The Truth about Crowdfunding Bret Conkin Capital Advantage 2015 10/24/15
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Title 1
The Truth about Crowdfunding
Bret ConkinCapital Advantage 2015
10/24/15
WHO WE WORK WITH
BRET CONKIN
@bretconkin
#CapitalAdvantage
The Crowdfunding Opportunity
#CapitalAdvantage@bretconkin
The Problem: The Funding Gap#CapitalAdvantage
@bretconkin
THE RISE OF FINTECHJP 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.Forbes
Banks could lose 15% of market share to technology companies. - Accenture
Fintech | Crowdfunding disrupting Banking, Lending, Venture Capital, Wealth Management & Investing
Big Data, sophisticated algorithms and User and Mobile friendly platforms are eroding market share for the high overhead, slow moving banks. BRET CONKIN
The Exchange with Amanda Lang CBC News
MEDIA BUZZ
Bret Conkin thinks Equity will become part of a Crowdfunding ladder for startups.
HOW CROWDFUNDING MODELS DIFFER
Donations Expect nothing in return
Rewards Pre-orders or perks for backersEquity Shares or securities in companiesDebt Loans via the Crowd not banks
GLOBAL VOLUME - BY MODEL
Equity is fastest growing model
$1.1 B USD in Equity CF in US 20149
WHAT IS DRIVING GROWTH?Surge of Internet Disruption of traditional industry inefficienciesWave of Mobile and Social Network adoptionCollaboration Economy meets Finance People wanting to Connect as they buy, do and investLeveled playing field for access to Capital and InvestmentAlternative Investments demand due to poor market returnsRise of Big Data and AnalyticsProof it Works
Make adjustments10
BRET CONKIN
The PlayersRegulations,Entrepreneurs & Platforms
#CapitalAdvantage@bretconkin
CROWDFUNDING REGULATIONS
Canadian Securities Commissions provide Prospectus exemptions that enable startups to raise money from anyone:
Private issuerFriends / Family / Business Associates Accredited Investor exemptionOffering MemorandumCan advertise their Capital Raise
$1M cap in Alta and Washington$5k for ordinary investor Alta$2k or 5% of annual income or net work (10%) over $100k Wash12
FRIENDS/FAMILY/BUSINESS ASSOC EXEMPTION
Ontario added Spring 15
$1M cap in Alta and Washington$5k for ordinary investor Alta$2k or 5% of annual income or net work (10%) over $100k Wash13
ACCREDITED INVESTOR EXEMPTION
$1M cap in Alta and Washington$5k for ordinary investor Alta$2k or 5% of annual income or net work (10%) over $100k Wash14
OFFERING MEMORANDUM EXEMPTION
$1M cap in Alta and Washington$5k for ordinary investor Alta$2k or 5% of annual income or net work (10%) over $100k Wash15
NEW CROWDFUNDING EXEMPTIONSMay 14 | Startup Crowdfunding exemption (BC, SK, MB, QC, NB, NS)2 X $250k cap on capital raises /year$1500 cap for retail investors /issueUse funding portalIssuers/Investors in participating regions only
$1M cap in Alta and Washington$5k for ordinary investor Alta$2k or 5% of annual income or net work (10%) over $100k Wash16
US MARKET SNAPSHOTFall 13 - Rule 506 (c) Allowed advertising to AIs - $765M USD4/15 - 33 states have/exploring intrastate crowdfunding
Texas has 8 instrastate platformsOnly 1% if the total amount raised via 506b17
2014 TOP RAISES: REWARDS | CANADA The Core $1.24M Audiophile Wireless Speaker
Plexidrone$1.22M Photography drone
Vanhawks$820k Smart Bike
(All $USD)
But most successful Kickstarters are < $10k
ACTIVE EQUITY PLATFORMS - CANADARetail InvestorsStartup ExemptionAccredited InvestorsAccredited Investor/Offering Memorandum
For Startups/Micro-cap companies
ACTIVE EQUITY PLATFORMS - CANADAPrivate EquityDeal flow via PE partnersInstitutional/AccreditedCorp Finance/Real Estate
For Later stage companies
Toronto office | based in IsraelLaunched 9/15 - shopping mall
TOP RAISES: EQUITY | CANADAPrairie Paper:$5M Treeless paper(via The OCMx)
Influitive$1.4M CRM (via OurCrowd)
Spacefy$300k- Creatives space sharing(via InvestX)
WAFU$230k Asian Dressings(via The OCMx/CircleUp)
Canadian platforms have only been active for 0-2 years
ACTIVE DEBT PLATFORMS - CANADA
US based | 1 year in business$100k in revenuesRates avg. 15% P2PRates 6% +
Receivables FinancingRates 9% +Small Business LoansRates 9.75% +
The two largest peer-to-peer lenders, Lending Club and Prosper, grew by 65 times from $26 million in 2009 to $1.78 billion in 2014. 22
BRET CONKIN
The truth about crowDfunding10 Myths Exploded
@bretconkin#CapitalAdvantage
Biggest Myth #1Start a Campaign and @bretconkin#CapitalAdvantage
Myth #2Crowdfunding only for Startups@bretconkin#CapitalAdvantage
ADDRESSING THE FUNDING GAP
P & G storyKiss Kiss Bank Bank26
BRET CONKIN
Truth #2A Strategy for All BusinessesAbout Efficiency & Evolution@bretconkin#CapitalAdvantage
Myth #3Only good for Gadgets, Gaming & Film
@bretconkin#CapitalAdvantage
WHATS IN YOUR GUT?
SOCIAL ENTERPRISE TO REAL ESTATE
BY SECTOR VOLUME
BRET CONKIN
Truth #3Crowdfunding is Cross-SectoralAbout Traction, Team & Approach @bretconkin#CapitalAdvantage
Myth #4Crowdfunding is a 1 Shot Deal@bretconkin#CapitalAdvantage
@bretconkin
Building Network of JumpersEquity/Rewards HybridDrew on own stakeholdersRaised 2x, planning 3rd
Company is in early stage and building its own network of "Jumpers"They could draw on their own stakeholder baseCombined rewards and equity - a $2K investment gave them $500 flight creditAre preparing for another round with the launch of their new technology to truly "crowdsource" flightsTotal raise to date about $100k
34
THE CROWDFUNDING ESCALATOR
EDUCATE YOURSELF
National Crowdfunding Association of Canada
ncfacanada.org
CrowdfundSuite BlogAlixeCormick.comCrowdfundinsider.comCrowdfundbeat.comCrowdsourcing.orgCrowdclan.comAltfi.comPlatform Guides & Coaching
BRET CONKIN
Truth #4Crowdfunding is a ContinuumStage drives Model & PlatformGet informed@bretconkin#CapitalAdvantage
Myth #5Crowdfunding is Easy (& Cheap)@bretconkin#CapitalAdvantage
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
The most important thing to do is deliver a carefully crafted campaign story to as many people as possible and get them to interact with it.
FundRazr is a master of this.
We have an automated coaching system to help normal Muggles easily create high quality fundraising campaigns.
And we have very advanced social media technology that helps our campaigns rise above the noise on Facebook and Twitter
Are you Ready? (Rewards Checklist)Pre-workSectoral Fit checkPrototype or ProductAbility to deliverWebsiteSocial networksCampaign Marketing PlanEmail List
Application RequirementsCompelling StoryFunding Goal/TypeRewards or PerksRich imageryTeam BiosPitch VideoTimelineFAQsRisks & Challenges
Are you Ready? (Equity Checklist)Pre-workSectoral Fit checkCorporate DocumentsArticles, MinutesSecurities registerFinancial StatementsShareholder agreementBusiness PlanCampaign Marketing plan
Application RequirementsFunding GoalBusiness ProfileFinancial statementsAudited if raising $500k+Management BiosPitch VideoInvestment DeckOffering documentFinancial Projections
BRET CONKIN
Truth #5Requires Investment of Time & Money Governance, Priming & Promotion@bretconkin#CapitalAdvantage
Myth #6Its about choosing the right Platform@bretconkin#CapitalAdvantage
VIEW FROM EUROPE
Source: Venture Law Corp- 100m+ Pounds UK in 2014- 201m Euros in 2014 ex UK
More Euro jurisdictions allow retail investors vs US
44
VIEW TO THE SOUTH
Source: Venture Law CorpEquityNet - Canadian companies $80M+ (includes offline)
E.g. $150M for Altaview Financial (Ottawa), $20M for Vierge Aromatique (Toronto), $4M for NYCE Sensors (Burnaby), $30M committed for TotalTech Healthcare (Kelowna)
45
Selecting a PlatformSectoral FocusGeographySuccess storiesOnline vs. OfflineFeesOnboardingSuccess %Exit CarrySupportOnboardingPromotion
Funding TypesPartnersCo-InvestmentInvestment TermsEntrepreneur or Investor LedPre-emption rightsVoting rights
BRET CONKIN
Truth #6Bring your Own CrowdPreparation trumpsPlatform@bretconkin#CapitalAdvantage
Myth #7Crowdfunding is Free Money@bretconkin#CapitalAdvantage
POST-CAMPAIGN DELIVERABLES
BRET CONKIN
Truth #7Keeping your Promises CriticalCommunication, Delivery & Brand Equity@bretconkin#CapitalAdvantage
Myth #8Its about The Money@bretconkin#CapitalAdvantage
BRET CONKIN
@bretconkinRewards Test Product/Market Fit
BRET CONKIN
Truth #8Its about The Process tooValidation, Refinement & Community Building@bretconkin#CapitalAdvantage
Myth #9Its a Haven for Fraud@bretconkin#CapitalAdvantage
Myth #8Its a Haven for Fraud@bretconkin#CapitalAdvantage
BRET CONKIN
Truth #9Crowdfunding is SafeTransparency, Due diligence & Algorithms@bretconkin#CapitalAdvantage
Myth #10 Venture Capitalists hate crowdfunding@bretconkin#CapitalAdvantage
58
$2.4M on Kickstarter$2.3B to Facebook
Spark Capital and Matrix Partners invested $19M and got a 20x exit
Occulus Rift example:$2.4M raised on Kickstarter$2B sale to FacebookSome 18 months later, the company has been sold for more than 400 times as much as it raised from KickstarterSeedrs est $300 reward = $20k
Rewards and Equity are blending into hybrid models and constantly evolving given the huge interest.
BRET CONKIN
@bretconkinBenefits for VCsStreamlined due diligenceMarket ValidationCommunication ChannelSyndicationAggregated Crowd WisdomAlternative Finance - $3.3T Opportunity
#CapitalAdvantage
BRET CONKIN
Truth #10Crowdfunding will surpass Venture Capital Entrepreneur Control & Community @bretconkin#CapitalAdvantage
The average for the crowdfunding market is expected to surpass those of the angel and venture capital annual averages of 20 billion dollars and 30 billion dollars respectively, to raise over 34 billion dollars by the end of 2015. - See more at: http://investorintel.com/market-analysis-intel/why-alternative-finance-will-conquer-the-3-3-trillion-market-opportunity/#sthash.1iqufzzV.dpuf60
BRET CONKIN
@bretconkin5 Key TipsGet legal advice Shareholders agreement, Offering documentLaunch with TractionList Investor ProfilesSet a realistic targetOversubscription creates momentumProduce Founder Q & A VideoPeople invest in people Engage customers or target marketBusiness understanding enhances investment
BRET CONKIN
@bretconkinThe Future?Legal since 2011CrowdCube: 100m (GBP) raised for 290 businessesCrowdCube Stats (Average GBP)Investment: 1800Raise: 350kInvestors/pitch: 169Equity offered: 10%Represent 50% of Equity Funding in UK (2015)
#CapitalAdvantage
1st deal 75k in 5 monthsJustpark in Feb 2015 3.7m in 5 weeks
62
BRET CONKIN
@bretconkin#CapitalAdvantageThe Future?
Seedrs and KissKissBankBank partner with ING Belgium on Crowdfunding Fast Track- Oct 15
Bank moves to advisory position2 day turnaround on eligibility and chance for success63
OUR SERVICES
Platforms
Dealers/Banks
Entrepreneurs
Investors/StakeholdersPlatform DevelopmentStrategic Planning AdvisoryMarketing/PRWorkflow/UXBusiness DevelopmentMarket ResearchPrivate LabelComplianceOperationsPlatform DevelopmentConsultingAdvisoryWorkshopsPrivate LabelChannel PartnershipsBusiness Unit DevelopmentPlatform AccessCampaign PlansCampaign PromotionPitch VideosSocial MediaFundraisingComplianceWorkshopsDeal flowSyndicationCampaign AdvisoryCurationPrivate LabelDashboards
TESTIMONIALS
I collaborated with Bret on the upcoming launch of a new dealer and new platform for crowd finance.His fintech expertise, broad skill-set and drive helped us innovate while still getting stuff done in timely fashion.
Aman Jain, CCO, Altfi Capitalwith great results, passing on valuable business advice and insights into the crowdfunding market too. Bret has a great ability to jump on the latest trends and make sense of them in a way that others can follow
Brian Jackson, Director, IT World CanadaBret is an absolute professional and it is a pleasure recommending him . Hes a recognized crowdfunding expert and advocate in North America and a valued asset and leading ambassador to the Canadian crowdfunding industry.
Craig Asano, ED, Natl Crowdfunding Association of Canada
KEYNOTES, WORKSHOPS & ADVISORYCanadian Resort Conference 2015Canadian Crowdfunding Summit 2015Experience Tectoria 2015Funding Road Show 2014/2015BCEDA Summit 2014Public Safety Canada Knowledge Exchange 2014NCFA/VEC Igniting Venture Capital in BC 2014Advisor, Adviseme International High Growth FirmsCommunity Futures Howe Sound 2009-12
Bret has done a phenomenal job instructing and coaching our small business clients. He works well with all different industries and personalities
Megan Lussier, Business Analyst, Community Futures Howe Sound
CONTACT
Bret [email protected]
Crowdfundsuite.com@bretconkin
Crowdfunding EvangelistPlatform Development ConsultantPlatform Founder/ExecutiveNational Crowdfunding Assn. of Canada Ambassador Blogger IT Business, CrowdfundInsider, TechvibesWily Defenceman
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