Crowdfunding - The Power of Friends, Family & Fools

Crowdfunding The power of friends, family & fools Author: Eva Hukshorn

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1.  EFactor is a Smart Network that matches entrepreneurs with the very people who can help them grow

2.  Finding Business Partners: from partners to investors, from coaches to customers

3.   Largest Entrepreneurial Network in the World with 1mio members in 185 countries

4.  An online community Offering you a network, knowledge, events, and every business resources you need to succeed @ discount!

5.   GO Online, fix your personal profile & company profile and get MATCHED!

It’s not about connecQons -‐ it’s about the right ones…

Eva Hukshorn: An introducHon

•  Work Experience -  Current: Partner EFactor

Board of Advisory: TreFoil Energy / CleanDrinks / Global Thinkers / ShowLinq

Coach Startup: Bootcamp Amsterdam / New Venture McKinsey -  2009 – 2010: Dutch BouHque – Marktlink Mergers & AcquisiHons, Amsterdam -  2007 – 2009: Royal Bank of Scotland – Corporate Finance, Amsterdam -  2004 – 2009: ABN AMRO – Corporate Finance New York, Amsterdam -  2003 – 2004: Accenture – ConsulHng London, Amsterdam

•  EducaQon -  1997 – 2002: MSc Economics, Finance – University of Groningen, the Netherlands -  2003: InternaHonal & Asian Studies – NaHonal Sun Yat-‐Sen University, Taiwan -  2009 – 2011: CerHfied Management AccounHng (CMA) – InsHtute of Management Accountants

(IMA), United States -  2009 – 2011: Colloquium General & Modern Art – Academy for History of Art, the Netherlands -  2012: InternaHonal Financial Report Standards (DipIFR) – AssociaHon of Chartered CerHfied

Accountants (ACCA), United Kingdom

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FUNDING TUESDAY, EVERY TUESDAY

So what can you expect from us each Funding Tuesday?

1.   Webinars on EFactor on Finance & Funding related topics in the EVENT SecHon

2.  Blogs & interviews with informal investors and funded entrepreneurs with Hps & tricks in the BLOGS secHon under NOW

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3.  Finance & Funding related arHcles on NOW feed

4.  In the Finance & Funding GROUP on our website you will find Q&As of the webinars under NETWORK

5.  In the KNOWLEDGE base you will find more and more presentaHons on Finance & Funding related topics, including the webinar presentaHons

6.  And if you become a VIP MEMBER you will personally be supported on your Finance & Funding related quesHons

Webinar Program Overview 2012

June 19: Business Plan WriHng -‐ A Roadmap to Success July 3: Pitching & PresentaHon -‐ 3 Minutes, 1 Impression July 17: Strategy -‐ A Vision for the Future, A Strategy for Gehng There July 31: BudgeHng & ForecasHng -‐ PredicHng the Outcome Aug 14: Working Capital -‐ An Unknown Key to Success Aug. 28: Capital Management -‐ Playing with Risk Sept 11.: Funding & Investments -‐ Some Sources are More Equal then Others Sept. 25: ValuaHon -‐ Art or Science Oct 9: Exit Strategy -‐ Nice to Have or Need to Have? Oct. 23: Bootstrapping -‐ An AlternaHve Answer to Funding Nov 6: Crowdfunding -‐ The Power of Friends, Family and Fools Nov. 20: Networking -‐ Nice You have 3000 Friends, I have 30 Relevant ConnecHons Dec. 4: MarkeHng & (Social) Media -‐ Noise or Value? Dec. 11: No Sales, No Glory Dec. 18: Most Common Mistakes of Entrepreneurs

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Typical life cycle of a High Content Growth Startup

IDEA PROTO TYPE LAUNCH GROWTH

PRE-‐SEED

SEED

EARLY & LATER-‐STAGE / GROWTH

IPO/EXIT

HIGH RISK

LOW RISK

CAPITAL DEFINITIONS 6

An overview of Funding Providers acHve in each of the stages

PRE-‐SEED & SEED CAPITAL

•  Friend Family & Fools •  Grant Funding •  University Funds •  Angel Investors •  Crowdfunding •  Bootstrapping •  CompeHHons •  Incubators

•  (Syndicate of) Angel Investors

•  Venture Capital •  Private Equity •  Commercial Bank

•  Venture Capital •  Private Equity •  Commercial Banks •  Hedge Funds •  Public Market / Stock

Exchange

EARLY & LATER STAGE /GROWTH CAPITAL

IPO/EXIT

USD 0 – 1mio USD 1 – 25mio USD 25mio +

HIGH RISK LOW RISK 7

What kind of funding do these Funding Providers give?

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1. Debt/Loan 2. Equity

Funding through own resources: -  Income -  Savings -  Revenue

Funding external parQes without ownership + fee: -  Personal Loan -  Bank loan -  ConverHble debt -  Mortgages -  Et cetera

Funding external parQes with ownership: -  Common -  Preferred -  Mezzanine

3. Bootstrapping

Which Funding Provider gives which form of Funding?

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3. Bootstrapping 1. Debt/Loan 2. Equity

Funding through own resources

Funding external parHes without ownership + fee

Funding external parHes with ownership •  Income & savings

•  Revenue •  Friends, Family &

Fools •  DonaQon Based

Crowdfunding, •  Grant Funding •  University Funds •  CompeQQons

•  Friends, Family & Fools

•  Angel Investors •  Peer-‐2-‐Peer

Crowdfunding •  Commercial Banks

•  Friends, Family & Fools

•  Incubators •  Equity Based

Crowdfunding •  Angel Investors •  Venture Capital •  Private Equity

But the world has changed: Before

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Friends, Family & Fools

(Syndicate of) Angel

Investors

Venture Capitalist

Private Equity

IPO

USD 50.000

USD 2mio

USD 25mio

USD 25+mio

USD 1mio

But the world has changed: Now

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Friends, Family & Fools

(Syndicate of) Angel

Investors

Venture Capitalist

Private Equity

IPO

USD 50.000

USD 2mio

USD 25mio

USD 25+mio

USD 1mio

A soluHon: Crowdfunding

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Crowdfunding (alternately crowd-financing, equity-Crowdfunding, peer2peer-lending or hyper funding) describes the collective effort of individuals who network and pool their

resources, usually via the Internet, to support efforts initiated by other people or organizations. Crowdfunding is used in support a wide variety of activities, including

disaster relief, citizen journalism, support of artists by fans, political campaigns, startup company funding, movie or free software development, inventions development and

scientific research.

Source: Wikipedia

Benefits of Crowdfunding

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1 Scale your own network of friends and family

2 Connect with professional investors outside your own network

3 Less risk for investors

4 More transparency and informaHon available

5 Boost sales due to extensive markeHng & social media campaign

Forms of Crowdfunding

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1 DonaHon Based Crowdfunding

2 Investment Based Crowdfunding

2a Peer-‐2-‐Peer Lending / Debt-‐based Crowdfunding

2b Equity-‐based Crowdfunding

1a Reward Based DonaHon

1b Revenue shared Crowdfunding

DonaHon Based Crowdfunding

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•  High success rate if executed well •  Client base before start

•  Sales-‐boost •  Increased brand awareness

•  No interest payments

•  No loss of equity

•  High promoHon costs

•  Managing expectaHons customers

•  Liquidity •  Smaller investment amounts &

incenHves

•  More interesHng for B2C then B2B

PROS CONS

Ø USA -‐ ROCKETHUB: www.rockethub.com Ø EUROPE -‐ EFUNDING: efactor.symbid.com

Peer-‐2-‐Peer Lending

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•  High success rate •  No loss of equity

•  Costs are predictable •  Companies with cash flows

•  All types of companies

•  Less involvement investors

•  Less advantages markeHng & sales

•  Cost commitment

•  Less healthy balance sheet

•  Not for startups

PROS CONS

Ø PLAYERS: Prosper, Lendesk, GreenNote, Loanio, Zopa, 51Give, Pertuity, RateSeoer, GeldVoorElkaar

Peer-‐2-‐Peer Lending

Equity Based Crowdfunding

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•  OpHon to Angel or VC investment

•  Investment amounts bigger

•  More interesHng for FFF

•  More ambassadors

•  Brand awareness

•  PromoHon costs

•  Finding proper investors

•  No real due diligence

PROS CONS

Ø EUROPE -‐ EFUNDING: efactor.symbid.com Ø UK -‐ Crowdcube: www.crowdcube.com

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Equity-‐based Crowdfunding: What if scenario 1

Source: Symbid

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Source: Symbid

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Source: Symbid


24 Source: Symbid

The rise of Crowdfunding

25 Source: Symbid

Europe and US remain the biggest market for Crowdfunding

26 Source: Symbid

How to be successful in Crowdfunding

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1 Takes on average 2 months to reach your funding limits

2 649 posts on Facebook and 143 posts on Twioer

3 71% of video pitches for campaigns are under 3 minutes long

4 65 unique investments to your campaign of SD 100

Crowdfunding is A LOT OF WORK!

5 Weekly basis: newsleoers, interviews tradiHonal media, mini-‐events, blogging

IntroducHon to our panel member: David Drake

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David Drake, co-‐founder of the TSL Capital CreaHon Event Series and founder and Chairman of LDJ Capital in New York City, has been involved in technology media and telecom (TMT), tradiHonal and renewable energy, project finance, real estate, infrastructure and equity and debt financing for over 20 years. Mr. Drake hosted the Harvard Club and Boston Symphony performances at his house and sat on the advisory board of Best Buddies Charity for auHsHc kids. Mr. Drake has been behind raising $250,000 in charity donaHons through his produced Carnegie Hall concert series. Mr. Drake holds Bachelor’s Degrees in both Chemistry and MarkeHng from the American University in Washington, D.C., an MBA in Finance and an MA in InternaHonal Law and Economics from George Washington University where he was awarded the Wallenberg Scholarship for academic merit.

David Drake on Trends & Developments in Crowdfunding

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•  Views on DIFFERENT TYPES of Crowdfunding

•  JOBSACT: Equity Based Crowdfunding in the United States & its influence on the rest of the world

•  What will be the NEXT STEP for Crowdfunding

www.thesoholoj.com Twiker: @TSLCCEvents

Webinar Program Overview 2012

June 19: Business Plan WriHng -‐ A Roadmap to Success July 3: Pitching & PresentaHon -‐ 3 Minutes, 1 Impression July 17: Strategy -‐ A Vision for the Future, A Strategy for Gehng There July 31: BudgeHng & ForecasHng -‐ PredicHng the Outcome Aug 14: Working Capital -‐ An Unknown Key to Success Aug. 28: Capital Management -‐ Playing with Risk Sept 11.: Funding & Investments -‐ Some Sources are More Equal then Others Sept. 25: ValuaHon -‐ Art or Science Oct 9: Exit Strategy -‐ Nice to Have or Need to Have? Oct. 23: Bootstrapping -‐ An AlternaHve Answer to Funding Nov 6: Crowdfunding -‐ The Power of Friends, Family and Fools Nov. 20: Networking -‐ Nice You have 3000 Friends, I have 30 Relevant ConnecQons Dec. 4: MarkeHng & (Social) Media -‐ Noise or Value? Dec. 11: No Sales, No Glory Dec. 18: Most Common Mistakes of Entrepreneurs 30

BECOME A VIP MEMBER WITHIN 1 WEEK AND GET YOUR PLAN CHECKED!

SPECIAL OFFER, ONLY USD 12!

1.   FREE checking of final draj business plan 2.   FREE discussion on next steps and how & where to find funding in your

region 3.   FREE to ask addiQonal quesQon related to funding & investment related

topics 4.   FREE documentaQon of all webinars so far, presentaQons + notes! 5.   FREE downloads on relevant entrepreneurial topics 6.   EXTRA discounts on all our products on our website 7.   Send me an email on: www.efactor.com/hukshorn 8.   Follow me on: www.efactor.com/hukshorn

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HTTP://WWW.EFACTOR.COM/VIP

Thank you!

This document was prepared by Eva Hukshorn. Several people and organizaQons have inspired

her to write this presentaQon, amongst which are, but not limited to the Founders of EFactor,

ABN AMRO/RBS, University of Groningen, InsQtute for Management Accountants, David Drake

– Founder of the Soho Loj

Crowdfunding - The Power of Friends, Family & Fools

Business

Transcript of Crowdfunding - The Power of Friends, Family & Fools