Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
In a care[...]
Category Archives: Fintech Interviews and Podcasts
Accelerating Financial Innovation and Access in Canada
Canadian Innovation | Nov 13, 2024
Image: Freepik/www.slon.pics
How Canada Can Speed Up Financial Innovation and Serve More People
At Elevate FinTech Stage 2024, BetaKit hosted two conversations that highlight both the challenges and opportunities Canada faces in its financial sector. Together, these sessions reveal an urgent need for Canada to catch up on financial innovation. Here’s a look at what was discussed and some fresh ideas Canada can look to adopt if interested in driving real progress.
- The first session with Koho’s Daniel Eberhard and Peter Aceto focused on the obstacles of becoming a licensed bank and balancing speed with regulation.
- In the second, Josh Scott from BetaKit discussed barriers to financial inclusion with Eva Wong of Borrowell, Manzil’s Mohammed Sawwaf, and Julien Brazeau from the Department of Finance.
Session 1: Koho’s Banking License Journey and Balancing Product Innovation
Koho CEO Daniel Eberhard and Chief Banking Officer Peter Aceto shared how becoming a licensed bank would help Koho to lower costs, control its financial products, and offer benefits directly to its customers. But the process has been long and complicated with the Office of the Superintendent of Financial Institutions (OSFI) imposing unpredictable timelines and criteria.
See: Canada Post Expands into Financial Services with KOHO
To protect their ability to innovate quickly Koho split off into two divisions: one for tech and one for banking. This setup allows them continue building new features while managing the regulatory demands of becoming a bank.
Daniel Eberhard, CEO Koho:
“We’d be really foolish to bet the business on something as unpredictable as the bank license process.”
He stressed that Koho would pivot if the banking license path became too restrictive, doubling down on Koho's commitment to innovation.
Panel Takeaways:
- Securing a bank license comes with significant regulatory hurdles and compliance requirements. Koho is carefully weighing the costs/risks with the benefits.
- Koho is continuing to innovate without waiting on regulatory approval by cleverly separating tech and banking into separate divisions.
- Koho’s story highlights how difficult it is for Canadian fintechs to break into the traditional banking sector. Without a clear path, companies like Koho must decide how much time and money they’re willing to risk.
Session 2: Financial Inclusion and Barriers to Access
In the second panel, Josh Scott led a conversation on financial inclusion with Eva Wong (Borrowell), Mohammed Sawwaf (Manzil), and Julien Brazeau (Department of Finance). The discussion focused on why many Canadians, especially those in niche communities, remain underserved by the traditional banking system. Wong pointed out that, although most Canadians have a bank account, many are “underbanked”—lacking access to the range of services they need. Sawwaf explained that for Canada’s 2 million Muslim citizens, the absence of halal banking options has excluded a large group from mainstream financial services.
Julien Brazeau commenting on Canada's slow approach to open banking:
“Six years is far too long for anyone to consider fast.”
Panel Takeaways:
- There’s a growing need for financial services that address the needs of specific groups like new Canadians, remote communities, and religious groups.
- Brazeau admitted that the government has been slow to work directly with fintechs, a gap that has delayed innovation and frustrated financial startups. There's a lack of collaboration.
See: Canada’s SMBs Deserve Better Banking. Lessons from US Fintechs
- After 6 years, Canada’s open banking implementation is still incomplete and the delays are stifling competition and are making it harder for Canadians to get the services they need.
Image: Freepik/Canada day
Ways Canada Can Drive Financial Innovation in Canada
Here are just a few innovative approaches that could propel Canada's financial ecosystem forward.
1. Fast track the implementation of open banking and enable the sharing of credit data from the start
For open banking to have an impact right from the start in Canada, credit data portability should be possible from the initial launch. This would enable customers to transfer their credit history between institutions smoothly thus minimizing obstacles and simplifying the process of changing service providers.
See: Open Banking: Revolutionizing Financial Data Sharing
Such an approach would establish a best practice where fintech companies could provide services to individuals encountering difficulties in accessing credit, such as those with unconventional or limited credit backgrounds (that are underserved by the banks).
2. Make it necessary for government financial programs to be compatible with Open Banking standards
When open banking is fully implemented in Canada the government could promote its usage by making it a requirement for government initiatives like business loans and housing support to be compatible with open banking standards. By enforcing this rule, banks and financial technology companies would have to follow banking protocols making it easier for Canadians to access these services no matter which institution they are with. This approach aims to increase collaboration within the industry without relying on voluntary adoption by private entities.
3. Create a "Digital Financial Inclusion Fund" to broaden access, for interest groups
Canada could establish a "Digital Financial Inclusion Fund" similar to initiatives in Singapore and the EU to address the financial needs of marginalized communities by supporting fintech companies in developing specialized products for groups such as rural residents and underserved populations with limited access to traditional banking services. This would be a collaborative effort involving the government of Canada and the private sector and its partners.
4. Tiered licensing system could help smaller fintech companies enter the market more smoothly
Canada could consider implementing a strategy like in Australia with a restricted banking license regime which permits fintech firms to offer services as they grow. This approach would enable startups to connect with customers on and gradually meet full qualifications without sacrificing security or consumer safety.
5. Establishing a Unified Digital Identification System for financial services
Influenced by India's Aadhaar and Estonia's e-residency initiatives a government supported digital identification system could enhance Know Your Customer (KYC) procedures within Canada's institutions. With a digital identity Canadian citizens could safely use financial services reducing the time consuming and frequently repetitive account setup processes.
See: The Trifecta of India’s Digital Transformation is Turning Heads Globally
The government management of a digital ID system would streamline access for Canadians living in underprivileged areas and potentially link with open banking to ensure secure data sharing practices. Data privacy may be a concern however.
6. Establish a program for fostering partnerships between Fintechs and Banks to offer financial solutions
Canada could create a program to encourage partnerships between banks and fintech companies to focus on financial inclusion projects. Inspired by Brazil where banks and fintechs have teamed up to serve underserved communities, this program would encourage similar collaboration in Canada for initiatives like microloans, financial education, and better digital banking services in remote areas. Rather than mandating these partnerships, the government could offer incentives, such as tax benefits or lighter regulatory requirements to banks and fintechs that meet goals for reaching underbanked populations. This would allow both sectors to work together to create practical solutions that benefit consumers and support Canada’s financial inclusion goals.
Closing Thought
Creating a faster, more competitive, and more accessible financial ecosystem requires bold action, a risk-taking mindset (with the benefits in sight) and proactive partnerships between the government, banks, and fintechs.
See: Canada’s Innovation Paradox – Strong Start, Missing Impact
By embracing innovative approaches and learning from global successes, Canada can move beyond slow timelines and limited access and work towards becoming a leader in financial inclusion.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
 |  |  |
Support NCFA by Following us on Twitter!Follow @NCFACanada  |
Fintech Fridays EP63: From Angel Investor to Change-Maker: Investing with Impact
About NCFA Canada | Craig Asano | October 21, 2024
FF EP63 Marcia Dawood
EP63: From Angel Investor to Change-Maker: Investing with Impact
Featured Guest:
MARCIA DAWOOD, Angel Investor, Advisor, Podcast Host, Author (LinkedIn)
Marcia Dawood is a leading early-stage investor and serves on the SEC’s Small Business Capital Formation Advisory Committee. She’s a venture partner with Mindshift Capital, a member of Golden Seeds, and Chair Emeritus of the Angel Capital Association (ACA). Marcia authored Do Good While Doing Well and co-produced the award-winning documentary Show Her the Money. As host of The Angel Next Door podcast and a TEDx speaker, she invests in over 50 startups, focusing on diverse companies solving global challenges. She holds an MBA from UNC Kenan-Flagler and lives in North Carolina with her family.
Book: Do Good While Doing Well
Do Good While Doing Well is a practical guide for those who want to create a meaningful impact through investing. Written by Marcia Dawood, this book explores how angel investing can be a powerful tool for change, extending beyond traditional charity. With insights shaped by her experience on the SEC's Small Business Capital Formation Advisory Committee, Marcia introduces readers to new opportunities made possible through regulatory changes, like equity crowdfunding, which allows investments in startups with as little as fifty dollars. This guide serves as a comprehensive "why-to" manual for those new to investing or those looking to align their investments with their values. It breaks down the mechanics of angel investing and shows how individual financial contributions can make a difference while offering the potential for financial returns. By the end, readers will be equipped with the knowledge and confidence to use their investments as a force for good, turning passion into impact.
Links
- Website: MarciaDawood.com
- Website: SEC's Small Business Capital Formation Advisory Committee
- Website: Mindshift Capital
- Book: Amazon Do Good While Doing Well | Overview
- Rap Battle: Angel Investor vs Venture Capitalist Rap Battle
- Podcast: The Angel Next Door podcast
- TedX: Marcia Dawood | TEDxCharlotte
About this episode
In this episode of Fintech Fridays, host Craig Asano sits down with Marcia Dawood, an influential angel investor, author, and advisor who serves on the SEC's Small Business Capital Formation Advisory Committee. Marcia shares her journey from her first angel investing meeting to becoming a key figure in the industry, supporting over 50 early-stage companies. The conversation dives into the differences between angel investing and venture capital, strategies for successful investments, and the evolving landscape of early-stage investing. Marcia also discusses her new book, Do Good While Doing Well, which guides readers through the balance of achieving financial returns while making a positive impact. Tune in to hear expert insights, the importance of fostering diverse investment ecosystems, and how new investors can start their journey with confidence. Enjoy!!
Duration: 57 mins
Subscribe and tune in each Friday to check out the latest movers and shakers in fintech. Listen to more podcasts here:
Season 1 | Season 2 | Season 3 | Season 4 | and weekly newsletter
Fintech Friday Transcript of Episode 63:
MARCIA DAWOOD, Angel Investor, Advisor, Podcast Host, Author (LinkedIn)
Intro: Welcome to fintech Friday's a weekly podcast brought to you by the National Crowdfunding and Fintech Association of Canada and partners. Covering all things fintech, blockchain, AI and alternative finance.
Craig Asano: My name's Craig Asano, the founder and CEO of NCFA Canada, welcoming you to season 4 of Fintech Fridays. Today is episode 63. It's a weekly podcast brought to you by NCFA and Partners where we sit down with the incredible people in the Fintech and funding community and talk about their journey, their exciting projects, innovations, the latest industry trends and developments, all from their perspective. So today, we have an amazing guest with us today. It's Marcia Dawood. She's an angel investor, adviser, podcast host, author, and more. If all that wasn't enough, she is the leading early-stage investor who serves on the SEC's Small Business Capital Formation Advisory Committee. She's a venture partner with Mindshift Capital, a member of Golden Seeds. She's also the chair of the Angel Capital Association of the US, which is, like I said, global professional angel investor society. And she's recently published a book, which we're gonna get into today, which is awesome. A book is called do good while doing well, which is a guide for investing, for impact, financial returns, and happiness and bringing the balance of all those things together. She's, she was an associate producer of an award-winning documentary, which I haven't seen. Shame on me. I am going to watch it, Marsha. It's called Show Her the Money, so, it's something to also look forward to where she shares her insights on investing and entrepreneurship, and she's podcast host, the Angel Next Door podcast and the TEDx speaker. She also walks the walk as we see, and in her bio has, confirmed that she's invested in over 50 early stage companies and funds, so she's committed to expanding, support for diverse companies that overcome, you know, big problems and really wants to accelerate positive change and do good in the world, and hope hopefully, everyone else can as well. So she's extremely passionate about these topics, so we're really looking forward to exciting, discussion today. And, previously, her background is in sales and marketing operations, at Kaplan Education, and she's got an MBA from the University of North Carolina where she currently resides. So, Marsha, thanks so much for joining us today to share your time, knowledge, and experience. Welcome to the show.
Marcia Dawood: Well, thanks so much for having me, Craig.
Craig Asano: So we've got a laundry list of topics we want go through here. So I think we'll just get into a little bit about your background and journey about how you got involved into angel investing and entrepreneurship, and, we'll start there.
Marcia Dawood: Sure. So in 2012, I was invited to an angel investing meeting, and I remember asking, what's angel investing?
I've known nothing about that. And I went to my first meeting. I saw a couple of local entrepreneurs, talk about their companies and the things that they were building, and I was just totally fascinated at what was going on right in my own backyard. I was living in Pittsburgh, Pennsylvania at the time, and I just thought, wow. This is really cool. I had no idea. I felt a little bit like I had been living under a rock. And then, went to a couple more meetings and started to realize, hey. This is something that I really enjoy. I enjoy getting to know the other people in the group. I enjoy, learning about all these different companies and technologies and innovations that are happening in the world. And from there, I ended up living in 5 different cities over a 10 year period, including Pittsburgh, New York, San Francisco, Dallas, and Charlotte. So I saw a lot of different ecosystems. I became a member of the board of the Angel Capital Association and went on to chair the board 2021 through 2023, and then ended up on this, Securities and Exchange Commission advisory committee, which so it's been a really cool, interesting journey seeing a lot of different ways to invest. And I thought, you know what?
We have to get this awareness problem to let everyone know that this is something that if they want to, they can participate in it. So that's what led me to all the things, the book, the podcast, all that. And and that's 5 cities you were saying. There's something about, those that that are lifelong learners that just they move around. They're very global or or, you know, inter inter, within the US and the various states.
But what why did what made you move, or what was the impetus for that? Yeah. Well, my husband is a CFO, so, the opportunities just kind of kept coming up in these various places. And, you know, a lot of times, it was with the same company and sometimes with a new company. But, that really gave me an opportunity because I already knew about Angel Investing to learn about what was going on in New York versus Pittsburgh, what was going on in, Silicon Valley versus Dallas. And so I just found that really fascinating to I mean, there's entrepreneurs and startups scenes in every city and every town. And a lot of times people don't even know what's happening in their own backyard. And I thought, you know, I think it would be really cool to start to get more people just to be aware and learn about it so that they can be involved too.
Craig Asano: Do you have a favorite ecosystem that just sort of, popped out? They always ask this question and, you know, I've done a lot of travel, many countries. I've lived in 6 and have been to 30+ and it's the first question everybody asks. What's your favorite? Do you have one?
Marcia Dawood: You know, they're all so different, and, I thought that, oh, if I live in Silicon Valley, you know, I'll be like the elite of the elite. Right? But there are really cool entrepreneurs everywhere. So I was really surprised at how interesting the ecosystem is in Pittsburgh. And I wouldn't have thought before I knew anything about angel investing, I would not have thought that Pittsburgh was the place I would find some really cool entrepreneurs and things that are going on. But think about it. A lot of places that have these really amazing universities, like Pittsburgh has Carnegie Mellon, University of Pittsburgh, you know, they're developing technology a lot of times in these universities that are then spun out into start up companies.
And I didn't really understand that or know much about it before I learned about angel investing. So I just I think it's just fascinating, and I love watching what people the ideas that people come up with. Sometimes I see it, and I'm like, oh my gosh. I would have never even thought you could have that or do that or whatever it is that they're creating, and I'm just always amazed.
Craig Asano: Amazing. I could feel the energy coming off the screen as it were here, but Pittsburgh has some good Canadian hockey players out there, Sydney Crosby on the Penguins. So we're all about that. But, from a vesting thesis perspective, you know, how do you choose? How do you focus, or do you sort of run with what the group is sort of presenting and saying? Or do you have a certain type of company you're looking for?
Marcia Dawood: You know what? That is such a great question. And when I started Angel Investing, I did not have a thesis. I didn't even know what a thesis was. I wish I'd had a thesis.
So in writing the book, I really wanted to kind of hone in on that because I had a little bit of what I call in the book shiny halo syndrome. Meaning, I was like, squirrel. That looks good. That looks good. And I really didn't have a strategy. That's not the way to do this. You should really be thinking about what do you care about, what do you wanna invest in, how much money you're gonna put, like, have a plan. Right? So in the book, I walk people through, like, a lot about that plan because I wish I'd had that. So now when I think about a thesis or strategy, I wanna think about, you know, what are the things I care about?
How much money do I have to invest? And if I you know, it ebbs and flows. You know, sometimes you might have a little bit more. Sometimes you might have a little bit less. It all does depend a little bit on the liquidity of the companies.
Is there, you know, are there exits? You know, after you're in this for a couple years, you will start to see exits. I know that I thought, wow. It just it does take a little while, but then all of a sudden, you know, I had some that came through in 2020 that was exciting, and I talk about that in the book too. So it it kind of ebbs and flows, and I think that it's just a matter of, like, putting what you care about and your, your investment strategy, not just your investment strategy within the asset class of in of, early stage investing or angel investing, but, also, how does it fit in with your overall investment thesis, your retirement accounts, your, you know, saving for your kid's college?
You know, all of those things are part of your entire investment thesis. And we always say at the Angel Capital Association, when you're gonna invest in an alternative assets, which includes angel investing, you really only wanna put maybe 5 or 10%, a small portion of your investable assets into that type of an asset class and then, you know, really have a diversified portfolio, and that's what a lot of financial planners will, you know, talk to you about too.
Craig Asano: Smart. I can, well, we can hear your CFO's husband's strategy coming through. Very sensible and smart. So when we sort of zooming out a little bit from angel investing in the US, I mean, we have an angel investing ecosystem here in Canada. How would you say from your perspective that they're different, or what are the similarities, or what does the landscape in the US look like, and how different is it from here in Canada?
Marcia Dawood: Yeah. I think that, like I said, there's entrepreneurs in every city, in every town. I did end up talking to, a group of people in Africa and, they actually said to me, well, all roads lead to Delaware. And so I kind of think in some cases, it is easier, and a lot of startup companies want to end up in the US. So if you're in Canada, you're in Europe, Africa, you know, they're, US investors are we're a little gun shy to invest outside of the country. And a lot of that has to do with all of our tax laws, the IRS, blah blah blah. So, you know but like I said, there's amazing innovation that's happening. And, actually, I've had I've talked to entrepreneurs here in Canada who have told me that there are times depending on where they live where they could get, you know, credits, tax credits for their R and D, their research and development.
There are places in Canada that are very entrepreneurial friendly. And so sometimes you may even see, an entrepreneur go to Canada to get started, and then they may end up back in the US or somebody from Canada might come. So I think there's a lot of very friendly, cross borders going on, especially with Canada since we're so close. But I have heard some really amazing entrepreneurial stories coming out of Canada. So you guys have a lot going on too, which is really cool.
Craig Asano: The there's definitely a lot going on, but it's on a smaller scale. Hopefully, it's growing. Everybody wants their ecosystems to grow. So, we're still hand in glove with the states. I mean, 70% of our trade goes back and forth.
We're you know, we've been partners for years, and I think from an investment perspective, you know, at least for accredited investors, that capital can move across borders a lot easily. So it's all legally possible, and I think the technology is enabling more of that, not just to track and, you know, sort of distribute and display the investments and the opportunities, but the regulations are sort of slowly, catching up in that regard. I know we have a couple of questions later on in the show. We'll you know, we can touch upon that. But, one of the questions that often pops up, through my own journey here is through companies looking for early stage capital.
You know, should they how did they approach, taking angel investment capital versus, say, a venture capital, you know, VC capital? What are the differences? We've heard a lot of different sort of versions over the years. What your view?
Marcia Dawood: So the number one thing that's different between an angel investor and a venture capitalist is angels invest with their own money. So they're writing a check out of their own checkbook, and a venture capitalist has usually a fund where they have investors that invest in that fund, and then they make their investment decisions based on their investment thesis. So those are the 2 kind of biggest things. I actually several about 2 years ago, I did a rap battle. I don't usually talk about this too much, but it is on my website. I did a rap battle of an angel investor versus a venture capitalist, and I go through all of the differences between the 2.
So if you wanna put that in the show notes, you're welcome to do that. It's kind of a 3 minute education on, angel investors versus venture capitalists.
Craig Asano: That's awesome. We're definitely gonna dig that one up and put in the show notes.
Marcia Dawood: Totally. But I guess I'd say, you know, when a company is first thinking about taking investment, I think that is the most critical time. And to really not just think about, oh, my gosh. I I've heard so many founders. They're like, oh, my gosh.
I need money. I need I need to, you know, get something so that I can build the product so that I can show that I have traction so I can get more money. And it's like it's a little bit of a rat race. And I really think if entrepreneurs just took a took a breath and said, hey. What is it that I need not just now, but what am I gonna need 6 months from now, a year from now, 2 years, 5 years from now?
And really started to plot that out about what are the milestones I'm gonna need to hit, how am I gonna develop my product or service or whatever they're doing, And then how am I gonna get to that exit? Now when you go back to start to talk to investors, they have a a pathway, a plan that at least has been talked about, thought out as opposed to this, like, hurry up. I need money. Oh my gosh. I need to get to the next, you know, like, the next milestone, next milestone because it is like a marathon.
And a lot of times, I feel like founders are, like, sprinting their way to the next place. But really thinking about that, in advance, but also building those relationships with potential investors way before you need money. Because I've had too many people come up to me and say, hey. You know, we see you're an investor. We'd like you to invest in our company.
Well, I don't know you. I don't have any idea what you're building. I don't know what you've worked on in the past, but, you know, in some cases, angels will be involved with a company or watch a company for sometimes months or even years before they'll make an investment. I know that we did that, at Mindshift Capital with a couple of different companies. We were I know that we did that, at Mindshift Capital with a couple of different companies.
We were watching, kind of seeing how they were operating, what were the milestones they were hitting, and then getting to a point where we would invest. So I always encourage, entrepreneurs to do that. In fact, I did write an article for Fast Company talking about this. We can put that in the show notes too for people. Cool.
Craig Asano: Yeah. That's great advice. Being more strategic, and it's not a sprint. It it's a journey. Are there any other, tips or advice, or what are some of the common errors or challenges that you think would be, you know, great insight for someone listening to the show here today?
Marcia Dawood: So I think sometimes I'll see companies that will say, you know what? I really, I need the money. I need to do this. I need to like, right now. And if if they just took a little bit more time, really thought through all of the things that they wanted to do, how they were gonna do it, I think that they would get farther and still be able to show the progress and really be able to use the best practices, not just of what they're learning about, but really get a network of the other entrepreneurs that are out there. I find that entrepreneurs will really help each other. I know everybody's busy and they're all trying, like, heads down to do that kind of the same thing. But that entrepreneurial network can be so helpful because, you know, who somebody who might not be the right investor for one company could be the right investor for another company. And if you know each other and you're really able to kind of use what you're doing, really think strategically about how you're gonna get there and be able to let people know.
You know, put it out there. I see too many entrepreneurs that say, oh, I don't wanna tell anybody yet what I'm doing because I need to build it. So then they'll see it, and it'll be beautiful, and everybody will love it. And I think to myself, okay, but We need to kind of see the process along the way, and we wanna see the journey. So don't be afraid to talk about it.
Craig Asano: I think that's great advice. I think you're you're absolutely right. The the days of being in the basement and hiding and waiting for the gold ribbon, the gold standard, it's all done. It's more, you know, iterative, and those relationships are key. So I think, you know, really, one of the benefits of doing a show like today and getting this discussion out there is, you know, fostering just sparking the initial, relationship and the idea to go cross border, connect with some entrepreneurs, hopefully some investors, and start that journey, be more strategic.
Marcia Dawood: So I think those are great, you know, great, advice for any entrepreneur. It doesn't matter where they are in the world. So, from a angel investing per perspective, you know, what has been, you know, most rewarding for you or challenging? You know, you can take that kind of question from both sides. You know, what has it been like?
You've been you've been at it for many years, and so, you know, you you're in the prime as an angel investor. So what has it been like for you? Yeah. I think that, like, probably one of the real rewards has been just getting to see a little bit behind the curtain. Like, what's really getting worked on out there?
What are the innovations that we really wanna see? Because I know I am always amazed at the type of things entrepreneurs are working on. And I think to myself, oh my gosh, I would have never thought of that myself. So that's neat. I also think it is super rewarding to be able to meet so many different types of people.
I mean, the entrepreneurs are doing amazing things, and I love meeting them, but also meeting the other investors, meeting the other people that are either in an angel group, or a fund, or just in the overall ecosystem, I would've I met people that I would've never met in my corporate life, who were working in other corporate lives. And that intersection of coming together, I just I think that's really cool. And while I was still working corporate world, I it actually angel investing kind of helped open my eyes to, hey. I now am looking at these startup companies as a whole picture. I'm looking at the team.
I'm looking at their product and how they're going to market and all these other things. And maybe in my corporate job, I was just like in this one little lane, but now I'm starting to think about it and broaden out a little bit. And I think that's really a fascinating way to learn about something new and be able to incorporate it into your day to day. So all of those things are I find very rewarding parts of it. Now if you want me to tell a little bit about what's not so rewarding Yeah.
Is there are definitely challenges in building companies. I mean, there are ups and downs that entrepreneurs have. If you, you know, if you are very, worried about, you know, the ups and downs part, then you probably just wanna read the quarterly newsletter and just see what's going on, because sometimes they do have challenges, but that doesn't necessarily mean they're gonna give up. And that's one thing I found about entrepreneurs. They will fight and they are very passionate about whatever they're working on, and they will continue no matter what.
And I will say that probably one of the more frustrating things was what happened during the pandemic and how it affected so many, companies. A lot of them really, really struggled. Fortunately, you know, here in the US, and I know Canada did as well, like, stepped in and was able to help a lot of the companies. Some didn't make it though. Some really thrived.
And then in the last 2 years, 2 to 3 years, the, investing market has just really dried up, and it's been extremely difficult for entrepreneurs to raise money in 2022, 23, and even part of, you know, 24 now. It has been challenging. I am hoping with, you know, interest rates in the US lowering, there hopefully, the m and a market will start to open up again. We'll start to see more acquisitions. They'll there'll be more liquidity.
I think all of those things could really help make a better environment for 2025, which is gonna make it easier for these entrepreneurs to fundraise.
Craig Asano: Yeah. Absolutely. Not sure if you mentioned at the beginning, of the show, but how big is angel investing in the states? Is there a number? You know, annually, how many billions are Invested, hundreds of millions or tens of millions?
Marcia Dawood: Yeah. There are numbers. In fact, we put out a report of the SEC advocacy office Small Business Advocacy Office does put out a wonderful annual report. You can just go on to the sec.govwebsite, in the US and be able to pull a lot of different numbers. (see: https://www.sec.gov/files/2024-oasb-annual-forum-report.pdf)
But just to give you an idea, there's roughly about 300,000 angel investors in the US. That's a tiny, tiny fraction of the, obviously, the total US population. And we've determined, you know, through the Angel Capital Association data and some other data here in the US, that there's probably, 16,000,000 households that could be what we determine to be an accredited investor, which means you have a certain level of wealth or income in order to make a private investment. You don't have to be an accredited investor if you're doing things like equity crowdfunding, but here in the US, that is a big a big deal if you're gonna write an individual check for equity into a company. So 16,000,000 households, that's a lot, and we only have 300,000 people participating.
So I really feel like we have a big awareness problem here because I'll see founders all the time who are trying to raise money. And then I talk to some people that I know would you know, could potentially be interested in investing, and they say, well, I I can't do that. I that's only for, you know, rich people, well connected. You have to be, you know, flying in private planes and all these types of things, and that's just not true anymore. Nowadays, if you're interested in investing, there are ways that you can invest for as little as, you know, $50, a $100 in an equity crowdfunding campaign.
In my book, I talk about how you can invest with philanthropic dollars into a for profit company. It's like there's a couple steps involved, but it's it can be done, and it can actually multiply then your charitable contributions. So there are a lot of ways that people can get involved. I think it's just a matter of, you know, picking the thing that's gonna resonate with them and then and then how they can help to contribute to the innovation they wanna see. Yeah.
Craig Asano: It's similar. All that that's a great answer and perspective on it. And I know I've we've met a lot of investors that would qualify as accredited investors, but they're not interested in taking those risks. Or maybe it's the education and the opportunity to see how it could work. And I think that's why the importance of relationship building and see how others are doing it, being strategic, taking time, you know, baby steps along the way. So it it's very sensible. Since, you mentioned it, the SEC Small Business Capital Formation Advisory Committee, if that's exactly what it's called.
Maria Dawood: That's what it's called. It's mouthful. So Yeah. I actually love the diversity of our committee. We're really talking about small business capital formation. So how are we gonna get money so that small businesses can grow? And if you look at how many small businesses there are in the US, in Canada, in every country, they're everywhere.
And how do we get them to be more sustainable to, you know, be able to for those startups that are scalable, the ones that we think are gonna, you know, be acquired or they're gonna have what we call an exit where there'd be a liquidity event. Sure. There's a lot of that, and we talk about capital formation for those companies. But what about the mom and pop, you know, main street type of companies? What if there's a coffee shop or a dry cleaner that needs to get just a little bit of funding locally in order to get off the ground?
You know, there's ways that we, talk about that too. We have a member of the committee, George Cook, who is, the founder of Honeycomb Credit, and that is a debt crowdfunding platform. And they work with coffee shops and the, you know, main street businesses all the time in order for them to be able to raise the capital they need, And then that isn't an equity exchange. That's actually just a debt instrument so that the person who's investing gets paid back over time just like they would any other loan, with a little bit of interest, and that can really help that local business. But I what I think is so cool about it is if I can invest in the local coffee shop down the street and then I go as a customer, like, how cool is that that I'm helping them and I get to know them.
And now it's just like building your local ecosystem so that, you know, everybody can thrive and everybody can win. In investing in your your local community, it's it's so critical that support. And how good does that feel? Right? It's as you say, you would walk in and, you know, not to brag, but you're more involved. You're that cup of coffee that you're, you know, that maybe that debt instrument, your support, your financial voting with your dollars in your own community goes a long a long, long way. So hopefully some of that it sounds like some of that's in the book, so we're definitely looking forward to getting our copy. Women in funding, we have a stat here, that says they receive less than 3% of funding presumably in the US. I mean, this is a global problem, here in Canada, of course, as well. So why do you think today still after talking about it for so long, and many kicks at the can to move the needle to enable or democratize or allow more to make change? You know, why is that disparity there? What do you think can be done to further improve it?
Marcia Dawood: Yeah. So I'll talk a little bit about the number, first of all, because we do talk about this 3%. You know, less than 3% goes to women, less than 1% goes to people of color. And, you know, those numbers are out there. They're and they're obviously very bad. If you start to look at the numbers more from the angel perspective, at the Angel Capital Association, we've actually found that the angel numbers are a little bit better. We're probably around 25% of the funding is going toward female founders. And when we talk about a female led company, at least in a lot of the groups that I'm in, we're talking about a diverse team, but we're we'd like to see a woman in the c suite with a significant portion of equity. So these we're not saying that these companies have to be all women. Right? So this we're all about diversity and making sure that there are lots of voices and lots of, people at the table. But how do we change this? How do we get more funding? That 3% percent number is, just to clarify, is more like a venture capital number, and there's the venture capital dollars are obviously much, much, much bigger than what's happening in the angel’s world. So we're just kind of like the little piece of the pie that actually helps those early, early stage companies get to the point where they can take venture capital money. But, you know, for the most part, what we're trying to do, you know, from a a as an investing standpoint is just help these companies with the money that, that they can get from either a fund or from the angel world and be able to, like, continue on in order to get toward an exit. But is it is there more that is it sort of an a pitch to the VCs that they need to back more, you know, different types of companies, or is it more on the investment side that, you know, there needs to be more female investors that can build that base of equity, that can feel, confident to take those risks to, you know, build an incredible career off of, investing, you know, wherever they might land.
Craig Asano: Where really does the rubber hit the road? Because it seems that there's always efforts, but every report, it's it's the same issue. And, you know, how how do we get there? Maybe what are the baby steps? Is it something the government needs to do? Is it something that, through education, we need to democratize more participation? Like, what do you really think the number one, advice or message to move that needle into, and who is that message towards?
Marcia Dawood: Yeah. I think you said it perfectly, democratizing the participation. If we wanna get more funding to women, to people of color, we're going to have to get more people who look like them in the room writing checks and who are who will be able to support them. And so we've seen, the numbers move a little bit, like I was saying, in Angel World, and I think it's because we have been very thoughtful in a lot of the different angel groups and especially in the Angel Capital Association to be able to encourage more women to get involved as investors. And one of the things that I found and one of the reasons I wrote the book, I have the podcast, is I'm trying to get people to see themselves in this role as an investor. And sometimes that word investing can be, it can throw people a little bit. They might think, oh, investing. Like, if I'm gonna be an investor, I have to know all of these finance things.
I have to have a finance degree. I have to, you know, be able to make a financial decision that's going to have this incredible outcome at the end. And if I don't get that incredible outcome at the end, then, oh, outcome at the end. And if I don't get that incredible outcome at the end, then, oh, I I will look like a bad investor. And that's like, very, very traditional mindset from a long time ago.
And, you know, even as women, we have been socialized to men do investing. We do philanthropy. That's a lot of what we see, especially here in the US. So, like, how do we change that? How do we get the awareness built up?
So because it's now all kind of coming together. You know? Of course, we wanna help these nonprofit companies, but, they're just a small portion of the overall innovation and things that are happening in the in the world. So how do we get more people to realize, like, you can be a part of this too. You have a voice, and that voice can help to fund the types of not just founders, but the companies that they're building that can actually help those, different groups.
Craig Asano: And how would those women who would be new to investing do would you advise to get involved? Would it be maybe having a look at some of the angel investing groups become a member, as you got your original footing? Would it be to check out the equity crowdfunding platforms and take a look and start to ask some questions and build a relationship with the founders and, see what resonates? Is it at that ground level that these changes have to be made to be transformative?
Marcia Dawood: That's where it has to. They have to feel the passion and the willingness to, you know, ride the volatility and take those risks, but yet at the same time feel they're doing you know, they're getting this incredible, like, positive experience making change.
Craig Asano: This is really a lot of what your book is talking about, so maybe we can jump into there, the do good while doing sort of well. And, you know, I have a question here around what does it mean, doing good through their investments and, you know, on route to becoming happy but at the same time, you know, having it's not philanthropy, it's something different. So how would you summarize the book and your thoughts for anyone who just might be reading it, what can they expect to get out of it?
Marcia Dawood: Yeah. So, I mean, doing good, a lot of times, can lead people to think about charity. We're gonna volunteer for charity. We're gonna donate to charity. And like I said, doing that is wonderful. But here in the US, for example, $475,000,000,000 is donated to charities annually here in the US. But that's only about 1% of the equivalent of only about 1% of the US stock market. So, if you're thinking about nonprofits and the burden that is being placed on them to do these big things, like cure diseases and cure our planet or all of those things. Those are a lot that's a lot of pressure to put on, nonprofits. So how do we think about doing good and doing well?
So, doing well used to always be, oh, well, I'm gonna have a retirement account. I'm going to invest in stocks or bonds or mutual funds or whatever they're gonna do so that we can get a financial return. But you can have both of those. You can invest in the things that you care about and be able to get a financial return at the same time. Now, again, this is a risky asset class.
We've talked about that before, but that's why you do things like diversify your portfolio. You get involved in various ways there, and in the book, I go through many examples of this. And the other thing, I I got to a point when, even after writing the book and having some early readers go through it, they said, hey, we really like the exercises. I have a couple of exercises in the book. They said, we really like the exercises because they help us, like, really think about and walk us through, like, what we would do or how we would do it.
Or one person who really would love the idea of going to join an angel group like you just, gave that, example of, that person might love that, and another person might hate that, and they might think, oh, well, I'd much rather go on to an equity crowdfunding site and look online. Perfectly fine. There's lots and lots of options for everyone, which is why I ended up writing a workbook to go with the book that has even more exercises and kind of step by step and walking people through, hey, this is what this really looks like. And if you wanna try something, you can kind of try it in a way in the workbook with before you actually have to go invest any money or invest any time. It's just a way to get started and get thinking about it before you would actually go do something.
So the book gives them that background. It gives them the information. It dispels some of the myths. It even has that strategic, workbook approach where, you know, it's getting them to think about their own situation and sort of meet face to face, which kinda scares a lot of people. They're talking about money. They're talking about investing their own money. And so that at the end of that book, the next step would be, hey. There's the Angel Association. Let's say, the ACA in the US or whatever they feel comfortable with. At that point, they would feel more, ex armed with a bit more knowledge, so they're ready to ask more targeted questions to to get involved and participate.
Craig Asano: So I think it's fantastic. I mean, the thing about, you know, the book who would you say it's targeting? Who did you write the book for? I now have some understanding of why you wrote the book. The passion for change and wanting to make that difference but who from your feedback so far from readers…who is it targeted for, and what has your response been since you since you launched it?
Marcia Dawood: Yeah. I wrote the book for people who wanna make a difference but really don't know how one person alone can do that because I know I felt like that. I felt like, well, you know, I heard that I hear that saying, be the change you wanna see in the world. And I think, yeah. I'm up for that. I wanna be the change. Wait a minute. How do I do that? How can I how can I make a difference as one person? And you can make a difference, and it does require a lot of us, one people, one person, to make that kind of a difference. Right? So that's really who I wrote the book for, and the response has been really wonderful. I'm you know, people have told me over and over again, you know, even people who are already in the angel space, have told me, you know, I really learned I learned stuff that I didn't realize. I kind of feel like because I did move around a lot and I I was involved in different groups, I I was the person who was like, oh, that looks like a cool model.
That looks like a cool way to invest. Let me try it, which probably isn't the best strategy when you don't really know what you're doing. Like, I don't I don't recommend that. And that's really why I wrote the book, but that was my, that was my learning process. And I really did like trying out all the things, and I thought, well, I tried out all these things. Maybe I should actually tell people about it so that they don't make some of the mistakes that I made. And so I think I wrote the book for, like, the me in 2012. I wish in 2012 somebody had handed me this book and said, hey, here's all the things. Now, in 2012, all of these things didn't necessarily exist because some of the rules that have changed in order to allow some of these things have happened since 2012. But, but, yeah, that's, like, that's really who I'm targeting.
And, you know, I had a friend of mine who read the book recently, and she said, you know, I this isn't really my topic. You know, I knew it was about investing, and I yeah, whatever. She's like, but then it was your book, and you you're my friend, so I'm gonna read it. And I then she says, but he I really liked it. And I thought, okay. Well, good. You know? So she, you know, she got a lot out of it even though at first, she was kinda like, I'm not really an investing person, but now I understand what you're trying to do. You're trying to demystify all of the things that are out there about what we think about, what we think is actually going to be, the way that we have to invest, and that's just not the case anymore. We have so many options.
Craig Asano: Fantastic. And how do how do folks get that book? Is it in all the bookstores? How do they get it?
Marcia Dawood: It's in the bookstores. You can get it on Amazon, US and Amazon CA. It can you can go to my website and order it directly from the publisher. Lots of lots of options.
Craig Asano: K. Perfect.
Yeah. No. I I'm excited to read it. I mean, I would have thought I would have read it prior to the podcast, but we'll do that after. Still definitely looking forward to it, and I might pen some thoughts post read and connect them into the show notes here, along with the rap battle. The rap battle's a must. We gotta pull the rap battle together. You know, moving to the next topic around angel investing and and technology, I mean, a lot of the education that NCFA, provides is really around a lot of the new tech innovations and the impact and the implications not just for from an entrepreneur's perspective, but also for investors. So, from your perspective, obviously, AI has exploded on the scene, and it's proliferating and having significant impact already just after sort of hitting the market in a couple years, and it seems to be changing daily. You know, we try to track as much as we can. The blockchain space as well, the tokenization. How do you see some of these technologies transforming, sort of investing broadly, or maybe specifically to angel investing? I know there's a lot happening, but I'd love to hear your thoughts.
Marcia Dawood: Yeah. In fact, we talked about this quite a lot. We had a oh, every year, we have a women's investor forum through the Angel Capital Association that I host in Boston. And the last 2 years, we've talked a lot about AI, especially from the standpoint of and things with the blockchain. All of these kind of technologies are coming out, and we're thinking to ourselves, okay. We are seeing companies who have, you know, some component of this in their business model. And we, as angels, are worried about how do we even evaluate a company like this. Because in some cases, the technology is changing so fast that we're not even sure how to really do that and what we've learned from some of the experts out there is that, looking at the company and the problem that the company is solving as a whole and take the technology out of it for a minute to really see is that something that's sustainable, is that something that's needed, and don't get so caught up in the shiny object of the tech, and the AI piece. That's been really helpful to me personally as an investor anyway because I feel like I was feeling a little kind of overwhelmed at how many companies are out there right now doing really cool innovative things, especially with AI. But I was really struggling about how am I going to evaluate that and what would it mean for me as an investor. And so I think taking that lens back and kind of, you know, looking at it a little bit differently and going back to some of the basics of diligence and how you look at a company, that to me made a lot of sense. And so I feel a little bit better now when I do see companies like that.
Craig Asano: Yeah. The it it's sort of like a Warren Buffett back to basics. And Yeah. If the fundamentals aren't there and you don't understand it, walk away. And so I I think there's a lot of hype and a lot of companies, and they are solving a lot of efficiencies or inefficiency gaps, but, will they be here tomorrow as the landscape is completely changing? And so, or is it a cash grab or is it a real business? And so that you know, that's it's certainly interesting to hear. Angel investing, the 300,000 angels that are in the US and, you know, far fewer here in in Canada, but where do you see the angel investing in the future? Is it growing? You know, we're sitting here in 2024. Let's have a look at where do you think it'll be in 5 years, or where do you think it'll be in in 10 years from today?
Marcia Dawood: Yeah, well, what I'm really hoping, and I do talk about it in the book, and then I literally just had a podcast episode not too long ago with the, CEO of republic.com, which is a equity crowdfunding platform here in the US, and they're a global platform too. But I really believe that we will start to see a democratization of the private markets. So if you think about how difficult it was to buy a public stock back in the eighties nineties, the fees were very high. You had to have, you know, a brokerage account in a certain way and have it funded with a lot of money before you could even buy. Think about buying a public stock. It took a long time. Nowadays, you can go on to E Trade or Robinhood or any online, platform, brokerage platform, and you can trade for free in seconds. So, wow, what a difference, you know, a couple decades make. I think we're gonna because of the speed of technology and advancement, I think we're gonna start to see that in the private markets too, more and more over the next 2, 5, 10 years. I really believe that you're gonna start to see more people getting involved because they're realizing they can. The yeah. They can, and there's more tools to evaluate. There there's more sort of opportunity to get access to deals that would otherwise, let's say, 5, 10 years ago, be limited to a small group that didn't wanna share that opportunity, didn't wanna talk about that deal.
Craig Asano: So it's certainly and then all the the democratization from the diversity perspective, others that, you know, the I know there's an accredited investor threshold, but retail investors or near credit investors, they're looking to generate some wealth. They're looking to have some impact. And so this whole angel investing as an individual, not as a fund approach, is explosive in terms of its potential. And so, I think that's spot on. The democratization of private markets, and we see that. I mean, a lot of companies are, hesitant now to go public or certainly delaying their going public. There's been hardly any IPOs here in in Canada for some time, and so hopefully, overall, the folks will strike the right balance just to enable enough capital from all channels to support the company so we can continue to do what we do. But, super interesting for sure. I mean, an interesting question here around, you know, as we I do recognize the time. We're getting nearer to the end, but if you could give yourself, one piece of advice when you first got into angel advice in angel investing, and I think this this sort of dovetails well into your book and others that might be contemplating making that investment, you know, through whatever channel. What would that piece of advice be to someone to yourself just getting into the game?
Marcia Dawood: Yeah. Just take your time. Look around. Look at what's out there. Go to a local event in your in your neighborhood, in your community. Find out you can literally just go search online for start up events in, and then you could just fill in your city or town. And there are things going on everywhere, and just start to get to know people. Start to get to know what's going on near you. And then you can look at there's a lot of things online you can look at too, but just take your time. Get started. Just find out what interests you and kind of see where that leads you as opposed to thinking, oh my gosh. I have to go and do this, and I have to write all these big checks and things like that. Like, don't get overwhelmed by the details. Just get started.
Craig Asano: Good advice. Do you have any inclination to launch your own venture fund for women? It it's sort of a I only say that because it's sort of what's next for Marcia? We're talking a little bit about the future of angel investing and private markets, but what about Marcia? You're very accomplished. You're doing all these things. You love it. What what's next for you?
Marcia Dawood: Well, that's what Mindshift Capital is. We are an investment firm that invests in women led companies globally. And, you know, so we have a fund and, we're deploying capital. And to me, funds are really one of the best ways that people can get involved because you instantly get a diversified portfolio. And I really love that, about funds. So for me, helping people get connected to the things that they care about and the things that they want to invest in. The people that they wanna meet. You know, I'm hoping that that's what the book will do. It will inspire people to go out and find out what's going on in their local community, get connected to people that have the same interests that they do. You know, for me, personally, I have an interest in anybody who's working on something related to curing ALS because my mother passed from that disease back in 2018. So, you know, connecting with other people or connecting with companies that are trying to work on a treatment or a cure for something like that, you know, that's how that's how all of these things get started. So I love to see people just going after the things that they care about and, you know, who they meet and how they do it along the way is great.
Craig Asano: Fantastic. Well, you connected with someone today about ALS, and that's me. My grandfather passed for the same disease, and so it was a very quick thing that happened. And before you know it, several months just a few months after being diagnosed, he had passed. So, I get it. I get it. So we're on to the start wrapping up the podcast here, we'd like to do this rapid fire questions just for fun. So we're expecting, you know, short, snappy answers here for some rapid fire questions. Are you ready to go? Ready to go.
Marcia Dawood: Okay.
Craig Asano: So in a in a word, what do you think the greatest opportunity in angel investing is today?
Marcia Dawood: Options. People have options, and I don't think there were nearly as many options in the past. So I'm really excited about all the options that people have today. Options.
Craig Asano: So the folks listening to the podcast, you gotta take one of those options and run with it or take it slow. Up to up to you, but there are options. So that's definitely a good thing. So next question. If you could have dinner sort of or get together with any influential figure, who would it be and why?
Marcia Dawood: Yeah. I love this question because I think it ebbs and flows. You know? One minute, it could be one thing. One minute, it could be another. Right now, because of the book and my podcast and everything, I am truly fascinated at people's relationship to money, and I really love all of the work that, Ramit Sethi has done in order to bring about this awareness of money. How do you feel about money? How are you gonna make money? And that's a topic that I think is kind of another next step back to your earlier question of what I wanna start exploring. Like, how can I don't know that we can get as many people on the playing field for angel investing as we could until we start to talk about that money thing?
Craig Asano: So I would love to sit and have a conversation with him. That's for sure. The, yeah, the taboo of money and the topic of it. It's pervasive. It's there. Next question. What's the most surprising thing you've learned on your journey as an investor?
Marcia Dawood: So I that's a toughie because, I mean, I'm always I'm surprised a lot of times by a lot of different things. And then in other cases, you're not surprised. Right? But, I guess I would say that sometimes I just am fascinated at what these entrepreneurs are working on. I sometimes they come up with these ideas that I would have never even thought this could possibly exist, and I'm just so in awe of those visionaries. I'm more of, like, an operations kind of person, so, I just love hearing the stories and all the things that they're coming up with. Just the innovation.
Craig Asano: Yeah. It's so exciting. Last question for rapid fire. What is one myth in angel investing that you you'd like to debunk?
Marcia Dawood: That you have to be rich. You know, so often, I've heard people say, well, you know, I've seen shows on TV, and, like, they fly in private planes, and, you know, they have 1,000,000,000 of dollars. I would have to have 1,000,000,000 of dollars in order to be an investor, and that, you know, simply is not true. So just being able to get people to think about investing in an early stage company a little differently, that's what's gonna start to change the game.
Craig Asano: Yeah. Absolutely. Yeah. This has been incredible, Marcia I really want to, thank you for spending the time sharing your knowledge. You, as we mentioned many times, you're very accomplished. We're excited to follow your continued journey on what's next for you, and you're, of course, welcome, back anytime on the show. How do folks get in touch with you if they wanna follow-up or learn more? And, you know, maybe one last message about that that book, and then we'll get down to the wrap up here.
Marcia Dawood: Sure. So, they can find me at my website. It's just my name, marciadawood.com. There's lots of resources on there. I do have a podcast web page that does have playlists. So, for example, if you're interested in learning more about equity crowdfunding or I've had a couple people on talking about AI, for example, that's all in there, and you can just click on, like, AI or equity crowdfunding, whatever it is, and it'll pull up whatever episodes are related to that. So, and plus, of course, there's always lots of book resources as well.
Craig Asano: I love the interest in in equity crowdfunding, of course, at NCFA we have been involved in grassroots for many, many years, and it continues to grow. We are still are in contact with a lot of those relationships with the guys in the US, the folks in the US that have spent many, many years democratizing, tracking the data. Of course, Republic and their evolution to, you know, become not just the original model of equity crowdfunding, but these new tokenized global platforms and liquidity pools. So super exciting for sure. I'm sure we could cover off a lot more topics, but, yeah. So thanks so much for sharing your valuable time with us, Marcia.
It's been great. And just to wrap up the podcast, folks, if you are new to Fintech Fridays here, please check out some of the incredible past episodes. I think you will be surprised with what you find, and we look forward to seeing you, next Friday for another episode of Fintech Friday. So have a good weekend, and thanks a lot, Marcia for joining us today. We'll certainly talk to you soon.
Marcia Dawood: Thanks so much for having me. It's a pleasure.
Outro : you've been listening to Fintech Fridays brought to you by NCFA and partners. Tune in weekly for the latest fintech Friday podcast by subscribing to this channel. The National crowdfunding and Fintech Association of Canada is a non-profit actively engaged with social and investment fintech sectors around the globe and provide education research industry stewardship services and networking opportunities to thousands of members and subscribers. For more information please visit ncfacanada.org.
End of Podcast
Subscribe and Listen to more Fintech Fridays podcasts here
Join NCFA's weekly Podcast series 'FINTECH FRIDAYS' where we sit down with the incredible people in the Fintech community and talk about leading fintech products innovations developments and challenges!
Interested in getting involved as a partner or participant? info@ncfacanada.org
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
| | |
Support NCFA by Following us on Twitter!Follow @NCFACanada |
Mastering Situational Interview Questions: A Comprehensive Guide to Acing Your Job Interview
Aug 20, 2024
Introduction
Job interviews make most people nervous. But situational questions take anxieties to another level! Unlike normal interview questions about your experience, situational questions give hypothetical workplace scenarios seeing how you would tackle challenges on the job.
What Are Situational Interview Questions?
Situational interview questions give candidates hypothetical “what if” scenarios involving workplace challenges to evaluate problem-solving thought processes by responding verbally in real-time during job interviews.
Hiring managers leverage situational questions judging analytical abilities, communication skills, composure, technical know-how and ethics observing candidates in action working through simulated job crises aligned to roles. Unlike experience-based questions, these force applicants to think on their feet applying skill sets immediately with little preparation.
Why Do Employers Use Situational Interview Questions?
Four reasons hiring managers rely heavily on situational job interview questions include:
Predicting Future Performance:
Watching candidates tackle hypothetical role-relevant issues predicts potential priorities, work processes, and interactions with coworkers/customers once they actually hold positions. Situations reflect realistic job previews.
Assessing Problem-Solving Skills:
Since many roles require quick critical thinking confronting everyday challenges, situational questions analyze logical reasoning capacities breaking down issues methodically to drive decisions and optimize results. Applied cognition gets tested in simulations.
Evaluating “Soft Skills”:
Common situational questions also evaluate difficult-to-quantify “soft skills” like professionalism, integrity, teamwork, and grace under pressure through responses assessing overall demeanor. Interpersonal instincts shine.
Standardized Job Comparisons:
Asking the same situational questions of all applicants for given roles allows easier side-by-side comparison evaluations from interviews assessing who shined brightest. Curveballs level playing fields.
Common Types of Situational Interview Questions
While exact situational questions vary across industries, several common topics include:
- Conflict Resolution: A teammate misses your presentation deadline jeopardizing a client deliverable. What’s your approach?
- Problem Solving: Website sales abruptly sink 20% month over month. How would you diagnose causes and turn numbers around?
- Leadership: Your project milestone falls behind schedule due to an underperforming contractor. How do you remedy matters?
- Customer Service: An angry client demands refunds for poor service but policies don’t cover requests. How do you respond?
- Adaptability: COVID lockdowns force closing offices. How will you complete training new hires virtually?
- Crisis Management: Social media erupts around a controversial brand statement. What next steps confront the spiraling PR crisis?
Preparing for Situational Interview Questions
Solid preparation tames situational interview anxieties:
- Understand the Job – Study job descriptions identifying likely required abilities assessed through situational questioning around customer, teammate, and supervisor interactions forecasting scenarios commonly arising.
- Research the Company – Explore the company’s website press pages grasping priorities, incidents, and pain points learned determining industry situational topics potentially asked. Recent news offers clues.
- Practice STAR Method – Mentally rehearse narrating situational responses applying the STAR method walking through the Situation faced, Task at hand, Actions you would take, and the desired Result if circumstances occurred in reality.
- Prepare Examples – Reflect on personal examples from past jobs where you successfully navigated real-life challenges similar to situations possibly posed, highlighting transferable experiences.
- Practice Out Loud – Physically vocally practice answering situational questions out loud as if in interviews confidently highlighting relevant skills as you logically walk through handling crises poised and thoughtful. Smooth narrative delivery capability takes practice.
Strategies for Answering Situational Questions
When actual situational questions get lobbed your way, employ these top tactics driving home run responses:
- Be Specific – Resist generalizations opting for vagueness. Get granular and detailed walking through exactly step-by-step how you would handle hypothetical situations with unique actions leveraging specific competencies you possess.
- Focus on Your Skills – Spotlight precise hard skill and soft skill strengths your answers demonstrate around communication, mediation, critical thinking, technical troubleshooting, or other competencies ideal handling scenarios posed through examples proving abilities.
- Stay Positive – Even when situational questions present negative hypothetical circumstances, keep responses upbeat and constructive avoiding blame or dwelling on what went wrong. Solutions-focused mindsets shine.
- Keep It Relevant – Prevent rambling, tying responses directly back to core issues presented within situations each time rather than veering conversations sideways without clearly addressing the original scenario challenges asked. Relevance keeps interviews on track.
- Be Honest – If faced with situational dilemmas exceeding current capabilities, be transparent about strengths and limitations, emphasizing how you would leverage other resources or learn quickly on the job to fill experience gaps if hired. Authenticity goes far.
- Reflect on Outcomes – After explaining how you would handle hypothetical challenges, wrap up by summarizing what the positive end results would be if actions get implemented reflecting measured leadership securing win-win resolutions benefiting all parties.
Common Pitfalls to Avoid with Situational Questions
While strong situational question answers impress, flimsy responses riddled with rookie mistakes undermine perceptions around candidate viability. Avoid these pitfalls:
- Being Too Vague – Sticking with superficial generalizations and avoiding specifics exposes gaps failing to grasp issues at hand fully or lacking concrete ideas addressing them. Details demonstrate comprehension.
- Overloading on Irrelevant Details – While specifics help, inundating interviewers with granular trivialities diluting core issues signals getting lost in assessing primary actions demanded most urgently in situations posed. Stick to relevant response essentials.
- Failing to Highlight the Outcome – Strong answers cover objectives, project impacts, and end results achieved if elected actions are implemented. Skip discussing imagined outcomes or assumptions on impacts and risk appearing indifferent to communicating eventual priorities driving decisions.
- Being Negative or Blaming Others – Never badmouth fictional teams or characters appearing in situational questions. Taking positive accountability and owning solutions wins favor over excuses blaming leadership or external factors. Own possibilities!
- Not Practicing Enough – Without thorough preparation drilling situational question responses aloud, candidates miss opportunities highlighting the greatest range of top-of-mind competencies when hot seats pressure skills recall easily. Rehearse extensively beforehand.
Overcoming Challenges in Situational Interviews
Despite extensive preparation, interviews still stir overwhelming nerves risking mental blanks. If questions initially catch you off guard, avoid panic through:
- Take a Moment to Think – Politely ask for a minute formulating thoughts before responding. Silent pauses feel eternal but buy vital time to re-centering focus.
- Focus on Your Strengths – What expertise makes you uniquely qualified to handle challenges presented based on past experiences? Highlight these domains sticking to familiar territory.
- Be Honest – If a scenario truly bewilders, say so while emphasizing your passion for learning quickly by asking key clarifying questions and demonstrating engagement. Transparency goes far.
Conclusion
Preparing for interviews feels daunting enough without added situational curveball questions evaluating problem-solving capabilities on the fly. Understanding why employers rely on situational questions assessing critical soft skills and crisis management competencies builds confidence rather than dreads facing them.
With a realization that interviews deliberately apply some pressure simulating workplace demands also comes the ability to overcome stressful moments through authentic communication of strengths, honest self-awareness around limitations, and unwavering solutions focus.
By studying company priorities and determining likely situational topics combined with practicing responses aligned to your backgrounds aloud, soon you’ll tackle situational questions as opportunities showcasing unique qualifications - not obstacles to avoidance. Mentally start writing your success story embracing interviews as engaging discussions instead of interrogations!
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
| | |
Support NCFA by Following us on Twitter!Follow @NCFACanada |
Regulatory Demands: Fintechs Caught in the Crossfire?
Regulation | Jun 5, 2024
Image: Freepik/rawpixel
Podcast Insights: Hester Peirce on SEC Rule-making and Regulatory Demands
In a recent podcast interview hosted by Compliance Week titled "Regulatory Demands," SEC commissioner Hester Peirce, often known as "Crypto mom," is blunt in her criticism of the SEC's rule-making process. However, what does this signify for investors, innovators, and fintechs—the main participants in the game?
Transparency Concerns
"We've seen a flood of rulemaking come out of the SEC in the last year or two... I have some concerns that the Commission hasn't been as engaged in public outreach as it could be, and the best way to write rules is to get input from the people who are actually going to be complying with them...If we start treating it as a burden rather than a privilege to get the input of the public, then our rules just won’t be as good, and they won’t stand the test of time."
Peirce focuses her critique on the SEC's lack of public outreach. "We've seen a flood of rulemaking come out of the SEC in the last year or two," according to her, "I have some concerns that the Commission hasn't been as engaged in public outreach as it could be."
See: Peirce Laments, SEC ‘Squandered A Decade’
Fintech companies, which are renowned for their agility and capacity for rapid adaptation, face difficulties as a result of this lack of transparency. According to Peirce, "the best way to write rules is to get input from the people who are actually going to be complying with them," therefore without clear communication and participation in the rule-making process, these restrictions may inhibit innovation and impair their capacity to benefit investors.
Protecting Investors, Not Stifling Innovation
"If a compliance officer is afraid to speak up... The focus should be on what the compliance officer did, not just on the outcome...Innovation is something that the SEC should be encouraging, not stifling."
Peirce goes one step further, emphasizing how these fintech companies may have a chilling effect on compliance officials. "If a compliance officer is afraid to speak up because they're worried about being blamed if something goes wrong," she contends, "The focus should be on what the compliance officer did, not just on the outcome." As Peirce notes, these officers may be reluctant to alert investors to any risks connected to novel financial products out of fear of incurring excessive responsibility, "leaving investors exposed." In the long run, this might make investors less protected.
See: Balancing Fintech Innovation and Regulation
Perhaps Peirce's most important quote is "Innovation is something that the SEC should be encouraging, not stifling," which is a direct call to action for the agency. This is a clear message for entrepreneurs and fintech companies alike. Peirce contends that in addition to safeguarding investors, the SEC should promote an atmosphere that welcomes novel concepts and technological advancements.
Striking the Balance
"We need to be mindful of the costs of regulation, and not just the benefits. When we write rules, we should try to write them in a clear and concise way."
Peirce does concede that rules are necessary. "We need to be mindful of the costs of regulation, and not just the benefits," she asserts. "When we write rules, we should try to write them in a clear and concise way." As Peirce notes, laws that are unduly onerous and complicated can "put a strain on smaller fintechs and innovators," restricting their capacity to compete. They can prosper as long as laws are reasonable and clear, safeguarding investors in the process.
See: Insights from the UK’s Pro-Innovation Regulation Review
Peirce is aware of the difficult balancing act. "The SEC needs to take a thoughtful approach to writing rules for this new and innovative area," she warns. Encouraging innovation while safeguarding investors must be balanced if the financial system is to remain healthy in the long run.
Closing Thought
The interview with Hester Peirce provides an insightful viewpoint on the difficulties faced by financial industry players. Her emphasis on encouraging innovation, emphasizing results over blame, and encouraging open communication are all in line with the goals of NCFA Canada and its members. The SEC can promote responsible innovation in the financial sector and eventually help all investors by pushing for a more balanced approach to regulation.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
| | |
Support NCFA by Following us on Twitter!Follow @NCFACanada |
Fintech Fridays EP62: The Future of Investment Crowdfunding: Innovations, Data, and Opportunities
About NCFA Canada | Craig Asano | Apr 5, 2024
EP62 Sherwood 'Woodie' Neiss
Apr 5, 2024: NCFA's Fintech Fridays podcast episode 62
The Future of Investment Crowdfunding: Innovations, Data, and Opportunities
Featured Guest:
SHERWOOD 'WOODIE' NEISS, Principal, Crowdfund Capital Advisors (LinkedIn)
Mr. Neiss, based in the US, is at the forefront of the investment crowdfunding industry, from issuance to data analysis, to secondary trading and liquidity. He co-authored the "Crowdfunding Exemption Framework," which became the basis of Title III of the U.S. JOBS Act to legalize equity and lending-based crowdfunding. He co-founded Crowdfund Capital Advisors ("CCA"), a consulting firm serving certain governments and multi-lateral organizations, including the Inter-American Development Bank, the World Bank, governments of Chile, Malaysia, Israel, and the UAE. He is also a co-founder of GUARDD, the EDGAR of financial disclosures for private companies, and is a General Partner of D3VC; a Venture firm focused on diversified investing among investment crowdfunding issuers. He is the chief architect of the CCLEAR Regulation Crowdfunding Database, which tracks and monitors online security transactions for investors, regulators, platforms, and the media. Before crowdfunding, Mr. Neiss co-founded FLAVORx, Inc., acted as its chief financial officer, and won Ernst & Young's Entrepreneur of the Year award, as well as the Inc. 500 award three years in a row. He's also a long standing advisor at NCFA.
About Crowdfund Capital Advisors
Crowdfund Capital Advisors (CCA) is a crowdfunding advisory, implementation and education firm founded by Jason Best and Sherwood Neiss, the leaders of the securities-based crowdfunding movement. CCA provides comprehensive advisory solutions to both public and private institutions.
Links
- Website: Crowdfund Capital Advisors | X
- Website: D3VC.ai
- Website: GUARDD
About this episode
In this enlightening episode of Fintech Fridays, Season 4, Episode 62, host Craig Asano, founder and CEO of NCFA Canada, sits down with the distinguished Sherwood 'Woodie' Neiss, a pioneer in the investment crowdfunding industry and an advisor to NCFA. Together, they delve into the evolution of investment crowdfunding, its impact on startups and investors alike, and the potential for future growth. Woodie shares his journey, from the inception of crowdfunding regulations to leading the charge with data-driven insights and AI technology in investment strategies. Listeners will gain an insider's perspective on the latest developments, the significance of data in shaping the industry, and the role of technology in advancing investment opportunities. Whether you're an investor, entrepreneur, or fintech enthusiast, this episode offers a comprehensive look into the dynamic world of investment crowdfunding, revealing how it's reshaping the landscape of finance and opening new doors for innovation and growth. Enjoy!!
Duration: 45 mins
Episode Jump Links:
00:00 Episode introduction
03:22 Meet Sherwood 'Woodie' Neiss
04:55 Investment crowdfunding and its evolution
06:34 Genesis of D3VC.ai, AI driven venture fund, and GUARDD
11:40 RegCF data access, reports, algorithms
13:47 Current state of U.S. Regulation Crowdfunding 2024
15:00 Impact of Crowdunding, innovation, job creation, economic stimulus ($6.8 billion)
16:15 Value creation, circular impact and velocity
18:50 JOBS Act 4.0, RegCF regulatory improvements
21:25 Investment Crowdfunding vs Angel-VC-seed/pitchbook
22:00 RegCF attracting more mature issuers and investors, removing FUD
23:38 RegCF diverse and inclusive, 41.7% offerings from women or minority
26:00 RegCF is scaling towards $1 billion annually
29:18 Platform dynamics and opportunities
31:28 Global expansion and tokenization
35:30 AI and technology's impact on RegCF markets
37:12 How to get started in industry, job insights and opportunities
40:05 Rapid fire questions
42:25 How to get in touch with Woodie
43:41 Episode close
Subscribe and tune in each Friday to check out the latest movers and shakers in fintech. Listen to more podcasts here:
Season 1 | Season 2 | Season 3 | Season 4 | and weekly newsletter
Fintech Friday Transcript of Episode 62:
SHERWOOD 'WOODIE' NEISS, Principal, Crowdfund Capital Advisors
Intro: Welcome to fintech Friday's a weekly podcast brought to you by the National Crowdfunding and Fintech Association of Canada and partners. Covering all things fintech, blockchain, AI and alternative finance.
Craig Asano: Hello everyone. My name is Craig Asano, the founder and CEO of NCFA Canada, welcoming you to another episode of Fintech Fridays. This is season four, episode 62 of NCFA's weekly podcast together with partners, where we uncover the latest and greatest and sit down with fintech founders, investors and talk about innovations, the developments, news and in today's instance, the latest and greatest in Investment Crowdfunding in 2024. Today we have an incredible guest. He's been on here before, so don't be shocked if you recognize Mr. Sherwood Neiss, aka 'Woodie'. So I'm going to from this point on, refer to him as Woodie. It's a very affectionate, nickname, but he's based in the US, he's also an NCFA Advisor, but I cannot think of someone better who's at the forefront of investment crowdfunding industry and has been so since its inception. So they're involved, and Woodie particularly, with data analysis right from Stem to stern of all aspects of crowdfunding. And they specialize in investment crowdfunding, secondary trading, liquidity, all the latest, topics. So, a long time ago, uh, we even had, for those of you who might actually have been there, Woodie, we flew him up. He came out to Vanfunding conference in Vancouver, talked about, uh, what he was doing at that time. Fast forward many years into the future, we have the privilege of looking at the data. Everything's data driven, a lot more insightful. There was a lot of unknowns, I wouldn't say, looking back, a tremendous amount of risk. But we're very excited to dig in to the latest data of what's happening in investment crowdfunding and also cover off the future. So, just very quickly, because, we do have a hard stop at 45 minutes for this podcast today. And I just want to say that Woodie has been an author. He's been a global speaker. He's launched a variety of crowdfunding related brands, and we're going to give him an opportunity to talk a little bit about, Crowdfund Capital Advisors. What's going on there? He's the co-founder of a company called GUARDD. So we'll let him talk about that later. He's got CCClear or all the regulation crowdfunding data project on the go and all the data pipelines and partnerships with all the various data sources, as well as his background. He was always, even pre-crowdfunding, he had won awards. He's Ernst and Young's entrepreneur of the year award. I bet you you don't hear that as as often as you do crowdfunding these days, Woodie. But he was a triple (3 years in a row) Inc 500 recipient as well. So, Woodie, I just want to welcome you back to the show. Thanks for agreeing to sit down to share your knowledge and experience with us.
Sherwood 'Woodie' Neiss: Hey, it's great to be here, Craig. It's just funny story, if you remember, I was late for the event in Vancouver because I had told the immigration people that I was here in Canada to legalize crowdfunding, and so they detained me. And then they they wanted to know everything that I was doing. And I was just like, maybe I used the wrong word, and so I, showed up to your event like ten minutes late but it made for a funny story when I got on stage.
Craig Asano: Yeah, it was very uncomfortable. I remember I was sitting there at the podium. You were the keynote speaker, and I just had to cover off ten minutes. That's okay. We've been there and done that. but, as just someone who's so involved with the space, very few OGs I guess we can say, that can sit down. Actually, both you and I and reminisce about old times. We always say it that we'd like to do sort of an episode that's just storytelling What it was like and more shoot from whatever is on the mind but today we're a little bit more focused because we want to cover off the report. We want to dig into the data, find out what's going on. But to kick things off, like we always do with with the format of the podcast here, we just give the speakers an opportunity to talk about, how you got involved with the sector that we're covering. Today it's all about investment crowdfunding. What was that journey for you? What were the motivations? And maybe you can kick it off with a very high level definition from your perspective, the guru, what is investment crowdfunding and what are you doing with all these other projects you got on the go?
Sherwood 'Woodie' Neiss: Investment crowdfunding is really Kickstarter, Indiegogo, but with securities regulations attached to it. So instead of people giving money to people with good ideas, people are investing money in people that have great business ideas. And in exchange for that, you're getting either an equity instrument or you're loaning money, so it's a debt instrument. This industry really started in 2016 here in the United States. It was something that, of course, accredited investors could be doing prior to this. It couldn't happen online but what we did in the Jobs Act of 2012 was to open the door to both retail investors as well as general solicitation. So now we enable these funding platforms that look like Kickstarter and Indiegogo, but are now regulated by the SEC and overseen by FINRA here in the United States to actually be a matching service. And so people with great ideas can list their businesses up there to raise capital. Investors can look at these deals. There's all these disclosures related to it. That's what we sort of capture information on 125 data points on every single company, and we've been doing that since 2016. We write this annual state of the investment crowdfunding industry report. It's only 150 pages long this year. So you could see, like in the first year when it was eight pages long, the industry's only grown just a tiny bit since then. No, it's grown tremendously and I think actually one of the things that might be helpful in this conversation is maybe if I share some of the slides, related to that as well.
Craig Asano: Yeah, absolutely. Did you want to talk about what you're doing I'm kind of interested to hear a little bit about the D3VC and the definition that I got for that project. It's all around AI venture and it's on top of the investment crowdfunding industry. So what's going on there?
Sherwood 'Woodie' Neiss: So, we wrote the law. We wrote the dummies guide to investment crowdfunding. We wrote the world Bank report. We traveled to 43 countries around the world. When the industry launched in 2016, we launched the database that we call CClear, and that collects the information on every company that's raising money online. That data in the beginning, was just so we could track what was happening in the industry, with all these offerings, because there's only a certain amount of information that the SEC collects and so we wanted to expand upon that. Have things like what industry are you in, what valuation are you does the company have if they're doing multiple rounds of financing online, that really becomes a valuable information. As this data set grew, we realized a few things. So we were just sitting in front of our computers every day looking at the new companies coming in, and we're thinking, wow, you know, fascinating company. You know, team that's got great experience. They've clearly done this before. They've raised VC capital. I would invest in them. with 8000 companies that are doing this, it gets to be a little overwhelming. So which ones do you decide to invest in? And with the beauty about machine learning and artificial intelligence and these large language models that we're seeing today is you can take data and you can feed it into these algorithms, and you can train these algorithms to look for signals depending on what you're doing. In our case, I sat down with three PhDs that are in data science, and I said, listen, I want you to take the data that we have, and I want to develop an algorithm that compares the companies in the data set that have graduated either out of it or gone on for follow on rounds of financing at a higher valuation to companies that are coming into the data set. So when they come in, I want to look at all the data that we have on them to see if there's signals that match those companies that have gone on for great things and if there are those signals there, then we want to have that, algorithm feed us up a weekly report that tells us which companies we should apply a human layer of diligence to. Because algorithms are great when they're looking at data, but that's very quantitative. It's very black and white. What we are trying to do is use take the data, let's take the human element out of that. A machine can do all that. You tell us which ones we should look at, and then we'll do our own human layer of diligence around it. So D3VC is an AI driven venture fund where we've taken all our data and we use it to look for deals on a weekly basis that we should be doing diligencing. And it's really fascinating. I mean, the companies that are in the data set are not startups that are unproven. These are early stage companies that have proven business models. They've got patents pending on a lot of their technology. A lot of them are at first revenue and so they're looking for money now to scale. And this is a great place to sort of play in and invest in because, if you're in this early stage investment arena, you know that early stage investment far outperforms late stage investment. I think it's 19.1% to 11.7% or something like that. So there's a there's a great delta there to get in at an early stage. So we're trying to apply AI to what we're doing with this investment thesis. That's D3VC. So the other flip side of this is, is when do I get out of these investments. You know, do I have to sit on this investment until the company has an exit, a sale, a merger, an IPO? And within the regulation that we have here in the United States, we put a 12 month holding period on these securities, after which they can be freely transferable. Now, the problem at that point is you just can't sell it to anyone. You actually have to go through a process, and you usually list it on what we call an alternative trading system. But in order for these securities to trade on an ATS, they have to comply with state securities laws as opposed to federal securities laws. And the state securities laws require that companies do ongoing disclosures so that investors, when they're looking at a company to buy or sell that stock, they have all the information, the most recent information on them. And so GUARDD is a company, a fintech company that we built to actually collect current information on companies that want to sell their securities on these ATS's so that they can comply with state securities laws that freely allow these securities to trade in all 50 states here in the United States. So we're at this sort of, you know, convergence of data, liquidity and venture capital. And all three of them coalesce under Crowdfund Capital Advisors.
Craig Asano: That's awesome. So if any of our listeners like investing in investment crowdfunding companies, can they access the intelligence that's coming out of the D3VC fund, and do they just get in contact with you there?
Sherwood 'Woodie' Neiss: Yeah. So it's a venture fund, so like any venture fund people are investing into the fund as an LP, and so that's a typical fund structure. So you know, we talk to people all the time that are interested in that. But people can also access the information that we produce through CCLEAR through a lot of what you're seeing behind me, which are reports that we publish, we have a daily, uh, a weekly tear sheet, which is free for anyone to get that shows percentage changes and what's happening in the marketplace. We have the biweekly report that really digs into what what's happening over a two week period and compares that. You can see what's happening in terms of investors investment sentiment, deal flow. So it's high level and then we've got a monthly report that really digs into like the top ten offerings. You've got an industry breakout there where we dig into software industry and show the trends over the past 12 months in that industry or sector and we've done that for restaurants. We've done it for beverages, we've done it for health care. So that's another report that people can subscribe to. And then I think the coolest thing that we have, which is a direct correlation to D3VC is our capital pulse ratings report, and so each week that comes out with the top 15 offerings that our algorithm says that we should look at, it's not necessarily the ones that we will be investing in because like I said, we do our human layer of diligence. But it's a great tool for people that are interested in just seeing, you know, you've got an algorithm that's already looking at this. Maybe I can use that to help my investment decision.
Craig Asano: Fantastic. Well, I think this is a perfect segue to actually crack open that report in terms of slides and have a look at what kind of data we're tracking and, you know, get some insights in the trends. And if we have a specific question, we'll maybe just pause you here and there, but we'll spend a little time going through at a high level what your, your take on some of the key slides and where you think it's headed.
Sherwood 'Woodie' Neiss: Okay. Um, I think you see the whole slide thing right now. Yeah.
Craig Asano: Got the whole slide and, yeah.
Sherwood 'Woodie' Neiss: All right. So again this um, this trends report, it was it's 200 slides long. Anyone can download it. Um, that QR code will take you right to where you can download those 200 slides related to the 150 page report. It's completely free. This is an abbreviated version of it. I am just going to quickly fly through a few things on it that are of, I think, of interest, Just the highlights and this is as of December 31st, 2023, there were 6800 issuers that ran 8000 plus offerings. So that means issuers are running multiple rounds online. We're seeing that more and more, which means that people are finding investment crowdfunding to be a viable means to access capital. And right now, of course, you know, we're almost the end of March. We're over 7000 issuers. We've got 8300 deals taking place. So you can see that that compounded annual growth rate at the bottom there, that 59% is really what's happening. This industry is not slowing down. It is just getting traction. Whether you're looking at it from the number of deals, the capital that's flowing in or the number of checks that are being written. Now, again, we only focus on what's happening in the United States. So the data that you're looking at really just shows you how this is democratizing access across the United States. With 1800 cities that have been funded, we've had 2.2 billion. It's over 2.3 billion now as of March, invested into these companies that have been successful with investment crowdfunding. There's been over 2 million investors that have written checks and these companies are creating jobs and they're pumping money into local economies all across the nation. Those are two critical things that governments, local governments, state governments, federal governments should be focused on. Because if you're looking at how you can stimulate not just entrepreneurship, innovation, but jobs and economic stimulus, this is a great way to do it by promoting, investment into startups and small businesses. These companies, for the most part, when they raise capital, hire people, okay. A lot of it goes into hiring people. A lot of it goes into scaling a business. That's why so many jobs have been created. But it's not just direct jobs. It's indirect jobs that companies use because they have to have service providers come in and help them with their business. These companies are, you know, they take in money, but they've got a whole expense expense lines on their PNL statement. And those expense lines are really money that's being pumped back into these local communities, and that's really important because that money circulates in these local communities. Right now, it's about $6.8 billion annually. So you can see we're having a sizable impact on what's happening. We think, granted, our economy's tremendously huge, but $6.8 billion is nothing to sneeze at. The other final thing on this slide that's really important to point out is these companies start at an early valuation, a very low valuation typically, and then they grow and as they hit their milestones, they can raise money at a higher valuation. So the latest valuation related to these companies that are raising money online is $75.6 billion. So what does that mean? It means that when these companies do have their exits, someone's going to get rich because that $75.6 billion is tied up, but it will be returned to investors. So we love that sort of part of the story. The other thing about this is the industry started here in 2016. So we're in our seventh year of it. If you look at venture investing, they have a 7 to 10 year horizon because that's usually when the exits start to happen. That's what we're seeing here in the United States. And so we're starting to see these companies being acquired, go public. And that's where these returns are starting to happen for investors. So we've got the 2016 vintage starting to have their exits. We're going to start seeing the 2017 and 2018 coming up. And remember I told you there's more deals happening. You know, we started with just a few deals in 2016. So you can see the velocity of the exits will be rapidly increasing over the next few years as well.
Craig Asano: That's fantastic. Before you go on to the next slide, just go back for a second. How supportive has the US government been to investment crowdfunding and what are they doing? Are they funding education? Are the economic development agencies involved with promoting investment crowdfunding as a source of job creation, everybody. Just looking at these numbers, I'm just interested to hear your perspective on in 2024 or maybe 2023-24, in current times, how involved is the government in promoting crowdfunding?
Sherwood 'Woodie' Neiss: Not at all.
Craig Asano: Not at all. Okay, so that's an interesting response because through the media we've seen the original Jobs Act and we've seen an evolution of sorts. And we catch wind of the Jobs act is evolving. They're constantly tweaking the rules. And now we got a Jobs Act I think it's called 4.0 Can you provide your perspective on how that might impact investment crowdfunding markets, maybe not the, or are they more around the laws?
Sherwood 'Woodie' Neiss: So currently in front of Congress, there's a bill that passed the House called H.R. 2977. And a part of it is includes improvements to regulated investment crowdfunding that would increase the cap from 5 million up to 10 million. Also have fixed some things in there that, were part of that created problems like funding portals could be liable for material misstatements but in fact, if, you know, funding portal is just a listing agent, they're not doing diligence on the details of an offering that's really for the investors or the crowd to do. So there were fixes like that in there, but the reality of things here in the United States is quite dismal when it comes to policy happening. We've got such a divided Congress. No one wants to have the other side look like they're getting a win and so this passed the House on strict party line votes, essentially. And the House is Republican controlled right now, so all the Republicans voted in favor of that, and currently the Senate is controlled by Democrats. So we are trying to get the message out there that this is good for our economy. But again, I don't think any Democrats want to show Republicans that they can have a win and so I don't think this is much opportunity for anything happening in the Senate until something changes here in the United States.
Craig Asano: Well, caps of issuer caps of 5 million and potentially 10 million are staggering numbers when you compare them to the Canadian, uh, investment crowdfunding landscape. So that was just one of the points that I wanted to flesh out there but okay, back to you, to the slides. Okay.
Sherwood 'Woodie' Neiss: All right. So let's just hit on a couple of these things. This shows you the deal flow over time. I told you in 2016, that's when the industry started, you could see that there was less than 250. It's steadily grown in 2023 was a tough year here in the United States for investing, whether you're in venture capital or in investment crowdfunding. I think a lot of these issuers saw that as well and decided to hold back on their offerings. So they're waiting to see and probably time the market. We're already seeing an uptick in 2024. So I think that issuer sentiments coming back where they'll be coming into the marketplace, more so than they did in 2023. But the industry is still growing, and we are just in inning two of this and you will see thousands of these companies raising money online. I guarantee you, within the next five years. This slide shows you what to happen in the VC world in comparison to investment crowdfunding. The yellow line is venture capital, early stage investments as tracked by PitchBook. The blue line is deal flow activity through a regulated investment crowdfunding. So what got a little crazy in 2022 and 2023 but there's this general upward trend that we're seeing here. So VCs pulled back, but the crowd didn't in terms of wanting to invest in these deals or issuers coming into the marketplace. These slides that I'm going to hit on next really go to prove that there was a lot of fear, uncertainty and doubt when the industry got started. And Craig, you mentioned that as well in terms of what kind of companies are people investing in? These are really risky. Maybe you shouldn't be investing in them. And then when the industry launched, we had a lot of young companies two years, less than two years old, but now we're seven years into it and the average age of a company is four years old. So the risk profile that I'm going to show you over the next few slides is changed dramatically, which means that it's a better pool for fishing in because it's less risky investments. So you can put your money in and maybe not worry so much, particularly if the companies, you know, established and they're post revenue and generating revenues. This slide just shows you how the established revenues has grown. The startup where 73%, 73.4% in 2016. That's dwindled down to 52%. You can see the established companies has grown dramatically, up to 47% in 2023. And to my point, average revenues in the beginning, these companies barely had any revenues. In 2023, they have over $1 million in revenue. That's what you want to see. You want to see a company that's proven that there's a customer that is willing to buy your product or service, and you want to invest in it. And a company that needs capital to scale and so that's what we're seeing come into this pool. These post revenue issuers in the beginning were not the majority, it was 63% Pre-revenue now it's 63% post revenue. I love pointing this stuff out. Again, less risk, less risk. Here we track in our data set, women and minority founders, 41.7% of all the offerings in 2023 had at least one woman or minority founder. I mean, that blows past what happens in Silicon Valley, where only about 2% of women are minority founders get funded. So granted, the dollar amounts are much, much smaller, and you know what VCs can do, particularly with this, the few that they invest in far eclipses what we're doing right now. But if we stay on this trend, we're just going to see a lot more capital getting into the hands of women and minorities. And we also can look at those companies and we see that they run pretty solid companies, you know, stronger revenues, less losses as well. We track annual reports for the companies that raise money online and through tracking annual reports, we can see how the revenues changed from the year in which they were funded to the following year. And what we've seen by looking at that is these companies that have been successful in their investment crowdfunding offering have seen a 284.5% increase in revenues from the year in which they raised capital to the year afterwards. So something's happening. Is it the crowd marketing for the company that's bringing more customers in that's helping increase the revenue? Is it the money that was brought in helps the company pour more into marketing and sales? Maybe it's a combination of all of that, but I don't care. All I care is to prove that investment crowdfunding leads to better results for these companies. Not only that, but these companies are sustainable. If you look at what the Bureau of Labor and Statistics says, they estimate that 50% of all new businesses fail within five years. But within investment crowdfunding, it's 17.8%. So we ran a study to look at all 6800 companies last year to see who was out of business, and we found that 17.8% of them were. So what does that mean? You're going to be most likely investing in companies that are going to stick around longer. So again, less risky. So we love these sort of data points.
Craig Asano: That longevity in the stronger companies that have come through, the crowdfunding, had successfully closed crowdfunding rounds. Why do you think that that is the case? Is it because they have more access to capital, or is the extra exposure and other benefits from crowdfunding?
Sherwood 'Woodie' Neiss: I think it's access to capital. and I'm sure there's many variables, but I think you hit the nail on the head. If you look at companies when they're trying to get a message to Washington about what they fear, and it's a lot of the times the number one thing is access to capital. So because regulation crowdfunding exists and these companies can go online and raise money from people that believe in them, we've solved that problem. And so by solving for that problem, you're not solving for it once, these companies go on and do multiple rounds of financing online. So you're continually feeding them capital as long as they hit milestones. People don't invest in companies if they're not hitting their milestones. And all that data is there to show them. But I think to your point, yeah, it's access to capital that's keeping them going. Right?
Craig Asano: Okay.
Sherwood 'Woodie' Neiss: All right. So just a couple other slides and then we can pop out of this because I could probably talk for years. This slide just shows you how capital has been flowing dramatically into the industry. It took us five years to get to the first billion dollars invested, and then it took 18 months to get to the next billion dollars invested. It won't be long before we have $1 billion invested in one year. That might be 2024. It might be 2025 but I think we're at the cusp of doing that now. What is interesting is if you look at this slide here, this one looks at the number of checks that are written. So it really was on a high growth rate through 2021. And then we what do we have in 2022. Well we had hyperinflation. We had the Fed come in and try and fix things with the interest rate. We had supply chain issues. All of that causes concerns with investors. And so investors pulled back and we saw that in the numbers here in terms of the checks that are written. And 2023, it was it was a little better than 2022, but everyone was waiting for the markets to sort of get their footing. And we've seen that here in the United States with what's happened in our public markets. There's a delay period between what happens at a public markets and what happens in the private capital markets. So I think we're now at that point where everyone's sort of comfortable with the soft landing that we're going to have, and we'll have more checks written. But what was interesting between these two charts is even though there were fewer investors, they were writing bigger checks. And that's why we saw the dollar amounts hit all time records in 2023. So the investors that stayed in the marketplace saw companies, great companies that I'm telling you are like, these post revenue companies that have great ideas and they're placing bigger bets on it. So, you know, I'm just going to take it out of that for now just so that we can talk about things. Because I know that was a lot that I just sort of shared.
Craig Asano: I think it's fantastic. I mean, you have investment crowdfunding as a whole, attracting stronger companies who are getting used to this cycle of having more access to capital than they had before in the past. Simultaneously, you have more mature investors writing larger checks. And it was interesting to see I'm not sure which one of the charts, but maybe five years in to see things really ramp up. And as the as the risk profile for these types of investments have changed. And kudos to you for setting up the CCLEAR database and tracking it, and now being able to with AI on top of that. So, you know, I want to dig into a little bit that we have about 15 minutes. So let's talk I guess a little bit about the platforms. I mean, you've seen all the data. What is going on? Is it that there's a concentration of a few platforms that are handling most of those deals? Are there opportunities for new entrants in terms of a portal operator to go get licensed? What do you see happening on the platform side?
Sherwood 'Woodie' Neiss: So since the industry launched, there were, I think, 119 companies that have registered with FINRA to run one of these funding platforms. It's not cheap. It's I'm sure the compliance related to it can be upwards of $1 million or more a year to run one of them. So you have to think, do I have the not just the ability to put one of these funding portals together, but to sustain the cost of managing and running it? Because you're going to you're going to operate on success fees. At least here in the United States, there are 80 platforms that are still active. Out of that 119. On a monthly basis, I would say that there's probably about 35 that are actively doing deals. But of that, 90% of the deals are happening on the top 4 or 5 platforms. And on the equity side, you're seeing that in Wefunder, Republic, and StartEngine We've got new broker dealers that are coming into the space, Dalmore and DealMaker. DealMaker is Canadian but they're making a huge presence here in the US. And then on the debt side, we've got platforms like Honeycomb and Mainvest and SMBX that are really leading the way in debt offerings for this industry. So is there a place for people to come in? Yeah, 100%. If you can capture a vertical, maybe you want to focus on veterans, maybe you want to focus on women or minorities. I think there's the ability to launch a platform and build a niche in that space that allows you to own it. But right now, we really are seeing the Wefunders, the Republics and the StartEngines owning a lot of the space in the industry.
Craig Asano: And some of those big players like Republic have expanded their models beyond the more traditional equity and debt. And they've gone global. Can you talk about you know us one of those portals and what is their experience from what you know, as as they enter global markets and start to compete globally.
Sherwood 'Woodie' Neiss: Yeah. Because, you know, so one of the things that we realized about the internet is the ability to cross, um, you know, nation, you don't have to be anywhere to get a message across. And what we're finding with these businesses is businesses solve solutions that have opportunities globally, but they also have solutions for which there's investors that are interested in investing in them globally. And so how do you deal with that when you've got securities laws that are, provincial? So what Republic and some of these other platforms are trying to do is either partner or buy platforms in other countries so that they could prepare to allow for cross investing that so they could allow for deal flow to happen from one country to another. And I think that's what Republic is trying to do. They are also expanding like you said. There is securities tokens is a big focus of what they're talking about because they see they see a lot of liquidity opportunity down the road. But the way in which you can really have easy liquidity is through tokens, because you can put it on the blockchain. And with that, you've got the distributed ledger that can sort of track what's happening, particularly when it comes to international transactions. That'll reduce the friction and the time in which you conduct these transactions. And I think that's where Republic's been focused but we're seeing a lot of these platforms trying to figure out how they can partner or expand overseas.
Craig Asano: Do you think that the tokenization of real world assets, which is separate from private companies and the digital securities is an area that like I just read a report this morning from, CoinGecko that provides data services in that space and it's been booming since, 2023, mostly in 2024 because the crypto investment has taken off. But do you see those tokenized models and the global liquidity and crypto as the future for investment crowdfunding, or is it going to be just a separate, stream or there'll be full integration? What do you envision say, three years out, five years out?
Sherwood 'Woodie' Neiss: I see investment crowdfunding as, in a way leading the charge for a lot of what will happen. It's very hard for one of these huge multinational corporations to decide to do things on the blockchain and tokenize things. I mean, where do they even start? But when you've got these startup companies that are showing promise, if you can issue securities on the blockchain and you can have them as tokens, down the road, as these companies grow and scale, you're really enabling that that mechanism under which they can raise capital and trade their securities to really grow and scale. So I think a lot of what we're seeing here in this space, and interestingly enough, in 2024, I've seen multiple token offerings happen in the investment crowdfunding space. But I see these companies strategically deciding to do that because they see what you are talking about as the future and they're preparing for that. But again, when you've got these small companies doing their initial rounds of financing, this is the time to think about that. Because later on, it's just going to be very, very challenging for these companies to do things on the blockchain and tokenize things. You know, when you've got just these cap tables that are huge and you've got a whole system and structure in place to handle it right now that is very different from what we're doing with tokenization.
Craig Asano: Absolutely. Each rabbit hole has its own challenges. What about the technologies? I mean, ten years back, five years back, it was pretty simple. It seemed, more advanced at the time but since then AI has exploded. There's just been a shift. What new technologies are being applied in investment crowdfunding markets? I mean, obviously from your fund perspective, the AI due diligence and almost private company stock picker, if you will. Uh, what technology? What? Let's talk a little bit about the technologies. What's happening?
Sherwood 'Woodie' Neiss: I mean, I think what we're doing with the venture fund is leading that charge because we see the opportunity. On how do you take these tools that are currently being developed and leverage them for better outcomes? But even within the platforms themselves, there's a lot of compliance that is that goes with these offerings, and so you've got companies like KoreConx out there that are developing solutions that so once you do your raise, you can manage your cap table. You can communicate with your investors. So I've seen a lot of technology development happen in that arena, which I think is great because it doesn't just apply to companies raising money through investment crowdfunding. You know, if you have investors and you need to communicate with them, any of these technology tools will help. But, you know, that's really where I've seen the majority of it. I mean, were there other areas that you were seeing things?
Craig Asano: Not specifically. I We just want to get your perspective while we have this time on where it's going. We're really talking about the future. We've got data to provide answers to almost all the questions that have popped up over the last ten years. So we're in a pretty good situation, I would say, uh, in particular, well the projects that you're involved with. One question. often we get calls from new grads, from innovators. They are always looking for new opportunities. And do you think in the investment crowdfunding space, there's specific set of skills or what sort of advice would you give for, the job opportunity. Folks are looking for for jobs. So where do you see do you see that as something that will continue to grow? Is it is it an area of focus? What sort of advice can you provide to someone looking to get into the market and get a job and get their start?
Sherwood 'Woodie' Neiss: I mean, there's so many different areas to look at it. I told you about the 310,000 jobs that have been created through this industry. So you could just look on these platforms to see which of the companies that are raising $1 million, and start looking up their email addresses and seeing who they're hiring, I think that might be the quickest way to a job. Just because they've got the capital to now hire employees. But all of these platforms themselves to have teams that work for them. So, if you just Google any of the, you know, 120 platforms that are out there, you can start going through that roster, particularly for in the tech side of things, this is this whole industry is tech-enabled. So you could reach out to the platforms themselves and look for jobs too. And then there's just so much opportunity in the compliance side. When you and when you put these offerings together, in many cases you will need a CPA review. So, oddly enough, and I don't know how many accountants are listening to this, but you can make a ton of money through regulated investment crowdfunding. At least here in the United States because if they require CPA reviewed financials, it's not a full audit, but they're charging $3,000 a pop to do that. And you can do hundreds of those, and make a lot of money just by doing those. If you're a lawyer, you can work with either the issuers themselves or the platforms themselves. I know we've seen individual lawyers make a name for themselves as the crowdfunding lawyers. So that's an important thing. And then there's just experts in the field, like people want to know what are best practices. How do I launch a campaign or an offering that's going to attract people's attention and raise the most money? That's where you can work with us on the data, and become a partner that way. And go out there and then market your services, as someone that can help people succeed with their offerings.
Craig Asano: Yeah. No. It's fantastic. Well, I see we've only got about five minutes, 4 or 5 minutes left. I want to move to our favourite part of the show. We do the rapid. one answer responses. We're sort of expecting quick questions. I think we got a good sense that it's good to be in in investment crowdfunding. It's growing. There's a ton of opportunities in the U.S. Canada's got a long way to to go. Maybe it's a whole another show on how we we ramp things up here. But in terms of rapid fire questions, are you ready for a handful of quick questions and expecting some quick answers? So let's do it here. So in in a word, how would you describe the future of investment crowdfunding?
Sherwood 'Woodie' Neiss: Optimistic.
Craig Asano: Optimistic. What is your go to financial app? One that you use all the time?
Sherwood 'Woodie' Neiss: Probably my bank app.
Craig Asano: That's not a fintech, a bank app. Okay. If you got good bank apps.
Sherwood 'Woodie' Neiss: I think I'm on it every day.
Craig Asano: Okay. Fair enough. So you got to count all the money. So, In a word, what drives you every morning? What helps you get out of bed?
Sherwood 'Woodie' Neiss: Honestly, do what you love type of thing. It helps that we wrote the law. It helps that we were there from the beginning. I find this whole industry fascinating. I'm very passionate about it and so it's the desire to see this industry scale grow and succeed. That keeps me going.
Craig Asano: I love the fact that you stuck with it. You made the law, and here you are today. Both of us in some capacity for a decade. More than a decade on. You know, it's incredible. Last rapid fire question. Can you recommend a hot book, a favourite movie? Something for for our listeners. They might want to check it out.
Sherwood 'Woodie' Neiss: I mean, everyone should read Crowdfund Investing for dummies.
Craig Asano: Did they update it? I mean, you wrote that a decade ago.
Sherwood 'Woodie' Neiss: I know, I know. You know what? They didn't update it only because when they told us they wanted they wanted us to write it in 2013. We said, well, the industry hasn't gone live yet, so we're going to be writing a book for which there is no industry yet. Maybe we should wait until the industry goes live. And our publisher said, no, the way we work is we get the book out now. And so the book came out and people weren't buying it because the industry hadn't launched. And so when the industry launched, we're like, we need to update it with the new rules and everything like, but nobody bought the book and I was just like, oh God.
Craig Asano: It's time to hit the Publisher again.
Sherwood 'Woodie' Neiss: And so if anybody wants to write the second version of the dummies guide with us, please let me know.
Craig Asano: Well, on behalf of our listeners before we let you go, you got to tell everyone how to get in touch with you, Woodie. If they've got questions or they're interested in getting involved, investing in the fund. How do they get in touch?
Sherwood 'Woodie' Neiss: So for the venture fund D3VC.ai is where you can learn about that. For Crowdfund Capital Advisors, it's crowdfundcapitaladvisors.com. And if you want any of these reports or any of the data associated with it, go to CCLEAR.ai and on all those websites you can find information about ordering reaching out to us or getting in touch.
Craig Asano: Fantastic. Yeah. I'll be sure to include these in the show notes. I want to thank you on behalf of all our listeners here at Fintech Fridays for your time and your insights, Woodie, as usual. kKeep killing it out there. It's amazing to follow and support where we can. So, you're obviously welcome back anytime. Thanks a lot for being, an advisor at NCFA for many, many years, and I'm sure for many more years to come. So, with that, I think that's a wrap for this episode. so thanks again for coming.
Sherwood 'Woodie' Neiss: Thanks, Craig. Thanks, everyone.
Craig Asano: No, absolutely. So, before we close, I just want to say, if you're new to Fintech Fridays, please check out any of the past incredible episodes. They're all on the website. I think you'll be surprised with what you find. We're always bringing on, fintech founders or investors talking about a topic of the day that is going to help you grow and deeply understand a particular sector or maybe your business. So thanks for listening. We'll tune in next Friday for another episode of Fintech Fridays. Thanks a lot, Woodie. Have a good day. Thank you.
Outro : you've been listening to Fintech Fridays brought to you by NCFA and partners. Tune in weekly for the latest fintech Friday podcast by subscribing to this channel. The National crowdfunding and Fintech Association of Canada is a non-profit actively engaged with social and investment fintech sectors around the globe and provide education research industry stewardship services and networking opportunities to thousands of members and subscribers. For more information please visit ncfacanada.org.
End of Podcast
Subscribe and Listen to more Fintech Fridays podcasts here
Join NCFA's weekly Podcast series 'FINTECH FRIDAYS' where we sit down with the incredible people in the Fintech community and talk about leading fintech products innovations developments and challenges!
Interested in getting involved as a partner or participant? info@ncfacanada.org
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
| | |
Support NCFA by Following us on Twitter!Follow @NCFACanada |
Climate Inflation Discussion for a Sustainable Future
Climate Inflation | Feb 6, 2024
Image by Freepik
In a recent podcast, Anna Dean and Stephen Jacobi feature the pressing issue of Climate Inflation and key takeaways
The podcast highlighted a critical warning from economist Paul Conway, Chief Economist at the Reserve Bank of New Zealand, about the emerging challenge of climate inflation.
He stated that climate change is in part responsible for recent inflation and the cost of living crisis - the rising cost of food, spiralling insurance premiums, the escalating cost of construction (as a result of additional demand created in cyclone/flood-damaged areas) pose a threat to economic stability and personal finance.
The insights shared in the podcast underscore the urgency of integrating climate considerations into financial planning and investment strategies, emphasizing the need for the financial sector to adapt to and mitigate the effects of climate change.
See: Harnessing Decentralized Finance to Combat Climate Change: A New Era of Sustainable Finance
The mention of rising home insurance bills due to climate change highlights the broader implications for the insurance industry and financial markets. As risks increase, there could be significant shifts in how risks are assessed and priced, affecting homeowners, businesses, and insurers.
Policy Implications
The realization that climate change is affecting people's financial well-being could catalyze political action. Historically, the lack of immediate economic impact has made it challenging to mobilize political will and public support for significant climate policies. However, as the economic consequences become more apparent, there may be increased pressure on governments to take decisive action on climate change, potentially leading to more aggressive environmental policies and investments in sustainable infrastructure.
Climate Inflation Discussion
The discussion suggests a growing awareness among the public and businesses about the tangible effects of climate change on their daily lives and financial health. This awareness could lead to changes in consumer behavior, such as increased demand for sustainable products and services, as well as changes in business practices towards more sustainable operations.
See: Biden’s Clean Energy Plan vs. Banking Regulations
The presence of climate change skeptics and deniers in the discussion, as well as references to "climate scams," indicates ongoing challenges in achieving consensus on climate action. Overcoming misinformation and skepticism remains a significant hurdle for mobilizing collective action on climate change.
Comments
Kevin Brady criticizes the reliance on economists for leadership on climate change, arguing that they lack understanding of what is crucial for ecosystem resilience and human survival. This comment is insightful because it suggests a broader, more holistic view of addressing climate change, emphasizing the importance of integrating ecological sustainability into economic decision-making.
Iain Climie discusses the immense benefits of reducing food waste, citing the IMECHE's "Waste Not Want Not" report, which notes that at least 30% of global food production is wasted. This comment is insightful because it implicitly critiques the inefficiency of current food systems and suggests a potential area for impactful change.
See: Canadian Banks Face Scrutiny Over Sustainability Claims
Colin Grant argues that the last hope for addressing climate change lies in massive-scale ecosystem regeneration, a solution that is not prioritized by most governments. This comment is insightful because it goes beyond merely reducing emissions and emphasizes the importance of restoring natural habitats and biodiversity as a way to sequester carbon, regulate climate, and support life on Earth.
Nathan Simmonds questions how long it will be until the systems supporting human civilization collapse under their own weight, critiquing the encouragement of over-consumption and pollution by businesses and institutions. This comment is insightful because it highlights the unsustainable nature of current consumption patterns and the blame placed on individuals for systemic issues.
Conclusion
As we live the adverse affects of climate inflation, let's commit to fostering sustainable economic growth through education, innovation, and collaboration. By doing so, we can ensure a resilient financial future that benefits all Canadians and sets a global standard for sustainability in finance.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
| | |
Support NCFA by Following us on Twitter!Follow @NCFACanada |
Fintech Fridays EP61: Making Markets and Investing in Crypto with the Phoenix App
About NCFA Canada | Craig Asano | Jan 26, 2024
FF EP61 Kay Khemani, Phoenix App
Jan 26, 2024: NCFA's Fintech Fridays podcast episode 61
Making Markets and Investing in Crypto with the Phoenix App
About Featured Guest
KAY KHEMANI, Co-Founder and Advisor, Phoenix App and Managing Director, Hatchworks
(LinkedIn)
Based in London, England, Kay Khemani is a seasoned professional in the finance and investment sector. He’s currently the Co-Founder and Advisor of the Phoenix App and also the Managing Director of Hatchworks, a venture firm with an in-house incubator who vets and invests across a wide range of sectors from gaming to fintech, renewables, AI, healthtech and crypto. Prior to his current roles, Kay held the position of Executive Director at Goldman Sachs and Analyst at J.P. Morgan Cazenove. He was responsible for researching and investing in approximately 100 pan-European cross-sector listed companies. His focus was on bottom-up valuation, stock picking, and contributing to Goldman's internal fund. Kay is an advisor and product expert for a variety of portfolio companies. Combined with his entrepreneurial spirit and advisory roles in cutting-edge sectors, makes him a distinguished figure in the financial and investment landscape.
About Phoenix App
Phoenix App is a cutting-edge platform designed to transform the landscape of passive cryptocurrency investing. At its core, the app empowers users to engage in market making, a practice traditionally reserved for financial institutions, now accessible to individual investors. By leveraging smart contract technology, Phoenix App simplifies the process of providing liquidity in the global trading of top cryptocurrencies, offering investors the opportunity to earn real-time yield in USDC. The platform stands out for its user-friendly interface and its emphasis on democratizing financial strategies once limited to high-level investment firms. Whether you're a seasoned investor or new to the cryptocurrency space, Phoenix App offers a unique opportunity to participate actively in the market, earn yields, and gain exposure to the burgeoning world of decentralized finance (DeFi).
Links
About this episode
In this enlightening episode 61 of Fintech Fridays, NCFA Founder, Craig Asano, sits down with Kay Khemani, an investment professional based in London, UK, the Co-Founder of the Phoenix App, and Managing Director of Hatchworks. Kay shares his journey from high finance at Goldman Sachs to the forefront of fintech innovation. Explore the revolutionary Phoenix app, a platform that simplifies market making in the crypto world, allowing users to become liquidity providers and earn from transaction fees, all simplified through smart contract technology. Learn about the risks and rewards of DeFi, the impact of ETFs on crypto markets, and gather essential insights for both new and seasoned investors. Enjoy!! (Full Transcript and Video)
Duration: 62mins
Subscribe and tune in each Friday to check out the latest movers and shakers in fintech. Listen to more podcasts here:
Season 1 | Season 2 | Season 3 | Season 4 | and weekly newsletter
Fintech Friday Transcript of Episode 61:
KAY KHEMANI, Co-Founder and Advisor, Phoenix App and Managing Director, Hatchworks
Intro: Welcome to fintech Friday's a weekly podcast brought to you by the National Crowdfunding and Fintech Association of Canada and partners. Covering all things fintech, blockchain, AI and alternative finance.
Craig Asano: Good afternoon everyone. My name is Craig Asano, the founder and CEO of NCFA Canada. Welcoming you to Season 4 of Fintech Fridays today is Episode 61, a weekly podcast brought to you by NCFA and partners, where we sit down with the incredible Fintech and Funding community to talk all about new launches, trends, product innovations, developments and challenges as well. So today we have a fantastic guest with us. We have Mr. Kay Khemani, who's based in London, England. Mr. Khemani is a seasoned professional in the finance and investment sector. He's currently the Managing Director of Hatchworks, a venture firm with an in-house incubator who vets and invests across a broad a wide range of sectors from gaming to fintech, renewables, AI, healthtech and crypto. Kay is also the Managing Director of a company called Neuchatel, who's involved with the investment committee at Hatchworks. And he's the Co-founder, Advisor and Speaking Rep for the Phoenixapp.io, which is what this podcast is going to focus on today. Prior. Well, the Phoenix app, I'll just say a couple words. It's a cutting edge platform designed to transform the way individuals engage in passive investing. The Phoenix app enables users to become market makers in global trading of top cryptocurrencies, offering investors the opportunity to earn real time yields in USDC. Prior to these engagements, Kay was the Executive Director at Goldman Sachs. He had a two year post there from 2009 to 2011. In his role, he was responsible for researching and investing approximately 100 pan European cross sector listed companies. His focus was on valuation, stock picking and generally contributing to the internal investment fund at Goldman. Kay is an advisor and an active product expert with a variety of portfolio companies. So combined really with his entrepreneurial spirit and his advisory roles, he's a distinguished figure in the financial investment landscape. So Kay, thanks so much for joining us today to share your knowledge and experience.
Kay Khemani: Thank you. It's a pleasure. And thank you for having me.
Craig Asano: Yeah, welcome to the show. So, uh, episode 61 cannot believe we've already reached this milestone. We're really excited to get into the discussion to talk all about the Phoenix app and what you've been up to, and here are the latest and greatest. So to kick things off, let's just talk a little bit about your professional background, sort of your journey, what you've been doing and your road to getting involved with, uh, launching and uh, involved with the Phoenix app.
Kay Khemani: Sure. Thank you Craig. So basically, as you rightly said before, I was doing all of this and we've been doing this for almost 12 years now. Um, I was working in high finance. I did a few years at Goldman Sachs, traditionally in equities, working in equity research. And then I um, before that I was actually at JP Morgan for four years, learning the ropes, uh, of research as well. Investment research. Studied a lot of sectors. Um, and then I got into entrepreneurship around 2012, and it was a very exciting time. You know, the the whole advent of web 2.0, it was in its swing and we got heavily into it. We created a few financial technologies over the years. We had a fair share of failures as well, and small successes, but more failures. Um, and then we start to become a bit more seasoned as entrepreneurs rather than pure corporate people. We understood what it takes to actually bring a business to profitability, which is very difficult, um, as you probably know, uh, and to sustain it as well, what happened around 2015, 2016 is as blockchain technology emerged kind of out of the crevices, slightly more into the mainstream, Ethereum allowed, smart contracts basically to be used in a range of applications in blockchain, it wasn't just about hodling Bitcoin and hoping for the best, it was actually about how you can use smart contracts and get rid of bad actors. For example, it is now possible for you as a trader to trade directly and buy Ethereum and Bitcoin and a range of digital currencies against a non-entity, a smart contract, basically. Historically, if you were to buy any asset, a stock or a bond or anything, you would have to go through your broker. Now, Robinhood and all of these brokerages, they have allowed you to to make this process pretty seamless. When you enter, you log in to your terminal. You are effectively trading, but you're also basically the other side of the trade is either another trader, but the intermediary is always a broker. So it's smart contracts. You can get rid of this. And that also means you could get rid of broker fraud. And that was our mission basically in 2016, 2017 is to use smart contracts to allow traders around the world to trade financial assets against other traders, but using an autonomous entity as a middleman rather than a broker. And the reason behind this is brokers would steal your deposits. This was a big problem in binary options, also in foreign exchange trading. And this allowed us to kind of crack that code, if you will. Now, what happened, of course, is you may know this or some of your viewers may know this is that CFD (Contract For Differences) trading typically 85%. The figure can be a bit higher depending on which country you're in. 85% of traders lose money over time. It can be even as much as 95%-97% if you go to retail. Institutional, approximately 70% of institutions on CFDs don't make money. So it's pretty bad. So although we were able to address the problem of removing the broker from the equation, allowing traders to trade, without any intervention. The main problem of traders not being able to make money that remained unaddressed. That's where Phoenix came into the mix. So what has happened is it's possible now for you to actually become, to take the other side of the trade, to actually become the market maker using smart contracts. The company that started all of this, it's actually a New York based. It's US based. It's called Uniswap. They are the world's largest decentralized exchange. Billions of liquidity is flowing through there every day. But the beauty is they have democratized this. And they allow you to actually become a liquidity provider so that traders around the world can buy Bitcoin and Ethereum and USDC directly from you. But you don't know they're buying it from you. You're literally interacting with a smart contract. The process is complex. What I've described to you, I've summarized it. But for you to actually do this, to get to grips with what it means to actually contributing liquidity, setting ranges, deciding if it's going to be asymmetric or non symmetric, all of these things. That's what Phoenix takes care of. So for the retail retail investor, we are basically simplifying the whole process. What does that mean? Basically, the retail investor does not have to work anymore to speculate, to do market research, to do fundamental analysis, technical analysis, learn about companies, you know, learn about the underlying currencies, if they're trading currencies or bonds. It's a good thing to know, for example, we do have that knowledge on board given our backgrounds, but it's not something we expect investors to know, who are, who just want to make money on the side as a passive income. And so this is as you were we were discussing before the podcast started. You mentioned, you know, how are the users doing? The good news is we launched this last year in April or May after two years of research and development, of course, and all the users that have joined, they've made money. They are market makers. They are not buying, for example, Tesla shares or they're not buying the euro versus the US dollar with the view to sell it later at a higher gain. That onus to to get that research and get it right is not on them anymore. All they do is they provide liquidity for other traders to buy and sell and for doing that, for providing that liquidity. They basically get a small fee. And from that fee, Phoenix takes a cut. The rest goes to them effectively. So basically we're democratizing, through smart contracts, the ability for users to make passive income by becoming market makers. And that technology hasn't existed so far. Now, obviously we'll get into a bit more in detail, but it's not like one is earning sort of, treasury yield type of returns 2%, 3%, 4%. If it was that we wouldn't be doing it. It wouldn't be exciting, right? Although it is a new source of, new revenue source of investors to make money passively. What makes this exciting is the rate of return you can earn adjusted for risk. So if you look at this from a risk adjusted return standpoint, That's where Phoenix really stands out relative to other ways of making money in blockchain, but also tradfi (traditional finance). We can talk a little bit more about the returns later and the risk if you'd like, but I can also go over them now.
Craig Asano: That's totally up to you. I was just looking at the outline. I think we've got the next 45 minutes is all dedicated right to this conversation and the Phoenix app. Yeah, maybe it's a good time. Let's talk a little bit about the risk and the reward and how it compares for the benefit of let's say retail investor that may not have had that much exposure to crypto investing, and maybe as you sort of alluded to earlier, that they're used to more trading. They might not even want to be involved with Self-custody. They may might be trading on an exchange. So how does how do the yields compare? And the word complexity. Let's try to simplify it for anyone that might want to learn what it's about and what it really will mean to them in their own portfolio.
Kay Khemani: Okay good question. So firstly, in terms of the returns, we have three classes of pools. Basically when you join the Phoenix app, which of course is free, I mean you don't get charged for sign up, you just sign up and we ask you to read all the information in the app. But of course, our team can also advise you. Now you have three pools. One is for the very low risk investors. For the category you just mentioned, the people that are completely new to the blockchain, for example. And let's say they have $100 to invest, right? Because that's the minimum amount that one can get in with. And basically at that point we would say, okay, you should go for the lowest risk option. That pool is called buffer. And that's called buffer because it's there to buffer the movements in the prices of the currencies that you provide liquidity in. So if you're providing liquidity as a market maker in Phoenix, you're not doing anything. It's all Phoenix is taking care of that for you. But what we're basically doing is that the bulk of your capital, the $100 that you put on the liquidity curve by using Phoenix, almost 80% of that is in US dollars. So the bulk of that is in a fixed, stable currency, and then 10%, for example, would be in Bitcoin and the rest would be in Ethereum. That's just an example. What that means for you as a liquidity provider is that because the bulk of your allocation. Is in a stable coin, a US dollar, if you will, the fluctuation, the value of your inventory. As a liquidity provider is going to be very minimal. If 80% of your capital is not in those coins, you'll still make money because you'll be selling Bitcoin and Ethereum to people that want to buy it from you. So you get a small cut, but you'll also be selling some of your dollars for people that want to buy dollars from you. And in the blockchain world, dollars are represented by very regulated stablecoins known as USDC. You may have heard of them. They're planning an IPO soon as well. They're based in the US as well regulated billion dollar project. So what makes this exciting is this low risk pool you'll only earn around 7 to 10. Right now it's doing around 11%. 7% to 11% a year in yields. Now when I say a year that's the annual percentage yield. That's not compounded. You can of course compound that at the frequency you like. But that's approximately the yield you earn. And that tends to beat. It's approximately in line with what stock markets will earn you over time. That kind of traditional 8 to 10% a year in over time. And it's well ahead of real estate and certain other traditional investments. And it also beats inflation now as well. Considering inflation has come down, that's 7% to 11%. But it's not that exciting. But of course it's also very low risk. What I mean by this. Just to give you an example, if Bitcoin, for example, fell by 20%, which can happen, the value of your portfolio will drop by approximately 2%. So that's a kind of acceptable risk, I would say, for someone who is new. Now if you want to move up the risk curve. So let's say you spent six months in Phoenix. You had $100 invested in the system and you said, okay, I like what I see. I want to expand my position a little bit. Then you can upgrade or you can move your position to the Cruise or the Ignite pools, which are medium and high risk, respectively. And all that means is that we have changed the allocation of how we're parking your capital on the liquidity curve. So instead of 80% in USD, it'll just be 50% or 40%, and the rest will be in the other top decentralized currencies. You as a result, will earn more as a liquidity provider. The fees there range for for the medium risk. They're approximately 12% to, I would say 15%, 16% for the medium pool, and for the high risk pool, it's approximately 20% to 30%. So that's you're really beating the markets there. And this is of course a real time. So that's two really important points I'd like to make is regardless of which pool you go inside, your capital is never tied up. You know, that's something we really want to stress is you're not investing in a hedge fund. You're not investing in a project that will yield, let's say, over five years you'll get your capital back and you're tied in. You have lock ups - no. Your capital is literally parked on the decentralized liquidity curve, and anytime you want to withdraw it, you just click the withdraw button, it gets withdrawn, it's sent back to your address. That's the most important thing. The same thing is with your fees. Your fees collect in real time every second or approximately every 5s-10s someone is buying or selling a digital asset on major exchanges like Uniswap. You're just getting a part of that action. And when that happens, you see your fee increase in your app. So it's all very transparent. It's all backed with on chain data. And that's basically the risk, if you will, in the system. There is there are no existential risks. So to put it, for example, if you are trading with a, I won't say a bucket shop unless you're trading at a broker and that broker goes under for whatever reason. We saw that with some bankruptcies, historically as well. You're only protected by the amount that by law is insured. So typically that's $75,000 in the US. It can be up to 100K in Europe, similar amounts if the broker is regulated. Here there is no broker but your money is lying on a decentralized smart contract that has had literally close to $30-$40 billion flow through it in the last 2 or 3 years, extremely heavily audited and never hacked, and one of the top industry teams behind it, the Uniswap team. So it's it's very, very, very industrial strength when it comes to security in that respect. So, we there are risks but they're limited broadly speaking to to price action basically and which pool you get into if that makes sense.
Craig Asano: Yeah, absolutely. I mean, as an investor, you want to understand where your money's going and you want to understand what those risks are. And you know, I'm going to be the devil's advocate here and try to be a retail investor that has some questions. I mean, one of the obvious questions would be is cases like LUNA. Or in the news we've had a lot of unusual risks for investors depending on their appetite. Market crashes and this extreme volatility and how the ecosystem has managed to rally back has been quite remarkable. But there's a lot of lessons there. I mean, maybe you can talk about your perspective and how that might impact or what are your thoughts with the LUNA crash and the fallout and what its impact might have been to investors then and you know, what's happening today and maybe let's take it a little...what do you envision how that's going to play out.
Kay Khemani: Fantastic question. So LUNA, basically changed the game for the worse. Luna happened in the first, approximately, if I remember from memory, early 2022. Maybe a few months before that but Do Kwon, who was the founder, who's currently a fugitive, and he's going to be tried by the SEC soon. You had a bunch of kids from higher education places who raised a lot of capital in the previous bull run. And this guy was was one of them. And he he was a fast talker, and he created an algorithmic stablecoin. All that is, is you're you may have heard of USDC, you may have heard of USDT. They are the two biggest stablecoin multi-billion projects. And if people want to move out of bitcoin, out of Ethereum into stable currencies, they basically sell the former and they get into the latter. It's been a mainstay of crypto for for a long time. And right now the market leader is USDC. This kid basically he created the Terra organization, and Terra had a bit of a run, he raised money and they basically created this narrative that algorithmic stablecoins is the way forward. You don't need to have a fiat currency. For example, fiat currency used to be backed by gold until it was depegged. They basically said that stablecoins and crypto do not need to be backed by anything but a very smart algorithm, basically. So no treasury. And that was the first red flag, but because they showed fancy math papers and, you know, people got a bit excited and it was the bubble, right? It was we were in the middle of the 2021, the second bull run pandemic had happened. A lot of helicopter money going around. People were really excited. They said, you know what? This stablecoin is offering us 20% a year yield 20%. I'm earning in cash, and I can withdraw at any time, and there's no risk to my capital. So in Phoenix, for example, I told you, in the highest risk pool, 20% to 30% a year is what you can earn. But there is risk to your your capital. The inventory value will fluctuate. What Terra said was there's no risk to the capital, and this peg will always remain because our algorithms are smart, and if there's ever a slight depegging to the dollar will go back up. Now, the fact of the matter is, on that narrative, they raised a billion plus or something. A lot of investors from Asia as well went in there. They raised a billion plus. I think it was even 2 billion, and they had all this liquidity to throw at the coin, if there ever was a depegging incident. Lo and behold, that depegging incident happened. And although they could defend that for a certain bit, once you get a depeg, when you get a stablecoin that depegs to the dollar, a lot of fear percolates in the market and they weren't able to manage that. And then people started dumping too much. And then the Ponzi just just completely exploded. Now here's the thing in answer to your question. What was the problem with with Terra? The red flags were there for the reasons I mentioned, but the biggest problem was there was no real source of revenue. How were they generated? They told you, Craig, come and put your capital with us. Buy this, this LUNA coin, the stablecoin, and you will get 20% a year and you get paid in a stablecoin. That sounds great to you, especially if you can withdraw your capital but you have to ask yourself this. How are they making that 20%? It turns out that 20% your money was being parked in other circular DeFi. You know, decentralized finance. There was a lot of DeFi schemes at that point, offering 100% return, 150% return by WizKids, quote unquote WizKids, who are all now in jail or disappeared. And so your money was basically being recycled in other ponzis. And it was horrible. It was really horrible because it worked for a bit, so people got excited. They overgeared, you know, at one point our firm had put in almost $70K - $80K into it. We lost $30K on the Terra collapse. We pulled out the moment the depeg happened. Other people lost their life savings because they thought the algorithm would save them. The problem is there was never a clearly defined source of revenue. Here, and by the way, that's not just just Terra Luna. This is almost all staking programs and crypto. The source of revenue isn't there. It just isn't there. It's just hopium. More money coming in to buy the project. So the project can use some of that treasury to pay you. It's robbing Paul to pay Peter. And this still continues. And projects like this will lure in investors and say, oh, you're earning this much in traditional finance, 5% to 10%. We can earn you 60%, 70% a year or 100%. So you put your capital there. You know, we're like moths to a fire, to a light. We get excited by these returns, but they never last. With Phoenix, it's a completely different story because we've told you the source of revenue. They are audited. There are billions of buying and selling happening every day on Uniswap, on some of the leading decentralized exchanges and centralized exchanges. In a centralized exchange like Kraken or Gemini or Coinbase. You can't become a market maker readily, but you can in the decentralized markets, and that's what Phoenix does. And and you can see how your revenues are generated trade by trade. So it's a completely different ball game. But in answer to your final question on that, what it did to investors. It made investors much more distrusting, which I think is good in a way because they're much more protective of their capital. Like you saw the ETFs being approved. The Bitcoin hasn't gone up that much, you know, and it's actually gone down. And that was much to the chagrin of many people and also surprise. And I think it's that's good because I think now you will start to see more stable programs coming through. And by the way, it wasn't just Terra Luna, it was also Celsius. They were offering you 5%, 6%, 7%, 8% on your money. You put down $10,000 or $50,000, you get a bit more. They were investing in stuff like Terra, they were investing in other stuff. So it was all circular. There was no real source of of revenue, no tangible source of revenue.
Craig Asano: So what I mean, as an investor, what advice would you provide retail investors or anyone who's dabbling in crypto and some of these yield farming staking programs. How do they identify red flag. What are the top red flags to look out for? And on top of that, if we can dig in a little bit in terms of the Phoenix app and how they're mitigating some of the overall risk and the overall risk portfolio. I think that would go a long way to, building that confidence and understanding. It's really about education.
Kay Khemani: Absolutely. So the. And that some of the main pitfalls, the way you can spot a scam pretty quickly is firstly, just go to the team section. I know this is this sounds so bare bones, but it actually is one of the best way to weed out a scam or a potential disaster. It doesn't necessarily have to be a scam in the traditional sense. The founders can be well-meaning, but the question is where is the culpability? Right? Where are they appearing with Craig on camera, showing their faces, their location, their CV on LinkedIn and stuff? You won't find this in 90% of DeFi projects today. Yeah, they may offer you 50% or 100% yields, but you don't see the team. You don't see the team because most of the teams are breaking securities laws by offering these type of things without accreditation. They're not doing accreditation checks, they're not doing KYC, they're doing nothing right. And most of them are in America or China. It's it's one of the two. And so they're basically on the run because they know eventually when the party stops, they're sitting with their treasury, they're going to rug and take that money or they're just going to abandon the project which ultimately for you, the investor results in a loss, total loss of project value. So that's the first sign. Please make sure that if you are getting very excited by a project and you see that they don't have a team or you have guys called Big Flipper, if that's the name of the founder or,iPhone Red is the name of the co-founder, then only invest 1% of your capital. Enjoy. Hope that that does 100 x but never ever bet your house on it or anything like that. The second thing, of course, is it should be a very easy question to be answered but you'll be surprised that once you enter DeFi, how complex it becomes. Like I've explained to you, basically how Phoenix makes money for you today. And I understand that some of the terms were probably new, but if your users rewatch this, it'll make sense. There's market makers that make a market for traders. Market makers make a lot of the money. Traders generally lose money. If you become the market maker, you have way less risk and you make money. That's what Phoenix does for you. So along with those two checks, basically first to find out who the team is. The second of all, to find out what the source of revenue is. Once you've done that, you're already dealing with a good project, right? If you have the answers you need, then it's all about capital allocation. And that's, that's just common sense advice that you can you can avoid most pitfalls by doing that. The final one that I would alert investors about is the level of returns that the project is promising. So typically if you go to Phoenix, the website today, you will see mention of the type of returns in terms of qualitative statements like double digit and all that. But you will never see crazy statements like make 50% a week or 20% a month, or 100% a year or anything, which sounds too good to be true. It's very easy, especially in today's cost of living crisis. We live in a very difficult period, especially for the younger generation. So you you have a bit of money, you're like, okay, let me bet the house on it. Maybe this is my one shot thing. It's not. Your money, you're going to lose money. You're 99% of the time you're going to lose money. So make sure that the returns make sense to you. So when you're entering the blockchain space, you are taking on the risk of leaving traditional finance and the protections that that part of the financial sector affords you. When you move into blockchain, it's a bit of a black box. And so these, these sort of checks that I've, I've told you today, if you do those, you'll fare well. And just note that when you're entering this higher risk space, you should demand higher returns. If there's some project in the blockchain that's saying you can earn 5% - 6% a year. No, that's not interesting because you can earn that in traditional finance. Right. With lower risk. So approximately the returns that Phoenix provides are realistic as long as you can verify the source of revenues.
Craig Asano: Perfect. So, you know, you were talking about as one of the strategies and 90% of the companies offering similar services or sort of investing orientated services in crypto who don't have their team, up on their website, who...it's very difficult to ascertain any information on them. So maybe you can just tell us a little bit about who's involved with the Phoenix app and how it was built. As far as I can tell, it was incubated out of Hatchworks where you're full time there.
Kay Khemani: Yeah. No, it's good. So Hatchworks is a technical advisor. We absolutely contributed manpower to it. The Phoenix Company itself is not part of Hatchworks. It's not in the Hatchworks group. It's a separate entity, separate shareholder structure, board structure. And in terms of the team, if you go to the team section, you will see the tech technical leads there. We have a testing team as well. Who does the user assisted testing on top. And of course, we have a legal advisor that takes care of the licenses and all those things. We have a roadmap on the regulation side as well. So the whole team can be found on the Phoenix website. I'm of course, there as well. If you also look at each member of the team, very important, you also see their career history. It's on LinkedIn. You be able to verify all those statements. We've been around in blockchain for six years now. So if you just Google us, you'll find out information about us.
Craig Asano: Yeah, well, no, it's just good to to know. And as you're saying, when folks like yourself are showing up and doing podcasts, you're living and breathing, you've been fascinated with this space and building this. Really, it's a new opportunity for for investors. One of the things since we're talking about all about investing in crypto. This is sort of a news related item that took the entire industry by storm and grabbed their attention. This is about the approvals in the US with the BTC ETFs. Can you, which have now since been been approved and it's had some impact on the market. And if you can just provide your thoughts on, what you think that will do for the market and that sort of use case and sort of where do you see it? How will that impact the Phoenix app and what you're doing, if anything at all?
Kay Khemani: Yeah, no, that's a great question. So the approval of the ETFs is of the ETFs is a very important. It's a seminal moment in crypto history and the blockchain industry because it legitimizes to a large extent an asset class so far that has been associated, as you know, with criminals, drugs, money laundering, racketeering and all that stuff. Cash has as well over time but Bitcoin gets a negative rap. So the fact that Blackrock, Fidelity and some of the biggest financial powerhouses in this world are now have backed it and I won't say twisted the SEC's arms to go ahead and approve it. You saw the SEC chairperson's statement as well. He basically wrote that although I have approved the ETFs, I don't actually condone Bitcoin yet myself. That just goes to show how much friction there was to get these out there because the younger generation absolutely wants to get into the blockchain. Kids today are not going to be like, oh, can I can you please find me a retirement account earning me 4%? I really want to get into real estate earning me 2% in Nevada or something like that. The world has changed. It's all about digital currencies, and that's why these big powerhouses know that in order to retain their competitive edge, they have to offer those products both to retail investors, but also to institutions and family offices and what have you. So, they did that and a lot of lobbying happened, and the world's most powerful banks were behind it. I know that Goldman Sachs and JP Morgan have applied to be APs, Authorized Placement agents. And what the ETF basically does is so let's say Vanguard or let's say Fidelity or Goldman or whatever, they launch an ETF. That's just the technical side of things. What that ETF allows to do is to raise funds by big money, and some of the marketing that goes behind this, some of the funds on the asset management fees they collect that is spent on marketing and spreading the word around the world. And these organizations have huge networks to informing the public that it is actually okay. Yes, it's a high volatility asset class, but it is safe if you invest through it in the right way. And that's the ETF vehicle that allows the common person. They're not forced to go to some crypto exchange in China or something or wherever. Give their KYC details, buy Bitcoin and hold it in some, self-custody wallet and lose the keys to them. If you do it through an ETF, you have protections in place. So in answer to your question, it's very good because it basically increases the perceived safety of investing in that asset and also the sector, as a whole. What it means for Phoenix is more flows. So the good news is, and I didn't mention this too much, but as a market maker in Phoenix, what you want is volumes. You want news. You you're earning fees but the markets are rising or falling, which is very unique. But what you want is you want basically, more news. The more news, the more volumes. With the ETFs, volumes have gone through the roof. So going into the ETF. So I would say the months of July, August, September, October, November of last year, the volumes were picking up because we were coming out of the bear market. But generally speaking, the annual percentage yield you were earning on the highest pool was around around 16%, 17%. On some good days, maybe 20%-23%. Now it's moved up structurally to 30% on the weekends. That's another thing, is the Phoenix app you earn on the weekends as well. Because blockchain markets don't close on Fridays. They continue to make money on Saturdays and Sundays. Traders around the world can trade. They're not dependent on brokers. So when you see a tick up in these APYs in the system, you know that there's something happening, and now it's just the volumes have gone through the roof after the ETFs. And we will structurally continue to climb as well because we're just at the at the tipping point.
Craig Asano: So getting getting back into the the model and how the Phoenix app can work for investors. One of the things you mentioned earlier in the podcast is they have full access to their own invested capital. Is it possible this is just a general question that popped into my head here to take risk off the table in part, so not the full amount, but have a program say, I'd like to take off, 5% of the gains every month as we go forward through this passive investing program. Is that a feature that if it's not there today, is it something that you think will be introduced at Phoenix?
Kay Khemani: We so we listen to to users and if users tell us that we would love to have either an auto-compounding, we received that request a lot auto-compounding at a specific frequency. So as you said, every 5% every month, maybe reinvest it back, take the rest out or take it out, send it back to my wallet, de-risk. We don't have these features, coded into Phoenix code at the moment, but the auto-compounding is something we definitely have to implement because so many users have requested it. So the answer is yes. It's not a feature that currently exists. What we do, however, urge users to do is to withdraw their fees every week. Just, collects at the end of the week. It's collecting in real time, and then on Sunday, whenever you have 20 minutes, hit the withdrawal, take your fees out, and pay yourself. Right. And so, the answer is yes. We want to code that in. We definitely want to build that auto-compounding feature in. One small thing to note is when you are moving capital to the liquidity pool, to the, to the wider decentralized smart contract,there are gas fees. I won't get too much into it, but in blockchain, the whole blockchain is maintained...the integrity of the blockchain, whether it's the Bitcoin blockchain, whether it's the Ethereum blockchain, is maintained by miners around the world. You they're called node runners. And you can run a miner, a server as well, which helps people process transactions. And you get paid in Ethereum, for example. Or if you're a Bitcoin miner, you get paid in Bitcoin. That's an entire industry by itself. Now the system has to compensate you, the miners fee, as a thank you for providing your server infrastructure to help process transactions. What that basically means is every time we are committing your capital on the curve, or when you're de-installing the capital, when you're saying, okay, I'm done with the program, I want to take my money out. There's a gas fee to pay. Right. So that gas fee is something Phoenix pays for you. We don't charge you that. Just let you know that. So that's something that we take from our management fees. We pay that. But it is worth noting that this whole process gas fees can vary within the day, and sometimes they can skyrocket when the network is busy. And so this is why we advise users to do this, not every single day, but to maybe do it every week or something like that. So even the compounding, you're going back to your 5%. We would say that it should happen at a frequency of maybe a week or two weeks or a month or something like that, rather than real time compounding. Because the system, the underlying system, is strong, the integrity of these chains is very strong. The very decentralized. Now having been there for almost a decade. But they are still somewhat clunky when it comes to gas fees.
Craig Asano: Yeah, absolutely. I've I've often read a story about those gas fees and it's a lot more than a coffee. So you're you're...
Kay Khemani: You can pay. You can end up paying. I mean, it's crazy if you're not careful, if you're trying to send $100 to somebody or receive, you can actually end up paying $100 to send $100 if you're not careful. But you can also end up paying just a dollar or even less. You just have to time that, right?
Craig Asano: Absolutely. So, you know, you bring up a good point about sort of the differentiation. How how does the Phoenix app, sort of compare and contrast with other staking platforms, maybe it's something to do on the product feature side or it's how it's structured. Like this example, you're covering the gas fees, which I think can be quite significant. It's this is one less fee that can compound and grow and get you over time. So how are you different? How is the Phoenix app different from other staking platforms?
Kay Khemani: Yeah that's a good good point. So another thing is that when you go to a traditional staking app and I won't get into the whole, you know, we're doxed people know who we are and all those things that we don't have those red flags. I mean, that's a given that Phoenix operates in a much more aboveboard way but from a feature standpoint, yes, the fees thing is one thing that you mentioned. And the second thing is when you're trying to stick and you go to another platform that claims to give you staking-based revenues, what do you do then? You have to connect your MetaMask or your decentralized wallet to that specific network. Hope that you don't get hacked. And that's a serious risk. These days. Your own web browser can be compromised. And then after that, you have to monitor the pools, how much volume is going through certain pools, and that typically these other programs have hundreds of pools to choose from. So it's information overload. Funny enough, the APYs, what you can earn and the risk is lower than Phoenix. So we actually have industry leading APYs as well. That's after management fees. So that's after the fees that the system takes. So we there's that and then once you decide on a pool you have to decide what ranges you as a liquidity provider want to provide liquidity in. If you want to provide liquidity across the entire spectrum. So for Ethereum prices of up to 10,000 all the way down to $100, you can do that, but you're not going to make much fees. If you go to concentric. If you go to concentrated, you're going to get stopped out, right? So you have to have fundamental analysis knowledge. If you understand what the sector is going, you have to also understand technical analysis. And given our backgrounds, we are all traders. We are all traders with backgrounds in high finance. We understand these things really well and so that you don't have to. So if you go to these competing platforms, you'll get lost. That's what we're effectively saying. We also urge users to do that. If you're entering the space, look at some of the platforms. We can actually if you ask us for tips, I'll be happy to tell your users which are competing platforms to go and test those out, and you'll see it's a it's a complete nightmare once you're in there. You don't know what's actually going on. With Phoenix you're sending money to the Phoenix app. The app money spent is immediately located on the on the liquidity curve, and you start earning and you can withdraw your capital. So we really dumb things down.
Craig Asano: So it's immediate once, once the capital is there and into the Phoenix app. The program will algorithmically, participate that portion as a market maker and one one thing I saw on the website was around the ability to reduce risk through hedging or hedging capital risk. Can you just explain how that would work for an investor in a simple way. Considering that let's say they might be a retail investor, they they don't want to be overwhelmed with all the pools but they want to make sure that the team is there, they have confidence in the technology, they they understand the fee structure, how they can get their money in and and out. What about the the hedging or other ways that they can reduce their risk through through the Phoenix app?
Kay Khemani: Okay. So the the risk that you have as a user in Phoenix is that the prices of Bitcoin and Ethereum tank. So they fall by 50% - 60%. Okay. And the market enters a bear. And although that risk is reducing now after ETFs because the products are becoming more and more institutionalized. And so you have checks and balances in place to stop those type of gyrations. But let's say that happens. You want to make sure that you have the least exposure to those currencies when that drop happens. So the simplest way to do it is to go into buffer, which is the lowest risk pool. I gave you an example of Bitcoin fell by 20%. Your capital would drop by 1% to 2%. So it's already very low risk if you if you want to have completely like no downside risk at all, that's trickier. That's a bit more trickier and it's not something we would advise to a retail investor because that involves shorting. Specifically that involves taking out a put option contract and basically paying the premiums to the option underwriter but then your downside risk is a liquidity providers is completely hedged. And also if the price shoots up, you don't lose out on that. If you if you did a naked short on Ethereum or Bitcoin, the problem with you then is okay if Ethereum Bitcoin fall great. You made you make money on that short but you will you will take a big hit if they rise, right. There's no way to hedge out a horizon. So although I don't want to get into put option and option underwriting here for the more institutional sophisticated investors, those instruments do do exist but for the retail investor, it's not something we would advise. What we would basically say is go into buffer, which is a very, very low risk pool, an extremely low risk pool, although you don't earn much money, you know, 7% to 10%, maybe 11% a year. Your your downside is extremely limited.
Craig Asano: Yeah. Okay. Great. Thanks. Thanks for illuminating on that. What about leverage? Often in the crypto investing space, you see advertisements, you know, 200 x leverage, 500%, in all of these things could look like opportunities, but what what are your thoughts? And do you offer leverage at the Phoenix app?
Kay Khemani: Very good question. No, we we hate leverage. So we're we're low risk. We don't like leverage. Uh, you. If you are an accredited investor, you understand leverage and you have access to credit facilities and you want to go in big on Phoenix and we can get our legal team in touch with yours, and we can have a discussion about how such a pool would look for you, so that your capital is safe and generates and pays off your interest on the on the leverage. But no way would we ever recommend leverage or for anyone to take out a loan to participate in Phoenix. Although the Phoenix is a safely engineered product, the downsides are pretty well protected, loans and crypto don't mesh. I would never recommend that. Now, if I personally, because I'm an accredited investor, I'm a quote unquote, I fall under the category of sophisticated investor. I do like where Bitcoin is headed and I wish I had more capital. And I have. Our company has thought about it accessing leverage to go long Bitcoin like Michael Saylor did. Right. And his bet has paid off fantastically for MicroStrategy. So but for Phoenix no, the answer is no. In general, leverage is bad in the space because, you know, we discussed that quotient 85% 90% of traders lose money. Those that are using leverage, 98% of traders blow their accounts. So I would not advise taking out leverage. For Phoenix, you don't need leverage. You really don't need leverage. You don't. On that point, I'd like to like to say that the good news is we have reduced the minimums. Because we want to also bring Phoenix to emerging markets. It used to be $1,000 to get into these pools. Now it's $100.
Craig Asano: Minimum $100 investment for.
Kay Khemani: Yes, exactly.
Craig Asano: Got it. Okay. Well, that's good to know. Let's switch gears a little bit about, maybe the industry level on regulation. And, you know, the DeFi space is, has been a hot sector. An area of great interest for a lot of investors, as well as all the builders and innovators. It's really about, well there's many facets to it but I see that direct to consumer investments and disintermediating some of the brokers that are involved in the process. But from a regulatory perspective what are your thoughts as governments, securities regulators try to wrap their head around striking the balance? I'll use that word, for on the innovation side and ensure that there's not a flow out of capital from their country. They're still providing investors in their countries these great opportunities. But we're living in a global, world where investors can come from all walks of life, all around the globe. What do you envision? You know, well, maybe you can talk about the current state of regulation for DeFi today. And where do you see it maybe moving, in the near future?
Kay Khemani: It's a good question. It's a fantastic question. The thing is in DeFi, DeFi is a niche inside crypto. It's a specific niche and DeFi, as you rightly said, is disintermediating the powers that be effectively. In theory, in a world that was run purely on DeFi, you would not need your broker. You know, you would not need JPMorgan Chase to buy shares of Tesla. That's the truth. So it challenges the very essence of what the big banks are built on. They're trading revenues. So you're basically taking them on. So to regulate DeFi in my opinion, is going to be a very, very, very big hurdle. If there's going to be any sort of DeFi, it'll be happening between banks, if you ask me, because they want to protect what's theirs. And so I think ultimately like it or hate it, regulators are very much influenced by big bankers and lobbies, as you see in the US, right? Washington, DC is pretty much a very well financed by banks and all this thing. You saw how much pressure Blackrock and these big guns put on the SEC to approve the ETF. So it's very unlikely that these regulatory agencies and in answer to question today they haven't sided with Joe Public over the banks. So and that's how I think it will continue. I don't think I'm not actually a DeFi enthusiast myself. I know the industry pretty well. I can tell you for the reasons I mentioned now, but also the quality of DeFi projects are so bad that it gives regulators a lot of ammunition to basically say, oh, well, look at look at LUNA, right? Look at this company. Look at this. We can't the only way we can regulate this is try and shut it down, because it's just garbage. So there are good concepts in DeFi. Phoenix is an example of DeFi. Uniswap is an example. Defi where you can become a liquidity provider. You don't have to go to or trade against a broker. You can make money in a new way. But these kind of dark projects, black box projects where like Luna, where you don't know what you're earning from where and stuff they end up collapsing. It's difficult to regulate those. Traditional regulation, just to end on a more positive note when it comes it is moving forward. So there's regulatory arbitrage. It's a great point that you brought up because what's happening is if you're in the US and this ETF approval didn't go through, capital would flow out. It would go out to other jurisdictions that allow that are more accommodative for blockchain regulation, like Singapore, like Switzerland, like even the UK. Now after the ETF approval, the Americans have kind of gotten the upper hand. Again. You know, almost 50%, 60% of capital flows for blockchain are still in the US. If they lose that to other countries that's a massive competitive disadvantage. So right now regulation is moving forward. Everyone's looking forward to see what America i going to do next. And slowly you start to see the right moves also in Europe. For example, Germany is quite pro bitcoin which which may surprise you. The UK claims to want to be the market leader, but they've been quite slow in approving ETFs and all these things. But Switzerland has been ahead of the curve. So it's it's moving forward. Hong Kong is moving forward as well. China is a bit more draconian on that front. So it's a bit of a I would say it's a pop mark progress.
Craig Asano: Yeah, it seems we're hitting a tipping point with more institutional adoption and regulators and governments worldwide, whether they are on this side of the fence or that side of the fence, they're recognizing the value of the technologies. That's a good segue into more of the innovation type question. I know on a lot of our podcasts, a popular question is around the impact of artificial intelligence and what that type of intelligence combined with, say, a retail investor or any type of investor. Do you see AI having a big impact into sort of your business and DeFi and in particular from an investing perspective?
Kay Khemani: I would say, AI is very exciting from a trader's perspective because we all in an ideal world, we don't want to put the effort to learn to trade the markets. We'd ideally like to have a little robot that can trade the markets more efficiently and make money for us, ideally on a monthly basis for life. Right? That's what we want but it's very difficult to get that right. And I think in answer to your question now with ChatGPT, we need to see the capabilities of how well I can ingest the myriad of data that it needs to do both qualitative and quantitative data that the internet spews out, in order to make qualified investment decisions that can actually make us sustainable return. We don't know right now how successful it is. I can tell you there is no retail AI robot that makes money. Even after ChatGPT, you know it's been out for almost one a year and a half. There is no retail robot that makes money that's truly sentient. There might be neuro, what you say, NLP models that are repurposed by major investment banks and hedge funds, quant funds that can make these guys money but we retail people, we don't have access to that technology. So I think, long story short, in order for brokers to exist, traders need to lose money, unfortunately. That is how the markets are kind of structured, wired right now. With Phoenix it's different because there you are the market. You are the broker. Effectively you're just making you're selling Bitcoin and Ethereum, passively but with your traditional model, I think AI challenges that as well, and I don't think the big banks would want to see you or me get our hands on that. But that's just my view.
Craig Asano: Yeah. It's such an exciting time around the world. I mean AI is really hungry for for data, and that is a processing and ingesting that data is allowing the personalization of our lives. You know, who wouldn't want an investing robot with the guards and rails to protect us but certainly envision these types of market making programs and investment models that continue to evolve through innovation in the crypto space to continue forward. So, I guess, as we sort of move towards the end of the podcast, we'd love to hear your thoughts. What do you think the, the whole crypto investing space, the DeFi space, the model and the area that you're focused on with the Phoenix app will look like in in five years, and coupled with that, what sort of... Are we missing anything in the discussion? We'd love to give you an opportunity to share a story or something that you feel would would appeal to investors or anyone that might have concerns. It's really, you know, the ball's in your court to help wrap this up.
Kay Khemani: No. Sure. Thanks, Craig. So I would say in answer to your question, if you take a five year view on where the space is headed after the ETFs have been approved, this, as I said, was a seminal moment. It will allow more information, more correct information and safeguards for new investors to be put into place so they can access blockchain technology safely and make money. More importantly, make money. And AI right now is broadly used in blockchain as a buzzword by projects to lure you in basically. AI based staking and all that. It's all nonsense. It's another red flag for me. Five years from now, I think DeFi would have progressed, I think would have been more regulated. I think the returns would drop as well as more realness enters in, which is important. And I think it'll be it'll be like any other asset class eventually. All the various cryptos and stuff. What I would do right now would urge all your users that have not done so is whether they like to join Phoenix or not. That's totally, you know, their prerogative. We're very happy to to receive them. But more importantly, we're sitting at a very important time in the history of investing. You look back 20 years ago, you look at what Microsoft did, sorry, 40 years ago, 30, 40 years ago. Apple. What those stocks were trading at back in the late 70s, the late 80s, as you know. And you look at that amazing chart and you're like, wow, had I invested back then. Right. How have we not all done that? And what I would ask people to do is to spend some time, like we did in 2016, which was life changingly important for us as a project to enter the blockchain with the smart contract to get rid of brokers. And that was a very big project for us. That kind of gave us the wings to create future projects. I would ask all of your users who have not done that already to really get clued up on what is happening with Bitcoin and blockchain. Specifically, what this what the ETFs mean for the access by the public to this technology. In short, I mean, again, I don't like to give investment advice, but you see what's happening to your cash in the bank. Inflation risks of bank failures, all these things. And then you see of course, a potential competing mechanism for cash, the one that does not deflate, one that is truly that you can own, as yours cannot be confiscated by governments. It's important to see what these ETFs mean for the space and also prices for Bitcoin price Ethereum over the next 5 to 10 years. When planning your your investments because these opportunities may not come back. So that's what I would say. And once you once you look at bitcoin Ethereum you learn about those. Only then I would say is you can kind of graduate to the other more kind of riskier niches in blockchain like DeFi, like NFTs and all of that.
Craig Asano: Well, you heard it folks. Not advice. Not investment advice, but from a seasoned, high finance, investor, who's been involved with incubating lots of projects and dedicated to the Phoenix app. I think it's exciting times, especially with the approval of the ETFs, potentially Ethereum ETFs. All these new technologies in the market today and they're only going to continue, as Kay was talking about on the ground floor. If you get involved, get educated, ask questions. But by all means you should, get in touch with with Kay. On that one, we would just say, how do users sign up and maybe how can they they find if anyone has any follow up questions with you, how do they get involved? How do they get in touch with you.
Kay Khemani: Absolutely. So obviously they can contact you, Craig, but if they want to come directly, just go to www.Phoenixapp.io. And there's a range of contact buttons there. Email. Also our telegram community where I'm there as well. Our users. You can chat to our users as well, ask them about their experiences. And you can also sign up to the app. We have a mac approved downloadable app, also PC approved downloadable app, but if you don't like downloading stuff, you can just click on Launch app on our website and you can sign up there as well. What I would advise you is actually, do that and get to know us, get to know the project, monitor the performance for a few months and don't invest now. Just monitor learn what Phoenix is because automated marketing market making is so unique. It's a it's a great source of revenue. But get educated first on it. And when you're ready to take the dive then you can always do that in the future.
Craig Asano: That's good information. Before we really wrap up the podcast, we can't finish it without a rapid fire questions. It's my favourite part of the show. We're just expecting, quick responses and just, you know, everyone. It feels it keeps it personal and interesting. So we're going to close this out with a rapid fire questions. You ready for that?
Kay Khemani: Yeah. Go. Let's go.
Craig Asano: Okay. So um, in a word, how would you describe the future of crypto?
Kay Khemani: Booming.
Craig Asano: What was that?
Kay Khemani: Booming. Booming.
Craig Asano: Booming. That's right. That fair enough. Moving on. What is the number one risk investors should be aware of in DeFi?
Kay Khemani: I would say non-doxxed teams. So teams that don't want to show their faces, that's a number one risk.
Craig Asano: Anyone...No transparency. Basically. No transparency. Hiding under the covers. Okay. Good answer. Next question. What's your personal mantra when it comes to investing in crypto?
Kay Khemani: My personal mantra is don't invest. The first thing to do is you're not going to miss out. The space is headed up in asset prices over time. Do not worry about that. Take your time to research the project, and you can make a lot of money, but you can lose a lot of money as well. So I would say just take that time, that one week or so, of really getting to a project. And very importantly, when you're ready, look at the world if you lost that money, how would that affect you personally? How would that affect your dependents? Your co-dependents? Your future? Your kids? Everything. If you believe that would really put you in a bad place, don't touch this investment. Always only invest money that you can afford to truly lose. And I know people say that, but it's only when they lose the money do they really feel that pinch. So be very, very careful.
Craig Asano: Yup, that's great advice. Don't bet the bank and don't take a second mortgage out. Yeah.
Kay Khemani: No, definitely don't take out second mortgages.
Craig Asano: Next question. Name a recent favorite book or movie that you would recommend to our listeners?
Kay Khemani: A favorite book or movie I've been watching entourage. I don't know if you guys know that watching the re-runs. There's so it's so entertaining. It's a great show. Sure. A lot of you already know it. Uh, my wife keeps up with the more latest Netflix movies and things. I just don't get time but that's what came to mind right now. I've been watching that, so that's great. You would love that.
Craig Asano: That's why you need the robot investor so we can all have more time.
Kay Khemani: Yeah, exactly.
Craig Asano: To watch. I don't know it, but I got Netflix. I'll have to search it.
Kay Khemani: Oh, you love it. You love it. It's really addictive. It's good.
Craig Asano: Perfect.
Craig Asano: So last question before we wrap up officially is what's your favourite go to financial tool or app?
Kay Khemani: Oh, trading view by far. I love trading view. I'm sure you guys all know it. It's just fantastic. It's so well designed. I met the founder a few years ago just on Skype. Very accessible and there was nobody. No one was using it, and today they're a global company. They pretty much I think they have 80% market share. Retail. Really great. Great app for free as well. Of course there's a premium version as well. But it's you can get so much data about charts, analysis, trading strategies, news. Great. It's like a Bloomberg terminal for the retail.
Craig Asano: Yeah. Trading. Trading is good. It's not. Not that expensive. Maybe it's a couple hundred bucks for the pro version and all sorts of bells and whistles and integrations as well. So, with that folks, you heard it. We really want to thank Kay Khemani who has shared his knowledge and expertise. He's involved with incredibly exciting project at the Phoenix app. And, his advice or non advice to investors has been wonderful. Just take it slow, get educated, watch and learn. And if you have questions, connect with folks that are transparent and willing to show their face and be along for this incredible journey. So once again Kay, I want to thank you. You're welcome back anytime. It's been awesome having you here.
Kay Khemani: Thank you for having me. Appreciate it.
Craig Asano: Yeah. Well, you know, come back in a couple of years. We'd love to hear where the Phoenix App is. And if anything interesting comes out of Hatchworks. Get get in touch for us for sure. Other than that, this is the conclusion of episode 61. And I would like to say, if you're new to Fintech Fridays, please check out some of our incredible past episodes. We think you'll be surprised with what you'll find. Uh, we look forward to seeing you next Friday for another episode of Fintech Fridays. Have a good weekend, everyone. Thank you.
Kay Khemani: Thank you.
Outro : you've been listening to Fintech Fridays brought to you by NCFA and partners. Tune in weekly for the latest fintech Friday podcast by subscribing to this channel. The National crowdfunding and Fintech Association of Canada is a non-profit actively engaged with social and investment fintech sectors around the globe and provide education research industry stewardship services and networking opportunities to thousands of members and subscribers. For more information please visit ncfacanada.org.
End of Podcast
Subscribe and Listen to more Fintech Fridays podcasts here
Join NCFA's weekly Podcast series 'FINTECH FRIDAYS' where we sit down with the incredible people in the Fintech community and talk about leading fintech products innovations developments and challenges!
Interested in getting involved as a partner or participant? info@ncfacanada.org
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
| | |
Support NCFA by Following us on Twitter!Follow @NCFACanada |
