TRANSCRIPT
slava (00:02.326)
Hello and welcome to another episode of Smart Humans. I am excited for today's guest. We have Rebecca Kacaba, who is founder and CEO of DealMaker. Rebecca, welcome to the podcast.
Rebecca (00:16.548)
Thanks for having me, excited to be here.
slava (00:19.198)
Absolutely. So we always like to start with the background. You know, how did you even get into alternative investments?
Rebecca (00:27.468)
You know, I could take you all the way back to my early days. I like to think I was an early adopter with my sticker trading racket in the schoolyard, but that was probably like, you know, 11 or 12, you know, making trades, stickers, fuzzies, shinies, all that good stuff. No, but, you know, eventually I went on to law school and got into the capital markets and started a...
slava (00:36.56)
What age was that?
Rebecca (00:54.064)
practice where I was advising founders, which I loved. I loved being close to founders and their innovation. It gave me so much energy. And so really saw an opportunity where founders were raising money and they were having a hard time with it. And I knew that technology was perfectly positioned to solve that problem for them because it was such a cumbersome paper-based process. And that's what technology is perfect for, right? To replace all that.
compliance function that was really bogging them down from what they were trying to do, which was just get a deal done and get their companies funded so they could get them off the ground.
slava (01:32.69)
And between sticker trading and actually starting DealMaker, what were the other influences or anything that do you think got you to being who you are today as part of co-founder and CEO of DealMaker?
Rebecca (01:46.104)
That's a great question. You know, I also competitively skied for a while. I think competitive sports are great breeding for doing anything at a high performance level. Really teaches you to handle the losses well. And as an entrepreneur, you know, there's always gonna be bumps in the road and really the ability to handle that is what defines your ability to succeed.
slava (02:09.446)
Nice. So you're obviously involved in the equity crowdfunding, which is an alternative asset of its own. But before we dive in there, what do you think of the other alt categories, for example, collectibles? You did mention you were a big fan of stickers back when you were younger or crypto. You know, Bitcoin is on a big run right now or private credit or real estate. Just give me your thoughts on these different parts of the market and how you even like to allocate your personal investments.
Rebecca (02:39.072)
Yeah, I'm less crypto focused. You know, I wish I got in the earlier days for sure. I feel like I missed out on that one, but the NFTs I've always been a big fan of. I love the art component of that. Art is so inspirational and I love the thinking and the creativity that it brings. And so I was a really big fan of a lot of that stuff when it was blowing up.
Artists are essentially entrepreneurs. And so, art is creating a business. Andy Warhol said it best. So I think there are some really interesting lenses. You can see the world through art.
slava (03:18.442)
And then what do you think about the yield oriented things like real estate or private credit? Do you look to invest into those things?
Rebecca (03:26.112)
Yeah, I think real estate is a good component of any portfolio. You know, one of my earliest purchases straight out of school was real estate. You know, when I could barely afford to, you know, eat the meals, I put it all into real estate and that served me really well. So, uh, my, my dad's always been big into real estate and I've followed that.
slava (03:48.93)
All right, great. And then are you investing much into other equities beyond obviously the private markets that you're doing? You probably have a big investment into your own company. So that's a big alt investment right there. But how much do you put risk on into other equity type investments?
Rebecca (04:05.58)
Yeah, I put it on where there's a deal that I like, I'd like the founders, I like what they're doing. Treasury investments is one that, you know, it puts some money into recently, they're doing something really cool with sculptures and pouring gold and silver and bronze and building sculptures out of that, which is totally unique. And I think unique opportunities like that are really where the gains are to be had. So for sure, when I see a deal, I like it, you know, back in the day when I was practicing law, there was a lot of oil and gas.
and mining, put money into that, but I can't say I ever made a big banger in that category.
slava (04:43.102)
And then you mentioned you wish you were in crypto earlier. Obviously, they're still today, right? It just touched 60,000 Bitcoin just touched 60,000 since the first time in 21, everybody's got an opinion on crypto. So I have to ask you like, what's your opinion today? Not the past. Is it the sort of thing that it's just 60 going back to zero? Or do you think it has a path to a million or what's, what's the Rebecca opinion on crypto?
Rebecca (05:08.98)
Yeah, I wouldn't say I'm the biggest crypto follower, which is probably why I don't play in that category. Like I like to play in categories that I know a little bit more about, but I think there's a place for it for sure. I think it's come and it's here to stay and it's trading well as a commodity. So it'll continue to do so.
slava (05:28.254)
Now I'm going to ask you a very broad question, which you could take wherever you want, which is what do you think of today's market? Today's economy, today's stock market, Reddit's about to come out with an IPO soon, that obviously means something. Nvidia is on a run, but there's a lot of other companies that haven't really seen those gains. The economy, is it up, is it down? It's hard to tell. So what's your point of view on where we're at and take that wherever you'd like?
Rebecca (05:54.572)
Yeah, I think it's clear to everyone, the big tech are kind of riding out, you know, the gains we're seeing in the market and video is taking a huge component of AI while other folks are going down in that category. So there's a lot of different factors at play. What we've felt because we, you know, at DealMakers sit very close to what we're feeling in the private markets, we felt a bit of a lift since January, February, folks a little bit more positive, more deals getting done.
category, we didn't see things go down the way they did in the IPO market and the way they did in the VC market. So I'm optimistic, but I'm an optimist. So, you know, even when we're riding it out through the latter parts of last year, we continue to see a little bit of activity, which is the same thing I saw in the markets in 2008. Like back in 2008,
I remember there wasn't a deal getting done anywhere to be seen. And this time we never really experienced that. We always felt that there were deals being done. Now that may be because we are more international, so you see different deals happening in different geographies. But interestingly, what we saw was that, you know, for our 2023 report to the market,
capital commitments were up almost 10% from the year before, so 2022, even though the number of offerings was down about 8%. So to me, what that signaled was really interesting that in retail, we saw retail investors basically funding the companies that they liked, that they backed. We saw follow on from retail communities into the companies they backed. So that trend...
really followed what we saw VCs and growth funds and hedge funds doing as well, which is super interesting to me.
slava (07:48.723)
And right before we dive more into DealMaker, the Reddit IPO that's supposed to come out, what's the signal there or what's your opinion on that? Are you buying the IPO?
Rebecca (07:59.42)
I love that. I've been touting that all over social media. I think it's a huge signal to the world about what we do in the alts category in helping founders build a community around their business and then use that community to build benefits for their business. That community can also be investors. And look, I've been saying that for years. A lot of people in our space have been saying that for years and now to have Reddit come out and basically signal to the market,
IPOing now, our users are important to us and having them have the opportunity to be part of the capital stack is important to us. It's just a huge signal that what we've seen a number of companies do this year, you know, Real Alpha did it, Autonomics did it, Monogram did it, all of these companies are following the same trend that Reddit is.
slava (08:52.215)
Just for the audience, when you mention monogram and these others doing the same trend, can you expand on what that means?
Rebecca (08:58.304)
Yeah, they did similar pre IPO. They offered around to.
fans or communities around their business to participate in some of the uplift. Because look, the whole reason for this ALTS category was developing was that Congress saw that retail couldn't get in pre-IPO as easily and they wanted to change that because that's where a lot of the gains are made. And so to have companies embracing this and seeing the benefit of giving their users
Rebecca (09:34.658)
intended.
slava (09:35.798)
This seems like a great segue for, if you could just share more for the audience in terms of background. So what is DealMaker? How did you start it? Can you give us a sense of size and scope? Like what's happening today with the platform?
Rebecca (09:48.576)
Yeah, so think of DealMaker as a digital back office for companies to set up their own online store to sell securities. So we make it as easy to sell shares online as it is to sell shoes, right? There's a lot of compliance stuff in reality that needs to happen to sell a security online versus a pair of shoes, but...
in the world today in 2024, buyers expect that experience to be the same. And so that's really what we're allowing companies to do is set up those online stores, drive their communities there, and then make them part of the capital stack. And when they do that, they get 54% more engagement from those users or those folks who are around their business, and they can really monetize and create a bigger business in a new way. It's the same trend you see MrBeast doing
Taylor Swift doing, right? They really know their community. They know what they want and they know how to engage people with their brand to build a bigger brand faster.
slava (10:49.214)
And can you give a sense of like some of the stats, like number of raises, number of investors, dollars through the system, et cetera, et cetera?
Rebecca (10:58.924)
Yeah, for sure. So we've done over 900 offerings, over 2 billion transacted through the platform. Last I checked, it was 1.3 million users on the system. So really doing this at scale, a lot of folks hitting $20 million plus offerings from retail communities. Now you can't do that overnight. You have to build up to that and build a community. We've got all kinds of tools and guidance to help folks do that.
slava (11:27.822)
Can you walk us through like the, what's like the average raise? I know if you just divide, you know, 2 billion by 900, it's a number, but there's probably some outliers. So what's like the average raise?
Rebecca (11:41.352)
It depends, we do everyone from pre-seed all the way to public companies, depends on the size of their community. And then we set up conversion metrics for how well that community we think will convert. And then they do the digital marketing and it depends on how the story resonates. So I, I hesitate to give people like a peg number that they think they could do. We really allow people to build a customized story and then build a community around them.
anything from you know 500k to the Green Bay Packers who do 65 million in a couple of days.
slava (12:20.418)
Did the Greenbabe hackers do it with you? Oh, that's so fun. Can you tell more about that story?
Rebecca (12:22.488)
Yeah. Yeah, that was a great one.
Yeah, so I mean the Green Bay Packers fan owned team, they wanted to raise money for a new stadium. So we set up their online store. That was an easy deal, right? Great brand, one of the biggest brands in the world. ESPN and a bunch of folks pick up the story. The traffic was...
insane. They raised over 30 million in less than 48 hours with people just banging down the door. We had Aaron Rodgers and a bunch of the players tweeting out photos of their system joking about how they're self-employed now because they're an owner of the team. So that raise was a ton of fun, ton of huge coverage for that. And really that same trend and that thread that Reddit is picking up where fans want to be owners of their team.
The cheeseheads are hugely engaged with the Green Bay brand for a reason, because those share certificates get passed on generation to generation.
slava (13:28.058)
In the Green Bay Packers situation, was that actually an investment? Like, so do they get a financial return?
Rebecca (13:35.516)
Not so much. They get to be an owner of the team. They get to go to meetings at the stadium. They get different access rights than the average fan, but the shares are non-transferable, so they don't get financial returns from the team.
slava (13:55.286)
Got it, but in many of the other examples, they do get financial returns, right?
Rebecca (13:59.296)
Yeah, absolutely.
slava (14:00.802)
So how should an investor, when they're looking at these opportunities, think about it differently than just let's call it investing into the public markets, into Nvidia? How should they diligence it and how should they explore what they're evaluating here when it's these private market deals brought to you through a deal maker?
Rebecca (14:20.416)
Yeah, I think it's the key is it's a most of them are privates, right? So they're going to be a buy and hold. So you got to think about that. And then you got to think about the risk profile of the stage that the company's at, because it could be anywhere from pre-seed all the way up to we do have public companies doing this as well. Usually if it's a public company, you're getting a little bit of a different perk on it, like a warrant. So that might change the return for you.
And then you're really just allocating your portfolio to how long you think you're gonna be in that security before you get some liquidity. And not every single one of them is gonna hit. So, you know, if you have 10K to invest, you wanna spread that out over a number of different offerings.
slava (15:03.018)
What's the average investment on the platform?
Rebecca (15:06.98)
just over $3,000.
slava (15:09.43)
Got it. And typically, are you seeing people are investing into their one project that they really like into their neighbor or to the person they really like, or they, like you say, building a portfolio of 5, 10, 20 different investments?
Rebecca (15:22.404)
We've got lots of users on the system who have built a portfolio across investments. Dealmaker is a little bit different in that it's not a marketplace, right? So there's no place where people are going to shop deals. We're allowing deals to self-host and build their community around that. So it's a little bit different than like a marketplace model.
slava (15:43.51)
Gotcha. And I know you mentioned Monogram and then a couple others very quickly. I would love for you to double click on that. Can you tell us about some success stories and what I mean by that? But even just one or two of an investor put money in and then years later they were able to get some returns. Do you have those examples?
Rebecca (16:03.008)
Yeah, yeah, for sure. I think there's a number of those. There's three companies that we saw go public this year. The other thing we've seen a little bit more of is companies doing dividend returning, generating products, and the market's really liking that. We've got Knight, Smoke, Go.
RAD, real estate, we're doing those. Picasso is one that people love, regular dividends on those products. So there's multiple paths to liquidity, I would say. And depending on the type of investment you're looking to make, those are some interesting offerings as well.
slava (16:39.958)
Great, so let's just talk about one of each. So you mentioned like Picasso, can you tell us what that company is? Like when they raised, how much they raised and kind of the dividends they've been returning?
Rebecca (16:50.989)
No, honestly.
slava (16:52.354)
Oh, okay. Okay. Do you know of like a case study on the, um, like the equity side where like the equity return, like somebody invested $3,000 and then a few years later turned into four and a half thousand dollars or $30,000. Do we have any examples? Um, over the last several years? Well, how long has deal maker been around actually supporting these companies?
Rebecca (17:12.876)
We've been on the market for six years.
slava (17:15.038)
Nice. So are there any of the, let's call it earlier vintage that I've seen some profitable exits of any sort?
Rebecca (17:24.153)
Yeah, Mystic went public after their raise. I'd have to check exactly what the trading price, but they came out on a positive trading price after some reggae rounds.
slava (17:34.002)
Nice. So people invested, let's call it a thousand or three thousand or thirty thousand. And then a few years later, they were able to not only get the return, but actually a profitable return.
Rebecca (17:44.34)
Yeah, that one was a little quicker than a few years.
slava (17:47.326)
Nice. I appreciate that. And what do you think, how has this evolved in the six years you've been doing this? So what's different today versus the day one when you started it?
Rebecca (17:58.944)
So much is different. We brought so many new innovations to market that have been fantastic in terms of streamlining how these deals work, and then bringing down the cost of capital, which is better for companies and ultimately better for the investors who are putting the money in, and really honing in on the benefits that the investors can get from the company, sometimes that in the form of perks. So really allowing investors to play a role in building the company, which is better for everybody.
slava (18:28.862)
Nice. Is there anything else that you think the audience should know in regards to diligencing or thinking about looking at these equity crowdfunding deals that obviously many of them you're supporting?
Rebecca (18:46.528)
Not really, no, I'm not their advisor, so.
slava (18:49.658)
Okay, no problem. And then on the other side, as somebody who's thinking about doing arrays using one of these platforms and obviously yours, how should they think about it? Any pros or cons or advice as to how they should think about it? Whether they should go down this avenue?
Rebecca (19:07.944)
Well, we're not an investor focused platform. So I think that's, it's a little bit different. We are our customers be issuer. So
slava (19:15.038)
No, I mean the issuer, meaning how would you talk to the issuer about if they're thinking about doing this sort of thing or not, whether or not they should do it.
Rebecca (19:25.3)
I think they should really think about all their roots to capital, right? And doing a community round can sit alongside other sources of capital. And it has different benefits in terms of engaging the community and monetizing them in new and exciting ways that can help you build the business. And it's not mutually exclusive to not go to do a...
institutional round as well.
slava (19:56.802)
That's super interesting. Do you have a sense for how often one of these equity crowdfunding rounds is like totally standalone versus as you say, in combination with some other VC round or other institutional round where it's a compliment to that other thing that's happening in parallel?
Rebecca (20:17.064)
There's a number of folks doing it. I think there's many different formulas to raising money, right? So you've got folks who are earlier stage that may for a couple of years do community rounds and then eventually go on to get institutional capital. EnergyX has done different rounds where they've got GM investing and they're gonna have institutional capital come alongside the community. You saw Substack do, I think it was a series B or C and then reserve a portion
their users. So there's many different formulas that can take place in the markets depending on what the comp what's best for the company. And I, I really think the CEO and CFO is need to think strongly about what's best for the company and the best sources of capital that we're going to help them build the business.
slava (21:08.111)
Awesome. And Substack, did it using DealMaker?
Rebecca (21:11.885)
we funded.
slava (21:13.15)
Okay, got it. And EnergyX, can you give me any more color on that? I haven't heard of that organization, so it'd be interesting just to know the case study if you have any other details.
Rebecca (21:25.172)
Yeah, they're live right now. So I don't, breach of security is a lot for, I don't wanna go there because I'm not supposed to recommend offerings.
slava (21:33.078)
Got it. No problem. So we'll skip Energy X not to break compliance here. We can move on then. A lot of our listeners really wanna be like, as knowledgeable and as smart as Rebecca and the other people that are on the show. So you obviously, you know, are.
exposed to a ton of information that you're processing all this, whether it's, you know, listening to things, reading things, watching things. So what is it that routinely you like to look at, watch, listen to that helps you, you know, develop your thinking?
Rebecca (22:08.076)
I read The Economist a lot. I read a lot of newsletters like Morning Brew and Liquidity and those kinds of things and really whatever is out there. A lot of founder newsletters this podcast as well.
slava (22:24.85)
Nice. I guess you're like many of the other founders, you love other founders.
Rebecca (22:30.996)
I love hearing those stories. I think it's so inspirational and it just gives you great motivation for what you're going to do.
slava (22:37.706)
Yeah, I mean, when I was building Indiegogo, I mean, that's literally the inspiration is just all these entrepreneurs and all these founders. And you get to experience that every day as well with DealMaker. My last question, without trying to have you break compliance, if you had to predict one thing that you think will be doing awesome three years from now, when we bring you back onto the show, what would be the one investment idea that you suggest that definitely does not have to do anything to do with your platform?
Rebecca (23:06.72)
I'm going to go back to art and real estate. I think there's some really cool offerings out there right now. A lot of the real estate ones are dividend generating and a lot of new forms of art offerings where we can see if some of those markets build up. There could be tremendous gains.
slava (23:24.546)
So it's crazy, literally like yesterday, there was an NFT. We thought this was over, right? But there was an NFT that I just sold for like 24 Bitcoin yesterday. So who knows, maybe we're back into that era. So art and real estate, well, thank you.
Rebecca (23:33.016)
Wow.
slava (23:42.782)
Rebecca, thank you very much for your time. We covered a lot of ground. I love the fact that we started with stickers at 11 years old and thank you for sharing the fact that you're a competitive skier. I do think that has a lot to do with your success. I think that seems to be huge. Great to hear that the platform is doing so well. You know, the fact that people have conviction around their investments and I love your line of you make selling shares online as easy as selling shoes.
I mean, that is just so clutch. The fact that you have over $2 billion that has gone through the platform and over a million investors is amazing. From Green Bay Packers to all these small startups, you're obviously supporting so many different types of offerings. An average of $3,000 investment. So this is not little nothing. This is real investments that people are thoughtful about.
Obviously it's done so well. Dividends, equity returns, people are exiting. And thanks for all the examples. So this has been a great conversation and we look forward to having you back on in the future.
Rebecca (24:43.072)
Awesome, thanks for having me. It was fun.
