November 2016

The Italian Invoice Trading Marketplace

Agenda

CrowdCity

How it works

Business strategy

Investor information

Market analysisI.

II.

V.

III.

IV.

3

Invoice Trading allows SMEs to assign their receivables directly to investors through an online Marketplace that

efficiently manages all flows of the transaction.

Invoice Trading: the Italian market vs the UK Benchmark

In the U.K. invoice trading volume achieved the £ 1Bln milestone in the summer 2016. In Italy, the market, with € 21Mln

of traded volume, is at an early stage of a promising growth path.

3,9

13,516,3

18,221,0

0

5

10

15

20

25

0,5 3,3 18,7 35,9 52,5103,4

195,5

314,0

434,8

618,4

796,3

0

200

400

600

800

1.000

8,1% Ann. yield

Italy

20 Investors

40Businesses financed

~ 220Sold invoices

36K Avg. invoice

value70 gg.

Avg. maturity

€ 21M Invested

United Kingdom

97,8%

Settled transactions Annualised yield

Market size (£, Mln)

Write downs: 0,3%

0%

2%

4%

6%

8%

0%

5%

10%

15%

20%

Yield Bad debts (right scale)

Market size (€, Mln)

I. Market analysis Source: MarketInvoice, Politecnico di Milano, data elaboration CrowdCity. Data refers to major players in their respective geographical area and represent almost the entire market

4

The Italian market for trade receivables is currently worth € 570Mld

Trade receivables market data (2015)

Trade receivables 2015 € 570Bln

Yearly growth (YoY) 3,0%

Businesses insolvency (YoY) -6,0%

Average loss on trade receivables 3,0%

Average payment days 95 days

Highlights

Business lending B2B average payment terms

55

27

38

17 18

56

80

35

51

1621

69

0

20

40

60

80

100

Contractual payment extension Effective payment extension

FOCUS: Factoring in Italy (2015)

Receivables advanced 9,8%

Yearly growth 3,0%

Average advance 80%

50

60

70

80

90

100

110

Prestiti fino ad 1 anno a società non finanziarie residenti in ItaliaValore nominale dei crediti acquistati pro soluto da intermediari finanziari ex 106 TUB

305 Bln

281Bln19 Bln

11Bln

68%

32%

56 Bln

Nonrecourse

Recourse

Source: Banca d’Italia, Politecnico di Milano, Euler Hermes, Intrum Justitia, data elaboration CrowdcityI. Market analysis

Loans up to 1 year to Italian non-financial sector

Face value of receivables acquired by financial intermediaries ex 106 TUB

570 Bln

570 Bln

56 Bln10%90 Bln

16%

5 Bln1%

421 Bln73%

Factoring

Invoicediscounting

Other

Unservedmarket79 Bln

14%22 Bln4%

35 Bln6%

436 Bln76%

P.A.

B2C

Export

B2B

Invoices Collection

Potential market

Outstanding invoices and collection solutions (2015)

(re

ba

se

d 1

00

)

5

The Invoice Platform - Competitive Advantages Innovation Efficiency

Price Settlement

The trade is settled within 5 days from assignment

In a single payment, equal to 100% of the sale price

Via wire transfer directly between seller and buyer

Service features

The subscription process is entirely digital and requires 10 minutes

The discount rate is negotiated directly between parties

Maximum flexibility in terms of frequency of use (i.e. no lock in period, minimum

commitments, etc.)

“Mediatore Creditizio" (i.e. authorized financial intermediary)

He assesses the obligor’s rating and the credit quality of every single transaction

According to his market’s knowledge and the analysis provided by the external

Rating Agency, he suggests the appropriate discount rate for each transaction

He identifies businesses that can benefit from the platform’s service

Online Contracts Management

The platform manages all communications between the parties

Contracts are underwritten with digital signature

Contracts are delivered with legally certified emails (PEC)

II. CrowdCity

CrowdCity innovates and simplifies the receivables assignment process

6

Seller

Seller

Businesses issue invoices to their customers in

connection to the delivery of goods or provision

of services.

The Company in need for cash can find on our

marketplace specialized Investors willing to

anticipate the liquidity in exchange for a

discount on the invoices’ face value.

The Platform approves as eligible only

receivables which are verified, legally

transferable and not overdue, only if related to

B2B invoices of € 25,000 or more, regularly

registered in the seller’s accounting books and

issued in compliance with the Italian law.

The receivables, sold with no recourse (i.e. “pro

soluto”), are rated according to their credit

worthiness which provides an indication of the

appropriate discount rate.

The sale price is transferred in a single payment to the bank account of the seller, within 5 days from the signing of the Sale

Agreement

III. How it works

The Seller cashes in the selling price within 5 days

Obligor

Investor

Seller

Seller

7

The Mediatore suggests the

appropriate discount rate, which is

equivalent to the current market

price of the receivables

The Mediatore Creditizio,

duly authorized by the

Regulator, analyses all the

information in his

possession to express an

indication of the appropriate

discount rate.

In his analysis the Mediatore

relies on his experience,

current market conditions

and his estimate of the

investors’ risk appetite.

Mediatore Creditizio

To assign a rating, Cerved

evaluates the company

financials, any prejudicial

event, the industry trends

as well as all information

gathered by reliable and

official data sources.

Cerved rating relies on

“Payline Decision”, the

innovative information

service that monitors in real

time payment habits of

Italian SMEs and their

Directors.

Cerved Rating Agency

Cerved uses a scale of 13

notches, 8 of which are

considered “Investment Grade”

CrowdCity’s analyses

independently the following

Company’s information:

Balance sheet strength analysis

Income statement profitability analysis

Cash flow balance analysis

Industry trends

The result is then published

on the Platform in a specific

Credit Report.

CrowdCity

The report is the reference tool

to analyse the risks of the

transaction

Obligors undergo 3 levels of credit analysis

III. How it works

8

The Sale Agreement: 100% online Management & Direct Settlement

The investor

downloads the

receivables Sale

Agreement and

underwrites it

with its digital

signature.

The seller is then

notified of the

investor’s

purchase and in

his turn he signs

the contract with

his personal

e-signature.

E-SIGNATUREPURCHASE

The receivables

are uploaded,

rated and

published on the

Marketplace.

The Investor sets

his eligibility

criteria and start

the selection

process.

The final portfolio

of Receivables to

be bought may be

identified either

through manual

selection or

automatically

thanks to the

AutoBid tool.

The contract is

finally sealed and

declared as not

amendable only

once CrowdCity’s

verifications are

successfully

completed.

CrowdCity then

notifies the Obligor

of the assignment

of the receivables,

via legally certified

emails, and

provides indication

of the bank account

details of the new

legal Entity to be

paid (i.e. the

Buyer).

NOTIFICATION

The investor

settles the sale

price via wire

transfer.

At the maturity

date of the

receivable, the

Obligor pays,

again via wire

transfer, the

invoice face

value directly to

the Investor (no

flows of

payments are

handled by the

Platform).

SETTLEMENT

CrowdCity verifies

that the Sale

Agreement is

properly defined

and completed,

and certifies the

official date of

both e-

signature’s.

Seller and buyer

can always access

for their perusal,

within the

Personal Area

section of the

website, the

contracts signed

by their

counterparty.

VERIFICATION

III. How it works

9

Beyond the Invoice Trading - Supply Chain Financing

IV. Business strategy

Strategy

Potential Sellers may be identified directly by the

Obligors, which are usually either multinational

corporations or players with a national footprint

with high credit standing.

Crowdcity analyses the Obligor’s supply chain to

identify businesses with solid fundamentals,

potentially interested in optimizing their working

capital.

The Obligor introduces CrowdCity to its interested

suppliers, facilitating the On-Boarding process.

Strengths

The relationship with the Obligor allows us to collect

privileged information about the potential seller.

The Obligor can confirm the quality of its business

relationship with the supplier.

The Obligor can thus rely on suppliers with a properly

managed cash flow cycle, and eventually may even

negotiate more favourable payment terms.

Supply chain

creditworthiness

Obligor

Large multinational company benefiting of a proven reputation and credit standing

AAABB -

10

23%

10%

67%

Discount rate

CrowdCity

Mediatore

Investor

Return distribution

REVENUES BREAKDOWN

Obligor

Mediatore

Investor

Face Value

1/3 of return

70% of commission

Alignment of interests between our Network and the Investors

Registered at the Albo dei Mediatori, they identify and

source different financing solutions for their clients. As

independent legal entities, they provide useful insights

and opportunities on the SMEs landscape. As sponsors,

they introduce and promote CrowdCity’ service to

businesses with liquidity issues/constraints.

Mediatori Creditizi

Professionals within the business consultancy sector,

they recommend CrowdCity as solution provider for

supply chain optimization. They seek out companies

that, even though fundamentally solid, still need to

optimize their liquidity management without

compromising the quality of their products/services

Financial Consultants

With regards to short term financing, CrowdCity allows

banks to offer a more effective service to their clients.

Where traditional banking fails to meet expectations (e.

insufficient credit lines, heavy capital constraints, etc.)

CrowdCity can complement their offering by providing a

fresh and efficient alternative solution.

Banks

Cash flow sequence

IV. Business strategy

11

Invoices as an asset class

Financial instrument: trade debt

Repayment: self-liquidating, zero-coupon

Duration: 30 – 180 days

Ticket size: from 25.000 € to 1.000.000 €

Risk-reward: credit risk + cash urgency

premium

0,0% 0,1% 0,2% 0,7%

3,7%

9,4%

15,8%

18,7%

22,1%

11,6%10,5%

3,9% 3,4%

0%

5%

10%

15%

20%

25%

A1.1 A1.2 A1.3 A2.1 A2.2 A3.1 B1.1 B1.2 B2.1 B2.2 C1.1 C1.2 C2.1

Cerved rating’s distribution

(avg. 2008 - 2014)

Sellers

Obligors

1-Y P(d) 0,00% 0,00% 0,00% 0,00% 0,01% 0,11% 0,27% 0,73% 1,60% 3,58% 7,08% 16,33% 52,78%

Investment Grade Speculative Grade

Risk metrics and investor’s risk management toolbox

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

5,0%

5,5%

6,0%

Average default rates -

subjects surveyed by Cerved

Risk Management tools

CrowdCity’s company report

Cerved credit rating report (ECA approved by ESMA,

in accordance with Regulation (EC) No 1060/2009)

Payline, the receivables’ settlement monitor

Diversification

Systemic risk: low correlation with financial markets

V. Investor information Source: Cerved, data elaboration CrowdCity

The Risk management process consists of a thorough credit analysis and the selection of properly diversified portfolios.

CrowdCity analyses the worthiness of every obligor and approves as eligible only the ones rated at investment grade level.

Contacts

Piazzale Luigi Cadorna, 13 Milano

Tel: + 39 02 89095407

Fax: +39 02 89092583

Email: support@crowdcity.it

Website: www.crowdcity.it

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