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Wallstreet disrupted! Direct Public Offerings and Behavioral Economics

Why is DPO or a Direct Public Offering, the long tail of finance ripe for disruption? It is simple. This is the long tail of financing and suffers from the same dynamics of the Pyramid Parallax. Now imagine every time you bought a tea or a burger or fruit from your farmer or your groceries at your local store or in your state, you were actually moving inventory, had a share in the equity of the busies and could trade your shares in a secondary market and not be troubled by how companies you could not observe were spending your investing dollars as a stock ticker on Wall street trading desks?

What happens when millions of small business owners with good fundamentals serving their local customers and ecosystems well in their neighborhood need to expand, get more efficient and don’t have access to mainstream capital? How big is that market? Look around your home and you have the answer!Every day millions of SMB owners lack the ecosystem connect to raise capital, expand marketshare, attract talent, attract the best business advisory and create greater value. This is a behavioral economics paradigm. It’s like we tend to choose queues in stores that are longer. However this is the market opportunity.

For example the average lend of under $500,000 per business added to over $126 B to 260,000 small businesses in the United States. However this is just the tip of the iceberg and like the #PyramidParallax of agriculture offers the same opportunity to connect SMBs and Consumers alike with a huge difference. disrupting intermediaries of mainstream capital and consumers being part of the experience.

“SBA has supported more than $126 billion in lending to more than 260,000 small businesses and entrepreneurs.”
http://www.sba.gov/content/sba-lending-activity-fy-2013-shows-sba-continuing-help-small-businesses-grow-and-create-jobs

PyramidParallax                    Screen Shot 2014-07-17 at 7.14.32 AM

 

Screen Shot 2014-07-17 at 10.42.18 AM

https://www.census.gov/econ/susb/

FORTUNE AT THE EDGES OF THE “PYRAMID PARALLAX”, DIRECT ACCESS!

https://gerardjrego.com/2014/07/04/fortune-at-the-edges-of-the-pyramid-parallax-direct-access/

So what is a DPO? Direct Public Offerings (DPOs) are a model of raising capital by selling equity (Section 504 exemption)the way any company would when they list on a major exchange such as NASDAQ or NYSE or LSE, except with a major difference. The securities are sold to a limit of $1m directly by the company or business to large numbers of unaccredited investors of the public within the state of business. This serves well especially if the customers and ecosystem state holders of the business can invest in a company that they buy the products and services and have the opportunity to share the risk and improve the value by investing.

Direct public offering
http://en.wikipedia.org/wiki/Direct_public_offering

 

Screen Shot 2014-07-17 at 6.21.19 AM

http://www.businessweek.com/articles/2014-06-05/how-to-go-public-without-a-stock-exchange

The early signals are clear. This market is ripe for disruption.

So applying our methodology of Inventory Lifecycle Return framework which is a set of algorithms that can model, capture and create value through business models we came up with a possible startup for a team. The framework is an interdisciplinary set of algorithms and models between Behavior+Supplychain+Business models+Financial metrics.

So we modeled DirectPublic.  A direct marketplace for the long tail of investing, connecting small businesses to investors who largely will be consumer or customers in the ecosystem of the business and this is a disruptive startup opportunity.  So leveraging our framework we put together a business plan and plug this live with some of the slides to share our work, contrary to what most folks do as the devil is in the detail and the detail is in our algorithmic framework.

Screen Shot 2014-07-17 at 6.21.26 AM Screen Shot 2014-07-17 at 6.21.33 AM Screen Shot 2014-07-17 at 6.21.56 AM 1 Screen Shot 2014-07-17 at 6.21.47 AM

 

We see the opportunity to create a marketplace that disrupts main street investing ecosystem is ripe. Why now?

1. Commoditization of behaviors at < $0.001/click

2. Behavioral economy is now mainstream, Uber, Lyft, Airbnb, SolarCity, et al

3. Emergence of smallholder ecosystems that are now connectable by marketplaces around mobility

4. The scale of industry

The derivative potential spinoffs of hyperlocal or DPO investing are;

1. Greater resilient communities

2. Reducing conflict

3. Sustainable social networks

4. Creating local opportunities for mainstream capital and adjacent ecosystems

5. Including the “excluded” due to scale

Screen Shot 2014-07-17 at 6.22.10 AM  http://www.premise.com  is a very good example of signals and market access.

 

This is part of our work and if you think that this is a real business plan, you bet it is. Most of the slides are not presented but would give you a core ideas of the work from what are. What we have is the behavioral-economic framework as algorithmic deep analytics which we are modeling across industries and identifying the disruptors/disruptive opportunities. A fund?

 

 

 

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