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The Global Investment Crowdfunding IndustryData, Insight & Trends

Jonathan Sandlund j@thecrowdcafe.com

Jonathan Sandlund | @jsandlund

Wednesday, July 17, 13

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

localinvestors.org live, think, invest local

about me

Jonathan Sandlundj@thecrowdcafe.com@jsandlund

Wednesday, July 17, 13

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Intro to Investment CrowdfundingThe Mechanism

Jonathan Sandlund | @jsandlund

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Funded$

$

$$

$

the mechanism

FAMILY FRIENDSCUSTOMERS

INVESTORSAFFINITIES X =

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Funded$$

$$

$

the mechanism

FAMILY FRIENDSCUSTOMERS

INVESTORSAFFINITIES X =

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Funded$ $

$ $

$

the mechanism

FAMILY FRIENDSCUSTOMERS

INVESTORSAFFINITIES X =

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Funded$

$

$

$

$

the mechanism

FAMILY FRIENDSCUSTOMERS

INVESTORSAFFINITIES X =

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Not Funded

$

$

$ $

$

the mechanism

FAMILY FRIENDSCUSTOMERS

INVESTORSAFFINITIES X =

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reward vs. investment-based

~ $5,000

~$100,000

Average Fundraise

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10Jonathan Sandlund | @jsandlund

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

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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

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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 markets in an enormous way

Jonathan Sandlund | @jsandlund

Wednesday, July 17, 13

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

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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

Wednesday, July 17, 13

Macro-Data: Selected Sample

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Equity180 Deals

$132 Million

Equity58 Deals

~$15 Million

Debt2,248 Deals$194 Million

Equity27 Deals

$2.2 Million

Equity9 Deals

$784,000

Equity15 Deals

$13 Million* Selected sample of platforms

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289 Equity

Placements

2,248 Loans

$300+ 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 - £1,000,000

‣ Secondary market

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

Debt2,248 Deals$194 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 2013Wednesday, July 17, 13

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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)

Equity58 Deals

~$15 Million

Jonathan Sandlund | @jsandlund

Wednesday, July 17, 13

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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

‣ Number of Investors 75

‣ Investment Size $1,070

Equity27 Deals

$2.2 Million

Jonathan Sandlund | @jsandlund

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=15)

‣ Number of Investors 15

‣ Investment Size $59,333

Equity15 Deals

$13 Million

Jonathan Sandlund | @jsandlund

Wednesday, July 17, 13

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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

Jonathan Sandlund | @jsandlund

Equity15 Deals

$13 Million

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The Disruption

Jonathan Sandlund | @jsandlund

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Crowdfunding

TechnicalDisruptionEntrance 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 to drive a paradigm shift in early stage capital markets

Investment Crowdfunding

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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

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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

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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

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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 Sandlundj@thecrowdcafe.com@jsandlund

Thank You!

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