Jul 19, 2022 · 47m · we-live-to-build
Turn Your Customers Into Investors Before You Ever Talk to a VC
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
On this episode of the 'We Live to Build' podcast, host Sean Weisbrot and guest Cecil Robles explore how founders can leverage equity crowdfunding mechanisms like Regulation A and Regulation CF to turn loyal customers into investors while maintaining corporate control and integrating Web3 enterprise utility.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Sean holds 20.1% of the talking time here. How this is scored →
Sean as informed peer 3.4 Guest teaching 5.1 Guest disagreement 1.4 Sean pushing back 1.6
speaking balance: gold is Sean, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 20:04 Cecil rejects Sean's million-dollar startup estimate and patent assumption
Cecil directly contradicts Sean's claim that preparing for a raise easily burns a million dollars in runway and firmly dismisses the notion that holding patents eases SEC approval.
Hardest push from Sean ▶ 29:25 Sean presses Cecil on not developing proprietary backend infrastructureSean questions Cecil's choice to rely on third-party tools like DealMaker, contrasting it with successful Web3 startups that built their own end-to-end KYC and token distribution software.
Biggest teaching moment ▶ 23:01 Cecil explains offshore entity restrictions under SEC crowdfunding rulesCecil educates Sean on the strict legal requirement that operating entities must be incorporated in the US and warns against siphoning funds into foreign parent structures.
Sean holds their own ▶ 41:42 Sean identifies the valuation risk of open secondary NFT trading for private firmsSean demonstrates strong financial and product expertise by pointing out that open secondary NFT markets undermine a private company's ability to control its valuation and price floor during investment talks.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Sean as informed peer | Guest teaching | Guest disagreement | Sean pushing back | Why |
|---|---|---|---|---|---|---|
| Understanding Equity Crowdfunding, Reg A, and Reg D | 2 | 6 | 2 | 1 | Sean asks broad foundational questions about crowdfunding, Reg A, and Reg D. Cecil delivers an extensive legal breakdown of accredited investor requirements, 506(b) versus 506(c) solicitation rules, and gently corrects Sean's assumption that Reg A is simply less of a headache by detailing heavy reporting requirements. | |
| Strategic Advantages of Choosing Regulation A Over Venture Capital | 2 | 4 | 1 | 0 | Sean prompts Cecil to explain the strategic rationale behind pursuing Regulation A over traditional venture capital. Cecil details the founder equity preservation benefits, customer-to-investor conversion, and alternative paths to public listings in an entirely cooperative explanation. | |
| Reg CF vs. Reg A: Requirements, Costs, and Filing Processes | 2 | 6 | 1 | 0 | Sean asks about the timing and qualification hurdles for Reg A. Cecil gives a structured lecture comparing Reg CF caps and Form C filings with SEC-qualified Form 1-A filings and PCAOB audit expenses. | |
| Timelines, Capitalization Runway, and SEC Qualification Factors | 3 | 5 | 2 | 2 | Sean estimates that operational runway and legal filings easily surpass one million dollars and asks if granted patents facilitate SEC qualification. Cecil immediately reins in the million-dollar estimate and clarifies that the SEC evaluates legal structure rather than patent status. | |
| Jurisdictional Restrictions and Raising US Capital for Foreign Entities | 4 | 6 | 1 | 1 | Sean brings up his own Singapore-incorporated startup to ask about foreign entity eligibility. Cecil delivers clear regulatory guidance stating operating companies must be US-based, prompting Sean to share his past hesitation around US legal overhead. | |
| Custom Funnels vs. Crowdfunding Portals and First-Party Data Capture | 5 | 5 | 2 | 4 | Sean challenges Cecil on why he relies on third-party backend software like DealMaker instead of developing proprietary tech, citing his own past ICO experience with Presearch. Sean also references identity resolution tech from Adam Robinson, which Cecil parries by noting his firm already owns four billion data records. | |
| Blockchain, NFTs, and Enterprise Utility in Equity Offerings | 6 | 4 | 1 | 3 | Sean showcases strong domain knowledge by pitching his model of token-gated SaaS beta access and challenging Cecil on how private companies can protect their valuations from volatile secondary open-market NFT floor pricing. Cecil explains how his enterprise stack provides closed, branded marketplaces. |
Statements from this episode (16)
Robles: Reg A eases fundraising but brings high costs and reporting
“Well, we'll say it's less of a headache from the standpoint of raising the dollars. It's not necessarily less of a headache from the standpoint of what you have to do to get there, the cost factor, as well as the reporting factor, the reporting requirements af…”
Robles: Venture capital forces founders to surrender excessive equity and control
“When you fundraise through venture capital there's generally a lot of caveats tied to you getting that money. And as a founder, you can give up a significant amount of control of your company. You generally have to give away board seats. You will likely have t…”
Robles: Regulation A offers a more cost-effective pathway to public listing
“If that's the direction that the company desires to go, or it's the right fit for that, it gives them a direct pathway to a public listing. That's much more cost effective and not necessarily easy to do, but it is more cost effective. And it allows them to go …”
Robles: Most companies should test with Reg CF before Reg A
“Well, I think that for most companies, they should probably test the waters with a reg CF, which is a regulation crowdfund.”
Robles: Reg CF caps raises at $1.07M without audits, $5M with audits
“So the regulation crowdfund, you are either only able to raise one point oh seven million if you don't have audited financials or five million if you do have audited financials.”
Robles: Reg CF is exempt and not qualified by the SEC
“Now a Reg A to get it actually, so another difference between Reg CF and Reg A is that a Reg CF does not get qualified by the SEC. It's what, it's what's called a an exempt offering.”
Robles: Financial audits for Reg A cost $25K to $100K
“You know, companies can spend anywhere from 25 all the way up to a 100,000 dollars I've seen to get an audit, depending on how complex their books and their financials are.”
Robles: Filing Form 1-A for Reg A costs $50K to $100K
“Number two, you have to file what's called a form one A and a form one A is basically what the that the filing document that the SEC will review. And you know, that can cost again, depending on how complex the business is and how complex the offering is, you k…”
Robles: EI.Ventures took a full year to achieve SEC Reg A qualification
“I mean, with EI ventures, it took a year to get qualified.”
Robles: Holding patents does not make SEC Reg A qualification easier
“No, that doesn't matter. I mean, it really is in your business plan. It really is in how good the attorney at the law firm is that's doing this. And it's in how, you know, good you present the package essentially.”
Robles: Roughly 87% to 91% of SEC Reg A filings get qualified
“I think there's somewhere around an 87 and 91% of reg A's that actually get to the point where they're filing with the SEC that get qualified. Don't hold me to that exact number. It might be different from the last time I checked, but I think it's somewhere ar…”
Robles: Reg A and Reg CF Require US-Incorporated Operating Entities
“You can't have that with a Reg A or even a Reg CF. The company has to be incorporated inside of the US for you to use any either one of these types of offerings. The team can be outside of the US but as far as the actual company has to be in the operating comp…”
Robles: Foreign Startups Struggle Raising US Capital Due to Exit Friction
“It's difficult for foreign companies to come into the U S and raise money from U S investors because U S investors want to know that they have some kind of a liquidity event. Is this pump company going to go public in the US? I mean, am I going to have to figu…”
Robles: Firm owns identity resolution tech and 4 billion data records
“We actually have that technology. We own the technology and we own about four billion data points and records. We also have all the PII data on it, all the hashed email data.”