Security Token Crowdfunding with Alon Goren

NTE 16 | Security Token


Before the word “crowdfunding” existed, Alon Goren already dove into financial technology by launching a social fundraising platform called InvestedIn, using social networking tools they have built to help people raise money online. A couple of years later, he dove into crypto full-time, and their conference, Crowd Invest Summit, became Crypto Invest Summit where they now have enterprise blockchain and security tokens, which he says are the evolution of the industry. Alon is an investor, speaker, host and leader of one of Southern California’s largest group of investors and entrepreneurs, 805 Startups. A pioneer in the crowdfunding space, he had been involved in over $200 million in online investment transactions. He joins us to talk about his support of the JOBS Act, their Security Token Summit, and what it takes to tokenize your business.

Watch the episode here:

Listen to the podcast here:

Security Token Crowdfunding with Alon Goren

I am excited to bring you an interesting guest I met at a meetup on cryptocurrency. I have Alon Goren and he is of CIS and the Security Token Summit. We’re going to talk a lot about some things that are going on. He gave an interesting presentation and caught my eye. It was pointing out some of the missing pieces to what’s going on in the whole community. In order for us to tokenize our businesses, there are bits and pieces still not quite ready for prime time. This reminds me of my earlier days, five years ago-plus when I was covering 3D printing for WTFFF?!. We had the same thing. We were always talking about the missing pieces. I know this is going to be interesting for you and he has tremendous experience. I’m going to cover that in his bio as we go through this. He’s also the host of Southern California’s largest group of investors and entrepreneurs. It’s called 805 Startups. He’s got a lot of exposure and view of what’s going on in building, supporting startups and entrepreneurs in the blockchain and cryptocurrency space. Alon, welcome.

Thank you for having me. I’m excited to be here.

You’re not just in the blockchain cryptocurrency, you’re overall in looking at it from the crowdfunding view.

That was my first dive into financial technology. Technically, I had a very short period of time where I worked in the systems architecture group at Countrywide fresh out of school. I didn’t do anything important there. I was working at Myspace and then at Amazon back in the day and I thought, “How cool would it be to use the social networking tools that we have built to help people raise money online?” We launched a social fundraising platform called InvestedIn before the word crowdfunding existed.

Before it was in the new rules.

NTE 16 | Security Token
Security Token: The fact that it’s regulated doesn’t mean that bad people are going to stop terrorizing people. It means that good people are now going to have more hoops to jump through and less ability to actually do good.

 

It was before it was legal and we quickly realized that we couldn’t do what we exactly wanted to do. We went the nonprofit model and the Kickstarter, Indiegogo model until it was legal. We have clients who raise money privately but use that same technology to amplify it and all sorts of things like that. That’s where I originally came into it and a couple of years ago, I dove into crypto full-time. Our conference Crowd Invest Summit became Crypto Invest Summit and now, it’s CIS because we’ve got enterprise blockchain and we’ve got security tokens. We’ve got builders and tracks where thousands of engineers come to learn about building in the space. It’s a cool evolution for me but it’s the evolution of the industry.

You’ve been in support of the Jobs Act as it shifted because that made crowdfunding more possible.

I got a decent following at the early days of crowdfunding by talking trash and saying, “There’s no chance the government is going to do anything to make it easier for anyone to do anything.” I’m this punk rocker. I grew up very antiestablishment and I didn’t believe that government would create rules that would make it better. When all of my friends in the space were telling me this thing called the Jobs Act is coming, I thought it was BS and then it happened. One part of me was excited because it did make certain things better, but the other part of me was still offended. I thought it was still not American, not fair, not what it could it be and should be. I’m not like a full hardcore libertarian to that end, but I do believe that people are inherently good and they’re going to do the right thing. If people are doing bad things, they should still go to jail and the crowd will find them. I thought it was offensive to have the accredited investor rules.

Telling us that we could or couldn’t invest in something.

The rules say, with certain types of deals we are allowed to participate, if we’re not millionaires and with other types of deals, you can only participate if you’re a millionaire. It’s insane because we were hoping the dream of crowdfunding and the dream of the democratization of capital is to level the playing field so that whether you’re a startup in Utah, an investor in Atlanta or you’re in Nairobi, you can participate in the same deals. You can raise money on the internet because you have a good idea and not because you have access to people who are millionaires. That was the whole idea. Crypto was exciting. Especially in 2017 and 2018, was the Wild West of ICOs but obviously going unchecked, there was a lot of craziness and a lot of fraud.

People are inherently good and they're going to do the right thing. Click To Tweet

That’s another reason why we probably don’t want to call it the Crypto Summit.

That is one reason why we don’t want to call it Crypto Invest Summit anymore but the main reason is I’m a huge fan of cryptocurrencies. The people who did wrong should go to jail and should get punished and that will keep people from doing wrong later. More than rules and laws because criminals don’t give a crap whether there’re rules and laws, there’re still going to be criminals. The fact that it’s regulated, doesn’t mean that bad people are going to stop terrorizing people. It means that good people are now going to have more expense, more hoops to jump through and less ability to actually do good. That is the frustrating part of the conundrum of the whole thing. It also drops us into security tokens which can take hopefully these old rules and with the aid of technology, with the aid of automation, with the aid of smart contracts and things like that, hopefully make the rules usable for everyone.

This is one of the things that I like to ask everyone who comes on the show. You’re having such experience in FinTech in general and going through the crowdfunding model but what part of it, where did blockchain cryptocurrency come in for you and you go, “This is what I’ve been looking for. This fills a need.”

There are so many things for me. For me, it is like that crowdfunding thing, it finally clicked. I had this dream and this is actually a vision for a product that I’ve well-documented. I started to raise money back in the day with my old company. I believe in and somebody should steal it from me. It’s being built in the blockchain space in general. When you take it a step outside of the crowdfunding that we’re talking about with everybody being able to do everything, in the United States alone and the number’s probably changed since the last few years, but the alternative investment space in the United States alone is somewhere around $7 trillion a year. That $7 trillion a majority or much more than 50%, but let’s say 51% or more is raised by third party marketers. That means the licensed investment bankers. If it’s a real estate deal, they pay between 3% and 10% to help raise the money, some types of venture funds and all these different funds raise money using third parties.

NTE 16 | Security Token
The Soul of a Deal: Making Deals in the Digital Age

Those third parties all have their own lane. They all do their own thing. If you’re a family office or a wealthy person, you go to maybe that group to do your real estate deals and that group to do startup deals. You’re constantly getting phone calls from other broker dealers and things trying to get you in on different deals. There’s no real way for them to trust using technology to help them in their process when they could. If they do use any technology, it’s proprietary, it’s their own thing. They’re living in Salesforce or picking up the phone, they’re making phone calls. What I would love is if there was one single platform. We actually built a model where if you have a broker dealer, you could do co-marketing agreements with other broker dealers. If Tracy introduces me to an investor for a real estate deal and they don’t invest but three years from now they invest in my company, I could pay Tracy legally through a co-marketing agreement between our broker dealers for that introduction.

Imagine if there was one single platform for raising money on the internet where non-accredited investors could go to accredited investors so everybody could be whitelisted for example. The regulation for where they’re located could be tracked, traced and constantly changed in an underlying layer. Every single time somebody invests in something or a particular deal is invested in whoever brought that deal to the table, whoever is still in charge of that deal of verifying the information and doing the paperwork that that takes place. Hopefully it’s very minimal because it’s all online, can actually continue to be paid on that deal.

That is almost exactly the same reason that it excited me but slightly different because I’m a product girl. I’m a hard goods product girl. I designed products for mass market retail that you bought at Costco and Walmart and target. The problem that I saw is that there’s so many great products and great ideas out there that don’t get invested in, that don’t get brought to market. Eventually they come through the channels and the original creator didn’t get credit for it. When I heard Steve Wozniak talking about that and so passionate about blockchain as a solution for that, I thought maybe it is finally time where your creative value is rewarded and what it does and that’s what you’re saying here is it brings more deals to the table. It brings more products and ideas into the world because we’re not afraid of us having to keep it secret and having to keep that hidden because we’re afraid we’ll lose our part of that deal.

It’s a very simple, traceable, verifiable and written into an immutable blockchain, into an immutable ledger. Imagine if Tracy sends me a deal, six months goes by and then something happens and I make a lot of money on that deal. Technically, I have a piece of paper saying I need to pay Tracy for it. If I forget to mention it to Tracy and she doesn’t know that it happened, she’s moved onto the next thing is Tracy going to get paid but shouldn’t a creator of something, that’s a better analogy, shouldn’t a creator of something, some piece of content. Imagine this podcast 30 years from now, somebody pays for it somewhere because it’s been taken from somewhere and reposted somewhere or reposted on a website that serves advertisements. Shouldn’t Tracy get her piece of that as the owner? That piece of art behind you wouldn’t it be nice if you sold it on eBay five years from now, if the original artist got some piece of that?

This is the thing that goes through my mind a lot in what’s going on in the community. I talked to thousands of inventors every year between trade shows and events that I speak at and taking phone calls. What I do is I make straight referrals and I finally had to create a platform to let people self-refer, which they don’t do at the pace as if they talked to me. The problem is I can’t make a living making referrals. I don’t believe in affiliate fee. I don’t want people to be paying more for the people I’m referring. I would refer them anyway but you don’t know until you meet me. I don’t know which person to refer you to until I meet you and know your project. It’s become a problem because I can’t get paid for my time there. I was like, “What am I going to do?” I created another podcast and I created a platform for it but at the same time it’s not quite as effective. Wouldn’t it be great if it was like my product royalty paid my bills? That helps that free flow of moving people forward, moving them through deals, moving the brokers in to bringing more ideas forward. It starts to filter out the ideas at the end of the day.

It works in these certain verticals and certain things like in the investment world. Majority of that $7 trillion is raised by third party brokers. They’re always so afraid they’re going to be circumvented. Here’s a way to track it, trace it and make impossible to be circumvented or next to impossible, if you do it right. In our world and these referrals, I’m a huge fan of doing exactly what you’re saying. If somebody goes, “I’ll pay you a commission if you help me find this.” I say no, almost every time across the board because I know that making those introductions and doing that will come back tenfold later in other opportunities. It’s hard in the near term to pay your bills, so you have to have a business. As much as we all love what we do, we have to live and we have to have a business. There are different ways in which this can enable that for people, especially in this new world with the gig economy and the new trust economy. Everybody is independent and how do you track things? You are not getting a paycheck day-to-day to do this for a living. This is you, you’re living is like you do every day.

The dream of crowdfunding and the dream of the democratization of capital is to level the playing field. Click To Tweet

You’ve done some work in the entertainment industry. You know how it works there. They have it old school way, not in smart contracts and blockchain, but they actually have it better. They’re very used to having royalty rights and smart contracts that have how much participation, how much credit you get but they have a bunch of lawyers and accountant managing all of that. It’s huge.

They’re also notoriously predatory with certain people who don’t know what they’re signing. There’s a term in the entertainment world, I only learned this term from a book. There’s a book called The Soul of a Deal by Richard Wolpert. He is one of my previous investors and one of my mentors. I love this guy. I sat down and I listened to a talk he gave and I read this book and I did fireside chat with him at one point. One of the terms that he talks about in the entertainment world is called monkey points. What they’ll do is they’ll create something where they’ll say, “You’re going to get four points on the profit of the this or this.” It’s so convoluted that no matter what happens in the end, their accountants will show, this movie did not make money. There’s some example, I don’t remember the exact movie, but maybe it was Forrest Gump or something like that. One of the highest grossing movies of all time lost money because they use creative accounting. They pay for all of the bills, of all of the studio and advertise from this one movie and somehow the actors never get their points.

It’s the same in product design. I can tell you how many times I’ve been screwed out of royalty along the way and didn’t make my upside. People want to know, why is it so expensive to work with you? Here’s why. If I’m not going to get it in upfront and that’s what I read an article about the reason why it’s so difficult to get attached good actors to the movies is because they are putting everything in there up upfront. They’re not willing to be screwed again. They’re like, “I’m done and this is my fee. It’s not worth my time.” Creativity could be really explored and exploited by this.

Let’s think of how most things are distributed through Netflix, Amazon digitally and all this stuff. You could technically, if you were an actor, you’re in that industry and you did it over the blockchain. It’s something I talk about with a friend that’s in LA in the tokenization space. Imagine a real time dashboard to see what the profits of a movie are and your actual distribution. It wouldn’t be that tough anymore to have it in almost real time. You can even tie the advertising to it because most advertising is bought digitally as well. Even if it’s a billboard somewhere, it’s still bought online digitally through agencies. Everything could be shown to the actors, actresses and crew. A commissioned ledger with the cap table of the movie showing you exactly what’s happening in real time. If this gets sold here, if there’s a contract here, this is how much you’re going to make. It’s totally possible.

I sat in at The Digital Entertainment World Conference on a couple of blockchain in Hollywood panel discussions. One of the things that they were talking about was a little bit more in the music industry side but very similar problems. If you’re doing music videos on YouTube, you have to enroll your video in with one particular licensed agent for it to not get shutdown on YouTube because they’ll shut it down because you’re using somebody’s music. You have to get through that panel. It’s costing you points, money and percentages for something that isn’t actually making you money per se on YouTube. For the most part, you’re getting hopefully millions of listeners, that’s their idea so that they’ll buy the album. You’re paying out for something you’re not actually making money back on.

NTE 16 | Security Token
Security Token: Startups are going up and down. It’s a rollercoaster ride. One day somebody could think their startup is dead and the next day it can become Airbnb.

 

The music industry in the last twenty years or whatever, the individual artists mostly make money off of touring, actually in person stuff and not making money online. I don’t know if that’s good or bad. I tend to think it’s better than it used to be actually. There used to be a few certain rock stars that would have good contracts and actually make money off of their contracts. Many more people have access to actually having a following now. If you go into it thinking, “I’m not going to make money off of producing the music. I’m going to make money off of the appearances.” You go into it with the thought, this might be my punk rocker self also. If one person listens to it, it’s better than if I had a contract and nobody listened to it. I do believe you, if you use it right in this new world, you could get listeners around the world that you wouldn’t have had before. Maybe if I was a full-time musician, I’d think differently.

We actually have a few exploring the use of podcasting as an inroad. Spotify bought a podcast hosting company. There’s a lot of that going on, Spotify, iHeart and all of them play it. If you don’t want to go through that normal distribution to put it out as a limited-edition podcast, there’s a lot of exploration going on in that way, which is in a way like doing indie movies. They’re independent, so they can produce everything themselves and hopefully recapture all of that.

The world of stealing music too gave way to iTunes and gave way to this new method where people are paying for music again, where they weren’t before. If you were a musician ten years ago, you’d probably have less chance of making money than you do with iTunes and stuff. Somehow people got super lazy and decided that stealing music was much harder than paying $0.99. All of a sudden $0.99, no big deal. We both pay $4 for a coffee. There is something to it.

Let’s talk a little bit about what I heard at your meetup. Let’s say you tokenize your business and it’s great. I’ve got my business, I’ve tokenized it, I found investors and I’m super excited about it but we have an exchange problem. They can’t easily exchange the tokens for other things they’re interested in or even exchange between themselves that there’s a little bit of that exchange model that is in the works.

With security tokens, you’re essentially taking a startup. People are doing it with real estate. People will be doing it with more mature companies and stuff but it’s mostly startups and real estate deals. Let’s say you’re taking your startup and you’re tokenizing it. You do have something that’s “liquid.” You have a token, one token might be worth $20 in the company or something or whatever it is. It’s tied to equity or revenue share or something like that and just because you have it, doesn’t mean that there’s another person that wants to buy it from you. It’s a very common problem in the micro-cap and small cap investment world. There are companies worth tens of millions of dollars or even less that trade on OTC markets and places like that.

As much as we all love what we do, we have to live and we have to have a business. Click To Tweet

They have these small conferences around the world for them to promote their companies to investor relations people and things like that, but just because something is the liquid, it doesn’t mean that there’s somebody there to buy it. There’s this promise of liquidity. Marc Boiron, he was in the audience but I’ve done panels with him since. He likes to tell people, “The fundraising part is the hardest part in terms of getting it done because it’s dependent on other people.” It’s also technically one of the less costly parts because tokenizing costs a lot of money. There are legal aspects to deal with. There are third-party vendors and things you’ve got to deal with and you don’t need the filters.

There’s marketing in getting the information out and the amount of time it takes you to get them funding.

There’s a big long process of tokenization that’s unnecessary at the beginning. The cost is going to go down a lot. It’s going to be one of those race sounds the bottom for all the service providers that are doing the tokenization part. The technology of tokenization will be the easiest part, but the fundraising is the hardest part. There’s no reason why you have to tokenize to raise money for your company. You could do a normal convertible note, do a normal easy fundraising process like every startup fundraises that’s not on the blockchain. There will be one block of texts that says, “We plan on tokenizing our assets at a certain point.” You would do that because once you raise money, once you have the budget for it, once it makes sense, you can tokenize. When we’re talking about early stage startups, the average exit for an early stage startup it’s like eight to ten years.

An early stage investor that’s a professional investor doesn’t expect to get their money back, if they get their money back for eight to ten years. To assume that because it’s legally transferable, doesn’t mean there’s going to be a bunch of people who want to buy it. In the process, startups go like this, it could go up and down. Startups are going up and down and it’s a rollercoaster ride and one day somebody could think their startup is dead and the next day it can become Airbnb. That’s why tokenization creates this opportunity. That’s a potential great opportunity but it doesn’t mean for sure there’s going to be somebody there. I know a lot of companies are selling it like, “We’re going to have this liquid asset and it’s going to be awesome.” Maybe it will be but there isn’t a community there yet. There may be and there probably will be but at the end of the day, because something is possible, it doesn’t mean it’s for sure happening.

In my opinion, you should sell the investment opportunity and you should talk about how you’re creating a way to where there may be liquidity or this option or there’s this piece of technology that hopefully will make it be a little better. I mentioned at the meetup, the former vice chairman of NASDAQ, when I talked to him about all of these tokenization and all these things. He made this observation that bond funds and these bond products that exist, trade at 3% to 5% premium. When they calculate their interests, I think he said, monthly or over quarter. If you normally calculate your interest quarterly, if you calculate your interest monthly, you’ll all of a sudden trade at a 3% to 5% premium. That’s significant in an investment world if you make 3% more money. Imagine in this new world where things are automated where things are online. Imagine if you could calculate interest daily, calculate interest by the second.

NTE 16 | Security Token
Security Token: If you’re not in the space or you’re looking to get educated and learn, CIS a good place to go.

 

It probably wouldn’t be efficient but imagine if every single day, if you had a product that yielded interest, if every single day you literally got that money into your account. You got an extra $25 in your bank account daily versus getting it every quarter or every month and you could trade it back and forth. That will make things more valuable. It will make things more interesting and it’ll make business more stable. At the end of the day, I don’t know from a startup perspective if having like a public stock or a public token is actually good for business. It could be good for marketing if done right. You have this army of people who own your tokens, now you’re launching products and doing things, that’s great. Think about how, it’s freaking hard to launch a startup. Imagine if you had something that even if you didn’t consider the fact that there’s probably going to be $5,000 to $10,000 a month in expenses that are tied to this, which is the number one reason startups fail is running out of money. Let’s throw that out the window and pretend that doesn’t exist. The mind share of having to deal with public shareholders, answer their questions, market it and deal with it versus running the actual company. It’s not necessarily a good thing.

I had thirteen Angel investors in my very first business in 1998. I’ve never taken investors since then because it was members of an LLC. They were people I knew. There was always a phone call, there was always like this, I’d issue out a report and they question everything. I was like, “I don’t ever want to do this again.”

I had a lot of investors in my last company and I actually for the most part had a good experience with them. They were mostly professional and great people. We did have one and a half not so friendly investors, even when things were going well, to the point where the good investors start to get mad at me sometimes, “How come you haven’t done a quarterly report and wait too long to send us. You used to send monthly reports and now you don’t send very much.” I realized I was not being very good to the good investors because there was a couple of bad seed.

Every time you issued it, you’d get all these calls. I know what you mean.

That you’d get called on these things, “What do you mean exactly by this? Why did that customer go away? Why did this thing happen?” You’re dealing with that versus running the company.

The world of stealing music gave way to iTunes and this new method where people are paying for music again where they weren't before. Click To Tweet

It’s a full-time job. That’s what you’re pointing. This is not a full-time job of raising investment, tokenizing and doing all those things but it also adds a lot of costs and distraction for business on a daily basis. With so many things influx and many unknowns, you’re adding more risk variables into the startup. It may not be the right thing. There are few exceptions where only blockchain could solve.

It could solve the instant reporting and things like that. If the average person who invests in a company, especially when you lower the minimums, to me $1,000 is a lot of money where as $25,000 to one of the investors in my previous company would have been their same threshold. You can’t discount people by going, “They only put in $100.” $100 to them is very meaningful and they want to ask you a question. You’re the CEO of the company, answer the freaking question. All of a sudden, you have this times 1,000, times 5,000 if you’re lucky. There are products we built actually for FAQ things and these private investor relations products for the space. Crowdfunding, also we had to deal with this stuff but it’s both a blessing and a curse.

Let’s talk a little bit about the summit because you’ve got another one coming up. The Security Token Summit, what happens there?

The Security Token Summit is a very high-end, more intimate event. On April 8th is the Security Token Summit and April 9th and 10th is the CIS. The reason why we separated these two things into two different events and two different companies was because they have a totally different vibe and attitude. CIS is great with 6,000 people at the Los Angeles Convention Center. It’s craziness. It’s a big expo floor. There are lots of people and it’s like speed dating. If you meet someone, you get their card, you say you’re going to follow up and you end up with a stack of cards at the end of the day. You can turn that into a lot of value. It’s exciting and the quality is great. What we wanted was, especially in the security token space, it’s where we’re spending 90% of our time personally. We want it to be able to sit down, breathe, have a meal, sit next to someone and have these more intimate conversations.

CIS SPECIAL DISCOUNT CODE OFFER FROM ALON: Enter newtrust20 at checkout.

People who might not want to go up on stage at CIS in front of thousands of people will be more willing to sit down and talk in front of the industry insiders and some of the top people in the space. We’re capping the attendance at 500 people there. It’s definitely an exciting few days. Security Token Summit, a good example of that is we always bug some of the biggest funds in space to be up on stage at CIS. Sometimes they can, sometimes they can’t. Sometimes there’s information we can talk about publicly that we can’t talk about or whatever. They also all want to be on their own offstage and definitely don’t like sitting next to the other people. Like some of the big shots wants to be alone, which is totally understandable. They don’t want to be compared to each other for different reasons and stuff like that.

What we did at Security Token Summit, this is going to be this high-end, intimate, whatever thing. They all signed on board, but we said, “We’re going to force you to be up on stage together.” For example, we have the first four tokenized venture funds. These are some of the biggest investors in the space all on one panel together, on stage at Security Token Summit. If they’re on stage at CIS, they’ll probably do their own private fireside chats or something like that. Because of the different nature of the event, we get different types of talks. We have the former vice-chairman of NASDAQ speaking at the event. We have Ami Ben-David, who people called the godfather of security tokens. He’s going to be up on stage presenting on there and stuff like that. It’s going to be exciting and it’s going to be huge. We have thousands of people coming from all over the world and great companies.

Tell me a little bit, what would be the goal of it? There’s education component. There’s information from the industry and what’s going on. What’s in it for me to attend, let’s say the Security Summit event?

For the average person, I would say if you’re not in the space already or you’re looking to get educated and learn, CIS is a good place to go. We have from basics to super advanced, we purposely make it very mainstream. A lot of the panels will dive into the weeds but they’ll also from the building blocks and the whole thing. When you leave, you should be energized and excited about this incredible new opportunity and industry. With the Security Token Summit, it is a bit more inside baseball. You will there and people are going to start talking about two token waterfalls and splitting them up. Doing all these different things and diving. If you’re maybe an institutional type of person, if you work at a bank, you work at an investment bank, you are an accountant or a lawyer, you might want to be there because you might want to dive into some of those intricacies.

You’ve got a good basis on the rest of the investment model. You’re going to understand how tokenization is shifting that or how security tokens’ shifting.

We do have some of the top compliance people in the world there. If you’re a lawyer, you might want to learn and understand how the compliance products and pieces might work from international jurisdictions or something. You might have a client that wants to invest in this space or he might have a startup that wants to tokenize as a client. You definitely want to know what’s going on.

Tell me a little bit about your business. You’re running these events, but what is it that you guys are building underneath it all?

These events took on a life of their own and we in a way punished ourselves by adding a second event. What we do personally is invest and advise in the space. Every year, we take one or two companies that we love that we meet at the conferences. We double down on them and do as much as we can to help them. We’ve created this platform with the summit that gives us access to the whole industry. We use that platform to help those companies.

You’ve got a nice large environment to choose from.

You’ll get to meet everybody from the startup side, but we also get to meet everybody from the investment side as well. They all have become our friends over the years. There are some people that do it well. We’re not those people or at least I’m not that person and generally most people don’t do it well. You see these guys and these women that have fifteen, twenty companies that they advise or 30 companies that they advise all in the same space, all raising money at the same time. You look at that, there’s no possible way they can add any value to those people. If I’m an investor and I get twenty introductions from the same person, I can’t believe that person has vetted those deals very well, has put thought and effort into it and has any skin in the game themselves. It’s practically impossible. There are a few investment funds that make 30, 40 investments a year and those people are beasts. Some of them do it well and some of them would spray and pray, some have a better track record than others. All these individual advisors, it doesn’t look good and we’re very cognizant not to become them, which is why we only do one or two companies at a time that we feel we can add value for. There’s a little bit of CMO style consulting we do, that’s tied to that world.

I’m glad that you said that because that’s where I see a lot of it falling apart. I cover emerging tech at all different stages. What I see a lot of it is truly the marketing side of things that actually fall apart for most companies. They don’t have what I call market proof. They aren’t working to get marketing proof for the concept that they have. When you miss those two things linked together, you run into great trouble. That’s really interesting that you offer that because in my numbers, it’s about 56% of failures occur because of product market fit. It has nothing to do with investment and team, it is product market fit. If you’re providing that little bit, you have a higher likelihood for creating success for your investment community and success for those startups.

People go all in on companies that they didn’t quite test.

One thing sounded good but they didn’t get how it was going to go to market or what’s going to happen there.

Even in the tech startup world, there are these incredible products over and over again. They get built but every ounce of resources they had went into building it and then they go, “We have to promote this.”

We see that on the product side all the time. I’m very used to that model of, I ran out of all my money and I’m like, “I’m so sorry, you won’t make it then.” That’s such a sad state to be in. I am so excited that we met and I hope to continue this. What I would love, Alon, is for you to send us some people whether it’s post conference or preconference, let us interview them. Let us add some value to them and let them expose them to our community. Our goal here at the New Trust Economy between Monika Proffitt and I are to create businesses and startups having success stories, having used cases, having opportunity understanding of, “Should I be doing this?” When you point out things like you did, where maybe it’s not the right thing. Maybe you should have the disclaimer paragraph that we might tokenize when we reached that stage but do it in a standard way, you have a higher likelihood for faster success. That is a great advice. I appreciate you coming on and sharing that with us.

Thank you so much for having me. I’ll absolutely send more people your way. To the audience, follow Tracy because I will send her some promo codes and maybe some giveaways of free tickets but for sure some discounted tickets for your audience.

As always, that will be at NewTrustEconomy.com. You can find us on Twitter and social media, @NewTrustEconomy. Alon, thank you for joining me.

Thank you.

Important Links:

About Alon Goren

NTE 16 | Security Token

Alon is Co-Founder of CIS, the world’s largest blockchain conference and Security Token Summit. He is an investor, speaker, host, and leader of one of Southern California’s largest group of investors and entrepreneurs, 805 Startups, with a laser-focused eye on building and supporting startups and entrepreneurs.

A pioneer in the crowdfunding space, Alon had been involved in over $200 Million Dollars in online investment transactions. He has developed technology that powers websites and financial transactions for Fortune 500 companies and well-known foundations such as Coca-Cola, American Express, ATB Financial, and Global Philanthropy Group. InvestedIn, Alon’s previous company, created a white label fundraising portal for individuals and businesses hoping to crowdfund ventures independently of major platforms. Later, his support of the JOBS Act, online media expertise and day-to-day interactions with venture funds, investors and financial professionals inspired him to create a solution to market hedge funds, real estate funds and venture funds to investors over the internet.

Before InvestedIn, Alon worked for entertainment tech giants such as Amazon, IMDb and MySpace where he managed customer experience, product development and support. InvestedIn was named “Best Marketplace Platform” by the Los Angeles Venture Association in 2013 and he was named to the Socaltech 50 for his work with InvestedIn. Alon is a thought leader on social enterprise, venture capital and crowdfunding, and has spoken at SXSW V2V, Kingonomics and many other conferences and been featured in prominent publications including Forbes, WSJ, Washington Post, TechCrunch and VentureBeat.

 

Love the show? Subscribe, rate, review, and share!
Join the New Trust Economy Community today:

Leave a Reply

Your email address will not be published. Required fields are marked *