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RockThePost Becomes Leading Crowdfunding Site For Startups

When it comes to tech startups, crowdfunding is all the rage these days. Many people, however, tend to use crowdfunding as a catch-all term, when in reality there are different types of crowdfunding. Joining us today to help shed some more light on what crowdfunding actually is and how it works is Alejandro Cremades, cofounder of crowdfunding site RockThePost. RockThePost is actually a startup itself, and has been one of the earliest equity crowdfunding sites up and running on the Web for the past two years.

IT Specialist:  Thank you for joining us today, Alejandro. To start with, can you provide our readers and overview of the background of RockThePost’s founders? Does your team have more of a tech background, a financial background, or a combination of both?

Alejandro: Thanks. Our team is very well diversified, and we believe we have the combined background and experience to truly create something game-changing. I have an extensive business and legal background. Prior to RockThePost, I was employed as an Associate at King & Spalding LLP New York office, where I was involved in the Chevron vs. Ecuador case, one of the biggest investment arbitration cases in history with $113 billion in damages at stake. I earned my Master of Laws degree in International Business & Trade Law from Fordham Law School, and this knowledge has proven critical in navigating the regulatory landscape revolving around the JOBS Act and equity crowdfunding.

My Co-Founder, Tanya, has an extensive background in business, specifically in the areas of product design, operations, sales and marketing. Not only did she graduate from Parsons School of Design at the top of the Dean’s List but also previously worked for large US-based corporations including Forbes and Fox News.

Our CTO, Drew, brings with him over a decade of development and engineering experience to RockThePost. His first startup, Fridge, was acquired by Google in 2011. In 2013, he was also part of the acquisition of Tumblr, to Yahoo!

IT Specialist: Can you provide an overview of RockThePost’s core mission as you see it, and perhaps provide some background on the inspiration that made you start RockThePost?

Alejandro: RockThePost aims to be a resource for both entrepreneurs and investors by streamlining the capital raising lifecycle, allowing for a larger pool of accredited investors to seamlessly invest in featured companies on the platform. Tanya and I are both children of successful entrepreneurs, and growing up we saw firsthand just how hard it can be to raise funds and begin a company. 

IT Specialist:We have heard a tremendous amount about crowdfunding, but nonetheless its unclear how much people truly know about the concept. Can you provide a general overview of crowdfunding – its background and perhaps how it works?

Alejandro: Crowdfunding is the idea of pooling financing for projects or ventures from a large “crowd” of backers. When most people think of crowdfunding, the idea of Kickstarter or Indiegogo comes to mind – where individuals are incentivized to back highly innovative creative projects and be a part of bringing something to light.

Equity crowdfunding, the space in which RockThePost is operating in, is completely different. We are still helping entrepreneurs obtain the needed funding to get their companies to the next stage, but rather than having “donations and rewards” act as incentives, we are dealing with securities of private companies in which only individuals who meet accreditation status as determined by the SEC are able to invest in private companies in exchange for a percentage of equity outlined in terms set in place by the entrepreneur.

We put together some further information for readers interested in learning more about equity crowdfunding here.

IT Specialist: Let’s now turn our attention to the government. Ronald Reagan once famously said that the scariest ten words in the English language were “I am from the government, and I’m here to help”. How helpful – or unhelpful – has the US government been in promoting the right type of environment for equity crowdfunding to succeed? Which is the main government agency you have to engage with or whose regulations you need to meet?

Alejandro: In April of 2012, President Obama signed the JOBS Act into law, which changes the landscape of online investing and fundraising. There are several Titles of the JOBS Act that are currently being implemented and/or proposed as they are determined by the Securities and Exchange Commission (SEC), FINRA, and the Federal Government. 

The JOBS Act is intended to provide easier access to capital for emerging and private companies in the US by allowing entrepreneurs to receive investments from the general population. This law states (among other things) that non-accredited investors can invest in private companies on its Title III. However, this legislation is not yet actionable (expected late 2014).

Title II of the JOBS Act lifts the ban on General Solicitation for private companies, and was officially implemented on September 23th, 2013. This means that private companies raising funds are now able to promote their raises publicly.

More can be read about the JOBS Act here

IT Specialist: Turning now to the specifics, can you take us through all of the steps that a startup needs to take to both list on RockThePost as well as to actually receive investments? 

Alejandro: Any aspiring entrepreneur or early stage company can easily sign up on our platform. Upon signing up, they are directed to input information about their company – industry, market size, team information, traction, etc. If an entrepreneur has questions, we offer educational guidance to further educate them on what it takes to start a company and get to the point where they will be most successful and “suitable to raise funds.” 

Upon listing on the platform, there are a variety of strategies an entrepreneur can take in order to secure investments. We’ve worked with countless entrepreneurs and been through the fundraising process ourselves, so we know what works, and we do our best to get to know and personally help out every startup in our community.

IT Specialist: Following up from the last question,how do investors participate with RockThePost? What rules or regulations do investors need to comply with? 

Alejandro: Apart from being able to contact any entrepreneur in our community, investors are matched with personalized deal flow based upon their investment preferences, and have the opportunity to participate in our Digital Pitch Events to provide direct feedback and request follow ups with selected entrepreneurs.

In order to invest in startups, an investor must meet the accreditation criteria set in place by the SEC. An accredited investor is an individual who meets at least one of these requirements:

A person with an income exceeding $200,000 or joint income with a spouse of $300,000 over the past two years

A person with a net worth exceeding $1,000,000 individually, excluding the primary residence

A person who is a general partner, executive officer, director, or related combination for the issuer of a security being offered

An institution with over $5,000,000 in assets

All investors must undergo a background check and review process before they are approved for official investment in a private company.

IT Specialist: From the perspective of the entrepreneur, what are the benefits that working with RockThePost provides them?

Alejandro: RockThePost offers many benefits to entrepreneurs, from giving aspiring entrepreneurs guidance, to connecting early stage companies with accredited investors, furthering their exposure, and streamlining the process of fundraising. 

IT Specialist: How do you differentiate yourselves from other equity crowdfunding sites? 

Alejandro: RockThePost is an accessible, yet highly curated and personal experience. We put forth as much effort as we can to genuinely get to know the companies we work with and determine how we can best help out.

We host Digital Pitch Events on a monthly basis to get our startups in front of investors who would otherwise be hard to access, offer educational expertise regarding entrepreneurship, investing, and the regulatory landscape, and provide our entrepreneurs with analytics tools to best strategize their outreach efforts.

5 years down the road we envision RockThePost as the go-to market for individuals wanting to invest in high quality, personalized deal flow – “The E*Trade or Charles Schwab for startup investing.” 

IT Specialist: What types of startups have listed with RockThePost? Is it more B2C, B2B, or a combination of both? Are there any startups that you would like to highlight that have recently raised capital with RockThePost – for example, CoFoundersLab just completed a successful fundraising round working with you, correct?

Alejandro: CoFoundersLab recently closed the minimum $680k in their seed round with RockThePost’s help. This is extremely exciting because they were the first generally soliciting company to recognize the benefits of Title II’s implementation.

The majority of companies in RockThePost’s community are high-growth startups in a variety of sectors that already have at least a minimum viable product and some level of traction (revenue, partnerships, users, some seed investment, etc.). The average offering characteristics are as follows, but not exclusive:

Seed-stage, Bridge, and Series A deals

Convertible notes and priced rounds

Median investment round of $750k, ranging from $100k - $4M

Median minimum investment of $20k per investment, ranging from $1k-$100k 

IT Specialist: For those companies that have successfully raised capital on your site, are you generally seeing that they’ve done so through many different types of investors putting in smaller amounts, or has it been more one or two core investors who have ended up as shareholders of these startups?

This all depends on the startup and their terms. Some companies have accepted low minimum investments from strategic investors, while others are able to close funding at higher amounts with fewer investors. 

IT Specialist: At the corporate level, has RockThePost itself raised capital, and who are your core investors?

Alejandro: We have very powerful individuals pushing RockThePost with us as investors that believe in the vision and long term mission of the company. Some of their affiliations include Telefonica, Robin Hood Ventures, and Mid Atlantic Angel Group.

IT Specialist: Finally, for either startups or investors who want to work with RockThePost, what is the best way to get in contact with you if they have any questions about starting the process? 

Alejandro: Feel free to get in touch with us at support@rockthepost.com

IT Specialist: Thank you for joining us today Alejandro, and best of luck going forward.

 

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