Deal Marketing on the Internet Using Software to Find Investors and Sell Your Deal
Presented by: Zack Miller (OurCrowd) & Steven Dresner (Dealflow.com)
About your webinar participants: Zack Miller, OurCrowd Zack Miller has been growing investment businesses for the past decade. He's held senior leadership positions and consulted to some of the top next-generation finance sites including Seeking Alpha, Lending Club, LearnVest, Wall Street Survivor, Covestor, and SigFig. Zack began his career in finance as an equities analyst at a multinational hedge fund. He's also the author of Tradestream your Way to Profits: Building a Killer Portfolio in the Age of Social Media (WIley, 2010) and runs the popular investing website Tradestreaming.com. Zack received his MBA from Northwestern's Kellogg School of Management and his BA in Economics from Harvard. Steven Dresner Steven is founder and chief executive officer of Dealflow Analytics and is responsible for corporate strategy relating to Dealflow.com. Prior to founding Dealflow Analytics, Steven was founder and chief executive officer of DealFlow Media (acquired by TheStreet Inc. NASDAQ: TST). Steven was also an investment banker with Ladenburg Thalmann & Co. and was founder and chief executive officer of VCOM Corporation (acquired by Utility.com). Steven has also been an active third-party marketer for hedge funds. Steven has a BS in psychology from George Washington University and both an MBA in finance and a graduate degree in computer communications and networks from the Lubin School of Business at Pace University. Steven is co-author and editor of six books including "PIPEs: A Guide to Private Investments in Public Equity" and "The Issuer's Guide to PIPEs" (Bloomberg Press), and is a contributor to "Reverse Mergers: Taking A Company Public Without An IPO" (Bloomberg Press). He just completed his latest collaborative book, "Crowdfunding: The Definitive Guide to Raising Capital on the Internet," published by John Wiley & Sons in April 2014.
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About OurCrowd, the global leader in equity crowdfunding. OurCrowd is the leading venture capital-equity crowdfunding platform for accredited investors to find and invest in professionally-vetted private, high-growth technology companies.
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Our team sources and diligences hundreds of early stage companies monthly, selecting and investing in a handful. Once we’ve invested, we open the round to our member base around the world to join on the same terms. Since launching in 2012, nearly 4000 accredited investors from 50+ countries have joined our platform to get access to top deals and have collectively invested over $43M into 37 companies. These angels have, with a minimum investment of $10,000, been able to co-invest with major institutional investors like General Catalyst, Accel Partner, Khosla, Canaan Partners, Microsoft, Horizons Ventures, and others.
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Jon Medved Co-‐Founder & CEO § Washington Post: "one of Israel’s leading high tech venture capitalists”
§ 12 exits >$100M § Co-‐founder, CEO of VRNG § Founder, Israel Seed Partners, $260M AOM
Elan Zivotofsky GP Investments § Prelude Israel § Tech Banking @ Lehman § Israeli tech analyst @ Goldman
Pini Lozowick General Partner § GP @ Alta Berkeley § Dir. MarkeYng @ Broadcom § Chairman of Provigent § Founder and GM of Verisense § 5 exits; total value $3B
Access to best opportuniYes
With top-‐Yer co-‐investors & angels
Team with deep experience invesYng in and growing technology companies
OurCrowd’s model: why global angels are using us to invest in startups
What is the future of deal marke=ng?
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Answer: SoCware
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A few things to keep in mind before we get started…
The No=on of Efficient Markets… Deals are similar to other products on the Internet and successful deal markeYng will require accurate product informaYon, lots of inventory, and easy access to data. The Growth in Online Deal Marke=ng… StaYsYcs indicate that deal markeYng on the Internet is poised for tremendous growth. The rise of Internet-‐based deal markeYng will be accelerated by the growth in deal portals and the repeal of the ban on general solicitaYon. This is bigger than crowdfunding… We aren’t talking solely about startup deals or venture deals. What’s happening will be a full-‐on migraYon of deal markeYng onto the Internet that includes deals in all sectors and of all types and stages.
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Here’s a basic fact: Efficient markets rely on information Due to regulatory changes and the rise of the social web, the business of raising capital is rapidly changing. Access to accurate informaYon and inventory will be the key to successful deal markeYng. Stock Brokerage: Ver 1.0 -‐ Asymmetric informaYon, phone-‐based selling
Ver 2.0 -‐ More informaYon, do-‐it-‐yourself research, Internet-‐based selling
Think… Capital Raising: Ver 1.0 -‐ Asymmetric informaYon, phone-‐based selling
Ver 2.0 -‐ More informaYon, deal portals/agents/syndicates selling on the Internet
Think…
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And another fact: Efficient markets of all kinds use the Internet for distribution of products
From banking and stocks to travel, music, retail, and virtually every industry, efficient markets coalesce around informaYon and move onto the Internet.
TradiYonal Radio = Minimal intelligence about users TradiYonal Travel = Fragmented info, expensive Pandora = Lots of intelligence about users Expedia = Aggregated info, inexpensive
Deals should be viewed like other “products,” and that’s why successful deal marke=ng will require accurate informa=on and distribu=on on the Internet! (Think about it.)
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Online deal marketing is poised for growth
Many deal portals are strategy-‐specific…
AcYve Global “Accredited” Deal Portals = 225 as of Jan 2014 (Crowdsourcing.org)
AngelList (seed stage investments) - 12,000+ accredited investors (TechCrunch) - 4,700 companies currently raising capital (Jan 2014)
Axial.net (private equity investments)
- 15,000 members (Jan 2014) - 4,125+ acYve deals (Jan 2014)
Intralinks (M&A) - Out of 2,400 M&A respondents to Intralinks survey: Over 55% of dealmakers currently use an online deal
network to support deal sourcing. Of them, over 85% of sell-‐side M&A professionals have marketed at least one deal online in the last 12 months. Among users of deal sourcing plalorms, over 50% of buy-‐side and over 40% of sell-‐side professionals have closed a deal that was sourced on an online network. 70% of dealmakers report that online communiYes of M&A professionals are making deal-‐sourcing more efficient.
AcYve Global Crowdfunding Portals = 945 (Crowdsourcing.org) - Growing fast: 330 portals added since November 2012 - Big push in the U.S. for equity-‐based crowdfunding, presently in SEC comment period
…which is why I an7cipate portals will be either regional or sector-‐specific
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Don’t take my word for it… Take the SEC’s word for it! (The SEC forecasts 20% growth in private placements)
All quotes from SEC Rule Proposal dated August 29, 2012 enCtled, “EliminaCng The ProhibiCon Against General SolicitaCon and General AdverCsing in Rule 506 and Rule 144A Offerings.”
“The RegulaYon D market is large compared to other markets, and offerings claiming the Rule 506 exempYon are by far the dominant type of offering in the RegulaYon D market. In 2011, 2010 and 2009, issuers raised an es=mated $895 billion, $902 billion and $581 billion, respecYvely, in transacYons claiming the Rule 506 exempYon.” (p. 46)
“…in 2011, 15,930 companies made 18,174 new Form D filings. The annual number of new Form D filings rose from 13,764 in 2009 to 18,174 in 2011, an average increase of approximately 2,205 Form D filings per year...” (p. 42)
“We esYmate that the proposed amendment to Rule 506 would result in an even greater annual increase in the number of Form D filings. As a reference point, we use the impact of a past rule change on the market for RegulaYon D offerings…this was followed by a 20% increase in the number of Form D filings…” (p. 43)
“…accredited investors who previously have found it difficult to idenYfy investment opportuniYes in Rule 506 offerings would be able to idenYfy a larger and more diverse pool of potenYal investment opportuniYes.” (p. 49)
“The eliminaYon of the prohibiYon against general solicitaYon would likely have a number of effects on issuers and investors. When using general solicitaYon, issuers would be able to reach a greater number of potenYal investors, thus increasing their access to capital. The proposed amendment to Rule 506 would likely reduce search costs associated with finding accredited investors who may be interested in a par=cular private offering, thus enhancing efficiency. The increase in the number of potenYal investors could result in greater compeYYon among investors interested in invesYng in an issuer, which may result in a lower cost of capital for issuers.” (p. 47)
“…we es=mate that the proposed amendment to Rule 506 would result in a 20% increase in Form D filings…or approximately 5,000 filings.” (p. 43)
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An overview of the marketplace
Issuers, investment professionals, sponsors, and accredited investors are all embracing the Internet as a source for deal-‐related informa=on. Accredited Investors1
• 8.5 million U.S. adults qualify as accredited investors • ~ 300,000 acYve angel investors in 2012 funded approx. 67,000 companies
Venture Capital2
• 480 acYve venture capital firms in the U.S. as of 2012 invesYng on average $7.2 million per deal • These firms manage $190 billion in commired capital Investment Professionals3
• 5.7 million counted in NAICS Code 52 – Finance & Insurance in 2011 U.S. Census • ~ 800,000 acYvely employed in securiYes industry Private Placements in Public EquiYes4
• 1,246 deals completed in 2012 • 4,193 market parYcipants (investors, legal counsel, placement agents) acYve in 2012 Crowdfunding5
• 86 million visitors to Kickstarter.com in 2012, up from 8 million in 2010 • 2.2 million project supporters • 570,672 funded mulYple projects
Sources: 1) Government Accountability Office, UNH Center for Venture Research 2) CB Insights, TechCrunch, NVCA 3) Economagic/U.S. Census, SIFMA 4) PrivateRaise 5) Mashable, Kickstarter.com
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Here are some of the companies solving problems in this relatively nascent area of deal tracking and analytics
• Crunchbase • Marermark • Dashboard • Tracxn • RelaYonship Science • And, Dealflow.com (shameless plug to follow)
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And some of the firms receiving investment in the area of online deal marketing
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Company Total Funding Amount Investor(s) Most Recent
Funding Date Business Descrip=on
LendingClub $388,300,000
Norwest Venture Partners, Morgenthaler Ventures, Canaan Partners, FoundaYon Capital, Undisclosed Angel Investors, AcYve Starts, Union Square Ventures, Thomvest Ventures, Kleiner Perkins Caufield & Byers, Bay Partners, Google Capital, Digital Sky Technologies, Coatue Management, Undisclosed Investors, T. Rowe Price, BlackRock, Wellington Management and Sands Capital
4/17/2014 Peer-‐to-‐peer lending
Prosper.com $119,900,000
Accel Partners, Benchmark Capital, Meritech Capital Partners, Fidelity Ventures, Omidyar Network, DAG Ventures, QED Investors, VoliYon Capital, TomorrowVentures, CompuCredit Holdings CorporaYon, Draper Fisher Jurvetson, Crosslink Capital, Sequoia Capital and BlackRock
9/24/2013 Peer-‐to-‐peer lending
Funding Circle $58,200,000 Index Ventures, Union Square Ventures, Accel Partners and Ribbit Capital 10/23/2013 Peer-‐to-‐peer lending in UK
Zopa $42,900,000 Arrowgrass Capital Partners, Augmentum Capital, Benchmark Capital, Bessemer Venture Partners, Tim Draper
1/30/2014 Peer-‐to-‐peer lending in UK
OurCrowd $30,500,000 Individual investors 4/28/2014 Equity accredited / crowdfunding plalorm
And some of the firms receiving investment in the area of online deal marketing
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Company Total Funding Amount Investor(s) Most Recent
Funding Date Business Descrip=on
Pret d'Union $25,700,000 Schibsted, Credit Mutuel Arkea, Kima Ventures, Weber Investments, Ag2r La Mondiale 11/7/2013 Peer-‐to-‐peer lending in Europe
Crowdrise $24,730,000
Union Square Ventures, Spark Capital, Index Ventures, RatPac, CAA Ventures, United Talent Agency, Bezos ExpediYons, Lightbank LLC, Individual investors and undisclosed venture investors
12/31/2013 Crowdfunding for charity
AngelList $24,000,000
Kleiner Perkins Caufield & Byers, Google Ventures, Draper Fisher Jurvetson, Atlas Venture, Marc Andreessen, Mitch Kapor, iNovia Capital, Ev Williams, SV Angel, Max Levchin, Paige Craig, Floodgate, The Kauffman FoundaYon, InnovaYon Endeavors, Version One Ventures, Rothenberg Ventures, Gil Penchina and Promus Ventures
9/22/2013 Equity accredited/crowdfunding plalorm
CircleUp $23,000,000 Google Ventures, Union Square Ventures, Canaan Partners, Maveron, David Topper, TriplePoint Capital and Rose Park Advisors
3/26/2014
Equity accredited/crowdfunding plalorm focused on consumer products
Realty Mogul $9,000,000 Canaan Partners 3/27/2014 Equity accredited/crowdfunding plalorm focused on real estate
Axial $8,500,000 Cove Point Holdings, Fabrice Grinda, First Round Capital, Lerer Ventures, Mark Gerson, Redpoint Ventures and Windcrest Partners
5/18/2012 Membership community of private companies and M&A
And some of the firms receiving investment in the area of online deal marketing
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Company Total Funding Amount Investor(s) Most Recent
Funding Date Business Descrip=on
FundersClub $6,500,000
Spark Capital, Intel Capital, Felicis Ventures, Y Combinator, First Round Capital, General Catalyst Partners, SV Angel, Andreessen Horowitz, Plug and Play Ventures, Pejman Nozad, DG IncubaYon, Chris Dixon, Start Fund, Draper Associates, Dan Rose, Jack Abraham, Netprice.com, Aaron Levie, GVA Capital, Farzad Nazem and Investmon Sarl
10/1/2012 Online venture capital
EquityNet $5,000,000 Proton Enterprises and undisclosed investors 4/8/2014 Equity accredited/crowdfunding plalorm
Seedrs $3,510,000 DFJ Esprit, Undisclosed Angel Investors and AFT Holdings 2/3/2014 Equity crowdfunding
plalorm in the UK
SeedInvest $3,000,000
Archer Gray, Avenue A Ventures, Great Oaks Venture Capital, JumpStart NJ Angel Network, Krillion Ventures, Scout Ventures and undisclosed angel investors
4/14/2014 Equity accredited/crowdfunding plalorm
Here’s how you should view the future of deals (and deal data)
There are two primary inputs in the world of deal tracking… 1) Deals (that is, companies running deals) and 2) investors in deals There are three types of en==es involved in deals (what we call the “three I’s”)… 1) Issuers 2) Investors and 3) Intermediaries There’s “hard data” and there’s “soC data”… Hard data = sourced informaYon. So} data = anecdotal or contextual informaYon. This informaYon forms the basis of deal tracking in the world of deal markeYng on the Internet.
If you give investors access to this data then you can begin to understand their investment preferences. (It’s not complicated. Again, think about it.)
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The way we’re solving problems @ Dealflow.com
As deal markeCng increasingly involves the use of soRware to assist – and in many cases replace – agents, finders, and investment bankers, we’re focused on problems related to
the DISTRIBUTION of deals. (DistribuCon is everyone’s “problem.”)
We’re using publicly available data and proprietary surveys to build detailed investor profiles and deal profiles with a view towards algorithmic matchmaking.
Companies like Nellix, Amazon, and Pandora refer to this as a “recommendaYon engine.” In the process of running our business, we’re building a large database of accredited individual investors and insYtuYonal investors, complete with detailed investment preferences.
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Remember… This isn’t (only) about crowdfunding.
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QuesYons relaYng to this presentaYon should be directed to: Zack Miller OurCrowd.com [email protected] Telephone +972 (0) 2 636 9300 or Steven Dresner Dealflow.com [email protected] Telephone +1 (516) 876 8006
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Thanks for joining us today
This webinar is an
produc=on. Find this and more content at blog.ourcrowd.com