You've heard about rewards based crowdfunding (the Kickstarters, and Indigogos) of the world, but do you know about equities crowd funding? With the anticipated Title III new regulations of the J.O.B.S (Jumpstart Our Business Startups) Act, which will allow for crowd funding on equities investments by accredited and unaccredited investors. Anticipated regulations will create a new asset class of investors with financial contributions making investments in businesses seeking new growth and ROI. What does this mean to the crowd funding market? How can issuers and investors get educated in this "new asset class" and on potential opportunities for investors and/or investments?

1. The *Real*
Crowdfunding
Investment
SXSW Interactive
March 7, 2014
#JOBSinvest

2. HISTORY
ABOUT THE PANEL
• Chief Marketing Officer of OfferBoard
• First member and founder of the Digitas
social team
• Award-winning chili cook
• Brand work includes American Express,
Nestle, Showtime, Gawker, GE, KitchenAid,
Whirlpool, Old Navy, Kraft, and Diageo.
@JessicaRandazza
#JOBSinvest
• Chief Executive Officer
• Chairman of CFIRA, the lead lobbying group
for the JOBS Act platforms
• Offerboard CEO, Former Managing
Director of Nehemiah Investments, Former
Wall St. attorney
• UT grad. Hook’em!@ChrisTyrrell

4. *REAL*
CROWDFUNDING
IS:
Technology
Relationships
Equity Capital
‘EQUITY CROWDFUNDING’
is the collective effort of individuals who
network and pool their money, usually via the
Internet, to support efforts initiated by other
people or organizations by providing finance
in the form of equity.
#JOBSinvest

5. LAW-ENABLED INNOVATION.
WHERE DID THIS COME FROM?
#JOBSinvest

6. #JOBSinvest

7. MARKET ACTIVITY • $35B in Title II
offerings since
Sept. 23
• Within 4 months,
“crowdfunded”
private security
offerings were
nearly twice the
amount of total
angel spend last
year on all
investments
• $5B more than
total VC spend
#JOBSinvest

8. EQUITY CROWDFUNDING BY TITLE
#JOBSinvest

9. TITLE II For Businesses
• You can now generally solicit and
publicly advertise.
• You still only have to file a Form D
with the SEC *after* taking capital.
• (This may change) Rules are
pending that would require
you to disclose details about
the solicitation 15 days before
you begin, and register ads.
•Investors MUST BE accredited, and
you must verify their accredited
status.
#JOBSinvest

10. TITLE II For Investors
• Only accredited investors can invest
in companies who generally solicit.
• Qualifying as accredited means
having $1MM in net worth, or
making over $200,000 for the past
3 years
• Investors will need to prove
accredited investors status, which
can be done by a Broker Dealer
platform (like OfferBoard!)
#JOBSinvest

11. TITLE III For Businesses
• Comment period ended Feb. 3, 2014
• Limited to raising no more than $1MM per year
• Depending on the amount offered (≥$500,000), audited financials are required
• Mandatory disclosures: 1) info about officers & directors, as well as owners of
20% or more of the company, 2) use of proceeds 3) timing and pricing of the
securities
#JOBSinvest

12. #JOBSinvest

13. TITLE III For Investors
• For income ≤ $100,000, invest a max of $2,000 or 5% of income or
net worth
• For income over $100,000, invest a max of 10% of income or net
worth
• Investments made in a Title III crowdfunding transactions can’t be
resold to unaccredited investors for a period of one year
TITLE III is NOT yet in affect. Anticipated to be implemented
by second half of 2014.
#JOBSinvest

14. TITLE IV
#JOBSinvest
• All investors, public advertising, no caps on
individual investment, but a $50MM total
cap
• Will create earlier IPOs
• Comment period still open until March 24

15. Companies relying on the Title III exemption to offer and sell
securities would be required to file an annual report with the
SEC and provide it to investors.HISTORY
RECAPPING THE
REGS
• Title II helps accredited investors find deals
more easily and company find investors
• Title III allows 99% to participate in exciting
private investments offerings
• Title IV allows companies to access public
markets (IPO) earlier than they could have
before
#JOBSinvest

16. While huge
opportunity, there
are some watch
outs to consider…
#JOBSinvest

17. RISKS For Companies
•Loss of intellectual property
•Deal getting “stale”
•Public failure
•Could scare off “smart money”
•May not agree with “crowd” (or
shareholders) ideas
#JOBSinvest

18. RISKS For Investors
•You could lose all of your money
•No liquidity
•Reputational risk
•Could be pushed around by
professional investors (Title III)
#JOBSinvest

19. OPPORTUNITIES
COMPANIES COULD HAVE…
FASTER
CHEAPER
MORE COMMITED CAPITAL
#JOBSinvest
GLOBAL REACH

20. OPPORTUNITIES
INVESTORS COULD HAVE…
BETTER DEAL FLOW
#JOBSinvest
GLOBAL REACH
HIGHER RETURNS

21. ADVANTAGES
#JOBSinvest
•Investors follow “smart money”
•Leverage social to reach new
audiences and investors and investors
invest with others.
•Investors learn about opportunities
from their networks.
•Trust makes investments happen
more quickly – and that means
companies improve their “speed to
money.”
Social channels and tools reduce barriers and take deeper
dives in to personal networks.

22. LEVERAGING DATA
#JOBSinvest
• Investing is currently managed by folks
who use “years of experience” and
“intuition”
• Fundraising is often hit-or-miss, with little
information on why an investor did or
did not invest
• We can now demonstrate, with real
data, what actions a company can
take that will improve their
likelihood of receiving investment.

23. Companies relying on the Title III exemption to offer and sell
securities would be required to file an annual report with the
SEC and provide it to investors.HISTORY
• Title II is now
• Title III is coming
• Title IV will change small public markets
• Data and networks create the power that
will continue to revolutionize capital
through crowdfunding
#JOBSinvest

24. QUESTIONS?
#JOBSinvest

25. Jessica Randazza, CMO
jessica@offerboard.com@j
essicarandazza
Chris Tyrrell, CEO
chris@offerboard.com
@christyrrell

26. How was the session?
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