1

Overview

§  Introduc0on:WoodsideCapitalPartners,RonHeller

§  TypicalFinancingCycleforaU.S.Company

§  PrimaryEarlyStageFinancingSourcesintheU.S.§  Angels/AngelGroups§  Accelerators§  VCs§  Strategics/CVCs

§  ForEachStage§  Overviewoftypicalsize,stage,structure,investmentlevels§  Applica0onprocessorhowtoaccessthem

§  TipsforRaisingCapital

§  M&AMarketHighlights(0mepermiPng)

WCPisaglobal,independentinvestmentbankthatprovidesworld-classstrategicandfinancialadvicetoemerginggrowthtechnologycompanies

§  Services:Primarilysell-sideM&Aadvisory;withsomebuy-sideadvisory,strategicpartnership,privateplacement(debtandequity),andothercorporatefinanceservices

§  M&Atransac0onvaluesaretypicallybetween$20Mand$200M

§  People:25professionals;backgroundsfromtopinvestmentbanksandentrepreneurs/CEOs

§  OfficesintheU.S.andEurope:HeadquarteredinbothCalifornia(PaloAlto)andEngland(London)

§  InternaDonalFocus:40%+oftransac0onsarecross-border

§  GlobalNetworkofPotenDalBuyers:Strongrela0onshipswithStrategicPartnersandPEfirms

§  DepthofExperience:Foundedin2001:over$8billionintransac0onvalue

§  IndustrySectors:Things —  ADAS

—  Ar0ficialIntelligence─  Cloud/EnterpriseSocware─  InternetofThings─  CyberSecurity

─  DigitalAdver0sing/Marke0ng─  Ar0ficialIntelligence─  HealthTech

─  Communica0ons/Networking─  Media─  DigitalEntertainment

WoodsideCapitalPartnersOverview

2SALEOFCOMPANY

SALEOFCOMPANY SALEOFCOMPANY SALEOFCOMPANY SALEOFCOMPANY SALEOFCOMPANY SALEOFCOMPANY SALEOFCOMPANY

SALEOFCOMPANY

25+yearsofexperienceadvisingtechnologycompaniesonM&Atransac;onsandprivateplacements

• PriorExperience:o  NewforthPartners(bou0queTechM&Afirm)o  CSFB’sTechnologyGroup:EquityPrivatePlacementsGroupo  SmithBarney’sTechnologyGroup:NYC,LondonandSanFranciscoo  BainandCompany(StrategyConsultant)o  NuMarketCommunica0ons(privatecableandtelevisionservicesprovider):FinanceandOpera0onsManager

• EducaDon:o  BAdegreeinEconomicsfromStanfordUniversityo  MBAfromHarvard’sGraduateSchoolofBusiness

• RepresentaDveClients:Smaato,Spotzot,SenseNetworks,3Scale,Infrascale,Ekahau,Oerlikon,Technicolor,GearyLSF,Conformia,Eagleware,EdgeDynamics,iSystems,Reciprocal,BeHere,ZhoneTechnologies,OpSource,Sanctum,ChinaNetcom,Eachnet,Vivendi-Universal,KestrelSolu0ons,Interwoven,CommerceOne,LucentDigitalRadioandSculpturedSocware

RonHeller,ManagingDirector,ron@woodsidecap.com

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Founder / Co-

Founders Friends &

Family VCs Strategics PE /

Growth Equity

TypicalCompanyFinancingLifecycleforaSuccessfulStartupCompany

Angels/ Accelerators

IPO Sale

Debt

5

Founder / Co-

Founders Friends &

Family PE /

Growth Equity

TypicalCompanyFinancingLifecycleforaSuccessfulStartupCompany

IPO Sale

Debt

VCs Angels/

Accelerators Strategics

6

GlobalVCInvestmentsbyInvestorCategory(Angels,EarlyVC,LaterVC)

7

Angels and Angel Groups

OverviewofAngelsandAngelGroups

§  Typicallyhighnetworthindividualsinterestedinmakingearlystageinvestments

§  Maybeorganizedintogroupsorclubs,buttypicallymakeindividualdecisions

§  Investmentamountvaries;commonly$25Kto$100Kinaroundof$100Kto$1million

§  Ocenprefertoinvestinanindustrywheretheyhaveexperience§  Investorsmaytakeac0ve(butgenerallyunpaid)roletoassistcompany’sdevelopment

§  Investmentstructuretypicallyaconver0blenote.Theinvestmentisconver0bleatadiscounttothepriceofafutureround(maybesubjecttoacap)andearnsaninterestrateun0lconverted

§  Canbeiden0fiedandaccessedviaGust,AngelList,directly(website)orthroughamember

§  Mostgroupshaveaspecificapplica0onform/process,andsomehaveafee§  Selectedcompaniespresenttothemembershipatperiodicmee0ngs

8

Representa0veAngelGroupsintheSanFrancisco/SiliconValleyArea

9

AngelAc0vityinCalifornia

10Source:AngelResourceIns0tuteandPitchbook,HaloReport2017:AnnualReportonAngelInvestments

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Accelerators

OverviewofAccelerators

§  Makesmallequityinvestments(e.g.,$20Kto$100Kfor5%to15%ownership)§  Mayhaveco-investmentrightsforfuturerounds

§  Offersharedworkspace,conferenceroomsandotherofficefacili0es

§  ProvideaccesstoIT,legalandfinancialresources(ocenatdiscountedrates)

§  Mayfocusonspecificver0cals(Healthcare,Educa0on,VideoGames),countries,orcorporateecosystems(suchasMicrosoc)

§  Maylimitperiodofusage,to3or6months,thenrequirecompaniesto“graduate”

§  Mayhavefounderdinnersorothereventsthatfeatureexperts,suchasbankersorlawyers,orwell-knowninvestors,execu0vesoradvisors

§  “DemoDays”provideforumforfounderstopresenttootherinvestorsandguestsoftheaccelerator

§  Mayexpectcompanytobebasedintheacceleratororrelocatenearby

§  Mosthaveanonlineapplica0onavailableontheirwebsitesforeachclasscycle

12

SF,NYCandSiliconValleyaretheMostPopularGeographicRegionsintheU.S.

13Source:CityLab

AcceleratorsintheSanFrancisco/SiliconValleyArea

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15

Venture Capital (VC)

OverviewofTradi0onalVentureCapitalIndustry

§  Firmsthatinvestfunds(primarily)fromins0tu0onalinvestors(theirlimitedpartners),includinginsurancecompanies,pensionfunds,anduniversityendowments,andwealthyindividuals

§  ThesizeoftheVCfirmcanvarydrama0cally,ascanthetypicalsizeoftheinvestment,andthestageofcompaniestheyinvestin(fromseedtolatestage)

§  MostVCsinvestwhilecompaniesareintheloss-makingphase.Whencompaniesbecomecashflowposi0ve,theycangenerallycangethighervalua0onsfrom“growthequity”PEfirms

§  Inconnec0onwithaVCround,oneormoreoftheindividualsfromtheVCthatleadstheroundwillocentakeaboardseat

§  Theearliertheinvestmentinthecompany’sdevelopment,thehighertherisk,whichgenerallytranslatesintoalowervalua0onandhigherpoten0alreturn

§  Theinvestmentstructureisgenerallyaconver0blepreferredequitysecurity(conver0bleintocommonequitywithaliquida0onpreferenceuponaliquidityevent)

§  Recenttrendshavebeentowardslargerfundsandlargerandlaterstageinvestments§  Socbank’sVisionFund($100B),SequoiaCapital($12B),moreunicornfinancings($1B+valua0ons)

§  ThebestwaytogetanaudiencewithaVCistomeethimorheratanevent,orbeintroducedtohimorherthroughsomeonewhoknowshimwell,suchasanotherentrepreneur,alawyerorabanker

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VCsInvestmentsintheU.S.(2012-2017)

17Source:PwC|CBInsightsMoneyTreeTMReportQ12018

EarlyStageVCsinSanFrancisco/SiliconValleyArea

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California/SFBayAreaistheMostWell-FundedRegion

19Source:PwC|CBInsightsMoneyTreeTMReportQ12018

VCs:Top5SectorsintheU.S.

20Source:PwC|CBInsightsMoneyTreeTMReportQ12018

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How to Get Financing

§  Large,GrowingMarkets(tosupport10x+Returns)

§  Disrup0veTechnologies/Solu0ons§  Businessplanwithcompellingini0alfocusplusabilitytoexpandover0me§  Beginwith“MVP”–minimumviableproduct,thenrepeatedlyiterate,andimprovebasedonuserfeedback

§  Demonstra0onofCommercialAcceptance§  Ifpre-revenue,growthinotherMetrics,suchasdownloads,pageviews,orbetausers

§  StrongCEO/Management/TrackRecord§  Passionate/hungry,charisma0c,leadershipability§  Resilience(nevergiveup),abilitytosolvevastrangeofproblems§  Abilityto“sell”(beaneffec0vespokespersonandsalespersonforthecompany)andraisecapital§  Opennesstofeedbackofallkindsandinputfrominvestors(“coachability”)

§  Geography(local)–VCswanttheircompaniestobewithin1hoursdrive

§  HighMargins

§  BarrierstoCompe00on(patentedtechnology,partner/customerrela0onships)

§  MarketLeadership(winnertakeall?,networkeffects?,virtuouscycles?)

§  CapitalEfficiency22

WhatdoEarlyStageInvestors(Angels,Accelerators,VCs)LookFor?

§  InvestmentDocuments§  Execu0veSummary(1–2pages),InvestorPresenta0on,BusinessPlan(financialmodel/projec0ons/

assump0ons,useofproceeds,analysisofcustomerandcompe00on)§  Keymetrics,suchasCAC(customeracquisi0oncost)andCLTV(customerlife0mevalue)

§  Coreteam(CTO,CFO,VPofSales/Marke0ng)

§  Teamofadvisors§  Legal,financial,technology,targetedmarketexper0se

§  Listoftargetedinvestors

§  Veryshortexplana0onofyourbusiness§  Whatdoyoudoandwhatproblemdoesitsolve§  “Elevatorpitch”

§  Prac0ceyourpitch,presenta0on,andanswerstocommonques0ons§  WatchSharkTanktoseegoodandbadexamples(hzps://www.youtube.com/watch?v=k3PY_p_M-8w)§  Don’twatchHBO’sSiliconValley(oratleast,don’ttakeitseriously!)

§  hzps://www.youtube.com/watch?v=3T6X-8oSPUE

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Pre-financingPrepara0on

ConsiderReloca0ngtoSanFrancisco/SiliconValleyArea?

§  Mostwell-developedecosystemintheworldforstart-ups§  Largestpoolsofearlystageinvestors(VCs,angelgroupsandindividuals)§  Accesstowidevarietyofeventsandresourcesthatsupportstart-upecosystem§  World-classtechnicaltalentandotherstart-upemployees§  Otherhighlyexperiencedprofessionaladvisors(bankers,lawyers,accountants,formercompany

execu0ves

§  SiliconValleyVCstypicallydonotinvestincompaniesthatarenotbasednearby§  Iftheyinvestinnon-UScompanies,theyocenhaveadedicatedfundfortheregionandprofessionals

basedintheregion(oranaffilia0onswithalocalfirm)

§  Abilitytoassesstopcompe00on,aswellasriskthatalargecompany(Google,Facebook,etc.)willentermarket(“killzone”)

§  Rela0onshipsneedtobebuiltoverextendedperiodof0me

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25

Strategics/ Corporate Venture Capital (CVC)

OverviewofCorporateVentureCapital

§  Aninvestmentreceivedbyanearlystagecompanyfromanunaffiliatedcompanyasanalterna0veto(orsupplementto)venturecapital

§  Theseinvestmentsaregenerallymeanttobestrategicinnature,andresultinameaningfulnon-financialbenefittothecorporateinvestor§  Leveragethetargetcompany’snewtechnologyorproduct;learnaboutanew

marketorapplica0on(suchasAIordrones)§  Leveragelargercompany’smanagement/marke0ngexper0se,manufacturing

plants,distribu0onchannels,etc.

§  MostCVCcomesfromcompaniesthathaveexplicitstrategicinvestmentmandatesandemployeesdedicatedtothisfunc0on§  However,aCVCgenerallyneedsasponsor/strongsupporterfromabusiness

division§  Objec0veisocentobecomemorecompe00veandadapttochangingmarkets

§  In2017,CVCsrepresented$31.7Binfinancingacross1,791dealsglobally(CBInsights).CVCspar0cipatein~20%ofVCdeals(upfrom15%fiveyearsago)

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§  FuturerevenueGrowth§  Maybe“offensive”(proac0vegrowth)or“defensive”(fendoffnewcompe00on)

§  “TryBeforeYouBuy”§  ReduceAccoun0ngImpactofLosses(vs.acquisi0on)

§  Technology,Products,PeopleorGeographicMarkets§  Tofillagap,orbeabletopursueanewopportunity

§  Market/Product/TechnologyKnowledge§  Especiallyfornewtechnologiesthatmayimpactcorebusiness

§  BezerInsightintoSmallerCompany’sStrengths

§  Op0ontoAcquireCompany(RightofFirstRefusal)

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WhatdoCorporateInvestors(CVCs)LookFor?

OtherStrategicPartnerFinancingConsidera0ons

§  Similartosellingthecompany,exceptthetransac0onisfor<50%(minorityinvestment)ratherthan>50%(majority,controlinvestment)

§  Acommercialbusinessrela0onshiporstrategicpartnershipmayberequiredforaninvestmentfromastrategicpartner

§  Strategicinvestmentsmayrequiremore0metocomplete§  Corpora0onsmoveslowly,moreapprovalsrequired,businessrela0onship

nego0a0ons§  Venturecapitalistsgenerallydonotlikeforstrategicstoinvestin“their”rounds

§  Partlyduetoslownessandunpredictabilityofstrategics,andalsobecausetheypreferforthestrategicstoinvestacertheirround,andatahigherprice

§  Developrela0onshipswithbusinessunit/productexecu0veexecu0ves

§  MaintaincleanfinancialsandIPownership

§  Don’tagreetodistribu0onexclusivityorRightofFirstRefusal

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CVCDealsbyRegionandIndustryVer0cal

29Source:GlobalCorporateVenturing

MostAc0veCVCInvestors(2017)

30Source:CBInsights

GlobalCVCDealsReachingNewHighs

31Source:CBInsights

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M&A Market Overview

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GlobalM&AVolume2001-2017(US$Trillion)

0,3 0,2 0,2 0,4 0,7

1,0 1,0 0,8 0,5 0,4 0,4 0,4 0,5

0,8 1,4

0,9 0,9

1,4 1,1 1,3

1,7

2,3

2,9

3,6

2,4

1,8 2,3 2,4 2,3 2,3

2,8

3,1

2,9 2,8

$1,7

$1,3 $1,5

$2,1

$3,0

$3,9

$4,6

$3,2

$2,3

$2,7 $2,8 $2,7 $2,8

$3,6

$4,5

$3,8 $3,7

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

>$10bn <$10bn

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GlobalM&A:2017Takeaways

§  AresilientM&Amarket:The2017globalM&Amarketposted$3.7trillioninannouncedvolumes,notwithstandingsubstan0alglobalgeopoli0caluncertainty

§  Cross-borderAcDvity:Cross-bordertransac0onsaccountedfor30%ofoverallvolume,meaningfullylowerthan36%in2016androughlyinlinewith31%in2015

§  MegadealsSlowDown:Thenumberof$10+billiondealswasdown5%(35dealsin2017vs.37dealsin2016),inpartreflec0nganuncertainregulatoryenvironment

§  TransformaDveandDisrupDvedeals:Severalstrategictransac0onsoccurredin2017,ascompanieslookedforopportuni0estoinnovatecorebusinessmodelsandmi0gatetechnologydisrup0on

§  ManyDealsWithdrawn:Thevolumeofwithdrawndealsin2017was$658billion,23%lowerthan2016and15%higherthan2015volume,partlyreflec0ngcon0nuedpressurefromregulators

§  U.S.TaxReform:ThesweepingtaxreformbillCongresspassedinDecember2017loweredtheU.S.corporatetaxrateto21%,andmayleadU.S.companiestorepatriatecashtobuyotherU.S.assetsandsellratherthanspinoffselectedsubsidiaries

§  LeadingSectors:Themostac0vesectorsbydollarvolumewere:diversifiedindustries,technology,realestateandhealthcare

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US/Tech:M&ATakeaways

§  SeveralStrongFundamentalsSuppor0ngRobustM&AAc0vity§  Highequityvalues,lowinterestrates,strongcorporatebalancesheets,loworganicgrowthopportuni0es,manyPEfirmswithdrypowder,availabilityofdebt

§  Fortech,2017wasadownyearrela0veto2016intermsofnumberanddollarvalue;about20%slowerin2017.PeakwasQ22016

§  Equityvalua0onsoftargetsveryhighreducingappealandreturnstobuyers§  Limi0ngfactorisnotenoughbuyersforallthecompaniesformed

§  Numberofpubliccompanieshasdeclined50%overthepast15years

§  Fourprimarybuyergroups:TechTitans(29%);Cross-Industry(16%);Interna0onal(29%);PE/FinancialSponsors(34%)

§  Cross-industryhasemergedmorerecently,andisgrowingrapidly

§  PEfirmsalsoincreasedtheirac0vityin2017

§  Interna0onaltransac0ons,especiallywithChina,hasslowed

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GlobalM&A:2018Outlook

§  AcDveM&AenvironmentconDnues:Weexpectstrongdealvolumein2018ascompaniescon0nuetolookforopportuni0estobolstermodestorganicgrowth

§  SectorConsolidaDon:Con0nuedsectorconsolida0onfueledbystrongequitycurrency§  DisrupDonDrivingM&A:Rateoftechnologicalchangeacceleratesdisrup0onacrosssectorsanddrivescross-sectorM&A

§  RegulatoryandGeopoliDcalChallengeswillRemain:EffortsbytheU.S.DepartmentofJus0cetoblocklargeacquisi0ons(suchasAT&T/TimeWarner),coupledwithincreasingscru0nyaroundChineseinvestmentsintheU.S.(aswellasincreasedM&Ascru0nybyChineseregulatorsofdealswiththeU.S.),demonstratethattheregulatoryenvironmentmayremainchallenging

§  U.S.TaxReform:U.S.companieswillbenefitfromalowertaxrateandtheabilitytorepatriatecashtotheU.S.

§  PrivateEquityAcDvity:Privateequityfundswillcon0nuetobeac0velyseekingtodeploycapital§  ReturnofAcDvism:Theresurgenceofshareholderac0vism,par0cularlyfromcampaignstarge0nglarge-capcompaniesandthoseoutsideofNorthAmerica

§  IncreasedFocusonPrivacyandCybersecurityDueDiligence§  ImpactofBrexit?

Thank You

ron.heller@woodsidecap.com

TheInforma0onandopinions inthisreporthavebeenpreparedbyWoodsideCapitalPartners Interna0onal,LLC,and itsaffiliate,WoodsideCapitalSecuri0es,LLC(collec0vely,“Woodside”).Allinforma0onsuppliedorobtainedfromthisreportisforinforma0onalpurposesonlyandshouldnotbeconsideredinvestmentadviceorguidance,anofferoforasolicita0onofanoffertobuyorsellasecurity,orarecommenda0onoranendorsementbyWoodsideCapitalSecuri0es,LLC,WoodsideCapitalPartnersInterna0onal,LLCandWoodsideCapitalPartnersUK,LLPofanysecurity.Furtherinforma0ononanyofthesecuri0esmen0onedinthisreportmaybeobtainedfromouroffices.Otherthandisclosuresrela0ngtoWoodsideCapitalSecuri0es,LLCtheinforma0onhereinisbasedonsourceswebelievetobereliablebutisnotguaranteedbyusanddoesnotpurporttobeacompletestatementorsummaryoftheavailabledata.Anyopinionsexpressedhereinarestatementsofourjudgment on this date and are subject to change without no0ce. Periodic updates may be provided on companies/industries based on company specificdevelopmentsorannouncements,marketcondi0onsoranyotherpubliclyavailableinforma0on.

ImportantDisclosures:

WoodsideCapitalSecuri0es,LLCisnotamarketmakerinanysecuri0esmen0onedinthisreport.

WoodsideCapitalSecuri0es,LLCandtheirofficersandemployeesmayfrom0meto0meacquire,hold,orsellaposi0oninthesecuri0esmen0onedinthisreport.WoodsideCapitalSecuri0es,LLCcompensatesindividualsforac0vi0esandservicesintendedtobenefitthefirm'sinvestorclients.Compensa0ondetermina0onsforindividuals,includingtheauthor(s)ofthisreport,arebasedonavarietyoffactors,andmayincludetheoverallprofitabilityofthefirmandtherevenuesderivedfromallsources,includingrevenuesfrominvestmentbanking.

WoodsideCapitalSecuri0es,LLCisaregisteredbroker-dealerandmemberofFINRA(www.finra.org)andSIPC(www.sipc.org).

WoodsideCapitalSecuri0es,LLCisanaffiliateofWoodsideCapitalPartnersInterna0onal,LLCandWoodsideCapitalPartnersUK,LLP.

Oneormoreprivatecompaniesinthisreporthaveconfiden0allyretainedWoodsideCapitalSecuri0es,LLC,WoodsideCapitalPartnersInterna0onal,LLCorWoodsideCapital Partners UK, LLP as an advisor. In addi0on, in the futureWoodsidemay seek to offer investment banking services to, and collect fees from, any of thecompaniesfeaturedinthisreport.

ThirdPartyDisclosures:

Anyanalystopinions, ra0ngs, andpublic company reports included in this report areprovidedby third-par0esunaffiliatedwithWoodsideCapital Securi0es, LLC,WoodsideCapitalPartnersInterna0onal,LLCandWoodsideCapitalPartnersUK,LLP.WoodsideCapitalSecuri0es,LLC,WoodsideCapitalPartnersInterna0onal,LLCandWoodsideCapitalPartnersUK,LLPmakesnoguaranteesthatinforma0onsuppliedisaccurate,complete,updatedor0mely,anddoesnotprovideanywarran0esregardingresultsobtainedfromitsuse.

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ImportantDisclosure

SiliconValleyOffices1950UniversityAve,Suite150PaloAlto,CA94303Tel:+16505132775UKOfficesRiverbankHouse2SwanLane,7thFloorLondon,EC4R3TT

Tel:+442079290248

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SiliconValleyandUKPresence