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Social Approaches to Funding and Lending

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Information about Social Approaches to Funding and Lending
Technology

Published on March 4, 2014

Author: jayvanzyl

Source: slideshare.net

Description

Social Approaches to Funding:
1. PFM and financial management tools
2. Open innovation models
3. P2P and other models to funding and lending

This landscape gives a perspective on the overlapping approaches to funding companies and projects in the social world.

Dr. Jay van Zyl
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Social Approaches to Funding November 2013 High-level Overview This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside Radical Ideas | Practical Implementation the client organization without prior written approval from SystemicLogic.

SystemicLogic Group of companies In a world where practical answers to problems are in short supply, our focus is to provide business relevant and implementable solutions. Our state of the art applied research solutions and consulting offerings are designed to solve complex business problems. We live in a socially aware society where involvement across a collective workforce community is used to drive innovation. Social Based Innovation paves the way to a more networked and integrated means of managing innovation. We are driving this evolution forward. At SystemicLogic Technologies we work with our clients to understand their unique needs and working methods and how technology can be a tool to make their businesses more efficient. We design and offer technology solutions that help our clients get and stay ahead of their competitors by increasing the efficiency of customer, employee or partner related services Fluid Business Solutions partners with organisations to create an effective change culture focused on tangible outcomes and business benefit by utilising a proven business discipline that takes the techniques that make gaming ENGAGING and COMPELLING and applies them to your Project Execution Environment. Page 2 Radical Ideas | Practical Implementation

Executive summary •  The model behind the social-based approach to banking has been gaining momentum since the 2007 financial crisis •  The model is seen as a disruptor to the current banking model •  SystemicLogic Research Institute has traced the development of the model since early 1996 •  The model is seen to be risky, partially because of the lack of regulations, however many players have instituted a levy on borrowers as a means to guard against non payments •  As a result of the levy, many players have shown significantly lower default rates, than what you’d typically find from banks •  Funding volumes have been growing at double digit percentages; from US$1,5 billion in 20011 to US $2.8 billion in 2012, and expected to grow to US$5,1 billion by end 2013 •  Its appeal has been that the model has been able to meet the requirements of both borrowers and retail investors •  The model has gained such wide appeal from potential investors in the US that institutional investors such as hedge funds and financial firms are become more actively involved and are beginning to look at the securitisation of the loans •  Emerging players in the South African market that have begun making waves include RainFin, YIBA, Startme and ThundaFund Page 3 Radical Ideas | Practical Implementation

Categories of social financial activity Personal Financial Management Crowdfunding Open Innovation Crowdfactoring Peer2Peer Crowdinvesting Crowdlending Crowd Funding PFM Open Innovation The Crowdfunding market is changing at an exponential rate. Our research aims to capture the key competitors and models that are enabling this social phenomenon at a particular static point in time. We expect these landscapes to be constantly changing. Page 4 Radical Ideas | Practical Implementation

Thecrowdcafe: Crowdinvesting ecosystems “Crowdinvesting is not a platform play, but an ecosystem play. The value of the actual platform—the technology that connects businesses with investors and facilitates an online transaction between the two—is becoming more commoditized by the day as Platform-as-a-Service providers proliferate, enabling anyone to launch a crowdinvesting platform. And in some instances, one that is fully broker-dealer compliant out of the box. It’s not the technology that will differentiate, and ultimately decide the success of, platforms—it’s their ecosystems. These ecosystems will consist of value added products and services; delivered to both businesses and investors; both pre and post-funding. A leading example of a service is curation. It delivers value to investors by reducing noise in the marketplace and improving the quality of deals they see.” Page 5 Radical Ideas | Practical Implementation

Disruptive technology and crowdfunding “In May 2013, Google announced an investment of $125 million in the peer-to-peer crowdfunding firm Lending Club. In the same month, Google Ventures (the venture capital arm of Google), together with Union Square Ventures and other VCs, invested $7.5 million in Series A funding for CircleUp, a crowdfunding platform that allows small businesses to sell equity to accredited investors. Does Google’s investments in crowdfunding mark the beginning of an era in which tech giants provide financial services” Page 6 Radical Ideas | Practical Implementation

Tracking the development of Crowdfunding UK band Marillion is funded by US fans to tour ($60 000) Spring Street Brewery launches the first Internet IPO Regulation US intensifies lobbying of congress to pass CrowdFundin bill Australian Small Scale Offerings Board (ASSOB) allows general public to invest 2003 SEC issues a release allowing companies to post their public offerings online Funding circle launches in the UK The Term “Crowdfunding” is coined Direct IPO platform lets the general public invest directly in small public offerings 1996 Pledgie and Sellaband Start ArtistShare is the first successful platform for fans to pre-fund albums of popular bands 2006 IndiGoGo is launched for films 2007 Grameen Bank founder Muhammad Yunus awarded Nobel Prize 2008 Congress passes JOBS ACT RocketHub is launched 2009 Kickstarter is launched Regulation exemption for people investing within a 200 mile radius of the company 2010 2011 2012 Patrick McHenry authors Crowdfunding Bill in the House of Representatives Platforms Event Page 7 Radical Ideas | Practical Implementation 2013

The development of various Crowdfunding platforms Est. Total Funding Size in ($ Million) 2003: First Donation based platforms (Artistshare) 2004: Crowdinvesting platforms are launched (Secondmarket) 2003 2004 2005: First P2P 2006: Microlender (Zopa; Crowdinvesting Kiva.org) platform (ASSOB) 2005 2006 2008: Rewards based platforms (indiegogo) 2008 2010: B2B crowdlending (Funding Circle) 2009 2010 Congress passes JOBS ACT (USA) 2011 2012 Major Pioneers in the various types of funding platforms Page 8 Radical Ideas | Practical Implementation 2013

Crowdfunding and Corporate banking trends UK band Marillion is funded by US fans to tour ($60 000) Funding circle launches in the UK The Term “Crowdfunding” is coined Australian Small Scale Offerings Board (ASSOB) allows general public to invest Spring Street Brewery launches the first Internet IPO Direct IPO platform lets the general public invest directly in small public offerings 1996 Pledgie and Sellaband Start 2003 2006 ArtistShare is the first SEC issues a release successful platform for allowing companies to fans to pre-fund post their public albums of popular offerings online bands US intensifies lobbying of congress to pass CrowdFunding bill IndiGoGo is launched for films 2007 2008 Grameen Bank founder Muhammad Yunus awarded Nobel Prize Value added service (Prepaid airtime) 2009 FX Trading (FIX API, Electronic, FX Trading) Mobile capability (mBanking, USSD,) Treasury solution (Islamic online treasury (OLT)) Online banking (Secured, web based portal, balances, transactions, transfer) Page 9 2009 2010 2011 Patrick McHenry authors Crowdfunding Bill in the House of Representatives Regulation exemption for people investing within a 200 mile radius of the company 2012 2013 Estimated Crowdfunding market of $5.1b Value added service (Track, reporting) Fund hedging (Global Operating Platform) Tax services (Automated workflow, application, collection platform) 2008 Congress passes JOBS ACT RocketHub is launched Kickstarter is launched Website look & feel (Banking 2.0, redesign, calculators) Remittance service (Online, money transfer) Crowdfunding market of $2.8b Mobile capability (Trade Advisor, payment, app) Payment capability (Payroll, integrated payment processing, contactless corporate card , commercial cards) 2010 Educational website (Women, start and grow businesses) 2011 2012 FX Trading (Integrated, online, trading, platform) Treasury solution (Mobile, treasury management) 2013 FX Trading App Online banking (Enhanced, secure, online platform, FX) Radical Ideas | Practical Implementation

The rapid emergence and growth of Crowdfunding platforms Platform Market Share & Growth Year on Year Growth in Funding Volumes (2012) Estimated African Share is $0.1m Grew 85% to $1.4bn. Grew 30% to $116m. Grew 111% to $1.2bn. 2013 est. Total $5.1bn Page 10 (Crowdinvesting is expected to Exceed $1bn in 2013) How are banks taking to Crowdfunding? • FNB Private Clients sponsor Angel Hub • Santander teams up with Funding Circle in the UK • BBVA has two crowdfunding platforms, BBVA 'Sum' and 'BBVA Friends & Family‘ • ABN AMRO launched a crowdfunding pilot, Seeds.nl • Volksbank Bühl has developed a micro community based crowdfunding platform in Germany • Belfius in Belgium has partnered with Angel.me • Holvi has announced a partnership with new crowdfunding site Mesenaatti What are Traditional alternative investors saying? Angel Investors Will Embrace Equity Crowdfunding, online platforms provide an improved company and investor experience. The average angel investor reviews 2,000 business plans annually while choosing to invest in just 3-5 ventures per year Venture Capitalist Firms Where VCs will interface with crowdfunding sites is by investing in the best crowdfunding platforms on a more focused level Private Equity Firms Many private equity firms are already strong advocates of equity crowdfunding sites and see the platform as an opportunity to diversify Radical Ideas | Practical Implementation

BBVA Research Releases Report, Addresses Crowdfunding July 2013 “Crowdfunding is a disruptive innovation that commercial banks cannot ignore. Perhaps, for the first time in history, business and individuals have access to an unprecedented source of capital created from the small contributions of millions of individuals around the world. This is good news for individuals and entrepreneurs, who may never have to worry about not being able to access traditional lending sources or using more expensive funding solutions to finance their projects. It is also good news for small investors seeking a higher return than conventional investment products. For banks, crowdfunding poses a challenge. From here on, they will face a new competitor with lower operating costs, a different approach to risk management and a simpler product offering. To what extent crowdfunding platforms will displace commercial banks in the retail and small business segments remains to be seen. However, banks should be prepared for this trend and make it work to their advantage. “ Page 11 Radical Ideas | Practical Implementation

How are the traditional banks and lenders reacting •  "There are people in SA looking at Crowdfunding," JSE head of strategy and policy Siobhan Cleary •  “The country desperately needs to get more small businesses up and running, and South African banks and venture capitalists are slow to dole out the rands. The country’s financial infrastructure is solid, and by leveraging this technology, massive opportunities could be created” Felicity Duncan Moneyweb •  The UK government has committed to award £100 million to alternative lenders such as online peer-to-peer finance companies in a bid to help boost funding to entrepreneurs •  “Lending and equity-based crowdfunding are disruptive technologies for the banking industry with the potential to displace banks as the primary source of funding for personal and small business loans.” and “Crowdfunding platforms could naturally evolve to become the primary source of financial services for young generations.” BBVA Research, US Economic Outlook 2Q-2013 •  Peter Renton, founder of Lend Academy: “We know there is also interest in the sector (Crowdfunding) from Barclays, Citi and Deutsche Bank.” •  James Watt Founder of BrewDog "We never consider a bank or an investment group when we need funds for more growth plans.“BrewDog is Fastest-growing food and drink company in the UK for three years Page 12 Radical Ideas | Practical Implementation

Communities naturally move to crowd based lending and funding Local Farming Community • Pool together large amounts of resource • Loans are provided between farmers • Three party agreements between Co-Ops and farmers • Risk is spread across a wider group of individuals • Banks are largely excluded Farmer B Farmer A Co-op, Agri Business Local “social” communities (BrewDog) • The community can own part of BrewDog • Investors are entitled to “Epic discounts” • Membership is grated with an Equity punk card • They have been able to raise more than ₤1m in less than a month • Currently running Equity for punks 3 • BrewDog is Fastest-growing food and drink company in the UK for three years Page 13 Radical Ideas | Practical Implementation

Further the agriculture value chain consists of several key activities that will benefit from crowdfunding activity Crowdfund finance to farmers and facilitate international development organizations Allow local communities to provide additional services around the primary farming activity Crowdfund information sharing and research Finance Supplies R&D Inputs Production Crowdfund various utilities that are used in the production process Facilitate long term lease and loan agreements Page 14 End users can invest in their local farmers and receive an income Collection/ Processing Distribution Wholesale/ Traders Retailing End User Crowdfunding provides an avenue for either intermediation or disintermediation Give development institutions the ability to facility distribution of produce Radical Ideas | Practical Implementation

What are the future trends in Crowdfunding? Page 15 Radical Ideas | Practical Implementation

Crowdfunding Platform Figures Radical Ideas | Practical Implementation

World wide growth in Crowdfunding based on… Number of platforms worldwide Funding volume millions Revenue in US$ Revenue and fees millions •  Over 40% of surveyed platform charge a transaction fee based on a percentage commission of funds paidout •  Commission ranges from 2% to 25% •  Additional revenue generated includes a fixed fee per campaign/ project and registration or listing fees •  63% surveyed used PayPal services •  Over 45% companies require investors to deposit monies in escrow accounts Page 17 Source: Crowdfunding Industry Report – May 2012 Crowdsourcing LLC Radical Ideas | Practical Implementation

World wide funding figures 2012 Image courtesy of statista.com Page 18 Radical Ideas | Practical Implementation

Sources of financing for startups Page 19 Radical Ideas | Practical Implementation

Funds raised through crowdfunding Funds Raised through Crowdfunding Platforms in 2012 by Type Page 20 Funds Raised through Crowdfunding Platforms in 2012 by Region Radical Ideas | Practical Implementation

Recipients of the funds Crowdfunding recipients by size, 2011 Crowd-funding revenue by size of recipient, 2011 Start-ups and small business: Less than $10 million in company annual revenue Small enterprises: $10 million - $100 million in revenue Medium enterprises: $100 million - $1 billion in revenue Large enterprises: More than $1 billion in revenue Page 21 Source: Crowdsourcing LLC Radical Ideas | Practical Implementation

Period and funding Average campaign timeframes Paid-out funds: reward & donations based Weeks Revenue by industry recipients, 2011 Page 22 Source: Crowdfunding Industry Report – May 2012 Crowdsourcing LLC Paid-out funds: equity based Radical Ideas | Practical Implementation

Peer to Peer (P2P) Lending Radical Ideas | Practical Implementation

Overview of P2P lending •  Also called Social Banking, where the lending transaction is facilitated directly between individual lender and borrower via a web platform •  The type of loan can be secured or unsecured •  The facilitator’s service provision includes –  Connecting the borrower with potential lender(s) –  Conducting credit checks on both parties, FICA and affordability checks in the case of borrowers –  Providing the platform where borrowers may list the requested loan amount and reasons thereof –  Matching borrowers with appropriate lenders and facilitating the contract terms –  May also provide second market listing where investors may sell their investment to other investors Page 24 Radical Ideas | Practical Implementation

Overview of P2P lending •  There are two rate models that may be used, namely –  Pre-set rate model: where the interest rate is based on borrower’s credit scoring –  Auction model: where investors bid on the listed loan request •  There are different types of lending, including –  Direct lending: transacting parties comprise a lender and a borrower –  Pooled lending: where a single investment of capital is split amongst multiple borrowers; where the source of investment is multiple lenders; or a combination of multiple lenders and borrowers Page 25 Radical Ideas | Practical Implementation

Overview of P2P lending •  The facilitators and service providers do not need a banking license as they are not deposit taking institutions, nor are they raising capital for lending purposes •  There is minimal risk for the facilitator and service provider because the terms of contract are negotiated between the lender and borrower, bound by the Credit Regulator •  Facilitators generate revenue by charging borrowers a fixed transaction fee, and lenders a service fee •  Benefits to this model includes –  Provides an alternative lending source for borrowers and investment mechanism for lenders/ investors from traditional financial institutions –  The return to lenders and rate to borrowers is better because there is no margin charged, only a fee by the facilitators Page 26 Radical Ideas | Practical Implementation

Key thoughts Prosper •  Headquarters: San Overview •  Re-launched: 2009 •  One of the most well-known P2P lenders in the market •  Leverages the power of the community to facilitates lending transactions between Francisco, California •  Rate model: Pre-set interest rate based on credit scoring •  Revenue: Loan origination fee & investors annual service fee •  Loan type: Unsecured & secured personal loan •  Funding volume to date: lenders and borrowers through their web platform •  Prosper administers the lending process including payments, collection and interest back to investors •  Changed its business model in December 2010 from auction-style model to pre-set rates on loans based on borrowers credit-risk •  Also provides a second market offering for Note Trading, in cooperation with CoFolio Investing $300 million •  ROI: 10.56% (2012) •  Loan types: –  Debt consolidation –  Home improvement –  Short-term bridge loans –  Auto & vehicle loans –  Baby & adoption loans –  Engagement ring loans –  Wedding loans –  Green loans –  Military loans Page 27 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: San Francisco, California •  Launched: 2007 •  Rate model: Pre-set interest rate based on credit scoring •  Revenue: Loan origination fee & investors annual service fee •  Loan type: Unsecured & secured personal loan LendingClub Overview •  Allows registered members to directly invest in and borrow from each other •  Its primary aim is to offer better rates to borrowers and better returns to investors •  Individuals and institutions may be lenders •  Works with various partners to administer the process, including collection agencies •  Also provides a second market offering for Note Trading to investors through Foliofn, where investors may sell their loan investment to other investors •  Platform also allows investors to build a portfolio of Notes based on their investment criteria •  Funding volume to date: $737,679,250 •  Interest paid to investors to date: $63,283,021 •  Loan types: –  Consolidate debt –  Payoff credit card –  Car and vehicle –  Home improvement –  Business loans –  Special events –  Green loans –  Pool loans Page 28 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: Johannesburg, South Africa •  Launched: 2012 •  Founders: Sean Emery & Hannes van der Merwe •  Rate model: Auction model where investors bid on listed loans •  Revenue: Loan origination fee & investors annual service fee •  Loan type: Unsecured & secured personal loan RainFin Overview •  RainFin connects South African individual borrowers with potential lenders through their online platform •  It aims to offer lower interest rates to borrowers and better interest rates to lenders •  Inspired by stokvel model which is an off-line model of the peer-to-peer lending model •  Individual lender may invest from R100 to R500,000 •  RainFin uses the auction business model where investors bid on the listed loan •  Borrowers specify the loan amount, the rate they would be willing to pay and the loan duration they prefer •  RainFin screens all borrowers through affordability, FICA and credit worthiness checks Page 29 Radical Ideas | Practical Implementation

Key thoughts Zopa •  Headquarters: London, Overview •  Launched: 2005 •  Zopa was founded in the UK and was the first P2P company in the world •  Zopa stands for ‘zone of possible agreements’; a negotiating term identifying the England, UK •  Number of employees: 28 •  Rate model: Interest rate based on credit scoring •  Revenue: Borrowers fee & 1% annual lenders fee •  Loan type: Unsecured •  Turnover: 2011 – £2.2 million •  Profit: 2011 – £26,143 •  Funding volume to date: bounds within which agreement can be reached between two parties •  Borrowers are charged a borrowing fee on the loan approved, which is added to the loan amount •  Lenders are charged a 1% annual lender fee on the amount they lend •  Lenders and borrowers are anonymous, unlike crowdfunding platforms such as Kickstarter •  Only individuals may lend money •  To reduce any risk, lenders only lend small chunks to individual borrowers. The amount lent to any one borrower is automatically set to £10, meaning a loanbook of £2000 will be split across 200 borrowers. Approximately £185 million Page 30 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: California, United States •  Founded: 2012 •  Rate model: Pre-set interest rate based on borrower’s financial history •  Revenue: Loan origination fee (including late and unsuccessful payment fees) & investors annual service fee •  Loan type: Unsecured personal loan •  ROI: 9%-10% Daric Overview •  Daric received an investment injection for its operations from Goldcrest Investments in early 2012 •  Will approaches their lending offering from a user experience perspective •  Offers different maximum loan amounts to individuals and businesses where the company will look at the borrowers’ “positives” such as their income and cash flow statements as well as their ability to repay the acquired loan-which creates the borrower’s “good financial history” •  Borrowers are able to load their bank account(s) to their online profiles and upon receiving the loan- the funds are then automatically deposited in the borrowers account •  Loans are broken down into different parts “grades” to easily place borrowers: their financial history and the amount borrowing affect their placements and Annual Percentage Rate (APR) that is to be repaid •  Loan types: –  Consolidate debt –  For general purchases Page 31 Radical Ideas | Practical Implementation

Crowdfunding Radical Ideas | Practical Implementation

Overview of our Crowdfunding model •  The Crowdfunding market is changing at an exponential rate. Our research aims to capture the key competitors and models that are enabling this social phenomenon at a particular static point in time. We expect these landscapes to be constantly changing •  The following model looks only at the various funding options available to individuals looking to crowdsource funds for business or project purposes, not p2p lending •  This approach is used for raising capital for new projects and businesses by soliciting contributions from the public, through an online Crowdfunding Platform •  Based on three models –  Receivable/ Crowdfactoring –  Equity/ Crowdinvesting –  Debt/ Crowdlending •  The funding is then further split by the target market that the funds are intended for: –  Startups or projects –  Small Micro and Medium sized organisations (SMMEs) –  Niche industries Receivable Startups SMMEs Niche industries Debt Page 33 Equity Radical Ideas | Practical Implementation

Geographic spread of evaluated Crowd Funding Platforms 1 14 14 26 3 12 1 1 8 Page 34 1 Radical Ideas | Practical Implementation

Geographic spread of African Crowdfunding platforms reviewed 1 8 Page 35 6 2 Radical Ideas | Practical Implementation

Crowdfunding Platform Positions Startups SMMEs Niche Recievable Crowdfactoring Debt Crowdlending Equity Crowdinvesting Radical Ideas | Practical Implementation

Crowd funding options in the new economy Level of Capita Investment Required Crowdinvesting Crowdlending Crowdfactoring Project / Idea Development Business Development Pre-Listing / Advanced Support Post Public Offering Radical Ideas | Practical Implementation

Level of Community Interaction Relative positions of key players Level of Business Support Radical Ideas | Practical Implementation

Crowdfunding options in the new economy Level of Capita Investment Required Crowdinvesting Crowdlending Crowdfactoring Project / Idea Development Business Development Pre-Listing / Post Public Advanced Support Ideas | Practical Implementation Offering Radical

Investment / Crowdfunding Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: Venice, California, US •  Launched: 2011 •  Classification: Equity/ Crowdinvesting & Recievable Crowdfactoring •  Target: SMMEs •  Field of expertise: Creating multiple networks of investors and service providers •  Notable: A nuanced understanding of the diverse disciplines within the online investment market including Entrepreneur Ecosystem Development, Early Stage Finance, Securities Law, and Online Services Crowdfunder.com Differentiator •  Online and offline accelerator for local entrepreneurial ecosystems that connects businesses to top entrepreneurs and investors in similar areas through online challenges & live pitch events. The approach looks to get service providers involved in the “Ecosystem” of services Overview •  Emphasis is placed on the local community and the relevance of a specific project to that community •  They are driven by the need to create globally connected local entrepreneurial ecosystems that serve as the foundation for development and innovation •  There is a concept called CROWDFUNDx which is a powerful online + offline accelerator for local entrepreneurial ecosystems. Through a proven process, CROWDFUNDx opens up access to capital for local startups and small businesses through a free and open online-to-offline community engagement model, powered by Crowdfunder’s global social network Page 41 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: Johannesburg, South Africa •  Launched: 2011 •  Classification: Equity/ Corculture Differentiator •  Entrepreneurs in search of funding need to complete an online application form that is available on Corculture’s website. The company will assess the application and if the idea is compelling enough, it will be approved for listing on their website Crowdinvesting •  Target: SMMEs •  Field of expertise: A team of high net work individuals with business experience have the opportunity to advice new companies and invest in their potential future •  Notable: They only have about 20 investors who range from angel investors who are willing to invest R500 000 to individual investors with deep pockets, amongst them wealthy SA businessmen, with the capacity to invest R50m Overview •  Corculture charges 5% of the value of the deal (the amount of money that was successfully raised for the entrepreneur •  Corculture is privileged to have a group of private investment funders who rank amongst some of the wealthiest individuals in South Africa •  They facilitate entrepreneurs at various business stages to become investor-ready •  The website doesn’t play a role other than an introduction and general information, opportunities are not listed, NDAs need to be signed by all parties for a deal to commence Page 42 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: Johannesburg, South Africa •  Launched: 2008 •  Classification: Equity/ Crowdinvesting •  Target: SMMEs •  Field of expertise: Identifting opportunities for investors who are looking to ‘Buy’ BEE points •  Notable: They have positioned Enterprise development as the key pillar in the BEE scorecard and assist companies to make better investment decisions Edge Growth Differentiator •  Enterprise Development is growing small and medium sized businesses by providing finance and support services that would assist them in becoming more competitive and overcoming the constraints to growth that they face Overview •  Edge Growth has worked with clients in a variety of industries and projects; ranging from ED strategy and programme design, enterprise development opportunity assessments to training consultants on how to select good businesses to invest in. Below is a summary of a number of our clients •  The website is used purely as an informational tool with no opportunities explicitly listed on the website, this is in contradiction to traditional funding platforms Page 43 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: New York, USA •  Launched: 2004 •  Classification: Equity/ Crowdinvesting •  Target: Startups •  Field of expertise: Leverage the world's most complete investor database to find appropriate investors for your business according to location, industry interest and other relevant criteria Gust Differentiator •  Gust enables skilled entrepreneurs to collaborate with the smartest investors by virtually supporting all aspects of the investment relationship, from initial pitch to successful exit Overview •  Gust is endorsed by the world's leading business angel and venture capital associations, and powers over 1,000 investment organizations in 65 countries •  Company profile presents all the information investors need to know in a professional way and facilitates the way in which entrepreneurs can reach many different investors •  Entrepreneurs are guided throughout the process to ensure they manage each aspect of a successful venture •  Notable: More than 160,000 start-ups have already used the platform to connect and collaborate with over 40,000 individual accredited investors •  Over 1,800 startups funded in the last 12 months Page 44 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: Cape Town, South Africa •  Launched: 2011 •  Classification: Equity/ Crowdinvesting •  Target: Startups •  Field of expertise: The focus is on the investor and how they can improve their portfolio through well qualified opportunities •  Notable: Investment Size: R1m-R10m AngelHub Differentiator •  AngelHub is a Business Angel Investment Group that pools funding, expertise & networks from a diverse range of early-stage Angel Investors for investment in highgrowth South African ventures to accelerate growth & create value •  AngelHub Use Gust and other platforms to identify opportunities beyond startups approaching them Overview •  The website used by AngelHub does not facilitate an online investing experience but rather facilitates the meeting of investors and “NDA” type, private sharing of investment opportunities •  Investors can form an angel group, which are individual angels joining with other angels to invest collectively in entrepreneurial firms •  Investment Length: 3-7 years •  Geography: Johannesburg and Cape Town (initially) •  Investment Stage: Early- stage or expansion phases Page 45 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: United States of America, New York city •  Launched: July, 2012 •  Classification: Equity/ Crowdinvesting •  Target: Startups/ SMMEs •  Field of expertise: First Line's focus is implementation of earlystage public strategies for a diverse range of hi-tech companies internationally IPO Village Differentiator •  IPOvillage.com is dedicated to crowdfunding initial public offerings (IPOs) Overview •  Given the monumental advances in online social media networking capabilities, lucrative pre-IPO investment opportunities can now be made directly available to the general public •  IPO Village's debut IPO will be on behalf of a First Line Capital portfolio company •  First Line's portfolio companies are all publicly traded. Therefore, public offerings provide shareholders with liquidity and a clear exit strategy •  Notable: Founded in 1995, First Line Capital is a boutique investment banking firm Page 46 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: Australia, ROBINA •  Launched: March, 2006 •  Classification: Equity/ Crowdinvesting •  Target: Startups/ SMMEs •  Field of expertise: Multiple support models •  Notable: $120,015,443 raised to date. Over 200 companies have been assisted. Listings have gone on to worldwide stock exchanges like the AIMS London Stock Exchange, Frankfurt, Toronto and the Australian ASX ASSOB Differentiator •  ASSOB has a large, diverse and committed community of stakeholders who work together to support Funders in every possible way •  Overview •  ASSOB assists small and medium sized business to sell equity (shares/stocks) in their business to friends, family, fans and followers of the business in a compliant and proven manner •  Businesses profiled on the platform usually raise between $600,000 and $1.2 million for each raising. some companies have achieved several raisings •  ASSOB is an interactive platform that connects quality private, unlisted and pre-IPO companies with investors and supporters of a company who want to engage financially Page 47 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: United States of America, Miami, FL •  Launched: November, 2011 •  Classification: Equity/ Crowdinvesting •  Target: Startups/ SMMEs •  Field of expertise: Multiple support models •  Notable: Named the #1 Equity Based Crowdfunding Platform by Worth Magazine EarlyShares Differentiator •  EarlyShares has a Crowdfunding support services including access to an ‘expert’ lounge, resources and ‘university’ which is a free service designed to help investors and business owners take full advantage of social based funding Overview •  EarlyShares securely connects high-potential entrepreneurs seeking funding with investors looking for quality investments in early-stage companies, with minimum investment amounts as low as $100 •  In addition to allowing new ideas to get funded, the EarlyShares platform allows existing busi •  Businesses can provide investors with ongoing status updates, newsletters and reports; and businesses can receive investor feedback and support thanks to the EarlyShares communication portal Page 48 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: United States of America •  Launched: January 2010 •  Classification: Equity/ Crowdinvesting •  Target: Niche •  Field of expertise: mobile apps, Facebook apps, social apps, websites, social networking, social media, healthcare and medical technology, high tech sciences, and energy and solar technology Startup Valley Differentiator •  StartupValley is a crowdfunding portal that allows technology startups and businesses to register and pitch their company or product to the crowd •  The Platform has a strong portfolio management component with the ability to ‘follow’ companies Overview •  StartupValley is an equity-based crowdfunding portal that allows tech startups and business to raise early-stage capital in exchange for equity ownership in their company •  Businesses can post their company, pitch their product, and raise funds for the development of their next big tech idea •  All investors and non-accredited investors will be given a related equity ownership in the company for their investment amount, as determined by the owners of the business. •  Notable: Companies can upload a comprehensive pitch with supporting documents •  Various regulatory concerns have seen little activity on the platform Page 49 Radical Ideas | Practical Implementation

Key thoughts AngelList •  Headquarters: South Differentiator •  Launched: January 2010 •  Classification: Equity/ Trending is based on indications of interest from candidates, investors and customers. In other words, when a lot of high-quality candidates, investors or customers say they want to meet your startup, in a short period of time, you “trend”. This improves your chance of success on the platform Beach - San Francisco, California Crowdinvesting •  Target: Startups •  Field of expertise: Investment and startup recruiting •  Notable: Over 1500 Overview •  AngelList's Invest Online feature lets accredited investors put small amounts of money into startups •  Startups still cannot publicly announce that they are raising money; only accredited investors can see which companies are raising money online startups have used AngelList to raise money. And startups that have raised money on AngelList have gone on to raise over $1.6 billion in subsequent rounds Page 50 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: California, United States of America •  Launched: August, 2012 •  Classification: Equity/ Crowdinvesting •  Target: Niche •  Field of expertise: Highly specialised in Healthcare Healthfundr Differentiator Healthfundr allows accredited investors to easily get to know and invest in early- to growth-stage, health and medtech companies Overview •  The companies listed on Healthfundr have undergone a rigorous screening and due diligence process •  Healthfundr lets investors easily explore and get to know the most promising companies. Once an investor knows the business, they do everything else to complete the investment, including arranging meetings and providing additional information Page 51 Radical Ideas | Practical Implementation

Key thoughts CrowdCube •  Headquarters: United Differentiator •  Launched: January, 2010 Business owners often relish the help and support of an extended community of stakeholders and investors can offer their services to new businesses •  Classification: Equity/ Overview Kingdom, Exeter Crowdinvesting •  Target: Startups/ SMMEs •  Field of expertise: Equity based financing and capital access •  Notable: ₤8,708,000 total •  CrowdCube aims to give entrepreneurs the opportunity to take control of raising funding from their own network of friends, family, customers and strangers •  It is a new way to fund start-ups and business expansion by crowdfunding for equity, giving entrepreneurs a platform to connect with ordinary people and raise venture capital amount successfully funded 36,157 Registered investors Page 52 Radical Ideas | Practical Implementation

Key thoughts FundersClub •  Headquarters: San Differentiator •  Classification: Equity/ FundersClub startups benefit from the experience, advice, and connections of a vast army of high-net-worth, highly-connected, and highly-experienced professionals with a vested financial and personal interest in helping the companies succeed •  Target: Startups Overview Francisco, California Crowdinvesting •  Field of expertise: Active members of FundersClub include top employees at corporations such as Amazon, Apple, AT&T, Bank of America, CNN, Dell, eBay, Electronic Arts, Facebook, Goldman Sachs, Google, Groupon, Intel, Intuit, LinkedIn, Logitech, McKinsey & Company, Microsoft, Pixar •  FundersClub is a new type of venture capital platform, built around a unique online marketplace that allows accredited investors to become equity holders in FundersClub •  The platform combines industry-standard venture funds, with an easy-to-use webplatform that allows members to browse and screen fund investment opportunities, view investment profiles and sign legal documents •  Notable: Over $5,011,221 invested by FundersClub. •  Over $41,090,213 invested in FundersClub companies Page 53 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: Stellenbosch, South Africa •  Launched: November, 2012 •  Classification: Equity/ Crowdinvesting •  Target: Startups/ SMMEs •  Field of expertise: They will validate the various opportunities and allow individuals to invest from as little as R1 across various fields Crowdinvest Differentiator Potential investors can view, share, LIKE, or invest Overview •  People come together and invest modest amounts in a specific high value investment opportunity •  The crowdinvest business model is similar to the successful “stokvels” or cooperatives that have been around for decades •  We are the first crowd sourced investment platform in the world offering investment opportunities in a range of different sectors: Business, Property, Fixed assets and Creative & Media •  Businesses, such as a new e-commerce start-up •  Creative projects like the new clothing range of an upcoming clothing designer •  Property for example a tenanted office building or •  Fixed assets like a 1965 Aston Martin DB5 •  Notable: Crowdinvest is the first crowd sourced investing platform in South Africa Page 54 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: United States of America, Fayetteville, Arkansas •  Launched: December, 2005 •  Classification: Equity/ Crowdinvesting •  Target: Startups/ SMMEs •  Field of expertise: Various partnership with key service providers alows equitynet to offer a variety of additional services •  Notable: 12,000 individual EquityNet Differentiator EquityNet's patented business plan software and Enterprise Analyzer™ technology enables entrepreneurs to analyse and optimise their business plan before they engage investors via the EquityNet funding network EquityNet is the only patented crowdfunding platform in the world Overview •  Angel investors and business supporters use EquityNet's advanced technology to efficiently screen and analyse businesses to fund and support entrepreneurs •  Investors get a standardised view of analysing opportunities with free access •  Entrepreneurs select from 3 paid models with varying levels of assistance in developing the business plan from EquityNet, Basic, Plus and Premium investors with $207,460,600 in funds raised Page 55 Radical Ideas | Practical Implementation

Key thoughts Seedrs •  Headquarters: London, Differentiator •  Launched: January, 2010 The Seed Enterprise Investment Scheme (SEIS) provides massive tax reliefs to individual investors who purchase new shares in very early-stage companies. •  Classification: Equity/ Borrowers have access to mentors United Kingdom Crowdinvesting •  Target: Startups •  Field of expertise: Equity based financing and capital access •  Notable: Access capital from a wide range of investors. •  Benefit from a seamless fundraising process. Overview •  Seedrs is an online platform for investing seed capital •  Investors invest money in startups in exchange for a portion of their equity, meaning that you buy shares in the business •  If a business you've invested in succeeds, the shares you own will become worth more than you paid for •  If you like a startup you see, you can invest between £10 and the full amount the business is seeking •  Connect with a strong network •  Access to Mentors Page 56 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: California, United States of America RealtyMogul Differentiator Crowdfunding for real estate •  Launched: August, 2012 •  Classification: Equity/ Overview •  Target: Niche •  Field of expertise: Real •  Insider access to pre-vetted real estate investments •  Pool money with like-minded investors to make investments that are otherwise difficult Crowdinvesting estate and property investing •  Notable: Each real estate •  Realty Mogul is a marketplace for accredited investors to pool money online and make direct investments into local real estate to access •  Real estate companies are provided with vetted investors investment is tied to a real estate company that deals with the hassles Page 57 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: United States of America, Columbus, Ohio •  Launched: 2012/05/22 •  Employees: 20 •  Classification: Recievable/ Crowdfactoring & Equity/ Crowdinvesting •  Target: Startups •  Field of expertise: –  Entrepreneurs –  Start-up businesses •  Notable: Fundable is an excellent option for businesses of all sizes - from a successful goal of $3000 for an organic skincare line to a successful goal of $900,000 for a mobile app, this is a crowdfunding site created by entrepreneurs for entrepreneurs Fundable Differentiator The company will also enable startups to offer either rewards of equity in return for investments Overview •  Fundable makes use of a Crowdfunding platform that connects entrepreneurs and commercial start-up businesses with potential funders •  The business owner must reach or exceed its funding target set in order to receive funds pledged by funders •  Aims to assist business owner raise money to build products or reach business goals •  Funders may also provide personal assistance to the business instead of cash Page 58 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: USA •  Launched: 2009 •  Employee composition: Management team, and advisory members •  Fees: US$50 per month to list on CoFolio platform Cofolio Differentiator •  Cofolio aims to connect small business owners looking for expansion capital with local investors, allowing anyone to build their own community portfolio Overview •  Business owner creates a Cofolio profile including reason for funding, amount requested, and other general information •  Classification: Equity/ •  Business opportunity is marketed to local community investors and once requested •  Target: SMMEs •  Field of expertise: •  Makes use of a equity or debt model for investors Crowdinvesting funds have been raised, Cofolio approved lawyers finalise the prospectus terms –  Small to medium sized enterprises –  Start-up businesses •  Notable: Cofolio allows your business to raise any amount of capital, although our recommended funding range is from $250,000 – $1,000,000 Page 59 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: San Bruno, CA •  Launched: 2009 •  Classification: Equity/ Crowdinvesting •  Target: Startups/ SMMEs •  Registered users: Total of 77 000 buyers, bulletin boards and brokers •  Fees: US$34 pm for Sharespost Overview •  Sharespost is an online platform that connects investors; from buyers, sellers and brokers with late-stage venture-backed companies and their shareholders •  Sharespost provides the information, tools and assistance investors need to close transactions •  To a degree, Sharespost companies offers the services of a traditional exchange, for private •  The online platform also facilitates transactions between shareholders and potential investors, i.e. secondary transactions investors and companies listing on the platform •  Investor type: Must be “Accredited or sophisticated“ investor under US SEC Regulations •  Field of expertise: –  Companies with a valuation of more than US$100 million –  Companies with US$10 million or more –  In business for 5 years or more –  Only vested shares with pre-public companies can be traded –  To trade, shares must be Page held for at60 least a year Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: New York, United States •  Launched: 2004 •  Classification: Equity/ Crowdinvesting •  Target: Startups/ SMMEs •  Number of projects: Secondmarket has bought together more than 100 000 individuals and institutions and completed billions of dollars in alternative investment transactions Secondmarket Overview •  Similarly to Sharespost, Secondmarket works with companies, buyer and sellers to create markets for alternative assets •  Users can create investment identities and build their own investor network •  Secondmarket also offers bank stock, fixed income and bankruptcy claims services •  Secondmarket is a registered broker-dealer and member of FINRA, MSRB and SIPC and a registered alternative trading system (ATS) for private company stock •  Field of expertise: Marketplace Illiquid Assets Financial Services Hedge Fund Venture Capital Private Equity Auction-Rate Securities Bankruptcy Claims Private Company Stock Private Community Bank Stock •  Restricted Securities •  Block Trades. CDO •  •  •  •  •  •  •  •  •  •  Page 61 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: Netherlands, Utrecht •  Launched: 2011 SymBid Differentiator •  Profit from the knowledge of the crowd, use all the tools you need to create and present ideas, interact with all social networks to also activate your own crowd •  Classification: Equity/ Overview •  Target: Startups/ SMMEs •  Symbid enables entrepreneurs to receive equity financing from large groups of people •  Symbid will offer a collaborative online environment where believers and entrepreneurs Crowdinvesting •  Incentive: The equity the borrower stands off will come with advice from the investors can interact with each other. This crowdsourcing element will enable participating companies to connect with members and tap their knowledge •  Symbid offers a Affiliate Program for partners who send users to the Symbid system •  Field of expertise: Symbid looks to shape ideas with the help of crowd input and develop sustainable businesses •  Notable: First equity-based crowdfunding platform Page 62 Radical Ideas | Practical Implementation

Key thoughts Investors Network •  Headquarters: South Differentiator •  Classification: Equity/ Access to free advice and Legal agreements, a toolbox of key entrepreneurial resources., a 'Help Section' where members can ask for advice, sections to search for entrepreneurial opportunities and strategic alliances •  Target: Startups/ SMMEs Invsestment opportunities can only be viewed once the investor has been approved Africa Crowdinvesting •  Incentive: The equity the borrower stands off will come with advice from the investors •  Field of expertise: Created to support and develop creative and uniquely South African Ideas Overview •  The business provides both face-to-face networking meetings in Johannesburg, Cape Town, Durban, Bloemfontein and Port Elizabeth as well as on-line networking •  Entrepreneurs seeking funding and growth, Investors seeking opportunities and Business Professionals seeking visibility facilities •  Registration is free for investors but is subject to approval •  Notable: Priority invites to Networking events Page 63 Radical Ideas | Practical Implementation

Debt / Crowdlending Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: United States of America •  Launched: January, 2008 FundRazr Differentiator •  advanced social media technology helps our customers’ campaigns rise above the noise on Facebook and Twitter. •  Classification: Debt/ Overview •  Target: Startups/ Projects •  Campaigns are seen by more potential contributors and, as a result, raise more money •  FundRazr can be used to fund just about any type of project or cause, examples include Crowdlending •  Field of expertise: Social media and analytics. Stats show our system generates over 300% more social media exposure compared with regular Facebook sharing funding medical expenses, memorials, accident recovery, pet care, natural disaster relief, charitable causes or entrepreneurial projects •  Anyone can use FundRazr to Crowdfund Anything. Anywhere. •  Notable: raised over $21,000,000 for over 36,000 campaigns in 18 different countries Page 65 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: United States of America, Denver, Colorado •  Launched: November, 2012 •  Classification: Debt/ Crowdlending •  Target: SMMEs •  Field of expertise: Quantifying and qualifying investment opportunities P2Bi Differentiator Reimagining business lending to give companies better cash flow and access to cash for day to day operational requirements Overview •  The business (our client) sells its invoices to P2Binvestor •  P2Binvestor (P2Bi) purchases the invoices, puts them up on our website and manages underwriting and collections •  The debtor receives goods and services from our client and is responsible to pay P2Binvestor •  The investor buys into a portfolio of client invoices Page 66 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: London, United Kingdom •  Launched: February 2011 •  Classification: Debt/ Crowdlending •  Target: SMMEs •  Field of expertise: MarketInvoice is a revolutionary new way for SMEs to access the capital locked in their long-dated invoices MarketInvoice Differentiator The advance will be paid into your bank account within 24 hours Overview •  Apply to MarketInvoice to raise finance against the invoices of one or more of your large end customers •  Professional investors advance you cash. A wide range of funders means sellers always get a good deal, and that invoices are sold quickly •  When your customer pays your invoice, you refund the advance plus fees, with any remainder forwarded to you •  Notable: £50,981,500 advances so far Page 67 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: Cincinnati, Ohio, United States of America •  Launched: August, 2011 •  Classification: Debt/ Crowdlending •  Target: Niche •  Field of expertise: SoMoLend automates, speeds and simplifies the steps for loan application, review, funding progress reporting, communications between borrower and lenders, and payments. We utilize best practices to help our borrowers develop and market their campaigns SoMoLend Differentiator SoMoLends technology platform uses a GPS location tracking system (think foursquare) so that investors can view a map of business borrowers in their community Overview •  SoMoLend is a Web-based lending platform that uses patent-pending technology to connect small business borrowers with individual and organizational investors (lenders), executed within a hyper-localizedgeographic scope •  SoMoLend's user-friendly technology allows small business borrowers to obtain loans from friends, family, customers, community supporters and interested organizations as well as from Facebook, Twitter, and LinkedIn connections •  Notable: Typically with 15 or fewer employees who need commercial loans ranging from $100 to $1 million Page 68 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: US •  Launched: September 2012 •  Classification: Crowdfunding/ Debt & Recievable/ Crowdfactoring •  Target: SMMEs •  Incentive: Investors receive a return on their investment for a set period of time Bolstr Differentiator Attorneys can sign up as service providers on bolstr Overview •  Bolstr was founded to provide Small Businesses with a simple fundraising tool that enables them to transform their network and community into a team of investors, and supporters •  Bolstr democratizes, and simplifies the process of raising money through a private offering •  Field of expertise: Small Businesses can effectively leverage their network and community to raise the money needed to operate and expand Page 69 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: California, United States of America Mosaic Differentiator Mosaic connects investors to solar projects in need of financing •  Launched: April, 2011 •  Classification: Overview •  Target: Niche •  Field of expertise: •  As the project earns revenue, investors are paid back with interest •  The fundamentals of solar makes it an attractive component of a diversified investment Crowdfunding/ Debt Investing in renewable energy, specifically solar energy •  Each investment you make is represented by a Mosaic Note. The note is a written promise to pay a specific sum of money over a fixed term portfolio: reliable technology, predictable energy output, and stable cash flows •  Notable: Over $2.1 million has been invested through Mosaic and investors have received 100% on-time repayments Page 70 Radical Ideas | Practical Implementation

Key thoughts SunFunder •  Headquarters: San Differentiator •  Employee composition: Investors earn back their principal investment plus intrest-based "Impact Points" to reinvest in another project of their choice Francisco, CA Management team, and advisory members Overview •  Revenue: A percentage of •  SunFunder uses its platform to connect investors who want to invest in solar energy •  Classification: Debt/ •  Relies on a partnership model with solar energy business around the world that provide funds raised Crowdlending •  Target: Niche •  Incentive: Capital repayments and ImpactPoints the equivalent of US$1 projects with companies that require affordable capital solar energy solutions to communities •  Funding target set has to be reached before the company can receive the funding •  The funding is in the form of a loan and investors receive capital repayments over the lifespan of the finance period •  Field of expertise: –  Solar energy companies Page 71 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: Serling, Virginia, USA •  Launched: 2009/10/01 •  Classification: Crowdfunding/ Debt products •  Target: Startups & SMMEs •  Incentive:The average Zidisha borrower pays less than 10% in annual interest and fees •  Field of expertise: Zidisha's lending model breaks new ground by using person-to-person lending to dramatically lower the costs of microfinance for lowincome entrepreneurs in developing countries Zidisha Differentiator •  It is the world's first direct peer-to-peer microlending service to link borrowers and lenders without intermediaries Overview •  Zidisha is a non-profit peer-to-peer microfinance internet platform that allows people to lend •  Members can fund loans for as little as a dollar, which the borrowers then use to develop business activities •  Lender participants have the opportunity to bid to finance all or a portion of the loan at a proposed interest rate •  Zidisha facilitates for the direct communication between its members (innovative in this space) •  Loans Raised: $1,080,414 Page 72 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: England, UK •  Launched: January 2011 •  Classification: Crowdfunding/ Debt products •  Target: SMMEs •  Incentive: The Average interest rate earned by Lenders: 10.79% •  Field of expertise: Intended to meet the needs of anyone managing an investment portfolio (including individuals, pension fund managers and companies with cash deposits), ThinCats provides direct access to the low risk market sector traditionally occupied by high street banks ThinCats Differentiator • Unique in the way that they always require security and carefully select a small number of relatively large deals. They have a list of Sponsors who work for the borrower in helping to prepare the loan case Overview • Lending members take part in an on-line auction to join a lending syndicate for each loan. At the end of the auction those lenders offering the best interest rates are selected to make up the lending syndicate and get the interest rate they have asked for • The Borrower is then offered a loan at the weighted average of the accepted bids plus 1.5% to cover operating, deal management and monitoring costs • The minimum loan is £1,000 and the maximum is the whole loan. So far the most common bid has been £5,000 but bids of £50,000 are not uncommon •  Loans Raised: 126 loans totalling £25.085m Page 73 Radical Ideas | Practical Implementation

Key thoughts •  Headquarters: London •  Employee composition: Management team, and advisory members •  Classification: Debt/ Crowdlending & Equity/ Crowdinvesting •  Target: Niche •  Incentive: Cash based on project revenue; receive early investor bonus •  Field of expertise: –  Renewable energy companies/ projects •  Notable: Its first project, launched in July 2012, raised £1.4m to fund a community-scale wind turbine Abundance Generation Differentiator provides retail investors with the opportunity to invest their money directly into renewable energy projects in the UK and get a regular cash return based on the energy produced Overview •  Abundance aims to link communities with individuals with Renewable Energy projects •  Companies or project owners offer debentures to potential investors •  Abundance then assists in structuring the debentures and to market and distribute them to registered interested investors •  The debentures, structured over a 20-25 year term, offer investors long-term, low risk and predictable investment opportunity •  Abundance platform also offers debenture holders the opportunity to sell their debentures to other interested investors Page 74 Radical Ideas | Practical Implementation

Key thoughts Funding Circle •  Headquarters: United Differentiator •  Launched: August 2010 Directly connects people who want to invest money with vetted, established businesses who want to borrow money. Accessing you money back is as simple as selling your loans onto other investors. On average it takes just 30 mins to sell a loan Kingdom, London •  Classification: Crowdfunding/ Debt products •  Target: SMMEs •  Incentive: Funding Circle investors are earning 6.2%* average net return

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