Today we're going to talk about crowdfunding. Now, crowdfunding tends to attract a lot of attention in press, with researchers, by industry people, and there's normally a lot of excitement around crowdfunding and some of the things that might be possible using crowdfunding. So we're going to look at crowdfunding in more detail. However, the first thing to recognize, is there are many different kinds of crowdfunding. You need to be careful because the term crowdfunding is often used loosely and widely, whereas within crowdfunding there many different categories and in each of those categories the markets are different, the investors are different, the securities are different, the returns are different. So it's really important to first understand what are we talking about when we're talking about crowdfunding. So what I've done is, I've listed out three broad kinds of crowdfunding. So the first is peer-to-peer lending, and this is the one that first start-off took off if you will, and so think of Prosper or Lending Club. The idea here is, lenders and borrowers get together and you use the wisdom of crowds to have people fund other people. So the idea is I want a loan, I want to remodel my kitchen or build a car or buy a car or consolidate my dad, I can do a posting and whoever feels I'm a worthy cause they can say, yeah, I'll lend you $50 or a $100, this is the interest rate. If there are enough people willing to do that, then there'll be some market clearing rate and I'll get funded based on that. So that's the notion behind peer-to-peer lending that we can do away with the intermediary, with the bank, we can just get funded by our peers. Now, having said that, that's very different from rewards space crowdfunding. So what's reward space crowdfunding? So think of Kickstarter. So you have a great idea, project. Think of a Pebble watch or the Coolest Cooler. What do you do? You can go to Kickstarter, do a little video, explain the concept, ask investors to put money in, and in return you give them rewards. Now, what level of rewards? Well, depends on how much money you put. You give $50 maybe you get a T-shirt, you give $500 maybe you'll get the product depending on what the product is. So there are different categories of rewards. So that is the rewards-based crowdfunding, a very different model than lending or peer-to-peer crowdfunding. Then last but not least, is equity crowdfunding. This is really what got people excited about crowdfunding, saying that there are these companies with great potential, you could earn very high return, but small investors can't invest. So why can't we let the crowd participate? You have the potential for high upside, of course you also have the potential for being wiped out. But then you can participate in projects that you feel worthy, and again, without having an intermediary in the middle right now. So you can see these three different kinds of crowdfunding. So first, the markets are different, the investors are different, the securities are different. So in lending, the security is dead, in equity crowdfunding the security is in equity, and in rewards crowdfunding the security is neither dead nor equity. The amounts involved are very different, the investor types are very different, the kind of people you have investing in peer-to-peer lending are different from the ones in rewards-based crowdfunding, and are different from the ones in equity crowdfunding. Now, equity crowdfunding itself actually has many different ways of crowdfunding under it, there are three different ways governed by three different regulations and we're going to talk a lot more about that. But it's important to understand that. So if someone says, oh, I want to do crowdfunding. You first need to narrow it down and say what kind of crowdfunding are we talking about. Is it peer-to-peer lending? Is rewards-based? Is it equity? Then drill down. So what we will do is, we will cover all three of these kinds of crowdfunding and try and understand what are these markets like, we'll look at who are the investor types, when would you list some of these markets, and what are the corresponding regulation. So we'll start with peer-to-peer lending because this has been there for a little while, this is a little bit more of a history, and we can look at what does this market look like and how has it evolved over time. We'll talk a little bit then about rewards-based crowdfunding. An equity crowdfunding is relatively new, but we need to understand the different types of regulation and the different forms in which it can be done. So next we will go and start with peer-to-peer lending.