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Transcript of Alameda County Crowdfunding - Berkeley_0.pdfآ  07-03-2017 آ  Crowdfunding Crowdfunding is...

  • Crowdfunding

    Berkeley Public Library

    March 7, 2017

    Alameda County SBDC

  • Thank you to Our Sponsor

  • Local SBA Ecosystem

  • Partnership and Hosting

  • Free & Low cost

    Seminars

    Our Services

    Free One-on-One

    Consulting

  • Seminar Examples

    Access to Capital Successful Business Plans

    Starting a Business Meet the Lenders

    Social Media Government Contracts

    Marketing Law for Entrepreneurs

    Worker Owned Businesses Buying a Business

    Starting a Restaurant Crowdfunding and Alternatives

    Starting a Food Business How to Pitch Your Company

    Finding Your Core Customer Exporting

    Website Development Home Based Businesses

  • ACSBDC Consultants

    Ron Barrett

    Loans FJ Cava

    Generalist

    David Bokash

    Business Technology

    Lee Lambert

    Director

    Deagon Williams

    Food & Restaurants

    Paula

    Mattisonsierra

    Retail

    Mari Lovalvo

    Human Resources

    David Mitroff

    Social Media

  • ACSBDC Consultants

    Dorian Webb

    Operations

    Bob Komoto

    Export/Import

    Maria Mejia

    Finance

    Tom Camerato

    Financial Modeling

    Mary Passarella

    Accounting

    Tom Yeh

    Strategy

    Ed Duarte

    Construction

    Paul Bozzo

    Equity Funding

  • How to register for services

    www.acsbdc.org

  • Our Client Results

  • Presentation Download

    www.acsbdc.org/handouts

  • Lee Lambert

     Director, Alameda County SBDC – affiliated

    since 2008

     Founder/CEO, Simple Buyout Plans and

    Hollywood Partners

     Founder, Cambridge/Samsung Partners

    (venture fund)

     Samsung Electronics, Van Kasper & Co.,

    Deloitte, Ernst & Young

     Harvard Business School, UC Berkeley

  • Crowdfunding

     Crowdfunding is forecasted to pass venture capital as a

    source of business funding in the near future

    2014: $16.2 billion worldwide

    2015: $34.4 billion worldwide

    2020 forecast: $90.0 billion (World Bank)

     2015 Venture capital: $124 billion

    2015 Crowdfunding - $34.4 billion, up from $16.2 billion

  • Crowdfunding Segments

    Source: Massolution

  • Platforms

  • Platforms

  • What is Crowdfunding?

     3 Basic Models

     Donation/ Reward

     Lending

     Equity

  • History of Global Crowdfunding

  • Recent History

    2003:Artistshare – website for artists to raise funds to

    make recordings

    Example: Maria Schnieder (Jazz) raised $130,000

    Premiums: $9.95 – first right to download

    $250 – name listed on notes

    $10,000 – listed as Executive Producer

    Won a grammy in 2005!

  • Rewards Based Sites

    Rewards Based Sites take Off!

    2008: Indiegogo

    2009: Kickstarter

    Rewards Based sites – encompassed arts, social causes,

    entrepreneurs and small businesses

  • Kickstarter

    Through March 6, 2017

     342,000 campaigns “All or Nothing” launched

     121,000 successful

     $2.9 Billion from 12.5 million backers

     31% over $10,000

     2.8% over $100,000

  • Famous Kickstarter Campaigns

    https://www.kickstarter.com/projects/ryangrepper/coolest-

    cooler-21st-century-cooler-thats-actually

    https://www.kickstarter.com/projects/getpebble/pebble-e-

    paper-watch-for-iphone-and-android

    https://www.kickstarter.com/projects/ryangrepper/coolest-cooler-21st-century-cooler-thats-actually https://www.kickstarter.com/projects/getpebble/pebble-e-paper-watch-for-iphone-and-android

  • Indiegogo https://go.indiegogo.com/wp-content/uploads/2015/12/Indiegogo-Statistics-Infographic-2015.jpg

  • Indiegogo Notable Campaigns

    https://www.indiegogo.com/projects/flow-hive-honey-on-

    tap-directly-from-your-beehive-environment--5#/

    https://www.indiegogo.com/projects/super-troopers-2#/

    https://www.indiegogo.com/projects/flow-hive-honey-on-tap-directly-from-your-beehive-environment--5#/

  • Most Popular Reward Platforms

    Kickstarter

     Need US Bank

    Account

     Must reach your

    goal

     5% fee

     3% bank fees

     Must be approved

    to start

    Indiegogo

     Accepts Paypal

     5% fee to goal

     or 9% if partial

     3% bank fees

     No approval

    process

  • Donation Based Crowdfunding

    2010: GoFundMe platform launches

     Charitable giving

     Medical bills, Disaster Relief, Little League Teams

     Over $3 billion raised

     About 8% fee all-in

    https://www.gofundme.com/success

    Charitable fundraising often done on Kickstarter and

    Indiegogo, + many other sites

    https://www.gofundme.com/success

  • Peer to Peer Lending

  • Peer to Peer Lending

    Dominant sites: Lending Club & Prosper

    Kiva – 0% Loans from your network and extended parties

  • Peer to Peer Lending

    Other than Kiva, lending sites can be very expensive for

    businesses, especially start-ups.

    Community lenders and Kiva are generally your lower cost

    alternatives.

  • Peer to Peer Costs

    Lending Club Rates

  • Equity Crowdfunding

    Emerged in 2011 with “Regulation D” Platforms

     Microventures – Tech companies

     CircleUp – Branded consumer products and retail

    Reg D allows only “sophisticated” investors

     Generally, $1 million net worth other than home

     Or, income of $200,000 last 2 years ($300,000 if

    married) and expectation to continue at same level

  • JOBS Act of 2012

     Allowed advertising for many types of crowdfunding

    offers

     Opened up market to solicit “unsophisticated investors”

    when regulations published by the SEC in May, 2016.

     Complicated restrictions (see chart next page)

  • Equity Crowdfunding Options

  • Equity Crowdfunding Sites

  • Crowdfunding vs. Venture Capital

    Potential Advantages:

     Easier to access

     Valuation may be higher

     Investment terms may be better

     Publicity

     Broader stakeholder base

    Needs to be structured to allow VC investment – VC’s

    don’t like to be “side by side” with unsophisticated

    investors

  • Regulation CF

     Intended to help small companies raise up to $1 million

    per year

     Many requirements before offering securities and

    ongoing reporting requirements.

    - Up front attorney/accountant fees to make an offering

    - Ongoing financial reports

     The new administration has stated it will seek ways to

    lower the costs/red tape for this process to make it

    easier to raise funds

  • Reg CF - JOBS Act

  • Reg CF Deals to September 2016

  • Another Way to Use Reg CF

    Use Reg CF to obtain a loan

    Example: Red Bay Coffee

    Raised $160,000 on Wefunder

    Terms: Repay with 5% of net revenues until investor is

    returned 150% of investment (early investors received

    200%). Forecast return in 3-5 years

    https://wefunder.com/red.bay.coffee

  • Strategy

  • Telling Your Story

    “Kickstarter as a phenomenon is made much

    more comprehensible once you realize that it’s

    not following the logic of the free market; it’s

    following the logic of the gift.”

    -Rob Trump

  • Storytelling

    1. Have a character (can be family, neighborhood, etc.)

    2. Share a problem/opportunity that character encounters

    3. Make your donor a “guide” in your story

    4. Give them a plan

    5. Call them to action

  • Examples

    https://www.indiegogo.com/projects/books-on-b-new-hayward-bookstore-independent-

    community--2#/

    https://www.kickstarter.com/projects/480091182/temescal-brewing-a-new-oakland-

    brewery-and-beer-ga

    https://www.indiegogo.com/projects/mr-dewies-cashew-milk-ice-cream#/

    https://www.kickstarter.com/projects/1764790454/core-kitchen-the-worlds-most-

    nourishing-restaurant

    https://www.indiegogo.com/projects/the-core-wireless-speaker-system#/

    https://www.indiegogo.com/projects/who-gives-a-crap-toilet-paper-that-builds-toilets#/

    https://www.indiegogo.com/projects/the-core-wireless-speaker-system#/ https://www.indiegogo.com/projects/the-core-wireless-speaker-system#/ https://www.indiegogo.com/projects/the-core-wireless-speaker-system#/ https://www.indiegogo.com/projects/the-core-wireless-speaker-system#/ https://www.indiegogo.com/projects/the-core-wireless-speak