Risk & Reward with Deirdre Bolton

I was recently interviewed on the Fox Business network. The Fox Business show Risk and Reward with Deirdre Bolton is focused on private equity and venture capital. I sat down with Deirdre to talk about Regulation A and what it means for the equity crowdfunding industry.

Deirdre Bolton interviewing Ryan Feit

Deirdre Bolton:

Early-stage venture capital investing has returned more than 21% in the past 30 years. It has outperformed stocks and bonds in that time and starting today, ordinary people can buy a stake in private companies. This is huge news with the passage of Title-IV of the JOBs Act.

Ryan Feit is with me now, he is the CEO of SeedInvest, an equity crowdfunding platform. Ryan, welcome, and congratulations on the launch. Essentially, this new rule means that if I want to invest in a tech company that I think is going to hit it big, I can?

Ryan Feit:

This is a big deal, because for the first time in our lifetime, any American can invest in startups.

Deirdre Bolton:

How much money is necessary to be an investor? Do I need to be an accredited investor, and for people who don’t know that definition, it means a million dollars (outside of the value of your primary home)?

Ryan Feit:

Historically you had to be an accredited investor to invest in startups and small businesses, and that was only 2% of the country. Now it’s open to everybody, but there are limits on how much people can invest.

Deirdre Bolton:

The assumption always has been that professional investors, at least in theory, are aware of all the risks that they’re taking. I know this new change came about slowly because there were some concerns about whether the average person actually make these investment decisions?

Ryan Feit:

The nice thing about what has come out today is that it’s very balanced. For any company that wants to raise capital from ordinary investors, they need to file documents with the SEC, and get a range of approvals.

Deirdre Bolton:

It’s still tracked, it’s not like “Hey I have this idea, give me money”?

Ryan Feit:

Exactly, and it’s taken longer than we wanted, but that’s because we needed to make sure that the rules were balanced.

Deirdre Bolton:

If somebody wants to invest today with SeedInvest, how do they do it?

Ryan Feit:

If somebody wanted to invest today you could sign up on SeedInvest, it takes two minutes. It’s completely free for investors and then you can browse all the offerings we have on the site, and you’ll be kept up to date.

Deirdre Bolton:

How is this different than other equity crowdfunding sites, CircleUp is one I’m thinking of, but there’s a few out there.

Ryan Feit:

The biggest difference between SeedInvest and other platforms out there is that SeedInvest is highly vetted. We’ve had around 4,000 companies apply to raise capital in the last few years, and only 1% have been accepted.

Deirdre Bolton:

Who is doing that? Are you the one sitting there with your colleagues saying; “These metrics don’t make sense, so we’re not going to put this company on the platform?”

Ryan Feit:

We ask every company the same set of objective questions and 80% of the filtering is done objectively. And then, we have an investment committee and we do our own due diligence to protect investors. Also, we are completely free for investors. We don’t charge 20% of the upside.

Deirdre Bolton:

How are you making money?

Ryan Feit:

Since we’re free for investors, we basically get paid a small placement fee or commission on anything that’s successfully raised by the company.

Deirdre Bolton:

I was teasing you a little bit earlier in the sense that you have been thinking about this for a long time. Today is your launch day, but how many years did it take you to build this?

Ryan Feit:

About three and a half years ago my co-founder and I realized that there was no reason that startups and investors cannot leverage the internet. We got involved in a movement to change 80 year old securities laws. We ultimately got a Bill rolled into what’s now known as a JOBSs Act that was signed into law on April 5, 2012. This has been three years in the making and today is a big day.

Deirdre Bolton:

Congratulations. I am sure that three years of dealing with government regulators is like nine years in another life, it’s sort of like the dog years. Great to have you with us. Ryan Feit joining me there, CEO of SeedInvest, an equity crowdfunding platform.


This post first appeared on the SeedInvest blog as: SeedInvest on Fox Business Risk and Reward

Mad Money with Jim Cramer

I was interviewed by Jim Cramer on the CNBC show Mad Money in February 2015. The interview covered topics such as angel investing, venture capital and a few recent companies that have raised capital on SeedInvest.

You can read more about the interview in the CBNC article about SeedInvest and the Crowdfund Insider summary of the interview.

Transcript: Jim Cramer interviews Ryan Feit

Jim:
Alright, here’s a really intriguing idea, what if there was a platform that let you invest right alongside venture capital firms in privately held startups. Guess what? It already exists, and it’s called SeedInvest. It’s a free online equity crowdfunding platform, that gives accredited investors a chance to invest in extremely well vetted startups. Investment minimums are as low as twenty-five hundred bucks, and depending on whether we get a positive ruling on part of the JOBS Act, which is scheduled for this October, a company like SeedInvest might be able to open up its network beyond just in accredited investors, who have to be fairly wealthy, to allow investments by regular people.

This is a great company to go “off the tape” for.  SeedInvest now has a network of twenty-five thousand users, seventy-five hundred are accredited angel investors, and unlike similar platforms that basically act as listing services, SeedInvest actively vets the startups that want to list on their network and only accepts about two percent of them.

I think this is an incredibly exciting concept, even though actually investing in startups, as we all know can be incredibly risky, that’s okay. So, let’s take a closer look with Ryan Feit, he’s the CEO and co-founder of SeedInvest, to find out more about this company and where it’s headed. Mr Feit welcome to Mad Money, good to see you sir.

Ryan:
Great to see you Jim.

Jim:
Have a seat, thank you.

Ryan:  
Thank you so much for having me.

Jim:
Alright, well this is exciting, because a lot of people say, you know what, why can only rich people invest in things that could make them richer?

Ryan:
Right.

Jim:
Now I know there’s this accreditation issue, and we’ve got to deal with that. But tell me what you’re doing to make it so, at the beginning at least, ordinary investors who are wealthy can get in, and then maybe all ordinary investors can get in?

Ryan:
Today SeedInvest is a leading equity crowdfunding platform. We connect investors to high quality startup investment opportunities. Historically only venture capitalists have been able to get into startups, and what SeedInvest does is that we have an online platform, and we enable ordinary individual investors to get into startups for the first time.

Jim:
Now we have a lot of people who call and they want to buy two thousand shares in a very red hot deal. And I’ll say listen it’s already going to move, or your broker might not have it. A lot of the things that you might be investing in ultimately could be that deal and the brokers may not have it, but you might allow people to get in it?

Ryan:
SeedInvest was built by investors for investors, and things like fairness, and transparency, are incredibly important to us. So one thing that we stand behind is that any investor on our platform, no matter how small, is going to get in at the same terms as a venture capitalist that they’re investing alongside.

Jim:
That’s terrific. Now how do you make money yourself?

Ryan:
SeedInvest, as you alluded to before, is completely free for investors. We don’t charge any carried interest like funds do. No monthly fees, no management fees. We get paid by taking a small commission on any capital that the startups are able to successfully raise from us.

Jim:
Okay, well give us an example or two of what you’re invested in right now?

Ryan:
So I can talk about, I don’t like to say my favorite company because it’s like saying my favorite child. But I’ll give you two examples of companies we’re excited about.

The first one is a company in the virtual reality space called Virtuix. Virtuix works with the Oculus Rift, that you might remember sold for two billion dollars to Facebook. When you’re playing the Oculus, when you’re wearing the Oculus Rift, instead of using a controller, if you’re playing Call of Duty, you’re actually moving around in the game and you’re in a virtual reality world. And guess what, Mark Cuban actually invested in a company alongside us. ­­­­

The second company is in the robotics space, it’s a company called Knightscope. They make a five-foot robot that weighs three hundred pounds that can hear, see, and smell. It rolls around alongside human security guards to protect schools and malls, and Microsoft actually just adopted them on their own campus.

Jim:
That was something where the germ of the idea, was the Boston marathon massacre?

Ryan:
That’s exactly what inspired the company. One of the best things about these startups that we work with every day is that they’re solving real problems. And people are getting in at the ground floor.

Jim:
Are there venture capitalists who don’t want you in?

Ryan:
In the beginning when we started that was a challenge for us. But since then we’ve been able to prove that we’re able to actually get our investors to add more than just capital to these companies, and actually be value add.

Jim:
So does that mean that the same companies that might make the rounds in Silicon Valley are also making the rounds to see SeedInvest?

Ryan:
Absolutely. So at this point most of our deal flow actually comes from venture capitalists that are not investing in the entire round, and want to share a part of the round with investors through SeedInvest.

Jim:
Explain the legal hurdles right now for someone whose watching, and they always wanted to have a couple of shares early on, and how they may not be able to qualify right now for SeedInvest.

Ryan:
So the genesis of SeedInvest is that about three years ago we saw that the early stage capital formation system was totally broken. So we got behind an effort to change eighty year old US security laws, and we changed it through something called the JOBS Act that was signed on April 5 2012. And because of that now investors can invest in private companies on the internet for the first time. But you need today to be accredited, which means you need to make over two hundred thousand dollars, or have a million in the bank. Now that’s all going to change later this year, but not yet.

Jim:
So people who are interested, they can go to your website, and read about it, and if they’re accredited obviously they can get to work. And if they’re not, then maybe they ought to speak to someone in government, because there’s no reason why only wealthy people should be allowed to get in on the ground floor.

Ryan:
Absolutely, you said it best Jim.

Jim:
Thank you very much. Okay that’s Ryan Feit, co-founder and CEO of SeedInvest. I got to tell you guys, if I were to start over again, I’d give some to a mutual fund to be diversified, and I would love to have been able to give some to this company.


This article first appeared on the SeedInvest blog as SeedInvest on CNBC