SaaS Interviews with CEOs, Startups, Founders
EP 484: $7M Raised with StartEngine CEO and CrowdFunding SnapWire CEO
20 Nov 2016
Chapter 1: What is the main topic discussed in this episode?
This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base.
Chapter 2: What is StartEngine and how does it facilitate crowdfunding?
You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per top. Five and six million. He is hell-bent on global domination.
Chapter 3: What recent law changes have impacted equity crowdfunding?
We just broke our 100,000-unit soul mark. And I'm your host, Nathan Latka. Okay, Top Tribe, this week's winner of the $100 is Zach Ferron. He's a 22-year-old Apple employee, and he's listening to the show and loving it. For your chance to win $100 every Monday, simply subscribe to the podcast on iTunes now and then text the word NATHAN to 33444 to prove that you did it to enter.
Chapter 4: How does Snapwire utilize StartEngine for fundraising?
Many of you call me and tell me you love my email marketing. I have a very secret tool that I use to do it. And it was so coincidental when Clay acquired the tool, it was called Drip. And I use Drip. I'm going to tell you how I use it later on in the episode. But if you want to use it right now and get the first 60 days free, go to nathanlacka.com forward slash drip.
I'll tell you my favorite feature and why I use it later on in the episode. Nathan Latke here. This is episode 484. Coming up tomorrow morning, you're going to learn from Dr. Dan Margolin.
Chapter 5: What are the financial models used by StartEngine and Snapwire?
He has $2.5 million in annual revenue and just launched an info product where he's already done $750,000 just on that alone. How is he doing it? Top Tribe, good morning. Nathan Latka here. We've got two guests today, and there's a reason both of them are on.
Chapter 6: How does equity crowdfunding ensure investor disclosure?
The first is Chad Newell. We had him on back in episode 40 at NathanLatka.com forward slash the top 40, where he talked about his business and touched on kind of crowdfunding around his company, Snapwire. Now, the additional guest we have on today is Ron Miller, who leads a crowdfunding platform. I don't even know if that verbiage is correct.
He's going to correct me if I'm wrong, but it's called StartEngine, right?
Chapter 7: What challenges do equity crowdfunding platforms face?
And StartEngine is helping companies like Snapwire. So what I'd like to do is first ask you both, are you ready to take us to the top? Absolutely. Okay, let's so there's a blend here, guys. And I don't want to bore people because there's there are very strict government regulations around this. And I don't want to get into like a ton of the detail.
But Ron, why don't you just very quickly kind of tell us what start engine does and and kind of the legal kind of boundaries you're taking advantage of? Absolutely. So StartEngine is the nation's leading platform that allows entrepreneurs to directly connect with potential investors to raise capital to fund their dreams.
And in doing so, it takes advantage of these new laws that have opened up the possibility for everyone to become an investor in these startup and growth companies.
Chapter 8: How do investors benefit from being early backers of startups?
Whereas before, in the days of Google, Dropbox, Facebook, all those kinds of companies, you typically had to be very wealthy and very well connected in order to have a chance to get in on the ground floor. Whereas now under these new rules, entrepreneurs like Tad Newell can go on a platform like StartEngine and basically allow anyone to invest.
And the other thing that it does is allows companies to advertise broadly that they're in fact selling shares of stock in their companies so that people can become aware of these opportunities. And when was StartEngine launched? We were launched in June of 2015. Okay, 2015. And how much total kind of invested dollars have been put through your platform to date up through October here, 2016?
Just about 20 million. 20 million, so healthy. Oh, yeah. There's been a lot of activity. We've got about 60,000 unique individuals who have participated in our community and of which I'd say something like 12 or 13,000 have become actual investors. Very cool.
And let's just break down very quick, Ron, how you're making money on this before we get into a real story of somebody using your platform in Chad. How do you make money? So basically, it depends on the specific rules we operate under.
But basically, we charge 5% of the total capital that's raised and it is paid out of the proceeds of the raise, meaning that the entrepreneurs, it doesn't cost them anything to try. Under the other rules for what's called the large online public offerings, these are the ones who will let entrepreneurs raise up to $50 million per year.
We just charge a flat $50 per investor for those, regardless of how much the investor puts in. So if we look at Chad's deal, which we're getting to deeper, and his goal is to do a million, the listed on your site is funding goal, $50,000 to a million. If he raises a million, what he'll actually be getting is a million minus 5%. Is that accurate? Yeah.
that is correct okay so is it fair to say since founding if i just do the math on your 20 million dollars in transaction volume you've done about a million dollars in revenue uh is yes i would believe that's correct about five percent is that is that your only revenue model or is there any kind of sas play on the back end No, there's no SaaS play at the current time.
We plan on developing our technology into a SaaS model, primarily for international distribution at some point in the future. But today, we are just focused on the U.S. market, and there is currently no SaaS option in there. Okay, great. So let's shift this over to Chad. Chad, there's a lot of options, I think, like this. Ron, maybe you correct me.
Maybe you are specifically tied into a government law that makes you actually very unique. But Chad, why did you decide to use StartEngine? In the beginning, we decided to test the Waters campaign under the rules of Title III. Companies couldn't be allowed to raise up to 50 million, but we quickly turned gears to what's called a Title III, where we can raise up to a million dollars.
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