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Enabling Digital Finance ++
Copyrights © Grow VC Group 20161
Alternative Finance Market and SME Access to Finance:
EU – US Meeting, Transatlantic Economic Council
Jouko Ahvenainen, Tallinn, June 2, 2016

Finance Sector Challenges
2
1. The finance crisis in 2008 started a chain reaction
that impacted regulation, credibility and business
models of banks
2. More regulation and requirements on capital have
limited banks’ capability to lend to business
customers
3. Digital currencies and especially underlining
technology, like blockchain, enables new ways to
make transactions without payment processors and
banks
4. People and companies are more critical towards finance
institutions and service costs, e.g. in fund raising, wealth
management and asset management
› Leads to try alternative providers
› Crowdfunding and p2p lending have emerged
5. Goldman Sachs has estimated that the alternative finance
addressable market is $3.3 Trillion
6. Average growth rate of the UK alternative Finance market is
159%
47%
68%
23%
49%
UK US
Level of confidence in banks
2008 2013
Source: Edelman Trust Barometer
350m
873m
2337m
0
500
1000
1500
2000
2500
2012 2013 2014
The UK alternative
finance market growth
Source: University of
Cambridge and EY: The
European Alternative Finance
Benchmarking Report

Emerging New API Ecosystems
3
Digital Back Office Services:
• Authentications, transaction processing, user accounts, transaction history, reporting
• Assets and their securities, ownership ‘tables’, finance instrument models
• Interfaces to 3rd party components, databases, ‘blockchain ledger’processing
Payment
processing
Credit RatingID verification3rd party
services
Blockchain
‘type’ services
Investing
Service A
Investing
Service B
P2P Lending
Service A
Users: Private & Institutionals
MarketData
Services
Wealth
Management A
Secondary
Market
Service A
Asset
Management A
Syndicate
Service A
Digital Fund
Service A
RiskManagement
and
insuranceservices

Data from the US and Europe
Alternative Finance Market
4

DATA-DRIVEN
DEAL EXCHANGE
May 2016
Real-time data and deals on private companies
raising capital, backed by analytics, insights and
research

MASSIVE CAPITAL MARKETS MOVING ONLINE
Number of
Crowdfunding Platforms
Worldwide
1,250
$300BN
Estimated Size of the
Global Crowdfunding
Market in 2015
$34.4BN
Value of the Early Stage
Investment Market
Estimated Revenue
Crowdfunding Added to
the Global Economy in
2014
$65BN
Sources: Massolution Crowdfunding Research 2015; CB Insights (https://www.cbinsights.com/blog/crowdfunded-venture-capital-hardware/); Crowdfunder!

CNBC DEALINDEX GLOBAL CROWDFUNDING INDICES
CNBC DEALINDEX AGGREGATE EQUITY
CROWDFUNDING GLOBAL INDEX
CNBC DEALINDEX INTERNATIONAL EQUITY
CROWDFUNDING GLOBAL INDEX

Tracking Private Companies & Assets Fund-Raising Online
Coverage across assets classes:
Equity Crowdfunding
Marketplace Lending
Real Estate Crowdfunding
Online M&A
Private Deals
Some of the asset classes listed above are not yet live on the DealIndex data platform!

DealIndex Dashboard

$650M+
LIVE FUNDING
2,000+
DEALS TRACKED
300
LIVE DEALS
$2M
AVERAGE DEAL SIZE
150+
SECTORS TRACKED

DealIndex Partners
Some of the
Featured Platforms
Media and Financial
Institutions
Partnering across
Alternative Finance

MINI-IPO
CROWDFUNDING IN
US: REG A+
CROWDFUNDING
$50M Equity Crowdfunding Under Regulation A under Title IV of the JOBS Act. Growth
companies raise up to $50 million from accredited and unaccredited investors in a mini-IPO
style offering serving as a potential alternative to venture capital or other institutional capital!
!
Case Study: Elio Motors
Elio Motors an American startup automaker founded in 2009. Elio Motors raised $17 million
from 6,600 investors in Dec 2015 on a Los Angeles based platform Start Engine, this was the
first company to make use of the recently approved Regulation A crowdfunding category in
the US, which allows unaccredited/ regular investors to invest alongside sophisticated /
accredited investors in the US. !
!
The company listed its shares at on the over-the-counter market on February 19 providing
liquidity opportunity for its shareholders. The share price for Elio Motors during the
crowdfunding raise was $12 a share and traded at $20-$24 a share on listing. This is the first
example of a company in the US making use of the new Reg A+ offering and subsequently
listing its shares.!
!
!

CROWDFUNDING IN
EUROPE
UK COMPRISES
80-90% OF THE
MARKET
The UK has been widely lauded as an innovator in alternative finance arena as the industry
has seen assistance from both elected and appointed policy makers. One of the key drivers
underpinning this development is the growing institutionalisation of the sector!
!
Online alternative finance in UK grew 84% to £3.2 billion from £1.74 billion in 2014.!
!
UK SMEs were the biggest beneficiaries as approximately 20,000 raised about £2.2 billion on
digital platforms during the year. !
!
Equity crowdfunding continues to grow rapidly jumping 295% to £332 million from only £84
million in 2014. This segment now represents 15% of all UK seed and venture funding.!
!
Institutional investors are playing a larger role in alternative finance with 32% of consumer
lending and 26% of business lending being driven by big money.!
!
!
!
!

TradeUp Export Capital Stats
15
TradeUp is the premier growth capital platform
for globalizing companies, an outperforming
segment:
• Its customers are typically US companies
that are starting export or globalization
• Companies have come to TradeUp seeking
> $200m over past 9 months
• Typical company has ~$3m revenues,
seeking $2m in capital
• TradeUp rejects ~85% of companies
• Working with partners and companies in
10+ countries
Main sectors
Average
revenue
($000s)
Total Capital
Sought
Financial Services
3,000
45,000
Healthcare
500
6,000
Tech / Clean Tech
1,000
76,600
Manufacturing
12,000
11,000
Project Finance
N/A
36,000

Combine alternative and public
markets and combine digital to
traditional finance
Hybrid Finance
16

Many Forces Drive Disruption
17
New finance models and
instruments
2. Distribution: Need for
new scalable cost-effective
distribution channels
3. Instruments: New
Alternative Finance
instruments
1. Capital:
Increased
requirements
to have
capital for
loans
4. Customers:
Look for
competitive
prices and
better ROI

1. Better Capital Efficiency
18
Investors
• Combining equity and lending enables, for example, to
1. Leverage equity investments
2. Get collateral for loans
• Investors can use platforms to attract more co-investors and
syndicate investments
• Participate in the securitization of p2p loans as an additional
option to invest
Banks
• Banks have regulatory requirements (e.g. Basel II / III) to have a
certain capital ratio for their risk-weighted assets
• Even well profitable loans can tie so much capital that
capital requirements make them to have sub par ROI
• Equity investors, other lenders, different lender seniority levels
and use of equity or loan from p2p as a collateral helps manage
the capital ratio
• Possible to develop instruments (funded through platforms) that
can offset loan liability or in cases work as a guarantee for loans
Ins*tu*onal Investors
or Lenders
P2P Lenders or
Investors
Required Capital
Less capital required,
if other investors or lenders
decrease risk of loans

2. More Effective Distribution
19
Platform as a Customer Interface
• Investors and lenders can operate in equity and lending
platforms
• Platforms take care of many needed processes like customer
acquisition, origination, KYC, Due Diligence, collection
• Typically possible to choose a risk level
• Open API also enables to automate a part or all of this work
• Requires trust in platforms, and agreements and T&C that are in
line by all parties
Automated Allocation to Smaller Ticket Size
• Pension funds and other large LP’s cannot handle small
investments (e.g. less than $500M) in a cost effective way
• Funds to make smaller investments have significant
management fees
• Technology enables the automation of smaller investments
based on given criteria
• Hybrid models combine automated processes and professional
work
Large Fund (e.g. $100B)
Small
Fund
Small
Fund
Small
Fund
Small
Fund
Investment Opportuni*es
Automated Inves*ng
Alloca*on PlaNorm
Management
fees

3. New Instruments for Investors
20
New Finance Instruments
• Alternative Finance offers new attractive investment opportunities
and its securitizations make the market more liquid
• Instruments to invest and lend money in platforms
• E.g. ‘p2p trust’ type instruments
• Securitization of online and p2p loans
• Risk management and guarantee instruments
• Work needed to find optimal regulatory and instrument models for
these instruments (e.g. Open-Ended, Closed-Ended, ETF, or
Evergreen fund)
• Crucial to have enough data from platforms and assets
Fund Simulators
• Technically implemented investment services that work like funds
• Investors can define their investment criteria, e.g.
• Geographical, industry sector, and risk level
• No costs from traditional management work
• Data and analytics needed to enable these products
Investment /
Lending
PlaNorm
Investment /
Lending
PlaNorm
P2P Fund
Crowd
Fund
Securi*za-
*on
Fund
Simulator
Investors

4. Customers Expect Better ROI and Prices
21
Enable Smaller Fees
• Competition in fund and wealth management business is more
and more about lower fees and more scalable models
• More effective and automated customer acquisition, investment
processes and more scalable investment models make it
possible to cut fees
• Data, Analytics and Artificial Intelligence offer new solutions to
manage and optimize investments and instruments
• APIs to cooperate with 3rd parties
Better ROI with Alternative Finance
• Alternative Finance, e.g. p2p loans, real estate and growth
capital, offers new high return opportunities to funds and
portfolios
• More uncorrelated assets and better diversification
• Need a scalable and cost effective solutions to invest in different
assets
• APIs to invest in Alternative Finance platforms
Investment / Fund Management
Open API
Robo-
advisor
Bank
Investment
advisor
Investment
plaNorm
Open API
Investors
Stock
Exchange
P2P
Lending
Equity
Crowdfund
Deal
Aggregator

What Enables All This?
22
1. Knowledge and Competence to Develop New Models
■ Combination of finance, banking, technology, and data science competences
■ Important to understand the API Ecosystem and innovate new business models
■ More global knowledge and mindset are needed
2. Data
■ Data enables institutional investors and banks to participate in the market
■ Data is the key component to develop new instruments and service
■ Advanced analytics and Artificial Intelligence (AI) enables new services and instruments
3. Technology
■ Open API
■ Ubiquitous back offices and middle ware for fundamental finance functions
■ Agile models to develop new applications on an open API back office
4. New innovation models
■ Building a new ecosystem, no one can do it alone
■ Accelerate innovation and ecosystem with partnering and open interfaces

Summary
23
Digital and Alternative Finance are changing finance value chain and products
■ More de-centralized models, e.g. based on API ecosystem and blockchain
■ From service silos to more more seamless collected services
Four key areas: 1) Capital, 2) Distribution, 3) Instruments, and 4) Customers
■ This is not only about technical, but it is one key driver to enable new services, business
models, better efficiency, and new finance instrument
■ Data is a key components for many new services
■ Develop fast – test – improve
Mainly due to regulation, differences in the US and European altfi markets
■ The UK has been the leading market, thanks to FCA’s open minded approach
■ The US market has been more for accredited investors, a mini-IPO market
■ Now more countries develop the regulation and many kind of markets emerge
Grow VC Group works in the core of these changes
■ Competence, technology, data, global presence, and constant innovating

Jouko Ahvenainen
jouko@growvc.com
+44 7889833165 / +1 6463636664
Grow VC Group – growvc.com
ENABLING
DIGITAL
FINANCE
24

Finance and
Services Infrastructure
Data, Research &
Consulting
Grow VC Group
Worldwide pioneer and leader
Crowd investing, peer-to-peer and digital finance enabler
Hong Kong - London - New York - San Francisco - Milan

Global leader of digital finance groups
■ Started its operations in 2009 being the pioneer to start digital finance service
■ Grow VC Group was the first in the world to launch an online startup equity
investing service in the world
■ The group includes 10 businesses
■ Grow VC Group companies have more than 100 active customers with millions of
end users globally having launched new digital finance services
■ The main hubs are in London, New York, San Francisco and Hong Kong
■ Several its companies are leaders in their own areas, e.g. Crowd Valley,
DealIndex and TradeUp Capital Fund
People
■ Grow VC Group’s management and founders have been listed as top influencers
in the world in digital finance, Fintech, crowdfunding and digital business
■ Our key people are serial entrepreneurs who have experience to launch several
new companies and products around the world to consumer and business market
■ Our people have been in executive roles to launch international corporates’
products to new markets and build data analytical approach for go-to-market and
sale
Grow VC Group
FinTech Firm of the Year
Award Winner 2015
26

Many Parties Work With Us
27