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U.S. Crowdinvesting Industry

Jonathan Sandlund

Jonathan Sandlund | @jsandlund |

@jsandlund

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thecrowdcafe.com leading provider of research, data and analysis on the global crowdinvesting industry

Jonathan Sandlundj@thecrowdcafe.com @jsandlund

About Me

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Rewards v. Investment Why it matters.

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~$5,000

~$160,000

Median Fundraise

~$775,000

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Loyalzoo Raised ~$300,000 from 157 investors.

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Very large investors Very small investors

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Title II (Accredited Crowdfunding)

vs. Title III (Retail Crowdfunding)

Title IV (Reg A+)

vs. Intrastate Crowdfunding

vs.

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Title II (Accredited) Crowdinvesting

Jonathan Sandlund | @jsandlund

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General Solicitation What does it look like?

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How much general solicitation (506c offerings) is happening?

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Shhhh….. Quiet 506c Deals

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Marketplace Structures & Considerations

Jonathan Sandlund | @jsandlund

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Market Segmentation.

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Platforms

VerticalizedSMBsStartups

By Addressable Markets

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‣ Sector-Focus

‣ Generalists v. Specialists

‣ Stage-Focus

‣ Seed v. Early v. Emerging Growth v. Later-Stage

‣ Project-Based (Real Estate / Film / Music / Etc.)

‣ Affinity

‣ By Race / Geography / Sex / Interests & Ideals

Additional Considerations

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Curated vs. Non-Curated Platforms

5% 25% 100%

Very High Curation High

No CurationModerate

50%

<5% 100%

acceptance rate

The Curation Spectrum

Carry 20% Carry

SaaS $19 - $69 / month

* selected samples

Blended 10% Success Fee + 10% Carry

Curation drives business models.

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Are investors a commodity? Where is the Enterprise Value being built?

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Market Optimizers

vs.

Market Makers

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The Value of a Distributed Cap Table Pre & Post-Funding

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Biggest unfair advantage of all.

Access to capital.

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What’s Next?

From 2000 to 2010 the cost of building a startup declined by a factor of 10X

Fundraising is next. Centrality will drive fundraising costs into the

ground, making capital formation accessible to all.

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What’s Next?

Twitter et al. liberated control over information

Crowdinvesting will liberate control over capital.

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The Disruption — Not If, But When

Jonathan Sandlund | @jsandlund

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Crowd funding

Technical Disruption Entrance of the internet into 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 collidingInvestment Crowdfunding

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Music

Travel

Retailing

Before After

Internet-driven Disruption Technical

A fundamentally more efficient capital formation process

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Technical

A Big UK Bank

Source: http://www-core.nesta.org.uk/library/images/NestaBanks.jpg

A fundamentally more efficient capital formation process

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Technical

Summed up...

✓ The first major change in security law in 70+ years;

✓ Invites the internet into the capital formation process.

TechnicalTechnical Disruption

What it means...

✓ Processes moved online✓ Efficiencies realized✓ Incumbents with

traditional cost structures obseleted

✓ New markets served

But it’s not just structural change driving the disruption.

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Cultural

It’s also cultural.

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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Chicago Booth: 13% of Americans trust the stock market

Distrust is pervasive Chicago Booth Financial Trust Index

Cultural

Today little alternative to public markets

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Tomorrow individuals empowered to invest in the the companies, people and causes they believe in

Cultural

Where are we?

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Time

Penetration

Market Adoption: S-Curve

Equity

Debt

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Jonathan Sandlund @jsandlund

Thank You!

Jonathan Sandlund j@thecrowdcafe.com