CROWDFUNDING combinations Presented by Karl dakin On behalf of the Colorado capital congress pbc Copyright © 2015 colorado capital congress pbc

CROWDFUNDING Crowdfunding is an old activity. The Internet, automation and new laws will make crowdfunding a disruptor within the capital industry.

Types of CROWDFUNDING There are three types of crowdfunding: Gifts Product pre-sales Investment

Sustainable business model Investment crowdfunding requires a sustainable business model out of which investors may be repaid.

Candidate INVESTORS There are an estimated 230,000 accredited investors in the State of Colorado. There are an estimated 4.3 million non-accredited investors in the State of Colorado.

4. INVESTMENT SALES DOCUMENTS CROWDFUNDING PROCESS Crowdfunding is not the answer to all capital needs. Strategy, planning and preparation are required to be successful. 1. ASSESSMENT 2. STRATEGIC PLANNING 3. CROWD BUILDING 4. INVESTMENT SALES DOCUMENTS 5. REGULATORY APPROVAL 6. CROWDFUNDING PLATFORM 7. PROMOTE CAMPAIGN

Capital candidates Crowdfunding should only be selected if it is the best strategy – obtaining needed capital at the lowest cost in the least amount of time with the least amount of effort.

CROWDFUNDING options Investment crowdfunding may result in sale of equity, debt or revenue.

CROWDFUNDING options Crowdfunding may be incentivized by free or discounted products and services.

CROWDFUNDING combinations Private Equity Product Crowdfunding Investment Crowdfunding Crowdfunding may be a single stage in a multi-stage capital raise. Crowdfunding may be combined with other forms of capital structures on a single project. Founder Time & Money Investment Crowdfunding Bank Financing

Capital list Make a list of everything you would buy with funding and determine what type of capital will be the best choice.

Capital matching

DETERMINE COSTS Determine the cost of the capital and the cost of raising capital and then compare all available options.

Cost comparison

Combination challenges Certain types of crowdfunding can place a stress on cash flow.

Capital candidates Before crowdfunding, you must engage in crowd building. Crowds may be comprised of customers, citizens, businesses, tourists, vendors & suppliers, and/or retailers.

SALES DOCUMENTS Crowdfunding requires the creation and presentation of information that allows an investor to understand the structure and issues of the investment.

REGULATION Investment crowdfunding is regulated by state and federal law.

platforms Investment crowdfunding typically requires that communications and investment are automated.

promotion Crowdfunding requires telling a tailored story to each crowd that may invest.

illustration ABC Company wants to build and operate an assistive living facility.

illustration ABC Company needs $1,250,000 to acquire land, to build, and to operate assistive living facility until achieving breakeven at the end of 1 year.

illustration ABC Company projects $250,000 per year profits with a 75% occupancy rate.

illustration ABC Company crowdfunds $250,000 by selling 50 units @ $5,000 each to people within the community.

illustration Investors are offered a 10% interest in ABC Company generating a 10% ROI with a commitment to buy back their stock at the end of 5 years.

illustration Investors also receive first priority on living in the facility when a vacancy exists. Investors may also be offered discounts or other incentives.

illustration Investors may be prospective customers, residents of the community, local businesses, and/or suppliers to the assistive living facility.

illustration ABC debt finances $1,000,000 through a local bank or private lending sources.

illustration ABC successfully raises the capital it needs, builds and operates the assistive living center and earns a good profit on its work.

Crowdfunding combinations Questions and Answers Karl Dakin, Director Colorado Capital Congress PBC karl@coloradocapitalcongress.com http://www.coloradocapitalcongress.com