Welcome to the Seismic Capital Investment Process.
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Q&A from the Webinar:
Q: What kind of returns are typical of venture investments?
A: Venture Capital is the consistently the highest producing asset available, above private equity, commodities, stocks, and bonds. Recent reports from the data service Pitchbook have pegged annualized IRRs for Venture Capital investments at 67%.
Q: What stage company is your sweet spot?
A: We like to invest in companies once they have a product and a customer. These two components demonstrate that the company has emerged from the idea stage. Sometimes, even before a company has a product and a customer, if we think it has significant potential, we’ll advise it beforehand to help reach those milestones. But our overriding strategy Is not to invest capital until the hurdles of product and customer are cleared.
Q: How much money do you expect to raise, and what is the average investment?
A: Our target currently is $49 million under our Reg A offering (for both accredited and non-accredited investors), and another $50 million through private placement (for accredited investors only). Under Reg A, we are allowed to raise up to $75 million per year.
Typically, we’ll invest between $1 million and $10 million in a single company. Our initial capital commitments are metered in over two years, with six-month budget reviews to make sure the company is performing and has the capital it needs to grow.
Q: Do you plan to take any of the companies you invest in public?
A: Yes. When we do, we expect we’ll distribute proceeds from the IPO to our investors.
Q: Is anyone else doing this?
A: No company besides Seismic Capital welcomes both accredited and non-accredited investors into a diversified portfolio of venture investments. Typical VC diversified portfolios are available only to institutional investors and ultra-wealthy investors.
Q: Are there any capital calls?
A: There are no capital calls. You are always welcome to purchase more shares after your initial investment, but there is no requirement to do so, and there never will be.
Q: Environmental ratings? Provided by who? Independent unlike Mood’s or similar to McCarthy, Crisanti and Maffie?
A: This question refers to a potential investment we are considering. The company provides quantitative ratings for the “E” portion of ESG (Environmental, Social and Governance) standards of companies and municipalities. This company is an independent, early-stage opportunity. It was referred to us by a recognized expert in the ratings business, our Seismic Capital advisor Robert Andrialis, who formerly ran the ratings business of Standard and Poor’s. One of the potential goals of this company is to be a SRO (Self Regulatory Organizations) authorized by the SEC. Financial Industry Regulatory Authority (FINRA) and the Chicago Board of Trade (CBOT) are two examples of SROs.
Q: Do the advisors own shares?
A: Yes, our advisors all own shares.
Q: How is this offering being received by the big wire houses?
A: It’s too early for us to be registered with the wire houses.
Q: Do investors receive shares in the companies or just Seismic?
A: Yes, investors receive shares in Seismic. There are some circumstances where we’ll likely distribute the remaining shares we hold in a company after we sell a stake in it or take it public.
Q: Is there a megatrend or specific industry you are focused on?
A: We like digital companies, but we’re interested to see companies that make tangible products, too. Seismic Capital has implemented a diversified investment strategy. Mostly we’re interested in companies that can shake up their sector … or create new ones. Our sweet spot to invest is when the company has a product and a customer. In Venture Capital terms, this is late-Seed/Early Series A.
Q: Is there a size maximum of an investor?
A: As noted, we welcome investors at all income levels. Our SEC-qualified Regulation A offering to accredited and non-accredited investors is for up to $49 million. Our accompanying Private Placement is for another $50 million.
Investors who come in before our Net Asset Value reaches $50 million receive Qualified Small Business Stock, which provides capital gains tax exemptions after a five-year holding period.
Q: How do I make money with Seismic?
A: Three potential ways:
- Through dividends which we intend to pay when our companies start to cash-flow.
- Through distributions that result when we sell a company or take it public.
- Through sales of your shares.
Q: Do I have to hold my shares?
A:There is no required holding period. You can sell the shares at any time.
Q:How did you come up with this idea?
A: We were seeing dozens of companies deserving funding, and we couldn’t support them all ourselves. We wanted to give these companies the backing they needed, and the time required to realize their visions. We wanted to make venture capital investing available to all kinds of investors. When we stepped back to figure out how to fit these pieces together, Seismic Capital emerged.
Q: Is there a limit on how much I can invest?
A: Our current offerings total $99 million. If you’d like to invest more than that, please let us know.
Q: Is it possible to invest monthly or quarterly?
A: Yes, just shoot a message to Alice Neuhauser, our CFO, at firstname.lastname@example.org, and she’ll make it happen.
Q: You said you are not allowed to make projections. Why?
A: The SEC guidelines for companies registered under Regulation A prohibit us from sharing our internal projections. Having said that, we expect to be able to grow the companies we are investing in, then produce dividends from cash flow and distributions from IPOs and sales of companies within our portfolio. Beyond that, we fully expect our stock price to rise, and our investors who hold our shares will realize a profit from eventually selling their shares, including, in most cases, with a capital gains tax exemption.
 Consult your tax advisor. The five-year hold is only to achieve the special tax treatment. Shorter holds reduce the benefit. Overall, there is no lock-up period (requirement to hold your shares). You can sell your shares at any time.
Some statements herein, including information incorporated by reference, discuss future expectations or state other forward-looking information. Forward-looking statements are typically identified by use of terms such as “may,” “will,” “should,” “expect,” “could,” “intend,” “anticipate,” “plan,” “estimate,” “believe,” “potential,” or the negative of such terms or other comparable terminology. Such statements are subject to known and unknown risks, uncertainties and other factors which are beyond Seismic Capital’s control. Actual events and results could differ materially and adversely from those expressed or implied in forward-looking statements. The forward-looking statements included in this email are based upon Seismic Capital’s current expectations, plans, estimates, assumptions and beliefs. Although Seismic believes that such forward-looking statements are based on reasonable assumptions, those assumptions may prove to be unfounded or inaccurate in whole or in part and Seismic Capital’s actual results may differ, significantly and potentially negatively, from the results discussed in the forward-looking statements. Factors that might cause such material and adverse differences include, but are not limited to, the Risk Factors discussed in our Offering Circular: https://tinyurl.com/SeismicOC202208 Seismic Capital is under no obligation to update forward-looking statements even if circumstances or management’s estimates or opinions should change. Prospective investors are cautioned not to place undue reliance on any forward-looking statements contained herein.
Seismic Capital Company and its affiliates do not provide legal, accounting, tax or investment advice, and nothing herein should be construed as such. Investors are encouraged to confer with their own advisors when making investment decisions.