TheCrowdCafe: Global Crowdinvesting Industry Presentation

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The Global Investment Crowdfunding Industry
Data, Insight & Trends
Jonathan Sandlund
Jonathan Sandlund | @jsandlund
@jsandlund
Wednesday, August 28, 13

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thecrowdcafe.com research, data and analysis on
the global crowdinvesting industry
localinvestors.org live, think, invest local
about me
Jonathan Sandlund
j@thecrowdcafe.com
@jsandlund

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Thank you!
Leading law ﬁrm serving the security
crowdfunding industry: Portals;
Crowdpreneurs; The Crowd.
thecrowdcafe.com/NYESN
Download

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Intro to Investment Crowdfunding
The Mechanism

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Funded$
$
$
$
$
the mechanism
FAMILY FRIENDS
CUSTOMERS
INVESTORS
AFFINITIES
X =

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Funded$
$
$
$
$
the mechanism
FAMILY FRIENDS
CUSTOMERS
INVESTORS
AFFINITIES
X =

7
Funded$
$
$ $
$
the mechanism
FAMILY FRIENDS
CUSTOMERS
INVESTORS
AFFINITIES
X =

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Funded$
$
$ $
$
the mechanism
FAMILY FRIENDS
CUSTOMERS
INVESTORS
AFFINITIES
X =

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Funded
$
$
$
$
$
the mechanism
FAMILY FRIENDS
CUSTOMERS
INVESTORS
AFFINITIES
X =

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Not
Funded
$
$
$ $
$
the mechanism
FAMILY FRIENDS
CUSTOMERS
INVESTORS
AFFINITIES
X =

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reward vs. investment-based
~ $5,000
~$160,000
Median Fundraise
~$775,000

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The Legalities of Crowdfunding
Title II & Title III of the JOBS Act

The JOBS Act
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Title II Title III
‣ Lifts ban on general solicitation
and advertising on security
offerings to accredited
investors
‣ Provided issuer takes reasonable
steps to verify accreditation
‣ Must ﬁle amended Form D
‣ Businesses Raise up to $1mm
in 12-month period
‣ Investors tiered limits on
investment amount
‣ Rule-making includes SEC and
FINRA
Crowdfunding for
Accredited Investors
Crowdfunding for
Everyone

Accredited Crowdfunding IMPACT
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‣ Brings dramatic eﬃciencies to our private capital
markets
• Efﬁciencies = (Internet) * (Private Sector Innovation)
‣ Geographically, socially indiscriminate
‣ Stands to motivate accredited capital off the
sidelines and into private markets in an enormous
way

Democratized Crowdfunding IMPACT
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‣ Businesses
• Conversion of Social to Financial Capital
• New Era of Marketing
‣ Investors
• Financial Empowerment
• Trust
• Meaningful Investment
‣ Society
• Equal Opportunity

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The U.S. Market

platforms: market segmentation
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Investment Crowdfunding Platforms
Niche/Affinity"Local" (SMBs)Startups

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Global Crowdfunding
What can we learn?

Macro-Data: Selected Sample
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Equity
180 Deals
$132 Million
Equity
59 Deals
~$16 Million
Debt
2,573 Deals
$227 Million
Equity
28 Deals
$2.6 Million
Equity
11 Deals
$954k
Equity
16 Deals
$15 Million
* Selected sample of platforms

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304 Equity
Placements
2,573 Loans
$300+ Million in Crowdfunding
Transactions...

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Crowdfunding Models
Innovation, Diversity

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‣ A+ to C Risk Bands
Applied
‣ Offer 1, 3, 5 year loans
‣ £5,000 - £1,000,000
‣ Secondary market
‣ Crowdfunded two
$80,000 small business
loans in under 29 minutes
Debt
2,573 Deals
$227 Million

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Discovery

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Splash Bathroom Accessories Limited

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Credit Score History

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Key Financials

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Questions & Answers

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$0!
$2,000,000!
$4,000,000!
$6,000,000!
$8,000,000!
$10,000,000!
$12,000,000!
$14,000,000!
Monthly Loan Originations Since Inception!
August 2010 June 2013

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‣ Launched 2010
‣ Sector Focus General (concentration: internet, food & drink)
‣ Lowest Raise $19,000 Highest Raise $2.3 million
‣ Averages (median, n= 48)
‣ Raise $124,800
‣ Equity Oﬀered 16%
‣ Post-Money Valuation $805,000
‣ Number of Investors 52
‣ Investment Size $2,712 (low: $331; high: $16k)
Equity
59 Deals
~$16 Million

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‣ Launched July 2012
‣ Sector Focus Internet
‣ Lowest Raise $15,200 Highest Raise 240,000
‣ Averages (median, n=24)
‣ Raise $64,000
‣ Equity Oﬀered 10%
‣ Post-Money Valuation $520,000
‣ Investment Size $1,070
Equity
28 Deals
$2.5 Million
Minimum Investment
$16

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‣ Launched Mid-2012
‣ Sector Focus Consumer Products/Retail
‣ Lowest Raise $440,000 Highest Raise $2.4 Million
‣ Averages (median, n=16)
‣ Raise
‣ Investment Size $59,333
Equity
16 Deals
$15 Million

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‣ Domain Expertise Founding team has deep experience investing in
consumer product and retail industries
‣ Curated Deal-Flow To date, less than 2% of applications accepted
onto the platform
‣ 3 Weeks Time it took Melt to raise $1,000,000
Equity
16 Deals
$15 Million

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The Disruption

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Crowd
funding
Technical
Disruption
Entrance of the internet into
the private capital formation
process.
Cultural
Disruption
A desire to connect more
meaningfully with the things
we buy, the things we do, and
the things we invest in.
Two mega-trends colliding. Driving a paradigm shift in early
stage capital markets
Investment Crowdfunding

Summed up...
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The ﬁrst major change in security law in 70+
years. Allows the internet to enter the
fundraising process.
Processes moved online, eﬃciencies realized,
and incumbents with traditional cost
structures obsoleted
What it means...
Technical

This is what it looks like...
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Technical

Nearly all categories disrupted by the
internet...
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Except fundraising.
Technical

A fundamentally more eﬃcient
capital formation process
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Technical
A Big Bank...
Source: http://www-core.nesta.org.uk/library/images/NestaBanks.jpg

But it’s not just structural change
driving the disruption
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Cultural
It’s cultural.

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Chicago Booth: Only 13% of Americans trust the
stock market
Distrust is pervasive
Chicago Booth Financial Trust Index
Cultural

Today little alternative to public markets
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Tomorrow individuals empowered to invest in the
the companies, causes and people they believe in
Cultural

A cultural shift
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‣ Web 1.0 The Information Web
‣ Web 2.0 The Connected Web
‣ Web 3.0 The Meaningful Web
Cultural

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Jonathan Sandlund
j@thecrowdcafe.com
@jsandlund
Thank You!
thecrowdcafe.com/NYESN
Download

TheCrowdCafe: Global Crowdinvesting Industry Presentation

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