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We welcome back our Bloomberg Radio, TV and YouTube audiences worldwide here on the Close with a discussion about unlocking venture capital. Well that's the mission of our next two guests, who are working to expand access to opportunities usually just reserved for the big guys, the institutional investors. Joining us right now is kind of well, the face of the retail rise of the retail investor, Kathy Would. She's a CEO of ARC invest You know her. She's joined alongside
Rebecca Cassava. She's co founder and CEO of a company called deal Maker, which is revolution how revolutionizing how companies raise capital by providing a tech driven platform for companies to use. Welcome to both of you, and I'm going to start with you, Rebecca. We all know Kathy and we all know just how responsible she is for a lot of sot of I guests, the democratization, if you will,
of a lot of investment vehicles. You're also doing something similar, and I'm wondering if you just kind of explain how deal Maker fits into that landscape.
Sure things, So, what we're doing is bringing a really technology driven approach to raising capital. If you think about it, if you rein invented capital raising today, it would be on the intranet, it would be data driven, and it would be democratized.
And so that's what our technology brings.
It essentially allows you to run ad campaigns and target investors who might be interested in your deal based on their digital profile.
I am curious, Kathy about these new types of platforms. We talk about the evolution of financial markets. We went from a day and age where financial markets were just for institutional investors. Then you had, of course, the rise of mutual funds and then ETFs of course, and then now a lot of new products in the private space and now trying to draw in individual investors. This is just the natural evolution as you see it.
Yes, it's natural in a way.
But I think during COVID it was turbo charged a lot of especially younger people who would not meet the accreditation standards. They were learning about new companies, investing themselves, trying to figure out what these new technologies were all about, and you know, happened upon private companies to which.
They had no or little access.
And I think because of that, and because I know, we started our venture fund for that reason, they came to us and said, you know, how is it. You know, we don't have enough, We don't make enough money two hundred and fifty thousand dollars per year, I think it is, and we don't have a million dollars in net worth to become accredited and have access to these you know, incredible technologies early in their lifetimes. Can you help us solve that problem? And so yes, that's why we started
our venture fund. It has no carry and people can have access to SpaceX and open AI and thropic xai.
X for as little as five hundred dollars.
Okay, So that's one solution to democratizing access of these companies to everyday individual investors. Kathy, could you explain a little bit about what it is that ARC is doing with a deal maker?
Well, actually, our venture team met Rebecca recently and I have yet to be briefed on exactly what we're doing together. Maybe Rebecca would want to talk about how far a long we are.
Yeah, I think it's opportunities like this where we can understand we can talk to Washington about what the investors and what the companies want. Like deal maker is taking a slightly different approach on it, where we see retail investors having a bit of a distrust of institutions today and companies wanting that one to one relationship with the brand.
And so we're both two different businesses taking a totally different approach to the retail market, but understanding the power of this and how it can be transformative for the capital markets in a lot of different ways, because let's face it, there's a lot of ways that the capital market's ecosystem is broken that both what ar kids doing and deal maker is doing can help solve.
I was kind of going, I'm sorry, yeah, so.
That's what I thought had happened. We are so like minded.
Charlie Roberts, who leads our VC effort, and Rebecca met at a conference and we just thought, Okay, we're both going at this from in a little bit of a different way, from different angles, but this idea of democratization is in its very early stages, so let's make sure we both encourage it.
Right.
You both encounter the same issues and you're looking to solve it in your own ways.
So We'rebecca. Can you talk a little bit about the biggest.
Pain points of capital raising that founders tend to face and how deal maker solves for that.
Yeah, I mean, ultimately, access to capital is a challenge for a lot of investors, right, It's very difficult to get VC investment that actually finds a very small part of the ecosystem. And then there's a lot of brands that retail investors love and they want to participate in and they can help amplify amplify the.
Business in a different way.
So we have technology companies, you know, Monograms building a robotic need surgery arm where they've got retail investors forming all of their beta users and really supporting bringing that business to life and driving revenue for them. So the reality is that businesses are built online today and there's a lot of different ways that retail can interact with these brands to help propel them forward.
Was there any issues when you were starting this, Rebecca, and was there any issues about regulatory concerns? I mean, we know that regulators is, particularly here in the US, look over the shoulders and they sort of I think kunt of Kathy alluded to. Look, they're saying, look, you don't have the net worth, so you must not be sophisticated enough to buy this type of vehicle. How did you navigate that regulatory side of this when you were coming up with this idea and building out the business.
Okay, well, shameless bug.
I think the regulators were brilliant in the way that they designed the legislation because the legislation protects investors already, So they put a cap on the amount that a retail investor can invest when they're not accredited, so they're not going to lose their shirt on any one single offering.
Because we know some offerings are going to succeed and some offerings are going to fail, and so the main thing that we're driving for here is to make sure that the investors are protected, and the legislation did that already, and so there's a bill in the House right now that's probably going to pass with the new administration that we're going to see the exemption limits go up from seventy five million to one hundred and fifty million. You've also got FIT twenty one, which is going to bring
a lot of interest to the crypto space. So we see the snowball just rolling now in terms of retail access to alls.
Kathy, I do have to kind of ask you about the climate in Washington, and I know you have a lot of friends, either business wise or personal in the incoming administration coming in. And there's been a euphoria I'm sure you've seen it ever since November fifth, even slightly before that, when it became somewhat clearer that Trump was likely going to win. He's promising obviously a much more
business friendly administration, one of deregulation. At the same time, he's also pitching fiscal policies that could potentially have some economic impact to the negative side. I am curious as to I guess what type of euphoria you're feeling, and more importantly, what type of caution, if at all, you're feeling as well.
Well.
If you look at the performance of our funds since the election, they've far outpaced the market, outpaced the mag seven and so forth. So I think of what the market is beginning to say is this administration is going to support innovative strategies, anything that will accelerate the growth, increase the productivity of our economy. Deregulation is going to be we think a very large part of that tax incentives, tax rate cuts as well. You mentioned the perhaps the
cutback in government spending programs. You know, in our mind, government spending longer term is taxation in one form of the other. It's got to be paid for with increased taxes now, increase taxes later, or basically through inflation inflating away the debt. And so we think that's going to
be very positive. This drive towards increasing the efficiency of the government, which will then limit the kinds of tax increases we've seen over the last few years, and perhaps even continue to roll back taxes, leaving more for the private sector at the expense of sort of inefficiencies in the government sector.
So Kathy following on that, the President elect has outlined a number of initiatives that he wants to put in place as soon as he is inaugurated on January twentieth. Of the different proposals of pro growth items that he has on his to do list, which do you think needs to be prioritized. Is it tax cuts, is it immigration reform, tariffs, is it deregulation? Which of those things should be at the top.
Well, consider the source.
So my answer might be different from President elect Trump's answer, but in terms of turbocharging growth, I think if tax rates, if.
This administration is going to cut tax rates.
The most important thing it has to do is make sure they're retroactive to January first of twenty twenty five, because and we learned this from the Reagan administration, if they defer or or phase in tax cuts, businesses and individuals will wait for the lower tax rates and that
can weaken economic activity. Beyond that, deregulation critically important. I think one of the reasons venture capital has had so much trouble during the last few years and strategies in the innovation space, especially in life sciences, is because M and A has been prevented by the FTC. That is going to change, so we are finally going to have price discovery as strategic buyer's bid for these innovative companies. We'll see how much they're really worth. This has not
happened in a long time. We also think therefore there will be liquidity events for private companies into the public world, which is also going to become very important.
Well, Rebecca, I'd like to get your thoughts on that as well, because when you look at the data for certainly in the first half of the year, I mean, VC funding activity was abysmal. We saw definitely a bit of a pickup in three Q. I'm not sure what the fourth quarter has shown, but are you optimistic we're going to see more VC activity kind of to the point of what Kathy was talking about in terms of the catalysts, is that going to really push this industry forward?
It definitely feels that way, it really does.
I think the momentum is there, the street is excited and feeling the effects of deregulation. And you know, one of the benefits that we saw over the down market activity was that retail investors stay strong. Like while VC activity did, retail investment continued to pull through and continue to carry a lot of the capital markets, which was what Congress intended when they originally passed the legislation. So we expect to just consider that upswing continuing.
Kathy, you had mentioned the ARC Venture Fund. I'm wondering, with this new administration coming in, the deregulation that you talk about and the things that they can do to really get the economy going and get companies going, do you think that startups will choose to stay private less. They'll start to look to the public markets as an engine of growth more so than they have in the past couple of years.
Well, it depends if again, if there's more deregulation and if the red tape associated with going public starts to disappear. Any company that wants to scale very quickly, and especially if they have anything, if they are at a higher fixed cost base. The robotics industry would be one example of this, they would probably scale faster in the public market. So we think it would be fantastic to have both markets operating efficiently efficiently.
One encouraged by more M and A.
Activity as we change the leadership at the FTC, and the other one just enjoying the lower red tape associated with less regulation. So we think this administration is going to be very pro business and is going to be that's going to be a big reason that the growth rate of the economy is going to accelerate in the next few years.
Kathy, I do want to get your thoughts on Elon Musk and his role in this administration, particularly given we know that arc is invested in many, if not all, of his companies. He's wearing a lot of hats and now he's got the Washington hat on in theory starting in January. I mean, how much do you think he can do given that he's not technically going to be in.
An official role.
And do you worry at all that his work in Washington might come at the expense of the attention to his actual companies.
Well, I think one of the reasons he he is dedicated to this is because his own companies have faced such regulatory pressures and obstacles, and he just knows he could change the world even faster than he already has if he got some of those obstacles out of the way.
But Kathy Kenny do that safely though, And I'm just playing devil's advocate here. I mean, a lot of those regulations are you know, you know, kind of meant to kind of protect the consumer to a certain extent from car crashes or whatever. You know, it's one thing to move fast and break things, as another, you know, to break your customer.
No.
I think if you listen to elon Musk and safety and focus on del lighting the end consumer. You know, Tesla has the safest cars in the world, and yet the regulators in the last four years have focused on almost every accident and fatality in an accident in a Tesla car, as opposed to in the other forty thousand accidents. So I think that he understands that there is an important place for regulation, that safety of the consumer is paramount that we're not going to dilect, We're not going
to neglect that. But there is such a thing as regulation gone too far. I've seen statistics that in the last four years, regulations piled one on top of the other and from different departments have taken six percentage points off of real GDP.
So that has to change.
And also to that point, though, Kathy and I want to this question as to you, Rebecca, and it really has to do about the idea of business creation. There's been a lot of stats about how business creation is just really just shrunk. Now, some of that's just because of the pandemic and a few other things, but there has been a lot of theories about government regulation, government oversight maybe putting a little bit of a squash on that.
Do you hear from that with some of the startups and the entrepreneurs that you deal with on a day to day basis.
Yeah, for sure.
I Mean when Elon said so himself, right, when Elon can build the rocket faster than he can get it approved to launch, you know, you've got a fundamental problem that's slowing down innovation. So of course, as a tech CEO, I'm very excited to see what he can accomplish applying engineering concepts to government as retail capital from direct to investor retail. We saw even in a down market, five issuers that raised on deal Maker go public on NASDAC
during the last year. So I think as we open up new categories, new ways of building businesses and having those be digital and what that means means there's different things that are going to emerge and different trends that are going to emerge. And definitely one of the trends that we saw was a lot of our companies are tech and robotics companies and now more emerging sports sports teams as well. We're going to see a whole different, changing landscape of companies going public sooner.
Kathy, I can't resist asking about Tesla since we were talking about Elon Musk. I know that your funds have been actively trading this week. Are fund sold about one hundred and sixty four thousand shares of Tesla this week. I'm guessing this is tactical, but I'm wondering if post election, there's a fundamental change in the story when it comes to Tesla.
Well, I think one of the changes, again back to regulation, is the likelihood that autonomous mobility, so robotaxis are going to be regulated not on the state level so fifty different regulators, but on the federal level. Autonomous vehicles will travel from state to states, so it really should be federal legislation. So I think that will speed up the move towards autonomous taxi networks. And I do believe for that reason, investors analysts are starting to model out what
that will mean to the Tesla model. It will take their gross margins from mid teens right now up into the sixties if we are right, because robotaxis and autonomous taxi network is a SaaS model. I think the other thing that has happened is more and more people are seeing videos of the humanoid robot doing all sorts of things that we didn't think were possible as the dexterity in its hands get so much better.
Yeah, and to your point, analysts over at me Zuho do see idiosyncratic tailwinds over the next four years for a company like Tesla, upgrading their price target there so when it comes to autonomous vehicles and all that. There are reports that Honda and Nissan are exploring some kind of tie up, maybe a merger. W what a combined company create a worthy competitor to Tesla or Chinese eatia makers even.
Well, I think that anytime there is a combination of two companies, takes a while for the integration to take place. So, if anything, we would think if there is a competitive dynamic from those two companies associated with autonomous that it will be delayed. More competition for evs is coming from China, no question. Now we have very big tariffs already in place to prevent that here in the United States, and we'll see what happens with the administration. I think that
Elon Musk is not worried about competition. If we're talking abou about Tesla, He's driving the cost curves down dramatically for his own company, So he's not worried about losing the EV tax credits either. He doesn't need them. He will be profitable. Tesla will be profitable without them.
Katy, I do want to pivot here and ask you about some of the market action, particularly over the last few months, and particularly when it comes to crypto. I'm sure you've seen the big run up in bitcoin above briefly above one hundred grand, now back below that today, but certainly phenomenal run on a year to date basis from where it was just a few months ago. Here do you still sort of see bitcoin really hitting some
of those lofty milestones that you've talked about before. I mean, one hundred thousand is still a long way from a million. I do kind of wonder how much further you think this could actually go.
Well, what's interesting about bitcoin today? Now that we're going to get more regulatory green lights, we're seeing institutional investors focus on this new asset class, and as they're learning about it, they're saying, wait a minute, this new asset class, or this component of a new asset class, Bitcoin is going to reach twenty one million units out there, twenty one million bitcoin out there at its peak, and no more from there on.
Where are we now?
We're all ready above nineteen and a half million units. And so if institutional investors are looking at this new asset class more seriously, and bitcoin is really the first of its kind in a new asset class, and we believe the biggest opportunity of them all, they must consider an allocation and so supply demand. They're doing the arithmetic, and we see a million to a million and a half by twenty thirty that the probability of that has increased because of institutional.
Okay, so that's six years from now, and I understand the supplied demand dynamics. But Kathy, I'm sure you're also very aware of some of the main criticisms that there really is no I guess fundamentals, if you will, at least in the traditional sense of how we try to value stocks or hard assets here. So beyond the speculative nature of I buy this and someone will buy it for more than me down the road, is there anything else there that gooses this beyond just that supply demand equation.
Well, I think it's a very big idea, and it's not just speculative. It's a global monetary system that is rules based, it is private, it is digital, it is decentralized, and it is backed by the largest computer in the world or the largest computing system. It's the most secure network in the world. So that's very important. Gold would be in the same category. Gold is a store of
value and it is fairly scarce. What's interesting in the last year, with the last having this April, the increase in bitcoin, the number of bitcoin per year, the percentage increase dropped to roughly zero point nine percent per year. That is below the one percent long term growth in the supply of gold, so it is becoming even more scarce than gold.
And the difference between.
Gold and bitcoin is when the gold price goes up, as it has production goes up, the rate of increase in the supply goes up. That cannot happen with bitcoin. It is mathematically metered to go up now zero point nine percent per year for the next four years and then the supply growth will be cut in half again.
So we think you.
Can use gold as a guide in terms of what this asset class is right now. At least, it's very definitely a store of value, a digital store of value, and it's a very big idea from our point of view.
You can also go to our.
Big Ideas, ourcinvest dot com Big Ideas twenty twenty three and see how we get to that one point five million dollars by twenty thirty in our goal case.
Rebecca, let me bring.
You back into the conversation here as we talk about crypto and you know, kind of the growth stage it's in with the change in administration, I'm curious whether crypto companies are a natural customer for a deal maker in tapping this retail investor base.
Yeah, they haven't been in the past because it was a gray area and you know, there was a lot of concern about whether it was legal and what they were doing is legal, but we'd definitely been considering that. On a go forward, I think that will change, which is what the legislation is intended to do. It's intended to clarify what is a security and what is not and going to be regulated differently as a commodity. And we also think there may be some interest now for
people to come back to tokenization. You know, that was big a couple of years ago, and then that totally fell off the radar. It was very hard to maintain the central register for the securities amidst all.
Of the trading activity.
But once the legislation gets clarified, we think there'll be you know, some renewed interest in that.
All right.
Fantastic to get both of your takes and really appreciate your joining us. And spending some time with us this afternoon, Rebecca Cassaba's co founder and CEO of deal Maker and Our Things, as well to Kathy Woods, CEO of ARC invest, joining us from Saint Petersburg, Florida,