Breakthrough VP - Skillsapien Crowdfunding Post-GS Seminar_2013-08-28

Crowdfunding Game Changer:What It Means For YouBernard Slede, Managing Partner

Disclaimer: Informational summary for discussion purposes only, not advice - legal or otherwise

Quick Background

Entrepreneur in several industriesCorporate VCProfessional advisor to CEOs of tech/media co’sSpecialize in growing revenues and financing#1 Startup America Champion in California

© 2013 Bernard Slede, Breakthrough Venture Partners

Photo credit: Wikimedia Creative Commons © 2013 Bernard Slede, Breakthrough Venture Partners

CrowdfundingLiberty?

What’s Crowdfunding?

To be accredited (US): Have earned $200k the last 2 years ($300k for couples)

OR Have a net worth >$1M (home excluded)


Different Types, Different Purposes

700+ sites, 3 types: Main Purpose Example1. Donations/Rewards Product

launch/validation2. Equity Fund-raising

3. Lending (30+) Borrowing


Crowdfunding is getting BIG

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$5-6B (e)


A Global Phenomenon

Platforms– US: CircleUp, SeedInvest…– Australia: ASSOB– UK: Seedups, CrowdCube– …

Securities Crowdfunding– US: “JOBS” Act– Italy: Decreto Crescita– …


Industry Associations– US

– Canada (52)

– Europe:

How much can you actually raise?• Often ~$20-100k• Consumer plays• Not equity• Success rate ~20%


But not suited for every business needFor instance, : >$738M from 4.6M peoplefor >46,000 projects but currently prohibits:• e-commerce, business, and social networking• medical, health, safety, and personal care products• Equity or loans


So…What does that mean forStartups and Venture Capital?

A Disruptive Shift For The “Asset Class”?

$6Bglobally in 2013*

But really maybe $150M equity?

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Benefits of Crowdfunding for Startups1) Might reduce geographical constraints2) More efficient; low cost: $ or time3) Better suited for: consumer and retail models4) Crowdsourcing of intelligence5) Market validation/social proof

“Crowdfunding has now emerged as a viable,scalable alternative to public and private finance”Carl Esposti, Author of annual Crowdfunding Industry Report


WINTER 2011Y Combinator:- Canadianentrepreneur- Generates revenues

- $375k Angel round

- Unable to raise VC

APRIL 2012:Kickstartercampaign:

$10M from69,000 people

MAY 2013:VC Round$15M

The Pebble Story


“The early crowd acts as a signal mechanism (predictionmarket ) for the professional types, and the professionaltypes act as a signal mechanism for the later crowd”- Kevin Lawton, author, “the Crowdfunding Revolution”

Benefits of Crowdfunding for Investors

1) More transparency and efficiency2) Increases deal flow3) Market validation/social proof4) Better investment decisions?

“Having companies that have been proven out usingcrowdfunding will only create better pickings for the venturecapital industry to come in and scale those startups.”Manu Kumar, K9 Ventures © 2013 Bernard Slede, Breakthrough Venture Partners

Beware of SEC proposed complications!The SEC has proposed filing requirements such as:. If you publicly discuss raising money: notify the SEC 15 days before. each time you publicly discuss funding: include legal boilerplate. and if you don’t toe the line, you’d get a 1 year fundraising ban …Comments on SEC proposals close in a few days: https://angel.co/sec

“[As a result of the extra filing burden], some commentators havequestioned whether issuers will be more reluctant to pursue Rule 506offerings.”- Dan McNamee, Esq. © 2013 Bernard Slede, Breakthrough Venture Partners

Higher Bar: Show Business Appeal• Compelling idea and business model• Team that can execute• Sizeable market• Advisers


“Now we often see the kind of traction that we used to expect fromSeries B companies in Series A companies, and from Series Acompanies in seed companies. A number of our recent Series Ainvestments built multi-M$ revenue run rates on their seed round.”Jeff Jordan, A16Z

What impact on valuations?

Seed Angel VC Growth

• An irrelevant question?• Valuations will be

driven by … supply anddemand

• Market will mature• Retirement funds• Flight to quality


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What to do for September 23rd ?• Before:

– Comply with SEC– Hire advisors to help tune your story, model, processes– Provide public comments on SEC site– Prepare crowdfunding application and campaign

• After– Proceed with caution, hedge your bets– Strictly observe do’s and don’t’s– Launch crowdfunding campaign ©

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Disclaimer: Informational summary for discussion purposes only, not advice - legal or otherwise

Next StepsStay up-to-date on the trendsWork with a securities lawyer and an adviser!To reach me: LinkedIn: www.linkedin.com/in/bernardslede Twitter: @BernardSlede SkillSapien: check out my availability


“Monetizing Innovation”

Economy & Finance

Breakthrough VP - Skillsapien Crowdfunding Post-GS Seminar_2013-08-28