Mar 25, 2020
BE SURE TO SEE THE SHOWNOTES ANDLISTEN TO THIS EPISODE HERE.
Eve Picker: [00:00:08] Hi there. Thanks so muchfor joining me today for the latest episode of Impact Real EstateInvesting.
[00:00:14] My guest today is Mark Roderick, founder of Lex NovaLaw and one of the top online crowdfunding experts in the country.I asked Mark to join me today to discuss the very exciting changesproposed by the Securities and Exchange Commission to regulationcrowdfunding. In case you haven't heard of it, regulationcrowdfunding, or Reg CF, is the securities regulation that isreally the first step taken by the S.E.C. towards democratizinginvestment. The additional changes proposed will give thisregulation real legs.
[00:00:57] Be sure to go to EvePicker.com to find out more aboutMark on the show notes page for this episode. And be sure to signup for my newsletter, so you can access information about impactreal estate investing and get the latest news about the excitingprojects on my crowdfunding platform, Small Change.
Eve: [00:01:18] Hello, Mark, it's delightfulhaving you on my show.
Mark Roderick: [00:01:21] Well, thank you verymuch. It is delightful sort of being there.
Eve: [00:01:25] Very good.
Mark: [00:01:26] Virtually.
Eve: [00:01:25] Just sort of. Yeah. Okay.Today, we're going to talk about raising equity online, which is apretty wonky subject, but you and I like it. And raising equityonline is also known as equity or investment crowdfunding. You saidthese proposals are great for the crowdfunding industry and forAmerican capitalism. They're not about Wall Street. They're aboutsmall companies and ordinary American investors, where jobs andideas come from. And you were referring to some proposed changes toequity online raising funds. And according to the S.E.C., amajority of entrepreneurs and emerging businesses raise capitalusing an exempt offering framework under the Securities Act. Andthey raise everything from seed capital for new businesses, tofunding growth on the path to an initial public offering, and,also, raise equity for real estate. So, I wanted to talk about therule changes and why you think they're so great.
Mark: [00:02:35] Well, okay. Big question and abig, big topic. I mean, maybe I'll just start at the granular leveland then kind of work backwards. If you are in or around theexisting industry, And I'm going to call it the Title 3 industry orthe Reg CF industry, as opposed to what we might call the Rule506(c) accredited investor industry. The accredited investorindustry in real estate is super-healthy. People are raising a lotof money and platforms are profitable and all kinds of wonderfulthings are going on. In contrast, the Reg CF world, the industry,it's sort of, you know, like when you cross the railroad tracks andcrossed into the less affluent part of town. It's a very, almost, Idon't want to get too hyperbolic, but, you know, it's a little bitof a desolate landscape.
Eve: [00:03:41] Oh yes.
Mark: [00:03:41] It's very difficult to makemoney for funding portals, and it's a vicious cycle as opposed to avirtuous cycle. So, it's hard to make money. Very small companieswith very limited resources are applying because of the limits – wecan only raise up to a million dollars a year, and in real estate,in particular, that's not very much money. And that leads theportals, the funding portals, too many of them, not yours, I shouldsay, but too many of them have adapted to that situation. You know,you're trying to squeeze money out of people who don't have anymoney and have led to a lot of shortcuts, and what I calledgimmicks, and that is a vicious cycle because investors, who arenot dumb, see that, they see that's what's going on. You know, theyjust ignore the entire industry. And that means that high qualitycompanies are that much less likely to try to use Reg CF. And ithas been a vicious cycle.
Eve: [00:04:46] Just backing up one minute. Ithink some of our listeners maybe not familiar with Reg CF orregulation crowd-funding. So, I just feel like I need to fill in alittle bit. Regulation crowdfunding and other online crowdfundingrules grew out of the Jobs Act of 2012, and the intent was reallyto move online crowdfunding for donations to crowdfunding forinvestment, right? And so regulation crowdfunding is the rule thatlets anyone over the age of 18 invest, but really kind of limitshow much they can invest, and how much the company raising moneycan raise. Those limits, I think, have been the real stumblingblock, right?
Mark: [00:05:31] Yeah.
Eve: [00:05:32] So, this has translated intosmaller offerings, just like you said, which these fundingplatforms, which are very heavily regulated to use that rule, itmeans that they can't make a lot of money. And that's kind of whereyou left off, right?
Mark: [00:05:50] That is exactly right.
Eve: [00:05:52] The new rules, which you seemedvery excited about last week, I think, will make some big changesin that landscape.
Mark: [00:06:01] Yeah. They will make a couplechanges that are, I think, taken together, just gonna be very, veryimportant and are really going to, to continue that bad metaphor Iwas using, really revitalize the Regulation CF neighborhood. Theseare the two most significant changes. As you said in your overview,Regulation CF or Title 3 – those are interchangeable names for thesame set of rules – limit very severely how much each investor caninvest. And the idea here was to protect widows and orphans fromall the shady entrepreneurs out there. But even if the widow ororphan wants to invest his or her entire net worth into aquestionable company, the Reg CF rules won't allow that. To thecontrary, they allow only very small investments. And that meansthat when you're trying to raise money in Regulation CF, you haveto find lots of investors, because each of them can only contributea very small amount. And, you know, that's hard. Marketing ishard.
Eve: [00:07:21] It's very hard.
Mark: [00:07:22] It is also inconsistent withother S.E.C. rules, which in general allow accredited investors toinvest as much as they want. One of the fundamental concepts inU.S. securities laws since the 1930s has been that rich people cantake care of themselves. They don't need the government to protectthem. And so the term 'accredited investor' is sort of a stand-infor rich people. All of the other S.E.C. rules, really, allowaccredited investors to make bad decisions, you know. An accreditedinvestor can invest his or her entire network in a single deal. Andpeople have noted, since the outset of regulation crowdfunding,that the regulation crowdfunding restrictions are inconsistent withthat general concept. So, one of the changes just made by theS.E.C., or proposed, is that, what do you know, accreditedinvestors will no longer be subject to those severe limits. Infact, they won't be subject to any limits. So, now if you canattract some accredited investors, you know, you can get people towrite big checks. So, that's an important change. Really importantchange.
Eve: [00:08:40] Yeah. Yeah. I mean, I'll giveone example that has impacted us. We have quite a few accountholders or investors who are accredited by definition based ontheir net worth. And they have very healthy networks, but they'reretired and they own their houses and their income is maybe below100,000. And under the regulation crowdfunding Reg CF rules, one ofthese investors was limited to investing 4,000 a year under Reg CF.But as an accredited investor, she can invest however much shewants. That's how weirdly bad the rule is right now.
Mark: [00:09:20] Yeah. And just to take thatone person, I don't know how much of a check that person mightwrite, but let's say it's, you know, 25 or 50,000 dollars, which isnot an unusual investment in the Rule 506(c) world. So ..
Eve: [00:09:34] Yeah.
Mark: [00:09:35] ... she goes from evenconservatively ...
Eve: [00:09:38] She couldn't be botheredinvesting 4,000. She might be interested in 15,000 or 20 or 25 butnot ...
Mark: [00:09:44] Yeah.
Eve: [00:09:44] Yeah.
Mark: [00:09:45] So, it doesn't take many ofher, you know, the difference between four and say, evenconservatively, 25. Those numbers add up quickly. That change initself was significant. But, in addition, the second change isthey've raised the limit from a million dollars to five milliondollars. And that means bigger companies, companies with morerevenue, more products, more services, more scale. Bigger companiescan now start using Reg CF. Yeah, I mean, you know, Eve, that amillion dollars is not very much in the real estate world. Fivemillion dollars really is a lot. Lots and lots and lots of dealsare done with equity of two or three or four million dollars. So,it vastly expands the number of ticket holders who are allowed toattend this event. And then, when you put those two together, youknow, now we can do a three million dollar raise where we can raiseas much as we want from accredited investors. That, suddenly,becomes an extremely viable business. And that's the point thatfunding portals will now be able to make money. In fact, they'll beable to make significant amounts of money. You know, that's like,again, going back to that metaphor, that is pouring a lot of moneyinto that neighborhood. And you're going to see, in my view, just afundamental change. You're going to walk through the streets andsay, oh, that used to be a dilapidated building. It looks nice now.And so on and so forth. And you're going to see better businesspractices from the portals. I believe you're going to see muchhigher quality offerings on those portals. In fact, you're going tosee websites that were formerly only in the Rule 506(c) world whohad shunned Regulation CF. You're going to see those companiesgetting their portal licenses and saying, hey, we can now expandour investor clientele at very little cost. You know, we've beenmarketing only to Rule 506(c) accredited investors. Now we canmarket to everyone. Why not?
Eve: [00:12:10] Maybe the answer, response towhy not, is the regulation that is attached to, being a fundingportal, and not to 506(c).
Mark: [00:12:20] Yes. I mean, it's certainly animpediment. I mean, you've been living in this world for the lastfive years and the regulation can make you pull your hair out. Butthe business opportunity, it seems to me, is ... the landscape justchanged completely in my view, you know, I ... within the lastthree weeks before these proposals came out someone called me, acompany, you know, we want to be a funding portal. And I tell them,because I try to be very straightforward with anyone, you know,you're not going to make any money. It's a funding portal.
Eve: [00:12:55] Right.
Mark: [00:12:55] You know, you want to go, haveto expand, vertically integrate. But it's a very, very difficultbusiness. And that was advice I've given in the last two weeks. Youknow, I've had people contact me since the proposals, and it'stotally different advice. This is a real opportunity.
Eve: [00:13:13] Yeah, yeah, yeah.Interesting.
Mark: [00:13:14] I mean, how do you see itaffecting your business? You're in the business.
Eve: [00:13:19] The thing you haven't touchedon yet is, there's a couple of things that really matter to me. Andone is, yes, the fact that accredited investors can invest whateverthey want really matters, because I no longer have to offerside-by-side offerings which are very complicated andtime-consuming. So, by a side-by-side offering, I mean a Reg CFplus a 506(c), at the same time. So, that can go away. I think thefact that the investor limits have been turned upside down is huge.The fact that now an investor can invest the greater of their networth or income is absolutely enormous for my crowd. And then Ithink the single purpose entity rule, which we haven't talked aboutyet, is huge. Until now, if you're going to use a regulationcrowdfunding offering type, your investors must invest into theactual deal, which is often not the way that real estate dealswork. So, being able to collect a group of investors in a singlepurpose entity to invest into a project, or a series of projects,is a very big deal. And I've been talking to one institutionaldeveloper who was really pulling his hair out and trying to figureout how to make Reg CF work for the community he's interested inusing it for, and that particular change makes the whole thingpossible. There's more, I'm sure, testing the waters. I mean, wehaven't talked about all these things, Mark. So, the marketingrules around Reg CF are stifling. And so I want to learn more aboutwhat does it mean now to be permitted to have a demo day or to testthe waters to, you know, just show the deal before you actuallyregister it with the S.E.C.? I think all of those things reallymatter.
Mark: [00:15:13] Yeah. There are some otherimportant changes, including, as you say, this so-called testingthe waters. We used to have this ridiculous rule, really, thatsubjected, you know, these tiny Title 3 issuers to more stringentrules, you know, then the largest companies. It was crazy.
Eve: [00:15:35] Yeah.
Mark: [00:15:36] If you were talking, somedeveloper was trying to create this little project, you know, youhad to tell that person, you can't even whisper that you areconsidering a Title 3 [offering] ... You can't tell anyone, youknow, don't tell your wife. And it was just this ridiculouslyrestrictive rule. So, that is now going to be swept away. Andbasically, for all intents and purposes, Title 3 companies, issuersare going to be like everyone else. Yeah, you can talk to peopleabout it. You can't take their money. But that's an importantchange for sure. The demo days. Meaning when you're local sciencecenter has a demo day you are now actually allowed to ... toattend. It was crazy that you couldn't attend before. We shouldmention that they've taken some things away. Many Title 3 issuers,the security that they were offering, as you know, were calledSAFEs – Simple Agreement for Future Equity. Very popular. TheS.E.C. has been convinced by someone that that is not anappropriate instrument for a small company to issue. So, they'regoing to absolutely get rid of them. Another very popularinstrument – revenue sharing notes. It isn't clear from theproposals, but it sure looks like they're getting rid of revenuesharing notes or at least want to.
Eve: [00:17:04] Interesting.
Mark: [00:17:05] You know what the lord giveth,the lord taketh away. I know there's going to be, during the publiccomment period, there's going to be a lot of people complainingabout those two things. We did take a couple steps backward, but Ithink we took about 10 steps forward, so, on the whole, they havemade the market much more robust. Yeah, I think it's very exciting,I, you know this is a world that, you know, you and I have bothdrank the Kool-Aid a long time ago. This is about providing capitalfor lots of people whose access to capital has hitherto beenrestricted. And it's also about providing investment opportunitiesto ordinary Americans that have hitherto been reserved for theultra-wealthy.
Eve: [00:17:55] Yeah.
Mark: [00:17:55] And that's why my blog postsaid, you know, this is not about Wall Street. It is actually aboutundermining Wall Street. It is about a sort of direct to thepeople, democratic American capitalism. And I think this is areally good step in the right direction. I don't see any down sidepersonally.
Eve: [00:18:17] Yeah, so you think the numberof funding portals is going to explode?
Mark: [00:18:20] I do.
Eve: [00:18:21] It's about 50 now, right?
Mark: [00:18:23] Something like that, yeah.
Eve: [00:18:24] And in real estate?
Mark: [00:18:26] I do. I think you're going tohave some competitors, which is good. Yeah, I think there are goingto be real estate funding portals, I even think, Eve, I think thatthe big real estate, the Rule 506(c) sites, I think they're goingto consider very seriously having subsidiaries that are fundingportals.
Eve: [00:18:47] Interesting.
Mark: [00:18:48] I think it's a natural toexpand their customer base. You know, I've always said that portalsare like retail stores. And I read a blog post once, saying aportal is like DSW. And DSW doesn't limit the kinds of shoes thatit sells, and it wants every kind of customer to walk in the door,right? And even, you know, a brand like Mercedes Benz, they don'tsell only a 100,000 dollar cars, you know, they sell a 35,000dollars car. Why? Why do they do that? It's not to make money fromselling a 35,000 dollar car. It's to get people into theshowroom.
Eve: [00:19:33] Yes.
Mark: [00:19:33] And expand their demographiccustomer base. And I think that's the natural route for portals aswell. We want to accredited investors. We want non-accreditedinvestors. We want everyone, right? I mean, that's always makesense to me.
Eve: [00:19:46] Right. Right right, right. So,can you think of some examples of projects that you saw in the pastthat if they went live now, would do so much better? Or is that toohard a question?
Mark: [00:19:57] You're, I mean, you're the onewho would know that.
Eve: [00:19:58] We have an offering live rightnow, which was just so complicated to put together, a side-by-sideoffering. And, you know, an opportunity zone fund offering. Theyreally needed a single-purpose entity for the opportunity zone fundinvestors. And, of course, we couldn't use it for Reg CF, so theReg CF investors missed out on the opportunity zone, tax discounts.And, you know, thinking about how that would be put together underthe new rules, it would be so easy.
Mark: [00:20:31] Yeah.
Eve: [00:20:31] I spent months putting ittogether.
Mark: [00:20:35] I mean, probably every projectyou've ever had on your platform.
Eve: [00:20:38] Yes.
Mark: [00:20:39] You would've had the abilityto pitch it to accredited investors. Simultaneously. And you wouldhave been legally been earning commissions on all of thosetransactions.
Eve: [00:20:50] Yes. Yeah. That's a really bigproblem.
Mark: [00:20:53] I mean, your life would havebeen very different.
Eve: [00:20:54] Well, I can't go back fiveyears, can I?
Mark: [00:20:57] No.
Eve: [00:20:58] So, what about the whole 'notbeing able to talk about the terms of the deal'? Like that's beenanother really huge stumbling block when you do advertise Reg CFoffering, you're not permitted to talk about the teems. You can'tsay, you know, the offering is nine percent preferred return.You're not permitted to say that. You're not even permitted to saythe minimum investment amount. Whereas with a 506(c) offering, youcan say all of that. Is that going to change?
Mark: [00:21:27] Not yet. It wouldn't surpriseme if it changed in the future. So, yeah, you're gonna be stuckwith those same advertising limitations. Now, I will just say thatyou can say those things.
Eve: [00:21:41] Yes, but that's all you cansay, right?
Mark: [00:21:42] But that's all you cansay.
Eve: [00:21:44] Yeah.
Mark: [00:21:45] And you can say a lot. Youknow, you can say come invest in this fabulous multi-family projectin Downtown Pittsburgh, and it's 72-percent leased and it'sgorgeous and it's environmentally friendly. You can go on and onand on and say all those things.
Eve: [00:22:04] You can't say "it's gorgeous"because it's in adjective, right?
Mark: [00:22:07] Ok, well, now I think, I can,I think you can say "gorgeous."
Eve: [00:22:11] No, I can't.
Mark: [00:22:13] The only thing you can't sayis ...
Eve: [00:22:15] I got my knuckles rapped forsaying "bold." Yeah.
Mark: [00:22:20] You just can't say, and by theway, we're raising two million dollars for that project. You know?You can talk about the project until you're blue in the face.
Eve: [00:22:29] Yeah. Well, that's been prettygood for us because we want to talk about the projects, but stillit is a stumbling block. I think people sit up and pay attentionwhen you say you can invest as little as 1,000 dollars and they'relooking at an ad talking about a great project, but they don'treally know. It's a question of will they click through? Right?It's definitely a stumbling block.
Mark: [00:22:50] Yes. And it will continue tobe.
Eve: [00:22:53] Yes. Ok. So, I want to justshift gears a little bit. We're doing this a bit backwards. But howdid you become an S.E.C. crowdfunding expert, and why?
Mark: [00:23:04] Actually, Eve, I think ourstories are in some ways, similar. So, I mean, I've always been aboring corporate lawyer. And in being a boring corporate lawyer,I've represented entrepreneurs my whole career. And when yourepresent entrepreneurs, one of the things you spend a lot of timedoing is helping them raise capital. Entrepreneurs are alwayslooking for capital, and raising capital used to be, you know,really, really hard. It's still really hard, but it used to be,before the crowdfunding rules, a lot harder, as as you know. Andwhen I saw the Jobs Act on the horizon, this must happen back inlike 2011, which is amazing, of course, how quickly time flies.
Eve: [00:23:50] Yes.
Mark: [00:23:51] But I said, wow, you meanyou're going to be able to use the Internet to raise money? This ishuge. It's transformative. It's disruptive. It's fantastic. And Idrank the Kool-Aid right away and thought this would just be agreat thing for the American economy. And I said, it's going to befun and I want to be involved with it. So, I immediately decidedthat that's what I was going to do. So, I learned all about it andstarted writing this blog and started speaking about it in public.And I'm so enthusiastic about it, and the rest is history. So,that's my story, which in some ways is probably similar to yours,right?
Eve: [00:24:33] Yes.
Mark: [00:24:34] You saw it and you said,aha!
Eve: [00:24:36] Yes. But not enough of us yet.Right. Still a pretty small industry.
Mark: [00:24:41] Still a pretty small industry,but it is growing, you know. People are raising, we talked aboutfive million being a pretty good real estate deal, you know, peopleare raising 15 million now. And that, when, you know, when you andI got into this industry, the concept of being able to raise 15million dollars for a deal online was unthinkable.
Eve: [00:25:06] Yes.
Mark: [00:25:06] You know, people were raising250,000 dollars to do a fix and flip. The industry is now fundingfrom very significant deals. And because entrepreneurs are alwayslooking for capital, you know, the entrepreneurs of the world arereally paying attention.
Eve: [00:25:26] Yes. Yeah.
Mark: [00:25:27] I'm a pretty good barometerbecause I am pretty well-known in the industry and I will, so whenI say my phone has sort of been ringing off the hook, that's apretty good industry barometer.
Eve: [00:25:40] It is. Yeah.
Mark: [00:25:41] You know, it probably meanslots of peoples' phones have been ringing off the hook. And thislatest change really has gotten people's attention.
Eve: [00:25:49] Yes. Well, it should.
Mark: [00:25:52] So, I think in 2020, I reallythink the industry, those of us who survive the coronavirus, anyway...
Eve: [00:26:01] Oh, that's depressing.
Mark: [00:26:02] Yeh, and I ... then are goingto, you know, really see a significant uptick.
Eve: [00:26:10] Yes. So, I have to ask the nextround of improvements that the S.E.C. makes, what do you want tosee on that list?
Mark: [00:26:17] So, I get asked that questiona lot and I never have a ready answer because I've been doing this,you know, I've been practicing law for so long. I have learned notto think about possible legislative or regulatory changes becausethey are so rare and so unpredictable, you know. There are twothings you never want to see being made. One is sausage and theother is law. I just focus on the world that I have, that I'm in,rather than on how it might be improved.
Eve: [00:26:57] I get it. The thing I thinkabout is of regulatory burden, which is enormous for smallcompanies. Really enormous.
Mark: [00:27:05] And how would you addressthat?
Eve: [00:27:08] For a small company that'snever done something like this before. As a member of FINRA, notonly are you following, you know, the regulation crowdfundingrules, but you're also following FINRA's rules, which require many,many, many things, like WURM compliance of emails and evidencingand things I never knew existed. It's very time consuming to learnat all, and it's time consuming to keep it up and to do itproperly. And I have a feeling that many platforms are not doing itproperly because it's just too hard. So, I think that really needsto be addressed in one way or another. You know, I don't know whata full-blown broker/dealer compliance book looks like. I'm sureit's worse. But in some ways I feel like FINRA wasn't ready tohandle these smaller companies, they've never done anything like itbefore. The compliance is ... huge. And, you know, we're surveilledevery quarter, and they said, well, every word. And that that'stheir job. So they have to, I'm not saying they shouldn't, but it'sall required, and it's a lot.
Mark: [00:28:19] Yeah. And I mean, maybe Iwould say the next significant change maybe should be from FINRArather than from the S.E.C..
Eve: [00:28:31] Yes, possibly.
Mark: [00:28:32] I completely agree with youthat FINRA didn't know how to deal with this and they started offwith a light touch, you know. The first funding portals that Irepresented that, they were easy to get approved. And then FINRAjust didn't know what to do. And, you know, the easy answer is froma regulatory point of view was always to make it more difficult.And so we've ended up in this kind of crazy situation where fundingportals, small, small organizations, are subject to the sameregulatory treatment as, you know, as Morgan Stanley. And it it isclearly not a good fit.
Eve: [00:29:16] That's right. Although I haveto say that they're trying, and in their communications with SmallChange, at least, the tone is more about helping us be aware ofwhat we're supposed to do. So, it's not a bad tone, but still, theregulatory burden is there. In a sense, I think FINRA got lumpedwith this without anyone much thinking about the consequences. Doesthat make sense?
Mark: [00:29:39] Yes. I mean, I'm not attackingFINRA, because, as you say, they're just doing their job. No onetold them, you know, you should act differently with the respectthat this particular species of FINRA member, as you know, I mean,these days we're submitting policies and procedures to FINRA thatare, you know, 75 pages long ...
Eve: [00:30:03] Oh, wow.
Mark: [00:30:03] ... could be a two personcompany where, you know.
Eve: [00:30:07] Yeah.
Mark: [00:30:07] The policies and proceduresamount to the two people saying this is how we're going to regulateourselves. You know, there's no one else to regulate. There's noone to supervise.
Eve: [00:30:17] Yeah, no, no. I know. It's ashame.
Mark: [00:30:21] It's almost been an absurdity,but there you go.
Eve: [00:30:25] So, yeah. Let's root for FINRAmaking the next change or, something happening that permits forFINRA to make the next change, because I'm not sure they're fullyin control of that themselves. I don't really, I don't really know.But, you know, we we pay a lot of money to a company called Smarshto archive all our emails, all our websites, everything, so thatthey're all WURM compliant. That's a big burden for a tinycompany.
Mark: [00:30:52] Well, there you go.
Eve: [00:30:52] We also pay a lot forinsurance, which is crazy expensive. I have a feeling that manyfunding portals don't ...
Mark: [00:31:00] Just don't do it. Yeah.
Eve: [00:31:01] ... pay for insurance,because they can't afford it. I like to sleep at night.
Mark: [00:31:05] I guess, what from the FCC,you know, rule 204, which is that burdensome advertising rule thatyou were alluding to earlier. That does seem a little too harsh.The idea of it, the theory of regulation crowdfunding is that everyinvestor should have access to exactly the same information at alltime.
Eve: [00:31:29] That's right. Yep.
Mark: [00:31:31] And so that's why they don'tlet you freely advertise. They want all attention to get focusedback to the funding portal.
Eve: [00:31:39] Right.
Mark: [00:31:40] Which is supposed to be thesole source of the information. And so, yeah, I totally understandthat. I'm not going to say there's no reason for the rule. I thinkmaybe this is an example of ideology, sort of, getting the betterof practicality. The rule is just impractical. And ...
Eve: [00:32:02] Yes. Yeah.
Mark: [00:32:04] The ideological purity of it Ithink is outweighed by the burden that it places on, again, onvery, very small companies.
Eve: [00:32:13] We've ended this on a badnote.
Mark: [00:32:15] Yeah, but well we're sort ofsearching for ways that maybe in five years from now, maybe theS.E.C. will make the rules even better.
Eve: [00:32:26] Yeah.
Mark: [00:32:26] But these little rules, youknow, again, we're dealing with tiny companies and you know, bigcompanies have the resources to hire lawyers, like me, or even havetheir own in-house lawyers. But these are tiny companies. So, a lotof these rules, as you know, in your position as a funding portalend up just being tripping points, you know, traps for theunwary.
Eve: [00:32:50] Yes.
Mark: [00:32:51] Yes, we could do with fewer ofthem. But on a positive note, again, 2020 is going to be a very,very good year.
Eve: [00:33:00] Yes, it is. And final question,what's next for you?
Mark: [00:33:06] What's next for me is, youknow, I've just started a new law firm, Lex Nova Law. Superexciting, fun, high tech, really cool, hiring more people, trainingmore people to learn about these rules. And part of my job in thecrowdfunding industry is to educate people. So, I love being on theforefront of education. And another part of my job, I think, is tomake the industry better. And that means more compliant, but alsomore efficient. The Internet, which is what crowdfunding is allabout, it requires efficiency, right? It is ...
Eve: [00:33:54] Yes.
Mark: [00:33:55] It is a tough taskmaster. Youknow, Amazon. You try to compete with Amazon in retail, man, youfind out how efficient they are. So, lawyers, the key kind offriction points in the syndication world, in the capital formationworld. You know, lawyers have to become more efficient. And I workon that all the time and try to work with industry leaders to makethe crowdfunding industry better for investors, in part by makingit more efficient. So, that's the answer your question
Eve: [00:33:55] Great. Well, I've had theprivilege of working with you on that. And I agree. Efficiencyreally matters. Thank you so much for joining me. And I also can'twait to see what the year holds.
Mark: [00:34:42] Thank you so much.
Eve: [00:34:44] Okay.
Mark: [00:34:44] Have a great day out in sunnyPittsburgh.
Eve: [00:34:51] That was Mark Roderick. We gotinto the weeds together about the proposed improvements toregulation crowdfunding. He and I both understand what thesechanges will mean to capital formation. As Mark said, theseproposals are great for the crowdfunding industry and for Americancapitalism. They're not about Wall Street. They're about smallcompanies and ordinary American investors, where jobs and ideascome from. You can find out more about impact real estate investingand access to the show notes for today's episode at my website,EvePicker.com. While you're there, sign up for my newsletter tofind out more about how to make money in real estate while buildingbetter cities. Thank you so much for spending your time with metoday. And thank you, Mark, for sharing your thoughts with me.We'll talk again soon. But for now, this is Eve Picker signing offto go make some change.
