J. Peterman is pitching this IPO

July 18, 2017 11:43 AM
Spoiler Alert: We prefer the pitchman, to the pitch

Recently enacted Title IV of the Jumpstart Our Small Businesses (JOBS) Act, commonly referred to as Regulation A+, allows private companies to offer securities to the general public subject to certain eligibility, disclosure and reporting requirements. YayYo Inc. is running ads on the financial cable networks, so we take a look under the hood.

Beverly Hills-based YayYo aspires to introduce a  single sign-on metasearch app for your smartphone that provides price comparison and booking of eventually all available ride sharing and taxi services along with select limousine and public transportation services. YayYo plans to offer all the convenience you expect plus unique benefits and conveniences not available from Uber, Lyft or taxi services alone.

Currently, YayYo offers non-accredited investors the option to invest during the pre-IPO stage. 

Pre-IPO investing?

The earlier that you are able invest in a start-up, the more money you can make. That’s one of the golden rules (and grand risks) of venture capital. For the most part, today’s “pre-IPO companies” are like private businesses, they aren’t considered start-ups anymore. These companies can have thousands of employees, millions of dollars in revenue and private valuations in the billions of dollars. They just haven’t gone public yet. And while they’re less risky than a typical (pre-revenue) startup investment, the upside potential is still very high. Because these deals tend to offer lower-risk and relatively high returns, they’re extremely high in demand. Which is why, generally, the largest institutional investors can get in. Individual investors had been unable to access these opportunities until now. But under new Securities and Exchange Commission (SEC) Regulation A+ rules, it’s possible for non-institutional investors to have access to these opportunities.

That is a good thing. Simply, more investors should have more investment options, including private offerings. But, with less operating, earnings and price history to evaluate, the risks are distinctly higher.

YayYo, which was incorporated in 2016, is offering for sale securities under YayYo under the regulation A+ that allows non-accredited investors into the equity securities market that was previously unavailable without SEC qualified investor or (high-net worth) accreditation. 

YayYo has opportunistically gone straight to selling shares for an IPO. That’s with less than 1,000 Play Store (android) downloads, without an actual functioning app, but, with a slick television ad promoting the offering.

Without a tangible product in hand, how can you judge its functionality, differentiation, user benefits and experience? Well, you can’t. 

The ideas is that in one app, you can compare prices of multiple rideshare companies like Uber, Lyft and others. You can also see who will get to you the fastest. You can book directly on YayYo and save. Have Uber and Lyft agreed to collaborate? Our conversation with YayYo founder and CEO Ramy, El-Batwari (see “Go for a ride with YayYo founder El-Batwari,” left) suggests that those talks are at best, in early stages.

Moreover, El-Batrawi, the consummate dealmaker and passionate mastermind behind YayYo, does not have the best bio for window-dressing for a speculative offering circular. He was previously barred by the SEC from starting a public company for five years and has a colorful past including an association with arms dealer Adnan Khashoggi.

The numerous risks of investing in this pre-revenue company are well-documented in the offering circular. So, what is drawing investors to consider the YayYo IPO?

With a massive marketing budget, YayYo has already spent thousands of dollars on commercials on CNBC and Fox Business, and continues to do so. The TV ad pitchman for YayYo is John O’Hurley — more commonly known as J. Peterman from Seinfeld…

“Then, in the distance, I heard the bulls. I began running as fast as I could. Fortunately, I was wearing my Italian cap toe oxfords. Sophisticated, yet different; nothing to make a huge fuss about. Rich dark brown calfskin leather. Matching leather vent. Men’s whole and half sizes 7 through 13. Price: $135.”

-- J. Peterman on Seinfeld, 1995

O’Hurley, a friend of El-Batwari, brought his flowery prose to YayYo…

“The future is here, today, and the future is YayYo. Yes, YayYo. YayYo is developing a Kayak-style single sign-on metasearch app that compares the prices and allows you to book ride-sharing and taxi services…so we are excited to announce an initial public offering of YayYo stock…and your chance to invest in the new millennium of ride-sharing…under these new SEC rules it’s possible for the little guy, like you and me, to buy into an IPO previously unavailable.”

-- John O’Hurley for YayYo, 2017  

About the Author

Shruti Khetan

Jeff Joseph is the CEO of The Alpha Pages, the parent company of Modern Trader magazine.
E-mail him at jj@alphapages.com or find him on Twitter @alphapagesceo and @venturepopulist.