Equity Expert David Drake talks with Opportunist’s Managing Editor Leslie Stone about his company’s role in capital formation, his upcoming conferences and why he believes real estate is going to be a hot sector for crowdfunding.
David Drake is the founder and chairman of LDJ Capital, a New York-based private-equity advisory firm, and of The Soho Loft, an event-driven global financial media company. Born in Sweden and fluent in six languages, he is a proponent of innovative investing in early-stage equity and the U.S. JOBS (Jumpstart Our Business Startups) Act, for which he lobbied both Congress and the European Commission.
“It’s very exciting that the SEC implemented Title II of the JOBS Act last year, lifting the ban on advertising [of some securities and private placements] for investors for the first time in 80 years,” says Drake. “In 2011, according to the SEC, there were about $968 billion in public offerings in the United States. Rule 506 of Regulation D, the most common way to raise money privately for funds and companies, was $895 billion in 2011. So we are talking about a $1.5 trillion potential market being affected where you can advertise. You have to be SEC compliant of course, but this is tremendous.”
Drake advocates innovative investing through his work as an international speaker and writer for major publications such as Forbes and Thomson Reuters. He is also the author of the book Crowd Fund Economics and co-author of Planet Entrepreneur: The World Entrepreneurship Forum’s Guide to Business Sucess Around the World.
Through The Soho Loft, Drake produces and sponsors 150+ events a year. He also takes on board advisory positions at companies, angel networks and venture funds, and guides them on such topics as international regulations, corporate strategy and fund structures, with emphasis on the growing trend of online investment automation for retail and angel investors.
Opportunist: Please tell us about The Soho Loft and how you came up with the name for the company.
David Drake: It all started with a loft in the Lower Manhattan neighborhood of Soho, fittingly called The Soho Loft, where from about 2002 to 2009 I would invite a lot of people for cocktails and dinner. As it turns out, these people—hedge fund managers, private equity fund managers, angels and venture capitalists—were networking and doing business while at the loft and I thought Well, I don’t know the industry but I want to know and to learn. So I had to just jump in. The last decade of my life has been about learning about different industry segments and distribution channels and where they structure their deals—and that hunger to learn continues today.
We report and unravel and put in layman’s terms investment strategies, how to raise money and where to raise money on a global basis. Our audience is family offices, accredited investors and Series-A and Series-B startups—companies that have raised seed money and have a little more momentum than simply being fresh off the boat. We help people understand best practices in different countries, who has the money, where to find the money and how to pitch for the money.
Opportunist: What is the role of each of the company’s divisions?
David Drake: The Soho Loft Media Group today consists of three main divisions mimicking the structure of the 200-year-old public U.K. firm UBM that owns PR Newswire: Times Impact Publishing, which focuses on impact investors. This division’s assets include TimesRealtyNews.com—the only publication in the world exclusively focused on real estate and online investor acquisition trends—and TheSohoLoft.com, our syndication of content platform. In addition, I write regularly for more than 100 publications including Wall Street Journal and Forbes.
The Soho Loft Global Symposium, Talks and Conferences produces 200-plus events a year, with 500-plus completed. Its focus is on capital raising globally and impact investors—40 percent on venture capital and business angel investors, 20 percent private equity,10 percent realty crowdfunding, 20 percent family offices and institutional investors.
VictoriaGlobal.co Corporate Communication with 20 directors in 20 cities covering: Investors Relations—road shows with one-on-one with hundreds of investors having invested before, ConnectInvest program – Business Intelligence, PR,TV, radio, blog and print, social media, marketing (branding and packing), advertising, corporate communication, business development and M&A, brand launches/go-to-market strategies.
Opportunist: What are some of the business sectors you focus on?
David Drake: Our strength is in life sciences, real estate, resources of mining, oil and gas and biotech.
All of these developments have been accomplished over the last five years, the culmination of which was that I was invited to the White House Champions of Change event last year and I also represented the U.S. Department of Commerce in Rome and Brussels on SME [small and medium-sized enterprise] policy.
Opportunist: What can you tell us about capital formation in Europe versus the United States?
David Drake: It’s interesting to see what’s happening on both continents and to see how people raise money and what is working—and not working—and to hear about the successes of young entrepreneurs and seasoned entrepreneurs all over the world who have been able to push their companies forward and raise money.
The European market has historically lagged the United States in most industry segments, and I believe they will always be a little behind because they have cultural and language issues. Crowdfunding is still lethargic in Europe and that is because of cultural differences. In Germany, for instance, people use the post office to make their payments. An unwillingness to give their credit card number away online is one of the inherent challenges in Europe and even Asia. It takes a lot of effort to educate somebody about using a credit card online. When it comes to crowdfunding for equity, however, they are ahead of us because they are allowed to take unaccredited investors’ money. Banks aren’t stepping up but other groups are, such as the angel network. The European Investment Fund and other matching funds in Europe on the federal level will match the angel investment. EBAN [the European Business Angels Network] in its Startup Investors Manifesto a couple of months ago announced that it plans to double investments in startups to $17 billion by 2017. That’s incredible.
Opportunist: Does The Soho Loft raise money?
David Drake: We don’t raise money. We are a media company telling the stories of what is happening elsewhere. We bring investors to the playground, which are our conferences, and they have invested numerous times in companies at those events but we do not raise capital per se. I guess you could say I am a matchmaker [Laughs] because I create the physical framework for people to meet. Investments are being made and we haven’t tracked them but they are probably in the several dozen over the last five to 10 years.
Opportunist: You have said that real estate is a hot sector for crowdfunding. How so?
David Drake: Real estate is exploding because this never existed before. Crowdfunding offers developers new ways to finance projects, and it gives small investors an opportunity to participate. It also affords socially conscious investors an avenue in which to support their local communities. In a blog post I wrote for Forbes in April 2013, I listed 10 firms I believed would have the biggest impact in the crowdfunding for real estate platform. Everyone was surprised—they didn’t realize there were 10—and today Times Realty News is tracking 100 such firms. The reason is that people throughout history understand how to buy real estate. You own the land you work on or you lease it. It’s the oldest asset we have.
Also, the Internet allows documents to be sent online, and that saves all parties time and money. They no longer have to FedEx 50 pages of documents to people in a family office. Now deals that have historically been one-on-one through the ‘boys club’ are getting exposure online. Private equity shops did this years ago. Now people are realizing I don’t have to pitch people face-to-face to give me a big check. Now they put it online and 10,000 people can see it. That’s showing me there will be a rush toward this industry in 18 months from developers who realize Oh my goodness, I can raise money for the first time in history through the Internet.
Opportunist: Can you tell us about some of your upcoming conferences and expos?
David Drake: Information about our events can be found on our website, but our Global Real Estate Crowdfunding Conferences on July 17-18 at venture capitalist Tim Draper’s Draper University of Heroes in San Mateo, Calif., and November 13 in New York City are our two major trend-setting events where we really talk about cutting edge developments in this industry.
Opportunist: Where do you see The Soho Loft headed in the coming years?
David Drake: We are building stronger partnerships, bringing more people to our events, and expanding global distribution for knowledge of how to raise money and how to find it. Within five years The Soho Loft will be a public company, and we will have acquired a dozen other corporations and we will be bringing social media to the forefront of liquid markets. The most liquid to me is always going to be the public market. Crowdfunding is focused on private companies, but we want to be the leader in showing entrepreneurs all over the world several dozen ways of raising money and allowing them to get to the liquid market.
Leslie Stone is an award-winning writer/editor with more than two decades of experience covering business, finance, real estate and lifestyle issues for newspapers, magazines and online publications. Originally from Virginia, she currently resides in Florida. Follow her on Twitter at @lescstone.
Follow David Drake on Twitter @DavidDrakeVC
Follow The Soho Loft on Twitter @TheSohoLoft
The Soho Loft - http://thesoholoft.com
Pitch investors Now at The Soho Loft Global Summits and Conferences - www.TheSohoLoft.com/Upcoming-Conferences/
LDJ Capital - http://www.ldjcapital.com
Times Realty News - www.TimesRealtyNews.com