A CEO’s Perspective Crowdfunding with Title III: Q&A w/WOLACO

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Since Title III of the Jobs Act just recently went into effect we decide to get a closer look at how CEOs actually view the new legislation in respect to their future financing needs. We had an opportunity for a Q&A with Terry White the Founder/CEO of athletic apparel company WOLACO. He was able to share with us the company’s history as well as their first crowdfunding experience with Kickstarter and his perspective on Title III.

 

CT: What does WOLACO mean?

TW: WOLACO is an acronym for Way of Life Athletic Co. I thought about the company name long and hard, I asked close friends for input, and conducted lots of surveys. However, it was during a commute home from my day job at the time that WOLACO popped into my head. I asked myself what I really wanted this company to stand for, and concluded that at the core, it was about an athletic and deliberate Way of Life.

Since the start, we’ve been uniquely focused on meeting the lifestyle needs of the modern male athlete—guys who need active apparel that’s bold, functional, comfortable, and built to last…not for brunch. Gear for guys who live life with deliberation, passion and daring.

 

CT: When and where did the idea come from?

TW: There are two pieces of the puzzle that came together soon after my college graduation. I was a collegiate athlete and despite much forewarning, I was caught off guard by the abrupt transition from that hyper-athletic lifestyle to a largely sedentary professional routine. As a young professional, I was spending 80 percent of my waking hours either sitting at a desk or commuting to-and-from work. When I wasn’t working or commuting, there were other hindrances that prevented me from living an active, healthy life. Living in New York City, you have the challenges of time, money and an outdated corporate culture that revolves around happy hours and client entertainment—indulgences. This challenging transition really moved me to want to find the right work-life balance.

 

Then, I had an idea for a product. At the end of 2013, I left my NYC apartment to go for a run. With my phone in my hand and my key tucked into my sock, I thought to myself, there must be a better way. So, I came up with the North Moore Short—a men’s athletic compression short with two sweat-proof pockets, one pocket for your phone or music device and the other for your keys, cash, credit cards, or any other valuables. This was the catalyst for WOLACO. The foundation of the brand was already being built, but it was this game-changing product that afforded me the window to enter the market.

 

CT: How is your compression gear different from others?

TW: We’re the first company to introduce sweat-proof compressive pockets to compression gear—and we’re the best at it. What makes us different is that we’re the only apparel company that’s uniquely focused on the needs of the modern male athlete.

 

  • To ensure built-to-last durability that can withstand our customer’s lifecycle (multiple washes, high intensity workouts) we use a heavier, performance-based compression fabric, held together by a flatlock construction with reinforced stress points. It’s intended to be Worn Hard, Washed Gently, as our care and content label advises.

 

  • To enhance and streamline your workout, our compression gear features two compressive, sweat-proof pockets, reminding you that sweating while working out isn’t just okay, it’s encouraged. The placement of these pockets is also strategic, making access to your valuables while working out seamless.

 

CT: Tell us how WOLACO got off the ground?

TW: It’s been a very organic process and largely grassroots the whole way through. It started with a small family loan that funded our initial product development. My brother Alex and I then liquidated a small investment fund to build our website. From there, we launched a series of pre-sales, selling 500 units of our North Moore 1.0 and then we graduated to Kickstarter to reach a more diverse customer base very quickly.

CT: What made you choose to fund via alternative investment options?

TW: It was a decision that I made early on. I had a concrete vision for WOLACO and I didn’t want to sacrifice that vision for large investments, especially during the foundational stages. Kickstarter, in particular, allowed me to remain vision-focused, while also engaging the community in a meaningful way, selling product to athletes around the world, and getting a lot of tremendous feedback and direction from our customers.

CT: Kickstarter is both a costly and time-consuming venture, what assured you of a lower risk to reward ratio? And what attributed to the success of your campaign, which exceeded goals by 400%.

TW: During campaign preparation, a mentor of mine, who had previously run a successful Kickstarter himself, told me that it was just like a game of dominoes. If you could line up all the pieces beforehand, once your campaign launches, all you’d need to do is nudge the first one and the rest falls into place. I took the concept to heart, and in many ways, his philosophy proved true. Preparation is everything; you cannot rely solely on organic traffic on the platform to fund the whole campaign. It requires a “kitchen sink” networking approach, which means exhausting every networking angle you can imagine, and preparing them for what is to come.

 

That said, in any business, the quality of the product is of pivotal importance. It’s also important to keep in mind that crowdfunding campaigns are unique in that the consumer takes an unusually large risk with you. Even if a campaign is well-funded, there are an incredible number of things that can still go wrong, whether that means a delayed delivery, or, worse case scenario, a complete failure of delivery altogether.

 

Lastly, creativity—the product or concept needs to turn heads and have a strong, consistent message. If you’re not doing something different, improving upon something or challenging norms, then you should think twice before launching a crowdfunding campaign. Some companies are well-suited for this type of funding method, but others, not so much. WOLACO was addressing popular demand for a product that met people’s needs. We had an overwhelming amount of organic support for this simple, well-engineered, yet unprecedented product.

CT: Tell us about the brand’s growth since its inception.

TW: We’ve grown from a community of 350 customers throughout the Northeast to over 6,500 customers from 50 countries around the world.

 

CT: How do you currently market your product line, and where are the products available?

TW: WOLACO’s gear is primarily available through our online e-commerce store, wola-co.com. We’re engaging in a number of additional means of distribution, though, including local retailers, on- and offline affiliates, and through a network of brand ambassadors.

 

To this point, the majority of our marketing to this point has been done through organic efforts, including social media and email marketing. We’ve leveraged influencers to raise awareness and gain exposure. And we’re looking to establish partnerships with those brands that align with our mission.

CT: What plans do you have for the future?

TW: Functional compression is how we started and will always be rooted in who we are. Over the next year, we’ll continue to listen to what our customers are saying. We’ll continue to elevate our compression offering, while strategically expanding our brand and thoughtfully introducing new products that fit the needs of our customer.

Our greater brand mission is to inspire an epic life through active living. As we look ahead, our ultimate goal is becoming the lifestyle brand for the modern athlete.

CT: The SEC’s JOBS Act, Title III went into effect on May 16th. Can you explain what that is, and how it’ll impact businesses looking to raise early capital?

The amendment to Title III of the Jobs Act is an easing of regulation. Which allows non-accredited investors to invest in companies raising raise less than $1mm on an annual basis.

 

Generally, the crowdfunding aspect of Title III of the JOBS Act makes capital potentially more accessible for young startups. It reduces invest risk by allowing for investors with less experience to invest less substantial dollar amounts in to early stage companies. For early-stage companies with a great story, vision and team, but limited traction and proof of concept in the market, Title III will help to raise capital in lieu of a lack of time in the marketplace. In turn, expediting investment and allowing them to focus on building their business.

 

Additionally, companies built around a community will benefit even further from Title III, as it is an opportunity to disperse ownership to some of the company’s most loyal customers. For early-stage companies, this community empowerment could be exactly what is needed to build much needed momentum.

 

Terry thanks for your time and we will keep our eye out for WOLACO and any new developments from your team.

terrywhite headshot  Terry White is the Founder/CEO of athletic apparel company WOLACO.

 

 

Q&A With Fundrise co-Founder and COO Brandon Jenkins

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We sat down and asked Brandon Jenkins, COO and co-founder of real-estate crowdfunding Fundrise.com to share with our readers some of the history and developments within Fundrise.com.

Hi Brandon, thanks for taking the time to share your thoughts with us.

CrowdTrader: Can you tell us about how Fundrise began and how you joined the team?

Brandon: The idea behind Fundrise came out of the personal experience of the founders as real estate developers in Washington, DC who recognized an opportunity to open up the world of real estate investing to a broader audience.

I joined when we were still doing our own real estate development projects – when Fundrise was just an idea starting to emerge.

CT: Fundrise has a bunch of unique features which is why I personally love the site, but how would you differentiate Fundrise from the other platforms out there?

BJ: First and foremost quality. We only work with the best quality real estate companies and search through hundreds of deals a week selecting only the top 1% to actually offer as investments.

Second, we focus on providing unmatched customer experience by creating a one-of-a-kind platform. Our technology is 100% designed and built in house…from scratch, so that the experience of investing on the platform is as straightforward and enjoyable as possible.

CT: The huge amounts of VC funding your company has raised is well known, where are you focusing most of this spending?

BJ: We are very diligent about how we spend. We want to know that we are getting a great return on our investment, so we focus our resources on creating the best products with the greatest long-term value.

CT: Since you are also in charge of product development, can you share with us any cutting edge product roll outs or features we can expect to see on Fundrise.com in the near future?

BJ: I can’t give away any specifics but we are working on a few big things that will be complete game changers for the crowdfunding industry…as big as the first day we launched.

CT: Do you have any plans to start issuing offers under Regulation A+ for non-accredited investors?

BJ: Our core business has always been and will be to provide the best quality investments to everyone – whether that is through Reg A+ or other offering structures we are constantly working to deliver on that goal.

CT: Fundrise.com is pioneering the prefunding model which definitely helps protect investors, but doesn’t this have a negative impact on the number of deals you can bring to market as well as the overall returns that investors will receive?

BJ: No, we are big believers in “putting your money where your mouth is” and prefunding every deal is evidence of the level of quality for each investment we offer. It also allows our investors to earn better returns because we are able to negotiate the best terms possible by having certainty of
capital.

Platforms operating under a “best-efforts” model have inherent uncertainty which puts them at a disadvantage when negotiating terms and this is passed along to their investors in the form of lower quality deals and a poorer risk adjusted return.

Refusing to lower our quality standards may result in us doing less deals in the short term, but we believe that our investors will benefit over the long run…and we are long-term in our thinking.

CT: Fundrise.com recently launched an income and growth portfolio which packages together a number of assets, this is starting to resemble a REIT how is this different?

BJ: It’s similar in that investors are able to diversify across multiple assets and we like that. Diversification is critical when it comes to smart investing.

It’s different in that investors get more transparency into what they are investing in and have much lower fees. Lower fees means better returns for investors.

CT: Currently Fundrise is only offering the two portfolio options for investment does this represent a fundamental change in your offering strategy? Will we still be seeing single offerings listed on Fundrise for investments?

BJ: We continue to develop ways for our investors to diversify across more deals at lower minimums – diversification leads to better performance and is something we have seen our investors consistently ask for.

CT: Where do you see the real estate crowdfunding industry in general in the next three years and Fundrise in particular?

BJ: One of our favorite quotes at Fundrise is from Bill Gates, who said “Most people overestimate what they can do in one year, and underestimate what they can do in ten” – crowdfunding is still in its earliest stage. Only in the last year have we truly started to compete and beat out traditional
institutional capital players to get deals done.

Over the long term, technology will disrupt the financial industry just like it did with book stores, travel agents, and taxi cabs – it’s simply more efficient to raise capital online with fewer middlemen each trying to get a cut of the action.

In the near term, you will start to see consolidation. The advent of crowdfunding has not gotten rid of normal business cycles and only when the downturn comes will you find out who was doing things right and who’s out of business.

CT: From a sponsor’s perspective, why should they choose Fundrise to raise capital?

BJ: The best real estate companies want to work with the best partners, ones that have a real depth of track record and experience in the real estate industry. They also want to get the best terms possible.

Because of the unique way in which we raise capital we can provide real estate companies with both the speed and efficiency of private funds and a cost of capital similar to the public markets -in short they work with us because we can provide them with the best deal.

 

Thanks Brandon, we will keep an eye out for new developments from Fundrise.com as I am sure the entire industry will too : )

 

 

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Brandon is the Chief Operating Officer of Fundrise, the country’s first online platform for real estate investment. Brandon works with the design and technical teams to set the strategic direction for the software platform. Before joining Fundrise, Brandon worked as an investment broker and advisor at Marcus & Millichap, the largest real estate investment brokerage firm in the country. Prior to his time in brokerage, he worked for Westfield Shopping Centers in the Regional Development Office.