He provides a summary of his interview, Episode 10 - Christopher Mirabile talks SEC, Crypto and More!, below.
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I recently had the pleasure of speaking with my good friend Marcia Dawood on her excellent podcast The Angel Next Door. I recommend the podcast highly - Marcia does a great job interviewing all sorts of interesting members of the angel ecosystem.
Just like with other podcast guests, during our conversation we talked about a wide variety of topics ranging from how I first got involved in angel investing, to some good exit stories, to my work on the SEC’s Investor Advisory Committee, to crowdfunding and regulation of the crypto market.
We started with a story about the origins of Seraf; how it came to be and how it has evolved into a very large platform serving early stage funds worldwide, and in particular its support for impact investors who wish to track custom KPIs.
Next we talked exits and how angels are seeing a greater variety of different kinds of exits than they used to. In particular we touched on private equity firms and I mentioned to her how Launchpad had sold five portfolio companies to PE firms in one year recently. This naturally segued into great exit stories and I shared a story about an exit that demonstrated the massive power of capital efficiency - a 22.2X return on a deal valued at 4X revenue!
Then Marcia asked me about the SEC Investor Advisory Committee, and I explained its origins in Section 911 of the Dodd-Frank Act, the IAC’s purpose in protecting investors, and the recent SPAC recommendation of which I was a principal author.
Since we were on the subject of the SEC, our thoughts turned to crypto and how recent enforcement actions are likely to lead to regulatory developments. While freely admitting to some enthusiasm for distributed ledger technology and all the potential for good it represents, I did confess to some serious concerns about the overheated coin market (which has since crashed as feared) and the risks people were taking on without necessarily understanding. I closed by noting that regulation was not only highly likely, but probably ultimately beneficial. I noted that SEC Chair Gary Gensler himself publicly stated that he feels that many of these traded crypto products have a high likelihood of being considered securities and that he feels the only way a healthy crypto market can survive long-term is with some basic investor protections in place to build trust and transparency.
As if that topic were not controversial enough, the next place Marcia drove the conversation was the subject of crowdfunding and Regulation CF. I talked about the pros and cons and trade-offs of using Reg CF as compared to traditional exempt Reg D Rule 506 deals, and touched on where crowdfunding is, and isn't, a fit for companies. I touched on how the rather strict rules and limits (including the offering integration rules) and long term implications of raising crowdfunding meant that it was fairly “expensive capital”. The amount and timing limits can be a challenge for a venture scale company trying to grow fast enough to serve a global market. My ultimate conclusion was (and is) that crowdfunding is a great complement to the angel and VC space, but that it is definitely not for every company. My advice was to “look beyond the brochure” on these platforms by talking to a lot of people who actually understand the rules and their implications.
I hope you have a chance to listen and to check out all the other great conversations Marcia is regularly hosting.
