Breaking the Rules: How FanVestor is Changing the Game in Fan Investing and Commerce
By: Michael Golomb
Tags: Sports, Music, Crowdfunding, Esport, Finance

In my last post, I discussed innovations and disruptions in business and introduced you to FanVestor, the first of its kind all-in data-driven ecosystem that is revolutionizing investment through fan investing and fan-commerce with regard to entertainment and sports. FanVestor’s mission is to democratize investing so everyone, regardless of their bank balance, can become an “owner/investor” in individual celebrities and teams about which they feel passionate. What follows is an in-depth look at how FanVestor compares with other types of investing such as traditional capital markets and how it is innovating the crowdfunding industry.

Historically, investing has been a privilege reserved for high net worth and high-earning individuals and institutions. For the most part, this investing is also focused solely on investors’ financial goals, with no consideration of their other possible motives for investing. In recent years that has begun to change, as the uptick in investment in mission-driven companies has demonstrated that consumers have a desire to invest in enterprises that are aligned with their own values and interests. Unlike profit-driven companies that later add a philanthropic foundation as an afterthought, entrepreneurs are now building businesses that are conceived around a mission to do good in the world, and investors, particularly millennials, are investing with their conscience. But even with this socially responsible view of business, the investment paradigm continues to ignore millions of potential investors, who don’t fit the criteria for the concept of investing in the traditional capital markets. Even if these consumers have the means to do so, they may not be knowledgeable about investing in the stock market and perhaps even have a fear or distrust this arena. Some of these consumers have only been exposed to the 401K or IRA retirement investment plans and think of anything else as too risky. Whatever the case, for companies such as FanVestor there is a tremendous opportunities to democratize investing and innovate on both crowdfunding and entertainment and sports finance.

The increased popularity of crowdfunding in recent years is due to both consumer and business interests. There are several benefits to these platforms: for one, startups can raise money more quickly without having to pay upfront fees. Crowdfunding is also beneficial for entrepreneurs, who have had trouble securing funding through venture capitalists or from lending institutions. There are other benefits to crowdfunding as well — the online “pitch” of a company or project is a very effective marketing tool. Ideas that are not attractive to mainstream investors might gain traction in the crowdfunding space, especially when it comes to FanVestor’s model of celebrity-driven campaigns with the fan-sourced financing concept. In fact, if an issuer comes up with the right idea at the right time it can go viral, leading to overnight success as we have seen already with several Reg CF and Reg A+ offerings. All these securities offerings such as FanVestor’s are done under the SEC/FINRA strict guidance and oversight as well as managed by FINRA-certified Broker Dealers or Reg CF Official Portals. Investors can observe the funding process, which can generate further excitement and inspire them to spread the word within their social networks and communities. And finally, because these investors were excited enough to invest, they may also become your best customers that in which they are investing.

While both traditional investing and crowdfunding models have their benefits, neither addresses the unique fundraising and investment opportunities in the sports and entertainment realms. Under the traditional investment model, control of investment opportunities today rest in the hands of media companies and sports teams. Moreover, investing in celebrities and entertainment has always been reserved for wealthy individuals and institutions, with no room for the average fan or follower. As with other forms of traditional investing, emotional investments are not even a consideration; it is often all about the monetary return.

The truth is, when emotions are at play, these campaigns can generate results with much lower cost of capital and higher valuations for the issuers than through the traditional capital markets. Why? Fans who invest in their idols do not typically think in terms of “What is my return on capital?”; “What are my minimum required multiples of revenue or EBITDA?” or “When do I need to re-balance my portfolio?” Their main motivator is to be a member of a community or a club associated with that celebrity. It is upon this principle that we based the foundation of our FanVestor “Invest with Heart” concept.

There still other significances between FanVestor and traditional investing models. Cross-border fan participation is barely accessible in traditional capital markets, especially from emerging markets; fans rarely, if ever, have the opportunity to invest in the international entertainment and sports figures they love. At the same time, unregulated fan investing has led to fraud, lack of accountability, and unimpressive financial incentives; there is also little to no engagement with those celebrities they invest in. On the other side of things, musicians and athletes who are seeking to raise capital have little to no knowledge of their fans’ financial background or spending habits.

Clearly, a new model was needed, and we have created that with FanVestor’s, fan investing and fan commerce platform for elite talent, musicians, and athletes as well as entertainment, sport and e-sport organizations — the only such platform in existence today with the highest level of compliance and online investing sophistication. It is the best of both worlds, combining the egalitarian, forward-thinking aspects of crowdfunding/fan-sourced fundraising with the security of traditional capital market investing. FanVestor allows celebrities to offer a percentage of any aspect of their career to the public. SEC-regulated financial products are FanVestor’s offerings, which means that owners/investors enjoy the same benefits (i.e. investment liquidity) as those who invest with investment banks such as Goldman Sachs or others. FanVestor investors now receive investment liquidity, future dividends and revenue shares when they invest. In addition, owner/investors are eligible for wide range of exclusive experiences and rewards — both digital and physical perks products/experiences not available through traditional investing or crowdfunding, such as priority access to music and sporting events and other experiences that are deeply meaningful to fans.

Moreover, through FanVestor aims to provide ways for the needed liquidity for eco-system participants once the offerings are successfully completed.

FanVestor’s platform is “Commercially Viable and Institutionally Credible™” because we work with major banking institutions as well as tax and legal advisors, including banks, accounting firms and law firms such a HSBC, Deloitte and Perkins Coie, respectively. FanVestor’s proprietary technology offers unprecedented security that is fully compliant with the SEC/FINRA investing regulations.

One of the most exciting aspects of the FanVestor model is its utilization of social media. Our platform is “talent agnostic,” meaning that any established talent, musicians, athletes, and entertainment or sport organizations can interact with, and raise capital from, their direct and indirect followers (through their fan clubs, et cetera) on Facebook, Instagram, and TikTok, Twitter, YouTube, and so on. This ability to leverage social media is enhanced by FanVestor’s one-of-a-kind data management platform, which provides celebrities unprecedented access to their fan’s purchasing history and online interests and the ability to use targeted messaging and retarget products to further monetize projects. Fans that become owner/investors enjoy the benefits of FanVestor’s SEC-approved investment offerings, micro-securitization, and innovative unique rewards. FanVestor first and foremost caters to celebrities and their fanbase, using the trusted voice of those celebrities to promote their own projects, thereby increasing our project conversions. This is a vastly different approach from other companies (such as Republic, Start Engine, etc.) in the market, who rely on traditional, sometime very costly, marketing campaigns to promote offerings and products.

The element that sets FanVestor apart in the world of investing is our proprietary concept of “Invest with Heart™.” We understand the powerful emotional connection fans feel for the sports and entertainment figures they love. While this has always been the case, social media has exponentially strengthened that connection by affording fans a glimpse into their idols’ lives both on and off the stage or playing field, including charities they are passionate about. Recall the trend toward investing in mission-driven companies? More and more, people are putting their wallets where their hears are, and if the sports figure or musician they respect most cares supports a particular cause they will be more likely to as well.

Take the Super Bowl, which is the largest annual sporting event in the U.S. and possibly the world — Super Bowl LIV, for example — had some 100M TV viewers, generating some $435M+ in-game advertising revenue for Fox. On the other hand, consider Portuguese soccer superstar Cristiano Ronaldo as another example. Ronaldo is not only known as the wealthiest athlete in the world, but the one with the largest social media platform (over 370 million followers across Instagram, Facebook, and Twitter — and that’s not counting his fan clubs). Every time he posts about his favorite charities — Save the Children, UNICEF and World Vision — more than 200 million people see it — and those are just his direct followers! The resulting ripple effect, and the incredible potential for doing good in the world, is why Invest with Heart™ is an integral part of the FanVestor philosophy.

Hmm, an immediate access to 3.5B global fans through these 77 celebrities. This provides FanVestor an enormous opportunity with the thousands of athletes and celebrities who have strong social media followings!

FanVestor does what Facebook and Instagram are not doing — let fans invest and engage. FanVestor does what eBay or Omaze don’t do — let fans invest and engage.

FanVestor does what Goldman Sachs & Merrill Lynch don’t often do — let the average and/or non-accredited investor invest.

FanVestor — lets fans invest in the careers and businesses of talent, musicians and athletes.

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In my next piece, I look forward to sharing some insights on the exciting multi-year partnership collaboration between FanVestor and iHeartMedia — America’s #1 audio and music network, with our first sweepstakes campaign launch, supported by participating elite artists and sport organizations, initially to raise funds to benefit COVID-19 foundations.

In the meantime, download the FanVestor app or visit FanVestor to learn more about the exciting road ahead for fan-financed investing.