Aaron Halfacre, CEO of Modiv.com

ADAM GOWER: How does somebody then value? If you're looking for an exit, which presumably - the implication is that that is what you're doing and that you're, you know, pitching to investors, that that's an exit, that's a possible exit for them as well. 

AARON HALFACRE: Yeah.

ADAM GOWER: How does somebody value the company if it is completely tied up in the value of the real estate as well? If they aren't separated, how do you get that "unicorn-type", you know, 100X of NOI or whatever it is. We think the most likely way to get that realization is through a listing event. Right?

So if you think about the natural path of tech-enabled stocks, is that they eventually list and that's when they get their biggest multiple. Right? So they raise early rounds and then once they've hit - you know, think of Uber or think of Airbnb, then they list and they've manifest the value and there's more people who can participate and believe in that value chain. Right? Because Cushman & Wakefield, which is a real estate appraisal business, its just evaluating the real estate. They don't care about that. It just sits on the books from an accounting perspective. How do you get that realized?

Well of course, you could bifurcate it and sell it off and get a valuation. Right? You could come up with your own arm's length evaluation. But that, you know, how do you really know what that's worth? Right? Because unfortunately, in the tech business, it's usually only - the worth is really measured by supply and demand. Right? And how do you best measure supply and demand is make sure that has a wide audience. And so we think the listing event would probably be the one - the catalyst, allow the the fintech value to be extracted or to be realized.

ADAM GOWER: So where do you think crowdfunding, overall, the industry, where do you think the industry is headed? Kind of give me some... I know you don't like projections, but - you can do that.

AARON HALFACRE: No, I don't mind.

ADAM GOWER: For the industry,

AARON HALFACRE: I don't mind, but I just don't think specific numbers are good. So, look, I've actually spoken this at a couple events recently, have some slides out. The parallels to - so, if you go back to May 1st of 1975, which was the May Day Act. That's when stock commissions were deregulated. I liken the May 1st, 1975, regulation to very much the JOBS Act. It created a new regulatory environment, right?

So, if you think about asset crowdfunding as we know it, the Reg A, Reg D and the Reg CF, all manifests out of JOBS Act. Obviously, crowdfunding existed before that, but it was sort of the the "rewards based" version. May 1st, right after May 1st, 1975, Charles Schwab started Charles Schwab and at the same time, Merrill Lynch raised its commissions. So, it got deregulated and it increased its commissions and Schwab reduced them.

If you go from the late 70s to the late 80s, you saw a plethora of companies Scottrade. Brown and Co., you know, Ameritrade, E-Trade, Trade Plus, Interactive Brokers. A bunch of different shops popped up offering discounted brokerage, using technology, providing better access to share purchases to investors, including non-accredited investors, right?

So, a very similar parallel about a plethora of low barriers to entry. A lot of companies started and then what did you see? You saw consolidation and then public listings and then even more consolidation. So now you really have a handful of them. On the other side of the business, John Bogle of the Vanguard Company launched a no load mutual fund in 1978. No-load mutual funds had already existed, but no one touched them. So they moved to a no-load mutual fund. And if you go back in time and look at the pundits, they'll say that this is going to kill the mutual fund business because you need a front-end loaded vehicle.

You need to be able to - it's expensive and hard to buy mutual funds and stocks, and you have to have these fees. And he proved them wrong. And now we've - now it's really uncommon, really uncommon to find a front-end loaded mutual fund. And you find it's really uncommon to pay a lot for, if anything, for a stock commission. And those two business models - Fidelity and Vanguard models over here and the Schwab and E-Trade models over there have merged.

So Schwab does discount brokerage and mutual funds and Vanguard does discount brokerage and mutual funds and they've merged and they're very large conglomerates, if you will. I see that same parallel happening in crowdfunding, real estate crowdfunding, because what we're trying to do is get a direct consumer business model. All of us are trying to do the same thing. Right?

Have a good linkage with the public and become an alternative real estate brand. That a Schwab or a Blackstone or a Vanguard or Seabury might say, well, that's easier than me trying to do it by scratch. I'll go in and I'll consolidate the space and now I'll have stocks and bonds and real estate to offer my investors. I think that's where we're headed.