The Crowd Funding Revolution What it is and Why it Matters.

The Crowd Funding Revolution

What it is and Why it Matters

About me

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President + Co-Founder at FundableCrowd funding platform for small businesses.

Founder at IdeaBuyer.comOnline marketplace for intellectual property.

President + Founding Team at Startups.co400,000 Members, 20,000+ Active Accredited Investors

Eric Corl

Eric Corl | © 2013 Fundable.com

Our Company

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• Crowdfunding Platform for Businesses

• Funding at Scale

• 22 Employees

• ESPN for Startups

• Office Made for Entrepreneurs

Our Vision

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Quick Tour

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Quick Tour

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Quick Tour

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Quick Tour

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Why Is Entrepreneurship Important?

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- Pay 45% of All Private US Payroll- Create 90% of the new jobs in America- Create 4,000 new jobs on an average day- Hire 40% of high tech workers- Provide 55% of all jobs.

Important But Neglected

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Less than 1/3 of professional investments are at the seed stage.

Most companies cannot raise money from professional sources until they no longer need it.

Big delta in the impact small businesses have and the funding available to them.

Traditional Funding Options

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Friends & Family Venture CapitalAngel Investments Bank Loans


Funding Options

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$60bb

Funding Options

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$60bb $20bb

Funding Options

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$60bb $20bb $20bb

Funding Options

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$60bb $20bb $20bb $14bb

Friends & Family

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Friends & Family


Pro’s Con’s

Quick to attain Potential Losses

Typically hands off Strained Relationships

Angel Investments

17Eric Corl | © 2013 Fundable.com

Pro’s Con’s

Larger Checks Business Involvement

Sophistication Answering to Someone

Additional Value 90-120 Day Close

91 out of Every 10,000 co’s

Venture Capital


Pro’s Con’s

Large Checks Lost Control

Inside Baseball Heavy Dilution

Earning Handcuffs

4 out of Every 10,000 co’s

Industry Limited

Rarely Seed Stage

Bank Loans


Pro’s Con’s

No Dilution Debt Service Costs

Quick Closing Personally Guaranteed

Rare for Startups

Brick & Mortar Centric

Funding Options

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$60bb

57%$17k

$20bb

.0091%$230k

$22bb

.0004%$800k

$14bb

.016%$145k

Why Are They So Low?

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• Geographically & Industry Limited

• Impersonal, Weighted Risk

• Biggest – Restrictions on the Public

Biggest Issue

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• It is illegal for the average person to invest in a private company.

• Prohibited by SEC restrictions.

• Millions of Potential Investors Cannot Invest

How Is This Changing?

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• Advent of Crowdfunding

• The Passage of the JOBS Act

• Re-Introducing the consumer into the funding process.

What is Crowdfunding?

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crowd funding -


the practice of funding a project or venture by raising money from a number of people, typically via the Internet.

Crowdfunding


Pro’s Con’s

Validate Your Business Competitor Exposure

Build Traction

Build Social Proof

Publicity

Gain Investor Interest

No Dilution

Crowd Funding Now

$1.4 BB2011


2012

$2.8 BB

Types of Crowdfunding

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Rewards Equity

• Offer pre-orders• Typically raising < $50k• Anyone can back you• No equity dilution

• Offer equity stake in company• Typically raising $50k to $10MM• Accredited investors only.• Must issue stock in company.

The History

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History

The Internet

The Legislation


The JOBS Act


Jumpstart Our Small Business Act

Signed into law April 2012 ("the crowdfunding act“)

Aims to decrease barriers to entry for startups

Passed 73-26 in the SenatePassed 380-41 in the House

Two Main Impacts

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1. It Removes the Ban on General Solicitation

2. It Gives Most Americans the right to invest in private companies.


General Solicitation

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Before: Pitching equity raises could only be done privately to accredited investors or within entrepreneurs' personal, private networks

After:General solicitation of equity raises is permitted.

Effect:Entrepreneurs visible to thousands more investorsMore investment opportunities for everyoneAnyone can own a piece of a company and diversify how they invest


Accredited Investors

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Fact:3.4mm N. Americans = accredited investors in 2010

Approximately 233.7mm N. Americans = accredited investors after JOBS Act


The #’s In Perspective

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Americans Gambled Over $550 Billion Last Year

American Public Has a Net Worth of $50 Trillion+

What It Does

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Will Democratize Funding for Entrepreneurs

Open Up Trillions In New Funding

Will Bridge the Funding Delta


How It Impacts You

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Helps more great companies get started and grow, regardless of where they are based.

States Like WV will have a competitive advantage.

Examples of CrowdfundingCompanies Raised Time

Fleksy $900,000 3 Months

Training Mask $20,162 30 Days

3D-Vision $24,878 30 Days

Seeds $25,000 60 Days


Fleksy


• Problem• Solution• Market Size• Traction• Team

BodBot


• Problem• Solution• Market Size• Traction• Team

Start Crowdfunding

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- Elevator Pitch & Description

- Funding Goal

- Compelling Rewards

- Profile Visuals

Marketing

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- Friends & Family

- Community

- Industry Bloggers & Journalists

- Social Media Networks

It Isn’t Just About Funding

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- Market Validation

- Meet Potential Partners

- Invaluable Press

- Social Proof

- Meet Potential Investors

Resources


[email protected]: Linkedin.com/in/ericcorlTwitter: @ericcorl

2012 Funding ReviewJOBS Act Infographic

Recommended Reading

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How to Write the Perfect Email Pitch

What Are Investors Looking For?

The Crowd Funding Revolution What it is and Why it Matters.

Documents

Transcript of The Crowd Funding Revolution What it is and Why it Matters.