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
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Intro to Investment CrowdfundingThe Mechanism
Jonathan Sandlund | @jsandlund
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Funded$
$
$$
$
the mechanism
FAMILY FRIENDSCUSTOMERS
INVESTORSAFFINITIES X =
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Funded$$
$$
$
the mechanism
FAMILY FRIENDSCUSTOMERS
INVESTORSAFFINITIES X =
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Funded$$
$ $
$
the mechanism
FAMILY FRIENDSCUSTOMERS
INVESTORSAFFINITIES X =
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Funded$ $
$ $
$
the mechanism
FAMILY FRIENDSCUSTOMERS
INVESTORSAFFINITIES X =
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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