Learn How To Market Your Reg A+ In The Current Market And Latest Reg A+ Tips; Interactive Clickable Video

Use the Chapters list below to select the part of the video you want to watch.

Chapters:

1. Rod Turner's background
2. Introduction of Manhattan Street Capital
3. Disclaimer
4. The Agenda of the session
5. What effect is the volatile stock market having on the ability to raise money via Regulation A+ online
6. The impact of Apple's iOS 14.5 privacy changes
7. Marketing your Reg A+ successfully in the current environment
8. Will Reg A+ work for my company?
9. Reg A+ Tips and techniques
10. The growth rate in Reg A+
11. Q&A - Reg A+ audit requirements
12. Q&A - What is the cost of investor acquisition?
13. Q&A - How much does Testing The Waters cost?
14. Q&A - Opinion on doing a Reg CF prior to a Reg A+
15. Q&A - How much investment would be necessary to go launch a Reg A+ without the campaign and how long does it take?
16. Q&A - Other than having a compelling, marketable story narrative, what are the key business metrics?
17. Q&A - With respect to testing the waters, what's the percentage of those who place an investment when the real offering goes down?
18. Wrap up

Disclaimer:

The content in this webinar is not and shall not be construed as investment advice. This information is meant to be informative and for general purposes only.

MSC is not a law firm, valuation service, underwriter, broker-dealer or Title III crowdfunding portal and we do not engage in any activities requiring any such registration. We do not provide advice on investments. MSC does not structure transactions. Do not interpret any advice from MSC staff as a replacement for advice from service providers in these professions.

Rod Turner

Rod Turner is the founder and CEO of Manhattan Street Capital, the #1 Growth Capital service for mature startups and mid-sized companies to raise capital using Regulation A+. Turner has played a key role in building successful companies including Symantec/Norton (SYMC), Ashton Tate, MicroPort, Knowledge Adventure, and more. He is an experienced investor who has built a Venture Capital business (Irvine Ventures) and has made angel and mezzanine investments in companies such as Bloom, Amyris (AMRS), Ask Jeeves, and eASIC.

[email protected]

www.ManhattanStreetCapital.com

Manhattan Street Capital, 5694 Mission Center Rd, Suite 602-468, San Diego, CA 92108.

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Before I get into the content brief intro myself and the company Manhattan Street Capital. So my name is rod Turner. I'm the CEO and founder of Manhattan Street Capital. I launched the company seven years ago. I have had the good fortune to play a key role as one of the top executives or founders of before Manhattan Street Capital, six other high technologies, startup companies to liquid outcomes that were beneficial to all concerned. Two of those were IPOs to the NASDAQ. One was Ashton Tate which we built to be the leading microcomputer database supplier in the PC world. And the second one is Symantec the Norton antivirus company, which where at that company I was there from before revenue. And as we started acquiring companies I drove the largest mergers and acquisitions into Symantec, including the Norton business, which we from which we launched the Norton desktop windows, which was hugely successful and also the Norton antivirus, which is still a major player in the antivirus space.

So that's a bit of my background. I've started that in my side of my career as a electrical engineer or a nuclear power station in England, and then moved into high tech, startups and management leadership roles, marketing and sales roles, and so forth. Manhattan Street Capital: I launched it. I launched this company in, March of 2015 because of Reg A+ we were then the first focused Reg A+ funding platform focused on Reg A+. And, we have grown the business since then gradually and also added Manhattan Street venture fund, which is a investing and lending fund. That is a compliment to, strategically fits very nicely with what we do at Manhattan Street Capital. We are an advisory and, listing platform. So we assist our client companies to initially help them figure out if they should use Reg A+ or one of the other instruments that we work with.

And then when we're involved in working together, we assist and advise them in all legitimate ways essentially quarterbacking the projects to maximize success in both cost efficiency and time terms. We are not a broker dealer, we're not evaluation service and we're not underwriters. So we're not allowed to tell companies what structure they should use. We're not allowed to tell them what valuation or share price they should use. So we don't do those things. We're also non securities attorneys. So we don't give securities advice. What we do do is from our observations and my observations of what's going on in the market advise our clients as best as, as much as we possibly can to maximize their success whilst doing so from observations of our own experience of our client's experience. And, and what we see happening in the marketplace, this webinar is, is gonna be somewhat different than our prior webinars, because so much of what we're discussing is it's, it's obviously focused on marketing Reg A+.

So much of that is proprietary and unique to us what we are doing. So I'll be describing overall issues and strategies and the changes that we're seeing. But I will not be volunteering the names of vendors that we've taken pains to select, train, qualify, and engage with our clients because their involvement is such a huge part of success in making these offerings work. So I'm not gonna give away the, the whole store on those things. You have to be a client to, to get all of that, but I will be giving overall a lot of helpful suggestions and feedback and context for the agenda as planned for this call for this zoom. So the agenda, the sequencings a little different than we put in the, in the plan, the sequencing of the content is the same, but the sequence of events is slightly different.

The first topic I'll get into is the effect of the current volatile stock markets on raising money in, in Reg A+ the second topic will be the impact of Apple's privacy moves with their iOS 14.5 operating system release. The next item will be marketing your Reg A+ successfully in the current environment and what that takes, how it's different. And then the next category will be, will, will Reg A+ work for my company. So I'll get into that and how the context and environment is shifted there. Then I'll give, I'll give some tips and techniques on Reg A+ as well as get into the scale and metrics of Reg A+ currently, and how it's been growing as a capital formation process going forward. Okay, thank you very much Ákos, who is here and has caused this event to come together. Logistically is in the background, always involved in getting these webinars set up and making them happen.

We will be producing a recording of this with a clickable index to it. So you can go just to look at the parts of the webinar recording that you find interesting. You don't therefore have to write notes now, certainly please do not record it because we will be going through the recording. And if we find errors in it, we'll remove the errors before we publish the final version. And again, it'll have a clickable index and we'll put it up on YouTube, so it'll be accessible to you and you'll be able to share it to people that meant that might benefit from it. Also, thank you very much for joining us today. And I apologize for the confusion that I caused by catching COVID. I'm glad I didn't host the webinar two weeks ago, cuz I, I had done everything in my power to get myself revved up and, and capable and recovered enough to speak clearly, but it would've been, it would've been a pretty marginal presentation from me and it probably would've harmed my recovery cause I was getting worse at that time.

I wasn't even on the recovery curve yet. I reached a fever at 105.5 the day after the planned webinar, which was Wednesday, two weeks ago. The next day I had a fever that I think it's the highest I've ever experienced. 105.5. Anyway, I am almost completely recovered. Thankfully. I did get vaccinated and I've had prior exposure to COVID that didn't hit, hardly affected me at all, but this particular one had a big impact. Okay. So getting first topic of the day primary topic of the day, what effect is the volatile stock market having on the ability to raise money via Reg A+ online. So it, it is a very different climate that we're in. I'm gonna get into the privacy moves, which are actually the biggest factor. They're much that that, that change has a far bigger impact than the stock market does.

But couple of interesting metrics when during March of 2020, it became apparent to the us markets that COVID was gonna have a, an impact here too, not just we confined to Asia or, or other parts far away. That three week period in March when markets went haywire our Reg A+ offerings that were live at that time and those that stayed live a couple of them paused their raises, but those that stayed live saw their costs of of acquisition of investors increased by about 25%. During that three week period, it didn't come to a standstill. It became more expensive by approximately 25% to raise money in that time, which I found to be amazingly good. I was really surprised that it was that good. And after about three weeks after that window of three weeks where the volatility was so high, three weeks later, we were back to normal.

And another four weeks later in May of 2020, the cost of acquisition of investors went down, but by about 15% because so many people were stuck at home and trapped and you know, looking for interesting things to do. So we, we got that period of time. The last two years has been, I think, extremely beneficial overall to online investing in, in general, on Reg A+ in particular because so many people that weren't aware of it became aware. We've seen significant uptake in institutional involvement and credibility for the process of raising money online. So it's grown very significantly. The expansion of reg CF from 1 million to 5 million a year was very significant that that's also been a part of the growth and the expansion of Reg A+ from 50 million a year to 75 has also expanded. But the biggest factor really is we've gone as a, as a, as a capital formation process.

Online raising of capital has gone from being a tiny little cottage industry that was really looked down upon by a lot of people in the finance business to one that has, has become respected and appreciated and has grown very rapidly. I'll get into the metrics later. So we've seen the quality and the stage of the companies that approach us these days is so much better than we used to see. It it's is really wonderful. The companies, the quality of them, the number of customers, the number of fans, their momentum, their profit was just seeing so much better companies with so much larger market potential than we ever used to see because they become, they have become more aware and they have tended to self-qualify before they approach us. So the whole process is so much more efficient for us than it used to be in part because we publish so much content.

It helps companies figure out if they should use these instruments in particular Reg A+. So a couple of other interesting metrics we've had, we've had days where when most of the investing traction comes from marketing outreach to the great masses of people that aren't aware of a particular company most up until now, cause most of our clients up until now, haven't had a large follow and we've got some clients now that do, which makes life a little easier, but when you're having to work for every investment, the typical a typical mechanism is of course we email our member base and as its effect, but the lion share of the investments come from advertising outreach, usually through Facebook, Instagram or Instagram, which owned by one entity, they've been the most efficient advertising vehicle to use. And so somebody's doing something else. They see an advertisement that is engaging enough to draw them into the investment offering page.

And then we have a limited amount of time to gain and keep their attention if they like it enough that they're interested enough to click the invest now button and provide us their email and phone number. Then of course, as you would expect those people or hot prospects, they're people that are genuinely interested enough to potentially invest now or later the thing which has been impressive to me and shows you that so many of these online investors are optimist is that we've had days where on a particular offering, 70% of the people that click that investment button and gave us their email and phone number went on to invest on their first visit. You know, when that is happening, obviously it's a compelling offering. That's being well marketed, but you also know that the nature of these people is that they are optimist and there's so much other evidence of that.

This is main street investors, obviously accredited investors and institutions are more skeptical, more difficult to please, and they take their time and do their due diligence. As one would expect that so much of the raising of capital and Reg A+ is done from main street investors who are so much of the time actually optimist. And I see this where, you know, through the platform, there'll be emails from of comments and questions to the either direct emails or comments posted on the offering page for management of, of our clients to respond to. And I get copies of those so I can help, we can help our CEOs answer those questions and make sure that they do it, do pay attention. So I see the messaging, right? I see the comments and you know, it's just, it's, it's so nice. It's so nice in a way to see that in a company that's doing a raise and is not planning to do any kind of listing anywhere of anywhere.

No, not even mentioning liquidity, just raising money with no end insight in terms of liquidity and no discussion thereof will see inquiries about, you know, somebody who invested three months ago saying when's the IPO, you know, there was never any discussion of an IPO and yet investors are assuming that there'll be one that gives you a really good sense of the nature of the investors that we see. So that is a factor. And that's part, part of the reason why we've seen such robust online investment activity during volatile periods of volatility in the stock market. It's helped actually. Obviously that brings with it, the, the attended responsibility to protect these optimists from themselves. So that three, five years down the road, they're ecstatic that they invested not disappointed because their brother-in-law was making them look full, like a fool at the, the new year's dinner.

Yeah. We need to protect them by educating them in ways that don't rely on them having to read the hundred 40 page, offering circular, to find out everything. We need to protect them from themselves to some reasonable extent. OK. So then what I'm really saying, another key factor is that only half of us households have a stock brokerage account, which tells you a lot, especially when you realize that a lot of the investors are that are investing, do not have a brokerage account. So they're not as tied to the NASDAQ and it's fluctuating of investors, which helps having said that in the current environment it's perhaps more important to some of our main street investors that they're dealing with, heavy inflation, they're dealing with ridiculous gas prices and uncertainties of various kind, both politically as well as, you know, the war in Ukraine and what it might or might not mean.

So those kinds of things, the looming recession as prices, you know, peaking and perhaps declining or actually declining those sorts of things are gonna affect main street investors more probably than the state of play in the stock market. But then on the positive side, we've got this new legislation that's just been passed where essentially there's a lot of money and encouragement to invest into environmentally sensitive businesses. So we'll see a great deal, more results for we'll see customers more able to buy from such companies and our clients that are in this space will be, and are benefiting immensely already from this new activity. So there'll be areas that are hot anyhow, right? Especially as more and more people come to conclude that climate change is damaging and we need to do things about it to more people that reach that conclusion, suppose the motivation to change things as well as to make investments that will do well cause of the needed change. Moving on now to apple, their new version iOS, the operating system that they provide on tablets.

And especially most importantly on iPhones version 14.5. It was announced in may of last year that apple was making this move. And it didn't have much of an impact that, that we were aware of or that we observed through last year, we took steps. There's a thing called the Facebook. Facebook, Instagram again has been the primary, most effective outreach vehicle to bring in investors to these raises. And they had a thing called the conversion API, which was pretty much useless and, and in heavy neglect mode, but they decided to change it upgraded and provide server level tracking because on the iPhone device itself, iOS 14.5 makes it very easy. In fact, block tracking of activities for users in the main. So I'll, I'll, I'll, I'll step back for a minute here. The default setting, when anyone buys a new apple device that runs iOS 14.5, which is every new tablet and every new iOS phone the default setting is privacy mode.

So if an invest, sorry, if a potential investor, if a user of an apple device wants to be tracked, which most people aren't really excited to to do, if they do want to be tracked, they have to find the place in the operating system on their device and change the setting because the default setting is off high privacy mode. So as you can imagine, as people upgrade to the latest version of the operating system and as they buy new devices, this is how they seriously big impact on the effectiveness of marketing online to apple device users and more important. And as important is the fact that most of the investing activity on mobile devices comes from apple users. They have generally their we and high propensity to invest. So this is seriously big news. This to me, eclipses the stock market fluctuations and the Ukraine war.

Those are side shows. In my opinion, the biggest issue we're dealing with as a, as an industry in raising money is developing new ways to find effective outreach mechanisms that will work anyway, even though apple is making life so much more difficult, you know, you'll you, you, if you were watching this, you'll have seen announcements from the various online social media platforms and make a lot of money from advertising revenue like Facebook and Snapchat and others where their revenues and profits have been really hap really hammered. And they're using various excuses like the Ukraine war and stock market and things, which I think are literally a distraction. The primary issue is that apple has made it very hard to track people's activity. And really what you, when you look back strategically at what's been going on starting in the late two thousands, there was really a free for where a lot of things were taking place that I observed that weren't allowed or were sh shouldn't have been allowed where players like Google and apple and Facebook, Instagram, and others were sharing and helping each other to scale up and looking at each other as non-competitors which at that point was more the case.

These days, they're more li lining up to compete with each other, but in any case, that was a sort of a free for all period. You know, if you think about 2010 through 2021, really all of, to the end of 2021, it's been an amazing, wonderful period where lots of tracking has been by default allowed and that's made for a lot of effective marketing. So we are gonna see a lot of small companies failing that were able to make money and, and customer acquisition was affordable in the past, which is no longer affordable. And we're also gonna see a lot of online raises that used to be live or become nonviable. This is huge to me, this is our single biggest priority as the company we are in the fundraising business. So we've become more selective. This isn't brand new. This is something we've been doing for some time, but becoming more selective because of the changes.

And now I switched back to what the context has felt like. So we jumped on board with the Facebook, Instagram conversion, API upgrades. They weren't documenting it properly. They weren't describing it fully. So we were at the leading edge of figuring that stuff out, making intelligent assumptions about what they were doing when they weren't documenting it adequately. So we got the conversion API working very early and it helped, but we didn't see a really desperate need for it last year. But what we've seen is starting this year in January, we've seen a significant reduction in the efficiency of advertising outreach through Facebook, Instagram. And if that wouldn't be such a problem, if there was a number two player that was really close, but there isn't right. So TikTok is the only game in town that might end up out and Instagram efficiency. Imagine a lot of you are thinking that Facebook, I'm sorry, that TikTok is for kids.

Certainly it started out that way, but they're targeting algorithms are astoundingly good astoundingly. Good. And so we've been encouraging our clients to use TikTok and our agencies that the clients that are sorry, the agencies that our clients use to, to use to and leverage it and it's early days, but we are having some very promising results from doing so it's different. It's more inconvenient because it's different. But the growth rate of TikTok is a stand inly fast, largely because they're targeting algorithms are incredibly good. And of course, targeting algorithms being incredibly good is key to showing ads to the right people, because that is what has made Facebook, Instagram so successful is that they know so much about their users, that they don't publish on the page, but they know in depth so much, they know more about me than I know about myself.

And they can be objective in, in easing it too. Right. Which I certainly don't have the ability to do so. My point is that TikTok is the only potential that I see as a social media platform that might equal or exceed Facebook, Instagram efficiency, but that there isn't a number two player on its close. Google is the closest and they're too far away from an efficiency standpoint and their efficiency has been impacted by these apple iOS changes too. So they're less efficient than they used to be. So this is a very, very important shift. And you'll see, as I said, you know, it's already evident to me and it'll become more evident that it's more difficult to raise money. Now it's more difficult to market anything when it in, when doing so entails targeting users through apple devices, particularly the iPhone and the tablet. So what are we doing about that? And what else is going on? We get into that.

We're seeing we are, we are attempting to lead and succeeding in some respects to lead a better feedback mechanism to the advertising platform. So if you imagine when Facebook is running an ad for a client company, they used to be able to track the arrival of that user on the offering page. And we would feedback to them what the investment engagement level was through the tracking pixel and that enabled Facebook's AI software to determine how to find other people like that, that engaged successfully in the investment process. Now the blink, the blinders are on they're like this they're driving blind. They can't see what the activity of the investor is when they arrive, they know who they sent. They know when they sent them, they know who they were, they know all about them, but they do not know what they did because the tracking pixels disabled, when an iOS 14.5 devices in play, and the setting is in privacy mode, which is the default setting, right?

So this is huge. So what we are doing is we are, we're already grabbing all of the available information in the back end as to success, we're sending as much information as the platform I, in this, we're sending every detail, like ready to they're all of it yet, but they're getting there, cause this is essential, right? You can imagine, they know they sent somebody, they know when they arrived, they don't know what transpired. We know when they arrived and we have ways of, we can track exactly what they did. So by feeding back that information with great detail to Facebook, Instagram, that becomes a, in an essential and very effective method of increasing efficiency. So they again are able to know which ad with which person was effective so they can find more people like that. Right? So you'll see a big shift towards doing that, where essentially it takes a lot of effort in the funding platform to go above and beyond and grasp all this information.

And it mitigates against using generic solutions where you can't do that level of tracking. Right. It has to be done in, I refer to us as a boutique because we aren't all about volume we're about success, fantastic companies that are invest that the investors will be celebrating, that they invested in in years to come. That's what we are about, not about pure volume, we're about long term success. So we're to jump all the hoops that, that are necessary to maximize efficiency. So part of, for getting promote my company mode, it's a very important seeing, seeing as a direct result of this is this, you know, is, is other ways to effectively reach audiences. So one of those is things is podcasts. Companies, I encourage you to participate at least in podcasts, but actually generating your own podcast. Audience is a great way to go.

We're in discussions with the company in the biotech space that has a half a million attendance level for their biotech podcast. This is a really valuable asset when it comes to raising money. Of course, right? So podcaster one, YouTube is another one, you know, building a big audience on YouTube, any place that you can build a large following that you have clouded influence and an engaged audience with becomes so much more important in the current context than it used to be TikTok is a great example of that. What's happening with TikTok is it's getting more and more mature, more sophisticated gradually as it grows very rapidly, and it's gonna get more and more difficult to become an influencer. It's gonna get more and more difficult to build a giant audience on to. So I encourage you, if you are gonna get yourself involved with TikTok that you do so sooner rather than later.

And another thing we're seeing is a trend towards leveraging owners of content sites, right? So one of the companies, these aren't marketing agencies per se, these are entities that own a lot of content where the relevant, where the content is relevant, where the content sites are relevant, then we can cause our client companies to be promoted to those content sites in a way that is independent of and not needing iPhone iOS 14.5 pixel tracking. So in some respects, it's a bit like a sledgehammer, but it's very cost effective. So we're getting tremendous results from doing that. And this isn't really an, this is a complimentary service that the agency and our clients use the marketing agency and our clients use, and that we help leverage where they own content sites, which are relevant to the investing process. And by using them, we can amplify the marketing efforts of our client companies and reduce the cost of marketing net hugely important.

And similarly one of we're working with one of our client companies where they are now in a relationship with a company that has over 10 million investor members and pretty good knowledge of a, those investor members preferences and in return for equity in the company, that's making the offering. The owner of the relationship with those investors is responsible now for all of the marketing outreach to their members to raise the money. There's no guarantee that they'll succeed. Of course, cuz you can't guarantee that kind of thing. But in return for an equity position in the company, they're going to bat in order to raise money cost effectively because they have a giant member base that they have goodness good relationship with and they can leverage and they have done some successful raises in that way before these are things that matter so much more today, email lists in some cases will be useful.

This we've had so much experience of email lists, turning out to be utterly useless when rented or purchased. There will be exceptions. We've come across a couple recently, but you know, you just, you have to be exceptionally selective when you were using email lists. But the point, the point I'm making here is that there is an adaptation process underway in order to deal with the challenge that iOS 14.5 presents us. It's a lot of shames. The, the status quo is no longer adequate. We've had it easy for 10 or 12, 14 years, and now things are getting much more difficult, which is where, you know, where the professionals come in and have to add value, which is of course what we do. Another trend that's underway, which we'll see more effect from is AI machine learning in better targeting. And that's what Facebook Instagram already does. That's what TikTok already does, but you'll see that popping up. In other places, we have an initiative ourselves to use AI machine learning, to identify which individual investors will have a much higher propensity to invest in a particular company. Hugely important. Continuing on this topic of how do we effectively market our Reg A+ offerings in today's environment, short form video ads in general are much more effective than they used to be much more needed than they used to be more frequent changes of ad content are more needed than they used to be. And short form video has also become very valuable in advertising and in organic content that you post. Right? So just bear those things in mind. Video is a humongous area of opportunity as our podcasts things mentioned.

So now I'm moving in, let see how we're doing on time doing okay. Will Reg A+ work for my company? Well, my biggest piece of advice to you is that this isn't a great time to start doing an online race because there's so much change. And because enough adaptation has yet hasn't been made, you know, the salt market is a, is a factor. The Ukraine war is a factor inflation and threatened recession. All of those things are factors, but to my mind, the SI single biggest factor is what I'm dis I've been describing to you in the the fact that marketing has been cut off at the knees by apple. That is huge as I think I've already said a few times, right? So if you have the luxury of deciding when you wanna raise money and you can choose to do so now, or later, later is probably gonna be better because there will be more adaptations that will have been made.

But if you need the money now, then these other factors are things that I suggest you would consider and build into your thinking, be more conservative. Anyway, assume it's gonna be more expensive assume you need to be more careful in the service providers that you work with. And I would strongly recommend you do not try to do this on your own. We gauge companies engage with us on a regular basis all the time, right? Every day of every week we get companies approaching us. And our, our challenge is to help them figure out whether they should or should not use the methods available to us and to recommend them to other methods where we're relevant. Sometimes companies approach us and gather as much as they can and then go off and do it on their own. Generally they're not very successful. But in this climate it's gonna be so much more difficult to do it yourself, frankly.

Just, just to be aware of that. So using the professionals, I know I'm biased in saying that, but it's also the truth. It is the fact using the professionals is more important, more valuable now than it's been in the past using test the waters. I was the one that suggested to the SEC in the summer of 2012, when they were looking for public feedback that they do what I call crowd audition. In my suggestion to them, they used, they called it test the waters, which we then trademarked in a number of forms. When, when it was announced, test the waters is a really good instrument because you can in inexpensive manner test market your company without having filed, without having an audit without having all the money in time, doing your Reg A+ any company that is a real business is allowed as long as it follows some simple guidelines to test market itself, to see if there's enough cost effectively reached investors to be got to in.

We provide that as a service. Again, I'm pitching, that's not sole intention here using test waters is a, is, is a more important instrument right now, in my opinion, having a large fan base, having a large customer base matters so much more than before, having a strong social media presence matters so much more than it used to do. So, you know, we have companies that are our clients now that are so much better established. You know, one of them has 200,000 customer lists. That's a very valuable commodity, obviously when you have happy customers and you have 200,000 of them, it's a hell of a lot easier to raise large amounts of money online from those very people. They know the company, they understand what it does already, and they have a positive vibe about it. Hugely valuable. The most, to my knowledge, the easiest raise to date still was a company called VI angel that raised 10 million, which was their maximum in 12 days, live to investors.

They had a, about a five or six days live. And then they had a break of a couple of weeks where they had to fix some problems. They hadn't anticipated. And then they went live again, but they emailed their 30,000 happiest customers and raised 10 million with no advertising at all. So the ad spend was do actually zero, as far as I'm aware they did some organic social media posts and they emailed their happiest customers. So that's the dream scenario, right? Happy customers. We're in discussions with the company. Now that has 400,000 customers that I assume are happy and obviously a very much easier way to raise money than a company that is starting out and doesn't have an audience of any kind or only a tiny audience or a B2B company that has a handful of happy customers, but that does not make a successful raise.

So those are those assets always matter. They matter more now, be flexible in your thinking, be open mind about using other methods to raise money. That is like the company that has chosen to issue equity to the third party. I mentioned to you, which is marketing their raise to their 10 plus million investor members being open minded to those kinds of arrangements as we are, right. It's all about success. It's not about being stuck in some rust, some habit, some method that we're used to it's about figuring out what works in the, in the current climate. And this current is significantly different.

The status it's more to market offer a to do a second Reg A+ had already done one with start engine and the start engine folks told them prior to the Ukraine war, they told them to expect to spend $3 for their entire raise for every excuse me, to spend $1 of marketing for every $3 that they raised as a goal, as an objective to reach, which to my mind is a heinously inefficient target and would be a heinously inefficient number to achieve. And then post January they told this company that they should expect to spend a dollar to raise a dollar 60 in investment capital post the beginning of the Ukraine war. And they pinned that on the Ukraine war, which I think is a complete fallacy. I don't think the war has had that much effect. It's the iOS 14.5 thing, which has had a big effect take the fact that Facebook, Instagram can only optimize events for eight offerings when you've got three or 400 of them going on a large platform engine, or one of the others, eight companies can get proper targeting through the AI of Facebook and Instagram's algorithms eight, not 300.

So the rest of them are getting averaged out across everything. So the pixels, to the extent the pixels are working on Android, they're working and on some apple devices, those pixels are optimizing against what is effectively a, a Hodge part of all the offerings that are live simultaneously then, which is terrible, right? The difference between optimizing for a real estate offering uniquely versus one over here, which is an electric car company, totally different. If you smush those together with two or 300 other ones, you're gonna end up with mediocrity on a good day. Right? So bear that in mind too, but that, that isn't itself new. It's just new to me because I learned some recent, I learned recently that those issues are not being dealt with by the platforms that do large quantity of offering simultaneously.

Okay. Yeah. A couple of other important developments in marketing one's offering successfully. And in helping you decide, if you can, if you can make a successful raise series offerings are an area of great opportunity at Reg A+ when applicable used beautifully applicable to real estate, but they can apply in other cases. So bear those in mind where you establish an LLC and then for each series within that LL within that raise, you may offer a house or a building or a segment of a building and sell that ownership in a phase through a unique LLC series within the LLC entity with its own valuation, someone ship its own unit price for that particular sub offering within the whole. This has the advantage that when you manage it properly and you have enough of an audience built up, then I'm gonna get to the questions later.

I didn't mention that on, but post questions in the Q a and I'll get as many of them I can at the end of the session at the, of my prepared remarks. Yeah, so series offerings can be wonderful. So that's something to bear in mind when it's relevant to your business. The rare, the rarity value of having a large audience of people that want to participate and bringing a tra or $200,000 available to purchase an interest in this particular office building. The finite size of it is in many cases, working beautifully, where it gets funded quickly, and then there's a gap until the next one comes along and that genuine rarity value can work really well. Another, another innovation that I'm seeing, which, which, which has tremendous promise is to make an app that is dedicated to your company and to the race. Obviously it has to make sense, and it has to be properly with all regulatory components. That's.

So I've seen this now in a, in a, in a few instances with series real estate offerings being offered via an app on a smartphone it's been done badly in a couple of cases where the investors are not being properly, made aware that of the liquidity restrictions and so forth and are inherent in a Reg A+. But when all of that is dealt with properly and the investors are notified properly upfront, this could be a phenomenally effective funding in fundraising instrument. Yeah. Using apps that are dedicated to to the business. And along with the other things that I've said audiences matter, right? So influencers matter more than they used to. The value of influences is heightened by the privacy movement. One of our clients has made an arrangement with a major famous musician worldwide with a 60 million social media following.

And we'll be going live with we're actually in the, in the next few weeks, we'll be going live and raising money via Reg D and Reg S combination for that company and intending to do a subsequent Reg A+ as well. But, you know, having a spokesperson who is an owner in the company who is stating overtly that they have a bias, but I love the company. You should check it out is an extremely valuable thing, right? So these are the sorts of things to be open-minded to. And if you have such opportunities, if you have influences that you can tap into pay very close attention to that, because that is again, a key to breaking the marketing log chat, figuring out how to make that work effectively. OK. So now I'm gonna move segue over into some tips. I'm not gonna try and do a comprehensive discussion of that, but I wanna hit on some interesting points that I find any companies aren't aware of, and then I'll get into the scale of Reg A+, and then I'll get into answering questions.

Excuse me, it's possible with Reg A+ to conduct an offering for three years without stopping. I'm not saying you should do that. I'm not saying you want to do that, but the, the ability to do so is very valuable. And one of the things that we bring to the table is because we are specialists in Reg A+ is a lot of nuances to it. And one of these is one of them is how to write your Reg A+ to facilitate that because the normal mode of operation is at the end of your first year, you are allowed to, to do another Reg A+, but you have to file again for that, it's easier. It's less expensive if it's quicker, because you've already done one, but you have to stop and file. And then when qualify, when requalified go live, whereas if you write the four a properly in the first place, then you can stay live continuously for a maximum of three years, which has a lot of positive characteristics attach. Obviously another one that's interesting is that there are some significant advantages to using a limited partnership. Obviously most raises are for sea corporations, fewer LLCs, and far fewer limited partnerships, but it's possible to use limited partnerships and, and incorporate proper liability protection. And the advantage is that the direct provision of liquidity to the company's investors or the entities investors is far less restricted in Reg A+ when you use a limited partnership entity, that's something which can be lovely to provide direct liquidity to your investors in a predictable and managed, appropriate, balanced manner.

We're gonna see, you know, in, in one of the side effects of the stock market being volatile, you know, I, I think it's probably overvalued temporarily right now, and what's gonna probably see some more down swing before we things settle out, but be that is, it may. The point is that while the market is in a nerve-wracking volatile state, then getting underwriters to dictate companies, public becomes heinously difficult. It it's like a switch gets to own. Very few companies are good enough to make it through the filter. In that case, direct offerings become more attractive. So I think over time we will anyway see an increased trend to direct offerings using Reg A+ and not using Reg A+ it's a very viable methodology and you don't have to use underwriters. So if you have a company that is substantially strong, that has a large enough investor base and profit or revenue predictability and a management team, that's up for the challenge of being a listed company, then a direct listing can be a good way to go. And I expect we'll be facilitating and assisting clients to do those direct listings over time. Just a matter of time before that comes to path, secondary offerings can make more sense through an online raise in this climate than going through underwriters for the same reason. If they've shut their doors to you and you really wanna raise money, then an online offering may be a better way to go.

And I think I touched on this earlier, but because of the increased awareness of, and the increased credibility of online fundraising, we see active institutional engagement with many of our client companies that we never used to see sizeable investment amounts. And of course they need better terms. They're not gonna invest on the same exact terms in a Reg A+ that somebody can get with a minimum two investment that a parallel Reg D synergy in it, the reg a, the offering in the first is a smart test award waters. We'll see an increased 10,trend to using test waters carefully. In the early days of Reg A+ test of waters tended to be used, by accident where companies didn't expect it would take as long to get qualified or to get ready or to get their audit done. So they were in reservation mode for ages and spent too much money advertising, and they lost the interest of their reservation holders when it's done properly. Uwe can work really well. We did a bio, we helped the company, a client, or Institute biologics, who did their biotech company, did their Reg A+ with us. They converted, I think they had 1.8 million of reservations when they became qualified and they converted 73% of the dollar value into investments in 10 days after qualification. Probably one of the best conversion rates that we've seen in Reg A+ of course, everyone doesn't give me their numbers, but we're having a similar success with another client right now.

Okay. So now I'm gonna switch over to the growth rate in Reg A+s the scale of, of the business quickly show a chart here, a lot of work to track Reg A+, post metrics. And you can see here, this goes back to Q3 of 2016, which is really when the volume started to pick up, this is the number of qualifications that the SEC has made per quarter with some smoothing to make the, the trend more obvious. So you can see that in the 2019 phase, we had a bit of a Dtic there, but then from towards the end of 2019 into 2020, we've seen significant growth it's Reg A+ qualifications of a back doubled in the past two years, which is very significant. My estimation is that we are running as an industry raising approximately 3.8 billion a year right now. And you know, this decline is to be expected between Q1 and Q2 of this year because of the market cause of the recession.

And I would say frankly, also for people paying attention because of iOS 14.5 release. So we're gonna have some challenges here for a bit, but the long term trend is very strong. And in my view, Reg A+ will, this will be distributing this chart to you guys later as a part of the webinar, when we send out the webinar link. In my view, Reg A+ is likely to see a 10 X increase over the next 7, 8, 9, 10 years. That's where I expect Reg A+ to be, and then grow it further for inflation. That's the kind scale I expect that Reg A+ will hit when it starts to, you know, it really, really comes into.

So now I will refer to the chat box for questions, please do pay attention to the disclaimers I gave disclaimers early on, at course, posted them for those who were here and has added them again added them again later. So I'm looking at the questions, I'll answer the questions as I can and where I can add value. If I find questions, I can't really add value, all skip past them. I had a question for Reg A+ how many times do these funds get audited and how much of the audit costs, how much to set up the fund operating costs? Okay, so there's a lot there. I can't answer all of that, but to do a Reg A+ it's necessary to, if the company has existed for more than two years, it's necessary to have two years of us gap audits upon filing with the SEC.

And then after off, after the offering, if you don't list on a major exchange like the NASDAQ or the NYSE, then you have an ongoing obligation to produce management financials each six months, and a US gap in us gap format and a us gap audit every 12 months and also to report any significant material changes in the business within 48 hours to the SEC and to your investor base in terms of the cost, the minimum realistic cost up front, including everything. And assuming a simple audit is about 150 K and about four months is realistically as quickly as is sensible to predict, to prepare all the documents and the audit against simp. Assuming a simple audit fire with the SEC in two months, and then to get through the SEC in two months, we've had a number of clients that were qualified in a week with the SEC.

Some of that has probably been because they've been stretched thin with so many SPAC IPOs and so forth, but even in recent time, we've had some very fast qualifications. The SEC seems to look favorably on Reg A+ filings that are controversial and that are from known providers. So operating costs you know, those, I can't really shed light on in such in this discussion. It's too much to get into too much detail and, and very specific to each company. Yeah. The cost of investor acquisition. So these numbers are changing, right. You know, as I made clear to give you the range that we've seen prior to iOS 14.5, to give you an example, the, one of the key metrics I use is how much does it cost in advertising to bring people in, have them engaged enough that they click the invest now button and provide their email and their phone number.

And that has ranged for successful offerings that has ranged from the lowest we've ever achieved. The $2 to get that lead up to about 12, $14. And after that it's to expensive. Those people have a very high propensity to invest, cuz they wouldn't have taken the time to click that button and provide that information otherwise. So we don't get tire kickers. We don't get much in the way wasted time there. But we do see a variety of expenses and obviously every offering isn't the same in terms of the percentage of people that will convert, but we have good metrics on that and it makes it easy to compare early traction from one company to another iOS 14.5 is changing the game, obviously. So I, I don't have enough data today on iOS 14.5 to rattle off those, those metrics adjusted for it.

But I would say as a matter of a rule of you should assume that Facebook, Instagram, the best games in town till now are now half as effective as they used to be right. Half as effective. So twice as expensive, which is huge. Testing the waters. If you do it yourself, you know, is probably gonna end up costing you some couple thousand, 4,000, something like that. And if you do, it's a little bit more expensive, but we can put together offering page and run ads to test and do comparisons to the level of traction we've for other offering. So probably 10 to 16 K have us do all of that. What's the, my opinion on doing a reg CF first, then a Reg A+ I think it's great. Reg CF has lots of great things about it. It's not a liquidity option, but it's a simpler offering.

You don't have to request permission from the SEC. The thing to bear in mind there is that cause it's grown so fast recently with the step up to 5 million and with the rapid expansion of online investing, I've seen companies, we invested through Manhattan Street Fund in a company last year that started a reg CF in November. And didn't go live until may of this year, may it should never take that long. And it was all about logistics. It was about the platform being overwhelmed about the marketing agency being overwhelmed. So just bear that in mind, does debt work well? It depends. And the yield is that's a, that is a different thing right now, of course, with inflation running as high as it is. So I don't have a solid number. It can, it's gonna end up depending on the circumstances, the solidity of the company behind the debt offering.

But you know, there are completely different class of people that want debt offerings and the solid return from it where they're most then concerned to make sure the entity's gonna be around pay they'll accept more conservative terms, different group of people than those over here that are looking to become millionaires because they think this is the next Tesla. So, and there's a small amount of overlap, but very little, I think between the two real estate offerings tend to be debt offerings and real estate is 65% of all the capital raised in Reg A+ to date. And that's probably gonna shift down a bit now, cause we've had such a long span of a boom in red and real estate. It's gonna slow down for a bit. I imagine, but in the past 8% was a sufficient yield to engage a lot of interest.

And I think it has to be higher. Now I can't give you more than that cause it's so dependent on the current climate and on the solidity of the company. How much investment would be necessary to go launch a Reg A+ without the campaign and how long it takes. So I would say if you in, if you assume a simple audit, then you're talking maybe 70 or 80 K kind of the low end of the range to get qualified and ready, but then the mark, you know, then assuming that you have a captive audience emailing to them and so forth, we're, we're very to work with companies such a situation obviously long. Does it take, I mentioned that earlier, you know, if, if, if the management of the company is focused and the order is simple, all it can be the long laid item, obviously.

Then two months of preparation fire with the SEC, two months to get through the SEC is very realistic. Can take longer if it's a very complex or if it's a crypto offering, it may never get through the SEC or it might just take a very long time. But for non controversial offerings, we've had a number get qualified in a week with no comments. So, you know, you don't guarantee that you certainly don't that, but can be that way. But four months is a realistic estimate. Other than having a compelling, marketable story narrative, what are the key business metrics? The early six companies should have ticked off to be a great candidate. So giant market potential compelling offering that is obviously differentiated and attractive to the market and defensible, you know, because if you go back to my first IPO was in 1983 with Ashton eight.

In those days, we were thinking that one day, you know, we would have that, that computer software and technology in microcomputers would cause an increase in productivity, which would impact employment. It didn't happen for a very long time, but now look at Uber, right? Uber and a bunch of other companies are directly affecting human employment and self-driving cars and things coming along. We'll do more of that. So now we're seeing productivity increases and impact on employment, which are very significant. And I would say in many of these cases, there's really no technology barrier, right? It's very easy to replicate what Uber's done. It's more about market share, grab and owning the, and owning the brand, owning the, the client reputation and, and relationship. So that does work, but it, it costs more and that mitigates more to raising more money, which a Reg A+ is suited to, but I'm not in favor of saying, oh, they have to have four years of revenues or they have to have more than 30 employees.

I mean, to my mind, those kind of checklists are pretty useless. It's isn't about those things. It's about how big a market are we addressing? How defensible is the company and its technology, how amazingly great is what's being done with those things in place and a strong team with the right ethos and principles and determination in, in gear, then great things can happen. One of our clients has developed a material which replaces steel rebar in concrete construction and other places, but that's the single biggest target use steel rebar alone is 200 billion a year of revenue worldwide. And that understates the number actually, it's also growing rapidly in Asia and in parts of Europe to make a that's just that's steel rebar, their material is proprietary. It's got better Tenile strength and steel. It weighs less, it costs less to manufacture and it doesn't rust at all.

And by the way, you can recycle the concrete when you tear the buildings down later on, on site, the steel rebar makes that remarkably difficult to do so instead of having buildings fall down because the steel in the foundations is rusting away and destroying livelihoods and lives in the process. It's a phenomenal material. So when you've got that scale of upside and that sets aside things like windmills that float on the ocean and things of that type and using construction in, in real estate for walls that are innovative, lighter, concrete substance, all sorts of amazing opportunities. When you've got that scale of upside and a proprietary material and patents in place, you know, that's an amazing company in terms of the scale of the upside, as well as the amount of money they need to raise. They need to raise 6 million to build us manufacturing at scale.

That's not a Reg A+ that's a rule 144 A. So okay. Answered that question with respect to testing the waters. What's the percentage of those who place to actually make an investment when the real deal goes down. So they are non-binding reservations like an indication of interest in the conventional IPO. They're not binding. But in the biotech company, I mentioned earlier, 73% of the dollar value of reservations converted in 10 days. So I believe that's probably the best that we've seen in the industry, but we can't improve it cause we don't have everyone else's numbers. So I would say the norm in the past has been 15%, maybe 20%, but that's for a lot of companies that mismanaged the process spent too much advertising early on, far too early when they weren't anywhere near close to getting qualified, you know, things like audits.

We had one company which insisted on using Deloitte and they had three, two U one us and two offshore entities in their company. Deloitte never got an audit done in time to file their Reg A+. And the, the board of that company finally canceled the IPO altogether. This was gonna reg be a Reg A+ IPO to the NYSE via Reg A+ I said that twice. Anyway, you know, that was a giant auditing company, not being sufficiently responsive or efficient for a small client. And the client was irreversibly attached to using Deloitte. If they used smaller auditors that we would've brought to the table for them and that we regularly bring to the table could have been done. And you know, would've been a lovely transaction.

Okay. So any more questions, please post them, if not we we'll move to a close shortly. Yeah. Good. So we've covered the ground reason. You, well, happy to take more questions. We will be sending out a recording of the webinar with the clickable index. Please be aware of the disclaimers. I'm not an underwriter or we are not broker dealers. We're not attorneys securities attorneys particularly, and we aren't even a marketing agency. But what we do is we bring in all of the best service providers that are cost efficient and time efficient and know their stuff to help our clients maximize their success and the cost efficiency of their raises. So we are project managing and advising to the extent the clients allow us to do that with our quarterback in the process. Okay. So let see any more questions here? Oh yeah.

Good. So that's our disclaimer. Thank you. Ákos so thanks again for putting this together, making this happen. Thanks Fernando. Appreciate you guys showing up. I apologize that I was sync with, but I'm glad I didn't do it that day. Would've been, you know, would've been a pain in the neck in so many levels, so many levels. Thanks for joining. We out link. Hope you enjoy this found useful. If you have up questions, please feel free to email me. And if I can help you delighted to do that very much, guys. Thanks Ákos for making this happen. Have a great day. Appreciate you being with us and involved.

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