Equity Endeavor - Pitch Deck

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  • 1. Equity Endeavor, Inc. Investor Presentation www.equityendeavor.com
  • 2. 2  Strictly Confidential Meet the Team Broderick McClinton Eric Sonnier Matt Christen §  Born and raised in Baton Rouge, LA §  Finance/Political Science Degree from Tulane University §  Associate, BlackRock §  Economic Development, Greater New Orleans Inc. §  Harvard Business School, 2014 §  Born and raised in Houston, TX §  Marketing Degree from The University of Texas at Austin §  Strategy & Operations Consultant, Deloitte §  Account Executive, MdotM, Inc. §  Harvard Business School, 2014 §  Born and raised in Houston, TX §  Computer Science Degree from The University of Texas at Austin §  Spent past 8 years programming various trading strategies into automated platforms
  • 3. 3  Strictly Confidential Before We Begin   We focus on helping traditional small businesses that operate within a limited geographic footprint. We do not support startups or individual projects. We are a rewards-based platform, which means that our business owners exchange non-financial (e.g., products, and services) items for contributions. Small Business Rewards-Based
  • 4. 4  Strictly Confidential Two Major Trends   Two major trends have led to the creation of the Equity Endeavor platform.
  • 5. 5  Strictly Confidential Trend #1   Upgrade or replace equipment Renovate or expand storefronts Enhance quality of service Create a better consumer experience Small business owners are having a difficult time finding capital to:
  • 6. 6  Strictly Confidential In fact, data shows a large need for capital to grow Source:  Pepperdine  Private  Capital  Access  Index,  4Q2013   25%   45%   65%   2Q  2013   3Q  2013   4Q  2013   Es-mated  %  of  Business  Owners  (<$5MM  in   revenue)  needing  loans  for  growth  or  expansion  
  • 7. 7  Strictly Confidential But capital is hard to find for small businesses* 68.8% Said equity was difficult to raise 68.7% Said debt was difficult to raise 34.0% Acquired a business loan *  Defined  as  having  less  than  $5  million  in  revenues     Source:  Pepperdine  Private  Capital  Access  Index,  4Q2013  
  • 8. 8  Strictly Confidential And this lack of capital isn’t a recent event Small business financing in the U.S. has experienced a steady decline due to a number of factors. Small businesses: Don’t have the resources of large corporations Are more risky Are perceived as unprofitable to banks Have lower potential equity returns compared to technology startups 0   2   4   6   8   10   12   14   16   18   0   50   100   150   200   250   300   2005   2006   2007   2008   2009   2010   2011   2012   2012(4)   GDP,  Trillions   Small  Business  Loans,  Billions   $50  billion  or  more   $10  billion  to  $49  billion   $1  billion  to  $9  billion   $500  million  to  $999  million   $100  million  to  $499  million2   Less  than  $100  million   Gross  Domes>c  Products  (GDP)   Source:  SBA:  Small  Business  Lending  in  U.S.,  2012  
  • 9. 9  Strictly Confidential Why is this a big deal? 64% of new private sector jobs 99% of U.S. firms Small Businesses in the U.S. play a very important role in overall economic activity American jobs 77 MILLION
  • 10. 10  Strictly Confidential Trend #2   $2.7 billion raised in 2012 1 million campaigns run in 2012 Forecasted 89% YoY Growth Crowdfunding has seen tremendous growth and is forecasted to continue its upward momentum. $0.0     $1.0     $2.0     $3.0     $4.0     $5.0     $6.0     2009   2010   2011   2012   2013F   Funding  Volume  (in  billions)   Source:  Massolu>on  2012  Crowdfunding  Industry  Report  
  • 11. 11  Strictly Confidential But small businesses* are not benefitting *  Defined  as  having  less  than  $5  million  in  revenues  /  Non-­‐financial  based  Campaigns     Source:  Pepperdine  Private  Capital  Access  Index,  4Q2013   Only 17% reported crowdfunding efforts
  • 12. 12  Strictly Confidential Why is this the case? Global, Not Local Lack of Focus No Customization   §  Crowdfunders  for  local  businesses   are  going  to  come  from  an  area  in   close  proximity  to  the  business   because  those  are  the  people  who   are  familiar  with  the  business       §  Small  businesses  don’t  fit  well   into  many  current  plaWorms.   They  oYen  find  themselves  on   plaWorms  where  they’re   compe>ng  against  tech  gadgets,   crea>ve  projects,  or  nonprofits     §  Local  small  businesses  have  different   fundraising  needs  than  tech  startups   and  crea>ve  projects.  They  need  a   plaWorm  that  rallies  a  community   behind  businesses  in  their  area     Existing crowdfunding platforms are not ideal for small business because…
  • 13. 13  Strictly Confidential Here are a few examples Focuses  on  individual   crea-ve  projects  that   largely  leave  out  local   small  business   No  focus  and  not   localized,  leading  to   subop-mal  situa-on   for  small  businesses   Equity  crowdfunding  is   not  a  viable  op-on  for   a  majority  of  small   businesses  
  • 14. 14  Strictly Confidential The Solution   Crowdfunding Platform Built for Small Business
  • 15. 15  Strictly Confidential Why is this the solution?   Raise capital for projects that will take business to the next level No requirement for principal or interest payments, or giving up equity Crowdfunding platform focused on traditional small business Bring customers closer to the business, which is an important data point for lenders and brokers Localized platform increases brand awareness within community & targets those who care most Value Proposition for Business Owners 1 2 3 4 5
  • 16. 16  Strictly Confidential How is our platform structured? Homepage Source of information for business owners, including explainer videos, testimonials, and a blog. Localized Portals We have created individual city portals with the goal that they look and feel “local.” Campaign Pages This page tells each business’s story and their reason for raising funds. Future features that create more of a community §  Educational content for small business owners §  Comments section so that business owners can engage with consumers §  Map feature that allows the community to find small businesses in their area §  Relevant articles, news, and events happening in the local area
  • 17. 17  Strictly Confidential Our crowdfunding campaign process Project Realization Campaign Creation Campaign Review Launch Campaign Raise Funds § Recognize need for addition to product or service offering § Structure creative rewards for crowdfunders’ contributions to campaign § Equity Endeavor conducts review of application § Campaign featured on relevant city portal § Crowdfunders contribute to the campaign and receive rewards Search Choose Pledge Receive Enjoy § Search for campaigns within city of choice § Choose the business you wish to pledge to and the reward of choice § Pledge the dollar amount associated with the reward choice § Receive the reward when the campaign succeeds. No funds debited if campaign fails § Enjoy reward and reap the benefits of the improvement or expansion made to the local business For  Business  Owners   For  Community  Builders  
  • 18. 18  Strictly Confidential Pilot Launch   Since launching our pilot in September, we have worked with 24 businesses, 10 of which have already finished their campaigns
  • 19. 19  Strictly Confidential We launched a pilot in Austin and New Orleans and had great results Failed   SUCCESS   Close  to  Launch   SUCCESS   SUCCESS  SUCCESS  SUCCESS  SUCCESS  SUCCESS   Failed  Failed   Close  to  Launch  Close  to  Launch  Launching  Soon  Launching  Soon   Launching  Soon   Close  to  Launch   On  Hold   Close  to  Launch   Close  to  Launch  Close  to  Launch   Close  to  Launch   Close  to  Launch   Close  to  Launch  
  • 20. 20  Strictly Confidential Texas   51%  LA   35%   Other 13%   Statistics for the 10 small businesses that have finished their campaigns $80,457 raised from 483 Crowdfunders Crowdfunder Breakdown 70% Success Rate
  • 21. 21  Strictly Confidential Case Study: RedBird Pilates & Fitness $10,000 Campaign Goal Small Business Owner Lee Vallely, owner of RedBird Pilates & Fitness Over 20 years experience in the health and wellness industry
  • 22. 22  Strictly Confidential Case Study: RedBird Pilates & Fitness $10,000 Campaign Goal Campaign Goal Raise $10,000 in order to: Move to a larger studio Purchase new equipment Launch of a RedBird teacher training program Launch of RedBird TRX training program Fund scholarships for women in East Austin
  • 23. 23  Strictly Confidential Case Study: RedBird Pilates & Fitness $10,000 Campaign Goal Campaign Results $10,725 raised in 30 days 86 campaign contributors 90 rewards purchased 94% of funds came from local contributors Brokers & leasing agents became more willing to work with RedBird
  • 24. 24  Strictly Confidential = Market Size Relevant Small Businesses Average Crowdfunding Raise 5.3MM $10,000 7% Fees Retained by Equity Endeavor $3.7B Per Year Market Criteria:  Only  includes  firms  with  0-­‐9  employees  in  our  designated  most  appropriate  NACIS  industries  (Retail  Trade,   Educa>onal  Services,  Arts  Entertainment  and  Recrea>on,  Accommoda>on  and  Food  Services,  and  Other  Services   except  Public  Administra>on)     Source:  United  States  Census  Bureau,  2011  Survey  
  • 25. 25  Strictly Confidential This is our timeline Solidify CVP and establish MVP §  Define MVP §  Begin pilot study in Austin and NOLA §  Enroll 4 SMBs per city §  Begin awareness campaign Grow presence and adapt offering §  Complete pilot §  Adapt service offering to incorporate pilot findings/feedback §  Enroll ~10 additional businesses per city §  Expand brand awareness through partnerships, social media, digital marketing, organic efforts Expansion §  Expand presence within Austin and NOLA §  Enhance user experience and add features to the platform (i.e., talent exchange, user profiles) §  Firm up customer acquisition strategy §  Expand to additional cities June - Aug 2013 Sept – Mar 2014 Apr 2014 +
  • 26. 26  Strictly Confidential Current Sales Funnel: Monthly leads have grown 3x since January acquisition channels 8 Social Media Advertising E-mails Outreach Partnerships Business Owner Referrals Press Content Downloads Street Teams Free Consultations Acquisition Channel  16      Customers   66     Ac>ve  Leads   134     Inbound  Inquiries  
  • 27. 27  Strictly Confidential Establishing a presence   Buy Local / Support Local organizations Local government & chambers of commerce Local media Small Business Vendors (Consultants, Accountants, Lenders, PR, etc) The community of business owners Forming relationships with 1 2 3 4 5
  • 28. 28  Strictly Confidential Our fee structure All business owners pay a front end fee that is 1% of target raise In addition to the 1% fee, business owners that raise target amount pay us 6% of the actual raise amount In addition to the above two fees, business owners that hit target pay our 3rd party payment processor an extra ~3.25% Business owners that do not hit target amount do not pay any additional fees outside of the first fee (1% of target)
  • 29. 29  Strictly Confidential Economics of a project Revenue Per Project Acquisition Cost 400 180* 220 Gross Profit 55% Gross Margin % We assumed a 50% success rate for this calculation §  Front-end fee: $10,000 average raise x 1% fee = $100 §  Additional fee (if successful): $10,000 average raise x 6% fee x 50% Success Rate = $300 §  Total Average Revenue Per Project = $400 §  Customer Acquisition Cost of $180 is an estimate based off the small amount of data we have We are not currently charging a fee, though we have discussed the fee structure with all customers, and have undoubtedly seen a willingness to pay
  • 30. 30  Strictly Confidential Equity Endeavor Financial Projections Revenue Front End Fees Commission Fees Total Revenue Operating Expenses Personnel Marketing Rent Administrative Total Operating Expenses Income Before Taxes Net Income Margin July-Dec 2014 2015 2016 2017 2018 30,000$$$$$$$$$$$$$$$$$$$ 240,000$$$$$$$$$$$$$$$$$ 960,000$$$$$$$$$$$ 2,400,000$$$$$$$$$ 4,800,000$$$$$$$$$ 90,000$$$$$$$$$$$$$$$$$$$ 720,000$$$$$$$$$$$$$$$$$ 2,880,000$$$$$$$$ 7,200,000$$$$$$$$$ 14,400,000$$$$$$$$ 120,000 960,000 3,840,000 9,600,000 19,200,000 147,500$$$$$$$$$$$$$$$$$ 630,000$$$$$$$$$$$$$$$$$ 1,585,000$$$$$$$$ 2,580,000$$$$$$$$$ 4,050,000$$$$$$$$$ 73,500$$$$$$$$$$$$$$$$$$$ 427,800$$$$$$$$$$$$$$$$$ 1,477,680$$$$$$$$ 3,305,280$$$$$$$$$ 5,980,704$$$$$$$$$ 12,000$$$$$$$$$$$$$$$$$$$ 24,000$$$$$$$$$$$$$$$$$$$ 52,364$$$$$$$$$$$$ 93,818$$$$$$$$$$$$$$ 154,909$$$$$$$$$$$$ 7,375$$$$$$$$$$$$$$$$$$$$$ 31,500$$$$$$$$$$$$$$$$$$$ 79,250$$$$$$$$$$$$ 129,000$$$$$$$$$$$$ 202,500$$$$$$$$$$$$ 240,375$$$$$$$$$$$$$$$$$ 1,113,300$$$$$$$$$$$$$$ 3,194,294$$$$$$$$ 6,108,098$$$$$$$$$ 10,388,113$$$$$$$$ -$$$$$$$$$$$$$$$$$$$$$$$$ (120,375) (153,300) 645,706 3,491,902 8,811,887 17% 36% 46% Number of Local Portals Number of Crowdfunding Campaigns Percentage of Market 5 10 20 40 80 300$$$$$$$$$$$$$$$$$$$$$$$$ 2,400$$$$$$$$$$$$$$$$$$$$$ 9,600$$$$$$$$$$$$$$ 24,000$$$$$$$$$$$$$$ 48,000$$$$$$$$$$$$$$ 0.01% 0.05% 0.18% 0.45% 0.91%
  • 31. 31  Strictly Confidential Amount of Capital Seeking to Raise: $500,000 Use of Funds Hiring Critical Personnel: Front-end Developer and Campaign Creation Specialist. Salesperson in 2015 Contracts: Website Designer, Freelance Work Marketing: Social Media/Digital/Print Advertising, Content Creation, Seminars for Businesses, Referral Payments, and Street Teams Operations: Rent, Travel, Accountant and Legal Fees