By Josef Holm, Crowdfunding Beat guest editor,
Editor’s Note: Each week I put a crowdfunding industry thought leader in the spotlight and ask them ten questions to inspire and educate. This week I am excited to welcome crowdfundig trail blazer, author and equity expert David Drake.
David Drake is an early-stage equity expert and the founder and chairman of LDJ Capital, a New York City-based family office, and The Soho Loft Media Group – The Voice of Capital Formation – a global financial media company with three divisions: Victoria Global Corporate Communications, Times Impact Publications, and The Soho Loft Conferences with 200+ annual global summits and talks on finance and investments. Mr. Drake has been involved in technology, media, telecommunications and impact investments for more than 20 years.
He is an advocate of the US JOBS Act and was invited to the White House Champions of Change and represented the US Commerce Department to the European Union in Rome and Brussels as a Small Medium-sized Enterprise expert. He is an international speaker and writer for major publications like WSJ, Forbes, Huffington Post and Thomson Reuters. He is the co-author of the books Planet Entrepreneur, Crowdfunding and Other Animals, Investors of Italy and is the author of the upcoming books Crowd Fund Economics, and The SPPICE of Crowdfunding.
Q: How did you get into crowdfunding and what was it that attracted you to this industry?
We were already covering monthly discussions on capital formation and job creation in early 2011 at The Soho Loft Conferences. Former Nasdaq Vice Chairman David Wield and half a dozen other speakers like RocketHub were constantly coming back from Capitol Hill with fresh content from sub-congressional discussions on the underlying laws that would later become the JOBS Act on 5 April 2012. Crowdfunding was one of the topics of discussion then and I forced it to become a conference topic which took off like wildfire. It culminated with our January 2012 conference with Congressman Patrick McHenry and 350 investors discussing capital formation and creation. There was a huge demand that was not being filled. I felt an obligation to become the platform where crowdfunders can get together several times a month. On 18 March 2012, we knew the vote at the Senate floor was coming up for the Jumpstart Our Business Startups (JOBS) Act, including crowdfunding, so I called Startup Exemption and Gate Global Impact to create CFIRA (Crowdfund Intermediary Regulatory Advocates). I suddenly became part of the JOBS Act: lobbying it, speaking at the UK Parliament with Richard Swart, representing the US Commerce department at the EU on SME policy and crowdfunding, and now today educating others through our conferences and publications under our global financial media firm, The Soho Loft Media Group. Check www.thesoholoft.com/upcoming-conferences for our events and www.thesoholoft.com/syndication for my articles on Wall Street Journal, Forbes, Huffington Post among others.
Q: What’s the most common question people ask you about your job and how do you respond?
I am often asked about what I do. Sometimes it’s a little confusing as we have about 30 different investments. I do education using media on capital formation and job creation from a regulatory point of view, locally and also internationally. For instance, I got the chance to break the news on July 2013 that Italy had passed the first crowdfunding law before any other country in the world. Today, our focus is to help build the ecosystem and be an educational platform for entrepreneurs, companies and individuals who want to raise capital from crowdfunding through series A,B,C,D, E all the way to pre-IPO and IPO. Many are consulting with me on the best strategies and structure to use in capital formation for fund-of-funds, family offices and venture capitalists both in the country and globally. More interestingly, some of the packages we offer allow people to raise money online congruent with the SEC (Securities and Exchange Commission) and FINRA (Financial Industry Regulatory Authority) regulations.
Q: Did you have a mentor or is there someone who inspires you as a leader? How did/do they impact on your career and life?
The Medicis, the Rothschilds, the Rockefellers and Nikola Tesla are some of the families and genius minds that have made an impression on me throughout my work. The Medici family, whose lineage allegedly ended 1712, supported the arts of Leonardo da Vinci, Michelangelo and Galileo.
The Rothschilds have, throughout the modern history of the last few hundred years, have created so much wealth that they were able to influence the markets, and even the governments at that time.
The Rockefellers are now broken up into so many different family groups who have been working with me for the last 6 years. I saw them making their newest announcement at the United Nations yesterday that the Rockefeller Brother Fund will remove their investments in oil by divesting it and going into alternative energy from now on. Many claim that Mr. Rockefeller’s office at the Rockefeller Center was the epitome of the family office that we know today. We do a lot of work with family offices and institutions, and getting them to look into crowdfunding as well as online automation systems, which is the newest investment trend.
I always mention in my talks and interviews The Oatmeal campaign on Indiegogo back in 2012 to secure the property where Tesla laboratory is located in New York and turn it into a museum in the future. This crowdfunding campaign’s goal was to raise $850,000. It closed with $1.4 million from over 33,000 backers. This year, The Oatmeal is crowdfunding to raise $200,000 to build the museum. Launched on 24th September, it reached over $183,000 in just two days.
Today, I’m part of EBAN (European Business Angels Network) that has recorded $8 billion investments in 2013, as well as the ACA (Angel Capital Association) in the US, which has posted $24.9 billion investments in 2013. In the 2013 EBAN conference in Istanbul, I met Dusan Stojanovic, a relative of Nikola Tesla. He is a super angel investor and was awarded the European Business Angel in 2013. During the course of the crowdfunding campaign he challenged the people to raise $33,333 and he matched that amount.
Shortly after, I decided to visit Tesla’s birth city in Croatia, Smiljan. Eversince, I have been fascinated with Tesla’s genius and his relationship with Thomas Edison. Tesla worked for Edison in Paris, but got JP Morgan to invest on his invention of alternating current which Thomas Edison hated. The unsung genius of Tesla impressed me, especially since the US government took his intellectual property and kept it hidden for 50 years.
All of these keep me endlessly curious. I like to see myself as fearlessly curious.
Q: What is the biggest challenge facing crowdfunding as an industry today and what solutions would you suggest?
Crowdfunding is still in its infancy stage. We just need to be patient and continue educating and showing success stories on how these tools are to be used. We will continue writing publications like Forbes and Huffington Post every month and having conferences talking about the application both for private equity, institutions and family offices in the space. I personally travel every week to different countries, different cities all over the world, and I interview and educate people on best practices congruent with local and international laws.
Q: What advice would you give someone trying to get into crowdfunding right now?
Make sure you have a crowd, and if not, find a crowd that listens to you. Make sure you also have a competitive advantage. This could mean having a lot of cash, but distribution is even more important. As an investor myself, we like to look at the team. There is more, which I obviously will not be able to share here.
Q: What resources and events (blogs, books, conferences, podcasts, videos, etc) would you recommend to someone looking to become a crowdfunding expert and why?
www.crowdsourcing.org – find the section on crowdfunding
www.crowdfundbeat.com – crowdfunding news and info
www.TheSohoLoft.com – articles, blogs, media and resources
www.TheSohoLoft.com/upcoming-conferences – listing of global crowdfunding conferences in cities near you
www.TimesRealtyNews.com – global real estate crowdfunding news and info
http://feeds.feedburner.com/TheSohoLoft – RSS Feed for instant access to the newest articles we publish on valuable and ingenious ways companies raise capital globally
http://feeds.feedburner.com/TimesRealtyNews – RSS Feed for instant access to the newest articles we publish on how to invest in real estate through crowdfunding
Q: What are you doing to make sure you continue to grow and develop as an industry leader?
Educate, write and advise so the big organizations have a legal understanding of current laws and development of future laws. Most importantly, as soon as you go online for crowdfunding, you need to have financial need exposure, just like a public company, and that’s what we would like to be with the investment we made through www.VictoriaGlobal.co.
Q: Can you tell us a little bit about how social networking and Web 2.0 have affected your organization or you personally?
It has allowed me to work from my phone and with hundreds of employees virtually working with me and on my 30 investments from all over the world. It also allowed me to travel and meet with government agencies and family offices looking for advice and direction.
Q: What do you think the crowdfunding space will look like five years from now?
I estimate it to be a $10 billion industry this year. A year ago, in my article for Forbes, I expected it to be at $95 billion in five years because industries like real estate have already put in $2 billion into the economy through crowdfunding technology. And so we can foresee this to be a $1 trillion market by 2025. Times Realty News, for instance, traces 120+ global crowdfunding sites focused on just real estate online financing alone. In addition, please note that my definition of crowdfunding refers to two or more people giving money online towards a service, project, product, investment, cause or experience, or what I like to call as SPPICE.
Q: What ultimate goal are you working towards?
I am working towards one-time solutions through financial media that will allow anybody to raise money online and offer stocks. This package is being implemented as we speak right now. It is very complicated with FINRA and SEC compliance but the broker dealers out there and all the leading technology providers are working with us very closely. Trade packages are now being implemented and people are raising money fast and quickly online.