Time for some proper due diligence/ independent auditing in our communities

[Joel]

Any update on this?

Why is he raising money again?

https://www.linkedin.com/posts/irazlotowitz_schwai-activity-7199189623003131904-WSLS

[Afrages6]

Any update on this?

Why is he raising money again?

Because he is out of money “but very close to turning profitable”

[jye]

https://www.linkedin.com/posts/irazlotowitz_schwai-activity-7199189623003131904-WSLS

“We're exploring an AI-powered auto-dialer with real-time coaching overlays“
Is that cold calling on steroids?

[Yehudaa]

Because he is out of money “but very close to turning profitable”

I know nothing about how this particular business is funded or whether the fundamentals pencil out, but IIRC he launched in the last couple years. In the context of a tech-based startup, I don't think taking this long to get to profitability is in itself a red flag.

My (uneducated) impression of the tech startup world is that it's a world of high-risk, high-return investments. Many investments might fold and lose 100% of their value, but the occasional grand slam (if one is zoche to it) can make up for all those losses many times over. Doesn't mean any founder is scamming anyone, it's just the nature of the sector. IIUC it's a world for experienced, well-capitalized, and highly-diversified investors, who aren't fazed by some losses, and are more focused on the big picture of their portfolio of investments in the sector. No idea where this particular company is headed, but hopefully those who invested here fit that bill.

/.02

[JMHO]

IIUC it's a world for experienced, well-capitalized, and highly-diversified investors, who aren't fazed by some losses, and are more focused on the big picture of their portfolio of investments in the sector. No idea where this particular company is headed, but hopefully those who invested here fit that bill.

+1
This is NOT a friend or relatives real estate deal. It's a totally different animal.

[knowitall]

I know nothing about how this particular business is funded or whether the fundamentals pencil out, but IIRC he launched in the last couple years. In the context of a tech-based startup, I don't think taking this long to get to profitability is in itself a red flag.

My (uneducated) impression of the tech startup world is that it's a world of high-risk, high-return investments. Many investments might fold and lose 100% of their value, but the occasional grand slam (if one is zoche to it) can make up for all those losses many times over. Doesn't mean any founder is scamming anyone, it's just the nature of the sector. IIUC it's a world for experienced, well-capitalized, and highly-diversified investors, who aren't fazed by some losses, and are more focused on the big picture of their portfolio of investments in the sector. No idea where this particular company is headed, but hopefully those who invested here fit that bill.

/.02

Agreed. Keep in mind the CRE markets are frozen now, transaction volume is severely depressed. I don’t know if his business model is one that can potentially be profitable, but it certainly makes sense for a startup in this industry to bleed heavily in this climate.

[Afrages6]

I know nothing about how this particular business is funded or whether the fundamentals pencil out, but IIRC he launched in the last couple years. In the context of a tech-based startup, I don't think taking this long to get to profitability is in itself a red flag.

My (uneducated) impression of the tech startup world is that it's a world of high-risk, high-return investments. Many investments might fold and lose 100% of their value, but the occasional grand slam (if one is zoche to it) can make up for all those losses many times over. Doesn't mean any founder is scamming anyone, it's just the nature of the sector. IIUC it's a world for experienced, well-capitalized, and highly-diversified investors, who aren't fazed by some losses, and are more focused on the big picture of their portfolio of investments in the sector. No idea where this particular company is headed, but hopefully those who invested here fit that bill.

/.02

Ch”v I didn’t call anyone a scammer. The title of this thread is about due diligence and like you said it’s extremely high risk here. Money shouldn’t be raised from fellow yidden on LinkedIn, the only reason it is, is because he is not been able to get a single fund that specializes in this stuff to invest.

Also this is very very different than any other startup that burns money for one simple reason. When Facebook or Tesla went public they were losing money but they were investing money into developing a lasting product with value. Here a large chunk of the money has been spent on salaries and the whole business and chance of profitability is based on brokers being able to sell loans. He could’ve started the same thing with zero money.

[aygart]

Money shouldn’t be raised from fellow yidden on LinkedIn, the only reason it is, is because he is not been able to get a single fund that specializes in this stuff to invest.

Isn't investing limited to accredited investors?

[Afrages6]

Isn't investing limited to accredited investors?

200k of income makes you an accredited investor. Certainly doesn’t put you in a position to put 25k into a startup.

[AsherO]

I know nothing about how this particular business is funded or whether the fundamentals pencil out, but IIRC he launched in the last couple years. In the context of a tech-based startup, I don't think taking this long to get to profitability is in itself a red flag.

But is he really a tech-startup or is this more of his legacy business hybridly repacked as a tech-startup? How many high level executives does he have that have more of a tech/startup background than a CRE background?

[Fish Tank]

Ch”v I didn’t call anyone a scammer. The title of this thread is about due diligence and like you said it’s extremely high risk here. Money shouldn’t be raised from fellow yidden on LinkedIn, the only reason it is, is because he is not been able to get a single fund that specializes in this stuff to invest.

You know for a fact that he tried getting institutional money?

Here a large chunk of the money has been spent on salaries and the whole business and chance of profitability is based on brokers being able to sell loans. He could’ve started the same thing with zero money.

How so ?

[Afrages6]

You know for a fact that he tried getting institutional money?

I can't say with 100 percent certainty but I can be fairly confident in the information that I have that they did try. If they didn't then it would be even worse 

How so ?

If he is admitting that the path to profitability is strictly on the backs of the brokerage then why couldn't he just start a discount brokerage?

[Fish Tank]

If he is admitting that the path to profitability is strictly on the backs of the brokerage then why couldn't he just start a discount brokerage?

Not sure what you mean. He did start a discount brokerage. He charges a flat fee instead of a percentage.

[Afrages6]

Not sure what you mean. He did start a discount brokerage. He charges a flat fee instead of a percentage.

Yes. But he also raised 25 million dollars so far to start that brokerage. I could open up shop tomorrow and charge what he charges or even less and save 25 million dollars.

[ari3]

Yes. But he also raised 25 million dollars so far to start that brokerage. I could open up shop tomorrow and charge what he charges or even less and save 25 million dollars.

And hire qualified brokers, pay back office, create a streamlined platform, advertise etc. etc.? How much experience do you have starting a business? How many successful businesses have you started without investing any money? None. Because it doesn't work that way.

[avromie7]

Yes. But he also raised 25 million dollars so far to start that brokerage. I could open up shop tomorrow and charge what he charges or even less and save 25 million dollars.

So why don't you?

[DaasTora]

The argument is now focused on whether he’s spending the money right and if a new business is expensive to start. I think it’s relevant but not the focus. The real question is why does he raise money from laymen when there are huge funds out there ready to invest in any serious project.
I’m not saying anything about him or his company, since I have no idea what’s going on there. I’m just wondering about his raise.

[AsherO]

Not sure what you mean. He did start a discount brokerage. He charges a flat fee instead of a percentage.

That’s what it started as, but has been evolving since. It comes across as a bit of a hodgepodge.

[Afrages6]

And hire qualified brokers, pay back office, create a streamlined platform, advertise etc. etc.? How much experience do you have starting a business? How many successful businesses have you started without investing any money? None. Because it doesn't work that way.

First of all I have started a business by bootstrapping it and I am in middle of starting another one now bez’h.

I diluted my point by exaggerating about starting it with zero dollars. However, raising 3 rounds of money to the tune of 25 million dollars to build out a back office for a brokerage is where my problem is with the business.

[Mordyk]

Not sure why it's fair to have this discussion in this thread.  Startups have risks and he is entitled to raise money.  And he definitely has a history of building something big. To bring skepticism to someone's business without fair reason is simply not ok


(I have no relationship to the guy or to his business,  nor have I invested)