Uploaded byAlessandro Maria Lerro
Funding Start Ups and Crowdfunding
The document provides an overview of financing options for start-ups, including bootstrapping, angel investing, venture capital, and crowdfunding, particularly focusing on the Italian market. It discusses the legal framework for equity crowdfunding and the types of investors involved, along with potential challenges in the market. Additionally, it highlights the expected growth of crowdfunding investments and the importance of quality teams and business plans for successful start-up funding.
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Funding Start Ups and Crowdfunding
- 1. Avv. Alessandro M.Lerro November M. LERRO Alessandro 27, 2013 Roma, November 15, 2013 LUISS – Scuola di Management – MBA ALUMNI FUNDING START UPs FINANCING START-UPs EQUITY CROWDFUNDING
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- 3. GARAGE BOYS Student experiments,no professional business planning, no expert teams, no proof of concept, wishful thinking FIRED or RETIRED FOLK Wishful thinking, looking for “something to do” SMART START UPs Good idea, professional business plan, skilled team, MBAs, overall quality ©2013 A.M. Lerro
- 4. FINANCING A STARTUP : • • • • BOOTSTRAPPING ANGEL INVESTING & VENTURE CAPITAL DEBT CROWDFUNDING ©2013 A.M. Lerro
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- 7. BOOTSTRAPPING TECHNIQUES: • SAVINGS •FAMILY & FRIENDS • PERSONAL LOANS • LENDING-BASED CROWDFUNDING ©2013 A.M. Lerro
- 8. ANGEL INVESTING & VENTURE CAPITAL ©2013A.M. Lerro
- 9. - In 2012global VC volume was $ 51,7 BL - 58% is in the USA - A USA VC usually looks into 200 deals/weak - VC focus on $1/3 ML financing in average - SYNDICATION is common ©2013 A.M. Lerro ANGELS & VENTURE CAPITAL:
- 10. In ITALY investmentsare mostly allocated to PRIVATE EQUITY operations. Just a few early stage deals. Mainly: - Buy Out; - Expansion deals; - Replacement deals. ©2013 A.M. Lerro ANGELS & VENTURE CAPITAL:
- 11. ©2013 A.M. Lerro Fundraisingexpected allocation:
- 12. Note: most are intercompany investments. ©2013A.M. Lerro Early stage investments: €100ML
- 13. ©2013 A.M. Lerro Investmentdistribution by stage 1° half Y2013:
- 14. ©2013 A.M. Lerro Averageinvested amount per stage 1° half Y2013:
- 15. Everything ought tobe 100% quality, but the first impression will rule ©2013 A.M. Lerro - FIND THE RIGHT TEAM - INVEST ON YOUR BUSINESS PLAN - INVEST ON YOUR ROADSHOW - SELECT THE RIGHT INVESTORS’ PROFILES - BEWARE SHAREHOLDERS’ AGREEMENT
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- 17. DEBT ( Mini Bond) ©2013 A.M. Lerro
- 18. D.L. 83/2012 “Sviluppo”art. 32 EMPLOYEES • > 10 employees • < 250 employees TURNOVER • > 2 ML euro • < 50 ML euro ASSETS • > 2 ML euro • < 43 ML euro WHO: SME (Small Medium Enterprises) ©2013 A.M. Lerro
- 19. “SPONSOR” appointed Audited annual accounts To be distributedonly to qualified investors (Art. 34 ter Reg. CONSOB 11971) MINI-BONDS MAY be eventually listed on the Extra MOT by Borsa Italiana ©2013 A.M. Lerro
- 20. “SPONSOR”: Bank, SIM, SICAV,SGR, Broker-Dealers art. 107TUF Ought to subscribe and keep: - 5% BOND (up to €5ML) - 3% BOND (from €5ML to €10ML) - 2% BONS (> €10ML) ©2013 A.M. Lerro
- 21. At the momentonly LARGER companies are on the market ©2013 A.M. Lerro
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- 27. 2012 C.F. VOLUMES “BUSINES” MOTIVATION “BUSINESS” VOLUMES Reward-based 383,000,000 16,3% 62,477,000 Lending-based 1,169,700,000 54,2% 633,977,000 Donation-based 979,300,000 12,8% 125,350,000 Equity-based 111,700,000 TOTAL 2,643,700,000 111,700,000 ≈35% 933,500,000 35% OFTHE 2012 CROWDFUNDING VOLUME HAS BEEN COLLECTED IN THE BUSINESS AND ENTREPRENUEURSHIP CATEGORY ©2013 A.M. Lerro CROWDFUNDING MODEL
- 28. By 2025 thevolume of INVESTMENT CROWDFUNDING will be: > $92 billions = 1,6% of household savings ≈ 2 x total Venture Capital volume ©2013 A.M. Lerro
- 29. ©2013 A.M. Lerro REWARD- BASED CROWDFUNDING ©2013 A.M. Lerro
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- 31. PLEDGES CATEGORY $ 10,266,845 High Tech OUYA:videogame consòle $ 8,596,474 Games Veronica Mars $ 5,702,153 Movie Torment: Tides of Numenera $ 4,188,927 Games Reaper Miniatures Bones $ 3,429,235 Games Double Fine Adventure $ 3,336,371 Games Form 1: 3D professional printer $ 2,945,885 High Tech Wasteland 2 $ 2,933,252 Games Homestuck Adventure Game $ 2,485,506 Games Oculus Rift $ 2,437,429 High Tech 3Doodler: 3D pen $ 2,344,134 ©2013 A.M. Lerro PROJECT High Tech PEBBLE – watch for iPhone / Android ©2013 A.M. Lerro
- 32. ©2013 A.M. Lerro PREORDER DONATION withPERKS ROYALTY BASED REWARD ©2013 A.M. Lerro
- 33. Rotterdam Bridge • PedestrianBridge, 350 m., 17.000 boards by Y2042 • Y2012: ca. 100.000€, 1300 boards • Civic Crowdfunding ©2013 A.M. Lerro DONATION with PERKS ©2013 A.M. Lerro
- 34. • Y2005 –no platform • LP: 300.000R = 27.000€ • 20.161 PLEDGES • Preorder LP: 150R • Purchase LP: 116R ©2013 A.M. Lerro PRE-ORDER Verity Price ©2013 A.M. Lerro
- 35. SELLABAND • Y2006 •Min. invest. 10$ • Target: 50,000$ • “Believers” • 10% reward ©2013 A.M. Lerro ROYALTY BASED ©2013 A.M. Lerro
- 36. ©2013 A.M. Lerro EQUITY- BASED CROWDFUNDING
- 37. JOBS Act wasthe first law in the world to regulate equity crowdfunding (apr. 2012) TIT. 2: accredited investors Implemented Tit. 3: retail investors Waiting for SEC regulation ©2013 A.M. Lerro
- 38. LAW: LAW n. 221,Dec. 17, 2012 “2.0 Growth Decree” REGULATION: CONSOB Reg. n. 18592 June 26, 2013 ©2013 A.M. Lerro
- 39. LEGAL FRAMEWORK: CONSOB hasthe supervision and is entitled to impose penalties Platforms ought to be registered with CONSOB Platfoms ought to meet reputation and competence requirements Investment is subject to MIFID and operated through BROKER-DEALERS ©2013 A.M. Lerro
- 40. TARGET CO.: ONLY INNOVATIVE STARTUPs ARE ALLOWED TO RAISE EQUITY FROM THE CROWD (…for now) ©2013 A.M. Lerro
- 41. You can raise €5.000.000,00 per company, per year ©2013 A.M. Lerro
- 42. PROBLEM/OPPORTUNITY: !? - The marketis too small - High Tech is too difficult for investors - High Tech is a risky business - Wider markets could generate more opportunities of investment, value creation and new jobs ©2013 A.M. Lerro
- 43. CROWDFUNDING PLATFORMS: ONLINE PLATFORMS, WHOSEEXCLUSIVE PURPOSE IS TO HELP COMPANIES TO RAISE EQUITY FROM THE CROWD (art.1.5.9 TUF) ©2013 A.M. Lerro
- 44. SMALL INVESTMENTS • Directlymanaged • MIFID exempted BIG INVESTMENTS • Partner with a BROKER-DEALER • Investment profile to match with proclivity to risk investment ©2013 A.M. Lerro
- 45. SMALL INVESTMENTS: INDIVIDUAL: < 500€per investment < 1000€ per year COMPANY: < 5.000€ per investment < 10.000€ per year ©2013 A.M. Lerro
- 46. PROBLEM/OPPORTUNITY: !? Crowdfunding is limitedto EQUITY. DEBT could be an other good opportunity. ©2013 A.M. Lerro
- 47. BROKER-DEALERS: BANKS and INVESTMENTCo.s Take in charge the PAYMENT, the execution of the investment, once the investor has decided to pledge. (… at least…) ©2013 A.M. Lerro
- 48. BROKER-DEALERS: BANKS and INVESTMENTCo.s CAN EITHER: MANAGE A CROWDFUNDING PLATFORM THEMSELEVES PARTNER WITH A CROWDFUNDING PLATFORM ©2013 A.M. Lerro
- 49. MIFID PROCEDURE: IDENTIFICATION OF THECLIENT ANTI-LAUNDERING RULES INVESTMENT PROFILE TO MATCH WITH PROCLIVITY TO RISK INVESTMENTS MIFID = European Union Directive, Markets in Financial Instruments and investment services ©2013 A.M. Lerro
- 50. ADVISING: Broker-Dealers may advise andgive suggestions, within their general rules. Platforms may not provide recommendations suitable to influence pledges. PLATFORMS BROKER-DEALERS ©2013 A.M. Lerro
- 51. PROBLEM/OPPORTUNITY: !? FOREIGN BANKS andINVESTMENT Co.s are in principle allowed to operate in Italy, but the absence of Monitoring Agreements between CONSOB and foreign Authorities inhibits such opportunity. ©2013 A.M. Lerro
- 52. INVESTORS: ITALIAN LAW PROVIDES AROBUST LEGAL FRAMEWORK OFFERING PROTECTION TO INVESTORS ©2013 A.M. Lerro
- 53. There is NO PERSONAL INVESTMENT LIMIT MIFIDregulates any NON SMALL investment ©2013 A.M. Lerro
- 54. SET OF WITHDRAWALRIGHTS: WHO WHEN WHY RULE Retail Investors Bank Foundations Registered Incubators 7 days from the investment No reason or explanation: they just changed their mind §13.5 Reg. Consumers* 14 days from the investment No reason or explanation: they just changed their mind Consumer Code Retail Investors Bank Foundations Registered Incubators 7 days from the news, but before the campaign closed Material mistake or §25.2 Reg. something new happened, suitable to influence the investment decision * The only case where platform are allowed to withold costs ©2013 A.M. Lerro
- 55. SHAREHOLDERS AGREEMENTS: INFORMATION RIGHT Any ShareholdersAgreement must be notified to Investors TAG ALONG or WITHDRAWAL RIGHT* If the Founding Shareholders sell the business or anyhow wave control * Only for RETAIL INVESTOR As long as the Company enjoys Innovative Start Up status ©2013 A.M. Lerro
- 56. PROBLEM/OPPORTUNITY: !? Foreign investors inprinciple are allowed to invest, but the lack of a Treaty about jurisdiction and conflict of laws could generate conflicts with foreign Authorities. This problem might severely limit investment opportunities. ©2013 A.M. Lerro
- 57. LAWS AND MATERIALS: www.CrowdfundingInItaly.com ©2013A.M. Lerro ©2013 A.M. Lerro
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