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INTRO

You’re listening to Unleashed with the Dacxi Chain, hosted by Andy Pickering.

Hi folks, it is Andy here. Welcome to Unleashed with the Dacxi Chain, a Dacxi podcast where we learn all about the Dacxi Chain and the incredible opportunities it unlocks. Let’s get on with the show.

Hey, folks. Andy here. Welcome to Unleashed with the Dacxi Chain, the podcast that features experts from within Dacxi and from across the global crowdfunding industry who are here to share their insights on developments shaping indeed the global crowdfunding economy. We have a fantastic guest on the show today. His name is Jonny Price. He is the VP of fundraising at WeFunder. And welcome to the show, Jonny. Just before we dive into the wonderful world of crowdfunding and WeFunder, let’s hear a little bit about yourself, Jonny. Just give us a quick introduction to yourself and your professional story in the lead-up to WeFunder.

GUEST INTRO

Yeah, for sure. I’m from England originally. You might be able to tell from the accent, even though I’m talking to you from Nashville, Tennessee in America. These days I live here, but from the UK, originally. Out of college, found my way into management consulting for my sins. Did that for six years. Partway through that I came to volunteer at a nonprofit called Kiva.org in San Francisco. And this was a crowdfunding platform for micro-loans, the micro-entrepreneurs around the world, mostly in the developing world. And so volunteered there for a few months in San Francisco, and met my wife, which is why I moved back to San Francisco permanently. And then in 2011, I joined Kiva full-time, left consulting, and joined Kiva full-time to launch their US lending program. So Kiva was known for lending to micro-entrepreneurs in Africa and South America, and I led the team to bring that model to support mom-and-pop shops in the US. A barber shop or a small-scale family farm, borrowing $5,000 from 200 people, lending $25 each. So grew that team for seven years and then in early 2018 joined WeFunder. And so I’ve been here now for five years. I lead our fundraising team. And yeah, basically our vision as I’m sure we’ll talk more about is helping more founders access capital and enabling ordinary people as well as millionaires and billionaires to invest in startups they love.

ANDY’S COMMENTS

Awesome. Thank you, Jonny. And yeah, let’s start to do that then. So WeFunder, of course, enables anyone really to invest in startups and of course, enables those startups to access capital. Give us a little bit of a sense of how WeFunder works, what the vision is, how long you’ve been going, and the kind of scale that you’ve achieved, Jonny.

PRICE’S COMMENTS

Yeah, sure. So we were founded back in 2012. 1st thing our founders had to do was to change the law. So for 80 years, the securities laws of the US didn’t allow unaccredited investors to invest in startups. The SEC said you had to be an accredited investor, kind of basically a millionaire to invest in startups. And so, yeah, in 2012, Congress passed the Jobs Act and the SEC rolled out regulation crowdfunding, which is part of the Jobs Act in May 2016. And so since May 2016, the last 60 years, everyone’s been able to invest in startups here in America. Not just the richest 5% of the population that is accredited investors. So it’s been a ten-year journey since we started the company to where we are today. We funded $500 million to about 1000 companies. So roughly half a million dollars per company that raise that half a billion dollars have been funded by hundreds of thousands of investors investing in companies through the platform. And our mission and kind of what we’re all about as a company, we are a public benefit corporation, so we’re a pretty mission-driven organization. We’re a B corp as well. And so we have kind of a two-sided mission. Right? So on the founder side, we want to get more capital flowing to startups. We think if we allow everyone to be an angel investor, not just the richest 5% of the population and if we empower more women to invest in startups and more angel investors of color. I live in Tennessee. 80% of venture capital dollars in America go to three states California, New York, and Massachusetts. And so again, if we can empower more people to be investing in states like Tennessee in the middle of the country, hopefully, we can get more capital flowing to founders, especially founders that might historically have been underrepresented. So that’s on the founder side of the equation and then on the investor side of the equation, the idea is let’s let everyone participate in the wealth that’s being created by startups, not just rich people, right? So what if at Uber’s IPO, instead of JasonCalicanus making $100 million and kind of some VCs and millionaires making money, thousands of drivers had become millionaires at Uber’s IPO? These days, more and more wealth is being created before the IPO rate. And if the only people that get to benefit from that wealth creation are rich people, then we believe that’s kind of another force for the concentration of wealth and kind of growing wealth and equality. So our vision is let’s let everyone participate in that wealth creation by investing in the early rounds of startups. So that’s kind of on the investor side, what we’re all about here at WeFunder.

ANDY’S COMMENTS

Yeah, I think that’s a really important point, Jonny, and very much agree with you. That is what the Dacxi Chain is all about as well. Really trying to lower the barriers to investing for all kinds of everyday people all around the world and give them access to those opportunities. The ability to invest in innovation. And there really is a potential kind of social good side to crowdfunding investing as well, right, Jonny?

PRICE’S COMMENTS

Yeah, totally. And I’ll kind of highlight two aspects of that, right? One is we think it’s really cool, especially for consumer-facing companies, if you can engage your customers as investors, they’re going to be more loyal customers, right? Their LTV goes up, their Net Promoter Score goes up, and they’re going to tell all their friends about it. And so there’s like a benefit that you get when you turn customers into owners from a revenue perspective and a growth perspective, as well as obviously being able to raise additional capital through WeFunder. And then the second point I was going to make escaped me. Hopefully, that will come back to me.

ANDY’S COMMENTS

All good. I’d love it if you could just give us a sense of how fast the global crowdfunding industry has moved, Jonny, because you will have been, even if not there from the beginning. You’ve been a participant for a long time and working inside the industry, of course, because crowdfunding really didn’t exist until, I don’t know, a decade ago, and now it is a big global movement.

PRICE’S COMMENTS

Yeah. So I think when you talk about crowdfunding, right, there are different varieties of crowdfunding. So when most people think about crowdfunding, they’re thinking of Kickstarter, right? Don’t know when Kickstarter came into being, maybe in 2005. What we’re doing at WeFunder it and there’s like, go fund me, right, which is like donations-based crowdfunding. And what we’re doing at WeFunder is investment-based crowdfunding, right? Most of it is equity. Probably 95% of the investment volume on the platform is equity. We actually do allow for debt-based crowdfunding as well. So, for example, there might be a brewery that’s raising a loan and can raise that from their customers, but most of what we do is equity. But yeah, so WeFunder is about investment crowdfunding. Our kind expectation is that investment crowdfunding becomes a much bigger industry than perks-based crowdfunding. I actually don’t know the stats. I believe we’ve already passed perks-based crowdfunding, but don’t quote me on that. But if you’re offering a rate of return, potential rate of return to investors, then our expectation is you’re going to be able to raise a lot more capital. And so hence the investment volume through investment crowdfunding, we think will be a lot higher than it is through Kickstarter. And you see that the average campaign on WeFunder raises half a million. The average Kickstarter campaign I believe is 25K. The average investment amount on WeFunder is $1,000 versus $80 for Kickstarter. So I think investment crowdfunding will be a much larger industry than perks-based crowdfunding or donations-based crowdfunding. In terms of the market size for investment crowdfunding, it’s still pretty small. So this year, I think regulation crowdfunding in the US will do about 500 million. Regulation Crowdfunding is the exemption where you can raise up to $5 million per year. It’s more for the kind of early-stage startups. And then there’s another exemption called regulation A+ for larger companies where you can raise up to 75 million. The market size there is a little fuzzier, and there’s a little less stage on it, but for Regulation crowdfunding this year, I think we’ll come in at about 500 million. And that’s a drop in the ocean of early-stage angel investing, you know, Early stage capital for either MainStreet businesses or tech startups. If you look at venture capital dollars, seed StageSeries AB which is really the sweet spot for WeFunder, the Friends and Family Round Capital, that 500 million, that’s the reg CF industry of which WeFunder is about 40% market share right now. So with the leading platform in terms of investment volume, but that’s still a really small market share, I would guess kind of 0.1%. Again, the data on the kind of angel investing in the VC market is pretty spotty but my guess would be 0.1% market share. And so that’s our vision over the coming decade, right, is how do we grow that 0.1% to 10%? How do we make it so that especially if you’re a consumer-facing company every round, as well as raising from VCs, right, this isn’t either or thing? Have a VC lead the round, price the rounds, but then open up an allocation of maybe 10%, or 20% of the rounds to let your customers invest. And whether that’s your Friends and family rounds, seed rounds, Series A-B-C-D-E-F-G every consumer-facing company should want to do this because it’s just becoming more and more the norm and expectation that why on earth would you not let your customers and community invest? That’s just going to basically increase their loyalty and increase their feeling like they’re a part of the team. They feel kind of tied to the brand, part of the community. And so the world we’re trying to build is somewhere in a few years’ time every B to C company is letting their customers participate in every round.

ANDY’S COMMENTS

I love it. Sounds fantastic. Jonny, talk us through the, I suppose investor journey. If the website for Wefunder is simply Wefunder.com and you can go along to the website and then you can see all the different kinds of startups or companies that are on there. There are categories just on the front page there are Moonshots, Y Combinator Startups, Entertainment, Main Street, Biotech, and then, of course, you can filter it down by female founders, minority founders, and virtual reality. So there’s a huge variety of different startups. There is something that would appeal to most people.

PRICE’S COMMENTS

Yeah, definitely. One of the cool things about WeFunder, one of the things I love about my job is that we’re working with bars and restaurants and soccer clubs and movies and Main Street businesses as well as tech companies flying cars, moonshots, as you say. And so yeah, there really is, whatever your passion, that’s our vision is that a startup in that space can invite their community and people that are passionate about what they’re building to be a part of the journey.

ANDY’S COMMENTS

And I also appreciate that on the website you’re honest about the risks I suppose you describe a new kind of stock market unlike the Nasdaq, we’re meant for startups and small businesses and then you talk through some of the differences. So you can explain some of these differences, Jonny, but the first one, as we say, is it says it’s much riskier. Never invest more than you can afford to lose. Startups are hard. Even the best founders fail. So maybe talk us through I don’t know if you kind of track the success rates or not, but just talk about what the likelihoods are of each of these individual startups achieving and what happens to the ones that fail and so on.

PRICE’S COMMENTS

Yeah, we always like to try to flag the risk to investors. And it’s not just the riskiness of these investments, right? Like investing in early-stage startups, a lot of those are going to go to zero. Maybe most of those investing at the seed stage is going to go to zero. But also it’s the liquidity, right? So this isn’t the stock market where you can invest $1,000 today, and then if the share price drops 10%, you can sell it for $900 next week. You invest $1,000 in a stock, on WeFunder that might be locked up for ten years, and maybe you get 20 extra ten one day when the company IPO is acquired, but much more likely, that will go to zero. And so we always try to flag the risks. The SEC has put limits on how much investors can invest through WeFunder or through any regulated crowdfunding platform. So anyone can invest $2,200 per year and then that number goes up based on your income and wealth. There’s like a formula that determines how much people can invest. So the SEC is obviously nervous about people not investing kind of more than they should in these pretty risky early-stage startups, and we try to flag that as well. The vision for us we talk about on the website. You’ll see this in our brand. It’s not investing in startups to make a ton of money. It’s investing in startups you love. So our vision is like investing in a company that you love. Maybe you’re a customer of, you love the brand, you love the product. Maybe you know the founder. You believe in the founder. You want to show that you believe in the founder by investing in them. Maybe it’s a cause you care about. There’s a company, Leah Labs went through Y Combinator and then launched on WeFunder. They’re, they’re trying to cure cancer in dogs. And they had, you know, hundreds of investors. And there’s a place on WeFunder. One of my favorite things to do, you can read the notes that investors write and say so many of these investors were writing notes like, my dog died of cancer. If I can be a part of a solution, say that we eradicate canine cancer. I would love to do that. Right? We had this company, Atom Limbs, that’s making better prosthetic limbs. There are 5 million on the platform and so many of their investors, thousands of people writing messages like I was in the armed forces, my colleague lost a limb serving their country. Again, if I can kind of be a part of bringing a product to market that helps their quality of life, that’s something I want to be a part of. Lil Libros is a company founded by two Latino women, who raised a few million dollars on the platform. I think they had 6000 investors and thousands of them. Great comments. They were trying to allow for more representation of the Latino community and kids’ books. They were like, we’re fed up with our kids reading books with no Latino characters in them. And so they set up this kind of publishing company and all of the messages were Latino women saying, this is so awesome, I’m so glad to be a part of it. I really believe in your mission and we need more representation in the books that my kids are reading. That is what WeFunder is all about, right? People investing in causes they care about and people they believe in, as opposed to yeah, investing to make tons of money.

ANDY’S COMMENTS

Yeah. Very well said, Jonny. And you say it really nicely on the website. I think this is a nice way of saying it. You kind of say startups can win big or they can go bankrupt. A good way to consider investing in them is to think of them as similar to socially good lottery tickets. At Dacxi Chain, Jonny, we’re trying to pioneer a new model for global fundraising. And it’ll be a fully regulated global ecosystem where investors all around the world have access to these opportunities. And of course, founders with innovative ideas who need funding can access this global investor pool and we’re going to use blockchain to tokenize these equity shares. So one of the advantages of that, of course, is people can invest in smaller amounts or bigger amounts, whatever they wish, depending on the jurisdictions in their part of the world. And then another advantage of that tokenization system is it enables more liquidity and helps to solve that liquidity problem, Jonny, by launching a second specialist secondary market where people can sell their tokens. This is kind of the vision for the future of the Dacxi Chain. What do you think of that model?

PRICE’S COMMENTS

Yeah, I love the idea of the kind of internationalization. Obviously, there are a bunch of regulations that you guys need to work through, but I love the vision of this. WeFunder is actually expanding in the EU. And so the idea that EU investors get access to American investment opportunities and vice versa, love that idea. Obviously, again, need to kind of think through the regulatory kind of compliance aspects in every country and yeah, on the liquidity side we also kind of, I think to a degree, there’s kind of the ability to get liquidity in terms of secondary transactions with a regular boring old database. Which is what WeFunder currently uses, and suddenly don’t have any plans to move it to the blockchain, maybe down the line. And there are probably some functionality benefits that from a liquidity and secondary perspective that come with it being on the blockchain. But we definitely do have plans to build a secondary market. One of our competitors, Start Engine, actually has a secondary market for Rxcf. We don’t see much liquidity right now, or much kind of demand for secondary, which is why we haven’t kind of prioritized building that ourselves at this stage, but we definitely kind of see that in the future.

ANDY’S COMMENTS

Fantastic. All right, well, as we start to finish off Jonny, please tell the listeners where they can find you online. Perhaps you’re on Twitter, or perhaps you are on LinkedIn. Again, tell people where they can go to learn more about WeFunder and just if there are any thoughts you have on the future of where all this is going that you’re prepared to share. What do you see coming down the line across the next five years or so? Yeah, please take it away.

PRICE’S COMMENTS

Yeah. Jonny Price on LinkedIn. J-O-N-N-Y Price. And then Jonny C Price on Twitter. Obviously, feel free to check out WeFunder. If you go to Wefunder.com, you can browse 300 startups that are raising right now. If you’re a founder looking to raise capital and you want to let your community and customers invest as well as rich people, we’d love to hear from you. There’s an easy place where you can go and just start an application. We’re a pretty open platform. We don’t want to be another VC picking winners and losers. If there’s a coffee shop in rural Wyoming that wants to raise 50K from their customers, we want to let them. So, yeah, hopefully, we can help some of your listeners here, Andy, who might be looking at raising capital. Right now we’re just in the US, but we are expense the EU soon. So, yeah, if you’re listening from the EU and you’re looking at raising capital, we’d love to hear from you as well. And, yeah, in terms of the future, I think I would just kind of go back to what I said earlier. I mean, obviously, we want to grow this thing. We think there’s very much room for us to grow into. And the world, yeah, the world we’re trying to build is one where in a few years’ time, especially B to C founders, can work for B to B as well. Can work for Biotech Buglier lab. It doesn’t have to be B to C, but especially for consumer-facing companies. Like every round, let your customers invest alongside VCs. They can lead the round, but let your customers invest. That’s A, going to accelerate your growth by turning customers into supercharged fans, but also B, it’s the right thing to do. If you build a big company, if you succeed in your mission, you have a nice exit, and you make money for your investors. Wouldn’t it be cool to make some of your earliest supporters and champions and customers money as well as the VCs and angels that are lucky enough to invest in you? So that’s the vision. And, yeah, we’re all on the WeFunder team working hard to kind of bring that future into the present.

ANDY’S FINAL COMMENTS

Awesome. Thank you so much for sharing your thoughts, Jonny, and thank you for coming on the show. Been a pleasure talking to you. All the best and bye for now.

That was Jonny Price from WeFunder. Very successful crowdfunding platform, of course, in the US. And as we’ve learned, they’re moving to establish in the EU as well. And yeah, so I hope you enjoyed that. I certainly enjoyed talking to Jonny. Love some of the phrases that we learned. Consider investing in startups more like socially good lottery tickets and like, that where your attention goes, your money flows. Or where your money flows, your attention goes. Yeah. Saying the same thing in different ways. Thank you for listening to today’s episode of Unleashed with the Dacxi Chain. Don’t forget to subscribe to the podcast in whatever podcast app you are using. Give us a five-star rating on Spotify or Apple podcast. That would be excellent. We always appreciate it. But yeah, that’s today’s episode, team. Thanks for listening and bye for now.