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November 15, 2016

Mike SigalEIR & PARTNERSHIPSmikes@500.co *Please Do Not Distribute

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/ About Mike Sigal

EIR & Partnerships, 500 Startups FinTechManaging Director, Co-Creation GroupSenior Innovation Advisor, SWIFT Innotribe6x Entrepreneur

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/ Agenda

Perspective on Digital TransformationAbout 500 StartupsTransformation in Financial ServicesHow FI’s are Responding to FinTech500 FinTech5 Startup Pitches

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/Netflix vs. Blockbuster (2004-2010)

Revenues in USD billion

2004 2005 2006 2007 2008 2009 2010

6.0

Physical rental

0.5

2.5

Digital rental

Source: McKinsey & Company

Digital technologies transforms industries…

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~40%of International Phone Traffic

…even regulated ones.

Source: Telegeography.com Jann 2014

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/ Digital changes ALL customer expectations

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/Tipping point

Start-ups exploit new

tech

Digital models

proliferate

Customers shift & Incumbents struggle

Laggardsshrink / die

“Newnormal”

New technology emerges

Innovative startups disrupt

Early adopters proliferate

Advanced incumbents start adapting

Mainstream customers

shift

Source: McKinsey & Company

Industry transformations happen predictably

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Talent & Opportunity is distributed globallyHistorically, winners are rare

• 1-2% return 50-100x+ (“Unicorns”)• 5-7% return 10x-50x (“Centaurs”)• 10-20% return 3-5x• 65-70% return 0-1x

Early indicators are clear if you know the KPIs

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// Most Active Seed Investor in the World since 2010

$250M+ AUM

1500+Investments

50 Countries

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The title “Partner” is used in accordance with customary business practice in the venture capital industry and does not indicate a legal status as a “partner” in a partnership. Headcount includes employees, interns, and contractors as of May 31, 2016.

Dave McClure Christine TsaiFOUNDING PARTNERFOUNDING PARTNER

Khailee NgMANAGING PARTNER

Bedy YangMANAGING PARTNER

SOUTHEAST ASIA LATIN AMERICA

500 Startups Management & Investment Partners

130 people, 18 countries

Hasan HaiderMIDDLE EAST

Santiago ZavalaLATIN AMERICA

Rui MaCHINA/SF

Marvin LiaoSF

Elizabeth YinSILICON VALLEY

Edith YeungSF

Sean PercivalNORDICS

Tim ChaeSOUTH KOREA

James RineyJAPAN

Sheel MohnotSF

Pankaj JainNYC/INDIA

Matt LernerUK

Krating PoonpolTHAILAND

Natavudh Moo Pungcharoenpong

THAILAND

Binh TranVIETNAM

Rina OnurISTANBUL

Mat JohnsonSF

Eddie ThaiVIETNAM

SILICON VALLEYGLOBAL / SILICON VALLEY25 yrs in SV as

entrepreneur + investorEarly Googler, strong

operational experience Founded and exited two

startups Recognized by Forbes as a multi-lingual, startup

community leader

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//4 Unicorns ($1B+ in valuation)

30+ Centaurs ($100M ~ $999M in valuation)* indicates companies that have already exited

A Selection of Current Portfolio Wins

* * ** * *

Companies are a select sampling of investments across 500 Startups funds and will not be held in Fund IV. While Fund IV has not invested in the rounds of financing shown on this slide, at least one 500 Startups fund has invested in one or more rounds of financing for each of these companies. The valuations listed herein are estimated as at 12/31/2015 based on 500 Startups Valuation Policy as set out in the Appendix to this presentation. These numbers provide a snapshot of estimated valuation as at a particular time and may change. Further detail with regard to financing of companies listed on this slide can be found on Crunchbase.

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/ How We Deploy Capital

General Investment Strategy of All Funds• $50-150K First Check, $150-500K Follow On Checks

Selection Criteria – Data-Driven Process Based on Pre-defined Metrics• Functional prototype (or previous product success) that solves a specific customer problem• Scalable internet-based distribution (search, social, mobile) or proven ability to scale sales• Capital-efficient business; operational at less than $1M in external financing• Measurable traction: engaged users, some revenue, and attractive unit economics• Cross-functional team with design, engineering and marketing expertise

Investment strategy and criteria represent current investment model and may vary at the discretion of the 500 FinTech general partner. Terms noted on this slide may vary by investment.

Accelerator

Seed

Distro

Follow-On

Angel Pre-Seed Seed Post-Seed Series A/B Growth

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/ 500 Startups Family of Funds

Global FundsFund IV – Flagship500 Mobile Collective500 Fintech

Regional Funds500 Canada500 Falcons (MENA)500 Istanbul (Turkey)500 Kulfi (India)500 Kimchi (Korea)500 TukTuks (Thailand)500 Startups JP (Japan)500 Startups Vietnam

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/ World-class Accelerator is a critical success factor

Accelerator Overview• 4-month program in Silicon Valley (4 cohorts / year) • $150K investment for 6% equity• Overall: >1500 applications > 250 interviews > 40 accepted = ~3% acceptance• Fintech: >300 applications > 10-15 startups/batch• Many post-launch, revenue-generating companies (no “idea-only”)

Investment strategy and criteria represent current investment model and may vary at the discretion of the 500 FinTech general partner. Terms noted on this slide may vary by investment.

Accelerator

Seed

Distro

Follow-On

Angel Pre-Seed Seed Post-Seed Series A/B Growth

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// Accelerator Deliverables

Community Advice Curriculum

Support Connections Money

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CONFERENCES + EVENTS1

TEAM MEMBERS

More than 50 events with 300-1,000 attendees per event, for a total reach of over 35,000

people in person + digital channels Design, technology, marketing,

and product experts fromtop companies in Silicon Valley

and elsewhere

From 50+ countries around the world, our founders provide peer

review and feedback on products, industry verticals, platforms, etc.

250+ 3,000+

MENTORS FOUNDERS7

ATTENDEES35,000

EVENTS50+

1. Conferences and Events are produced by 500 Startups Incubator, L.L.C. The 500 Startups funds do not participate in any revenue generated by these activities 2. The numbers represented on this page provide a snapshot of some of our Community-building platforms as at a particular time. They are estimated as of 12/31/2015 and may change.

500 Startups Events and Community Platforms

COMMUNITY

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The Case for Transformation in Financial Services

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$13T$13T17% of Global GDP

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< 1%US Loans Originated Online

Source: Wall Street Journal June 2016

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/ The best and brightest don’t want to work for incumbents.

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30%Operations & Compliance Staff

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3 BillionNEW smartphone users by 2020

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FinTech: Technology-based solutions to make financial services more efficient, whether by disrupting or enabling incumbents.

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12,000FinTech Startups Globally

Source: McKinsey & CB Insights

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/ 2014 Areas of Innovation - Global

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/ Digital delivers superior margins…

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/ …and customer satisfaction

Source: OnDeck company filings

OnDeck Community Banks Regional Banks National Banks

76

46

19

9

Net Promoter Score US customers n=100

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Source: KPMG & CB Insights

$50B10x investment in 5 years

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PaymentsLending

PaymentsPaymentsPayments

‘GAFA’ anchors customers’ digital lives…

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434M Customers8.5M Merchants12.7B Transactions/Year

PaymentsCredit ScoringLendingBankingInvestments

$60BMarket Cap

Sources: http://expandedramblings.com/index.php/alibaba-statistics/; Wall Street Journal Market Watch Apr 26, 2016

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/ 27 FinTech Unicorns - $137B+ in Market Cap

http://www.bizjournals.com/sanjose/news/2016/03/09/19-fintech-unicorns-that-might-end-up-being-real.html

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Source: CBInsights data

2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q40

10

20

30

40

50

60

70

80

90

FinTech M&A Activity: 2011-2015

M&A IPO

Exits in the space are climbing

300 in 2015 vs. 100 in 2011

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/ Different subsectors & regulation = different industries

Tipping point

Laggardsshrink / die

“Newnormal”

New technology emerges

Innovative startups disrupt

Early adopters proliferate

Advanced incumbents start

adapting

Mainstream

customers shift

Source: McKinsey & Company & Mike Sigal Analysis

Capital MarketsFull Stack Banking

LendingWealth Management

Payments

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/ FinTech will decimate Financial Services margins.

Source: PwC Global FinTech Survey 2016

Fund transfer & payments

Banks Average Asset/Wealth management

firms

Insurance firms

28%

24% 23% 22% 21%

% of Top Line estimated to be lost

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How are FIs Responding to FinTech?

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/Tipping point

Laggardsshrink / die

“Newnormal”

Advanced incumbents start adapting

New technology emerges

Innovative startups disrupt

Early adopters proliferate

Mainstream customers

shift

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/ Corporate Innovation Objectives

• Access top-tier technology talent• Upskill current organization

• Bolting on products that are tough to build/operationalize in a traditional setting

• Access to new customers

Avoiding Disruption

Human Capital

Product

Customers

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/ FinTech Startups Strenghts

Utilizing emerging

technology

Disintermediating

Disaggregating

Democratizing

• Technology at core of business• Faster adoption

• FinTechs deliver services at a lower cost

• Separate services to bypass regulatory constraints

• Targeting non-traditional customers

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/FinTechs want to partner with corporates

Scaling

Regulation

Customer Acquisition

• Scaling taking longer than other industries

• Regulatory compliance = cost and risk (Founders don’t want to go to jail)

• Institutional customers are slow to adopt• Retail customers are tough to mobilize

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/ How banks are responding to FinTech (Jan 2015)

Source: https://medium.com/@avinashswamy/how-are-banks-reacting-to-fintech-891617c69321#.76i2kfq51

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Dealflow

Accelerators

PR & Sponsorships

Competitions & Events

Silicon Valley Outposts

Investing in VC funds

Outcomes

Strategies

Human Capital

Product

Customers

Partnerships

Investments

M&A

43

Innovating Like & With Startups

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Dealflow

Accelerators

PR & Sponsorships

Competitions & Events

Silicon Valley Outposts

Investing in VC funds

Outcomes

Strategies

Human Capital

Product

Customers

Partnerships

Investments

M&A

44

Most incumbents must develop startup-like capabilities

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Adding CapabilitiesChanging MindsetTransforming Culture

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Target the right vision/objectivesDon’t mistake ‘Digitalization’ for ‘Digital’Get some startup/VC “mojo”Conduct disciplined, rapid experimentsEngage customers & stakeholdersPick the right KPIs for the right timeFind ideas globally#GET500STRONG

Rules for Building Innovation Capabilities and Culture

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Financial Services for the Rest of Us!

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Source: https://www.cbinsights.com/blog/fin-tech-funding-growth/

World’s Most Active Early-Stage FinTech Investor

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/// 140+ investments • 24 countries • Exceptional Results

Wealth/Investing Financial Management Payments/Transfers

Lending Crowdfunding Insurance

Red outline > $1B in value - Blue outline $100m-$1B in value

Blockchain

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/ Selected portfolio company vignettes

Portfolio Companies Entry Valuation

Current Valuation Follow-on Investors

$50M

$18.5M

$3.5B (70X)

$100M (5.9X)

$9.5M $117M (12.3X)

$1M* $85M (85X)

$6.5M $36M (5.5X)

Acquired by

* Accelerator Investment. The first investment in Conekta was from Mexican.vc

Date

Aug, 2012

Oct, 2010

Sept, 2010

Nov, 2013

Aug, 2015

$5M $175M (35X)

$1.5M* $75M (50X) Ashton Kutcher

$26M $130M (5X)Oct, 2014

Dec, 2009

Aug, 2014

$130K* $19M (146X)Oct, 2012

Multiples are valuation increases in the company, not the increase in our investments valuation

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/ World’s Broadest FinTech Deal Flow

• Staff in 20 countries / 25 languages• 500 Startups micro-funds (Canada, India, Thailand, Vietnam,

Japan, Korea, Turkey, SE Asia, MENA, LatAm)• 50+ startup ecosystems events globally/year• Global Brand / Position as Most Active FinTech Investor• Referrals from angels, VCs, CVCs, Founders & LPs• FinTech Accelerator Applications

• Batch 16: ~100 applicants• Batch 18: ~350 applicants• Batch 20: ~50 applicants (1 week)

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/ Sample FI’s Affiliated with 500 FinTech

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/ Platform for Transforming Financial Services

$50-75M Early-Stage VC Fund200-300 FinTech Startups GloballyDisruptors & Enablers across financial services

World Class Accelerator 500’s Traditional Accelerator CurriculumFinTech Team, Mentors, Curriculum & Partners

Corporate Partner ProgramPortfolio, Community & Knowledge Access

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/ Building your Innovation Capabilities with 500 FinTech

Corporate PartnershipLP Investment in 500 FinTech FundUpside: Corporate FinTech Accelerator

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/ 500 FinTech Corporate PartnershipsPortfolio Access

Global deal flow & insightsInfluence company selection with your solutions

‘orders’Community Access

Entrepreneurs, investors & peer relationshipsLeverage 500 Brand Equity

Knowledge AccessStrategic Advisory & BrainstormingAccelerator Apprenticeship & Corporate Acceleration

Training

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/ Strategic Benefits for Corporate Partners & LPs - DRAFT

LP Investment (OR) <$2.5M $2.5M $5M $10M+Annual Partnership Price (1-year commitment with no investment) $100K $125K $250K $500K

PortfolioAccess

Quarterly Portfolio Newsletter & Reporting ✔ ✔ ✔ ✔Custom Lists 4 6 121-to-1 Introductions 5 10 20Accelerator Office Hours or Workshop (2x/year) OH-only OH-only OH-only BothLimited Exclusivity ✔

Communit

yAccess

Invitations to Private FinTech Preview & Summit events 1 2 3 4500 Startups Event Access & Discounts for LPs ✔ ✔ ✔ ✔Invitations to participate in Geeks on a Plane programs 1 2Complimentary Pre-Money Registrations 1 2 3Distribute Product Discounts to Startups Portfolio Portfolio + ApplicantsLogo Exposure at FinTech Fund Events Silver Gold Platinum

KnowledgeAccess

500 Insiders web-seminars delivered by 500 Partners & Staff ✔ ✔ ✔ ✔500 Startups Educational Program Discounts ✔ ✔ ✔ ✔Secondment at Accelerator 2 weeks 4 weeksPrivate Conference Calls 1x/year 2x/year 3x/year 4x/yearExecutive Brainstorming Sessions 1x/year 2x/year

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/ 500 FinTech LP Investment Opportunity

Partnership Benefits

+Financial Returns

Co-investment Opportunities

For LP prospectus, please contact mikes@500.co

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/ Upside: Corporate FinTech Accelerator

Your challenge(s)Your team500’s targeted startups & techniquesDeloitte’s innovation ‘sandbox’1-3 Proofs of Concept

Build your Innovation Capabilities in just 6 months

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/ Get #500STRONG

Questions? Want to introduce Startups to 500 FinTech?Want to invest in our FinTech Fund or partner with us?

Mike Sigalmikes@500.co

Join the 500 Fintech Community and get our updates http://bit.ly/2c3Q9s6