As entrepreneurs begin to shepherd their idea from concept to an equity offering and beyond, they soon learn about all of the different facets of running a business – more than they can hope to be competent at on their own.
As they begin to grow and seek capital, one person’s counsel they would be wise to seek is Mark Elenowitz. Mr. Elenowitz is the CEO at BANQ, an internet marketplace that has re-envisioned the offering process by allowing the crowd to participate in offerings from top tier investment banks. BANQ is a division of TriPoint Global Equities.
He is a panelist on “Platform and Funding Options” a session covering the various platforms and crowdfunding options available. Moderated by Dara Albright, the panel also features StartEngine cofounder and executive chairman Howard Marks, author, angel investor and entrepreneur Manny Fernandez, and Stratifund cofounder and CEO Marc Snover.
“We advise companies on how to evolve to be a public company,” Mr. Elenowitz said. “We make sure the offering is both fair to the issuer and attractive to the investment community.”
Mr. Elenowitz added the offering needs to be structured to offer the greatest chance of success. That can involve many factors, including making sure executives have clear expectations of what comes next, such as what is a reasonable valuation of their company.
“Executives are excellent at running businesses, but this is a massive new undertaking and they don’t realize its complexity,” Mr. Elenowitz said. Regulatory issues, disclosure requirements and working with auditors are some of the issues they need help with.
“We are bankers. We’re not a website or a funding portal, and we work side-by-side with issuers throughout the process.”
Now is an exciting time in finance, Mr. Elenowitz explained. Regulation A+ offers the combination of Wall Street due diligence with the power of the crowd to bring back the small cap IPO. Many BANQ issuers are also looking to soon trade on higher exchanges like the NYSE.
Amidst that excitement Mr. Elenowitz stresses patience. It takes a long time to put together a proper offering.
“We are a professional bank and are focused on quality, not quantity,” Mr. Elenowitz explained. Other sites are subscription based and may have more incentive to push deals onto their platform but BANQ only earns money when clients conclude a successful offering.
Mr. Elenowitz provided additional advice for companies considering an offering. Make sure your concept is attractive to investors. Be honest. You cannot value yourself at $300 million when you have $1,000 in the bank. Many make that mistake.
And be detailed.
“Our offering statements mimic an S-1,” Mr. Elenowitz said of the initial registration form the SEC requires from public companies. “You look at some other statements, shake you head and wonder who wrote it.”
Conferences like the Crowd Invest Summit West 2016 play an important role in educating a larger community of retail investors and entrepreneurs about the merits of alternative finance. When asked what other steps are needed to grow the industry, Mr. Elenowitz looked to the history of online trading. The process became compliant with regulations, and bankers began to use it. Once they understood it, online trading’s popularity soon transferred to the crowd.
Don’t be surprised if the same thing happens with the capital raise process, he suggests.
Contributors
