Roy Morejon, PresidentCommand Partners
www.commandpartners.com
Presented By:
Equity CrowdfundingHQ Charlotte at Packard Place
Who am I?
● President @CommandPartners, A Top Marketing Agency for Startups by Hubspot
● 2014, Best Place to Work in Charlotte
● 2015, #17 Fastest Growing Private Company in Charlotte
● Crowdfunded over 170 Successful Projects
● Raised over $65 Million in past 4+ years
● Featured in CNN, Entrepreneur, Forbes, AdWeek, SEJ, Fast Company, Pando Daily, Yahoo! Tech, Crowdfund Insider
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
What is Crowdfunding?
● Is the collective cooperation, attention and trust by people who network and pool their money together, usually via the Internet, in order to support efforts initiated by other people or organizations.
● Use an online community to solicit pledges
● It uses word of mouth and wisdom of the crowd to generate interest and pledges
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There are 4 main types of crowdfunding;
1. Rewards, 2. Equity, 3. Donation,4. Loans
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● Is it a good fit?
● Video and Design
● Rewards that matter
● Realistic Funding Goal
● PR = People + Relationships
● Social Media Shares
● Stretch Goals
● Paid Media
● Friends and Family
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
1885
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
Crowdfunding Stats
● In 2013, crowdfunding was a $7,000,000,000 industry
● In 2014, crowdfunding was a $16,200,000,000 industry
● $34.4 Billion in 2015
● Projections for 2016 are over $80 Billion!
@RoyMorejon #HQCrowdfunding
What is Equity Crowdfunding?
● Investors receive equity in a company and (potentially) receive a return on their investments in the form of the company’s profits.
Accredited v. Non-Accredited Investors
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Are You Accredited?
● To qualify as an Accredited Investor in the US, an individual must meet one of the following criteria:
● A net worth exceeding $1 million (excluding their primary residence equity), either individually or jointly with their spouse
● If single, an annual individual income of more than $200,000 for each of the last two years
● If married, a joint annual income of $300,000 for each of the last two years
● Serve as a partner, executive officer, director or similar role in the company seeking investment
@RoyMorejon #HQCrowdfunding
Are You Non-Accredited?
● Those that have a net worth (joint or individual) less than $1 million and have earned less than $200,000 annually ($300,000 including spouse) over the last two years.
The passage of the Jumpstart Our Business Startups or JOBS Act in 2012 means that
Non-Accredited Investors can participate in equity-based crowdfunding.
@RoyMorejon #HQCrowdfunding
April 5, 2012 - Jumpstart Our Business Startups Act (JOBS Act)
September 23, 2013 - General Solicitation (Title II)
June 19, 2015 - Reg A+ (Title IV)
January 29, 2016 - Reg CF Rules Set (Title III)
May 16, 2016 - Reg CF Launches
@RoyMorejon #HQCrowdfunding
@RoyMorejon #HQCrowdfunding
The JOBS Act
● Equity crowdfunding made legal in 2012 when President Obama signed into law the JOBS Act
● Goal of Act was to reduce constrictive regulations, allowing for the funding of small businesses by outside investors
● Five Titles, each addressing problems and challenges facing startups and small businesses
● Titles II, III and IV directly impact equity crowdfunding
Title II
• Enacted in September 2013• Streamlined communication and general
solicitation of Accredited Investors• Before, investors could only be solicited through
private, in-person meetings with family, friends and colleagues
• Now, companies can advertise their intent to acquire funding for their projects, including online and through social media
Crowdfunding Under Title II: Accredited Investor Equity Crowdfunding
Benefits and Drawbacks
• No limit on the amount you can raise• Can advertise online and solicit investors• Most affordable JOBS Act provision to use• Only accredited investors• Additional legal requirements over a regular
private placement• Hard to raise private money unless company is
revenue producing
Title III
• Enacted in October 2015, becomes legal to use on May 16, 2016
• Opened equity crowdfunding to Non-Accredited Investor participation
• Startups and small businesses can raise up to $1M in a period of a year through crowdfunding
• Significant disclosures are required for companies to help provide transparency
Title III
• Investors making <$100,000 per year can invest the greater of $2,000 or 5% of annual income
• Investors making >$100,000 per year can invest up to 10% of their annual income
• During a 12-month period, the aggregate of securities offered to an investor through crowdfunding offerings may not exceed $100,000
Crowdfunding Under Title III: True Equity Crowdfunding
Benefits and Drawbacks• Lots of restrictions on marketing - can only use
“tombstone” ads and must do all “marketing” on the funding portal where the offering is, can’t really build a crowd before launch - not legal under the rules
• Biggest issue other than cost - All or nothing offerings like Kickstarter. If you set a goal, and don’t hit it, you do not get anything. Given the up front cost of legal, accounting, marketing, etc. this is very dangerous
• Requires “reviewed” financials if raising more than $500K - expensive - not as expensive as audits.
Title IV
• Enacted June 2015• Also referred to as Regulation A+ or the Mini-
IPO• Grants exemptions from certain registration
requirements for small offerings for companies that don’t exceed $50 million in a 12 month period (increased from $5 million)
• Gives companies the option to submit a draft offering statement for confidential review by the SEC before the offering goes public
Title IV
• Breaks offerings into two tiers:
• Tier 1: Offerings up to $20 million in a 12 month period
• Tier 2: Offerings up to $50 million in a 12 month period
• Tier 2 Offerings subject to additional requirements, including audited financial statements
• Non-Accredited Investors can annually invest in a Tier 2 offering up to 10% of their income or net worth, whichever is greater
Crowdfunding Under Title IV: Regulation A+/The Mini-IPO
Benefits and Drawbacks
• Can market and generally solicit and “Test The Waters” before you go live
• Not “all or nothing” - keep whatever is raised• Requires filings with the SEC and “qualification”
of the offering, which is expensive and time consuming
Growing Your Company Through Crowdfunding In Multiple Steps
1. Rewards-based campaign - cheapest to do - proof of concept, raise some seed money and give away none of your company
2. Title III equity campaign - If already successful with rewards, this will be a logical next extension. Build more brand ambassadors, bring in the next round of up to $1M
3. Mini-IPO - Now that company is revenue producing, capitalize on this and raise up to $50M to take it to the next level.
Recap: Why Choose Equity Crowdfunding?
• Allows a company to publicly fundraise• Everyone can contribute (230 Million
Americans)• Low cost mass market funding option• Customers become investors and, in
turn, evangelists
Planning and Executing a Crowdfunding Project
Using crowdfunding for seed money requires a concrete plan and strategy from start to finish
Picking a Platform: Consider the Following…
What tools/features does the platform offer?
What features do you need?
Consider branding, multimedia, donor databases, additional fundraising events, tax-deduction information and more
Picking a Platform: Consider the Following…
Does the platform have any restrictions?
• Some platforms have deadlines, project approval requirements and restricted access to donor information
Picking a Platform: Consider the Following…
Should you go with a platform that serves a niche market?
• Depending on your project, a niche platform may serve you best
Logistics
• Create a detailed timeline of everything your campaign will require
• Consider requirements and regulations from both your crowdfunding platform and the SEC
• Determine what your costs will be, and set a funding goal depending on your costs
Marketing & Outreach
Start building up steam and gathering your “crowd” well before you plan to launch. You may want to…• Assemble a social media presence to reach
backers beyond your network• LinkedIn can be especially helpful here!• Create a landing page where interested
investors can enter their email address for more information
• Run email marketing campaigns with your email list
• Create a strong pitch and reach out to the media
Managing a Campaign
A crowdfunding campaign is a full-time job - you can’t “set it and forget it.” You’ll need to…
• Communicate and interact with your investors regularly - Keep them informed by providing regular campaign updates
• Go beyond your platform to reach investors - Use social media and pitch journalists to reach more investors; don’t rely on your funding platform alone
• Be flexible - crowdfunding campaigns can be wildly unpredictable, so be willing to change your strategy as needed
Communicating With Your Investors
• Create a communication strategy, including all content• Use videos and multimedia to make a personal connection
with potential investors• Use the right communication platform - it may be your
website, your crowdfunding campaign page, your social media channels, emails or a combination
• Extend your reach beyond your network through social media
• Create a strategy for follow up and investor relations once your campaign is over
• Stay engaged with your investors throughout your entire campaign
Case Study
Command Partners helped build every aspect of Digitzs’ equity crowdfunding campaign, including:
• Creating and designing a pitch deck for the founders to use while meeting with investors
• Design and draft the materials for the campaign on EquityNet, such as business models, revenue projections, board member bios, etc.
• Writing the video script for the landing page and investor page
• Developing the landing page and investor page wireframes and create the design work
Command Partners led the PR initiatives for the entire equity campaign, including:
• Drafting several press releases for the launch of the EquityNet campaign and other milestones
• Reaching out to interested media partners about the startup
• Spearheading the #LessWorkMoreLife initiative that the founder of Digitzs brainstormed- the goal was for people to share what they wanted to do with the time they gained through using a payment platform such as Digitzs
Command Partners served as the between Digitzs and investors. This entailed:
• Reaching out to between 20-500 investors per day on EquityNet, Crowdfunder and AngelList
• Scheduling meetings between investors and the Digitzs founder
• Answering any questions about Digitzs that investors may have
Overall, Command Partners helped Digitzs raise over $2.6 million
Roy Morejon, PresidentCommand Partners
www.commandpartners.com
Presented By:
Crowdfunding Questions?@RoyMorejon
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