Welcoming SecFi to Our Portfolio

Last year Social Leverage led an investment in SecFi, whose vision is to help startup employees make sense of their stock options and equity.  The company was founded by Wouter Witvoet and Frederik Mijnhardt. Wouter was motivated to start the company from his own experiences at a fast growing startup.

Wouter on the left and Frederik on the right.

Wouter on the left and Frederik on the right.

As of today, the website and product are live to the public (transactions have been happening the last six months while in stealth mode). The website has some very useful options calculators and education for ANY start-up employee and founder.

So what does SecFi do?
Whereas traditional financial institutions only care about the currently wealthy, SecFi is building products for employees pre-wealth so they can take advantage of their financial opportunities. They do this by providing financing to employees of growth and late-stage private companies so they can exercise their stock options and to the shareholders who already own their stock. The key to their offering is that all financing comes without risk to the borrower – if the company goes under, there is no legal obligation on the borrower to pay anything back. In return, borrowers pay a compounding interest rate and share a portion of their equity when the company has a liquidity event.  Using SecFi for financing has the following benefits:

  • Unlike selling, a Secfi financing defers capital gains taxes until exit and lets companies and employees keep their Qualified Small Business Stock (QSBS) tax treatment.
  • Financing against your shares lets you keep the upside compared to selling on the secondary market.
  • Avoid having all your wealth locked up in one company and keep your savings for what matters to you.

How does it work?
Employees and shareholders apply for financing on SecFi’s platform, which based on each individual’s personal and tax situation determines how much financing you are eligible for. Once an agreement is reached, SecFi pays the determined amount. SecFi’s structure works for all companies, too. They have ensured that their platform doesn’t violate any company’s restrictions so employees everywhere will have an opportunity to exercise their options when they want to.  In instances where the employee doesn't need financing, they can still use SecFi's products to better understand the value of their equity/options, better plan for upcoming taxes and best prepare for a potential IPO or company tradesale.

 

SecFi’s Vision
SecFi’s ultimate goal is to be the financial advisor that helps employees and shareholders before they are wealthy and are bombarded by a plethora of “old school” financial advisors. We simply couldn't find a technology solution that helps people in this process.

The vision and the solution line up very well with how we see financial services and the industry evolving and we're excited to have a role in helping SecFi succeed.

Meet Social Leverage portfolio company Rally Road

RallyRd_1955_Porsche_356_Speester_05.jpg

Howard was first on our team to write about the founders (Chris Bruno, Max Niederste-Ostholt, Rob Petrozzo) and team at Rally Road.  

RallyRd is a mobile platform which provides investment opportunities in individual, high-end, blue-chip automobiles. RallyRd intends to democratize the collector car market by providing passionate automobile enthusiasts with an opportunity to invest in the market, even if they may not have the financial capability to purchase one of these beautiful cars on their own. RallyRd are currently targeting the 50 million US auto-enthusiasts, more than 25 million of whom have seen car auctions (Barrett-Jackson and Mecum), in order to allow them to participate in the classic car auction space. The opportunity is in monetizing off of enthusiasts’ desire to participate in their passion, while giving them an opportunity to grow their wealth as well.

RallyRd securitizes each individual asset into a mini-company, which is then packaged into an Initial Car Offering (ICO). After educating participants about the asset through a variety of mediums such as photo and video, RallyRd allows investors to participate in the ICO through the RallyRd app. Using the app, participants can then also engage in a secondary market as the value of the asset fluctuates.

The RallyRd app in action.

The RallyRd app in action.

To get a better idea of what RallyRd is really up to, checkout CEO Chris Bruno discuss with Maria Bartiromo of Fox Business News.

Chris, Max and Rob and are three life-long friends, who have always followed the collector car market, but never felt like they had an access lane to get inside the velvet rope.  It was easy to dig in around RallyRd as the guys are fully transparent and as eager to learn from our team as we were about their business.

Max, Rob & Chris (from left to right)

Max, Rob & Chris (from left to right)

Estimates put the size of the collector car market at 10 billion dollars, with RallyRd focusing specifically on bluechip cars. The value of these has increased more than 300% in the last decade according to the Hagerty index, which tracks the average value of the 25 most sought-after automobiles (adjusted for inflation):

media-20180208.png

As you can see, the vehicles on Rally Rd. represent an asset class that has historically outperformed the stock market as well as other alternative asset classes (including gold, fine art, and real estate). Expanded opportunity lies in rebranding and increasing the number of available markets to investors. All of these markets could feasibly be adapted to this model and significantly increase the market size of the product.  

Rally Road’s mission is to democratize alternative investments like these, providing access, liquidity, and transparency to markets that have traditionally only been available to a select few.

We’re excited to help RallyRd bring their vision to life.  It truly is where People, Passion and Profit meet.

Techcrunch recently covered our investment along with the company’s press release.

Social Leverage intern, Samuel Roland, contributed to the research for the blog post.

A Whiff of eCommerce

We've long been thinking about changes to ecommerce.  There's no doubt that Amazon is killing it and along the way, drastically changing the retail landscape as we've known it for the past 50 years.  And yet, it seems that there are niche brands that are able to create a loyal audience, create an authentic movement and cement a place in history all for themselves.

I recently spoke to an ecommerce entrepreneur who hit the nail on the head.  He told me that it doesn't matter what he sells - although in his case, it was mattresses.  The value of his platform is his ability to acquire customers in cost effective ways, build the brand and following for repeat and word of mouth customers and to control the supply chain to be able to provide the ultimate product.

That mindset led to our second investment in our Fund III (we'll talk about the first, third and fourth investments in future updates).  The company is Whiff.com and they sell custom and curated fragrances - that's right - perfume!  At the highest level, they sell a pack of 5 different perfumes (or colognes) that they put together into themes (Autumn Nights, After Dark, Work & Play) and many, many more.  You subscribe to receive a different curated pack (5 scents and 3 of each one) every month for $7.95 or simply buy them a la carte.  It gets more interesting though, because you can also customize the different fragrances to create your own scent.  And once you're happy with your custom fragrance, you can even sell it on their platform and earn a commission.  They have an impressive vision for the platform which they're seeding with perfume subscribers. 

Whiff.com Website

As is our usual custom, we were excited by both the size of the market opportunity and by the team.  One of the founders and COO is Jason Pang (clearly he needs to tweet more).  Jason was previously the founder of our Fund II portfolio company SparkFin (acquired by Stocktwits) and before that he was the CEO of Prima Cinema, and first employee at DivX where they exited with an IPO. 

Jason on the left and Paul on the right.

Jason on the left and Paul on the right.

Jason initially drew us into the company and he is heading up the operations side of the business, which is much more complex than it might seem on the surface. The company is led by founder and CEO, Paul Tran.  Paul is a lifelong entrepreneur, leading companies in different in industries from enterprise real estate software to surveillance equipment distribution.  Most recently, Paul has become an ecommerce and social media ad expert, launching and growing both Dermaclara and Manscaped in the past few years to almost cult like followings.

Below is a quick example of a creative video ad that the team put together to spur some interest:

 

 

 

 

 

Whiff.com launched last week, allowing everyone to smell better; go grab your Whiff pack today!

Congratulations to Bitium, now a part of Google

We were fortunate to be able to invest in Bitium in early 2013.  With the rise in the sheer number of SaaS applications, it was evident to us that there needed to be a company and product to securely and easily consolidate all of the logins and permissions across the enterprise.  Founders Scott Kriz and Erik Gustavso built just that product, and have been successfully growing the company over the last four years.

Today we're proud to say that the company has been acquired by Google and that the product will help Google Cloud continue to deliver best in class identity management solutions to its customers.  We are very happy for Scott, Erik and the entire Bitium team.

Vacation Rental Pricing Optimization with Beyond Pricing

Beyond Pricing helps property owners optimize their yields for short term rentals.  That sounds like a mouthful, but what does it really mean?

From my own experience, I leveraged Beyond Pricing when I was living in San Francisco.  My family chose to spend summers in San Diego, given the vastly different weather during the summer months in those two locales.  As we were largely out of the house for two months at a time, I listed my house on AirBnb and quickly linked up Beyond Pricing.  I found that Beyond Pricing allowed me to set and update daily pricing for my listing many months in advance, taking into account supply and demand for hotels and short term property rental sites coupled with knowledge about local weather, events and many other factors.  These updated prices were often times much higher than I would have set for myself - and I was successfully booking out at a <70% level.  At the same time, I had set a threshold level on the lower end that I wasn't willing to pass - sometimes it's just not worth having people in your home even if that would allow you to achieve closer to 100% occupancy.  Beyond Pricing allowed me to have less renters in my property while actually making more money - that's what they do - and they do it automatically without any user intervention needed after the initial quick and painless setup.

The hotel industry has had this capability for decades.  If you've ever tried to book a hotel for various dates, you'll see daily fluctuations not just based on seasonality, but on day of week, events, weather, distance to booking time, perceived supply and demand ratios and more.  Beyond Pricing brings all of that sophistication down to the individual, allowing any person with a single room or a single property to do better with that listing. Somewhat surprisingly, the largest users of platforms like AirBnb, VRBO, Homeaway, etc. are not individuals but rather large scale property managers (the medium sized ones would have a minimum of a 100 listings).  Even more surprising, these property managers utilize property management systems (PMS) which also did not have the ability to price their listings in an intelligent and dynamic fashion, until Beyond Pricing came along.  Now the top property managers in the world are leveraging Beyond Pricing, through its integrations with property management systems like HomeAway Software's V12 and Escapia, Streamline and more.

In July, Beyond Pricing both acquired Smart Host and made their Market Data and Nearby Listings feature freely available, features that every vacation rental owner should use, whether or not they ultimately also leverage Beyond Pricing's automated pricing.  As Ian said in that blog post:

The ability to see comps and gauge their performance relative to neighbors is one of the most common features requested by hosts and managers.

Existing Beyond Pricing users can find the new Nearby Listings tab available immediately for each of their listings on their dashboard

Beyond Pricing now has a user base of over 120,000 listings in over 1,000 markets around the world and are continuing to innovate both on the product and the business model.  I'm excited to see what's still in store for this excellent team.

For those of you that have gotten this far and want to join the company for a front row seat, Beyond Pricing is hiring for a senior full stack engineer, a sales development rep (SDR) and a revenue manager - please apply and spread the word!

The Priceline of Commercial Lending

Last year we made the commitment to be more diligent with our efforts to find talent in the Phoenix ecosystem.  We started Social Leverage here in 2008 and it’s only fitting we open ourselves to the local opportunity.  With our larger presence in both New York and California, oftentimes smaller tech markets such as our hometown of Phoenix don’t get the attention they deserve. In 2015, we began to engage with several new Phoenix tech community members which ultimately led to an introduction to CommLoan.  It really hasn’t been since GolfNow that we leaned in locally and I’m really glad we did here. We tracked CommLoan for over a year before being nudged by one of our LP’s to dig in further. The company made a significant pivot at the start of 2016 that made a difference.   CommLoan is now nearly profitable and the business has proven to be highly scalable through the past two quarters. Their pipeline grows weekly with opportunity.

Yesterday CommLoan announced that Social Leverage and Via West as co-lead’s of their $2.25M seed round.  It’s been a pleasure getting to know the management team at CommLoan.  Founder, Mitch Ginsberg, has assembled a rock star team of experienced professionals, including former Starwood CFO, Alan Schnaid, who invested alongside us in this round and is joining CommLoan as their CFO/COO and board member.  

CommLoan is a company aiming to be the PriceLine of the commercial mortgage business.  The mortgage brokerage business has barely changed in the last 30 years and is yearning for technology to disrupt it. Mortgage brokers working on smaller loans ($10 million and under), the lion’s share of whom are small ‘mom and pop’ firms, have weak coverage of lenders in comparison to CommLoan, and typically take a week or more to provide loan quotes versus instantaneous results from CommLoan.

CommLoan provides the private label clients (primarily real estate brokerage firms around the country that do not have in-house mortgage brokerage) with a no-hassle method to steer business through their network for this service, thousands of potential “salespeople” for CommLoan are already in the market, resulting in a win-win opportunity for all parties involved. Through this approach, CommLoan can experience exponential growth to its platform and develop a reputation from name players in the industry. For 2017 the company will grow a Consumer Direct portion of the business, in which borrowers will go directly to CommLoan through existing relationships, introductions, or search engines, which has even greater margins than the private label.

There’s some exciting things happening in tech around Phoenix these days and I'm happy that we’re a part of it.

LiveStories Raises $3M to Continue Their Vision

Last week, I had the opportunity to travel to Seattle to congratulate the LiveStories team on making it to the next step of their journey.  LiveStories is changing the way governments work with data and there have now been multiple reports of their most recent fundraise.  While the fundraise is not the end goal, the additional capital and support of the new investors will be extremely meaningful in helping CEO Adnan Mahmud realize his vision for the company.

We had announced our original investment in the company about 18 months ago.  Since then, the company has grown significantly across every part of the business.  Eric joined as CTO and has been instrumental in building out a significant data ingestion and communication platform.  Samuel recently joined to build out the sales function and is already making his mark known.  Andy, Anders and EA are continuing to do great work.  From my perspective, perhaps one of the biggest testaments to the team has been their dedication to focus this product specifically on the needs of the public sector - dedication which is now starting to bear fruit as more and more government agencies adopt their technologies and more than 45 million constituents are now being served through the platform.

True Ventures is the lead for this most recent investment round.  Aside from True being a great partner, having them join along for the ride is especially great for me as they were (along with Social Leverage), the first investors in my last company, Assistly.  I've known Puneet for a number of years and he will be a terrific asset for the team.

As part of last week's event, Eric showed us a demo of a new product that LiveStories will be rolling out in the near future.  It's too premature to speak about this product, but I will say that I was thoroughly impressed.  The team was also clearly stoked and it was really nice to see the pieces coming together.  There's still a long road ahead, of course, but LiveStories is on the right path and Social Leverage is honored to be a part of the journey.

The Future of Your Digital Identity

The Future of Your Digital Identity

One of my first angel investments was in LifeLock ($LOCK) back in 2006. I have been bullish on the space ever since. In the last twelve months there have been hundreds of large scale credit breaches including Target, Ashley Madison and eBay.

If you’ve ever had your identity stolen, you know the pain of undoing the damage. That is why I’m excited to announce Social Leverage’s seed investment in Civic Technologies. I will also be taking a board seat.

Breaking Glass

Breaking Glass

Glassbreakers.co launched as a peer mentoring site for women in January of 2015.  In the year since then, more than 13,000 women with work experience from over 80,000 companies have registered and actively engaged on the platform.

Beyond their consumer-facing mentorship network, Glassbreakers is now expanding into the enterprise.  They are set to completely redefine how companies address, support and scale diversity and inclusion.  We believe that Glassbreakers’ enterprise model solves a huge pain point for large businesses by providing the tools to measure impact in hyper-relevant ways.  We see tremendous growth opportunities with Glassbreakers as the first to market enterprise software for diversity and inclusion.

Fantasy Sports is Serious Business

Fantasy Sports is Serious Business

A successful stock portfolio requires access to great statistical information, innovative ideas, and consistent performance, which is why I created the Stocktwits community. Building a great fantasy sports team is no different. When the stakes are high and you need to beat your opponents, you’ll need every bit of edge you can get.

That’s why we’re excited to announce our seed investment in Erik and Peter Groset’s Fantasy Sports Company. In their past lives, Erik was the co-founder and inventor of Zipbuds, an innovative solution to tangled earbud and headphone cables. Peter was a senior software engineer at San Diego’s own ecoATM. These smart, business-savvy brothers are passionate about helping fantasy sports players become real contenders.