Published in the San Diego Union-Tribune, February 1, 2016
I get pitched ideas all the time. Recently a woman came to interview me and challenged me with trying to find a better way to energize the technology/startup/innovation economy here in San Diego.
As they say, physician, heal thyself. So, I am going once more into the breach, ready to stand on the other side of the desk and pitch my idea to you.
I am doing this because I believe in the wisdom of crowds, and I believe in the power of better ideas, recognizing that where they come from is irrelevant. So, without a pitch deck, (that’s like walking between the former twin towers without a net), here we go.
I want to create a real time, local version of “Shark Tank.” The idea appears simple. Get a panel of qualified sharks and have local companies present in front of them. So far, if you were a VC, you would begin to nod off, but now let me throw you the fishhook.
The viewing audience, the 3 million people who live in San Diego, could invest along with the sharks, in relatively real time. Voila! New technology and revised SEC rules for equity crowdfunding make this possible.
Two years ago, I wrote this idea as a television show (“Angels Or Demons”), but the regulatory environment stymied me. Back then, it was illegal
because among other things the vast majority of the audience were not “accredited investors.” That is a term of art that says you are sophisticated and have a lot of money and can afford to lose it. Failure to adhere to this rule brings the wrath of Khan and the SEC down upon you. I am not sure which is worse.
But never discount the power of time and timing. The JOBS Act under Title
III is poised to make investing available to the unaccredited investor, the little guy.
There are some rules, but for the moment, let’s assume that Betty in El Cajon, who makes $30,000 per year, wants to get in the startup, small company game. As of May 2016, she can invest up to 5 percent of her salary ($1,500) to purchase common stock in a private company. (There are some fine points, but in general the above statement is relatively true.) There are also some restrictions on public communications and solicitations – in other words, plenty of nuanced issues for the lawyers – but as a big idea, I think it has some legs to stand on.
Next, I need to convince my investors that it can scale, that we can grow into a unicorn. OK, let’s franchise/license the idea to 50 other cities. Investing is local and this idea/show brings investing to the local community. I am going to need: a television station to commit some time, a mobile platform, local/national advertisers and some legal eagles to keep everyone out of jail. Then I will have to raise some money and find some sharks – yada yada – just like any startup.
At this point, I am hoping the venture capitalist has put away his phone and is almost sitting up in his chair. Then I give him some details. The presenting company must use an approved platform (I like Start Engine) to get approved by the SEC (takes a couple of weeks) and then if everything is kosher (another legal term), the dough, which was in escrow, is released and the company sends the stock certificates, and they go do their thing.
My VC is finally leaning in. The local sharks are going to have to work the deals, just like the real sharks do, so I’m going to need a management team and some bandwidth. Mark Cuban doesn’t do this alone.
My VC is finally beginning to salivate, and he asks the killer question. How do you make money? I tell him, I am not sure, but we will figure it out later. I duck that body blow and tell him that my first task is to do a pilot – an MVP -minimum viable product. He says he will take it to the next partner meeting. (I wonder if that is the same as the check is in the mail).
If you have recommendations, harpoons, or thoughts, feel free to send them to [email protected]
Rule No. 452
Believe in the wisdom of crowds.