Mary Juetten, Founder & CEO
Feb 10, 2014
Pennsylvania Bar Association IP Section
CROWDFUNDING UPDATE
"TRAKLIGHT", "ID YOUR...
L

Crowdfunding Overview

REWARDS BASED:
Indiegogo, Kickstarter, Rocket Hub

EQUITY BASED:
Federal not yet legal; some int...
Rewards Based
CHOOSE THE BEST PLATFORM FOR
YOU:
• ALL OR NOTHING
• % BASED ON TYPE
• BE REALISTIC
FIND THE CROWD

Success is directly related to Social Capital
Social Capital is more than Social Media
Equity Status
Equity/Security is not yet Legal (Title III)
Rule comment period ended Feb 3rd
Intrastate live in several st...
585 PAGES OF RULES
10 Requirements JOBS Act
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Registration & Incorporation in US
Names – Directors, Officers, >...
Rules – FORM C Disclosure
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Registration & Incorporation in US
Names – Directors, Officers, ...
GAAP Financial Statements
< $100K – CEO
$100K to < $500K Review
> $500K = AUDIT by non-PCAOB but CPA
Firm
Not the same CP...
EQUITY is not Easy
Tough requirements include:
Business Plans
Financial Statements
Use of Proceeds
Valuation
$

Devil in the Details

$XM Valuation/ $X per share price/ Total $XK

Spend:
$XK Now
$XK Next
$XK Then

MAKE
$XK
$XK
$XK
...
Valuation Issues
Recent Venture
Beat article:
- Employee Stock
Options
- Key Performance Indicators (KPIs)
CROWDFUNDING
APPROACH
IDENTIFY IP
PROTECT IP
PICK A PLATFORM

BUILD SOCIAL CAPITAL
CREATE A PITCH
CREATE PITCH

Campaign
Business Plan
Projections
Rewards

`
CONTENT IS KING
Expert
Blogs
Speaking
Social Media
PR
Traklight blog

Start working on this
BEFORE you launch your
campaig...
Infringement!
Education is KEY
INVESTORS
ISSUERS
INTERMEDIARIES
Questions?

IDENTIFY. PROTECT. SUCCEED.
www.traklight.com

Mary Juetten
mejuetten@traklight.com
@traklight
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  • Pebble Watch campaign was an outlier
  • Quality not quantify
  • Microventures, CircleupSoMoLend is debtAngel List – accredited investors
  • Chaos – examples of errors
  • Registration &amp; Incorporation in the U.S.Name, legal status, address, website, etc.2. Names of directors, officers, and 20%stockholders3. A description of the business and theanticipated business plan of the issuer4. Prior year tax returns5. Financial statements6. Description of intended use of raisedcapital &amp; proceeds7. Target offering amount, deadline, andregular progress updates through the lifeof the offering8. Share price and methodology fordetermining the price9. Description of the ownership and capitalstructure of the issuer, including a lot ofdetail about the terms of the securitiesbeing sold10. Terms of any other outstanding securitiesof the company, including a summary
  • Microventures, CircleupSoMoLend is debtAngel List – accredited investors
  • Not all the requirements but not to be done over night.
  • When it comes to reward-based crowdfunding, while these don’t establish an equity price which can be considered a direct comparable, they serve a very important role in market validation of the execution and scalability of the business model.  Price points, customer traction, sales funnel, order fulfillment, and other critical information can be gleaned from a rewards-based campaign and incorporated in the next iteration of the product, or serve as validation of key business model assumptions.Since many valuations of pre-revenue startups rely on key performance indicators (KPI) and not on financial fundamentals, KPI validation is critical in building investor confidence and can indirectly impact valuations and funding(ESOP) where stock options are issued to early employees and investors with very low exercise prices, which are set to equal the price of common stock at the time the options are issued.  The equity prices flowing through crowdfunding platforms will create a new set of early stage valuation comparables, data that have largely been missing from the public eye before.  This can potentially have huge implications on the pricing of ESOP plans, particularly in the early stages.Read more at http://venturebeat.com/2013/10/08/crowdfunding-101-dont-forget-to-protect-your-idea/#SYYEMlRC8xvTg4s5.99Read more at http://venturebeat.com/2013/10/08/crowdfunding-101-dont-forget-to-protect-your-idea/#SYYEMlRC8xvTg4s5.99When it comes to reward-based crowdfunding, while these don’t establish an equity price which can be considered a direct comparable, they serve a very important role in market validation of the execution and scalability of the business model.  Price points, customer traction, sales funnel, order fulfillment, and other critical information can be gleaned from a rewards-based campaign and incorporated in the next iteration of the product, or serve as validation of key business model assumptions.Since many valuations of pre-revenue startups rely on key performance indicators (KPI) and not on financial fundamentals, KPI validation is critical in building investor confidence and can indirectly impact valuations and funding.Read more at http://venturebeat.com/2013/10/08/crowdfunding-101-dont-forget-to-protect-your-idea/#SYYEMlRC8xvTg4s5.99
  • DNA Zoo Tees. Funding used to fulfill orders and “ramp up production” Infringed on songs.
  • PA Bar

    1. 1. Mary Juetten, Founder & CEO Feb 10, 2014 Pennsylvania Bar Association IP Section CROWDFUNDING UPDATE "TRAKLIGHT", "ID YOUR IP", "IP VAULT", and "IP CLOUD" are registered trademarks of The PIP Vault, LLC. © MMXIII The PIP Vault, LLC. All Rights Reserved.
    2. 2. L Crowdfunding Overview REWARDS BASED: Indiegogo, Kickstarter, Rocket Hub EQUITY BASED: Federal not yet legal; some intrastate OTHER: Angel List, Lending Club, Georgia CF
    3. 3. Rewards Based CHOOSE THE BEST PLATFORM FOR YOU: • ALL OR NOTHING • % BASED ON TYPE • BE REALISTIC
    4. 4. FIND THE CROWD Success is directly related to Social Capital Social Capital is more than Social Media
    5. 5. Equity Status Equity/Security is not yet Legal (Title III) Rule comment period ended Feb 3rd Intrastate live in several states
    6. 6. 585 PAGES OF RULES
    7. 7. 10 Requirements JOBS Act 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Registration & Incorporation in US Names – Directors, Officers, >20% SH Business Description & BUSINESS PLAN Prior years Tax Returns Financial Statements Use of Proceeds Offering Details & Progress Updates Share price & methodology (VALUATION) Ownership & capital Capital (existing, offering & differences)
    8. 8. Rules – FORM C Disclosure 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Registration & Incorporation in US Names – Directors, Officers, >20% SH Business Description ONLY Prior years Tax Returns Financial Statements ONGOING & ANNUAL REPORTS Use of Proceeds Offering Details & Progress Updates Share price & methodology (VALUATION) Ownership & capital Capital (existing, offering & differences)
    9. 9. GAAP Financial Statements < $100K – CEO $100K to < $500K Review > $500K = AUDIT by non-PCAOB but CPA Firm Not the same CPA as preparations!
    10. 10. EQUITY is not Easy Tough requirements include: Business Plans Financial Statements Use of Proceeds Valuation
    11. 11. $ Devil in the Details $XM Valuation/ $X per share price/ Total $XK Spend: $XK Now $XK Next $XK Then MAKE $XK $XK $XK SELL $YK $YK $YK OPERATE $ZK $ZK $ZK
    12. 12. Valuation Issues Recent Venture Beat article: - Employee Stock Options - Key Performance Indicators (KPIs)
    13. 13. CROWDFUNDING APPROACH IDENTIFY IP PROTECT IP PICK A PLATFORM BUILD SOCIAL CAPITAL CREATE A PITCH
    14. 14. CREATE PITCH Campaign Business Plan Projections Rewards `
    15. 15. CONTENT IS KING Expert Blogs Speaking Social Media PR Traklight blog Start working on this BEFORE you launch your campaign.
    16. 16. Infringement!
    17. 17. Education is KEY INVESTORS ISSUERS INTERMEDIARIES
    18. 18. Questions? IDENTIFY. PROTECT. SUCCEED. www.traklight.com Mary Juetten mejuetten@traklight.com @traklight

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