Saturday, August 31, 2019

Wait! Are you telling me that I can literally take $500 and...

Imagine a world where almost all individuals in the community have the opportunity to invest in almost any business in their community...  Wait! What...?

About Will McGuire

Our Community is Innovative
The concept is so foreign yet strangely familiar.  We pass the buildings and bustling entrepreneurs in our communities.  They and their teams serve us coffee as we sit at tables made by a company built by entrepreneurs, while looking at our email, calendar, and news feeds on our phones...apps, phone components, and even the digital data that transports the communication...all made by entrepreneurs.  Did you know several of the innovators who developed the tech we all use reside right here in our state?  

Everything we use to live out our day to day life was at some point created by someone who had an idea and turned it into a business.  Most of these entrepreneurs will need to seek funding at some point in time beyond what they can provide themselves.  That's where trouble seems to start for several entrepreneurs, but they have an incredible asset directly in front of them and most have no idea it exists.  

Do you know what it is?


It's You...
...and me and potentially everyone in the community.  

I was invited to perform a lunch and learn educational session at a co-working location near Charlotte.  In these settings I give people the disclosures that I'm not an RIA, attorney, etc. so I can't provide them or anybody else investment or legal advice.  My job is one of education to businesses, investors and the partner network which serves both.  It's always neat to see individuals in these sessions connect the dots.

In the middle of my session one of the attendees said [ I'm paraphrasing a bit] 
"Wait! Will, are you telling me that if one of the potential high-growth businesses in our co-working space puts out a public offering, I can see that offering from my cell phone and literally take $500 of my money and invest in them?...and if they really take off, I have the potential for VC-like (Venture Capital) returns?"   
I responded,"Yes, the opportunity is now possible...and it's not just high growth ventures. Its also 'Main street' businesses like the coffee shop you love, the brewery you visit, the restaurant or other store that you go to. These all have the potential opportunity to raise capital from anyone." 
Her response:  "That is so cool.  I never knew I had the opportunity to do that, but it makes so much sense.  Why hadn't we been doing this before?"
My response: "Exactly what I said when I 1st learned about it 3 years ago.  Your response is similar to many others I've spoken with once they hear this is possible."


It became possible a little over 3 years ago
Entrepreneurs now have the ability to seek capital from anyone, starting with those who know, love, like, and trust them.  It doesn't matter if who they know are 'accredited investors' or not.  

Businesses can seek capital from wealthy investors and everyday investors using a variety of offering types, providing them the opportunity for returns assuming the business is successful.  Real Estate, "main street" businesses and yes, even  potential high growth startups can raise capital from their crowd.  

Individuals with various risk profiles have the opportunity to find investments tailored to their preferences.

  • Regular Pay Back Potential:  Businesses offering revenue shares at 1.5x or 2x returns, or real estate with dividends may be attractive to individuals who prefer investments that offer to pay them back regularly.  Businesses may also offer a perk to make the investment more attractive and to market their business.

    Example: A food truck, brewery or boutique may offer a 1.8x return + perk where for a $500 investment the investor gets 10% off the entire purchase once a month when they bring in their friend.

    I won't dive into all of the mechanics of how revenue shares can be use by all types of businesses, but just know they are incredibly flexible.
      
  • 5x, 10x, 100x, 200x+ Multiplier Potential: If another person prefers high potential gains (high risk), they might prefer to invest in potential high growth startups. 

    Example: If the next potential Unicorn offers a public raise early on when their valuation cap is say $5M and Exits/has an IPO at $1B valuation 7-10 years later, the investor shares would be worth $20,000 for every $100 invested. 

    A Unicorn (company with valuation of >=$1B) is a rare find, yet the opportunity exists. We have companies across our state who have achieved those types of valuations and also have several who never become Unicorns but still provide the potential for 5x, 10x, and other high multiple returns.
In either case, 
  • Businesses have more options to source capital than they did before.  
  • Individuals have more opportunities to invest in businesses who have the potential to provide them returns they didn't have access to before.
Anyone who gets into investing in this way needs to know that investing is very risky and no one should ever invest more than they are willing to loose because there is never a guarantee for any return.  

So what world are we creating?
We're creating a world where almost all individuals in the community have the opportunity to invest in almost any business in their community, from their favorite places in town to visit to the potential next high growth startup.  People have the opportunity to literally shape their community by the businesses they invest or don't invest in.  They have the opportunity to the potential returns from the growth of their community.

I hear from people everyday that they want to be connected to the community where they live.  They want to live in communities where they raise their families together with their neighbors who become friends... or even if they don't have kids, they want to experience life together with their neighbors who become friends.  They want to give back.

Most just never knew that they could be even more vested where they live simply by investing in businesses in their community. 

So this brings up a very important question...
"What is your why?"...  In my opinion, it's the most important question I ask every founder.  So it's only fair I share My Why.  My Why is I want to create the world I want future generations to live in... for my kids, my friends' kids and others in my community, including those I'll never meet.  I want them to have the opportunity to do the same, simply by investing in those they know, love, trust and who are creating something of value that is sustainable in every sense of the word.  To me that's community.  At the end of the day, Margin = Mission.  

What's your why?