TheCrowdCafe | Investment Crowdfunding Presentation

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The Global Investment Crowdfunding IndustryData, Insight & Trends

April 5th, 2013

Jonathan Sandlund j@thecrowdcafe.com

Jonathan Sandlund | @jsandlund

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thecrowdcafe.com leading provider of research, data and analysis on the global investment crowdfunding industry

localinvestors.org live local. think local. invest local.

about me

Jonathan Sandlundj@thecrowdcafe.com@jsandlund

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Our sponsor: Thank you!

Leading law firm serving the security crowdfunding industry: Portals.

Crowdpreneurs; The Crowd

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Intro to Investment CrowdfundingThe Mechanism

Jonathan Sandlund | @jsandlund

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reward vs. investment-based Reward-Based Investment-Based

‣ Receive no financial return

‣ Legal today

‣ Perks or rewards in return for pledges

‣ Securities offered in return for crowds’ investment

‣ Equity

‣ Debt

‣ Revenue share

‣ Blend

‣ The JOBS Act

‣ Title II vs Title III

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Funded$

$

$$

$

the mechanism

FAMILY FRIENDSCUSTOMERS

INVESTORSAFFINITIES X =

Jonathan Sandlund | @jsandlund

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Funded$$

$$

$

the mechanism

FAMILY FRIENDSCUSTOMERS

INVESTORSAFFINITIES X =

Jonathan Sandlund | @jsandlund

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Funded$$

$ $

$

the mechanism

FAMILY FRIENDSCUSTOMERS

INVESTORSAFFINITIES X =

Jonathan Sandlund | @jsandlund

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Funded$ $

$ $

$

the mechanism

FAMILY FRIENDSCUSTOMERS

INVESTORSAFFINITIES X =

Jonathan Sandlund | @jsandlund

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Funded$

$

$

$

$

the mechanism

FAMILY FRIENDSCUSTOMERS

INVESTORSAFFINITIES X =

Jonathan Sandlund | @jsandlund

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Not Funded

$

$

$ $

$

the mechanism

FAMILY FRIENDSCUSTOMERS

INVESTORSAFFINITIES X =

Jonathan Sandlund | @jsandlund

12Jonathan Sandlund | @jsandlund

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

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The JOBS Act

‣ Signed into law by President Obama on April 5th, 2012

‣ Passed the House 390-23; Passed the Senate 73-26

‣ 270 day rule-making period given to the SEC & FINRA (Dec. 31, 2012)

‣ SEC missed Dec. 31st deadline

‣ Title II & Title III delayed

Jonathan Sandlund | @jsandlund

The JOBS Act

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Title II Title III

‣ Lifts ban on general solicitation and advertising on security offerings to accredited investors

‣ Broker-Dealer License/Affiliation

‣ Provided issuer takes reasonable steps to verify accreditation

‣ Businesses Raise up to $1mm in 12-month period from both accredited and non-accredited investors

‣ 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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‣ Will bring 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 companies in an enormous way

Jonathan Sandlund | @jsandlund

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

Jonathan Sandlund | @jsandlund

platforms: market segmentation

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Investment Crowdfunding Platforms

Niche/Affinity"Local" (SMBs)Startups

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Global CrowdfundingWhat can we learn?

Jonathan Sandlund | @jsandlund

Macro-Data: Selected Data

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Equity180 Deals

$132 Million

Equity34 Deals

~$7 Million

Debt1,751 Deals$144 Million

Equity17 Deals

$1.3 Million

Equity9 Deals

$784,000

Equity11 Deals

$9.7 Million* Selected sample of platforms; data is a selected sample

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251 Equity

Placements

1,751 Loans

$290+ Million in Crowdfunding Transactions...

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Crowdfunding ModelsInnovation, Diversity

Jonathan Sandlund | @jsandlund

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‣ A+ to C Risk Bands Applied

‣ Offer 1, 3, 5 year loans

‣ £5,000 - £500,000

‣ Auction model: investors bid

‣ Secondary market

‣ Crowdfunded two $80,000 small business loans in under 29 minutes

Debt1,751 Deals$144 Million

Jonathan Sandlund | @jsandlund

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Discovery

Jonathan Sandlund | @jsandlund

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Splash Bathroom Accessories Limited

Jonathan Sandlund | @jsandlund

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Credit Score History

Jonathan Sandlund | @jsandlund

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Key Financials

Jonathan Sandlund | @jsandlund

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Questions & Answers

Jonathan Sandlund | @jsandlund

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‣ Launched 2010

‣ Sector Focus General (concentration: internet, food & drink)

‣ Lowest Raise $19,000 Highest Raise $1.6 million

‣ Averages (median, n= 34)

‣ Raise $97,000

‣ Equity Offered 15%

‣ Post-Money Valuation $633,000

‣ Number of Investors 51

‣ Investment Size $2,468 (low: $331; high: $11k)

Equity34 Deals

~$7 Million

Jonathan Sandlund | @jsandlund

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‣ Launched July 2012

‣ Sector Focus Internet

‣ Lowest Raise $15,200 Highest Raise 240,000

‣ Averages (median, n=17)

‣ Raise $64,000

‣ Equity Offered 10%

‣ Post-Money Valuation $560,000

‣ Number of Investors 69

‣ Investment Size $1,127

Equity17 Deals

$1.3 Million

Jonathan Sandlund | @jsandlund

Minimum Investment $16

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‣ Launched Mid-2012

‣ Sector Focus Consumer Products/Retail

‣ Lowest Raise $500,000 Highest Raise $2.4 Million

‣ Averages (median, n=4)

‣ Number of Investors 20

‣ Investment Size $39,667

Equity11 Deals

$9.7 Million

Jonathan Sandlund | @jsandlund

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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 have been approved

‣ 3 Weeks Time it took Melt to raise $1,000,000

Jonathan Sandlund | @jsandlund

Equity11 Deals

$9.7 Million

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To Summarize

Jonathan Sandlund | @jsandlund

Summary

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‣ Data • Zero Fraud

• Young Market, Traditional S-Curve

‣ Crowdfunding Platforms • Colorfully Diverse

- Debt, Equity, Rev-Share, Blend

• Empowering Businesses & Investors

‣ Value • Businesses, Investors, Communities

Jonathan Sandlund | @jsandlund

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Jonathan Sandlundj@thecrowdcafe.com@jsandlund

Thank You!

Jonathan Sandlund