CROWDONOMIC MEDIA

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Securities CF Impact on Traditional Finance and

Regulatory Regimes

Short Intro: Perspectives from the Front Line

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@Crowdonomic; @Leo_Shimada www.crowdonomic.com /

crowdonomic.vc

• Crowdonomic

• Fin-Tech = CF + Investment and Technology Professionals

• Multiple Regulator Engagement to help Shape Competitive Policy

• Singapore Home Grown; Active throughout ASEAN

• Largest in SE. Asia; Longest Running in SG

• Mission: Connect Region’s Best Growth Co’s w. Global Capital

Highlights: Asia Trends and Trajectory

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• CF Journey: From Novelty to Financing

• Potential: Disrupting “Fundraising” to “Financial Services”

• Asia = CF Power House; China = Scale; SE. Asia = Growth

• CF & Traditional FI Relationships: From Amusement to Courtships

• Regulations at an Turning Point; Grey Operators Clamp Downs

• Securities CF on Accelerated Trajectory; Outpace Reward/ Donation CF

Global (1): Wall Street Under Siege from New Type of

Competitors

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“There are hundreds

of startups with a lot

of brains and money

working on various

alternatives to

traditional banking”

Dimon Sees Threat

From Silicon Valley

Source: The Wall Street Journal

Jamie Dimon, CEO of JP Morgan

Global (2): Fin-Tech Players are Unbundling

Traditional Financial Institutions

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Source: CB Insights

In Asia: The Banking Snr Management – Changing

Competitive Mind-Set

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Source: Crowdonomic Discussions

Private Internet Banks

Securities Crowdfunding

P2P / Debt Crowdfunding

On a Market Capitalization-basis, CF Global Leaders

Would Already be a Top 10 ASEAN Bank

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Source: Bloomberg; Press Releases

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Market Capitalization Comparison

Bn SGD; As of April 22nd, 2015

52

4339

> Quarter of

top SG

Banks

38

29

> Third of top

IND Banks

33

20

> Half of top

MY Banks

15 13

Comparable

to top ASEAN

Starting to Have Real Business Impact Today

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Source: Press Release

Loans to US companies

buying goods from

Chinese suppliers

Same service – Lowest

rate less than half of

BoC rates

On the Way - Asia CF Power House; China Dominates

in Scale; SE. Asia the Breakout Region in Growth

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China

East Asia & Pacfic

S.Asia

Europe & Central Asia

Latin AM / CRBN

MENA

Africa

Low High

114

122

58 (51%)64 (52%)

9 (8%) 10 (8%)

6 (5%) 6 (5%)

17 (15%) 17 (14%)

14 (12%) 14 (11%)

7 (6%) 7 (6%)3 (2%) 3 (3%)

Crowdfunding annual transaction value –

Intermediate term

Billion; Singapore Dollars

c

CF Currently Targets the Startup / MSME Sector –

High Potential Segment for Banks

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130 to 160 mn

MSMEs

Up to 67% feel they

are un(der) served

Banking revenue

potential ~310bn SGD

Note: NOT Adverse Selection

Source: IFC MSME Databse 2011

+20% Compound

Annual Growth Rate c

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Cross-sell / Upsell banking services

Extend Coverage to Un(der) Banked MSME/ Startup Sector

Offer innovative financing product to M/SME clients

Differentiated offering to private and priority banking

Monetization through ancillary services

Diverse Commercial Advantages to FIs to Participate

in CF Focus Segments

And Opportunity to Participate in Attractive Asset

Class through Equity Participation

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2007 2008 2009 2010 2011 2012 2013 2014

USD Cumulative Loans Issued by Lending Club (LC)

10.3 mn

USD

$1.3m/ 214

loans

$24.8m/

2,996

loans

$76.6m/

8,277

loans

$202.9m/

20,814

loans

$460.3m/

42,535

loans

$1,178.2m/

95,902

loans

$3,242.9m/

240,321

loans

$6,205.4m/

477,320

loans

Investment timing / environment

LC as a mobile app (pre-

platform strategy

implementation)

Pre-Regulatory Quiet

Period during 2008 Q2/Q3

Before LC reaching pure

inflection point

Cumulative

issued loan $

and volume

Price per Share

$0.15 @

Series A

$15 @ IPO

pricing

$23 @ 1st day

closing

Est. return @

IPO of x55

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FI Direct Participation – Too “Change Averse”;

Differentiated Business Model; Culture; Economics

Technology

Decision Making

Products

Infrastructure

Mindset

Regulations

Traditional Finance

Complex

Heavy (Deposits)

Legacy

Complex / Political

Monolithic / Physical

Risk / Long Term

S. Crowdfunding / Fintech

Simple

Fit-for-Purpose

2.0 / Core

Data / Market Driven

Virtual / Mobile / Lean

Innovative / Speed

Source: BBVA Research; Crowdonomic Discussions

Key players in Wallstreet, Highstreet, Mainstreet, SV

quick to embrace this CF thru Partnerships

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Referral

Sourcing /

Distribution

Direct

Investments

Equity

Investments

into CFPs

Not Exhaustive

Co-

Investments

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Regulation will Play a Key Part - All major markets now

at various stages of implementing CF legislation

Countries in Asia debating Equity CF

regulatory frameworks New Zealand Live Apr. 2014 – Equity / Debt CF

Malaysia Target Q2/Q3 2015 – Equity CF

Japan Target mid-2015 – Equity CF

India Proposal review – PCP* ended

Australia Proposal review – CAMAC

Singapore Public Consultation Paper shared

China Public Consultation Paper shared

Hong Kong Committee set up

Thailand SEC Public Consultation Paper

released in December 2014Source: Crowdonomic Analysis; Competitive Intelligence; Literature search

* PCP: Public Consultation Process

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Leading Markets with Multi-Year Track Records and

Credible Industry Players

2014

FCA Introduces

CF rules

2007

>8bn SGD to date

2012 2013 2014 2015 2016

JOBS Act

signed into Law

by Obama

SEC

implements Title

II (Mass mktg)

Title I, V, VI

Effective

Immediately

SEC proposals

issued for Title

III, IV

SEC potential

Implementation

for Title III, IV

2010

>130mn SGD in

Funding (2014)

20132012

>70mn SGD in

Funding (2014)2010 FSA Authorized

> 1bn SGD to date2009

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Competitive and Innovative Policies

Issuers

Investors

Offers

Operator Role

Advertisements

Corporation Only

AI / HNWIs Only

1 mn USD Primary Only

Neutral Marketplace

Within Website only

VC Funds

Inclusive w/Protective

Measures

Uncapped + Secondary

Investor / Fund Mgr

Via Social Media

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Regulatory Impact on Industry

• Formation of Loose Alliances between Conventional Fis and Fin-Tech

• Near in – ‘Crowd’ed Space; Multiple Announcements; Little Substance

• Beginning of the End of Loopholes / Exceptions

• Long term trajectory – New type of Financial Sector

• Regulation – ‘First Steps’ for Competitive Policy

• Medium term – Fin / Tech Deficit leads to Mass purge / Consolidation

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Thank You + Questions