Craig Cecilio - Founder & CEO of DiversyFund

Welcome to the Tacos and Tech Podcast where we discover cutting edge technology and the builders making it happen. I'm your host, Neal Bloom, San Diego's tech ambassador, and together we're going to uncover what technology San Diegans are creating with our own blend of local lifestyle. This podcast episode is proudly brought to you by our friends at Cox Business, a broadband and cloud services provider to the modern tech company. As a longtime supporter of San Diego Startup Week and the San Diego startup community, Cox also puts on top Tech awards. Get started. And most recently, quick pitch with San Diego Venture Group and techcoast Angels. Thanks again to our friends at Cox Business for their support of the community. All right, welcome back to the Tacos and Tech Podcast. I am here with Craig cecilio, founder and CEO of DiversiFun. Thanks for being here.

Yeah, thanks for having me.

Give us a quick synopsis. What is Diverse Fund?

Basically, it's real simple. Diverse Fund is a fintech platform created to build wealth for everybody. So regardless of your net worth, regardless of your socioeconomic background, we're introducing alternative investments to everyone in America. Awesome.

Well, really excited to dig into that piece, but let's go way further back, maybe even as far back as Ellis Island.

Nah.

Where did you grow up originally?

Grew up in Fairfield, Connecticut.

Okay. And did you come from a family in technology or what was kind of.

The background family's businesses that they're in the background of? My parents, mother was a schoolteacher, father just worked for some people, so I would say they were pretty much middle class family, kind of suburban middle class family.

Okay.

Average, nothing special.

Got it. And how'd you end up on the west Coast? What brought you to San Diego?

I always had an itch to get to the west coast and when I was applying to colleges, I got. My parents allowed me to get as far as Colorado, but I knew as soon as I could make the decision in my own head, I was going all the way west. I really wanted California. My eyes were on California, but I thought that was a great experience for myself because I was able to kind of really kind of get into a little bit the outdoors a little bit more there. I really kind of got into the environment out there. I started being an environmental law major my first year at school. That was really interesting. Understand the indigenous species of Boulder. Colorado was not that interesting. So I think after the my first couple classes, I kind of knew. I like fighting for a cause, but not necessarily I like the biology part of the interesting.

What did you switch to?

Well, at that point I switched to the law side. Lasted about a year and then I switched it to kinesiology and general studies.

Oh, really? Cool. So did you work in that field right out of college?

Yeah. I was fortunate enough to work with the strength and conditioning coach and the athletic trainer. And it was great because they didn't see eye to eye, which I like because it was two different philosophies. And in that time period, we had a top five football program at the school. So our facilities were just top notch facilities. I was offered to go to the NBA program, the master's program there, to become a student trainer with the team and to sit on the sidelines as a student trainer. You run out on the field when you're on national television. But I kind of really had that dream to move to California, and I respectfully declined. And I said, hey, I want to move to California to become an entrepreneur. It was in my blood. I knew at an early age that's what I wanted to do. But I did have a great experience.

Yeah, that's cool. So tell them about the entrepreneurial blood piece. Like what Were you surrounded by other entrepreneurs growing up?

I'll have to trace that back from my bloodline. I would say my mother's father, my mother's grandfather, actually, they were in Florence, Italy. And what he did was he was an entrepreneur. He tried to open up a vineyard in France. And hence my mother's name is Lorraine. And he was in Lorraine, France. Didn't work out quite well. So he moved from France to South Africa. And at that time period, he might have heard of King Solomon. So he actually worked in the diamond mines. And he wasn't that greedy. He made enough money and he took his money and he went across to New York and settled in Connecticut and bought a bunch of land. And the great depression happened. My great grandparents, they were landowners and they took in a lot of people at that time and did odd jobs. Survived the great Depression. So you could say that generation kind of was the blood of the entrepreneurship.

Got it. Okay, that's really cool. So you land in San Diego first. Coming west or where did you end? Okay, and what's your first entrepreneurial venture?

Well, the first decision was to make with us moving out with someone from Boulder and we're arguing, should I live in Mission beach or should I live in La Jolla? Oh, tough question. So he won. He was little than me. He had a little bit of a spe over me. And so I was like, okay. So that was the first thing. That was the first major decision right There, which I kind of didn't make, I kind of went along with. But that exposed me to a lot of people who had a lot of wealth, create a lot of businesses, and luckily within my first couple years there was just doing odd jobs. I met someone who was into syndication. He was a solvency attorney at the time, and he knew of people who were syndicating. He was an attorney for someone who syndicated real estate deals. And this person was considered like the godfather of the town of everyone conducting real estate syndication in San Diego. So I got exposed to that at an early age. How to raise capital, how to lend capital out, how to raise capital for your own projects, your own development deals. So I kind of walked into that. But my first couple years out here of building relationships and being at the right place kind of gave me that opportunity.

Got it. Okay. What time frame was that?

97. I moved out here, built a relationship probably in 98.

Okay, so what was the real estate environment like in the late 90s here?

That was a lot different.

Really.

It was. It was really. I felt at that point in time that I felt privileged that they were teaching me stuff. And I was kind of. And I read books about this. You always read books about this, about people saying, hey, I'd work for free. But I basically told them, it's like, you don't have to pay me. I just want to learn. And I just was a sponge. Anything I could learn from people, every odd job that I had in real estate in the beginning was always meeting the most successful person where I was at and asking them and taking them to lunch and studying from them. And then you know how that works. And I meet this person, study from him. So I really had that openness that people are just kind of giving me that information in a time period which was kind of pretty much pre Internet, where it is information is always king at the end of the day. So I was just kind of a sponge as much on as I can and slowly and beholden. I think in like the early 2000s, it was just. That was pre. Pre recession. It was just. It was a fun time period, let's just say that.

Yeah, so were you. So you got into real estate investment on your own?

Eventually, yeah. Yeah, eventually. 2003 opened up my. My first company, real estate investment firm. At that point in time, I was able to aggregate a bunch of investors and syndicated a bunch of deals. That market was a little bit different. You, no matter what you had, was you were making money. So a lot of stuff I was taught in the late 90s, a lot of the underwriting, how to structure stuff really didn't come into play. Really, when I opened my doors, it was basically more just kind of really networking and trying to get as many deals as possible because everything penciled out, and everyone who lived in that time period understands that everyone made money no matter what they touch. But I always felt back in my mind all the stuff I learned, I'm not applying today. All the underwriting skills, all the way you're supposed to kind of do things, weren't really, you know, it's 100%. 100% of the people were doing it properly. And so you kind of saw that kind of riding a wall, I think. In 2005, I had a meeting with the Godfather person, and he said that, I think this is not going to last. And that was November 2005. That was a time period I was having lunch with him, talking about building a fund, and I'm based on. About leaving that. I said, hey, you know what? It's not a good time to start a fund. I'm going to wait and see what happens. And then, you know, I held off of open up a fund to a lot later on.

Yeah, pretty smart.

Smart. Maybe. I don't know. You stuck fearing me a little bit.

Yeah, got it.

So then.

So what was the recession like for you? I mean, what were you doing then?

It was different. I found a way to kind of just kind of get by. It was kind of an accordion effect. It's like you had a company, 20 employees, shrink it down to two or three employees, keep it simple, keep the overhead low. There's still a couple deals really hard to do. But I did have an extensive network, so I was able to survive. I was too small to fail. I didn't have a lot of assets and have a fund, so nothing really, kind of really failed. And no one really lost money that I worked with. And then I always kind of believe things are cyclic. And so I had a former employee come back to me because I always try to keep those relationships alive. And mentioned the idea is, Craig, we could buy real estate real, real cheap. And I was like, okay, I'm open. And we started talking, and I started listening and looking at the numbers. I'm like, this is insane. And so since I didn't lose a lot of people money, when I approached people, it was. I was. So they would listen to me. And a couple of them jumped on board some of my investors and started building wealth right there.

Got it. Okay, so is that still a company that you've built today or take us through it.

I dissolved that company to focus full time on diversity funds, and it was a couple years to do it, so pretty much ended in 2015 and formed diversity fund with Allen Lewis in August 2016. And I always say, really, we took our first online dollars in late November 2016, but it was really not until November of 18, which is real recent, that we're really kind of practicing our vision.

Okay.

And that was due to the fact that we had to apply to the SEC to get qualified. This keyword here. He has to use the word qualified, not approved. We're qualified with the SEC to offer this investment to anyone, regardless of your socioeconomic background. It just has to be 10% of your net worth. So before, these investments were just for the wealthy, for hedge funds, for institutional investors, family offices. So that was always the vision to do that. And that already ties back to the late 90s when I was taught the business. And a lot of people in the area, I was. You can make your own conclusions of who those people were and what they looked like there. It was really a boys club of that. And so I was always, always questioning that and always, like, my ethics and the way I was raised, I was like, well, why can't other people doing it? My parents never had that opportunity growing up, and so I was. It was kind of a natural progression for me. And then I was always kind of like, in the forefront, like at a Palm Pilot back in the day. Yeah, I was always, like, doing emails, email marketing, all that stuff along. As soon as technology improved, I was applying it. I had websites in 2003. So it's kind of a natural evolution for me. It was not something that was really, oh, my God, this is brand new. But it was kind of more of an extension of what already started.

Got it. Okay. So that's kind of the genesis of the creation of it. When did you say, we're taking the leap? We're all in. Like, what made you do that?

Finally, I heard about this. I think in 14, I started reading about it and getting involved with that, about the whole jobs act and what it can be. And really kind of wrapping your arms around it was. Was difficult because it's not that simple. So they. They released a law in 12, but it really doesn't go into effect two years later. And the biggest one was one of the first ones was in 13, I think it was September, which says you could solicit investors online directly for the first time, but they have to be accredited and you have to verify them. Well, I'm like, what's really different? Because people are doing this anyway, but they're just have a workaround. So it was a big deal, but not that big of a deal. But really it's a big deal because your advertisements could say that stuff and people can invest right away legally. But it was really not until 15, it was May of 15 that reg A plus went into effect. And that was for the non accredited investors. You're going, okay, this is great. But then there's this whole process with the SEC and you have this law that not one person has got qualify for the SEC just now it's enacted. So now you have to do what? Okay, what am I going to do with this? And then first thing you do is you're not going to submit the paperwork or draw that up support on page documents. You need to hire an attorney. Well, no attorneys have successfully done this, so who am I copying to do it? So a couple firms did it and kind of watched that happen and really took a year, a year and a half till a couple of them started popping up. And what you had is some firms were using that to raise capital. So I was like, okay, if I use this to raise capital, it's gonna cost me 4 to 500,000 legal fees to raise 2 million bucks. 5 million bucks. That doesn't really kind of make sense. And then so how do I apply this? And so that took a little bit of working out. And we said, hey, let's create a fund where we can invest money for the non accredited investors. And we put that together and what type would that be? And we started kind of having discussions on what that would be and we put that into work. And at the same time simultaneously we had to build our brand up so that that costs you money. So it's almost like two barriers. Entry one, they have these pre existing laws that have a barrier to get involved. And then if you want to do something without law, you already have to have the money because it takes a couple million bucks to build a company, build a staff, build a brand, build a platform. So it's not just a barrier to the people, it's the barrier to the people who want to create that type of platform. And then if you have the money already, why would you want to start from scratch and do something like that, right? Sometimes I ask myself that why did we do it? But we did it and here we are today. So that whole thing is like, okay, it's almost like there's like they Pass stuff is it. They pass it for political reasons. Which part of the Jobs act is from Dodd Frank. So it was for political reasons.

Yeah.

But you know, then why does it get kind of stuck?

Yeah. But it also was theoretically trying to get people out of pulling them up out of the recession, I imagine too. Right.

Yeah.

Giving more people access.

Yes.

And which is pretty cool that you guys are doing that here in San Diego. Tell us about the. I mean, you don't really necessarily have a technical background. What was that like, bringing that into this realm?

Yeah. Was really for me. I always seen technology and try to apply it to different businesses along the way. So it's not technically I didn't have the specific skill set, just a general awareness of how to apply technology to business. And I think my strength came from creating businesses and. And hiring the experts to do it. So yeah, those pains. I've gone through those pains and it could relate it to a lot of different things is growing up business, business pains and hiring different people and learning that tech world and how that works. And it's like anything else. Maybe it took us a little longer on the tech side, but the other sides of the business parts we are experts in. So maybe part of it we weren't experts in it, but everything else is. And that's kind of our weakness. But now that weakness is actually becoming a strength. We built out a pretty solid tech team. We're pretty happy with them as we speak. Right now we're launching a new version of our platform which we're pretty excited about. That is going to look pretty fantastic. But you got to look at where you are at any point in time, your strengths and weaknesses. And so your strengths get. You always want to focus on your strengths because sometimes your weaknesses catch up to you. And what can you do to mitigate those weaknesses as well? So how do you manage that with anything else? Is now my responsibility solely as the CEO of the company is to put the experts in all those positions.

Totally do your invest. I mean imagine most of your investors knew you from the real estate side.

Yeah.

And now are saying, oh, and you're adding technology too. As long as you have the expert team around you, then you know, now you've got like double the firepower of what kind of people you can go investors to back this too. Right. Which is pretty cool.

Yeah.

Yeah. So tell us about the. The platform itself. I mean how it sounds like it's pretty recently qualified. So what's the. How are people using it or are they yet.

Yeah. So it's it's open to anyone in the US all 50 states. It's a pretty simple process. Everything's done online. We have a very low minimum of $2,500 right now on that site. It's really designed for people to really diversify their portfolio. Diversity fund diversified there was thought in the name because of that reason and to start building wealth for themselves, learning how to save money. So if you have X amount in your savings account, can I stick this into an account that's going to gain us more wealth and build us more money over time? And at the end of the day, it's. Why do we really want to build wealth? Well, what we all have in common is kind of that I call it like the American dream. Going up the wealth ladder. One is I want to have that opportunity. And I think that's what we in today's political atmosphere is like. Let's not forget is that's what we love about this country is because we have the opportunity to go up the wealth ladder. So we have an instrument just for that today. And so by going up the wealth ladder, we want to do that because we want to increase the quality of our life.

Yep. That's awesome. So it's live and people are investing all over.

We've had people as low as 2,500 and as high as a million dollars come through without talking to someone all over.

That's awesome.

Yeah.

And it's all real estate investments.

Yeah. Today our product is a reit, so it's a real estate investment trust. So we took an asset that we knew well that we thought based on the investment type and what we're offering on that had the lowest risk involved.

Got it. Okay. Really cool. Tell us more kind of where you're headed in the future. I mean, you're launching today, obviously like part the next version of the product, but what's next?

So I got the next two to three years. We're gonna focus on this offering. We're gonna have a second offering attentive release date in a 2019, early 2020. And as we work out the kinks and your cost per acquisition and get all that kind of fun number stuff down, we're gonna introduce another product. We're looking at maybe a venture capital fund, maybe some other alternative investments in there. So we're really hoping to launch that in the 2020. 2021.

That's really exciting. I'm excited to see that for sure. Kind of at the forefront in this jobs act. Kind of crowdsourced funding. I feel like, yeah. Are there peers here in San Diego that you can turn to that are also trying to do it as well?

A lot of people are trying to do it.

Yeah.

I've been since 14. I've been on a lot of platforms and met a lot of people nationally who've been trying to do it. And it's difficult to do. It's difficult to start from scratch, take an idea, find a product, and put all those pieces together. I've met the competitors or the other sites and how they've done it. What I'm surprised about is how traditional still is. I'm saying this in have this little think a speech I'm giving next week is where the person has just changed like a chameleon. They went from here to here. It's the same person behind the scenes in it. And so I'm a little surprised with that, but maybe not too surprised. It just kind of like, huh. So it makes me feel like what I'm doing is a little bit. Gives me a little more umph in my day, a little more bounce to my step, because there's not a lot of new people out doing it. It's kind of the older person has kind of morphed himself back into someone else, but still old guard, still involved with it. And if you look at that, you could say, hey, there's one called Cadre. They call themselves crowdfunding with a minimum $250,000 investment in their. Jared Kushner's behind them. So that really new. So you kind of peel away the layers. There's not that much out there. But what I'd love to see is more people, more companies be successful. Cause that creates competition. Competition forces us to get better. And for us, getting better, it's really offering better products and better customer service.

Totally. Just the awareness. I mean, more companies around will do the education for you, too, of how accessible this is to a larger part of the country.

Yeah. I still think, and I hate to say this, it's just I don't know if the banks necessarily like it. I don't know if the family offices necessarily like it. I'm not sure if the hedge funds, institutional investors necessarily like it because it takes away some of their ways they make money.

Got it. Okay. Interesting. So they may actually be trying to cloak some of the awareness in general.

Yeah. And they change. Right. They're the same people. They're the chameleon. They're the ones changing. So it's kind of okay. What's really going on. And that's why? It's tough because I think there's a lot of regulation. So at the end of the day, we've noticed some things happening to our stuff. We're like, okay, what's going on here? So we know it's harder for us in this journey because we have to make sure we're in compliant the whole way because we know these types of people will probably put eyes on us.

Got it.

And that's why we kind of went straight to be SEC qualified. It's like, whatever. What's a higher credibility than the SEC saying, hey, okay, you guys are open for business?

Yeah, got it. That's really cool. Well, we're excited to continue to see its growth. You guys are based right here in downtown San Diego. You've been living in downtown San Diego.

For quite a bit, right about 2009? Yeah.

Okay, good period of time. Yeah, yeah. So you've seen it grow up here?

Yeah.

What do you like about downtown?

I like everything about downtown. I like how one of the things is really growing. The tech community is really growing. I like the fact that I'm a foodie. I mean, all the good restaurants are downtown. Little Italy. There is a lot going on. I mean, I thought we'd have a football team here too, downtown, but I like the fact that recently the Padres signed a 300 million dollar contract. So that gives us a little bit. Okay. The city is all in to seeing the success here and seen it develop over the years. It's been pretty amazing. So what it morphed into.

Yeah, that's awesome. Well, speaking of food, this is the Tacos and tech podcast. You have a favorite taco spot?

You know, there's a lot of spots and right now we're across the street from Taco Stand. So Taco Stand's been my go to.

Yeah, yeah, yeah, they're great. Super consistent too. I think we went there when we met up. Yeah.

Was there yesterday? Was I there yesterday or the day before?

What about. Are you a coffee fan? You a coffee drinker? Like any favorite coffee shop coffee?

Yeah, I do. I like Influx a little bit. And right across the street from Achilles Coffee.

Yep.

It's a good one.

Cool. How about a craft beer drinker at all?

Not too much into beer. I'm more into whiskey.

Oh yeah, we have some interesting local distilleries. Have you found any of those?

I'm big on the Japanese whiskey. I'm lucky that I have a friend that way up there that I have a bottle of.

What?

Yamakaze 18.

Oh, nice so.

Yeah, I'm lucky. I'm fortunate to get some good bottles of whiskey. Yeah.

Yeah. I'm a Japane whiskey fan, too.

Gotta check it out.

Yeah, I will for sure. Craig, thanks so much for the time together. It's good to get to know you, get to know the Diverse Fund story and we're excited to watch you guys continue to grow.

Yeah, great. Thanks, Neil.

Appreciate it.

Appreciate it, too.

Thanks for joining us on the Tacos and Tech podcast with Neil Blum. Thanks again to Cox Business for helping make this possible by expanding the reach of the San Diego tech ecosystem. This has been a partnership with the San Diego Venture Group and the San Diego Regional Economic Development Corporation's SD Life Changing Campaign. You can find Neil Bloom on Twitter at Neil bloom and on LinkedIn.