As Wildfire supporters, we’ve received significant inbound related to their unique “crowdfunding” approach. Equity crowdfunding is very new and most public market investors have questions about the process so we wanted to provide an overview of how it works to help you better understand the opportunity.
We’ve broken our explanation into three points:
- The Myth of 10X and Liquidity
- Investing Like a VC
- Understanding the Wildfire Process
And if you have any other questions or concerns, as always, feel free to reach out.
Don’t Fall for the Overnight 10X Fallacy
Ultimately, we believe crowdfunding is the future. In short order, we believe it could even replace the CSE. For those who are unfamiliar, the CSE is an exchange focused on speculative, early-stage companies. In general, if you’re investing in companies on the exchange, you accept that it’s a high-risk high-reward play.
Unfortunately, most people invest on the CSE looking for overnight 10-baggers, but these plays simply do not exist. This leads us to our first important point. In reality, the combination of a 10X return and immediate liquidity is a myth.
Most of the penny stocks on the CSE are pump and dumps; you’re more likely to lose money than gain. If you see the stock climbing and you think there is real liquidity and an opportunity to 10X your investment – the joke is on you – you are the liquidity.
A real 10X opportunity will take time to develop.
We detailed in our guide why we believe there is potential for Wildfire to be a 9-13X opportunity based off only one year of their buildout. If you look multiple years out, the return could be as high as 20-30X.
However, that doesn’t guarantee your investment will be liquid at that time. It likely will be more than a year; however, this is the type of timeline an investor should expect with a high-risk high-reward investment opportunity. Anything less and you’re buying a lottery ticket or being scammed.
In fact, according to venture capitalist Peter Thiel, most VC funds have a 10-year outlook. In comparison, this makes Wildfire look like a rather short-term investment for such a substantial upside.
As well, for those trigger-happy investors, the lack of liquidity may also be a benefit. You can’t overthink and make an emotional decision, but you will have to wait for the opportunity to develop.
This brings us to our second point, timing.
Invest with a VC’s Timing
By using a crowdfunding campaign, Wildfire is effectively giving you access to a Series B investment opportunity. Investing in a company at this stage in its lifetime is usually reserved for the rich and wealthy and VC firms.
Unfortunately for most investors, this is the stage where a significant amount of capital return is made.
Many of the recent IPO’ing companies have raised too much money privately, leaving no returns for the public markets. Yet they still IPO and investors still show interest hoping to capitalize on some disruptive idea.
Unfortunately, they are only given table scraps, which leads to stocks that go nowhere (i.e. Lyft and Uber).
By gaining access to an opportunity at an earlier time, you can be one of the investors who reap the rewards of one of the first capital rounds.
And while I’ll admit crowdfunding isn’t common, it has been done before. With video games and blockchain technologies leading the way with tens of millions of dollars in capital.
It would be great to have the access that VC’s do, but as smaller investors, we have to use the avenues provided to us. Crowdfunding is our way of investing like a VC and getting in on the ground floor of a solid opportunity.
With that said, I’ll try and detail the process to make it more familiar.
Wildfire’s FrontFundr Process
Participating in the funding round is a simple three-step process and can all be done without leaving your seat.
First, it starts by going on the Wildfire’s FrontFundr campaign page. From there, once you click invest, you will be directed to a brief questionnaire to confirm you’re eligible. This is largely to make sure you’re aware of and can handle the risk associated with an early-stage investment.
Second, after submitting the form, you will receive a phone call within 24 hours to confirm the details of your responses, including your investment.
Finally, you will be sent a private placement subscription agreement that you can sign electronically. After signing, you will immediately be directed to a secure portal to transfer the funding from your institution of choice.
It’s that simple. Once this process is complete, you’ll be part of the Wildfire team and a supporter of an authentic approach to the cannabis industry.
Investors also have the option of completing the process via mail if that is something that’s preferred.
FrontFundr is a reputable crowdfunding platform, they have successfully funded over 40 companies for well over $35 million dollars.
They have their own thorough due diligence process, and in 2018 they won the Innovation Award from the Private Capital Markets Association.
Ultimately, they serve as an excellent example of Canadian FinTech disruption that helps bridge entrepreneurs with capital.
Some Parting Thoughts
Equity crowdfunding for the cannabis sector is truly groundbreaking and provides an opportunity for all investors (large or small) to be part of a big idea very early on.
As we’ve stated in our original guide, we’re big believers of Wildfire’s authentic approach to the cannabis industry and view it as a powerful investment opportunity for those who have the ability to take a longer-term view with their capital.
Equity crowdfunding is the future, investing in powerful grassroots business opportunities at the ground floor – it is the antithesis of what early-stage corporate cannabis is today. The change couldn’t come soon enough!
The Wildfire Collective is a Market Awareness client of Capital 10X.
The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.