equity crowdfunding by the numbers
TRANSCRIPT
EQUITY CROWDFUNDING BY THE NUMBERS
1
Copyright (c) 2015 SeedInvest, LLC (“SeedInvest”), All rights reserved. This communication is for information purposes only and should not be regarded as a recommendation of, or an offer to sell or as a solicitation of an offer to buy, any financial product. Investments are offered only via definitive transaction documents and any potential investor should read such documents carefully, including all of the risk factors relating to the investment, before investing. Start-up investments involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest in start-ups. The most sensible investment strategy for start-up investing may include a balanced portfolio of different start-ups. Start-ups should only be part of your overall investment portfolio. Investments in startups are illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest. All securities-related activity is conducted by SI Securities, LLC, a wholly owned subsidiary of SeedInvest, and a registered broker-dealer, and member FINRA, SIPC, located at 222 Broadway, 19th Floor, New York, NY 10038, and/or North Capital Private Securities Corporation, an unaffiliated entity, and a registered broker-dealer, and member FINRA, SIPC, located at 2825 E Cottonwood Pkwy, Salt Lake City, Utah 84121.
STARTUPS CREATE NEW JOBS IN THE UNITED STATESSmall businesses are America’s driving economic force. Access to capital remains one of an entrepreneur’s greatest challenges in getting a new business off the ground.
of the nation’s private sector employment.
2/3OF GDP IS PRODUCED BY STARTUPS ANDSMALL BUSINESSES
50%
Sources: Small Business & Entrepreneurship Council 2
CURRENT FUNDING SOURCES
0.91%ANGEL INVESTING
57%PERSONAL SAVINGS & CREDIT CARDS
38%FRIENDS AND FAMILY
0.05%VENTURE CAPITAL
1.43%BANKS
95% of startups and small businesses are funded by personal savings, credit cards, and friends and family. Streamlining this process can help founders spend less time raising capital and more time growing their business.
Source: US Small Business Administration 3
Kickstarter, the top US rewards based crowdfunding portal by volume, has by
itself facilitated more than $1.5 billion in fundraising since its launch in 2009.
Equity crowdfunding enables companies to raise larger amounts of capital by allowing investors to own a piece of each company.
$500,000$7,825Average Company RaiseAverage Company Raise
CROWDFUNDINGMARKETPLACE
Sources: Kickstarter and SeedInvest 4
AMERICANS ARE READY TO INVEST
SeedInvest polled 18,000 non-accredited investors about the upcoming changes to 80 year old US securities laws and found that there is significant pent-up demand to invest in startups and small businesses.
Said they are likely to invest in a startup when
the laws change.
Said they have invested in stocks and
bonds before.
Said they expect to invest in multiple
companies per year.
Said they expect to invest at least $1,000
per company.
75%89%89%68%
Source: SeedInvest 5
OUR FIRST TESTING THE WATERS CAMPAIGN
1 hour 24 hours 48 hours
in indications of interest.$9,300,000 48 HOURSin 3,171
PEOPLE
Source: SeedInvest 6
INTERESTING DATA ACROSSTHREE DEALS
8,000Total People
$34MMInvestment Interest
$4,000Average Interest
Our first Testing the Waters campaigns confirmed our hypothesis that loyal customers would have significant interest in owning a small piece of their favorite companies.
Source: SeedInvest 7
$11,000,000
$9,000,000
$7,000,000
$5,000,000
$3,000,000
$1,000,000
$0
DSTLD Snapwire WayBetter
THE FIRST 48 HOURS ARE VITAL
3/4 OF INDICATIONS CAME
FROM SMALL INVESTORS
6,000
5,000
4,000
3,000
2,000
1,000
0
$1,000 $5,000 $10,000 $25,000 $100,000
ANTICIPATED INVESTMENT VOLUME IS EVENLY DISTRIBUTED$10,000,000
$1,000,000
$10,000
$0
$1,000 $5,000 $10,000 $25,000 $100,000
Source: SeedInvest 8
COMPARINGREGULATION MODELS
AverageCheck Size $40,000
Regulation D Regulation A+
~20
$5,000
$1,000,000
$4,000
1,000+
$500
$100,000
AverageNumber of Participants
SmallestCheck
LargestCheck
Equity crowdfunding has been legal in the UK for 4 years.
LESSONS FROM THE UK
2,000 + COMPANIES RAISED OVER £175MILLION / ZERO FRAUD
9Regulation A+ numbers are anticipated based on TTW campaigns. Source: Crowdfund Insider
2.6
1.1
0.4
A RAPIDLY GROWING MARKETGlobal Equity Crowdfunding Amount ($ in Billions)
Source: Massolution
2013 2014 2015E
10
THE NEXT MAJOR FINTECH FRONTIER
$1,170
$400
$258$211$186
$30
Immediately Addressable FinTech Market Opportunity ($ in Billions)
Payments Small BusinessLoans
Student Loans Personal Lending
Wealth Management
Crowdfunding
ACCORDING TO GOLDMAN SACHS
Source: Goldman Sachs 11
“Crowdfunding, sourcing funding across a network of supporters, is potentially the most disruptive of all of the new models in finance.”- Goldman Sachs, March 2015
12
