Selecting the correct crowdfunding platforms series – MicroVentures The 2012 passing of the Jumpstart Our Business Startup Act (JOBS Act) allows privately-held companies to sell equity to the public. There are many platforms available to help companies launch, host and manage their equity crowdfunding campaign. Each episode of this multi-part series will feature a different crowdfunding site explaining to Dan Humiston how their platform provides the guidance and infrastructure for companies to launch a crowdfunding campaign. They will also clarify what types of cannabis companies their platform accepts. Brett Andrews from MicroVentures is today's featured guest. Produced by PodConX Cannabis Crowdfuning - https://podconx.com/podcasts/cannabis-crowdfunding MicroVentures - https://microventures.com/ Bret Andrews - https://podconx.com/guests/brett-andrews
Selecting the correct crowdfunding platforms series – MicroVentures
The 2012 passing of the Jumpstart Our Business Startup Act (JOBS Act) allows privately-held companies to sell equity to the public. There are many platforms available to help companies launch, host and manage their equity crowdfunding campaign. Each episode of this multi-part series will feature a different crowdfunding site explaining to Dan Humiston how their platform provides the guidance and infrastructure for companies to launch a crowdfunding campaign. They will also clarify what types of cannabis companies their platform accepts. Brett Andrews from MicroVentures is today's featured guest.
Cannabis Crowdfuning - https://podconx.com/podcasts/cannabis-crowdfunding
Dan Humiston - https://podconx.com/guests/dan-humiston
MicroVentures - https://microventures.com/
Bret Andrews - https://podconx.com/guests/brett-andrews
CC Microventures
Dan Humiston: [00:00:00] Today raising cannabis capital. We are continuing our cannabis crowdfunding series with our old friend, Brett Andrews from MicroVentures Brett. Welcome back to the show.
Brett Andrews: Hey, Dan. Nice to see you again. Thanks for having me.
Dan Humiston: It's been a while. How have you been.
Brett Andrews: I've been doing great. How about yourself?
Dan Humiston: good. I'm good. Back when we started this show, you are a reoccurring guest because micro ventures was one of the only crowdfunding platforms, smart enough to host cannabis related campaigns. But even with MicroVentures is known for breaking down barriers. You still have to follow federal banking regulations.
What type of cannabis or hemp businesses can micro ventures, et cetera.
Brett Andrews: Yeah, that's a good question. So I think when we spoke initially, what was it a couple of years ago? At the time we were really focused on. Ancillary products and services. So, technology companies that we're S we're building products in the cannabis industry and serving cannabis [00:01:00] companies.
It's shifted a little bit over the last couple of years. We started to see. Stuff that is getting much closer to touching the plant, right? So products that are actually infused with some sort of cannabinoid, and I've been looking at those it's on a case by case basis.
So it is a little bit of a a moving target in terms of what we can and can't work with. But it's certainly expanded since we first spoke the last couple years.
Dan Humiston: Just because of business complies doesn't necessarily mean they'll get automatically accepted because MicroVentures does not accept. Company that applies.
Brett Andrews: Yeah, that's right. We still, ultimately whether it's cannabis or any other industry, you need to. That an investment opportunity meets a certain standard, right? We want to put quality opportunities in front of our investor base. And so when we're looking at a business this varies a little bit, depending on what the product or service might be.
But we want to see that they've got a problem . With a known solution. A lot of ways we find that out is by traction. [00:02:00] So if it is a software or some sort of service, that's not in the consumer packaged goods space, know, we want to see users. We want to see the product is out in market.
If it is a, let's say a CBD company, for example, then we want to see sales. We want to see that the company has gotten to a point where they've validated that. At least some market for the product and that they're looking for capital to grow. Beyond that, I think differentiation is is important for us.
So obviously over the last couple of years, the cannabis space has exploded with a lot of different businesses. So I think it's become a little more challenging to find those companies that really stand out within the large space that it is. But when we see something that you know is different than what's out there is showing some promise through early traction and a is run by a team that we really believe can execute.
That's what gets us excited.
Dan Humiston: Can you walk us through the process? Like from the time somebody were to apply until the time the money hits their bank.
Brett Andrews: Yeah. Sure. So the very first [00:03:00] step is an intro call, or I guess submitting an application, we have companies that come to us by way of applications on our website, referrals from people within our network occasional outreach. When our team sees something that we're particularly excited about.
Once we have that first point of contact, we typically review whatever materials the company has. Usually that's a pitch deck, or maybe even the executive summary. And then we go to set up an intro call, which I'm usually participating in through the intro call. We do some high level details.
Understand what the business does where they are in their current timeline and what they're looking for from a fundraising perspective. From there we have a investment committee approval process. So for those. Opportunities that I believe our team will have interest in.
I do a little further due diligence and then present those to our team. If it does get moved to the next step, then we will sign an agreement to move forward on the round. We'll work out what the terms of that raise are going to be and how much we're going to attempt to raise for the company. [00:04:00] And then we go into a more formal due diligence process.
During that period, we are collecting a lot more in depth due diligence documents. Our team starts to put together a package which is first done through like a word document and then eventually shared on our platform to investors. And simultaneously with that, we're also getting the regulatory documents done.
I'm sure. Listeners of your show, and maybe you have heard past guests are probably familiar somewhat with the reg CF process, but you have to go through a form C filing a disclosure investor disclosure document filing as well as a financial review, some other items. So we , help companies guide through that process with whoever the third one.
Service providers. So attorneys and CPAs that are working on that. And then once we have the full package together, then we go live on the platform and start raising capital. In terms of timeline, our target is always 30 days for that first piece of getting the due diligence documents done it, things can vary a little bit depending on how prepared and documented things are [00:05:00] on the company side.
And then the raise period varies quite a bit, depending on the company and how much traction there is itself.
Dan Humiston: And isn't there a certain point where you have to hit a minimum investment in order for the campaign to continue.
Brett Andrews: Yeah, that's right. So , all of our campaigns have a minimum and then a maximum. So that minimum is the minimum they need to pass by the end of the raise period, which is outlined in the form C there will be a closing date of that offering. We need to cross that minimum threshold in order to break escrow, meaning to close on any amount of funds.
Up to that maximum number. And so we typically work with the company hand in hand on deciding what that minimum is. But that's right.
Dan Humiston: Before we wrap up, let's talk about investing. It's not very expensive. In fact, you can get in most campaigns for as little as a hundred bucks, but like any investment there are risk. What are some things investors should know before they invest?
Brett Andrews: I think that they really need to do their own due diligence as [00:06:00] well. As you mentioned before, we. We do everything we can to properly vet opportunities on the front end. Both from a, business value perspective, as well as a compliance perspective, to make sure that the offering is following the guidelines that are set forth by the sec.
But part of the reason those guidelines are there. So that investors have access to in-depth information about the business. I think that when you go to a campaign on our platform, for example we have the fund summary, which is the digital layout of all the stuff related to the business.
So this is everything from kind of background on the company, what the company does the business model and he sort of financials background on the team. And then obviously terms of the investment with that, there are links to the form C. As well as the other disclosure documents that are required to be filed with the sec.
So I would encourage investors to go through all of that information before making a decision both on the platform and to the links of the sec website, if anything. Even if you're just [00:07:00] curious, I think it gives you a better understanding of how these types of investments are done.
And then we also have a discussion forum at the bottom of those campaigns, where if you do have questions, you can submit them there in the entrepreneur or the founder can actually respond directly to your question. So I would encourage investors to look through all of the information and then if they have any questions and to reach out through.
Dan Humiston: Yeah, the discussion forum is great. I also like the videos, a lot of your campaigns have a video, which are great.
Brett Andrews: Yeah, that's right. So we do with the companies to put together videos very often. It's not a requirement for us, but it's something that can go a long way. I think I heard this somewhere that a picture's worth a thousand words, then a video's worth like a million or something to that effect where I do think that.
Yeah, we can take in a lot more information through video. And I think you can get a sense for the founders because very often in those videos they're speaking a little bit, so you can get a sense for the, whether or not they're professional and all the other aspects that you may not be able to get.
Just through [00:08:00] reading through legal docs.
Dan Humiston: Now there are a bunch of crowdfunding platforms. What makes MicroVentures unique?
Brett Andrews: Yeah, that's a good question. Dan, so I guess first off, all of us have to operate by the same playbook in terms of the regulations that sec is imposed on these reg CF fundraises. So there's certain things that have to be consistent across platforms.
You know, We've been around for 10 years, So we're one of the older platforms that's been doing this and have consistently been growing year over year. Additionally, when we got started reg CF wasn't even a in play at that point. So everything that we did was through a reg D exemption, , which is a different type of fundraising mechanism where you, the offerings available to accredited investors, only what that's allowed for us to do is have them.
And additional side of our business and build a pretty vibrant base of accredited investors. And then those folks participate quite often to our reg CF deals. I think that makes us in some ways different [00:09:00] than in some of the other platforms that are out there.
Dan Humiston: Yeah, I'm sure it helps. When you have a couple accredited investors jumping in on a campaign, that's got to help get the number up quick.
Brett Andrews: Yeah, we see a, it's typically a reasonable percentage of the funds that are raised through our reg CF campaigns come through the accredited investor portion. Part of that is just there aren't limits into what they can contribute. So they can write checks of any size. But , that is a trend that we've seen over the years.
Dan Humiston: We have brats and MicroVentures info in the show notes. So if you're considering raising money or you're looking for a company to. Check out their website and please make sure you read everything and understand everything before you invest. Brett. It's always great to catch up. Thanks for being on the show today.
Brett Andrews: Hey, likewise, Dan, that's always a good time. And thanks for having me. It was great.