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Crowdfunding for University Startups

Crowdfunding for University Startups. Tony Stanco Executive Director. Opportunities in Crowdfunding. Crowdfunding raised $1.5 billion in 2011 530 crowdfunding platforms Source: Business2Community, October 2012. Most successful crowdfunding campaigns.

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Crowdfunding for University Startups

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  1. Crowdfunding for University Startups Tony Stanco Executive Director

  2. Opportunities in Crowdfunding • Crowdfunding raised $1.5 billion in 2011 • 530 crowdfunding platforms Source: Business2Community, October 2012

  3. Most successful crowdfunding campaigns • for an e-paper wristwatch called Pebble Watch, raised $10 million • one for a video game, raised $6.3 million from 90,000 fans online

  4. Hype Cycle of Technology Innovation Source: http://blogs.msdn.com/b/stmteam/archive/2009/07/24/are-we-beyond-the-trough-of-disillusionment.aspx

  5. Opportunities in Crowdfunding 4 types of crowdfunding models: • Pre-sale product (millions of dollars) • Donation-based (could be hundreds of thousands; average $5-10 thousand) • Equity-based (could be millions); waiting for SEC • crowdfunding to accredited investors only; approved now • Debt (could be millions); waiting for SEC

  6. Pre-sale Based Model • Funders buying product that generally needs to be created • Providing funding for design/manufacture • Funders expect delivery of product

  7. Pre-sale Based Model - Problems • Late delivery/No delivery • Not what they expected • Think it's like Amazon • Don't understand the risks • No refunds for non-delivery or disappointments • FTC looking into it because of some complaints • Better disclosure of what funders should really expect

  8. Equity-Based Model • Funders are investors, who are financially-motivated • Equity is given to funders • Funders expect a return

  9. Equity-Based Model – only to Accredited Investors • Related but legally different • Crowdfunding to sophisticated/accredited investors only • no unsophisticated investors • Some doing this already

  10. Equity-Based Model - Problems • Will angel investors and VCs follow-on? • less problem for angel/VC only crowdfunding • Capitalization tables can be messed up with hundreds/thousands of investors • Unsophisticated investors with unreasonable expectations • Don't realize 90-100% failure rates in startups • Class-action potential • Market of lemons • Only those that can't get angel or VC funding • Investors Fraud

  11. Some fraud protections • THE JOBS Act contains investor protections • Capped the amount that unaccredited investors can invest • Capped up to $2,000, or 5 percent of their income, whichever is greater in a given year • Also, businesses that raise money on crowdfunding portals must disclose relevant financial information; • for companies seeking more than $500,000, that includes audited figures

  12. Donation-Based Model • Funders are donors; don't expect return or product • Want to help some cause • Clearly patient groups can help life science technologies and companies • Looking for better care or cures

  13. Our Beta Site – open to some now on test basis http://ustartups.com

  14. NCET2 Funding Continuum RESEARCH FUNDING RESEARCH COMMERCIALIZATION FUNDING PROOF OF CONCEPT PURE RESEARCH PRODUCTI-BILITY SCALA- BILITY PROFITABILITY COMMERCIALIZATION BARRIER Gov’t funding Foundations SBIR Phase I SBIR Phase II Investors: Angels/VCs/ Global 1000 SELF- SUSTAINABILITY/ M&A/IPO USTARTUPS.COM SBIR WORKSHOPS UNIVERSITY STARTUPS SHOWCASE NCET2 Funding Continuum

  15. Crowdfunding to Angels, VCs, Global1000 http://ncet2.org/uss

  16. PARTICIPANT LIST OF Investors and GLOBAL1000 Companies 3M ABB Technology Venture Abbott Access Bridge Gap Ventures Acero Capital Active Angel Investors Air Products and Chemicals Allied Minds AMD Applied Ventures Artiman Ventures Ascent Venture Partners Ashland Astra Zeneca (10 slots) AT&T Atrium Capital BASF Bausch & Lomb Baxter Bayer BD Technologies Birchmere Ventures Blue Tree Allied Angels Best Buy Capital Canaan Partners Charles River Ventures Chart Venture Partners Chemical Angel Network Chevron City Light Capital CNF Investments Colgate-Palmolive COVIDIEN Ventures Core Capital Partners DBL Investors DFJ Mercury Dow Chemical Company DuPont Early Stage Partners LP Elevate Ventures Evonik Faurecia Florida Gulfshore Capital Flybridge Partners Formation 8 Garage Technology Ventures General Electric General Motors Georgia-Pacific Grotech Capital Group Hersheys H.I.G. BioVentures Honda IDEA Fund Partners IDG Ventures Intel Capital Johnson & Johnson Johnson Controls Jumpstart NJ Angel Network Kleiner Perkins Caufield & Byers Livingston Securities Lockheed Martin (3-5 attendees Matrix Partners Merck Meridian Ventures Partners Microsoft Mid-Atlantic Venture Association Monsanto (3 attendees) Motorola Solutions Venture Capital National Venture Capital Association (67 corporate slots) New Vantage Group New Venture Partners LLC North Bridge Venture Partners Northrop Grumman Corp. Novo Nordisk (10 attendees) Novak Biddle ONSET Ventures Opus Capital Osage Partners Paladin Capital Group Pfizer Philips (5 slots) Procter & Gamble Reckitt Benckiser Group Richmond Global Roche Molecular Systems Rock Spring Ventures Saint-Gobain External Venturing Sanofi SBIR Program Managers (10 attendees) SchilbergBioAdvance Schlumberger Siemens Sierra Angels Silicon Valley Bank Sony SR One (GSK) STNewVentures Synchrony Venture Management Takeda Ventures The Sherwin-Williams Company Triathlon Medical Ventures University-Industry Demonstration Partnership (10 corporate slots) Valhalla Partners Verizon Communications Vista Ventures Visteon Corporation

  17. University Startups Conference and Showcase, Mar 20-21, 2013, http://ncet2.org VCs and Angels

  18. Thank you! • Email: tony@ncet2.org • Conference: http://ncet2.org • University Startups Showcase: http://ncet2.org/uss

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