CROWDFUNDING MARKET REPORT

CROWDFUNDING MARKET REPORT FACTS AND FIGURES - Q1 2014 BY CROWD VALLEY INC

IMPORTANT NOTICE

Please note that the provision of the information in this presentation does not create and is not intended to create a relationship between Crowd Valley Inc. and any other person. You are not and should not regard yourself as being a client or customer of Crowd Valley Inc. and must not expect Crowd Valley Inc. to have any duties or responsibilities to you, act for you or your clients, or be responsible for providing protections afforded to customers or yourselves or be responsible for advising you in any respect. Please consult your own advisers as you deem necessary. The information provided herein is solely for informational purposes and should not be construed as an attempt to solicit new clients or advertise our services for hire. The information and opinions contained herein have been compiled or arrived at in good faith from sources believed to be reliable; however, Crowd Valley cannot be held responsible for its accuracy or completeness. Crowd Valley does not engage in the offer, sale or transfer of securities. Securities may not be offered or sold in the United States absent (i) registration under the U.S. Securities Act of 1933, as amended (the Securities Act) or (ii) an available exemption from registration under the Securities Act. Please consult legal counsel in the appropriate jurisdiction before offering, selling or buying securities as registration under the Securities Act or similar state legislation may be required.

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EXECUTIVE SUMMARY

Being an infrastructure provider for the international crowdfunding market, Crowd Valley has gained a central position in this space. This gives the company a broad overview on the sector’s most recent developments, with data collected on over 6,200 individuals and companies to date. The present report differs from the previous ones, published with data collected in Q3 and Q4 2013, as it is based on surveying a randomly-selected sample of more than 100 individuals and companies out of the about 650 that have expressed an interest in entering the crowdfunding market during the first quarter of 2014. Therefore, the analysis provides probably the first data-driven insights on how the international crowdfunding sector is developing in 2014. The demand for crowdfunding technologies is still mainly based in the USA and it is above all directed at equity investment models for startups. Nevertheless, during this quarter Crowd Valley observed a steep increase in the demand for lending models and real estate platforms. Other regions including Europe and Asia also play a major role in the crowdfunding sector, representing significant proportions of the total demand for crowdfunding services. In Q1 2014, the variety of organizations and professionals interested in entering this new financial market is even more vast. In particular, many actors coming from the traditional finance sector (i.e. broker dealers, asset managers, investment advisors, private equity funds, etc) have shown an interest in crowdfunding. This seems to confirm what Crowd Valley always believed: crowdfunding will bring about a paradigm shift, affecting not only the early stage finance world, but the entire financial industry.

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INTRODUCTION

Since the start of 2014, a few important milestones have been achieved by the crowdfunding industry. In particular, in Europe, the UK and France have released their regulations for securities crowdfunding, and the Spanish government has announced that it is also working on regulatory activities. New Zealand has approved regulations for securities crowdfunding, which are so far some of the most liberal. The European Commission has released a communication on crowdfunding where it states that it will support the development of this new financial source, as key for Europe’s long term growth. The UK has also allowed p2p loans as part of Individual Savings Accounts (ISAs). All of these advances have stimulated the attention of many actors, who are following closely the situation and are getting ready to move the first steps into the market. Crowd Valley has examined in this report a randomly-selected sample of more than 100 observations from across six continents, in order to unveil some of the most interesting trends in the crowdfunding sector, which are presented in the following sections. *Disclaimer on Data Collection It should be taken into account that the sample used to analyze the market trends is composed only of organizations and professionals who approached Crowd Valley due to interest in one or more of the company’s services.

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INVESTMENT MODELS

Being a provider of technologies, services and methodologies for securities professional looking to get involved in this new financial market, Crowd Valley seeks to understand the demand for the different investment models. The company identified four main categories of investment models: 1) Equity-based crowdfunding; 2) Lending, which includes peer-to-peer lending, business loans and other forms of lending; 3) Reward-based crowdfunding; 4) Combined, which refers to those cases where two or more of the aforementioned models are combined in one platform. The charts below show the percentages each investment model held on the total demand for crowdfunding operations during Q4 2013 and Q1 2014. Even though equity remains the most demanded model, compared to the previous quarter, it has been undergone it has undergone a decrease (from 82% in Q4 to 60% in Q1). This has been counterbalanced by a consistent increase in the demand of lending models (from 5% in Q4 to 29% in Q1). The demand for combined models keeps, instead, growing.

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Q1 2014

INVESTMENT MODELS

Q4 2013 Q3 2013

82% 78%

60%

29% 5%

14% 2%

1) Equity

2) Lending

8%

5%

3) Reward

10% 5%

3%

4) Combined

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INVESTMENT MODELS (Q1 2014)

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ASSET TYPES

Many people still associate crowdfunding with startups, even though during the past two years, this new fundraising methodology has been used to enable investments in many other assets than startups alone. Crowd Valley has directly witnessed a rising demand for crowdfunding portals for other assets such as real estate, cleantech and energy among many others. In particular the company identified four main categories of assets: 1) Private companies*; 2) Real Estate; 3) Other Real Assets, which include, among others, energy, cleantech and life science; 4) Other, which comprehends all other kinds of assets, that could not fit into the former categories, for example education and intellectual property (IP). The charts below represent the total demand for crowdfunding platforms or services divided by asset type. In Q1 2014 Real Estate has experienced a steep increase: from 19% in Q4 to 30% in Q1. While the “Startups” category holds firmly its position, this quarter two new categories made it into the chart: Peer-to-Peer (P2P) and Peer-to-Business (P2B), where P2P refers to individuals supporting other individuals and P2B refers to individuals supporting businesses or other entities. In fact, given the great increase in the demand of lending models, as highlighted in the previous section, Crowd Valley decided to look more closely at it, segmenting the asset types in P2P and P2B loans. *In this edition Crowd Valley changed the category name from “Startups” to “Private Companies”, since it observed that the demand is not just for startup portals, but for more mature businesses platforms too.

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Q1 2014

ASSET TYPES

Q4 2013 Q3 2013

46% 44% 43% 30%

24%

19% 16%

23%

9%

6%

13%

13% 0%

0%

0%

15%

0% 0%

1) Private Companeis

2) Real Estate

3) Other Real Assets

4) P2B

5) P2P

4) Other

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ASSET TYPES (Q1 2014)

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CLIENT PROFILE

In fifteen months of activity, Crowd Valley has been approached by many organizations and professionals interested in its crowdfunding technologies or related services. The variety in the potential clients’ profiles is particularly interesting. The company has identified several types of organizations which were then grouped in the following categories: 1) Broker-Dealer representatives; 2) Angel Network; 3) New Company, which refers to potential clients who are going to create a new company for the crowdfunding activity; 4) Incubator; 5) University; 6) Already existing Crowdfunding Platform; 7) Private Equity Fund; 8) Other, which includes already established companies that are planning to expand their operations into crowdfunding. In the present edition we changed the survey form, including three new categories: Large Corporation, Investment Advisor and Asset Manager. These types of actors, who now display an interesting percentage on the total demand, during the past data collection processes were probably self-declaring “Broker-Dealer” or “Other”. Adding the three abovementioned categories allowed the company to segment further the demand and frame in a more accurate way the situation.

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Q1 2014

ORGANIZATION TYPES

Q4 2013 Q3 2013

9%

1) Broker-Dealer

18% 21%

2%

2) Angel Network

6% 7%

35%

3) New Company

34% 32%

2%

4) Incubator

6% 7%

0%

5) University

5% 6%

6%

6) Crowdfunding Platform

6% 6%

2%

7) Large corporation

0% 0%

6%

8) Investment Advisor

0% 0%

4%

9) Asset Manager

0% 0%

7%

10) Private Equity Fund

3% 0%

28%

11) Other

22% 21%

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THE GEOGRAPHY OF CROWDFUNDING PLATFORMS

The demand for crowdfunding services is global. In fact, as shown by the following chart, the organizations and the professionals who approached Crowd Valley since its start are from six different continents. North America, driven by the US, which is still the main market, improves its position, with its percentage increasing from 42% in Q4 to 45% in Q1. In Q1 2014 the demand from Europe went back to the level of Q3 2013 (from 34% to 27%). In particular, the UK, Italy and France remain the biggest markets in the region. The new entrant of this quarter is Australia, which is among the top six locations with 4% of the total demand. Africa and South America maintain more or less the same percentage as the previous quarters, while Asia experiences a decrease.

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CROWDFUNDING IN REGIONS (Q1 2014)

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Q1 2014

TOP 7 LOCATIONS

Q4 2013 Q3 2013

43% 37%

United States

36%

8% United Kingdom

14% 13%

4% Italy

5% 5%

4% Australia

0% 0%

3% France

3% 3%

3% Canada

4% 4%

31% Other

31% 33%

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Q1 2014

TOP REGIONS

Q4 2013 Q3 2013

45% North America

42% 47% 27%

Europe

34% 26% 7% 12%

Asia

12% 8% Africa

7% 8% 5%

South America

4% 4% 4%

Oceania

2% 2%

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FOCUS ON THE US (Q1 2014)

Even if the demand for Crowd Valley’s crowdfunding services and technologies is global, the biggest market remains the USA (37% in Q4 2013 and 43% in Q1 2014), where the crowdfunding sector is more established than elsewhere*. Thus, this section presents facts and figures focusing only on the US market. It is particularly interesting to notice that, although “New Company” is the main category, the actors from the traditional finance sector (i.e. Broker-Dealers, Private Equity Funds, Asset Managers and Investment Advisors) play a relevant role. *

Massolutions, 2012. Crowdfunding Industry Report.

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INVESTMENT MODELS IN THE US (Q1 2014)

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ASSET TYPES IN THE US (Q1 2014)

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ORGANIZATION TYPES IN THE US (Q1 2014)

1) Broker-Dealer

4%

2) New Company

30%

3) Private Equity Funds

4) Investment Advisor

5) Asset Manager

6) Other

9%

4%

9%

35%

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FOCUS ON THE FINANCIAL INDUSTRY

Given that in Q1 2014 the demand from traditional financial industry actors represents a significant part of the total demand for crowdfunding services , Crowd Valley decided to focus on these types of actors in the present section. The charts below highlight the investment models and the asset types most required by the financial industry actors. As it was easy to predict, the demand for reward crowdfunding platforms is null. More interestingly, real estate is the most requested asset type.

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INVESTMENT MODEL IN THE FINANCIAL INDUSTRY (Q1 2014)

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ASSET TYPE IN THE FINANCIAL INDUSTRY (Q1 2014)

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CONCLUSION

The present report presents facts and figures obtained analysing the data the company collected during Q1 2014. The results contained in this report are probably the first datadriven trends of the international crowdfunding market to be published in 2014. In particular, since the start of 2014, the organization observed the following new trends: 1) The demand for lending models has increased significantly; 2) Real estate is the asset category where demand has increased the most; 3) New relevant actors from the traditional finance world, such as private equity funds and asset managers, are looking to enter the crowdfunding ecosystem; 4) USA still remains the main market, but other countries, for example Australia, are strengthening their position. 5) Traditional finance world actors are especially interested in Real Estate crowdfunding. By publishing this information Crowd Valley aims to expand the current knowledge about this new, transparent financial sector and to support regulators and other relevant stakeholders in the global ecosystem in evaluating the market’s evolution. The company will continue publish similar reports on a regular basis.

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CROWD VALLEY CONTACTS

Main Contacts

MARKUS LAMPINEN - CROWD VALLEY CEO [email protected] (646) 801 4054

PAUL HIGGINS - CROWD VALLEY COO [email protected] (415) 580 0087

REX KEMPCKE - ENERGY EXPERT [email protected]

Report Authors

ALESSANDRO RAVANETTI - CROWD VALLEY CMO [email protected]

IRENE TORDERA MARKETING & COMMUNICATIONS COORDINATION [email protected]

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THIS REPORT WAS DESIGNED BY OUR TRUSTED PARTNER:

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