fundedbyme class at ie business school's global mba
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Crowdfunding and angel investment - Benefits - Market - How to conduct a crowdfunding campaign - Why FundedByMe should be your platformTRANSCRIPT
The Fastest Growing Crowdfunding Platform Connecting Investors and Entrepreneurs.
September 2014
www.fundedbyme.com @fundedbyme www.facebook.com/fundedbyme © 2014 FundedByMe España
Miguel Ángel L. Trujillo. Director General España [email protected] - (+34) 626 007 140
+6M€ invested in 43 projects since November 2012
WHO’S MIGUEL? • International Advisor in Finance, Crowdfunding, Management, and
Entrepreneurship • Country Manager Spain. Fundedbyme Crowdfunding (Sweden). • BA International Partners (Spain and USA)
– Investment Events. Business Angel Trainings • European Business Angel Network - EBAN (Brussels), COO
– 100 members. 28 countries • Crecer+ Accelerator (Basque Region, Spain). Director
– 15 companies. Investment Events. Business Angel Network • University Knowledge Transfer Association (Madrid).
Spin-off Departament Manager • Entrepreneur • Investor: Partizipa, Samastah, Naturix, BrokerStars, FundedByMe
• Who has raised money for their venture before?
• Who has invested in unlisted companies before?
• Who has backed / invested a crowdfunding campaign before?
WARMING UP!
• Why crowdfunding? • FundedByMe • What’s in a Crowdfunding Project? • Safe and legal? • How to do a successful crowdfunding
campaign? • How to integrate a crowd of microinvestors in
the company (Spain’s case)? • Success cases
CONTENTS
• Finance a project or company by collecting small and medium amounts of capital from many individuals, usually through the Internet
• The key lesson: “crowd” first. Then, “funding” • Models
– Donation – Reward – Equity – Lending
WHAT IS CROWDFUNDING?
Money Visibility
Trust
WHY CROWDFUNDING?
MONEY VISIBILITY TRUST •Entrepreneurs get funded •Investors earn money
•Businesses are seen by thousands •Investors coinvest and share risks with hundreds
•100% legal, secure and transparent
WHY CROWDFUNDING?
“FBM opened an unexpected financial opportunity for my company”
“I reached hundreds of international investors”
“A new way to impulse innovative businesses”
WHY CROWDFUNDING? FUNDEDBYME ENTREPRENEURS
“An innovative, trustful and profitable way to invest”
“An alternative to traditional banks, which helps entrepreneurs too!”
“A window to new projects and good investment opportunities”
WHY CROWDFUNDING? FUNDEDBYME INVESTORS
1. It works!
Spain’s Equity Success Cases at FBM – Samastah: 76,800€ - 23 investors – Brokerstars: 28,862€ - 52 investors (10% int’l) – FundedByMe: 682.000€ - 384 investors – 5 days! – Naturix: Launch in October. 28,5k€ compromised
WHY CROWDFUNDING?
• One crowdfunding campaign: • Increases quarterly sales 351% • 28% start-ups raise money from angels in 3
following months • 1 hour of work on crowdfunding = ROI 813$ • 39% businesses create 2.2 jobs
Source: Crowdfund Capital Advisors
WHY CROWDFUNDING?
2. More than money – Marketing – Ambassadors – Team test – Market, value proposal, and MVP validation – 100% compatible with other sources of
finance: business angels, VC, participative loans (ENISA), public money…
WHY CROWDFUNDING?
3. New possibilities – Richer type of investors
• 70%: “I want to be part of the Next Big Thing” • 30%: “I want a x4 ROI”
– Crossborder investors – Shareholders’ agreement proposed by
entrepreneur
WHY CROWDFUNDING?
4. Market volume doubles annually since 2011
1200 2670
5100
9600
0
2000
4000
6000
8000
10000
12000
2011 2012 2013 2014
€ invested (1000s)
Source: Massolutions Report
WHY CROWDFUNDING?
WHY CROWDFUNDING?
5th platform in Europe!
FUNDEDBYME
Source: Crowsourcing Week, May 2014
40.038 registered members. 3rd in Europe!
FUNDEDBYME
FUNDEDBYME
Team Awards
Press
Recognition
Top 100 Europe’s StartUps
Investors
• Why crowdfunding? • FundedByMe • What’s in a Crowdfunding Project? • Safe and legal? • How to do a successful crowdfunding
campaign? • How to integrate a crowd of microinvestors in
the company (Spain’s case)? • Success cases
CONTENTS
THE CROWDFUNDING PROJECT
• Why crowdfunding? • FundedByMe • What’s in a Crowdfunding Project? • Safe and legal? • How to do a successful crowdfunding
campaign? • How to integrate a crowd of microinvestors in
the company (Spain’s case)? • Success cases
CONTENTS
• Current legislation allows crowdfunding – +70 platforms in Spain only – 1000s of deals closed in Europe in 2013. – 0 official frauds in Spain. 2 official frauds in USA
LEGALLY SECURE
• National cf laws in Italy, Denmark, and France • Other countries (Sweden, UK) regulate cf by
general financial laws • EU is touching financial laws and directives,
and would issue a directive to promote continental harmonization
LEGAL SCOPE
• Current legislation allows crowdfunding • Upcoming legislation (2015)
– Good: market regulation • Compulsory registration at securities authority (CNMV)
and Bank of Spain • Protection to retail investors
– Bad: excessive protections due to politicians’ cf ignorance could jeopardize market’s growth
SPAIN’S LEGAL SCOPE
• Current law does not allow us to touch the money in Spain
• After the crowdfunding round is over, the invested companies are fully liable for any legal and fraud issues that may arise between the investors and them
LEGALLY TRUSTFUL
• FBM only presents high quality projects to investors
• Miguel recognized professional of the industry (IE, EOI and Deusto Business Schools, EBAN)
• High investment in legal knowledge in 7 countries
LEGALLY TRUSTFUL
• Why crowdfunding? • FundedByMe • What’s in a Crowdfunding Project? • Safe and legal? • How to do a successful crowdfunding
campaign? • How to integrate a crowd of microinvestors in
the company (Spain’s case)? • Success cases
CONTENTS
• No easy money – Microinvestors don’t get active by themselves
• No 2nd division money – As important (and difficult) as angels or VC money
• No alternative but complementary money – Business angels and public money want to
coinvert
LET’S BE CLEAR FIRST
1. Documentation and investment proposal 2. Marketing and comunication campaign
2 KEYS
• Prepare, prepare, prepare • Time, time, time • Resources, resources, resources
HOW TO SUCCEED?
USE A CANVAS TO GET PREPARED
• Identify, define and locate your targets • Research their needs, problems, aspirations,
behaviors, demographics • Typical equity investor persona
– 75% men, in their 30s-50s, urban, highly educated, net worth +50k€ / yr, engineer, liberal professional, entrepreneurial background, business owner, some financial education
1. CLIENTS’ SEGMENTS
• Backers – I want that reward!
• Great value for the backer • Perceived value => economic value
– Average backing: 50-60€
• Investors – “I want to be part of the next big thing” – “I want an x4 ROI, and an exit in 4 years” – Average investment: 1500-3000€
2. VALUE PROPOSAL
– Crowdfunding Plataform • Description: Video, Presentation, Team Info, Social
Networks • Documents: Exec Summary, Pith Deck, Financials,
Investment Proposal, Shareholders’ Agreement, Annexes
• Walls of questions and activity
– Own Channels • My crowd • My social and media activity
3. CHANNELS
• Goal: find, motivate and build investor or backer loyalty – Fast and customized assistance – Entrepreneurial team directly available for
questions by phone, mail, in events and exclusive meetings
– Shareholders’ agreement ready – VIP treatment for VIP investors or backers
4. CLIENTS’ RELATIONSHIPS
• Rewards – Something the backer wants – 4 levels recomended: 1st level is a “low-barrier”
one (cheap), 4th level is a “no-brainer” (expensive but lots of value)
– Exclusive, scarce, much more vaule than price
• Investments – Reasonable valuation, ROI, exit strategies – Reasonable minimum investment (eg. 500€)
5. REVENUE STREAMS
• Upload in the platform professional documents to stimulate investors – Business-Angel standard quality – Proof that your business is possible, viable and
investment-ready – Document cascade
• Video > exec summary > pitch deck in power point > business plan > financials > investment proposal
6. KEY ACTIVITIES
• Plan and execute a marketing and communication campaign to reach 5,000-10,000 targets – Preparation: 1-2 months – Minimum: 1-2 persons 2-3 hours / day
6. KEY ACTIVITIES
• 100 days before: presentation and web ready • 80 days: list and first activity on relate fora and
groups online and offline • 60 days: warm-up campaign in social networks
and own crowd. Build a mail list. First pre-investments. People in waiting list
• 40 days: identify influencers (bloggers) and talk with them in person
EXAMPLE OF COMMUNICATION PLAN
• 20 days: create campaign’s pitch in the platform with the feedback received
• 1 day before launch: people queueing to invest • 2 hours after launch: 20% goal raised. Big start.
Spread the news (press releases, blog posts, social networks)
EXAMPLE OF COMMUNICATION PLAN
• 2 days after: launch party, potential investors invited, speeches to talk about the launching success, make people invest live
• During the campaign: request recommendations to current investors, organize meetings, webminars, new content every day in social networks, personal meetings, Facebook ads
EXAMPLE OF COMMUNICATION PLAN
– Entrepreneurs’ team – My crowd (contacts, social network followers) – Entrepreneurs’ knowledge – Partners, consultants, collaborators (FundedByMe
advisors, lawyers, video producers, community managers, event organizers, journalists, etc.)
7 AND 8. KEY RESOURCES AND ALLIANCES
• Platform’s commissions • Payment Provider commissions (reward) • Marketing and communication campaign • Premium service providers (eg. Strategic
consultants) • Lawyers, notary • Total Estimate: minimum 10-15% capital
raised. Up to 30% in complex projects
9. COSTS
• Why crowdfunding? • FundedByMe • What’s in a Crowdfunding Project? • Safe and legal? • How to do a successful crowdfunding
campaign? • How to integrate a crowd of microinvestors in
the company (Spain’s case)? • Success cases
CONTENTS
Solution 1: Direct Investment. No vehicle • Agile & cheap option • No need to go to the notary to purchase new
shares (“ampliación de capital”). Just invest & sign. No problem for foreign investors
• The shareholders’ agreement could establish limited political and economic rights (or shares A and B)
• Samastah used this option
LOTS OF PARTNERS. NO PROBLEM!
Solution 2. Vehicle: “Comunidad de bienes” • Fastest & cheapest option • Potential conflicts should be foreseen in the
shareholders’ agreement • No notary. Just a contract written by a lawyer • No problem for foreign investors • Very limited legal protection • Investors a fully liable inside the “comunidad” • Good option for small deals
LOTS OF PARTNERS. NO PROBLEM!
Solution 3. Vehicle: SL (Limited Liability Co.) • Most secure option (but higher cost) • Foreign investors sign a power of attorney
(cost: 30€) not to be at the notary’s office and to get the Spanish Tax ID
• Full legal protection to investors • The most professional, recommended option
LOTS OF PARTNERS. NO PROBLEM!
Solution 4. Phantom options • Private contract that purchases only the
economic rights of the share, not its legal property
• No notary. No problem for foreign investors • Brokerstars used this option in their
crowdfunding round
LOTS OF PARTNERS. NO PROBLEM!
Solution 5: Join Accounts Contracts (Cuentas en Participación)
• Easy & cheap • No share purchase, but a “right” in the
business • Only economic rights. No influence in the
company
LOTS OF PARTNERS. NO PROBLEM!
VERY GOOD OPTION FOR MATURE COMPANIES • 2 options: participative loans & regular loans
– Best option: participative loans (loan money = company equity)
• Private contracts. No notary • No problem for foreign investors to join • Waiting for the 2015 legislation. Current
legislation poses no problems. • Available in FBM Spain in 2015
WHAT ABOUT CROWDLENDING?
• Why crowdfunding? • FundedByMe • What’s in a Crowdfunding Project? • Safe and legal? • How to do a successful crowdfunding
campaign? • How to integrate a crowd of microinvestors in
the company (Spain’s case)? • Success cases
CONTENTS
• FundedByMe. March 2014. 682.000€ in 5 days • Samastah. March 2014. 76.800€. 23 investors. • Naturix. To be launched in October. Total deal
66.000€. Already raised 28.500€ from 4 investors (last 2 joined yesterday)!
SUCCESS CASES
WOULD YOU JOIN NATURIX?
1. Innovative, transparent, legal and safe vehicle
2. Entrepreneur gets capital, an army of ambassadors, an awesome marketing campaign, clients, and lots of visibility
3. Attracts business angels and coinvestors 4. Market and entrepreneurial team is tested 5. Capital as serious and as difficult (or easy) to
raise as any other
KEY TAKEAWAYS
VC is now what private equity was before. Angels are now what VC was before. And crowdfunding is now what angels were before.”
Hall T. Martin
Director. Texas Entrepreneur Networks, USA