Presentation given by Jonathan Sandlund, TheCrowdCafe.com @Silicon Valley Crowdfunding Conference April 3, 2014.

1. 1
U.S. Crowdinvesting Industry
Jonathan Sandlund
Jonathan Sandlund | @jsandlund |
@jsandlund

2. 2
thecrowdcafe.com
leading provider of research, data and analysis on the
global crowdinvesting industry
Jonathan Sandlund
j@thecrowdcafe.com
@jsandlund
About Me

3. 3
Rewards v. Investment
Why it matters.

4. 4
~$5,000
~$160,000
Median Fundraise
~$775,000

5. 5
Loyalzoo Raised ~$300,000 from 157
investors.

6. 6
Very large investors Very small investors

7. 7
Title II (Accredited Crowdfunding)
vs.
Title III (Retail Crowdfunding)
Title IV (Reg A+)
vs.
Intrastate Crowdfunding
vs.

8. 8
Title II (Accredited) Crowdinvesting
Jonathan Sandlund | @jsandlund

9. 9
General Solicitation
What does it look like?

10. 10

11. 11

12. 12

13. 13
How much general solicitation (506c
offerings) is happening?

14. 14
Shhhh…..
Quiet 506c Deals

15. 15
Marketplace Structures &
Considerations
Jonathan Sandlund | @jsandlund

16. 16
Market Segmentation.

17. 17
Platforms
VerticalizedSMBsStartups
By Addressable Markets

18. 18
‣ Sector-Focus
‣ Generalists v. Specialists
‣ Stage-Focus
‣ Seed v. Early v. Emerging Growth v. Later-Stage
‣ Project-Based (Real Estate / Film / Music / Etc.)
‣ Affinity
‣ By Race / Geography / Sex / Interests & Ideals
Additional Considerations

19. 19
Curated vs. Non-Curated Platforms

20. 5% 25% 100%
Very High
Curation High
No
CurationModerate
50%
<5% 100%
acceptance rate
The Curation Spectrum

21. Carry 20% Carry
SaaS $19 - $69 / month
* selected samples
Blended 10% Success Fee +
10% Carry
Curation drives business models.

22. 22
Are investors a commodity?
Where is the Enterprise Value being built?

23. 23

24. 24
Market Optimizers
vs.
Market Makers

25. 25
The Value of a Distributed Cap Table
Pre & Post-Funding

26. 26
Biggest unfair advantage of all.
Access to capital.

27. 27
What’s Next?
From 2000 to 2010 the cost of building a
startup declined by a factor of 10X
Fundraising is next.
Centrality will drive fundraising costs into the
ground, making capital formation accessible to
all.

28. 28
What’s Next?
Twitter et al. liberated control over information
Crowdinvesting will liberate control over capital.

29. 29
The Disruption — Not If, But When
Jonathan Sandlund | @jsandlund

30. 30
Crowd
funding
Technical
Disruption
Entrance of the internet
into 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
Investment Crowdfunding

31. 31
Music
Travel
Retailing
Before After
Internet-driven Disruption Technical

32. A fundamentally more efficient
capital formation process
32
Technical
A Big UK Bank
Source: http://www-core.nesta.org.uk/library/images/NestaBanks.jpg

33. A fundamentally more efficient
capital formation process
33
Technical

34. Summed up...
✓ The first major change
in security law in 70+
years;
✓ Invites the internet into
the capital formation
process.
TechnicalTechnical Disruption
What it means...
✓ Processes moved online
✓ Efficiencies realized
✓ Incumbents with
traditional cost structures
obseleted
✓ New markets served

35. But it’s not just structural change
driving the disruption.
35
Cultural
It’s also cultural.

36. A cultural shift
36
‣ Web 1.0 The Information Web
‣ Web 2.0 The Connected Web
‣ Web 3.0 The Meaningful Web
Cultural

37. 37
Chicago Booth: 13% of Americans trust the stock
market
Distrust is pervasive
Chicago Booth Financial Trust Index
Cultural

38. Today
little alternative to public markets
38
Tomorrow
individuals empowered to invest in the the companies,
people and causes they believe in
Cultural

39. Where are we?
39
Time
Penetration
Market Adoption: S-Curve
Equity
Debt

40. 40
Jonathan Sandlund
@jsandlund
Thank You!
Jonathan Sandlund j@thecrowdcafe.com