How To Sign New York Banking Presentation

Industry sign banking new york presentation later

hi I'm Ryan fight CEO and co-founder of seed invest appreciate you guys having me here today I'll just give you a little bit of background on seat and vests and how we got involved in the JOBS Act and got everything started and then go ahead and demo it for you so kind of the background is i started in banking I was at bank called Lehman Brothers that some of you guys might have heard about so I did banking there I left summer of 07 about a week before everything started to get really ugly so my timing was pretty good and then went on to a private equity firm called Wellspring that was in New York and went back to business school and during my second year when I was finishing up a warden that basically came across a couple guys that have been lobbying for a year to try and change 80 year old US securities laws I got involved in that effort mostly because being at and later stage finance there there is uh there is kind of a model it I guess the best way to put it is that I want I went back to school because I wanted to get into something more entrepreneurial and I was actually shocked at how challenging it is for startup companies and small businesses to raise capital and just kind of how the model hasn't changed in a long time yet because the securities law is impossible it's been impossible to actually really use the internet and so it made a lot of sense to me that companies and investment bankers and investors should be able to use the internet which is pretty much transformed almost every industry out there over the last 20 years but hasn't touched early-stage capital formation and so because of that I got involved in this effort ultimately we got the JOBS Act sign and so the part of the JOBS Act that gets the most press is related to non-accredited investors and I know a lot of people have a lot of concerns about that and a lot of those concerns might be justified it it's still still very TBD as I think a lot of you guys know but the piece of the JOBS Act that's I think really important and and a lot harder to argue about is the fact that it really allows you know investment bankers investors companies to use the internet to make transactions a lot more fluid to hopefully get more capital to companies that need it and make that process more efficient and so basically that flash forward as seed invest right now we are a funding platform for credit investors and right now startups and small businesses we have about 650 accredited investors on the platform that are looking to a messing companies we have about 130 companies a month that are applying to raise capital and so in the last few months we've had a few successful fundraises but we've as we've been building our technology over the past year we've had a lot of interest from angel groups from some some just organizations with with entrepreneurs and investors and then also from investment banks and investment advisors to use the technology we built to facilitate their own transactions and so because of that we basically have built what we're about to show you which is seeding best groups which is I believe very powerful for investment banks and so I've been speaking to a few folks from neba about allowing neba members to potentially use our technology because if you can imagine what we've been what we've been doing in seed invest we've been allowing angel groups to be syndicating deals to each other across the country and so the same thing is very possible for neba where different investment banks and investment advisors can use an online platform to facilitate syndication of deals and sharing fees with each other and also making the process of investing in a company a lot easier so I'm done talking I'll walk you through it and feel free to jump in with questions or you know happy to take questions at the end so basically what you see here and I don't know if Doug's is Doug in the room by chance okay so i use view trade in his example glad he's not in the room i can't get in trouble so basically this is a company overview page so if you have if you're an investment advisor investment bank you can imagine this being basically your homepage where in potential investors and companies will come and so has a little bit about your company what types of deals you're looking to do and then if you scroll down soon you'll basically have an overview of any of the managers so you can imagine this would be if you're an angel group these this is a manager if you're an investment bank this could be the registered reps or whoever is managing the deals and then if you scroll down you can have enlists investors as well so if you go back up this is just general overview page if we click on workspace in the top right I'll take you to more of the meet so the first thing you see is notifications and so every investor that you have in your network in addition to all the managers have their own newsfeed so as a manager I can see any investments that are made by any investors in my in my network if let's say another investment bank or another neba member shows me a deal I'll get a notification about that via email and also on the site if somebody that I'm showing the deal to express his interest or looks at the documents I'll get a notification so this is kind of a place where all the different information that's happening is all consolidated and we track everything so if we click on deal funnel basically here I can see three different types of deals so the first deal on the right is a deal that's under review so in this case another neba member has a deal steer clear that they think might be interesting for me and so they syndicated to me and it's under review and what that means is that I until I approve the deal only I can see it once I approve it all the investors in my database will get a notification about the deal and they can then let me know if their interests of the deal so the second type of company in the middle diabet is a company that's under consideration so I've said okay I think this deal is worth showing to my investors I'm going to click approve once you do that all of your investors in your database will get an automatic notification that diabet is under consideration just come and tell me whether you're interested and for how much would you potentially be interested in so one of the challenges for broker-dealers investment bankers even a you know investment groups is that a lot of times you do all your due diligence and you don't really know if there's interest in a deal or not and you waste a lot of your time so we allow you to quickly kind of get a sense of whether or not there's interests and then you spend your time and effort on due diligence at that point so if we click on interested here on on dietbet basically here if I'm an investor all common else let's say I'm an investor interested in investing 25 grand if the diligence shakes out yeah whatever he's typing economics are amazing and then he click Submit and right away as a manager I get a notification that you know whoever it is is interested in 25 grand you can see now there's 25 grand of member interests that's all tracked and then the other thing that I can do is I can share this deal with another neva member so if we click on syndicate now I can basically you know type in anything I'm not even sure if the internet is going to work but yeah so anyways we can we can you can you can send an email to someone who's not on the platform and let them know about it or if there are other neba members or we have a number of angel groups and VCS on our platform you can also show the deals to them and then track if any other investors and the other networks are interested in it you know if there is interest from another neba member for instance you can then work out a fee split so just click syndicate and so now georgetown alumni angels who he sent it to got a notification about the deal so the third third piece is once there's enough interest in the deal you can then launch the deal and what that what that does is it makes a live fundraise where investors can actually come to the site and make live investments on site which i'll show you which is something that you know hasn't I don't think anybody was doing before us so it's pretty powerful so this is kind of my this is a live deal and this is my fun this is my act this is kind of my dashboard as a manager so I can see this deal has been syndicated two times I can see who syndicated it to what groups and I can figure out if there's interest from the other groups and then I can see that six of my investors have invested and I can see how much they invested and and then deal terms of I have specific fees whether it's you know if it's a placement fear or carry or wherever it is you can set your own fees and then if we cook on deal diligence on the next tab this basically is a summary of kind of my diligence findings on the deal for my for investors to look at you can also track any conversations that you've had with any potential investors here so you know we took a lot of we spent a lot of effort making sure everything was very compliant as far as Finn run the SEC and so through the internet you can track all this data which makes makes your life a lot easier and I think we're the only platform that is we demoed this for the sec and finra in the last few months and I've gotten pretty good feedback from them and have actually been helping them think through a lot of us how to use kind of the Internet to facilitate transactions so so if you click on deal activity this again is similar to what you guys saw at the beginning where I can see any investments anyone who's interested it's all right here so it makes your life a lot easier and then now I'll show you what it's like to to look at a company from an investor's standpoint so click on View company profile so this this company for example is listener they're looking to raise 750 grin they've raised 500 grand so far so if i scroll down the first thing you see is a deck so an investor pitch deck on the company if we click on video usually companies will have a overview video from the team talking about their idea its kind of their you know live live pitch if you scroll down just information on any other about the company about any previous investors about if they're part of an incubator and accelerator and that information on the team and advisors all here board members so pretty good way to do diligence on the on the team if we scroll up we'll check out the data room now so click on data room basically we we built our own data room I think it's a lot better than interlinks but I'm biased I've used intralinks a lot and this basically allows you to to kind of set up the data room however you want so usually people come to the private folder and look at you can have the model the cap table etc if you click on legal people will use it for their legal docs and you can you can really drop anything in the data room it's very flexible if you scroll up sand to to to edit data room from a company standpoint it's really easy to drag and drop stuff you click on add file all this is is very scalable and from from a kind of investment bankers standpoint the company can do a lot of the work and the investors can come and look at everything and so it's it is pretty simple I think if you click on edit permissions we actually built in a set of permission so that certain files might be more sensitive than others so for instance some companies work with might have a patent that they're a little bit more careful about who they show it to and so you could drop that in the miscellaneous folder and click on custom what that does is it makes it forces investors to actually request access to that folder in order to get it and you can grant them access on an individual by individual basis as you can see on the bottom so it's very it's very flexible and you know every company is different so every fundraise is different so it's it's a it's worked really well this is one of my favorite features it's called meetings and this basically allows you to host we built this all ourselves as well it allows you to host a live Roadshow with investors throughout the country and with the company so you can see here we recently had a wrote had a roadshow with 19 accredited investors all across the country that's the CEO Steph and Jacob of Kimbrel and he basically walked through his pitch deck to investors everywhere and then at the end of it there were 19 investors that you can see on the right s a bunch of due diligence questions he answered them live on the spot so I mean to me the things like this are really the way things are going as far as capital formation and it's it's pretty incredible too you know log into something like this and have this type of a tool okay so if we go back up on a fake use click on f accuse there so I mean one of the things we've have certainly found is that investors asks the same types of questions most of the time ninety percent of the stuff gets repeated and if you're a company you know you're sending the same files everybody over and over so the data room is nice you're also answering the same questions over and over so we have consolidated all in one pay place where any investor that's interested can ask a question right when the question gets posted you can have it go directly get you can have an email go directly to the company so they come on and answer the question or you can also have it come to you if you're an investment banker and you can answer the question on their behalf but it's all it's all in one place and other investors can kind of benefit from that and they can add to the discussion so this has worked out well so that is basically the due diligence tool that's the due diligence tool set I'm now going to show you the mic kind of my favorite part which is the the online investment flow so if we click on invests in the top right basically what we've done is we have I you know we've made investing in private businesses as easy as buying a stock online and as everybody in this room probably knows that there are a lot of implicit challenges with that stuff like KY Co fact checks Patriot Act checks AML there's how do you payments there's escrow there's a lot of stuff and we spent a lot of time over the past year in three months making that very streamlined and simple so I'll walk you through it so basically there are usually two types of investors or either investing as an individual or they're investing maybe in a partnership with their wife or through an LLC that they've set up so you can see you can either invest as an individual or you can invest on behalf of an entity if you're very very non tech savvy you also can invest offline so we pretty much have catered this to everybody as seed invest we have we have people or investing ten grand that are 30 years old that are pretty tech-savvy they're comfortable investing online we also people that are 65 that have our investing 50 grand that you know like to use offline so we've tailored it towards I think everybody we spent a lot of time on that so if we click let's invest as an individual so here as a as an investment banker or an advisor you can set the minimum investment amount let's invest 10 grand feeling a little spending too much money lately ok so we're investing 10 grand so here is basically where we do online identity verification so basically once once my information is entered in we're running a live kyc check so we're matching the person's identity versus we're all public databases and we're also doing an automatic oh fact check for AML purposes in a patriot act check so we're running a verse OFAC database for doing all this instantaneously it typically takes I'd say less than 15 seconds and we've gotten very effective at being able to do this all online so anyone who's been through this process of doing kyc and AML well I think appreciate this I think we certainly do we've tried to do it both ways so so if we click verify a workspace interesting go hey send do a ctrl shift shift tab maybe I'm not sure I we clicked on alright why he's why he's doing that clicked on something else so basically yeah anyway so basically the things we'll do through the investment flow is enter your inve tment amount and then we'll do the automatic check and we actually have two types of identity checks the first one will compare your information versus all publicly available and for publicly available databases we typically are able to verify someone's identity eighty percent of the time through that if that doesn't work we have a second layer of a check where we will actually do what's called an auto wallet test and we'll check your information sorry we'll ask you questions that only you would know the answer to like what's your mother's maiden name when did you move to this resonance so we'll do both of those layers we've had a lot of issues with the internet so I think that's the what's going on right here but sin if you go back to the lat if you go to the DA go to the next page click on continue click on verify here we've just we've had we've had a lot internet issues that's why we were late so I this might actually not might not work so just leave it leave it here I'll talk through the rest if any if anyone is interested we can show you the last three steps / or going to be over there all day so we can just walk you through it but basically after this page when you click verify your identity is verified we will take basically the person's name email address and investment amount and will automatically drop it into the legal docs online so whether you're doing at preferred stock common stock convertible note it's all customizable and basically the all the information will be dropped in the legal doc online it's a shame this isn't working because probably the coolest part but would love to show you later but will basically drop it in the legal docs you read it you can actually sign the legal docs online with one click it's all totally legally binding and the legal docs will then be held in escrow after that step the neck the next step is you enter in your bank account information so we're integrated with an ACH payment provider that allows us to pull the investment amount from the investors account so we'll check you enter your name your bank or sorry your bank name checking or savings and your routing number and account number and then we'll basically pull the money from that account and if you use escrow we're integrated with an escrow service provider and we'll send that money to the escrow account and then once the transactions closed the money will be released from the escrow account into the issuer's account and the in the company will countersign the legal docs and they'll get the legal docs back so again I can show you all that in a minute once we get better internet but uh and then every investor has their own workspace which is the last thing so as an investor I can kind of track any companies I'm looking at and once I make investments I basically will have access to what we call virtual data room and it's a place for the company and all the investors have access to and just like you saw the de live kind of road shows companies can do quarterly live virtual board meetings with all their investors wherever they're based on the internet and they can do monthly reporting through our site which is which is really efficient as well so that is that is the basics again I look I'd love to show you the last few steps because they're probably the most exciting will be over there but I'd love to take any questions I'm sure there are a few yes yeah good question so yeah yeah now great question so he's asking about the first page you saw like managers and investors so we had so if you're a angel group you actually want your members to be shown because it attracts other members that will pay fees to be part of your group but if you're an investment banker you definitely don't want that to be shown so there's actually a button on on settings where you can turn that off good question yes we're using a third so we built a lot of it ourselves but we're using a third party vendor to run to run the checks ideology exactly good call yes we're affiliated with the broker-dealer summer registered rep a broker-dealer oh there's an issue available to make over your deep so the way it works is if you are a broker-dealer whose license you know you can have to do the transactions privately without us if you have a deal that you want to involve us in then we can you know do it under our broker dealer but yeah but obviously it involves a discussion yeah in the back you give it a little more color your perception from bindra on your credit certification process yeah sure so good question what kind of feedback we've gotten from FINRA on our certification process so as I'm sure nobody in this room is surprised by FINRA is not like the most technologically advanced organization so it's been it's been a long educational process we started speaking with them last summer and have been kind of speaking with them for now about a year and so it's been gradual at first there weren't a lot of welcoming arms but over time I think they realize that this is coming and that things are changing and so instead of just having a stiff arm now it's kind of like okay we'll walk me through this and how does once title 2 of the JOBS Act which if people don't know about it is really important which removes 80 or ban on general solicitation so once that kicks in pretty quickly how how are things going to be shared so we've I've written them some letters I mean we've been pretty helpful on that front so I guess not as far as them and the SEC I think they've been pretty welcoming and pretty and I think they like our process generally any other follow-ups on that maybe there's more specific questions but it's not a bit the most important thing on on kyc on AML and then also when it comes to title to on actually being able to share stuff online through online advertising or social media the most important thing that FINRA is tracking everything so we've actually shown them in the SEC that you can track way more by using online platform than doing it offline because if anybody looks at a document I can we our database keeps information on who looks at what documents whose look who's actually reading the legal docs so stuff that you'd never be able to do offline so stuff I think they're starting to understand that it's pretty powerful and actually is helpful from an investor protection standpoint if you're doing it the right way yeah in the front it's only available to accredit investors yes yep it's issuers that are responsible for filing with the individual states so we'll let after every transaction will let them know automatically what States your investors are in but it's up to the issue or to make those filings yes simultaneously wire yeah good question yes so let's say you have a ten percent fee you can send ninety percent to this your ten percent to you as a broker-dealer right away yeah it just sits in the escrow agreement you just model you just enter in your feet yeah good question yes what is the charge for a particular to be so we're charging a month we charge a monthly fee and it ranges depending on your activity how many people how many investments your processing etc so it can it can range anywhere from I think 179 per month to 2500 per month depending on how active you are we also typically charge just under five hundred dollar registration fee but I actually was going to tell Emily this we decided for any neba members we're going to rape waive the registration fee and you know it's the extent we can get a lot of neba members to get on board happy to work out something as far as a discount I think it's it's the more people you can get to use this within you know your organization whether it's kneebar just your other networks the more powerful it is so and then what about the view so we don't charge issuers at this point unless like for us if if we're raising money from our investors will charge a placement fee but as the individual broker dealer or investment banker if you want to charge people to apply that's up to you ok issue a pumpkin record you they can come directly to us as well yeah Junior League brother Neil 11 yes so I mean the way to think about it best way is let's say we have five different neba members that are using this we're almost like our own broker-dealer so if you have a company apply to you you're the only one who can see that unless you share it with other neba members or with us you share the deal with us you know we can show it to our investors and we can set our own fee split just like any broker dealer would but you can keep it private if you want to my question was in the usual does the issue a meeting sponsored by rotating right oh no they do not you know usually do well yeah yeah definitely yeah we have about 650 accredit investors and we're growing at about 150 new investors a month right now yeah so think about I mean we're like a lot you know big angel group with active investors follow me no they're your clients so the thing that we've done the thing we've done with other people is that is that if you want to keep your investors your investors that's fine or if you want you know if you're okay with us showing your your investors are deals and we pay you for it then we can do it that way either it's flexible different people have different kind of you know goals yes no not at all I you know it really the thing we've built which is nice is that if you have a deal we don't it we have no access that it's your deal if you want to share with us and we have a you know we and you want us to show it to our investors and we we can help each other but aside from that it's your deal and the same thing with us when we have deals we can syndicate it to you and you you have the full destroys over whether or not you it's a deal you want to participate in so yeah it's definitely not I don't think it's competitive whatsoever there are a few questions sorry we're not now I mean I might my co-founder work today heated tech investing his career I did everything aside from tech so we'll kind of look we can kind of look at anything yeah we don't have an industry vertical at this point there are certain verticals that have worked better for us so far but we're not we're not industry specific yes I have an issue where ya give you access the dealer she dressed Larson school if you want to take a fee on it are you saying right so then you we go yeah yeah I would work as a mother compensation is your food that yeah right yeah the same issue neither nervous system I like on the right back unless you see how exactly precision yeah so so if he's the underwriter just like you saw the view trade group it would be under review trade and so you know if he has is a if he has his own investors he'd show it to his own event then then you'd syndicated syndicated to us so yeah exactly yeah so we do it that way so that it's up its if you're the if you if it's your deal it's up to you whether or not you want other people to be kind of doing the deal with you just like it we did a company raised 140 thousand dollars on our platform in seven days one of our early ones says the smallest one thanks yeah we've done we've got other presentations we need to get to so if people have further questions we're really be a puppy right next door we'll be here for a while so yeah just happy to have you to talk through this I'm happy everyone has questions so thanks a lot for having us and and look forward to talking to everyone more about this thank you you