Recapping Mr. Wonderful’s First StartEngine Webinar
Renowned businessman and investor Kevin O’Leary, aka “Mr. Wonderful”, recently joined StartEngine as an investor and strategic advisor. On Thursday, April 16th, Kevin sat down with StartEngine’s CEO Howard Marks for the first time in public to discuss why he partnered with StartEngine as well as how small businesses can raise funding today.
Kevin succinctly summed up his opinion at the beginning of the webinar when he said, “great companies that are growing need money, and they should get it.”
How Entrepreneurs Can Find Investors Today
The issue is that in today’s market, great companies have a uniquely hard time of getting that money. Howard and Kevin discussed how venture capital deals have dried up. “A lot of my companies had term sheets and had almost closed deals,” Kevin said. “Those deals evaporated” in the wake of COVID-19.
Rather than taking new meetings and investing in new ideas, venture capital firms are instead focused on making life and death decisions within their own portfolio. Which of the companies they’ve already invested in will survive with additional guidance and funding? Which won’t?
Without VC funding, where else can businesses turn? The Paycheck Protection Program helps alleviate that issue somewhat, but $350B isn’t a lot of cash when you’re talking about all of the small businesses in the US. In fact, as Kevin mentions on the webinar, that very day it was announced that the $350B was gone. It had all already been loaned out already, and thousands of businesses that applied were left with nothing. $350B is a drop in the bucket when you are talking about millions of small businesses affected by this pandemic.
Mr. Wonderful’s Take on Equity Crowdfunding
Howard and Kevin then discuss the merits of equity crowdfunding as an alternative funding option for companies to raise capital. “I think the new normal for businesses will be to know your investors and have a direct relationship with your constituents,” Kevin said.
Through equity crowdfunding, companies can build a community with their investors, and their customers can become their investors. It aligns companies with their investors in a way that wasn’t possible before.
During the webinar, Kevin mentioned that he actually wanted to start his own equity crowdfunding platform until he found StartEngine. “I realized there was no chance I could catch up, so thankfully you let me become an investor in the business and an advocate [for StartEngine], and I’m going to be using it for my companies.”
Howard then showed a graph (below) of investor activity on StartEngine to illustrate how equity crowdfunding is still viable even today.
People are still investing on StartEngine today. There has not been a drop in activity like there has been in the world of venture capital.
Two StartEngine Alumni Share Their Experiences
Later in the webinar, Howard and Kevin are joined by two StartEngine entrepreneurs who previously raised capital on StartEngine.
First, they spoke with Jason Brown from Called Higher Studios, a faith-based movie studio, who noted that one of the biggest benefits of his company’s raise was the community-element of equity crowdfunding. Jason started the company with no following, and after raising $1.07M on StartEngine, not only did he have 3,000 investors, but he had another 15,000-20,000 people across their social media channels as a result of the marketing they did over the course of their campaign.
Next, Kevin and Howard spoke with JD Claridge from xCraft, a drone company that had previously appeared on ABC’s Shark Tank. Kevin and JD reminisced on how JD flew an xCraft drone in the studio and scared the cameraman because they were so fast (they can reach over 60mph).
JD then talked about his experience running a company that “was born out of crowdfunding”—xCraft started on Kickstarter and has conducted multiple crowdfunding raises, as well as two equity crowdfunding raises on StartEngine. JD was able to use the funding from each of these rounds to advance and improve the technology behind the drones, and now he is developing drones for different verticals and purposes, from emergency responder drones to those designed for agriculture.
In the second half of the webinar, Howard and Kevin transitioned to a Q&A with the audience, where a few attendees were randomly selected to ask their questions. Among them was Dylan, a young entrepreneur with a window treatment business, who asked whether this was a good time to buy materials to create more of his window treatment product.
Kevin gave this teenager the live “Shark Tank treatment” and gave him some helpful advice on how he can develop his business. The key: focus on sales and early feedback before scaling up inventory. Dylan, if you’re reading this, best of luck with your window treatment startup!
Watch the webinar in full below: