Crowdfunding.Hawaii VC Summit.Day2

273
-1

Published on

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
273
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
13
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Crowdfunding.Hawaii VC Summit.Day2

  1. 1. Delineating Securities-Based Crowdfunding Part 1 The Market: Global Data, Insight & Trends Part 2 The Impact: For Businesses, Investors & Communities Jonathan Sandlund Jonathan Sandlund | @jsandlund | As of 11/2/2013 @jsandlund !1
  2. 2. about me thecrowdcafe.com 
 leading provider of research, data and analysis on the global crowdinvesting industry localinvestors.org 
 live, think, invest local Jonathan Sandlund
 j@thecrowdcafe.com
 @jsandlund !2
  3. 3. Thank you! TheCrowdCafe.com Sponsors Leading law firm serving the crowdfunding industry !3
  4. 4. rewards vs. investment Reward-Based ‣ Receive no financial return ‣ Rewards / Perks ‣ Legal today Investment-Based ‣ Securities offered in return for crowds’ investment ‣ Equity ‣ Debt ‣ Revenue share / Royalty ‣ Blended ‣ The JOBS Act ‣ Title II vs Title III !4
  5. 5. Investment Crowdfunding The Mechanism Jonathan Sandlund | @jsandlund !5
  6. 6. the mechanism Rewards-Based CUSTOMERS FAMILY AFFINITIES FRIENDS $ $ X = Funded $ $ $ !6
  7. 7. the mechanism INVESTORS CUSTOMERS AFFINITIES FAMILY FRIENDS $ $ X = Funded $ $ $ !7
  8. 8. the mechanism INVESTORS CUSTOMERS AFFINITIES FAMILY FRIENDS X $ $ $ $ = Funded $ !8
  9. 9. the mechanism INVESTORS CUSTOMERS AFFINITIES FAMILY FRIENDS $ $ X $ $ = Funded $ !9
  10. 10. the mechanism INVESTORS CUSTOMERS AFFINITIES FAMILY FRIENDS X $ $ $ $ $ = Funded !10
  11. 11. the mechanism INVESTORS CUSTOMERS AFFINITIES FAMILY FRIENDS $ $ X $ $ = Funded $ !11
  12. 12. the mechanism INVESTORS CUSTOMERS AFFINITIES FAMILY FRIENDS X $ $ $ $ $ = Not Funded !12
  13. 13. So… why is investment-based crowdfunding such a big deal? !13
  14. 14. SmallKnot !14
  15. 15. rewards vs. equity Median Fundraise ~$5,000 ~$160,000 ~$775,000 !15
  16. 16. The Legalities of Investment Crowdfunding Title II & Title III of the JOBS Act Jonathan Sandlund | @jsandlund !16
  17. 17. The JOBS Act Title II Title III ‣ Lifts ban on general solicitation and advertising on security offerings to accredited investors ‣ Businesses Raise up to $1mm in 12-month period ‣ Amended Form D (Proposed changes only—currently NOT in effect) ‣ Rule-making includes SEC and FINRA ‣ Legal today. Effectuated September 24th, 2013 ‣ Not legal today. Proposed rules released. Commenting period open through January 2014 Crowdfunding for Accredited Investors ‣ Investors tiered limits on investment amount Crowdfunding for Everyone !17
  18. 18. Title II In Action Demo Days !18
  19. 19. Title II In Action Startup Investing “You can pick your own winners, and invest as little as $1000— or invest $5000 in a fund with all 25.” !19
  20. 20. Title II In Action Real Estate Investing !20
  21. 21. Title II In Action Global Deal Flow “As a result of the new SEC regulations, effective today, all of OurCrowd’s deals will be posted publicly for US investors on OurCrowd’s website as well as on social networks, email, and through online and offline advertising and public meetings.” !21
  22. 22. Title II Impact ‣ Geographically indiscriminate ‣ Creates frictionless access to deal flow for investors ‣ Creates frictionless access to investors for businesses ‣ Will motivate accredited capital off the sidelines and into the private markets Jonathan Sandlund | @jsandlund !22
  23. 23. What about Title III? !23
  24. 24. Title III Impact (Retail Crowdfunding) ‣ Businesses • Conversion of Social to Financial Capital • New Era of Marketing • Re-writing the capital formation formula ‣ Investors • Financial Empowerment • Trust • Meaningful Investment ‣ Society • Equal Opportunity !24
  25. 25. ! The U.S. Market Jonathan Sandlund | @jsandlund !25
  26. 26. Platforms market segmentation Investment Crowdfunding Platforms Startups SMBs Niche/Affinity !26
  27. 27. Platforms market segmentation Startups ! 1. Angellist48! 2. Gust20! 3. Seedups28! 4. MicroVentures21! 5. Seedinvest13! 6. FundersClub10! 7. RockThePost7! 8. WeFunder12! 9. Fundroom! 10. FundersClub! * Accredited Platforms SMBs 1. SoMoLend13! 2. Bolstr5! 3. Fundable7! 4. Localstake14! 5. Dealstruck10! 6. LendingClub6! 7. P2BInvestor11! 8. Raiseworks9! 9. Relayfund1! 10. Prosper2! Niche 1. HealthFundr29! 2. VentureHealth16! 3. Poliwogg13! 4. HealthiosXchange15! 5. ExplorationFunder11! 6. Agfunder17! 7. Fquare8! 8. RealtyShares12! 9. RealtyMogul9! 10.RealCrowd9! 11.Groundbreaker12! 12.Crowdmason15! 13.Collaperty8! 14.CircleUp10! 15.ReturnOnChange13! 16.WeSparkt6! 17.Slated7! 18.Pave5! 19.Upstart7! 20.Alumnifunder11! Generalist 1. EarlyShares10! 2. EquityNet10! 3. ExemptCapitalNetwork2! 4. FlashFunders2! 5. Ibankersdirect13! 6. ConfidentCrowd4! 7. 99funding6! 8. IRAvest7! 9. Crowdfunder8! 10.FundAmerica93! 11.Axial Markets! !27
  28. 28. Platforms market structures The Curation Spectrum Very High Curation High Moderate 5% 25% 50% No Curation 100% acceptance rate <5% 100%
  29. 29. Platforms business models 20% Carry 10% Success Fee + 10% Carry $19 - $69 / month * selected samples
  30. 30. The U.S. Market To think about… ‣ Investors Productization ‣ Investors Secondary markets ‣ Investors Portfolio management ‣ Investors Data ‣ Businesses Ecosystem: one-stop shop for fundraising ‣ Businesses Optimization of the Cap Table (pre-funding) ‣ Businesses Optimization of Execution (post-funding)
  31. 31. ! Global Markets What’s the data say? Jonathan Sandlund | @jsandlund !31
  32. 32. !32
  33. 33. Macro-Data: Selected Sample Equity 180 Deals $132 Million 
 Equity 11 Deals $954k
 * Selected sample of platforms; as of 12/4/13 Debt 3,142 Deals $294 Million 
 Equity 83 Deals ~$26 Million 
 Equity 32 Deals $3.3 Million
 Equity 23 Deals ~$25 Million
 !33
  34. 34. $300+ Million in Crowdfunded Security Transactions... 300+ Equity Placements 2,900+ Loans !34
  35. 35. Debt 2,702 Deals $240 Million 
 ‣ A+ to C Risk Bands Applied ‣ Offer 1, 3, 5 year loans ‣ £5,000 - £1,000,000 ‣ Secondary market ‣ Crowdfunded two $80,000 small business loans in under 29 minutes !35
  36. 36. Discovery !36
  37. 37. Splash Bathroom Accessories Co. Profile !37
  38. 38. Credit Score History !38
  39. 39. Key Financials !39
  40. 40. Questions & Answers !40
  41. 41. Monthly Loan Originations Since Inception! $14,000,000! $12,000,000! $10,000,000! $8,000,000! $6,000,000! $4,000,000! $2,000,000! $0! August 2010 June 2013 !41
  42. 42. Equity 73 Deals ~$22 Million 
 ‣ Launched 2010 ‣ Sector Focus General (concentration: internet, food & drink) ‣ Lowest Raise $19,000 Highest Raise $2.3 million ‣ Averages (medians; n= 65) ‣ Raise $160,000 ‣ Equity Offered 16% ‣ Post-Money Valuation $960,000 ‣ Number of Investors 59 ‣ Investment Size $2,963 (low: $331; high: $80k) Jonathan Sandlund | @jsandlund !42
  43. 43. Deals per Month. Since Inception n = 65 !43
  44. 44. Equity 29 Deals $2.7 Million 
 ‣ Launched July 2012 ‣ Sector Focus Internet ‣ Lowest Raise $15,200 Highest Raise $320,000 ‣ Averages (medians, n=29) ‣ Raise $64,000 ‣ Equity Offered 10% ‣ Post-Money Valuation $516,000 ‣ Number of Investors 79 ‣ Investment Size $1,013 Jonathan Sandlund | @jsandlund Minimum Investment $16 !44
  45. 45. Equity 23 Deals $25 Million
 ‣ Launched Mid-2012 ‣ Sector Focus Consumer Products/Retail ‣ Lowest Raise $440,000 Highest Raise $2.4 Million ‣ Averages (medians, n=19) ‣ Raise $784,500 ‣ Number of Investors 15 ‣ Investment Size $74,263 Jonathan Sandlund | @jsandlund !45
  46. 46. Equity 23 Deals $25 Million
 ‣ Domain Expertise Founding team has deep experience investing in consumer product and retail industries ‣ Curated Deal-Flow To date, less than 2% of applications have been approved ‣ Ecosystem Strategic partnerships with General Mills and Procter & Gamble ! Jonathan Sandlund | @jsandlund !46
  47. 47. Equity 31 Deals $7.2 Million
 ‣ Launched Mid-2012 ‣ Sector Focus Technology Startups ‣ Investors 6,700+ accredited investors; now invite-only ‣ Averages (median, n = 23) ‣ Raise $236,000 ‣ Number of Investors 32 ‣ Investment Size $6,839 Jonathan Sandlund | @jsandlund !47
  48. 48. Summary of the Global Markets ‣ Data • Zero Fraud — to date • Young Market; Traditional S-Curve; Yet to see step-function growth 
 ‣ Crowdfunding Platforms • Tremendously Diverse • Debt, Equity, Royalty-Based, Blended • Serving Startups, Small Businesses, Emerging Growth Co’s, Projects, Individuals !48
  49. 49. ! Part 2. The Impact For Businesses, Investors & Communities Jonathan Sandlund | @jsandlund | As of 9/16/2013 !49
  50. 50. For Businesses ‣ New Source of Capital • Indiscriminate Geographically, Socioeconomically • Optimization of the Cap Table
 ‣ Uprooting the Risk Equation • Pre-Validate ideas and concepts 
 ‣ New Era of Marketing • Conversion of Social to Financial Capital • Meaningful customer acquisition and engagement !50
  51. 51. For Businesses Startups ‣ Breaking geographic barriers ‣ Fail faster; fail cheaper Small Businesses ‣ Conversion of social to financial capital ‣ New era of marketing Emerging Growth Co’s ‣ Not “sexy” enough for VC, not big enough for PE? ‣ Creates access to growth capital !51
  52. 52. For Investors ‣ Efficient Access to New Asset Classes • Historically difficult to access; across all industries • Attractive financial upside ‣ Spanning the Risk Spectrum • Equity, debt, revenue-share • High-risk, low-risk ‣ Meaningful… • Aligning our values with our investments !52
  53. 53. For Investors ‣ Reclaiming control over our local capital markets 
 ‣ Empowering citizens to imagine—and invest in—the communities they want to see !53
  54. 54. Case Study
 Rebell Conditioning ‣ Raised $12,000 ‣ Revenue Share ‣ Min Investment $1k; Max $6k ‣ 48 Hours Time to raise !54
  55. 55. Case Study
 Cardinal Spirits ‣ Raised $850,000 ‣ Investors 24 ‣ Average Investment ~$35,000 ‣ Min Investment $2,500 Max Investment $100,000 ‣ 97% of capital from local investors ‣ Crowdfunding + Bank Financing !55
  56. 56. Case Study
 1351 H Street NE ‣ Raised $325,000 ‣ Investors 175 ‣ Average Investment ~$1,800 ‣ Min Investment $100 ‣ 100% of capital from local investors !56
  57. 57. Zanesville, OH
  58. 58. Where to begin…? Awareness & Education ✓ What is security crowdfunding? ✓ Who are the platforms? ✓ Building strategic relationships ✓ Education. Education. Education. Work with, not against, existing capital infrastructure ✓ CDFIs ✓ SBDCs ✓ Community Banks ✓ Venture funds ✓ Angel groups ✓ Universities
  59. 59. The Disruption — Not If, But When Jonathan Sandlund | @jsandlund !59
  60. 60. Investment Crowdfunding Two mega-trends colliding Technical Disruption Entrance of the internet into private capital formation process. Crowd funding Cultural Disruption A desire to connect more meaningfully with the things we buy, the things we do, and the things we invest in. !60
  61. 61. Internet-driven Disruption Before Technical After Music Travel Retailing !61
  62. 62. Nearly all service industries re-imagined by the internet... Source: Quora Technical But not fundraising... yet !62
  63. 63. A fundamentally more efficient capital formation process Technical A Big UK Bank Source: http://www-core.nesta.org.uk/library/images/NestaBanks.jpg !63
  64. 64. A fundamentally more efficient capital formation process Technical !64
  65. 65. Technical Disruption Summed up... ✓ ✓ The first major change in security law in 70+ years; Invites the internet into the capital formation process. Technical What it means... ✓ Processes moved online ✓ Efficiencies realized ✓ Incumbents with traditional cost structures obseleted ✓ New markets served
  66. 66. Cultural But it’s not just structural change driving the disruption. It’s also cultural. !66
  67. 67. A cultural shift Cultural ‣ Web 1.0 The Information Web
 
 ‣ Web 2.0 The Connected Web
 
 ‣ Web 3.0 The Meaningful Web !67
  68. 68. Chicago Booth: 13% of Americans trust the stock market Cultural Chicago Booth Financial Trust Index Distrust is pervasive !68
  69. 69. Cultural Today little alternative to public markets Tomorrow 
 individuals empowered to invest in the the companies, people and causes they believe in !69
  70. 70. Where are we? Market Adoption: S-Curve Penetration Time !70
  71. 71. Thank You! Jonathan Sandlund @jsandlund Jonathan Sandlund j@thecrowdcafe.com !71
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×