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Ron Suber - Prosper

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Keynote speech at Crowdfunding East Conference - Harvard Faculty Club, August 2013 (www.CrowdfundingEast.com)

Keynote speech at Crowdfunding East Conference - Harvard Faculty Club, August 2013 (www.CrowdfundingEast.com)

Published in: Economy & Finance, Business

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Transcript

  • 1. CROWDFUNDING: PAST, PRESENT, FUTURE
  • 2. Crowdfunding (Crowd Financing, Equity Crowdfunding, Crowd Sourced Fundraising) ► NOT NEW ► 17th century to fund books ► 1884 to fund Statue of Liberty pedestal ► A collective effort to network, pool money via the internet ► Activities include: ► ► Support of artists, movies, video games, entertainment ► Political campaigns ► Start up/acceleration company funding ► ► Disaster relief/charity Civic projects/community oriented Originated from Crowd Sourcing – small contributions from many parties 10-25% Z COMPLETION A IDEA CROWDFUNDING IS HERE. PROPRIETARY & CONFIDENTIAL . © 2013 2
  • 3. Crowdfunding Models FUNDS AS DONATION OR SECURING INVESTMENT? 1. Debt Based Interest payment on top of capital payment - also known as peer to peer finance 2. Equity Based Fund in exchange for equity hoping value goes up or dividend 3. Profit sharing % of gains distributed to investors 4. Gifts, virtual thanks, mention in the credits Reward those who provide support early on 5. Hybrid model Combination of the above PROPRIETARY & CONFIDENTIAL . © 2013 3
  • 4. Different Approaches All or Nothing Keep It All Bounty Money only collected if Funds collected are kept Give the funds collected target dollar amount met whether target amount is upon project reached or not completed/success PROPRIETARY & CONFIDENTIAL . © 2013 4
  • 5. Benefits & Challenges BENEFITS CHALLENGES ► Financial gain ► Little or no “IP” protection ► Raise profile and reputation ► Once posted – easy to copy ► Marketing, awareness, branding ► Costs (Paypal, site and rewards for supporters) ► Feedback ► Failure ► Replaces email marketing ► Fraud ► Breaking local boundaries – opens the world ► Donor exhaustion ► Lessens the battle for initial stage ► Scam, abuse, regulatory capital sourcing ► Realistic Easily and safely expands number ► No buzz/promotion ► Articulate the story and the edge ► Need a social network ► Vet the idea before funding request ► of supporters ► More diversified investor base PROPRIETARY & CONFIDENTIAL . © 2013 5
  • 6. Crowdfunding Platforms 2001 • ArtistShare 2006 • Pledgie • Sellaband 2008 2009 • Indiegogo • GiveForward • Kickstarter • Rocket Hub • Fundly 2010 • MicroVentures 2011 2012 • FundaGeek • EarlyShares • Fundable • Abundance • Funded By Me (UK) (Sweden/Norway) 2013 • Additional countries including Finland, Canada and Italy • Seedmatch (Germany) In US And many more… In Europe PROPRIETARY & CONFIDENTIAL . © 2013 6
  • 7. The Crowdfunding Landscape Sweden and Norway Germany UK Additional countries: ► Finland ► Canada ► Italy US PROPRIETARY & CONFIDENTIAL . © 2013 7
  • 8. Conditions for Crowdfunding 3 2 1  Human nature: People want to help  Goodwill  Social aspect OK to fail Lots of ideas and projects Easy and almost free (40+ sites to promote) PROPRIETARY & CONFIDENTIAL . © 2013 8
  • 9. In The Media PROPRIETARY & CONFIDENTIAL . © 2013 9
  • 10. Success Doesn’t Happen Overnight ► ► ► ► ► Regulatory: Work closely with Regulators to help shape the governance going forward. Education: Focus on educating both sides of the marketplace, without a common understanding of benefits difficult to have the two sides exchange value. Scale: Identify key market segments to promote the platform – rate of adoption will dramatically increase with the right message to the right segments. Efficiency: Once value exchange is created, tirelessly work to improve efficiency to lower costs for both sides of the platform. Technology: Makes all of the above possible – also changing very quickly. Building a nimble platform allows for the marketplace to adapt to the needs of both constituents quickly. 10
  • 11. Where Does the Crowdfunding Industry Go From Here…Possibilities ► One aggregate platform above each site ► Mobile ► The future of small business funding ► Reduces friends and family round ► ► ► Crowd funding and Non-banks such as Mint, Prosper and Lending Club are among dozens of new companies shaping the way customers raise capital, lend, invest, pay, transact, save and plan Peer-to-Peer foreign currency exchange to make it cheaper, quicker, easier and more efficient to send cash abroad as well as pay in multiple currencies Even more open-source, developer-friendly “API's” for permission-based access to financial accounts enabling quicker funding, less theft/fraud and more crowd funding solutions to raise capital, borrow, lend and invest PROPRIETARY & CONFIDENTIAL . © 2013 11
  • 12. This Is Just The Beginning PROPRIETARY & CONFIDENTIAL . © 2013 12
  • 13. Thank you PROPRIETARY & CONFIDENTIAL . © 2013 13
  • 14. Disclosures Neither Prosper Funding LLC nor Prosper Marketplace, Inc. are registered as an investment adviser with any federal or state regulatory agency. The information contained in this presentation is for informational purposes, and should not be construed as individually tailored investment advice or as a recommendation with respect to any security or investment approach. This presentation has been prepared without regard to the circumstances and objectives of the conference’s participants and should not be relied upon as authoritative or taken in substitution for the exercise of judgment by any participant. Each participant should consider the appropriateness of any investment decision having regard to his or her own circumstances, the full range of information available and appropriate professional advice. Prosper Funding LLC and Prosper Marketplace, Inc. recommend that each participant seek independent investment and financial advice concerning any services or investments discussed in this presentation. Notes are offered pursuant to the Prospectus which accompanies this presentation and which is also available at www.prosper.com/prospectus. Persons considering investing in Notes should review the Prospectus in its entirety. PROPRIETARY & CONFIDENTIAL . © 2013 14