Equity Crowdfunding: Is It a Good Funding Option for Your Startup?Geri Stengel, President / Ventureneer 8.12.2015

EQUITY CROWDFUNDING: IS IT A GOOD FUNDING OPTION FOR YOUR STARTUP?

●What and why

●Just the facts, ma’am

●Give it to me straight

●What’s it take to succeed

●Both sides of the equation

●Resources

2

What Is Equity Crowdfunding?

Regulation D of Title II of the JOBS Act

●506(b)

●506 (c)

●Title III, still to come

Why Equity Crowdfunding?

●Centralizes

●Streamlines

●Simplifies

●Shortens the fundraising process

JUST THE FACTS, MA’AM

5

Equity Crowdfunding Is In Its Infancy

Venture Capital Angel Investments

$48 Billion

Real world $24 Billion

Crowdfunding $.5 Billion

Source: MoneyTree, Center for Venture Research and Crowdnetic for 2014

Success Rate Among Entrepreneurs Seeking Angel Investments

Real World

19%Crowdfunding

24%

Top 10 Cities for Equity Crowdfunding

GIVE IT TO ME STRAIGHT

9

Misconceptions Cloud Equity Crowdfunding Reality

●Verifying accreditation

●Managing investors is complicated

●Financial reporting

●Expensive

●Venture Capitalists diss crowdfunding

●If you build it, they will come

●Social media outreach will make your campaign go viral and the rest, as they say is history

Photo credit: Flickr, Faungg's Photos, Cloudy Mountain

The Ugly of Crowdfunding

Photo Credit: Flickr, Tambako The Jaguar, «I'm ugly, and?»

Equity Crowdfunding: To Carpe Diem or Not

Photo credit: Flickr, Hamish Darby, kasplosh

●A large market

●Solving a major pain-point

●Defensible competitive advantage

●An exit

●A great team

Fundraising: No One Size Fits All

●506(b)

●506(c)

●Offline

●RewardsPhoto credit: Flickr, David Goehring, Emptily Nested

Choosing an Equity Crowdfunding Platform

● Compensation

● Deal structure

● Due diligence

● Exclusivity

● Minimums and maximums

● Products

● Regulation compliance

● Regulatory Profile

● Self service vs. full service

● Stage of company

● Syndicates

● Tools

● Track record

● Value added

Success Stories

Wonder TechnologiesCrowdfunderCommitted: $800,000

DigitzsCrowdfunderCommitted: $2 million

ONEVESTOnevestCommitted: $2 million

Le Grand CourtageCircleUpRaised: $400,000

Good Clean LoveCircleUpRaised: $400,000

Smarty Pants VitaminsCircleUpRaised in 2 rounds: $4.7 million

The Benefits of Leading With a Rewards-Based Crowdfunding

●Debt and Equity free

●Market research

●Social proof

●Validation

●Customer engagement

●Marketing

Use Rewards-Based Crowdfunding as a Stepping Stone

Other Company MachineKickstarterGoal: $50,000Raised: $312,000

VROUPlum AlleyGoal: $30,000Raised: $32,000

ThinxKickstarterGoal: $50,000Raised: $65,000

IndiegogoGoal: $10,000Raised: $19,000

Website$25,000

TOTAL: $110,000

Real Food BlendsIndiegogoGoal: $10,000Raised: $16,000

BumblerootIndiegogoGoal: $9,000Raised: $10,000

WHAT’S IT TAKE TO SUCCEED

18

Equity Crowdfunding Pointers

●Build your network before you need it

●Get organized

●Segment network, target appropriately

●Communicate clearly

●Focus on solving a pain point

●Highlight the skills of the team

●Make a compelling video

●Emphasize traction: customers, partners, media mentions, etc.

●Show momentum

●Reach out often using different

●Make the ask and ignore rejection

●Attend to details

Photo credit: Flickr, Anonymous Account, Where

Skills Required

●Organized, diligent

●Marketer

●Story teller

●Clear communicator

●Realistic projections

●Aligns words with actions

●Frank when mistakes happen

●Good follow up

Photo credit: Flickr, Bob Bob, Getting airtime in the women's boarder cross at The Brits 2010 at Laax, Switzerland

BOTH SIDES OF THE EQUATION

21

What’s in It for the Investor?

●Make a profit

●Apply their own skills and experiences

●Give back  

●Participate actively in investing

●Join boards of directors, especially true for women  

●Finding like-minded people to invest in – values driven

Photo credit: Flickr, Simon Cunningham, Return on Investment

Why Angels Like Crowdfunding Platforms

●Increased deal flow

●Curated deals

●Centralized/convenient

●Transparency

●Streamlines process

●Saves time

●Diversifies portfolio

●Learn from others

RESOURCES

24

Resources

●Stand Out In the Crowd: How Women (and Men) Benefit From Equity Crowdfunding

●All Geri Stengel’s articles on crowdfinance

●6 Common Misconceptions About Equity Crowdfunding

●How to Ensure a Successful Crowdfunding Campaign

●5 Secrets to a Successful Equity Crowdfunding Campaign

●Study Reveals Secrets to a Successful Crowdfunding Campaign

●Going For it through Crowdfunding

●Women vs. Men: Who’s Better at Crowdfunding?

●How Crowdfunding Is Closing The Funding Gap for Female Founders

Questions

STAND OUT IN THE CROWD:How Women (and Men) Benefit From Equity Crowdfunding

THANK YOU

Follow on Twitter: https://twitter.com/VentureneerLike on Facebook: https://www.facebook.com/VentureneerJoin on Google+: https://plus.google.com/+GeriStengel/postsVisit Ventureneer: http://ventureneer.com

Early Growth Financial Services

Follow on Twitter: @EarlyGrowthFSLike on Facebook: https://www.facebook.com/EarlthGrowthFSVisit Early Growth Financial Services: http://www.earlygrowthfinancialservices.com