1. CROWDFUND INVESTING Innovation Napa Valley October 17, 2012

2. Our Financial System is Broken U.S. Savings Allocation U.S. Jobs/GDP by Business Size Although half of our jobs and output comes from startups and small businesses, essentially all of our savings go into Fortune 500 companies

3. WHO WE ARE Jason, Zak & Sherwood 3 entrepreneurs, co-founders of the Startup Exemption Co-authors of the Crowdfund Investing Framework Inc. 500 award recipients – Fastest growing private companies in US Together raised over $80M in VC/PE capital Authors of Crowdfund Investing book (Wiley) November 27, 2012 Co-Founders and Board members of CfIRA and CfPA Co-Founders Crowdfund Capital Advisors

4. DEFINITION CROWDFUND INVESTING A large number of unaccredited investors making modest investments in a small business in exchange for equity or debt securities.

5. CROWDFUND INVESTING CURRENT CROWDFUNDING CURRENT BUSINESS NEED DONATION-BASEDEQUITY FUNDING Small businesses & start-ups Up to $1M GAP THIS IS WHERE CROWDFUND INVESTING COMES IN

6. Everyone we talked to said it would never happen… “The House and Senate will never agree” “Don’t waste your time” “You’re crazy…” “What can 3 regular guys get done in Washington?” “Who’s gonna pay for this?”

8. WHAT WE DID January 2011 Jason, Zak & Woodie have an idea to make it easier for small businesses to raise capital Summer 2011 Testify in front of House Committees November 2011House passes the first version of the law November 2011Rally in D.C. February 2012Participate in Senate Committee hearings March 2012Senate passes the final version of the law April 2012President Obama signs JOBS Act 460 DAYS

9. AND ON THE 460 TH DAY…

10. HOW IT WORKS 1/ THE BIG IDEA Start up or small business owner has a high-potential idea 2/ WEB 3.0 Leverages social media for community financing 3/ CROWDFUND INVESTING CrowdFund Investing provides funds at a crucial growth point 4/ GO PRO Success attracts professional investment 5/ THE CYCLE CONTINUES More entrepreneurs follow, transforming Main Street through ‘localvesting’

11. LEGISLATIVE FRAMEWORK SMALL BUSINESS OWNERS Raise up to $1M per year with ‘all or nothing’ terms UNACCREDITED INVESTORS Invest at 1 of 2 levels: Lesser of $2K or 5% income (<$100K income) Greater of $100K or 10% income (>$100K income) Regulate websites for all CrowdFund Investing State registration pre-emption SELF-REGULATING ORGANIZATION CfIRA, CfPA Boards Engaged with FINRA SEC negotiations NASAA engagement SEC CROWDFUND INVESTING FRAMEWORK

12. THE FUTURE OF CFI April 2012 JOBS Act signed into law December 31 2012 General solicitation begins for accredited investors January 2013 - Delayed SEC rulemaking process continues March 2013 FINRA rulemaking begins July 2013 (best guess) Crowdfund Investing begins 2012 2013

13. INDUSTRY BEST PRACTICES 1/ Criminal and securities background checks 2/ Easy to understand T&C, investor agreements and disclosures 3/ Robust investor education 4/ Social connectivity tools 5/ Investor communication tools

14. LET’S TALK ABOUT FRAUD 1.Background check before starting 2.Still need to market a smart idea 3.Need to post it on a funding portal 4.Need to have a strong network of people you want to take advantage 5.Need to be able to respond to their potentially exposing inquiries … fast 6.Must hit 100% of your funding target within the time frame

15. CROWDFUNDING IS GLOBAL 1/ Use social media to create a transparent market to connect entrepreneurs with capital 2/ Possible solution to “gap financing” problem 3/ Geography, Interest and Origin Communities 4/ Crowd validation + entrepreneur execution = positive signaling for follow-on capital 5/ Investor and Entrepreneur education required

16. WHAT WE LEARNED 1/ PUT A STAKE IN THE GROUND 2/ SHOW UP 3/ SELL WHAT PEOPLE ARE BUYING 4/ STAY ON POLICY & OUT OF POLITICS 5/ SUCCESS HAS MANY FATHERS

17. More Funding, Much More Funding Gartner estimated market size in 2013 Friends and Family investing will shift to crowdfunding “Just a 1% Shift to Startups & SMBs = $300 Billion” - Fred Wilson $6.2 Billion $60 Billion in Friends & Family $30 Trillion in Total U.S. Savings Estimated equity crowdfunding market size is in the billions

18. 18 The Crowdfunding Professional Association (CfPA) is dedicated to facilitating a vibrant, credible and growing crowdfunding community while also advocating for an industry view versus a single company perspective. Uniting a broad-based coalition of industry participants, the association is committed to ensuring the credible development of the industry, including a commitment to the highest ethical standards. www.crowdfundingprofessional.org

19. THANK YOU EMAIL SHERWOOD@THECCAGROUP.COM WEBWWW.CROWDFUNDCAPITALADVISORS.COM QUESTIONS?

20. Donation/Equity/Debt Platforms Examples of Donation-Based Crowdfunding Platforms: www.rockethub.com www.kickstarter.com Platform Links Examples of CrowdFund Investing Platforms: www.seedinvest.com (equity based) www.seedinvest.com www.crowdfunder.com (equity based) www.somolend.com (debt based) www.gatetechnologies.com (broker dealer platform)

21. REGULATORY UPDATES Startup Exemption Framework: www.startupexemption.com/exemption-framework#axzz1vANkx2lL SEC JOBS Act Comments Page: www.sec.gov/spotlight/jobsactcomments.shtml SEC FAQ for Crowdfunding Platforms: www.sec.gov/divisions/marketreg/tmjobsact-crowdfundingintermediariesfaq.htm Crowdfunding Professional Association (CfPA) Launch Release: www.prnewswire.com/news-releases/crowdfunding-pioneers-launch-professional- association-in-concert-with-regulatory-advocacy-group-150451405.html