Magic Whale Formula:

The 3 ingredients for attracting investors to your crowdfunding (ICO/STO) campaign  

Below is a redacted and slightly edited and updated version of a memo provided to a client regarding how to attract investors to their business, in mid 2017. For background, they’re a 5 year old private investment firm, whose stock is traded OTC and who invest in startups focused on blockchain tech. To further this model they were exploring additional ways to raise capital, specifically to acquire more startups. Below is a high level framework of what investor “whales” are looking for. This is not investment advice. These are redacted insights into what you should be considering if you’re looking to also engage potential investors in your business enterprise.

If you don’t have time to read it all, I’ll summarize: It still takes money to make money.

Note - all crowdfunding campaigns (regardless of if you call them ICOs / STOs) require a legitimate business model, ta...more

I owe Jack Shaw a favor. It’s one of those, “This one time in Cambodia...” type of favors. We won’t speak of it beyond perhaps a nod and wink. It’s not written down anywhere; the details of such are so vague as to be almost non existent, while encompassing the known universe. It expires upon death, of the sun; and can be redeemed whenever and by another person who need only walk up to me and say, “Jack Shaw sent me. He says to tell you ________”. And tada, that favor has been redeemed for value.

Jack would call this favor a “marker.” It’s more valuable than your house, the Empire State Building & 100k Bitcoins combined. It can even be redeemed for something even more precious, my time or an opportunity or access to my network. You know, those things that money can’t buy. Well, you can lease my time from time to time.

Favors, markers and promises are humanities’ first virtual currencies.

They’ve gone digital recently, as Jack might redeem his marker via a Wh...more

What is Blockchain - The Santa Claus Perspective

Typically when people ask, “What is Blockchain?” the conversation quickly dissolves into “How” blockchain works. How blockchain works is actually only important to about half of 1% of the top tenth of techies. Business, Thought Leaders and pretty much everyone else pretending to understand how the tech works, should leave those technical elves to their wizardry and focus on the big picture. Being the proverbial Santa Claus. Cause really have you ever actually even heard of Santa doing anything? So why does he exist?

The Santa Claus of Blockchain Strategy

If I asked you “What is the Internet?”, assuming it’s three decades ago, would you run through the technical aspects of how ISP, LAN and DHCP work? Or would you tell me all the cool shit that it will spawn? How would you advise me from a strategic standpoint on how to understand the “www”, to position my business and investments to be relevant, successful and fabulously rich for th...more

Blockchain isn't hot sauce

The definitive executive guide to understanding WTF blockchain is AND why you should care.

Note — This is a brief executive guide because as an executive, you have better things to do than get a new degree in yet another decades old “emerging” technology.

What is blockchain? Think of it as a group text message. Those annoying times when you have twenty or hundred people talking about something. Where some people have names, some have numbers and they’re all actually just sharing data. Data can be anything from text, photo, meme, video or hotel reservations. A blockchain is immutable and distributed, just like your group text message. Send a classic Friday Happy Hour NSFW photo to a group text. Even if you delete it on your cell phone, it still exist on everyone else’s. That’s the essence of distributed ledger technology (DLT), aka blockchain. Shared, distributed, immutable data.

What can you do with blockchain? As a ledger it records and sha...more

Going Public in a Post-Spotify World

More than 1,450 companies globally IPO’d in 2017 -- the busiest for new listings since 2007. Yet while there were the most IPOs in a decade worldwide, U.S. companies, with annual sales of less than $500 million, may believe they are too small to go public. This may be a contributing factor to widely-cited data indicating the number of IPOs in the U.S. has fallen by about half over the past 20 years. There are viable, alternative paths to going public for small- and micro-cap companies without incurring the costs and complexities of the overhyped IPO. While it wasn’t without hype and high-expectations, Spotify’s direct listing on the New York Stock Exchange shines a spotlight on non-traditional, but reliable approaches to entering the public markets.

                  The Slow PO

In contrast to the traditional initial public offering (IPO) process and more aligned with Spotify’s ap...more

OTC Market Group recently submitted a comment letter on FINRA Rule 6432 to the Financial Industry Regulatory Authority, Inc. (FINRA) in response to the request for comments on FINRA Rules Impacting Capital Formation.

In the letter, we recommend that FINRA work with the SEC to make Rule 6432 more efficient and regulatorily relevant by adopting a disclosure-based approach and promoting the public availability of information. Our letter recommends the following simple modifications to the administration of Rule 6432 that would provide immense benefits to smaller companies looking to access well-regulated secondary markets:

Making the Form 211 review process more efficient by adopting an objective review standard and implementing a three-day turnaround;
Requiring that Form 211 materials be made public and issuers (not broker-dealers) be liable for any misrepresentations;

Outsourcing certain Form 211 functions to IDQSs, including allowing an IDQS to file a Form 211 directly with F...more

OTC Market Group recently submitted a comment letter to the Financial Industry Regulatory Authority, Inc. (FINRA) in response to the request for comments on the Effectiveness and Efficiency of its Payments for Market Making Rule 5250.

In the letter, we recommend amendments to Rule 5250 that would allow issuers to compensate broker-dealers for the reasonable out-of-pocket expenses involved in preparing and submitting a Form 211. Finding a broker-dealer to file a Form 211 presents a daunting initial hurdle for companies looking to access the public markets in an efficient and orderly manner.  From the broker-dealer perspective, filing a Form 211 involves collecting, reviewing and analyzing the issuer’s disclosures, as well as responding to FINRA’s comments and questions. The process presents a significant cost and time commitment, with no possibility of remuneration.

Rather than banning payments all together, FINRA can more effectively facilitate small company access to public m...more