Discover the online lending landscape and the opportunities for investors and entrepreneurs with Canaan Partners' GP Dan Ciporin. Dan is a repeat online lending investor, Lending Club Board member, and an investor in Borro, the leading online asset-backed lending platform (also currently funding on OurCrowd). He will join OurCrowd's Principal David Stark and Head of Investment Community Zack Miller for a lively discussion and Q&A session.

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Canaan Partners Overview

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Recent Fund Announcement

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Total Assets Under Management

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Early Stage, Multi-Sector

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12 Exits in 12 Months

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 Crowdfunding
 Lending alternatives
 Payments and digital
currency
 Unique SKUs
 High margin products
 Ability to leverage social
eCommerce
 Reinventing old industries
 Crowdsourcing
 Reputation economy
Marketplaces
Technology Investing Themes
FinTech
 Data center efficiency
 Software defined everything
 Internet of everything
 Business analytics
 Mobile/Enterprise apps
 eCommerce enablement
Big Data Cloud

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 Crowdfunding
 Lending alternatives
 Payments and digital
currency
Technology Investing Themes
FinTech

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Dan Ciporin, General Partner
Experience Education

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The FinTech Opportunity: Watch Out Money,
Your World is Changing!
January 15, 2015

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AdTech
$165B
Financial Services
$25,450B
Financial Services Spend Eclipses AdTech by 150x

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Traditional Bank Lending Turned On Its Head
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4th Largest US Internet IPO in History

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Financial Services is a $25T+ Business
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1.7
3.1
9.4
11.2
0
2
4
6
8
10
12
Commercial Consumer Credit Home Mortgage Deposits
Total ($ Trillions)
Source: Deposits, Consumer Credit and Home Mortgage from Federal Reserve Bank; and Commercial from MarketWatch

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Financial Sector Has Yet to Optimize Technology
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Lack of Innovation Hamstringing Margins
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Reliance on Trading Volumes to Drive Revenue
15
% Equity Trading Volume Over GDP

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Basel I Basel II Basel III
1988
2005 -
2009 (slow
adoption)
2010
Common Equity 2.00% 4.50%
Tier 1 Capital of
Risk Weight
Assets
4.00% 6.00%
Leverage Ratio
3% - (US FED announced it would be
6% for 8 Systemically important
financial institutions, 5% for insured
bank holding companies)
Liquidity Coverage
Ratio
Firms of size need to hold 21-30 days
of net cash outflow on hand
Other Notes
Defined Risk Weighted
Assets (RWA), Tier 1 Capital
Ratio, Leverage Ratio
an additional "mandatory capital
conservation butter" of 2.5%
Focused on mainly on
reporting requirements
a "discretionary counter-cyclical buffer",
which would allow national regulators to
require up to another 2.5% of capital
during periods of high credit growth.
Regulation Increases Pressure on Banks

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Reserve Requirements Also Cutting into ROE
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Cost Advantages Powered by Tech
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Origination All online
Pays commissions to
agents accepting
physical cash
Gross sending
volume
90% ACH, 10%
cards
Mostly Cash
Gross margins 66.5% 45%/55%
Other costs No physical locations
Cost for maintaining
and growing physical
locations
Not Just P2P: Remittance Another Example
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Personal Asset-Backed Securities: Yet Another
Example
 Technology expansion of the market via the Internet: allows for
loans against physical goods to be originated online
 Principal/interest rate losses over 4 years: ZERO. Defaults of
10%, but with 130% recovery of those defaults
 2014 Revenues of ~$20 MM on ~$73 MM of originations,
growth rate of over 70%
 Automated appraisal system built upon 45K historic appraisals
 Extremely attractive lifetime values, based upon strong repeat
usage

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The Market is Evolving
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P2P Forecasted to be $500B in 10 Years from Just
5 Players Alone
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Opportunities Abound
 MASSIVE market (Trillions, not Billions)
 Lack of innovation from incumbents
 Regulatory environment lifting startups
 FinTech exploding now
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Questions?
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