YouSaid · the spoken record

Daniel Gallancy

lines on the record: 52
first: 2023-04-04
most recent: 2023-04-04
sittings or episodes: 1
sources: podcast

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“Yeah. So, first of all, Clay, we're thrilled to have you as an investor. And for folks who are interested in investing, you can go to invest.auticama.com slash wsb and autocomma is spelled at a k-m-a. We're named after the atacama desert in Chile, which is spelled with the C. But we spell our name with K. And at invest.autacoma. You'll find information about milestones that we've hit, our success to date. You'll find our investor presentation, the ability to talk to investor relations, and a whole lot more. And we'd love to have you as investors.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“So, I think it's important to mention the ways in which exits can occur, but I think simultaneously it's important to mention that the team at Autocomma is focused on building the business. And we have confidence that building a good business will ultimately result in a good exit in one of those forms or some other form.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Can come in a variety of different forks. You know, Exit can be an acquisition by another cybersecurity company or another company in general. Open time cybersecurity companies will acquire other cybersecurity companies. And except to me in the forward IPO, and they need to be in the form of an I position not by a cybersecurity company or other company, but rather by a financial sponsor, you know, by private. So those are three examples. And of course, we are not opposed to any of those three. All three of those would be interesting ways, good ways of affecting an exit. Right now, the way we're thinking about it is build the most powerful business we can build, grow revenue as powerfully as we can, create a bunch of really happy customers who want to continue to spend, grow the product line. We do those things and we do them well. And I'm confident that an appropriate exit will appear.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Biggest reason is that I have a personal proclivity towards enabling everybody to invest. I don't think it should just be in the hands of venture capitalists. I'm not saying that they should be excluded. I'm not saying you should prohibit them from participating. They have their place, but there's no reason why that guy and that woman and that person over there and that person over there shouldn't be able to participate as well. Let them read about the company. get to know us do their own work a little bit and you know if they want to participate there shouldn't be any barriers to that so you know once i i think once i discovered the crowdfunding space and i realized what's possible you know the fact that anyone can invest and there's no longer these goofy restrictions just because you don't you don't have some threshold amount of income or some threshold amount of assets i think ones i discovered that i shouldn't discover that it's quite liberating i really love the idea”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“North toward some of the big exits. There are plenty of cybersecurity companies where the exits have been well north of a B, right? So obviously some that have been well over the 10B. We would love to be able to provide our investors with B's 30X, 300x and these gargantuan return. He said, you know, our job right now is to continue to bust our behinds to make that happen. My team, you know, credit to my team. I think my team is terrific. They're doing an incredible job pushing us forward. But we wanted to pick a reasonable valuation where investors can participate. The founding team doesn't get excessively diluted, but investors can participate and still make a really great return. And I think we've done that.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“In terms of valuation, so our current equity crowd running round is at a 29, 29 million dollar valuation. How do we come up with that? We wanted something that wasn't too high, wasn't too low. You'll see in the equity crowdfunding space that there are all sorts of ranges of valuations. And I would, by the way, listener, beware, right? You will see valuations that are egregious. And just be aware of the fact that when you see, oh, one billion dollar valuation. On a company that doesn't have any revenue, think carefully about what you want to do there. The thing about great crowdfunding is you sort of get to pick your own valuation and then people either invest or don't invest. So we wanted to pick something that was reasonable, right? You know, that's based on the fact that, you know, we have total contract value of about 2.3 million dollars right now. So we felt like it was in a reasonable number. And then if you look.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“You can be caught, of course, but it's much easier to cover your tracks. Besides your webcam, which you've probably put a piece of tape over if you're an attacker, there's no camera to watch you do it. So lather attacks going on. And businesses are the primary targets of these attacks because they have opportunities to steal money or steal data or unfortunately extort businesses. And then, of course, the underlying data is like your data in my data about us. the attackers know that and the attackers know that they can really do a lot of damage and they take advantage of that.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“I think the study that you referenced captures it quite well. The need for cyber security is only increasing. And, you know, it's increasing for a lot of different reasons. It's increasing because the complexity of the internet is only increasing. The places in which we keep our data, that number of places, that's only increasing. The opportunities for attackers, that opportunity space, unfortunately, is increasing. You know, cybercrime is the new way of conducting criminal activity where you can hide behind something. Physical crime, it still certainly still happens today, right? But there are cameras everywhere, sure. I don't think it's as appealing to be a mugger on the street when you might get picked up by a camera as it is to be an attacker behind a keyboard. Or of course there are”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Revenue on a year over year basis, annual recurring revenues, the amount of new customers that we get in, of recurring revenue, by somewhere between 30 and 40%. So we love it. We're thrilled. And it's super cool technology. It serves a really important purpose. Customers love it. And we're thrilled to be doing it.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Of accessing data here in a gargantuan manner, right? So if stealing one piece of a key is difficulty X, stealing two pieces is not 2x. It's like X to the sum power, right? It's very difficult to calculate, but it's much, much more difficult. So you end up with incredibly powerful protection against what's known as data exfiltration. Exfiltration meaning the theft and potential exposure of that data elsewhere. And it's been great. And we have more than 60 enterprise customers. 60 would be very, you know, 60 doesn't necessarily sound impressive if you're talking about mom and poppy. We're talking about big companies, right? So you're getting big companies to buy this stuff with success and they like it and they're buying more of it. You know, if you look at just, you know, Q1 is not quite over as we're recording this. It's approaching over. By the end of Q1, we will probably have grown, you know.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“To decrypt that piece of data, you can on the fly let the shards of the key be reassembled and so tap approves. It's got sort of a UI UX user interface user experience of what looks like 2FA. You just tap a button on your phone and then boom your cryptographic key is reassembled. The file is decrypted. You're ready to rock and roll. Meanwhile, if somebody manages to get access to the underlying encrypted data, all they have is a bunch of encrypted nonsense. They need to have the keys. So in order to steal your data, it's no longer just breaking into your Google Drive, breaking into the file server, breaking into Dropbox or whatever it is. Yeah, if they have to do that, but they also have to get the piece of the key that's on your phone, the piece of the key that's on the server, the piece of the key that's on a laptop. It's much, much harder. So you've increased the difficulty.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Cryptographic key or otherwise into multiple components. We saw this within the Bitcoin and crypto world, and we said, wait a second, this is great security. Why isn't anybody doing this for enterprise cybersecurity? And we were shocked at how little of this sort of thing was actually going on in the enterprise cybersecurity world. So, of course, we said, this is great. This is a great opportunity. Everyone is running towards the white hot Bitcoin and crypto world. And we say, wait a second, wait a second. There's something great here tech-wise. We could take that and apply it someplace else. And people are not running into that area. They're not all trying to do that same thing. So we built out an encryption platform that enables the splitting of keys and the reassembly of those keys at the point of decryption. So you'll have a piece on your laptop, a piece on your phone, a piece on your iPad. You know, a piece could be on a server. And then when you want...”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. And I'll give you the 22nd Genesis story, which will explain how we got the product piece. So when I spent some time in the Bitcoin world, one of the most interesting aspects of that space in my mind had been various different mechanisms of storing cryptographic keys. So without getting too mired in the underlying details, cryptographic keys would enables you to send Bitcoin, crypto from party A to party B. You have that key, you can send it to another person. You better keep that key very well protected. And one of the really neat ways to do that is to split the key into pieces. And I would say most well-known mechanism for doing that, cryptographically assuming known as Shamir's secret sharing scheme. So using, so Shamir's secret sharing scheme is what's known as an example of threshold protography. It's a mechanism of splitting a piece of data being”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“We have for the time being exhausted our $5 million cap. It's $5 million every 12 months. So now right now we're still raising under what's known as Reg D. So we can take money from accredited investors, but also under what's known as reg S. Reg S enables us to raise capital from anyone overseas accredited or not accredited. So overseas relative United States. So anyone, SEC says under reg S you can raise capital from folks who are outside of the United States regardless of their accreditation status. We look forward in the future to, if at all possible, we'll see reopening the reg CM piece and being able to deal with even more investors in the United States who are not accredited. I think that's great. But for now, it's accredited U.S. and not the accredited slash accredited overseas.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“So I'd have come with his cybersecurity company based in New York City, and we started an equity crowdfunding round late last year under Reg CF and also RegD. So we did these two things simultaneously. And then also another Reg called Reg S, which I can explain in a moment as well. The Reg CF portion filled very quickly. So between Reg CF and then silver credit is we hit the $5 million in like five days. I said earlier that many companies find this to be a slog. We found it to be a very efficient and effective way of raising capital. We're thrilled we did it. We think it was great. And now why give these investors updates? And it's great. I'll do a webinar and I'll have all these folks who are investors like, nobody, and I'll be able to tell them directly what's going on, which I enjoy. And I hope they enjoy too. I think they do. We've continued along with the equity crowdfunding route here. So right now.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Were to destroy venture capital. I do not expect that. What could be interesting is the coexistence of the two and the continued growth of equity crowdfunding and the ability for people who are not venture capitalists to I think that coexistence can actually be not just healthy, but beyond that, I would say symbiotic. And a good example of that is a situation in which there's a consumer-facing product and the users are excited about the product. And they want to put in capital. And that can sit right alongside the VCs.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“I have to get back to you with the exact numbers. There is data out there. If I'm not even close to the 750B, it's not even close to disrupting venture. It was one of the reasons why I lady did so interesting, where at the earliest stages, it's not even close. And there are many reasons why it's not even closed. You still have a lot of hot deals that know they can go straight to VCs and get the money, get it done fairly quickly. Whereas the equity crowdfunding route is sometimes viewed as more of a slot, a longer process. It depends. It doesn't always. When we did it, we filled around very, very quickly. But I think there's certainly a perception that it can take a long time. And I think in many instances it does. So it has not yet disrupted the venture capital world. And I don't know when it will. It may never disrupt it per se. It may exist alongside it. I would be surprised if equity crowdfunding”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“And hoping that the users get more excited than they already are. So there's that as well. So it's not limiting to the venture capitalists, but what it does, it enables investors who happen not to be accredited, to participate in these sorts of days.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“You can certainly follow along with others. There are newsletters and all sorts of kind of publications that will talk about these things and compare them. And I think that's a good way to do it. There are websites that will also where you can kind of compare and contrast. You know, conceptually similar to a screening tool for stocks, right? Where you can screen based on earnings growth or revenue, some particular rich. So there are a bunch of ways for a person to get informed about this stuff. Certainly do your homework. What's nice here is the fact that these opportunities are no longer limited to venture capitalists. It's not that VCs can't invest in these things and often they do, by the way. Some of these opportunities are led by venture capitalists and they're taking money from the crowd anyway because they want a community building exercise. They have a product and they want their users to get even more excited about the product.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Uncle is raising money for the car wash. And you know that there is a need for a car wash there. And you think that there will be demand. And you think that that car washer will make money, then you have some information on which you can make potentially a reasonable decision, right? And an outsider wouldn't know one way or the other necessarily, right? So maybe you have information as a community insider that would enable you to put capital into an entity because you have a sense for upcoming demand. And that doesn't have to be a call on right. Maybe you're a physician. And what's being proposed is a medical device. And you understand that area particularly well. Or you're not a physician. Maybe you're just like a biologist. Who knows? You understand some particular area. That can be interesting. Those are interesting opportunities. So that's the second way. So first really portfolio. Second way is you have some sense for what's going on with that particular industry. Third way is”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“I think this is an interesting topic. There are at this point an abundance of equity crowdfunding opportunities. You can go on websites like WeFunder or Republic or Startengine. There are a bunch of these things out there. And you can see these companies that are raising capital. Now, question, should you put capital into one of these companies? I'm not here to answer that. What I can talk to you about is, so I think this is your question, some of the frameworks for analysis here. So certainly one approach is to take a portfolio approach and say, okay, I don't know which ones to pick. But I'm going to pick A and B and C and D and E and F and 10 of them, right? And put an equal amount of capital H sort of hedge your risk that way. Second way to do it is if you have some specific familiarity, this goes back to the car wash example. If you lived, you know, in the town where you're”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“In regular crowdfunding, you're generally getting access to a product perhaps before it's released to the general public. That's generally when you're getting hit versus in equity crowdfunding, you are getting other shares of stock or some other security interest in the target company. So with the regular crowdfunding, you're getting a one-time thing. You're getting the widget that they make. With equity crowdfunding, you get shares of stock of the company, which you could own into perpetuity. And to the extent that, you know, ultimately those shares pay a dividend or ultimately there's an acquisition, you have the opportunity to make money, not just receive a product”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Reg A at reg CFR, the equity crowdfunding regulations. And I think it's really important to talk about equity crowdfunding versus traditional crowdfunding. The type of crowdfunding From old school crowdfunding.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Are being done via Ready A and RegCL. So you've had a lot of innovation as a consequence of these regulations emerging. You couldn't have done that. Forget the social media part. You couldn't have done that before the Jobs Act. Now you can. And it goes to show that innovation will persist and you end up the caps on that are all the nuttle is, but are often a regulatory framework. And if you loosen those caps, you'll probably see more innovation emerge.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“CFR, a great starting point. Clearly, more needs to be done. It's still too onerous overall. And if you look at, for example, just some of the fees that exist if you're involved in Reg CF, those fees can hit 10ish percent, which is a gargantuan amount of money. Imagine you're raising $5 million, half a million dollars going to intermediaries. It's a lot of money. I would say that the reform process remains incomplete here. And you see a lot of areas in which there is innovation based upon these reforms, like based upon those new regulations. So, for example, if you see a real estate venture, a real estate opportunity advertised to you on social media or fractual ownership in a car or a collectible, or fractial ownership in artwork. All of these things.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Look back to, for example, 2017-18, there was a whole ICO craze. What is that? That's a form of capital formation. Now, does it violate regulations? So many regulators would say yes, right? But people were saying, hey, this is a way to conduct capital formation. There were tons of scams. It was tons of bad stuff going on. There was good stuff too. But people were doing it outside of the framework of reggae and reg CF. Some people actually tried to embrace region of meld the two together. I don't know how well that went. I think some of those went okay. But the point is it occurred in this sort of big rush. And people were like, you know what, here's a great way's a great way to raise money. And it worked. And you continue to see situations in which individuals and companies will have interesting ideas and they have trouble forming capital to create a new entity, to create a new venture to affect those ideas. I think Regain.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“For a very long time, there have been complaints about the inability to conduct a general solicitation. I came to the exact catalyst that led to the legislation in 2012. But what I can tell you is that the desire for a freer form of capital formation has existed for a very long time. At the time, 80 years of pent-up demand, now it's 90 years later, at the time was 80 years, 80 years of pent-up demand for people to have easier access to capital formation. And I would say that reg A plus and reg CF have certainly not fully solved the problem. They'd solve it a little bit, but you can tell that there continues to be significant demand for capital formation through mechanisms outside of RegD, outside of the venture world, based on a lot of things that you see around you. So if you look at the look at the look at the”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“But the ability to get involved in the capital formation process when you have an insight as to the value proposition of that business where others might not, that's what's so important here. That's what's so important here. That's a big change.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“But I want to focus on one outsiders, wealthy individuals who don't live near your uncle, they may not understand the need for that car wash in that community. They may say, is there really demand for this? Do people really care? But if you live in that community, people who live in that community with your uncle, they will have a sense, perhaps, as to whether or not there's demand for that car wash. And maybe, you know, one of them will say it himself, you know what? There's tons of demand for this. I really want a car wash here, right? Not just because I want to be able to wash my car, but also because I think it will generate good returns. There are no other car washes in a 50 mile radius, and there are a tons of cars here. And I happen to know that because I'm in the community. Well, great. Now your uncle connects directly with this, you know, this individual. The individual can put in 500 bucks, 100 bucks. It's not going to necessarily be the fastest process if everyone's putting 100 bucks.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“That's an increase from the original approximately 1 million. So started as you could raise up to a million bucks. Now you can raise up to 5 million bucks. And people are using it. Companies are using it with some fairly successfully, some a lot less successfully, but it's definitely in use. And it's a huge change because now your uncle can say, I want to open that car wash. And you might not need 75 million bucks for it, but maybe you need 2 million bucks for it. And you can go out on the street with a sandwich board and say, I want to raise some money. Now, he can't enter take the money and put it in his pocket. He needs to use an intermediary. The intermediary charges fees. There's a whole racket there. There's always a racket of these things. But the fact that he can do it, the fact that he can go into his own community and say, hey, I want to raise money for this car wash is really important. And here's why. Well, there are many reasons.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“The wheels of God do not move quickly. Once they were put into force, the rules were different. So under Regulation A, a company can solicit from the general public. They have to file this sort of kind of mini prospectus, right? It's not quite the same as what you'd file in a traditional IPO, but it contains a lot of the same information. Once the company has filed that, the company can go out and raise up to $75 million from anybody, from anybody. That number, that 75 number used to be smaller, but it was increased. Regia is a slightly lighter weight regulation. So instead of having to put together this mini prospectus, you need to put together an even more miniature one. It's like, it's less onerous. And the subsequent chord A requirements are less onerous. And that lets you raise up to $5 million, again, from the”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Exceedingly limited number of ways in which you could do that process. Now, what changed here more recently in 2012 was the Jobs Act. So the Jobs Act had lots of stuff in it. But the thing that's relevant, the piece of it that's relevant to capital formation was the establishment of two new regulations. One was called, is called Reg A, and the other is called Reg CF. What do they do? They allow for within certain confines a general solicitation targeting investors who are not accredited and they enable capital formation from people who are not necessarily accredited investors. By the way, many investors turn out to be accredited and they don't realize they are, but that's another, we'll come back to that. But with the establishment of those new regulations, it was a change. 80 years of history change”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“So, you know, after the Depression, and you had the acts of 33, 34, and 40, you had a far more restricted landscape in terms of how capital formation could occur. And by the way, the SEC's mission, I forget the exact mission statement, but in there are the words capital formation. So, you know, you could no longer stand in the middle of the street with a sandwich board and say, I want to take capital. Instead, if you were raising money for a new entity, you were approaching wealthy people. You were approaching other established entities that have money and say, I want to put this new entity together. I want to put together a new company. And that was the process of capital formation. And that persisted for a very, very long time. Basically, that there were exceedingly limited number of ways that you could do capital formation. And this is all outside the public markets. This is all private markets.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that's right. And by the way, it's a common misconception that I hear all the time when people talk about ESG. ESG has become thematically important, right? People are talking about it all the time. And you have a lot of people who talk about ESG and say, I don't want my money going to, for example, the petrochemical industry. But if they're buying and selling shares of ExxonMobil on the stock exchange, whatever one thinks about ESG, put that aside. I take no view on that, right? But what I think we need to avoid is the red herring that is in this context, my money is going to the company. It's not going to the company unless it's capital formation, unless it's primary shares.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“I'm just buying from someone else on the other side of the trade. That's a secondary market. To stick from the primary market, primary market is if you were one of the VCs who invested in Google, I believe that the Sequoia was one of them, I'd have to look. Sequoia provided primary market capital. They did so under Regulation D, right? Because Sequoia is for sure accredited. So last but not least, and I'll stop, an accredited investor could be a human being or it could be an entity, like a venture capital group.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“To go public, you could do an IPO, and that's a register with the SEC. But basically, there are these exemptions. You need to be following one of the exemptions. One of the exemptions is known as Reg D. And Reg D is what enables accredited investors to provide capital to a new entity, right? Then there's the IPO process. That's another exemption. And there are a small handful of others. And then there are the ones that have emerged more recently. But that's where you end up with what's called primary capital. So primary capital is I'm going to put new money into a venture and the company itself is going to get that money distinct to very distinct from trading in the traditional capital markets, buying and selling shares of stock for your brokerage. That's whole secondary market. In other words, if I invest in Google by buying shares of Google, I guess outfit, sorry, they don't get my money.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“And we talked about the definition there, if you like. You could do that, right? And those are essentially people who have a certain amount of wealth or capital or a certain amount of income. They have to meet these thresholds for wealth or for income, which is a much tighter pool. And the assumption there for better or worse is that those people are more sophisticated. Or perhaps it will be less tumultuous if they lose some money. What the exact assumption is I don't, I actually can't tell you, but it's somewhere in there. Now, is that assumption good or is it silly? That's probably a little bit goofy because there are plenty of people who have plenty of money, don't know what they're doing. And there are plenty of people who don't have that much money, who are very smart and do know what they're sugaring. But, you know, this is the way the world is the way the world is. And this is the way the regulations were set up by the 90 years ago, the securities act of 33 is 90 years ago. So, you know, that's a general solicitation. You can't do it anymore. And then, you know, after that, of course, if a company wants...”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“You cannot, Swiss generally, you must go through various different proper channels. So what ultimately is allowed and what ultimately is not allowed? So if you want to solicit capital for capital formation and you're a private individual, you have to go to”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Boston 29, and people were angry as people always are during the bust. And, you know, that anger sometimes gets directed properly and sometimes it's misdirected. It really depends. I won't say I'm not sufficiently adept as a historian. That's not like my I won't say whether or not the anger was appropriately directed in that case or not, but what came out of the crash of 29 and the subsequent depression were three big pieces of legislation in the United States. The Securities Act of 33, the Exchange Act of 34, and the Investment Advisor Act of 40. Basically, what the first two of those acts did was they said no more of this general solicitation stuff, no more sandwich board.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“He were to stand on the street corner and say, I'm raising money at a sandwich board. I raise money for this collage. Give me money and I will sell you shares in the car wash. We will be a debt security, whatever it is. That would be considered what's known as a general solicitation. He is asking the world for capital. General solicitations in the United States and in most other developed market countries are prohibited under securities regulations. I'm going to stick with mostly the US because that's where my familiarity is the greatest. But you can't do that or historically you have not been able to do that. And that history goes all the way all the way back to the Great Depression. So before the Great Depression, you most certainly could do that, and people did. And there were a lot of scams and lots of kind of nonsense that would go on. And then, you know, in the Roaring 20s, there were a lot of, you know, there were IPOs for companies that had no prospects at all. And then you had.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, absolutely. Actually, before we do, I want to add to what you said about Airbnb. Airbnb is certainly not the only example of that. There are a handful of companies that actually won't name names here. But one company in particular that's in the digital asset space, let's say, its competitors had suffered a lot of difficulty at the hands of incumbent banks. Banks didn't want to have relationships with a lot of these competitors. One company got together with the right VCs. The VCs called a particular bank and said, don't shut this company's accounts down. So these VCs can all split a sense and drive their own returns. It's really fascinating. But okay, to answer your question, your question was about primary markets, secondary markets, general solicitation. Let's do the general solicitation part first. Your uncle with your fictitious uncle with the fictitious car wash, if your fictitious uncle with the fictitious car wash, if he wanted to raise money for this car wash,”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“But I don't think that's quite the way to look at it because you really want to be cognizant of the manager here. And a big difference between managers in the speaking of competitive management, managers in the publicly traded equity markets, you'll see these managers who will perform spectacularly and then it will go away. Not always, but often in the venture world, success can create more success because they get bigger and they have access to better deals and they get more connected. They get more entrenched in the top tier club and they get better access to better deals. So they can create for themselves over time an increasingly powerful advantage. That has been the case historically. Whether that remains the case going forward, impossible to say, but I suspect that will continue to be the case.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“To be attracted by the likes of the top tier venture groups. Consequently, those venture groups, and it's very clubby. Those venture groups get access to these great deals. And smaller venture groups tend to be a little bit more left out in the cold. Now that may be changing a little bit, but if you look at historically, certainly over the past 30, 40 years, it's largely been the case. Now, if you aggregate it all together, the last data set that I saw indicated that there's actually a slight discount. So if you look at the returns on venture capital, if you look across the board, so take the high performing waters and the less spectacularly performing ones and the aggregate performance is a couple according below the S&P or the Russell over the same period.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“So it's difficult to get precise data on this, but I have seen some data sets on this. So first thing is that the data is skewed. And I'll explain why that is. So when I say skewed, what do I mean? Certain venture capital groups will have tremendous, tremendous outperformance. And they'll be able to maintain that for quite some time. Whereas others will lag. So you have this kind of odd distribution. Now, by the way, you could say that that's the case for equity fund managers, publicly traded equity fund managers, but I think that the skew here is going to be stronger when I say here, I mean the virtual world. Why? The reason tends to be access to deal flow. So the fancier, the better the prospects of the company, the more likely they are.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Equities, right? So trap. BTFs and mutual funds because you don't want to double count, right? That's more than 40, somewhere between 40 and 45 trillion, right? So, you know, 15, 16, 70, 18, 19X, high teens X, the size of the venture world, right? So even when the venture world is big, it's still small on a relative basis.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Pre World War II at all, it really emerged. There's a tiny, tiny little bit in the 60s, a little bit more in the 70s, and then really in the 80s. So in the 60s, it was so small it didn't really matter. In the 70s, that's when you had groups like Sequoia and Kleiner Perkins start. And at the time, it was maybe $100 million industry, so pretty small. By the 80s, it was like a single digit billion. I think the number I last saw was 3 billion in 1980. By 2000, it was more than 100 billion, okay? Just skip 20 years, skip another 20 years to 2020 slash 2021. And now we're talking about 750 billion. So much larger. Now, that seems very large, but just by way of comparison, if you look at the, you know, the market caps of, you know, all U.S.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Property, right? Or something where, and I know you covered this a lot in your podcast, something where there's an important molt, right? Sort of from the foundation, from ground zero. And that's where the venture industry really cares, those sorts of businesses. In terms of its history, it's surprisingly new. So we're going to talk about the regulatory background, which is actually, it's not boring. It's actually really interesting and very important. But just in terms of timing, it didn't really exist.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“So, venture capital is a very specific corner of the capital formation world. And VCs really look for businesses that will scale hugely. So there's nothing wrong with car washes. And by the way, they can be great businesses. They can generate a lot of cash. And there are private equity companies that are rolling up car washes and taking the public, right? So that's happening too. But venture capitals are not really looking for car la la la la la la la la la la la la la la la la la la la laches because it's very difficult to scale. So VCs tend to be interesting, I would say, you know, stereotypically, and I'll use that word, in businesses like software companies, right? Or biotech company. Something where you can put in a modest amount of capital up front and then get these really tremendous returns on capital because what you're getting returns on tend to be, for example, network effects or intellectual”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Be a hybrid instrument. There are all sorts of formats in which that could happen. But the process of that new capital air quotes forming and then the new venture getting off the ground, be it a VC-like venture. I use air quotes there where it can scale tremendously or a small business like a laundromat, right? All that stuff is capital formation. So with that as a prerequisite, your question was really about the venture world.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT
“Maybe I should start by talking about capital formation and perhaps defining the term a little bit because I sometimes find that when I'm discussing this, people say, what in the world is capital formation? And it's a good place to start foundationally before we talk about eventual growth. So capital formation is the process through which investors come together and provide capital to a new entity. So if you want to start a brand new company, right? If your uncle wants to start a new car wash and your uncle says, hey, you know, I want to do this thing and maybe your uncle doesn't quite have the right amount of capital for it, your uncle would inherently be involved in the process of capital formation. He may not go with that as most people do not, but he would eventually go to friends and family and say, hey, I'm trying to put together this car wash and I'd like you to put in some money. And that could be in the form of equity. It could be in the form of debt.”
2023-04-04 · We Study Billionaires · TIP541: How Equity Crowdfunding is Changing the Game w/ Daniel Gallancy · IDENTIFIED FROM THE TRANSCRIPT