This keynote was presented at a workshop of PWA Professional Women Association in Milano. It is about reward based and equity based crowdfunding. Compared to other presentations of mine, this is shorter.

1. Avv. Alessandro M. Lerro
January M. LERRO
Alessandro29, 2014
Roma, November 15, 2013
LUISS – Scuola di Management – MBA ALUMNI
CROWD FUNDING
FINANCING START-UPs
EQUITY CROWDFUNDING

3. CROWD - SOCIAL
INNOVATION

4. FROM
DO IT YOURSELF
TO
DO IT WITH OTHERS

5. FROM SOCIAL LENDING

6. 2013 LENDING CLUB TURNOVER: $ 2 BILLION !!!
TO INVESTMENT LENDING

7. TO INVESTMENT
CROWD FUNDING

8. Joseph Pulitzer
©2013 A.M. Lerro

9. ©2013 A.M. Lerro
REWARD
LENDING
EQUITY
DONATION
SOURCE:
©2013 A.M. Lerro

10. 1000
©2013 A.M. Lerro
FINANZIAMENTI
1200
800
600
400
200
0
REWARD
LENDING
EQUITY
DONATION
SOURCE:
©2013 A.M. Lerro

11. By 2025 the volume of
INVESTMENT CROWDFUNDING
will be:
> $92 billions
= 1,6% of household savings
≈ 2 x total Venture Capital volume
©2013 A.M. Lerro

12. ©2013 A.M. Lerro

13. DOES IT WORK ?

14. Research: June 2012 –June 2013
SALES INCREASE
REWARD-BASED:
EQUITY-BASED:
+24%
+351%

15. Research: June 2012 –June 2013
JOBS CREATION
SUCCESFUL COMPANIES HIRING:
NEW JOBS:
2,2 PER PROJECT
87%

16. Research: June 2012 –June 2013
INVESTING LEADS GENERATION
Angel o VC INVESTMENTS
within 3 months:
Investments negotiations
28%
43%

17. ©2013 A.M. Lerro
REWARD - BASED
CROWDFUNDING
©2013 A.M. Lerro

18. ©2013 A.M. Lerro
400
350
300
250
200
150
100
50
0
REWARD-…
2010
2011
2012
SOURCE:
©2013 A.M. Lerro

19. PLEDGES
CATEGORY
$ 10,266,845
High Tech
OUYA: videogame consòle
$ 8,596,474
Games
Veronica Mars
$ 5,702,153
Movie
Torment: Tides of Numenera
$ 4,188,927
Games
Reaper Miniatures Bones
$ 3,429,235
Games
Double Fine Adventure
$ 3,336,371
Games
Form 1: 3D professional printer
$ 2,945,885
High Tech
Wasteland 2
$ 2,933,252
Games
Homestuck Adventure Game
$ 2,485,506
Games
Oculus Rift
$ 2,437,429
High Tech
3Doodler: 3D pen
$ 2,344,134
©2013 A.M. Lerro
PROJECT
High Tech
PEBBLE – watch for iPhone / Android
©2013 A.M. Lerro

20. ©2013 A.M. Lerro
PREORDER
DONATION
with PERKS
ROYALTY
BASED
REWARD
©2013 A.M. Lerro

21. Rotterdam Bridge
• Pedestrian Bridge, 350
m., 17.000 boards by Y2042
• Y2012: ca. 100.000€, 1300
boards
• Civic Crowdfunding
©2013 A.M. Lerro
DONATION
with PERKS
©2013 A.M. Lerro

22. • Y2005 – no platform
• LP: 300.000R =
27.000€
• 20.161 PLEDGES
• Preorder LP: 150R
• Purchase LP: 116R
©2013 A.M. Lerro
PRE-ORDER
Verity Price
©2013 A.M. Lerro

23. SELLABAND
• Y2006 
• Min. invest.
10$
• Target:
50,000$
• “Believers”
• 10% reward
©2013 A.M. Lerro
ROYALTY
BASED
©2013 A.M. Lerro

24. ©2013 A.M. Lerro
EQUITY - BASED
CROWDFUNDING

25. JOBS Act was the first law
in the world to regulate
equity crowdfunding (apr.
2012)
TIT. 2: accredited investors
Implemented
Tit. 3: retail investors
Waiting for SEC regulation
©2013 A.M. Lerro

26. LAW:
LAW n. 221, Dec. 17, 2012
“2.0 Growth Decree”
REGULATION:
CONSOB Reg. n. 18592
June 26, 2013
©2013 A.M. Lerro

27. LEGAL FRAMEWORK:
CONSOB has the supervision and is
entitled to impose penalties
Platforms ought to be registered with
CONSOB
Platfoms ought to meet reputation and
competence requirements
Investment is subject to MIFID and
operated through BROKER-DEALERS
©2013 A.M. Lerro

28. TARGET CO.:
ONLY
INNOVATIVE START UPs
ARE ALLOWED
TO RAISE EQUITY
FROM THE CROWD
(…for now)
©2013 A.M. Lerro

29. You can raise
€ 5.000.000,00
per company, per year
©2013 A.M. Lerro

30. CROWDFUNDING PLATFORMS:
ONLINE PLATFORMS,
WHOSE EXCLUSIVE PURPOSE
IS TO HELP
COMPANIES
TO RAISE EQUITY
FROM THE CROWD (art.1.5.9 TUF)
©2013 A.M. Lerro

31. SMALL INVESTMENTS
• Directly managed
• MIFID exempted
BIG INVESTMENTS
• Partner with a BROKER-DEALER
• Investment profile to match with
proclivity to risk investment
©2013 A.M. Lerro

32. SMALL INVESTMENTS:
INDIVIDUAL:
< 500€ per investment
< 1000€ per year
COMPANY:
< 5.000€ per investment
< 10.000€ per year
©2013 A.M. Lerro

33. BROKER-DEALERS:
BANKS and INVESTMENT Co.s
Take in charge the PAYMENT,
the execution of the investment
MANAGE A
CROWDFUNDING
PLATFORM
THEMSELEVES
PARTNER WITH A
CROWDFUNDING
PLATFORM
©2013 A.M. Lerro

34. MIFID PROCEDURE:
IDENTIFICATION OF
THE CLIENT
ANTI-LAUNDERING
RULES
INVESTMENT
PROFILE TO MATCH
WITH PROCLIVITY
TO RISK
INVESTMENTS
MIFID = European Union Directive, Markets in
Financial Instruments and investment services
©2013 A.M. Lerro

35. ADVISING:
Broker-Dealers may advise
and give suggestions, within
their general rules.
Platforms may not provide
recommendations suitable
to influence pledges.
PLATFORMS
BROKER-DEALERS


©2013 A.M. Lerro

36. INVESTORS:
ITALIAN LAW PROVIDES
A ROBUST LEGAL FRAMEWORK
OFFERING PROTECTION
TO INVESTORS
©2013 A.M. Lerro

37. There is
NO PERSONAL
INVESTMENT
LIMIT
MIFID regulates any NON SMALL investment
©2013 A.M. Lerro

38. INVESTORS EDUCATION:
Companies must invest on
education and offer it to
potential investors.
It helps with the asymmetric
information problem.
©2013 A.M. Lerro

39. INVESTORS confirm
• that they understood the
risks of equity investment
INVESTORS confirm
• that their personal estate
will be not compromised
It is NOT an Entrepreneur’s onus; NO particular
formality required; NO third parties databases
©2013 A.M. Lerro

40. SET OF WITHDRAWAL RIGHTS:
WHO
WHEN
WHY
RULE
Retail Investors
Bank Foundations
Registered Incubators
7 days from the
investment
No reason or explanation:
they just changed their
mind
§13.5 Reg.
Consumers*
14 days from the
investment
No reason or explanation:
they just changed their
mind
Consumer
Code
Retail Investors
Bank Foundations
Registered Incubators
7 days from the
news, but before
the campaign
closed
Material mistake or
§25.2 Reg.
something new happened,
suitable to influence the
investment decision
* The only case where platform are allowed to withold costs
©2013 A.M. Lerro

41. SHAREHOLDERS AGREEMENTS:
INFORMATION
RIGHT
Any Shareholders Agreement
must be notified to Investors
TAG ALONG or
WITHDRAWAL
RIGHT*
If the Founding Shareholders
sell the business or anyhow
wave control
* Only for RETAIL INVESTOR
As long as the Company enjoys Innovative Start Up status
©2013 A.M. Lerro

42. - 5M€ max per year
- Any nationality (platform, target, investors, …)
- Registered Platforms
- No investment limit per person
- Investment concluded through Broker-Dealers
- Free sale of the shares
(incentives to keep them)
- STRONG consumers’ protection
- 5% equity: Professional Investors
©2013 A.M. Lerro
TAKE AWAY:

43. LAWS AND MATERIALS:
www.CrowdfundingInItaly.com
©2013 A.M. Lerro
©2013 A.M. Lerro

44. WWW.LERRO.IT
ROME
Alessandro M. Lerro
alessandrolerro
alessandro@lerro.it
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