Patrick G. Mackaronis, co-founder and Director of Business Development at social media startup Brabble, interviews BreadStreet founder David Kent.
Breadstreet.com, Inc. is one of the nation’s leading investor leads providers. David Kent, President of BreadStreet.com, Inc. recently started the first and only of its kind Investors Union founded to create a marketplace for private investment deals such as oil and gas drilling, films, alternative energy, new technologies and other types of worthy ventures that do not have access to the public capital markets because of stringent SEC regulations in the area of private investments in start ups. I thought it would be interesting to learn more about his newest project along with his tips for Entrepreneurs currently on the market for investors funding. Check out his answers about this latest project!
Jim: David, can you tell us a little about yourself?
David Kent: I consider myself an entrepreneur. I enjoy being in business and helping other businesses find investors and get their ventures off the ground. I’ve had curiosity about business ventures and investments from an early age. I started my career in an oil and gas call room pre-screening investor prospects for big Texas oil and gas companies. I worked my way up into a supervisory position, learned the ins and outs of the business and soon managed my own call room. I’ve been in the investor leads industry for 10 years now and I’ve been the President of BreadStreet.com, Inc since 2005.
Patrick G. Mackaronis: You mentioned the investor leads industry? For many Entrepreneurs, this industry remains a mystery. Can you tell us about the secret behind the veil? Who are these investor leads and can they help Entrepreneurs looking for funding?
David Kent: Absolutely! According to a study by the Small Business Administration, 96% of small businesses get funded through individual private investors. A private company looking for angel capital needs access to quality pre-screened investor leads that they can present their opportunity to. Lead providers normally purchase investors leads lists from companies raising capital or create their own lists through investment surveys and then sell those lists to other companies looking for funding. A good investor leads provider surveys investors to make sure they meet the standards for an “Accredited Investor” set by the Securities and Exchange Commission (SEC). BreadStreet.com further goes beyond the basic definition of a leads provider and actually invites accredited investors to join as members of the BreadStreet Investors Union for the purpose of reviewing investment opportunities. This process tremendously helps Entrepreneurs in that they end up talking to an interested investor willing to listen to their proposal as supposed to cold calling an investor lead from a generic investor leads list sold by our competitors.
Patrick G. Mackaronis: What is the BreadStreet Investors Union?
David Kent: The BreadStreet Investors Union was started as an initiative to help accredited and financially sophisticated investors streamline their investment research process and to create a marketplace for private deals that cannot be marketed to the public because of the SEC non-solicitation rule. In the past few years, we had received many reports from BreadStreet Investor Members that they get overwhelmed with investment calls from all kinds of companies and that they do not have the physical ability to properly screen the multitude of calls to find “the one”. This gave us the idea to start the Union where members set their exact investment criteria and investment range. When the right opportunity comes along, our members are the first to have a look. Now, investor members of the Union refer all of their investment calls to the BreadStreet web site. Callers complete their proposals on our secure Investments Message Board and our investor members get a notification if the opportunity meets their criteria. They can further take a more proactive approach and search the board themselves. The best part about being a Union member is that you get activity reward points for the investment reviews you complete that you can redeem for various perks like gift cards, travel, laptops etc. Thus, investor members of the BreadStreet Union never get taken advantage of by investor lead providers who sell the investors’ personal information without the investors’ authorization. Our members totally love the program and we enjoy great loyalty from our members!
Patrick G. Mackaronis: What about Businesses looking for funding? In what ways can the BreadStreet Investors Union help them find that funding?
David Kent: The benefits to capital seekers and issuers are many and the Union can definitely have a great impact on businesses’ ability to find funding. Let me start though by saying that BreadStreet.com, Inc does not participate in the capitalization process in any way. Breadstreet.com, Inc does not pre-sell, close or advise investors to invest in any company and BreadStreet cannot promise or imply the final results from the discussions between Issuers (capital seekers) and Investor members. What we guarantee though is that any capital seekers who comes to us and meets the criteria set by our union members will have the best shot. It is our guarantee that every single investor prospect from the BreadStreet Investors Union (categorized as “Documented Investor” at our site) will not only be a qualified financially sophisticated investor but will also be ready to take our Client’s call and have a hard look at their deal! No wasted time for Entrepreneurs + 100% Reg D compliant leads! Further, the letter that the Union members provide to BreadStreet is made available to the Entrepreneurs. The letter includes the investor’s financial professional (accountant, investment advisor, banker) contact information and an authorization to any party in possession of the letter to verify the investor member liquidity stated on the letter.
Patrick G. Mackaronis: Ok. From what we heard so far, I have no doubt that many Entrepreneurs will be thrilled to talk to the BreadStreet Union Investor Members. How does BreadStreet get compensated though? Clearly, lots of work goes behind the scene.
David Kent: Yes of course. We make sure we do our homework. Yet, the service is inexpensive compared to commissions charged by licensed broker dealers. Our Clients only get charged a flat fee for contacting an investor member of the Union. Further, they pay the fee only if they want to contact an investor member and not if the investor calls them as a result of seeing their ad posting on the Investments Board. The contact fee is anywhere from $250 to $400 per Documented Union Investor Member and the average liquidity of our investor members is in the range of $193,000. We have members with liquidity as high as $10 million and the contact fee is still a flat fee of $400. Besides, if an Investor member declines to review a proposal, we guarantee the delivery of an investor prospect with comparable qualifications to the Entrepreneur who recruited our service.
Patrick G. Mackaronis: Can you give us an example of the type of Client who comes to the BreadStreet Investors Union?
David Kent: We have one man sole proprietorship type start ups to big oil and gas corporations using the service. Any private company looking for investment capital will find the service invaluable. We have Clients in all industries.
Patrick G. Mackaronis: What will you recommend to the business people who are long on ideas but short on cash who may not be able to afford the service?
David Kent: If they cannot afford the proactive approach of directly contacting the accredited investor members of the BreadStreet Investors Union, I would recommend the next best thing which is having their investment proposal posted on our Investments Board. We give many incentives to our investor members to regularly check out the board. If an investor calls you as a result of seeing your ad, all you pay for is the ad spot, which is $49.95 a month and you further get complementary access to our premium database of surveyed investor leads and listings of angel capital and venture groups..
Patrick G. Mackaronis: What is your single best idea for Entrepreneurs on the market today seeking capital to get their ventures off the ground?
David Kent: Get proactive and make some calls to investors! It never hurts talking to a millionaire!
Patrick G. Mackaronis: Thanks for your time David! You’ve given us some invaluable insight to your organization that I am sure will be helpful to Entrepreneurs!
Interview by: Patrick G. Mackaronis