Most startup founders are trained to think about capital in one narrow way: raise venture money, grow fast, stay private as long as possible, and eventually hope for an acquisition or IPO.
Jonathan David Nelson thinks that model is broken.
Not slightly inefficient. Broken.
In this episode of the Ignite podcast, Jonathan joins Brian Bell to unpack why the startup financing machine no longer works for most growth-stage companies, why the U.S. public markets have become hostile to smaller public companies, and why the London Stock Exchange may offer a smarter path for founders stuck between venture capital and private equity.
Jonathan’s background makes him an unusual voice in capital markets. He grew up in Latin America, trained as an ER and ICU nurse, went back to school for software engineering, built Hackers and Founders into a global startup community, advised on crowdfunding policy, worked across emerging startup ecosystems, and now runs HF Capital—an AI-native investment bank focused on IPOs, secondaries, and M&A.
That mix gives him a rare lens: part operator, part hacker, part capital markets obsessive, part outsider who never agreed to pretend the system made sense.
From Trauma Nurse to Capital Markets Contrarian
Jonathan’s path into venture did not start at Goldman Sachs, Stanford, or a Sand Hill Road fund.
It started in Honduras.
He grew up in Latin America as the child of missionaries, in a small village hours down a dirt road. As a kid, he was already programming and managing his father’s mailing list. When he later came to the U.S., he expected to follow a missionary path. His father pushed him to get a practical trade first, so Jonathan became a nurse.
He worked as an ER trauma nurse before eventually injuring his back and moving into software engineering. That transition led him to Silicon Valley, where he became obsessed with startups.
His wife, tired of hearing him talk about startups nonstop, pushed him to get out of the house one night a month. That became Hackers and Founders, a meetup that started as a casual bar gathering and grew into one of the largest founder communities in the world.
But the more founders Jonathan met, the more he saw the same pain point repeat: raising capital was brutally inefficient.
Founders wanted to know where the “money tree” was in Silicon Valley. Jonathan’s answer was blunt: there is no money tree. Fundraising is a grind. It takes months. It is a brute force algorithm.
That realization became the foundation for his current work.
Fundraising Is Still a Brute Force Algorithm
One of the clearest themes in the episode is just how inefficient fundraising remains.
Jonathan compares fundraising to a brute force algorithm: knock on doors, get meetings, pitch, get rejected, and hope that one out of every ten or fifteen conversations converts.
Brian adds his own experience from raising venture funds, describing thousands of “no’s” even with an existing track record.
The point is not just that fundraising is emotionally hard. It is structurally wasteful.
Founders spend months selling stock instead of selling product. VCs spend years raising funds. LPs sit behind layers of intermediaries. Capital moves slowly through a system that is supposedly designed to fund innovation.
Jonathan’s frustration comes from seeing the full chain.
As a former nurse, he thinks in systems. In medicine, understanding how blood flows through the body tells you where to apply pressure when something goes wrong. He applies the same logic to capital markets: how does capital actually flow through the startup ecosystem?
When he realized that pension capital could pass through fund-of-funds, venture funds, and multiple fee layers before reaching entrepreneurs, he saw the system as an inefficient capital delivery mechanism.
His conclusion: the ecosystem is sick, and someone needs to heal it.
Why Crowdfunding Did Not Fully Democratize Startup Capital
Jonathan also reflects on his work around the JOBS Act and equity crowdfunding.
Crowdfunding was supposed to democratize startup investing. In some cases, it worked—especially in real estate. Real estate can generate dividends, rent, and recurring distributions. Investors have a clearer path to getting money back.
Startup equity is different.
If a small business or startup raises money from its community, when do those investors get liquidity? Usually, only through an acquisition or IPO. And those paths are not equally available to everyone.
Jonathan points out that much of tech M&A is highly network-driven. It depends on who knows corporate development teams at major acquirers. If you are outside the club, your odds of finding liquidity are much lower.
That is the core flaw: crowdfunding can help people buy private equity, but it does not solve the exit problem.
More access to illiquid assets is not the same thing as democratization.
Why Jonathan Thinks the U.S. IPO Market Is Broken
Jonathan’s most provocative argument is that the U.S. public market system no longer works for most companies below massive scale.
In his view, the U.S. exchanges are optimized for large hedge funds, high-frequency traders, and mega-cap companies. They are not well optimized for capital formation for smaller growth companies.
If a company goes public in the U.S. at a $100 million, $300 million, or even $1 billion valuation, Jonathan argues it can quickly become an orphaned public company.
The risks include:
Limited or no analyst coverage
High volatility
Activist hedge funds
Short selling pressure
Expensive legal and compliance obligations
Difficulty competing for attention against companies like OpenAI, SpaceX, Anthropic, or other dominant tech names
For a smaller public company, being technically public does not guarantee liquidity, coverage, or investor interest.
It can mean higher costs, more scrutiny, and less control—without the full benefits of being public.
The London Stock Exchange as a Startup Financing Hack
Jonathan’s alternative is not “never go public.”
It is: consider going public somewhere else.
He became interested in the London Stock Exchange after learning that its market structure is very different from the U.S. system. After studying dozens of global exchanges, he came away believing London has one of the best-engineered IPO products for smaller growth companies.
The appeal, according to Jonathan, includes:
Lower IPO costs compared with the U.S.
Lower ongoing public company maintenance costs
A sponsor bank model
More reliable analyst coverage
A market maker relationship
A less litigious environment
Different rules and norms around short selling
Better support for smaller public companies
The key insight is that a company doing $50 million in revenue and growing 50% year over year may no longer be a fit for venture capital—but it may be a very interesting public company in the right market.
That is the gap Jonathan wants HF Capital to serve.
The 50 and 50 Company
Jonathan describes his target company as being in the “50 and 50” range: roughly $50 million in annual revenue and growing around 50% year over year.
That kind of company can be awkward for venture.
It may not be growing fast enough for top-tier late-stage VC. It may not want private equity control. It may not want to take punishing liquidation preferences. But it may still be a strong, valuable, growing business.
In Jonathan’s view, companies like this should have more financing options.
An IPO on the London Stock Exchange could let them raise capital, create liquidity, and use public stock as a strategic asset without being forced into another painful private round.
The founder tradeoff is real. Once public, the company no longer controls its valuation in the same way. The market sets the price. Macro shocks, sector sentiment, and public investor perception can all move the stock.
But Jonathan argues that private markets have their own version of the same risk. Founders just understand those risks better because they are familiar.
The unfamiliar option is not necessarily the worse option.
Why Late-Stage Private Rounds Can Hurt Founders and Early Investors
The episode also gets into one of the least understood parts of startup finance: liquidation preferences.
When a late-stage investor puts money into a company, they may receive preferential rights that determine who gets paid first in an exit. A 2x liquidation preference means that investor gets twice their money back before common shareholders or junior preferred investors receive proceeds.
If the preference is participating, the investor may get their preference and then also participate in the remaining proceeds.
That can be excellent for the late-stage investor. It can be brutal for founders, employees, and early backers.
Brian and Jonathan discuss how late-stage investors may prefer an acquisition because liquidation preferences can matter in an M&A outcome. In an IPO, the cap table typically converts to common stock, which can wipe out those special preferences.
That creates a boardroom conflict.
Founders may benefit from going public. Early investors may benefit. Employees may benefit. But late-stage investors with structured terms may prefer a private equity acquisition.
That is why Jonathan’s idea can face resistance from boards, even when founders are interested.
Why SPACs Went Wrong
Jonathan is also skeptical of SPACs.
A SPAC, or special purpose acquisition company, is a shell company that goes public with the goal of acquiring an operating company later. In theory, it offers companies an alternative path to public markets.
In practice, Jonathan argues, SPACs are often stacked against the company being acquired.
Investors in the original SPAC can have incentives to redeem or sell, and the operating company can end up public without the same preparation, reporting maturity, or investor base it would have built through a traditional IPO process.
The result can be a brutal drop in market value after the transaction.
For Jonathan, SPACs were a financial engineering hack that often went badly wrong. His point is not that all financial engineering is bad. It is that the structure matters, the incentives matter, and founders need to understand who benefits.
Secondaries, SPVs, and the Anthropic Problem
The conversation also moves into startup secondaries.
A primary investment is when investors buy shares from the company, and the money goes into the business. A secondary transaction is when existing shareholders sell shares to other investors.
Jonathan notes that the secondary market has grown dramatically and is now a major part of venture capital.
But he is deeply skeptical of many hot-company secondary offers, especially those involving companies like Anthropic.
The issue is structure.
👂🎧 Watch, listen, and follow on your favorite platform: https://tr.ee/S2ayrbx_fL
🙏 Join the conversation on your favorite social network: https://linktr.ee/theignitepodcast
Chapters:
00:01 - Introduction to Jonathan David Nelson and HF Capital
01:23 - From Missionary Kid in Latin America to Trauma Nurse
03:10 - How Hackers and Founders Started as a Bar Meetup
04:26 - Why Fundraising Is a Brute Force Algorithm
05:37 - Understanding Capital Flow Like Blood Flow
08:15 - Advising the SEC and the Limits of Crowdfunding
09:40 - Why Startup Exits Remain the Broken Piece
10:47 - Why U.S. Public Markets Fail Smaller Companies
13:02 - The Origin of HF Capital and Tokenized Stock
15:26 - Discovering the London Stock Exchange Alternative
17:05 - Lower IPO Costs, Sponsor Banks, and Less Litigation
19:23 - Why Founders Still Default to U.S. Markets
21:19 - The “50 and 50” Growth-Stage Startup Profile
24:28 - When an IPO May Not Be the Right Move
26:34 - SPACs Explained and Why They Often Collapse
30:32 - Private Rounds vs. IPOs for Growth-Stage Companies
31:37 - Liquidation Preferences and Founder Dilution
35:24 - Why Boards Resist Alternative IPO Paths
36:23 - Capital Markets as a “Capital API”
38:02 - Building an AI-Native Investment Bank
40:14 - Why HF Capital Is Becoming the Bank, Not Just Selling Software
41:11 - The Coming Explosion of Smaller AI-Native Startups
42:26 - Secondaries, Latin America, and Undervalued Growth Companies
44:39 - What Startup Secondaries Actually Are
45:30 - Anthropic Hype, SPVs, and Risky Secondary Deals
47:13 - Custody, Forward Contracts, and Secondary Market Due Diligence
Transcript
Jonathan David Nelson (00:00:00.031):
Like we’re all product people. We’re all engineers, designers, you know, operations, people inside of startups. It’s no longer sexy to have like a former investment banker as part of your fund. So VCs have forgotten like how to do financial engineering. We’ve largely forgotten how to do exits. Everybody’s like, you got some of that liquidity, man. Like I would love it. Can you buy a secondary from me, man? I heard that’s the thing. You can buy my stock from me. And so like Silicon Valley is kind of stuck. We’re all just kind of trapped in this liquidity thing. It’s taken 14, 15 years now for a company to IPO. So my best performing companies in my venture portfolio, my investors have to wait 15 years for that. Like that’s a lot of crabby investors for a long time.
Brian Bell (00:01:03.042):
hey everyone welcome back to the ignite podcast today we’re thrilled to have Jonathan Nelson on the mic he spent the first part of his career as an ER and ICU nurse before stumbling into Silicon Valley that is an odd path building hackers and founders which grew from a bar meetup for or programmers into one of the largest founder communities on earth, spanning dozens of countries. Over 15 years in and around venture, he’s advised SCC on the JOBS Act and crowdfunding roles, worked with the White House and immigration as economic growth and contributed to studies on building tech ecosystems across LATAM. Today he runs HF Capital, which he describes as an AI native investment bank focused on IPOs, secondaries, and M&A. He’s one of the more contrarian voices in the market right now. He thinks the U.S. public markets are broken. interesting for everyone short of a Decacorn this will be a great conversation he’s evangelizing the London and European exchanges as a real alternative to Series B and he’s been publicly torching the wave of sketchy anthropic secondary vehicles flooding people’s inboxes he’s blunt he’s funny and he’ll disagree with me on air which is exactly why he’s here Jonathan
Jonathan David Nelson (00:02:10.061):
No, I won’t.
Brian Bell (00:02:10.642):
You’ll be here, Brian. Love it. Yeah. I’d love to start with your origin story. What’s your background?
Jonathan David Nelson (00:02:15.309):
I am a strange kid. I grew up in Latin America. Parents were missionaries. So I was the only white kid at the end of six hours of dirt road in a tiny little village at the end of Honduras called Minas de Oro Honduras I was programming managing dad’s mailing list of a hundred people that supported kind of what they were doing when I was like seven years old way back in the early 80s came to the states and was saying I was going to be a missionary dad said yeah get a trade first I was like great computer science love me some computers dad was like you know I don’t want you playing video games the rest of your life son you should be a nurse like your mom was a nurse it was very helpful when we were in the jungle I was like, okay, I was fresh off the boat. So I studied being a nurse, did that for a while, dropped out of seminary, grew a ponytail and worked as an ER trauma nurse for a number of years. I threw my back out and eventually injured out, went back to school for software engineering and I heard that you could sell ones and zeros and I know how to copy and paste so I was like I can build an app sell it for a dollar copy and paste five million times I’ll make five million dollars so easy where do I sign up
Brian Bell (00:03:23.848):
can I invest this work Yeah, I want to invest in that.
Jonathan David Nelson (00:03:26.690):
Yeah, hell. So I moved to the valley and I was working a couple miles away from Google’s HQ while I was finishing up a software engineering degree online and drove my wife crazy. She kicked me out of the house one night a month to go to this hackers and founders meetup that she helped me organize and things went viral from there. So yeah, weird backstory.
Brian Bell (00:03:46.621):
That’s so random. And then at some point you you started hackers and founders. What was the impetus to do that?
Jonathan David Nelson (00:03:53.091):
Driving my wife crazy talking about startups all the time. So I’d be like, oh, my gosh, programming language, this and nerdy things that. And she was like, honey, I love you. But yeah, You gotta get out of the house one night a month for the love of God you gotta let me help you build your business network honey so we started this meetup called hackers and founders in 2008 and after the economy collapsed a bunch of people started showing up at the meetup like In 2009 we were having a couple hundred people show up at the meetup like it was my bar night dude and we started having it twice a month and then once a week in SF San Jose Mountain View East Bay just kind of all around and people started peppering me with, they’d come up to me and say, hey, I’m here for two weeks on my visa and I need to raise $5 million. Where is the money tree in Silicon Valley? I’m like, money tree? They’re like, yeah, you go, you shake the money tree, you get a bunch of money in two weeks and then you go home. I’m like, yeah, dude, that’s not gonna happen. it’s gonna take you nine months and it’s hard it’s a brutal brute force kind of
Brian Bell (00:04:54.980):
thing fundraising is a chore like every every fund I’ve had I’m on fund three I’m closing it out probably by time this episode airs like this month in June yeah but no I mean like it’s two years of grind every single fund every single every single time and I have good track record it’s just and the same with founders it’s just a grind I mean just to close around six to nine months right
Jonathan David Nelson (00:05:14.563):
it’s a brute force algorithm it’s just you got to knock on doors you got to get the meeting you got to do the pitch you got to get turned down and you know every 10 or 15 pitches one might actually convert so if I need 50 limited partners in my fund
Brian Bell (00:05:28.494):
better find 500 limited partners to pitch basically exactly I remember fund one or fund two was my first real fund fund one was like a rolling fund fund two is my first traditional fund I was raising when you know the sky was falling in late 22 so half of my commits fell out and I think I counted up the no’s on that fund they were in the thousands for sure but like of the people that knew me knew like from team ignite the syndicate had invested with me I probably had 1400 no’s yeah 1400 yeah that’s a lot
Jonathan David Nelson (00:06:01.468):
I mean, it’s just, it’s so inefficient. And that has just always driven me crazy. And literally after the first four to 5,000 conversations about what a pain in the ass it is to raise capital, I’m like, dude, I’m the last person that people should be asking, like, how to raise capital. Like, I save lives and wipe ass. And I usually wipe a lot more ass than I do saving lives for a living.
Brian Bell (00:06:22.883):
And that was like, why are you asking? And I’m all out of lives to save.
Jonathan David Nelson (00:06:25.665):
Exactly. And I was like, how in the world? Like, why? How does this work? And the weird thing about growing up in Central America is I grew up in a currency crisis in Costa Rica. Like, the exchange rate went from 8 to 1 to 160 to 1. I’m like eight years and so you just think about money and like how does it work and what’s the exchange rate and how does it you know and just as a kid growing up in that you just kind of fundamentally think about money differently and so I just started saying you know what how does money work in in Silicon Valley. Like, it was very helpful for me as a trauma nurse to know how blood flowed throughout the human body. If someone gets stabbed and you’re leaking, where do I put pressure? You know, here or here? So how does capital flow throughout the ecosystem of Silicon Valley? And I was completely surprised when I found out that my nurse’s pension got invested into entrepreneurs through a fund of funds, through a venture fund. And when I learned that the fund of funds took 1% times 10 years, 10%, and the fund venture fund to 2% times 10 years 20% so it was 70 cents on the dollar of my nurses pension that actually got deployed yeah yeah and I’m like this is inefficient like kind of silly and like one the way back like I sell my company how does that work well the venture fund takes a 20% profit share and the fund of funds takes a 50% and then 65 cents on the dollar ends up in the hands of the nurse I’m like well this is an inefficient capital delivery mechanism man like we should engineer a new system and you know should do this and that and the other thing and you know the engineer inside of me just started saying you know the system is broken must fix the nurse inside of me saying you know the ecosystem is sick must heal and that kind of led me on this long torturous journey and now I’m starting an investment bank man because this process this process shall not stand man
Brian Bell (00:08:15.824):
And I love this and I want to get to HF Capital but there’s a couple more things I want to talk about because you’ve done a couple of really interesting things. You actually advised the SEC as I mentioned in the intro on the JOBS Act on Title III crowdfunding almost a little over 10 years ago. Yep. This was supposed to democratize startup capital. Did it work and or did it just produce a lot more noise in the system?
Jonathan David Nelson (00:08:35.551):
It worked for a certain category of companies. It works really well for real estate because real estate offers dividends, you know, right?
Brian Bell (00:08:44.255):
There’s some distributions coming in every quarter and yeah.
Jonathan David Nelson (00:08:47.037):
And so Investors have a way of actually getting some money back and it’s pretty easy to fractionalize that you know I get a million bucks in rent on a annual basis and I have a thousand investors everybody gets you know a thousand bucks a year and so that’s actually The problem is, is that how if they buy stock in a crowdfunding, when do they get to resell that stock at a profit? Well, the two ways that you do that are through an M&A and through an IPO. 90% of the world’s tech M&A happens within 60 miles of my front door here in San Jose, California. And it’s all very clubby. Who do I know who knows someone at Google corporate development who might actually be interested in buying my engineering team because I’m out of money. And so if I’m a small business owner in Minneapolis and I want to build, I don’t know, a barbershop, I need to fund money, raise money to actually grow my barbershop. I should be able to crowdfund for my customers. But how are they ever going to be able to sell that stock? They’re not realistically. So that’s like the bug in the system is this like exit piece. And our stock market in the United States is optimized for massive hedge funds and high frequency traders. And so they are not optimized for the SEC’s third mandate, which is capital formation. And they pretty much only work for like SpaceX and Anthropic. and massive multi-billion dollar valuation companies if you like go in the United States at a hundred million dollar 300 million dollar valuation like you’re kind of
Brian Bell (00:10:22.258):
screwed yeah why is that why why are you kind of screwed there a couple of reasons
Jonathan David Nelson (00:10:27.682):
with a small cap IPO in the United States you run a couple of risks one is if you get a hedge fund that’s an activist they buy five million bucks of your stock or five percent of the company they can and demand a board seat. Then they can start arguing for you to do stuff. Hedge funds can short your stock. And in the United States, you don’t actually have to borrow the stock. It’s kind of a trust me, bro, short system. Like I’m going to short the stock. And then they can tweet about it because you can talk to your own book and if a large hedge fund starts shorting $100 million stock as an entrepreneur like I’m screwed and so you get these massive volatility kind of swings how do I if I’m a $500 million if I’m a billion dollar company in the United States on the US stock markets I’m like number 4,000 on the S&P 5000 on the Russell 5000 index right right how do I a billion dollar valuation how do I compete with all the noise and all of the media and all of the earned media that SpaceX is getting or Anthropic is getting like I can open AI which is kind of yeah or you know top 20
Brian Bell (00:11:33.670):
tech Cerebris who just IPO recently yeah how the hell do I compete with them I
Jonathan David Nelson (00:11:37.872):
don’t so how do I convince an investment banking analyst to cover my stock and then they market and sell that analyst report to like institutional investors it’s just not going to happen So below $5 billion in market cap in the United States, the vast majority of those companies are just orphaned. They get no analyst coverage. $5 billion is what a medium-sized hedge fund. So there’s all of these risks that are kind of built into the United States stock market system. It’s just too big and it’s been too successful.
Brian Bell (00:12:11.605):
And then so, you know, fast forward now to HF Capital, the AI Native Investment Bank that you’re starting. What was the origin story there?
Jonathan David Nelson (00:12:18.756):
So I was thinking we could tokenize stock, you know, if I could build a global digital stock certificate that could could trade on blockchain with, you know, could it be legal in 185 different legal jurisdictions around the globe and not get me thrown in jail? Like you can do that, but you have to IPO or do the reporting in compliance to actually be able to let retail investors, you know, the poorest 97% of the country to actually buy that stock legally per the SEC’s rules. So I was going to do that, but yet you need tools to streamline and automate that process. Publicly traded quote unquote venture fund that would have tokens instead of limited partner shares. I got the SEC, the police inside of the SEC to verbally sign off. I was like, dude, will you write something so I can show it to like investors? They’re like, yeah, no, we don’t do that. And so rich people in Silicon Valley had no idea why I would ever want to do this. Like, why is it needed? We don’t need it. We don’t need it. Like there’s tons of exits. People outside of Silicon Valley didn’t believe A in blockchain and B that I could ever do this without going to jail. So it struggled. Somebody at the London Stock Exchange. I bumped into Chris Mayo at the London Stock Exchange and they started talking about how their IPO are vastly different. And I was like, no. And it’s common in the UK if I’m doing 10, 20, $30 million a year in revenue, like I can IPO in a London exchange. And all of my concerns are like, well, what about hedge funds? Well, it’s illegal to short stock like you guys do in the United States and the UK. You actually have to borrow the stock from someone and sell it. And the people that invest in these small cap IPOs are like long only. I’m like, okay, well, how do I get analyst coverage? Well, you get a sponsor bank, you get a chaperone, and you’re guaranteed analyst coverage. I’m like, well, what about volatility? I’m like, well, you know, no. You have, like, well, how do I, if I have to trade 10% of my stock, like one of my investors wants out, how do we do that? I said, well, because you get a sponsor bank, you get a market maker, and they will pick up the phone and make some calls for you. And you might not sell it immediately, but you can sell it over the next three to six months without tanking the stock. I was like, how the hell have I never heard about this? Like, how do you screw me? They’re like, well, we’re the London Stock Exchange, dude, we can’t really screw you. So I was insanely curious about this, very suspicious. And so being the engineer, I need to know how the system works. So I’ve talked to 28 stock exchanges now looking at different listing regimes around the globe. And by God, they have the best, like the best engineered IPO product. They struggle marketing it because you’re a 400 year old brand and why would we need to market you know the London Stock Exchange and there’s just kind of some legacy stuff there the listing seems fantastic but it’s you know it is what it is so you scout you scoured the market
Brian Bell (00:15:08.580):
for all the different stock exchanges and the best the best one especially for it sounds like small cap mid cap that you found was London Stock Exchange maybe talk a little bit about some of the things they do you talked about the sponsored bank which is interesting So you always have this market maker and analyst coverage you literally have to put up collateral on a short which probably radically reduces the actual shorting of a stock right because you got to put up some money to do that. What else did you find with the
Jonathan David Nelson (00:15:41.302):
We will have more shareholder lawsuits in the next six months in the United States than London has had in the last 10 years. Because in the UK, the loser has to pay for the lawsuit, has to pay the legal costs for the other side, much less litigious. In the United States, the SEC says, hey, if we’re going to be public, you have to fill out all of these forms. And the lawyers who are really good at filling out those forms charge you about two grand an hour. Like the S1 and the S1 registration statement, K forms, the Q forms, all of that stuff. If I need to, well, if I want to raise more money, I need to file either an S1 or an S3. Each one of these S1 forms, it’s like a 1,000, 1,500 hours of legal time at 2,000 bucks an hour, you’re looking at like one to 3 million bucks, crazy expensive. And so just maintaining a listing in the United States, you’re looking at anywhere between one to $3 million. To IPO, you’re looking at anywhere between five to like 60 million bucks. in the UK you get a sponsor bank you hire a regulator like it’s a licensed physician it’s called a nominated advisor they do most of the most of the form filling out for you they make sure that you’re doing things okay their lawyers cost about 20% of what our institution what our public markets lawyers do here their accountants on this lower end of the market they have a bunch of boutique accountants boutique law firms that do this and they’re much cheaper so all in to IPO instead of five to 60 million bucks, you’re talking about one to four. Your annual maintenance costs are probably about $350,000, $450,000. And it’s a completely different kind of regulatory mindset. And venture capital is kind of a latecomer to the UK. And so companies just got less used to raising money on the London Stock Exchange. Like that’s how companies in the UK and Europe have grown for 400 years.
Brian Bell (00:17:37.512):
So why don’t more companies do this? What’s the friction there where everybody wants to IPO on the NASDAQ or New York Stock Exchange versus the LSE? U.S. has much better marketing, much better financial press.
Jonathan David Nelson (00:17:51.292):
You know, like when was the last The U.S. Capital Markets Press doesn’t cover them. Founder we have 20 years worth of venture capitalists in Silicon Valley probably more like 25 that don’t understand capital markets like we’re all product people we’re all engineers designers you know operations people inside of startups it’s no longer sexy to have like a former or investment banker as part of your fund. So VCs have forgotten like how to do financial engineering. We’ve largely forgotten how to do exits. Like everybody’s like, you got some of that liquidity, man. Like I would love, can you buy a secondary from me, man?
Brian Bell (00:18:37.125):
I heard that’s the thing you can buy my stock from me.
Jonathan David Nelson (00:18:39.646):
And so like Silicon Valley is kind of stuck. We’re all just kind of trapped in this liquidity thing. It’s taken 14, 15 years now for a company to IPO. So my best performing companies in my venture portfolio, my investors have to wait 15 years for that. Like, that’s a lot of crabby investors for a long time. And so, but we don’t know anything else, you know, and here this punk guy who, you know, has got a ponytail and goes around saying, you know, trust me, bro, the London Stock Exchange has a better system. And the people in town are like, are you crazy? Are you a communist? Like, are you well? And I’m like, I’m a hacker, dude. Like, this is a hack.
Brian Bell (00:19:16.523):
at what point would a startup want to consider IPOing versus raising a series I
Jonathan David Nelson (00:19:21.769):
don’t know DEF whatever I’m looking for companies in like the 50 and 50 range 50 million bucks a year in revenue 50% year over year growth like growing 50% year over year close to profitable that is not a venture fundable company Right. Like Sequoia will not write you a check.
Brian Bell (00:19:37.650):
No, if you just went from 25 to 50 mil, or let’s call it, I guess that would be 35 million of ARR to 50, that’d be roughly 50% growth. And you’re roughly EBITDA, you know, cash flow positive. You’re just not venture backable anymore at that scale. I mean, you might be able to find a VC firm to write you a check, but
Jonathan David Nelson (00:19:57.915):
Yeah You give me a tech stock that’s growing profitably 50% year over year I will yellow that bitch every day of the month Like, I’m in Like, are you kidding me? And I get audited financials And I get quarterly reporting And, you know, financial transparency Yeah, like these should be public stocks. They should not be private companies. But the private equity industry, the venture capital industry in this, everybody in the United States is like, no, no, no, no, don’t IPO. It’s a nightmare. Don’t IPO. It’s a nightmare. It’s a nightmare. But I think it’s a great hack, dude. The benefits to the founder are, it’s a lot less. My due diligence essentially is done in my IPO process in London. It’s done. I report financially, like everything about me is transparent. So if I want to raise a follow-on round, I talk to my sponsor bank, say, hey, dude, I want to acquire this company or I want to open up this, you know, other market, blah, blah, blah. Do you think I could actually raise another 50 million bucks? Your sponsor bank will say, let me make some calls and they will come back and say, yeah, we can You can do the deal. Like two, three days later, a week tops, you close your check. And as a founder, I didn’t have to do that fundraising. Like my investment bank, they’re an outsource sales team. So when I heard this, I’m like, wait, wait, wait, wait. I can raise follow on rounds in days? If I want to acquire a company, I can just issue more stock. I can just acquire another company in stock. I can start rolling up other companies. I’m like, why isn’t everybody doing this? How do you screw me? I think it’s just it’s a marketing thing. People just don’t understand it. They’re terrified of it. Boards are terrified of it. VCs who are on the boards are like, I don’t want to screw up the best company in my portfolio. No, let’s try to find a private equity fund we can sell you to.
Brian Bell (00:21:45.843):
That’s interesting. So why would a company not do this? So kind of take the steel man the other side. So, hey, I’m a founder. Maybe I’m growing faster than the 50%, right? So I’m more venture backable. That would be one reason we kind of covered that. But are there any other reasons why you wouldn’t consider
Jonathan David Nelson (00:22:04.039):
I no longer control my stock price. So as a founder, when I want to sell my stock, I go out and fundraise. And if I no longer say this is my valuation and I don’t sell, if they want to sell at a much lower price like I have that choice as a publicly traded company you don’t get that liberty and so something happens to the stock market a war happens in the Middle East my share price drops AI starts to happen I’m a SaaS company people think oh my gosh I’m gonna get killed you know my share price drops like there are things out of your control that affect your share price and that sucks The other side of that is I never have unhappy investors because if my investors are unhappy, they sell my stock. If they believe in me, they own my stock. So it’s a different flip. It’s a different switch that you have to flip. You can’t talk as much about the internet. you should probably hire an investor relations and PR firm like that should become you know you no longer just talk to VCs and talk to you know build your company you’re still talking to public investors but you’re generally talking to them through the press so that’s kind of a different flip if I’m nerdy that’s hard right And honestly, I did work with a company, took them to IPO. Zay, after a lot of work, the board decided to launch their own SPAC in the United States. And a SPAC is like a clean company that doesn’t have any operations.
Brian Bell (00:23:39.470):
Explain what SPAC means. It sounds like an acronym for people who don’t know what that is.
Jonathan David Nelson (00:23:43.042):
It’s a total acronym. So it’s a special purpose acquisition company. The only purpose of this company is to one IPO. It’s just it’s a paper. It’s an on paper company. It’s a shell company. You convince an investment bank to let you take it public. You convince investors to put money in it. And then my job as the owner of the SPAC is I go around and I look for another company to acquire. It’s a special purpose acquisition company. So when I see a company that I want to acquire, I acquire them with stock. The SPAC investors can either sell the stock, sell their own stock in the SPAC, or they can roll it over into the new company. There are some quirks with how we do SPACs in the United States, that it’s very easy to SPAC at a $300 million valuation. All of the investors in the original SPAC ghost. And now I’m trading at a $2.5 million valuation. And that’s what happened with the company that I worked with because the board decided to launch their own SPAC because it was sexier. It’s 23, 24. Everybody’s doing this. We know how to manage the risks, blah, blah, blah. I’m like, dude, it’s a bad idea. It’s a bad idea. It’s a bad idea. You should just IPO in London instead. They put a bunch of money into the SPAC,
Brian Bell (00:24:58.397):
but they couldn’t take that money in stock fast enough to acquire the company, the target company. So it lost all its value.
Jonathan David Nelson (00:25:05.121):
The SPAC had 60 million bucks in it. Investors had put money into the SPAC. They get warrants. So if the SPAC acquisition goes well, they can buy more stock at a discount. If it doesn’t go well, if they don’t like the acquisition, They can just sell. And so there’s all of these incentives for people to actually buy into the shell and to withdraw their money after the acquisition is complete. So that happens all the time.
Brian Bell (00:25:31.416):
This is why I hear in the news all these SPACs collapsing in value so fast.
Jonathan David Nelson (00:25:35.739):
So what happens is the SPAC does the acquisition. The other company becomes public through this reverse merger process. It’s financial engineering. All of a sudden, all the investors are like, Bail! Everybody sell! And the share price ends up just tanking. It’s pretty normal for a SPAC to drop 85, 90% of its value in the first year.
Brian Bell (00:25:58.376):
Wow and is that because they don’t have the same lockup restrictions as regular IPOs or?
Jonathan David Nelson (00:26:02.559):
It’s that it’s kind of a way around SCC rules because the company that IPO is doesn’t have any operations so their filings are very cheap when they acquire another company now the company has to build all of that they haven’t done this before they have to build this internal muscle they have to figure out how to do it they’re probably not good at public reporting yet and The investors had an incentive, a big financial incentive to have the acquisition and then sell their stock. And so it’s SPACs are stacked against the company that gets acquired.
Brian Bell (00:26:35.871):
So let’s say I’m a startup and I have 50 million of revenue. Yes. So basically I can go out, probably can’t raise 50 million on, I don’t know, call it 250, right? Because I’m only growing 50% a year. Maybe I can raise, I don’t know, 10 on 50 million to revenue growing 50%. What do you think that valuation would be in venture? It’s probably 150, probably 3x of revenue, something like that. So I can go raise maybe 15 on 150. It’s all 10% of the company, maybe 30 on 150. What would be kind of the terms on the London Stock Exchange IPO process that you think you could get? So are they better typically?
Jonathan David Nelson (00:27:10.968):
If you are raising privately at that stage, I am probably selling what’s called liquidation preferences. That investor is probably getting a lot of insurance.
Brian Bell (00:27:21.131):
Yeah, which kind of messes up people like me earlier on the cap table right now, because now they have 2x LICPREF. Maybe you can explain what that is for people listening and haven’t heard that before.
Jonathan David Nelson (00:27:30.533):
So again, it’s another bit of financial engineering. A liquidation preference is when a company gets liquidated or exit, I and preferred I get a preference and how much money do I get back before anybody else gets that money back so if I have a 2x liquidation preference I invest 10 million bucks into this company when this company IPOs the first 20 2 million dollars in liquidity comes back to me because I have a liquid liquidity.
Brian Bell (00:27:57.827):
I have a 2x liquid pref. Yeah.
Jonathan David Nelson (00:27:59.508):
And so I get 2x my money back and everybody else who’s lower did a 1x liquidation preference because we’re founder friendly and we want to be in an earlier stage.
Brian Bell (00:28:09.856):
And the company was growing 5x back then when we invested.
Jonathan David Nelson (00:28:13.198):
Exactly. And so the early investors end up getting screwed. The founders end up getting screwed.
Brian Bell (00:28:18.471):
Right, let’s say the IPO for, I don’t know, let’s say it’s a, or they exit, they get acquired by a PE firm for $100 million. So the first $20 million of proceeds is going back to that late stage 2X Lickpref investor. Now there’s $80 million left over. for all everybody else yep but the it depends if it’s participating or
Jonathan David Nelson (00:28:38.716):
non-participating maybe explain that as well so participating preferred is I get 2x and then I get 10% of the rest like I bought 10% of the company the first 2x I come and then the participation is I participate the same as everybody else does
Brian Bell (00:28:55.178):
Now I still get 10% of the 80 million.
Jonathan David Nelson (00:28:57.401):
So I get another 8 million. Wow. So I get $28 million. For my $10 million investment. On my $10 million investment. It’s a great investment.
Brian Bell (00:29:05.931):
Right. That’s a little 3X. And if you just invested two, three, four years ago, your LPs are pretty happy.
Jonathan David Nelson (00:29:10.517):
Absolutely. And so from like an asset managed perspective, it’s brilliant. It’s not founder friendly. Founders are almost always very optimistic about their companies. And if they’re up against the wall, though, they got to do what they got to do to keep the company going. And so they they will take bad terms if I IPO that company everything my whole cap table converts to preferred stock converts to common stock so I sell common stock that 2x liquidation preference VC or PE firm probably bought a board seat as well and they’re going to start putting the thumbscrews to me to do whatever is best they’d
Brian Bell (00:29:46.675):
rather see the acquisition But if you IPO, my understanding is all the Lickpref gets crammed down to common. So you bought 10% of the company, you wrote a $10 million check at $100 million, you’re just going to get 10% of that IPO, whatever that is. Versus like an acquisition. Now the acquisition cascades down the Pref stack. That’s why the VC is the late stage VCs will steer a company towards an acquisition. They’d rather see their buddy down at the PE firm buy the company because now they’re going to stand to 3X instead of 2X.
Jonathan David Nelson (00:30:17.413):
And chances are the guy, the buddy at the PE company is probably a limited partner in my fund. I mean, that’s just the game. You can’t hit the players. Don’t hit the players, hit the game.
Brian Bell (00:30:26.134):
Yep. Hit the players, hit the game. Exactly. But here comes Jonathan with an idea, right? To the founders. And so the founders bought in. This is this sounds great. I’m going to get more money as a founder, right? All my employees and myself and my my co-founders. And now I got to go sell this to the board. And that’s therein lies the friction right there.
Jonathan David Nelson (00:30:46.478):
Yes. And board members are like, why have I never heard about this? Same reaction I had. How do you screw me? Like what’s the downside? No, like SPACs were creative. That was a hack. And that went really, really wrong. And, you know, there are risks. You know, what if I can’t sell my stock? What if it’s a down market? What if my industry isn’t sexy anymore? You still have the same risks of that in the private market, but you understand how to.
Brian Bell (00:31:11.769):
You know what you’re getting into? There’s a little bit of like a jumping off the cliff with the IPO, right? Yeah. Because now I’m bringing it out to the market.
Jonathan David Nelson (00:31:17.371):
It’s fundamentally changing how your company runs.
Brian Bell (00:31:19.412):
Right yeah and then there’s a cost right what does it cost to do another another raise privately at that late stage let’s call it the 50 million dollar revenue company growing 50% a year and I’m going to go raise another 10 to 20 million versus IPO is there a cost savings there?
Jonathan David Nelson (00:31:36.462):
Privately depends on how much you value your time. If it’s in a private market, and if you’re taking a flat round or a down round, you’re probably looking for those investors for 12 to 18 months and your company’s growth is going to stall, you know, blah, blah, blah. It’s the time. value I then find an investor I do diligence I am chasing I’m selling my stock instead of selling my product that is what it is if I IPO I do diligence for once and for all and then I maintain it and it’s I as an engineer inside of me I think of capital markets stock markets as a capital API as long as I comply with these rules these are my API keys I can plug into the capital market who have been created to get capital to the companies that need it when they need it.
Brian Bell (00:32:24.473):
This is my swagger doc for the... Yeah.
Jonathan David Nelson (00:32:28.076):
And so engineers kind of understand the API in the capital markets, but I’m probably the only person that talks about it that way. And so it’s been a hard sell, frankly. I probably pitched three I had a handful kind of bite and the boards stopped them all so next step is I’m probably going to raise a single purpose growth fund where I invest in the company I take a board seat on the condition that that I walk the company through the IPO
Brian Bell (00:33:02.499):
process oh that’s interesting now you’re on the board and you can kind of have a little bit more sway
Jonathan David Nelson (00:33:07.207):
And I have skin in the game. And the founder sees it not as Jonathan saying, trust me, bro, you should totally IPO here. It’ll be awesome. Oh, and I, by the way, you’ll have to pay me for the privilege. Two, I’m buying your stock. I’m putting my capital at risk. and we will do this together. I’m on your board. So I can’t really run away after the IPO. Like I got to be with you. So that’s the direction that I’m heading. But this entire process, like, dude, there’s probably only 10 or 15 things Ignite Insights Ignite Insights You have access to all the prospectuses of every public company for the last 40 years. You can train an AI on that. You can generate it and have a lawyer just supervise it. Double check it. Human in the middle. All my compliance. Like that should be AI. have a human in the middle to be sure you’re not hallucinating you should be able to have an AI map the universe of public investors and IPOs because that’s public so we should be able to know who to talk to for what kind of company and when there’s all sorts of things that can be automated and I’m like why isn’t anybody else doing this I out of those 10 or 15,000 people I’m probably one of like a handful of product guys so that’s why I’m building my AI native investment bank
Brian Bell (00:34:35.132):
Fascinating. So why not build, I mean, I’m sure you thought about this. Why not build the tools and just sell them to the investment bank versus become the investment bank yourself?
Jonathan David Nelson (00:34:44.819):
Sure. You know, it’s SaaS. I can sell you a SaaS product and that’s great. I get monthly recurring revenue or I can sell you a SaaS product and I can use it myself and I can charge a commission. SaaS plus.
Brian Bell (00:34:59.118):
And I think I think your model is interesting because I think what’s happening and I see it in the early stage because we invest precedency right we do some late stage secondary stuff which we can get into but for the most part it’s precedency right and I see more startups being created than ever getting more traction than ever
Jonathan David Nelson (00:35:16.283):
Yes.
Brian Bell (00:35:16.543):
But there’s also this there’s higher highs like the Anthropics and OpenAIs and etc. But I think there’s also this like fatter tail of outcomes.
Jonathan David Nelson (00:35:24.632):
Yes.
Brian Bell (00:35:25.113):
That are going to need more options. Right.
Jonathan David Nelson (00:35:28.396):
Absolutely. And it’s getting there fewer and fewer companies IPOing. It’s taking a lot longer. I think Having been at Hackers and Founders for years in 2008, 2009, I was probably the tip of the spear. And I was like, y’all need to be ready. There’s going to be an order of magnitude more founders created now that I have Stripe and now that I have access to open source and AWS and cloud.
Brian Bell (00:35:50.936):
Yeah.
Jonathan David Nelson (00:35:52.857):
AI there’s going to be another order of magnitude or two more startups they’re going to be smaller by definition and ventures kind of scaling but it’s probably four or five years behind investment banking is 15 years behind the ball on this like nobody that I’ve come across well there’s actually a YC company that’s focusing on AI and M&A they have like an M&A An engineer and an M&A investment banker kind of working side by side. Fantastic. But like there’s Silicon Valley doesn’t understand this. This is like a New York thing. It’s like a London thing.
Brian Bell (00:36:27.948):
yeah so you’ve also through practical VC worked on secondary side so these are LPGP interests and and funds tell us more about that so after the last IPO that I worked
Jonathan David Nelson (00:36:39.651):
on 2002 22 23 I got a little burnt needed to take a break friend of mine Dave McClure said hey I’m building a secondaries fund could you help me buy some secondaries in Latin America you’re from there you’ve invested down there for years I’m like yeah sure what do you want it’s like I want one investment like okay when six months he ended up liking the discounts and the quality of this the quality of the companies that he was buying into that I think it ended up being like 15% of his funds number two just because he is a value growth buyer so he looks for the best value in the company with the strongest financials and in Latin America these companies like there’s two funds that raise that do growth investing down there and if they pass you’re kind of screwed and so these companies just sell and sell and sell and they have to be profitable and so This company’s doing two, $300 million a year in revenue, growing 80% year over year with a 10% profit margin, dude. And where are they going to IPO? Mexico? No. United States? Not for another five years. So we were one of the only, there’s a couple more now, but we were the only buyers of secondaries in the region and it’s a great business great fund I mean tiny tiny LP in one of his funds and I’m like thrilled it’s gonna do great and so but I wanted to kind of throw I brought my own shingle into the iBanking thing and so that’s kind of what I’m doing but secondaries market is now as large as the primary market the secondaries do people in your audience understand what a secondary is is that you can explain
Brian Bell (00:38:17.841):
it for people who might be listening to understand what that is yeah
Jonathan David Nelson (00:38:21.003):
so it’s a New York financial engineering term so the primary investment is when the company itself sells stock to investors and the money that the investors invest go into the company that’s the primary investment any kind of secondary sale is when investors sell that stock between themselves investors sell to each other and so you’re buying second hand stock so it’s a secondary sale and so right now there is a very quickly growing market for buying and selling secondaries, i.e. everybody wants to buy a little bit of Anthropic. Oh, my gosh. Oh, my gosh. Oh, my God. Do you have any Anthropic?
Brian Bell (00:39:00.244):
Do you have any? Oh, man. I get emailed every day. Exactly.
Jonathan David Nelson (00:39:03.763):
I get like five people a week asking me if I have access to Anthropic because I’m in Silicon Valley and I’m like yeah you don’t want that because it’s going to be
Brian Bell (00:39:10.366):
scammy by the time it’s offered to you I just saw one today it was 1.3 trillion so that’s like literally almost 50% over the latest valuation and was it through a
Jonathan David Nelson (00:39:20.490):
multi-layer SPV yep they all are and so what happened how that works is I can actually buy like 50 million bucks of Anthropic stock from one of the entrepreneurs. Well, I can’t buy the stock. I can write a contract to buy the stock in the future at a price.
Brian Bell (00:39:36.916):
That’s a forward contract. That’s different.
Jonathan David Nelson (00:39:38.496):
But it’s a forward contract. I put that contract into a special purpose vehicle and SPV, which is just a shell company that holds a contract. Jonathan David Nelson (00:39:46): and then I can sell pieces of that SPV to other investors who are like, ooh, I’m going to create my own SPV out of this. And so I’m going to buy chunks of this SPV and then I’m going to create my own SPV and I’m going to go and find other investors so it’s like this group of Russian nested dolls where you have an SPV that owns a part of an SPV that owns a part of an SPV that owns a forward contract on stock options and if you actually look at where those SPVs are incorporated you know you might catch one in Panama you might catch one in the Cayman Islands a lot of these tend to be
Brian Bell (00:40:23.502):
sketchy yeah you gotta you gotta be careful and we’ve done a lot of these at team ignite and we’re always making sure there’s there’s a custody of like shares and the due diligence because you can end up in these yeah forward contracts or like yeah it’s like multiple shells through all kinds of Caribbean islands yeah so yeah
Jonathan David Nelson (00:40:40.757):
you gotta be careful there yep absolutely but it’s the secondaries market is as big as the primary market in venture capital right now
Brian Bell (00:40:48.265):
it’s crazy but a lot of times the companies themselves have rofer right so one of
Jonathan David Nelson (00:40:55.212):
the couple of challenges one is according to SEC rules I can’t have it see the 2000 or 5000 shareholders before I actually have to report like a publicly traded company before I have to fill out that awful S1 registration statement so as a private company I need to control who’s owning my shares and if I have a bunch of people selling little pieces parts of my company all over the place like that’s a regulatory danger for me and if they’re scammers selling this stuff or shady or or various shades of gray. I’m taking the reputational hit on the value of my stock. I’m no longer controlling the value of the stock. There’s a market kind of, I’m raising money at a $900 billion valuation. Eanthropic someone offers you to sell the stock at a $1.4 trillion valuation 1.3 on one hand that’s nice because then I can actually go back to my primary investors and say oh look on the secondary market my stock is 1.3 you’re getting it from easily 900 billion but the company wants to control it so they have these rights of first refusal written into their incorporation whereas they get to buy the stock first before anybody else actually gets to buy it before you sell it to anybody else So you usually need to have the board to buy in to selling the secondary if it’s actually secondary shares. Right. You generally need board approval for that.
Brian Bell (00:42:20.507):
That’s what a lot of people don’t realize is if you are going to buy the shares on the secondary market and actually transfer the shares, the company needs to approve. And most likely a hot company like Anthropic will not approve. They’ll say, no, we’re going to buy those shares.
Jonathan David Nelson (00:42:32.657):
Correct.
Brian Bell (00:42:33.578):
Yeah. Let’s talk about the future like what are you excited about over the next you know five or ten years as you kind of look at this these categories developing this IPO market hopefully taking off your AI driven investment bank taking off. What are you excited about?
Jonathan David Nelson (00:42:48.958):
I mean, I’m excited about the tools that I’m building internally. I have been a genetically engineering as opposed to vibe coding. I have been vibe coding ton of internal tools, which have been like truly giving me like superpowers. Like I had a massive network before. because I ran hackers and founders. Like the tools that I’m actually building with AI and putting that in AI and connected to other different APIs, I feel like I have like Jarvis for fundraising right now. And I’m going to have Jarvis for IPOs and I’m going to have like Jarvis M&A as well. I will probably have Jarvis for secondaries. And so that has been mind blowing as to how much I’ve been able to build in a short amount of time and how much leverage I think that’s going to give me in the future.
Brian Bell (00:43:35.760):
Right, right.
Jonathan David Nelson (00:43:59.410):
the future of blockchain I have said for years is building new capital markets infrastructure payments infrastructure stock settlement real estate transactions loans bonds all of that is going to be on chain at some point in time and it’s probably going to be emerging markets that are starting to leapfrog the United States in some of these technologies yeah So like Venezuela, Argentina, you know, the economies are terrible. They, Venezuela, half of the country’s economy runs on like crypto.
Brian Bell (00:44:30.316):
Right, on stable coins and, right.
Jonathan David Nelson (00:44:32.457):
It’s not a micropayment. It’s just how you pay for things. East Africa, almost all of Kenya’s economy is built on a currency that’s based on cell phone minutes. Wow. So you can, it’s called M-Pesa and Vodafone accidentally crashed. I created it because you could transfer minutes to each other and you can sell the minutes and people just started using minutes to pay for things and it’s now like East Africa and PESA is like the euro for large stocks of East Africa. and sell Vodafone cell phone minutes and pay for things like on feature phones. Like that in my mind is leapfrogging what’s happening in the United States. I’m much more excited about what’s happening in emerging markets than I am in the US. You know, I love to be some Stanford You know, I grew up in Latin America, helping Latin Americans have access to the same capital markets tools as the gringos have in the United States or East Africa, like the
Brian Bell (00:45:31.232):
Why hasn’t like a Mark Zuckerberg level founder just said, nope, if you want to buy into my company, it’s like, here’s the token. Why hasn’t anybody enforced that or has any well-known unicorn founders done that yet or done that? DecoCorn founders said nope we’re completely blockchain if you want to buy our company here it is here’s the token it’s freely tradable you can buy in anytime you
Jonathan David Nelson (00:45:52.794):
can sell anytime why has anybody done that in the ICO craze was probably 2017 so we’re only nine years out there is a crypto company and I’m spacing on the name they’re actually going to be IPOing it like they’re doing like three four hundred million dollars a year in value in valuation they’re Basically their equity has been the tokens that they issue, but it’s different than their stock. And so, you know, they haven’t really needed to sell stock because they sold tokens along with their equity at the same time. They will be public probably in the next 24 months. they’re an Asian company a lot of crypto companies have issued you know Binance issued the Binance coin all of these crypto companies haven’t needed they’ve sold a product which has been their blockchain tokens as opposed to selling their stock and so they haven’t really needed to sell their stock but yes bonds need to be on the blockchain there’s so many more efficiencies if you can get the blockchain to actually operate fast enough to actually all of these assets are essentially going to be on chain at some point it’ll take another 10 years
Brian Bell (00:46:54.102):
It’s amazing. I learned so much about the IPO process. Where can the founders and VCs and anybody interested get in touch with you?
Jonathan David Nelson (00:47:02.664):
Yeah, no, absolutely. Email me, jay at hf.capital. And I’m, you know, pretty active on LinkedIn. So Jonathan Nelson at LinkedIn. Happy to talk. Happy to chat. And if you give me a chance to geek out about capital markets, I’m in.
Brian Bell (00:47:16.886):
Yeah, well, it was a lot of fun. I learned a ton. Thanks so much for coming on.
Jonathan David Nelson (00:47:19.767):
Really appreciate it, Brian. Thank you.
