A letter to the IPO Village Sponsors & Team from IPO Village

Dear friends,

It is a couple of months into this exciting and revolutionary endeavor and its about time we give credit where credit is due. A little back story for those who are just catching up.

IPO Village was conceptualized and launched by a core group of like minded professionals, firms and organizations who experienced, what can only be called, a shared epiphany. Social networking on the Internet has finally advanced to the point where it could possibly birth and sustain a brand new asset class… the Class of the Crowd. As our core group was essentially from the world of investment banking, our ideas and solutions came from a public market perspective. For over two decades we all had been involved in, venture capital, IPOs and listing and sustaining early stage companies on U.S. exchanges. Facilitating capital for public offerings the traditional way has always been expensive and is exceedingly difficult. Always left negotiating with savvy investors whose interests do not necessarily align with the companies that we were representing. But that was the process and so it went…

Until… the crowd began to make their sentiment clear, “WHAT ABOUT US?” Why must companies sell their IPOs through middlemen? Why must we buy the IPO stock in the market only after it has changed hands twice and been marked up over 20%? Why can’t the companies sell their IPO stock directly to us, the “average joe” retail investor? Why can’t we buy IPO stock at the pre-IPO prices that the underwriters pay for it? Why do you need the underwriters anyway?

The crowd has spoken.

So that is what we set out to do. Create a not-for-profit public service site to equity crowdfund early stage IPOs. The site would be free. No underwriters or underwriter fess. No brokers or broker’s commissions. Free. Companies with verifiable registered public offerings would be welcome to host their offerings on IPO Village. We would educate the new investor, teach them how to conduct their own due diligence and provide them with relevant, valuable, interesting and entertaining industry content.

We did it! IPO Village launched in July. We announced the appointment of our “Mayor” 2 weeks later. The next week we announced the company that would be the first ever to crowdfund an IPO on the internet. There is still up to two months until the offering will be approved by the SEC and open for investment and already over $1 million (over half the goal) has been pledged via over 500 investors. It really looks like this offering could sell out shortly after accepting investments.

It is amazing and the prospects are overwhelming. However, the point of this post is to acknowledge those that have made it possible. Once again, IPO Village is not-for-profit. That means that all the time and resources have been contributed by all parties at the bare minimum cost. This is a project with a conscience run by supporters that have committed themselves to succeed and that know how to execute.

- To Daniel Hirsch and Simon Erblich of First Line Capital, who had the vision, contributed capital, leadership and made all the resources of their firm available 24/7.

- To Seth Farbman of VStock Transfer, for providing and assisting to integrate the entire back-end compliance systems, transfer agency services and industry connections.

- To Doron Erblich and team, a veteran renowned tech guru and entrepreneur, for taking upon himself the role of CTO and website marketing initiatives.

- To Howard Orloff one of the visionaries of the crowdfunding revolution and the proprietor of Crowdfunding-Website-Reviews.com, the go to website for industry reviews, who selflessly accepted the position of “Mayor” or Managing Director of IPO Village. Around the clock commitment, bringing an outstanding array of talent, leadership and resources to the table.

- To Jerry Jennings of Emerson Gerrard,for his professional public relations activities and wise guidance.

- To Joy Schoffler and team of Leverage-PR, for her marketing savvy, high-profile rolodex and all around positive, get up & go attitude.

We have surely left out names, and to those we apologize, but we will have the chance to make mention of them in the future as the team continues to grow rapidly.

We would also like to take this opportunity to invite those interested in getting involved in this exciting endeavor, to reach out to us via this blog or by email.

We are building a revolutionary market place that has unlimited growth potential and the ability to branch off into many complimentary directions. We are building it to adapt and last. There are many areas still yet to explore.

IPO Village

News Flash! Early-Stage Companies CAN Go Public

Since I can remember, there has been this misnomer regarding young emerging growth companies that they had no place in the public markets. The stock market was for IBM, Apple and Home Depot.

Surprise, surprise! This is simply not the case and it has not been so for a very very long time… the regulations have been the same forever.

While it may be cost-prohibitive for many companies (and I say may, bacause it is not the rule and there are also creative solutions), it is definitely possible for a company in almost any stage of business to file a public registration statement with the SEC, have a market maker file their 15c211 with Finra  and get listed on any of the U.S. exchanges.

Of course it is not as easy as all that, but is a lot more of a viable option then it is given credit for in the industry. The reasons are shamefully obvious. If companies were to direct their own public offerings or conduct DPOs as it were, they would by definition, be cutting out the very prestigious, indispensable and handsomely (if not handsome) paid underwriter (in another life, I am that underwriter). Until today this really had no chance to ever surface. The tentacles of social connectivity simply were not yet long enough.

Facebook, Linkedin, Google+, YouTube, the tentacles are getting pretty long. Long enough to entangle the entire globe in a crowdfunding frenzy and make many investment bankers come to a stark realization… there is a new competitor on the horizon…. EVERYONE….the CROWD is coming…

Check out this video to learn how to get it done solo.

Due Diligence, Due Diligence, Due Diligence

In my office we have these words framed… “Due diligence, due diligence, due diligence… review it once, review it twice, review it three times.” I like to add, “or forever hold your peace”.

Investor’s personal financial situation
A priority before making any investment into early stage companies, is to recognize that these investments are high risk. It is therefore imperative that an honest assessment is made as to how much is acceptable for one to invest. One should only invest an amount equal to how much they are prepared to lose.

Due Diligence
Due diligence is not simply about reading documentation or reviewing numbers. It is about understanding the company’s business plan including their;

  • market landscape
  • marketing strategy
  • competition & competitive advantage/s
  • financial; historical/current/projected
  • use of proceeds
  • company’s valuation

Most importantly, it is critical to research the management team. Can they execute their plan? A flawed management team can screw up a perfect business plan.

In the end, for beginners or even the average retail investor, it is most prudent to seek out the guidance of a sophisticated investment advisor.