The Exit Engine Podcast Episode 28: Jason Fishman on Crowdfunding

Welcome to the ExitEngine Podcast, episode 28. Good morning, John.

Good morning, Joe.

How are you, man?

I'm doing great.

And yourself? I'm doing great because I'm really excited today. We've got a fantastic guest on the podcast today.

Absolutely, I'm psyched.

This has got— so when you're going out and you're looking to be able to— one of the things, ways in which you can start as a startup especially, is to be able to start raising capital is through crowdfunding, right? The thing about crowdfunding is really great. The problem is that it's not a complete system. When you go into StartEngine or any of these crowdfunding sites or whatever, you are making a listing and you're going to put a bunch of information up on a website, but that's basically the extent of what they're going to do. What Jason's company does is comes along and says, we're going to get this out in front of these investors and we're going to advertise this and we're going to help you attract investment money through digital advertising in particular, because it's incredibly efficient and effective. And so, uh, we are welcoming Jason Fishman to the program this morning. Hey, Jason, how are you, man?

Good, good. Excited to be here, gentlemen.

Excellent. Thank you so much for joining us. You know, what we see is, it's certainly easier, and we're just jumping right in here, by the way. It is much easier to be— the idea of getting capital is much easier to do when you have capital.

Unfortunately.

Right? And so, the fact that I think the biggest thing that we're seeing and that we're getting feedback from, or, you know, in our business, is people looking to be able to— how can you help me access capital and how can I go about that? And of course, the first thing that we're going to say to people is, right, well, where are you financially right now and what do you have and what do you, you know, and what can you put on the table? And by the way, how clean a business are you? Because that's one of the first things that we find all the time, that people are not even prepared to even look for money yet because Of the state of their business, right?

We're just on the marketing side. We're usually not participating in those conversations, but we feel it, the delays, you know. Hey, we're going live next week, we need to get you guys on board. And then 3 months later, 4 months later, it keeps getting pushed further and further back, and we start getting the hint of what's actually occurring there, especially on the reg— the Form 1-A files.

Yeah, because obviously, and especially in a crowdfunding situation, you are making a legal, you know, SEC filing, right? And so your books and everything else that you've got to show people has to be real, has to be good, and it's going to be certified by a third party before the SEC accepts it, right? So you've got to be right, at least in terms of clean. You've got to be clean. You've got to know that you have these things that are real, especially from a financial standpoint. But talk a little bit about also about this. What I'm interested in is the story aspect, right? Because One of the things that we've seen, you know, John and Carol and I have seen obviously, is that— and we're making a big part of our practice— is getting the story down, right? And the story that tells— the story is not just a financial picture, but as a picture, it's the picture, it's the, it's a picture of the founders, the, the reasons why they're in the business, right? The things they've accomplished already, uh, things like that. So obviously when you're going to get capital, whether it's crowdfunding or any other capital, Being able to have these, have your story together, right? Really, really matters.

Absolutely. You know, I like to make a lot of offline-online analogies. So if someone walked up to you on the street, or even if you sat down for a pitch meeting with them and they were very dry, they told you the numbers and asked if you wanted to invest. I know I wouldn't be as inclined to become a shareholder and partner with them. And if I felt like I really knew them and connected with them on a personal level of, oh, I know the story. This is the founder's name. This is where he grew up. This is what he did in business. Here are his past successes. Here's why he put each of the team members on board with him. And this is what they've done. Here are the numbers they've already been able to produce. I don't know if you know how big of a problem they're solving is. And this is me sharing the story with my friends, my family, maybe just explaining why I invested.

Sure.

Maybe encouraging them to invest alongside me. So being able to talk about, you know, story, beginning, middle, end, or, you know, present day and where things are going, it makes everything that much more believable. It makes everything feel like that much more, uh, of a team and shareholders coming on board to the team. I mean, given that there are the differentiating factors for digital. Likely not meeting the founder in person on a Reg CF, you know, thousands of investors. Reg D, I see offline discussions, whether it's a phone call or an in-person, that is more common. But even if that doesn't take place, digital allows for scale. So instead of that meeting, instead of that storytelling happening one-to-one a few times a day, it could be occurring thousands of times a day. Uh, you know, we can encapsulate that story into a 2.5 to, let's say, 5-minute video on the offering page and then splinter out into shorter formats and advertisements, point towards it in outreach, have it living in the content that prospective investors are finding when they're searching around and doing their due diligence. So being able to have that story live in digital mediums, we can then drive traffic with advertising and outreach to the tune of thousands of people per day.

Mm-hmm.

Thousands of qualified investors at that each individual day and see the conversion rates occur from there. But people invest in people. The story is where that lives. It's also where the deal itself becomes more plausible. I mean, you feel more confident that it's actually going to occur.

Right. The way that we've started to look at it was that we figure like, and again, we've worked with you and with some of these crowdfunding sites now and things like that. And we're doing, obviously doing a lot of the blocking and tackling work of getting these companies prepared to even go out for their first initial round of funding, right? Which is, again, not where— not always from an exit standpoint where you're playing, right? When we talk about— but from our point of view, exit planning starts from day one, because especially certain industries, right?

Right.

So one of the mutual clients that we have is an RTD cocktail company that basically has about a 4-year window, okay, to be able to get in make their money, make their splash, and make a company that's worth a lot of money and get out, right? And so being able to— so again, so that this is why it kind of comes into play in the kind of exit planning discussion, is raising capital in order to be able to raise more capital, right? Can you talk a little bit about what your experience has been in terms of, you know, in terms of investors in general? What, what, what is the thing that you, you know, are there commonalities Obviously, there are different profiles for different investors and stuff, but what are you— what is it, generally speaking, that the investors are kind of like looking for out of, especially out of like startup and kind of young companies?

Sure. The term investor could be broad when looking at regulated investment crowdfunding, and there's an obvious difference from Reg D, 506 accredited investors, uh, and Reg CF, uh, Investors who may be coming in as low as $100 on, on some of these filings. I've seen even lower minimums. So for Reg CF, there are user owners, uh, whether it's B2C, uh, or B2B, uh, but, but just playing off business to consumer for a moment, we'll work with breweries that bring in patrons, uh, to become owners into the business.

Sure.

And it's not, you know, charitable crowdfunding or, you know, anything like that. They're looking to become an owner. I think there's a pride of ownership that comes along with it. They want to bring their friends to the brewery and say, hey, I'm an investor in this. That's not limited to physical locations. You know, let's say it's a product in the ski and snowboard world and you're on the chairlift telling your friend, hey, I'm an owner in this you know, glove company, this board company. There's something that is attached there. And if you really believe in the company, if those prospective investors love talking about the product and, you know, the role it plays in that community, there are accredited investors that participate in these Reg CFs. And in some cases, they're looking at the return and, you know, how this could grow. from a $10, $30 million company to multi-billion dollar company, which we see in the market here today. There are issuers that started in that $20 million range that are now multi-billion dollar valuations on the Regulation A. They started with Reg CF. So talk about an upside.

Right.

And much different than you would see on public markets, as an example. for the most part. But there are then highly active retail investors. I know Reg CF investors that have participated in over 200 deals using Reg CF. Some of them talk about it regularly and point out the deals that are their favorites. Others just see the ads, they see the content, and they're moving forward at minimum levels of about a few thousand dollars per per investment. I've also done extensive data mining. I could tell you that there are a good amount that have been, you know, over 50, over 100 investments. When we're working on our targeting, it's historical equity crowdfunding investors. It's those who have an interest in the industry, maybe geofencing, geo-targeting around it, likely some income net worth targeting higher. The amounts there, the easier it's gonna be for them to move forward. And there's always outliers. Test, optimize, scale.

That's the approach.

Right. Yep. So we need the data to show us what to optimize towards and what to scale. I wanna share one more note about this, and that is some early polls I took of Reg CF investors. They shared with me they wanted the experience of being a shareholder in that organization. They wanted to see that company grow and be along for the ride with them. They wanted to talk about it. And if they're investing in 5, 10 companies at, let's say, an average of $1,000, the average last year in 2024 on Reg CF was $1,500. Let's say it's $1,500 each. They invest in 10 companies, $15K. That may not be the type of returns they could retire off, let's say, but something they could cheer on and be excited for those successes along the way.

Yeah. And to your point, Jason, if they want to be affiliated with them, right, they want to have— they have an affinity to these products, they use them, they want to see them succeed. So in essence, they're joining the company.

Especially if it's something that they're reading about on a daily basis, you know, Business Insider, Forbes, wherever they're going for Some tech entrepreneurial type news, uh, if it's an emerging space and now they have the opportunity to invest in a company, in a team that is doing amazing things there, they're usually pretty interested and a percentage of them will move forward.

It's interesting. Oh yeah, John.

Yeah, I just wanted to— so you emphasized team a couple times, Jason. So do you find— can you speak a little bit about the team in this? Obviously the team is very important because it's not The Joe Show, the Jason Show, the John Show. It's, you know, are investors really concerned and do they really look for a team at the companies in which they invest?

Yes, absolutely. I like to say the most proactive founders have the most successful campaigns here. They are the face on the video in the pitch. They are referenced throughout the offering page, the ongoing content, the advertisements. Similar to what we see with the leading tech companies in the world and being able to, you know, talk about the CEO of Apple, Tesla, you know, ChatGPT, any of the organizations, you're referencing the leader. The same is true for the top Regulation A+ campaigns, which are generally groups that have been very successful for Reg CF and then now moved up to the stages where they could raise up to $75 million. And, you know, you could reference them all by first name.

Yeah.

It's their enthusiasm, it's their energy, it's their excitement, their resilience, their grit that I believe pushes them through the slower periods of the crowdfunds, the stages where growth is, you know, trotting along. And then you'll see, you know, months later, in some cases the next year, massive strides in what they're doing.

Right.

And I think that is a differentiator, by the way, of the groups that don't raise over $100K and the ones that raise over a million, multiple 7 figures, is not just sticking with it, but testing out new things on a daily basis, not giving up. And being able to manage it to a point of effectiveness.

And that's really good. I mean, that's really good advice for founding founders of any business in general, right? I mean, so much of this has to do with your ability to be able to stay with it, right? Because what we've seen so early on, and we've all probably experienced this even personally ourselves, I know I have, is I've had 5 startups, you know what I mean? And the reality is that the reason you've never heard of any of them, Right? But the idea is to be able to weather it, right? To be able to get the right people around you, to your point, the team, to be— that helps move, keep moving the, you know, keeps moving the ball forward, especially when you personally might be in a financial hole just from starting the company, right? And so what we're finding is that there are so many people who have these, so many founders who have these great ideas, who have sustainable, good, viable businesses are in personal debt, right? Because they've stuck their entire everything they've got in credit cards and everything else in here and whatever. And the— and what happens to these people is that no matter how the good idea is, they can't stay at it because I got to go get a job because I got to eat, right?

Yeah.

And I think part of what I— what stands out to me about what you guys do you know, preparing the entity, the organization for exit and working on the business versus just being consumed by what's occurring in the business. Because it is a different conversation if I'm speaking to a founder that not only has very limited capital, but it's their own bank account and every dollar coming out is theirs.

Right.

Or if they have a marketing budget set aside for this exercise, which is largely a marketing play. You're looking to reach investors, you're looking to raise capital online, have to be tapping into digital marketing tactics. And being able to take a step back, see the business where it is at this stage of the capital raise, where it needs to go, what needs to occur in between, can be difficult if there's question marks on how payroll is gonna go through the next week or anything's gonna occur on a financial side. I know plenty of groups that aren't taking checks or salaries or anything like that right now. But I would point out a few things about what needs to occur for a Reg CF campaign.

Yeah.

I mentioned the average investment being $1,500. That's based on about 1,440 Reg CF campaigns in 2024, uh, and $1,500 as a building block. I, I should mention, if you're on a portal, it could be a bit less, maybe closer to $1,000 average investment. If you're self-publishing, maybe it's closer to $3,000 as an average investment. But let's just project conservatively with $1,500. That means for every 1,000 investors you get in, you're raising $1.5 million. Given some groups can't raise more than $1.235 without audited financials, some are only looking to raise a few hundred thousand dollars. Let's say it's a mom-and-pop, but at the same time, using round numbers, 1,000 investors in, you know, the traditional VC community, that sounds crazy. In digital, That's very possible. I mean, there's plenty of brands that do over 1,000 conversions in a day and potentially more, produce more transactional value than that 1.5 million. So it's possible, but you have to look at it as that digital play. How do I get 1,000 people to physically move forward there? Tapping into your first-degree network, encouraging them to share with their network, your second-degree network. Having good content channels, advertising is a very straightforward way to buy traffic and bring them to that offering page, and you could do so with very targeted people. There is outreach. I think outreach gets overemphasized at times because you still need to get that audience to the page and to invest. So if you're getting a meeting set up 2% of the time, even if it's, you know, 5%, 20% of the time. You have to have that meeting happen. You have to get them to the offering page. You have to do the follow-ups. And just for Reg CF, it's, it's again, high volumes of smaller investors. You may have some bigger investors come in, $5,000, $10,000, $25,000, maybe even a few 6-figure investments, but you'll still need a lot of the smaller investments to move the needle.

Sure.

So building an algorithm to, to show this is where I'm getting traffic, here's what percentage of them conservatively are going to convert. here's the average investment, here's what's gonna come out the other side. It's something I don't always see, you know, drawn up for issuers, and they're usually surprised when we break it down and understand how much traffic, and maybe 50,000 visits per 1,000 investors.

Right.

So you really have to figure out, you know, are there financial publishers talking about us? Can we project how much traffic they're driving to the offering page? Are there gonna be advertising? Where? What's gonna happen with those prospects? So, so really setting it all up and, and understanding what those costs may be so you could budget accordingly. If all you're doing is putting up an offering page and thinking, hey, let's see what happens, statistically it's not gonna produce.

Yeah. I mean, that's what we saw with, with another, you know, kind of beverage company that we've been, we had been talking to as well, is that they had, they turned out it was an, it doesn't, wasn't even the topic of conversation until like 3 calls in. Where they're like, oh yeah, we're— we have a crowdfunding campaign. I was like, wait, you're telling me this now? And they had, they had like, like a couple of thousand dollars and had been doing it for like 6 months. I was like, dude, you're not— why aren't you— you should be— every single post that you make should be about this, right? Every single thing that you do and say and advertise right now should be about this, because if you can't do this, then you can't— you're just, you're just dead in the water.

And building on that Jason, what, you know, you mentioned that there's, you know, there's a process for this and you can't just put up a landing page, but what is the most interesting thing you've learned about crowdfunding that either sort of turned your head or is like, wow, I didn't anticipate that being a key thing about crowdfunding and I'm going to incorporate it into our process going forward?

Sure, sure. So, Joe, you're talking about a page that has an empty restaurant sensation around it. The product could look great, the brand, everything about it, but it feels off. No one's there. $2,000 raised, I think you said. And this is common, unfortunately too common if you look at the medians of how much is raised in the space, which around $100K to date. It was even less last year, which means half of the issuers aren't producing those amounts. You know, it's not too different from, let's say, the VC space. You think about how many deals VC responds to that comes across their desk. Looking at stats online, it's a small percentage of deals that get funded, you know, by venture capitalists or, you know, angels even at that. So it's not to say any channel's gonna have a high success rate, but at the same time, You have to be able to position yourself as a company everyone's talking about, that line around the block. And I think that would be the surprise for me, John, is how important that is. I've seen companies that, given their financials, their team, uh, their product, should be the, the most investible. fail. And I've seen groups with questionable models at times max out their rounds. And because of how many people were talking about them, because of the momentum they were showcasing, and the internet works off social proof. So it's not a complete shock, but you think it would be different for an investment, right?

Yeah.

It's gotta, it's gotta, the math has to add up here. The calculations have to do the talking when really, uh, getting featured by the right publishers.

Yep.

You know, having the right investor reviews, having the right, uh, movement where, where every time a prospective investor gets back to your offering page, there are substantially more people who have participated in the deal. The total raise amount is much higher. Can speak louder. It can echo more than just what's listed on the page or in the financials. There's been groups with, uh, I'll call it questionable valuations that have exponentially outperformed some of those with the most excitement around them. So, uh, that's, I think, always a surprise.

Just because that their social proof has been there as the campaign has unfolded, right? And so in other words, I see the, you know, the, the number, the amount of money that this company has raised on the platform, and I can see it growing over time. And I'm one of those investors, I— we kind of talk to people about this all the time, about how people will come in and they will see and they will check and they will wait and they will go away. And we're looking at, you know, right now we're looking at just like any other website traffic and stuff, we're looking at the, you know, at unique visits versus, you know, versus, you know, individual visits and stuff like that, and looking at the um, you know, the, the web traffic going to the offering page, right? And, and trying to, trying to look at trends and stuff and how is this going to go. Um, but a lot of what we see is that people are going to come back 6, 7, 8 times and watch the needle move.

Mm-hmm.

Till they— and then until they're wherever their personal thing is, they're going to say, yep, that's the point at which I jump in. Now it's at $40,000, or now it's at $100,000. Now I'm going in with my $1,000 or whatever because That's— everybody's got their individual requirements, especially at this micro level, right?

It's tough to measure marketing performance around that as well too, because it may seem like it's ineffective at first, but 6, 7, 8 touchpoints later, as you said, I referenced those same numbers, you see a shift in the results and then you're able to optimize towards the segments of who you're targeting that are converting after that sales cycle. Could be a few weeks, could be a few months. And then suddenly you have some analytics that you're able to lean on and scale up those traffic sources and it could produce to a much greater degree.

Right.

Right.

Yeah, absolutely. So, I mean, it really is the idea behind the crowdfunding and what we're just level-setting here is to say that for of all, any kind of investment is going to require a story, okay? And that you've got the financials in line and you've got a story that you're telling that shows movement. It shows positive growth. It shows a place. It shows that you've got a management team, or at least a team in place that know what they're doing. I think, again, a lot of our clients have come to us because they've been smart enough to say, I don't really know exactly what I'm doing, and I would like to have some help in making sure that I don't make giant mistakes. And that's You know, that's obviously a key thing. So getting help. But yeah, I think what one of the biggest things you're pointing out here is the fact that we're going to treat this— you need to look at this situation just like any kind of other, basically, kind of advertising or marketing campaign, right? And you're gonna, you're gonna test and you're gonna optimize, right? And you're gonna do all the things that you adjust it and everything else as you learn and go, just like any other campaign that you'd be doing, right?

It's true.

And then having the money behind that campaign to be able to do that campaign in the first place is a key to success because the reality is the offering page alone is probably not gonna do this, right?

Just as you're speaking, I'm thinking of it too. It's not always the best products that win in any market. It can often be the products that are marketed best. So the same is true here, right? And I think towards, uh, things I buy on Amazon or other places, and yeah, there may be a, a lower price option, but, but this brand I've been seeing everywhere and there's probably something to it. Everyone's buying that one. I'm gonna get that.

Right.

Uh, there's an aspect of that that's occurring where it may not necessarily be the best deal. In many cases it is, but it may not be the best deal as much as the deal that's marketed. to the greatest degree. And then for me, it's, you know, making sure there's enough visits, there's enough people actually getting to the offering page. I mean, I've seen deals that have told me, hey, we're marketing, but it's not working great. We've only raised a little bit. We don't know if we wanna do more marketing when we're first meeting them. And I ask, you know, hey, how much traffic has been to your offering page? And it's under 1,000 people who have been there. And then I find, They actually have a great conversion rate. They just need to find more traffic. They need to get more people there. And what they did was very minimal and didn't really bring people to the deal. So I love that the people you speak with are asking for help.

Yeah.

Sometimes there's this mindset of let's not spend a dollar on advertising. Let's raise our full goal. Let's just do everything internally, where at a minimum, I would encourage everyone to talk to experts, talk to people who work on high volumes of these deals regularly. I say high volumes, not just the top ones, because you get to see different verticals, uh, different times of year, different timelines, different budgets. You get to start to gauge what works, what doesn't work, and whether it's, uh, you know, at the portals You know, definitely speaking to John and Joe, whether it's, you know, DNA, but it doesn't have to be us. Any marketing agency, any consultant, I welcome a warm marketing chat anytime. I know a lot of the other founders in the space do as well too. So I would say, do not be shy.

Set up these calls.

Let them know, I may not be able to work with you. Just wanna introduce myself. I know there's only so many issuers in the space, and maybe there's some tips you could share with me and a relationship we could have ongoing. I don't know too many people who are going to shy away from that.

No, absolutely. I think that's the same approach that we've taken as well. I mean, the reality is, you know, look, we're all kind of in it for the same thing. What we've all seen is that there are, you know, that there are people, A, that need help, right? There would be a lot more successful business transitions and a lot more successful businesses if more people were actually getting this help, right? And, right, and then, and knew about things like crowdfunding and stuff like that. I mean, imagine the success. I just, I know for myself that Look, crowdfunding is maybe, what, a decade old, right? I mean, you know, I think back to some of the businesses that I had and everything else, and not being able to have taken advantage of that stuff was, you know, a huge drawback. I mean, looking back at it, didn't know it at the time, but the idea is that being able to go through this, this is an option at all, right? We always— John and I always talk about with our clients and the whole thing is that what we're trying to do is give people options, because most people don't understand that they have options.

They're not—

there may not always be great options. Like, not, you know, not everybody that comes— we work with a lot of people who are distressed too. And so sometimes the options aren't great. There's— it's all relative, right? But at the end of the day, the fact that this exists at all and that the SEC has made it exist legally and all that stuff shows that there is an appetite for this. You're, you know, the— some of the latest numbers that I've seen in terms of 2024's, you know, results from crowdfunding, the whole thing have been the best ever. You know, there's been— there are more people, more transactions, more companies that are doing this, more investment money in there. I saw, I saw a crazy, you know, billion-dollar number around crowdfunding the other day. I'm not sure if it was accurate or not, but, you know, that might have been all time. But the reality is that, yeah, it's a lot of money out there that is coming in these little microdoses. And the reality is, is that, you know, microdosing is good for everybody.

Yeah.

Yeah, but you must— I mean, you obviously in your business, and we should say too, I mean, obviously Jason's expertise is, uh, he's got a company called DNA, which is actually an advertising, a digital advertising company, but specializes in getting, you know, investors to crowdfunding sites, you know, and in general. But the idea is that, you know, looking at this like it's any kind of other marketing challenge, right? And what I loved about what you said before, Jason, maybe you can talk a little bit more about this, is from a budgeting standpoint, is to— is there are so many people that are going to go into this thinking that all I got to do is get my listing up there and whatever, and all these people are going to come at me. But no, the reality is, is that, you know, on some of these things, we're talking about $50,000 more— $50,000 or more in advertising is what it's going to take potentially to 10x the amount of traffic and money and things like that that you're getting right through in a crowdfunding site.

Yeah, and you could slow down, pause, stop. You're not handcuffed to, uh, let's say a $50,000 spend to play off that scenario, which, which is something I point out. If you're planning on, you know, $50,000, $100,000, maybe spread out over 4 months, maybe spread out over longer, I think that's a good approach. That being said, you could be spending, you know, $100 a day on Meta, on an advertising platform, and be getting, you know, a minimum level sample size, but somewhat of conclusive data over time and be able to optimize and be able to drive people there. You could scale it as it's working. Many issuers perform rolling closes and reinvest portions of that capital. So I don't want the budget to sound like a deterrent, but I do want that ideology out there of you're gonna need some type of marketing resources to produce this. Now, that may be media that you're able to get without putting anything down.

Right.

You know, there are issuers who get featured by financial email newsletters that charge the investors, and those investors are looking for the deal flow. They're acting on it quickly. Given the, those newsletters are picking, you know, 1 out of 100, in some cases 1 out of 1,000 deals to promote. But I've seen groups with little to no marketing budget, you know, hit very large levels. But it's not what happens the majority of the time.

Sure.

You need to figure out how to get the traffic there. And when we're talking about success rates, I should point out, you know, most issuers don't market. They're, they're Putting up that page, like you said, there's a saying in the industry, if you build it, they will come, does not apply to investment crowdfunding.

Right.

Put up a website tomorrow, you're not gonna do $1 million in sales the first month just organically. It's not gonna happen. You know, 1 out of 1 million times maybe, but it's just statistically not going to occur. So you wanna figure out how to get people there, even if it's in a lean way. And then you're ramping up as you're seeing performance. And, you know, 7% of the issuers last year and the year before hit $1 million or more. Again, I'd say over 50% didn't market. So if you are positioning yourself as a, what I call a top 10% campaign, the page shows all different types of social proof. This publisher featured us. We spoke at this conference. Check out this podcast was on last week. You know, maybe this is in the update section of the offering page.

Right.

If it's filled with thought leaders in your industry talking about how great you are, an elite investor, an anchor investor doing the same and why they participated. And then that constant movement, even with minimum level investors, every time a prospect gets there, there's more that has been produced in terms of capital raised. You're gonna be standing out from these other groups.

Yeah.

And I say the top 10% of investors get all of the investments.

And Jason, who is the typical crowdfunding investor? I know it's sort of, it's wide-ranging and it's diverse and it's not the same person or the same type of person in each one, but in general, have you found the theme in who are these people who are doing a lot of this crowdfunding investing?

Yeah. You know, Jon, I'd love to be able to tell you they're 38 years old, male, Los Angeles, and go on the internet at 5:00 PM. But it's across the board.

Right.

And some campaigns that has been the case, usually with an interest of, hey, they follow pages around these type of politics or pages around AI or pages around a specific industry on social media and they're able to target them accordingly. But there isn't one audience that's been a constant. You know, we can target by age, by gender, by geolocation, by mobile device for any ad placement virtually. We could target by what they're searching on social search platforms, what they're searching on social platforms at that, the type of content they're engaging with on social platforms. We could upload email lists. We've done extensive data mining, over a million historical equity crowdfunding investors. We could upload that and run ads specifically to those individuals. And I say advertising because we get a lot of analytics around it.

Sure.

You know, just putting out an article, there are things that you'll be able to see in terms of the traffic. Depending on where you're set up, there'll be more demographic information you're able to bring in. But with advertising, you're producing it and quickly you're able to see, hey, Audience A, audience B, audience C, this one's producing best, and then can filter by those categories I was mentioning. You could actually see that data across.

And that data you're getting in a paid campaign can then translate also to your non-paid tactics, right? And so your social media, the things that you're doing personally into your own network or whatever, or in leveraging other people's, what we call, we're always leveraging everybody else's kind of ecosystem, right? That's one of the things that social media does. But in general, we want to do just about everything in order to kind of amplify the message, right? But to get the learning from a paid campaign that you have total control over, that you can A/B test, that you can do that stuff, and then bring that learning back to your non-paid stuff and say, now we're just going to talk about it this way. Also, the nature of that stuff and the way that you bring up a great point, because I think that people understand that these campaigns can last 3, 6 months, right?

Longer at times.

Maybe more. So the question is, there's a change that is occurring, right, by nature as you're in the middle of this campaign. And so being able to react to the new information, to update the, you know, the crowdfunding community on what's happening now since the launch, right, being able to adjust messaging and stuff like that, all can happen in this digital way, right? Because of the nature of digital and stuff that can't happen when your pitch deck in the room with the 4 investors is the pitch deck. And I mean, and that's it. It's that presentation. You don't get, you know, maybe you get some learning that you use for the next presentation, whatever, but the reality is you're not gonna get a second chance with those people, whereas online, potentially, as we mentioned before, people might be coming back 5 or 6 times, 7 times. To see what's going on, right?

That's absolutely true. The advertising retargeting, if they're following your content feeds, if they're seeing things that are exciting, if you have, I dare I say influencers, but, you know, social proof from industry experts. We've had clients from mid-campaign, the investors from Shark Tank participate in their deal individually, and then they're featured in the ads. or a big publisher talks about them, or, you know, some type of celebrity. It could be a volume of nano or micro influencers, those with under 10,000 or under 100,000 followers talking about it. And if you see, you know, there's that saying, the more times we hear the same information from the more sources, the more we believe it.

Yeah.

So if every time I see a retargeting ad, it's someone else saying, you know, hey, I just invested in this company and this is why, and you should take a look, they're doing great things. It starts becoming more and more trustworthy. So that may not happen with an offline pitch. I actually knew an investor here at an accelerator in Los Angeles. He told me about a different investor in LA, so it's a secondhand story, but a major investor in LA said he wouldn't invest in a deal until he had been recommended from 3 different people outside of the company.

Interesting.

Okay. It is interesting, right? And, and it speaks to something of, hey, if that buzz isn't there, if that validation isn't there, am I just getting sold? What's happening in this pitch meeting?

Right.

So it could occur after even an investor disappears. There's always those talks as well of, uh, you know, a celebrity-type investor gets involved in a startup and outside of equity crowdfunding, and the next day, you know, 40 other investors move forward and And people that had been pitched, you know, months, even years prior move forward now.

Wait, that guy invested?

Yeah, they're like, oh, now I can invest. I've been— my thought initially has been validated by this person.

Yeah.

Exactly. Yeah.

Amazing. Do you find it industry-wise that there is, you know, obviously the tech sector is always gonna be, you know, hot, you know, from an investment standpoint anyway. And so obviously we see on crowdfunding that's not much different. But are there industries that do well or verticals that do better than others in the crowdfunding scenario?

It's the full spectrum of different industries. KingsCrowd.com, I do a lot of research on there. And on the advanced search, you could search by vertical. Some of them are a bit broad and you have to dig in there. for some time, but you could see everything from health tech and med tech, which years back was looked at as a slower industry for equity crowdfunding. A lot of AI companies, a lot in real estate. There are success stories in the industry, and once those come out, there tend to be far more founders, CEOs that look to enter the space and utilize the same tools. So our first Regulation A+ campaign, Rayton Solar, they're now Rayton and incorporate a variety of different energy products. After that win, and they had Bill Nye the Science Guy in their pitch video and in their advertising placements, we were getting inquiries from solar companies right and left. And some of them did well, others marginal. So I say this because it's not to think that because this one issuer in this one industry did well, every group will.

Right.

We work with a company, Boxabl. They're one of the top issuers to date. They have foldable tiny homes, and we've spoken to, you know, a dozen groups like them that have already attempted this. And said, hey, we're looking for a new marketing partner, but haven't seen anywhere near the type of results, the type of success. And going back to the founders, it's Paulo, it's Galeano, they're the ones driving the ship and they have their internal marketing resources. They work with different groups. They bring different people in for different aspects of it. But you could name them. You could go meet with them in person at their factories in Las Vegas.

Right.

Do a full tour and everything about the product, everything about the social proof that we've discussed. Elon Musk says he lived in one for a year. They have a variety of celebrities that talk about how great the product is. It all follows that same formula.

Right.

And again, I could go Reg A, Regulation A+ tour, you know, one by one that's had the most monumental campaigns and Say the same thing about the founder, who's featured them, who else has talked about them. Uh, it's, uh, it's, um, true.

The, the, again, the— you're not gonna— the reason probably that you're not seeing that these industries or whatever is because, again, it comes down as a company-specific thing, right? It's about who are the founders. It's the whys. It's why, you know, what we always say is it's why, uh, you know, it's, um, sorry, why this, why this company Right? Why this— these people who are doing this, and why now?

Yes.

Right? So those 3 whys have to be answered in this crowdfunding campaign clearly and out there. But then you're like you mentioned before, it's like we got to get all these things in line, right? You need the story to be good, you want the numbers to be good, you want the trajectory to be right, you want the founder stories and where they came from to be interesting and engaging and identifiable and all that stuff. You want You want them to feel, you know, it needs to be right for the market.

Yes.

So when we look at a booze company, right, their whole thing is completely different, right? Like, we're almost like afraid to show it to other clients because it's so radically different from what they would— that other client would do— that it's almost off-putting. Like, they're like, well, that's not for us. Because no, no, it's okay. This is just their brand. Your brand is different, and your brand will come through in the way in which it's right for you in your campaign. But understand that the thing that they are doing the correct way is that they are expressing their brand, they are showing their ownership, they are showing their wins and successes, they are showing why they are fit, capable people to lead this thing, and they've got the right team members and brought in help to do the right things, and that they've got a good trajectory, and the social proof is there and all that stuff. And that's what wins. Right?

Absolutely. And that's what separates one brand from the other in the same industry and why it's hard to say, hey, automated retail, just launch a campaign, you're gonna raise capital versus, hey, it could be, you know, a brick and mortar mom and pop with one location. But if they have a strong enough following and there's enough people getting involved there, and then they have some higher profile clients or some publishers talking about them, that they may be able to close out the round much quicker than even a group that's more notable in their space or in the tech sector with amazing—

The next AI company thing, right, is gonna get a lot of attention. But the reality is that, you know, for everybody else, it's like, no, you just have to actually be a good company.

Yep.

Right? I mean, at the end of the day, this is what we keep telling all of our clients is like, no, it's not— you're not putting the wool over anybody's eyes. Like, this is not a situation in which gonna put one, you know, well, I'll get the thing and get out with my, you know, you know, and, and have, uh, you know, a bunch of people give me money and whatever, and I'm not gonna, you know— no, this is like, you have to actually— your product actually has to be good. It has to be something that people want. In fact, you are going to your own actual target market first to get them to be, be the ones who supply you with the capital.

Yes.

What makes crowdfunding so amazing is because you are— if you think about it, When you're advertising this, whether you're spending $50,000 a month or $10,000 a month or $2,000 a month on advertising, you are just advertising to mostly to your market. Yes, and the market wants to be— wants you to exist.

Yeah, and it's one of those things I would imagine that these crowdfunding campaigns help sort of— can help companies define themselves, right? When they're forced to put a story down And, you know, work with you on marketing campaigns, it helps sort of, I would imagine it helps, I don't know what the word is, but sort of ingratiate that theme and those themes into the company and into the, frankly, DNA, pun intended, into their company, right? So that it really becomes, they're creating this story for the company, but then it sort of, it comes back into the company. That makes sense.

Absolutely. Beyond the capital, There is marketing value that is produced from these capital raises. And that's not just my perspective. That's what founders, that's what clients tell me directly. You mentioned $50,000 in advertising. That could be 2 million, could be 5 million people who see those advertisements. And if you get 1,000 investments off of that, that's great. You may be seeing a 10, 20x return, maybe higher on capital with a good—

Yeah.

Return on advertising spend, return on marketing spend with the capital coming in. That, that could be a great cost of capital for you, especially with the valuation that you're setting and you're filing.

Yeah.

But think about all those people that have now seen you. And if you continue running these campaigns, the top issuers tend to refile and they're 3, 4, 5, 6 campaigns deep at this point. So if you're doing that for years, this becomes a great marketing tool. You know, seeding relationships with press, with strategic partnerships, being able to use that as part of your valuation in future rounds as well too, or just strategic partnership conversations. And then the growth that occurs with the revenue or the new users from there as part of your company growth in the next filing.

Yep.

So absolutely, I look at this as a marketing play and we've built funnels where audiences come into the investor page. They buy shares. They're then promoted the product or provided company updates. Let's say it's on the B2B side and they're taking action. They're sharing those company updates. They're purchasing the product that they're then getting their friends to purchase the product. They're purchasing the product for their friends for the holidays or their birthdays or whatever it may be because, hey, it's their company. So there are also marketing funnels where they come in as customers, as clients, and then, you know, pointed to the investment campaign. So, It is absolutely part of the marketing stack, and there is a lot more impact beyond just the capital that comes in.

That's an excellent point. I mean, I think, again, whenever we're up against budget stuff, especially early on in companies where the money is so tight, and being able to say, look, you're gonna get kind of double the bang for your buck with this, right? As you go in and you make a play in this stuff and spend some money advertising this fundraise, You are also advertising your brand. And that's the, you know, it's kind of doing, you're getting kind of double duty out of that stuff, at least for a period of time, which I think is, you know, really important and a very efficient thing to do, right, for a startup.

And Jason, I'm sorry, go ahead. You're gonna answer.

No, just a brief add to that, Joe. Absolutely. You know, a startup coming to us saying, hey, we have a $50,000 advertising budget, you know, monthly is less common than a group saying, hey, We're raising capital, it's working. If you could get us, you know, 5, 10, 20x returns, let's start at 50x, excuse me, $50K, and then move it up. 'Cause again, they're getting that return and then they're getting the marketing impressions, traffic, audience growth as part of it. Right, right.

Is there anything, Jason, that we haven't talked about so far about crowdfunding that you'd wanna sort of impart to the people who are here to learn about raising money via crowdfunding or just raising money in general from the vehicles that you've I think it can never be said enough that this is a lot of work, and the majority of campaigns don't hit their goals.

There are inherent risks with capital raising. Same is true with marketing campaigns. You know, Facebook, Google, they don't guarantee results. Uh, if they could, they would and charge a premium on it.

Okay.

So you combine those things And there, there is risk involved. But if you use the tools correctly, they, they, they can work for you. It's a matter of managing them to a point of results, effectiveness.

Execution.

100% execution. So we've seen groups with little to no performance 3 weeks in, even 6 weeks in, that were surpassing all of the performance benchmark goals. you know, 10, 12, uh, you know, by week 10, week 12. Uh, we've had groups that it took 4 months for them to hit $1 million, but then only 2 months after that to hit the second million and even had the founder looking to stop at that point saying, you know, it's just not moving the way it should. We really need more.

Right.

Then only 1 month. Uh, so we're talking about month 7, uh, to hit the third million. And then in the final 3 weeks, another $1.5 million. So $4.5 million. They capped out there. They increased from $3.7 to $4.2. The board wouldn't authorize more than $4.5. They had a waiting list afterwards. But if they had stopped month 2, month 3, and said, hey, we need, you know, $3.7 million, we're a few hundred thousand, this isn't going to happen. I understand the logistics here. You know, it's not going to happen. They would have missed out on all of that.

Sure.

Right.

If we as marketers would've said during month, month 6 there, you know, kind of stalled around $1.8 million. Yeah, you don't want to continue spending, you want to stop, let's just wrap it up for you. We'd be doing a disservice as marketers and say like, hey, retargeting pool you're building, the conversion rate you're getting before, we're just waiting for enough touchpoints from this next audience. That this, this will improve. And even if we just move to closing, you're gonna see a lot more investments come through.

But that's real.

But Jason, you, you, but, but I mean, in, in that scenario, you knew that, right? And so the, I, the, when you saw that slowdown and the whole thing, you were like, don't, don't worry. Like, it's gonna be okay. Or were you like, there's a possibility that, I mean, how do you make a decision like that? You, you know, given that you had to make a decision, you had to be agree, your team had to agree on it. You had to, the, the client obviously had to be like, and they were already feeling like maybe this is stalling out. Like, how do you overcome a decision like that to get an outcome the way you did?

We don't want to say it as confident as don't worry. There are many things that could occur that can affect performance, including current events. I mean, we saw slowdowns, uh, February 2022, the whole industry slowed down. Uh, war was starting. There's been other things that happened, uh, last year, uh, 2024. Around the economy and, you know, election year and things like that. So one thing could happen in the news and that could prevent investments for that day, longer. But as marketers, we're looking at this data and have to encourage you to continue for these reasons. We have the luxury of pointing at many campaigns and what they've done before. I'm just giving one example. I have You know, hundreds. And what we found is groups that stick around will see stronger numbers here, and you are getting return. It's not as strong of a return as before, but we believe it'll pick up, and here's why. And, you know, it's tough because if they're speaking with me, they may think it's a business trying to get more business from them.

Right.

Just continue working with us for a few months. But I have to tell them, you know, this is business as side, as a marketer, whether you're doing it internally or with us, I would not stop. You are in the top percentiles of all Wrigley CF campaigns to date. You are seeing a return. It will improve statistically during the closing, and because of some recent actions we've made, I think it's going to spike in the next 2 weeks here. Why don't we give it a couple more weeks, look at the analytics together each week, and make those data-driven decisions together? And it worked. And I wouldn't have stated it as strongly if it wasn't producing. I will tell you, the stats aren't great when groups stop advertising. It's, you know, old adage and goes back, you know, decades and everything. But by making those recommendations and for groups that have the ability to move forward, it can make a huge difference. I say the same thing to a group that has, you know, no performance and they're 3 weeks in, by the end of month 2, They're starting to get good return on ad spend, and by month 3, they're getting a great return on ad spend. And then they have those tools. Once you crack the code, you can continue using it to ramp up your current round and your next round, the one after. We speak with groups, we work with groups in real estate that have aggressive goals for how many investors they want to have in 2035, in later years at that. I've seen some long-term strategies.

Yeah.

And what that means, because more and more of these conversations are going to go online. I mean, we live, we spend more time on these digital devices. We'll probably be integrated with the devices at some point so that the quicker you master it, the faster you build your own digital audience that you're able to tap into and close out your next round quicker. When you're able to say these audiences with this type of creative down this type of funnel produces around this level, that, that, that's a very valuable tool.

Huge tool. Huge tool. I've got 2 questions. One is about— I want to talk about incentives for a second. Okay, so in addition to, you know, in addition to obviously the offering itself and the advertising and stuff like that, obviously there's a financial incentive. And when we talk about— we haven't talked about a SAFE yet. We probably should actually bring that up in the context of this conversation, just to say, you know, when you are filing this, you know, CF Reg that Jason's been talking about, which is basically a form that is a filing with the SEC that says, I am doing a crowdfunding campaign, this is what I— this is my business, this is the— obviously all the important information including the financials, the financials have been certified by a third party, blah blah blah, this is all real. And they say, great, thank you much for filing this, and now it's a real campaign that anybody can invest in legally, right? Um, the question becomes about extra incentive outside of the fact that now understanding that a $100 investment, right, is not going to give me voting interest in any company, right? But it's obviously— we talked earlier about the bragging rights, the ability to say, I, I'm an owner of this thing, and, you know, and maybe I can have a little bit more access to somebody or whatever, or I can show my girlfriend the factory or whatever the cool thing is. Um, on top of that, we've learned that extra incentives for to increase, to help increase the amount given often help as well. Can you talk a little bit about that, that work and what you've seen work there?

You know, on the marketing side, we're promoting what the issuers put together. We've worked with groups that, uh, have share prices that are, are very believable, some that are questionable. I, I, I've been surprised in the results with both. We've worked with groups that have debt deals. And you know have operated on safes. It's usually a conversation that occurs before we're involved, but what I would encourage is some competitor audits. We have a strategy program; it's called the Eight Point Plan. The second piece is a competitor marketing audit, and you want to find other groups that have structured in a similar way and how they've been able to market. On the marketing side, we can really highlight this in the messaging and talk about, you know, on debt deals payouts, on SAFEs, the perks and what, why this should be attractive. We gotta control the narrative so we can do so in short-form advertisements and content pieces. We can, you know, bold, we can create the visual hierarchy so the eyes go directly there, even on a glance test on the offering page. And want to be able to explain in a way that the audience can not only understand and perceive the value, but they can actually share it with their friends, their family. As I mentioned earlier, even just to justify why they invested, but hopefully to market to them.

Yeah.

So if they're on the golf course with their brother and a couple buddies and they're talking about what this company is doing and they're like, It's a safe. Here's how it's going to work out over time. It's a great deal. You should take a look at it. That's not going to occur unless they understand it inside and out. If it feels like it goes over their head, it's gone. So it's a matter of breaking it down in as few words as possible. So, you know, what could be said in a sentence versus a paragraph, what could be said in a few words versus a sentence, given the medium, given the format that it's being published on, should be explored.

Right, right, right.

Yeah.

What about, uh, so the last thing I wanna talk about is quick. It was, where is the, what is the role of AI right now in all of this? And where do you, where is it now? Where do you see it heading? Are you guys utilizing it? What is the, what do you think is the, cuz we've, we've been having a lot of these conversations internally and especially around ExitEngine and stuff like that. But what is the, where, where do you see it right now and what's your, what's your thoughts?

Well, first of all, the word, the term AI is misused in many cases. Automated technology isn't necessarily artificial intelligence. You know, if I turn on the light in the room here, it's not a, you know, AI candle or, you know, there's so many things that they're like, hey, this is an AI server. Like, it's a very—

Right.

I'm pressing for water here. Um, I've, my first introduction to AI was actually through advertising. Programmatic machine learning advertising marketplace where publishers, media buyers, publishers, advertisers are able to trade advertising inventory and in milliseconds. And there was AI that we would use to optimize off millions of lines of data in a millisecond and determine where we're placing ads. It was beyond human capabilities and has been integrated into many major ad tools here today. I could tell you about 40, 50 lines of targeting filters. Just, you know, I named a few earlier, just, you know, like the back of my hand. And to look at millions, again, beyond what I could get a human to do in our offices.

Sure.

That's what I look for when evaluating AI tools. Can this be done better than what a human on my team or anywhere else can do? Uh, if the answer is no, I don't like using it. Um, that's not a popular opinion, by the way, but, uh, there's these sayings of, I want AI to clean my house and do my laundry so I can work on creative projects. We, we, we work on creative projects. I don't wanna just automate those. The messaging, the visuals, if we could do a better job with our talented team who's worked on hundreds of deals, many of them have been with us for years and they're, they're really not brought to accounts till they have that type of experience with us. So there are things we use AI for to improve our work, polish our work. Uh, the thing I would warn about AI, uh, which has been said many times before, is it's It's about the prompts, the data you're putting in. It's different terminology for different platforms and the acceptance. So if you take someone who's not versed in, let's say, the tennis industry, and it's a tennis product that's raising capital, maybe it's a software, you know, something tech, something cool, but around tennis, and you have them use, let's say, ChatGPT. To create content. They may say, oh, look how fast it created content, my whole content calendar, everything we need.

This looks good. This sounds good.

Let's get it out. Meanwhile, they may be using words that tennis players do not.

Yeah.

They may be, you know, phrasing it in ways that are clearly wrong and they're not able to pinpoint. I see messages that are wrong all the time from AI. They may not be capturing the brand voice. And there's a saying for design, if people only notice bad design, you don't notice good design. It just blends into wherever you are for the most part. But if it's bad, it stands out.

Yeah.

I can identify quite often like, hey, this is built by AI, that's built by AI, whether it's visuals, there tends to be a specific glare to it, whether it's messaging and it just sounds off. And this doesn't sound like the brand. This doesn't sound like the person who emailed me. They used AI. lie on this. I don't want our clients to feel that. I don't want prospective investors to feel that. So, uh, what I was getting at there is it's all a matter of who's behind the wheel, right?

Sure.

If you have, uh, you know, a leading advertising copy expert putting in information and getting it back and twisting it, and, oh, this is going to be a better hook, this is going to create a better emotional response, the call to action stronger here, you're going to get a better result. So It's not as simple as use these AI tools, you're gonna be good. That being said, AI can save a lot of time. It can allow you to do things that would be outside of budget in terms of video production and in terms of, you know, creating variants that are personalized for many different audiences at once.

Yep.

There are great things that can be done with it, but you just wanna be careful. It's not, a stamp of approval because it was created with AI. I see all types of low quality come out with it as well. But there are ways to use it to save a lot of time. You just wanna make sure the quality is coming out at the same end because similar to what you said with the pitch meetings and hey, you got one shot. If you're reaching people with flawed creative and digital mediums, you could lose them very fast.

Right, right, right. That was excellent. Jason, this has been really, really, really informative. Thank you so much, man. Like I said, it's the kind of thing that I think our audience will really dig. It's, uh, you know, uh, we've been talking with Jason Fishman, who is the CEO of an agency called DNA. DNA actually specializes in, uh, in helping people advertise their crowdfunding campaigns and be able to bring investors to the table. Um, Jason, thank you so much for taking the time out today, man. It's been really, really great, really fun talking with you, and I really appreciate it, man.

My pleasure. Thank you guys, really enjoyed the chat. I hope everyone got something out of it who's tuned in, and, uh, always feel free to reach out.

I love talking about, uh, Jason, where can our, where can our audience find you if they want to, want to actually reach out to you?

LinkedIn's very easy. Jason Fishman DNA, you know, you'll find me. You can go to our site, digitalnicheagency.com, and check out my podcast, Test, Optimize, Scale. Not just more hours of me speaking, but a lot of other industry thought leaders and tips and examples from the people who are seeing the most success.

Well, we are, we are Jason Fishman fans, and we are, uh, we are fans, and we are fans of everything that you guys have going on. And it's, uh, we're, we're excited to be, you know, in your orbit anyway as well. So thanks again for coming on the show. Really, really appreciate it, man. And we will, uh, we look forward to seeing you soon.

Likewise. It was a blast. Thanks again.

Thanks, man. Appreciate it.