On today’s show, we chat with Brian Smith who is the Co-Founder and CEO of Redcrow. Alongside Jerry Harrison, Redcrow set off on a mission to democratize the investment process for people otherwise shut out of early stage investing opportunities. Prior to Redcrow, Brian was a Financial Advisor with Morgan Stanley Smith Barney, advising high net worth families.
IN THIS EPISODE, YOU’LL LEARN:
- What is an accredited investor?
- What is the future like for crowdfunding?
- What is a Cap Table?
- What is the current process that founders might take to raise capital?
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BOOKS AND RESOURCES:
- Connect with Brian Smith
- Website of Redcrow
- Website of Redcrow Live
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- Silicon Valley LinkedIn Group Account
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- Email Shawn@thesiliconvalleypodcast.com
Disclaimer to the Transcripts:
Intro 00:00
You’re listening to The Silicon Valley Podcast.
Shawn Flynn 00:02
On today’s show, we chat with Brian Smith who is the Co-Founder and CEO of Redcrow. Alongside Jerry Harrison, Redcrow set off on a mission to democratize the investment process for people otherwise shut out of early stage investing opportunities. Prior to Redcrow, Brian was a Financial Advisor with Morgan Stanley Smith Barney, advising high net worth families. Today we talk about what is an accredited investor, what is the future like for crowdfunding, what’s the current process that founders might take to raise capital, and much more. Enjoy.
Intro 00:37
Welcome to the Silicon Valley Podcast with your host Shawn Flynn who interviews famous Entrepreneurs, Venture Capitalists and Leaders in Tech. Learn their secrets and see tomorrow’s world today.
Shawn Flynn 01:01
Brian, thank you for taking the time today to be on Silicon Valley.
Brian Smith 01:04
Thanks for having me, Shawn.
Shawn Flynn 01:06
Can you give us a little bit of background on yourself, your team, and the history of your company?
Brian Smith 01:12
So, I am the CEO and co-founder of Redcrow. Redcrow is a direct invest marketing platform for early stage healthcare companies. It took quite a road, you know, traveled to get to this point to found Redcrow. But I was at Morgan Stanley, working as a financial advisor for a family office. Prior to that, I had a background in marketing, which is my degree. I was at New Balance, Reebok, and then even Abbott Labs. I did a stint there for five years. But I always knew I wanted to get into finance. And back in the day, in the 80s, I was referred to as a stockbroker which evolved into more of a financial planner position. And what I learned pretty quickly is you’ve got to know people with assets and money to be successful in that business. And so I didn’t really come from a network where people had a lot of money. So I figured if I could get out there and meet people… And one of the reasons I loved working for Abbott was I got to meet all these great doctors. And I figured, well, you know, they have money, and maybe they could be future clients. So I ended up doing that and built a business at Morgan Stanley in Boston.
Brian Smith 02:23
And in 2003, my wife and I were expecting our first child. And at 24 weeks into the pregnancy, I got a phone call from my wife. She was at the emergency room as something wasn’t right. And so we ended up in a hospital in Boston, Brigham and Women’s, and my wife had started dilating. And because it was our first pregnancy, we weren’t considered high risk, and we weren’t being seen often and she was younger. And what happened was, my wife filled up with too much amniotic fluid, so it made her body think she was much further along than she actually was. And she started dilating. So we were too early. We’re at 24 weeks. And I’ll never forget being in the hospital in the middle of the night and her water broke.
And the chief of newborn medicine at Brigham and Women’s, Dr. Steve Ringer, I remember he pulled me aside and he said, “It isn’t looking good.” And even if she’s alive, we don’t know if we can keep her alive because we weren’t able to administer steroids. So we had a little girl, Juliana, who was born in the middle of the night, one pound, four ounces. And several hours later, we lost her. She couldn’t breathe on her own. So pretty traumatic. I mean, I come from a very large family, over 30 cousins and lots of aunts and uncles and never experienced anything like that. But what I did after going through something like that was I got very involved with the March of Dimes and a lot of different organizations that were making labor in order to be safe. That was my way of coping with such a loss like that.
Brian Smith 03:56
And along the way, it just happened very organically. I ended up with clients at Morgan Stanley that were doctors. And one of them happened to be Dr. John Davis, who’s the chief of newborn medicine at Tufts in Boston. And John called me one day and said, “You know, there’s this new medical technology coming out of Tufts with IP from MIT. And it’s a new fetal monitor device. And I think you should take a look at it. They’re trying to raise money. And maybe Morgan Stanley would want to look at it.” So I got really excited. I went and met with the team actually at Tufts. And I said, “I’m going to take this back and see what I can do. Either Morgan Stanley can invest in it or I can bring it to my clients.” And what I quickly learned was, it was way too early for Morgan Stanley’s investment bank.
And then my branch manager made it very clear that I could not represent the investment to my clients because it was not a Morgan Stanley investment. And you see the logic there. It’s a high-risk investment. Morgan Stanley didn’t give it its blessing, if something were to go wrong, and I put one of my clients in it, then it could fall back on Morgan Stanley. Like, “Well, he’s a Morgan Stanley advisor, who advised me to do it.” So I realized pretty quickly why I couldn’t represent it. But it just felt like too great of an opportunity. And they wanted me to help them. And I think what happened was after going through my personal experience, I felt like there needed to be some more for me, like this couldn’t be it. So what I did was I made a personal decision with the blessing of my wife, Jessica, and I left Morgan and took an advisory role with the company, the fetal monitor company called MindChild, and did business development for them. So I helped them get inroads with healthcare systems and hospitals, and introduced them to investors.
Brian Smith 05:44
And what I realized pretty quickly, was that there was this world of investors that wanted to hear about this opportunity, and they wanted to see something early. And they love the social impact nature of what this company was doing. And some of the people that wanted to meet the company were individuals that I was trying to bring on as clients at Morgan Stanley that were sort of like, “I’m all set. I’ve got somebody.” When I brought them something unique, they took the meeting. And so that hit me. And then I started watching what was happening in the crowdfunding space with Indiegogo and Kickstarter. And I thought, “How are billions of dollars going through these platforms for donation-based projects, whether it’s a music or a movie or something that’s based for charity?” And I remember thinking, what a difference it would have been if a company like MindChild could have done a campaign on a platform like Indiegogo and Kickstarter, but instead of a donation, it was actually for equity.
Brian Smith 06:43
Well, in 2012, the JOBS Act was written by the Obama administration that said just that. Private companies can now advertise themselves on an investment platform for accredited and non-accredited investors. And so that really hit me because I’m like, I think, at this nexus here of what I’ve done in my past and what I’ve experienced and what I’m seeing to do something. And so I ended up bringing the concept of Redcrow to my co-founder, Jerry Harrison. So Jerry is most well known as one of the founding members of the band Talking Heads. He’s a Rock and Roll Hall of Famer, and also in the 90s, a very successful producer. And in fact, I met Jerry through a mutual friend Chad Taylor, who was the guitarist for the band Live. Live sold over 8 million records, the biggest one being Throwing Copper that Jerry produced. And so I had known Chad through the 90s and then really got to know him in the mid-2000s.
When I was moving from Boston to the west coast, Chad said, “You need to meet Jerry. He’s a great guy, and I think beyond being a musician, he’s a great entrepreneur and you should get to know him.” Well, I ended up moving to Mill Valley, California, where Jerry had been residing for 30 years when he left New York City. And so I started talking with Jerry and learned about GarageBand, which he found in the late 90s, which we can talk a little bit more about. But that was early crowdsourcing. And so I brought this concept to Jerry about the JOBS Act and starting a platform. And Jerry’s first thing was, well, “I’m really concerned that people are going to think they’re investing in the next Facebook and lose all kinds of money.” I said, “Well, Jerry, I think we need to keep it focused. Let’s make sure these companies are making a social impact. But let’s pick a niche that we can help get support from the vetting process by the time these companies go live on the platform.” So Jerry had brought in Amanda Welsh in the early days, helping us kind of wireframe the platform and she brought in her husband who was connected to a development team in the city and it all kind of all just came together to the very point where we’ve had Aisling Harrison, who’s Jerry’s daughter come in actually assisting me in the early days. And now she’s our Chief of Staff and Creative Director and does so much on the marketing side of our platform. We have Dr. Orwen Charles who’s our Managing Director, and he deals directly with these healthcare companies and talk the talk and has created this amazing advisory team. So it’s come together quickly over the last three years and the space is moving fast.
Shawn Flynn 09:27
When you say the segment is moving fast, can you talk a little bit more about that?
Brian Smith 09:32
Yes, it’s just now I feel that investors and entrepreneurs that are raising money are realizing that equity crowdsourcing is an alternative way to go for raising money. We’re even connecting with companies that don’t want the VC money yet, because they’re too early. They don’t want to be diluted or maybe they just don’t want it. period. So what else can we do to put ourselves out there? We’ve tapped into you know, a lot of folks that we already know. And so this whole concept of being able to invest directly online is catching on. And I think you’re even seeing it happen on the public markets. I feel like with this space, it’s the early days of e-trade, where you had to get comfortable with trading online. Now, it’s a new market. It’s startups that are now available to all investors. And I think our Redcrow is doing it. It’s just a little different than what has been done previously. And we’re taking it to the next level where we’re trying to make it about the quality of the investments that end up on the platform for investment.
Shawn Flynn 10:41
You’d mentioned that startups right now are looking for alternate ways to invest. Can you talk about why not just going to friends and family is possibly the best solution?
Brian Smith 10:53
I think a lot of companies do. I think it’s how you start out and what, oftentimes, someone might not realize when they start a company, is how much startup cost is involved, from attorneys to papering your subscription agreement, to deciding if you should get a graphic designer to put together your pitch deck, get some professional coach.
Shawn Flynn 11:17
I have to ask, what’s the subscription agreement?
Brian Smith 11:21
So your subscription agreement is the offering that you’re going to present to an investor. All the terms and the details of the investment. Are you offering common shares? Are you offering preferred shares? Are you offering a safe agreement? I mean, these are all terminologies that can even be new to many entrepreneurs. But you also want to protect yourself and say, “Okay, well, I only need, you know, $200,000 and my company is valued at x”. Well, what if you value your company at $400,000 and you’re raising $200,000. You just gave away half your company.
So working with somebody to help you with valuation compared to how much you’re raising, and what makes sense in this raise and how you’re going to raise it. A lot of these things come into play when you’re starting a company. But then where do you go after you’ve gone and your friends and family and these friends and family is all relative, right? Some people may have billionaire friends and families, others may have accredited investors that could put in $10,000 or $25,000.
Shawn Flynn 12:18
Right. What is the current definition of an accredited investor?
Brian Smith 12:23
Yeah, absolutely. So an accredited investor today is an individual that makes $200,000 a year. For a household, it’s $300,000 a year. And then the spectrum is pretty broad. So it’s income based on those levels, and then a net worth criteria. And that is a million dollars net worth not including your primary residence. So for investors to invest on our platform, you have to be considered an accredited qualified investor. So it’s either-or. It’s one of those two options and if you’ve got both well great for you, too. So that’s what it is today.
Shawn Flynn 13:04
Now this definition, is it a brand-new definition? Is it something that… is it outdated at all? Should the definition of an accredited investor, in your opinion, be updated or changed in any way?
Brian Smith 13:17
Yeah, so I have a pretty strong opinion on this. And first off, that definition is a very old definition established by the SEC many, many years ago. To update it based on the criteria’s of income and net worth from when it was originally established, you would be dealing with a much higher income and a much higher net worth that you have to be to be considered qualified. However, we’re trying to get the SEC to go in a different direction. And that is that an accredited investor should be based on more experience that you might have investing. So you may be a professional that’s investing in your 401k or in an IRA, that gives you some experience in investing. So you’re not somebody who doesn’t know anything about investing. Also, one of the arguments has been, let’s take, you know, our platform, which is focused on health care. That you are in the healthcare community, as a doctor, a nurse, you’re a patient advocate, you do something within healthcare, that you have some knowledge in this industry. And so therefore, you’re making an investment that’s coming with some knowledge, some education, and therefore, you could be considered an accredited investor just based on the type of investment you’re looking to make. So we’re seeing a lot of this coming up. There’s actually a bill that I believe it passed the house and it’s now going to the Senate to see if they can adjust what an accredited investor is. And I think that becomes a game changer for this equity crowdfunding.
Brian Smith 14:54
You know, I go back to my days in wealth management and what often we would see is individuals falling right underneath the accredited status. So they don’t have a million liquid network, maybe they have 800,000. And I had clients that are working in New Hampshire, let’s say, and they were making 175,000 a year, which is a good living in a state that doesn’t have high tax and the cost of living is lower. And yet they still couldn’t invest. Because they didn’t meet that criteria. So you take that example. And now think about an individual making $200,000 a year in San Francisco, and yet they’re riddled with debt. There’s nothing stopping them from investing as much as they want. And yet they are in a least favorable position compared to the individual who might fall short of some of those criteria’s and continue to grow their wealth.
Shawn Flynn 15:47
Now, are there any other laws that if you had the chance that you might change for crowdfunding in general, or laws that entrepreneurs should know about?
Brian Smith 15:58
Yeah, and it’s one of the reasons that we are not currently doing non-accredited investing. So when the JOBS Act was created, we had regulation CF, which allowed for non-accredited investors to invest in early-stage companies. And we got really excited about that, both Jerry and I. I mean, we saw that as a way to democratize how investors get to invest and how companies raise money early. One of the challenges in our industry dealing with high level healthcare companies, and a lot of seasoned CEOs who use experienced attorneys to begin their companies, is both CEOs and attorneys who have seen the nightmare that can happen with a lot of individuals on the cap table.
Shawn Flynn 16:41
Can you talk about what a cap table is?
Brian Smith 16:44
Sure. So your cap table is made up of all your investors. So you may be a company that’s raising a million dollars and maybe you have five qualified investors and then they take out the entire round. And so that’s a manageable cap table. You’ve got those five investors. What is often being seen in regulation crowdfunding is potentially 100 or 200 investors. And that gets scary for future investors like venture capitalists when they’re looking at a cap table. And they’re thinking they’ve got all these small investors; how do we manage this? And you know, this could be a problem for us. So one of the things that the accredited investors are able to do so the companies on our platform, they can form an SPV with accredited investors. And then SPV is a single purpose vehicle. And it is basically a pool of investors in one entity that invest into a company, and that one entity sits on the cap table. So the cap table may have you, me, and then this SPV and the SPV may have 25 individuals in it. But the 25 individuals don’t sit on the cap table, the SPV does and that special purpose vehicle is managed by somebody and so they represent those individuals on the cap table.
Brian Smith 17:59
Well, when the JOBS Act was written for regulation CF, and a non-accredited investor, they did not allow for SPVs. So the good news is they allowed every company, every individual to invest directly into the company and own that company stock. But the bad news is for non-accredited investors, the criteria and the limits or the maximum is set pretty low. So if you’re trying to raise a million dollars, you’re going to be limited to how many investors you can take. Because there’s such small investments, or you end up taking a bunch in your cap tables crowd. And then the last piece I would say, for regulation CF companies, that are companies that are trying to raise money using non-accredited investors, you can only raise up to a million dollars in 12 months. And that’s an issue. Most of the companies we’re seeing they’re in their late stage seed or early A and in healthcare, you know, you’re talking a million and a half to $5 million. So right away, it’s not attractive to them.
Shawn Flynn 18:58
How else are entrepreneurs raising money?
Brian Smith 19:01
Well, you know, you can go back to… We can go back to the broker dealer model. So they can engage a broker dealer. But most broker dealers I know, they want it to be worth their time. So, it’s a significant amount of money that they are willing to engage. And they’ll take a percentage of the money that you’ve raised. What you always want to do is go to the FINRA, the SEC websites, and look at brokercheck.com. And then you can see to make sure that this is a compliant broker dealer, that their licenses are all intact. And then of course, you can hire an investment bank. And a lot of investment banks, they’re going to take a pretty large retainer, and there’s no guarantee that you’re going to be able to raise money from an investment bank. They’re going to help you put together a plan and a pitch and they’ll go out and try to sell it. So again, if you’re looking to work with an investment bank, well, you probably want to engage one that has a good reputation, or you could talk to somebody that’s worked with them. And then of course, you’re just out there on your own trying to raise money, right? As a founder, you’re trying to build a company. You’re also going to have another full-time job, which is raising money.
Shawn Flynn 20:02
So I’ve heard of individuals that will help find money for companies that aren’t investment bankers, that are just people that say, “Hey, I know a lot of high net worth individuals. They’re all credited investors. I’ll make some introductions for you. But I’d like to have percentage.” What happens in situations like that? I mean, they’re accredited investors that they’re working with, but there is still that middleman accepting a commission. Does that have any issues or problems that these companies might face later?
Brian Smith 20:29
Yeah, this is a very important point that you’re bringing up and may even be a great future guest for you on the podcast is an SEC attorney or somebody from the SEC. I don’t want to speak in their language. But here’s what we do know. That scenario that you just laid out is illegal. It’s forbidden by the SEC to do and we tell companies all the time, you do not want to be paying a non-broker dealer who’s not registered with the SEC and FINRA to be raising money for you and for you to be paying them whether it’s cash or options. If you’ve got people that know you and know what you’re doing, they certainly can introduce you to potential investors. Maybe even you’re paying somebody to be an advisor to your company and their compensation is based on all the business development type work that they’re doing. And along the way, they may introduce you to an investor. What you can’t turn around and do is say, “Well, if they invest five $5 million, or a million, or even 100,000, I’m going to throw you a little vig there at 5% of what you raised.” And you know, it seems to me and this is me now coming out of the SEC shadows talking. I can see how the mistake is made. You’re not paying somebody to go out and do this work for you and you can’t afford them and you’re not happy with what they’re doing. So how do you measure performance? Well, success. You introduce me to somebody that person invested, I want to compensate you, I want to reward you. I want to thank you for helping my company. And it’s unfortunate that you can’t do it, but it really does not fall in line with trying to protect investors. And that’s the big thing. And that’s why the SEC has an issue with it is they’re trying to protect the investors and because of these laws, you’re also trying to protect the company. Because it’s very easy if I introduced you to a company, and I’m not a broker dealer, and then you learn about the laws. And then you said, “You know, that company is not doing really well, I could try to get my money back. And all I have to do is say, ‘I invested because I thought, you know, Brian was a broker dealer, and he turned out not to be, and therefore it was sort of an illegal investment.’”
Brian Smith 22:34
And if you even wanted to contact the SEC, what we’ve seen in the past, and you can read about it, is deals have been unraveled when compensation has been given to non-broker dealers. And it’s an example because you don’t want investors being taken advantage of when somebody who may have just been attracted to the investment and the vig, but really didn’t know about the company. So they just figured, “Hey, you know, I got this great arrangement. Someone’s paying me 5% you should take a look at it. They invest in it then you make the 5%.” But you really didn’t know what you were recommending. And broker dealers are obligated to understand the investments that they’re recommending to people. I mean, that’s their job. So this is why we feel that equity crowdfunding platforms help aid these companies that if they can’t afford a broker dealer… And that’s the other thing, most broker dealers will only take you on if it’s a large raise because it’s a lot of work. So if I’m trying to raise money and my compensation is 5% of my raise. I’d rather go represent a $50 million investment than somebody who’s trying to raise 700,000. And what’s interesting is along the way, we’ve met a lot of entrepreneurs that have either taken money for raising money for somebody or companies that have compensated somebody and they just didn’t understand the law.
Shawn Flynn 23:47
So as an entrepreneur trying to get funding, what type of questions should they ask to find out if the person’s an accredited investor or if the person could even invest in their company?
Brian Smith 23:58
Most companies what they’re doing is through a 506B offering a Reg D. And it’s a situation where the investor self-verifies that they are an accredited investor. Usually your subscription agreement has a box that you check and you’re saying I agree to all this, some of the parameters can be listed like I make $200,000 a year or I have a million-net worth. A subscription agreement is what you would give a potential investor to document that they’re making an investment, and all the terms and agreements of the investment will be within the subscription agreement. In fact, if you go on our platform, and you look at investing in a company, one of the things that comes up is the subscription agreement that you read through and you sign off.
Shawn Flynn 24:41
What type of information is normally in a pitch deck?
Brian Smith 24:43
It’s funny, I just went through this exercise yesterday, as a matter of fact, with someone. If you want to give a company overview, you want to talk about the problem that currently exists in the market. What’s the biggest challenge? Then you want to talk about your solution. Not *page be in there, and then your product. So here’s our product that’s going to help the problem, it is part of the solution that we’re creating. You want to showcase your leadership team, your management, you want to show how your technology works. So maybe a diagram of what it is and the features that consist of it. And why is it so different than anything that’s out there? You want to talk about your revenue model, show that, and then you want to do the ask at the end. Here’s what we’re looking to raise. And here’s why.
Brian Smith 24:46
So a lot of, you know, you can do a lot of reading and they say, try to keep it to 10 to 12 pages, including the cover page. And that’s why I said, you know, let’s keep the pitch decks tight. Let’s get the message across. Because as an entrepreneur, if you don’t feel you can get your message across in 10 slides, then you really need to dig deeper. Because if you’re at an event, at a dinner, you need to be strong and solid on your pitch. And we see that a lot, especially in our field with the healthcare side of things. A lot of doctors, entrepreneurs, scientists, very smart individuals don’t necessarily know how to market and maybe even telling their story. At times, it goes over individuals’ heads. So we try to help them bring it down, where somebody who maybe they’re not a cardiologist, but they understand maybe they’ve had a fib. And they really feel like this could be an important device to them. We want to make sure that we’re talking in a language they could understand.
Shawn Flynn 26:24
Other crowdsourcing platforms, before we talk about yours, how are they taking in revenue for themselves? How are they earning money? Kickstarter, Indiegogo? Are they verifying and taking a percentage or what’s their business model?
Brian Smith 26:39
They can take a percentage of the money that’s being raised. So it’s not considered an investment. You’re matching people up that want to invest in your project. So whether it’s a company, a movie record that you might be making, whatever it might be, I opened up a painting gallery and I want to raise some money and I’m going to give people discounts on the paintings, if they want to donate to my campaign. That’s the Indiegogo and Kickstarter world. And then there’s other platforms that are charging a syndicate. So you charge the investors to get into a pooled vehicle to invest in companies on their platform. So they’re taking money from the investors. They charge a subscription type model to investors to come onto the platform to look at deals. Or the money is being generated through the companies that are coming on the platform.
Shawn Flynn 27:29
And then how do you guys earn a commission or money on your services?
Brian Smith 27:35
So no commission, we do have a broker dealer partner, and we will consider a broker dealer part of our model. At some point, Jerry and I, very early thought we would be a broker dealer. But the more we learned about the rules and regulations, and how much running a broker dealer is like running another company, we figured somewhere along the line our transactions will be enough and our deal flow will be enough that maybe a broker dealer wants to come partner with Redcrow. But we just get to the point where we say it’s time to either acquire a broker dealer or start a new one. I like the idea of finding one that we can partner with, very similar to what we’re doing today with a broker dealer named Jumpstart Securities. And what Jumpstart Securities has done with us is they take 1% of all the transactions through the platform. It’s a small percentage, and it’s really an admin cost for them. They’re relying on the diligence that Redcrow and our team has done for them to feel comfortable representing the investments.
Brian Smith 28:33
So today, what we do is we take a small onboarding fee and cash from the company. And then we’re taking the options from the company, roughly 40,000 worth of options. Because we want to say we’ve got skin in the game with these companies. So our success will be tied to the success of the company. So in the meantime, we’re aggregating all of these equity positions from these companies at the going price of what they’re offering on our platform. And then again, we’re taking an onboarding cost to cover the marketing to cover the setup of the technology.
Shawn Flynn 29:09
Is there any startup that has been on your platform that you have a sentimental connection with? Anyone that you really want everyone to hear about?
Brian Smith 29:19
A company that’s about to come on our platform called Emulife, and what they’ve created is an artificial womb. So the baby’s born premature, there’s this bath with this fluid, that it’s very much like the baby being in the womb still and being able to grow. That obviously hits very close to home. Amir is an amazing CEO. And he’s driven with this passion and he’s got a fun story. And I’m excited for everybody to see his video and learn more about him. And then, you know, I love HeartBeam which is on the platform. This is revolutionary to have a card that you can carry with you. That’s more than what an Apple Watch can do today with a one lead ECG or even in a two lead to have a 12 lead that’s portable. That’s a gamechanger because a lot of times, what can happen is you can have a cardiac event, but by the time you get to the emergency room and they hook you up to the 12 leads, the event may be over. And they can’t pick that something that happened, other than maybe there was some damage.
Shawn Flynn 30:16
And what is the future for Redcrow? What’s going to happen in the next few years?
Brian Smith 30:20
I believe that the future for Redcrow is we will end up either partnering with a large financial organization that realized a couple things. The alternative investment space is growing. It’s being sought after by the clients. We have this millennial boom happening right now. And this amazing transfer of wealth from baby boomers to millennials, and millennials are looking for social impact type investments. They’re okay with patient capital, letting it go to work. And if you’re not a Morgan Stanley or Goldman Sachs that’s offering these types of investments outside of funds, what’s going to happen is I believe and they’re starting to see it, money leaving these firms. So they can go into these private investments because these private investments, thanks to the JOBS Act, are becoming more and more public, as opposed to the past where you either had to go the right university and know the right people to know that these opportunities even exist. And the idea of this triple bottom line or in some cases, the double bottom line, where I’m making money and doing good at the same time, that’s becoming more and more appealing from family offices down to, you know, the smaller investor. So I see that happening.
Brian Smith 31:30
But I also see Redcrow becoming this massive network within healthcare, from entrepreneurs, to healthcare organizations, companies, hospitals, patients, patient advocates, where it’s a collective voice that’s helping to drive innovation, and getting the hospitals in the healthcare systems to support it. You know, the nice thing that we’re also seeing is patients have taken control of their own health more than ever, and I think a lot of this is because of what’s happening with insurance companies. But let’s just say I’m an expecting mom, and I’m either expecting twins, or I have a history of high-risk births. And I’m pregnant. And we saw this really cool company that was on our platform called Angel Eyes. Angel Eyes is a camera that sits in the NICU. So when the baby’s born premature and has to stay in the hospital, and when mom and dad are released and they have to either stay in a hotel or go back to their homes, one of the most nerve wracking things that could ever happen because I’ve been through it is, “Is my baby okay and I can’t be there.”
Brian Smith 32:34
So you’re always calling the NICU nurses to get an update. But what Angel Eyes provides is real time video of your baby in the NICU and you can see the baby whether it’s on your phone or on your iPad. And it’s something that makes such a difference for that parent. So now if I’m expecting a baby and I know hospital A in my community has the Angel Eye and hospital B doesn’t, I’m going to say I want this technology, because I’ve read about it. I heard about it. I’ve seen it. And we’re seeing more and more of that, like the healthcare systems have to bring in these technologies, if they’re going to compete with other area hospitals.
Shawn Flynn 33:11
And Brian, is there anything else you want our audience to know, before we wrap up for today?
Brian Smith 33:16
I would just say a couple things, I would say we always put on our site, invest in what you know, and knowledge is meaning. I think if you do feel like you have an experience in a certain field, healthcare or something else, you know, these are great opportunities to be looking at, and to support an early stage company. I think it gives you ownership in a company, unlike a public stock could give you. And if you’re experienced in something that you are knowledgeable about, more often than not, it’s probably a good investment for you to consider. But also, you could bring value to that company or to that entrepreneur. And I think a lot of times we talked to entrepreneurs, they want the investment, but they join our platform for the community and for the feedback and how can maybe even someone help me get a pilot program, nevermind just the investment. So I would say that.
Brian Smith 34:04
And then on the flip side, I would say, just know these are high risk investments. That you may be excited about something, maybe you make an investment that’s early, even though you might want to make a bigger investment and see how it goes. Maybe they hit a milestone and then you put more in. But I do think this is the future. I would ask how these companies are being vetted and curated that are on the platform. And then most importantly, do your own vetting as well. Talk to the entrepreneur. I mean, we love it when we see an investment come through the platform overnight, and even the CEOs, like I didn’t even talk to that person they made an investment. Well, that’s great. They must have felt comfortable and they believed in you. But there’s nothing wrong either with what I’m seeing, but I want to go step further and talk to the CEO.
Outro 34:50
Thank you for listening to The Silicon Valley Podcast. To access our resources, visit us at TheSiliconValleyPodcast.com and follow our host on Twitter, Facebook, and LinkedIn @ShawnFlynnSV. This show is for entertainment purposes only and is licensed by The Investors Podcast Network. Before making any decisions, consult a professional.
