How DealMaker is driving crowdfunding’s promising future

A lot of great missions are being initiated in the capital raising world, but DealMaker’s stands out; they are successfully creating one global capital market. This mission is driven by Rebecca Kacaba, CEO and co-founder of DealMaker, who believes crowdfunding is a catalyst for influencing global markets. Our team recently sat down with Rebecca to learn more about what makes her excited for the next five to ten years in the capital raising space. We hope you will be inspired as much as we were;

For Rebecca Kacaba global crowdfunding is driving a paradigm shift in how future global business will operate. Global crowdfunding is expected to grow by $264 billion between 2023-2027, meaning more and more people are making impact investing a core part of their investments. Consequently, some of the largest startup success stories in the market today are driven by companies with a mission that resonates with an audience or community. 

Not only is Rebecca excited about the prospect of funding startups who have a mission to improve the world, but more importantly crowdfunding is also swinging open doors for minorities and women founders. In crowdfunding, women-only teams have a 40% better chance of meeting fundraising goals, and the current trend shows an increase in the percentage of women-led projects succeeding with their capital raises. 

As the general public are now a major source of capital for companies raising money via crowdfunding, Rebecca sees a shift in how companies are founded, who is finding success, and what this means for the future;

“If you look at institutional funding (VC, banks, etc.) only about 2% of women and POC founders get backed; however, with ECF that jumps up to 35%. When the crowd bets on a startup, they are far more inclusive in the founders profile than traditional funding. So, fast-forward to another 10-15 years, and now the people leading companies in America and across the globe are fundamentally different.”

DealMaker is supporting founders who want their customers and community to have a say in what the future will hold. Their solution is creating a toolkit that streamlines the capital raise experience for investors and founders alike. And one major tool in that toolkit is proper insurance protection; 

“Insurance is always going to be a piece of that [crowdfunding] ecosystem, whether it's D&O or any of the other types of insurance that a company requires, we need to have those kinds of protections readily available for our clients.” 

Our partnership with DealMaker provides critical D&O protection to companies that are looking to raise capital via accredited or non-accredited investors.

To hear more about the impact Rebecca sees crowdfunding having on the future and what principles she admires about her team, read the full conversation between David Carpentier, CEO and cofounder of Assurely, and Rebecca Kacaba, CEO and cofounder of DealMaker below.

You’ve made some big announcements over the past couple months; particularly your increased relationship with FundAmerica and their clients (not to mention the partnership with Assurely). How does that fit into the larger DealMaker strategy and how it relates to how you differentiate yourselves?

It definitely is a core part of our thesis; we have an ambitious strategy to build one global capital market. And we do that by building new and sophisticated capital market tools for the future that help founders and their partners raise capital digitally. The partnership with Prime Trust was a great vote of confidence in our tech, they wanted to make sure that their customers found a good home and, chose us as they saw us as the leader in the market. 

It is a difficult thing to accomplish; building one global capital market - in terms of international payments, international compliance and everything that encompasses. But as we continue on this journey and continue to increase the level of sophistication of the technology we can provide to our clients more and more tools that continue to bring the world together over the internet. It’s for this reason I am confident we will accomplish our goal.

YEAH, THERE'S A SAYING THAT ONCE AN INDUSTRY TOUCHES TECHNOLOGY OR THE INTERNET, IT'S VERY RARE FOR THEM TO GO BACK THE OLD-FASHIONED WAY. SO I’M GLAD TO SEE YOUR VISION IS ON THE SAME TRACK. I WOULD LOVE TO KNOW HOW IMPORTANT YOUR LEGAL BACKGROUND IS FOR YOU IN YOUR UNDERSTANDING OF THE MARKET AND WHAT INFLUENCE IT HAS ON DEALMAKER’S VISION?

It's interesting; both my co-founder and I come from legal backgrounds. He was in New York, and I was in Toronto. We saw the same pain points in different jurisdictions regarding the way capital was being raised - it led us to create a tool we needed ourselves. With over a decade of experience closing these capital raises, we looked to build something to address the gaps both in process and technology that we dealt with every day. 

We built a tool that all of our partner law firms, marketing firms, and Investor Relations firms now use with their clients. It’s digitized and streamlined the end-to-end process, while checking all of the compliance boxes as well. Our legal background gave us the expertise to look at the law and build something that's a great compliance solution, but works better, faster, cheaper, and serves many jurisdictions.

Can you talk a little bit about those clients that you are serving? Do you have a targeted type of Company? Or what does your average persona look like? Are you boiling the ocean or are you starting with somebody specific?

We provide digital payment rails that any founder or company that needs to raise capital can use. They can add our white-labeled functionality right onto their website - similar to eCommerce plug-in like Shopify. Instead of ‘buy now’ it’s ‘invest now’ and the compliance requirements for selling securities are in the payment flow. It’s transformative.

Consumer-facing brands; clients who have a really strong value proposition are incredibly successful at raising capital this way. They want to turn fans and customers into shareholders, and we give them the functionality to do that. No longer are they beholden to just going out to Wall Street or VCs for financing. If they have a strong brand and community support, they can raise capital using the DealMaker toolkit. The most success we are seeing are with clients like Miso Robotics, which is a robotic burger-flipping arm that has raised $67 million digitally. Or the Green Bay Packers, who wanted to raise money for their new stadium, so we set up an online ‘invest now’ functionality for them, and they raised over $65 million in less than four months.

What do you hope to see in the next five years in the capital-raising space? Where do you fit in?

It’s a digital transformation of the industry that we are a major part of. Global crowdfunding is exploding from $8.6 billion in 2020 to over $113 billion just last year. So it's an exponential increase in the amount of capital being raised with retail investors. In the private securities market, analysts predict it growing from $7 trillion in 2021 to $30 trillion by 2030, and we are seeing bigger and bigger deals being raised digitally. 

Another interesting developing trend is something called Impact Investing, which is aligning your investments to your moral values - choosing companies you see as ‘doing good’. It’s interesting to consider that where people choose to invest their money could potentially radically change the world.  Millennials see Impact Investing as a core factor - they want to feel good about the companies they put their money into, and in five to 10 years from now, we could see those companies make a material impact on the world.

 
Equity Crowdfunding (ECF) is also democratizing who gets this funding. If you look at institutional funding (VC, banks, etc.) only about 2% of women and POC founders get backed; however, with ECF that jumps up to 35%. When the crowd bets on a startup, they are far more inclusive in the founders’ profile than traditional funding. So, fast-forward to another 10-15 years, and now the people leading companies in America and across the globe are fundamentally different.

Let's go backwards a bit; what have been some of your biggest surprises since DealMakers started back in 2018?

I love that question. One of the reasons I got into FinTech was that I loved that you build something, you put it out into the world, and you never actually know how your users will use it. When I started this journey as a capital markets attorney, I saw my clients having a problem. I wanted to fix that problem in terms of the way they were raising their financing. It was paper-based, cumbersome, and costly, and I wanted to fix that. 

As we built the functionality we envisioned, it turned out that we had built a platform that could facilitate any capital raise. Our tech supports a common stock offering like the Green Bay Packers, a crowdfunding raise via exemption types like Reg CF, Reg A, Reg S, a warrant exercise, a Reg D and even Canadian crowdfunding. We built something flexible and it’s been so incredibly powerful and adaptable. I’m proud of the innovation we’ve brought to the space.

Ok, self-serving question. What role does risk management play in your platform?

As securities lawyers, we understand the legality of the process, and have built the checks and balances right into our process. We've had risk management embedded since day one. That was a huge focus for us because a part of what our tech powers is fund transfers. Another key requirement is in the regulatory regime. That gives our customers a significant level of protection. It goes back to us focusing on being focused on companies and partners. We're not trying to acquire investors, we're solely focused on standing behind our companies and partners to make them successful. 

We are not just innovating the capital raise experience for companies, our approach brings a whole new business model to the world of raising capital for public or private companies alike. 

Partnering with Assurely is another key, founder-focused initiative for us. Assurely provides an additional layer of support for our companies; because our companies are playing in a new space, regulation crowdfunding, there's new risk present. Insurance will always be a piece of that ecosystem, whether it's D&O or any of the other types of insurance that a company requires, we need to have those kinds of protections readily available for our clients.

Suppose you were given the opportunity to teach a university course, what would you teach and what would be your main lesson?

I love this question. At DealMaker there are two core skills that we focus on as a team that contribute to us being able to have all the success that we've had - emotional intelligence (EQ), and adaptability quotient (AQ). Those are really key traits that no one teaches you, but they're core traits in people who are successful. Those with a high EQ can constantly be learning and taking feedback and getting better. You see the ability to pivot and navigate the world in founders all the time (AQ), but we believe this skill is essential for everyone to have because of the pace at which FinTech and the world at large are changing. 

Part of our motto is ‘we're comfortable in change where others aren't’. If people have a high EQ or AQ, they can better navigate the rapidly changing world better.  At DealMaker we often talk about reimagining a new way of doing your job and ‘disrupting yourself out of a job’. Our team is brilliant because they have the ability to do that - streamline and simplify the complex, constantly change, because they have such a high adaptability quotient to adapt to change, and they have such a high emotional intelligence that keeps them learning and growing in that environment. 

So, if I was going to teach a course it would be on EQ and AQ because I think these are core success muscles that anybody can learn… they just have to be aware of them and then they have to commit to developing them.