Equity-based Crowdfunding : Economic and regulatory challenges ahead Co-investment / SmartAngels case study

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1 Equity-based Crowdfunding : Economic and regulatory challenges ahead Co-investment / SmartAngels case study Benoist GROSSMANN Managing Partner September 2015

2 1. IDINVEST PARTNERS LEADER IN EUROPEAN MID MARKET PRIVATE EQUITY Founded in 1997, Idinvest Partners is an independent pan-european PE manager focused on the small / mid-market segment 6 bn of Assets Under Management SMEs financed Primary fund investments 1,800m funds (+106 GPs) Secondary transactions 450m + 47 secondary transactions Equity Co-investments 370m + 48 companies Private Debt 2,000m companies Growth Capital 1,300m companies May 2010: successful spin-off from the Group International team headquartered in Paris: 55 people dedicated to investment and support (vs. 25 in 2010) Sustained growth of assets under management: 6bn (vs. 2.8bn in 2010)

3 1. IDINVEST PARTNERS Successfully investing in European best-of-breed companies Idinvest Partners as a specialist in direct private equity investment A clearly defined investment strategy Covering 3 sectors: Media/Internet/Information Technology, Cleantech and Healthcare European companies with hyper-growth potential and worldwide reach 2m to 10m per round, 10m to 15m per company Lead and active investor (board seats) A team of 5 investors, with deep sector expertise having worked together for 10 years

4 1. IDINVEST PARTNERS TECH PORTFOLIO Software/ IoT Fintech Adtech/Media E-Commerce/Gaming

2. CROWDFUNDING TODAY HUGE MARKET AND FAVORABLE CONDITIONS $40bn 60,00 0 Global crowdfunding market in 2015 Projects crowdfunded in France in 2015 50% Percentage of Business and Entrepreneurship

5 2. CROWDFUNDING TODAY HUGE MARKET AND FAVORABLE CONDITIONS $40bn 60,00 0 Global crowdfunding market in 2015 Projects crowdfunded in France in % Percentage of Business and Entrepreneurship Projects Favorable Environment Banking desintermediation (direct access to capital market products) Regluatory policies (Loi Macron in France) Seek for higher-return financial products due to low-rate environment Technology & Socialization Changes in technology (network effects, marketplace funding models, mobile accessibility) Social networks (word of mouth, investors club, lower COCA) Reinvention of SMEs financing Behaviors change Easy access to SMEs capital Transparency

6 3. TRENDS AND KEY DATA CROWDFUNDING: $1 TRILLION BY 2020 Total funds raised by crowdfunding platforms worldwide Worldwide market share by category Volume of equity-based fundings is skyrocketting Business lending overtook consumer lending in Europe

7 4. INVESTMENT IN SMARTANGELS Registered by the AMF as a CIP (new French crowdfunding status), SmartAngels enables startups, early stage and growth companies to issue equity and bonds (launch in S2 2015) within the legal framework of public offering exemption $10bn French non-listed equity and bonds: market WE TAKE MEASURABLE RISKS WE CHOOSE EQUITY WE UNDERSTAND BUSINESSES WE HAVE A LONG-TERM VIEW

8 5. CROWDFUNDING POTENTIAL ISSUES SOME CRODWFUNDING PLATFORMS INCLUDE SCORES OF RISKS REPUTATION RISK CONTROL COPYRIGHT & INTELLECTUAL PROPERTY COMPLIANCE & ACCOUNTING PRIVACY SCAMMERS AND LACK OF TRUST INADEQUATE DUE DILIGENCE LACK OF ACCOUNTABILIT Y LACK OF FINANCIAL MATTERS LACK OF COMMUNICATIO N 8

9 6. WORKING WITH EXPERTS TO LIMIT SUCH RISKS AND INVESTORS ON SUCH PLATFORMS ARE SCARCELY EXPERTS????? IT MAKES IT ESSENTIAL TO INVEST WITH SERIOUS AND PROFESSIONAL CO-INVESTORS TOP VENTURE CAPITAL FUNDS TOP ANGEL INVESTORS 9 XAVIER NIEL MARC SIMONCINI JACQUES-ANTOINE GRAJON

FREDERIC MONTAGNON LIMIT THE RISKS SOURCING NETWORK EXPANDED

10 7. STRONG CO-INVESTORS BENEFITS XAVIER NIEL PIERRE KOSCIUSKO- MARC SIMONCINI JEAN-DAVID BLANC JACQUES-ANTOINE MORIZET GRAJON FREDERIC MONTAGNON LIMIT THE RISKS SOURCING NETWORK EXPANDED STRONG EXPERTISE BUSINESSES GAIN TRACTION MORE TRANSPARENC Y 10

11 8. HOW SMARTANGELS WORKS COMPANIES STARTUPS INVESTORS Individuals SMEs Institutional players Looking for investors Looking for investments Direct financing model without holding management EQUITY BOND 11

9. ALLIANZ & SMARTANGELS The first crowdequity institutional fund Principles Crowdequity fund between 5-10m 5-10m Rechargeable Over 5 years Automatic matching of Allianz client s investment Benefits

12 9. ALLIANZ & SMARTANGELS The first crowdequity institutional fund Principles Crowdequity fund between 5-10m 5-10m Rechargeable Over 5 years Automatic matching of Allianz client s investment Benefits For Allianz For Allianz Gains insights about Fintech disruption model Highly diversified asset management Enlarges its CSP+ customer base Reinforces its branding in the startup ecosystem New strategic offer designed for institutional players and funds Secures volume of transactions in the next year Reinforces its branding Boosts the dealflow and attracts startups with higher stage of maturity 12

13 10. SMARTANGELS KEY DATA m 12k Established as a pioneer of equity crowdfunding Members in June 2015, x3.5 since the last 12 months, with no marketing expenses Raised through the platform since inception, e CAGR of +55% Backed projects including Canibal ( 1.7m), NUMA (+ 1m) Employees and experienced board members (P. Robin, X. Lazarus, R. Le Moal) Scalable business model: low structure cost with no holding management First crowdfunding investment fund in Europe with Allianz launched in April 2015 One vision: from Equity Crowdfunding to Capital Marketplace for non-listed companies 13

Startup funding: a fastgrowing. market. points KEY INFO IN

Startup funding: a fastgrowing market 10 KEY INFO IN points 1 2 FRANCE: A CHAMPION IN ENTERPRISE CREATION Between 2009 and 2012, the net enterprise creation compound annual growth rate was 3.3%. There