SiliconAlley Startup Services for Startups

DRAFT AND CONFIDENTIAL • JANUARY 26, 2013

SAMS

Startup Asset Management Service


SAMSAbout SiliconAlley.com

Since 1996, SiliconAlley.com has been dedicated to thegrowth and evolution of the Internet industry. It is both acommunity and a resource. A center of excellence whereindustry best practices can be explored and where visionand innovation are shared to build new Internet businesses.It is a common ground for both people providing servicesand those in need of them.

The service we are offering to investors is the managementof their startup investments. Investors who see startupinvestment opportunities, but for lack of experience and theminimal capital required, are unable to manage this asset fortheir portfolios.

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SAMSStartup Reality Check

11 out of 12 startups fail.

The dominant reason for failure is the startup’spremature scaling in one or more of 5 dimensions: - customer - product - team - business model - funding

Source: 2011 Startup Genome Infographics

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SAMSIntroducing …

Silicon Alley Startup AssetManagement Service (SA|SAMS)

We manage your tech start-upideas, investment and processfrom concept to market.

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SAMSOur Umbrella Services

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SAMSOur Key Deliverables

･ Education･ Real estate･ Legal･ Accounting･ HR & recruitment

･ Brand strategy･ Marketing strategy･ SEO/Social media plan･ Business development･ Public relations

･ Wireframing･ MVP design･ MVP build･ MVP testing

･ Go-to-market strategy･ Investor documents･ Investor intro and negotiation･ Board member selection

SupportServices

CustomerDevelopment

ProductDevelopment

BusinessStrategy

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SAMSOur Best Practices / What We Believe In #1:Pivot & Achieve Market Validation Early!

• Release the product sooner and confirm datamatches expectations.

• If data does not match expectations, pivotuntil traction and market validation isobtained.

• Scale at the appropriate points only afterdata validation.

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SAMSOur Best Practices / What We Believe In #2:Don’t Waste Time; Speed-to-Market is Key

• It’s not cool, it’s cool work.

• Mentor employee relationship.

• The episodic nature ofdifferent time zones workingtogether.

• Start building the idea rightaway, not sitting in classes.

On- Off- Shore Shore

24-HourWork Cycle

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SAMSOur Best Practices / What We Believe In #3:A Lean Process = MVP Launch in 12 Weeks

Week 1 2 3 4 5 6 7 8 9 10 11 12

Wire-framing

MVP Design:2-3 Rounds of

Development, Testing& Pivots

MVPTesting

MVPLaunch

BrandStrategy

MarketingStrategy

SEO /SocialMediaPlan

BusinessDev.

PublicRelations

Customer Development:

Product Development:

ProjectPlanning

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BusinessStrategy


SAMSA Typical Process for Most Startups:Lengthy, Inefficient and Expensive

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SAMSOur Way vs. The Traditional Way

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SAMSOur Tech Skill Sets

Others:･ Apache Lucene･ Google Analytics･ Machine Learning･ Adriano

Languages:･ Java･ C#･ PHP･ Ruby･ JS･ C/C++

Framework:･ Backbone.JS･ jQuery･ Zend･ ASP.NET･ Spring

Databases:･ mySql･ sqlLite･ mongoDB･ ravenDB

Process:･ Lean UX･ Pen Testing･ SCRUM/Kanban･ thread modeling･ wireframing

Mobile:･ Android･ Windows Phone･ PhoneGap･ HTML5･ jQuery Mobile

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SAMSStartup Selection Criteria:

What We Look For in Startups

Credentials and track record

Low maintenance principals; ability to listen well

Innovative technology not just better mousetrap

Reasonable flexible valuations

Products which can be built quickly at low cost

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SAMSSource of Deals/Sales Leads

Lawyersand

Accountants

OurNetwork

andContacts

VCswho areburied indeal flow

Teachers& Prof’lOrgs.

Reporters& SocialMedia

Contacts

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SAMSLiquidity Opportunities

VendorFinance

JointVenture

CashFlow

Sale Refinance

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SAMSInvestment Fee Structure

Series A,Vendor Finance,Joint Venture,

Sale, Cash Flow,Refinance

MilestoneBonus

ManagementFee

SuccessFee

ProfitShare

Retainer

2% carry perannum

Optional basedon type ofservices

rendered to thestartup

Investor gets100% return of

the capitalfirst. Then split

the balance80/20

A monthlyretainer that’s

less thanwhat

professionalservice firms

charge

2%!80/20

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SAMSIllustrative Calculations

Potential Return on Investment:

Investment= $100k

Investor’s 80% Profit Share = $720k(In this scenario, investor makes 8.2x his original investment.

SA’s 20%Profit Share

= $180k

Investment:

$ 1 mil$900k$800k$700k$600k$500k$400k$300k$200k$100k

Capital: $78k

Retainer: $20k

Management Fee: $2k

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SAMSOur Core Team

Norman S. Rosenthal

･ Over 25 years management and technical experience in technology companies ･ Positions included VP of Sales, CMO, COO, VP of BusDev and President ･ Presently CEO of Tempest Systems, a cutting edge technology-consulting/ advisory firm providing business development services to 100+ hardware and software vendors.

Arthur Bierer

･18 years of experience at Microsoft as a Software Developer and Product Guy･ Built Internet Explorer 1.0･ Worked as Windows developer, worked with Anders Hejlsberg on the C# language･ Founded the NY International Technology Meetup which sponsors monthly events for technologists･ Founded abDevLabs along with 3 companies in the past year since leaving Microsoft

Miles J. Rose

･ Founded siliconalley.com in 1996･ Liquidity events: Consumer Search (sold to NYTimes 2006); Squashware software to Adobe･ Advisor to Oddcast, the Humo Network･ Guest lecturer at NYU･ Named to Silicon Alley Top 100･ Received Mayor of New York’s citation for hosting WWWAC BizSig meeting during Internet World･ Featured in articles in New York Times, Wall Street Journal and other business publications

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SAMSWhy Partner with Us

• The only NYC incubator with turnkey services to ensurestartup success (Go-to-market strategy, Investor documents, Investor intro andnegotiation, Board member selection, Wireframing, MVP design, MVP build, MVP testing, Brandstrategy, Marketing strategy, SEO/Social media plan, Business development, Public relations,,Education, Real estate, Legal, Accounting, HR & recruitment)

• Proven best practices get things done faster and cheaper

• Access to an extraordinary large set of tri-state areaangel, VC, institutional and strategic investors

• Founders have 50+ years of combined experience

• siliconalley.com’s long-standing reputation as a primaryinfluencer of investment capital to NY-based techcompanies

• Hybrid resource teams and offices (onshore and offshore)

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SAMSStartup Reality Check

11 out of 12 startups fail.Source: 2011 Startup Genome Infographics

But businesses that go through incubators have an87% success rate (still in business after 5 years) …

Source: National Business Incubation Association

… and business-heavy founding teams are 6.2x morelikely to successfully scale with sales.

Source: Genome Report 2012

Alternate version for Page 2


SAMSOur Best Practices / What We Believe In #3:A Lean Process = MVP Launch in 12 Weeks

Week 1 2 3 4 5 6 7 8 9 10 11 12

Wire-framing

MVP Design:2-3 Rounds of

Development, Testing& Pivots

MVPTesting

MVPLaunch

BrandStrategy

MarketingStrategy

SEO /SocialMediaPlan

BusinessDev.

PublicRelations

Customer Development:

Product Development:

ProjectPlanning

Business Strategy (Go-to-market Strategy, Investor Docs, Intro, Negotiation, Board Members)

Support Services (Education, Real Estate, Legal, Accounting, HR & Recruitment)



SAMSOur Way vs. The Traditional Way


SiliconAlley Startup Services for Startups

Business

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