EP 484: $7M Raised with StartEngine CEO and CrowdFunding SnapWire CEO

Ron Miller, CEO of StartEngine,who was in Episode 40 of The Top and Chad Newell, CEO and founder of Snapwire. Listen as Ron and Chad explain how the new rule of SEC in equity crowdfunding helped their companies.

Famous Five:

• Favorite Book? – Ron: The E-Myth

• What CEO do you follow? – Chad: Sean Malarkey
• Favorite online tool? — Ron: Internal Email / Chad: Google Sheet
• Do you get 8 hours of sleep?— Ron: No
• If you could let your 20-year old self know one thing, what would it be? – "It's all about confidence." – Ron Miller

Time Stamped Show Notes:

• 01:40 – Nathan introduces Ron and Chad to the show
• 02:30 – StartEngine is the nation's leading platform that allows entrepreneurs to directly connect with potential investors to raise capital
• 02:45 – The new law opened up the possibility for everyone to become an investor
• • 03:11 – It allows companies to advertise broadly
• 03:24 – StartEngine was launched in June 2015
• 03:30 – Total amount invested is $20 million
• • 03:42 – 60,000 unique users have joined their community
• 04:00 – StartEngine charged 5% of the total capital from the proceeds raised
• 04:20 – Entrepreneur can raise up to $50 million a year in the online public offering and StartEngine charges $50 per investor
• 05:10 – "We are currently focusing on the US market and there's no SaaS in there"
• 05:30 – What made Chad decide to use StartEngine
• 06:40 – Why StartEngine is ground-breaking
• 07:00 – The congress' limitation on investing in a company
• 07:31 – "Real wealth is made by being an early investor"
• 07:54 – The new law is a radical shift
• 08:51 – Nathan believes that the best investors are customers
• 09:10 – Snapwire has 300,000 photographers in the platform
• • 09:22 – Buyer ratio is much smaller than the photographers
• 09:45 – Snapwire has pay-as-you-go and a SaaS model
• 10:08 – Snapwire's revenue is 50% from pay-as-you-go and 50% from SaaS
• 10:20 – 9,000 images have been bought in Snapwire since their launch
• • 10:30 – Snapwire was founded in 2014
• 10:34 – Snapwire has raised $2.8 million
• 11:15 – Snapwire raising in StartEngine opened up a lot of opportunities
• 11:45 – Can you use StartEngine after a price round?
• 11:52 – The main advantage is that companies can set their terms
• • 12:03 – Some companies have to essentially create a second priced or non-priced round
• 12:58 – The good thing about equity crowdfunding is you have to disclose everything
• • 13:08 – Disclosure statement is clear
• 13:41 – Lawsuits and CAP table
• • 14:10 – There's a disclosure and subscription agreement that investors sign
  • 14:30 – "I think there's an immersion of risk"
• 16:14 – There are limits to investments and to returns
• 16:28 – During crowdfunding, there's also a limit on the amount of investment that a company will accept
• 17:00 – "As far as information rights, you can be very clear in the disclosure"
• 18:00 – It is not allowed to give out public information even if it is unintentional
• 18:15 – Upon investing, you will get a shareholder report that is in compliance with security exchange commission requirements
• 18:40 – "Competition can't reverse engineer your strategy in execution"
• 19:06 – StartEngine has 12,000 – 14,000 investors
• 19:20 – Total of 15-18 companies have raised in StartEngine
• 19:30 – 14 team size in StartEngine
• 19:36 – StartEngine raised capital through seed round and Series A
• • 19:47 – Total of $7.7 million raised
  • 19:54 - Ron didn't use their platform to raise
• 20:25 – Average value of an investment is $1400
• 20:40 – StartEngine's biggest competitors are Seed Invest, Next Seed, WeFunder and Flash Funder
• 21:11 – What should people look for in the marketplace?
• • 21:23 – If certain companies are establishing themselves in a specific niche area
  • 21:43 – Success rate of the companies
  • 21:57 – Support the companies can provide to entrepreneurs
• 22:13 – Connect with Ron through his email
• 22:34 – Contact Chad at Chad@Snapwi.re
• 24:53 – The Famous Five

3 Key Points:

• Real wealth is made by being an early investor.
• The good thing about equity crowdfunding is the disclosure.
• Be confident in yourself.

Resources Mentioned:

• Toptal – Nathan found his development team using Toptal for his new business Send Later. He was able to keep 100% equity and didn't have to hire a co-founder due to the quality of Toptal developers.
• Host Gator – The site Nathan uses to buy his domain names and hosting for the cheapest price possible.
• Freshbooks – The site Nathan uses to manage his invoices and accounts.
• Leadpages – The drag and drop tool Nathan uses to quickly create his webinar landing pages which convert at 35%+
• Audible – Nathan uses Audible when he's driving from Austin to San Antonio (1.5-hour drive) to listen to audio books.
• Assistant.to – The site Nathan uses to book meetings with one email.
• Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
• Drip – Nathan uses Drip's email automation platform and visual campaign builder to build his sales funnel.
• Ron@StartEngine.com – Ron's email address
• Chad@Snapwi.re – Chad's email address
• Show Notes provided by Mallard Creatives