CROWDFUNDING: PAST, PRESENT, FUTURE

Crowdfunding

(Crowd Financing, Equity Crowdfunding, Crowd Sourced Fundraising)

NOT NEW

17th century to fund books 1884 to fund Statue of Liberty pedestal

A collective effort to network, pool money via the internet

Activities include:

Disaster relief/charity Support of artists, movies, video games, entertainment Political campaigns Start up/acceleration company funding Civic projects/community oriented

Originated from Crowd Sourcing small contributions from many parties

10-25%

A IDEA

Z COMPLETION

CROWDFUNDING IS HERE.

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Crowdfunding Models
FUNDS AS DONATION OR SECURING INVESTMENT? 1. Debt Based
Interest payment on top of capital payment - also known as peer to peer finance

2. Equity Based
Fund in exchange for equity hoping value goes up or dividend

3. Profit sharing
% of gains distributed to investors

4. Gifts, virtual thanks, mention in the credits

Reward those who provide support early on

5. Hybrid model
Combination of the above
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Different Approaches

All or Nothing

Keep It All

Bounty

Money only collected if target dollar amount met

Funds collected are kept whether target amount is reached or not

Give the funds collected upon project completed/success

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Benefits & Challenges

BENEFITS

CHALLENGES

Financial gain Raise profile and reputation Marketing, awareness, branding Feedback Replaces email marketing Breaking local boundaries opens the world Lessens the battle for initial stage capital sourcing

Little or no IP protection Once posted easy to copy Costs (Paypal, site and rewards for supporters) Failure Fraud Donor exhaustion Scam, abuse, regulatory Realistic No buzz/promotion Articulate the story and the edge Need a social network Vet the idea before funding request

Easily and safely expands number of supporters

More diversified investor base

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Crowdfunding Platforms

2001
ArtistShare

2006
Pledgie Sellaband

2008
Indiegogo GiveForward

2009
Kickstarter Rocket Hub Fundly

2010
MicroVentures

2011
FundaGeek EarlyShares

2012
Fundable

2013
Additional countries including Finland, Canada and Italy

Abundance
(UK)

Funded By Me
(Sweden/Norway)

Seedmatch
(Germany)

In US In Europe

And many more

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The Crowdfunding Landscape

Sweden and Norway

Germany

UK

Additional countries:

Finland Canada Italy

US

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Conditions for Crowdfunding

3 2 1
Human nature: People want to help Goodwill Social aspect

OK to fail

Lots of ideas and projects

Easy and almost free (40+ sites to promote)

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In The Media

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Success Doesnt Happen Overnight

Regulatory: Work closely with Regulators to help shape the governance going forward. Education: Focus on educating both sides of the marketplace, without a common understanding of benefits difficult to have the two sides exchange value. Scale: Identify key market segments to promote the platform rate of adoption will dramatically increase with the right message to the right segments. Efficiency: Once value exchange is created, tirelessly work to improve efficiency to lower costs for both sides of the platform. Technology: Makes all of the above possible also changing very quickly. Building a nimble platform allows for the marketplace to adapt to the needs of both constituents quickly.

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Where Does the Crowdfunding Industry Go From HerePossibilities

One aggregate platform above each site Mobile The future of small business funding Reduces friends and family round Crowd funding and Non-banks such as Mint, Prosper and Lending Club are among dozens of new companies shaping the way customers raise capital, lend, invest, pay, transact, save and plan Peer-to-Peer foreign currency exchange to make it cheaper, quicker, easier and more efficient to send cash abroad as well as pay in multiple currencies Even more open-source, developer-friendly API's for permission-based access to financial accounts enabling quicker funding, less theft/fraud and more crowd funding solutions to raise capital, borrow, lend and invest

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This Is Just The Beginning

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Thank you

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Disclosures
Neither Prosper Funding LLC nor Prosper Marketplace, Inc. are registered as an investment adviser with any federal or state regulatory agency. The information contained in this presentation is for informational purposes, and should not be construed as individually tailored investment advice or as a recommendation with respect to any security or investment approach. This presentation has been prepared without regard to the circumstances and objectives of the conferences participants and should not be relied upon as authoritative or taken in substitution for the exercise of judgment by any participant. Each participant should consider the appropriateness of any investment decision having regard to his or her own circumstances, the full range of information available and appropriate professional advice. Prosper Funding LLC and Prosper Marketplace, Inc. recommend that each participant seek independent investment and financial advice concerning any services or investments discussed in this presentation. Notes are offered pursuant to the Prospectus which accompanies this presentation and which is also available at www.prosper.com/prospectus. Persons considering investing in Notes should review the Prospectus in its entirety.

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