The Explosion Of Crowdfunding With Will McGuire

Don't miss today's episode with Will Maguire of Incolo, formerly Crowdfund nc, to discuss the future of crowdfunding and how you can invest small amounts of money in your local company. Welcome to the Next Level Income show where it's our goal to raise your income, investments and life to the next level. I'm your host, Chris Larsen. You can get a free copy of my book@nextlevelincome.com just click on the book link. If you put your address in, I'll even send you a free copy. On today's show we have Will Maguire of Incolo. Will has invested in over 70 startups, been an advisor to several since 2016 and his goal is to improve community awareness and access to the private marketplaces. Blending traditional and newer models. Will believes our region is at the ground floor of one of the greatest growth periods it has ever seen, which will be led by a community of individuals from families, entrepreneurs and partners who build really great companies and reinvest together. Today's show is sponsored by MFIN Summit. Coming up on June 10th through the 12th. Do you want to learn how to buy an apartment building? If owning and managing or being an investor is better for you, perhaps you just want to learn more about the asset class, which is apartments. The MFIN Summit is a three day information packed event for multifamily investors with over 1000 attendees and over 50 speakers, including yours truly. You'll hear from experts about finding deals, raising capital, underwriting strategies, selecting markets and so much more. You can hear me as well as dozens of other speakers during the event. Just go to m.finsummit.com that's that's mfinsummit.com to grab your ticket, use promo code next level in all caps. That's next level all caps. To get $100 off. Whether you're new to multifamily investing or a seasoned investor, you do not want to miss this event. Join me at the Multifamily Investor Nation Summit. Will, welcome to the show.

Thank you. Happy to be here.

Yeah, I'm excited to have this conversation today. So I talked about in the intro how you now are running in Colo. And we're going to get into kind of why the name change and what crowdfunding is. But before we do that for the audience, if you don't mind, will share a little bit more about your background, how you ended up in the role you are today.

Yeah, I'd be happy to do that. But first I wanted to say congratulations. I understand what 20 years of dating for you and your wife today.

Oh yeah, you remembered. Yeah. So it's the day we're recording here in about, I don't know, five hours will be our official 20 year anniversary of our first date.

So excited.

Yeah.

We'll keep this as brief as possible because I'm sure she wants to be.

With you and she'd be with me 20 years. She'd probably be like, we're actually going to, we're going to celebrate this weekend, you know, be in the middle of the week. It's like, you know, you got kids, you're running around doing stuff, but we definitely, we definitely recognize it this morning.

That's great. That's fantastic. Well, I'm happy to be here and thank you for letting me be on here. I mean going back to your original question, I mean our, a little bit about me was I got started out when I was, I'll start state, I went to NC State, I was in my, you know, senior year. We were shutting down Hillsborough street for all day street festivals, raise money for charity. It kicked off street construction for that area, you know, had multiple stages up. It was a lot of fun. I was finishing out aerospace engineering and doing application programming and then in my entrepreneurial class we were trying to find out how to grow hops, you know, for beer production, other things like that commercially in North Carolina because they're looking for a new cash crop. And lo and behold I was engaged to my wife earlier, fiance at the time, wife now and she was in ministry. And so I said well after I graduate I can pretty much follow her anywhere as long as she doesn't get a call. Alaska, I can do event production, I can do technology and we can brew beer. So it'd be great, you know, I can come out. But she got a call up to Richmond, Virginia where I worked for a global company at the time. Done a lot of programming or program work on big systems. Worked with large media company in the US People probably recognize during a Berkshire Hathaway acquisition worked for one of the largest renewable companies that does a bunch of hydro plants across the US and Canada. And I was working with an acquisition firm up in New York. I was doing more the management of their application teams website. But all that led me to another company called. Well I don't know if I can mention the name here but I'll just say they were a public benefit corp, which a lot of people are like what's a public benefit corp? So I just tell them well it's a company that wants to do More with their money than just money. To the man. And so good examples. Public Benefit Corp. Patagonia, Newman's own. They just. Their companies in a way where they do really great business, but they want to do something else with the net profit. So people, work colleagues, they're called to, but they. They do something different than net profit. When I was working with that consulting firm that had set up a consulting firm no different than a Bain or BCG in that world, it led me into this other world I found called investment crowdfunding, where anybody can be an investor. And I thought, this is kind of cool. I can put in money in the stock market, but I didn't know I could diversify, like in tech companies that were not on the stock market. You know, that world existed. And so.

And about what year was that?

2018, I believe. Oh, no, my first. 2016. Yeah, 2016 is first time I got into that. And then moving forward after that, I was down at Interval because we were trying to figure out how to get back down to North Carolina, and I saw just tons of founders complaining about access to capital. I'm looking down at my portfolio on my cell phone. I'm like, I've got like 12 companies in here that are in, like, California and Texas and Boston that have all raised money from the crowd. And they're not breweries and restaurants. They're like fintech, agtech, Medtech. Some of those companies have already exited now. And I could not figure out why this wasn't going on in North Carolina. And so my whole motivation was I'm going to allow founders to tap into capital from their community and then leverage that crowd to help them grow as companies. And that was the whole auspices for starting what is now Polo was Crowdfund NC at the time, a restart of Crowdfund nc.

I love it. I love it. And that's how we got connected. Well, through the, you know, through the, you know, kind of the venture capital space, if you will, and through the entrepreneurial space. And I guess so. I love. I love your engineering background. I think maybe that's why we relate. But talk a little bit. You guys just changed the name to Incolo. Just. Just here recently from NC Crowdfund. So before we get into kind of like what crowdfunding is and kind of. It's really actually still in its infancy as far as I'm concerned. But what is in Colo and why the name change?

That's great. Well, in Colo was because we wanted a brand that better represented what we did.

And it Actually came by.

I won't call it accident, but it came by in a really unique way. So we're sitting in a rebranding exercise.

Team, and on the first day, we're just throwing adjectives up on a board. And one of the adjectives was juicy, because, you know, we work a lot of little people, too, that are learning about this world of building businesses. And one of them said, what we do is juicy. And then we had a couple others up there. Innovative, connected, community, locality. And just a whole slew of them. And one of our team members said, man, I guess we just have to combine some of these. Team member goes up to the board and throws three together and just goes. In Colo, I'm like, man, you know, like, I kind of shrugged it off, be honest with you. Because I was like, it can't be that easy. That's literally has gone through my head. Like, it can't be that easy.

So is that innovative, connected and local? Is that it?

Yeah. Or community. The founders we talked with has said keep it kind of nondescript so that people can interject their own words in there. Inch, hello. But, you know, like, Anya is the one that went up to the board and went incolo. And two later, as we're thinking through brand names, we can't find one we all like. So we said, why don't we go back to that Inkolo name? And Anya's on her computer. She's like, guys, in colo is a word.

We're like, what is it really?

It's actually a word. It means I, or to cultivate. And we're like, that's exactly what we're doing. We're cultivating community.

How about that? I had no idea. Yeah. Now I'm looking it up. I'm like, wait a minute. Is this really. How about that? I had no idea. I thought it was just. It was the name that you guys came up with. Yeah, that's pretty wild. That is pretty wild. And that's perfect for what you guys do. Absolutely. All right. So in Colo, we touched a little bit on crowdfunding. I heard of this crowdfunding through one of the platforms where you can fund. I think the first thing that I looked into was it was one of the first smartwatches, before the Apple Watch came out. I was like, oh, this is really cool. You can fund this company, but it's so much more. So I think a lot of people will. A lot of our listeners, they're fairly familiar with what a 506B reg D506B or 506C offering is. So if you're listening, you probably know what a stock is, you know what a bond is. You may not know what a private offering is or private placement. But real quick. So a 506B or C offering, it's a private placement, they typically have to be accredited and with a 506B have a relationship with somebody within the organization to be able to invest. Now over the last, what would you say, five to 10 years, they have expanded some definitions and some platforms to allow people to have access to this space and at next level income. We like to say invest like the rich do and the rich like to invest in these private placements. So talk about how crowdfunding and some of the regulations have taken this a step further, will, to really democratize the ability to invest in these companies.

Yeah, sure thing. So the whole industry kind of started.

Out back when AngelList got started, if people are familiar with that platform.

AngelList. Yep.

Because a lot of people are familiar with AngelList. They're like, oh yeah, we group investors together, they're accredited and put them into these 506B offerings.

And a lot of the tech companies.

That people are familiar with actually that are on the stock market actually were probably part of an angellist round. I mean, you can go to the website and see it around that same time. The whole point in that is around.

The same time a lot of these.

People that wanted to democratize the capital were going to see basically with the argument of like, why is it legal for somebody to take their entire paycheck or take their entire life savings and go put in a lottery ticket in their corner store or go put it in Vegas on black.

But they can't even take a hundred.

Bucks and go invest in a startup company or commercial real estate or just something that is, you know, in the private markets in the backyard. So it took four years and they.

They approved and approved a regulation of.

Securities exemption similar to 506B or more akin to 506C where you can publicly solicit. The only difference is that a founder can raise at that time up to a million seventy thousand from anybody on basically friendly founder terms.

And that could be equity, it could be debt, could be a debt based.

Instrument like a revenue share.

Not sure if people are familiar with that or not, but basically a company carves off a portion of the revenue to pay back the return. But what was really neat about that is flash forward now we've got almost a billion dollars, if not surpassed a Billion dollars raised across regulation crowdfunding and this other one, Reg A, which allows companies raise up to 75 million. And now regulation crowdfunding allows any founder to raise up to 5 million here.

5 million. That's a big jump.

Yeah. That all changed March 15th. There were, I think, at least two that I know of that closed out 5 million within the first week.

That's impressive. That's impressive. So talk about the mechanics of that, Will. So how does that work? Because if I want to go buy a stock, I go on my Fidelity account or I go on Robinhood or one of these. And now it's kind of similar. Right. When I started investing in the stock market, there was like, we were coming out of the period where you had, like, round lots where you had to buy, like, 100 shares at a time. You had odd lots. And there was these high broker fees. And then Schwab was kind of, when I started investing, had this ability. Now with Robinhood, you can buy a fraction of a share, like down to almost cents worth. Right. Or a couple bucks worth. So how does this work? Kind of mechanics. So if somebody says, hey, this is interesting. Like, how does that actually work to get the money out of my hand into the founder's hand?

Great. Great question. It's similar to the way people are accustomed to Robinhood working. It's just in the private market instead of companies on the stock market.

Okay.

So, for example, the other day, on one of the platforms, there was an offering for a aerospace company, and the minimum investment size was a dollar.

So if somebody wanted to go invest in that company, they went to their cell phone or to their computer, and they basically just plugged in some basic information like they would on any setup of any type of bank account or brokerage account. You know, what's my name? What's my Social Security? Am I investing as myself or an entity put in their bank account information transfer funds? So the whole process is designed to take three or four from initial all the way through investing.

That's incredible. And then founders, smaller companies that are out there. So give us some examples, whether it's of companies we might have heard of or local companies that you're working with that are using this type of platform to raise money.

Yeah, Great question. Well, I mean, one of the neat parts about this new way of raising capital or new way of people investing is it's really across every single industry. So while I can't talk about current companies they're raising today, one of the companies that we worked with in the past was battery exchange. And they essentially were like the red.

Box for battery rentals.

So if you think about if you're stuck, you're trying to go to a convention center or you're trying to go to a bar or restaurant with your friends or family and you don't want to be tied to a wall, there's a whole generation now where there's a whole stress associated with their dying.

Yeah, right. Oh, yeah.

Serious psychological concern. I mean, their whole business kind of went around the practical need to be connected with other people, especially like our children, when they may be away, not mine, because they're not old enough yet for a cell phone. But there are many that. And so. So when Covid hit, obviously that had an impact on the company because bars and restaurants and convention centers shut down, but they had closed around and they leveraged their crowd to pull them into industries that you wouldn't typically think rental batteries are used. I can't share all of those. But they basically leverage their crowd strategic mechanism to keep their company alive and growing during that time, which was really, really cool.

That is pretty cool. So circling back on Incolo, former Crowdfund nc. Right. I always want to see crowdfund nc, but formerly Crowdfund nc. So you mentioned in your intro that you saw all these companies doing this from Silicon Valley and what we're associated with. You wanted to bring it here locally. So tell us a little bit more about Incolo's mission, what you're focused on now.

Yeah, basically Incota's mission is to provide a community of founders and experts and all the resources a founder really needs to grow their company. Because at the core of investing, let's say a company's not raising capital or capital raise isn't what they need to pursue. Well, if they're going to grow as a company, they still need to be a great company. Still they have to figure out how they're going to fund the company. And so our core services actually focus around helping a founder basically have a push button. They can get an answer to any question they may need an answer to or partner they may be able to partner with to drive sales. But at the end of the day, when companies do need to raise capital, they've got access to this greater resource that's out there. And the funny part is the majority of the nearly billion dollars that's been raised in the industry is actually coming from people that are connected to the founding teams, either in the first or second degree networks. And a lot of times people haven't invested in this way or don't even know. And so what's happening is it's actually generating a whole base of investors that are coming into the process that say, that's really neat. I've never considered myself as an investor, but when we boil down what investment is rich is putting money in companies that you think can generate financial return, that you believe the team running them can generate that return. And a lot of cases, in most cases, we're doing it for more than just the financial return. It has all sorts of other returns locally. So a lot of the founders we look with, they look at a strategic. If an investment crowdfunding round is strategic for them, it's normally because they can define, not philosophically, how is that aligned to give a crowd potential opportunity for the rewards that can be generated, but also strategically, how is that into sales process or supply chain or something else like that?

Yeah, no, I love it. And the thing is, I've been associated with Venture south, which is. We started as Asheville angels here in 2015, I think it was, I joined shortly thereafter. And, you know, for me it was, it was really cool to see these local companies and be able to participate in them, you know, help them out, connect them. So I love how you're doing this on a, on a bigger scale. With respect to that, are you guys limited to North Carolina or do you help companies that are outside of that scope?

Not at all. We help companies, we've even helped some.

That are national nature, that are trying to move here.

And so we kind of look at.

It from, if you're connected to North Carolina, if the North Carolina ecosystem can help your company grow, scale and exit, then whether you're starting here or you're moving here, you're connected here. We're there to help those founders.

It's awesome. And I was just reading last week, it was talking about how a lot of companies from California are now moving to Raleigh, how it's one of the, like Austin. You're talking about how it's Austin's kind of a second Silicon Valley, how Raleigh is now, you know, like, like the Silicon Valley of the East Coast. What do you have to say about that?

Well, you know, there's been a lot of talk for a long time that, you know, we're going to be the Silicon Valley, you know, east coast. Going to be the Silicon Valley, the East coast, or whatever the phrase is. And I don't think this area is going to become that. I think what's kind of unique that I found in North Carolina or the Southeast in general, there's a lot of little fragmented ecosystems. And what I mean by that is that a lot of value creation happen within each one of those. You know, you got AR and VR, we've got healthcare in multiple pockets, we have fintech in multiple pockets. And sometimes they don't talk to each other. But what happens in that is a lot of innovation.

It's not single thing.

So I think if a Silicon Valley of the east coast did arise, I think what would happen is that we would get a lot of innovation in those different pockets. And then there's ability for partnerships where founders and partners can cross pollinate with each other so that the best idea the market wants kind of comes out. And people are more collaborative in the process. We call it coopetition. So they can be competitive, but there's always opportunity to work together and just depends on what the market needs at the time.

Yeah, it's the abundance mentality. I mean, you look around and we share information and you help each other out and you make these connections and it's not a fixed pie, especially in a market that's growing like this. And we love, I mean, we love Raleigh, Charlotte, obviously Asheville, where I live this whole stretch, and I would even add Winston Salem in there. All these areas are bubbling up with entrepreneurs that have moved to this area from other areas of the country. So I think we're just getting started. Even though it's been happening the research triangle, I mean, geez, I was in college and people were moving there. So it's been going on for a long time.

I'd agree with that. And I'm sure as you're talking with traditional funding groups or other funding groups in this area, I mean, I even know a couple of funding groups that were purely regulated to parts of the country. And they said we're only on the Southeast now. And when I ask them why, they say, well, the Southeast has the same talent pool. They have just as high quality. Founder density is just smaller. So their whole vision is making that density thicker so it becomes an even higher quality entrepreneurial community. And I think that's a, I think that's a cool statement coming from somebody from the outside moving in.

Yeah, no, it is. And we're going to, I think we're going to keep seeing it as people move from, you know, you know, California and Northeast and you just see, you just see a ton of net in migration here. So. Okay, so what are types of investments that you guys focus on? Will? What are some types of companies that have come through the program so far.

Oh, great.

Great question. We've had everything from like battery exchange.

Which I mentioned, to medtech companies that had the potential to save people's life and walk again. We have distilleries sitting through, like, the sound of that. Real estate. Say what?

I like the sound of that.

Oh, yeah, yeah. People tend to like the place we.

Can go to enjoy provisions.

But, you know, like, it's the whole.

Diversity of the entrepreneurial community.

I mean, the outside companies looking to.

Grow and scale with it. I mean, we've got people that are working on blockchain projects too.

Not the, not the, hey, crypto, let's.

Go launch an ICO project.

But how are we using the core.

Fundamental technology shift to, you know, a decentralized node to actually move our business forward? So, I mean, the whole diversity that you can imagine, that's across North Carolina from a business perspective, our goal is that we can serve all of it. And it's because the process of building a great business is very similar. The context is different, but the partners are already with the network.

Yeah, I love it. Just checking out the platform and seeing the diversity of companies on there. It's really cool. I think with the Millennials, the way they've been investing and now Gen Z, which I've been really impressed with, this small group of Gen zers, I'll call them, that I've come to know here over the past six months. They're very different than the Millennials and I think they're very entrepreneurial, they're very driven. It's going to be really cool to see how this really affects them. So I guess tell the audience what is your focus going forward and then how can they learn more about Inkolo and potentially participate in some of the things that you guys have going on?

Yeah, great, great question. So Encola's focus moving forward is just surrounding founders with the resources and experts and community need to thrive. And then when those founders have needs for funding, there are plenty of options out there. So I'll give you an example. Right now we've got a founder from a business advisory perspective from Incolo side that we're working on for a new business that's out there.

And when looking at capital path that.

Founders considering using like SBA funding plus public funding. So there's all sorts of creative ways that founders are looking to capital stack their path, whereas other founders we have, they're working on an approach for driving purely through sales channels and they're able to leverage the partner network to say where's their mutual alignment for our company.

To grow and help disrupt a space. But we can do it together now. And they're looking at that from a partnership perspective. So it's really super interesting to see what's happening right here in our backyard.

Yeah, that's awesome. So how can people learn more about NCOLO and participate now?

You just go to Incolo IO and for anybody that's just interested in what's out there that's connected to North Carolina, we've got a site called ncgrind.com it's right off the Incolo IO website. So Incolo IO and we centralize and link from there. But we put together NC Grind from an investor awareness perspective because we had so many people asking us, well, what's being built in our backyard. And so the majority of the companies on NC Grind, like we haven't even helped those companies yet. They're just, they're out there that are just publicly raising capital from the community. And so we show their story and just show what's being built in our back. It's really cool. Some of the companies are here that I didn't even know we're located here. We found out about that through the fact that they chose to open up investment raise to the public and then people can go learn about what's actually being built in our backyard. And that's a really cool story of us, I would say.

Yeah, no, I love it. So you should definitely check it out. If you're listening today, Incolo I.O. that's Incolo I.O. we will link it in the show notes. And will one last thing before we wrap up here today. You started off talking about when you were at NC State, if you could go back to your 25 year old self and you're just starting out, what advice would you give yourself?

Oh man, that's a great question.

I'd probably say just keep exploring, keep being curious and don't be afraid of what may be in the future. You just got to keep pushing through, take all the experience that you're going to wrap along the way and just know there's a journey that you may not see the outcome, but it's the journey that counts.

I love it. It's the journey that counts. I think that's so important. You know, it's like the dog that catches the car. You're like, what next? You got to enjoy the process as you go through it. So will I always enjoy talking to you. Thank you so much for sharing your experience with the audience here today. Again will McGuire. Check it out in Colo IO.

Thanks, Chris.

Hey Chris, here again. I hope you found this episode valuable. Now I have one more thing to give to you. We have a page for my coaching clients where you can get a free copy of my book as well as much more from previous guests on the show. Just check out nextlevelincome.com/coaching to get a free copy of my book, audiobook and much more. I'll send you a copy of my book and cover all the shipping costs as a thank you for listening to the podcast. Also, please like share and take just 90 seconds to give us a rating on Apple Podcasts.