Startup Talk The Canadian Startup Podcast
Building a Better Path to Capital with Equivesto
The Startup Coach is joined by two of the cofounders of Equivesto Ryan Correia and Alex Morsink. Discussing the problems with raising capital, how Equivesto and Equity Crowdfunding is changing the game, Equity Crowdfunding Success stories, Investing in Equivesto and more.
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Full Automated Transcript below
Building a Better Path to Capital with Equivesto
Announcer: Direct from the six world renowned Canada’s largest city with Canada’s biggest thinkers, visionaries, and hustlers. This is startup talk, featuring the founders, funders, innovators, and community leaders. Who’ve led Canada’s startup ecosystem right here in Toronto. You’ll hear the challenges, the failures, the successes, Toronto startup podcast gives you the full story direct from the entrepreneurs
and influencers who’ve made a difference. Now, the host of startup talk, the founder of Toronto starts this startup coach
Ryan Correia: Equivesto is a Canadian equity crowdfunding portal and growing community of over 3000 members. We are currently raising capital to grow our reach and help even more investors and founders.
If you’re interested in becoming a co-owner of Equivesto starting at only $500. Visit Equivesto.com for more deals.
The Startup Coach: Welcome back to startup talk. I am the startup coach, founder of Toronto star. It’s one of the largest startup communities in Canada. And with me today are the co-founders of Equivesto Ryan and Alex.
Alex Morsink: Hey Craig. Thanks
Ryan Correia: for having us. Thanks for having us, Craig. You’ve
The Startup Coach: been working in our community for a long time. I’ve known you, but a lot of people don’t know what Equivesto does. So why don’t we start with, what does Equivesto do.
Ryan Correia: Yeah, I think we’ve known you for well, before we even started this business.
Well, Equivesto is a licensed exempt market dealer and equity crowdfunding portal that enables everyday Canadians to invest in vetted startups, small businesses, real estate opportunities, starting at. A hundred dollars through our service businesses can raise up to 1.5 million from their customers, fans, followers, and extended community members.
So it creates a larger pool of potential angel investors. Companies can source investment from and provides private investment access for marketing.
The Startup Coach: I know you both had full-time jobs working with large corporations before this, and it’s a big jump to leave a lucrative job and build a startup and even more of a challenge to meet all of the regulations that Equivesto had, had to do to go where you are.
So the question is, why did you do.
Ryan Correia: I wouldn’t say that my, my paste-up was lucrative, but certainly more predictable career path. But I think what, what scared me more than failing at building a startup was was that the sort of regrets I would have in the future. If I didn’t follow what I was passionate about entrepreneurship for Alex and I is in our blood.
And the problem we wanted to solve was early stage funding, you know, Alex and I go way back. Uh, going to the same business school, we eventually, you know, best friends. And we always said we would start a business together after, after uni and Alex went on, he went into his finance career. I went into a tech career, so it was sort of fitting that we started a FinTech.
Uh, we saw that the number one reason, you know, startups failed was due to under capitalization. You know, underrepresented groups, such as BiPAP and women led businesses having a significant disadvantage. So at the time when we were looking into how to solve this problem, the concept of equity, crowdfunding, like a democratized version of angel investing that allows the general public to invest alongside angels and fees.
Was blossoming in the U S and UK. And we knew that this was something that we needed to bring sort of mainstream into Canada. Like all financial products Canada’s really, really slow to adopt. You know, it took us three and a half years to get, you know, sort of everything together and get registered. But, you know, if I look back at our original deck, it’s really nice to see that our central goals haven’t changed at all, creating a better way for founders to raise capital and bringing private investment access to all.
So it was just simply something we knew we had to solve. How big
The Startup Coach: is this problem of the inability of raising equity for
Alex Morsink: startups? It is a quite sizable challenge, Craig and part, I think part of what makes it more complicated is a lot of the information and content being created for the startup community is often created.
By one of the largest startup communities in the United States and Silicon valley. And so a lot of the content there is really focused around doing large raises from Erik and venture capitalists with big valuations. And, you know, if you’re on things like Crunchbase or PitchBook, you’re seeing stuff like this happening and you feel.
Everybody’s out there doing this, closing these big rounds. The reality is, especially in Canada, there’s only a limited number of angel investors and a limited number of venture capital firms. And so from the perspective of a company, going out to look to raise capital and actually get access to funding traditionally, with being able to get capital only from VCs angels, you know, groups like that.
Always a, you know, a massive sort of a limited pool of funds available. It could become very competitive and it was really just trying to get money from these limited individuals and with equity crowdfunding, it’s really changing the number of people who can actually participate and become investors in these companies.
It takes it from, okay, you need to go into. Seek approval and validation from the small group of more powerful individuals to now, everyone is able to participate. Everybody is able to invest and the amount of capital in Canada that is being controlled by self-directed. Individual investors who are looking to invest in higher risk opportunities, whether in the public markets or the private markets, we estimate to be over 300 billion Canadian.
And that’s far more than that. It’s been deployed into startup funding so far that’s that’s in the public markets. And now with equity, crowdfunding companies are able to allow their communities to take some of the funds. They might’ve been putting towards public markets or other activities and put them towards startups.
And that really. Changes the game for Canadian companies and their ability to actually raise capital. And from the perspective of a company going out to raise capital, people are often focused on, okay, I need to get money from VCs. I need to do a VC raise and they forget maybe sometimes that. VC funds are actually created to invest in certain types of companies.
And they have their own investors which have demands, which have requests. And so VC funds might be looking for a very specific niche of tech company. That’s looking to scale within a certain timeframe. And if your business doesn’t happen to meet that, then that VC fund is not going to be interested. In funding you.
And so not only are you limited by the quantity of VC funds, but also making sure that your business happens to align with, you know, what VC funds are currently interested in and the timeline they want meet. So it does end up being rather limiting for companies looking to raise.
Ryan Correia: For
The Startup Coach: example, like if the is looking for a 20 times, return on an investment and you’re only potentially going to ULA 10 times, they wouldn’t be interested, but thousands of other people potentially would be
Alex Morsink: right.
That’s a, it’s a fantastic point. The, the VCs are targeting a very specific type of investment opportunity for their own investors. They want kind of moonshot kind of businesses where okay, more than half of them are gonna fail, but the ones that succeed are going to become so successful and so wealthy that they’ll cover the losses of all of the rest, as opposed to businesses that might be able to get.
Far better returns than you might get from just investing in companies in the stock market, because they’re smaller and they’re going to grow to that larger size business and you can kind of get in on the ground floor, but they’re not at that same scale of, of what a VC is looking. If your
The Startup Coach: business is a hundred million dollar potential, which is a great business, most VCs aren’t interested, but other people are, and that’s a great potential business,
Alex Morsink: right?
There’s, there’s so many businesses, it’s either, you’re a small business and then VC wants nothing to do with you. And you have to go to a bank or you’re like a tech startup that’s looking to rapidly scale and go global. And your market is like trillion dollars and the companies anywhere in the middle and including the small businesses, haven’t really had.
Access to equity funding at scale before. Um, and it’s really been just limited to kind of being lucky enough to have wealthy friends and family. And so with equity crowdfunding, it’s just allowing that whole community to come in and invest in support the business. If your business is growing and becoming more successful, because you have a strong customer base who love your product and care about it, and they want to help support your business grow.
Equity crowdfunding gives you another way to actually make them shareholders co-owners in the business as well. So they can benefit from your growth and success as well. So how are
The Startup Coach: it? Is it to get access to capital for those businesses that are looking for a five X or six X return? And why is it so.
Alex Morsink: Well, I think it really does speak to some of the legal challenges of actually getting capital to a private business that doesn’t just in general, a private business. Right? You’re if you think about the traditional space, if a company is going out to get external capital, it’s limited to finding high net worth investors who are allowed to invest in private businesses or to go out and.
Uh, get alone, which is usually has to be backed by personal guarantees and, you know, assets of the company, uh, and all these kinds of things from a traditional bank. People always want to find investors in. They’re hoping that they’re finding an investor. That’s kind of got this big bag of money and they’re just looking for places to put it.
Nobody is sitting around with money, doing nothing, certainly a larger, more experienced investors. Those investors will have the funds deployed elsewhere and they might move the funds. To something new, if that appears to be a better fit from them. But in terms of actually being able to go out and get access to capital and raise capital from individuals or find capital, there’s not really, there’s not really a ton of options.
There’s grants from the government. And I know there’s, you know, partners of ours and yours that really focus on that, but it’s not like every single potential way that a business. Could potentially raise capital is very easy to access and it’s outlined it’s kind of placed simply in front of a company.
It’s hard work raising capital from VCs in the first place. You know, it can take months and months of pitching and going and speaking to people before you eventually get a yes, even in a traditional. It’s a lot of work, not that equity crowdfunding is easy and you just kind of show up on the platform and people throw money at you because it’s not, but it’s certainly, you know, it just is providing more opportunities for companies to, to raise.
Ryan Correia: Now you
The Startup Coach: mentioned early on, or Ryan did about women founders and BiPAP founders. And I was talking to one of the founders of she, oh, a couple of years ago. And she said that women led companies only get 7% of the VC funding. I don’t know if that’s still a problem. Can you tell me a little bit about the gaps here?
And if there is an explanation.
Ryan Correia: Yeah, I think it stems centrally from, you know, investor representation. If you look at the demographics, the representations of your sort of angels, and there there’s some, some stats on our website about it. If you look at the demographics of how that spread is made up, the actual companies that get invested in are almost identical, you know, so 1%, uh, you know, black, uh, investors equal 1%, uh, black founded VC.
Companies. So there’s a very clear indication here that unconscious biases are playing a pretty big role in terms of how companies are getting funded. So that’s one of the areas that’s amazing about equity crowdfunding. As we refer to as democratized investing is it’s providing access to investments. A very wide net of people who generally come from these companies, communities who understand them better and thus can trust them enough to, to invest.
And that’s really what we’re all about. Is it providing that level playing field and where at least you have a fair shot at accessing that same capital.
Alex Morsink: Well, and to, to build on what you’re saying there, right? When we think about how a lot of individuals generate. Sizable wealth and transition and have transitioned from kind of a regular person to a very wealthy individual.
A lot of individuals have created their massive amounts of wealth through investing in private companies in the private markets. They get into companies early, the companies ended up being successful, and then that’s really kind of where they’re able to make their fortune. They invest in a wide range.
Some of the companies don’t succeed, but some do. And then that helps generate that wealth. And so equity crowdfunding actually solves kind of both pieces where not only are we helping founders raise capital from their extended communities that get access to capital from a variety of sources, it’s a more diverse founders can also get funding, but at the same time, we’re allowing.
More diverse communities to participate into this traditionally closed off private investing process and hopefully helping to distribute the wealth even further. If you think about the statistics that Ryan mentioned, where, you know, I think it’s like over 70% of investors happen to be white males.
Those are the individuals investing their money in the startups and when the startups do well, those are the individuals financially benefiting. And so we have a situation where there’s not a lot of opportunity for that wealth to be shared and also have returns being given to other communities because they don’t really have a chance to participate.
And so this is creating access on both sides. So, how
The Startup Coach: does it all work? I’m not going to go and ask from a random person on the street. Will you give me $50,000? So how does equity
Alex Morsink: crowdfunding work? Yeah, well, and starting with your example as private company, going to a random person on the street and asking for $50,000 is actually illegal.
And so there’s actually quite specific rules that the Canadian government and securities regulators have set out around who can raise money from who and how you can ask and all that sort of stuff, but essentially equity crowdfunding. Is a company going and working with a licensed platform like Equivesto.
So to be able to make their investment opportunity open to the public, to high net worth investors, but also to everyone in the community, a company would go work with a platform, go through our full due diligence process, get verified and get ready for a campaign. During that process, they would also be reaching out.
Gathering their community, getting people excited, letting them know about what’s coming. Once the company is already in the campaign is launched, then they can invite in their community and the general public to invest in the business and raise capital. That way individuals literally sign up as an investor on equal Festo.
Run our sort of background checks on the individual investors. We are actually licensed to review each investor and help make sure that they understand the risks and the challenges of investing in a private company. And they’re fully aware of what they’re participating in. We’re actually also able to provide investment advice if they so desire about their suitability to different investments on the platform, but that all is done quite easily and quickly.
So the individual signs up as an investor, they’re able to see the offering and invest sign digitally, provide the funds all in real time. And then the funds are gathered, uh, in a segregated account. During the campaign, the campaign runs for up to 90 days, and then it closes if the company was successful and, and raised their, their goal of the funds, then congratulations, uh, you know, the, the funds are released to them.
Uh, the filing is made with the regulators and now all of these individuals are investors in the business.
Ryan Correia: Yeah, absolutely. Before we would use examples of other companies, but now that we’ve been operating for some time, I’m actually going to use some of our own. So, you know, to, to date, we’ve had over 20 companies launch something with us, some of the more notable success stories include one, a good example would be like Hotsy financial, they’re, they’re a neobank that, you know, that plans to help people, uh, you know, spend, save, build credit, you know, track their finances.
And they’re really focused on, you know, financial wealth. Uh, for people regardless of their background or situation. So this was a message that really, really resonated with, you know, what equity crowdfunding is all about. So they were able to raise over 300% of their goal and their target on equity on equal pesto.
So one of the highest in terms of percentage over their goal that we’ve had in our history. And, and then they later on went to, to raise an addition. $500,000 on, on Dragon’s den, which was amazing from, from investing in west hall. So, you know, they’re, they’re on a really good trajectory. I think, you know, we, we played a small role in, in their, in their story, but Tafari and the team have done an excellent job, you know, taking, taking their business to the next level.
And, and it was a clear example of showing how, uh, you know, a community round a, an equity crowdfunding round can play a good position. And how, you know, future angels, future teacher VCs are not afraid to participate after our long alongside community rounds. Another example I would probably bring up would be.
Uh, element 79 gold. They were actually our first clients. And as the name suggests, they’re a conservative Canadian-based gold exploration company. And, you know, after their crowdfunding raised, they w they went IPO and listed on the, uh, CSS. And what’s amazing is they actually hit a 52 week high of a dollar 65, which, you know, was a 16.5 times growth from the 10 cents warrants that were sold on Equivesto.
So, uh, just to, just to be clear, if you, if you invested a hundred bucks, you know, and sold at that time, you, your investment would have grown to. Uh, 1,650 bucks, um, in less than a year, which is, which is an amazing return. I’m not saying that that’s going to happen with every company, but this was a really good example because you know, many pre IPO companies like to utilize a mechanism like equity crowdfunding to help meet that sort of, they have a minimum requirements of number of shareholders that they need in order to list on an exchange.
So it’s a mechanism that they use to, to get that base. And it’s also. In a way, it provides them that sort of marketing reach that they can reach new audiences to get, to get that base. So that’s a really shining example of, of, uh, of a pretty traditional space utilizing equity, crowd funding as well. And then another one and, and a final example I would bring up would be a Whirlpool.
It’s kind of funny. They they’ve come full circle, you know, we’ve, they were a client of ours and now we’re actually a client of theirs and they’re doing some really, really interesting stuff in the sort of NFT space, helping businesses better engage their users. Um, we in fact set up our own rewards app, utilizing their technology and, and it’s really designed for.
Essentially reward are low, like our most loyal users for learning about equity, Festo, sharing our content and learning about the private investment space. So really the idea of why we partnered with them was to help spread financial literacy through gamification. So we wanted to make it more fun. You know, the private spaces.
It can be boring at times. And there’s lots of information and misinformation out there. We’ve spent time creating this big base of information on our website, through our learning center and through our community page. And we wanted to make sure more people saw it was through something amazing, like what a Whirlpool’s building.
But anyways, back to that, back to their success, you know, after their ECF round, uh, award pool was able to close an additional $2.8 million from private investors, um, which really. Not only their document as a business, but also, you know, the interest in their space and the cool things that they were doing, um, to, to solve what they’re solving in terms of engagement and rewards.
Alex Morsink: Um, and those are, it wasn’t just even, um, private investors. It was also some VC funds as well. And so it helps to support that. It’s not like, oh, I do an equity crowdfunding round and then no VCs will want to participate or anything like that. It shows, you know, even, um, a few years ago when we were just getting started, there was still, you know, it was clearly understood from VCs that they would be happy to participate.
Even after an equity crowd funding round.
The Startup Coach: Those are all are sound like great companies, but just to hit on a note saying not even, I’m not just startup. Uh, I understood that a cafe in BC raised on your planet.
Ryan Correia: Yeah, that was a, that was also a great example. It was a women led business out in Squamish, BC.
So there were a restaurant they’d launched during the pandemic, which was amazing to see them. And they have hit markets, which, which was great. You know, restaurants were in question for sure at the time, but they, they used a really interesting concept where that their, their backers are going to be people who are in their community.
You know, the people who are around. Uh, who go to their restaurant who trust them, who know them, um, who enjoy their product or service. Those are the people that they were focused on, on bringing in as investors. And it’s amazing, but because when you build a and put up a restaurant in a, in a community, your community sort of comes together and, you know, instead of being something like donation-based crowdfunding or, um, sort of rewards-based crowdfunding where you’re, you’re sort of either getting a product or, or just simply donating these people are getting ownership, stake into the business.
So they. Forever advocates for your business. There are co-owners and thus, they will essentially push your message advocate for your business and into the future. So now that, that, that, that’s a very good example of a, yeah. Thanks. Thanks for bringing that up, Greg. And we also had something similar in, in, uh, Alberta, um, a company called Alberta bio board, uh, essentially a factory that was looking to in, in a small county called Stettler county.
They were setting up and. Equity crowdfunding raise, not necessarily because they needed the capital, but because they wanted to offer an opportunity to their local community, a place where, you know, there isn’t that many of these types of large firms around to invest and participate in the growth of their business.
So that was another example of, of how a community can come together and support a business, as opposed to just traditional private investors sort of reaping the rewards.
The Startup Coach: What is that equal vest, those business model. How do you make.
Ryan Correia: Yeah, we, we have, uh, two main products, equity crowdfunding mentioned before where companies can raise up to 1.5 million from their community of fans, followers, and extended network.
For that we charge a $2,500 application fee, which helps cover some of the due diligence costs. But for us, it doesn’t, it doesn’t nearly cover enough. It’s mostly about asking the question to. Are you serious? Are you ready to do this, this thing with us together? Because it is a big investment in terms of time and energy.
So that’s the reason we recharge that upfront. And then where we make most of our money is on the success fee. We take a 7% success fee from a successful raises. One of the requirements of equity crowdfunding is, is to set a minimum target. If investors are, if, if a company is unable to reach that minimum target all investors.
Get refunded. And so we are closely aligned to the success of companies. Like our success is closely aligned to the success of our clients. So those that’s our main product. And then we have a secondary product, which is, you know, incredible accredited investor, only campaign, so much more traditional mechanism for raising capital.
We’re a technology-based company. And so most people in the exempt market dealer space, they, they are still a little bit old school and thanks to our fully digital online process, uh, traditionals like, and credit investor on the campaigns are, are very useful to funds. Traditional real estate and other areas that are looking to, to process their, their investors through, through a service like ours.
So, you know, we help them with their documents signing. We help them with the actual transaction of the product. And of course we do the upfront due diligence, an investor investor, accredited investor status vetting, which is also important. Uh, I think that’s a big part and Alex could talk about this more is in the space, you know, Many, many people don’t actually ask the question to their investors.
Are they truly accredited? That is dangerous. That is dangerous to the company because you know, if things don’t go well for your business and the fact that you didn’t actually take that information and confirm it, they could, they could essentially Sue you. I understand
The Startup Coach: that you’re using your own platform to raise capital for Equivesto what should people know about this investment opportunity?
Alex Morsink: we’re, we’re actually very excited to be able to do that. Yeah. Got our license and launched in 2020. And as Ryan mentioned, we’ve done well over 20 campaigns so far. I think it’s almost at 30 at this point and we’ve launched seven new campaigns, uh, on Sunday this week. Um, so we’re continuing to grow, uh, quite rapidly for us.
We have received so many requests from members of our community to be able to address. In our business as well. We’re out here facilitating community rounds, allowing community to participate. We’re talking to you and to other members about the benefit of allowing the community to invest. And we hadn’t had that opportunity to do it for ourselves yet.
And there was a really strong demand from the community to make that possible. And so. We really were excited to be able to kind of, once we had really kind of established ourselves and got operational and had run a fair number of campaigns, we wanted to open ourselves up to our own community and essentially allow them to invest in us and share.
Our upcoming growth and continued success and really be able to reward them for the trust they placed in us. And the support that they’ve given us since we launched the business, that’s really the, the main focus. Uh, one thing that I would also. The, as we mentioned, there’s some specific rules around equity, crowd funding, and sort of how it works in the Canadian space.
And, uh, we are happy to be able to actually participate and provide feedback to the regulators around the crafting of those rules, uh, just last year. But in these equity crowdfunding rules. They actually prohibit platforms for using them, putting themselves on the platform, using this set of equity, crowdfunding rules.
And so even though our campaign is open to the public, the way we have structured our campaign is actually using a different set of rules called the offering memorandum. And it’s not necessarily super relevant to everyone. But the main point that I mentioned is running an offering memorandum round requires considerably more due diligence, review legal preparation requires audited financial statements and so many additional pieces.
And so we have done all of these things as well, to be able to allow our community to invest in us. And that provides even more security and protecting. For investors from the general public, it’s something that is generally prohibitive to a startup to complete because it can cost, you know, between 50 and $100,000 to do everything necessary to prepare an offering memorandum round.
So most startups are not going to spend a hundred thousand dollars before they can even take a dollar of investment. But for us, it was really important to be able to allow the community to participate. And because we are already regulated and we’re already preparing audited financial statements. We already have a lot of these kinds of security protection requirements in place.
Anyways, as a licensed platform, it was much easier for us to prepare that in addition, uh, to, to facilitate investment in this way. So who can get involved, who can actually participate. Right. So busy talking about the legal stuff. I forget the reason why people actually want to hear the answer. We are currently licensed in four provinces, so we can take investors in our own campaign from Ontario.
Alberta Nova Scotia and British Columbia. The minimum investment in the campaign is $500. And basically that’s, that’s all the requirements you need to sign up and create an account on Equivesto. So of course, uh, and we’re going to ask some personal questions as we’re required to do by the government in order to verify your information and confirm that you’re suitable, but the sign up forms should take.
You know, we always say five minutes, but it’s really more like one. And then you can actually make the investment entirely online, sign the documents, move the funds and everything, uh, all digitally.
The Startup Coach: What are your growth plans at?
Ryan Correia: Awesome. Yeah. Some of, some of our main goals post res include obviously broadening our investor base.
You know, we want to go Canada wide we’re, as Alex mentioned, we’re in four provinces. Um, and thanks to the new rules that, that just came out in September of last year, it’s now across Canada. So it’s a simple process of essentially picking up all the other provinces and, and making it available. Uh, we also want to market to them, you know, we have our feet in.
Here for sure in Ontario, but we definitely want to go out there and build a presence in, in these other provinces. So marketing to them is very important. You know, we want to improve our user experience by implementing smarter technology. As Alex mentioned, you know, our onboarding forms can take up to five minutes.
You know, we want it, we want to make that quicker, more efficient, but also keeping it safe and secure is our main priority. And keeping in of course, compliance, expanding our team. You know, we’re, we’re a very. Very lean team. Uh, as of now, you know, Alex and I wear many hats, um, but you know, to keep our, our sort of quality of service to this, this growing base, this accelerating base, we, we definitely need to bring in more people so that that’s another main priority of ours.
Let’s even more companies on our platform. So, or so investors can have a wider variety to choose from. I think we’ve already represented that by launching. An additional seven companies on Sunday. So we have the most companies we’ve ever had listed, um, on our platform right now, um, on there. So you go peruse, you could find anything you could possibly think of, I think is a pretty wide variety to choose from.
So I think that’s also important from a diversification point of view, investors need options. So that’s the. What we’re really going to try to do is to bring in, bring on more, more and more businesses, develop more free education for investors and companies, as, uh, as the private private market knowledge is pretty limited in terms of especially Canadian private market knowledge is pretty limited.
Um, so we want to make that publicly available. So. You know, as I mentioned before, financial literacy is a very big task where we’re undertaking in terms of providing very clear and very easily digestible information. Uh, we’ve created a community page over the last, I think three months ago, we launched it and in the idea is to, is to bring people in so that it’s more interactive.
People can respond, engage with our current. And provide a, you know, a safe and a location where people can ask questions. That’s really what our community pages about grow our partner network. You know, we can’t build this in silo. I think we have to create a more cohesive startup and small business ecosystem.
A lot of people are solving different problems and we’re not trying to solve them all growing our partner network, not just in Ontario, but across Canada is important to us. So we’ve already developed some amazing partnerships. Uh, we just want to build on that and then finally, Building more products, financial products are difficult to, to bring out.
It took us so long to, to develop and bring out our initial product. But, um, that’s another area and, and we’re going to get feedback from our users on what will best benefit them. You know, not simply what, you know, Alex, and I think the space is going, but, you know, utilizing this amazing new base that we just got, you know, all these equity, crowdfunding investors, they are probably our most loyal users of our, of our.
Of our software. And so asking them, you know, what they think, you know, what would be the best products that they would like to see that that’s another area that we’ll be focusing on. Can you
The Startup Coach: tell me about some of the team you have backing you, advisors mentors?
Ryan Correia: Yeah, absolutely. I mean, obviously at the home is as Alex and myself, you know, Alex, the fin me, the tech, but our third and sort of final board member is Cameron Anderson, who, who really keeps us in check.
I think Alex, he he’s also our lead investor and he has an amazing track record of, of angel investment in an entrepreneurial experience. You know, he’s done this for a very long time. And, uh, you know, there’s not that many businesses, he really takes a board role in, but he chose, he chose us for a reason because he believes in us and, and we’re very thankful for having him.
He’s definitely. You know, guide us through, you know, the last few years, we’re extremely happy to have him on board. Another key member would be our chief compliance officer, uh, Lawrence, Boyce, or Larry as we call them. Um, he brings a lifetime of experienced and income and Canadian compliance and regulatory space, I think over 40 years, uh, Uh, point is in fact, he actually wrote the, or help write the chief compliance officer qualifying exam.
So it goes to show how much he knows about the spaces that he was. I think for many years at the Toronto stock exchange and a few other places, a very reputable note. So, you know, in development of our policies and procedures and, and just overall guidance with our entire compliance structure, he’s, he’s extremely valuable to it, to our team.
Then we have a really extremely robust. Um, advisory team with, uh, I think a collective, uh, over 200 years of collective experience, you know, in, in all sorts of areas like finance technology, you know, venture capital angel investments, investment bankers, private equity, you know, they, they have really brought, I guess, a guiding light to, to when Alex and I, you know, have questions or need some advice.
Um, and what’s amazing to see is as is many of them, I think. Majority of them are also backers of our business. So they, they not only saw potential at the beginning, but also if usually led to, to them, um, essentially putting their money where their mouth is and supporting us. So, which is, which is amazing to see.
And yeah, and they helped us guide us to do that, you know, complicated registration process and, and reach our, I would say current point of success. So we’re, we’re thankful for having all of them onboard. Do you
The Startup Coach: have any tips for those thinking about raising capital for this.
Alex Morsink: Yeah, I think, uh, raising capital is definitely, uh, something that takes a lot of focus and time and dedication.
It’s not often as, as, as easy as everyone would like it to be. I think I’ll, I’ll share sort of two main tips. The first one being investors are people too. And so take time to think about who the investor is that your approach. Why they’re investing. If they have an investment thesis, whether that’s a venture capital fund, an angel investor or anything like that, a family office think about and take the time to research, what kind of investments they like and what they look for and what their approaches cause that’ll help you actually determine which people you should be reaching out to for you.
But in terms of. Advice that can really help you have a successful round, whether it’s with angel investors or equity. Crowdfunding is really about understanding the value of building community in your business. Equity crowd funding is an opportunity to allow your community to invest, but those same community members will be your product testers, your first customers, maybe even your suppliers, or they can become almost like a guerrilla marketing team.
And so taking the time to. Be open with people about what you’re building and building a sort of mini fan base almost as you’re growing your business is really important and can pay huge dividends down the road for your business. So don’t necessarily be purely in sort of undercover, um, stealth mode.
For your whole business. You want to be maybe a little bit stealth mode around maybe your technology or your sort of secret sauce or something like that. But you certainly want to have an opportunity and focus on gathering people in a wait list or a newsletter where you can build some community around your business.
You can do this for free. You know, if you’re in stealth mode for two years, you can. Tell people, the outbuilding, something cool joined my wait list for two years. And then when it comes time to, you know, pull off the cover and really reveal your shiny business, you’ve also got maybe 1000, 5,000 people who are all kind of waiting and excited too, to see how they can support you.
And, you know, we always talk about, uh, you know, It takes a village to raise a child kind of a thing, and it certainly can take a village to, to help grow a successful business. So don’t miss out on the opportunity to build your community for free over time. And the
The Startup Coach: advice I’m pitching to investors, what to do, or maybe more importantly, what.
Alex Morsink: The biggest thing that when, when pitching to an investor is, is really being concise and clear and direct in your message, but also being able to demonstrate your passion for your business. So making sure you have prepared adequately. And so, you know, look at some templates that either we have, I know Craig, you have a bunch of different pitch deck templates, but bill use a template to kind of build your story and your message.
I think it through, you’ve been working on your business for months or years, and you’re sort of immersed in this whole idea in this story. These other people are not. So you want to make sure you can clearly outline in a sort of storytelling flow almost of. What is the problem? Your business is solving.
How are you solving it? What is the market that you’re addressing? And how is, is there potential profitability for your business? How is your company actually going to make money? You want to work through a clear story, almost like building a little house, letting the investor know the details in a concise way of how this is going to work and make sure that you can bring that passion across as well.
When you’re pitching an investor. They are looking and potentially considering investing in your business, but you’re the one who is running it. So you need to make sure that they can understand and get a feeling from the pitch that, okay, you’re clearly an intelligent person who has gone forward and created this business, but you’re going to think through the problems and you’re going to address them in a level headed way.
You’re excited and driven to actually go and solve this problem. So when things get tough instead of quitting, You’re going to somehow find a way to get through it and achieve those results. So having that passion combined with that sort of calm clear-headed and detailed understanding of the business itself fit to a very direct and straightforward story, really helped clarify your entire message to investors.
And then if you combine that with the advice before about how to repair your business in terms of. Making sure you understand who you’re pitching to and what their interests are. That’ll set, you set you up for great success and don’t be discouraged. Um, you know, there might be a 99 or 999 nos before you get to the yes.
Um, but your desire and willingness to keep going is really what’s going to make that difference. And the most important advice of all is know which advice is good advice, and which is advice is bad. ’cause, you know, as much as I love our startup community, there’s lots of people offering advice all the time, including me.
So make sure to think about whether my advice is actually useful to you or whether, you know, it’s maybe not the right fit being involved
The Startup Coach: heavily in the community for the last three years or so, or five years or so. What communities and resources would you recommend in the startup?
Ryan Correia: We obviously have our community page and that learning center I mentioned before.
So definitely check that out. If you, if you, haven’t already lots of free resources on there, you know, about private company investments, you know, private capital raising. So whether you’re a founder investor, check it out. We always recommend if you’re really early stage. Business, you should consider working through a structured accelerator.
Some of our partners that we’ve, we’ve done sort of educational workshops with include, you know, the DMZ, the, for Jack McMaster, you know, DDQ, Queens university, where Alex and I are from, uh, how tech and the innovation factory or other partners of ours. There are also many other accelerators out there. You know, university-based ones that.
You are an excellent place to go, but yes, a good resource for at least building the basics around your business and making sure that you’re getting, like I said before the right, or like you mentioned before the right information. If you’re looking for a startup lawyer, we’ve also done some great work with, uh, and, uh, Craig, you have to with insight legal, there aren’t that many firms out there.
That truly understand equity crowdfunding. And I think, you know, we’ve, we’ve sent a lot of clients to them and they’re Toronto based and they definitely know what they’re doing and are able to, to help us out with, with our, with our clients. So, um, I recommend them, um, some other great communities have, you know, sort of in founders and investors, uh, startup.
That’s a, that’s another partner of ours, uh, founders, beta, another partner, and as well as, uh, uh, so all excellent locations where, uh, you could set up a profile and, and get to know other founders and investors. So excellent, excellent places, coworking space. We intern in Toronto, we actually work, uh, out of, uh, uh, a company called work house, uh, which is a Canadian owned and operated coworking space.
So, uh, we recommend them, um, Both supporting Canadians. So, yep. And, and another one would be for, for pitch training. Uh, Craig, uh, of course will, uh, from out loud speaker school he’s he’s world-class and has done some amazing things with, you know, Techstars and, and some other very reputable accelerators. So, uh, I would recommend him if, if you’re looking to, to enhance your pinch.
And then of course, Toronto starts, um, amazing resource, you know, everything, everything startup, you know, your events are amazing. So we’ll be at your event tomorrow. So we’re very excited for that. Um, you’ve been a great partner for us. You’ve had a
The Startup Coach: number of companies raise capital on your platform, and you’ve talked about a bunch of them already.
What are they saying about equity crowd funding versus traditional capital raises. And, and where does it fit in the whole cycle? I think
Ryan Correia: people are confused. Yeah. Uh, I, I think a common sort of theme most of our past and current clients say about us is, is there sort of quality of service? I think, um, you know, we’re willing to go the extra mile to ensure that companies are in the best position to succeed before they launch their funding campaign.
So we really sit with them over months to prepare them for an equity crowdfunding round, you know, um, An odd stat that we always bring up is, is, you know, we have delayed every company, uh, or on average, we have delayed every company by about a month before they’ve launched. And I know that’s an odd thing to, to bring up and be proud of, but, you know, and, and foregoing revenue and, you know, increasing our.
But it’s really to make sure that the companies are fully prepared before they launched and ensuring their success as best we can. Um, and so we really are focused and aligned with founder success by putting the time and putting the effort in, um, to make sure they understand what they’re getting themselves into.
Um, and what makes us different than, you know, between us and sort of traditional. It is obviously the access, you know, you’re able to access people. You would normally not consider investors, uh, when you’re, when you’re seeking capital, you know, your extended community. So with the right approach, you’re able to actually convert as, as Alex was talking about before your social capital that you built over time, you know, that waitlist of people and eventually into investment.
Um, with the right approach and if, if everything goes well. So I think that that’s a really the biggest difference between traditional and inequity crowd.
Alex Morsink: Building on your comments there, Ryan, another difference that, uh, some people might not realize between a traditional race and equity crowdfunding would be the role that we play as the platform.
So with traditional capital raising, uh, let’s say, let’s say an angel investor group or something like that. You go, you pitch the angel investor group. The angel investor group has to basically assign someone to go and do months of due diligence on you. Basically, whoever puts their hand up first from the Andrew group, essentially, and then also you will then negotiate directly with those investors around the amount of the investment, but also the valuation of your business and all these other pieces.
And sometimes it can feel a little bit like a zero sum game where the lowest. The valuation is the more control they get for the money and everything like that. So it can go a little bit back and forth when raising through an equity crowdfunding platform, we are that friendly intermediary. So we are doing the due diligence for all the investors in advance.
So the investors can show up and know that, okay, all of these things have been checked. It’s all safe for me to make an impact. But also at the same time, the founder is able to provide us information for us to verify that doesn’t then have to be made public as part of a campaign. So if you have a bunch of patents and you want to talk about them because they are really helps strengthen your business, but you don’t also want to display the patents for everyone to read by providing them to us.
We can verify that they exist and everything, and allow you to talk about it without having to make it. I would also say on the sort of valuation discussion we, as the platform will help companies go through plan and understand their valuation, find ways to strengthen it. If they’re looking to, to sort of really support a certain valuation and then also structured the deal for them so that when it is placed in front of investors, they have.
A fair understanding of what they think that they’re worth, but it’s also positioned. So investors feel like they’re getting a good deal and they’re excited to participate. So it changes it a little bit from I’m going to sort of deal directly with this investor who has, it can feel like sometimes all the power to I’m approaching the situation with help with experienced assistance so that I can be open to investment and it feels safe for investors to participate.
But also, I don’t feel like I’m not in a controlled. You’re only
The Startup Coach: successful if your customers are successful and therefore you care more. That that’s amazing.
Alex Morsink: Yeah. Well, and you know, we sometimes have, um, companies that work with us come back and say, it’s like, you know, it’s almost like they went through a mini accelerator working with us because you know, you, you come with your pitch deck, you come with your financial projections.
We’re not distorting. Take that and attach it to a campaign page and sort of pat you on the back and say, away you go, we’re going to go through it in a lot of detail and make sure that it’s robust and ready and is prepared to go out and kind of face investors so that, you know, when you are in front of the investments that you all are well prepared and everything does make sense.
And it’s been thought through. And so from our perspective, all of that additional effort can take a lot of time, but it’s really to benefit the company. And so. Benefit from a lot of that without necessarily having to pay a ton of money up.
The Startup Coach: This sounds awesome. You guys are growing fast. It sounds like a great investment opportunity.
If people are interested, can you tell us about the opportunity again and where do they go?
Alex Morsink: so we’re currently raising capital. Anyone living in Ontario, Alberta, Nova Scotia, and BC can participate. The minimum investment in the company is $500 and you can go to equal festo.com and. The view live deals to see all of the deals on the platform, including ours.
Uh, we’ll also post a direct link to the offering and it’s all there on our portal. There’s tons of information there. Uh, so feel free to go in and check that out and you can reach out to Ryan and myself or anyone on the team. If you have questions and the links
Ryan Correia: to all
The Startup Coach: those will be in the show notes, but if people will just want to follow you, what platforms should they go to?
Alex Morsink: We are everywhere. Uh, Equivesto is on LinkedIn, Facebook, Twitter, Instagram, where we’ve got a YouTube channel with tons of educational videos as well. You can also join our community, which Ryan has mentioned has a lot of free access to education about investing and getting into the space. And if you just want to say, Hey, just send me an email.
When you’ve got new deals, I don’t really care about the rest. Join our newsletter. It comes out every two weeks and all it does is say. Here are all the new live deals on Equivesto. It’s very simple. Um, so you can join our newsletter, um, on our website as well. I really appreciate
The Startup Coach: you both Alex and Ryan taking the time today to tell us about Equivesto and all the companies who’ve raised on your platform.
Alex Morsink: Greg, it’s been great being here.
Ryan Correia: This has
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