The Truth about Crowdfunding

Transcription

1 10/24/15 The Truth about Crowdfunding Bret Conkin Capital Advantage 2015

2 WHO WE WORK WITH

3 @bretconkin BRET CONKIN #CapitalAdvantage

4 @bretconkin #CapitalAdvantage The Crowdfunding Opportunity

5 @bretconkin BRET CONKIN #CapitalAdvantage

6 @bretconkin #CapitalAdvantage The Problem: The Funding Gap

7 THE RISE OF FINTECH JP Morgan to Grant IPO Access to Everyone. - Techcrunch Regulators need to heed the rise of crowdfunded techquity markets. - Globe & Mail Investment in fintech has quadrupled. Fintech Crowdfunding - Forbes disrupting Banking, Banks Lending, could Venture lose 15% Capital, of market share to technology Wealth Management & Investing companies. - Accenture

8 MEDIA BUZZ Bret Conkin thinks Equity will become part of a Crowdfunding ladder for startups. The Exchange with Amanda Lang CBC News Big Data, sophisticated algorithms and User and Mobile friendly platforms are eroding market share for the high overhead, slow moving banks. BRET CONKIN

9 HOW CROWDFUNDING MODELS DIFFER Donations Expect nothing in return Rewards Pre-orders or perks for backers Equity Shares or securities in companies Debt Loans via the Crowd not banks

10 GLOBAL VOLUME - BY MODEL Equity is fastest growing model

11 WHAT IS DRIVING GROWTH? Surge of Internet Disruption of traditional industry inefficiencies Wave of Mobile and Social Network adoption Collaboration Economy meets Finance People wanting to Connect as they buy, do and invest Leveled playing field for access to Capital and Investment Alternative Investments demand due to poor market returns Rise of Big Data and Analytics Proof it Works

12 @bretconkin BRET CONKIN #CapitalAdvantage THE PLAYERS Regulations, Entrepreneurs & Platforms

13 CROWDFUNDING REGULATIONS Canadian Securities Commissions provide Prospectus exemptions that enable startups to raise money from anyone: Private issuer Friends / Family / Business Associates Accredited Investor exemption Offering Memorandum Can advertise their Capital Raise

14 FRIENDS/FAMILY/ BUSINESS ASSOC EXEMPTION Ontario added Spring 15

15 ACCREDITED INVESTOR EXEMPTION

16 OFFERING MEMORANDUM EXEMPTION

17 NEW CROWDFUNDING EXEMPTIONS May 14 Startup Crowdfunding exemption (BC, SK, MB, QC, NB, NS) 2 X $250k cap on capital raises /year $1500 cap for retail investors /issue Use funding portal Issuers/Investors in participating regions only

18 US MARKET SNAPSHOT Fall 13 - Rule 506 (c) Allowed advertising to AIs - $765M USD 4/15-33 states have/exploring intrastate crowdfunding

19 2014 TOP RAISES: REWARDS CANADA 1. The Core $1.24M - Audiophile Wireless Speaker 2. Plexidrone $1.22M - Photography drone 3. Vanhawks $820k - Smart Bike But most successful Kickstarters are < $10k

20 ACTIVE EQUITY PLATFORMS - CANADA For Startups/Micro-cap companies Retail Investors Startup Exemption Accredited Investors Accredited Investor/Offering Memorandum

21 ACTIVE EQUITY PLATFORMS - CANADA For Later stage companies Private Equity Deal flow via PE partners Institutional/Accredited Corp Finance/Real Estate Launched 9/15 - shopping mall Toronto office based in Israel

22 TOP RAISES: EQUITY CANADA 1. Prairie Paper: $5M - Treeless paper (via The OCMx) 1. Influitive $1.4M - CRM (via OurCrowd) 1. Spacefy $300k - Creatives space sharing (via InvestX) 1. WAFU $230k - Asian Dressings (via The OCMx/CircleUp) Canadian platforms have only been active for 0-2 years

23 ACTIVE DEBT PLATFORMS - CANADA Receivables Financing Rates 9% + P2P Rates 6% + Small Business Loans Rates 9.75% + US based 1 year in business $100k in revenues Rates avg. 15%

24 @bretconkin BRET CONKIN #CapitalAdvantage THE TRUTH ABOUT CROWDFUNDING 10 Myths Exploded

25 @bretconkin Biggest Myth #1 #CapitalAdvantage Start a Campaign and

26 @bretconkin #CapitalAdvantage Myth #2 Crowdfunding only for Startups

27 ADDRESSING THE FUNDING GAP

28 @bretconkin BRET CONKIN #CapitalAdvantage Truth #2 A Strategy for All Businesses About Efficiency & Evolution

29 @bretconkin #CapitalAdvantage Myth #3 Only good for Gadgets, Gaming & Film

30 WHAT S IN YOUR GUT?

31 SOCIAL ENTERPRISE TO REAL ESTATE

32 BY SECTOR VOLUME

33 @bretconkin BRET CONKIN #CapitalAdvantage Truth #3 Crowdfunding is Cross-Sectoral About Traction, Team & Approach

34 @bretconkin #CapitalAdvantage Myth #4 Crowdfunding is a 1 Shot Deal

35 Building Network of Jumpers Equity/Rewards Hybrid Drew on own stakeholders Raised 2x, planning

36 THE CROWDFUNDING ESCALATOR

37 EDUCATE YOURSELF National Crowdfunding Association of Canada ncfacanada.org Platform Guides & Coaching CrowdfundSuite Blog AlixeCormick.com Crowdfundinsider.com Crowdfundbeat.com Crowdsourcing.org Crowdclan.com Altfi.com

38 @bretconkin BRET CONKIN #CapitalAdvantage Truth #4 Crowdfunding is a Continuum Stage drives Model & Platform Get informed

39 @bretconkin #CapitalAdvantage Myth #5 Crowdfunding is Easy (& Cheap)

40 Goal: To tell a campaign story.. To as many people as possible. And get them to interact with it.. EXPECT TO SPEND 5-10% OF PLANNED RAISE FOR VIDEO PRODUCTION, PR, SOCIAL MEDIA AND EVEN PPC

41 Are you Ready? (Rewards Checklist) Pre-work Sectoral Fit check Prototype or Product Ability to deliver Website Social networks Campaign Marketing Plan List Application Requirements Compelling Story Funding Goal/Type Rewards or Perks Rich imagery Team Bios Pitch Video Timeline FAQs Risks & Challenges

42 Are you Ready? (Equity Checklist) Pre-work Sectoral Fit check Corporate Documents Articles, Minutes Securities register Financial Statements Shareholder agreement Business Plan Campaign Marketing plan Application Requirements Funding Goal Business Profile Financial statements Audited if raising $500k+ Management Bios Pitch Video Investment Deck Offering document Financial Projections

43 @bretconkin BRET CONKIN #CapitalAdvantage Truth #5 Requires Investment of Time & Money Governance, Priming & Promotion

44 @bretconkin #CapitalAdvantage Myth #6 It s about choosing the right Platform

45 VIEW FROM EUROPE - 100m+ Pounds UK in m Euros in 2014 ex UK Source: Venture Law Corp

46 VIEW TO THE SOUTH EquityNet - Canadian companies $80M+ (includes offline) Source: Venture Law Corp

47 Selecting a Platform Sectoral Focus Geography Success stories Online vs. Offline Fees Onboarding Success % Exit Carry Support Onboarding Promotion Funding Types Partners Co-Investment Investment Terms Entrepreneur or Investor Led Pre-emption rights Voting rights

48 @bretconkin BRET CONKIN #CapitalAdvantage Truth #6 Bring your Own Crowd Preparation trumps Platform

49 @bretconkin #CapitalAdvantage Myth #7 Crowdfunding is Free Money

50 POST-CAMPAIGN DELIVERABLES

51 @bretconkin BRET CONKIN #CapitalAdvantage Truth #7 Keeping your Promises Critical Communication, Delivery & Brand Equity

52 @bretconkin #CapitalAdvantage Myth #8 It s about The Money

53 @bretconkin BRET CONKIN Rewards Test Product/Market Fit

54 @bretconkin BRET CONKIN #CapitalAdvantage Truth #8 It s about The Process too Validation, Refinement & Community Building

55 @bretconkin #CapitalAdvantage Myth #9 It s a Haven for Fraud

56 @bretconkin #CapitalAdvantage Myth #8 It s a Haven for Fraud

57 @bretconkin BRET CONKIN #CapitalAdvantage Truth #9 Crowdfunding is Safe Transparency, Due diligence & Algorithms

58 @bretconkin #CapitalAdvantage Myth #10 Venture Capitalists hate crowdfunding

59 $2.4M on Kickstarter $2.3B to Facebook 59

60 BRET CONKIN Benefits for #CapitalAdvantage 1. Streamlined due diligence 2. Market Validation 3. Communication Channel 4. Syndication 5. Aggregated Crowd Wisdom 6. Alternative Finance - $3.3T Opportunity

61 @bretconkin BRET CONKIN #CapitalAdvantage Truth #10 Crowdfunding will surpass Venture Capital Entrepreneur Control & Community

62 BRET CONKIN 5 Key 1. Get legal advice Shareholders agreement, Offering document 2. Launch with Traction List Investor Profiles 3. Set a realistic target Oversubscription creates momentum 4. Produce Founder Q & A Video People invest in people 5. Engage customers or target market Business understanding enhances investment

63 BRET CONKIN The #CapitalAdvantage Legal since 2011 CrowdCube: 100m (GBP) raised for 290 businesses CrowdCube Stats (Average GBP) Investment: 1800 Raise: 350k Investors/pitch: 169 Equity offered: 10% Represent 50% of Equity Funding in UK (2015)

64 BRET CONKIN The #CapitalAdvantage Seedrs and KissKissBankBank partner with ING Belgium on Crowdfunding Fast Track - Oct 15

65 CONTACT Bret Conkin Crowdfunding Evangelist Platform Development Consultant Platform Founder/Executive National Crowdfunding Assn. of Canada Ambassador Blogger IT Business, CrowdfundInsider, Techvibes Wily Defenceman