thecrowdcafe: global crowdinvesting industry presentation
DESCRIPTION
Presentation on the global crowdinvesting industry given to the NYESN Meetup in NYC.TRANSCRIPT
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The Global Investment Crowdfunding IndustryData, Insight & Trends
Jonathan Sandlund
Jonathan Sandlund | @jsandlund
@jsandlund
Wednesday, August 28, 13
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thecrowdcafe.com research, data and analysis on the global crowdinvesting industry
localinvestors.org live, think, invest local
about me
Jonathan [email protected]@jsandlund
Wednesday, August 28, 13
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Thank you!
Leading law firm serving the security crowdfunding industry: Portals; Crowdpreneurs; The Crowd.
thecrowdcafe.com/NYESNDownload
Wednesday, August 28, 13
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Intro to Investment CrowdfundingThe Mechanism
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13
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Funded$
$
$$
$
the mechanism
FAMILY FRIENDSCUSTOMERS
INVESTORSAFFINITIES X =
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Funded$$
$$
$
the mechanism
FAMILY FRIENDSCUSTOMERS
INVESTORSAFFINITIES X =
Wednesday, August 28, 13
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Funded$$
$ $
$
the mechanism
FAMILY FRIENDSCUSTOMERS
INVESTORSAFFINITIES X =
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Funded$ $
$ $
$
the mechanism
FAMILY FRIENDSCUSTOMERS
INVESTORSAFFINITIES X =
Wednesday, August 28, 13
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Funded$
$
$
$
$
the mechanism
FAMILY FRIENDSCUSTOMERS
INVESTORSAFFINITIES X =
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Not Funded
$
$
$ $
$
the mechanism
FAMILY FRIENDSCUSTOMERS
INVESTORSAFFINITIES X =
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reward vs. investment-based
~ $5,000
~$160,000
Median Fundraise
~$775,000
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12Jonathan Sandlund | @jsandlund
The Legalities of CrowdfundingTitle II & Title III of the JOBS Act
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The JOBS Act
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Title II Title III
‣ Lifts ban on general solicitation and advertising on security offerings to accredited investors
‣ Provided issuer takes reasonable steps to verify accreditation
‣ Must file amended Form D
‣ Businesses Raise up to $1mm in 12-month period
‣ Investors tiered limits on investment amount
‣ Rule-making includes SEC and FINRA
Crowdfunding for Accredited Investors
Crowdfunding for Everyone
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Accredited Crowdfunding IMPACT
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‣ Brings dramatic efficiencies to our private capital markets • Efficiencies = (Internet) * (Private Sector Innovation)
‣ Geographically, socially indiscriminate
‣ Stands to motivate accredited capital off the sidelines and into private markets in an enormous way
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13
Democratized Crowdfunding IMPACT
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‣ Businesses • Conversion of Social to Financial Capital • New Era of Marketing
‣ Investors • Financial Empowerment• Trust • Meaningful Investment
‣ Society • Equal Opportunity
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The U.S. Market
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13
platforms: market segmentation
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Investment Crowdfunding Platforms
Niche/Affinity"Local" (SMBs)Startups
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Global CrowdfundingWhat can we learn?
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13
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Macro-Data: Selected Sample
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Equity180 Deals
$132 Million
Equity59 Deals
~$16 Million
Debt2,573 Deals$227 Million
Equity28 Deals
$2.6 Million
Equity11 Deals$954k
Equity16 Deals
$15 Million* Selected sample of platforms
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304 Equity
Placements
2,573 Loans
$300+ Million in Crowdfunding Transactions...
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Crowdfunding ModelsInnovation, Diversity
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13
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‣ A+ to C Risk Bands Applied
‣ Offer 1, 3, 5 year loans
‣ £5,000 - £1,000,000
‣ Secondary market
‣ Crowdfunded two $80,000 small business loans in under 29 minutes
Debt2,573 Deals$227 Million
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Discovery
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Splash Bathroom Accessories Limited
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Credit Score History
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Key Financials
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Questions & Answers
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$0!
$2,000,000!
$4,000,000!
$6,000,000!
$8,000,000!
$10,000,000!
$12,000,000!
$14,000,000!Monthly Loan Originations Since Inception!
August 2010 June 2013Wednesday, August 28, 13
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‣ Launched 2010
‣ Sector Focus General (concentration: internet, food & drink)
‣ Lowest Raise $19,000 Highest Raise $2.3 million
‣ Averages (median, n= 48)
‣ Raise $124,800
‣ Equity Offered 16%
‣ Post-Money Valuation $805,000
‣ Number of Investors 52
‣ Investment Size $2,712 (low: $331; high: $16k)
Equity59 Deals
~$16 Million
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13
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‣ Launched July 2012
‣ Sector Focus Internet
‣ Lowest Raise $15,200 Highest Raise 240,000
‣ Averages (median, n=24)
‣ Raise $64,000
‣ Equity Offered 10%
‣ Post-Money Valuation $520,000
‣ Number of Investors 75
‣ Investment Size $1,070
Equity28 Deals
$2.5 Million
Jonathan Sandlund | @jsandlund
Minimum Investment $16
Wednesday, August 28, 13
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‣ Launched Mid-2012
‣ Sector Focus Consumer Products/Retail
‣ Lowest Raise $440,000 Highest Raise $2.4 Million
‣ Averages (median, n=16)
‣ Raise
‣ Number of Investors 15
‣ Investment Size $59,333
Equity16 Deals
$15 Million
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13
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‣ Domain Expertise Founding team has deep experience investing in consumer product and retail industries
‣ Curated Deal-Flow To date, less than 2% of applications accepted onto the platform
‣ 3 Weeks Time it took Melt to raise $1,000,000
Jonathan Sandlund | @jsandlund
Equity16 Deals
$15 Million
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The Disruption
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13
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Crowdfunding
TechnicalDisruptionEntrance of the internet into the 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 colliding. Driving a paradigm shift in early stage capital markets
Investment Crowdfunding
Wednesday, August 28, 13
Summed up...
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The first major change in security law in 70+ years. Allows the internet to enter the
fundraising process.
Processes moved online, efficiencies realized, and incumbents with traditional cost
structures obsoleted
What it means...
Technical
Wednesday, August 28, 13
This is what it looks like...
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Technical
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Nearly all categories disrupted by the internet...
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Except fundraising.
Technical
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A fundamentally more efficient capital formation process
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Technical
A Big Bank...
Source: http://www-core.nesta.org.uk/library/images/NestaBanks.jpg
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But it’s not just structural change driving the disruption
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Cultural
It’s cultural.
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Chicago Booth: Only 13% of Americans trust the stock market
Distrust is pervasive
Chicago Booth Financial Trust Index
Cultural
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Today little alternative to public markets
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Tomorrow individuals empowered to invest in the the companies, causes and people they believe in
Cultural
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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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Jonathan [email protected]@jsandlund
Thank You!thecrowdcafe.com/NYESNDownload
Wednesday, August 28, 13