ECFA Toronto Conference Portal Presentation

The Portals - What is Happening In Canada

2014 ANNUAL CANADIAN EQUITY CROWDFUNDING CONFERENCE Toronto, Ontario

April 24, 2014


Moderator: ● Brian Koscak

● Partner at the law firm of Cassels Brock & Blackwell LLP located in Toronto, Ontario and practices in the area of corporate and securities law.

● Co-Chair, Equity Crowdfunding Alliance of Canada ● Chairman of the Private Capital Markets Association of Canada (formerly the

Exempt Market Dealers Association of Canada ● Member of the Ontario Securities Commission’s Exempt Market Advisory

Committee Brian can be reached by phone at 416-860-2955, by e-mail at [email protected] or on twitter @briankoscak. Brian also regularly writes about Canadian securities law matters on his personal blog at www.briankoscak.com.

The Portals - What is Happening In Canada Four Presentations & Panel Discussion Equity Crowdfunding Portals – How do they work? I A Restricted Dealer (Social impact issuer focus)

● Carlos Pinto Lobo, CCO, MaRS SVX II A Portal Working with an Exempt Market Dealer

● Sandi Gilbert, CEO, SeedUps Canada III Portal - Exempt Market Dealer (Pending)

● Tim McKillican, CEO, OpenAvenue (Real estate focus) ● Peter-Paul Van Hoeken, CEO, Silver Maple Ventures

IV Panel Discussion

Equity Crowdfunding Portals – How do they work? I A Restricted Dealer (Social impact issuer focus)

● Carlos Pinto Lobo, CCO, MaRS SVX

Moderator: ◦ Mark Skapinker

Speakers

What are the roles of Angels and VC in equity

crowdfunding

Welcom

SVX is registered as a restricted dealer with the OSC and AMF

Access: We are a single point of access to a diverse range of impact investment opportunities

Cost effective: Our services are

available at very low or no cost; thereby reducing transaction and operation costs.

An independent, values driven, non-profit organization: SVX is committed to supporting and enabling the growth of impact investing to benefit social, environmental and economic development.

Our Partners

Lack of Deal Flow: Given limited resources, impact investors cannot easily identify quality impact investments in order to make an appropriate investment.

Lack of Expertise: Impact investors do not always have the ability to prepare and conduct due diligence.

There is a tremendous opportunity in the growing marketplace: Currently the total Canadian impact investment market is $5.3 billion and is expected to grow to $30 billion in 10 years. The SVX provides a single access point to connect investors to ventures with robust information.

Governance & Management

• Ontario incorporated • Strong governance structure • Evidence of relevant expertise within

management and/or directors • Disclosure of any current or past legal actions

against management and/or directors

Impact

• Ontario-focused impact • Five (5) Key Performance Indicators (IRIS-

based if possible) • GIIRS, 3rd party rating (or B Corp), for social

purpose businesses • Impact narrative

Financials

• Revenue-generating ($50k - $25M annually) • Audited or reviewed financial statements • Pro-forma projections • Adequate current assets, fixed assets, or cash

reserves • Ownership information, including past and

current sources of capital

Other

• Complete business plan • External, professional references • Auditor/reviewer & legal counsel contact

information • Debt &/or equity capital need ($25k-10M for

ventures, $2-50M+ for funds) • IP & R&D information (if necessary should

venture not meet revenue requirements)

Ratings: For-profit organizations are required to complete either a Global Impact Investing Ratings and attain a score of 100,or be a B Corp.

Metrics: Each issuer is required to submit 5 key metrics.

Narrative: All issuers must have an impact narrative, which explains the impact they are hoping to achieve.

Outreach and Pipeline Building. We are continuing to build our pipeline of ventures, funds, investors and service providers.

Public Launch. We launched the SVX at the TMX on September 19th, and since then 12 ventures have placed their offering on the SVX with more in the background

Franchising. We are pursuing opportunities to franchise the platform in Canada, US, and around the world, and exploring leveraging the platform for other formats, including crowdfunding.

Carlos Pinto Lobo Chief Compliance Officer, SVX [email protected] [email protected]

Equity Crowdfunding Portals – How do they work? II A Portal Working with an Exempt Market Dealer

● Sandi Gilbert, CEO, SeedUps Canada

2014 Canadian Equity Crowdfunding Conference

Portals & the Exempt Market

Sandi Gilbert Founder SeedUps Canada

COO - The Exempt Capital Network Board Member – National Angel

Capital Association Co-Founder – Equity Crowdfunding

Alliance of Canada

Templates

• The private capital markets have been active – $142 Billion raised in 2011 – But … small business didn’t have much access to this capital

• The public markets haven’t been responsive to small business – No appetite for young, growing companies

• The ‘road show’ approach is tough for small business

How did we get here? It’s tough to raise capital … things had to change

Templates

• Like a dog to a bone … – I invested the last 24 months figuring it out – Met with regulators, small companies, venture capitalists, broker

dealers and peers across the globe

• How could we help small business gain access to the ‘ordinary’ investor – Investors wanted to be empowered

• How could we make it compliant?

The JOBS Act It got my attention

Templates

ECN • A collaborative platform for the Exempt

Market

Equity Crowdfunding Portals – How do they work? III Portal - Exempt Market Dealer (Pending)

● Peter-Paul Van Hoeken, CEO, Silver Maple Ventures

April 24th, 2014

Silver Maple Ventures Inc.

Connecting ventures with the broader investor community

Equity Crowd Funding Alliance (Canada) - Conference Toronto

Presented by: Peter-Paul Van Hoeken

26

Silver Maple Ventures Inc., Founder & CEO

Equity Crowd Funding Alliance (Canada), Co-Founder and Member Executive Council

Over 15 years experience in finance, investment management and business consultancy

International positions in banking Consumer Banking, Corporate & Investment Banking, Corporate Development

Management Consultant, The Netherlands

Masters’ degree Business Economics & Finance, Erasmus University Rotterdam, The Netherlands

Peter-Paul Van Hoeken

Silver Maple Ventures

• Connecting Companies with Investors (accredited and non-accredited)

• Realizing Funding from Pitch to Securities Purchase

• Building an online platform to connect companies with the broader investor community

• To be operated as registered Exempt Market Dealer

27

Who is Silver Maple? Silver Maple Ventures

• Lack of access to early stage & venture capital

• Immature Market Place for early stage and venture capital

• Canadian venture capital is relatively small, immature and risk averse

The Problem for Companies

28


The Solution – The CROWD Even a small fraction of a percentage would make billions of

dollars available for venture investment (debt+equity)

Household Net Worth

CANADA U.S.

$6.4 trillion $64.8 trillion

$13 bn $130 bn

$32 bn $325 bn

$64 bn $648 bn

0.2%

0.5%

1.0%

Shift to investment

crowd funding

29 Sources: Bank of Canada, US Federal Reserve, Venture Capital & Private Equity Association (CVCA)

Venture Capital investments in Canada in 2013: $2bn….


The Opportunity Creating a NEW ASSET CLASS accessible

for the crowds

Disruptive Technology Solutions, Social and Democratic financial eco-system

Driving Innovation and Canadian Businesses

Creating Jobs and Economic Growth

30


Silver Maple’s Solution Investments Only (debt and equity)

Investment Platform in support of

dealer activities

Transaction-Based Offering investment transactions through secured electronic payment environment

Standardized Investment Products

Standardized products Customization Investment Documentation Optional

EMD Obligations Know-Your-Product, Know-Your-Client and Suitability Obligation

Investor Services Online Investor portfolio and account services in partnership with Specialized Services Providers

31


Curation & Due Diligence

Highly Selective Criteria (Objective and Subjective). Internal Due Diligence, Optional third party assessment

Leveraging Angel/Venture Capital Expertise

Angel/Venture Capital

Investors Retail Investors + =

More money raised More companies

funded

Investment opportunities on platform subject to opinion and due diligence of lead investors

Supporting retail investors (less experienced) investors community in their decision-making

Real time tracking of subscription statistics (e.g. average, peak , distribution) during campaign

32


The Funding Gap

33


EARLY STAGE EXPANSION ACQUISITION/ BUY OUT

$5 Mil. $25K $20 Mil.

Credit Card, Friends &

Family

Seed Capital

Start-up Capital

Expansion Capital

3rd-4th Rounds/ Mezzanine

Close Business

Associates

Angel/Venture Capital, Junior

Public Companies

Private Equity & Public Financing

$500K

Focus Silver Maple

Funding Great Companies

• Silver Maple will soon operate in multiple Canadian cities

• On-the-ground vetting of companies and connecting with experienced angel & venture investors

• Silver Maple helps Startups and Small Medium Enterprises

34


35

Silver Maple Ventures Inc. Contact: Peter-Paul Van Hoeken

604-787-2345

[email protected]

Thank You Silver Maple Ventures

peter-paul@frontfundr

Equity Crowdfunding Portals – How do they work? III Portal - Exempt Market Dealer (Pending)

● Tim McKillican, CEO, Open Avenue (Real estate focus)

Crowdfunding has the potential to transform real

estate investment Tim McKillican

President, Open Avenue April 24, 2014

Tim McKillican is the Founder and President of Open Avenue, an Ontario-based real estate crowdfunding platform (http://www.openavenue.com). Tim has a number of successful start-ups under his name, including Level Social Inc., a social media company. Tim is a University of Waterloo graduate in Computer Engineering and has been investing in real estate with Revel Development Corporation since its inception. Tim has a passion for disruptive technologies and is excited to bring new real estate investment opportunities to the mass market.

Crowdfunding brings investment opportunities to the masses

Do-it-Yourself-ers • Large capital

requirement • Knowledge • Time • Retail prices

Institutional (pension funds, REITs)

• Highly competitive • Lower yields

$100-500k $20M+

Bridge the Gap

Individuals pool together on attractive

investments with an experienced manager

Crowdfund investors provide equity investment

Project Value $5,000,000 Equity (Crowdfunding Investment)

$1,500,000

Debt (Mortgage) $3,500,000

Real estate investment has similar elements to traditional enterprise

Annual Revenue (Rental Income)

$400,000

Operating Expenses $120,000 Net Operating Income (NOI) $280,000 Mortgage Interest (Year 1) $138,000 Mortgage Principal (Year 1) $83,000 Annual Cashflow $59,000 Cash-on-Cash Return 3.9% Total Return (Year 1) 9.5%

Cash flow real estate investment does NOT rely on speculation or appreciation to provide reliable returns to investors.

Investors Have Protection Limited Partnership

Structure Investors own title to the

asset

Physical asset with legal recourse rights General Partner can be

removed

Audit

Limited Partnership

Investor Investor Investor

General Partner

Service Agreements

Crowdfunding technology provides transparent access to investments

Crowdfunding empowers the investor to build their community

Many local jobs and contracts for SMEs are created through a single project

Project Value $5,000,000

Construction Labour Costs $1,500,000

Professional Contracts $500,000 Development Fees to Municipal Gov’t

$600,000

Servicing Fees to Local Utilities $200,000 Land, Materials, Contingency, Soft Costs

$2,200,000 A single crowdfunded real estate project can create 30+ local jobs at $60,000

annually, plus contribute $800,000 to the local municipality.

Open Avenue: A platform to connect investors with real estate investment opportunities

Crowdfunding has the potential to transform real estate investment

www.openavenue.com

Equity Crowdfunding Portals – Panel Discussion

Questions for the Portals 1. What is the greatest challenge for portals under the

proposed equity crowdfunding rules? 2. What investor education initiatives are you

contemplating? 3. What will be the greatest challenge in ‘on-boarding’

issuers and what action will you be taking to address them?

slide | 49


THANK YOU

ECFA Toronto Conference Portal Presentation

Documents

Transcript of ECFA Toronto Conference Portal Presentation