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Security Token Insight: Expert Interview with Ryan Feit, Co-founder & CEO of SeedInvest

Expert Interview


 

Ryan Feit

CEO, SeedInvest

Ryan Feit is the CEO and Co-Founder of SeedInvest. Prior to founding SeedInvest, Ryan worked at Wellspring Capital Management and Lehman Brothers in New York City where he invested in, financed, and managed dozens of private and public businesses. Ryan was instrumental in the passage of the 2012 JOBS Act, which changed 80-year-old U.S. securities laws to make it possible for entrepreneurs to raise capital over the Internet.

Since then, Ryan has served as a focal point of the budding Equity Crowdfunding industry, co-founding the Crowdfunding Professional Association and serving as a board member of the Crowdfund Intermediary Regulatory Advocates. He also worked closely with members of the SEC, FINRA, the White House, and the Treasury Department on the implementation of the JOBS Act. In addition, he frequently serves as a subject matter expert on startup investing and the JOBS Act for the Wall Street Journal, the Washington Post, CNBC, FoxBusiness, the Economist and the New York Times as well as a columnist for Fortune Magazine and Inc. Magazine.

Ryan received an MBA in Entrepreneurial Management from The Wharton School of the University of Pennsylvania and a BBA in Finance and Accounting from the University of Wisconsin-Madison.

LinkedIn    |    Twitter    |    Medium    |    Company

SeedInvest is a leading equity crowdfunding platform that provides individual investors with access to pre-vetted startup investment opportunities. SeedInvest has funded over 150 startups and boasts a rapidly growing network of over 200,000 investors. SeedInvest has had over 30,000 startups apply to raise capital since inception and has accepted less than 1% of those companies to feature on the platform. All securities-related activity is conducted by SI Securities, LLC, a wholly owned subsidiary of SeedInvest, and a registered broker-dealer, and member FINRA/SIPC.

Transcript


 

Adam Chapnick:

Welcome to “Security Token Insight”, brought to you by the Security Token Academy. The security token industry is here and will provide a key foundation for the evolving financial internet.

Amy Wan:

The Security Token Academy provides insights about this new era for security token enthusiasts, investors, and issuers. The security token industry is here, and you can get involved.

Adam Chapnick:

Hi, there. I’m Adam Chapnick.

Amy Wan:

And I’m Amy Wan. Thanks for joining us. Coming up on today’s episode of “Security Token Insight”, in your security token investing news, details on the SEC’s public forum on digital assets. We’ve got an expert interview with Ryan Feit, the co-founder and CEO of SeedInvest, and he’s talking about the recent sale of the company to Circle.

Plus, find out what’s in this week’s edition of the Security Token Edge. That and more is coming up on this episode of “Security Token Insight”.

Adam Chapnick:

Now it’s time for your security token investing news. We begin with news from the Securities and Exchange Commission. The SEC is hosting a public forum focusing on digital assets and distributed ledger technology. The event is organized by the agency’s strategic hub for innovation and financial technology. Topics such as STOs, digital asset platforms, and distributed ledger technology innovations will be discussed. The forum takes place at the SEC’s headquarters in Washington, DC on May 31st.

In other news, security token exchange tZERO is expanding into Bitcoin trading. The company, which is owned by Overstock.com, will be launching its own traditional cryptocurrency trading app in June. The app will allow traders to buy and sell Bitcoin and Ethereum. The app is being developed by a startup company called Bitsy, which is a subsidiary of, guess who? Overstock.

And finally, some international security token news to share. Security token platform, Tokeny, has announced the European rollout of a new service called “investorID”. It’s a decentralized application that enables investors to compliantly accessed tokenized securities by verifying their on-chain identity. It helps security token issuers quickly find out if an investor is eligible or not for an offering. No word yet on if, or when, this will be available in the US.

By the way, both Tokeny and tZERO are gold corporate members of the Security Token Academy. To learn more, go to our website, securitytokenacademy.com, and click on the directory tab and the corporate member homepage.

Amy Wan:

New York-based platform, SeedInvest, is also in the news because of their recent sale to Circle. We first told you about the pending acquisition at the security token industry launch event in New York back in October.

Adam Chapnick:

Now that the sale of SeedInvest is complete, what will happen to the company? Will it be business as usual? Well, we asked those questions to Ryan Feit, the co-founder and CEO of SeedInvest. Take a look.

What kind of companies are featured on SeedInvest? Is there a profile?

Ryan Feit:

Yeah, so at SeedInvest, historically, we’ve typically funded companies that are raising their first $500,000 in their seed round and all the way up to companies that are raising $20 million or more in a series B, and in terms of industries, we typically are funding technology companies, although we also will fund consumer retail companies, and geographically, most of our deals are with US-based companies, although we have been expanding internationally as well. We’ve funded companies in Europe and in Israel and Asia as well.

Adam Chapnick:

And what about on the other side? Who’s able to invest on the platform?

Ryan Feit:

Yeah, so it all kind of goes back to the Jobs Act. Initially when we started, only accredited investors can invest in startup companies, and that is, depending on what you look at, around 2% of the country that has enough income or net worth that has been allowed to invest in startups.

So we started with that for the first three years or so, and then as we worked with FINRA and the SEC and Treasury Department and the White House to actually change US securities laws to make it possible for more people and ordinary people to actually access startup investments for the first time.

We began to open up our platform to not just accredited investors, but non-accredited investors. So today on SeedInvest, we are open to all investors. We have different deal types. We have some deals that are done through regulation D that are just available to accredited investors, and then we have some companies that raise capital through regulation crowdfunding or through regulation A-plus. That can raise capital from all investors, and on SeedInvest today, we have about 250,000 investors who have registered on SeedInvest, and about 50,000 of those investors are accredited investors, which includes high net worth individuals, family offices, and venture capital funds.

Adam Chapnick:

Got it. Now, back in November at our “Security Token Industry” launch week, we learned of a pending acquisition involving SeedInvest and Circle. Let’s quickly take a look at that clip.

Jeremy Allaire:

We acquired Poloniex in February of this year. They were really innovative in being one the very first marketplaces for all these alternative assets in the United States and grew very, very fast. They needed help kind of scaling and growing the business, but that was the first key step in building a token marketplace that can support a really broad range of digital assets, from currency assets to commodity assets to ultimately what we’d like to see is the trading of security token assets as well.

So that led us to Ryan and the SeedInvest team, and really wanting to have a primary issuance platform for raising capital for business to form capital, but to marry that with the crypto-infrastructure that we had been building out to be able to allow businesses and ultimately even individuals, we hope, to issue digital securities over the internet and allow investors, both accredited and non-accredited investor, to invest in those and ultimately to provide global secondary liquidity platforms for those as well, which is a really tremendous opportunity that crypto makes possible.

Adam Chapnick:

Now flash forward to today. It’s March 2019, and Ryan, you have an update on the acquisition. Can you tell us a little bit more?

Ryan Feit:

Yeah, so excited to announce that we officially closed our sale to Circle. We received regulatory approval and closed the sale a few weeks ago, and so we’re now part of the Circle family of 300 employees across the world and real excited to be officially partnered with Circle and continue addressing our larger vision that we’ve had at SeedInvest.

Adam Chapnick:

Well, congratulations. That’s big news.

Ryan Feit:

Thank you. Appreciate it.

Adam Chapnick:

So on that, so can you give us a little color on why you actually decided in the first place to sell SeedInvest to Circle and why, on the other hand, they were interested in acquiring you?

Ryan Feit:

Yeah. Well, on the SeedInvest side, we’re very proud of what we’ve built and what we’ve been able to accomplish over the last six and a half years, but frankly, we still have a lot of work left to do, and we’re confident that by joining the circle team, we’ll be able to accomplish our original vision and be able to do it a lot quicker.

At the end of the day, we’re joining a team at Circle that is very well capitalized, has a best-in-class management team, is backed by some of the world’s best investors, and really has a global brand that’s really a leader in the industry. So Circle has raised $250 million dollars. That included Goldman Sachs, Excel, General Catalyst, IGG, Baidu, and Jim Breyer and others, and the co-founders of Circle, Jeremy Allaire and Sean Neville, their first two companies before founding Circle, they took public, so amazing amount of experience, and Circle is really just getting started, so have a lot of work left to do and excited to be partnered with them.

Adam Chapnick:

What’s going to happen-

Ryan Feit:

And on the Circle side, in terms of why they wanted to acquire us, Circle built, really, a leading brand in the blockchain crypto space and have been growing tremendously fast, but they saw a really big opportunity when they looked at what their longer-term vision was, that a lot of the business that they’re trying to build globally will be regulated, and when they looked at SeedInvest as a partner, they saw a business that we had built where we had started our own broker dealer that we’ve operated for over four years, and on the other hand, we also built technology that enables you to facilitate investments in startups as easy as buying a share of stock, and that’s very hard to do at scale.

So beyond that, we spent a lot of time with each other and just really had a similar vision and similar culture, and the rest is history.

Adam Chapnick:

By the way, we have Ryan’s full interview on our website. Be sure to check it out. SeedInvest is a gold corporate member of the Security Token Academy. To learn more, go to our website, securitytokenacademy,com, and click on the directory tab and the corporate member homepage.

Amy Wan:

Right now, I’d like to let you, our viewers, know that you can get the latest industry updates in our free weekly newsletter, the Security Token Edge. The newsletter is packed full of insightful information about the security token industry, the latest copy, featured news from Securitize, eToro, CoinBase, and much more.

To subscribe and get your free weekly copy, go to our website, securitytokenacademy.com.

We also invite you to check out “The Digital Rapper” on Medium. It’s our new behind-the-scenes series on the teams booting out the security token industry. These are in-depth interviews covering a wide variety of topics. You can view these when you follow us on Medium.

We have an upcoming interview with Tokeny. You’ll want to check that out later this week. You can find out more information on our website, securitytokenacademy.com

Adam Chapnick:

In a first-of-its-kind, multi-city webinar on tokenization of commercial real estate, Crest, a project of the Security Token Academy, provided a detailed case study on the tokenization of the St. Regis Aspen Resort. Learn how the webinar explored the disruptive forces that are emerging in commercial real estate, or CRE, financing. Here is your preview.

Disruption in commercial real estate has been appearing in lots of different ways, certainly in the office category of commercial real estate, also known as CRE. The appearance of coworking companies such as WeWork is a major new trend. Also, the appearance of technology companies that strive to improve property operating efficiency through “prop tech”, or property technology, is another area of CRE disruption, but there is a new type of disruption emerging in the are of CRE financing. It’s a way to raise money via a new solution, which is compliant with US SEC regulations.

It’s called “tokenization”, and it is based on security tokens. This wave is barely just beginning, but examples are starting to emerge, and that’s why we’re here today as we cover the tokenization of the St. Regis Aspen Resort.

Amy Wan:

I wanted to help our viewers take a closer look at this iconic hotel, so while I was there, I had the opportunity to meet with the hotel’s general manager, Heather Steenge-Hart. Let’s take a look at what she had to say.

This is a gorgeous property. Can you tell me a bit about it?

Heather Steenge-Hart:

I’d love to. We have 179 guest rooms, 30 suites, this is one our three specialty suites, and then we also have 25 residences, two- and three-bedrooms, which are fractional ownership.

Amy Wan:

Fantastic. What else should we know about this property?

Heather Steenge-Hart:

Well, the rooms and our public spaces were designed by Lauren Rote, and she was wanting to make sure that we’re bringing in the outside light into the hotel, that it was like a mountainside manor, that it was contemporary, very, very comfortable because after you go skiing you just want to relax, and so I think she really did a lovely job in portraying those goals overall.

Adam Chapnick:

Regarding this specific property, you had the listing at JLL and sold it to Stefan and Elevated Returns. What’s the backstory on that?

Jeffrey Davis:

Yeah, in 2010, we had the property on the market, and we had reached out to a number of offshore investors and had gotten in touch with OptAsia. We had been in touch with them on previous transactions before, and we sold the asset to OptAsia and Stefan in 2010.

Adam Chapnick:

And the $19 million of tokens that were raised, what were those funds used for?

Stephane De Baets:

Well, I mean, that was a return of capital to the owner, so effectively, the tokenization is a true sale of ownership into the property, so the current owners decided that the maximum they were willing to give away at that valuation was 18.9%, so that’s what we put for sale, and we were happy enough to fill up the entire stack.

So the way that it works is that you actually sell the property into an operating partnership. You create REIT shares interest of the partnership, and you capitalize the REIT through the sale of smart contract. Smart contract is effectively a digital share certificate, so rather than to have the old fashioned paper share certificate, you have a digital form of it. It’s a beautiful instrument because all the securities regulation are actually embedded into the contract itself, and it’s cheaper, it’s faster to transact, and it offers also the ability to have a global product trading on multiple exchanges.

Jay Bernstein:

We got involved with Elevated Returns, first helping Stefan in trying to liquefy in a different format, in a registered format, a traditional listed read format, the St. Regis Aspen, and then helped him transition his project to a tokenized solution.

Prior to helping Stefan, we’ve also been very active in the whole idea of creating liquidity around non-traditional liquidity solutions around single-asset real estate, and so it was a natural for us to help Elevated Returns and Stefan with their project.

Henry Elder:

Everything is going to get tokenized. Your identity will be tokenized, your title will be tokenized, your mortgage will be tokenized, your equity will be tokenized. I mean, that is the future, when everything is running on this integrated, efficient, immutable blockchain system.

Adam Chapnick:

To watch the full webinar, just go to crest.io to register. Registration is free.

Amy Wan:

Back in October, the Security Token Academy held events around the nation to signal the kickoff of the security token industry. We held security token meetups in Los Angeles and also in New York City. Attendees who purchased tickets to our two-day cruise and conference in New York boarded the Spirit of New York yacht from Chelsea Harbor for an evening cruise along the Hudson River.

Adam Chapnick:

That was followed by the Security Token Industry Launch event inside the Conrad New York. Hundreds of people were in attendance as industry leaders rang the opening bell to signal the official kickoff to the security token industry.

To view all of the videos from Security Token Industry Launch Week, go to our website, securitytokenacademy.com, and click on the events tab, and select “launch event video library”.

The best part? It’s free! And contains a wealth of information.

Amy Wan:

All right. That’s it for today’s episode. Be sure to follow us on Twitter, Facebook, Telegram, and Medium, and don’t forget to subscribe to our YouTube page so you don’t miss out on any of our videos and expert interviews. I’m Amy Wan.

Adam Chapnick:

And I’m Adam Chapnick, and before we go, be sure to send us your security token questions, and we could answer them right here on “Security Token Insight”. The address is [email protected] Be sure to include your name with your question so we can mention it on the air, and a big thank you to our platinum corporate member, Merrill Lynch, and all of our gold corporate members as well. We invite you to learn more about our corporate members by clicking on the directory page on our website.

For everyone here at Security Token Academy, thanks again for watching.

Amy Wan:

Be sure to checkout our live online videos and panel discussions featuring security token experts from around the world. Visit securitytokenacademy.com, and click on the interviews tab.