October 7, 2020

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Darren Marble – The Deal Flow Show - October 8, 2020 Reply

[…] Darren MarbleCo-CEO, Crush Capital; CEO, Issuance  Episode #1 : Raising $17 Million On First Reg A+ Deal […]

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Darren Marble on Raising $17 Million On First Reg A+ Deal


Description
Darren is Co-Founder & Co-CEO of Crush Capital and Co-Founder & CEO of Issuance. Darren is a leading expert in Reg A+ raising and he is the father of a new and innovative series called, “Going Public” to be launched Q1 of 2021.

Crush Capital is a pioneering FinTech firm with a mission to democratize access to investment opportunities and usher in a retail investor renaissance. As the creator of the “Going Public” series, Crush Capital empowers retail investors by providing access to IPOs and other financial products on goingpublic.com that were previously reserved for the wealthy and connected.

What you’ll learn from this episode:
– Knowledge of Reg A+
– How investing is becoming democratized
– How to catch his upcoming series, “Going Public”
– The kind of mentality that it takes to be a successful entrepreneur

Connect with Darren:
LinkedIn


Full Transcript:

JP Maroney:

Hello and welcome again to another edition of the deal flow show on JP Maroney, your host, along with my cohost for this episode, mr. Paul Nicoline, um, we have a great guest as many. Uh, we have great guests here today for this episode, and it’s Darren marble. He’s with both issuance as well as the founder and CEO of crush capital. And, uh, we’re going to be talking about some pretty exciting things. And Darren, I was watching you on LinkedIn. I’d seen some of the posts you had made, and they were topics that really resonated with me personally, especially related to capital raising and digital platforms that are being used nowadays for capital raising as well as, um, the, the deal making process. So I know you’ve been involved yourself with some acquisition, um, activity recently within the last couple of years in your own business.

So we’re going to get into that whole dynamic and let’s keep in mind that we’re going to talk about your business, your background, but we’re also creating content. That’s going to become a book called deal-makers deal breakers, where you’re going to a lot of your tips and strategies and ideas about the deal flow process, going to the negotiating table, that whole MNA process, raising capital, um, how important that is. And we’re going to share a lot of that knowledge and it’s going to be available in perpetuity to our audience and to our readers worldwide. So let’s jump into this episode. Tell us a little bit about how you got started in this business, in the Capitol mall.

Darren Marble:

Well, thanks guys for having me on it’s a real pleasure. Um, like any good entrepreneur we failed into it. Uh, I started a company about 10 years ago. We cut our teeth marketing rewards based crowdfunding campaigns. Um, of all things we marketed about a hundred campaigns on Kickstarter and Indiegogo. In five years into that business, we were introduced to our first regulation, a plus issuer. We signed that company and we launched that company’s campaign. It was for an automotive startup out of Arizona called Elio motors on June 19th, 2015, which was actually the day the regulation a plus securities exemption went into effect in the U S and that campaign was successful from a capital raising standpoint, raised about $17 million from 6,300 everyday Americans, and a was a real good pivot for my company. We went full swing into the regulation, a plus industry, uh, into more traditional capital markets, so to speak. And haven’t looked back since

JP Maroney:

Very cool. So you’ve been on that real bleeding edge, I guess, of the whole regulation, a, um, industry. How do you, because this has been obviously an interest with us at Harbor city. We’ve done reg D offerings for our bonds previously, and currently are moving into the broker dealer space with reg D offerings, but we’ve kind of slated the idea of a reggae for the first quarter of next year as something potential in our securities counsel firm is very big. They do tons and tons of reggae’s now, but how do you see the impact of our environment that we’re in right now with, with COVID-19 and all this, you know, sequestering people or whatever, um, affecting the capital raising markets and especially impacting reggae in a positive or negative way.

Darren Marble:

It has definitely impacted the reggae plus industry, uh, in a very positive way reggae. Plus, if you think about it at its core, it’s really an alternative financing vehicle. And right now alternative financing is white. Hot companies are struggling to raise capital from traditional sources. And in fact, there’s more companies struggling for the same capital pools, uh, traditional VC, et cetera. In fact, we’ve seen more growth in the reggae plus industry and in our businesses in the past nine months than we’ve ever seen in the past five years. So I think the industry as a whole is really taking off more and more companies are looking for creative ways to finance their businesses. And of course the beauty of reggae is that it can be done entirely online. So the fact that it’s a digitally native capital raising mechanism makes it advantageous for companies in this environment where traditional VC is based on face to face meetings and going into someone’s office.

And then doing that all over again, a reggae can be done entirely online on the issuer’s own domain or on a platform. And, uh, you know, part of the beauty of that of course, is that everyday Americans, retail investors can participate in these offerings, you know, and on the one hand, you’d think that, uh, you know, maybe there’s an issue here because, you know, reggae is raising from retail investors, how are the retail investors doing? Are they still there? People are unemployed in the millions, it’s a kind of a crazy time. And the reality is they are there. Um, and you know, the, the average investment in one of these offering is about $2,500. And, you know, you think about that. There’s a lot of people that can and do invest $2,500 into these, a reggae offering. So it’s just been, um, a really great year. And I think we’re fortunate. And the service providers in this industry are fortunate and we’re doing everything we can to help, uh, high quality companies raise capital in these markets. Because of course, it’s a very challenging times for, for a lot of companies and of course, people as well.

JP Maroney:

How do you, um, when you, when you talk about raising completely online and whether it’s on the issuer’s website or a platform such as yours, what percentage of let’s say subscriptions or however it’s stated in a reggae, but the purchases of the, the security is made without talking to someone meaning the investor, does it completely sorta non-contact with a human being?

Darren Marble:

It’s a great question. Um, I would estimate about 80% of retail investors are buying reggae securities on an investment platform without speaking to a person. And I think there’s several reasons for that one, because when you run these campaigns on, on a website, you’re actually able to provide a lot of valuable information, um, in a relatively clean, easy to understand format. Um, the, you know, a two minute sizzle video, a link to the offering, circular, how much capital is the company raising? What are the terms? What is, what is the deal structure? And so there’s plenty of room for deal information to be communicated effectively to the average investor on the site. Um, and then the other reason is because again, the average investment here is about $2,500, not $25,000, nor is it a quarter of a million dollars. Therefore the decision making process is streamlined.

It’s easier to convert an individual investor and get them excited about putting in $2,500 into a deal without talking to a person than a more traditional angel investor. Who’s going to pull it over and maybe do more traditional due diligence. Now that said, there are firms we work with in the regulation, a plus space, hybrid financial, um, out of Canada’s one of them, they run call centers so that we, you know, have a click to call function on these campaigns. If you hit one of these investment sites that we’re managing, and you’d like to speak to a person, you have that option. So some companies do implement that ability, uh, in their investment campaigns. We think it’s quite effective, but I wouldn’t say it’s a prerequisite or a requirement for success. And that’s kind of the point of these campaigns in this industry. It’s designed to be faster, easier, cheaper for companies to raise capital and ultimately easier for the retail investor as well. And so it’s a win win when an issuer is able to clearly communicate their investment, a value proposition to the retail community at large and retail investors feel confident in consuming that information to the point, they’re able to buy securities in a matter of minutes without speaking to another person. And I think you’ll consider, you’ll continue to see that trend continue in the years ahead

Paul Nicolini:

Because of its digital nature. Are you finding the demographics of the investor is lower now the average age of the investor?

Darren Marble:

It’s another good question. I think the answer is it depends on the retail distribution strategy for the particular offering. Um, so on the one hand, one of the hot trends right now in the regulation, a plus industry is, um, an increase in the number of independent financial publishers that are providing coverage and awareness for a multitude of regulation, a plus campaigns, and the publishers, uh, happened to have audiences that skew a bit older. The average age of their subscribers might be 60 years old, a male that has disposable income. So it depends on how the issuer is, uh, creating awareness for the deal. If there’s a financial publisher involved, the people who are buying those information products from the publishers and paying them a fee to access that information, they tend to skew a little bit older. Uh, on the other hand, I think, you know, the average age of a reggae retail investor, somewhere between, you know, maybe 30 and 40.

Um, so it’s really not the Robin hood, uh, demographic. It’s not a young gen Z investor. Who’s buying a security for their first time. On average, a reggae investors tend to be a little bit older, a little bit more experienced and potentially savvy or even very savvy. And I think that’s one of the reasons that this is working so well, um, is issuers are having success targeting likely investors, and more often than not likely investors in a reggae deal are not buying a security for their first time, but they’ve, they’ve got some, some kind of investment experience under their belt.

JP Maroney:

You mentioned the public, the financial publications and your SA is that on a, um, like an advertising type situation. They’re, they’re paying a fee to be exposed to that audience. Or as you said on the opposite side, you’ve got a paid subscription base. And as part of their service, the publisher is providing this information or access to their readers,

Darren Marble:

Uh, the latter. And that’s part of what’s so great about this model and, and what’s working really well in the industry. The publishers that are providing coverage of these reggae investment opportunities are totally independent. They do not charge compensation to the issuer. They don’t take cash fees, they don’t take stock fees. Um, they don’t put a contract in place with the issuer, therefore they’re independent and unbiased. And when they go out with coverage of a deal, they’re able to tell their subscribers that they’ve scoured the market. And they’ve identified ABC company as a promising or interesting alternative investment opportunity. And therefore, um, that, that promotion carries a lot of weight with their subscribers. And there’s no disclosure, there’s no 17 B disclaimer required because they have not received compensation. So that model is working really well right now. And you know, what we’re doing with this series is probably worth mentioning where we think the industry is actually headed in kind of the final, uh, and maybe the biggest way to distribute these deals is through a television series.

And that’s what we’re launching. You know, we’re launching a series called public where we follow the stories of founders as they’re raising capital, taking their companies public to NASDAQ. And for the first time ever, the viewers of the show can actually invest into the IPOs at the IPO price. And we thought, what better way to get, um, a retail investor or a customer of a brand excited than to really, you know, provide an in depth profile and follow the journey of these companies, not just on a landing page or in a two minute sizzle video, we’ll put them in a, in a story, put them in a show where the viewers can follow the founders week after week. And as crazy as that sounds, I actually believe it will be the largest distribution ever brought to the industry. Uh, when we launched this thing in April next year, uh, we signed a distribution deal with entrepreneur media. They run the website, entrepreneur.com. We’re forecasting about 2 million unique viewers per episode. And at one point, you know, I would would’ve thought this was crazy. You know, I would’ve diverted or reverted back to like, let’s do a paid media campaign or let’s get some PR for the company. But we think this is actually a very natural way to expose retail investors to a deal, and to allow them to invest from their desktop phone or tablet device.

Paul Nicolini:

Are there any regulatory landmines with this, with this idea?

Darren Marble:

You know, you would think there are, uh, but it turns out there’s not that there is a proper way to do this series. So, you know, you look at reggae plus, well, what is it? It’s a securities exemption. Uh, it allows a company to raise $50 million. It allows the company to generally solicit or market their investment and anyone over the age of 18 globally can legally invest. So we’ve been able to drive hundreds of millions of dollars into companies using this, uh, securities exemption through paid media campaigns, Facebook campaigns, Google campaigns, through PR campaigns, um, getting a company featured in the wall street journal, the New York times, getting an interview on Cramer’s mad money, a podcast like yours, uh, or owned media campaigns. The company can now market their investment to their million paid customers. So a TV series is actually a natural and obvious extension to what’s already been happening in this industry for the past five years now.

Are there nuances and kind of some details, uh, in, you know, in the production? Yes, there are so quick example. We have to make sure that anything that makes it to air. So, uh, you know, if you’re one of the companies and we’re producing the series and we put you in the show and it errors week after week in April next year, the statements you make have to match up with the statements that are filed in your form. One, a offering circular with the sec. So there’s a more rigorous production review and editing process is going to be infused into this series. Then there is, and probably most other shows the statements have to match up. Um, and then there’s some other nuances. For instance, the reason we chose to have this series streamed online instead of featured on a broadcast television network is because once a company receives sec qualification, technically they’re only able to communicate the investment, uh, through electronic means with a clickable hyperlink.

And I know that might sound crazy too, but it’s, it’s in law. So that means you actually can’t have a version of this show that’s on, uh, let’s say CNBC where, you know, the company’s on every week or it’s a standalone format and people go online to invest there, there’s format issues there. So, because we’ve been in this space for a number of years, we’re very familiar with the nuances of the securities rules, uh, compliance rules, regulations. And so we’ve designed this series to be, uh, not only compliant. Um, but actually what we think we’re doing is we think we’re fulfilling the promise of the jobs act, the promise of the reggae plus exemption. This is what these laws were designed to do. They’re designed to, you know, provide easier access to capital for emerging businesses on one hand. And on the other hand to level the playing field for everyday Americans to give everyday Americans an opportunity to become owners and businesses whose products and services they use in their everyday lives, what better way to do that, uh, and democratize access to investments and put these deals in a show that’s broadcast to millions of people are streamed online in this case, you know, week after week for 10 weeks.

So there’s my, uh, my, my long winded answer, but the answer is, yes, it’s completely doable.

JP Maroney:

What is the mix that you’re seeing of debt versus equity in the reggae offering?

Darren Marble:

I think most reggae offerings are our equity offerings. Um, you know, there is an exemption called a reg CS, which stands for regulation crowdfunding. That’s another securities exemption went into effect in 2016. Companies can raise up to just over a million dollars. Those are for really super early stage companies. Um, what we consider to be the highest risk deals in the industry. And of course, they’re generally illiquid investments, which is another concern in those deals. You might more commonly see, um, debt investments, uh, convertible debt safe, et cetera. Uh, in the reggae deals, most of these companies have raised an angel, a series, a financing. They might be doing 10 $50 million in sales. At that point. The majority of those deals, um, are, are, are equity deals

JP Maroney:

Entering the capital markets, as you know, is no cheap, um, process, right? And if you go to the, the traditional route, like a broker dealer community, it can be substantial with all the layers of, uh, service providers compliance, third party, due diligence providers, all of that sort of thing. What is the typical cost for a reggae plus, um, offering, as you’re seeing it, maybe you can give me an elastic band of the, the low enough

Darren Marble:

It’s going to range from eight to 12% cost of capital, maybe an average of 10% and maybe 10% of that 10% is paid upfront to a handful of service providers to initiate or launch the campaign. So, you know, I think the average reggae issuer we’re working with right now is raising about 10 million, uh, average costs of about a million dollars with maybe a hundred, maybe $150,000 paid up front to a handful of service providers and a another 850,000 or $900,000 of expense on the back end of the deal as the company is funding. So, you know, the truth is that regulation a plus is not technically a cheap way to raise capital. Um, it’s also not necessarily an easy way to raise capital. There are a number of service providers that are required to work together, uh, in unison, uh, to help these companies be successful.

However, I believe it’s the greatest securities exemption available in the United States today and potentially for years to come because companies can market their deals, they can turn their customers into investors. When you turn a customer into an investor, you’re actually creating the most powerful brand ambassador you could ever dream of someone who’s a, you know, literal a investor in the company they’re financially invested, emotionally invested. That’s the ideal relationship a company should desire with their customers, not just to be a customer and own a product, or, you know, pay a subscription for service, but to become an owner in the business and the lifetime value of those customers increase, et cetera. So I would say eight to 12%, uh, the more capital you raise the lower, the cost of capital. So on a $20 million financing, the cost of capital could be seven or 8%. And certainly on the lower end, if you raise just $5 million, cost of capital could be 15% or more. Uh, but the average company we’re working with is raising 10 million with about a 10% cost of capital

Paul Nicolini:

Capital, or issuance. Is there any other function in this process that you all provide?

Darren Marble:

Well, crush capital is the creator and owner of the going public series. We’re actively casting for season one. We’re looking for five great companies to put into this show. Uh, we’re two weeks out from announcing our hosts. We’re four weeks out from announcing the first issuer

Paul Nicolini:

I had to interrupt. I said, we have one for you. If you look looking for a great company, we do have one

Darren Marble:

A hundred percent, listen, send it across right now. Companies can apply on going public.com. Um, and then issuance’s is, um, you, my legacy financial marketing firm, we take deals, um, you know, deal to deal basis. And, um, we we’ve been doing it for years. I think the common denominator between these two businesses is they are both centered around the reggae plus securities exemption. And, uh, you know, crushed capital has a vision to put these deals into a television series. So it’s just a different format. It’s a different marketing and retail distribution strategy, you know, and ultimately guys, what, what really drives us is the belief that everyday Americans do deserve an opportunity to invest into earlier stage private companies at a minimum. They deserve the opportunity, whether somebody wants to invest into a deal or not, of course, they’re going to make that decision. Uh, it’s their discretion, but we think it’s, um, you know, just unfortunate that for so long retail investors.

I mean, if you look at the IPO markets today, these big companies like Uber and Lyft, they go public 10 years after staying private, they’ve raised billions of dollars in private markets. Um, and all the value is rung out by the early investors. And you know, who doesn’t get a piece of that action. The millions of customers who contributed to that valuation, they’re left to buy the shares in the public markets 10 years later. And we think that that’s criminal. We think that that needs to change and it needs to change now in that when given the opportunity, uh, customers will often take advantage of that and become owners and businesses whose products they use, uh, whose founders they believe in whose founders a worldview aligns with their worldview. That’s where we believe the markets are headed. In fact, we think it is a mega trend. It will be a mega trend in capital markets for companies to allow customers to become owners. And so that’s what drives us. And that’s a common denominator between crush capital and issuance.

JP Maroney:

What is the acceptance that you’re seeing in the more traditional channels like the broker dealer or adviser community for reggae’s?

Darren Marble:

Well, I think, you know, broker dealers, they can’t deny that this is a viable pathway for capital raising and, you know, look, here’s, here’s a great example at crush capital. We’ve partnered with an investment bank in the series. In fact, we partnered with Ross capital in Southern California. They’ve agreed to firm commitment, underwrite the reggae plus IPOs that we put into the show. That’s actually an industry first. It’s never happened. If we look back five years, all the past reggae plus IPOs were all underwritten on a best efforts basis. So here we have a credible small cap underwriter, willing to step up to the plate and pioneer the industry with us. And we think that solves a lot of the problems and issues were prevalent in the past reggae plus deals. So I think I can start there and say, Hey, look, here’s a great example.

We now have a credible investment banks coming into the industry for the first time ever. And they’re going to firm commitment, underwrite these deals. And that’s something that hasn’t happened in five years. That’s a good indicator of what’s happening in this industry right now and what the future for the industry holds. So we believe that in the years ahead, more investment banks, bulge bracket firms, larger investment banks are also going to begin participating in this space. And of course the sec has recommended that the cap on reggae go from 50 to 75 million. We believe that that will take effect sometime in early 2021. And when it does, it will just draw more high caliber companies into the industry. And of course, higher caliber service providers, including broker dealers, investment banks, and underwriters who now see an opportunity to generate larger fees. So all of these things I think are a good indicators that there’s a lot of growth to be had in this space in the months and years ahead

JP Maroney:

With what you mentioned earlier with entrepreneur media, you kept using the word, we have a deal, we did a deal. And then you just talked about Ross capital, basically what you stated an unprecedented deal, where they’re going to blanket take your, your deals, which I know there’s a lot of things going into that, but you’re a consummate deal maker. That’s what I, my sense is is, you know, you go back to your, uh, as you said, rewards based crowd funding that was pre reggae side of things. My question for you is when you’re, because this, this content again is now what kind of, kind of shift gears a little bit is more about the deal making process when you’re putting together these kinds of deals, whether it’s entrepreneur media in your show, whether it’s Ross and the acceptance of an underwriting of these deals, what is your process for preparing for battle or engagement going out, seeking out partners, seeking out, um, deals that make sense to help you achieve your objectives? Can you walk us through the mindset of the deal making process?

Darren Marble:

Yeah, look, I mean, we can use entrepreneur as an example. What we, we realized needed to happen to make this series come to life is we needed a deal with either a television network or a big digital publisher, um, that aligned with our, our mission. And so that was the first thing is, you know, what makes a good deal? Well, if you have an alignment of values, uh, if we share the same vision of the world, then that’s an incredibly valuable starting point because without alignment, everything else can fall into place rather easily. And the beauty of that is you often go into conversation with potential partner and you can flush that out very quickly. So for example, you know, my business partner and I had crushed capital, and I’ll never forget this. We went into a talent agency that was representing LinkedIn. And at some point this was like three years ago.

Somehow we thought LinkedIn could be a good platform for this series. And so LinkedIn referred us to their talent agency in LA. We’d get into a room with this guy and it’s like, you know, pearly white halls of some big Hollywood agency. We tell him about the reggae plus exemption, and it’s a game changer and everyday Americans can invest into, um, what could be promising investment opportunities. And this guy says, that sounds crazy. I said, I don’t think the average person should have the right to invest in these deals. They could lose all their money. They’re not informed. They’re not sophisticated. And we knew right away, this is not, this is not our guy. This guy does not share the worldview that we have. In fact, he’s an antagonist. Let’s get the heck out of here, you know? And so we got outta there. And, uh, the, the folks at entrepreneur had precisely the opposite perspective.

They believe that, uh, the future of investing involves retail investors and that customers deserve an opportunity to become owners. So alignment of values is something we look for right away. And, uh, you either have it, or you don’t, you usually can’t convince somebody to have your, your values, but if you share the same values, that’s a good starting point. Um, you know, and again, everything else from there is almost a detail. Um, I think other things that are important for us are the people who we’re going to be working with. Uh, you know, I I’m in my early forties now, I just turned 40 last year. And I’m at the point in my, my life and career. I don’t wanna, I don’t want to work with people who were punks or who are going to be challenging to work with, or we don’t get along.

Life is too short. We want to work with people who we’re going to have a fun time working with. So if we have alignment of values, who are the people on the other end of the deal, can we see ourselves working with these people, not just on a project, but you know, for years to come, can we be successful working with them all for a long time? So we have to like the people we’re working with. And, um, it’s actually important. I mean, it’s, I think we’ve all been in situations where we end up getting into a project. Um, it could be, you know, anything where the people on the other end of the deal are antagonistic or they’re challenging to work with. And that just creates headaches and stress and drama. I don’t want to deal with that. I want to work with people who are easy going, who are cool, who are fun, have a sense of humor. Uh, and so once we have alignment, we’re looking for likability, you know, and then there’s the details of the deal. Do the economics work is the value exchange fair? Are we getting what we want? And the deal is the partner getting what they want. I would say those are the top three things is alignment of values are the people we are working with. Good people are, we’re going to have a fun time working with them and then do the economics of the deal match for each, each party.

Paul Nicolini:

Interesting. Yeah, that is, um, Darren, what do you do in the case of failure? How do you deal with that? How do you manage that and how do you move forward?

Darren Marble:

You know, I’ve been an entrepreneur now for 10 years, and I think, you know, you learn to handle failure. Um, at least for me, my ability to handle failure has evolved tremendously in the early days, you know, failure hurt. Um, it was painful. It’s stung, it was demotivating. You could even get emotional about it and I’ve been through it so much. Now that it almost doesn’t phase me. I know that if I’m not failing, uh, in some ways I’m probably not pushing the boundaries hard enough, you have to fail to succeed, uh, as a business owner or entrepreneur as a dealmaker, there’s nobody that has a hundred percent track record of success. Um, it just doesn’t exist. And so failure is part of the game in business and in deal-making. And I think what smart entrepreneurs and deal-makers do is they do a postmortem. So for deals that don’t work, you know, let’s look back, let’s not just, you know, have a quick call and then move on to the next, let’s take a moment, pause and reflect.

Why didn’t that deal work? What, you know, what did we go in a, what were the expectations going in? And you know, where, where did we miss the Mark in? What can we do in the future to avoid that outcome? So savvy deal makers learn from their mistakes. They try not to make the same mistake twice or three times, because if you do, you’re just not learning. And so the failure becomes a part of your methodology. It becomes a part of your DNA, uh, as, as a dealmaker. And you try to, uh, repeat the behaviors that result in successful outcomes or you and your partners or clients, and you avoid the behaviors. Um, you know, that that result in failures and at the end of the day, you just get back up, get on the horse and do it again. And you gotta have an optimistic attitude. Uh, and you know, that can take you far.

JP Maroney:

I love it. And the mindset part of it. Here’s a good question for you, and I’m going to ask it when they come back, but if you’re listening or watching this episode of the deal flow show, you can get access to previous episodes as well as subscribe and follow us for future episodes@thedealflowshow.com on behalf of myself, Paul Nicoline, my cohost for this episode, all right. Back to Darren Moore marble. So here’s my question. You were a, um, a high jumper, correct? Or involved in track and field, right?

Darren Marble:

That’s right. Yeah, man, I can’t believe you guys figured that out.

JP Maroney:

One of our guys that you’ve talked to here is on our business development team, Daniel Penn Miranda. So he’s the producer for the deal flow show as well. You’ve communicated with him in email. Daniel was a competitive, long distance runner in high school. And college went to college on scholarship for that. And he and I were talking the other day about mindset and he was talking about visualization and how he used to literally visualize, run the race. Um, even I think, and I’m going to get it right. The kick is that right? Daniel, he even visualize the kick at the end. Um, how he, you know, put it into gear and went and saw it in his mind. We’ve heard Tony Robbins, obviously one of the more vocal people about this, but many successful people talk about mindset, anything from the track and field days that were habits or characteristics or patterns or anything that have carried over and served you in business or in the deal making process.

Darren Marble:

Absolutely. And I love that anecdote. Um, you know, visualization is critical. I mean, if I think back and it was 1998, I was a, the state champion high jumper in California. Um, and you know, there there’s some natural talent. I was a tall lanky guy and that turned out to be a good structure for a high jumper, but I had a great coach. I had a great mentor and I think that’s something that was really critical to my success. Um, as a founder, uh, in business years later, finding people that have experience, finding people you can talk to seek advice from, and this goes to, you know, the value of creating an advisory board, a fiduciary board surrounding yourself with industry experts. Um, you’ll never know it all, but you know, having a great coach, uh, in, in track and field in high jump back in the late nineties, I would have never had the success I did had I not had my coach, uh, Fred Graber.

And, um, you know, now in business, I’ve also consciously sought out mentors, uh, people who are a little bit older that have more experience and knowhow and have, uh, had more success than I have. So, you know, having a coach is important, you know, and what I loved about sports is, you know, I’ve always been competitive. And, um, you know, I don’t think you have to be an athlete to be a successful entrepreneur, but for me that, um, desire to compete and win has always stayed with me. Um, you know, winning feels great and celebrating the Winfield’s great and you to win requires a lot of patience and dedication and failure along the way. And I’ve always wanted to win in sports and in business. And, uh, you know, this is just, I’m thinking of this out loud, but one of the things I always loved about high jump it’s one of those very strange sports where you always go out on a loss, you know, a race is a race.

You have, you know, 40 seconds or 50 seconds is somewhere in between every time high jumped, you have three attempts at each height. You clear the bar at six, eight, it goes up six, 10. You clear the bar at six, 10, it goes to seven feet. And you always finish that event on three misses. You’re forced to lose. Um, and it’s just, it was a incredibly humbling experience. I think it taught me a lot, um, about resilience and getting back up. But, um, I wanted to share that with you. It’s just people, you know, they get these sports confused, high jump pole, vault, high jump. You’re jumping over the bar, pull jump you’re, uh, you’re, you’re jumping, you know, you got the pole, but, um, I, I think I took a lot away from that experience, but having a great coach, a great mentor showing up, I think are big factors in success down the road.

JP Maroney:

I love that. And the idea of a loss is actually the goal, right? You, your goal is to keep pushing the bar higher until you cannot achieve it. And you go out on the loft. I never actually drew that comparison. That’s that’s very interesting. So you asked the question about failure earlier. I want to come back to that real quick. And you mentioned having coaches and mentors back years ago, 1995, Tyler, Texas, my wife and I had been building businesses for a few years. I was 25 years old. I’d been building companies for attempting to build companies for six years. I went bankrupt, lost everything, found myself, sitting in a little room, just outside where they were about to hold our bankruptcy hearing. And it felt like sitting like a minnow sitting in a shark tank because they had us in the waiting area with our creditors.

Like those people were across the room, sitting in the chairs, looking back at me. And I sat there at that moment in one of my greatest failures that you mentioned that you said it feels like a stopper, right? Like it’s the end of time when you’re younger. And, and I sat there in that moment and I made myself two promises. The first promise I made to myself was that I was going to never, ever give up on my dream. My granddad used to have a sign that hung in his study that said, winners never quit and quitters never win. And that’s cliche to us now, but I thought back to that sign and I remembered that sign. The second promise I made to myself ties into what you said about getting the right people as mentors. I said, I’m going to seek and search until I find the people who have done what it is that I want to.

And then I’m going to learn from them. One of my greatest quotes I got from one of my mentors years ago. He said, if you want to be a master at anything, study what the masters have done before you learn to do what they have done and then have the courage or the guts to do it. And you can be a master just like them. There’s already a pattern. And if you look at building a business, launching a product, you know, a capital raising process like this, the model has already been built. You just have to be willing to find the people surround yourself with the people. I’m super excited that we’ve had you on this show to be able to share some of that knowledge, um, before we go. Um, and again, you’re listening or watching the deal flow show. And if you’d like to get access to more episodes, go to the deal flow show.com. We’ve got Darren marble on with us again, my cohost Paul Nicoline, one more quick question. What kind of people would you like to hear from, there’s going to be people that watch this, hear this, and they’re going to think, Hmm. Maybe I should reach out to this guy. What kind of people would you like to hear from and how should they best get in touch with you?

Darren Marble:

Uh, two kinds. We’re looking for companies that are interested in raising capital and building their brand companies that might have a consumer product, a retail business direct to consumer. They can apply to be featured in the inaugural season of going public on going public.com. I’m also, um, an open networker on LinkedIn. That’s where I have, uh, my, my, my social presence and profile. And, uh, we’re hiring. We’re actually hiring at those, uh, crushed Capitol for the going public series and issuance, uh, my financial marketing firm. We’re looking for account managers, project managers. So companies can go to, uh, you know, contact me on LinkedIn. If you think you want to learn more about what we, what we’re doing and, uh, how we might be able to work together. And thank you for asking,

Paul Nicolini:

Well, we’ve already heard about your, um, your, your high school, athletic, um, career, but what else can the business community know about Darren marble that they don’t already know?

Darren Marble:

I’m seven years sober. I have not drank alcohol for seven years and I credit my sobriety, uh, in large parts of my entrepreneurial success. Um, and I wrote about it in an article in business insider a few years ago, you know, running a business is, uh, the odds are against you nine out of 10 times, you’re going to fail. So if the odds are that rough, what can you do to increase your odds of not failing? And for me, making the decision to stop drinking turned out to be the best, uh, personal and business decision I ever made. And for the record, I was not ever thinking that that was going to be a good decision for me. I didn’t think I had a huge problem. I was a big red wine drinker, but, um, I’ve been sober for seven years. And what it’s allowed me to do as an entrepreneur is to channel all of my energy and my focus and my intelligence and skill into business building and to dealmaking. And, um, it’s been an incredible, um, transformation for me. So if anybody out there is listening, something’s not working in your personal life. Something’s not working in your business. You’re not closing the deals you want. I challenge you to stop drinking for just 30 days. Um, and then maybe 90 days and see if it makes a difference because it did for me.

JP Maroney:

Congratulations. Excellent. Well, on my own behalf of my cohost, Paul Nicoline, I’m JP Maroney. Thanks Darren marble again for joining us from issuance and crush capital and for not only sharing about your company, cause we all want to go out there and, and, uh, get a chance to promote and talk, but from digging deep into your storehouse of knowledge and sharing back with our audience, I know you’ll be getting in Pat people getting in touch with you as a result of hearing your story, hearing what y’all bring to the market, and also hearing about these exciting new deals and projects that you all have going on. Once again, this is the deal flow show, and if you’d like to get access to more episodes are subscribed for future. Go to the deal flow show.com. We’ll see you in another episode very soon. Take care. Thanks Darren. For more episodes, visit the deal flow show.com and subscribe.

October 7, 2020

Darren Marble on Raising $17 Million On First Reg A+ Deal


Description
Darren is Co-Founder & Co-CEO of Crush Capital and Co-Founder & CEO of Issuance. Darren is a leading expert in Reg A+ raising and he is the father of a new and innovative series called, “Going Public” to be launched Q1 of 2021.

Crush Capital is a pioneering FinTech firm with a mission to democratize access to investment opportunities and usher in a retail investor renaissance. As the creator of the “Going Public” series, Crush Capital empowers retail investors by providing access to IPOs and other financial products on goingpublic.com that were previously reserved for the wealthy and connected.

What you’ll learn from this episode:
– Knowledge of Reg A+
– How investing is becoming democratized
– How to catch his upcoming series, “Going Public”
– The kind of mentality that it takes to be a successful entrepreneur

Connect with Darren:
LinkedIn


Full Transcript:

JP Maroney:

Hello and welcome again to another edition of the deal flow show on JP Maroney, your host, along with my cohost for this episode, mr. Paul Nicoline, um, we have a great guest as many. Uh, we have great guests here today for this episode, and it’s Darren marble. He’s with both issuance as well as the founder and CEO of crush capital. And, uh, we’re going to be talking about some pretty exciting things. And Darren, I was watching you on LinkedIn. I’d seen some of the posts you had made, and they were topics that really resonated with me personally, especially related to capital raising and digital platforms that are being used nowadays for capital raising as well as, um, the, the deal making process. So I know you’ve been involved yourself with some acquisition, um, activity recently within the last couple of years in your own business.

So we’re going to get into that whole dynamic and let’s keep in mind that we’re going to talk about your business, your background, but we’re also creating content. That’s going to become a book called deal-makers deal breakers, where you’re going to a lot of your tips and strategies and ideas about the deal flow process, going to the negotiating table, that whole MNA process, raising capital, um, how important that is. And we’re going to share a lot of that knowledge and it’s going to be available in perpetuity to our audience and to our readers worldwide. So let’s jump into this episode. Tell us a little bit about how you got started in this business, in the Capitol mall.

Darren Marble:

Well, thanks guys for having me on it’s a real pleasure. Um, like any good entrepreneur we failed into it. Uh, I started a company about 10 years ago. We cut our teeth marketing rewards based crowdfunding campaigns. Um, of all things we marketed about a hundred campaigns on Kickstarter and Indiegogo. In five years into that business, we were introduced to our first regulation, a plus issuer. We signed that company and we launched that company’s campaign. It was for an automotive startup out of Arizona called Elio motors on June 19th, 2015, which was actually the day the regulation a plus securities exemption went into effect in the U S and that campaign was successful from a capital raising standpoint, raised about $17 million from 6,300 everyday Americans, and a was a real good pivot for my company. We went full swing into the regulation, a plus industry, uh, into more traditional capital markets, so to speak. And haven’t looked back since

JP Maroney:

Very cool. So you’ve been on that real bleeding edge, I guess, of the whole regulation, a, um, industry. How do you, because this has been obviously an interest with us at Harbor city. We’ve done reg D offerings for our bonds previously, and currently are moving into the broker dealer space with reg D offerings, but we’ve kind of slated the idea of a reggae for the first quarter of next year as something potential in our securities counsel firm is very big. They do tons and tons of reggae’s now, but how do you see the impact of our environment that we’re in right now with, with COVID-19 and all this, you know, sequestering people or whatever, um, affecting the capital raising markets and especially impacting reggae in a positive or negative way.

Darren Marble:

It has definitely impacted the reggae plus industry, uh, in a very positive way reggae. Plus, if you think about it at its core, it’s really an alternative financing vehicle. And right now alternative financing is white. Hot companies are struggling to raise capital from traditional sources. And in fact, there’s more companies struggling for the same capital pools, uh, traditional VC, et cetera. In fact, we’ve seen more growth in the reggae plus industry and in our businesses in the past nine months than we’ve ever seen in the past five years. So I think the industry as a whole is really taking off more and more companies are looking for creative ways to finance their businesses. And of course the beauty of reggae is that it can be done entirely online. So the fact that it’s a digitally native capital raising mechanism makes it advantageous for companies in this environment where traditional VC is based on face to face meetings and going into someone’s office.

And then doing that all over again, a reggae can be done entirely online on the issuer’s own domain or on a platform. And, uh, you know, part of the beauty of that of course, is that everyday Americans, retail investors can participate in these offerings, you know, and on the one hand, you’d think that, uh, you know, maybe there’s an issue here because, you know, reggae is raising from retail investors, how are the retail investors doing? Are they still there? People are unemployed in the millions, it’s a kind of a crazy time. And the reality is they are there. Um, and you know, the, the average investment in one of these offering is about $2,500. And, you know, you think about that. There’s a lot of people that can and do invest $2,500 into these, a reggae offering. So it’s just been, um, a really great year. And I think we’re fortunate. And the service providers in this industry are fortunate and we’re doing everything we can to help, uh, high quality companies raise capital in these markets. Because of course, it’s a very challenging times for, for a lot of companies and of course, people as well.

JP Maroney:

How do you, um, when you, when you talk about raising completely online and whether it’s on the issuer’s website or a platform such as yours, what percentage of let’s say subscriptions or however it’s stated in a reggae, but the purchases of the, the security is made without talking to someone meaning the investor, does it completely sorta non-contact with a human being?

Darren Marble:

It’s a great question. Um, I would estimate about 80% of retail investors are buying reggae securities on an investment platform without speaking to a person. And I think there’s several reasons for that one, because when you run these campaigns on, on a website, you’re actually able to provide a lot of valuable information, um, in a relatively clean, easy to understand format. Um, the, you know, a two minute sizzle video, a link to the offering, circular, how much capital is the company raising? What are the terms? What is, what is the deal structure? And so there’s plenty of room for deal information to be communicated effectively to the average investor on the site. Um, and then the other reason is because again, the average investment here is about $2,500, not $25,000, nor is it a quarter of a million dollars. Therefore the decision making process is streamlined.

It’s easier to convert an individual investor and get them excited about putting in $2,500 into a deal without talking to a person than a more traditional angel investor. Who’s going to pull it over and maybe do more traditional due diligence. Now that said, there are firms we work with in the regulation, a plus space, hybrid financial, um, out of Canada’s one of them, they run call centers so that we, you know, have a click to call function on these campaigns. If you hit one of these investment sites that we’re managing, and you’d like to speak to a person, you have that option. So some companies do implement that ability, uh, in their investment campaigns. We think it’s quite effective, but I wouldn’t say it’s a prerequisite or a requirement for success. And that’s kind of the point of these campaigns in this industry. It’s designed to be faster, easier, cheaper for companies to raise capital and ultimately easier for the retail investor as well. And so it’s a win win when an issuer is able to clearly communicate their investment, a value proposition to the retail community at large and retail investors feel confident in consuming that information to the point, they’re able to buy securities in a matter of minutes without speaking to another person. And I think you’ll consider, you’ll continue to see that trend continue in the years ahead

Paul Nicolini:

Because of its digital nature. Are you finding the demographics of the investor is lower now the average age of the investor?

Darren Marble:

It’s another good question. I think the answer is it depends on the retail distribution strategy for the particular offering. Um, so on the one hand, one of the hot trends right now in the regulation, a plus industry is, um, an increase in the number of independent financial publishers that are providing coverage and awareness for a multitude of regulation, a plus campaigns, and the publishers, uh, happened to have audiences that skew a bit older. The average age of their subscribers might be 60 years old, a male that has disposable income. So it depends on how the issuer is, uh, creating awareness for the deal. If there’s a financial publisher involved, the people who are buying those information products from the publishers and paying them a fee to access that information, they tend to skew a little bit older. Uh, on the other hand, I think, you know, the average age of a reggae retail investor, somewhere between, you know, maybe 30 and 40.

Um, so it’s really not the Robin hood, uh, demographic. It’s not a young gen Z investor. Who’s buying a security for their first time. On average, a reggae investors tend to be a little bit older, a little bit more experienced and potentially savvy or even very savvy. And I think that’s one of the reasons that this is working so well, um, is issuers are having success targeting likely investors, and more often than not likely investors in a reggae deal are not buying a security for their first time, but they’ve, they’ve got some, some kind of investment experience under their belt.

JP Maroney:

You mentioned the public, the financial publications and your SA is that on a, um, like an advertising type situation. They’re, they’re paying a fee to be exposed to that audience. Or as you said on the opposite side, you’ve got a paid subscription base. And as part of their service, the publisher is providing this information or access to their readers,

Darren Marble:

Uh, the latter. And that’s part of what’s so great about this model and, and what’s working really well in the industry. The publishers that are providing coverage of these reggae investment opportunities are totally independent. They do not charge compensation to the issuer. They don’t take cash fees, they don’t take stock fees. Um, they don’t put a contract in place with the issuer, therefore they’re independent and unbiased. And when they go out with coverage of a deal, they’re able to tell their subscribers that they’ve scoured the market. And they’ve identified ABC company as a promising or interesting alternative investment opportunity. And therefore, um, that, that promotion carries a lot of weight with their subscribers. And there’s no disclosure, there’s no 17 B disclaimer required because they have not received compensation. So that model is working really well right now. And you know, what we’re doing with this series is probably worth mentioning where we think the industry is actually headed in kind of the final, uh, and maybe the biggest way to distribute these deals is through a television series.

And that’s what we’re launching. You know, we’re launching a series called public where we follow the stories of founders as they’re raising capital, taking their companies public to NASDAQ. And for the first time ever, the viewers of the show can actually invest into the IPOs at the IPO price. And we thought, what better way to get, um, a retail investor or a customer of a brand excited than to really, you know, provide an in depth profile and follow the journey of these companies, not just on a landing page or in a two minute sizzle video, we’ll put them in a, in a story, put them in a show where the viewers can follow the founders week after week. And as crazy as that sounds, I actually believe it will be the largest distribution ever brought to the industry. Uh, when we launched this thing in April next year, uh, we signed a distribution deal with entrepreneur media. They run the website, entrepreneur.com. We’re forecasting about 2 million unique viewers per episode. And at one point, you know, I would would’ve thought this was crazy. You know, I would’ve diverted or reverted back to like, let’s do a paid media campaign or let’s get some PR for the company. But we think this is actually a very natural way to expose retail investors to a deal, and to allow them to invest from their desktop phone or tablet device.

Paul Nicolini:

Are there any regulatory landmines with this, with this idea?

Darren Marble:

You know, you would think there are, uh, but it turns out there’s not that there is a proper way to do this series. So, you know, you look at reggae plus, well, what is it? It’s a securities exemption. Uh, it allows a company to raise $50 million. It allows the company to generally solicit or market their investment and anyone over the age of 18 globally can legally invest. So we’ve been able to drive hundreds of millions of dollars into companies using this, uh, securities exemption through paid media campaigns, Facebook campaigns, Google campaigns, through PR campaigns, um, getting a company featured in the wall street journal, the New York times, getting an interview on Cramer’s mad money, a podcast like yours, uh, or owned media campaigns. The company can now market their investment to their million paid customers. So a TV series is actually a natural and obvious extension to what’s already been happening in this industry for the past five years now.

Are there nuances and kind of some details, uh, in, you know, in the production? Yes, there are so quick example. We have to make sure that anything that makes it to air. So, uh, you know, if you’re one of the companies and we’re producing the series and we put you in the show and it errors week after week in April next year, the statements you make have to match up with the statements that are filed in your form. One, a offering circular with the sec. So there’s a more rigorous production review and editing process is going to be infused into this series. Then there is, and probably most other shows the statements have to match up. Um, and then there’s some other nuances. For instance, the reason we chose to have this series streamed online instead of featured on a broadcast television network is because once a company receives sec qualification, technically they’re only able to communicate the investment, uh, through electronic means with a clickable hyperlink.

And I know that might sound crazy too, but it’s, it’s in law. So that means you actually can’t have a version of this show that’s on, uh, let’s say CNBC where, you know, the company’s on every week or it’s a standalone format and people go online to invest there, there’s format issues there. So, because we’ve been in this space for a number of years, we’re very familiar with the nuances of the securities rules, uh, compliance rules, regulations. And so we’ve designed this series to be, uh, not only compliant. Um, but actually what we think we’re doing is we think we’re fulfilling the promise of the jobs act, the promise of the reggae plus exemption. This is what these laws were designed to do. They’re designed to, you know, provide easier access to capital for emerging businesses on one hand. And on the other hand to level the playing field for everyday Americans to give everyday Americans an opportunity to become owners and businesses whose products and services they use in their everyday lives, what better way to do that, uh, and democratize access to investments and put these deals in a show that’s broadcast to millions of people are streamed online in this case, you know, week after week for 10 weeks.

So there’s my, uh, my, my long winded answer, but the answer is, yes, it’s completely doable.

JP Maroney:

What is the mix that you’re seeing of debt versus equity in the reggae offering?

Darren Marble:

I think most reggae offerings are our equity offerings. Um, you know, there is an exemption called a reg CS, which stands for regulation crowdfunding. That’s another securities exemption went into effect in 2016. Companies can raise up to just over a million dollars. Those are for really super early stage companies. Um, what we consider to be the highest risk deals in the industry. And of course, they’re generally illiquid investments, which is another concern in those deals. You might more commonly see, um, debt investments, uh, convertible debt safe, et cetera. Uh, in the reggae deals, most of these companies have raised an angel, a series, a financing. They might be doing 10 $50 million in sales. At that point. The majority of those deals, um, are, are, are equity deals

JP Maroney:

Entering the capital markets, as you know, is no cheap, um, process, right? And if you go to the, the traditional route, like a broker dealer community, it can be substantial with all the layers of, uh, service providers compliance, third party, due diligence providers, all of that sort of thing. What is the typical cost for a reggae plus, um, offering, as you’re seeing it, maybe you can give me an elastic band of the, the low enough

Darren Marble:

It’s going to range from eight to 12% cost of capital, maybe an average of 10% and maybe 10% of that 10% is paid upfront to a handful of service providers to initiate or launch the campaign. So, you know, I think the average reggae issuer we’re working with right now is raising about 10 million, uh, average costs of about a million dollars with maybe a hundred, maybe $150,000 paid up front to a handful of service providers and a another 850,000 or $900,000 of expense on the back end of the deal as the company is funding. So, you know, the truth is that regulation a plus is not technically a cheap way to raise capital. Um, it’s also not necessarily an easy way to raise capital. There are a number of service providers that are required to work together, uh, in unison, uh, to help these companies be successful.

However, I believe it’s the greatest securities exemption available in the United States today and potentially for years to come because companies can market their deals, they can turn their customers into investors. When you turn a customer into an investor, you’re actually creating the most powerful brand ambassador you could ever dream of someone who’s a, you know, literal a investor in the company they’re financially invested, emotionally invested. That’s the ideal relationship a company should desire with their customers, not just to be a customer and own a product, or, you know, pay a subscription for service, but to become an owner in the business and the lifetime value of those customers increase, et cetera. So I would say eight to 12%, uh, the more capital you raise the lower, the cost of capital. So on a $20 million financing, the cost of capital could be seven or 8%. And certainly on the lower end, if you raise just $5 million, cost of capital could be 15% or more. Uh, but the average company we’re working with is raising 10 million with about a 10% cost of capital

Paul Nicolini:

Capital, or issuance. Is there any other function in this process that you all provide?

Darren Marble:

Well, crush capital is the creator and owner of the going public series. We’re actively casting for season one. We’re looking for five great companies to put into this show. Uh, we’re two weeks out from announcing our hosts. We’re four weeks out from announcing the first issuer

Paul Nicolini:

I had to interrupt. I said, we have one for you. If you look looking for a great company, we do have one

Darren Marble:

A hundred percent, listen, send it across right now. Companies can apply on going public.com. Um, and then issuance’s is, um, you, my legacy financial marketing firm, we take deals, um, you know, deal to deal basis. And, um, we we’ve been doing it for years. I think the common denominator between these two businesses is they are both centered around the reggae plus securities exemption. And, uh, you know, crushed capital has a vision to put these deals into a television series. So it’s just a different format. It’s a different marketing and retail distribution strategy, you know, and ultimately guys, what, what really drives us is the belief that everyday Americans do deserve an opportunity to invest into earlier stage private companies at a minimum. They deserve the opportunity, whether somebody wants to invest into a deal or not, of course, they’re going to make that decision. Uh, it’s their discretion, but we think it’s, um, you know, just unfortunate that for so long retail investors.

I mean, if you look at the IPO markets today, these big companies like Uber and Lyft, they go public 10 years after staying private, they’ve raised billions of dollars in private markets. Um, and all the value is rung out by the early investors. And you know, who doesn’t get a piece of that action. The millions of customers who contributed to that valuation, they’re left to buy the shares in the public markets 10 years later. And we think that that’s criminal. We think that that needs to change and it needs to change now in that when given the opportunity, uh, customers will often take advantage of that and become owners and businesses whose products they use, uh, whose founders they believe in whose founders a worldview aligns with their worldview. That’s where we believe the markets are headed. In fact, we think it is a mega trend. It will be a mega trend in capital markets for companies to allow customers to become owners. And so that’s what drives us. And that’s a common denominator between crush capital and issuance.

JP Maroney:

What is the acceptance that you’re seeing in the more traditional channels like the broker dealer or adviser community for reggae’s?

Darren Marble:

Well, I think, you know, broker dealers, they can’t deny that this is a viable pathway for capital raising and, you know, look, here’s, here’s a great example at crush capital. We’ve partnered with an investment bank in the series. In fact, we partnered with Ross capital in Southern California. They’ve agreed to firm commitment, underwrite the reggae plus IPOs that we put into the show. That’s actually an industry first. It’s never happened. If we look back five years, all the past reggae plus IPOs were all underwritten on a best efforts basis. So here we have a credible small cap underwriter, willing to step up to the plate and pioneer the industry with us. And we think that solves a lot of the problems and issues were prevalent in the past reggae plus deals. So I think I can start there and say, Hey, look, here’s a great example.

We now have a credible investment banks coming into the industry for the first time ever. And they’re going to firm commitment, underwrite these deals. And that’s something that hasn’t happened in five years. That’s a good indicator of what’s happening in this industry right now and what the future for the industry holds. So we believe that in the years ahead, more investment banks, bulge bracket firms, larger investment banks are also going to begin participating in this space. And of course the sec has recommended that the cap on reggae go from 50 to 75 million. We believe that that will take effect sometime in early 2021. And when it does, it will just draw more high caliber companies into the industry. And of course, higher caliber service providers, including broker dealers, investment banks, and underwriters who now see an opportunity to generate larger fees. So all of these things I think are a good indicators that there’s a lot of growth to be had in this space in the months and years ahead

JP Maroney:

With what you mentioned earlier with entrepreneur media, you kept using the word, we have a deal, we did a deal. And then you just talked about Ross capital, basically what you stated an unprecedented deal, where they’re going to blanket take your, your deals, which I know there’s a lot of things going into that, but you’re a consummate deal maker. That’s what I, my sense is is, you know, you go back to your, uh, as you said, rewards based crowd funding that was pre reggae side of things. My question for you is when you’re, because this, this content again is now what kind of, kind of shift gears a little bit is more about the deal making process when you’re putting together these kinds of deals, whether it’s entrepreneur media in your show, whether it’s Ross and the acceptance of an underwriting of these deals, what is your process for preparing for battle or engagement going out, seeking out partners, seeking out, um, deals that make sense to help you achieve your objectives? Can you walk us through the mindset of the deal making process?

Darren Marble:

Yeah, look, I mean, we can use entrepreneur as an example. What we, we realized needed to happen to make this series come to life is we needed a deal with either a television network or a big digital publisher, um, that aligned with our, our mission. And so that was the first thing is, you know, what makes a good deal? Well, if you have an alignment of values, uh, if we share the same vision of the world, then that’s an incredibly valuable starting point because without alignment, everything else can fall into place rather easily. And the beauty of that is you often go into conversation with potential partner and you can flush that out very quickly. So for example, you know, my business partner and I had crushed capital, and I’ll never forget this. We went into a talent agency that was representing LinkedIn. And at some point this was like three years ago.

Somehow we thought LinkedIn could be a good platform for this series. And so LinkedIn referred us to their talent agency in LA. We’d get into a room with this guy and it’s like, you know, pearly white halls of some big Hollywood agency. We tell him about the reggae plus exemption, and it’s a game changer and everyday Americans can invest into, um, what could be promising investment opportunities. And this guy says, that sounds crazy. I said, I don’t think the average person should have the right to invest in these deals. They could lose all their money. They’re not informed. They’re not sophisticated. And we knew right away, this is not, this is not our guy. This guy does not share the worldview that we have. In fact, he’s an antagonist. Let’s get the heck out of here, you know? And so we got outta there. And, uh, the, the folks at entrepreneur had precisely the opposite perspective.

They believe that, uh, the future of investing involves retail investors and that customers deserve an opportunity to become owners. So alignment of values is something we look for right away. And, uh, you either have it, or you don’t, you usually can’t convince somebody to have your, your values, but if you share the same values, that’s a good starting point. Um, you know, and again, everything else from there is almost a detail. Um, I think other things that are important for us are the people who we’re going to be working with. Uh, you know, I I’m in my early forties now, I just turned 40 last year. And I’m at the point in my, my life and career. I don’t wanna, I don’t want to work with people who were punks or who are going to be challenging to work with, or we don’t get along.

Life is too short. We want to work with people who we’re going to have a fun time working with. So if we have alignment of values, who are the people on the other end of the deal, can we see ourselves working with these people, not just on a project, but you know, for years to come, can we be successful working with them all for a long time? So we have to like the people we’re working with. And, um, it’s actually important. I mean, it’s, I think we’ve all been in situations where we end up getting into a project. Um, it could be, you know, anything where the people on the other end of the deal are antagonistic or they’re challenging to work with. And that just creates headaches and stress and drama. I don’t want to deal with that. I want to work with people who are easy going, who are cool, who are fun, have a sense of humor. Uh, and so once we have alignment, we’re looking for likability, you know, and then there’s the details of the deal. Do the economics work is the value exchange fair? Are we getting what we want? And the deal is the partner getting what they want. I would say those are the top three things is alignment of values are the people we are working with. Good people are, we’re going to have a fun time working with them and then do the economics of the deal match for each, each party.

Paul Nicolini:

Interesting. Yeah, that is, um, Darren, what do you do in the case of failure? How do you deal with that? How do you manage that and how do you move forward?

Darren Marble:

You know, I’ve been an entrepreneur now for 10 years, and I think, you know, you learn to handle failure. Um, at least for me, my ability to handle failure has evolved tremendously in the early days, you know, failure hurt. Um, it was painful. It’s stung, it was demotivating. You could even get emotional about it and I’ve been through it so much. Now that it almost doesn’t phase me. I know that if I’m not failing, uh, in some ways I’m probably not pushing the boundaries hard enough, you have to fail to succeed, uh, as a business owner or entrepreneur as a dealmaker, there’s nobody that has a hundred percent track record of success. Um, it just doesn’t exist. And so failure is part of the game in business and in deal-making. And I think what smart entrepreneurs and deal-makers do is they do a postmortem. So for deals that don’t work, you know, let’s look back, let’s not just, you know, have a quick call and then move on to the next, let’s take a moment, pause and reflect.

Why didn’t that deal work? What, you know, what did we go in a, what were the expectations going in? And you know, where, where did we miss the Mark in? What can we do in the future to avoid that outcome? So savvy deal makers learn from their mistakes. They try not to make the same mistake twice or three times, because if you do, you’re just not learning. And so the failure becomes a part of your methodology. It becomes a part of your DNA, uh, as, as a dealmaker. And you try to, uh, repeat the behaviors that result in successful outcomes or you and your partners or clients, and you avoid the behaviors. Um, you know, that that result in failures and at the end of the day, you just get back up, get on the horse and do it again. And you gotta have an optimistic attitude. Uh, and you know, that can take you far.

JP Maroney:

I love it. And the mindset part of it. Here’s a good question for you, and I’m going to ask it when they come back, but if you’re listening or watching this episode of the deal flow show, you can get access to previous episodes as well as subscribe and follow us for future episodes@thedealflowshow.com on behalf of myself, Paul Nicoline, my cohost for this episode, all right. Back to Darren Moore marble. So here’s my question. You were a, um, a high jumper, correct? Or involved in track and field, right?

Darren Marble:

That’s right. Yeah, man, I can’t believe you guys figured that out.

JP Maroney:

One of our guys that you’ve talked to here is on our business development team, Daniel Penn Miranda. So he’s the producer for the deal flow show as well. You’ve communicated with him in email. Daniel was a competitive, long distance runner in high school. And college went to college on scholarship for that. And he and I were talking the other day about mindset and he was talking about visualization and how he used to literally visualize, run the race. Um, even I think, and I’m going to get it right. The kick is that right? Daniel, he even visualize the kick at the end. Um, how he, you know, put it into gear and went and saw it in his mind. We’ve heard Tony Robbins, obviously one of the more vocal people about this, but many successful people talk about mindset, anything from the track and field days that were habits or characteristics or patterns or anything that have carried over and served you in business or in the deal making process.

Darren Marble:

Absolutely. And I love that anecdote. Um, you know, visualization is critical. I mean, if I think back and it was 1998, I was a, the state champion high jumper in California. Um, and you know, there there’s some natural talent. I was a tall lanky guy and that turned out to be a good structure for a high jumper, but I had a great coach. I had a great mentor and I think that’s something that was really critical to my success. Um, as a founder, uh, in business years later, finding people that have experience, finding people you can talk to seek advice from, and this goes to, you know, the value of creating an advisory board, a fiduciary board surrounding yourself with industry experts. Um, you’ll never know it all, but you know, having a great coach, uh, in, in track and field in high jump back in the late nineties, I would have never had the success I did had I not had my coach, uh, Fred Graber.

And, um, you know, now in business, I’ve also consciously sought out mentors, uh, people who are a little bit older that have more experience and knowhow and have, uh, had more success than I have. So, you know, having a coach is important, you know, and what I loved about sports is, you know, I’ve always been competitive. And, um, you know, I don’t think you have to be an athlete to be a successful entrepreneur, but for me that, um, desire to compete and win has always stayed with me. Um, you know, winning feels great and celebrating the Winfield’s great and you to win requires a lot of patience and dedication and failure along the way. And I’ve always wanted to win in sports and in business. And, uh, you know, this is just, I’m thinking of this out loud, but one of the things I always loved about high jump it’s one of those very strange sports where you always go out on a loss, you know, a race is a race.

You have, you know, 40 seconds or 50 seconds is somewhere in between every time high jumped, you have three attempts at each height. You clear the bar at six, eight, it goes up six, 10. You clear the bar at six, 10, it goes to seven feet. And you always finish that event on three misses. You’re forced to lose. Um, and it’s just, it was a incredibly humbling experience. I think it taught me a lot, um, about resilience and getting back up. But, um, I wanted to share that with you. It’s just people, you know, they get these sports confused, high jump pole, vault, high jump. You’re jumping over the bar, pull jump you’re, uh, you’re, you’re jumping, you know, you got the pole, but, um, I, I think I took a lot away from that experience, but having a great coach, a great mentor showing up, I think are big factors in success down the road.

JP Maroney:

I love that. And the idea of a loss is actually the goal, right? You, your goal is to keep pushing the bar higher until you cannot achieve it. And you go out on the loft. I never actually drew that comparison. That’s that’s very interesting. So you asked the question about failure earlier. I want to come back to that real quick. And you mentioned having coaches and mentors back years ago, 1995, Tyler, Texas, my wife and I had been building businesses for a few years. I was 25 years old. I’d been building companies for attempting to build companies for six years. I went bankrupt, lost everything, found myself, sitting in a little room, just outside where they were about to hold our bankruptcy hearing. And it felt like sitting like a minnow sitting in a shark tank because they had us in the waiting area with our creditors.

Like those people were across the room, sitting in the chairs, looking back at me. And I sat there at that moment in one of my greatest failures that you mentioned that you said it feels like a stopper, right? Like it’s the end of time when you’re younger. And, and I sat there in that moment and I made myself two promises. The first promise I made to myself was that I was going to never, ever give up on my dream. My granddad used to have a sign that hung in his study that said, winners never quit and quitters never win. And that’s cliche to us now, but I thought back to that sign and I remembered that sign. The second promise I made to myself ties into what you said about getting the right people as mentors. I said, I’m going to seek and search until I find the people who have done what it is that I want to.

And then I’m going to learn from them. One of my greatest quotes I got from one of my mentors years ago. He said, if you want to be a master at anything, study what the masters have done before you learn to do what they have done and then have the courage or the guts to do it. And you can be a master just like them. There’s already a pattern. And if you look at building a business, launching a product, you know, a capital raising process like this, the model has already been built. You just have to be willing to find the people surround yourself with the people. I’m super excited that we’ve had you on this show to be able to share some of that knowledge, um, before we go. Um, and again, you’re listening or watching the deal flow show. And if you’d like to get access to more episodes, go to the deal flow show.com. We’ve got Darren marble on with us again, my cohost Paul Nicoline, one more quick question. What kind of people would you like to hear from, there’s going to be people that watch this, hear this, and they’re going to think, Hmm. Maybe I should reach out to this guy. What kind of people would you like to hear from and how should they best get in touch with you?

Darren Marble:

Uh, two kinds. We’re looking for companies that are interested in raising capital and building their brand companies that might have a consumer product, a retail business direct to consumer. They can apply to be featured in the inaugural season of going public on going public.com. I’m also, um, an open networker on LinkedIn. That’s where I have, uh, my, my, my social presence and profile. And, uh, we’re hiring. We’re actually hiring at those, uh, crushed Capitol for the going public series and issuance, uh, my financial marketing firm. We’re looking for account managers, project managers. So companies can go to, uh, you know, contact me on LinkedIn. If you think you want to learn more about what we, what we’re doing and, uh, how we might be able to work together. And thank you for asking,

Paul Nicolini:

Well, we’ve already heard about your, um, your, your high school, athletic, um, career, but what else can the business community know about Darren marble that they don’t already know?

Darren Marble:

I’m seven years sober. I have not drank alcohol for seven years and I credit my sobriety, uh, in large parts of my entrepreneurial success. Um, and I wrote about it in an article in business insider a few years ago, you know, running a business is, uh, the odds are against you nine out of 10 times, you’re going to fail. So if the odds are that rough, what can you do to increase your odds of not failing? And for me, making the decision to stop drinking turned out to be the best, uh, personal and business decision I ever made. And for the record, I was not ever thinking that that was going to be a good decision for me. I didn’t think I had a huge problem. I was a big red wine drinker, but, um, I’ve been sober for seven years. And what it’s allowed me to do as an entrepreneur is to channel all of my energy and my focus and my intelligence and skill into business building and to dealmaking. And, um, it’s been an incredible, um, transformation for me. So if anybody out there is listening, something’s not working in your personal life. Something’s not working in your business. You’re not closing the deals you want. I challenge you to stop drinking for just 30 days. Um, and then maybe 90 days and see if it makes a difference because it did for me.

JP Maroney:

Congratulations. Excellent. Well, on my own behalf of my cohost, Paul Nicoline, I’m JP Maroney. Thanks Darren marble again for joining us from issuance and crush capital and for not only sharing about your company, cause we all want to go out there and, and, uh, get a chance to promote and talk, but from digging deep into your storehouse of knowledge and sharing back with our audience, I know you’ll be getting in Pat people getting in touch with you as a result of hearing your story, hearing what y’all bring to the market, and also hearing about these exciting new deals and projects that you all have going on. Once again, this is the deal flow show, and if you’d like to get access to more episodes are subscribed for future. Go to the deal flow show.com. We’ll see you in another episode very soon. Take care. Thanks Darren. For more episodes, visit the deal flow show.com and subscribe.

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