My presentation at Crowdcult - Russia on October, 19th, 2013

1. Crowdfunding
For Large Corporations and
Professional Investors
Elena Mikhaylova
www.CrowdfundProductions.c
om
October 2013

2. Crowdfunding is an American word. But
even in the United States less than 20% of
adult population has ever heard about it.
And there are many rumors and unrealistic
ideas circulating among those who have
read about crowdfunding.

3. M
yth: Crowdfunding=Kickstarter
F
act: There are four types of crowdfunding: Donations,
Rewards, Debt and Equity. Debt, or Р2Р lending is
leading in the growth rates and in the amount of
money raised among all the types. Even considering
the fact that Kickstarter is the largest rewards based
platform, it is responsible for less than 10% of all the
money raised through crowdfunding and there are
over 700 other platforms around the world.

4. M
yth: Crowdfunding only useful for those who can’t get
a bank loan or to raise money from venture capitalists.
F
act: More and more inventors and startups use
crowdfunding campaigns as a part of their marketing
and PR strategy, to crowdsource product design and
development, to validate market demand, to pre-sell
the product and to find potential partners, distributors
and investors. And those are the tasks every business,
a startup or an established company, has to work on
constantly in order to succeed and grow.

5. M
yth: Equity Crowdfunding is important for startups
only
F
act: Out of 40 companies which were raising money
in August on Crowdcube, the largest British equity
crowdfunding platform, only 14 were startups. All
others were companies at their later stages of
development.
And this is the data about the raises on Crowdcube over
last two years:

6. M
yth: Equity Crowdfunding creates unlimited
opportunities for fraud
F
act: Equity crowdfunding has been in presence in
several countries (Australia and France, for instance)
for several years. But there is zero cases of fraud
registered. Out of more than 160 companies that have
raised funds through ASSOB in Australia over last
seven years, 85% are still in business, which is a much
better result than investments made by major VC
firms.

7. M
yth: Equity crowdfunding is too dangerous for
inexperienced investors, so the Government should
protect them from going broke.
F
act: According to the currently discussed in the US
crowdfunding law (JOBS Act, Title III), people who have
an annual net income below $100,000, can invest in
private companies no more than $2,000 or 5% of their
income in a period of 12 month. So their chance of
substantial loss from investing through crowdfunding is
significantly lower than from gambling.

8. The re a re two o the r m y ths Ia m g o ing to d is c us s in this
p re s e nta tio n:
Crowdfunding
is a threat to banks, VCs and
business angels, so they should protect
themselves from its influence,
Large
established businesses shouldn’t “depend
on the crowd”

9. The Goal of this Presentation
Is to demonstrate how established
businesses with multi-million dollar
revenues, large banks and
investment groups already use
crowdfunding to grow their market
share.

10. Four Approaches:
•Creation of your own crowdfunding platform to post
projects from outside of the company to attract new
talents and to build new partnerships,
•Partnership with existing crowdfunding platforms,
Development
of internal crowdfunding projects inside
of a corporation,
• Crowdfunding as an investment.

11. Dragon Innovation
(Boston, MA)
Uses its expertise and industry connections to help bring
on market new hardware products

12. Coca-Cola Subsidiary in
Mexico
Has created a crowdfunding platform Transformadora
Ciel to support local community projects

13. Complete Corporate Philanthropy and Employee
Volunteering Platform (США)

14. Square Enix
(UK)
Has combined two approaches by creating its own
platform where anybody can post a new game
for public vote. The games which get the most votes
will be presented and
promoted on Indiegogo.

16. Philips
Uses Indiegogo to support its image of an innovative
company and to discover ideas for new products

17. +

18. Crowdfunding to mitigate market
risks for new products

19. IBM – internal
crowdfunding
The company tries to encourage new ideas creation by
initiating crowdfunding contests among the employees

20. Professional Investors are
Interested in Crowdfunding

22. Investments by Venture
Capital Firms in
Crowdfunding Platforms

Lending Club – more than $215 Million (incl. Google)

Prosper - $45 Million

Indiegogo - $16,5 Million

Crowdtilt - $14,1 Million

Kickstarter - $10 Million

CircleUp - $9 Million (Google Ventures)

FundersClub – more than $6,5 Million

23. Institutional Investors Diversify
their Portfolios
One third of the credit resources on Lending Club is
provided by pension funds
Another one third –
By accredited investors
and financial advisers

24. How Banks Can Use
Crowdfunding
One of the largest European banking groups, ABNAMRO, has created its own crowdfunding platform Seeds.
It provides a place for companies to raise money from
existing and potential customers. The same time, it
provides valuable information for the bank’s credit
department and allows it to make better loan decisions by
supporting the businesses with more loyal customer base
(which means, a better chance to succeed in a long run).

25. Conclusion
How Corporations and Professional Investors Can
benefit from Crowdfunding:
Market
validation for new products before investing
significant amount of money
Reputation Management, positive image creation on new
markets, government relations, partnerships with local nonprofits and influencers
Head hunting, search for companies for M&A and ideas for
new products
Innovation development inside of an organization, team
building
Monitoring of trends in customer demand
Investment portfolio diversification
Venture investments in crowdfunding industry (platforms
and infrastructure)

26. What’s Next?

Active entrance in the market of major financial
institutions and investment groups (hedge funds,
banking groups),

Adoption of crowdfunding in business practices of
global corporations like General Electric,

Synergy of equity crowdfunding and angel
investment groups,

Emergence of stock exchange for shares of crowd
funded companies and their acceptance as a viable
option for alternative investments

27. Want to Be on Top
of the Industry News?
Join us at Aspen Global Investment Forum on January 6th-7th,
2014. Among the speakers are leaders of AngelList, Prosper,
CircleUp, MicroVentures, founders of major debt and equity
crowdfunding platforms from Australia, UK, Israel, France and
Netherlands. Learn about the latest developments from the
industry captains and enjoy your time on the slopes of the
famous ski resort.

28. How to contact me:
Website:
www.CrowdfundProductions.com
Email:
info@crowdfundproductions.com
LinkedIn:
www.linkedin.com/in/elenamikhaylova1/
Meetup:
www.meetup.com/Crowdfunding_Kickstarter/
YouTube:
www.youtube.com/user/CrowdfundProductions
Twitter:
@Alive_Digital