Happen to catch Cash Crowd on CNBC last week? Four companies selected by CNBC-- Nomad, Kosofresh, Hubb Filters, and Whole Life Pet--presented their companies to a panel of investors (and thousands of viewers at home) on live television. For the first time on national television private companies publicly fundraised--a feat only made possible (and legal) by recent regulatory changes. Outstanding consumer entrepreneurs and investors Lynn Tilton, Eric Ryan, Barry Nalebuff, and Alicia Syrett were Cash Crowd judges. Collectively, the companies they've started have grown revenues into the billions.
- Lynn Tilton is an American business magnate and investor. She is the chief executive officer and sole principal of Patriarch Partners, LLC and its affiliated entities, a holding company managing 75 companies with more than $8 billion in revenues.
- Eric Ryan founded Method Products in 2001. Fusing his knowledge of fashion and design, he has invented a modern line of cleaning products that are sold in over 25,000 retail locations. Growing revenues to over $100 million, Method was acquired by Belgium-based Ecover in late 2012.
- Barry Nalebuff is a Professor of Management at Yale School of Management. An expert in business strategy and game theory, Barry co-founded Honest Tea in 1998. Honest Tea was acquired by Coke in 2011, having grown sales from $250,000 in its first year to more than $70 million at the time of the acquisition.
- Alicia Syrett is the Founder and CEO of Pantegrion Capital, an angel investment vehicle focused on seed and early stage investments. She is a member of several angel networks including Golden Seeds and NY Angels and currently serves on the Board of New York Angels, as the Chairman of the Board of Directors of HeTexted, and on the Advisory Boards of Beauty Booked and Willa.
Publicly advertising private investment offerings is a new thing, made possible by the implementation of Title II of the JOBS Act last Fall. Title II enacted a new securities exemption--Rule 506(c) of Regulation D--which allows companies, to publicly advertise their private offerings. (For the first time in 80+ years!) Given the risk of private investing, the SEC requires individuals to be accredited to invest. Kosofresh, Nomad, Hubb Filters and Whole Life Pet are all leveraging this new 506(c) exemption--hence their option to publicly announce their fundraise on Cash Crowd. (And hence my ability to even talk about it!) Rule 506(c) carries enormous implications for entrepreneurs and investors alike. Whereas previously, companies were all too often bound to their immediate geographies or social or professional networks--they can now reach out to potential investors across any medium. Online or offline. It certainly doesn't guarantee outcome--but it does present new opportunities. And reduces inefficiency in the private capital market overall. Cash Crowd is a great example. What an awesome opportunity for entrepreneurs to gain exposure to thousands of potential partners, suppliers, buyers, customers, and investors. These companies are exercising Rule 506(c) to publicly reach investors in all sorts of new and creative ways; be it through their websites, social media, flyers, emails, and, of course, word of mouth. It's early days, but there's no denying: private capital markets are changing. Becoming more open, transparent and fair. It's change we're excited to accelerate at CircleUp--and thrilled to be a part of.