crowdfunding as an asset class - markus lampinen, growvc and crowdvalley

Crowdfunding – Asset Classes and Crowd Driven Models

Markus Lampinen

October 27, 2012

CrowdFuture

Marketplace for startup funding Founded 2009 “Everyone Funding Startups”

– 2011 - $25M– 4000+ startups– 190+ countries – Several raised rounds, first exits

Big idea? To democratize startup funding

Background – Grow VC

The Network Society: Networks cause a comprehensive restructuring of society at large, they are breaking old models of organization.

Crowdfunding is ..

Small money, large crowd No gatekeepers, anyone can invest

Why Crowdfunding?

Same access to information

Efficient and effective framework via direct participation

New customer audiences

Access to new asset classes

.. no one is as smart as everyone?

Securities Crowdfunding

Equity investments Interest bearing loans Other models

One model DOES NOT fit all cases

Who benefits?

VC’s and Angels get– More liquidity– More information– More validation and filtering by ‘the crowd’

Ordinary people– Get more equal opportunities and access

Entrepreneurs– Engaged investors and validation

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Summary: Grow VC Group

Grow VC Groups pioneers funding models for companies globally The Group focuses especially to offer crowd based marketplace and

community technology, and investment products that can work with or be used by 3rd parties

Crowd Valley offers platform and back office functions for crowdfunding services

– Already over 400 customer platforms in the network– #1 equity crowdfunding platform in the world

Mutual Seed Fund offers a crowdfunding co-investment service Grow Advisors, ChangeLab23 and Grow Global Program offer

services to build startups globally

Grow VC Group – growvcgroup.com

Finance and Services Portfolio

Samples:

Infrastructure

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Over 16,500 investors

Over 4,300 startups

10% monthly growth

Almost $35 Million investment money

Users from 200 countries

The most global market place for equity

Over 400 3rd party crowdfunding networks on the platform

Dozens of investments, millions of money

Equity Investments Are Just The Start

US statistics (Bureau of Economic Analysis, Feb 2010)

The “professional investor” numbers– VC Market: $12.4B– Angel Investor market: $23B

• 100 – 300K active angels• Only a few hundred in Silicon Valley

The “ordinary people” market– “Informal investor market”: $162B– Household savings: $8000B+ and rising..

Crowdfunding is bigger than funding the next Facebook or Google

Trust networks challenge outmoded models of control

Trust and Micro loans

People invest in..

What they know and trust

Who they know and trust

What does it mean for crowdfunding?

Read & write, participatory, conversational: markets are conversations, marketing is a conversation, business is a social science!

A new language:

Connected Ecosystem is Needed

Connected Local Ecosystems

• One BIG Kickstarter?• There is a reason the financial market is de-centralized

with specialized brokers, marketplaces and exchanges• Local operators like incubators, angel networks, brokers

add credibility and transparency• Who do you trust?

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Crowdfunding Ecosystem

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It’s important to build the framework for crowdfunding together with other investment models– Get other investors and money to participate– Help manage investments– Continuity for next funding rounds

Investors can also offer other value There can be co-investment models, passive or active It is important to build co-operation with business

angels, VC’s, incubators and others in the ecosystem

Crowdfunding is Diverse

Crowdfunding is not only for non-accredited investors or for equity investments

Crowdfunding for institutional investors, high net worth individuals, accredited investors…

Crowdfunding for equity, loans, real estate, specific properties or assets...

Case: Oil & Gas

Oil and Gas properties in the US

Crowdfunding for institutional investors, possibility to allow “normal people” to participate in the future

Co-investments with mezzanine fund

Typical deal $8M - $20M

Case: Real Estate

Real estate is a known asset class, suffers from high entry costs and low liquidity

Crowdfunding for accredited investors, possibility to allow “normal people” to participate in the future

More efficiency and transparency in the process

Case: Grassroots Ecosystem

Joint effort between university incubator, angel network and early stage fund

Direct participation via crowdfunding to allow grassroots to reinforce itself

Benchmarking “entrepreneurial ecosystem”

WE HAVE A DREAM:more equal opportunities,

where companiesand investors unite

to accelerate innovation

Future

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• Crowdfunding is here to stay, equity crowdfunding is just starting to grow

• Crowdfunding does not replace other models or solution for needs, it needs to work with the entire ecosystem

• A working, connected ecosystem is needed: It’s crucial to build an ecosystem where different stakeholders and investment models work together, including crowdfunding

• Crowdfunding is not only for startup funding, it will have an impact on the whole finance sector and make it more effective

Thank You

Markus LampinenCEO / Crowd Valley Inc

+1 646 801 4054 (US)markus@crowdvalley.com

845 Third Avenue, New York

www.growvcgroup.com