TECHNOLOGY INVESTING – EXPLAINED*

*Everything I Can Teach You In 20 Minutes

Takeaways•Review of Why Technology Companies Are Different

– If you were here last year, *that* presentation in 5 minutes

•Trends in Technology Today– What is the herd following?

•Investing in Narwhals– Huh?

•But first… who am I to tell you this?

A Journey… Still Not Complete

School

Western and UBC, because one degree is not enough!

Operations

Founded two technology companies. One was poorly timed and failed, the other grew to 100 people before I left

Asset Manager “Buy Side”

Venture capitalist, managing other people’s money

M&A Advisor/Capital Raiser “Sell Side”

Venerable Vancouver Firm

My Own Company – GCA

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THE GCA TEAM• The GCA Team has extensive technology deal experience with over seven decades of technology and financial industry experience

• GCA augments the core team with industry experts as needed to ensure un-paralleled connections and execution for clients

Paul Kedrosky, Ph.DCo-Founder & Thought Leader

21 years Investment Banking & Private Equity

Andrew Jones, CFAPrincipal & Co-Founder

18 years Business Development & Company Management

Brent Holliday, MBACo-Founder & CEO

20 years Entrepreneur, Private Equity, & Investment Banking

Gord Baizley, CFA, LLBExecutive in Residence

15 years Investment Banking, Legal & CFO Roles

Noah Shipman, CFAPrincipal

6 years Investment Banking & Buy Side M&A

Chris Robertson, CFA Level III CandidateAnalyst

2 years Tech Start-up in Financial Technology

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Pending

BC Based eCommerce Company

Debt Re-Financing/Equity

{Close Mid February}Capital Advisor

Pending

BC Based Software Company

US Public Company

{Close Early February}M&A Advisor to the Seller

July 2014

Secondary Share Sale

Capital Advisor to the Selling Shareholders

June 2014

M&A Advisor to the Seller

March 2014

M&A Advisor to the Seller

January 2014

Growth Equity Financing

Capital Advisor

December 2013

Secondary Share Sale

Capital Advisor to the Selling Shareholder

April 2013

M&A Advisor to the Buyer

June 2013

Capital / M&A Advisor to the Seller

September 2012

Growth Equity Financing

Exclusive Capital Advisor

October 2011

M&A Advisor to Seller

September 2010

Growth Equity and Recapitalization

Capital Advisor

September 2010

M&A Advisor to Seller

September 2010

M&A Advisor to Seller

July 2010

Growth Equity Financing

Capital Advisor

GCA TEAM EXPERIENCE – TECHNOLOGY TRANSACTIONS

Garibaldi Transactions(All others with previous firms, involving Garibaldi

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Technology Is Different

Tech is Super Cool

Tech Can Make You Wildly Rich

David Cheriton – Stanford professor, Born in BC, PhD in Computer Science

In 1998, wrote $100,000 check on his porch to Sergey and Larry, graduate students at Stanford

They didn’t even have a bank account He is 648th richest man in the world, 12th richest Canadian $2.75 billion net worth, largely from a $100,000 bet {He is richer than Chip Wilson}

Technology is the Leading Edge of Progress

•Pure Science needs nurturing

•Research and Invention needs support

•Development (The D in R&D) happens within companies

•Commercialization is hard and needs capital:– An idea/invention is not necessarily a product– A product is not necessarily a company– Ideas: Worth nothing– Execution: Worth Everything

The Business of Technology is Hard• “If it was easy, everyone would do it and there

would be no money in it”

• It changes very, very fast

• It is prone to massive disruption

• Only the smartest invent, the rest copy

• The biggest asset your company has leaves the building every day – smart people are the key to success

• Successes and Failures can be spectacular

Three Ways To Invest In Tech•Good news: It’s not rocket science

•Early– Seed stage – Friends & Family or Angel Investing– Invest in Angel or VC Funds– Tax Credits if in BC

•Public Markets (more in a minute)

•Support Technology Initiatives (Indirectly Invest)– Education – need kids excited and exposed to technology– Research & Development – vote for more science

Early Stage Tech Investing

•Very Risky

•Private or Public Company Investing

•Technology, Team, Traction, TAM

•Portfolio Approach: – Venture Capital Math: I Can Only Lose 100%, But I Can

Make Much More– If 1 in 10 gets 15x and the other 9 get zero, I am making

good money

Embrace Technology Investment

•Where there is great risk… there is great reward

•High Technology Multiples Driven By:1. Initial Speed to Market2. Rapid Adoption of Products/Services3. Beating Existing Products/Solutions4. Develop Market Leadership in a Sector5. Big, Big Markets

• By Protecting Their Position with Patents and Continuous Innovation, the Winning Technology Companies Keep Getting Bigger

• {Its not 1999, today’s tech companies have sales and… gasp… some have profits}

Technology Trends

The History of Technology Is Made of Massive Disruptions, Mini Disruptions and Iterative Innovation

Current Technology Trends – Mini Disruptions

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Local Start-Up Examples•Wearables – Fatigue Science

•Everything Mobile – Mobify

•Internet of Things – BitStew

•Robotics – Aeryon Labs

Investing in… Narwhals?

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•Unicorn Club Technology companies in US

that reached $1b in value born in 2003 or later

Mythical beast that is desirable – everyone wants one

•Narwhal Club Canadian version Technology companies that

reached $1b (CDN) in value born in 1999 or later

A real beast that not many people know exists

Narwhals - Explained

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Narwhal Club – Founding Members

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Narwhal Club – Founding Members

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Narwhal Club – Founding Members

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Narwhal Club – Founding Members

Market Capitalization

$25+ Million $400+ Million $2+ Billion $10+ Billion

~$400 million

~$450 million

~$460 million

~$750 million

~$850 million

~$860 million

~$1.0 billion

~$1.1 billion

~$1.2 billion

~$1.4 billion

~$1.5 billion

~$2.4 billion

~$3.0 billion

~$3.4 billion

~$4.2 billion

~$6.6 billion

~$7.4 billion

~$8.6 billion ~$15.1 billion

Canadian Public Technology Landscape

2014 IPO CandidatesPre-IPO Financing

Candidate Description

Kinaxis delivers cloud-based supply chain solutions, including S&OP, supply planning, capacity planning, demand planning & inventory management

$116M IPO(June 2014)

Beyond The Rack is a private online shopping club for men and women that holds limited-time sales for members only

US$10M Debt Facility(September 2014)

HootSuite is a social media management system $60M Private Placement(September 2014)

Desire2Learn provides e-learning solutions $85M Private Placement(August 2014)

Real Matters provides insight into residential and commercial properties $40M Private Placement(July 2014)

Vision Critical builds online platforms that allow two-way communications with customers, employees and citizens in contexts ranging from market research to civic engagement

$14M Private Placement(July 2014)

BuildDirect is an online building materials and home improvement products retailer$50M Private Placement(December 2014)$30M Private Placement(January 2014)

Shop.ca is a Canadian multi-merchant marketplace, offering brands, products and services from trusted retailers, manufacturers and providers

$31M Private Placement(May 2014)

BTI Systems is a provider of networking software and systems to improve operational efficiencies and scale the delivery of services

$27M Private Placement(January 2014)

Shopify is a SaaS based commerce platform that allows anyone to easily sell online or at their retail location $100M Private Placement(December 2013)

Cymax is an online home and office furniture retailer and enabler of eCommerce for furniture retailers Raising Now

PointClickCare.com provides a web based SaaS solution that includes an integrated approach to clinical, billing, and administrative functions of the EHR process Raising In Q3

Achievers delivers a cloud-based Employee Success PlatformTM which allows companies to engage, align, and recognize employees Raising in Q3

Endurance Wind is a manufacturer of small wind turbines and operator of wind utilities in Europe, Hawaii and Latin America Raising Now

IPO

Pre-

IPO

Priv

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Plac

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g in

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5The Next Great Canadian Tech Companies - IPO

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Emerging Narwhals

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Emerging Narwhals

Public Market Tech Investing

•Read and watch

•Be aware of the IPOs

• See the up and comers (Unicorns & Narwhals)

•Be long

•Buy the ETFs

•Watch the trends

•Read the analysts

Who Made The Most Money In The Gold Rush of 1849?• Leland Stanford

He sold the Picks & Shovels to the Miners He was one of the “Big Four” that Built the Pacific

Side of the First Railroad He Got A University Named After Him

• In Technology, you don’t always need to invest in the lead dog. Many companies make great money and grow fast… but don’t make CNBC headlines

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Now You Know Your Narwhals

•Go out and invest, carefully

•Follow other tech investors and learn from them

•Call your broker and ask to be in on those Canadian technology IPOs

Call Brent Holliday at 604-617-4161E-Mail brent@garibaldicapital.com

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