Late Stage Deal Term ReportA thorough analysis of private company investment Deal Terms

• 2: Analysis Breakdown

Section 1 Report Overview

• 3: Valuations by Quarter

• 4: Regional Breakdown

• 5-15: Deal Term Teardown

• 16: Definition of Terms

Section 2 Analysis

• 17-18: VC Experts Overview

• 19: Terms of Use

Section 3 Appendix

REPORT OVERVIEWThis represents a sampling of data in the VC Experts database

2

The “Company Intelligence Report” by VC Experts is aimed at providing specific deal terms and estimated post-money valuations for the venture-backed company. Included in the report are national industry averages and investment rounds with deal terms. VC Experts has compiled this intense level of data from Federal and State regulatory filings, as well as strategic partners, to aid in providing better transparency of private company information.

An

alys

is B

reak

do

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Total Number of Companies in Analysis 234

Available Deals 270

Industry/Sector All

Date Range Q4 2013 - Q4 2014

Region(s) All (US)

Rounds Included Series D & >

Round Direction All

Stock Type All

Liquidation Multiple All

Liquidation Preference All

3

Late Stage Valuations

Complete Company Profile Reports can be purchased here at the VC Experts Report Center

Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

$

$500

$1000

$1500

$2000

$2500

$3000

$3500

$4000

$4500

$5000

Mill

ion

s

Late Stage Valuations by Quarter Series D Series E Series F Series G Series H or >

Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

Box, Inc

LendingClub Corp

Cloudera, Inc

DocuSign, Inc.

AliphCom

Pinterest, Inc

Pure Storage, Inc

4

Regional Breakdown

Silicon Valley65%

New England

9%

New York State7%

Northwest5%

Southern California

4%

Southwest3%

Midwest3%

Southeast2%

DC/Metroplex1%

Colorado1%

42%

29%

20%

7%2%

Q4 2013

Series D42%

Series E33%

Series F16%

Series G5%

Series H or >4%

Rounds(Q4 2013 - Q4 2014)

37%

35%

18%

5%5%

Q1 201445%

31%

17%

5%2%

Q2 201443%

34%

13%

5%5%

Q3 2014 47%

32%

11%

5%5%

Q4 2014

5

Rounds of Financing

• Series D Rounds led the way with 42% of financings analyzed

• There were a few companies that took on their 8th round of financing or more. Examples include:

AliphCom (Series J, K, L) Palantir Tech. (Series I, J) Veracode, Inc (Series I) Apigee Corp (Series H)

$1252

$673

$611

$805

$360

$ $200 $400 $600 $800 $1000 $1200 $1400

Series H or >

Series G

Series F

Series E

Series D

Average Valuation by Round (In Millions)

Down Round

13%

Flat Round13%

Not Applicable

1%

Up Round73%

Direction (Q4 2013 - Q4 2014)

16%

11%

2%

71%

Q4 2013

6%8%

3%

83%

Q1 2014

16%

8%

76%

Q2 2014

20%

16%64%

Q3 2014

5%

26%

69%

Q4 2014

6

Round Direction

**Why are some results marked as N/A?If N/A was used as indication for the "Round Direction" and/or the "Liquidation Preference for the Current Round", then this was due to there not being a previous round of financing for that particular company. If N/A was used for the "Type of Preferred Stock", then the preferred stock was not a "Conventional Convertible" or a "Participating Preferred"

• Up rounds were found in 73% of the deals analyzed

• Down Rounds & Flat Rounds were even at 13%

• Companies that had down rounds:

Joyent, Inc Kony, Inc NABsys, Inc Aethon, Inc Giga Omni Media, Inc

$27

$158

$751

$ $100 $200 $300 $400 $500 $600 $700 $800

Down Round

Flat Round

Up Round

Average Valuation (In Millions)

Conventional Convertible

61%

Participating Preferred

39%

Stock Type(Q4 2013 - Q4 2014)

60%

40%Q4 2013

56%

44%Q1 2014

66%

34%

Q2 201461%

39%

Q3 2014

63%

37%

Q4 2014

7

Security Description

• 39% of the deals analyzed contained Participating Preferred stock

• 61% of those Participating Preferred deals were not capped

• Companies that fell into this group included:

LendingClub Corp Elevance Renewable

Science, Inc Bit9, Inc Flurry, Inc

$161

$837

$ $200 $400 $600 $800 $1000

Participating Preferred

Conventional Convertible

Average Valuation (In Millions)

56%

44%Q4 2013

67%

33%

Q1 201459%

41%Q2 2014

33%

67%

Q3 2014

64%

36%

Q4 2014

No55%

Yes45%

Capped Participation

(Q4 2013 - Q4 2014)

8

Capped Participation

• 45% of the deals analyzed that were Participating Preferred included a Cap in participation

• Companies that fell into this category include:

DocuSign, Inc MuleSoft Infusion Software, Inc LogRhythm, Inc AtTask, Inc

$134

$195

$ $50 $100 $150 $200 $250

No

Yes

Average Valuation (In Millions)

>1 - 2x9%

>2 - 3x1%

>3x1%

0 - 1x88%

Not Applicable

1%

Liquidation Multiple

(Q4 2013 - Q4 2014)

13%

87%

Q4 2013

5%3%

92%

Q1 2014

9%2%

86%

3%

Q2 2014

8%3%

89%

Q3 2014

11%

89%

Q4 2014

9

Liquidation Multiple

• A liquidation multiple of 1x was found in 88% of the deals analyzed. This is typical of a majority financings analyzed across industries

• Approximately 11% of the deals analyzed had a liquidation multiple greater than 1x

• Companies with > than 1x include:

Box, Inc Zoove Corp Flowonix Medical, Inc NinthDecimal, Inc

$28

$71

$123

$635

$ $100 $200 $300 $400 $500 $600 $700

>2 - 3x

>3x

>1 - 2x

0 - 1x

Average Valuation (In Millions)

7%2%

91%

Q4 2013

7%3%

90%

Q1 2014

3%

97%

Q2 2014

3%2%

95%

Q3 2014

5%

95%

Q4 2014

Full Ratchet5% Not

Applicable1%

Weighted Average

94%

Anti-Dilution(Q4 2013 - Q4 2014)

10

Anti-Dilution

• Historically, weighted average is the most common Anti-Dilution provision, and this sample was no different with 94% of the deals providing this provision

• Full Ratchet anti-dilution provisions occurred in 5% of the deals analyzed

• Deals that Full Ratchet Anti-Dilution occurred were as follows:

Zero Motorcycles, Inc Auspex Pharm, Inc RainDance Techn, Inc

**Why are some results marked as N/A?If N/A was used as indication for the "Round Direction" and/or the "Liquidation Preference for the Current Round", then this was due to there not being a previous round of financing for that particular company. If N/A was used for the "Type of Preferred Stock", then the preferred stock was not a "Conventional Convertible" or a "Participating Preferred"

$49

$596

$884

$ $200 $400 $600 $800 $1000

Full Ratchet

Weighted Average

Not Applicable

Average Valuation (In Millions)

Junior1%

Not Applicable

1%

Pari Passu61%

Senior37%

Liquidation Preference

(Q4 2013 - Q4 2014)

64%

36%

Q4 2013

3%3%

58%

36%

Q1 2014

2%3%

72%

23%

Q2 2014 52%48% Q3 2014

55%

45% Q4 2014

11

Liquidation Preference

**Why are some results marked as N/A?If N/A was used as indication for the "Round Direction" and/or the "Liquidation Preference for the Current Round", then this was due to there not being a previous round of financing for that particular company. If N/A was used for the "Type of Preferred Stock", then the preferred stock was not a "Conventional Convertible" or a "Participating Preferred"

• A Senior Liquidation Preference was found in 37% of those deals analyzed

• Pari Passu Liquidation Preference was found in 61% of the deals analyzed

$219

$398

$806

$ $200 $400 $600 $800 $1000

Senior

Junior

Pari Passu

Average Valuation (In Millions)

67%

15%

2%

16%

Q4 2013

68%

14%

3%

15%

Q1 2014

69%

22%

9%

Q2 2014

85%

8%2%5%

Q3 2014

71%

10%

8%

11%

Q4 2014

8%72%

<8%14%

>8%3% Not Stated

11%

Dividend Rate(Q4 2013 - Q4 2014)

12

Dividend Rate

• Historically, an 8% Dividend Rate has been used in a majority of the deals analyzed, and this was true in 72% of the deals from this sample

• Also, 89% of the deals analyzed included Non-Cumulative dividends

• Examples of non-traditional Dividend Rates were as follows:

AliphCom (10%)

Cardiva Medical, Inc (10%)

Evernote Corp (5%)

Mobile Iron, Inc (6%)

$235

$243

$653

$1630

$ $500 $1000 $1500 $2000

Not Stated

<8%

0.08

>8%

Average Valuation (In Millions)

93%

7%

Q4 2013

90%

10%

Q1 2014

89%

11%

Q2 2014

89%

11%

Q3 2014

82%

18%

Q4 2014

No89%

Yes11%

Cumulative Dividend

(Q4 2013 - Q4 2014)

13

Cumulative Dividend

• Non-Cumulative Dividend were found in 89% of the deals analyzed

• Examples of companies that contained a Cumulative Dividend deal term were as follows:

Seres Health, Inc MINDBODY, Inc Selecta Bioscience, Inc Flowonix Medical, Inc Parchment, Inc

$325

$605

$ $100 $200 $300 $400 $500 $600 $700

No

Yes

Average Valuation (In Millions)

89%

11%

Q4 2013

92%

8%

Q1 2014

91%

9%

Q2 2014

92%

8%

Q3 2014

89%

11%

Q4 2014

No91%

Yes9%

Pay to Play(Q4 2013 - Q4 2014)

14

Pay to Play

• 9% of the deals did have a Pay-to-Play penalty, with the most frequent being the “conversion to common stock”, followed closely by “the conversion to common stock and loss of anti-dilution”

• Companies that had deal terms with Pay to Play penalties were as follows:

Inrix, Inc Acquia, Inc Aileron Therapeutics, Inc DC Devices, Inc AreNA Solutions, Inc

$96

$623

$ $100 $200 $300 $400 $500 $600 $700

Yes

No

Average Valuation (In Millions)

100%

Q4 2013

67%

33%

Q1 2014

77%

23%

Q2 2014

84%

16%

Q3 2014

79%

21%

Q4 2014

No82%

Yes18%

Redemption(Q4 2013 - Q4 2014)

15

Redemption

• 82% of the deals analyzed did not include Redemption rights

• Companies that did include Redemption Rights in the Term Sheet were as follows:

Pinterest, Inc VMTurbo, Inc Thumbtack, Inc Demandbase, Inc Simply Hired, Inc

$395

$624

$ $100 $200 $300 $400 $500 $600 $700

Yes

No

Average Valuation (In Millions)

Preferred Stock - A class of capital stock that may pay dividends at a specified rate and that has priority over common stock in the payment of dividends and the liquidation of assets. Many venture capital investments use preferred stock as their investment vehicle. This preferred stock is convertible into common stock at the time of an IPO.

Round of Financing – The Series of Preferred or Common that is being authorized and issued in the current round.

Round Direction – Direction of the series preferred being issued based off of the current series issue price VS. the prior series issue price:

UP = current round is priced HIGHER than the prior round

FLAT = current round is priced the SAME as the prior round

DOWN = current round is priced LOWER than the prior round

Liquidation Preference – the order at which the assets or funds are dispersed upon a liquidation, dissolution, or winding up of a corporation, either voluntary or involuntary

Senior- the Series of Preferred being issued is SENIOR in liquidation preference to all other Preferred Stock and Common Stock

Pari Passu- the Series of Preferred being issued shares equally with one or more other Series of Preferred Stock but prior to the Common Stock

Junior – the Series of Preferred being issued is JUNIOR to one or Series of Preferred

N/A- Not Applicable is used if there is not a previous round of Preferred issued (EX: Series A round)

Multiple of the Liquidation Preference – The amount per share that a holder of a given series of Preferred Stock will receive prior to distribution of amounts to holders of other series of Preferred Stock or Common Stock based on the amount invested. This is usually designated as a multiple of the Issue Price, for example 2X or 3X.

Type of Preferred Stock –

Participating Preferred Stock - A Preferred stock in which the holder is entitled to receive the appropriate liquidation preference and after all payments have been made to the various Series of Preferred, the Participating Preferred Stock can participate in receiving any remaining funds or assets, on an “as if” converted basis, alongside the Common Stock shareholders.

Conventional Convertible Preferred – non-Participating, can convert to common and receive Pro Rata distribution, but CANNOT participate with the common on an “as if” converted basis.

Liquidation Cap – The Cap or Max Participation amount that the Participating Preferred Stock can received when participating

Anti-Dilution– Contractual measures that allow investors to keep a constant share of a firm's equity in light of subsequent equity issues. These may give investors preemptive rights to purchase new stock at the offering price.

Weighted Average –The investor's conversion price is reduced, and thus the number of common shares received on conversion increased, in the case of a down round; it takes into account both: (a) the reduced price and, (b) how many shares (or rights) are issued in the dilutive financing. See Broad-Based Ratchet and Narrow-Based Ratchet definitions.

Full Ratchet – The sale of a single share at a price less than the favored investors paid reduces the conversion price of the favored investors' convertible preferred stock "to the penny". For example, from $1.00 to 50 cents, regardless of the number of lower priced shares sold.

Redemption – The right or obligation of a company to repurchase its own shares.

Pay to Play Penalties – A requirement for an existing investor to participate in a subsequent investment round, especially a Down Round. Where Pay to Play provisions exist, an investor's failure to purchase its pro-rata portion of a subsequent investment round might result in one or more of:

Conversion to Common

Conversion to Shadow Preferred

Loss of Anti-Dilution protection

Loss of right to participate in future rounds

Cumulative Dividends – Dividends that accrue at a fixed rate until paid are "Cumulative Dividends" which are payments to shareholders made with respect to an investor's Preferred Stock. Generally, holders of Preferred Shares are contractually entitled to receive dividends prior to holders of Common Stock. Dividends can accumulate at a fixed rate (for example 8%) or simply be payable as and when determined by a company's Board of Directors in such amount as determined by the board. Because venture backed companies typically need to conserve cash, the use of Cumulative Dividends is customary with the result that the Liquidation Preference increases by an amount equal to the Cumulative Dividends.

16

Definition of Terms

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19

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