INVESTOR: BEST PRACTICE + Q&A

Markus Wagner

26th of Feb. 2015; @MarkusWagner

CEO - i5growth Inc. (Palo Alto) – www.innovationcenter.eu

Chairmen of Adv. Board - i5invest seed capital (Austria/Vienna)

Board AustrianStartups – Austrian Startup Association (non-profit)

Investment Committee Member – SpeedInvest (seed and Series A fund in Austria)

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MADE in AUSTRIA & Successful in the US (Silicon Valley)

CONGRATULATIONSTHIS WILL BE AN EXCITING TIME FOR YOU

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…known for Mozart, Sissi & Sound of Music

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…known for – Music & Culture

…part of your job will be educating aboutAustrian tech & startup scene

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Strong Austrian Brands

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and recently known for a lively, liberal culture & tech scene

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Vienna‘s Biggest Asset: 180.000 students in Vienna (40% int.)

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Notable EXITS (starting by 2010):• 2010: fatfoogoo – Digital River• 2010: greentube - Novomatic• 2010: jajah - Telefonica• 2010: 123people - PagesJaunes• 2011: RF-iT Solutions – Enso Detego• 2011: sensordynamics - Maxim• 2011: silverserver – Tele2• 2011: redcoon – Metro’s Media Saturn• 2011: dynaTrace - Compuware• 2011: payolution – Moneybookers / Skrill• 2011: checkfelix.com - KAYAK• 2012: Kununu - Xing• 2012: Tupalo – Herold / European Directories • 2012: Arztsuche24 – Herold / European

Directories • 2012: Blue-tomato – Zumiez Inc.• 2012: paysafecard - Skrill• 2013: tripwolf – German Publisher • 2013: SolveDirect – Cisco• 2013: Runtastic – Axel Springer• 2014: Immobilien.net – ImmobilienScout24• 2014: Wikidocs – Atlassian• 2014: MobFox – Matomy Media Group

(MTMY:LSE)

Notable Events (starting by 2012):

• 2012: Andreessen Horowitz/Citi Ventures investment into Jumio

• 2012: Blossom investment of seedcamp

• 2013: CodeShip investment of seedcamp and Techstars

• 2013: Former Expedia CEO invests in TourRadar

• 2014: CodeShip receives US Series A

• 2014: Foundertalks.org launches (brings YC alumni to Austria for experience exchange)

• 2014: Ulmon investment of Global Founders Capital

• 2014: 100% Austrian Team in YC patch

• 2014: Talenthouse investment of ProSiebenSat.1 Media AG

• 2014: Austrian team joins YC producthunt.com (founding team member)

• 2014: Austrian flatout joins Cisco’s EIR program

• 2014: Austrian Crate.io TechCrunch Disrupt Europe Winner

• 2015: ChatGrape Betaworks (US) investment

Austrian Ecosystem Exits / Notable Events

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AUSTRIAi5invest

USAi5growth

WE ARE LONG TERM PARTNERS (through all stages, 2/year):

START-UP MENTORING

SEED FUNDING

CORPORATE DEVELOPMENT / M&A ADVISORY

WE ARE LAUNCHPAD FOR THE US MARKET:

US MARKET ENTRY / STRATEGIC PARTNERSHIPS START-UPs EUREOPEAN VCs / ACCELERATORS OLD ECONOMY

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Portfolio Overview

#inspire, #innovate, #incubate, #invest, #internationalize

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Who we are – Our Team in Vienna – what‘s new

Founded 2007, Vienna - partner i5growth Inc. in Palo Alto

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Herwig SpringerCEO Corp. Dev.,M&A

h.springer@i5invest.com

+43 650 530 8976

Patrick ProkeschDirector Corp. Dev.,M&A

p.prokesch@i5invest.com

+43 676 303 4854

Paul WeinbergerPartner

Markus WagnerChairman ofAdvisory BoardCEO - i5growth Inc./ USA

AlexanderIgelsboeckAdvisory Board

Martin BrunthalerAdvisory Board

Georg NovakExecutive Assistant

g.novak@i5invest.com

+43 676 841 282 150

Bernhard LehnerPartner

Vlad GozmanPartner

Advisory Board Partner

US vs. Europe

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US vs. EUROPE – ACCESS TO CAPITAL

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66%

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Europe USA

Enterprise Value / Sales - Jan 2015

Enterprise Value / Sales

How do capital markets look at Internet Companies?

Source: Capital IQ & i5invest Analysis

US-based companies trade at a 66% premium above their peers in Europe.

Companies in the Anglo-Saxon Regiontrade at higher multiples in general.

Does being in the US add value for the sake of being in the US?

0.00

1.00

2.00

3.00

4.00

5.00

6.00

-

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

6,000.0

7,000.0

8,000.0

9,000.0

10,000.0

United Internet AG(DB:UTDI)

Yandex N.V.(NasdaqGS:YNDX)

Telecity Group plc(LSE:TCY)

Top 3 "European"

Enterprise Value EV / Revenues

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

-

50,000.0

100,000.0

150,000.0

200,000.0

250,000.0

300,000.0

350,000.0

Google Inc.(NasdaqGS:GOOGL)

Facebook, Inc.(NasdaqGS:FB)

eBay Inc.(NasdaqGS:EBAY)

Top 3 American

Enterprise Value EV / Revenues

What are the big players and their valuations?

USD in bn

US vs. EUROPE – IT’S A BIG GIRL’s & BOY’s GAME!

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US vs. EUROPE - IT IS EXPENSIVE THERE!

6/03/2015

Factors that should be considered when talking about a bubble

Interest rates are basically 0%

Total tech investments incl. M&A close to 2000

Rising pre-money values

IPOs with negative Earnings

Rising tech salaries

We are in Europe (with still big global potential)

BUT: We need to improve the ecosystem and create serial entrepreneurs with international exits

1

2

5

3

4

-

2,000.0

4,000.0

6,000.0

8,000.0

0

200

400

600

800

Tech investments

Number of Deals

Investments (USD in m)

2

4

0

20

40

60

80

100

The percentage of IPOs with negative earnings

3

0

20

40

60

80

100

Pre-Money Valuations

Later RoundSecond RoundFirst Round

(USD in m)

5

86000

88000

90000

92000

94000

96000

98000

2009 2010 2011 2012 2013 2014

Software Engineer Base Salary

(USD)

Source: i5invest analysis, PwC, DJ VentureSource, Jay R. Ritter / Business Insider and Glassdoor / BI.

What are silicon valley investors looking for?

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What are investors looking for?

1. Amazing management team (facebook, google, airbnb, …)2. Strong IP / technology – protection of IP3. It needs to solve a clear problem - clear product market fit4. User traction, great growth5. Revenues - proof of revenue potential6. Huge market size 7. Competitive landscape: Defensibility, entry barriers8. Capital needs9. Clear sales & go-to-market strategy10. Clear exit strategy 11. Sources of credibility & trust: known team-members, angels,

accelerators, …12. Office location: US / Silicon Valley / SF13. Visa issues: none

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…in the end supply and demand for investment opportunities drive the valuation

Star

tup

inve

stm

ent

oppo

rtun

ities

Angel investors

(Deals) experience and points of reference for

valuation

Industry knowledge

Angel network

Supply Demand

What is the value of a startup?

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THE BAD NEWS: The supply is huge, no euro investments

Hundreds of accelerators, incubatorsTens of thousands of startupsThousands of founder teams of ex-googlers, facebook, NASA, tesler, Microsoft, EA, …

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THE GOOD NEWS: Funding follows Success

Use your time in the valley to work on your success:• Think big – most probably your idea serves a too small market for

the valley (think 10x = 10 times as big)• Success means product – market – fit• Success means traction

• KPI’s• Customers• Revenues• Users, Traffic, conversions

• You will need a rock star team, with rock star execution skills• Build your network, you will need it later• Fail well = fast, learn, there are valuable leftovers, keep on going• Be open, the outcome might be different to what you think

• You might move & flip• You might change your product, customers, business plan, team• You might go back to Europe and even be more successful there

Come prepared

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Come prepared 1

1. Create a great linkedin presence (premium)2. Create a great Angel.co presence 3. Create a great crunchbase presence 4. Choose a time of interesting industry events5. Look for the right place to work (bay vs. SF, …)6. Look out for interesting accelerator programs 7. Look out for experts, evangelists in your space, they might

become angels later8. Meet competitors, connect with peers 9. Meet former employees of competitors and potential future

team members10.Act as you always have been here for a long time11.Bring a unlocked phone, multiple credit cards (or check)12.Bring English business cards, pitch deck, train the pitch

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Come prepared 2

13.Watch silicon valley show: http://www.hbo.com/silicon-valley#/

14.Start-up Class from Y Combinator Sam Altman in Stanford: http://startupclass.samaltman.com/

15.Reading Advice: http://www.amazon.com/Zero-One-Notes-Startups-Future/dp/0804139296

16.Start to read techcrunch frequently 17.Watch great company pitches on youtube, i.e.

TechCrunch Disrupt18.Learn about growth hacking: #500Distro

https://www.youtube.com/user/500startups19.Look for the right meetups (www.meetup.com) 20.Sign up for newsletter: http://www.aicsv.at/21.Go Silicon Valley - Austrian Pavilion Group

See you soon, in the valley!

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Startup Mentoring and Seed Funding

Venture 1 Venture 2 Venture 3 Venture 4 Venture 5

Innovation Management and Product Strategy

Go-to-Market Strategy

Company Setup and Office Infrastructure

IT Dev. & Operations, Accounting, Finance

Seed Funding, Business Planning & Public Funding

HR & Recruiting

Marketing, PR & Media Planning

Social Media Marketing and SEO

Development

Project Management

Product Management

Development

Project Management

Product Management

Development

Project Management

Product Management

Development

Project Management

Product Management

Development

Project Management

Product Management

help ideas to grow

?

International Business NetworkBusiness development