Fintech Fixes…& Fortunes

Sector FocusStrategic

Investors & Advisors

Average Initial Investment< $1 Million

$40 Million Venture Fund

Early Product-Market Fit

Dan Rosen

STRONG DEAL FLOW

DAN RAVEHVice PresidentGoogleViola Private EquityWharton MBA

Our Team

*Employees of Aduro Advisors, which provides Commerce Ventures’ back offices services

NIKHIL RAJVenture PartnerWalmartKosmixHarvard MBA

BRAUGHM RICKECFO*True VenturesAbout.meUC Davis

ANDREA FITZHENRYExecutive AssistantHighland CapitalSullivan & CoglianoMCLA

SHELLEY RUBINOController*DeloitteKeyCorpUniv. Of Akron

PETE KIGHT

(Acquired for $4 BILLION by Fiserv)

BOARD MEMBER:

FOUNDER / CEO

EDUARDO CASTRO-WRIGHTCEO / VICE CHAIRMAN

SCOTT THOMPSONPRESIDENT / CEO

BOARD MEMBER:

SCOTT THOMPSONCEO, ShopRunnerCEO, Yahoo!*President, PayPal*

PETE KIGHTVice Chair, Fiserv*Founder & CEO, CheckFree (IPO)*

ANIL AGGARWALChairman, Money2020CEO, TxVia (Acq’d by Google)*CEO, Calrity (Acq’d)*

TOM LITLECEO, Litle & Co (Acq’d by Vantiv)*Founder, Industry Ventures*

ERIC DUNNEVP Payments, Intuit Early CFO & CTO, Intuit*

SCOTT SHAWVice Chair, Kessler GroupInvestor: Ozumo, Usushi, Aliaswire

SCOTT LOFTESNESSPartner, GlenbrookGM, First Data Merchant Services*Strategy & Int’l, Visa*

VINCE PASSIONECEO, LendKeyCOO, DealerTrack*President, AmeriTrade*

KAREN WEBSTERCEO, Market Platform DynamicsPresident, PYMNTS.com

Our Network

MIKE WALSHCEO, CyberSource(Acq’d by Visa)*Advisor, Warburg Pincus

GREG COHENPresident, iPaymentCRO & CSO, Cayan*President, Moneris*

JOHN MCDONNELLCEO BitnetVP, BD at CyberSource(Acq’d by Visa)*

EDUARDO CASTRO-WRIGHTVice Chair, WalMart*CEO, WalMart, USA*

TODD KRASNOWHighland ConsumerSVP Marketing, Staples*

*Indicates previous position

CORPORATE INVESTOR 1

•Largest issuer of prepaid debit accounts in the U.S. (75 million cards in circulation)

•$232 billion of annual payment volume•Customers include:

CORPORATE INVESTOR 2

•Leading provider of tech and processing to the financial services industry

•$5 billion in 2014 revenues•Leader in electronic bill pay and ACH processing, moving $1 Trillion each year

•Account processor for 1/3 of all U.S. FIs•Power 145 million deposit accounts and 75 million online banking users

CORPORATE INVESTOR 3

•5th largest homeowners insurer, 6th largest auto insurer

•8th largest U.S. credit card issuer, 26th

largest bank•Over 10 million members•$25 billion of net worth•Top-ranked bank in Net Promoter Score

STRONG DEAL FLOW• LOTS OF IT

• 1000+ investment opportunities since launch

• EARLY STAGE• 99% Seed or Series A

• PROPRIETARY• 65%+ of opportunities from proprietary sources

• RELEVANT• 90%+ of deal flow in FinTech & Commerce

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UNIQUE FUND 1 PORTFOLIO

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$35 Million

$80 Million

$141 Million

$281 Million

2013ACTUAL

2015EXPECTED

2016PLAN

2014ACTUAL

NOTE: Includes all revenues from entire active portfolio

PROMISING RESULTS

STRICTLY CONFIDENTIAL

WHAT’S GOING ON IN FINTECH?

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FINTECH IS EXPLODING…

…AND NOT JUST IN U.S.

...AND NOT JUST BY VCs

INCUMBENTS ARE ENGAGED

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...SO EXITS ARE STRONG

...FINTECH IS HOT!!

WHY?

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SHIFT TO MOBILE BANKING

50

60

70

80

90

100

110

2013 2014 2015 2016

MILLIONS OF U.S. ADULTS USING MOBILE BANKING

•72 million Americans, 18-34•85%++ own smartphones•Digital (Mobile) vs. Physical•Personalized vs. Broadcast•$1 Trillion of student debt, BUT…•Will account for $10T of lifetime purchasing power

MILLENNIALS

MILLENNIALS

MILLENNIALS

MILLENNIALS

BIG BANKS INVESTING

US Banks to spend $62B on IT in 2015

•Top 4 U.S. Banks EACH spend $7-10 billionannually on Technology

SOURCES: Celent, Information Week, Bloomberg, WSJ

NEW ENTRANTS:

12M+ users

10M+ users

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NEW ENTRANTS:

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NEW ENTRANTS:

OPPORTUNITIES

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SECURITIZATION FAILED…

…ALT LENDING AROSE

PLATFORMS SCALING

$5B Market Cap, $7B in 2015 loans

$355M equity, $7B in H1 2015 loans

$1.4B equity; $400M of debt

$660M Market Cap

$240M of equity; $360M debt

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UNDERSERVED: 401(k)

$5 trillion of defined contribution retirement assets

• Only 5% of fiduciary advisors actively involved in 401k advice

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RISE OF “ROBO-ADVISORS”$130M raised, $2B+ AUM

$103M raised, $1B+ AUM

$105M raised, $2.5B+ AUM

$30M+ raised, $300B tracked

Acquired by BlackRock

PAYMENTS: GROWING

SOURCE: McKinsey

MERCHANT ACCEPTANCE

$4B mkt cap, $30B+ volume

$280M raised, $10B+ volume

$30B+ volume (Acq’d $800M)

$1B+ volume, just raised $40M

$266M raised, $25B+ volume

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PAYMENT FRAUD EXPLODES

SOURCE: Nilson

INVESTING IN PROTECTION

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BTW, B2B FINTECH IS HOT…Just raised $225MJust raised $111M

Just raised $100MJust raised $80MJust raised $50M$129M raised

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…AND SMBs NEED CREDIT

SOURCE: FDIC

Volume of <$250,000 Loans (U.S.)

SMB LENDING$93M of Equity, $650M of Debt$240M of equity; $360M of Debt

$660M Market CapJust raised $50M

DATA: BIG & EXPLODING

•Big Data technology market expected to reach $38 billion this year

•Financial Services is one of the largest spenders on big data technologies for Credit, Risk, Fraud Prevention, CRM, Capital Markets

BANKS NEED HELP

•By 2016, 25% of the Top 50 global banks will have launched a banking app store for customers

•Europe adopts PSD2 opening up txn data•Yodlee supports 27 million daily API calls•Aggregation supports thousands of apps servicing 10’s of millions of users

APIs & OPEN BANKING

SOURCES: Gartner, Yodlee

•Spend & invest app (think BofA’s Keep The Change)

•Built on aggregation APIs•Live 1 year•650,000 members•Mostly millennials•$25++ million of savings

CASE STUDY: ACORNS

126 Fin Tech startups targeting Millennials have raised

$2.3 Billion

MILLENNIAL BANKING

DIGITAL CURRENCY

2014: $335M OF VC FUNDINGJust raised $75MJust raised $116M

Just raised $30MRaised $40M last yearRaised $30M last yearRaised $30M last year

Just raised $50MCONFIDENTIAL

SPECULATORS EXITED

BUT LATELY, PRICE IS UP

SOURCE: CoinDesk

…STEADY USAGE GROWTH

SOURCE: Blockchain.info

INSURANCE TECHNOLOGY

Insurers will spend

$175 billion on IT spending in 2015

SOURCE: Celent

IS DRAWING VC DOLLARS

INVESTING IN FINTECH

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VC INVESTING 101

•Team•Market•Product•Financial

ECONOMIES OF SCALE

BANKING = ECO-SYSTEM

Questions?

Dan@CommerceVC.com+1 (415) 500-5352

@VentureDan

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