The Power of Equity Crowdfunding with Cary Breese of NowRx

For decades, startup capital was almost exclusively raised through venture capital firms, relying on a handful of institutions and high-net-worth individuals to drive innovation and bring disruptive new businesses to the market. In 2012, the passing of the JOBS Act enabled millions of retail investors to finally access startup investment opportunities, giving them a shot at significant returns and giving founders an entirely new way to fund and grow their big ideas.

In this episode of The Money Movement, Jeremy** is joined by Cary Breese, CEO & Co-Founder at NowRx along with SeedInvest* Co-founder and CEO Ryan Feit.


*Important Disclaimers


  1. This presentation should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or to adopt any investment strategy. Past performance is no guarantee of future results, and there can be no assurance that an investment strategy will be successful or that the historical performance of an investment, portfolio or asset class will have a direct correlation with its future performance.
  2. SeedInvest's due diligence process is no guarantee of success or future results. All investors should carefully review each investment opportunity and cancel their subscription within the allotted time-frame if they do not feel comfortable making any specific investment based on their own DD. Learn more about due diligence on the SeedInvest Blog and our vetting process in our FAQs.
  3. Past performance is no guarantee of future results. In addition, SeedInvest's due diligence process is no guarantee of success or future results. All investors should carefully review each investment opportunity and cancel their subscription within the allotted time-frame if they do not feel comfortable making any specific investment based on their own DD. Learn more about due diligence on the SeedInvest Blog and our vetting process in our FAQs.
  4. All securities-related activity is conducted by SI Securities, LLC dba SeedInvest, an affiliate of Circle Internet Financial, and a registered broker-dealer, and member FINRA/SIPC.
  5. NowRx is offering securities through the use of an Offering Statement that has been qualified by the Securities and Exchange Commission under Tier II of Regulation A. A copy of the Final Offering Circular that forms a part of the Offering Statement may be obtained from: NowRx:


** Jeremy is an early-stage investor in NowRx

Jeremy: Hello, and welcome to the Money Movement. We are excited today to have Cary Breese join us from NowRx. I've had the pleasure of watching NowRx over the past several years grow, as a phenomenal growth story and really a partner and client that we've worked with for years. Also, joined here with Ryan Feit, co-host here on the Money Movement, focusing on issues in startups, startup growth, and the possibilities of using the internet to transform how finance works.

Clearly, Cary maybe you could just kick things off. I think you've got an amazing story for how you've built your business on the internet yourself. Your product is delivered partly on the internet, partly obviously in the, "IRL," in the real world, but have really leveraged the internet as a financial platform as well. Maybe just to kick things off it will be great to just hear high level on the story of the company, and how you've gotten to where you are today.

Cary: Yes, great. Thanks for having me here, Jeremy, and good to see you again, Ryan. We knew we wanted to transform the healthcare industry, and we started looking at pharmacy, and exactly what you said Jeremy really struck us, right from the very beginning that internet is powering more and more consumer services, and if you can find the right blend of offline and online functions and capabilities, you can really create a fantastic new customer experience, and that's really what we try to do at NowRx.

We're a digital-first company, but we do have some hard assets and delivery capabilities, and fulfillment centers, and that's really the way we see the modern consumer experience trending. You're right the way we raised money for our startup companies, is a bit new as well and perhaps a bit innovative and something that we've partnered with Ryan with way back in the very beginning under the Jobs Act and Regulation A Equity Crowdfunding.

Our first round was I think back in 2017, if memory serves and we never looked back, it's a brave new world. A lot of new opportunities exist now for people to get involved in investing and cryptocurrency in early-stage startups. It's certainly an interesting convergence.

Ryan: I'm curious, Cary, so I know this isn't your first successful startup, and I think it would be helpful for the audience to hear about your entrepreneurial journey, maybe leading up to NowRx, and I guess more specifically what it would is like for your prior startup raising capital traditionally.

Cary: Yes, I'm a multi-time entrepreneur, started out with electrical engineering degree. I got interested in finance, I ended up working for an insurance company, and my first startup was in the insurance space doing a lot of automation and back then the internet was just starting out. We were doing things like XML, and thought we were really advanced. This is early 2000s, but just automating legacy industries is something that I've always been interested in, and started out doing that in the insurance industry, automating underwriting and quoting processes and claims processing.

I sold that company after about seven years, and made a little bit of money, not enough to retire on, but it was enough to try some more startup ventures, and we went into more of a technology space, a database company called GeneDB, where we were trying to automate how you launch applications in multi-cloud environments, is when cloud computing was first coming into its own. For that company, we really struggled to raise venture capital, frankly, to answer your point, Ryan.

I think historically for entrepreneurs trying to start companies and get funding, there's really only been one path for most of time, and that's going to professional venture capitalists. I always thought that was somewhat limiting. It is been the norm and most entrepreneurs have plenty of stories about working with VCs and venture capitalists serve a huge need for our society. They've certainly launched a lot of great companies, but it's just one method, and it's always been a certain way and there's some idiosyncrasies with it.

It's not always necessarily entrepreneur-friendly. It can be somewhat onerous, in fact, you can have investor-friendly provisions around dilution and ratchet provisions, and valuations can sometimes be a little bit lopsided because an entrepreneur maybe not knowing better is going up against these big venture capitalists that have all the money, have all the power, and so it's a little bit of an asymmetric contest there.

The company GeneDB, we never really got off the ground, because we just couldn't get it funded. We had a bunch of customers that were raving about the product, but to scale the business we needed capital, and we just couldn't get out of the gate with that one. I learned a lot from that experience, and when we decided to start NowRx, we were certainly open-minded to other forms of capital raising, and that's when I met Ryan and the rest is history.

Ryan: Got it.

Jeremy: It's been pretty interesting. I think you're one of the very few companies that has taken your entire life cycle through direct internet capital raising on the internet. Maybe just for the audience's benefit. Maybe just talk about the number of raises you've done, how much capital you've done sequentially over time, and then how that ties to the growth of the business.

Cary: Yes, we raised some seed funding initially to really get the proof of concept up and running. It was about $3 million, and a lot of that was family and friends traditional go ask everyone you know for $25,000, and we did that for a couple of years, but about $1 million of that was so-called crowdfunded with regulation CF which we did with SeedInvest, and Ryan under circle before circles time, and then we had really good success with that.

One thing we learned about the NowRx story is as a delivery pharmacy and creating this world-class customer experience, we noticed that regular customers and just retail type of investors, the concept really resonated with them. We took a leap of faith and went out to raise a series A, and this was after talking to quite a few venture capitalists again and getting some term sheets. We weren't really comfortable with valuations, not really.

We thought that fair and getting some again investor-friendly terms that weren't necessarily in our best advantage, and giving up control of the business. We put together a series A that was a $7 million raise in a equity crowdfunding environment on the SeedInvest platform. We closed that round in four months, and it was spectacular. It was great interacting with retail type of investors, CMS has a great forum where you can comment and interact with investors and answer questions about the company.

We were so successful with that series A of $7 million that we went out and decided to do a series B, and that raise was $20 million. We were oversubscribed, we ended up raising $21.5 million in equity crowdfunding, and that was a record. That was a record for SeedInvests and certainly for us and we were just so--

Jeremy: The whole industry.

Cary: The whole industry as well, right. It really told me that the world has changed. You look what's happening with Robin Hood, and all these other opportunities for retail investors. Cryptocurrency, I think is brought in a lot of retail investors as well into currency trading, and you just see the trends going that way. With that behind our backs, we are now engaged in a series C, and we're targeting a $50 million raise in equity crowdfunding. We're already at $16 million-plus, so I think we'll break the last record, Ryan.

Ryan: I would be shocked if you don't, I'm looking forward to seeing what we end up at, but--

Jeremy: It's amazing, the theme of democratization of the financial system, democratization to how access to capital, democratization and opening up for individuals to participate in capital and that animates, I think circle and SeedInvest and the like. In your view, obviously, you're growing the business. At the end of the day, people are investing, because you're having success in growing the business, but you've built this relationship with investors and your customers, and the like that's really, really different.

I'm trying to think out loud, like how many businesses are there that from day one basically built the business with their investors? Where you're talking about the broader customer base as well, even being stakeholders in a way people talk about stakeholder capitalism, that can mean a lot of different things to a lot of different people, but the idea that your customers and your shareholders and the ecosystem you're in can all be connected and grow value together is a really powerful concept.

Not just pension funds that put money into venture capital firms, or what have you and there's a directness to that. I'd be interested in stories you might be able to share about the relationships that you have with customers/investors, and how has that informed how you think about building the business? Do you think it's competitive advantage for you at some level?

Cary: Yes, I agree with all your comments there. I'll maybe just add on to that, and then answer your question more directly. I look at it this way. We're trying to build a national brand for NowRX. We want to be a national company, we're expanding throughout the country now. Started out at one location in Northern California. We now have eight locations throughout Northern and Southern California and Arizona. We've just signed leases for new locations in Colorado, in Nevada, in Washington, and Texas. We're on a great path, but it's still a bit of work, and can be daunting at times to really build that brand recognition.

When you're a startup, you're going up against incumbents that have more brand recognition and more brand power, and probably more financial resources. As an entrepreneur, I always try to think about, what are the best ways to build that brand in the most efficient way? For me, crowdfunding, one of the biggest benefits is that every investor that comes into our round through equity crowdfunding becomes a brand ambassador. That's just a given. That's the way it works. We have plenty of anecdotes of investors that have spread the word for NowRX introduced us to maybe their doctor, maybe their friends and family.

Maybe they live in another town where we don't yet have a service area, but they're asking for us to start a location there. We have this-- One of our features on our website is, tell us where you want to launch another NowRX location. We're preceding territories where we don't even exist yet, by having this broad base of now 10,000+ brand ambassadors that are investors. This last week, Jeremy, I had an investor/customer introduce me to a group of physicians that was really interested in better medication management, preventative medicine and we've had that conversation.

I think we're going to partner with us. What a great, powerful force that is, as you're growing a company. For me, if you look at the long-term play, it always made a lot of sense. I talked to Ryan about this, in the early days, I think the SEC was really smart to create this new category of company, where you can access capital from retail investors, which ordinarily was only open to public companies with publicly [unintelligible 00:12:42] stock. You look at big public companies, they have a lot of what we're talking about.

They have customers that are investors, but that's not usually available to a startup company. This emerging growth company concept, under Regulation A, I think, is really a powerful hybrid between the private company world and the public company world. Puts NowRX on a glide path to become a public company, because we've already built support from retail investors. That's who we'll be dealing with when we go to an IPO one day.

Jeremy: Yes, I had a couple of related questions. One was part of the now that you're doing Reg A deals like this and a lot bigger, et cetera, the registrations, the financial disclosures, the other things, there's more there. I know, for most closely held private companies and most venture-backed startups, you don't have to tell anyone what your revenue is. You don't have to tell them what's in your P&L? How are your expense is trending? That's one of the reasons why I think a lot of founders have been reticent, like, "I don't want to have to go out there with that," but at the same time, it's good discipline.

It's good discipline to say, "Here's my business, here's the details. I'm willing to tell the world what this is." Like you said, it gets you ready to be a public company, but how has it been as a private company CEO being out there and being more transparent about the business than most private companies CEOs have to do?

Cary: It's definitely more work, but you're right. 100% I agree with what you said. It's really good discipline. Frankly, I see it even a little bit more than that. I think that the private company environment with private investors, where they don't have to disclose things and frankly, they can make projections that are as outlandish as they want. Frankly, in my view, this is my personal opinion, I think that creates even more and more dysfunction.

There's almost an incentive in the private investing world for entrepreneurs to make extreme and outlandish claims about their product or their future. We all read the news and companies like Theranos and Biome, these are signs to me of the dysfunction that's in the private investment market. The VCs, unfortunately, almost create an incentive for entrepreneurs to lose discipline and to become just completely outrageous with their projections. I've never had a problem with that. My style has always been more direct and transparent as a business person.

It's more work, but it is good discipline, I am building a company towards an IPO. What better way to get ready than start getting ready now? Start getting audited financials now. Start building those financial controls. It's way better for society at large. It's way better for investors. There's much more transparency there.

SeedInvest plays a great role for investors in being that vetting organization to even add more discipline. I welcomed all of it. I agree with you, maybe not all entrepreneurs would be as comfortable with that, but they should be. My message to them is, "Embrace it, do the extra work and the reward will be there."

Ryan: Yes. One of the other benefits to companies like yours and others will probably find when they do go public is one of the challenges that people often hear from New York Stock Exchange or NASDAQ is that they just don't have enough shareholders. Especially if they're trying to do a direct public offering, where one of the requirements is you have a certain shareholder base. If you actually have gone through crowdfunding and Regulation A+, Cary you'll have 20,000+ investors at the end of this easily. That's pretty unique and pretty powerful. It gives you more optionality.

Cary: It is. I think from a, if you're an underwriter, I would imagine that gives you some confidence that this company has already demonstrated itself and built up support from retail investors, and that number, like you said, in the tens of thousands. That's a boost of confidence when going out in the public market for sure.

Jeremy: I'm curious, we a few months ago made an investment in Crowdcube, who I'm pretty sure you know, who's a leading online fundraising platform over in the UK and expanding into Europe rapidly this year. One of the things that we're excited about is being able to enable companies in the US and also companies in the UK and Europe be able to raise capital globally, that down the line we think that fundraising for startups, and frankly, probably, all alternatives shouldn't just be regional, and it should be more global in nature.

I'd love your thoughts on obviously, you're expanding into Texas, you're not expanding into Europe quite yet, but hopefully, in the future, how you think about that idea of being able to tap another million-plus potential investors across the ponds?

Cary: Yes, I think it's a great idea. I agree with you. I think this is a global opportunity, certainly, for NowRX and absolutely for investing as well. We had some experience with Crowdcube that was very positive. Had a good interaction with sophisticated retail investors in the UK. I get asked all the time, and you know as well, Ryan, that, there's a steady flow of wannabe investors in this space, and then just crowdfunding in general from a multitude of countries. The more we can globalize this, the better. I'm all for it.

Jeremy: I want to come back to another-- A theme that we touched on earlier, which is about some of the things that really differentiate how you operate and grow a startup when you're building it on crowdfunding and building it by building this internet investor base. It's really tied to in private companies, typically, with venture capital investors, you sometimes can get misaligned incentives. There's control provisions or governance mechanisms or other things that can be challenging for management.

I'm curious, has this changed how you manage your board of directors? Has it changed how you think about independent board members? Is this more tightly held? I guess related is, does this allow you to take a longer-term view versus maybe firms that feel like they got to do something for their LPs now? Does it allow you to-- how does it change how you govern the company in a sense?

Cary: Well, definitely on the long term versus short term strategy, there's no question in my mind that raising capital through crowdfunding has given us more control over our own destiny. Our board has remained relatively small compared to other companies that are taking on one or two venture capitalist partners every round. That's quite a big board. With board members that as you point out, may not necessarily have their interest aligned with what you as an entrepreneur or founder might have for the company.

Certainly, in healthcare, Venture Capital in Silicon Valley has not had a really great track record, and part of that is, I believe of short-term focus. The average lifecycle of Venture Capital firm is seven years. By the time you're getting investment from them, they're probably two or three years into that fund already, and you're looking at a really short time frame. Their focus then becomes grow at all costs, and growing at all costs, has some costs.

We've tried really hard to build a company that has lasting power. We want to build this national brand, and a national company in a $450 billion industry. That takes some time, and that's okay with us. We love what we do. We run to work every day. We want to build a company and focus on things like the best customer experience and things that we want to focus on. Sure, we want to grow, but we don't want to grow at all costs.

We don't want to grow at the cost of reducing the customer experience below what we think is acceptable, or grow beyond what our systems and platforms can handle at that time. We want to scale methodically, and carefully, and deliberately, and we're growing really fast. We grew from $7 million, to $14 million, to $22 million, and we'll be north of $35 million this year. We're growing fast.

Jeremy: That's awesome.

Cary: We don't feel outside pressure or other people that we have to satisfy with our growth. We're happy with our own growth, where it is, and we're focusing on the things that we want to focus on. I think board governance actually becomes more manageable under crowdfunding, and certainly, you can keep a longer term focus if that's what you want.

Jeremy: It makes a lot of sense.

Ryan: Cary, I'm curious, you talked about the fact that at some point, your goal is to go public. I know you hired a CFO who's taken a couple companies public in the past. How are you thinking about when the right time is for that? What do you think the company needs to accomplish prior to doing that? A second part of that question would be, to the extent our space in terms of online fundraising, is able to provide options for secondary markets a lot earlier in a company's lifecycle. Is that something that you think would be interesting if you were doing it over again? Two-part question.

Cary: When you write for an IPO, we could talk about that all day long, probably, but I think in just a few bullet items, one of the things we want to make sure we have in place is the right level of financial controls. I brought in the CFO, as you pointed out, Mark Marlow, phenomenal CFO, he's taken several medical technology companies public, so he knows this space. He's been really almost a founder in the companies that he's taken public from kitchen table, all the way to IPO.

Really thankful he's joined the company. Mark's working on bringing in Deloitte and Touche as an auditor, so we're up in our financial audit. We've been an audited company, but now we're bringing in big four. We're migrating off of QuickBooks onto a Microsoft Dynamics accounting system. There's a number of things. We also brought in a controller, so there's a number of things on the financial side to get ready for that financial reporting burden that comes with being a public company.

This takes a year or so to develop fully. That's in motion. As far as the business operations side, there's a lot of kitchen table talk sometimes about, or bar room talk about, "Do you need $100 million in revenue or $200 million? Is $50 million, enough? What's the right float size?" I'm not sure. I think as you pointed out earlier with 20,000 plus investors already under our belt, I think we might have different parameters that we need to hit.

Personally, I'd like to see the business grow a little bit more, and have more of a national presence. I think that'll be a better story, and we'll get a little more support from public markets. Then the other wildcard is what are public markets doing? I don't think I would go out today if that was an option, but it's hard to predict what the market's going to do in the future, so the environment has to be right as well.

Ryan: Second part was, today as a private company there is really no actual secondary market for companies to allow their shares to trade. There's some platforms like Forge and Equity Zen and others, that Nasdaq Private Markets where you can do tender offers and people can sell their shares one-off through more of a brokered process, but there is no liquid secondary marketplace for private securities. You see a lot of stuff in the crypto markets that operate pretty effectively, but not really with traditional private securities.

If you were doing it again, and let's say, in five years, there is a liquid secondary market, and you have 20,000 shareholders, do you think that's something that you would entertain in terms of doing it, allowing secondary market liquidity prior to an IPO, a few years ago, let's say?

Cary: You've mentioned that in the past as something that might be an interesting concept. I think, it certainly has some merit. It'd be interesting to see. I haven't been following that part of the market. Like you mentioned, there are some platforms already that dabble in pre-IPO stock, and privately held type of stock. I imagine that would be successful if the right company could pull that together. I would think you would be in a really great position to do that.

Who knows, our IPO may be several years off, we may decide to keep building the company. If we get good access to capital, that's certainly a possibility. You notice I didn't give you a deadline of when we think we're going IPO. Secondary might be an interesting option for some of the existing shareholders to get a chance to get some return on their money.

Jeremy: Just coming back to just this overall model, as you look back on how you executed this in the past, and you're obviously, in the middle of a capital raise right now, but looking back, are there things that you would have done differently? If you're giving advice to a startup founder, who's considering this for the first time, what are the major things that you think make this work well, or things that were challenging? Just some advice for founders out there that are inspired by what you've been able to do, and considering it themselves.

Cary: I get a few calls because our record round that we raised last time, does prompt a few calls from people trying to look for some advice. My advice is usually fairly simple. It's two or three things to try to focus on if you're an entrepreneur, and you're thinking about crowdfunding. Number one, pick a good platform, like SeedInvest. Not all the platforms are the same. I think they have a really great approach to the business and the transparency that they bring to the process, I think is really part of it.

I think for the entrepreneur, embrace that same transparency about your company. Also, boil your message down, so it can be digested by someone who's not a professional investor looking at 20 pitches every day. It's a different story and messaging that is required, when you're going out to a retail investor in a crowdfunding environment. Try to keep that in mind when you're creating your messaging and the storyline around the company. I recommend entrepreneurs try to get traction as early as possible.

Traction in the marketplace with a product or service is the currency of the realm. You got to have a track record, if you can, at all, get that. Run out to as many customers as you can, even if it's just feedback on the survey, or what if, or a freemium model. Whatever it is, start building traction and feedback. You can then talk about that, and investors really respond to that. Then the last one is, don't be afraid to really promote your round. I think a lot of entrepreneurs hear about crowdfunding without knowing much about it, and think it's a build it and they will come.

Companies like Circle and SeedInvest certainly have a large community of investors that are looking at your profile when you first set it up. You also should be willing to go out there and promote your round to your own customers, even through your own marketing effort, and really put some effort into the promotion of it, because you're trying to get to a wide audience and all of that investment in that marketing promotion is going to come back to you in what we talked about earlier.

Every investor you can go grab is another brand ambassador. It's worth the time and effort to go build up a really big base of people that are following your company and investing and talking about your company. It's a virtuous cycle, and it's a worthwhile effort.

Jeremy: Makes a ton of sense. Very cool. Well, Cary, this is just a exciting time in the history of internet capital formation, and you're trying to set a new record in that, or I think on track for that. It's been so exciting to watch and I'm sure there's going to be another chapter of this as you experiment with whether it be secondary markets, or what it is to transition from private to public over time. there's so much to learn and share here. Just really appreciate all of your support as a customer as well for working with Seed Invest and Circle.

Cary: Well, thanks, Jeremy. I've really enjoyed the journey with Circle and Seed Invest. Ryan, I can't thank you enough. It's been a fun ride and we've got a few more rides to go in the future, I'm sure.

Ryan: Likewise. We actually just closed that gap. We had actually two of our portfolio companies that have gone public in the last few months. I think it was really rewarding for the CEOs of those companies to have these thousands of investors that have never been able to invest a single dollar in private companies before actually get a really good return. Never been done before.

The magnitude of hopefully, fingers crossed, what will happen with NowRX setting these records for online fundraising, and to hopefully have 20,000 plus people that actually have a really good outcome will be, I think, really rewarding and exciting. Thanks for everything, Cary. It was great talking [crosstalk].

Jeremy: I have one last comment, which is a fun story. Which is, before Circle and SeedInvest were in business together I learned about NowRX by looking at SeedInvest and made an investment. I'm a very happy early-stage investor in your business, and I think seeing what you've been able to do inspired me as well. I'm a grateful shareholder as well.

Ryan: That's great to hear, Jeremy. Thanks for the support. Let's see if we can make that investment worth a whole lot of money.

Jeremy: [laughs]. Sounds good.

Ryan: Thanks, Cary.

Jeremy: Thank you.

Cary: Thanks guys.


Jeremy Allaire
Co-Founder, CEO & Chairman at Circle
Ryan Feit
Co-founder, CEO, SeedInvest
Cary Breese
CEO & Co-Founder of NowRx

Get more insights in your inbox. Sign up today.