An Introduction to Crowdfunding for the Newbie

Ray Burrasca Tech4Good-Denver July 20, 2016

Speaker: R.P. Burrasca Managing Director, The A+ Team, LLC and Windom Peaks Capital, LLC; Founder & Organizer of Colorado Crowdfunding Meetup (www.coloradocrowdfunding.org)

• Ray Burrasca is a seasoned company finance professional and experienced corporate lawyer with over 40+ years experience in corporate finance, securities compliance and transactional law. He has practiced finance and corporate law both in privately-held and publicly-traded corporations, and has practiced on Wall Street and in Silicon Valley

• In addition, Mr. Burrasca previously served as the chief financial officer of $500 million dollar pulp & paper company located in the state of Maine, as well as the CFO of a startup game development company previously located in Colorado.

• Mr. Burrasca’s experience includes all facets of corporate finance and private equity, including, among others:

• registered and private securities offerings (including IPO’s) • both private and public mergers & acquisitions • leveraged buyouts (including management-led, hostile and “vulture” fund driven) • mezzanine lending • venture capital and startups • hedging & corporate debt swaps and hedge funds • derivative securities

• Part 1: Who / What is Colorado Crowdfunding? • Who Are We?? • What is Colorado Crowdfunding and What’s Its Purpose??

• Part 2: What is Crowdfunding? • B.C. (Before Crowdfunding) – What Were The Options?? • A New Day Dawns – Contemporary Crowdfunding • What is Crowdfunding?? • Is Crowdfunding Something That’s New?? • How Large is Crowdfunding? • What Crowdfunding is Not!!! • Is Crowdfunding Dangerous?? • What Types of Crowdfunding Are There?? • Summing Up

Who / What is Colorado Crowdfunding?

Formed 4 years ago, Colorado Crowdfunding is now the third largest meetup organization in the U.S. dedicated exclusively to educating the general public about, and advocating for the wider adoption of, crowdfunding as an alternative source for funding ideas, projects, products, businesses and causes …

To “create free, safe and secure spaces where you can come and learn everything you need to know about crowdfunding, in all of its iterations, and how to do it right, without having to worry about predatory service providers picking your pockets or pocketbooks.”

• Run 8 distinct monthly meetups, all under the Colorado Crowdfunding banner, 5 of which cover different areas or aspects of crowdfunding.

• In addition to this “Introduction to Crowdfunding for Newbies” we run the following additional monthly meetups …..

COME TO THE COLORADO CROWDFUNDING MEETUPS: 8 Different Meetups, 6 Different Meetups Sites and Five Different Major

Categories of Crowdfunding:

http://www.coloradocrowdfunding.org

http://www.meetup.com/Crowdfunding_Kickstarter/

http://www.meetup.com/Colorado-Crowdfunding-Real-Estate-Crowdfunding/

COME TO THE COLORADO CROWDFUNDING MEETUPS: 8 Different Meetups, 6 Different Meetups Sites and Five Different Major

Categories of Crowdfunding:

http://www.meetup.com/Colorado-Crowdfunding-Cause-Donation-Based-Crowdfunding/

http://www.meetup.com/Colorado-Crowdfunding-Kickstarter-for-Creative-Projects/

http://www.meetup.com/Colorado-Crowdfunding-Colorado-Springs-Crowdfunding-Meetup

COME TO THE COLORADO CROWDFUNDING MEETUPS: 8 Different Meetups, 6 Different Meetups Sites and Five Different

Major Categories of Crowdfunding:

http://www.meetup.com/Colorado-Crowdfunding-Cause-Donation-Based-Crowdfunding/

• Developments affecting Donation- / Rewards-Based, as well as Investment-Based (both debt and equity) crowdfunding

• The inventing process and the steps necessary to successfully commercialize / monetize the products that result from that process

• Startups and the funding available for them • Private equity and what’s happening in the capital markets • Securities law developments that impact startup, as well as

mature, businesses

• “Why Investment-Based Crowdfunding Will Succeed” • https://www.linkedin.com/pulse/20140630140157-19099616-why-investment-based-

crowdfunding-will-succeed • “Title III: Non-Accredited Crowdfunding –Fixing What’s Broken by Starting from

Scratch” • https://drive.google.com/file/d/0B-9hndH8ivh4NVVrSTNkNU9kR0E/view?usp=sharing

• “Torching State Crowdfunding for Startups Without Even Trying” • https://www.linkedin.com/pulse/torching-state-crowdfunding-startups-without-even-trying-

burrasca • “How the SEC Changed the Face of Crowdfunding (and Capital) in One Day”

• https://www.linkedin.com/pulse/how-sec-changed-face-crowdfunding-capital-one-day-r-p-burrasca

• “How to Create a Successful Non-Accredited Crowdfunding Ecosystem (Hint: It's Not What's Been Done So Far)”

• https://www.linkedin.com/pulse/how-create-successful-non-accredited-crowdfunding-hint-r-p-burrasca

• “The Emergence of True Crowdfunding” • https://www.linkedin.com/pulse/emergence-true-crowdfunding-r-p-burrasca

Is it something new? What’s it all about? Why do we even need it??

(before crowdfunding)

2015

16-Year Picture of Wall Street - Your Retirement Money

The Government???

“At any point in time, 80% of the businesses seeking funding in Colorado [insert maybe the nation??] are seeking less than $100,000 ….” Mike O’Donnell Executive Director Colorado Lending Source

…a New Day to Dawn!

The Game Changer

But, What is Crowdfunding?

crowd·fund·ing ˈkroudˌfəndiNG/ noun noun: crowdfunding; noun: crowd-funding 1. The practice of funding an idea, project,

product, business or cause by raising many small amounts of money from a large number of people, typically via the Internet

Is Crowdfunding something new?

NO! . . . Crowdfunding has been around for centuries. It’s been used to support

causes of all kinds (e.g., theaterical productions, musicians, etc.), e.g., Shakespeare Subscription business model which was used in the 17th century

to finance book printings 19th and 20th-century theatrical Broadway productions Statue of Liberty

Gathered crowds would:

Listen to presentations Ask questions of the fundraisers Share in the excitement, and Ultimately, make donations.

Today we have the internet -- opens up a host of new possibilities and

applications for crowdfunding.

AS OF APRIL, 2015

• Global crowdfunding grew again in 2014, expanding by 167 percent to reach $16.2 billion raised, which is up from $6.1 billion in 2013.

• In 2015, the industry is set to more than double once again, on its way to raising $34.4 billion.

• North America continued to lead the world in crowdfunding volumes, growing by 145 percent and raising a total of $9.46 billion.

The Massolution research team collected information on 1250 active crowdfunding platforms across the world.

In 2013, the World Bank commissioned a study on these and other related issues.

Stated: “Crowdfunding is going to be a disruptive global influence.”

The study predicted that by 2025 the crowdfunding industry could grow to $93 billion, however, even they didn’t know how disruptive …

Source: H Terry, D Schwartz, T Sun “The Future of Finance Part 3: The Socialization of Finance,” Goldman Sachs. March 13, 2015

What Crowdfunding is not!

What Crowdfunding is

Lots of Hard Work! … and, it requires skill …. Learn how to do it right or hire someone(s)

who can …..

However, when it comes to hiring third

parties, or even picking out the right platform,….

Beware! Danger!

Crowdfunding Platforms and Other Types of Crowdfunding Service Providers

Crowdfunding is the new “Gold Rush” and

You’re the Prospectors!

Remember who made all the money during the last Gold Rush; hint: it wasn’t the prospectors

Types of Crowdfunding

Pure Donation/Cause-Based Individual Charity 501(c)(3) Organizations and Causes, and Social Causes in All Other Forms

Rewards-Based Creative Projects, and Technology and Other Consumer Items

Investment-Based Debt-Based

Microfinance Peer-to-Peer (P2P), and Peer-to-Business (P2B)

Equity-Based (Includes Investments in Real Estate) Equity Convertible Debt, and Revenue Sharing

HOW CAN I FIND OUT MORE ABOUT ABOUT THE DIFFERENT TYPES OF CROWDFUNDING AND WHICH TYPE IS THE BEST TYPE FOR MY IDEA, PROJECT, PRODUCT, BUSINESS OR CAUSE?

The 5 Different Flavors of Colorado Crowdfunding meetups They are:

1. Investment-Based Crowdfunding for Business (principal moderator – Ray Burrasca)

2. Real Estate Crowdfunding (principal moderator – John Carter; Others -> TBA)

3. Rewards-Based Crowdfunding for Creative Projects (i.e., Kickstarter-style crowdfunding, minus the cool gadgets and minus technology)(principal moderator – Rita Crompton; Others -> TBA)

4. Product Pre-Sale Crowdfunding (cool gadgets and technology of all sorts) (principal moderator – Rita Crompton)

5. Social Impact Crowdfunding / Cause & Donations-Based Crowdfunding (principle moderator – Dennis Batchelor; Others -> TBA)

CHECK FOR THE SCHEDULE OF EACH MEETUP ON EACH MEETUP’S INDIVIDUAL MEETUP SITE

http://www.coloradocrowdfunding.org

http://www.meetup.com/Crowdfunding_Kickstarter/

http://www.meetup.com/Colorado-Crowdfunding-Real-Estate-Crowdfunding/

CHECK FOR THE SCHEDULE OF EACH MEETUP ON EACH MEETUP’S INDIVIDUAL MEETUP SITE http://www.meetup.com/Colorado-Crowdfunding-Cause-Donation-Based-Crowdfunding/

http://www.meetup.com/Colorado-Crowdfunding-Kickstarter-for-Creative-Projects/

http://www.meetup.com/Colorado-Crowdfunding-Colorado-Springs-Crowdfunding-Meetup

CHECK FOR THE SCHEDULE OF EACH MEETUP ON EACH MEETUP’S INDIVIDUAL MEETUP SITE http://www.meetup.com/Colorado-Crowdfunding-Cause-Donation-Based-Crowdfunding/

Thank You!

Ray Burrasca

www.coloradocrowdfunding.org Office: (720) 535-5219 rburrasca@coloradocrowdfunding.org cell: (303) 910-2344 rita@coloradocrowdfunding.org cell: (303) 910-8889