The Month End Podcast

Episode Fourteen: Marc Levit • ForecastEasy (2nd Appearance)

September 28, 2021 Marc Levit Season 1 Episode 14
The Month End Podcast
Episode Fourteen: Marc Levit • ForecastEasy (2nd Appearance)
Show Notes Transcript Chapter Markers

The Month End provides emerging inventory based brands real life knowledge in the accounting, finance, and operational world. Our guests are not only similar brand founders and owners, but key stakeholders and contributors to the industry. Each episode provides a glimpse into the vast experience and insight from its guest’s unique background in a casual, conversational tone.

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In episode fourteen, Accountfully's Managing Partner, Brad Ebenhoeh sits down with Founder of ForecastEasy, Marc Levit for a second discussion. We round out two in-depth interviews with a look into equity crowdfunding.  Equity crowdfunding is a fairly new concept, but brings its own set of challenges inline with the benefits.  Marc offers a look into how it all works, which types of brands benefit, and the three areas to focus on for your best chance at success.

SHOW NOTES and VIDEO RECORDING:  http://www.accountfully.com/podcast​​

The ForecastEasy Website:  http://www.forecasteasy.com

• • •

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Brad Ebenhoeh  0:00  

Welcome to The Month End, a CPG community chat.  The Month End will provide emerging CPG brands real life knowledge into the accounting, finance, and operational worlds. Our guests will be key stakeholders from those same brands as well as other key contributors to the industry; all of which have vast experiences and insights that we'll share with the audience. 


Brad Ebenhoeh  0:20  

Welcome to Episode 14 of The Month End podcast. We are looking forward to having our first return guest here - Marc Levit from ForecastEasy.  How are you doing today, Marc? 


Marc Levit  0:30  

Hey, Brad, great to be back. 


Brad Ebenhoeh  0:32  

Yeah, so Marc, on our last episode, we discussed all things, finding or forecasting 101, and this time, we're going to touch base on the very exciting new world of raising money in this space; equity crowdfunding. So this one will be equity crowdfunding 101, which is a whole new concept that we'll get into, to kind of you know, summarize and kind of get more background on Marc. 


Brad Ebenhoeh  0:54  

If you didn't listen to the prior podcast. Marc is a career consumer investment banker who developed strategic and financial plans that aided in transactions to the world's most admirable strategic acquires, including Moet, Hennessy, Constellation Brands, Gallo and Chanel. And then earlier this year, Marc founded ForecastEasy - a cloud based forecasting tool that mirrors the forecasting process, using these transactions but simplified into a framework that can be completed by founders in a matter of hours versus days or weeks. And I will second that, related to forecasting. So anyways, Marc, glad to have you back. And we are looking forward to the chat on equity crowdfunding.


Marc Levit  1:31  

Yeah, I think that's great, Brad. And one thing I'll mention it's equity crowdfunding feels new. But really, it's been around for almost a decade. It's just that really, I'd say in the last, you know, six months, nine months, 12 months, it's it started to grow up a little bit and reasons I'm sure we'll touch on and perhaps might be a lot more appealing to a broader, you know, number of brands and companies.


Brad Ebenhoeh  1:55  

Yeah, yeah, there's a, clearly I think, the last 90 days from my visibility, just from our clients requirements or needs of like, 'Hey, what about this? What about that', I'm like, 'Whoa, this, this thing is getting out of hand a little bit'. And most of those are within the CPG space in terms of understanding the needs and requirements, etc. So let's start off.  What is it? What is equity crowdfunding?


Marc Levit  2:16  

That's a great question. It's, a lot of people conflate it to the Kickstarter, and Indiegogo is of the world where, you know, where are we given our products to, you know, kind of get some cash up front. But equity crowdfunding is that but but actually, you're selling real securities of your company. So you're selling the future cash flows, or the future value of your company, in exchange for some ownership stakes today, that in exchange for cash. So it's the same thing you do with friends and family, it's just that it's a wide group of folks that are starting to be called, "investomers"; they're often your investors, and they're either your new customers, your existing customers, or potential customers.


Brad Ebenhoeh  3:01  

Love it.  Investomers for everybody out there, invest-omers. I love it. So why now? Why the last 90 days? 


Marc Levit  3:11  

Yeah, you know, I think there's a few things that have really changed and have really allowed this industry to grow up from the crowdfunding side. The most notable, which -all the crowdfunding sites will let you know is - that the size of the raise has been expanded from a million dollars maximum per year, to 5 million maximum and a regulation CF listing, which, you know, most of the brands that I work with sort of that two to 3 million, is the sweet spot that they're looking to raise. And so crowdfunding was often a partial solution where you know, you could raise a million bucks, that's great, but then we'd have to go out and raise, you know, six or nine or 12 months later, this, this very much allows for the full raise to happen at once. But more importantly, for me, you know, what's kind of changed over the last 18 months is that the entire investment pool can be put on the cap table as a single line item. So rather than having to deal with, you know, 100 or 1000, cats and dogs and getting their information and back and forth, you know, it's very much about one entity that each of the sites takes care of on your behalf. So it makes you know, the reporting much simpler. I mean, really, the minimum is one report a year to this base, a lot of the companies will give two or three or four. But you know, as that being the only sort of, you know, required aspect of it, it's a very approachable way to raise capital for a lot of companies.


Brad Ebenhoeh  4:42  

Yeah, that can get out of the hand with having, you know, 500 new K1 investors on your tax return.


Marc Levit  4:50  

And I think the one other thing you know, Brad to add in there is that as more and more people are talking about it, these communities are getting bigger. And so there are more investment Just on the site that make the races go faster and a wider, you know, grouping of folks looking at your brand. And if they say, hey, there's a great suncare brand on here, maybe I should invest in it, one, and two, should I try the product? So it's it's almost like a marketing event? For a lot of Yeah.


Brad Ebenhoeh  5:18  

Yeah, like a separate sales channel, slash marketing channel. So you said regulation CF, what does that mean?


Marc Levit  5:28  

You know, there's, there's a couple different raises one is called an A plus and that gets into some complicated areas where you can raise up to $15 million. But the regulation CF is what most of these companies are doing on the platforms. And the simplest way to describe it is it's up to $5 million raise, you know, at one given point in time, or throughout a 12 month period of time.


Brad Ebenhoeh  5:51  

Awesome. All right. So we're all familiar with the other ways of raising money, right? Equity, Friends and Families series A, series C, you know, convertible notes, safe notes, debt, etc. Right. So clearly, this isn't going to replace all of those other entities that will compliment them. But you know, at the end of the day, I guess, you know, what are the positives are? Why to do it, versus the other items?


Marc Levit  6:15  

Yeah, that's a great question. And, you know, Brad, what I'll say is, most companies that can raise from friends and family will continue to do so. It's absolutely a great avenue, especially right at the beginning, oftentimes, people investing in you - not necessarily a business or a product. So you know, you can get some pretty preferred terms, and also some very patient capital. With that said, You know, Friends and family, if you can't fill out a round with them, and if you look to private equity and venture capital, they're often going to tell you, 'Hey, you know, we're writing bigger and bigger checks, and our fun sizes are getting bigger. And so, you know, we kind of have to write a $5 million bigger check, or we can't analyze a company that's got under 2 million of revenue, because we're data people, and we need to see the velocity in the accounts. And if you're not 2 million in revenue, the numbers just kind of don't add up to anything that we can fully understand. So there's sort of a white space, if you will, of ‘I either don't have friends and family’ or they're tapped out. I'm not big enough or ready enough for private equity. And I say this as positively as I can. But it's one of the only options for those in between topics.


Brad Ebenhoeh  7:30  

Yeah, I mean, that's, that's a, you know, a big part of where Accountfully lives and you can see the frustrations, the, from our clients, as well as just the time commitments and trying to raise this and the amount of just time and conversations and back and forth, etc. Um, a couple of things on that, as we kind of move into considerations around this number one is like, what is the, from a consideration standpoint, related to terms, right, let's talk about terms for a second. So like, a lot of times, if you're a small company, a million dollar annual revenue, you're growing, we'll get a raise, you may be in between friends and family, you know, private equity, VC, etc. You're talking to Angels, but it's a lot of different folks to talk to. But when you're calling to the market related to this aspect, you can set more preferred terms from your perspective as the company right? Like, can you chat through that item?


Marc Levit  8:23  

Sure, absolutely. And you touched on a lot of great points right there, Brad, where most of these sites will allow you to raise capital in the way you'd like. So you could give preferred equity, you could give common equity, you can do any sort of debt instruments. Sometimes they're safe. I've even seen revenue shares, usually more for like retail establishments, not necessarily consumer brands. But so first, you get to choose what type of security you're offering. And then second, and there's good parts to this and bad parts to this, you get to completely choose your valuation, there is no formula there is no metric it is, what do I feel like selling my securities for. And you see if the market agrees with you, if you can, you know, raise the money, that means you probably raised at the right amount. And if you can't, then you got to think of either sweetening it in certain ways or others. With that said, Brad, you can raise capital at an unbelievably high valuation on a lot of these sites. But I don't think it's in the best interest for a lot of brands to do. So. If you're raising it too high of a valuation, of course, you'll be diluted a lot less than you would be at a lower valuation. But a you're going to come into trouble, you know, 1, 3, 5 years from now, when you're having financial metrics that are more measurable, that still can't justify a valuation that high until you're going to have a lot of you know, your investors and investomers with you who are going to, you know, be demanding super fast growth to grow into those valuations. And it creates a construct where there's just a lot of kind of the incentives between the investors and management aren't necessarily there. And there's a lot of pressure. And there might be a lot of, you know, upset, folks, if it takes five years to grow into the valuation. So with that said, I'd say if you're raising capital on a crowdfunding site, definitely take the high end evaluation range, it's your right to do that. But keep it in something that's defensible and understandable, and that you have the ability to grow into, you know, there are sites out there, there's companies out there raising at, you know, $50 million valuations that are barely sold anything. And that's just tough to grow into, it's, it's gonna lead to a lot of complication.


Brad Ebenhoeh  10:45  

Yeah, I mean, you know, you think about about the next raise that you're discussing in the future, I think, like, the short term, you know, issues with that is, as these types of folks that are on the site, investing in these companies, you know, we all see social media armies, and things like that of, you know, somebody says, some bad tweet, and then 55 people, you know, you know, negativity, and then you know, like it like, this is where like, this is a positive of where you're developing these 1000s of investomers, but what if you make them mad, or irritate them, or think that as they become more sophisticated in this aspect, realize, well, that person or that company, did us wrong, because they really, you know, withheld information' or, or were weren't very authentic about like their valuations, you have to consider that aspect as well, because you're now getting 1,000 customers, they're going to see your information versus before, you may have had, like, five, you know, 1000 investomers, versus having like, 10 people on your cap table in your private company, and nobody else has access to your data, right? So you just got to understand that because that's some big things there to understand,


Marc Levit  11:46  

A to become really positive with that, Brad, you know, then the opposite is very true of raising a 7 million valuation. And we can show, hey, we're doing well, our revenues raising, we're a little more profitable. Now we're raising at a 12, you know, a year later on the same site, your investors are going to be thrilled, and they're going to buy more and more of your products, and there's just a really positive feedback loop.


Brad Ebenhoeh  12:07  

They're correct. You're creating this community. It's interesting. There's a lot of some kind of additional considerations here. So what about like legal formation considerations related to like how you need to be set up as an entity type of financial audit requirements, or visibility, or annual reporting, you kind of go into that for us?


Marc Levit  12:27  

Yeah, you know, for almost all companies, they either are or become C-Corps, I didn't know this very simple to do. So it doesn't take more than a couple of weeks, and, you know, a couple $1,000 and relatively, you know, easy to do, and they each of the sites provide resources. So that's one thing you need. Depending on how much money you're raising, I think there's a half a million dollar million dollar and then $5 million threshold, you'll need different type of either audited or reviewed financials by you know, either a, your own person who does the books, or an external person or a full on review audit. So those are definitely costs and time planning mechanisms, you'll have to think about, but I'd say overall, on the scope of the process of getting a capital raise done, those things, you know, are weeks worth of time, not months worth of time.


Brad Ebenhoeh  13:26  

Yeah, and I'll say this from, you know, the accounting/ Accountfully background, right. There's a lot of our clients that have come to us saying, 'I need audited financials and raising money, I need these tomorrow'. The biggest - The biggest thing with this is, you know, Marc just said his time considerations; like audits, reviews, whatever your requirements are for financials to begin the process, that takes time. Okay, so there's two aspects to that; number one is having your ducks in a row financials in place, you know, statements in place reports, so that you can have a basis to start. So you don't, you're not starting from zero, because some folks come to us having started with us having in their books in a year, and then they need audited financials, it's like, well, you're way behind the curve here. So staying ahead of the game, and clearly, that's good, you know, business owner, you know, just what you should be doing, you know, in terms of a business of keeping your bookkeeping updated, having those multiple financials, but then on top of that, having that audit or review does take time on top of that aspect, but you have a baseline, you got to give yourself several weeks, you know, a couple months in advance of finding something they can do that aspect and, and this is an aspect of as you're learning these type of new ways to raise money, understanding like how long in advance I need to certain thinking about this or starting to search for an audit firm or review form or things like that. So it's not always money considerations, a ton of time considerations come into place when you're doing something like this. 


Brad Ebenhoeh  14:48  

And then the other kind of question is that I have on this is like industry related, um, you know, these rules have been around there's some new rules that have happened now. You know, to help you really, like, expedite this process, the last several months last, you know, year or two, is there some concerns? And I know you're not looking at a crystal ball, but is there anything for us? Or, you know, the folks to be worried about, like, well, will this stop at any point? If we do this right now? Will this then impact our next round of Series B? Or what series A or whatever their? Their? their long term plans are? Like? How does? Is there anything for anybody to know about in relation to that?


Marc Levit  15:23  

I think you're thinking about this completely right. You know, as you kind of looked at your best case scenario of business of how we bought it over the next five, seven years, you know, our forecast again, right of what we think we can do on a top line and profit level, you know, we should get a good sense of what our business might be worth, if we hit those metrics. And then if we back into, you know, okay, we're a few years before that, what's a reasonable valuation to be raising at, and kind of everything we do is within reason, I think that'll set people up for a good chance to be successful. I think that where a lot of the issues may lie, is if this is viewed as a money grab, where it's let's raise 2 million bucks as quickly as we can, you know, without having a ton of communication with these folks, and an evaluation that they may never see, again, I think we're gonna see a couple of those examples happen in the next two to three years. But I think that'll be the minority. I mean, I really think that, you know, I've looked at a couple 100 consumer brands on the site, and I'd say their valuations are rich, but you know, they're in the realm of somewhat reasonable, man, we stick to that. And we keep going forward on this. You know, it's it's a viable path. I think, like the investomers need to also understand is, you know, we talked about penny stocks being highly volatile, right, and a great way to potentially, you know, lose your entire investment. I mean, these are fractions of a penny stocks. Yeah. And, you know, what's good, though, is that on average, people are investing $500, $1000 bucks a person, which, you know, is a lot to some people, but, you know, in the scheme of things, it's not a down payment on a car, or something like that.


Brad Ebenhoeh  17:16  

Definitely, definitely good information. Alright, let's get into the process here. Yeah, so first question, like, what are the what are the, you know, what are the key websites, or the apps or the locations to go to kind of learn more about this? Or who's facilitating this type of, you know, process and workflow?


Marc Levit  17:33  

Yeah, you know, there, it seems like there's a new one every day that's popping up, you know, where I'll coach, your listeners to go are probably the four that are largest and most consumer brand oriented. That's the Start Engines of the world, the We Funders, the republics, the seed invests, each one has kind of their own nuances to it, and what makes it interesting and different. You know, I've put a lot of research into this. And ultimately, at the end of the day, I kind of suggest to folks I work with going to the biggest ones, because it's, you know, it sounds so simple. But at the end of the day, you want to go where there's the most people, the biggest community, you know, we're on Instagram and Facebook, because you know, it's got good tools and features, but also, they're the biggest and all our friends are there. So I'd find the biggest ones and go there. Typically, what they say Brad is, about half of your dollars are going to be raised by people, you know, people that are your customers, or friends and family that you say to go on the site, where people you directly market to about half come from the communities themselves to saying, hey, there's a new company here, that looks pretty cool. So, you know, with 50% of the dollars coming from, you know, the community, but let's go to the biggest communities, the deepest communities.


Brad Ebenhoeh  18:55  

Yeah, that number is very surprising to me. 


Marc Levit  19:00  

Oh, yeah? 


Brad Ebenhoeh  19:02  

How high it is just related to kind of you think through this process. But then that also tells you how big these communities are, and the people that are interested in from my aspect, I only see like, as long as it's successful. And this processes, I see that percentage getting higher and higher, which is super interesting for the, for the folks out there who have, you know, these brands who have great eComm, or you know, Instagram following want to do something like this, consolidating their following and their actual customers in their community with something like that on these big sites, like, like, this is gonna be a very successful race for most of these folks, as long as they do that, right.


Marc Levit  19:36  

And I think that, you know, the first thing these sites will ask you is, what does your you know, sort of email list look like? How many people that you touch and what's your following on social because, you know, if you can get that 50% from your own to be driven up higher and faster, there's going to be so much momentum and an oversubscribed round and you know, all the good aspects that come from this.


Brad Ebenhoeh  19:58  

Alright, how much can be raised, and like, what are the increments of raising? And are there? 


Marc Levit  20:05  

Yeah, so $1 million can be raised in 12 months under certain sort of registration guidelines. And then the next pocket is up to $5 million within 12 months, and then there's a third one that's up to 50 million, which is not relevant for most folks. It's usually the one to five. And often what will happen is you start out with the one and then you extend it and say, Oh, my gosh, we're oversubscribed, you know, we've expanded this to become a two or $3 million dollar raise, you know, there's a little gamesmanship, right on, you know, hey, like, be a part of this. We're running out of space right now, because so many people love us. And it's, it's all about keeping the momentum. So, yeah, one to 5 million for most.


Brad Ebenhoeh  20:50  

So if you just from a mechanic's standpoint, if you go in, 'hey I'm going to raise a million dollars at this valuation', and you don't hit a million, like what happens for the folks who of the 750k, you did raise like, Can you take that? Can you not? Does that go back?


Marc Levit  21:06  

Yeah, great question. there's typically a minimum amount where you'll say I need to raise this amount of money before the raise is even, you know, contemplated that numbers often artificially low, somewhat purposefully, so that, you know, let's say you're trying to raise a million bucks, but you raise 220, typically, you're going to be able to take out that 220 and utilize it. 


Brad Ebenhoeh  21:32  

Gotchya.


Marc Levit  21:32  

But you have to disclose to your investors, of course, you know, what the minimum is before you can, you know, start to enact upon those.


Brad Ebenhoeh  21:41  

Gotcha. And then I know, you mentioned earlier, like, the, you know, the amount that the investomers are actually putting into the company, is there a minimum for them of $100, 250? Does that, does that matter by deal?


Marc Levit  21:55  

Yeah,it's dependent by deal, I'd say typically 250 to 500 is, is the entry amount, something in that realm. And then, you know, if you think of a million dollar raise, it's gonna have some really small checks in it, and it's gonna have some really big checks in it. But the way most sites have been coaching me is it's 1000 checks of $1,000.


Brad Ebenhoeh  22:17  

Gotcha. Interesting, is there, similar to the ones that the site you mentioned before, where you're just kind of, you know, giving money, Kickstarter ... are some of these brands, I'm assuming are giving away merch and or like gift cards or whatever, to kind of help support the, the raise process?


Marc Levit  22:38  

That's exactly right. It's - there's little, you know, gates, if you give $500 we'll give you a swag bag $1,000 will get you 10% off your order and stuff like that. Some of the stuff gets crazy. I mean, if you give 100,000 on some of these, like, they'll fly you out somewhere and wine and dine you with the founders, and some, you know, crazy stuff like that. But, you know, I would suggest little things to sweeten the pot would probably be helpful. But you don't need to go over the top here. People want to be a part of the brand. They don't need to, you know, use their funds, the funds they're giving, you don't necessarily need to be returned, you know, like, back to them.


Brad Ebenhoeh  23:19  

Yeah, take money in and then spend it on a ton of merch. And then how long does it take? So I guess what I'm saying is if you know what, let's say I have, you know, a million dollar raise, and I go out, and within a week I raise a million dollars, just because I have a following. You know, I promoted and got it can't take it out, then does it last 60 days, if that's the initial spend, or if that's initial kind of terms of the deal?


Marc Levit  23:46  

Yeah, so each side will be different, I'll say typically, the raise process will look like, you know, 'Brad, let's press go'. And it's four to six weeks to kind of get set up on the site and get your profile and your videos and all your digital assets and ready to go. And then from there, it typically takes they say, 90 ish days for a successful raise. As few as 30 days they've had successful raises, and some raises, just, you know, take a full year to ever get done. But sort of the numbers they're putting in your head is four to six weeks to get started, 90 days to fill up the raise. So you know, call it four to six months in total, from the day that you press go. And each site is different, but once you're collecting dollars, there's usually like a two to four - two to four week grace period, before you're able to start distributing some of those funds.


Brad Ebenhoeh  24:40  

Gotcha. And then I guess the last thing is, can you distribute like partial, if like I'm going to raise? Oh, you can? Okay, great. So you can find raising $2 million in my minimum is 250 or whatever I hit that I can protect technically take out 250k or


Marc Levit  24:54  

Okay, yeah, you have to hit your minimum. And I know some sites do that. I don't know if all sites do that. But, you know, that's right, you set the minimum at $100,000, you're trying to raise a million once you hit 100,00 in two or four weeks, or whatever it is, goes by, yeah, then start taking out the cash. And, you know, the one area we haven't touched on too, is that you're gonna have to spend a lot of time and effort marketing this raise, that there's going to be some non insignificant dollars, that they suggest reinvesting back into marketing and driving demand into buying the shares. And sometimes they say it's the raises themselves that help to fulfill upon themselves because, you know, you raise 250 grand, and then you take out 50, to put right back in to then raise the next 750, or something to that effect.


Brad Ebenhoeh  25:47  

Yeah, it's interesting, the whole kind of process mentality and strategy around it. It's a whole different ball game. Yeah. All right, what does it cost?


Marc Levit  25:57  

So there's typically two fees; one is a percentage of capital raised, and you know, six and a half to eight and a half, somewhere in that range six and a half percent, eight and a half percent, some sites will take a percentage or two of equity as well. But what's good about that is, you know, you've set the valuation. So if you set it up $40 million, you know, face sharing above $40 million. 


Brad Ebenhoeh  26:22  

Yep. 


Marc Levit  26:23  

And then typically, there's some cash costs of, you know, think of 10 to $25,000, as sort of the amount of a little bit of legal a little bit of financial, some of them have you pay a starting fee, some of them will take that starting fee out of dollars distributed to you, so you don't have to outlay cash. But again, with marketing, I would think about $10,000, to just kick off your campaign with some marketing assets to help, you know, drive in the first folks, which are the most important because you're raised to zero on it for three weeks, you know, you're a little bit dead in the water, you want that to go from zero to 100,000 200,000, as quickly as you can.


Brad Ebenhoeh  27:05  

Gotcha. So basically, you're gonna have you're kind of processing kind of merchant fees, right? What are the actual site takes a percentage of what was raised and possibly equity, you have kind of your leat legal upfront, kind of see conversion audits, reviews, financials up front, you have possibly some startup costs that go directly to the site, or they take that at a later date. And then the last thing, and probably the most importantly, here is that the marketing budget that you need to allocate really has a good strategy and both short term and long term on that process.


Marc Levit  27:33  

That's exactly right. And just to throw some numbers out there that, you know, surprised me a little bit as I've worked with a couple brands through here, marketing can be five to 10% of the overall race, which is, you know, almost doubling, you know, the overall fee. With that said, the fee goes straight to the company, the marketing can be used, you know, for other purposes, and hopefully, theoretically brought in more customers for you. But no, you add it up, and that could be 12, 15% of capital raised goes, you know, goes out the door in these situations.


Brad Ebenhoeh  28:06  

Yeah, it's interesting, because you can think about how you are how are our companies factoring in these market- this marketing spending upfront, spend their cost acquire a customer, or lifetime value of the customer because literally you are, you know, you could be identifying new customers, and you know, and you're paying for it through this raise process, but also there's an indirect possible spend, and some of these, what percentage of those kind of investomers or new folks that weren't that 50%, that were part of your army, that are now going to be part of your army that basically came through that so? 


Marc Levit  28:34  

Totally. 


Brad Ebenhoeh  28:36  

Alright, so kind of wrapping up a couple other things here. So, you know, I guess I'm gonna end on the kind of the other question, but just from, you know, your end, like from a moving forward standpoint, like, is this gonna be around for a long time? Is that your gauge, like, just from a thought process and seeing clearly other industries and markets, you know, democratizing everything, right, and cutting out every middleman that exists? You know, so like, I mean, what's your kind of, you know, your, your thesis on that?


Marc Levit  29:07  

Yeah, no, you're  absolutely right. I think about Robin Hood all the time. I mean, this is Robin Hood, on the micro level, you know, I'll answer in the negative and say, equity crowdfunding is absolutely wrong. For so many investors. It's absolutely wrong for so many companies. But with that said, there's enough good to it that it really is becoming a viable way for companies that are sort of in that half a million to 3 million in sales, to get to the next level, and there's really appealing aspects to it. And I think the downsides you know, are you know, one of them is your your financials are public. Some people really care about that. And that's a non starter. Other people couldn't care less. You know, I haven't heard any bad stories. But theoretically, you know, if you've got 1000 investors, you might have a little bit of an issue with, you know, an angry investor, I haven't heard any issues of this, you know, and theoretically, the sites are there to help you. But you know, those are kind of the two largest negatives I've seen, or heard about, or questioned, and just the ability to raise a million bucks, 3 million bucks, and, you know, half a year, I just, I don't know, another avenue for a half a million to 2 million in revenue brand to do that without having a really good network of friends and family. And, you know, if this is one of your, you know, brand owner’s greens to grow their brand into the next XYZ, I just, I think this is an area they have to think about is a really good option for helping them get from point A to point B.


Brad Ebenhoeh  30:48  

Yeah, I agree. It's a, you know, having more options. I think in everything in life just makes everything better, even though some people are gonna mess up, or it's risky for some people, or, you know, some people don't follow through properly. But, I mean, why not? Is there specific industries that are more successful than the others?


Marc Levit  31:08  

Yeah, great question. Um, consumer is, you know, really important, because it's typically the price points reasonable, right, or you can buy something for $10 to $100 each, it's a whiskey bottle, or a bottle of sunscreen or something like that. It's just industries people understand. So almost all your clients I think, would be, you know, potentially eligible, because highly visual storytelling people, you know, reasonable price point. The other areas, some, like, tech companies, like far out tech that I just don't even try to understand, you know, big ideas, pre revenue, often that are raising huge amounts of money at huge valuations. And it's about, you know, like, seeing things that are like pizza, making robots and like, you know, cars that fly and stuff like that. So I'll let that be and stick more to the consumer brands, but I'd say those are the two I see most often.


Brad Ebenhoeh  31:09  

Yeah, and that makes sense. Those that are in front of the eyes of the of the folks that are investing. And then and then I think the tech space makes sense. Because if somebody was want to get into huge upside of those videos, valuate valuations, that nobody can understand that, that, that that's a side conversation. So if my company is doing this today, yeah, we're gonna move forward with this, you know, process or this plan? What are the three things I should think about in my head to do and to start executing on or to start like to do today in order to properly be successful? So I'm in, I pressed the button on the four to six weeks up front, like, so I've already made the decision. Now, what do I need to do to go execute? What what are the three things I should think about?


Marc Levit  32:50  

Yeah, great question. The first thing I think about is storytelling, you know, it's the digital assets, it's the video, and it's the visuals and the story. For better or for worse, a lot of these investomers just don't care about the valuation similar to, you know, the Robin Hood and the mean stocks we were talking about. And so you have to tell your story in a really appealing visual way that that brings the folks along with you. So get your digital assets to be you know, top notch. That's first and foremost, and then second, you know, plug for you talk to your accountants and lawyers, right, and make sure that everything you're putting out there is, is right and representative of your business. And then third, I think, instead of just telling the story of the digital assets, and you know, the brand and what's great about it, you got to find a way to tell the story of the future, you know, and where we can go and how we can get there, and who's going to help us get there, and what the exit might look like one day, you know, not necessarily dollars in values, but sort of who would buy this, you know, if we're a nut butter company, like, who are the players out there that would be really interested in I think that when you explain, you know, oh, look, Hershey's has been trying to get into the nut category for a long time unsuccessfully and here's why. And here's five other companies that you know, are similar. That gives people wide eyes and really excited about investing because they say, 'Oh my God, this makes so much sense'. So yeah, digital assets, get your financials and legal back in in order and then tell a great story about the future and who might be able to buy it.


Brad Ebenhoeh  34:33  

I love it. I love it. Yeah. So storytelling, get your support system in place, and then forecasts looking forward. And that kind of loops back around to what Marc does at ForecastEasy and kind of that the forecasting podcast we had last episode in Episode 13 of The Month End so, man, that was a lot of information Marc, it was fantastic. I learned a ton. I knew I touched to this but now I know a lot more. Looking forward to the folks that listen to this to be able to really grasp it as well because I I think there's a lot of information out there. And really, I think when you understand at a high level, what the, what it is and how you execute on it, you're really able to piece together your, you know, your one to three to five to 10 year kind of plan of raising money, right? Where does it fit in depending upon the different variables that exists kind of in terms of your business's lifecycle. So appreciate the time Marc. Again, Marc Levit from ForecastEasy. Really appreciate all the information on crowdfunding equity, where can we find you, Marc if we need to?


Marc Levit  35:31  

It's [email protected] ; M-A-R-C


Brad Ebenhoeh  35:35  

cool. Yep. And again, forecasteasy.com is a great forecasting tool for all the small businesses out there. So Marc, thanks again. Appreciate it. Have a good one. 


Marc Levit  35:44  

All right. Thanks, Brad.

What is Equity crowdfunding?
Investomers
Why equity crowdfunding is so much more popular
What is Regulation CF
Why crowdfunding versus classic fundraising methods?
Time considerations to take into account
Talk through terms of the funding options
The crowdfunding community - how it can help your cause/ how to use it to your advantage
Legal considerations: entity type, audit requirements, annual reporting, etc
What to understand from the accountant's perspective for audit prep
Marc's take on the future of crowdfunding
Key websites/apps to utilize
How to leverage your audience to your advantage: email list, social following, etc.
How much can be raised/ what are the increments?
What if you don't raise your goal amount? Can you still access the existing cash, and when?
What typical dollar amounts is each investomer putting in?
Do you need to add in gifts? How extreme should you go with your campaign?
What a typical raise process looks like
When can I start using the cash I raised?
What does the process typically cost?
What is the typical rate/ fee structure?
Marc's take on the longevity of the industry
Which industry it is best geared toward
Three things to master for a chance at success
How you can reach Marc