crowdfunding: next generation financing
TRANSCRIPT
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CROWDFUNDING: Next Generation Financing
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www.crowdonomic.vc!
February 2015
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Finance Industry Radar … Rapidly Shifting Competitive Landscape
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New Players Changing the Game… Innovativation, Advantaged Operating Model
Products!
Processes!
Infrastructure!
Economics!
IT!
Complex!
Manual!Repetitive!
Physical!Palatial!
Legacy!
Tool!
Traditional Finance!
Simplicity!Back to Basics!
Transparent!Digital / Data !
Mobile Lean !
Lean!
Core Enabler!
Crowdfunding!
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Global Crowdfunding Titans…Rocket launch from Facebook App to Billion Dollar Company
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• Debt Crowdfunging!• Borrowers + Lenders !
• Started 2007!• Facebook App!
• 6.2bn USD in cumulative loans!• Mid-single digit default rates!
Malaysia Bank #3!
Malaysia Bank #2!
Malaysia Bank #1!
25 billion MYR!
55%!
35%!
30%!
Market capitalization (As of Feb 4th, 2014)!
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Crowdfunding… Online Crowdsourcing of your Venture Financing / Investment Needs
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What it is: Crowdsourcing for venture capital !
How it Works: Fundraising accelerated by social media and harnessing the wisdom of the crowds!
Fill standard offer templates!
Publish Online!
Advertise via social media!
Access virtual investor community!
Reach $ target!Grow your business!
Smaller amounts of money from many people to reach higher targets!
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Efficient and Transparent Investment and Fundraising Process
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Standardized offer templates
‘1 click’ investment participation
All or nothing crowdfunding process
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CF Engine… Ability to Harness the full power of web and social media
Publish Offer Page!
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Virtual Community! Distribution!
Social Proof! Validation!
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Technology! Consumer/Retail/F&B!
Real Estate! Fund!
Versatile Financing Option Effective across Industries
10+ mn MYR!
10+ mn MYR!
5 mn MYR!
265 mn MYR!
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It is a Game Changer for both Start-ups and Investors
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Efficient outreach to multiple investors via internet!
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Startups & MSMEs!
Low – mid digit FRs!Record millions !
8 -12 weeks!Average online fundraise period!
Invest along-side seasoned pros!
Investors!
Crowdsourced due diligence community!
Bite-sized Investments / Diversified Portfolio!
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For non-top 1% in wealth; The Need for Wealth Creation has Never Been Greater
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Quota: “Richest 1% will soon hold more net wealth than the other 99% put together”!
Quota: “48% of the world’s net HH wealth in the hands of the world’s richest 1%”!
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Venture Investments available to a restricted few.. This will change with Crowdfunding
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Late 1800’s! 2004!
ROI:x 3000!
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Investors: Navigate a New Asset Class through a Collaborative Approach
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>"
CF Platform!
>"
Angel Investors!Lead syndicates!
Systematic Deal Flow!
>"
Investment Funds!Crowdsource LPs!
Top-up through Crowd!
>"
Retail Investors!Invest alongside
professionals!
>"
Corporates!Use CF as an early
prediction market!
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Established Businesses: Building Advantaged Ecosystems through Win-Win Partnerships
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>"
CF Platform!
>"
Financial Service Providers (1)!
Value-add licensed activities!
>"
Corporates!Sponsor and Mentor
upcoming Stars!
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Incubators!Provide foundation for
growth!
>"
Financial Service Providers (2)!
Ancillary Services!
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All Markets at Advanced Stages of Introducing Pro-Crowdfunding Reform… Malaysia at the Forefront
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! Under review - TBD!
China! Under review - TBD!
Hong Kong! N/A!
Thailand! SEC Public Consultation Paper released in December 2014!
Source: Crowdonomic Analysis; Competitive Intelligence; Literature search!* PCP: Public Consultation Process!
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China
East Asia & Pacfic
S.Asia
Europe & Central Asia
Latin AM / CRBN
MENA
Africa
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Future Orientation: Crowdfunding in the developing world expected to reach $122bn. Asia will dominate.
Source: “Crowdfunding’s Potential for the Developing World” Report; InfoDev, Finance and Private Sector Development Department Washington – World Bank !
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! ~80 bn!
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ECF Regulatory Framework – Malaysia Highlights*
(*) Note: Contents in this page are based on SC ECF Public Response Paper and they are still pending parliament final approval. Source: http://www.sc.com.my/wp-content/uploads/eng/html/consultation/140925_PublicResponse_2.pdf!
Who: All Malaysia incorporated private companies + SC Registered Micro Funds!
How much: Private Companies (RM 3 mn / RM 5 mn) + VC Funds (uncapped)!
Share Types: Common Shares (preferred and ordinary); single type per Offering!
Fundraise Type: All-or-Nothing (Oversubscription is allowed)!
Offer Types: Primary (new share sale); Secondary (existing shares; 2 wks per 6 months)!
Advertisements: May advertise to the public but ONLY via the ECF platform!
Investors: Retail (RM 50k) + Angel (500k)+ Sophisticated Investors (Uncapped)!
Disclosures: <300k (not mandatory); 300 – 500k (case by case); >500k (Audited) !
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Strong Malaysia Market Fundamentals
* HNWI: High Net Worth Individuals!
68k HNWIs*! with! 1 trillion MYR in Net Wealth by 2015!
Significant size retail investor base highly optimistic about investing across asset classes!
Source: e27; World Startup Wiki !
3rd largest # of exits in SE. Asia!
Developing entrepreneurial ecosystem!
Growing # of local entrepreneur Heroes!
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Wrap-up
• Niche>Alternative>Mainstream…. Preferred Venture Financing option!
• Startups/SMEs: Efficient access to Smart Capital!
• Investors: Economic Participation in Next Bn $ Company!
• Businesses: Value Accretive Partnerships!
• Crowdfunding: Online Crowdsourcing Venture Financing / Web + SM!