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