10/24/15 The Truth about Crowdfunding Bret Conkin Capital Advantage 2015
WHO WE WORK WITH
@bretconkin BRET CONKIN #CapitalAdvantage
@bretconkin #CapitalAdvantage The Crowdfunding Opportunity
@bretconkin BRET CONKIN #CapitalAdvantage
@bretconkin #CapitalAdvantage The Problem: The Funding Gap
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
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
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
GLOBAL VOLUME - BY MODEL Equity is fastest growing model
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
@bretconkin BRET CONKIN #CapitalAdvantage THE PLAYERS Regulations, Entrepreneurs & Platforms
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
FRIENDS/FAMILY/ BUSINESS ASSOC EXEMPTION Ontario added Spring 15
ACCREDITED INVESTOR EXEMPTION
OFFERING MEMORANDUM EXEMPTION
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
US MARKET SNAPSHOT Fall 13 - Rule 506 (c) Allowed advertising to AIs - $765M USD 4/15-33 states have/exploring intrastate crowdfunding
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
ACTIVE EQUITY PLATFORMS - CANADA For Startups/Micro-cap companies Retail Investors Startup Exemption Accredited Investors Accredited Investor/Offering Memorandum
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
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
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%
@bretconkin BRET CONKIN #CapitalAdvantage THE TRUTH ABOUT CROWDFUNDING 10 Myths Exploded
@bretconkin Biggest Myth #1 #CapitalAdvantage Start a Campaign and
@bretconkin #CapitalAdvantage Myth #2 Crowdfunding only for Startups
ADDRESSING THE FUNDING GAP
@bretconkin BRET CONKIN #CapitalAdvantage Truth #2 A Strategy for All Businesses About Efficiency & Evolution
@bretconkin #CapitalAdvantage Myth #3 Only good for Gadgets, Gaming & Film
WHAT S IN YOUR GUT?
SOCIAL ENTERPRISE TO REAL ESTATE
BY SECTOR VOLUME
@bretconkin BRET CONKIN #CapitalAdvantage Truth #3 Crowdfunding is Cross-Sectoral About Traction, Team & Approach
@bretconkin #CapitalAdvantage Myth #4 Crowdfunding is a 1 Shot Deal
Building Network of Jumpers Equity/Rewards Hybrid Drew on own stakeholders Raised 2x, planning 3rd @bretconkin
THE CROWDFUNDING ESCALATOR
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
@bretconkin BRET CONKIN #CapitalAdvantage Truth #4 Crowdfunding is a Continuum Stage drives Model & Platform Get informed
@bretconkin #CapitalAdvantage Myth #5 Crowdfunding is Easy (& Cheap)
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
Are you Ready? (Rewards Checklist) Pre-work Sectoral Fit check Prototype or Product Ability to deliver Website Social networks Campaign Marketing Plan Email List Application Requirements Compelling Story Funding Goal/Type Rewards or Perks Rich imagery Team Bios Pitch Video Timeline FAQs Risks & Challenges
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
@bretconkin BRET CONKIN #CapitalAdvantage Truth #5 Requires Investment of Time & Money Governance, Priming & Promotion
@bretconkin #CapitalAdvantage Myth #6 It s about choosing the right Platform
VIEW FROM EUROPE - 100m+ Pounds UK in 2014-201m Euros in 2014 ex UK Source: Venture Law Corp
VIEW TO THE SOUTH EquityNet - Canadian companies $80M+ (includes offline) Source: Venture Law Corp
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
@bretconkin BRET CONKIN #CapitalAdvantage Truth #6 Bring your Own Crowd Preparation trumps Platform
@bretconkin #CapitalAdvantage Myth #7 Crowdfunding is Free Money
POST-CAMPAIGN DELIVERABLES
@bretconkin BRET CONKIN #CapitalAdvantage Truth #7 Keeping your Promises Critical Communication, Delivery & Brand Equity
@bretconkin #CapitalAdvantage Myth #8 It s about The Money
@bretconkin BRET CONKIN Rewards Test Product/Market Fit
@bretconkin BRET CONKIN #CapitalAdvantage Truth #8 It s about The Process too Validation, Refinement & Community Building
@bretconkin #CapitalAdvantage Myth #9 It s a Haven for Fraud
@bretconkin #CapitalAdvantage Myth #8 It s a Haven for Fraud
@bretconkin BRET CONKIN #CapitalAdvantage Truth #9 Crowdfunding is Safe Transparency, Due diligence & Algorithms
@bretconkin #CapitalAdvantage Myth #10 Venture Capitalists hate crowdfunding
$2.4M on Kickstarter $2.3B to Facebook 59
BRET CONKIN Benefits for VCs @bretconkin #CapitalAdvantage 1. Streamlined due diligence 2. Market Validation 3. Communication Channel 4. Syndication 5. Aggregated Crowd Wisdom 6. Alternative Finance - $3.3T Opportunity
@bretconkin BRET CONKIN #CapitalAdvantage Truth #10 Crowdfunding will surpass Venture Capital Entrepreneur Control & Community
BRET CONKIN 5 Key Tips @bretconkin 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
BRET CONKIN The Future? @bretconkin #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)
BRET CONKIN The Future? @bretconkin #CapitalAdvantage Seedrs and KissKissBankBank partner with ING Belgium on Crowdfunding Fast Track - Oct 15
CONTACT Bret Conkin bret@crowdfundsuite.com 778.323.7297 Crowdfundsuite.com @bretconkin Crowdfunding Evangelist Platform Development Consultant Platform Founder/Executive National Crowdfunding Assn. of Canada Ambassador Blogger IT Business, CrowdfundInsider, Techvibes Wily Defenceman