An iBelay Update

An iBelay UpdateAn iBelay Update

January 27, 2000

AgendaAgenda

• iBelay

• FastIdeas

• Colorado

• Market focus for investing

• Investments Status

P4 P15P3P2

6 Month Execution

Venture Accelerator

$100 M Fund

iBelay StrategyiBelay Strategy

• 15 portfolio companies in 2000• Position as public operating company• 10 of 15 companies will fit the

operating model• 2 liquidity events in 2000• Position for exit by Q4 2000

– IPO of operating company– sell to ICG, CMGI, Safeguard– long term hold

StructureStructure

iBelay, LLC•Fund of Limited Partners

FastIdeas, LLCPete Estler, Managing Member

P4 P15P3P2

FastIdeas, Inc.Data centerTechnical consultingRecruitingFinance/admin and legalPhysical real estateBusiness planning and strategyMarketing communications

P1

Employees

Cash Cash Services Services Common SharesCommon Shares Preferred SharesPreferred Shares Non-Statutory OptionsNon-Statutory Options

iBelay Partners, LLCPete Estler & John

Moinester

Status of FundingStatus of Funding

• Closed on $45 M - Dec. 6th

• 2nd Closing Scheduled Feb. 16th

• $55 M Targeted for 2nd Round– Shaw Comm. = $10 M– Shaw Family = $5 M– Tango = $??– Barnard = $50 M

• Possible Debt Financing for 2nd Round Deals

• Re-Investment Strategy

Deals StatusDeals Status

Deals done

• DataPlay

• Epidemic Marketing

• NetLibrary

• Productbuzz

• Ereo

Deals pending

• FastIdeas• Grant Seekers• Contact Zone• Sub-Prime• Advantage

PEO• RT/One

Target Deal StructuresTarget Deal Structures

Our Idea Their IdeaiBelay 70% 60%

Founder 0% 20%

CEO 15% 10%

Mgt/Emp* 15% 10%

*Includes FastIdeas Portion

THE iBELAY THE iBELAY ACCELERATORACCELERATOR

Accelerator Business ModelAccelerator Business Model

• Funded and 100% owned by iBelay

• $2M invested

• Break even on services delivered

• Focus– support execution of 6 month acceleration plan– success = 1st round funding within 6 months

= company stands on its own

Accelerator ServicesAccelerator ServicesAccelerator ServicesAccelerator Services

• Data center• Technical consulting• Recruiting• Finance/admin and legal• Physical real estate• Business planning and strategy• Marketing communications• Networking/Rolodex

Acceleration ProcessAcceleration Process6 month focus on four objectives

–prove the business model; rigorous metrics

–1st Customer–management team –scalable systemwrite

biz planprove business model

scale business

1 mo.$25 k 4-6 mo.

$1.5 M 3-12 mo.$15+ M

IPO/Exit

Accelerator ManagementAccelerator Management

Options Pool

P1 P2 P3 P4 P15

Tom Ball

Data Center

TBD

Staffi ng

J ohn H ickey

Operations

Larry Engle

Fin/Lgl/Adm

TBD

Marketing

P ete Es tler

CEO/P res ident

5%5% 5% 5% 5%

COLORADOCOLORADO““The Wild Wired West”The Wild Wired West”

COLORADO: COLORADO: The Wild Wired WestThe Wild Wired West

• job growth• educational attainment• economic vitality

The nation’s leader in...

• 2nd highest concentration of hi-tech workers• 2nd highest percentage of population online• 3rd highest percentage of PC households

• 3rd highest percentage of Web-enabled businesses

A wired work force...


• #3 domestic relocation destination• Governor’s Commission on Science and

Technology• Colorado Institute of Technology

– $250M initiative to build the “MIT of the West”

• Reasonable cost of living– Denver: 90% San Francisco, 67% Boston– Boulder: 68% Menlo Park, 84% Cambridge

Future forces...



Future forces…VC investment in formative stage Internet ventures: Q1-3, 1999



Per Capita

0 5 10 15 20 25 30

CA

MA

CO

WA

TX

NY

NJ

PA

VA

FL

$58.1 M invested in 1st three Quarters of 1999

Colorado’s Anchor Colorado’s Anchor Technology CompaniesTechnology Companies

Colorado’s Anchor Colorado’s Anchor Technology CompaniesTechnology Companies

THE DIRECT MARKETING THE DIRECT MARKETING OPPORTUNITYOPPORTUNITY

DM &Brand Advertising: $370B in 2003DM &Brand Advertising: $370B in 2003

1999 $107.9

$173.7

2003 $148.5

$221.6

Brand AdvertisingDirect Marketing

• iBelay will capitalize on shifts within DM

7.1% CAGR

2003

$52.7

$26.3 $84.5

$21.7$11.5$7.9$5.5$17

Direct Mail DR TVTelemarketing NewspaperMagazine RadioInternet Other

1999

$41.8

$20 $66.2

$17.1$9

$6.1$0.75

$13.5

DM Break Out: $222B in 2003 DM Break Out: $222B in 2003

• iBelay focuses on the Internet channel

6.2% CAGR

Online Advertising Media Online Advertising Media Spending TrendsSpending Trends

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

1999 2000 2001 2002

Jupiter

Forrester

YankeeGroup

• 51% CAGR over the next 3 years

2003

35%

65%

Online Shift to DM: $5.5B in 2003Online Shift to DM: $5.5B in 20031999

75%

25%

• DM share of Interactive advertising swells from 25% in 1999 to 65% in 2003

64.3% CAGR

2004

$365

$1,300

$114

$16.8

Advertising EcommerceEBPP CRM

Email the DM ‘Killer App’Email the DM ‘Killer App’

• Email poised to become the cornerstone of multiple high-growth markets

1999

$255

$51$15 $3.7

Email TrendsEmail Trends

• The most widely used Internet application• 99M Americans sent 335M emails daily in

‘99– number of boxes will double within 3 years– daily volume will quadruple

• Distinction between email messaging, marketing and customer service blurring

OPPORTUNITIES RESULTING OPPORTUNITIES RESULTING FROM BROADBANDFROM BROADBAND

Shift in Consumer BehaviorShift in Consumer Behavior

• Effects– More Time Online– Access from

Anywhere– More Online

Spending

• Causes:– Lower Cost– Availability– Ease of Installation– Consistency of

Promotion

•Consumers get What they want, When they want , Where they want

Why Broadband?Why Broadband?

• Today vs. Tomorrow– Which would you choose?

• 56.6kbps vs. 36mbps Connections• Dial-up vs. Always on • Text based vs. Rich, Interactive Content• Expensive vs. Cheap Broadband Access• Lines at the Mall vs. e-Commerce

Anywhere

AT&T Projection :

253% CAGR

DLJ Projection : 76% CAGR

100

1,000

10,000

100,000

1,000,000

1998 1999 2000 2001 2002 2003

Gig

ab

its p

er

Seco

nd

Internet Network capacity doubles every 9 monthsInternet Network capacity doubles every 9 monthsInternet Traffic doubles every 100 daysInternet Traffic doubles every 100 days

Source: Red Herring Feb. 2000Source: Red Herring Feb. 2000

Bandwidth Demand ProjectionsBandwidth Demand Projections

OPPORTUNITIES RESULTING OPPORTUNITIES RESULTING FROM THE SHIFT FROM PCs FROM THE SHIFT FROM PCs TO INTERNET APPLIANCESTO INTERNET APPLIANCES

Information Explosion not Just Information Explosion not Just for PCsfor PCs

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1995 1996 1997 1998e 1999e 2000e 2001e

Millions of Content Windows

Includes Web pages and cable and broadcast TV channelsSource: McKinseye=estimated CAGR 150%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1995 1996 1997 1998e 1999e 2000e 2001e

Millions of Content Windows

Includes Web pages and cable and broadcast TV channelsSource: McKinseye=estimated CAGR 150%

84.7% CAGR for Internet Appliances84.7% CAGR for Internet Appliances

Market Shifts away from PCsMarket Shifts away from PCs• Mobility revolution

– more mobile devices than PCs connected in 2003– 1Billion handsets by 2003– 51% growth in Personal Companions

• Device independence– browser access to data and applications

• Home networks– 10 M U.S. homes will be digitally remodeled by ‘02

$35 B Wireless Data Rev. in Europe by 2003$35 B Wireless Data Rev. in Europe by 2003

Wireless Internet AccessWireless Internet AccessPortable

PCs37%

Handheld Devices

7%Smart

phones56% Portable

PCs24%

Handheld Devices

6%Smart phones

70%

17.2 M Wireless Data

Computing Devices in

2000

134.3 M Wireless Data

Computing Devices in 2004

2 Billion Short Messages per Month in Europe2 Billion Short Messages per Month in Europe

Wireless Data RevenueWireless Data RevenueEuropean Market Forecast by ApplicationEuropean Market Forecast by Application

services/e-commerce = $18 Bservices/e-commerce = $18 Bcorporate extensions = $12 Bcorporate extensions = $12 B

2003

Device IndependenceDevice Independence

Hardware:cell phone

PDA

television

pager

radio

Application:voice

management

video

e-mail

music

Home NetworksHome NetworksPenetration and RevenuesPenetration and Revenues

0

10

20

30

40

50

60

70

80

1999 2000 2001 2002 2003

Mill

ion

s o

f U

S H

ou

seh

old

s

0

200

400

600

800

1,000

1,200

1,400

1,600

Mill

ion

s o

f $

Networked HouseholdsOn-line Households

PC HouseholdsRevenues from Home Networking

Why One Market Segment?Why One Market Segment?

Convergence of course• Phones were used for talking• Pagers were used for paging• PDAs were used for information

Shift to application centric - platform independence

• Phone, pager, PDA - just a device to run applications that–carry voice, message, store information

Wireless Data EnvironmentWireless Data Environment

Wireless data

Software

Content

Wireless

op

erators E

qu

ip.

and

dev

ices

iBelay’s Focus

Opportunities/ConclusionOpportunities/Conclusion

• Applications that take advantage of information explosion served to all Internet/Information Appliances

• Applications that take advantage of mobile platforms/carrier technologies/protocols

• Sharpest focus on intersection with direct marketing, broadband, and e-commerce

CAPITALIZING ON BUSINESS CAPITALIZING ON BUSINESS TO BUSINESS (B2B) TO BUSINESS (B2B)

COMMERCE SHIFTING FROM COMMERCE SHIFTING FROM OFF-LINE TO ON-LINEOFF-LINE TO ON-LINE

B2B Market SpaceB2B Market Space

• 1/4 of all B to B purchases made online by 2003

• Software spending to support B2B commerce– $1.65B in 1999 – $22.5B in 2004

• $43 B online trade of hard goods in 1998, will surge to $1.3 T by 2003 – an annual growth rate of 99%.

Reasons for ShiftReasons for Shift

• Attracts new customers

• Reinforces customer relationships

• Improves sales channels

• Improves post-sale services

• Removes inefficient distribution

TrendsTrends

0

200

400

600

800

1000

1200

1400

B2C 8 18 33 52 76 108

B2B 43 109 251 499 843 1331

1998 1999 2000 2001 2002 2003

E-commerce Breakout (B $)E-commerce Breakout (B $)

STATUSSTATUSDeals Done

•DataPlay

•Epidemic Marketing

•NetLibrary

•Productbuzz

•Ereo

Business ConceptBusiness Concept

• Web enabled digital content distribution media and storage device for portable information appliances and hand-held consumer entertainment devices

• Drive and Media will be about the size of a match book

Deal StructureDeal Structure

• Deal


• Viral Email Marketing

• Email That Pays

• True One-to-One Marketing

• B-to-C Affiliate Model

• Launched in November


Shares Ownership

• Founders 5,350,000 39.95%• Sequel VP 3,501,406 26.14%• World VP 1,250,000 9.33%• Option Pool 3,000,000 22.40%• Other 291,867 2.18%


• E-books for institutions and individuals

• $32 B U.S. and $100 B non-U.S. English publishing market

• Targeting 50 Million U.S. Library patrons

• Launched product in mid ‘99

• iBelay can help create Internet and data industry partnerships

Funding SummaryFunding Summary

Funding History• Series A 8/98

– $5 M

• Series B 5/99– $25 M

• Series C 10/99– $72 M

• Series D 1/00– $15-20 M

iBelay’s Investment• Series D• $5 M• x,xxx,xxx Preferred

Shares• Y.Y% diluted

ownership


• Become the Internet’s largest and most robust provider of product information-focused business communities.

• Our content aggregation and ecommerce referral strategy uniquely positions us to become the leading infomediary in the emerging $1.5 trillion online B2B ecommerce market


• Series A Convertible Preferred• Funding Sought $10 to $12 million• max. $4 million Co-Investment by Current

Sareholders (pari passu)

Ereo? - No infoEreo? - No info

STATUSSTATUSPending Deals

•FastIdeas

•Grant Seekers

•Contact Zone

•Sub-Prime

•Advantage PEO

•RT/One

An iBelay Update

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