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

1. HBSAB Panel: Crowdfunding Part II
DANIEL GORFINE
DIRECTOR OF FINANCIAL MARKET POLICY AND
LEGAL COUNSEL, MILKEN INSTITUTE
DECEMBER 4, 2013

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. New Capital Access Tools
© 2013 Milken Institute

10. © 2013 Milken Institute

11. 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

12. Donation-Based Crowdfunding in 2012
Source: TechCrunch, massoultion

13. Crowd Investing: Title III JOBS Act
Source: Fundable, Earn MBA degree.

14. 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

15. SEC Proposed Rules
Title III
Investment Advice/
Recommendations
Portal
Compensation
Models
Ongoing
Disclosures
Investor Education
Requirement

16. 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

17. 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%