Gust Kepler, CEO of BlackBoxStocks, says the company’s path to going public on the Nasdaq was a cocktail napkin story.
The Dallas-based stock analytics and social media SaaS platform is expected to go public on the market later this month or in early November. It is seeking to raise up to $20 million and looking to trade under the ticker BLBX. Pricing terms were not disclosed.
After launching BlackBoxStocks in 2014 and building it on “shoestrings,” the startup is bucking the VC route, uplisting from the OTC Pink market in an effort to give everyone a “shot at getting a piece of the action in an early stage," Kepler said.
BlackBoxStocks has traded under the same OTC symbol since 2015. At close on Oct. 14, the company’s stocks were trading at $7.05 per share. While Yahoo! Finance currently lists BlackBoxStocks’ market cap on the OTC markets at more than $68.5 million, Kepler said he estimates it at around $100 million, a discrepancy he attributes to the deal structure of early-stage VC and private equity investors.
“We felt there was a better way to capitalize a company. We'd raise our own money initially,” Kepler said, “We didn't want to do any highly dilutive issuances in the interim before we can get to a larger exchange, so we toughed it out.”
While going public, BlackBoxStocks’ deal still provides benefits that let Kepler and other leadership retain some of the control that other early-stage founders see in their initial cap tables. Upon completion of the offering, Kepler will retain more than 50% of board member election voting power.
“To be profitable, we may put all that money back into marketing and building new products, but the growth is where we want to focus and we think we can continue on our trajectory,” Kepler said. “We've made the mistakes early on; we've learned from them and will be much wiser now that we finally what we consider a big payday.”
Kepler spoke with NTX Inno about BlackBoxStocks’ lead-up to IPO and its future plans in an interview.
Would you say it's safe to characterize this as almost like an alternative to taking on VC dollars?
Yes. People call me crazy. They're like, ‘Why are you public at this early stage? This is ridiculous.’ Well, I want to keep our capital structure very tight. We were able to get some funding initially, which you find when you're a pre-revenue company, the sky's the limit, people throw money at you. Once you start generating revenue, you would think it would be easier to raise money, but it's never enough.
A lot of companies don't go public at this early stage. But then, Amazon broke that model. We think we can communicate to our user base that we may be profitable, we may put all that money back into marketing and building new products, but the growth is where we want to focus, and we think we can continue on our trajectory.
So, why not go the crowdfunding route then?
People have access to our company at this point in the OTC market, and there'll be much more liquidity when we list on Nasdaq. You almost have to do as much work to do a crowdfunding (raise), as you would have to do to uplist.
We are catering to the retail investor, the same people that use our product every day. In the trading world, we want people to be able to invest in our company in an early stage, where there's still a lot of room for growth. And there haven’t been multiple rounds of entries and exits in the private world before it ever comes to Wall Street.
What are the trends in the industry that you have your eyes on?
There’s a trend for retail investors to become… more educated as to what they're doing, you know, R/WallStreetBets and a lot of the Reddit social media groups and Twitter groups, they've done something very dynamic. They've democratized trading and sharing information amongst the masses. We seek to provide analytics that further augments those movements. So, those types of trends are something we want to leverage on and work within. We're just more of an intel weather window in Wall Street. In real-time, our systems scan the market and monitor multiple times per second live from the exchanges.
What’s next for BlackBoxStocks?
We have some new products that use a lot of our proprietary technology… along the lines of helping people that are in positions for weeks, months or longer. There are all kinds of unique alerts we can offer that’s working in conjunction with a user's brokerage account, and we think that would give us an opportunity for some exponential growth. We also are planning to launch a cryptocurrency platform that uses our hybrid system of social media and analytics.
This interview has been edited for brevity and clarity.
