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All right, so now we're gonna talk about something very interesting and something actually when you when you contacted us, you brought up a good point He's like, I don't think you talked about this, and like, you know what, we haven't talk about it, right, so, yes, equity crowdfunding. Right, so people might not be familiar with equity. Well, crowdfunding in general is a way to raise money from large amounts of people, right. So, like the most popular form
is kickstarter. People things like that, Right, It's kickstarter where you kind of like a donation kind of charity thing. Sometimes you can give people like T shirts, but it's pretty much they're not getting nothing in return for that except for just good will they want to support you. Right now, Equity crowd funding is something that is new that came about from President Obama's Jobs Bill.
Up, I'm not yeah, the Jobs Act.
And yeah, so can you talk about that because it's pretty interesting.
Yeah.
No. So, you know, one of the any business, right particularly within in tech companies, right, you have to raise funding and for for you know, decades now, right. The way you do that is go to an investor, right. You pitch your vision to that one individual usually or a fund, and you know they make a decision on if they're going to give you the startup capital that you need to go build this thing, and in exchange, they get equity, right, they get ownership part ownership in
the company. And that's how it's been done for ages. Now one of the things that it has created is a very big gap in terms of wealth and the access to generate wealth, right when you talk about angel investors, right, and again, trust me, like I've learned all of this stuff in the last five years. I didn't, Like I said, I don't even know what Silicon Valley was or the word, and so this was all things that I had to
learn on the go. But when it comes to angel investors, these are basically wealthy individuals that are investing their own capital, like out their bank account. They they're investing in the companies getting equity.
Uh.
And then when those companies go on to do very well and get sold or i po then those angel investors, those wealthier, those wealthy votes get even more wealthy, right because they get a return on their capital.
And so it was creating this gap.
And and you know, shout out to Obama because he you know, saw that there was a disparity there and thought that anybody should be able to have access if they can access that deal, right, because there's there's there's part access, but then having the capacity to even get involved, right, and so he created the Jobs Acts, Right, it's jumpstart our business startups, and it is you know, it's it's actually a whole lot of different things. But one of
the things in there is equity crowdfunding. And what it does is it gives founders of companies the ability to open up the fundraising to what they call non accredited investors. So that angel investor that I mentioned is going to be an accredited investor. And to be an accredited investor, you have to make two hundred and fifty thousand dollars a year or more at least for the last three years as your tax you know, paperwork will show or have a million in liquid ascents.
Yeah, we can see how that could be a problem. Like especially in the communities we live in.
It's like, how many people do we know that make two hundred and fifty thousand as a combined family somebody one person make.
It and as a group, actually you can.
You and your spouse collectively have to make three hundred thousand, right, and so they even make that bargain a little higher, and so or have a million in liquid assets.
That's it. That's the only requirements to fifty million in assets.
Or a million in liquid liquid, So it can't, but it basically can't.
They got to be something like a retirement account on bank or stock stuff like that, things that you can.
Look at the liquid at yeah quickly.
And so that's you know that and honestly or like what I looked at in the research I've done, it's that's about eight or nine percent of Americans, right, And so the ninety one percent essentially right, can't can't even access that deal. Even if they know the founder of X y Z company. They can't you know, invest even if they havn't to have some load of cash that they came across or whatever. But so what Obama said is, you know, through the Jobs Act, now anybody should be
able to access that. So in twenty sixteen is actually when they went through, and now you started to see the rise of these equity crowdfunding platforms. So the thing that you have to know is like if I run a tech company or startup, just because you know the Jobs Act exist doesn't mean you could just walk up and give me some money and say I want to be an investor.
The companies have to go through. So this is all sanctioned by the SEC.
You know, there's a lot of kind of formal terms I won't bore you guys with, but you have to go through a very extreme vetting process. So first, there's the platform. So you brought up a good point Kickstarter, Indie, go go, right, these are forms of crowdfunding. Go fund me is a crowd as a crowdfunding platform, right, and again to your point, you're raising money for something from a large crowd of people.
Hence the name.
The original of the crowdfunding itself was based on a rock band like yeah, they couldn't get money to go on tour.
Oh yeah, so their fans came together to say, like let's fund them to at least have a tour to perform.
Hen it's crowdfunded.
Troy always comes with it was like a white elephant always comes with like these little does That's all right, so we back to the crowd.
Yeah, so you know, crowdfunding as in and of itself exists, right, It has existed for some time, all the way back to the rock band. Right, and to your point, crowdfunding came in right when you and let's just draw a comparison.
Let's take Kickstarter for example.
This is a Kickstart is a company that enables you to run a crowdfunding campaign, right, and so you can put up your project, whether it's a film, whether it's a whatever it is, right and you can basically promote it and people will buy in and maybe you have perks. Like you said, now, the difference, right, you talk about equity crowdfunding. There are also platforms, right, so republic is one that is probably one of the more popular ones. There's others called we funder, you know a few others
that you know allow you to have an equity crowdfunding campaign. Now, they have to go through a rigorous process to even be set up. But the big difference between those two platforms is that on Kickstarter, if I'm not mistaken, basically anybody can set that up. You can go in there, fill out the thing and then boom, launch your campaign and it's up to you.
And you have to raise a certain amount to even access.
To the capital for equity crowdfunding because these are technically public offerings right of shares in a company and a private company, it has to be sanctioned by the SEC. So it's a very rigorous process, right, I mean they dove deep into the financials and all the history of the company. H And then that's how you're able to even be accepted on one of the platforms, right like Republic for us. And then and really it's a it's a because basically I don't even know if we said it.
What it means is equity crowdfunding enables anybody not a credited investors to invest into private companies for as little as you know, I think legally the minimum is like ten dollars.
Yeah, now that's something that all right, So I don't want people to not understand this, so because I get I get this question on my DM so often, like when I post stuff about like Beyond Meat and like Lift and all of these stuff, and I post stories about like nas and like how he invested early, and people like, well, how can I invest in these companies early?
For the most part, you really can't, right, like you said, I mean on that level is like angel investors and vcs, but even on the small levels and credited investors, so you have to be like a special kind of person
for lack of a better word, to actually invest. But now it allows the general public crowdfunding allows the general public to invest in companies on the ground level, because, like you said off camera, one of the main disadvantages is that you're getting people that can invest in these companies and then when they go public, their percentage goes up like a thousand percent. But by the time the general public is in the stock market, they've already made them money that they're out.
They're out the gay right.
So and it's it's interesting because probably the most famous in our community person that has done that is Jay Morrison. He did a real estate crowdfunding with the Tulsa Real Estate Fund and he same thing.
He raised money from.
The crowd and I think like over ten million dollars in a very short period of time. So it's a very successful real estate crowdfunding fund campaign. But it's something for people to understand from two aspects of it. From a business owner, it's a way to raise money, right because financing is extremely important and it's hard to get bank loans, it's hard to get outside financing. So this is a way for business owners to raise large amounts
of money. Now you're giving up equity in it, and we'll talk about that, but you know, you don't get nothing for something. You always have to do something. So and it's also a way for investors to invest in companies that they believe in and they think that can blow up because now you might put in ten thousand dollars on a company, but in five years that company, that percentage might be worth one hundred thousand because you
got it on the ground level. And you as said something about Ben Harwitz, right, Ben Howardz If anybody's not familiar, he's a tech giant, VC giant, and he's good friends with NAS. He's one of the reasons why NAS is really blowing up. He's kind of like mentored him. I read some stuff about that If anybody's not Familion, Niles is doing this thing with Queensbridge Bridge. Yeah, and they invest in like lifting Ring pill Pack, all a lot of these companies. And so Ben is really into hip hop.
He's like a hip hop head. And it was maatic from what I understand, is like one of his favorite albums. Ever, so he just he developed and Horror was not Black by the way, if you didn't know about the name.
If.
So, he's just the barbecue.
So you were saying that it was crazy because roughly he invested like two point fifty into Instagram and then like two years later it was worth like eighty million or something like that.
Right, Yeah, I mean, so I don't have any facts on this. Actually shout out the Chamellionaire if you know, Chamellionaire is really really been winning and this Houston's own ride dirty and you know he's been winning in the tech game and just real quick, you know he I mean, we were talking about a situation that happened I think twenty seventeen finals, right, and this is where it actually
came out that you know, chamillionaires. Yeah because he because he yeah, he was you know he was court side, yeah, and like in the background of a picture. And it's how many ring tones did he sail at the finals game game five, you know, court side And people came and said, no, he's been early investor in Lyft, early investor in ring you know, early investor in the number
of companies that have done well. And so you know, actually Chameleon I was the one that kind of you know, put this, put this kind of this data out and now I don't know, you know, the details and specifics on it. So let me make that clear, but there was a very sizeable return you know in the in the eighties of millions of dollars you know, based on
that initial investments from what I hear. But it shows the power of equity ownership right and and now was I think with the with the real point that he was making is that you know, you have to be able to get in on the ground level, and for so long the price was so much higher than earners.
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You know, most of our folks in the community could ever even think about investing. And so with the equity crowdfunding, that's where because it's coming from a crowd of people, you can make that price much lower, you know what
I mean. And so for like for win win for two hundred and fifty dollars you can own equity, right, I'll be it a smaller portion compared to somebody that's putting in twenty five grand or two hundred and fifty thousand, but you know, it's all about having a slice of that pie, particularly if you believe in the company, if you believe in the mission, if you're going to be a consumer of it, right, and that to your point, the ninety one percent that aren't that are non accredited investors.
They have to wait until it's already publicly traded to even you know, have some ownership, right, imagine being able to do that on the front end. But now you actually can. And that's where the equity crowdfunding, to your point, comes in, where we can raise money, particularly as black founders, we have now an alternative avenue to raise money from the crowd versus having to go to a very particular specific demographic of vcs and people.
I'm glad you brought that com millionaire story up because it highlights a problem in the community. So it all started with the It was like the Golden State Final. Anybody knows finals tickets they cost a lot of money, like hundreds of thousands, Like it's crazy now hundred of thousands, but a lot of money, a lot of them. So he's front row at the finals, and it's like a joke. It's like, damn, how many how much ringstos did he sell?
Like he has somebody here doesn't belong where feen years.
But little do they know the guy's been making millions of dollars and investing in companies long after his musical career was over. So when they find that out, it's like, now it's not funny anymore. Right, So it's like a lot of times we highlight celebrities and entertainers, but like even if you look at that Jay Z and Beyonce at the front row, everybody knows them, but they're probably middle class for everybody else in the front row. Like the guy that got into the fight, nobody knew who
he was. He worth eight billion dollars, just a random billionaireuntil he put It's like, how many people that you don't know are just billionaires? The one person that you do know just became a billionaire. Not not you know, no disrespect to James b. We love them, but that just goes to show you how much money it's out there.
Right, Yeah, in the Trail.
Hotel, right, And you know, and that's why I'm glad you brought that up, because when I was in the Bay, right, one of the things that I really actually appreciated, you know, relative to l A right, is that you didn't know who you was talking to or what you were doing.
Like the money was just shown way differently, you know what I mean.
And you just have people that were just grinding and hustling and building companies, and you know, you meet a guy just randomly looked like you know, random guys like yeah, man, you know, just sold my second company, Amazons.
Words, you know what I mean, and drinks on you.
Then you know what I'm saying, it's it's just a different it's a different mind said and to your point, like you know, like you said, it wasn't funny no more, you know what I mean. And you know, I think that I love these examples where you look at you know, a cha millionaire who and that's a great friend.
Shout out to Cam and and by the.
Way, he's he's an entrepreneur as well as an investor. He started his own tech app tech company called Convos, which I you know, suggests everybody go check out and download, and he's been building and feeding into the community, giving back, you know, and and and you gotta you gotta love that.
But you look at, you know, the Beyonce situation right where if for those who don't know, you know, she essentially passed up a cash offer to perform at a big Uber event, passed on six million dollars, as the story goes, and wanted equity in exchange, and they gave it to her, and then they just recently I pod and supposedly it's worth somewhere in the three hundred million
dollar range. Right, And again that's the power of equity, because you know, they I PO, you own shares of the company, and now you're able to cash that in. Now granted that's on paper, right that that worth, but she can cash that in and make it.
You know, who else has a good equity story? I told this story before, but I never told her on the podcast. Some might as well tell fifty cur shout out to fifty.
We don't we don't owe him any money? Oh yeah, yeah, Now, so.
Everybody knows fifty cents vitamin water he made, like they say, ninety eighty million dollars, right, because what happened is that the he had equity, I think like ten percent equity stake in the company. Then Coca Cola brought it for a billion dollars and then his ten percent was worked like one hundred million. What they don't know is that so vitamin Water they got from Vitamin Water there from Queen, Queensland Queen.
So yeah, so fifty Queens gets the money. So fifty is.
From Queens from southside and you know who else is from Queens Metal World Peace, why not normally he's from Yeah, he's from queens Bridge, home with Us and Mob Deep and a bunch of other people. So when the guys that started Vitamin Water, they was looking for somebody from Queens hometown and they wanted a celebrity, so they approached Roan Our tests about being like the face of vitamin Water.
Right, he's an athlete, sizeable names, it's you know at that time.
So they offered him the same deal, ten percent equity stake, and he wanted two hundred thousand dollars. They didn't have two hundred thousand dollars to actually pay him, so they told them, well, we can't give you two hundred thousand, but we can't give you ten percent, He turned down fifty cent, took the deal.
Just so happened.
One year later, Goca Cola bort them for a billion dollars and at ten percent, turned into one hundred million dollars. So round our test gave up one hundred million for two hundred thousand. Education. He didn't fully understand the power of equity. He's like, no, pay me. You try to pull a fast one over right right, right, right, but it all comes down to education. So now you hear
Beyonce say, pay me in equity. So we're starting to fully understand this, and especially in the VC world and Silicon Valley, that correct, siliconlic Silicon Valley, they're gonna know now.
Well you was gonna know anyway.
So that's something that's been going on for years, right where it takes time and the back end is always more profitable than the front end. So now we fully understanding this, and we need to be fully aware of this. So in that vein being that you have run a successful equity crowd funding campaign, you're actually still running in it.
You're still running it right now. All right, somebody has a business and they want to take the same route that you did, right, what are the steps to actually, because I know you said it's a whole process with the sec they gotta get approved and all that stuff, Like what's the steps?
Yeah, so the steps is, you know, you you have to you essentially can apply I believe to the company.
Now we were a little rare.
We actually you know, companies reached out to us, like Republic and how that got set up. So, but there is kind of a submission process, I believe where you can be considered. They actually have people on their team that are looking for companies and they're trying to say, hey, we think you should do an equity crowdfunding campaign because you know their model is they make a percentage of what you ultimately raise, right, So they're looking for great companies that they think.
Will be successful.
So if you end up finding yourself in a position where you know, you reach out and there's alignment, they do a vetting process themselves, then you're you're kind of in the game. You gotta go through the process of you know, pulling all your financials, right, you got to go through It's just like I said, it's a very
rigorous process. And you I think the thing you have to make sure that you understand is what you're what you're kind of getting yourself into, right, because not and this goes back to even and this is probably a whole nother podcast just around the types of funding and who gets that type of funding right, because if you you know, depending on your business, right, there are only a certain type of business, certain types of businesses that
should be raising money from venture capitalists, right because these vcs want to see ten x return like hockey stick growth, right, and that's why they're giving you that money. If you ain't, if you ain't getting that way, which is fine, right. You have other companies that just grow steadily profitable, you're making money. That's a great business, but you shouldn't be taking money from kind of the the investors that we're talking about right in terms of their credit, because there's
a there's an expectation there. But when you when you go back to you know, looking at your business and where you are, right, I think one of the things that is key to look at, and we looked at this even in our own decision, is how attractive and understandable will it be to the crowd, right, Because you've gotta you gotta resonate with people, and we're building something that we believe touches everybody. Right, you talk about uh, sports and philanthropy and entertainment.
Right.
Uh.
My good friend Don dix And said the other night that you know, she invested in our company as well, and she said that, you know, when when operates into recession proof businesses, entertainment and sports, people could be doing down bad and all across life, but you're gonna watch that game. You're gonna find a way to you know, get in in that into that experience, and so you know, you got to think about is this going to be
attractive to the average consumer. That was one thing that I had to really kind of even adjust how we talk about the company because I'm so used to talking to sophisticated you know, investors.
That this is what they do.
So there are terms in terminology that we can use that they understand very quickly, whereas you're talking to the crowd right through communication or whatever.
You got to kind of break that down. And I've been learning to your point.
Like the the big gap and knowledge of what equity it actually is, even even to the point where on the hiring side, one of the things for startups is you have little capital usually, so you can offer early employees equity, right, and that's where you get big time companies like uh, you know, big time engineers at Google for example, who will leave Google right a very cush job and go work at a startup because they're getting
some percentage in the equity. So they're saying, I'll pass on that you know very well to do job, to take equity because I'm.
Going to help build this thing to become whatever that is.
Even as we've now come to Houston, there's been conversations with potential employees that who don't necessarily even understand. They're like, no, like, you know, we need this much money, and it's like, well, you know, we'll be a little under market, but we want we can comp that with equity, which now I find myself having to explain, actually, how valuable that that's that that you're the fact that you even have an opportunity to have equity.
Is a big deal.
And that's what that's why I love these pop culture examples. Beyonce a chameleon there, you know fifty that everybody knows, and they're showing that, you know, how powerful that is. And now the fact that anybody can get in on that equity. I think it is a game changer for not only our communities. You talk about generating general tional wealth and you know create what you guys talk a
lot about financial literacy. When you know better, you do better, right, And I think this is changing the game and opening up those opportunities.
One of the things you said, and that's extremely important. It is like even if it's a small right, like one percent in equity. Right, let's say it's two hundred and fifty dollars, Like that's the initial investment to own a percentage, Right, that could turn into fifteen thousand, right if you if you had more, obviously it turns into more of a profit, but that fifteen thousand can be the startup for you to invest in something else, like your first piece of real estate or your first restaurant.
How it may feel fit for yourself.
It's a beginning, right.
A lot of people think, like it's so small, I can't do it in Houston.
Right.
You said something earlier about it becoming a tech hub, like it's going to be the Silicon of the South. How's the vision for that, right? And who's ei the forefront of it are the people out here that are going along in that struggle with you.
You can sense the kind of the fervor in the air of like, you know, this is exciting, right because Tip even with the investment, we got some new investors. Shout out to them, you know here in Houston that have typically invested only in you know, oil and gas and energy. So now to have some you know, innovative, fast growing tech company opportunities has been great for those
you know, kind of traditional investors. But what I'm more proud of is that we can bring this opportunity to everybody from Third War to the Swat, you know, to downtown and the Gallery, anybody across the city, in the in the country, and really the world. That's the great thing about equity crowdfunding. Also, you can invest from anywhere in the world. I mean, we got investors in Canada, Australia, Africa that.
Have come through in our campaign.
And it gives everybody that opportunity to gain that equity we've been talking about.
It's powerful.
Man.
They weren't thank you for coming in. We appreciate you.
My graduates from my school being forced back drop. Mike Dropp, you.
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