Steven P. Weinstein is CEO of Seismic Capital, an early-stage growth investor committed to identifying, guiding, and nurturing companies seeking to meaningfully disrupt the space they work in. Mr. Weinstein brings value to the firm and over 30 years of experience in the capital, financing, private equity, venture capital, and real estate markets.
Russ Alan Prince: Tell me about Seismic Capital. Why did you start the company?
Steven Weinstein: About four years ago, my partner Eric White and I noticed we were being approached by many promising companies who were asking for our help in raising small amounts of capital. We decided we’d rather be their investor than the conduit to their investment money, and the idea for Seismic Capital was born.
Seismic Capital allowed us to solve two problems at once. First, we wanted to make venture investing available to everyone, since in the past, it’s been limited to large investors. With Seismic, we’ve made it possible for all investors—accredited, non-accredited, institutional, pension funds, and so forth—to participate. Second, we wanted to improve our companies’ chances of success. We’ve also been able to build an infrastructure that helps our companies thrive and hopefully turns them into the unicorns we want them to be.
Prince: What makes you different from other venture capital firms?
Weinstein: So many things! First off, we don’t like the model of throwing money at a company and saying, “We’ll see you at the IPO.” We know from experience and from a study we commissioned of over 40,000 startups that early-stage companies are most likely to fail because of (a) running out of money, and (b) getting mired in administrative details rather than developing products and services. Seismic fixes both of those. First, by providing long-term, patient capital, and secondly, by taking on the onerous admin responsibilities.
These two key components of our strategy—assured, patient capital and a supportive ecosystem—allow those companies to focus on the three most important activities that will determine their success: developing technology, building product, and acquiring customers. Our job at that point is to be supportive by consistently checking in to make sure their capital needs are being met and that they are fulfilling their goals.
Aside from how we work with our companies, we’re different from traditional VCs in many ways. First, management never puts itself ahead of the investors. Everyone owns the same class of shares. When investors win, management wins. Second, there are no fees—not for AUM, not for closing a transaction, not for monetizing a deal. Third, there are no capital calls. And fourth, our shares are capital gains tax protected at the federal level, and in most cases at the state level too after a holding period. You can sell your shares at any time—no lockup—but if you hold them for five years, the tax protection kicks in…in full.
Prince: How do you support the companies in your portfolio?
Weinstein: Most venture companies and venture investors focus on milestone funding. The company raises money to reach a milestone, and then when it does, it raises more, ostensibly at a better valuation. Even when this works perfectly, it means the company is always focused on money raising, not dedicating 100% of its energy to growing. When it doesn’t work perfectly, which is most of the time because that’s how life is, a milestone becomes outdated, or it gets missed because other opportunities present themselves. Suddenly the company is in a death spiral—and a good opportunity often goes to waste.
At Seismic, we commit two years of funding up front and re-visit the budget every six months. It’s our goal to be the permanent capital solution for our companies as they grow. We want them to get the job done right, not just fast.
As previously noted, we take on admin responsibilities. Beyond that, we have a stellar board of advisors who are experienced in just about every aspect of building and growing companies. We rely on our advisors as we look at companies, and as we grow Seismic itself. Our portfolio companies have access to the same advisors when they have a problem to solve, need a door opened, or just want to brainstorm.
Since Seismic is a holding company and not a fund, some people have compared us to Berkshire Hathaway. That’s very flattering…certainly, the structure is the same. We hope we can deliver the kinds of results for our investors over time that Warren Buffet has delivered for his.
Prince: What sectors are you interested in for 2023?
Weinstein: Seismic follows a diversified investment strategy and will continue on that path in 2023. Our first investments likely will be in online gaming and cellular network infrastructure, then business tools, women’s health, supply chain, and parts development and management. We believe we’re best when we invest in what would typically be called a “late seed round” or “early Series A.” We value a company with strong, ethical management, a product, and at least one customer.
We’re also highly focused on our fundraising in 2023. Currently, we’re raising a total of $99 million, of which about half looks as if it will come from our first institutional investor. Our SEC-qualified Reg A offering is available on our website (https://seismic.company/investoroffering/) for accredited and non-accredited investors, minimum of $1000 which is unprecedented for VC, and we have special incentives under a Reg D offering for larger, accredited investors, a minimum investment $50,000. As noted earlier, there are no fees and no capital calls. For those looking for more information on the Reg D offering, they can email me at spw@seismic.company.
RUSS ALAN PRINCE is the Executive Director of Private Wealth magazine (pw-mag.com) and Chief Content Officer for High-Net-Worth Genius (hnwgenius.com). He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals.
