1. Material in this seminar is for reference purposes only. Neither any of the authors nor the publisher are engaged in rendering legal, accounting, investment, medical or any other professional service directly through this webinar. Neither the publisher nor the authors assume any liability for any errors or omissions, or for how this seminar or its contents are used or interpreted, or for any consequences resulting directly or indirectly from the use of this seminar. For legal, financial, medical, strategic or any other type of advice, please personally consult the appropriate professional. Keys to Successful Crowdfunding – Q&A With the Team That Wrote the Crowdfund Investing Framework Jason Best and Sherwood Neiss

2. Slide 2 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss About the Webinar Speaker Sherwood Neiss & Jason Best, Principals - Crowdfund Capital Advisors 1. Sherwood & Jason are successful entrepreneurs that have raised over $80M in private capital from PE/VC/Angel communities 2. Understand the needs of the PE/VC community & securities attorneys 3. Co-authors of the framework under which Title III (Crowdfunding) of the JOBS Act was signed into law by President Obama 4. Founding board members of the Crowdfunding Intermediary Regulatory Advocates and the Crowdfunding Professional Association - the industry’s regulatory and trade groups 5. Advising investors, entrepreneurs and governments globally regarding how to architect and implement Crowdfund Investing in their countries and regions

3. Overview Slide 3 Crowdfund Investing offers opportunities for innovations from entrepreneurs and investors Crowdfund Investing will create new investors in SMEs & Startups Crowdfund Investing, like all fundraising is not easy…but it is the opportunity for a new way to fuel the growth of your business Crowdfund Investing requires careful planning and execution before, during and after your campaign Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

4. Donation Crowdfunding vs Crowdfund Investing Title III of the JOBS Act – Equity and Debt Crowdfund Investing Title II of the JOBS Act – Accredited Investor Crowdfunding The Role of the Entrepreneur/Investor The Role of the Intermediary/Regulator The Role of professional investors and broker dealers Agenda Slide 4 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

5. Donation Crowdfunding vs Crowdfund Investing Donation Crowdfunding is perks based or pre-ordering product Donation has no oversight yet in 2012 over $3B was raised – projections are over $5B in 2013 Crowdfund Investing is securities based (debt or equity) Social media is the key ingredient to enable solicitation Standardization of process and documents to scale offerings Expected to soon be a $4B/year market- Source: University of California, Berkeley What to Know Slide 5 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

6. What to Know Title III of the JOBS Act Limits on Issuers $1M per year Cap on what a company can raise via crowdfund investing “All or nothing” financing requirement Limits on Investors Caps based on income/net worth thresholds and stock must be held for at least 12 months Limits on Intermediaries Funding portals vs. broker/dealers Preemption of state registration of crowdfund investing offerings Slide 6 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

7. What to Know Title II of the JOBS Act – ACCREDITED INVESTOR CROWDFUNDING – AVAILABLE NOW Limits on Issuers No limit on amount you can raise Limits on Investors Up to 2000 investors Limits on Intermediaries Must be closed to the general public Requires all investors to be regularly certified as ‘accredited’ Slide 7 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

8. What to Know The Role of the Entrepreneur/Investor Required to submit to Criminal/Securities Fraud/Background Check Legislation prescribes business plan Type of security & valuation will dictate who passes all or nothing threshold Social media will provide general solicitation and crowd intelligence will provide vetting Investors become marketing engine for the business now that they have a vested interest in its success Slide 8 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

9. Role of the Crowdfund Investing Intermediary/Regulator Intermediaries can either be funding portals or broker/dealers All must perform at least minimal duties (background checks, investor education components, standardized disclosures) Funding portals will play a hands off approach and outsource 3 rd party roles (escrow, transfer agents) All funding intermediaries will be registered with the SEC Funding portals are not allowed to give investment advice FINRA will be the SRO to provide regulatory oversight What to Know Slide 9 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

10. 1. Personally experiment with donation and equity/debt crowdfunding – understand the process and psychology involved 2. Identify the funding platforms that you believe are leaders in volume or approach 3. Identify secondary markets that are creating liquidity for private shares (Gate Technologies is an example of this) 4. Start building your “crowd” via Social Media Tips and Strategies Slide 10 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

11. Personally experiment with donation/perks and equity/debt crowdfunding – understand the process and psychology involved What can we learn from 5 years of perks-based crowdfunding 30% rule for social proof Majority of contributions are from first or second degree connections Why do people give to these platforms? Passion and be a part of something bigger than yourself, Communication is key Raising money on a perks based site takes a lot of work What to Do Slide 11 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

12. What to Do Slide 12 Identify the funding platforms that you believe are leaders in volume or approach Survey the landscape Select a small number of equity/debt platforms to invest in one or two companies – learn their processes to determine best practices Engage in the process as an investor to understand motivations, frustrations and opportunities Monitor companies over time and follow-up offline with 2-3 companies that have successfully used CFI to learn about their experiences Think of this all as due diligence for CFI and the funding platforms Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

13. Identify secondary markets that are creating liquidity for private shares (Gate Technologies or Second Market are examples) The law requires a 12 month hold period on these securities to prevent “pump and dump” schemes. After 12 months CFI shares can be sold on secondary markets In some cases, these markets may provide exits – but this is NOT guaranteed What to Do Slide 13 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

14. Action Steps as crowdfund investing begins Use CFI as the “action step” for companies that are not quite ready for PE/VC investment or not a good fit for PE/VC When you succeed in CFI and complete your milestones, you are an entrepreneur with more proof points and demonstrable success. You have taken significant steps to prove market relevance What to Do Slide 14 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

15. 1. Donate to a crowdfunding platform to experience the process 2. CFI is happening – learn about it now so you can be ahead of the curve 3. Plot a strategy for how you will play in this space 4. Talk to a securities attorney to get their take 5. Don’t wait to be the last one in - get started now 6. Start building your crowd both offline and online Do’s and Don’ts Slide 15 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

16. What is the difference between crowdfunding and crowdfund investing? When will the market begin? How many platforms will be available when this market begins? How exits and liquidity be generated? How is an entrepreneur going to manage 100 investors? What are the fraud protections that are in place for investors? What can I do now as an entrepreneur to raise money for my business? What is going on globally with crowdfund investing? FAQs Slide 16 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

17. Point 1: Crowdfund Investing is happening. Be prepared. Point 2: Strategize for your portion of the $4B/year market Point 3: Take the time to understand how it works today Conclusions Slide 17 Keys to Successful Crowdfunding – www.SuccessWithCrowdfunding.com Jason Best and Sherwood Neiss

18. Jason@theCCAgroup.com Sherwood@theCCAgroup.com (877) 427-2350 www.SuccessWithCrowdfunding.com Twitter: @crowdcapadvisor Contact the Speaker