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North Bay Business Journal

Monday, July 29, 2013, 6:55 am

Wall&Main hopes crowdfunding idea has mileage

United miles offered in return for funding startups

By Loralee Stevens, Special to the Business Journal

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    Wall&Main CEO and founder Michael London briefs some of his executive team.

    Led by Marin County resident Michael London the team intends to offer MilagePlus miles the company purchased from United as an incentive for the public to kick in an initial $1 million dollars for startup Wall&Main (855-925-6246, wallandmain.com).

    “Crowdfunding via the Internet is the future for starting small businesses,” said Mr. Landon, who previously founded HQ, a pioneering commercial space leasing company now a part of Regus.

    He predicts a wave of crowdfunding companies rising in the wake of the Security & Exchange Commission’s expected ruling loosening regulations and allowing startup companies to sell equity stakes to small investors.

    “Right now in this country you can only crowdfund on a donation, or ‘awards’ basis. Equity funding is restricted to venture firms and high wealth individuals. But that’s going to change very soon, likely by the year’s end,” he said.

    Wall&Main has built a three-phase business plan around that expected ruling. Crowdfunding first ”as an example for future customers” then crowdfunding for a series of incubated startups and existing companies looking to expand. Both campaigns use frequent-flyer miles as awards for backers.

    “Phase 3 is when the model really takes off, when the SEC allows crowdfunding using equity or debt. By that time, we’ll have staked out a significant share of the crowdfunding company industr,” said Mr. London.

    The team expects to amass a stable of young tech companies, the type investors love, as well as companies with good management teams or great ideas, during its phase 2 operations.

    The “secret sauce” is a deal he’s inked with United to purchase nearly unlimited frequent-flyer miles. Wall&Main is offering them in blocks, or awards packages, for “Founding Champions.”

    “We thought it up as an alternative to the awards usually offered: a gadget or service produced by the fund seekers,” he said. “This deal not only differentiates us from the pack, but it’s a boon to tech and other B2B companies that don’t have a widget to offer as an award.”

    Backing of $4,500 brings 150,000 MileagePlus award miles along with a subscription to trip planner Tripit, opportunities to invest in startups and other travel and investment benefits. Kick in $7,500, and the package includes 250,000 miles; $15,000, 500,000 miles; and $30,000, 1 million miles.

    “These awards are not for everyone,” said Wall&Main executive vice president of business development Martin White, who has worked extensively in the airlines awards industry for TWA and other airlines.

    “Clearly if you’re looking for a cheap way to get from Buffalo to Milwaukee this isn’t for you. But if you travel frequently and for long distances on business, it’s a pretty significant award. In fact, it’s the only way you can amass such a large number of miles. The airlines don’t offer more than 100,000.”

    Used wisely, he said, the packages could easily be worth two to three times the face value. United and its Star Alliance partner airlines go all over the world, just about anywhere a business traveler or tourist would choose to go.

    Mr. London and his team hope to jump-start their company with the mileage offer. So popular do they expect it to be that once their enterprise is up and running, they don’t intend to take any equity positions at all in customer companies, relying instead for income on a 9 percent fee on the capital raised.

    Other revenue will come from fees for services to the companies they help fund, such as marketing, web development, human resources and accounting.

    “We picture a whole distribution network, an eco-system if you will, where crowdfunding fuels the growth of new businesses, which then share knowledge,” said Mr. London. “The frequent-flyer miles are tools they can purchase from us to use along with equity stakes for their own crowdfunding campaigns.”

    He and his partners are lining up law firms, insurance companies, marketing groups and other services to aid startups. He hopes to add two to three highly qualified young companies or entrepreneurs a month to the network.

     ”At the end of the day, it’s all about company and job creation. President Obama’s jobs bill is what brought me out of retirement to lead this enterprise. That and the tremendous opportunity posed by crowdfunding,” said Mr. London.

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