Thought Leader in Financial Technology: DealMaker CEO Rebecca Kacaba (Part 2)

Sramana Mitra: What is your business model?

Rebecca Kacaba: We charge technology fees – setup, monthly, and transactional. We are very aligned with our clients. They can pay as they raise capital. We’re not asking them for a big upfront payment. We make money as they make money.

Sramana Mitra: You take a percentage of the transaction?

Rebecca Kacaba: Yes, under our broker-dealer model. In other ways, they pay after they close capital.

Sramana Mitra: It’s a percentage of that capital?

Rebecca Kacaba: For our compliance services, that’s a 1% fee. In other ways, there’s the technology fee – $15 when an investor signs, $15 when they fund, and $250 for a background check.

Sramana Mitra: We have come a long way in crowdfunding. The part of the crowdfunding industry that first started gaining traction was the Kickstarter model where people can place an advance order on. Then nine months later, the company fulfills that order.

On the equity crowdfunding side, one of the themes that have come up is who leads the round. In a lot of cases, people want a VC to lead the round, price the round, and then the community comes in on that same term sheet. What are you seeing? How are deals being priced? Has this model changed?

Rebecca Kacaba: That’s a good question. That is, traditionally, how a lot of people think about how a round needs to be done. I have done a number of rounds, but not that way. Sometimes there are advisors who can help you with how to market your business and make sure that you’re not giving up too much control or too much equity.

If you do that, DealMaker can help power whatever you come up with. Then you market that to the crowd. Maybe you’re testing the waters and got interested. Then when you open the offering, you convert all that. You don’t necessarily need to have a lead. As a founder, there are benefits to you to not having lead set terms.

Sramana Mitra: Some of the equity crowdfunding platforms don’t accept that. They want an external financial investor set the terms.

Rebecca Kacaba: Right. That’s the antithesis of equity crowdfunding. Let the community come in and invest in the offerings that it feels passionate about. It puts the control in the hands of the founder.

Sramana Mitra: Most people don’t know how to set valuations and they don’t even know how to evaluate a company. You’re talking about every person becoming a venture capitalist. It’s a specialized skillset.

Rebecca Kacaba: It’s a skill that’s becoming more prevalent.

Sramana Mitra: For a very small set of people.

Rebecca Kacaba: I put a lot of value in the ability of people to lead their own financial education and decide what investments they want to make. We have a lot of partners that help founders set terms. We have partners that have communities. In the internet age, a lot of people can look up the symptoms of the disease that they have. They can make decisions on their own.

This segment is part 2 in the series : Thought Leader in Financial Technology: DealMaker CEO Rebecca Kacaba
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