Raising capital is one of the very first steps in starting a real estate deal, a start-up company, or just any for-profit venture. However, there are certain rules to be followed when acquiring money for such purposes, and they vastly differ between Canada and the United States. Peter-Paul Van Hoeken, Founder and CEO of FrontFundr, joins Ava Benesocky and August Biniaz to discuss the regulatory framework for raising capital in these two countries. They explore the benefits of the democratization of private market investing and the power of storytelling in elevating marketing strategies. Peter-Paul also talks about the complexities of relationship building in the business world and the evolution of investment crowdfunding in the digital world.
Get in touch with Peter-Paul Van Hoeken:
- LinkedIn: https://www.linkedin.com/in/peterpaulvanhoeken
- Company: https://www.frontfundr.com
If you are interested in learning more about passively investing in multifamily & Build-to-Rent properties, click here to schedule a call with the CPI Capital Team or contact us at info@cpicapital.ca. If you like to Co-Syndicate and close on larger deal as a General Partner, click here. You can read more about CPI Capital at https://www.cpicapital.ca.
#avabenesocky #augustbiniaz #cpicapital
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About Peter-Paul Van Hoeken
Peter-Paul has over 15 years of experience in banking in Europe. After moving to Canada in 2010, he worked with several young companies and realized that there are no efficient channels for attracting capital and that most investor are locked out from investing in private companies.
Peter-Paul is the founder and CEO of Silver Maple Ventures Inc., the company that built and operates Canada’s leading investment crowdfunding platform FrontFundr and DealSquare, Canada’s first centralized dealer platform for private placements.
He is a member of the Ontario Securities Commission – Fintech Advisory Committee and also serves on the advisory committees of the Private Capital Markets Association in Canada (PCMA) and National Crowdfunding Association Canada (NCFA).
Peter-Paul holds a Master of Science in business economics and finance from Erasmus University Rotterdam, in the Netherlands.
Raising Capital In Canada Vs. The U.S.: Key Differences & Opportunities With Peter-Paul Van Hoeken
We’re going to be demystifying capital raising, money raising, equity raising, and all these different great topics because no venture is possible without funding. Hundreds of years ago, when the new world was found, people in the modern world at that time, Europe, were trying to get these ships together to go to the new world and bring back riches, gold, smoked fish, jewels, and all these great things. They needed some funding. People wanted to put a ship together and get the troops ready to go to this new world. They would go to royalty, the wealthy people, get money from them, and say, “If you put up the money, we’ll put up the sweat equity.”
I guess they didn’t call it sweat equity back then. “If you put up the money, we’ll put up our lives. We’ll go to the new world, bring back riches, and divide it up.” In the modern-day, the way business works is the same thing. You go to investors and say, “Investors, put up the money. We’ll handle everything.” If it’s a real estate deal, a new company, a startup, or whatever the venture is, capital is always needed.
In this episode, we’re going to be talking not only about raising money but also about the regulatory framework to be able to raise money in Canada and the US a bit as well. We’re talking about the platform that we are connected with and the platform that we’re on. The CPI’s deals are on this platform, FrontFundr.
I’m passionate about capital raising and what we’ve been through. We’ve learned a lot about compliance in Canada and regulatory compliance in the US, myself connecting with investors, relationship building, and telling a compelling story, which a lot of issuers on FrontFundr’s platform have to do to raise the capital and relationship building. There are so many exciting things when it comes to capital raising. It’s like an art. I’m excited to dive into this episode.
Why don’t you tell our audience about our guest? Let’s get this show started.
We are joined by Peter-Paul Van Hoeken. Peter-Paul has over fifteen years of experience in banking in Europe. After moving to Canada in 2010, he worked with several young companies and realized there were no efficient channels for attracting capital and that most investors were locked out from investing in private companies. Peter-Paul is the Founder and CEO of Silver Maple Ventures Inc., a company that built and operates Canada’s leading investment crowdfunding platform, FrontFundr and DealSquare, Canada’s first centralized dealer platform for private placements.
He’s a member of the Ontario Securities Commission and Fintech Advisory Committee and also serves on the Advisory Committee of the Private Capital Markets Association in Canada and the National Crowdfunding Association Canada. Peter-Paul holds a Master of Science in Business Economics and Finance from Erasmus University, Rotterdam, in the Netherlands. Welcome to the show, Peter-Paul. We’re very excited to have you here.
Welcome.
Thanks for having me.
Let’s dive into things. Before any of our US-based audience log off thinking this is going to be only a Canadian show, I want to let everyone know that FrontFundr helps issuers from both Canada and the US raise funds on their platform.
Also, internationally. If you’re in the club and hear about this, you know that there’s a platform that allows you to reach Canadian investors. Voxable is a company that I’ve been looking at for a while. Elon once lived in one of these homes, which can be built in a matter of seconds because you pull a string with a crane, and it builds a home in a matter of minutes. As soon as I learned that the company was on FrontFundr, I learned that they help international and US investors.
Peter-Paul And The Origin Story Of FrontFundr
That’s amazing. Canadians love to invest elsewhere as well. Peter-Paul, let’s get into things. How did the idea of FrontFundr come about? What inefficiencies or missing links did you see to start such a platform in this space?
It’s interesting what you mentioned about shipbuilding and funding for ships. Coming from the Netherlands, where maritime transport was across the world for spices and all sorts of goods, there was vibrant shipbuilding. To fund those ships, they used early concepts of investment crowdfunding. They enable the public to invest in these companies, build ships, and spread the risk. The ships in the storm and whether ships would also go under. It was a full circle on what investment crowdfunding is. The only difference is we use a bit more digital technology.
To answer your question, upon moving to Canada, I started working with early-stage companies, helping them get ready to raise capital. I experienced how challenging it is for those companies to raise capital and how they’re going to the usual suspects, a small group of Angel investors, perhaps family members, or if they’re a bit later stage, they could also tap venture capital funding, but it’s a small group. Secondly, I was intrigued by what I saw happening in the UK, where the first investment crowdfunding platform launched in 2010.
That made total sense to me, using technology to connect early-stage companies needing funding to grow their business to the wider investor community through online platforms, enabling them to reach a much wider audience beyond these usual suspects and tap into the retail investor space. I was intrigued by that. I thought this made a lot of sense. I got excited about the fact that you can open up, democratize investing in private companies, and enable these private companies to tap an entirely new pool of capital from the public. That’s how it started.
Technology and online platforms must be used to connect early-stage companies in need of funding to grow their business to the wider investor community. Share on XTo pull this off, that’s a regulated space if you deal with investments. This was in the early days. There was no such online platform in Canada at all. In Canada, we have a pretty tight regulatory landscape. We don’t have an SEC like in the US. We have provincial regulators. Sometimes, we’re blessed with thirteen of them, but it imposes some challenges because we don’t harmonize. I embarked on that journey and started pulling together the pieces of the puzzle, technology and regulation, and got registered to build this curated marketplace of early-stage companies and connect them with the wider investor audience.
Difference Between Startup And Real Estate Deal Funding
Peter, let’s distinguish between startup funding and real estate deal funding. They’re vastly different and the types of investors who invest in these investments are different. Give us a crash course on startup funding, which encompasses VC funding, seed funding, Angel investors, pre-seed funding, and then a real estate investor who needs some capital to buy a multifamily deal.
A typical startup is an entrepreneur with new ideas, typically innovating a market and resolving a problem with an entirely new solution. Those are high-risk ventures. That is why these companies look for capital in the form of equity that carries high risk but also potentially high reward. If you’re able to get into a startup from the very beginning and the startup does well, goes global, and perhaps is acquired in multiple years or goes public, if you were able to invest in the early days, you have the potential to realize an enormous return on that investment.
It’s like Peter Thiel investing $1 million into Facebook, and that million dollars is worth billions.
At the time of Facebook, everybody who was the first adopter using it said, “That’s cool. I can see this succeed. Maybe I can invest $100 or $500,” they would have had a huge return on that. That’s the idea. The typical startups are companies looking for risk capital to build their companies. That’s different from other asset classes like real estate, which typically has an underlying asset. Investors want to participate because they expect the value of the property to be appreciated.
That is also an asset class being democratized and opened up for the wider investor community. Many people don’t necessarily have the means yet to purchase a house, which would concentrate all their assets in one property. What if they could tap into fractional ownership in real estate? The whole investment crowdfunding space covers multiple classes. The companies we see on FrontFundr are private companies, startups, scale-ups, and later-stage companies that are either in tech space, CPG, impact investing, and those kinds of categories.
Understanding The Democratization Of Investing
You’ve mentioned the democratization of investing a few times. I wanted to bring attention to this topic because we hear that as well. We want to allow everybody to invest with us but the regulatory framework does not allow that. Some of it makes sense, but there are two main schools of thought when it comes to this idea of everybody having the opportunity to invest in any deal they wish.
One school of thought is that private investments should be reserved for the financially savvy, high-net-worth investors, high-income earners, and people who are financially literate. The common man, the blue-collar worker, shouldn’t come over and play here. They should stay in their own sandbox. In Canada and the US, 95% of people are non-accredited, so they don’t have an option to access these investments.
The other school of thought is that everybody should be able to invest in anything they want. The argument they use is that if a blue-collar worker, a mechanic, or a teacher wants to empty their bank account and buy any type of stock they want online, they can do that with the click of a button. Why can’t they invest in an exempt market or private placement type of product that is known in the US and Canada?
In the US, it’s known as private placement. We’ll go over that in a moment to distinguish between the two. As these private companies can invest in Wall Street, why can’t they invest in a private company? You’ve been in this space for a while. You’ve talked about democratization. What is Peter-Paul’s view on this topic? How do you see it?
If you look at the public markets, where retail investors have entered, stocks, bonds, everything publicly traded used to be dominated by institutional players. That has dramatically changed across the globe, where online investing platforms allow anyone to invest in public stocks as they like. They already have access to investing in public securities. It raises the question, why not in private markets? Private markets are a different asset class, typically higher risk but with potentially higher returns.
Why shouldn’t the same public have access to those investment opportunities? From a portfolio perspective, having about 10% in private market security is recommendable. How is it that retail investors are locked out from investing in private markets where it makes sense to perhaps allocate a proportion to that?
The other important perspective I would bring here is that newly found companies resolve a problem that has the potential to go global and become successful. There is an upside for investors. Why would retail investors not be able to invest in those kinds of opportunities? Why are they traditionally only able to invest in, we talked about Facebook early on, when it went public, when we all know that the massive returns were created in the earlier days or at least by the investors that were able to participate earlier. It’s not fair, is it? Why wouldn’t retail investors have access to that?
That is what I strongly believe. This is also why it excited me to start FrontFundr, the fact that you give the wider audience and retail investors the opportunity to invest in companies that they’re excited about, believe in, and like to see succeed. To your point, does it mean they go over FrontFundr, watch your video, and say, “Cool. This can only go well. I’m indeed going to take my whole bank account and put all my money in this company because surely it’s going to go through the roof?” Probably not very wise.
That’s also why FrontFundr is registered. You mentioned the exact market dealer. We are a registered dealer. We were the first registered EMD in Canada to transact fully online. We pioneered quite a bit in the early days, working with the regulators and getting approval to transact from start to finish online. At the same time, make sure we comply with all the securities rules and all of that. Part of those rules is that we have an obligation to determine, based on an investor’s profile, whether it’s a wise idea to make a certain investment and amount in one company.
For each investment at FrontFundr, we perform a so-called suitability. That’s why we need to know a bit more about the investor, their risk tolerance, their assets, and their investment experience. If we see an investor who invested $50,000 of a total investible asset of $100,000, we will deem that unsuitable and notify the investor, saying, “You might want to diversify and perhaps invest less and spread your risk.” We have an obligation and a role to educate and help both investors and companies that raise through the platform. It’s not a Wild West where we list like Craigslist or anything, see if it sticks, and anybody can invest as much as they want. We are running a curated marketplace on both sides.
You gave a very diplomatic answer, Peter-Paul. To summarize, you believe in the democratization of investing in private companies, private placement, as it is known in the US, and the exempt market, as it’s known in Canada. With a caveat, with a but, most lawyers answer that way, that there should be some level of a regulatory framework where people can’t come in and empty out their whole bank account. There are levels to it in what you’re saying.
How To Transform The Canadian Framework
Continuing that conversation, I was doing some research. In the US, the JOBS Act came out in 2012, which made the process of syndication and raising money for small companies much easier. In Canada, we had the abolishment of the Northwest exemption, which put a lot of flow into the offering memorandum exemption. I understand that your intent is to make it easier for retail investors to invest in products and your company’s intent is the same.
If the regulatory framework in Canada makes the process so difficult, for example, an issuer like us has to draft an offering memorandum, which is a prospectus light and has to do audited financials annually, which is very costly, especially when you have a very extensive org chart with companies across Canada and the US. Sometimes, it’s a gray area where all of those companies might have to do out of the financials, which is in the thousands.
It’s a situation where the intent might be there but then the regulatory makes it so difficult for issuers to get involved and do deals. My follow-up question to that is this. We have a potentially new administration coming into Canada. In the US, we had a new administration come in but we’re going from liberals, most probably, to conservatives, depending on what happens in Canada. If Pierre Poilievre won and brought you in as an advisor about the exempt market and securities, what would you do differently in Canada’s framework if you got that job?
I mentioned we have thirteen securities regulators. This is not a new conversation. This has been going on in Canada for a while. We have thirteen provincial securities regulators. I would harmonize that right away. I would do a US model where you have an SEC, a federal regulator. You still have provincial regulators. The US also has state regulators but you can have those provincial regulators execute and oversee securities activities in their jurisdiction. I would have one regulator.
Canada is too small for my economy and population. We’ve got over 40 million people in Canada. These provincial rules and frictions create barriers for companies that want to raise capital across Canada and are confronted with different rules, as well as for investors. Certain exemptions are available in Ontario but not in BC, or the limits in BC are higher, and in Ontario, they’re lower or vice versa. This is across the country. The first thing I would do is harmonize it, remove those barriers, and reduce unnecessary costs of raising capital for private companies.
Raising Capital: The provincial securities regulators in Canada must be harmonized. This will remove barriers and reduce unnecessary costs of raising capital for private companies.
Amazing. Thank you for that.
How FrontFundr Works With Investors
Changing the topic a little bit, how many investors are there on FrontFundr? How much money have you raised since inception?
One by one, we’ll go.
We’ve built a community of over 50,000 investors on FrontFundr. We’ve done that through over 180 successful capital-raising campaigns and raised over 200 million through the platform. Whether you’re an accredited investor or a smaller retail investor, everybody can invest through FrontFundr for as little as a few hundred dollars to $100,000 or $1 million plus. Out of those 50,000, roughly 25% are accredited investors and the other 75% are non-accredited investors. We have a lot of retail investors on the platform.
Top Exemptions In Raising Money In Canada
CPI’s last deal, Atlas at Bay Point, was published on FrontFundr. We raised close to almost $10 million US on the platform. I’m excited about that. Let’s talk a bit about the regulatory framework. When it comes to securities compliance in Canada, you discussed how every province has its own securities commission. If it were up to you, you would harmonize that and have one body like the US. Talk to us about some exemptions that exist.
For the audience who might not understand, the idea of exemption is that you have a business idea and want to raise money, but regulators say, “Slow down. You have to comply with their rules before you can raise money. If you need to raise money through an initial public offering, you must draft a prospectus.” You’re like, “Hold on a second. I don’t want to go through that. That’s going to take a year and cost me $500,000. I just want to buy this apartment building. By that time, I have 60 days to close. I need to get this going. I don’t have time for that.”
Regulators say, “Fine. You can use these exemptions that exist, the prospectus exemption.” You’re exempt from going through the prospectus route. That’s how I describe it. I hope that’s correct, Peter-Paul. They list these exemptions that exist so that you can go raise money. One of them being the offering memorandum exemption that we discussed. Talk to us about some of the top exemptions that are being used.
You talked a lot about crowdfunding. Crowdfunding is a general lexicon word about getting groups of people to raise money. Syndication and crowdfunding are very similar. As part of these exemptions, there’s also a crowdfunding exemption that’s totally separate from this concept of crowdfunding. Talk to us about some of these top exemptions that exist in Canada to raise money.
This is my favorite topic, the regulations and the rules in Canada. You’re right. Exempt from what? You’re right. Indeed. Exempt from filing a prospectus, which is typically a costly and onerous way to raise capital. This is what public companies typically do. If you’re a small company looking to raise $500,000, a prospectus is way too expensive. There is the offering memorandum, which is the prospectus light, which enables you to raise from accredited and non-accredited investors.
The only thing is you need all those financial statements for the offering memorandum, and you need to put together the actual offering memorandum and the offering document itself. For a company raising $500,000, it’s still very expensive to do all that. Often, these companies don’t have all those financial statements that you need to do and then subsequently need to file every year.
The problem is that private companies have traditionally only been able to raise through other prospectus exemptions. One is the family, friends, and business associates, the FFBA. You can go to your friends or a family member and say, “I’m building this company. Would you like to invest?” People are not aware that they’re using a rule, but they are using the rule of FFBA.
Raising Capital: Private companies have traditionally only been able to raise money through their family, friends, and business associates.
The moment you incorporate the company, and if you have more than one shareholder, you’re automatically under the umbrella of private issuer exemption, pretty much.
It goes up to 49 investors and beyond that, you can’t use the private issuer exemption. Most companies are not aware that they are private issuers and are using those rules. The FFBA, but you only have so many family members and friends because the whole thing is, how do you define a friend? It’s not like friends on Facebook. Regulators are a bit of a gray area. They’re not too keen on FFBA anyway because you could say you can define everybody’s friend. That’s the traditional exemption that’s used.
The other one is the accredited investor exemption. You need to meet certain income and asset thresholds to qualify as an accredited investor, which, for example, Angels typically and other wealthier investors. That’s a small group, a couple of percent in terms of people that qualify for that under that exemption.
The next one is the offering memorandum, which we discussed. For companies raising smaller sums of money, it’s still a lot of work. The regulators in Canada came up with prospective exemptions for startups. It’s called a startup crowdfunding exemption, the 45-110. They gave all these exemption numbers. It enables private companies to raise from anybody they want. They need an offering document for that but it’s a fairly light document. There are no financial statements needed.
It’s easier for these companies to use this exemption and raise capital. There are a couple of things. The investor can invest up to a maximum of $2,500, or if they go through a registered portal, like FrontFundrs, and we deem it suitable, then it can be $5,000. That’s an exemption that the regulators in Canada have introduced. Different startup crowdfunding exemptions were fragmented, which is very difficult. Since 2021, we have harmonized startup crowdfunding exemption in Canada, which is 45-110. It’s been harmonized across Canada. That’s a positive thing. That is progress.
Companies can use this rule. Typically, if they raise from $500,000 up to $1.5 million, that’s the limit for this rule. FrontFundrs operates as an exempt market dealer, so we can combine these rules. Typically, if a company wants to raise $3 million, we use the FFBA, accredited investor exemption, and startup crowdfunding exemption. We can stack them to maximize investor outreach. That’s a summary of the exemptions, how they’re used, and the key ones available in Canada.
For our US-based audience, I want to distinguish the offering memorandum exemption that exists in Canada, where you’re drafting this extensive document, which allows you to raise money from accredited and non-accredited investors, is very similar to the Private Placement Memorandum or PPM in the US. That exemption is a 506(c) exemption.
You need to draft a private placement memorandum. The difference is that when you draft a PPM in the US, you can only raise it from accredited investors. In Canada, when you draft the offering memorandum, you can raise it from accredited and non-accredited, but you have to do audited financials annually. In the US, you don’t have to do any other financials.
Another quick item I want to touch on is the accredited investor and private issuer exemptions. Private issuer exemption limits you to 49 and 50 investors. It’s a non-reporting exemption, so you don’t have to report anything to the issuers. You open a company and you have a shareholder or a partner. You don’t have to report anything to the regulatory bodies. If you do the accredited investor exemption, you have to report.
For example, in CPI and some of our deals, even though we were bringing on only accredited investors, we still decided to do the private issuer exemption because we didn’t have to do any reporting. You have to be savvy. It’s a maze. It’s like Canada, where there are lots of ice. You’re walking on ice as you’re trying to navigate. Let’s keep going here.
Navigating Economic Turbulence And High Interest Rates
Changing the topic a little bit. How did you see the investor sentiment shifting in the market as there’s been quite a bit of economic turbulence and interest rates going up over the past couple of years, faster than ever before, and GPs finding themselves in some trouble? Did you see a change on your platform and how much capital was being injected into the issuer deals on your platform?
We saw two significant changes there over the years. It’s fair to say here in Canada and globally that the democratization of the private markets is ongoing and unstoppable. It’s going to get bigger, but it’s still in process. We saw a significant jump around COVID, where there was no other way to raise capital than keeping distance. Raising online is a great way to reach out to prospective investors. Investors also became more familiar if they weren’t already with purchasing everything online, including investing.
We saw a huge spike in investment activity on our platform around COVID. It’s the breakthrough where investors went online and familiarized themselves with investing online. We saw tremendous growth during COVID. The economic downturn went the other way, where we clearly increased interest rates and high inflation. People have become much more careful and cautious when investing in general, particularly in more risky investments in private markets.
We saw a sharp decline in investment activity on the platform around 2021 or 2022. We also had to adjust because it was two ways for us. For companies, you also made a comment about venture capital and GPS having trouble raising capital. They also hit the brakes. The venture capital dried up. Companies were looking for alternative channels to raise capital. That was where we were interested.
“Maybe I should raise capital online and reach out to a much wider audience.” We had a lot of interest from companies looking to raise capital through this alternative route, but we also had an investor side and a marketplace, and they became more cautious and careful. It has been more challenging. We saw average raises by companies go down. You have to adjust in terms of what feasible goals are and how you can define the milestones and the funding path while raising less capital.
Since the last quarter of 2024, we feel like the market has turned a corner. Interest rates have come down significantly in Canada. We have six consecutive rate cuts by the Bank of Canada. Inflation is within the target range again. We’ve seen it pick up activity and we see that investors are coming back. It’s an early sign, but it’s moving in a positive direction.
We can feel that too. I want you to take me back to 2013, when you first founded your company. Retail investors were learning more about private alternative investments. Some investors haven’t learned about the space yet and they’re very excited that this is even an option. Have you seen a huge uphill climb since then for investors getting excited to invest in private alternative investments?
I saw what was happening in the UK, where it started in 2010 with investment crowdfunding. It made a lot of sense to me. About 40% plus of companies raised through FrontFundr-like platforms in the UK fully or use it as an additional. Back in 2013, when I decided to fully jump into this, everybody was in the dark about how this would be possible. Should it even be allowed, including regulators?
The reason I jumped into the opportunity was because of the offering memorandum, which existed in most provinces already for many years. It was originally used a lot in real estate but also in the resources industry, the mining industry. OMS enabled you to raise from non-accredited investors as well. That’s what I had my eyes on. I’m not dependent on regulators. I can use that offering memorandum but run into challenges. For a company that’s only looking to raise perhaps $500,000 or $1 million or a few million, the OM may still be too onerous to do that and be too expensive.
At that time, it was a complete novelty to invest in a startup, but I’m not an angel. Investing a few hundred dollars in companies is like, “Can I raise truly from the public, no matter whether accredited or non-accredited?” The whole journey then was not just about building and promoting FrontFundr and putting all the pieces together but it was also about creating an awareness and educational side of it and explaining in the market how this works and that this is indeed possible. It’s great to be a first mover and innovate, but you also have to do all the heavy lifting in terms of building the market if you like. That was a tremendous job. I would argue that investment crowdfunding or investing in the private markets in Canada in most early days is still in its infancy.
It is great to be a first mover and innovate. But you also have to do all the heavy lifting in building the market you like. Share on XSegregating Accredited And Non-Accredited Investors
Going back to you having the signing authority of any regulation that comes out, would you still segregate between accredited and non-accredited investors? Do you still want that idea to exist, that certain investors, because of their income and net worth, are accredited and the rest of them aren’t or would you just abolish that as well?
The accredited investor exemption is an invention by the securities regulators. They came up with it. I know that in the US, they’re reviewing whether the thresholds are still applicable and should be revised. It was also based on the fact that if you’re not an accredited investor and you have X amount of money, you can probably afford to lose a certain amount.
The fact that we have smaller investors that have a total portfolio of a couple of tens of thousands of dollars, perhaps they’re looking to invest in private markets. As long as they can make smaller investments if they lose all their money, which are smaller investments, it’s not going to break the bank or get them into trouble because they’re able to make smaller investments. Their accredited investor exemption should be overhauled.
I see a lot of accredited investors writing big checks without necessarily informing themselves as well as they should have done but simply because they are able to invest large amounts of money. I see smaller investors that invest a few thousand and perform very diligently make an informed investment decision by reviewing all the materials we disclose on FrontFundr. It’s ready for a review. The thresholds, income, and asset tests should be revised. It’s becoming less relevant.
Importance Of Marketing In Raising Money
Switching the conversation, here’s the last question before the next segment of the show. Let’s talk about investor psychology, going back to companies and products. An inferior product compared to a superior product will make more sales if it has better marketing. It all goes back to marketing. Talk about that idea when it comes to issuers or companies that have a product, for example, in your platform.
What has been your experience on who can raise more money? Is marketing still a huge part of it, or is it that investors look at the investment and the returns that exist and want to invest in the highest forecasted return product? Talk to us about what you’ve seen over the years. How important is marketing when it comes to companies trying to raise money?
Raising on FrontFundr, we’re providing a virtual stage for companies to go on this virtual stage and broadcast their investment opportunity to our audience and also reach out to new audiences. To do that effectively, you typically need marketing resources and you need to undertake marketing activity. Companies that allocate resources, time and money for that are typically more successful on the platform than those that have zero resources. That’s also why we indicate that there’s a potential issue for successfully raising on FrontFundr.
The other one, which is important because it is indeed psychology with investors, is that the typical companies on FrontFundr are relatively newly founded companies addressing problems in the market with innovative solutions. There’s often not a proven track record yet, even with those solutions. It all comes down to storytelling. Storytelling on the platform is important. Get people excited and explain as clearly as possible what you’re trying to achieve, how you want to do that, and why you’re looking to raise money from investors.
Storytelling is necessary if you are looking to raise money from investors. It gets investors excited about the opportunity and the confidence you and your team can execute. Share on XThe whole storytelling and getting investors excited about the opportunity and also excited about the confidence that you and your team can execute are key components of FrontFundr. It’s about telling the story and getting people excited about, “I want to be part of that. I can see these guys succeed and grow a successful company.”
Ten Championship Rounds To Financial Freedom
We have a lot more questions for you, but we get to the top of the hour. We know you’re super busy, Peter-Paul. Let’s get to the next segment of our show. Ten championship rounds to financial freedom.
There are ten questions, Peter-Paul, and whatever comes top of mind. First question. Here we go. Who’s been the most influential person in your life?
In business, it’s Steve Jobs.
We know that Peter-Paul has tremendous attention to detail.
Second question. What’s the number one book you’d recommend?
A book that I read is No Rules Rules about the Netflix story. It’s very interesting. It’s all about innovation and how innovation builds great companies.
No Rules Rules: Netflix and the Culture of Reinvention
I’ll check that out.
Next question. If you had the opportunity to travel back in time, what advice would you give your younger self?
Once you set your eyes on something and are ready to jump, jump with both feet. I worked initially in banking and finance, a very predictable and protected environment. It took me some time to make up my mind. I made that move back in 2010. I also moved to Canada. I would expedite that process.
Next question. What’s the best investment you’ve ever made?
The best one I made was in a plant-based protein company. They raised about $700,000 on FrontFundr through a convertible note. They were identified as an old plant-based hype by an investment banker in Canada. I took them public. I had a very handsome exit within two years. It’s about 35 times my investment.
CPI, you might not get 35 times but we try to double your money in 5 years.
That’s a pretty good answer.
Next question, Peter-Paul. What’s the worst investment you’ve ever made? What lessons did you learn from it?
The worst investment I made was a company. It happens in Canada with junior exchanges. It’s a company with big plans to go public. This was also after the other story I told you. I smelled the coffee but I didn’t do it in the right way. Companies that first talk about going public and doing it in a year with X return. I invested in a company where I got carried away by that story. There’s a time and a place for companies to go public, but this one was clearly too early. That was not a good investment.
Next question, how much would you need in the bank to retire today? What’s your number?
To do the things I want to do in retirement, it’s $3 million.
It’s very achievable.
I’d like to think so.
If you could have dinner with someone dead or alive, who would it be?
We’re throwing hard ones at you, Peter-Paul. We’ll give you two. We can do one alive and one dead.
I would say Ernest Hemingway. It’s interesting I came up with that one. I like his books and would like to have a chat with him. Alive is Obama.
For $1 million, you can get him to come speak for you. You could have him.
That would take a third of my retirement.
Peter-Paul, next question. If you weren’t doing what you’re doing today, what would you be doing now?
I love cooking and food. If I did something completely different than what I’m doing, it would be cooking and running a place.
Where can our audience get an idea of what the setting is like?
Southern Spain.
I would have guessed Spain as well. They have great food there.
Here’s my favorite question. Book smarts or street smarts?
Street smart.
Last question. If you had $1 million in cash and you had to make one investment, what would it be?
It would be SpaceX. I was about to say OpenAI, but maybe I should say DeepSeek.
You blow it out of the water. It does it way cheaper and faster. Thank you so much. We appreciate all the wisdom and information you shared with us. You were very candid and open.
Peter-Paul, quickly let the audience know the best way to reach you.
I’m on LinkedIn, Peter-Paul Van Hoeken, and FrontFundr.com. Those are the easiest ways to reach me.
Thanks for being on the show.
Likewise, thanks for having me. I enjoyed it.
