October 7, 2020

Episode – 06

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[…] Oscar JofreEpisode #6 : REVOLUTIONIZING the Alternative Private Placement Market […]

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Oscar Jofre on REVOLUTIONIZING the Alternative Private Placement Market


https://youtu.be/fcGIX8RCk2o

Description:
Oscar Jofre is the Co-Founder, CEO, and President of KoreConX.  KoreConX is the first all in one platform for private companies to manage company records, capital market activity, fundraising and investments. They are revolutionizing the Alternative Private Placement Market by providing a one of a kind platform that allows shareholders to sell their securities in real time!

What you’ll learn from this episode:
– KoreConX’s platform for real time information on privately held companies.
– How KoreConX is providing a secondary market for investors of private placements.

Connect with Oscar Jofre:
Linkedin

Full Transcript:

JP Maroney:

Hello and welcome to another edition of The DEAL FLOW Show. I’m JP Maroney, your host, along with my co-host, Mr. Paul Nicolini here from Harbor City Capital and The Deal Flow Show team. And we’ve got a great guest here today, Mr. Oscar Jofre from KoreConX. And I’m excited because I’ve gotten a little bit of a hint behind the scenes about your company and what you’re doing. It’s really on a topic that we’ve been excited to kind of dive into. We’ve talked about Reg As, we’ve talked about private equity. We’ve talked about debt. We’ve talked about a lot of different pieces of the capital stack, but we haven’t spent a whole lot of time talking about crowdfunding and we look forward to jumping into that and understanding a little bit more about your business and what you do. Why don’t you take us back a little bit though, Oscar, and talk to us a little bit about how you got started in the capital markets.

Oscar Jofre:

Great. And it’s great to be on your show today, JP and Paul, I’m really looking forward to this. My journey into this, like any entrepreneur it’s hands on. So I had the pleasure of working in the capital markets since early 2000, I was right there, as you may recall, the day when Enron collapsed and the headlines read where were the directors, right? It was astonishing back then that people were asking the questions, where were they? And the director was saying, where was the information? We didn’t have access to it. So it was an interesting dynamic, uh, got to learn about the capital markets from one side, there are two sides of capital markets. There’s the list of the public world and obviously the private world. And we thought, you know, I spent about 10, 15 years there watching it, but not moved the needle.

People still did the same old, same old, same old, even though Frank and dog was around and governance, which required people felt like they have to do it. They didn’t want to do it. And during that time, obviously I’ve learnt a lot like any, anything you do, you will learn, you see how things are done. And I had the pleasure of one of those odd occasions in your life where I got to meet David wield. And it was just, uh, right at the perfect crossroads in my career as an Infor entrepreneur. And seeing that I really couldn’t move the needle in further on the publicly listed side. And here’s this man talking about democratizing capital and the United States, and J has just changed my life completely because I now have the foundation on how it worked. And here was this opportunity to start right from scratch to fix it. And that was my entrance into the capital markets. It’s been a journey that’s 20, 30 years in the making. 

JP Maroney:

What was the first thing that you worked on when you jumped in?

Oscar Jofre:

So I first got involved. Uh, obviously again, the message was where were the directors? So the solution that we brought to the market was a boardroom product. How do we make board of directors accountable? How do we get them, the tools, the information that they needed. And it became a kind of a checks and balances kind of environment. And it kind of took away the, the, the whole element of the board working together with a company. It just became, you know, we get this, we get this, then we get this, we get this. And so that was one set of board. And then the other board was, do we really need to do this? Like, you know, it’s um, so it was our first entrance into it. Um, and then from there we started branching, expanding it further, but within the public world, uh, JP, that was really no more further expansion because nobody had an appetite to do it. You know what I mean? The motivation wasn’t there on a positive way, only a very small few companies, less than a hundred that really understood why they were doing it for the greater good, the vast majority were doing it just so they could remain listed as a listed issue.

JP Maroney:

Okay. Um, what was your background before that though? How did, how did you migrate over from that, with the, with the public markets plays? Um, what were some of the things that you worked on before that obviously it’s still capital markets?

Oscar Jofre:

Well, interesting enough. I did. I didn’t, I it’s like everything. It just happens. Uh, I started, uh, got into capital markets, uh, not by stumbling into it by, you know, I had a previous private company called Babel fish, uh, the world’s largest translation platform back in 1999, early 2000. And it became my first run in with securities regulators. And I really didn’t understand what that meant was at that time. And, you know, one thing led to another that, wow. So as my career was coming to an end with Babblefish many, my, my, my startup with that came from translation. All of a sudden I’m moving into the capital markets, right from the beginning, just before the collapse of, and wrong learning about corporate governance and compliance and adopting it, using technology. So throughout my career, as an entrepreneur, um, my vision has always been to empower even before Babblefish, uh, I brought out a product with voice recognition. 

So this is the way going back to 1988, 1989, the early nineties, when we could actually speak to computers and people go, well, we have that today. Yes. But then we didn’t. And you know, the, the, the boards that would actually process, uh, the, the actual language translation were about this big today. It’s a little tiny little chip. Uh, so it just goes to show you the leaps we’ve done. So, but throughout my career, as an entrepreneur, it’s been creating solutions that empower. So in that case, it was empowering the medical industry, the legal industry, uh, and then from there, you know, translation was another empowerment. The internet is coming on. Why shouldn’t everybody in the world have access to it? Cause in the early days, was it English only. And then as that, you know, as I finished with that particular company, another opportunity emerges as you start engaging in the capital market. 

It was just one of those opportunities as an entrepreneur that just came at me and all of a sudden it’s, wow, this is a huge problem. There’s an opportunity here. And again, we did well for a while, but it wasn’t moving the needle the way we want it to like everything else. You’re not looking for it. It’s not like David Weil was up there looking for me, or I’m looking for him here. He is, I’m listening to him. And I just kind of just changed. I knew all those 10 years finally paid off 10, 15 years paid off and learning the capital markets.

Paul Nicolini:

So you mentioned Enron twice. And I know that was a big event. Was that star, was that a point of your empowerment that you wanted to get information to? The people surely the shareholders at that point needed all the information they could get. Was that something that kind of got the wheels turning?

Oscar Jofre:

It did it did. I mean, it was sorta like, you know, going from a private company, typical entrepreneur, all my lawyer handles everything. It was rather a wake up. When, you know, as a small, a small company, you got to deal with regulators and all sudden something else is emerging perfectly up at the same time. That’s when it just kind of lit up that wall. There’s this massive disconnect. I didn’t realize how big it was and run was the wake up. So not only did you have the shareholders disconnected, but the very people that the shareholders voted in, they would disconnect it. So you had kind of a, you know, an industry that’s completely being operated by insiders and everybody else was left on the out. And obviously the new rules, Frank and DOD, and other rules that have come out to bring a better governance, better transparency.

You know, people use those words during the early 2003, 2004. You’ll remember everybody says, we’re going to be more transparent. Well, what does that really mean? Right. And then as the more I got deep inside these public companies, I really got disappointed. It really, it didn’t make me jaded. It just, I was disappointed because here’s, what’s this one opportunity you had to not only demonstrate the kind of companies you are and some of the big ones they did do it, but the smaller ones, it was just give me the money, let me do my stuff. And, you know, I’ll deal with shareholders as they come. And that was for me, was that, was it. I just couldn’t, it just seemed like nothing was ever going to change. And it was rather interesting that when you try in the early 2004 and two and five people would say corporate governance, corporate governance, corporate governance, right.

And the bigger players, you know, they, they did everything right. And the smaller listed issuers, which is 98% of them for them, it was sort of like, ah, just got to deal with it because if I don’t, I’m going to get the listed, but you know what, we’ll just keep running it the same old way. And I, that for me was the final clincher. I just kind of said, Hey, and, uh, and I knew that, you know, I, at the beginning, I didn’t know how all that knowledge that I had, how the board of directors work, how the disclosures will you mean, what does transparency really mean? How it would transform into the private side. But once I got in, it was the best education ever. I have no regrets about what happened. None whatsoever. It’s just unfortunate. It wasn’t adopted in a positive manner that it should have been.

JP Maroney:

You obviously had to pull together a team to create and build out and then ultimately sell. How did you identify the type of people that you were going to work with to create that first venture?

Oscar Jofre:

So the interesting thing, when I first got into capital markets here I am, I’m coming from technology translation going into capital markets. I mean, it’s not two apples, the same different colors. Now it’s totally different. Um, like everything else that I do, you find a suitable advisors, team players that have vast, more experience. One thing that I pride myself in always finding smarter people than me to be part of the journey, do they see the same thing I do? And in those days we did, we found the best leaders, Peter Day, Stephen Jera, Lawsky the best names in corporate governance. So there was no shortage of them, right? There was no shortage of people writing articles on what the board should be, what the pink elephant means in a boardroom. So it was great to see that the right people were aware of it and they, they knew change needed to happen.

It just that it was unfortunate change was going to take a little bit longer. So, um, but I’ve adopted that model everywhere. I’ve gone in my career as an entrepreneur is that I always surround myself. Even today. When you look at my company today, core connects you, you see the people that made the difference, and they’re not just names. They’re people that we actually include in our day to day business and operational side. So David wield, the father of the jobs act, the very person who created the crowdfunding and the reggae and the reg D a general solicitation. This is the man. He is an advisor to our company, the man who created co-founder, uh, Frank and Doug, dr. [inaudible] again, part of our advisory. So we surround ourselves with the smartest people to make sure that what we’re trying to align and what empowerment we’re trying to do. Isn’t going off side with the very people who created the new regulations on legislation. So it, it, I think the success of in-company today is you have to make those combinations happen. So you’re not derailing yourself from the path of bringing empowerment into something. 

JP Maroney:

A lot of deal-making obviously as a sales process, right? So you’re, you’re having to persuade people that your idea’s worth pursuing. Whether you’re gathering a team or you’re sitting across the table from someone that’s going to be a strategic partner, or you’re selling the product I heard many years ago. And I really believe this, that it’s a lot easier to sell fire extinguishers than it is insurance policies. And, um, you know, the, when somebody has a problem, they’re, you know, they’re willing to pay for a solution, but you were identifying a problem in the marketplace and really going out and selling them a way to prevent a problem, you know, a way to prevent issues in their businesses. How did you get that message framed in a way that allowed you to be successful early on when you were really bringing something new to the market? 

Oscar Jofre:

Yeah, it’s interesting. I was just in a presentation just before coming to you today. And I was asked the question of our journey when we started core connects. And when we launched it, because we’ve been at this now for over 10 years, but the platform has only been live for four. So why did we wait so long? Because it actually, people couldn’t see the problem, even though I knew the problem was coming, even though people like David wield and many others believe what we were saying, and they were encouraging us. So you have to understand, you need encouragement. You need investor dollars to be there for a long path. And what we kept saying was the time will happen when people will cringe and increase meaning, Oh my God, I actually have a thousand shareholders, no, wait a minute, 10,000, no, a hundred thousand. What am I going to do it? 

You know, no matter what we kept telling them, what are you going to do? Here’s a dude, but now I know, you know, I got 10 shareholders today. It’s, you know, so nobody can visualize that until it happens. And you can’t even show them an example because they can’t relate it to themselves. So we educated them in understanding what it would take. And so here is the one mistake that the industry, some, uh, early entrance made. And that was when they entered the private markets. They entered it the same way, the public markets. And what does that model look like? I raised $5 million. I got 2000 shareholders. They sit on my cat, they will, and there they are our higher end investor relations person and just sending reports, monthly reports. And there’ll be okay. And you know, and once you start trading, you don’t even really know who owns your shares anymore, but in the private world, that’s not the same, your name, JP Paul, you sit on the cap table. I see how many shares you own. I see what you’re doing with my company. I see what news releases you’re getting. So you’re directly connected to me. I can’t just report to you once a month and leave you alone. That’s now why the investor invested in the journey of the company. So what has changed is that we’ve always been believers than shareholders in private companies are more than just shareholders. They become members 

And Basadur for the company. They become the evangelists or the gladiators to go out and tell the whole world, Hey, I just invested a hundred dollars in this company. I’m a shareholder, right? I mean, look at me, I got 48 accredited investors in my company. I love them. They are, I love them dearly because they believed in my dream few years ago and they invested, I have nothing but praise for them, but if I could get any of them to go to LinkedIn with an, with a, you know, with a social media and me saying, I invested in Corgan, X it’d be a miracle. But as an investor who invested a hundred dollars, $500, a thousand dollars is doing it over and over and over and over. Why? Because they fell in love with the journey and the vision of that entrepreneur. That is the, that is the thing that we were waiting for all those years. People, people to catch on to that light on, and it’s now happening. and now you got one of the biggest spark blood’s catalyst that’s driving it. 

COVID-19 COVID-19 as for, for everything that we can look at, yes, it’s bad. We get it, but something good is emerging out of it. And what’s emerging out of it is that Americans are investing in American based companies every single day. In fact, the numbers prove that year over year, this is over a hundred percent plus of our online investing for reg CF reggae. Plus all of that. What is that telling you is that people are now adapting to it much faster. The average, you know, investment was maybe a hundred dollars at one time. Now it’s over a thousand. So you know it, so it’s not stopping. It’s actually accelerating the traditional capital, raising me, sitting in front of JP, having a coffee, doing a presentation. Okay. Those have come to a halt right now. Yes. But the online side, absolutely not in the army. He is, is that it’s not just the non-accredited or the retail investor. As people call it’s. Every investor is moving online because it is easy. It’s comfortable. And you can instantly see all the information, the more reason why companies need to revisit their approach and the management of all of this. Hence the reason why we exist, it’s now become important because there’s now examples to show them what we’ve been saying. It’s been, this is the path that is going to undertake. So, you know, it’s, I don’t meant it to be in a cruel way, but COVID-19 has become the catalyst that this industry needed for our private capital markets to go like this. And this is where we are right now. We’re moving, we’re moving our needle closer and closer to get there. 

Paul Nicolini:

You’re obviously an expert in crowdfunding. Tell us something else we need to know about crowdfunding and also where is its place today in the capital markets. 

Oscar Jofre:

So when crowdfunding first emerged as a term, really, as you probably saw, it was very received very negatively by the capital markets participants, meaning the broker dealer, community legal. There was a lot of, uh, you know, there’ll be a lot of fraud and this and that. Um, and, and, and what people need to understand is that every one of us do crowdfunding. So let me give it to everyone in specific numbers. So it’s very clear. There is 152,000 plus companies every single year in the United States that raise capital. Yes, that many out of that only 1,200 or 1,500 are venture backed. Those companies are not crowdfunding. Let’s be very clear there. They’re raising their capital through venture capital. The rest of you everybody’s crowdfunding. What is crowdfunding? Crowdfunding is reaching out to somebody you don’t know, and letting them know your opportunity. Crowdfunding has been seen.

Well, you know, it’s online where people can see it. That is a choice that is not pro funding. That is a choice in the exemption that allows you to sell it. So to me, any form of capital raising is crowd funding. Why is crowd funding becoming so important today? Because for the very first time, it is the only exemptions, the only form that people can raise money in. So in the United States, we’ve got regulation CF, where companies can raise up to a million dollars through these online platforms. At the same time, you can use some other regulation called regulation, a plus where you can raise up to $50 million on your website, fully regulated, fully qualified again from the crowd. So there are, those are both called equity crowdfunding, and you can also do a reg D [inaudible], which is again, the accredited investor. And again, you can crowd from that and you can raise that to a broker dealer or on your own. 

So to me, crowdfunding is everything. Unless you’re that special, you know, 1200, 1500 companies, the vast majority of us, 98, 99%, we raised money by crowdfunding. There’s again, the stigma knock on wood. Crowdfunding has opened it up. If it wasn’t for crowdfunding. The fact that people built on build tools to allow an investor, to go through an investment process from a to Z meaning entering their details, going through a KYC process, ID, AML investor verification, signed a subscription agreement and make the payment online. The entire capital markets in the United States will come to a raging halt because that’s exactly what’s happened with those who do not have those tools. So today everybody’s rushing in to get them. So Mark my words in 2021, everybody will be doing online investing. So the terminology that’s changing, you hear words like online investing. I’m not really doing crowdfunding, I’m doing equity crowdfunding.

Again, you’re going out to the crowd, whether that’s an accredited crowd or non-accredited and bringing it in. Um, but it’s, it is one of the most amazing forms of capital raising. It has gone from nothing when it first got introduced to over 2,700 companies, just in regulation, CF that have used it successfully to raise capital from the general public. And so that it’s showing your progress, it’s creating jobs, which is part of the jobs act. Regulation is another exemption where companies are able to raise capital up to 50 million and some have even used it three years in a row. I mean, I have clients I’ve gone not the first year, the second and the third. So the regulation is favorable even to the companies themselves, because it allows them always imagine being able to go to your customers and have them invest in your company. I mean, that’s, that’s the golden goose that everybody looks forward to. We now have a way of doing it.  

JP Maroney:

It’s one thing to have a platform. It’s one thing to have a methodology for raising. I want to talk about how companies attract the investors in just a moment, but if you’re listening to, or watching this episode of the deal flow show, you can get access to our archives as well as subscribe and follow us to get access to our future episodes@thedealflowshow.com. And we’ve got a great guest with us. Oscar, uh, want to shift a little bit because you’ve been talking a lot about the platforms and the regulations and the rules and the average entrepreneur that’s sitting out there. That’s looking to raise money or currently raising money. Obviously he’s asking the question, how does someone continue for three years straight to con you know, keep attracting investors through, let’s say a reggae plus, where are the investors coming from? Because when reggae first started, my understanding of it was that it worked really well for someone who already had an audience. Maybe they had a big consumer brand, um, with a lot of people that as you said, emotionally bought in to the brand. And therefore, now I want a little piece of it and say that I’m an owner in this business. I own piece of equity in the company, but where to companies today attract the investors that invest through programs like a reggae plus.

Oscar Jofre

That’s, that’s a great question. It it’s a great lead to it. So the, the industry has created a segment that hadn’t existed years before. Uh, these are companies that provide investor acquisition tactics. So there are a number of ways where, uh, and, and tactics that you can employ to bring awareness into your opportunity. Um, that could be newsletters, finding financial newsletters or family, office newsletters, high net worth advertising emails, uh, advertising on television ads and so on. So there’s a number of techniques, including webinars to bring awareness. The original thought of reggae was yes, there are some people say, look, Oscar, the only type of companies that can come into this space, they need to be retail based and they need to, you know, have an established brand. I can give you examples. Companies like biolife four D they are, they’re not a retail. They’re, they’re a BTB biotech company and they’re doing it. 

Everybody’s got an audience, everybody in the world’s got an audience. The key is, can you resonate your language, a message to everybody? So they understand what you’re doing. I have another company called quadrant. Bio-sciences building an autism. So it doesn’t matter if it’s manufacturing homes like Boxell, um, two companies who are doing cannabis. People go, cannabis is so easy. It’s not, it’s no longer easy. Why? Because the spectrum is from a to Z. All we tell people is that our companies that come to us for assistance and reggae is you need a team. And no matter whether you got one follower or a thousand or 3000, sure, it’ll make it easier. Messaging, messaging, and messaging using the right tactics to bring the attention to you, to your site. So people can click the invest button and make the desirable investment in your company. We still have to be a viable business that everybody likes and, and understands, but we are far away from the spectrum that it’s only this B to C companies. 

Now it’s pure B to C B2B, everything in between. And it’s exciting because the we’re now see the, the, the successes and the failures. So every entrepreneur right now is thinking, yeah, Oscar, I want to do a Ray guy, but so what makes a success? What makes a failure? The success is when you play with a team. So keep this in mind. So when you are doing this kind of regulation, you got a lawyer you’re going to broke a dealer, escrow provider. You’ve got the company that provides you the investment. You got the transfer agent, you got your investor. IRPR, it’s a team. All of us are going to work together with you to be successful. So that’s success. And those are companies that can raise, you know, 15 to 50 million and they do it. We’ve seen it. And then there are those that say, you know what? 

I’m just going to do it by myself. Okay? The regulation provided you that mechanism to do so, but at the same time, you’re doing it by yourself. So who is helping you bring in that audience? So I’ve met companies that after two years, they’ve only raised like 50, $75,000. And the answer is really simple. As long as you want to play alone, you’re on the internet. You’re a needle in a haystack. You, you have to understand that in order for people to find you, you have to work with a community and you have to bring awareness. So those are the two sides of any capital raising, whether it is done online or offline, but in online, it’s even more so that you’ve got to work with a whole bunch of individuals. So it does cost money, but your return is far cheaper than you going from city to city, doing presentations in Chicago, Boston, New York, LA, San Francisco. And then you come back home to the Iowa. I made, I did 25 meetings. What did you get here? You can do a thousand meetings at the same time, all online, talking to investors worldwide and taking small offers of a hundred dollars. 

JP Maroney:

What are you suggesting that a company set aside as a budget for a successful reggae plus raise? 

Oscar Jofre:

So a bread game. We, we actually provide this to companies I suggested by this. So you’re looking at the legals between 50 to 60,000, your regulatory filings, $5,000. Your investor acquisition companies initially will be about 25,000, but you’ll spend anywhere between 25 to 200,000 or more of the, the next, uh, item that you gotta pay for is your broker dealer. They’ll charge you a 1% C to do on all the compliance on the back end. Um, and then you need the transfer agent, which is what our platform is providing them the invest button. And we charge you a monthly fee of $950. So we, so what is that old total up? So we tell people 250,000, you’re ready to do a reggae. So what are most of the companies doing? They go, Whoa, wasn’t ready for that. They’re using break CF. So they use a rec CF that allows them to raise up to a million dollars. So you see a lot of this. So we got clients like Zenith Boxell that went in there, raised a million dollars. And while they’re doing that, they’re already applying to do a reggae. So it’s, it’s an amazing when you start combining the regulations to assist you to grow your company. 

JP Maroney:

Okay. So I’m going to push you a little bit further down the board, then a CF, what kind of a budget does one need to look at coming into that? 

Oscar Jofre:

So, CF is a little different because you’re not in, you’re not in control as much as you think you are. Why? Because in order to raise capital, you could only race it in the FINRA approved platforms like Republic, we funder. So you go through these platforms, you apply. So there’s a small legal fee for the form C so you need audited information, sorry. Non-audit but you do need an account. So you’re looking at between 15 to $20,000 to get started to doing a reg CF. So there is a cost associated with it, and plus the platform will take a fee as well. They’ll charge between seven to 9% on the fees. Some of the platforms do take the half of that fee in, in, uh, equity, in your company, the same equity as the everybody else. And while other state get on a hundred percent, the whole idea of reg CF is that, you know, for anybody listening here, if you’re saying to yourself right now, I need 150,000, that’s all I need. 

When you point a reg CF, you’re not raising one 50, you’re probably going to have to raise your in 50,000 or a little bit more. You have to count in the amount of time that you’re going to spend with the legal and accounting and the filing with the sec. And then you’re going to do a little bit of marketing, not too much. There are more restrictions and reg CF, how you can market, where in reggae, you’re all on. I mean, you can do so many things and you can bring all that traffic to your website. Um, but again, you’re being limited to a million dollars. And, um, you know, it, it, it’s a great for a company that is needing the capital and has a very small budget to get to. We’ve seen companies do it very small budget, but very smart in their deployment of their marketing tactics.

Paul Nicolini:

Well, uh, it’s good, great stuff. Uh, Oscar, your, your knowledge, your experiences. It seems very vast to that point. You’ve written a couple books. Can you tell us about those books and where we can find them?

Oscar Jofre:

Yes. So when equity crowd funding was first coming out on, I released equity crowd funding, one Oh one, which is available in English, Mandarin and Spanish, um, 30 million copies have been downloaded. It’s a free book. So it’s the ABCs of equity crowd funding to this day. It’s still the same formula. Um, my second book is called digital securities. One-on-one so basically we’re now in an era where we’re talking about, what we heard back then was this is great. You’re allowing private investors to come in. That’s great. You’re gonna lock them up for 30 years. So that’s what you hear well with reggae, what people don’t realize there is no lock up period. The investor has a free trading security. So now we’re moving into the direction of digitizing the securities to be able to make it more cost effective for them to be able to sell them in the open market. And I’m not talking about public markets, I’m talking about registered secondary market ads, which are for privately held companies only, um, which will allow, you know, small investors to be able to trade between themselves, um, sell their shares, sorry, and then be able to transact in a cost effective manner. So all of this is the new digital frontier that when we meet moving into, so to get my books really simple, you can go to our site, www core connects.com, and you can register in the platform and the books are free downloadable inside. Okay. 

JP Maroney:

So you said something that is, is actually very interesting. What you’re saying is there are platforms being developed now or have launched. There’s a secondary markets for privately held securities that like a reggae, cause you know, some reggae’s have actually listed, right? So they’ve used that as a, as a mechanism to go public, but you’re saying that a reggae raise can a company could remain private, but provide some liquidity or an exit for those that are holding those privately held shares. I’m curious to understand a little bit more about that. Can you explain the platforms and how that process works or what the development is in that area right now? 

Oscar Jofre:

Sure. So the, the private world, I mean today more and more companies are staying private where we’re not going public, none of us. And if we do, we’re going public prematurely, I think the early entrance in reggae, that was one of the mistakes. That’s why the, the reason why red gate got kind of tainted a little bit, there were, you know, I’m not going to go into the regulatory issues, but it, they, they shouldn’t have gone public all my clients today in reggae, reg CF and reg D are staying private. So that’s great. That’s a great decision by company. I want to build it. We have a different exit or we’ll go public at a later time when we’re bigger. And the regulations allow that to keep raising money. But again, the shareholder needs to sell for whatever reason they need liquidity. So we there’s been a lot of talk of liquid or due for the last two, three years. 

The emergence of blockchain has really sparked this up. Tremendously. Look at that and using this technology, we can start being able to trade more efficiently and cost effectively. So the question is, why has it taken so long to get that green come true? Because even though you can build a technology DyKnow technology does not replace securities law, it doesn’t replace the regulators, the oversight parties. So I am happy to say that in less than 14, 15 days, the very first, um, secondary market registered FINRA broker dealer, it took them almost three years to get approved, which is under our infrastructure will allow a trading of reggae, shares, rec CF shares, and reg D shares of individual investors. This is a game changer, so people will watch. So game changer, because up until now, the only trades we’ve seen in secondary are half a million dollars or more. That’s great. That’s not the average person. This is going to do a hundred. Yeah. The trade that’s the everyday person. Yeah. For them to go, they can scale up. It’s big difference. The other ones could never scale down. So this is a very exciting time for the industry. Um, we are announcing this, uh, the upcoming core summit. Uh, we’re big advocates in education. Everything I believe in everything about organics is we educate everyone. We educate ecosystem. We educate the investors. What we ended up having are people who understand how it all works. They understand who all the players are. Nobody is playing in, you know, some shaded background. So the core summit we have on October the seventh is an educational event for reggae. We have commissioner Hester, Perce speaking. Um, we have the top lawyers who have downed reggae. The, we have the top broker dealers have done reggae, the investor acquisition, the a to Zed of reggae, all of it around education. And during that, we will be showcasing the secondary market for regulation a, which is going to change the market dramatically for everyone for the very first time to be able to do that. And again, it, it took them almost like I said, three years to get approved. So it’s not an easy undertaking. Not everybody is going to get that license, but it’s, it’s showing the path. They will be the first and there will be others. And, um, I’m extremely thrilled by this because you know, most companies like me, we’re, we’re, we’re, we’re going to use the regulation. We’re going to get 30,000 investors. A small base has to sell for whatever reason, but that’s not a reflection of all of them. I w you know, not every shareholder wants to sell. They understand their journey and they’re in it for the long run. But if those need to sell, there should be every opportunity for them to be able to do so in a more efficient cost effective way that it doesn’t affect the company. Meaning, you know, the traditional way is I need to call the CEO. I need to confirm that, you know, JP owns the shares that he, there are no liens and they can trade and, and all that. And then to be able to then see if the company’s real, all these things, which take months and months now, it’s in seconds that the secondary market doesn’t even need to know, uh, contact the company and disrupt you. In fact, the company’s cap tables automatically updated real time, um, because the transaction is happening at a registered ATS vendor broker dealer, which is then connected to the transfer agent and all this. So it’s a win, win, and all of this is operating under an infrastructure that allows people, that ability to do that. And that’s how you bring real change. You bring the participants who have the licenses and bring them together, and then you educate the market on what’s possible. And we’re finally there. 

JP Maroney:

That is good. That’s good stuff. This is good. Yeah. You said game changer. I think it’s going to be huge. I can’t wait to see the development and we certainly want to talk about some of the companies that we’re familiar with that would make a lot of sense. So is it the individual shareholders that will go in and list, um, they’ll open an account and list shares that they have for sale? Is that how this is going to play out?

Oscar Jofre:

Yeah, that’s right. So basically the process will be every company that is a reggae private company. Only of course not public private company that wants to list on this secondary market. Um, one of the first step is they will be onboarded to our platform, uh, to be able to, uh, have all of the information. The ATS will have instant access, uh, to the shareholder base because they need to be able to see who their holders are and all that data. Um, and that’s all done through an infrastructure we’ve created between the two companies. The first step is obviously the company has to apply to the platform, the registered ATS, but if you’re a reggae and you done obviously a filing for them to do their due diligence, it’s like 24, 48 hours. And it’s done the beauty of reggae is that the registered ATS only has to do so much work because all that information has been filed with the sec. 

So an all the shareholders we already know they’ve been vetted in because there was a broker dealer doing the KYC. So this is again, it’s a fully regulated, I’m fully compliant, but again, giving everyday people the opportunity to, if they want it, there it is. And they will be able to just click a button, go there, open an account, indicate that they want to sell these securities. It’s like a bit and ask. And you know, to me, it’s, I’ve been waiting for this for, you know, four or five years. I’ve been hearing about it. I’ve partnered with companies is that, Oh yeah, Oscar, we’re coming with it like, well, are you sure? Yeah. Bring me the clients. And we would bring them to them, the ready to go. And then they’d go, well, we need companies that can trade minimum half a million dollars. I go, so guys, so this is institutional trading. It’s not, it’s not every day institutional trading. We’ve always had the fact that you put it on digital. Okay. That’s great. You made it efficient for them, but when you get it down to a hundred dollars, you got a winner. And this is the one, this is the, this is the one that we’ve been waiting for a long time. And, um, um, 

Yeah, I’m, I’m very pumped. I mean, October 7th is going to be a really big day for all of us. And in particular now, because of COVID-19 more and more companies are pivoting their, their strategy on Capitol racing. So most of my day spent with companies, Oscar, I’m doing a reg D and my lawyer says, I should talk to you because I’m struggling selling my securities. And what am I doing? And I go, look, I, it’s not that you’re struggling. It’s just that right now, you’re trying to reach an audience that typically you would meet face to face. So try to imagine for yourself, would you write $150,000 check? Just somebody you met on the internet. And so, unless you’ve got a close relationship with them, it’s very difficult. So, but that same person, ironically enough, is investing a thousand $5,000 in multiple companies. And hasn’t met any of those companies at all.

So, so you, you need to pivot your race from, you know, the accredit, which they go out. I want to keep my floats small. I get it. I understand that, but this is what’s the con. And if COVID-19 is going to be here, I heard numbers that we’re looking at third quarter 20, 21, right before we can start grouping events and all that. That means how are you going to survive? How are you going to make it if you can’t sell your security? So I think it’s really important for people to recognize that it’s, it’s now the norm. And I firmly believed that even post COVID-19, everybody will prefer this way, because they’ll see how efficient it is. Look at that my investors go online. I put an offering there, they see it. And broker dealers who are doing that now, moving that direction, they’re going to do extremely well companies who can pivot themselves from all. Yeah. I only did accredited. Now I’m doing reggae. They’re going to like real estate. Real estate has always been, you know, accredited investor. Now they’re moving into retail and they’re like, you know what? It’s, the numbers are bigger, but at least we’re getting our capital raised, completed, and we’re getting the valuations that we want to keep in our company.

JP Maroney:

Very interesting. If you’re watching or listening to this episode of the deal flow show, you can get access to our archives as well as get access to future episodes, follow us and subscribe by going to the deal flow show.com. We have Oscar Joffrey on with cork and ex and, um, this has been actually very exciting. I just looked down at the time and we’re coming up on the end of our time together. I would really like to think about having you come back on, uh, for certainly for season two, but as we do some specialized programs where we’re diving into different things, we’re going to be doing one on Spock’s. We’re also very likely going to be doing one on reggae and have you come in as a panelist on a special program like that and help educate our audience. I really appreciate you being on the show. Um, before we go tell folks other than maybe the website or phone number, email, what would be the best way for them to reach out to you and what are the kinds of people that you’d like to hear from in our audience or even the network that we’ve built through the deal flow show and professionally.

Oscar Jofre:

Yeah. Thank you for that opportunities to, to find me. It’s really simple. I’m on LinkedIn and Twitter, uh, Oscar Joffrey. So it’s, I’m very easy to find I’m a Wikipedia. Um, as far as who we like to hear from, so here is the audience we currently have. We have over 120,000 companies in our platform, and they range from companies that raised $10,000 companies are raised two and a half billion. We have companies with one shareholder and we have companies with 274,000 shareholders and counting everything in between. I don’t discriminate. We don’t discriminate. We operate in us, Canada, UK, India, Australia, New Zealand, Singapore, and UAE. We’re a global company today. Um, and we have partners 700 partners worldwide. We believe in working with everyone. And one of the one promises that I make to all the entrepreneurs out there is when you come into core connects and our ecosystem, you have our word and you have our charter and our governance standard. 

We have no financial relationships with any of our partners, which means that when we give you guidance to go and talk to somebody, we are never financially motivated. We’re only motivated to make sure that you can execute. That’s the only thing that matters, because if you’re not able to execute, we’re just wasting your time. So everybody in our ecosystem has great trust with us. We’ve grown from three partners in 2018 to where we are now. And all of it has been built on trust. Everything we do is we’re creating this massive global ecosystem so we can start removing the barriers that companies have to go through when they, they raise money. Very good. 

Paul Nicolini:

That’s great. Um, Oscar, it’s wonderful to hear that platform and that platform goes live. We have to have him back on. This is incredible stuff, really groundbreaking and kudos to you really. It sounds wonderful. Tell us a little something about yourself that otherwise people wouldn’t know. 

Oscar Jofre:

Um, well, I’m an immigrant, uh, I’m a Canadian, uh, citizen, of course. Uh, I, I go back between us and Canada, but obviously with COVID-19, I’ve been blessed and being at home, I’m very fortunate, three beautiful children, three beautiful boys that are proud of my life. Um, my journey and to all of this and to everyone is that I love giving back. I really, truly do. It’s, uh, I get criticized a lot sometimes from our shareholders that I give away the farm. Um, but I know What it’s like to be an entrepreneur. I really do. I, um, so it’s the one part that, um, I’ve tried to make sure that we always, um, try to, uh, bring to everybody’s attention is that, um, you know, part of me feels that it’s difficult to do certain things. So, um, I like, uh, I want to make sure that everybody has a chance and I get great gratification. When I see companies who raise $10,000. Trust me, I get excited about that, as weird as it sounds I do, because I love what they’re doing. And I see that that $10,000 made all the change they needed in order to get the spark going. And, you know, the companies that raised a billion or half a million, that’s it. That’s fantastic. I love them too. I don’t get me wrong, but it just, to me, it’s just, uh, I know what it’s like to be an entrepreneur and I joined it. So, uh, Oscar as an open book,

JP Maroney:

Hey Oscar, I appreciate that. That is good. Excellent. And it’s, it’s very congruent with the way I feel. I know our team probably gets started hearing me say it, but I believe it. I live it. The more you give, the more you get, but you’ve got to give, give, give before you get, get, get that’s law. And you certainly are living that living proof personally, but also living proof in your business. We really appreciate you being on the show. Again, if you’re watching or listening to this episode of the deal flow show, check us out@thedealflowshow.com, follow us subscribe. And if you think you’d be a good guest or know a good guest, please reach out to us. We’ll see you in another show very, very soon. Take care everybody. Bye bye.

October 7, 2020

Oscar Jofre on REVOLUTIONIZING the Alternative Private Placement Market


https://youtu.be/fcGIX8RCk2o

Description:
Oscar Jofre is the Co-Founder, CEO, and President of KoreConX.  KoreConX is the first all in one platform for private companies to manage company records, capital market activity, fundraising and investments. They are revolutionizing the Alternative Private Placement Market by providing a one of a kind platform that allows shareholders to sell their securities in real time!

What you’ll learn from this episode:
– KoreConX’s platform for real time information on privately held companies.
– How KoreConX is providing a secondary market for investors of private placements.

Connect with Oscar Jofre:
Linkedin

Full Transcript:

JP Maroney:

Hello and welcome to another edition of The DEAL FLOW Show. I’m JP Maroney, your host, along with my co-host, Mr. Paul Nicolini here from Harbor City Capital and The Deal Flow Show team. And we’ve got a great guest here today, Mr. Oscar Jofre from KoreConX. And I’m excited because I’ve gotten a little bit of a hint behind the scenes about your company and what you’re doing. It’s really on a topic that we’ve been excited to kind of dive into. We’ve talked about Reg As, we’ve talked about private equity. We’ve talked about debt. We’ve talked about a lot of different pieces of the capital stack, but we haven’t spent a whole lot of time talking about crowdfunding and we look forward to jumping into that and understanding a little bit more about your business and what you do. Why don’t you take us back a little bit though, Oscar, and talk to us a little bit about how you got started in the capital markets.

Oscar Jofre:

Great. And it’s great to be on your show today, JP and Paul, I’m really looking forward to this. My journey into this, like any entrepreneur it’s hands on. So I had the pleasure of working in the capital markets since early 2000, I was right there, as you may recall, the day when Enron collapsed and the headlines read where were the directors, right? It was astonishing back then that people were asking the questions, where were they? And the director was saying, where was the information? We didn’t have access to it. So it was an interesting dynamic, uh, got to learn about the capital markets from one side, there are two sides of capital markets. There’s the list of the public world and obviously the private world. And we thought, you know, I spent about 10, 15 years there watching it, but not moved the needle.

People still did the same old, same old, same old, even though Frank and dog was around and governance, which required people felt like they have to do it. They didn’t want to do it. And during that time, obviously I’ve learnt a lot like any, anything you do, you will learn, you see how things are done. And I had the pleasure of one of those odd occasions in your life where I got to meet David wield. And it was just, uh, right at the perfect crossroads in my career as an Infor entrepreneur. And seeing that I really couldn’t move the needle in further on the publicly listed side. And here’s this man talking about democratizing capital and the United States, and J has just changed my life completely because I now have the foundation on how it worked. And here was this opportunity to start right from scratch to fix it. And that was my entrance into the capital markets. It’s been a journey that’s 20, 30 years in the making. 

JP Maroney:

What was the first thing that you worked on when you jumped in?

Oscar Jofre:

So I first got involved. Uh, obviously again, the message was where were the directors? So the solution that we brought to the market was a boardroom product. How do we make board of directors accountable? How do we get them, the tools, the information that they needed. And it became a kind of a checks and balances kind of environment. And it kind of took away the, the, the whole element of the board working together with a company. It just became, you know, we get this, we get this, then we get this, we get this. And so that was one set of board. And then the other board was, do we really need to do this? Like, you know, it’s um, so it was our first entrance into it. Um, and then from there we started branching, expanding it further, but within the public world, uh, JP, that was really no more further expansion because nobody had an appetite to do it. You know what I mean? The motivation wasn’t there on a positive way, only a very small few companies, less than a hundred that really understood why they were doing it for the greater good, the vast majority were doing it just so they could remain listed as a listed issue.

JP Maroney:

Okay. Um, what was your background before that though? How did, how did you migrate over from that, with the, with the public markets plays? Um, what were some of the things that you worked on before that obviously it’s still capital markets?

Oscar Jofre:

Well, interesting enough. I did. I didn’t, I it’s like everything. It just happens. Uh, I started, uh, got into capital markets, uh, not by stumbling into it by, you know, I had a previous private company called Babel fish, uh, the world’s largest translation platform back in 1999, early 2000. And it became my first run in with securities regulators. And I really didn’t understand what that meant was at that time. And, you know, one thing led to another that, wow. So as my career was coming to an end with Babblefish many, my, my, my startup with that came from translation. All of a sudden I’m moving into the capital markets, right from the beginning, just before the collapse of, and wrong learning about corporate governance and compliance and adopting it, using technology. So throughout my career, as an entrepreneur, um, my vision has always been to empower even before Babblefish, uh, I brought out a product with voice recognition. 

So this is the way going back to 1988, 1989, the early nineties, when we could actually speak to computers and people go, well, we have that today. Yes. But then we didn’t. And you know, the, the, the boards that would actually process, uh, the, the actual language translation were about this big today. It’s a little tiny little chip. Uh, so it just goes to show you the leaps we’ve done. So, but throughout my career, as an entrepreneur, it’s been creating solutions that empower. So in that case, it was empowering the medical industry, the legal industry, uh, and then from there, you know, translation was another empowerment. The internet is coming on. Why shouldn’t everybody in the world have access to it? Cause in the early days, was it English only. And then as that, you know, as I finished with that particular company, another opportunity emerges as you start engaging in the capital market. 

It was just one of those opportunities as an entrepreneur that just came at me and all of a sudden it’s, wow, this is a huge problem. There’s an opportunity here. And again, we did well for a while, but it wasn’t moving the needle the way we want it to like everything else. You’re not looking for it. It’s not like David Weil was up there looking for me, or I’m looking for him here. He is, I’m listening to him. And I just kind of just changed. I knew all those 10 years finally paid off 10, 15 years paid off and learning the capital markets.

Paul Nicolini:

So you mentioned Enron twice. And I know that was a big event. Was that star, was that a point of your empowerment that you wanted to get information to? The people surely the shareholders at that point needed all the information they could get. Was that something that kind of got the wheels turning?

Oscar Jofre:

It did it did. I mean, it was sorta like, you know, going from a private company, typical entrepreneur, all my lawyer handles everything. It was rather a wake up. When, you know, as a small, a small company, you got to deal with regulators and all sudden something else is emerging perfectly up at the same time. That’s when it just kind of lit up that wall. There’s this massive disconnect. I didn’t realize how big it was and run was the wake up. So not only did you have the shareholders disconnected, but the very people that the shareholders voted in, they would disconnect it. So you had kind of a, you know, an industry that’s completely being operated by insiders and everybody else was left on the out. And obviously the new rules, Frank and DOD, and other rules that have come out to bring a better governance, better transparency.

You know, people use those words during the early 2003, 2004. You’ll remember everybody says, we’re going to be more transparent. Well, what does that really mean? Right. And then as the more I got deep inside these public companies, I really got disappointed. It really, it didn’t make me jaded. It just, I was disappointed because here’s, what’s this one opportunity you had to not only demonstrate the kind of companies you are and some of the big ones they did do it, but the smaller ones, it was just give me the money, let me do my stuff. And, you know, I’ll deal with shareholders as they come. And that was for me, was that, was it. I just couldn’t, it just seemed like nothing was ever going to change. And it was rather interesting that when you try in the early 2004 and two and five people would say corporate governance, corporate governance, corporate governance, right.

And the bigger players, you know, they, they did everything right. And the smaller listed issuers, which is 98% of them for them, it was sort of like, ah, just got to deal with it because if I don’t, I’m going to get the listed, but you know what, we’ll just keep running it the same old way. And I, that for me was the final clincher. I just kind of said, Hey, and, uh, and I knew that, you know, I, at the beginning, I didn’t know how all that knowledge that I had, how the board of directors work, how the disclosures will you mean, what does transparency really mean? How it would transform into the private side. But once I got in, it was the best education ever. I have no regrets about what happened. None whatsoever. It’s just unfortunate. It wasn’t adopted in a positive manner that it should have been.

JP Maroney:

You obviously had to pull together a team to create and build out and then ultimately sell. How did you identify the type of people that you were going to work with to create that first venture?

Oscar Jofre:

So the interesting thing, when I first got into capital markets here I am, I’m coming from technology translation going into capital markets. I mean, it’s not two apples, the same different colors. Now it’s totally different. Um, like everything else that I do, you find a suitable advisors, team players that have vast, more experience. One thing that I pride myself in always finding smarter people than me to be part of the journey, do they see the same thing I do? And in those days we did, we found the best leaders, Peter Day, Stephen Jera, Lawsky the best names in corporate governance. So there was no shortage of them, right? There was no shortage of people writing articles on what the board should be, what the pink elephant means in a boardroom. So it was great to see that the right people were aware of it and they, they knew change needed to happen.

It just that it was unfortunate change was going to take a little bit longer. So, um, but I’ve adopted that model everywhere. I’ve gone in my career as an entrepreneur is that I always surround myself. Even today. When you look at my company today, core connects you, you see the people that made the difference, and they’re not just names. They’re people that we actually include in our day to day business and operational side. So David wield, the father of the jobs act, the very person who created the crowdfunding and the reggae and the reg D a general solicitation. This is the man. He is an advisor to our company, the man who created co-founder, uh, Frank and Doug, dr. [inaudible] again, part of our advisory. So we surround ourselves with the smartest people to make sure that what we’re trying to align and what empowerment we’re trying to do. Isn’t going off side with the very people who created the new regulations on legislation. So it, it, I think the success of in-company today is you have to make those combinations happen. So you’re not derailing yourself from the path of bringing empowerment into something. 

JP Maroney:

A lot of deal-making obviously as a sales process, right? So you’re, you’re having to persuade people that your idea’s worth pursuing. Whether you’re gathering a team or you’re sitting across the table from someone that’s going to be a strategic partner, or you’re selling the product I heard many years ago. And I really believe this, that it’s a lot easier to sell fire extinguishers than it is insurance policies. And, um, you know, the, when somebody has a problem, they’re, you know, they’re willing to pay for a solution, but you were identifying a problem in the marketplace and really going out and selling them a way to prevent a problem, you know, a way to prevent issues in their businesses. How did you get that message framed in a way that allowed you to be successful early on when you were really bringing something new to the market? 

Oscar Jofre:

Yeah, it’s interesting. I was just in a presentation just before coming to you today. And I was asked the question of our journey when we started core connects. And when we launched it, because we’ve been at this now for over 10 years, but the platform has only been live for four. So why did we wait so long? Because it actually, people couldn’t see the problem, even though I knew the problem was coming, even though people like David wield and many others believe what we were saying, and they were encouraging us. So you have to understand, you need encouragement. You need investor dollars to be there for a long path. And what we kept saying was the time will happen when people will cringe and increase meaning, Oh my God, I actually have a thousand shareholders, no, wait a minute, 10,000, no, a hundred thousand. What am I going to do it? 

You know, no matter what we kept telling them, what are you going to do? Here’s a dude, but now I know, you know, I got 10 shareholders today. It’s, you know, so nobody can visualize that until it happens. And you can’t even show them an example because they can’t relate it to themselves. So we educated them in understanding what it would take. And so here is the one mistake that the industry, some, uh, early entrance made. And that was when they entered the private markets. They entered it the same way, the public markets. And what does that model look like? I raised $5 million. I got 2000 shareholders. They sit on my cat, they will, and there they are our higher end investor relations person and just sending reports, monthly reports. And there’ll be okay. And you know, and once you start trading, you don’t even really know who owns your shares anymore, but in the private world, that’s not the same, your name, JP Paul, you sit on the cap table. I see how many shares you own. I see what you’re doing with my company. I see what news releases you’re getting. So you’re directly connected to me. I can’t just report to you once a month and leave you alone. That’s now why the investor invested in the journey of the company. So what has changed is that we’ve always been believers than shareholders in private companies are more than just shareholders. They become members 

And Basadur for the company. They become the evangelists or the gladiators to go out and tell the whole world, Hey, I just invested a hundred dollars in this company. I’m a shareholder, right? I mean, look at me, I got 48 accredited investors in my company. I love them. They are, I love them dearly because they believed in my dream few years ago and they invested, I have nothing but praise for them, but if I could get any of them to go to LinkedIn with an, with a, you know, with a social media and me saying, I invested in Corgan, X it’d be a miracle. But as an investor who invested a hundred dollars, $500, a thousand dollars is doing it over and over and over and over. Why? Because they fell in love with the journey and the vision of that entrepreneur. That is the, that is the thing that we were waiting for all those years. People, people to catch on to that light on, and it’s now happening. and now you got one of the biggest spark blood’s catalyst that’s driving it. 

COVID-19 COVID-19 as for, for everything that we can look at, yes, it’s bad. We get it, but something good is emerging out of it. And what’s emerging out of it is that Americans are investing in American based companies every single day. In fact, the numbers prove that year over year, this is over a hundred percent plus of our online investing for reg CF reggae. Plus all of that. What is that telling you is that people are now adapting to it much faster. The average, you know, investment was maybe a hundred dollars at one time. Now it’s over a thousand. So you know it, so it’s not stopping. It’s actually accelerating the traditional capital, raising me, sitting in front of JP, having a coffee, doing a presentation. Okay. Those have come to a halt right now. Yes. But the online side, absolutely not in the army. He is, is that it’s not just the non-accredited or the retail investor. As people call it’s. Every investor is moving online because it is easy. It’s comfortable. And you can instantly see all the information, the more reason why companies need to revisit their approach and the management of all of this. Hence the reason why we exist, it’s now become important because there’s now examples to show them what we’ve been saying. It’s been, this is the path that is going to undertake. So, you know, it’s, I don’t meant it to be in a cruel way, but COVID-19 has become the catalyst that this industry needed for our private capital markets to go like this. And this is where we are right now. We’re moving, we’re moving our needle closer and closer to get there. 

Paul Nicolini:

You’re obviously an expert in crowdfunding. Tell us something else we need to know about crowdfunding and also where is its place today in the capital markets. 

Oscar Jofre:

So when crowdfunding first emerged as a term, really, as you probably saw, it was very received very negatively by the capital markets participants, meaning the broker dealer, community legal. There was a lot of, uh, you know, there’ll be a lot of fraud and this and that. Um, and, and, and what people need to understand is that every one of us do crowdfunding. So let me give it to everyone in specific numbers. So it’s very clear. There is 152,000 plus companies every single year in the United States that raise capital. Yes, that many out of that only 1,200 or 1,500 are venture backed. Those companies are not crowdfunding. Let’s be very clear there. They’re raising their capital through venture capital. The rest of you everybody’s crowdfunding. What is crowdfunding? Crowdfunding is reaching out to somebody you don’t know, and letting them know your opportunity. Crowdfunding has been seen.

Well, you know, it’s online where people can see it. That is a choice that is not pro funding. That is a choice in the exemption that allows you to sell it. So to me, any form of capital raising is crowd funding. Why is crowd funding becoming so important today? Because for the very first time, it is the only exemptions, the only form that people can raise money in. So in the United States, we’ve got regulation CF, where companies can raise up to a million dollars through these online platforms. At the same time, you can use some other regulation called regulation, a plus where you can raise up to $50 million on your website, fully regulated, fully qualified again from the crowd. So there are, those are both called equity crowdfunding, and you can also do a reg D [inaudible], which is again, the accredited investor. And again, you can crowd from that and you can raise that to a broker dealer or on your own. 

So to me, crowdfunding is everything. Unless you’re that special, you know, 1200, 1500 companies, the vast majority of us, 98, 99%, we raised money by crowdfunding. There’s again, the stigma knock on wood. Crowdfunding has opened it up. If it wasn’t for crowdfunding. The fact that people built on build tools to allow an investor, to go through an investment process from a to Z meaning entering their details, going through a KYC process, ID, AML investor verification, signed a subscription agreement and make the payment online. The entire capital markets in the United States will come to a raging halt because that’s exactly what’s happened with those who do not have those tools. So today everybody’s rushing in to get them. So Mark my words in 2021, everybody will be doing online investing. So the terminology that’s changing, you hear words like online investing. I’m not really doing crowdfunding, I’m doing equity crowdfunding.

Again, you’re going out to the crowd, whether that’s an accredited crowd or non-accredited and bringing it in. Um, but it’s, it is one of the most amazing forms of capital raising. It has gone from nothing when it first got introduced to over 2,700 companies, just in regulation, CF that have used it successfully to raise capital from the general public. And so that it’s showing your progress, it’s creating jobs, which is part of the jobs act. Regulation is another exemption where companies are able to raise capital up to 50 million and some have even used it three years in a row. I mean, I have clients I’ve gone not the first year, the second and the third. So the regulation is favorable even to the companies themselves, because it allows them always imagine being able to go to your customers and have them invest in your company. I mean, that’s, that’s the golden goose that everybody looks forward to. We now have a way of doing it.  

JP Maroney:

It’s one thing to have a platform. It’s one thing to have a methodology for raising. I want to talk about how companies attract the investors in just a moment, but if you’re listening to, or watching this episode of the deal flow show, you can get access to our archives as well as subscribe and follow us to get access to our future episodes@thedealflowshow.com. And we’ve got a great guest with us. Oscar, uh, want to shift a little bit because you’ve been talking a lot about the platforms and the regulations and the rules and the average entrepreneur that’s sitting out there. That’s looking to raise money or currently raising money. Obviously he’s asking the question, how does someone continue for three years straight to con you know, keep attracting investors through, let’s say a reggae plus, where are the investors coming from? Because when reggae first started, my understanding of it was that it worked really well for someone who already had an audience. Maybe they had a big consumer brand, um, with a lot of people that as you said, emotionally bought in to the brand. And therefore, now I want a little piece of it and say that I’m an owner in this business. I own piece of equity in the company, but where to companies today attract the investors that invest through programs like a reggae plus.

Oscar Jofre

That’s, that’s a great question. It it’s a great lead to it. So the, the industry has created a segment that hadn’t existed years before. Uh, these are companies that provide investor acquisition tactics. So there are a number of ways where, uh, and, and tactics that you can employ to bring awareness into your opportunity. Um, that could be newsletters, finding financial newsletters or family, office newsletters, high net worth advertising emails, uh, advertising on television ads and so on. So there’s a number of techniques, including webinars to bring awareness. The original thought of reggae was yes, there are some people say, look, Oscar, the only type of companies that can come into this space, they need to be retail based and they need to, you know, have an established brand. I can give you examples. Companies like biolife four D they are, they’re not a retail. They’re, they’re a BTB biotech company and they’re doing it. 

Everybody’s got an audience, everybody in the world’s got an audience. The key is, can you resonate your language, a message to everybody? So they understand what you’re doing. I have another company called quadrant. Bio-sciences building an autism. So it doesn’t matter if it’s manufacturing homes like Boxell, um, two companies who are doing cannabis. People go, cannabis is so easy. It’s not, it’s no longer easy. Why? Because the spectrum is from a to Z. All we tell people is that our companies that come to us for assistance and reggae is you need a team. And no matter whether you got one follower or a thousand or 3000, sure, it’ll make it easier. Messaging, messaging, and messaging using the right tactics to bring the attention to you, to your site. So people can click the invest button and make the desirable investment in your company. We still have to be a viable business that everybody likes and, and understands, but we are far away from the spectrum that it’s only this B to C companies. 

Now it’s pure B to C B2B, everything in between. And it’s exciting because the we’re now see the, the, the successes and the failures. So every entrepreneur right now is thinking, yeah, Oscar, I want to do a Ray guy, but so what makes a success? What makes a failure? The success is when you play with a team. So keep this in mind. So when you are doing this kind of regulation, you got a lawyer you’re going to broke a dealer, escrow provider. You’ve got the company that provides you the investment. You got the transfer agent, you got your investor. IRPR, it’s a team. All of us are going to work together with you to be successful. So that’s success. And those are companies that can raise, you know, 15 to 50 million and they do it. We’ve seen it. And then there are those that say, you know what? 

I’m just going to do it by myself. Okay? The regulation provided you that mechanism to do so, but at the same time, you’re doing it by yourself. So who is helping you bring in that audience? So I’ve met companies that after two years, they’ve only raised like 50, $75,000. And the answer is really simple. As long as you want to play alone, you’re on the internet. You’re a needle in a haystack. You, you have to understand that in order for people to find you, you have to work with a community and you have to bring awareness. So those are the two sides of any capital raising, whether it is done online or offline, but in online, it’s even more so that you’ve got to work with a whole bunch of individuals. So it does cost money, but your return is far cheaper than you going from city to city, doing presentations in Chicago, Boston, New York, LA, San Francisco. And then you come back home to the Iowa. I made, I did 25 meetings. What did you get here? You can do a thousand meetings at the same time, all online, talking to investors worldwide and taking small offers of a hundred dollars. 

JP Maroney:

What are you suggesting that a company set aside as a budget for a successful reggae plus raise? 

Oscar Jofre:

So a bread game. We, we actually provide this to companies I suggested by this. So you’re looking at the legals between 50 to 60,000, your regulatory filings, $5,000. Your investor acquisition companies initially will be about 25,000, but you’ll spend anywhere between 25 to 200,000 or more of the, the next, uh, item that you gotta pay for is your broker dealer. They’ll charge you a 1% C to do on all the compliance on the back end. Um, and then you need the transfer agent, which is what our platform is providing them the invest button. And we charge you a monthly fee of $950. So we, so what is that old total up? So we tell people 250,000, you’re ready to do a reggae. So what are most of the companies doing? They go, Whoa, wasn’t ready for that. They’re using break CF. So they use a rec CF that allows them to raise up to a million dollars. So you see a lot of this. So we got clients like Zenith Boxell that went in there, raised a million dollars. And while they’re doing that, they’re already applying to do a reggae. So it’s, it’s an amazing when you start combining the regulations to assist you to grow your company. 

JP Maroney:

Okay. So I’m going to push you a little bit further down the board, then a CF, what kind of a budget does one need to look at coming into that? 

Oscar Jofre:

So, CF is a little different because you’re not in, you’re not in control as much as you think you are. Why? Because in order to raise capital, you could only race it in the FINRA approved platforms like Republic, we funder. So you go through these platforms, you apply. So there’s a small legal fee for the form C so you need audited information, sorry. Non-audit but you do need an account. So you’re looking at between 15 to $20,000 to get started to doing a reg CF. So there is a cost associated with it, and plus the platform will take a fee as well. They’ll charge between seven to 9% on the fees. Some of the platforms do take the half of that fee in, in, uh, equity, in your company, the same equity as the everybody else. And while other state get on a hundred percent, the whole idea of reg CF is that, you know, for anybody listening here, if you’re saying to yourself right now, I need 150,000, that’s all I need. 

When you point a reg CF, you’re not raising one 50, you’re probably going to have to raise your in 50,000 or a little bit more. You have to count in the amount of time that you’re going to spend with the legal and accounting and the filing with the sec. And then you’re going to do a little bit of marketing, not too much. There are more restrictions and reg CF, how you can market, where in reggae, you’re all on. I mean, you can do so many things and you can bring all that traffic to your website. Um, but again, you’re being limited to a million dollars. And, um, you know, it, it, it’s a great for a company that is needing the capital and has a very small budget to get to. We’ve seen companies do it very small budget, but very smart in their deployment of their marketing tactics.

Paul Nicolini:

Well, uh, it’s good, great stuff. Uh, Oscar, your, your knowledge, your experiences. It seems very vast to that point. You’ve written a couple books. Can you tell us about those books and where we can find them?

Oscar Jofre:

Yes. So when equity crowd funding was first coming out on, I released equity crowd funding, one Oh one, which is available in English, Mandarin and Spanish, um, 30 million copies have been downloaded. It’s a free book. So it’s the ABCs of equity crowd funding to this day. It’s still the same formula. Um, my second book is called digital securities. One-on-one so basically we’re now in an era where we’re talking about, what we heard back then was this is great. You’re allowing private investors to come in. That’s great. You’re gonna lock them up for 30 years. So that’s what you hear well with reggae, what people don’t realize there is no lock up period. The investor has a free trading security. So now we’re moving into the direction of digitizing the securities to be able to make it more cost effective for them to be able to sell them in the open market. And I’m not talking about public markets, I’m talking about registered secondary market ads, which are for privately held companies only, um, which will allow, you know, small investors to be able to trade between themselves, um, sell their shares, sorry, and then be able to transact in a cost effective manner. So all of this is the new digital frontier that when we meet moving into, so to get my books really simple, you can go to our site, www core connects.com, and you can register in the platform and the books are free downloadable inside. Okay. 

JP Maroney:

So you said something that is, is actually very interesting. What you’re saying is there are platforms being developed now or have launched. There’s a secondary markets for privately held securities that like a reggae, cause you know, some reggae’s have actually listed, right? So they’ve used that as a, as a mechanism to go public, but you’re saying that a reggae raise can a company could remain private, but provide some liquidity or an exit for those that are holding those privately held shares. I’m curious to understand a little bit more about that. Can you explain the platforms and how that process works or what the development is in that area right now? 

Oscar Jofre:

Sure. So the, the private world, I mean today more and more companies are staying private where we’re not going public, none of us. And if we do, we’re going public prematurely, I think the early entrance in reggae, that was one of the mistakes. That’s why the, the reason why red gate got kind of tainted a little bit, there were, you know, I’m not going to go into the regulatory issues, but it, they, they shouldn’t have gone public all my clients today in reggae, reg CF and reg D are staying private. So that’s great. That’s a great decision by company. I want to build it. We have a different exit or we’ll go public at a later time when we’re bigger. And the regulations allow that to keep raising money. But again, the shareholder needs to sell for whatever reason they need liquidity. So we there’s been a lot of talk of liquid or due for the last two, three years. 

The emergence of blockchain has really sparked this up. Tremendously. Look at that and using this technology, we can start being able to trade more efficiently and cost effectively. So the question is, why has it taken so long to get that green come true? Because even though you can build a technology DyKnow technology does not replace securities law, it doesn’t replace the regulators, the oversight parties. So I am happy to say that in less than 14, 15 days, the very first, um, secondary market registered FINRA broker dealer, it took them almost three years to get approved, which is under our infrastructure will allow a trading of reggae, shares, rec CF shares, and reg D shares of individual investors. This is a game changer, so people will watch. So game changer, because up until now, the only trades we’ve seen in secondary are half a million dollars or more. That’s great. That’s not the average person. This is going to do a hundred. Yeah. The trade that’s the everyday person. Yeah. For them to go, they can scale up. It’s big difference. The other ones could never scale down. So this is a very exciting time for the industry. Um, we are announcing this, uh, the upcoming core summit. Uh, we’re big advocates in education. Everything I believe in everything about organics is we educate everyone. We educate ecosystem. We educate the investors. What we ended up having are people who understand how it all works. They understand who all the players are. Nobody is playing in, you know, some shaded background. So the core summit we have on October the seventh is an educational event for reggae. We have commissioner Hester, Perce speaking. Um, we have the top lawyers who have downed reggae. The, we have the top broker dealers have done reggae, the investor acquisition, the a to Zed of reggae, all of it around education. And during that, we will be showcasing the secondary market for regulation a, which is going to change the market dramatically for everyone for the very first time to be able to do that. And again, it, it took them almost like I said, three years to get approved. So it’s not an easy undertaking. Not everybody is going to get that license, but it’s, it’s showing the path. They will be the first and there will be others. And, um, I’m extremely thrilled by this because you know, most companies like me, we’re, we’re, we’re, we’re going to use the regulation. We’re going to get 30,000 investors. A small base has to sell for whatever reason, but that’s not a reflection of all of them. I w you know, not every shareholder wants to sell. They understand their journey and they’re in it for the long run. But if those need to sell, there should be every opportunity for them to be able to do so in a more efficient cost effective way that it doesn’t affect the company. Meaning, you know, the traditional way is I need to call the CEO. I need to confirm that, you know, JP owns the shares that he, there are no liens and they can trade and, and all that. And then to be able to then see if the company’s real, all these things, which take months and months now, it’s in seconds that the secondary market doesn’t even need to know, uh, contact the company and disrupt you. In fact, the company’s cap tables automatically updated real time, um, because the transaction is happening at a registered ATS vendor broker dealer, which is then connected to the transfer agent and all this. So it’s a win, win, and all of this is operating under an infrastructure that allows people, that ability to do that. And that’s how you bring real change. You bring the participants who have the licenses and bring them together, and then you educate the market on what’s possible. And we’re finally there. 

JP Maroney:

That is good. That’s good stuff. This is good. Yeah. You said game changer. I think it’s going to be huge. I can’t wait to see the development and we certainly want to talk about some of the companies that we’re familiar with that would make a lot of sense. So is it the individual shareholders that will go in and list, um, they’ll open an account and list shares that they have for sale? Is that how this is going to play out?

Oscar Jofre:

Yeah, that’s right. So basically the process will be every company that is a reggae private company. Only of course not public private company that wants to list on this secondary market. Um, one of the first step is they will be onboarded to our platform, uh, to be able to, uh, have all of the information. The ATS will have instant access, uh, to the shareholder base because they need to be able to see who their holders are and all that data. Um, and that’s all done through an infrastructure we’ve created between the two companies. The first step is obviously the company has to apply to the platform, the registered ATS, but if you’re a reggae and you done obviously a filing for them to do their due diligence, it’s like 24, 48 hours. And it’s done the beauty of reggae is that the registered ATS only has to do so much work because all that information has been filed with the sec. 

So an all the shareholders we already know they’ve been vetted in because there was a broker dealer doing the KYC. So this is again, it’s a fully regulated, I’m fully compliant, but again, giving everyday people the opportunity to, if they want it, there it is. And they will be able to just click a button, go there, open an account, indicate that they want to sell these securities. It’s like a bit and ask. And you know, to me, it’s, I’ve been waiting for this for, you know, four or five years. I’ve been hearing about it. I’ve partnered with companies is that, Oh yeah, Oscar, we’re coming with it like, well, are you sure? Yeah. Bring me the clients. And we would bring them to them, the ready to go. And then they’d go, well, we need companies that can trade minimum half a million dollars. I go, so guys, so this is institutional trading. It’s not, it’s not every day institutional trading. We’ve always had the fact that you put it on digital. Okay. That’s great. You made it efficient for them, but when you get it down to a hundred dollars, you got a winner. And this is the one, this is the, this is the one that we’ve been waiting for a long time. And, um, um, 

Yeah, I’m, I’m very pumped. I mean, October 7th is going to be a really big day for all of us. And in particular now, because of COVID-19 more and more companies are pivoting their, their strategy on Capitol racing. So most of my day spent with companies, Oscar, I’m doing a reg D and my lawyer says, I should talk to you because I’m struggling selling my securities. And what am I doing? And I go, look, I, it’s not that you’re struggling. It’s just that right now, you’re trying to reach an audience that typically you would meet face to face. So try to imagine for yourself, would you write $150,000 check? Just somebody you met on the internet. And so, unless you’ve got a close relationship with them, it’s very difficult. So, but that same person, ironically enough, is investing a thousand $5,000 in multiple companies. And hasn’t met any of those companies at all.

So, so you, you need to pivot your race from, you know, the accredit, which they go out. I want to keep my floats small. I get it. I understand that, but this is what’s the con. And if COVID-19 is going to be here, I heard numbers that we’re looking at third quarter 20, 21, right before we can start grouping events and all that. That means how are you going to survive? How are you going to make it if you can’t sell your security? So I think it’s really important for people to recognize that it’s, it’s now the norm. And I firmly believed that even post COVID-19, everybody will prefer this way, because they’ll see how efficient it is. Look at that my investors go online. I put an offering there, they see it. And broker dealers who are doing that now, moving that direction, they’re going to do extremely well companies who can pivot themselves from all. Yeah. I only did accredited. Now I’m doing reggae. They’re going to like real estate. Real estate has always been, you know, accredited investor. Now they’re moving into retail and they’re like, you know what? It’s, the numbers are bigger, but at least we’re getting our capital raised, completed, and we’re getting the valuations that we want to keep in our company.

JP Maroney:

Very interesting. If you’re watching or listening to this episode of the deal flow show, you can get access to our archives as well as get access to future episodes, follow us and subscribe by going to the deal flow show.com. We have Oscar Joffrey on with cork and ex and, um, this has been actually very exciting. I just looked down at the time and we’re coming up on the end of our time together. I would really like to think about having you come back on, uh, for certainly for season two, but as we do some specialized programs where we’re diving into different things, we’re going to be doing one on Spock’s. We’re also very likely going to be doing one on reggae and have you come in as a panelist on a special program like that and help educate our audience. I really appreciate you being on the show. Um, before we go tell folks other than maybe the website or phone number, email, what would be the best way for them to reach out to you and what are the kinds of people that you’d like to hear from in our audience or even the network that we’ve built through the deal flow show and professionally.

Oscar Jofre:

Yeah. Thank you for that opportunities to, to find me. It’s really simple. I’m on LinkedIn and Twitter, uh, Oscar Joffrey. So it’s, I’m very easy to find I’m a Wikipedia. Um, as far as who we like to hear from, so here is the audience we currently have. We have over 120,000 companies in our platform, and they range from companies that raised $10,000 companies are raised two and a half billion. We have companies with one shareholder and we have companies with 274,000 shareholders and counting everything in between. I don’t discriminate. We don’t discriminate. We operate in us, Canada, UK, India, Australia, New Zealand, Singapore, and UAE. We’re a global company today. Um, and we have partners 700 partners worldwide. We believe in working with everyone. And one of the one promises that I make to all the entrepreneurs out there is when you come into core connects and our ecosystem, you have our word and you have our charter and our governance standard. 

We have no financial relationships with any of our partners, which means that when we give you guidance to go and talk to somebody, we are never financially motivated. We’re only motivated to make sure that you can execute. That’s the only thing that matters, because if you’re not able to execute, we’re just wasting your time. So everybody in our ecosystem has great trust with us. We’ve grown from three partners in 2018 to where we are now. And all of it has been built on trust. Everything we do is we’re creating this massive global ecosystem so we can start removing the barriers that companies have to go through when they, they raise money. Very good. 

Paul Nicolini:

That’s great. Um, Oscar, it’s wonderful to hear that platform and that platform goes live. We have to have him back on. This is incredible stuff, really groundbreaking and kudos to you really. It sounds wonderful. Tell us a little something about yourself that otherwise people wouldn’t know. 

Oscar Jofre:

Um, well, I’m an immigrant, uh, I’m a Canadian, uh, citizen, of course. Uh, I, I go back between us and Canada, but obviously with COVID-19, I’ve been blessed and being at home, I’m very fortunate, three beautiful children, three beautiful boys that are proud of my life. Um, my journey and to all of this and to everyone is that I love giving back. I really, truly do. It’s, uh, I get criticized a lot sometimes from our shareholders that I give away the farm. Um, but I know What it’s like to be an entrepreneur. I really do. I, um, so it’s the one part that, um, I’ve tried to make sure that we always, um, try to, uh, bring to everybody’s attention is that, um, you know, part of me feels that it’s difficult to do certain things. So, um, I like, uh, I want to make sure that everybody has a chance and I get great gratification. When I see companies who raise $10,000. Trust me, I get excited about that, as weird as it sounds I do, because I love what they’re doing. And I see that that $10,000 made all the change they needed in order to get the spark going. And, you know, the companies that raised a billion or half a million, that’s it. That’s fantastic. I love them too. I don’t get me wrong, but it just, to me, it’s just, uh, I know what it’s like to be an entrepreneur and I joined it. So, uh, Oscar as an open book,

JP Maroney:

Hey Oscar, I appreciate that. That is good. Excellent. And it’s, it’s very congruent with the way I feel. I know our team probably gets started hearing me say it, but I believe it. I live it. The more you give, the more you get, but you’ve got to give, give, give before you get, get, get that’s law. And you certainly are living that living proof personally, but also living proof in your business. We really appreciate you being on the show. Again, if you’re watching or listening to this episode of the deal flow show, check us out@thedealflowshow.com, follow us subscribe. And if you think you’d be a good guest or know a good guest, please reach out to us. We’ll see you in another show very, very soon. Take care everybody. Bye bye.

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