Razitall, a phonetic play on Raise-It-All, is a new crowdfunding platform founded with both entrepreneurs and investors in mind. The goal of the New York-based platform is to help entrepreneurs raise the target amount needed during a Reg CF campaign in order to succeed and to help investors increase their wealth.
The Razitall platform allows entrepreneurs and investors to connect and explore equity investment offers governed by the Title III Rules. Investors have the ability to help fund small business owners who want to grow their business and do not have other alternatives for financing. Investors can participate in owning part of the business and are able to receive financial returns if and when the business succeeds. The platform was launched in stealth mode on 1/8/18 with its first pitch; 5 February marks the day when Razitall’s official marketing campaign takes off. By this date, the platforms expects to have more than 5 offerings available, including WhatIf and English for a Song.
Leading the new platform is CEO Dean Hampton. With over 25 years’ experience, Wharton grad Hampton has held a diverse range of leadership positions in several industries including tech, financial services, banking, insurance and education which shaped his perspective on how digital transformation can dramatically improve global business operations and spurred him to design and develop Razitall’s equity crowdfunding platform.
I recently had the opportunity to catch up with Hampton to learn more about the genesis of Razitall, its team, its advantages over the crowd and recommendations to improve crowdfunding regulations. Our interview follows.
Erin: What was your first experience with crowdfunding? How has this and/or other experiences shaped your vision for Razitall?
Dean Hampton: In building several startups I have always been challenged by how to fund them. It is very difficult to get early stage funding. Whichever channel you choose, bank, VC, or angel, the path is filled with serious hurdles and complications. When the JOBS Act passed, it created the possibility to change that for small businesses. We immediately started designing the best way for this to be implemented. In order to make the process really easy for entrepreneurs to raise money on Razitall, we focused on removing the usual painful barriers.
Erin: Why equity crowdfunding? Tell me about the team, how it was brought together and your plans for growth.
Dean: Not just equity crowdfunding, but Regulation Crowdfunding, was the key. Reg CF allows Razitall to market investment opportunities to the public, and take investments from unaccredited investors. This is a revolutionary change and could directly improve the economy if implemented correctly. It was the natural convergence of Kickstarter & Shark Tank and is the most effective way to help as many small businesses as possible. For a low fee, we can bring entrepreneurs and investors together without the traditional complications introduced by brokers.
Everyone on the team has a shared passion to make it easier for entrepreneurs to raise money, and to create a trusted community where peer to peer investing can thrive. We have all been involved in building online communities for commerce purposes in the past. Our goal for Razitall has been to simplify the legal and regulatory issues so entrepreneurs can focus on their pitches and investors can fairly evaluate opportunities.
Erin: Who has Razitall chosen to advise the platform? Who else has provided guidance as the platform has taken shape?
Dean: We have learned about Regulation Crowdfunding alongside everyone else. We watched it being created, and then passed into law. We have become our own Reg CF guide in the process. We have been assisted by experts in each area to create the Razitall model. It has been a convergence of crowdfunding, early stage investing, ecommerce, peer to peer business communication, and the social layer that is necessary to connect it all. After we had our desired solution, we had to evolve it to embrace all of the final rules released by the SEC and interpreted by FINRA.
Erin: How have you learned from other platforms’ successes and failures? What have you learned from creating an equity crowdfunding platform from the ground up?
Dean: We have learned:
- from UFP- the reality of being shut down when they failed to meet regulatory requirements and standards.
- from successful platforms- that you have to have a strong social outreach and strategy in order to make it successful.
- from others- the barriers can be so high that entrepreneurs cannot get in the door. Then the platforms do not have the right pitch volume and investors are deprived of the opportunity to decide who they think is worthy of their investment.
Most of the participants think about Reg CF very much like the old broker model and we think that it needs to look more like Kickstarter: easy to access for both investors and entrepreneurs. While creating an equity crowdfunding platform from the ground up, we learned that in order to remain committed to our vision, we had to persist through unchartered territory and had to seek special regulatory approvals for credit cards and Bid War, our signature auction-style model.@Razital CEO @razitalldean: We learned that in order to remain committed to our vision, we had to persist through unchartered territory...Click To Tweet
Erin: How do you plan to differentiate Razitall from the other crowdfunding portals operating in the US? How will you ensure that Razitall will thrive given the strong competition?
Dean: We differentiate from the other portals by being Easy, Flexible, and Exciting.
Easy – We make it easy for entrepreneurs to focus on their pitch, while we help them with the regulatory process. We make it easy for investors to sign up with only an email and password, and they can invest with the convenience of their credit/debit cards.
Flexible – We make it flexible by offering 4 return models; 3 equity models, and 1 presale. Entrepreneurs can choose which model they prefer to use for their offer, and investors have the option to choose pitches to invest in according to the return model as well.
Exciting – We make it exciting by offering dynamic bid pricing to keep the bid (investment) price as low as possible so more people can participate. We also have our signature Bid War feature, which allows competitive bidding for popular pitches while limiting the total number of investors on a single pitch.
We will ensure that Razitall will thrive given the strong competition by offering something that is unavailable from our competition and by focusing on continued innovation..@RazitallCEO Dean Hampton: @Razitall differentiates from the other #crowdfunding portals by being Easy, Flexible, and Exciting. Click To Tweet
Erin: How will Razitall address the US market and source deals? How will you and the team vet potential partners?
Dean: Our goal is to be able to reach out to entrepreneur communities to find people who need funding outside of the Silicon Valley, New York, and Boston hubs. To meet Main Street America. We are engaging entrepreneur programs across the U.S. to find the next pitches.
Regarding pitches, we take the strategy that we let the crowd decide, rather than curating the pitches ourselves. If it is compliant with regulatory, we run the pitch. We do not turn pitches down because we do not think they are good ideas. The crowd needs to determine that. That is the exciting part of crowdfunding, to see what takes off.
Erin: What’s in Razitall’s pipeline? Will it be a full stack platform?
Dean: Yes, entrepreneurs have responded well to our outreach and represent a wide variety of investment opportunities. We have 20 pitches being built now in a wide variety of industries from beer to prosthetics.
Erin: How can crowdfunding regulations be improved?
Dean: Besides the obvious increase in funding limit, we would like to see investors have the immediate ability to resell securities purchased through Reg CF. As soon as someone makes an investment, they should have the option to resell it. I think it would significantly improve market liquidity and investor confidence, which benefits everyone. The current 12-month holding period is an artificial barrier.
We strongly encourage the annual crowdfunding limitation for entrepreneurs be raised into the millions. A significant limit increase would better serve, and therefore, better attract, entrepreneurs. In turn, this would create more opportunities for investors, especially unaccredited investors, to have access to a broader range of Reg CF deals. Beyond regulatory improvements, there are industry improvements to seek as well. We would like to see the payment method world accept crowdfunding, like PayPal.
We are also looking at ICOs as a possible payment option.A failed pitch can teach more than a successful one. @razitallClick To Tweet
Erin: Please elaborate about ICOs and utilizing crypto on the platform.
Dean: We are looking seriously at crypto on two levels. The first is how some of our competitors are accepting crypto currencies as payment for securities. We don’t see the full ecosystem in place for this yet, but can imagine that Entrepreneurs may be able to accept crypto payments once the services for trading them are more mature and less volatile.
We are also looking at funding crypto currencies who are looking to raise money to get started. The SEC has published some strong warnings against the viability of these financial models, and we are interested in finding the right currency to support, rather than just leaving that risk to the investors in our community. We are currently on the lookout for the right Entrepreneur partner.
Erin: What other news would you like to share about the platform?
Dean: By creating a model with no up-front costs, we make it free for entrepreneurs to take that first step to getting funded and building an audience of people interested in their service or product. They can test their messaging, gather feedback from the crowd, and learn how they are being seen by the market. We are trying to remove the fear of failure for our entrepreneurs so they can get started learning, even if they do not feel totally ready. A failed pitch can teach more than a successful one.
Erin: Where do you see Razitall in a year? in 5 years? in 10 years?
Dean: 1yr – we would like to be helping solve the secondary market problem.
5yrs – we are interested in establishing independent overseas branches of the Razitall platform.
10yrs – we want to have enough capital to begin investing in entrepreneurs directly.