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Crowdfunding Panel at Harvard Business School (Dec 4, 2013)
 

Crowdfunding Panel at Harvard Business School (Dec 4, 2013)

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The Harvard Business School Association of Boston hosted a panel on crowdfunding Dec. 4, 2013. This slide deck was published for the attendees of the event by Daniel Gorfine, of the Milken Institute, ...

The Harvard Business School Association of Boston hosted a panel on crowdfunding Dec. 4, 2013. This slide deck was published for the attendees of the event by Daniel Gorfine, of the Milken Institute, who moderated the panel. Attending the panel were representatives of OurCrowd, CircleUp, Fundrise, and RocketHub.

Details of the event can be seen here: http://www.hbsab.org/article.html?aid=801

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    Crowdfunding Panel at Harvard Business School (Dec 4, 2013) Crowdfunding Panel at Harvard Business School (Dec 4, 2013) Presentation Transcript

    • HBSAB Panel: Crowdfunding Part II DANIEL GORFINE DIRECTOR OF FINANCIAL MARKET POLICY AND LEGAL COUNSEL, MILKEN INSTITUTE DECEMBER 4, 2013
    • State of Angel Capital Total Angel Investment 2001-2012 Billions 35 30 80000 30 70000 25.6 25 22.5 20 26 23.1 18.1 22.5 19.2 20.1 17.6 15.7 22.9 60000 50000 40000 15 30000 10 20000 5 10000 0 0 Sum of Total Angel Investment (in billions) Data Source: UNH Center for Venture Research Sum of Total Ventures Funded
    • State of Venture Capital Total Venture Capital Investment 1995-2012 120 9000 Billions 105.12 8000 100 7000 80 6000 5000 60 54.85 4000 40.96 40 21.47 20 8.01 11.35 22.17 19.69 23.26 23.59 27.59 3000 31.93 29.97 29.67 20.25 23.29 26.96 2000 15.01 1000 0 0 Sum of Total Venture Capital Investment Data Source: NVCA/ PWC Moneytree Report Sum of Total Number of Deals
    • Venture Capital Moving Away from Seed Billions VC Investment 2000-2013Q3 18 16 14 12 10 Startup/Seed Avg=$3mil Early Stage Avg=$5mil 8 Expansion Avg=$8mil Later Stage Avg=$10mil 6 4 2 0 Data Source: NVCA/ PWC Moneytree Report
    • Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 State of Small Business Lending Volume of New Commercial Loans and Leases to Small Businesses Q1 2005-Q2 2013 140 130 120 110 100 90 80 70 60 Source: Thomson Reuters/PayNet Small Business Lending Index
    • Sources of Startup Financing Limited Sources of Startup Financing (% of firms) Personal/Family Savings 60 62 11 10 Credit Card Bank Loan 19 7 Other personal/family assets 10 7 Home equity 4 Government Loan 1 9 3 0.7 0.3 Venture Capital 11 None needed 0 10 25 20 Employers Source: Corporate Executive Board, US Small Business Administration 30 SolePropreitor 40 50 60 70
    • US IPO Market: Small vs. Big Companies US IPOs with Pre-IPO Annual Sales Less Than or Greater Than $50m/Year Source: SEC Advisory Committee on Small and Emerging Companies, September 2012; Ritter, University of Florida
    • Public vs. Private Market 2012: Public Market Totaled $1.2tn Private Market Totaled $1.7tn Billions Aggregate Capital Raise 2009-2012 by Offering Method Source: Ivanov, SEC
    • New Capital Access Tools © 2013 Milken Institute
    • © 2013 Milken Institute
    • Funding Landscape Angel Investment: Range based on lowest and highest total annual Angel investment per deal from 2001-2012, UNH data VC Investment: Range based on lowest and highest total annual VC investment per deal from 1995-2012, NVCA data Investment Stage range based on lowest and highest total annual VC investment per stage per deal from 1995-2012, NVCA data Startup/Seed: $3.2mil Early Stage: $5.0mil; Expansion: $8.4mil; Later Stage : $10.3mil Data Source: ACA, NVCA © 2013 Milken Institute
    • Donation-Based Crowdfunding in 2012 Source: TechCrunch, massoultion
    • Crowd Investing: Title III JOBS Act Source: Fundable, Earn MBA degree.
    • Crowd Investing Disclosures Vary by Offering Amount Crowd Investing Offering Amount (including offerings in preceding 12 mo.) Disclosure Requirements Up to $100,000 Most recent income tax returns; financial statements certified by issuer’s executive officer $100,000 - $500,000 Financial statements reviewed by independent public accountant $500,000+ Audited financial statements Source: sec.gov
    • SEC Proposed Rules Title III Investment Advice/ Recommendations Portal Compensation Models Ongoing Disclosures Investor Education Requirement
    • Rule 506(c) Investing  Title II of the JOBS Act  Ban on General Solicitation Lifted  Accredited Investor Verification Required  Reasonable Belief Investor Accredited  Proposed Rules
    • Regulation A+  Small Company IPOs have declined as a share of overall market  Total filing expenses under Regulation A+ are estimated to decrease by 50% when compared to smaller reporting company S-1 filings, and by 71% when compared to traditional S-1 filings IPOS in US % of Total Number of Deals 79% 73% 54% $100+mil 58% 56% 51% 47% 49% 59% 57% 52% 51% 41% 25% $50-100mil 30% 24% 27% 19% 10% $25-50mil $0-50mil 29% 11% 10% 15% 12% 25% 9% Data Source: WR Hambrecht + Co, Dealogic 4% 19% 18% 8% 8% 34% 30% 15% 6% 12% 28% 6% 4% 9% 0% 3% 4% 3% 8% 1% 5% 3%