EQUITY CROWDFUNDING

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MaGIC Startup Academy Presentation – Investor Day

October 17th, 2014

crowdonomic.vc@Leo_Shimada

@Crowdonomic

Facebook.com/C

rowdonomic

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Professional Team with fintech/investment expertise

Senior

Consultant

Asia Strategy

LeadMBA BA. Law

Senior

Consultant

Interest rate

TraderMBA Engineering

Reona Shimada

Co-founder & CEO

Nicola Castelnuovo

Co-founder & CCO

S.E. Asia

Innovation

S. Korea

Finance

China

M&A

South Asia

Tech

Japan

Strategy

UKS.E. Asia India

Tech

W.EuropeNorth Asia

Finance Operations InnovationInvestment

Experience and expertise

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Headlines

• Equity Crowdfunding (ECF)…Fundraising Disruption

• Secret sauce… Social Media (Distribution) + Democratic Participation

• From: Difficult and inefficient = > To: Modern way to do a difficult thing

• Def. Online crowdsourcing a company’s venture financing needs

• Complementary to higher quality VC / Angels (Leads)

• Malaysia – a pioneer market, power to Start-ups

Agenda

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Crowdfunding… This is Finance 2.0

What it is: Crowdsourcing for

venture capital

How it Works: Fundraising accelerated by the power of social

media and harnessing the wisdom of the crowds

Fill standard

offer templates

Publish Online

Advertise via

social media

Access virtual

investor community

Reach $ targetGrow your

business

Smaller amounts of money from

many people to reach higher targets

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Publish Offer Page

Access virtual

investor community

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Acceleration Validation Traction

ECF: Fundraising accelerated by the full power of

web, social media and technology

Agenda

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ECF Regulatory Framework – Highlights*

(*) Note: Contents in this page are based on SC ECF Public Response Paper and they are still pending parliament final

approval. Source: http://www.sc.com.my/wp-content/uploads/eng/html/consultation/140925_PublicResponse_2.pdf

Who: All Malaysia incorporated private companies + SC Registered Micro Funds

How much: Private Companies (RM 3 mn / RM 5 mn) + Micro Funds (uncapped)

Share Types: Common Shares (preferred and ordinary); single type per Offering

Fundraise Type: All-or-Nothing (Oversubscription is allowed)

Offer Types: Primary (new share sale); Secondary (existing shares; 2 wks per 6 months)

Advertisements: May advertise to the public but ONLY via the ECF platform

Investors: Retail (RM 50k) + Angel (500k)+ Sophisticated Investors (Uncapped)

DISCLAIMER: This does not constitute any legal or financial advice

Disclosures: <300k (not mandatory); 300 – 500k (case by case); >500k (Audited)

Modernization of Fundraising Regulations and

Activities

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No General Solicitation

Prospectus Exemptions: Limitations

on Advertisement; Investor Types; #

Public Offerings = Costly

Disclosures / Prospectuses

Fundraising: Extremely Difficult and

Restricted Activity

Advertisement Flexibilities

Full use of Web / Social Tools

Template and Standardized FR

Process for Efficiencies

Fundraising: Still Really Difficult Activity

but Equipped with Modernized Tools

It will be a Game Changer for both Start-ups and

Investors

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Efficient outreach to

multiple investors via internet

Startups

Low – mid digit FRsRecord millions

8 -12 weeksAverage online fundraise period

Centralized deal

sourcing platform

Investors

Crowdsourced due

diligence community

$1 to 5KBite-sized investments to

diversify investment portfolio

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ECF: Issuer post-crowdfunding performance

Business Survival

Rate

Follow-on Investment

Rate

Exit Multiple for

Crowd Investors

86% 71% x10+

*1 *2 *3

*1: 86% of all sampled Equity Crowdfunded businesses still operational on ASSOB since 2005 vs 59 % of companies still

in business 3 year after establishment according to US Bureau labor of statistics

*2: % of sampled Equity Crowdfunded businesses by Crowdfund Capital Advisors who have already secured follow on

investments (28%) or were in discussions (43%)

*3: Rewalk estimate: Rewalk raised $1.3 mn via ECF platform in 2013. IPO valuation was $191M in September ’14. At its

maximum, its market valuation was $428 mn

Source: Various; Crowdonomic Team analysis

No reported cases of

Fraud

Shareholders can be

bundled up into a

vehicle

Investors are also chosen;

Use lead investors to

inform market

Lead investors will create

investment momentum

“I’ll be stuck with managing

Thousands of Shareholders (and

forced to IPO)!”“High Risk of Fraud”

“if it’s a great idea, everyone will

invest”

The Market will be over-flooded

with NVA Capital creating a

bubble

We are tackling Common Equity Crowdfunding

Concerns

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Agenda

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Equity CF Offer Page – A dedicated fundraising page

Content: Building Up Credibility on Your Offer page

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Board & Team

with relevant

credentials

Endorsement from

fans and industry

experts

Strategic

Partnerships

IP

Attractive

valuation and

desirable exit

Demonstrate

ability to achieve

milestones

Additional Items:

• Business Plan

• Investor Pitch

Deck

• P&L

• Cash Flow

• Balance Sheet

• Sell the vision / dream

• Ground the business plan

• Nail the delivery

• Form as important as Quality

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Visual: Supporting Your Offer Page with Video

Do

• Be vague

• Be boring

• Be awkward

• Show only the product

Don’t

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Video Case Study: Twenty Something London

Watch this video at https://www.youtube.com/watch?v=f2SqVkGmRX4

Team: Assembling a Capable Fundraising Team

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Charismatic Front

Person

Graphic Design/

Video Person

Social Media

Person

Document and

numbers person

• Media

spokesperson

• Investor

Meetings

• Brand

Ambassador

• Social media

updates

• Site updates

• Answering

enquiries

• Putting

together the

offer page

• Putting

together the

financial

documents

• Designing

visuals

• Creating video

and other

creative assets

Are you Ready?

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YOU’RE DOING IT WRONG

Target

Anatomy of a Successful Campaign

Cumulative Funds Raised

Funds Pledged per Day

Dance Floor Theory

How can you get a crowded dance floor?

Dance Floor Theory

How can you get a crowded dance floor?

You need a proper execution plan to draw in early supporters.

Building up a Follower Base to Share Your Story

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source: ASSOB

Fundraising Target Minimum Followers

$500K 100

$750 150

$1M 200

$1.5M 300

$2M 400

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Marketing and activation support a Crowdfunding

Platform will provide

Expected

reach via

platformPlatform Social

Media Updates

Platform Blog

Platform

Newsletters

Membership

Access

Templates

Platform

Marketing

Cannot rely fully on

a platform’s reach to

hit your target

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Extend your reach with your own execution plan

Expected

reach via

platform

Reach via own

initiatives

Public Relations

Personal Mail

Outs

Media Interviews

Blogger Outreach

Product Demos

Social MediaAwards

Competitions

Site Visit/ Factory

Tour

Awards

Competitions

Company Blog

Updates

Investor Meetings

Offline Events

Converting a follower to an investor

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Become a

FollowerDownload Offer

Documents

Become an

investor

MYTH: Followers will convert once they visit your offer page

Converting a follower to an investor

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Become a

Follower

Download Offer

Documents

Become an

investor

REALITY: Conversion needs constant engagement

View Company

Profile

Request More

InformationBecome a

follower

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Case Study: Pip & Nut - constant online engagement

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Campaign Execution: Best Practices

Prepare follow

up videos,

creative assets

and regular

campaign

updates

Be quick to

respond to queries

and comments

Show your

appreciation and

thank all your

investors

Contact press only

once you have

obtained some

funding to have a

newsworthy angle

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Recap

• Secret sauce… Social Media (Distribution) + Democratic Participation

• ECF: Difficult and inefficient = > To: New way to do a difficult thing

• Malaysia – a pioneer market, power to Start-ups

• Combine with Lead Investors + Conventional best practice

• Promote, Market and Execute…make full use of this New Freedom

www.crowdonomic.vc

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READY?