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