Guest post: Lucas Marquardt
Mark Cuban photo credit: VentureBeat Magazine
So where does Mark Cuban stand on Crowdfunding?
By Lucas Marquardt
I admire Mark Cuban for seemingly being the “everyman” in the Shark Tank. Sure, he’s brash and outspoken and while I don’t agree with him on everything, I do respect his opinion when it comes to venture capital.
That being said, I was disappointed when he spoke disparagingly about investment crowdfunding back in March. I was also disappointed to see an entrepreneur with a Real Estate Crowdfunding platform ripped to shreds on Shark Tank the month before. In that instance, Mark Cuban declared that he was “out” in less than 60 seconds.
However, in this morning’s Wall Street Journal, Mark Cuban speaks about income inequality and how it’s virtually impossible for the 99% (i.e. not him) to “keep up with the 1%, guys like me…” He also discusses what he believes are fundamental flaws in the “No. 1 place for this country to create capital for companies”, the stock market. On one hand, he says that it’s “too difficult to go public” and most companies aren’t able to undertake the time, cost and complexity of this exercise. On the other hand, due to high-frequency/algorithmic trading, most people don’t trust the stock market enough to put their money there. The result?
“So if the normal people in this world are really working hard, doing what they’re supposed to do, living frugally, saving money, they’re f*cked because they don’t trust the markets.”
Well said, Mr. Cuban. I think.
Whether he thinks so or not, I think that his comments in this morning’s paper are in fact an endorsement of investment crowdfunding. He’s right…why should “normal people” put their money in the stock market? Well, because, it has been their only option to date. Expensive wealth managers can help you make money in this space while doing their best to help you mitigate your risk, but at the end of the day, you’re still investing in post-IPO companies that have already experienced the most exciting part of their growth curve prior to most of us having the opportunity to buy their stock. What the 99% get for the most part is the scraps left over after the action, with the exception of the rare booms (and busts) that make the nightly news.
Imagine this. What if you didn’t send the $200 that you have to invest each month to Wall Street and instead were able to invest in businesses in your own community? For example, this month, you’re going to make a $100 investment in your local independent grocery store (solid, low risk investment), $50 in your local craft brewery (medium risk investment) and another $50 in a local tech company that you think is about to take off (high-risk investment). You’re making all of these investments by way of investment crowdfunding. You’re not necessarily buying stock/equity in each of these businesses, some are revenue share certificates and others are interest-bearing loans.
The point is, investment crowdfunding allows the “normal people” to place their investments with businesses that they know and trust. With the right portfolio mix, I believe that it’s possible to achieve above-market returns with reduced risk. What’s more is that now you have access to the exciting part of a high-growth company’s growth curve. You may not hit it every time but if you make enough (responsible) investments, you just may end up with a $100 investment in the next Apple which is now worth $100,000.
Even though I dispute the notion that non-accredited investors by default are generally “unsophisticated”, I do agree that investments in this space should be widely diversified. Spread your money around and help more businesses in your community, they’ll appreciate you for moving your money from Wall Street to Main Street.
Stay tuned for my newest undertaking, Invest Local LLC. We will be launching in the coming months with exciting new ways for the rest of us to invest in our favorite local businesses.
In the meantime, please feel free to share, comment, email ([email protected]) or ask me about how your business can access capital in ways that have not been available for the past 80 years.
Lucas Marquardt | Blue Jeans Capital, Inc | Denver, Colorado
Lucas Marquardt, MBA, is the finance lead of The A+ Team LLC, a Denver-based consultancy that helps qualified businesses utilize the profound change in U.S. Securities Law known as Regulation A+ – Title IV of the 2012 JOBS Act (Jumpstart Our Business Startups) – which scales back 80-year-old securities laws by allowing U.S. companies to raise up to $50 million every 12 months from both accredited and non-accredited investors. A long-time crowdfunding proponent, Marquardt is also managing director and founder of Blue Jeans Capital, Inc., which helps Colorado businesses raise growth capital by tapping existing customer bases of both accredited and non-accredited investors to participate in equity crowdfunding campaigns.
Contact Lucas Marquardt on LinkedIn: https://www.linkedin.com/in/lucasmm
reprinted with permission