Equity Endeavor - Pitch Deck

Equity Endeavor, Inc. Investor Presentation

www.equityendeavor.com

2 Strictly Confidential

Meet the Team

Broderick McClinton

Eric Sonnier

Matt Christen

§  Born and raised in Baton Rouge, LA §  Finance/Political Science Degree

from Tulane University §  Associate, BlackRock §  Economic Development, Greater New

Orleans Inc. §  Harvard Business School, 2014

§  Born and raised in Houston, TX §  Marketing Degree from The University

of Texas at Austin §  Strategy & Operations Consultant,

Deloitte §  Account Executive, MdotM, Inc. §  Harvard Business School, 2014

§  Born and raised in Houston, TX §  Computer Science Degree from The

University of Texas at Austin §  Spent past 8 years programming

various trading strategies into automated platforms


Before We Begin

We focus on helping traditional small businesses that operate within a limited geographic footprint. We do not support startups or individual projects.

We are a rewards-based platform, which means that our business owners exchange non-financial (e.g., products, and services) items for contributions.

Small Business Rewards-Based


Two Major Trends

Two major trends have led to the creation of the Equity Endeavor platform.


Trend #1

Upgrade or replace equipment

Renovate or expand storefronts

Enhance quality of service

Create a better consumer experience

Small business owners are having a difficult time finding capital to:


In fact, data shows a large need for capital to grow

Source: Pepperdine Private Capital Access Index, 4Q2013

25%

45%

65%

2Q 2013 3Q 2013 4Q 2013

Es-mated % of Business Owners (<$5MM in revenue) needing loans for growth or expansion


But capital is hard to find for small businesses*

68.8%

Said equity was difficult to raise

68.7%

Said debt was difficult to raise

34.0%

Acquired a business loan

* Defined as having less than $5 million in revenues Source: Pepperdine Private Capital Access Index, 4Q2013


And this lack of capital isn’t a recent event

Small business financing in the U.S. has experienced a steady decline due to a number of factors. Small businesses:

Don’t have the resources of large corporations

Are more risky

Are perceived as unprofitable to banks

Have lower potential equity returns compared to technology startups

0

2

4

6

8

10

12

14

16

18

0

50

100

150

200

250

300

2005 2006 2007 2008 2009 2010 2011 2012 2012(4)

GDP

, Trillio

ns

Small B

usiness L

oans, B

illions

$50 billion or more

$10 billion to $49 billion

$1 billion to $9 billion

$500 million to $999 million

$100 million to $499 million2

Less than $100 million

Gross Domes>c Products (GDP)

Source: SBA: Small Business Lending in U.S., 2012


Why is this a big deal?

64%

of new private sector jobs

99%

of U.S. firms

Small Businesses in the U.S. play a very important role in overall economic activity

American jobs

77 MILLION


Trend #2

$2.7 billion raised in 2012

1 million campaigns run in 2012

Forecasted 89% YoY Growth

Crowdfunding has seen tremendous growth and is forecasted to continue its upward momentum.

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

2009 2010 2011 2012 2013F

Funding Volume (in billions)

Source: Massolu>on 2012 Crowdfunding Industry Report


But small businesses* are not benefitting

* Defined as having less than $5 million in revenues / Non-‐financial based Campaigns Source: Pepperdine Private Capital Access Index, 4Q2013

Only 17% reported crowdfunding

efforts


Why is this the case?

Global, Not Local Lack of Focus No Customization

§  Crowdfunders for local businesses are going to come from an area in close proximity to the business because those are the people who are familiar with the business

§  Small businesses don’t fit well into many current plaWorms. They oYen find themselves on plaWorms where they’re compe>ng against tech gadgets, crea>ve projects, or nonprofits

§  Local small businesses have different fundraising needs than tech startups and crea>ve projects. They need a plaWorm that rallies a community behind businesses in their area

Existing crowdfunding platforms are not ideal for small business because…


Here are a few examples

Focuses on individual crea-ve projects that largely leave out local small business

No focus and not localized, leading to subop-mal situa-on for small businesses

Equity crowdfunding is not a viable op-on for a majority of small businesses


The Solution

Crowdfunding Platform Built for Small Business


Why is this the solution?

Raise capital for projects that will take business to the next level

No requirement for principal or interest payments, or giving up equity

Crowdfunding platform focused on traditional small business

Bring customers closer to the business, which is an important data point for lenders and brokers

Localized platform increases brand awareness within community & targets those who care most

Value Proposition for Business

Owners

1

2

3

4

5


How is our platform structured?

Homepage Source of information for business owners, including explainer videos, testimonials, and a blog.

Localized Portals We have created individual city portals with the goal that they look and feel “local.”

Campaign Pages This page tells each business’s story and their reason for raising funds.

Future features that create more of a community §  Educational content for small business owners §  Comments section so that business owners can engage with consumers §  Map feature that allows the community to find small businesses in their area §  Relevant articles, news, and events happening in the local area


Our crowdfunding campaign process

Project Realization Campaign Creation Campaign Review Launch Campaign Raise Funds

§ Recognize need for addition to product or service offering

§ Structure creative rewards for crowdfunders’ contributions to campaign

§ Equity Endeavor conducts review of application

§ Campaign featured on relevant city portal

§ Crowdfunders contribute to the campaign and receive rewards

Search Choose Pledge Receive Enjoy

§ Search for campaigns within city of choice

§ Choose the business you wish to pledge to and the reward of choice

§ Pledge the dollar amount associated with the reward choice

§ Receive the reward when the campaign succeeds. No funds debited if campaign fails

§ Enjoy reward and reap the benefits of the improvement or expansion made to the local business

For Business Owners

For Community Builders


Pilot Launch

Since launching our pilot in September, we have worked with 24 businesses, 10 of which

have already finished their campaigns


We launched a pilot in Austin and New Orleans and had great results

Failed

SUCCESS

Close to Launch

SUCCESS

SUCCESS SUCCESS SUCCESS SUCCESS SUCCESS

Failed Failed

Close to Launch Close to Launch Launching Soon Launching Soon

Launching Soon

Close to Launch

On Hold

Close to Launch

Close to Launch Close to Launch Close to Launch Close to Launch

Close to Launch


Texas 51% LA

35%

Other13%

Statistics for the 10 small businesses that have finished their campaigns

$80,457 raised from 483 Crowdfunders

Crowdfunder Breakdown

70% Success Rate


Case Study: RedBird Pilates & Fitness $10,000 Campaign Goal

Small Business

Owner Lee Vallely,

owner of RedBird Pilates & Fitness

Over 20 years experience in the health and wellness industry



Campaign Goal

Raise $10,000 in order to:

Move to a larger studio

Purchase new equipment

Launch of a RedBird teacher training program

Launch of RedBird TRX training program

Fund scholarships for women in East Austin



Campaign Results $10,725 raised in 30 days

86 campaign contributors

90 rewards purchased

94% of funds came from local contributors

Brokers & leasing agents became more willing to work with RedBird


=

Market Size

Relevant Small

Businesses

Average Crowdfunding

Raise

5.3MM $10,000 7%

Fees Retained by Equity Endeavor

$3.7B

Per Year Market

Criteria: Only includes firms with 0-‐9 employees in our designated most appropriate NACIS industries (Retail Trade, Educa>onal Services, Arts Entertainment and Recrea>on, Accommoda>on and Food Services, and Other Services except Public Administra>on) Source: United States Census Bureau, 2011 Survey


This is our timeline

Solidify CVP and establish MVP §  Define MVP §  Begin pilot study in Austin and NOLA §  Enroll 4 SMBs per city §  Begin awareness campaign

Grow presence and adapt offering §  Complete pilot §  Adapt service offering to incorporate pilot

findings/feedback §  Enroll ~10 additional businesses per city §  Expand brand awareness through partnerships,

social media, digital marketing, organic efforts

Expansion §  Expand presence within Austin and NOLA §  Enhance user experience and add features to

the platform (i.e., talent exchange, user profiles) §  Firm up customer acquisition strategy §  Expand to additional cities

June - Aug 2013 Sept – Mar 2014 Apr 2014 +


Current Sales Funnel: Monthly leads have grown 3x since January

acquisition channels

8

Social Media AdvertisingE-mails OutreachPartnershipsBusiness Owner ReferralsPressContent DownloadsStreet TeamsFree Consultations

Acquisition Channel

16 Customers

66 Ac>ve Leads

134 Inbound Inquiries


Establishing a presence

Buy Local / Support Local organizations

Local government & chambers of commerce

Local media

Small Business Vendors (Consultants, Accountants, Lenders, PR, etc)

The community of business owners

Forming relationships

with

1

2

3

4

5


Our fee structure

All business owners pay a front end fee that is 1% of target raise

In addition to the 1% fee, business owners that raise target amount pay us 6% of the actual raise amount

In addition to the above two fees, business owners that hit target pay our 3rd party payment processor an extra ~3.25%

Business owners that do not hit target amount do not pay any additional fees outside of the first fee (1% of target)


Economics of a project

Revenue Per Project

Acquisition Cost

400 180* 220

Gross Profit

55%

Gross Margin %

We assumed a 50% success rate for this calculation §  Front-end fee: $10,000 average raise x 1% fee = $100 §  Additional fee (if successful): $10,000 average raise x 6% fee x 50%

Success Rate = $300 §  Total Average Revenue Per Project = $400 §  Customer Acquisition Cost of $180 is an estimate based off the small

amount of data we have We are not currently charging a fee, though we have discussed the fee structure with all customers, and have undoubtedly seen a willingness to pay


Equity Endeavor Financial Projections

Revenue Front End Fees Commission Fees

Total Revenue

Operating Expenses Personnel Marketing Rent Administrative

Total Operating Expenses

Income Before Taxes

Net Income Margin

July-Dec 2014 2015 2016 2017 2018

30,000$$$$$$$$$$$$$$$$$$$ 240,000$$$$$$$$$$$$$$$$$ 960,000$$$$$$$$$$$ 2,400,000$$$$$$$$$ 4,800,000$$$$$$$$$90,000$$$$$$$$$$$$$$$$$$$ 720,000$$$$$$$$$$$$$$$$$ 2,880,000$$$$$$$$ 7,200,000$$$$$$$$$ 14,400,000$$$$$$$$

120,000 960,000 3,840,000 9,600,000 19,200,000

147,500$$$$$$$$$$$$$$$$$ 630,000$$$$$$$$$$$$$$$$$ 1,585,000$$$$$$$$ 2,580,000$$$$$$$$$ 4,050,000$$$$$$$$$73,500$$$$$$$$$$$$$$$$$$$ 427,800$$$$$$$$$$$$$$$$$ 1,477,680$$$$$$$$ 3,305,280$$$$$$$$$ 5,980,704$$$$$$$$$12,000$$$$$$$$$$$$$$$$$$$ 24,000$$$$$$$$$$$$$$$$$$$ 52,364$$$$$$$$$$$$ 93,818$$$$$$$$$$$$$$ 154,909$$$$$$$$$$$$7,375$$$$$$$$$$$$$$$$$$$$$ 31,500$$$$$$$$$$$$$$$$$$$ 79,250$$$$$$$$$$$$ 129,000$$$$$$$$$$$$ 202,500$$$$$$$$$$$$

240,375$$$$$$$$$$$$$$$$$ 1,113,300$$$$$$$$$$$$$$ 3,194,294$$$$$$$$ 6,108,098$$$$$$$$$ 10,388,113$$$$$$$$-$$$$$$$$$$$$$$$$$$$$$$$$

(120,375) (153,300) 645,706 3,491,902 8,811,887

17% 36% 46%

Number of Local PortalsNumber of Crowdfunding CampaignsPercentage of Market

5 10 20 40 80 300$$$$$$$$$$$$$$$$$$$$$$$$ 2,400$$$$$$$$$$$$$$$$$$$$$ 9,600$$$$$$$$$$$$$$ 24,000$$$$$$$$$$$$$$ 48,000$$$$$$$$$$$$$$

0.01% 0.05% 0.18% 0.45% 0.91%


Amount of Capital Seeking to Raise: $500,000 Use of Funds

Hiring Critical Personnel: Front-end Developer and Campaign Creation Specialist. Salesperson in 2015

Contracts: Website Designer, Freelance Work

Marketing: Social Media/Digital/Print Advertising, Content Creation, Seminars for Businesses, Referral Payments, and Street Teams

Operations: Rent, Travel, Accountant and Legal Fees