Intrigued by the offering, I met with CEO Jeff Tennery & COO Roy Slater for lunch. Both Jeff & Roy updated me as to the status of prior and current financing offerings. In case you were not aware, much has changed with Moonlighting since the Daily Progress’ June 17, 2018 article related to the company’s initial coin offering announcement of “Moonbit”.
Due to regulatory uncertainty, Moonlighting ultimately decided to postpone the Moonbit offering until 2019. In lieu thereof, the company has undertaken a three-pronged financing approach: (i) said Title III crowdfunding raise (via Crowd SAFE), (ii) traditional seed round equity raise and (iii) security token (available only to accredited investors). This financing strategy is unlike any other that I have seen in Charlottesville, providing new advantages for both investors and founders.
Investor Benefits: The Crowd SAFE allows both accredited and non-accredited investors alike to invest in Moonlighting. As a good portion of Moonlighting’s freelancers and consumers are unlikely to be accredited investors, the Crowd SAFE allows users of the Moonlighting platform to invest in the company. The traditional seed round gives angel and similar investors the opportunity to invest in a more seasoned company (nearly five (5) years of continuous operations). The security token allows accredited investors to share in the company’s revenue.
Founder Benefits: For one and at the outset, multiple financing avenues naturally creates a higher likelihood of meeting overall financing goals. Multiple financing avenues also naturally create more favorable control terms for founders. Both Moonlighting’s Crowd SAFE and security token do not come with exit pressures, as would otherwise likely exist when taking investments from venture capitalists. Also, the Crowd SAFE and security token contemplate a mass of investors, and, with each having a relatively low stake (as compared to say venture capital investors), these investors are less likely to influence the founders (for better or for worse). Like control terms, economic terms will be more favorable to Moonlighting and its founders by using the above-described multifaceted approach. For instance, while the security token offers revenue sharing, this token will not dilute the shares of the founders. Also, having more than one financing avenue guards against one group of investors gaining unreasonable leverage against the founders.
There are many ways for companies to raise money in 2018. While the paths to certain financing options are currently being blazed, cut-off and/or repaired, one thing is clear: Moonlighting is blazing a new path in Charlottesville. Time will tell whether other local companies will follow.