Murdoch Gatti (00:02.665)
Steven Maarbani, welcome to the rate of change with York Wealth Management.

Steve (00:06.616)
It's a big hit, mate. Thanks for having me.

Murdoch Gatti (00:09.417)
Absolutely. I've heard about venture crowd for years. I think I spoke to you guys like about a decade ago, I've been following your journey. But why don't we just begin like we always do for people not familiar with yourself and venture crowd and just tell everyone a little bit about yourself, Steven, and how you got into the wild, wild financial markets.

Steve (00:28.886)
Yeah, well, so I'm a corporate lawyer by training and I was a partner at PWC here in Sydney. I was at PWC for 10 years and I ran the venture capital practice. So in that capacity, I acted on the establishment of a number of the VC firms around the country that you'd know and then acted with and then worked with those fund managers to build their due diligence processes and you know,

run the ruler over various investments from a legal perspective, negotiate the transactions and assist them with their investments. And I was also on the management committee of Sydney Angels. So I've worked with sort of high net worth angel syndicates to do exactly the same thing, to identify typically private companies that have significant growth potential and then to participate in the legal due diligence side of that, help to negotiate the terms and then, you know, assist them with financial.

close. 25 % of my practice was with the founders themselves. So with the private companies themselves looking to structure their capital strategy. So what does their next 12 months look like? What sort of capital will they need for that? How do they tell that story? Who are the appropriate people to go to and how do you do that? And then work with those founders once they have a strategy to actually execute their capital raise. So

Basically my entire career has been in the private capital markets. Everything from seed all the way through to pre-IPO has been where I've tended to play. And I guess what that does is elevates and highlights some of the inefficiencies of the private capital markets. And I think we're sort of seeing that over the last sort of couple of years, what happens when it doesn't work.

And so from there, I, you while I was there, we're looking at those, those inefficiencies and the pain of both sides of investing in private companies, whether you're an investor or you're a founder looking to raise capital and trying to work out what does the future of this look like? And so that's kind of how it all started.

Murdoch Gatti (02:40.297)
Yeah, it's a, tell you what, it's, so interesting since I've been in markets, how the evolution of technology has made systems faster, more accurate, more compliant, or just, you know, the craziest thing is just the invention of the life. I think of my first phone one was in your like, you're out of your nine and just evolved from a hard brick, which we could practically defend yourself with as a weapon to the ability to, you know, do everything in the palm of your hands and

What would you call it like instantaneous gratification? Like, there was a thing 20 years ago that we couldn't you and I couldn't do we do unless we're chained to a desk. You know what mean? Like, you know, but now it's a work anywhere culture and people just want access to as many deals as possible. You know, it's funny, like a lot of very wealthy families I speak with, they actually have an account with every single major broken house.

Steve (03:18.53)
That's right.

Murdoch Gatti (03:34.673)
In Australia, there's no loyalty anymore. What I'm finding from like a stockbroker in a raising perspective. But when it comes to the wealth management side, that's still like a marriage. Are you finding the same?

Steve (03:45.4)
Yeah, so I think, you know, what is the differentiation? I suppose is the question. So, you know, do people have exclusive deal flow anymore? How valuable is that origination? You know, arguably, there are some brokers that can make that case, but very few can. you...

I guess the digitization of the private capital markets democratizes access. And so when that starts to happen, the question becomes who are the intermediaries that no longer play a valuable role? And that's what happens in the digitization of any industry. It's the same thing. It's what happened in hospitality and entertainment and music and film and all that stuff. No one goes to travel and anymore. All of those steps between I need to fly to Brisbane and me.

have now been digitized and the intermediaries that used to play a role and used to charge for that role have just been disintermediated and the whole thing's been made digital. I'm not saying brokers have no role to play. I'm simply saying the better brokers will be the ones that have...

you know, some level of differentiation above what is now a very egalitarian private capital market. So for example, if you went onto the venture website, you will see deal flow there that is invested in by, you know, major family offices as well as VC funds, et cetera, et cetera. But if I'm a regular punter, I can put in five grand or 10 grand and participate in that exact same deal on exactly the same economic terms, no broker required. And that is exactly where

we believe the private capital markets are ultimately going. And so I don't know if that answers your question, but I think all of those things are good things, right? Because there will always be a need for high touch, deep DD, bespoke origination and the connection between that kind of deal flow and that kind of investor. And in addition to that,

Steve (05:54.474)
the digitization of the private capital markets now allows hundreds of thousands of people who never would have had access before, but have both the willingness and the capacity to make an investment into private companies to do that digitally without the blockers, without needing a broker, without the high cost to play, without the fee structure that's typically involved. And the result of that has been here and overseas,

The volume of capital that's available for private companies has grown. Hundreds of millions of dollars have been added to the private capital markets over the last couple of years and it's forecast to continue to grow. And the efficiency with which that connection can be made, because it's being made digital, using digital tools, is significantly better than it's ever been before. And if that feels like too much of a stretch for your listeners, think about this for a sec.

The public capital markets, the listed capital markets, both in Australia and overseas are on the decline in every major economy because companies are now choosing to stay private longer and longer and longer. So where you used to list in order to create both...

an opportunity to raise capital and full liquidity, you just don't need to do that anymore. You can get both of those things in the private capital markets because there's so much private capital out there. And that growth is being driven not just by institutions in the top end of town, but by investors across the entire spectrum from retail through to the mass affluent to the emerging affluent to high net worths on. So you've got this massive demand that's coming from all investors who want access to private market assets.

Steve (07:48.962)
but you've got a private capital market which is largely still inefficient. And so the answer to that is, and we can see this happening right now in five years time will be completely different, the digitization of the whole process. There is no ComSec for private assets, right? So over the next five years, what we'll start to see emerge and this is where VentureCraft plays, is to say, if this is a brand new group of investors, all of whom are now becoming...

who want access to private market assets more than they ever have before, how will they get that access in a cost efficient, easy cost to serve way? It has to happen through digital platforms. So that's sort of always been our focus to drive mass adoption and the connection between those investors and those kinds of issues.

Murdoch Gatti (08:36.649)
It's an interesting point you make about the word access, right? And I see this in the wealth management space as well, say with managed funds, like the invention of, let's call it what is, platforms, right? And let me just take a step back for a second using the term accessibility. When all this was created, how did you access these transactions? What was the process, right? And the beautiful thing about innovation and the evolution of entrepreneurs and building things and

you know, the creativity component is if you really want to bring it down to brass tacks, there's essentially three main players in the industry. There's people that have money that are looking for opportunities to grow their money. And door number two is as businesses or companies, right? That need money that have a deal, don't have the capital and need that money in order to grow and create that opportunity to peel off a couple of pineapples and go buy a Ferrari or whatever they want to do with it.

But then we're in the middle where essentially where the facilitator or the broker, right? Which is essentially bringing the two parties together, making a market, taking a fee for the transaction. So all we're really discussing here is just the evolution of that. Nothing's changed. It's exactly the same thing, probably going all the way back to the Egyptian days, right? It's the same thing, but it's just how interesting is it with just the evolution of technology is making these things more accessible, easy, easy to get into.

Like even from a legal and a compliance standpoint, some of these deals, like the minimums are normally a hundred grand, half a million dollars, a million dollars to access, but that's not necessarily that amount of money. I'd argue from a middleman's perspective, isn't from a that's a minimum one. What they're trying to do is remove a headache by dealing with multiple applications and just making it a very hard task from a compliance standpoint. Wouldn't you agree?

So just taking the phrase accessibility, just bringing it back to brass, brass tacks, what is this? The other thing which I find with technology and you speak to people as well, human beings still want to deal with another human being. I can't remember the case study, which are referenced, probably something in Forbes, something I read, but human beings still want to deal with a human being when it comes to dealing with strategy. But then when it comes to execution, they want to essentially,

Murdoch Gatti (10:57.161)
have everything in their fingertips and the ability to execute those strategies in a time efficient, you know, cost efficient function. Human beings will still happily pay a goddamn fortune in fees if they're getting the results, right? But people feel like for tasks that don't require that human interaction, they want to pay a lower fee. Would you agree with that?

Steve (11:19.116)
Yeah, totally. mean, what you've just described, the whole cost to serve theme, I think you're absolutely right. I don't think those minimum investment amounts are set high for any other reason than below that, the cost to serve becomes unprofitable. And that's fine. That part of the market will always exist and will need to exist and serves a very important purpose. And in addition to that, if cost to serve could be brought down,

by digitizing process and access, then everybody benefits. There's more capital in the market. More people can access wealth creation opportunities through the private markets, et cetera, et cetera, et cetera. And I think that's, mean, all the wealth advisors we talk to, quite often we get approached by people who say, our clients want access to venture capital deals, startups and scale ups at that phase of growth. They have lots of property. They've got private credit. They've got yielding product, blah, blah. Now they want to allocate whatever.

it is to alternatives, they don't know how to get access, right? And they don't want to be in a fund for five years or 10 years or whatever, they just want to pick and choose. They want to see the deals that are relevant to them. They might be in retail, they might be a doctor, whatever. So they want to see health tech stuff or they want to see retail technology or whatever it might be. How do you do that in an efficient way? Like it's really difficult to do. But if we accept that the next generation of wealth management clients, yeah.

are the millennials and gen Zs of today, and that they are in the process of becoming the beneficiaries of the largest intergenerational transfer of wealth in history, then the question becomes, how do they want to invest? Yep. So, and that's kind of been our focus for years, which is the way they're going to want to invest is going to be very different to the way their parents invest. They're not going to want to go and play golf with their financial advisor to write a check into something. It's like, just talk to me about making it as efficient as possible.

make it digital if you possibly can. You're absolutely right. I want to know that I can pick up the phone and speak to somebody. There's a real human being on the other side. But every other part of that that isn't trust related, but is process or workflow related, make that as efficient as it can possibly be. That's what we've been hearing for years and years and years. that's, that's, that has been the driver for our business. And when we thought about, well, where can we make a contribution? Your question was, how did you end up in financial markets? Where can we make a contribution?

Steve (13:42.072)
Do we need to be another broker? No. Do we need to be a wealth advisor? No. Should we be an angel group or a venture capital fund? No. There's lots of great people doing all of that work. What was missing for us was the digitization of that process. And that's working really well. We've raised over $330 million across over 150 portfolio companies. And we're not just talking about, you mentioned crowdfunding before. Sometimes I hear people say...

Murdoch Gatti (14:05.389)
What is crowd? Sorry, sorry to cut you off, but I think this is actually very important, right? How did the door open for essentially this particular platform? And my understanding is essentially the concept of crowdfunding created this pathway or opportunity. Do you mind just getting into the history before we discuss the now and the future of how this actually originated?

Steve (14:21.794)
Yes.

Steve (14:28.514)
Cool.

100%. So when I was at PWC, one of the things I was doing is giving the thought leadership for the firm on the future of venture capital. And so we would do these annual briefings in Sydney, Melbourne and Brisbane. we would talk about, typically we would talk to fund manager clients, either people who are running VC funds or wanted to build a funds management business about what's going on in VC, where are the thematics that were important? What were we seeing overseas and what...

was there to think about over the next 12 months. One of the final briefings I gave was around the digitization of the venture capital sector, driven, as you say, by the introduction of equity crowdfunding rules in the Northern Hemisphere, and then in Australia. The reason that was so significant is not because now you can invest 50 bucks into a brewery, but because what that was saying was conservative regulators all over the world,

we're looking at securities legislation, fundraising legislation, which has always been highly guarded by regulators and saying, in this new digital world, we have to allow for other ways for that to happen. Yeah, we have to allow for digital marketing. We have to allow for retail investors to provide smaller amounts. have to open up those markets and make it a little easier for private companies to raise the capital that they need to do.

what from a policy perspective is really, really, really important work. You know, might be curing cancer. might be, you know, new battery technology. This stuff is super important. And if we don't fund it, it just never happens. And this was a concession that was being made by regulators all over the world. So that's exactly how it started, equity crowdfunding. And I spoke to one of my clients, Artesian Venture Partners, and I said, guys, you should set up a digital platform alongside your business. Long story short, we did it together.

Steve (16:27.424)
From there though, we looked at that and went, okay, this legislation allows us and enables us to syndicate capital into a venture capital deal. That's what it's for. But actually the thematic, the more important thematic is we can now, what we've learned is we can digitize capital, we can syndicate capital digitally into any alternative asset. It just happened to have started with private companies. So it can move into property, it can move into private credit.

And so VentureCrowd became a digital investment platform for alternative assets. So all of those same efficiencies and digital workflows make it possible for our investor base to invest into, whether it's a startup, scale up, pre-IPO deal in the venture capital side, through to a property development project, equity, debt, pref equity, Mez debt, first mortgage funding, or as you say, private credit.

private credit into property, private credit into private companies. All of those things now are, they are the evolution of crowdfunding. So when people sort of say, isn't crowdfunding for 50 bucks, people want to put 50 bucks into the local brewery. The short answer to that is no, crowdfunding has absolutely grown up. Crowdfunding is the digitization of the private capital markets. And it's not, it's, we are on an absolute tipping point, right? Hundreds of millions of dollars have been.

driven into the private capital markets digitally every single year. In the UK, for example, last year, 30 % of all VC invested, 30%, like a third of the VC market was done digitally through one of two platforms. So it's not going anywhere. This is just, and it's not competitive with traditional sources of funding, it's accretive too. All of the research is really clear on this. It's just broadening and opening up the market. And that's good for everyone. It's good for investors, it's great for...

issuers who are looking to raise capital in order to do whatever it is they're working on.

Murdoch Gatti (18:29.225)
quite interesting. Let's the way you touched on was syndicated. I think we should dig into this because this word or this particular way of doing things is actually the process or vehicle, which enables, you know, a joint venture deal with property or something like that to become realistic. And the other thing which I should we should discuss in the syndicated clients are probably sitting there going, okay, we're listening investors going, okay, well, if we do syndicated, what about the big broking firms? Does that mean you you're cutting you're cutting their lunch?

Maybe we should also discuss back when it comes to dealer iteration and access that, you know, it's not exclusive, right? It doesn't matter where the money comes from. So what's actually very interesting about this is if you're a retail, what I always found fascinating about the wholesale certificate thing, which is if anyone's not listening is two and half million dollars of assets or income 250 grand year in year for the past two years or half a million dollar allocation. What I've always felt

crazy about that. And been discussed in detail, you know, with phasio is they're discussing it needs to be a mental test, which never sat right with me. What if you've got a trust fund kid that's got given $50 million doesn't know who he is, you know, his ear from his toe, right? And then, you know, he's gonna go, he's fine to go, but a kid that's worked in, you know, financial markets of five years as 23 is not allowed to so I don't that to me that makes no sense at, at all. Right. But what I wanted to discuss

Steve (19:51.799)
Good.

Murdoch Gatti (19:56.423)
years I mentioned before, maybe it's come back to the top of the conversation is what is a syndicated structure? And then, you know, if you're dealing with a broker and you got a broker at ABC, and you want these deals, can he access these through his broker? Like are they just reserved for venture crowds products you're doing? I'm kind of getting at right? Do you to explain that? Because I think that's important for people to understand.

Steve (20:23.384)
Yeah, 100%. And that's a really good point to make. The platform is designed to be accessible by everybody.

Quite often we do have financial advisors who are acting on behalf of clients who use the platform to make an investment for and on behalf of their clients. It doesn't change any of those dynamics. just, when I say it provides access, there's no, the access as you say is not exclusive, it's open to everybody, anybody can participate. In terms of the larger,

participants, traditional participants in whether it's a property development deal or a VC deal. All of those, but if you look at the deal flow we do, what tends to happen is those parties still tend to be involved. And we make allocations of the various parts of the capital stack available much more broadly. So, you what's really cool about that, if I go back to your example around.

you know, the person who's been working in the financial markets for 20 years, doesn't have 2.5 million bucks and doesn't have 250, somehow can't participate, but is smarter than, you know, you or I in running the rule or over, they should be able to participate. They know exactly what they're doing. In fact, they're well placed to do that. Making that group of people, giving that group of people access alongside those larger groups is what's so exciting, I think, about this kind of syndication.

When I was at PwC, I ran a team of lawyers who were, they would have been between sort of 30, in their 30s typically, none of them were earning $250,000 a year. They could run the ruler over the due diligence for a company much more effectively and much more accurately than I could. And they had $5,000 and $10,000 and whatever to participate, but just didn't have access.

Steve (22:16.792)
And in that group of people, technically retail, between sort of earning sort of 150 and 249, there's a significant number that are managing, that have access to a significant amount of capital that could not participate and now can. And that I think is what's going to really significantly change the way the private capital markets operate.

Murdoch Gatti (22:46.153)
So with the deals that you have, right, so let's just break it up. got this discussion, venture capital first, because essentially venture capital like myself, you know, was the beginning since you know, it's how you start, right? Do you start a property? Do you start in the equity? We started in an equity. So you know, here we are. And there's a byproduct. You know, we now understand the property space, right? Because it's just a natural course of things. The other thing that always amazed me was when people discuss wealth management, when you go work at a firm, you only do equities, you always should invest in property. And then the makers, you got a great retail investment trust for you like

that you serious like you do you understand the tax code? What they're really saying is we don't get fees from that transaction, right? Which I think is wrong, right? So I'm enjoying the fact that a lot of people are waking up and providing clients access to property and private credit. But on the venture capital side, the one thing I want to cover with syndicated wrap, to say you get a deal, right, and maybe discuss a particular transaction. That deal or that company that might want to stay private for longer, won't just necessarily come to you, correct?

So they may come to yourself and then the other five top on the street, say in Sydney, right? Watch the mention of names, people know who they are. And you might turn around and say, you know what? We're good for 20 % of the book. Yep. Right. So you're co-investing alongside the other advisors in a raise for a large amount of money, right? But it's a syndicated vehicle, which enables essentially everyone to take a share of that particular vehicle and then go into

Steve (24:02.712)
Yep.

Murdoch Gatti (24:12.905)
And they participate in the main parent alongside the other advisors because at the end of the day, all these companies care about is raising the 10, 20, a hundred million dollars that's required. Right. So I may be, maybe I dug into a bit too more, but do you want to just explain the mechanics about, actually how the deal works with a private equity company?

Steve (24:22.859)
As- as the-

Steve (24:32.482)
For sure. And we have the same outcome Murdoch, I want to be super, super clear. We don't care about owning the entire allocation. We've never cared about that. Our only mission is to make it easier for those founders and promoters to raise the capital that they need and get on with doing whatever they're supposed to do. So if we can help with that, we would love to help with that. If you've got access.

Murdoch Gatti (24:50.953)
Do you mind using an actual past deal just to kind of give a bit more clarity?

Steve (24:55.478)
Yeah, for sure. So the way we normally sort of talk to people about this is, let's use venture capital for an example, right? There are lots of potential participants who would look at a VC deal. Angel groups, angel syndicates, family offices, venture capital firms of different sizes with different mandates. Then there's grant funding, there's...

corporate VC, cetera, et cetera, Now, if I'm a founder, I'm looking at that group of people, highly, highly fragmented market and trying to work out who should I speak to, right, about raising my capital. Firstly, in all of those categories, there are thousands of different people you could speak to and that list changes every 10 minutes. In Australia alone, they are scattered all over the country and there's a different set of rules of operating.

Even if you do have access to those people and you go and you meet with them, you're then dealing with their particular mandate, wherever their particular portfolio might be, wherever their particular fund might be at that particular time, particular appetite this week, and so on and so on. If you're really lucky as a VC founder, you will find an investment committee that truly understands your industry when you walk in there, like get it, and they understand the problem you're trying to solve and they're on board. The likelihood of that though is

quite difficult. That's the reality. So, you know, we, my view is founders should do all of those things and they should open up their deal to the crowd so that they have options and, you know, they're not stuck in a binary strategy, which is if all those people say no, which happens a lot, even to really, really, really good companies.

like ask Melanie Perkins from Canva what the first three years of trying to raise capital for that company was, now look at it, right? But at the beginning, nobody wanted to touch it. Why? was the same business, no one wanted to touch it. Today, Canva would come directly to us and we would open up a campaign to the crowd and say, check this out. This is software that allows any novice that's sitting in any business anywhere across the country to...

Steve (27:18.552)
build quite sophisticated and really professional looking marketing material. And you don't have to be an expert to use it. Sounds simple, right? How about that for 10 bucks a month? Now, everybody in the market who's in marketing or runs a small business or blah, blah, blah, blah, blah, they're gonna get that problem in seconds, right? And we've seen this happen over and over, over and over again. I was at South by Southwest last week where we were sponsoring the startup village and the grand final pitch. And one of the examples I gave was,

around a cancer therapeutic company. We were approached by two ex CSIRO scientists. They had developed a cancer therapeutic which could be administered into the body using nano cell technology. Now I'm not a scientist, so that's all I know about it, right? But pretty cool stuff. Now early results were strong, but they were running out of cash after approaching all of the usual investors in those categories I just described. When they came to me, honestly, I thought, I'm not sure whether digital, a digital,

whether this complex intellectual property that you've developed can be communicated effectively and resonate well enough with a mass market of investors in a digital forum. I wasn't sure whether it would be appropriate for that. So they gave us a million dollar allocation and kept talking to everybody else. We raised a million bucks in four weeks and there was heaps of momentum for this deal. So they left it open and then it went to two million, then it went to three, then it went to four.

And then finally got to $5 million and the board said, okay, thanks for your help, close this deal now. 12 months later, they now have major joint venture arrangements with distribution and manufacturing partners across Southeast Asia. And two weeks ago, we got word of their clinical trial that was running in the US. Late stage pancreatic cancer patient had exhausted all of her options, was given two months to live and was allowed to trial this technology under the FDA's right to try compassionate grounds.

Two years later, peer-reviewed research demonstrates that that woman is not just alive and well, but the tumour is nowhere to be found. It is the first recorded case in the world of a late stage pancreatic cancer patient, two months to live, who made a complete recovery using innovation funded by the crowd digitally. Right, so, you know.

Steve (29:46.233)
The contribution that can be made to the private capital markets is in a digital forum by opening it up to as many people as possible is really important. It's already making a difference. if you just fast forward what that looks like in five years from now, it will, and I've always believed this and we're seeing it now, become a significant part of the private capital markets. And that is a good thing for both issuers and for...

investors. In terms of your question around syndication, I don't know if I answered it actually. But quite often, maybe this is the end.

Murdoch Gatti (30:19.613)
Hahaha

That's why I love these conversations. We just go on tangents and come back and go, we have to actually answer what the hell this indication is.

Steve (30:28.76)
Sorry, I hope that story was helpful. That's what actually makes this...

Murdoch Gatti (30:31.729)
No, no, it's very, it's very helpful. Like as an example, I use Canva, right? I've got, you know, friends or family friends who got pancreas out of Canva. And I've experienced it before where, you know, I bring a, I do private equity as well, where, or investment banking, we bring a transaction like I actually, to what you're explaining, I actually go track down the five funds that actually want to play in this particular space. But they're human beings.

Steve (30:55.223)
Yep.

Murdoch Gatti (30:57.001)
And they're very good at what they do. But when the market's hot, like we saw during COVID times and the money was just pouring in, everyone wanted to do a transaction. But it became very tough around 2021 for the past three years that even great deals, people are feeling gun shy because you know, deals that have been in like nearly I think something crazy like I was trying to a mate the other day that's got a huge amount of money in this stuff. And he reckons about nine out of the 10 companies in he's got, you know, around $10 million in these deals.

Every single one of them are practically asking for more cash. They've all got fantastic products. They will have, you know, track record deals are coming through, et cetera, but they're all, you know, cash poor, essentially. And then what's happening is that their mindset of some of these investment vehicles are, should we add late to a new transaction? Or should we support the ones we currently have? And when that conversation comes and you've got a fantastic business like Canva or the company which you mentioned coming to the table,

They're not saying no, because I don't like it. They might just be saying no, because they're capital constraint. Or they might not, they might just feel, you the markets off and it might be the wrong call. But then what's interesting about the this crowdfunding venture crowd space is the deals now been offered to a wider portion of the market and you can't and little Timmy Smith, you know, might've just got to give him 50 grand as a bonus and want to park it somewhere. But that, that gentleman knows everything about Canva because they personally use it. Right.

Steve (31:58.104)
Yeah, for sure.

Murdoch Gatti (32:22.845)
And now that's available, right? When my potential is only five fund managers that want to actually look at it now, it's completely opened up. just, again, it comes down to, you know, access and creating solutions just to get a deal done in a tough market. Anyway, so massive statement. I don't think there's a question there, but yeah, back to syndication.

Steve (32:42.924)
No, no, that's really helpful to hear that from your perspective, because obviously we agree that that's what's happening. And as I said, our role is simply to facilitate that if we possibly can. So when we hear stories about like the cancer story, we get very excited about that. Bottom line, that's why we're here. That's why we do it. Because I genuinely believe that entrepreneurship is hard.

The work of a founder is really hard. There's no such thing as an overnight success. I work with these people day in, day out. They often go years without taking a living wage. They are absolutely committed to whatever cause they're working on and they will save us, right? That is the innovation that's gonna make a difference to our lives now and in the future. And that deserves to be supported. And I feel very strongly about that. And I don't think the capital markets do a good enough job of it. It's so erratic. It's fragmented, it's inefficient.

It's hard to navigate. It's all of those things. So in addition to all of the sources of private capital that exist today, the digitization of it is a really, really important adjunct.

Murdoch Gatti (33:52.029)
very interesting. The other the other conversation I've been having with a couple of others, you mentioned that people want to stay private for longer. That's been around for a while. But the other one I'm hearing quite a lot of now it's, it's cheaper to buy than it is to build. So a lot of companies out there in acquisition mode, you buy business instead of back a brand new business, right from a risk perspective. Are you seeing that as well?

Steve (34:08.898)
Push it.

Yeah, absolutely. that's, yeah, and look, that has always kind of been the case in my experience, corporate innovation, I don't want to say it doesn't work like a blanket statement that has no exceptions. Of course it has exceptions, but there's lots of examples where you can point to it and say, why did you do that? I'll give you one example, which everybody's very clear on 250 million bucks spent by the ASX, right? Trying to digitize chess.

250 million bucks, then they fire the entire team. It's really hard to do in a major organization. Quite often, the better way to do it, and I think the more innovative corporates do do this, is to identify the emerging technology companies that are playing in their space or solving problems that they care about and stay close.

There's a number of ways to stay close, right? You can make an investment, you can partner with those people. There's heaps of ways that you can stay connected to the solution as it builds. And then once it has the traction that you need, that's when you have conversations about acquisition. And I just think that's a better way to do it. I came out of a major organization and I know how hard it is to innovate inside those groups. It's just tough. It just doesn't work. Really doesn't.

Murdoch Gatti (35:32.041)
Unless you're Elon Musk, you can just go buy Twitter. you need to pay. I know, no one's got that balance sheet.

Steve (35:35.517)
I know, is it Is it working? Is it working, I don't know. But yes, to your point though, yes, the acquisition space is heating up. We actually think this year, sorry, I want to say this year, the 2025 calendar year will be a really good year for &A.

Murdoch Gatti (35:57.961)
Let's so let's let's dig into that because it's been a bit of a, you know, crypto winter has the expression goes, what do you think is needed? Or, you know, you said the next 12 months are looking healthy, but you know, I suppose everyone's out there wondering, you know, when the tap will be turned on for essentially like small caps, growth base, you know, people to start getting excited about the I suppose the more riskier end, but you know, higher risk higher award to an extent, part of the market, what do you think's needed?

Or is it just naturally happening anyway?

Steve (36:29.612)
Well, think some of the key macroeconomic factors that have held us back over the last 24 months are beginning to stabilize a bit. Like in property, for example, construction cost increases, they haven't finished, there's still a bit of risk there, but they've begun to plateau. They're not what they were 12 months ago where you couldn't get an apartment project off the ground because nobody could price it. Like it's still.

you know, that was highly risky. was no leveling of the cost of construction workers. Their, their supply chain was still really, really broken on the other side of it at a more broad perspective outside property. you know, interest rates have stabilized. haven't had any increases for awhile. there is some comfort that that will remain the case for some, for, for a while.

There is discussion of it potentially coming down first quarter of next year. Inflation is relatively stable. not where the RBA wants it, but it's relatively stable. So employment rates are good. Those kinds of things, there's still a lot of demand for housing, et cetera, et cetera. So at its core, many of the things that were making it difficult to price risk and make forecasts.

are beginning to sort of level out. Now there's always, that could change tomorrow morning, right? But at the moment, the kinds of conversations we've been having with our investors 12 months ago are very different to what we're today, which is 12 months ago, it was like, this is still on the rise. No one's got any idea when that's gonna stop. Inflation's on the up. We have no idea when that's gonna stop. Construction increases are through the roof more than we've ever seen in living in my memory. We don't know where that's gonna stop, which means all these projects which are dependent on that just basically have to be shelved.

if you're in those projects, you're probably gonna lose money because how do you get out of it now with, know, the profits are just gonna be eaten up by construction, et cetera, cetera. That's not the case today, right? I'm not saying it's all rosy, but that's not the case today. And so the general feeling is those key things that were holding back the pricing of risk are feeling like they're beginning to plateau, you know, everything goes in cycles, right? So we might just be here and then...

Steve (38:51.21)
If that continues, and we'll see over the next couple of months, our sense is that next year is looking better. The other reason we have that feeling is because we ran a number of pre-IPO deals about 24 months ago, which was supposed to list last year. Obviously the IPO markets were pretty bad last year. So everybody put them on hold, their listings on hold. The conversations we're now having with those founders is,

We're back on track, we're having those conversations around listing, we're more bullish about listing in the next 12 months. my sense is, both from an &A perspective and a listing perspective, that we'll begin to normalise over the next 12 months.

Murdoch Gatti (39:34.825)
It's interesting your perspective because then when someone's dealing with the deals and dealing with you see the clients coming through what's being raised when the money's coming from you can see different people's perspectives and I suppose just like temperament kind of changed a bit right? Yeah. No, we got we got away. Final resources I think was like, you know, the beginning of the year was one of the only four actually got off the ground but you know, gold copper. So that was still palatable for a lot of people. But yeah, look, let's let's let's discuss

Steve (39:47.564)
Yeah. Yeah.

Murdoch Gatti (40:05.161)
You mentioned properties. Let's dig into that. we do property as well. I'll just bring up a deal that we currently have. I won't go into details, but I'm just curious as into how it works. So say Mossman, 500 square meters, $12 million build, return on cash after everything's about 53%. 80-20 for the families, 80 % of the cash they're seeking 20%. So that's not.

It's not large, right? But on a deal like that, so the LVR is very, very low. But why I'm bringing up Mossman, I suppose I should pre-discuss this. There's parts of the market, which you agree that are lot more difficult to do projects in than others, right? So I'm bringing up Mossman as an example, because Sydney, we're finding, you know, it's run as course, everything's very expensive at the same points you made, like CBD is very difficult. The returns in

Steve (40:52.407)
Yes.

Murdoch Gatti (41:04.273)
I love this particular product where you like you say you take shopping shops and like a main street that everyone knows and all it is just shops below you take that project you buy all five or six or 10 of them knock it down build high res luxury apartments on top and you replace the shopping on the front that's a fantastic product right but you know because of everything you mentioned you know the profits might not be there so where I'm going with this is some pockets of Sydney still have

enough oomph to make the deal looking worthwhile. But then I think we were discussing off air as well, how maybe you into this, how big Queensland's booming, right? Anything on the M1, Ipswich, Yatla, Crest, May North Harbor. There is a lot of these projects that are just booming. So are you finding with the deals that you're seeing come through, they, is it more specific location is the problem or is it just the overall market when it comes to like construction?

Steve (41:51.138)
Yes.

Murdoch Gatti (42:04.457)
costs essentially impacting appetite.

Steve (42:07.81)
So I think construction costs are impacting feasibilities across the country, but our focus, our geographic focus for property has always been Southeast Queensland. So we've got eight or nine projects running right now and three or four that are in option mode, taking the next steps, but we've only ever focused on Southeast Queensland. That will grow over time, but...

So I'm not a property guy, right? So I'm a venture capital, my background is venture capital funds management financial services. So this business started in venture, expanded into property. And when we were looking at, okay, what is the best way for us to do that? You know, we did a whole lot of research and decided Southeast Queensland was the place we wanted to be.

then the Olympics were announced and a bunch of other things. This is pre-COVID, right? So that's not something anyone could have forecast. But what COVID did to Southeast Queensland, I think is, you know, it's well documented, net migration, net domestic migration into Queensland from every other state has been, not every other state, but certainly New South Wales and Queen's, has been through the roof. And that's not stopping anytime soon. You you made the joke that all your clients either live there or they're moving there. That's still the case, right?

So the growth in Southeast Queensland over the last couple of years has been insane. So whether by luck or by strategy, the projects that we are involved in have benefited from that. So even though cost increases have really...

know, pack the punch in terms of the feasibility. So has gross realization. So as those numbers have gone up, they're kind of typically kept level. In terms of what happens next, the Olympics are in 2030. The amount of infrastructure being dedicated to Southeast Queensland by state and federal governments is the highest per capita of any state anywhere.

Steve (44:14.61)
that, you know, if you unpack that investment into infrastructure in Southeast Queensland over the next few years, it's very difficult to argue, plus the net migration, et cetera, et cetera. It's very difficult to see why Southeast Queensland isn't still a really strong growth prospect for investors, either directly or through developments. That's certainly what we're finding. We're looking for more projects there as well.

Murdoch Gatti (44:40.297)
What when you say projects there, what does that mean? Because just for people listening, a lot of people familiar, probably some people aren't, you know, let's let's go through the list, right? You can do apartment building blocks, you can go on the commercial side, light industrial, you can get a bunch of farmland converted to 600 houses. The other one I heard, was chatting to someone else who very up to date with what's happening in the Chinese market. And she pointed out that

Steve (44:46.264)
Yep.

Murdoch Gatti (45:02.217)
some of the Chinese equivalents of Amazon, you can get things delivered within two hours. Whilst here it's like a 24 hour cycle because the distribution center, right? You buy it, it's in the house, it goes. They're now discussing in China, like, you know, having distribution warehouses, you know, sub distribution warehouses from the main in regional areas so that things just get there faster, which makes me wonder if that's coming to Australia with a large Chinese population, you know, is there a demand for

know, the distribution style warehouses for chemists warehouse, Amazon, you know, essentially everything that people naturally quickly buy from is that in demand. So I suppose what specifically is the product that you're finding appealing in the South East Queensland?

Steve (45:38.552)
official.

Let me give you some examples. Everything we do so far is in residential. Some of that is in NDIS and co-living, but it's all residential. We've got a 314 land lot subdivision in Glenbar, which is near Toowoomba. Toowoomba doesn't sound very sexy, but it's the second largest inland city in the country. It's got a brand new airport, hundreds of millions of dollars of infrastructure being pumped into it.

Boeing is out there, Contas is out there. And if you look at the forecast for the Darling Downs agricultural region is out there. That whole area is really, really interesting to us. And we have seen, we've released the first three stages of that project, 75 lots all sold out. Stages four and five are live right now. Half of that's already sold out. We're looking at rolling straight to stages six and seven. Heaps of demand, still good prices, but...

Every time we do a, we sell out the lots that are available, we do a price revision up and it's been really, really strong and we expect that to continue. I'll give you another example, Gold Coast, Carrara. We've got a 58 lot luxury town home development, gated community, single road in the middle, resort style facilities up on a ridge, eight kilometres from Broad Beach, looking at the ocean and surface paradise skyline. You know.

in that project, you can get a, you know, two story, three bedroom luxury townhouse, literally looking at the view, never to be built out with all of those luxury facilities, like 1.5, 1.6, three bedrooms. So, four, one. I know. Mate, that's a one bedroom in the city, in Sydney. So, this is what's going on. And still,

Murdoch Gatti (47:22.087)
wild compared to what you can get like in Langkow. The same thing would be like four million dollars.

Steve (47:35.288)
our projected profit from that project over the next 24 months is between $9 and $11 million. And we still have a high level of confidence. I'm sorry, I don't know off top of my head, but I'm sort of holding onto it. As the CEO of the business, I'm holding onto that number over 24 months. And to give you an idea, so we raised the equity for that through the crowd, 8.5 million dollars, bought the project, began the civil works. We raised

Murdoch Gatti (47:43.721)
What's that as a percentage just for people?

Steve (48:04.876)
the Mez debt for that, we raised first mortgage finance and right now we're closing the final $5 million dollar preff equity part of that project. Civil construction's already started, the road's going next week. Yeah, there'll be sales office on site in January. And I think our expectation is that by January, once the first couple of sales are made, we'll be able to revalue the entire project. And it will just.

you know, our, our expectation is that we'll go up and that that profit number will continue. So that's just giving you a bit of a feel. can, I can give you other examples as well, that's Cool. Yeah, Yeah, cool. So, two different style now, right? So two different projects that are not direct Rezzi development. we've acquired an option over different sites. One is in Riverside. The other one is in, Morningside.

Murdoch Gatti (48:41.483)
plays the examples of the fun part so what gives another example

Steve (49:01.568)
is about six kilometres out of the Sydney, out of the Brisbane CBD. One is, one has the potential to be DA approved for NDIS, you know, three towers of NDIS living. The other one has the potential to be approved for a co-living development six kilometres out of the CBD. Our role in that is to, we raise the capital to fund the consulting work that takes the project from a block of land to a

approved NDIS facility or an approved co-living building with an operator in place. And then we'll either sell that project with the operator in place and a feasibility for the construction, showing what the revenue from the finished building looks like to somebody to build or we'll build it ourselves. Once they build it ourselves, we've got a property team who will oversee the development, but it'll be funded through the crowd. Now, not just through the crowd, we also use institutional lenders in these projects. So...

The crowd gets involved in the equity, they'll get involved in the prefectly, the mayors, but they'll always be an institutional funding partner that does the first mortgage construction stuff. So, I mean, we're not, our interest is not in being a developer. Our interest is in making available the financial products at various parts of the capital stack in a property project to as many people as possible. And by doing that fast tracking the capital raising process so that the thing could, you know, get off the ground and do what it needs to.

Yeah, so that's another bit of an example. The other stuff we've got, the other property projects we have going on, we've got an Albany Creek, a project in Albany Creek, it's 48 townhouses on the river there.

Steve (50:47.584)
Yeah, I think that's a good sort of cross section of the kind of work that we do. But we'll do everything from acquire a piece of grass that has the potential just simply to be to have evaluation uplift by obtaining complex approvals to all the way through to the development of the product and the sales of the product.

Murdoch Gatti (51:13.161)
This is important as well because you know, when people say property, they think, you know, what type of property? Well, they don't know. So, so it's interesting to now, now I know that venture crowd speciality in this particular space is in the residential or essentially like,

land subdivision, right? You're essentially purchasing a last buckle land and you're sticking essentially building a little village on it, right? And then selling it out for a particular profit. So with these projects that come, are you finding them yourselves or are you working with developers seeking capital?

Steve (51:47.138)
Both, yeah both. And as the platform continues to advance, within 12 months from now, our aspiration is to be doing less and less of the origination ourselves and to simply making the technology and the connection available to developers to simply raise their own capital using our platform. So in some ways, our property business, my view is,

You can't digitize something you don't understand how it works, right? So we've spent years kind of going, okay, let's look at all of the variations in residential property from options through to development through to all the way through to construction and so on. Understand how to position those in a digital way to close capital fast. And then what's required from an investor nurturing conversion communication process.

Let's digitize that entire process. Let's use that ourselves. Let's work out where all the blockers are. And then let's put digital tools in place to address those blockers. And with that, productize it and hand it to the market to use themselves. That's what we've done with venture capital, right? We are more advanced with venture capital than we are with property. But then, like in the first quarter of next year, the plan is to take our venture capital product and apply that to our property business. And over time,

simply allow the platform to be used by any developer to do the same thing with or without us, right? Just using the tech as the way to do it.

Murdoch Gatti (53:21.427)
So you're suggesting a property developer in time, like you can do in the venture capital markets, can potentially white label or engage your venture crowd in a white label strategy. And then, you know, with their distribution list or their current network, you know, launch a transaction.

Steve (53:39.106)
Correct, 100%. So, can I give you an example from the venture capital side? Because that's real time. And then we can sell it at a price. So if I'm a founder now, I can go onto the platform and subscribe to use the technology. I can build my own expressions of interest page. Every single field has guidance, written and video guidance that's proprietary to VentureCrowd. If you...

Murdoch Gatti (53:46.992)
Absolutely. Yep.

Steve (54:07.448)
If you struggle with things like content creation or quickly synthesizing the message for your business, which everybody does, no matter how good a founder you are, this is a marketing function and people aren't always very good at that. And we know that. So we built a tech solution for that, which is our own proprietary AI agent, which has been trained with 10 years worth of Bench Crowds campaign collateral and data. And so now you can simply say, and we call her Sophie.

proprietary, not GPT, and you can pick up your pitch deck, you can drop it into the system, and it will give you three or four different taglines that you might want to use as well as a summary of your business. And it works, it works really well. We've been using it for years, that's why we don't have a copywriter anymore, because we've digitized that process. Now we give it to the founder to use whenever they want. Then they send that, they'll then send that link to whoever they want. Use a property example, right? You might already have a network of people who you would typically...

bring into your deals, you could just send to those people privately if you want, and no one ever has to see that deal unless you specifically send it to them. Or you can list it on the Venture Crowd platform for an additional fee and it'll go out to, it'll be on a high traffic platform where people go for these kinds of deals, but also we'll go to our 76,000 registered members. You don't have to do that, but if you want that additional distribution, you can get it. From there, people start to express interest, right? And that begins to form up in a,

a mini CRM. if you're the founder or the developer, go back into your dashboard, you can see who's investing, who's interested in investing, how much are they interested in investing, et cetera, et From there, the next hardest thing becomes who is most likely to invest, right? And again, we used to give that job to a highly trained business analyst who would take over a day to try to work that out. Who's Murdoch Gatti, what has he invested in before, is he interested in property, is it a venture, da da, and then list it.

so that you can target the most important investor first. But now with Sophie, she can run the ruler over hundreds of digital data points and determine in seconds what that list should be and rank them for you. anyway, point is the technology is making the process significantly easier. That product is live in market with founders and by sort of January of next year, we're gonna take.

Steve (56:29.4)
We're gonna look at that whole workflow that we've built and say, how does this apply to property developers, property syndicates, and then tailor it to that. So by like March, hopefully April of next year, it'll be in the hands of developers is our expectation.

Murdoch Gatti (56:46.043)
Is that only available for the founders and the developers or is there a, speaking of the venture capital sign, a tool available for like say my business, say, say I'm running a deal. You know, and I want it all automated and nice and clean and simple, know, can as an advisor, you know, running my own practice, utilize venture crowd to essentially launch a rise. And the other question, why I'm phrasing it that way is there are some specific things I find like sometimes

some founders in the early stage and they don't want to go over the 50 shareholder cap, right? For obvious disclosure reasons, right? So hence they have, you know, minimum, I don't know, 50 grand as required just to ensure they get the most amount of money, you know, with, and that's a specific reason just in the first stage. Are there tools available for that? Or if we use venture crowd, it has to be minimum of grand, five grand, 10 grand, or can we specify, you know,

actual minimums half a million dollars or whatever it is, is that available?

Steve (57:45.24)
You can specify whatever you want, right? It's your capital raise, not ours. And whatever it is in your capital strategy that makes sense for your business or project, you can set that however you want it to be set. But let's talk about the 50 shareholder rule just for a second. That's obviously always been an issue, which is why we've got two Australian financial services licenses. And in those licenses, there are a number of different authorizations that allow us to do lots of different things, including running single asset managed investment schemes.

So if you wanted to syndicate all of your people into a trust that we manage for you, right? And that trust is the only investor in the company or the project can also be done, right? We do that all the

Murdoch Gatti (58:24.969)
So hold on a second, that trust from a legal standpoint, right, instead of having 50...

I see your point. Some investors I find in that early stage might not want that to be the case because they want the, you it comes down to, you're stuck inside a vehicle as a shareholder to an entity, which is better for the company, right? But other individuals might specifically want the individual.

Steve (58:49.079)
And so, and we can accommodate that too, we totally get that. But I would say to founders in that position, you don't want, I probably wouldn't accommodate somebody who was gonna put in 10 grand to go direct onto the cap table. But if you were gonna put in 100 grand and you want it to be direct on the cap table, that's absolutely a question for the founder. We won't block that, right? That's a matter for you. You don't wanna turn down that money if it's

Murdoch Gatti (59:10.235)
No, no, this is reason why this is very interesting for me, because we've done a race for a particular company, which is in cleaning services, they have a coding, which essentially kills mold, it doesn't exist. They've tested it everywhere. But the problem was, all the hospitals and everyone in the government, they loved it. But COVID was just kicking a can to be seen to be doing it, they never actually executed. So we they've got 43 on the share register out of the 50. They don't want to go over, you know, for the exact same point you're raising. But again, you know, they require capital because they're having huge traction with

Steve (59:32.694)
Yeah. Yeah.

Murdoch Gatti (59:39.303)
government housing for homes where essentially with all that mold, like there's the stories of what documented of, know, like you have a tenement tenant that comes in, you know, and they just leave every single year. So seven years of revolving door and the costs keep going. They brought this thing in and then essentially someone hasn't left for three years because it completely kills all the mold. You spray it on and last last forever. But the scenario which they have is great product ticked off everywhere. They won the award last year for the best product, but they have a cashflow

problem. So they've just brought it back to brass tacks, no one's DSL, they know nothing. They're physically doing the work work themselves growing it all. But the problem has been the slot for seven shareholders. But in order to raise the amount of capital, you kind of need each person going to 100 250 grand and the appetite as we just discussed previously hasn't been there for that. But you're saying potentially as a solution with venture crowd, we could create a trust structure, open that up to a whole lot of smaller amounts, they can still

get the money required, solve that problem and then do very well. Is that how that works? And it only counts as one name on the registrars is underneath the trust structure. That's very interesting. See, I love having these conversations, learn stuff all the time.

That's very interesting. Definitely going to speak to you about that off air, but look, okay, everyone's going to know what's what are the fees, right? So say that transaction, what are the what are the fees? How does it work?

Steve (01:01:06.36)
So we don't charge the investors, right? So we don't, because we don't want to block the access to capital. You know, we want as many investors participating in these deals as possible. So for the founder though, or the issuer, there's an establishment fee to establish the campaign. And then we take a success fee off the back. And it will just depend on how much you want to do yourself versus you need assistance from Venture Crowd as to what the establishment fee and the

commission actually.

Murdoch Gatti (01:01:38.557)
Can I the range as a percentage? I'm going to be, yeah.

Steve (01:01:39.768)
So we've got a self-serve model which allows you to use the technology and run it yourself. All up it's about three grand for the establishment fee and you'll pay three percent commission on capital raised. If you want us to do more of that work it's a ten grand establishment fee and seven and half percent.

Murdoch Gatti (01:02:02.729)
Got it. So hypothetically say I do that myself. The company pays three grand, you charge three hypothetically say the fee, normally for VC works anywhere from five to six, right? So if I do all the work chasing it up, but the vehicles available, then essentially the advisors split is, know, the three and the three minus the difference, essentially. Is that what I'm understanding?

Steve (01:02:13.506)
Yeah.

Steve (01:02:25.75)
Yep. Yep.

Murdoch Gatti (01:02:28.893)
Very interesting. I'm definitely going to chat to my mate about this one.

Steve (01:02:32.901)
Sounds like a really interesting piece of innovation, mate. So if we can assist, we'd love to.

Murdoch Gatti (01:02:37.929)
Yeah, so this is coming to property. Is there any other players in the market currently doing this in the property space?

Steve (01:02:46.034)
there, there are other, property crowdfunding platforms around, but I don't think they, they're just, none of those groups, are looking at the problem in the same way that we are. They tend to be like a bulletin board for deal flow, right? But it's basically. Yeah. Yeah. And there's a lot of that. There's a lot of that. doesn't, we don't think that's necessarily very innovative and that's not a criticism. It's just.

Murdoch Gatti (01:03:04.137)
Yeah, and I see that all the time.

Steve (01:03:14.006)
we feel like there's another solution that needs to be leaned into. And that's sort of what we're working on, which is how do you actually enable the developer or the syndicate lead, yeah, in your case, to package it all up with the tools that they would otherwise have paid a bunch of advisors to provide, lawyers and...

brokers and et cetera, et cetera, et cetera. How do you just give that technology to people to just run at scale? And then it tears from there, right? The more assistance you need, obviously the fees change, but that is very different to a digital bulletin board for alternative deal flow.

Murdoch Gatti (01:03:54.993)
The only other question I would get a lot from developers on this point is regarding sensitivity, right? You know, these guys love NDAs. let's, okay, why am I bringing this up? Let's talk about any deal South Queensland. Say someone finds a deal, second two years developer relationship to get this particular transaction. Quite literally mums the word, right? They get the option on the deal, right? They got time to settle, raise the capital, you know, then off they go. But if

A lot of these very, very good property projects, even the people, the buyer and the seller.

Steve (01:04:24.984)
.

Murdoch Gatti (01:04:32.073)
These people do not want anyone knowing this deal's going down. And if they hear this deal was gone into the mainstream market, right? They spook and they bail. And then essentially the best deals will never go back to these developers again, right? It's a nature of the beast I've found within very, very high-end property development with venture crown. there a way, I don't know, right? It's difficult, right? Is there a way to essentially keep

transaction to an extent, private whilst distributing to the masses and then later on divulge, you know, what the project is to kind of get around the confidentiality part, you if someone's serious.

Steve (01:05:14.188)
Yeah, I mean, I don't think you can distribute to the masses and keep it a secret. Yeah, not really. But there's ways to play it, right? Which is if you're using the technology simply to make your process a lot more efficient, it doesn't need to be a public race. No one ever needs to know about it. It can remain private, but distribution becomes harder because you'll have to distribute directly, right? But if you want broad distribution, which is...

Murdoch Gatti (01:05:18.533)
I know, right? I know it's not possible, you know, it's just a question.

Steve (01:05:43.158)
really the model we prefer, we think that's the model that works better, then yeah, there are things that you'll need to disclose. Now you can tier that disclosure process by having, you know, an expressions of interest campaign that leads into a live raise. Your expressions of interest campaign can limit what you say.

Right? So you don't have to give away the address or those kinds of things. There are ways to position it to obtain interest without giving everything away. From there, you'll know who you're dealing with because you'll have a CRM which has every person in there and you can decide who you want to engage with and who you don't if you're nervous about confidentiality. But I mean, really, like...

That's not the model we prefer. Like I just say to people, can't sell a secret. If you want to sell a secret, we're probably not for you. But if you want to go loud and proud and talk to the world about this amazing thing that you're working on and raise capital quickly through as many people as possible, syndicated into a vehicle which allows you to run fast, this is what we do.

Murdoch Gatti (01:06:50.995)
very, very interesting. Yeah, I just find this entire space fascinating because like being lived, seen, done it, know, raise money, the doll and smile being done at all, but the ability to digitize this space. I've seen a lot of people try to do it and some not as successful, but it's very, very interesting.

Very interesting this space. Is there any other deals or any other interesting anecdotes in the venture capital space you want to cover?

Steve (01:07:20.472)
look, there's a lot. I'll give you one more example. So we worked with, we've been working with the company for the last few years. It started as a drinks business called Nexbar. The two relatively young founders were focused on replacing sugar.

in beverages, right? Because there's all the stats around the amount of sugar that's consumed and the impact on diabetes and obesity. I don't think any of that's a secret. I don't know the numbers off the top of my head, but it's through the roof, right? All over the world, massive problem. So they wanted to tackle this issue of how do you create a sugar alternative, which is not artificial, but is completely natural. So, you you can get like Coke, no sugar, but if you look really closely, it's got things in it like a spartan main, which is now known to be cancer.

Murdoch Gatti (01:08:14.313)
which is horrendous for you. Yeah.

Steve (01:08:17.037)
Yeah, it's officially a carcinogenic as of last year under the World Health Organization. So, you know, it's a bit of a furphy to say, I'm drinking no sugar coke, so I'm okay. Well, you kind of not. But anyway, that's another issue. It's a problem to be solved really was the thing, right? So they went in, they've worked on thousands of iterations of the formula. They now have a naturally sugar-free sweetener, which is as good as sugar.

in terms of the mouthfeel, so just tastes like sugar. There's no aftertaste, there's no stevia aftertaste, none of that stuff. They built it into a business called Nexpa. We helped them with their very first raise. They've gone from $2.5 million worth of gross revenue to just over 20 last year. They're now in the UK. They have manufacturing capability in Europe. They're in 15 places across Europe. They've now broadened out from one brand into like three or four different brands, including a...

The good brekkie, which is like an up-and-go equivalent, but with no sugar and nothing artificial. They've done a partnership with Pat Cummins, the Australian cricket captain. He's a 10 % owner in Pace, which is a sports hydration drink, which he co-created with them. So they use their sugar and then all of the other electrolytes and sporting needs that an athlete might want to create the Pace brand. And so now what they've built is

Goodness Group Global, includes Nexpo, but also includes a number of different other brands. There's no major institutional capital in there, right? It's all the crowd, right? Different levels of sophistication. There's some really sophisticated investors in there, but different levels of sophistication. And we've done every single raise for them since they started from debt to preference equity to preference notes, private credit, right? Two years ago, 18 months ago.

They needed more capital to grow into the UK and Europe. The equity markets were really, really tough, as you just mentioned before. We said, look, what about a yielding product? Because yielding products, private credit is quite popular with investors. Even those who are cautious about equity right now, they raised $4.5 million in four weeks in preff notes. And that's kind of the role we want to play. We want to assist founders with their capital raise.

Steve (01:10:34.53)
from the very first one all the way through to their exit, whatever it is that they might need. And we have the licenses that facilitate that, not just equity crowdfunding, but ordinary, pref, safe notes, convertible notes, whatever it is you need to do at that point in your growth, whatever the relevant capital instrument is for you, we can assist with that and we can do it digitally at scale.

Murdoch Gatti (01:10:58.025)
It's just amazing how far the industry has come in the past 20 years.

Steve (01:11:03.244)
Yeah.

Murdoch Gatti (01:11:04.137)
Yeah, it's kind of wild. I kind of love it. I love innovation. It's so exciting. It's so exciting. And there's so many great opportunities out there. And the biggest thing I've always been about is just how do you access them? Right? That's why I'm a big fan of the platforms coming through like, you know, hub 24 net wealth, like, you know, yes, some are better than others. But like, I wouldn't say, you know, you have to use one over the other. I just it's just great that these platforms now exist. So human beings, my parents, my friends, whatever they can access things.

Steve (01:11:08.662)
Yeah.

Murdoch Gatti (01:11:32.521)
that once was an opaque market and very, very difficult to get and kind of this like if you're in the know, you're in the know type culture. And the other thing why that's I think this what you're doing is very important is when you're in that, like if you're in the know, you're in that culture, you're kind of hanging on the phone waiting for a deal to come through. But you don't know whether or not that's a good deal or a bad deal. You just hear the fact deal. And as you and I both know, the best deals you end up getting over subscribed to get cut back, you might only get 20 % of what you want. But then the bad deals and you don't know it's a bad deal, you end up getting a full 100 % you're like what just happened?

Steve (01:11:47.031)
Yes.

Steve (01:12:02.812)
And what about the ones you're missing out on? Right? So let's just use, let's go back to the Canberra example for a moment. If you were relying on the fund managers who first saw that deal to bring new deal flow, they would have turned down Canva at that point. They did turn down Canva hundreds of times for the first three years. Right? So this idea that, I'm not saying, it's not a criticism, it's just, this is the reality.

Murdoch Gatti (01:12:05.053)
Yeah.

Steve (01:12:30.434)
You know, you're dealing with one person or a small investment committee, they're making a call on behalf of all of these people. But wouldn't it be, our view is simply, isn't it more efficient if you're looking for a view about a product, particularly venture capital, like your mold company, and you want to get an idea of, is this company going to work and do I want to invest in it? You could ask three people for their view, or you could ask thousands of people for their view. One of those sample sizes is going to be more accurate.

Right? One of those sample sizes is just naturally going to be more accurate. Why not just ask the market what they think and do that in a way which allows them to make an investment with their own money. Like we actually think crowdfunding, putting a raise to the masses is not just a good way to raise capital to do it efficiently and quickly and use that in addition to the rest of your capital strategy, but it's also an indicator of the success of your business.

If no one wants to touch it, maybe it's a shit product. And maybe as an investor, you should be cautious, right? But if it goes through the roof, that's thousands of people saying, wow, this mall thing is really interesting. I would buy that and I'm going to invest in it. It's a bit of a validation.

Murdoch Gatti (01:13:47.049)
you just made, like I've been watching a lot of Shark Tank, right? There was some guy that created like a nasal thing and the guy's like, you know, I would never buy that. It's just the deal makes no sense. But then they took it out to the market, right? I think he came in at, what was he wanting? He wanted like to sell, you know, 20 % for 300 grand or whatever it was. And it wasn't much, but you know, his valuation was a million dollars. I know those dumb as don't know at all, but if the valuation time was a million dollars, they said, you're crazy. Don't do it. Anyway, two years later, the mark, the valuations now are 20 million. Cause what happened is

what I'm finding and anyone listening to this should take seriously is when people look at deals, they look at how much money has been made. And some people are very conservative, right? And a lot of people that run money are very intelligent, but they look at the conservative side. Let's not lose first before we go in. The thing is when you have neurodivergent, let's call it what it is, full blown ADHD creative folk that are amazing people, right? They don't necessarily look at, know, am I going to lose the

They just see a phenomenal opportunity, a product that doesn't exist. And they just want to go absolutely ham, right. And be completely obsessed by that product and make it work. Whatever consequence comes their way. They don't care. They're to literally old school battle this thing and hunt that thing down and make sure there's food on the table. Right. Why I find venture crowd and crowdfunding so interesting is when you can get an idea like that, that actually gets checked by someone like your team, like yourself to make sure it is actually legit. It's not like, you know,

like, know, dodge core, like a crypto coin, this is going to blow up or something equivalent, right? That when you take a product like Canva, when people are using this on the daily, and they actually understand how good it is, or you take something that kills black mold, where, know, people are starting to get now health problems, like people are starting to discuss how black mold in the in their family can actually potentially this is not, I don't know if there research on my head, you know, lead to

really horrible things like infertility in women. there is horrible things that can come and you don't even know that, know, mold's in your house, right? And then if you can take, but if someone's lived through this and they're trying to remove something like mold in the house and the products available, right? You know, it's actually great for the mind, the bank account to have access to, you know, things that human beings see on a daily and let them make their own decision, which I find very interesting about what you guys, guys and girls do.

Steve (01:16:03.5)
Yeah, exactly.

Murdoch Gatti (01:16:09.353)
Anyway, a of a statement, but yeah, it's it's interesting about, as you mentioned, you give a product out to the market, which you check that's legit. And then you let the people decide, is it actually a good product? they, and they, and they vote, you know, with their, with their bank account, essentially, is that right?

Steve (01:16:24.151)
Okay.

That's pretty much it. That's pretty much it.

Murdoch Gatti (01:16:31.025)
Yes, well, we could be here all day. is there anything, Steven, is there anything else we've missed or anything you want to leave people with that are listening to this?

Steve (01:16:39.16)
just that if you're a founder or you're a property developer, at the moment, everybody's sort of saying it's too hard to raise capital. That's not been our experience. The digitization of private capital markets is making that easier. And we think that we're just at the beginning of that wave in Australia and globally. And that's a really good thing for everybody in the market. It's good for issuers. It's good for investors. It will open it all up. It will make it more democratic. And I think I hope as a result, we'll see.

you know, more projects get off the ground and, you know, homes created for families all over the place and great innovation turning into, you know, cures for cancer and et cetera, et cetera. yeah, that's the thematic and I think it's, you know, we're just at the beginning of it.

Murdoch Gatti (01:17:26.313)
If anyone wants to learn more, how can they find you?

Steve (01:17:29.24)
www.venturecrowd.com.au or you can, I'm on LinkedIn, we're not hiding, really easy to find. Steve Maarbani, just Google that and I'll come up, I'd be very happy to talk to anybody on either side of those transactions if they're interested.

Murdoch Gatti (01:17:48.105)
Steve, it's been brilliant having you on. I learned quite a bit, so I really appreciate that and I hope you have a great day.

Steve (01:17:54.047)
on your mate. Thanks so much Ian.

Murdoch Gatti (01:17:56.073)
All right, take it easy.