Venture Capital 101

July 16, 2013 Montreal, Quebec

Presentation Outline My Background Rho Canada Ventures Overview What is Venture Capital? What do we look for in an investment? Ownership Breakdown Investment Process

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My Background
Associate at Rho Canada Ventures
Fundraising Activities Deal Sourcing Due Diligence Financing Portfolio Management

Skills
Venture Capital Cloud & SaaS Technology & Strategy Consulting Life Sciences Enterprise CRM

Mobility

Project Management Certification Training Received In: Venture Capital, Oracle On Demand, Salesforce.com, Veeva Systems, Agile Development

Employment & Education

D E Year 03 04 05 06 F 07 08 C 09 10 B 11 12 13

A. B. C. D. E. F.

Associate at Rho Canada Ventures Consultant at Accenture Financial Analyst at Virgin Mobile Sales Operations Analyst at IBM Canada Sales & Marketing Intern at Frito Lay Canada Honours Bachelor of Commerce McMaster University

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Presentation Outline My Background Rho Canada Ventures Overview What is Venture Capital? What do we look for in an investment? Ownership Breakdown Investment Process

Confidential & Proprietary

Rho Canada Ventures Team

Montreal Investment Team Members
Jeff Grammer, Partner
31 years of operational and venture experience in Silicon Valley, Boston, and Montreal. Joined Rho in 2006 , is a Partner in Fund I & II, and co-invested with Rho since 2002 Areas of expertise include Cloud Computing, IT, New Media, Security, and Wireless & Communications Previous experience: Intel, Chips & Technologies, N*Able, Ember, TechFarm Ventures, and Sigma Partners BA and MA from Boston University

Roger Chabra, Partner

20 years of operational and venture experience in Toronto and Montreal. Joined Rho in 2010, is a Partner in Fund I & II, and co-invested with Rho since 2008 Areas of expertise include E-Commerce, Adtech, Mobility, and Internet & Consumer Services Previous experience: GrowthWorks Capital, BCE, Hargan Ventures, Rogers, Mobilessence, and Logorhythm BA and MBA from University of Western Ontario

Sean Brownlee, Partner

20 years of operational and venture experience in Boston, Ottawa, and Montreal. Joined Rho in 2012, is a Partner in Fund II, and co-invested with Rho since 2010. Areas of expertise include IT, Energy & Clean Technology, Infrastructure Technologies, and Wireless & Communications Previous experience: JMH Capital, EDC, and 3i Corporation BA and MBA from Carleton University

Jonathan Arsenault, Associate

4 years of Technology & Management Consulting experience in New York City, Toronto, and Haiti. Joined Rho in 2012 Areas of expertise include Enterprise Software, SaaS, and Mobility Previous experience: IBM, Virgin Mobile, and Accenture B.Comm from McMaster University

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Rho Capital Partners Company Overview

Rho was founded in 1981 as an asset management firm for a European family Private Equity focus since the early 1980s Anchor investor in several leading early stage venture funds Active direct investor across all stages of venture and growth companies Admitted first outside client in 1993 and today has three divisions: Rho Ventures Rho Canada Ventures Rho Fund Investors Rho Capital Partners has $1.42+ billion assets under management Most recent direct fund is RCV II $100 million, 2012 vintage Most recent US direct fund is Rho VI $510 million, 2008 vintage Offices in New York, Palo Alto, and Montreal
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Rho Ventures
200 company investments

Rho Canada Ventures

Fund I: 20 investments Fund II: 8 investments (looking to do ~30)

Rho Fund Investors

170 fund investments

20 Investment Professionals

Presentation Outline My Background Rho Canada Ventures Overview What is Venture Capital? What do we look for in an investment? Ownership Breakdown Investment Process

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Venture Capital Process

Source: SBI Holdings http://www.sbigroup.co.jp/english/business/am/venturecapital.html

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Presentation Outline My Background Rho Canada Ventures Overview What is Venture Capital? What do we look for in an investment? Ownership Breakdown Investment Process

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Inside An Investors Mind

Other Considerations: - Pain & Value Proposition - Exogenous Market Trends - Competition - Differentiation (UVP) - Barriers to Entry - Go-To-Market Strategy - Roadmap - Business Model - Financial Model - Risks - Sector Focus & Diversification Summary:

Source: Jeff Clavier, Funders & Founders Visual Startup Blog http://fundersandfounders.com/inside-the-investors-mind-jeff-clavier-early-investment/

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Presentation Outline My Background Rho Canada Ventures Overview What is Venture Capital? What do we look for in an investment? Ownership Breakdown Investment Process

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VC Ownership Benchmarks

Source: Inc42 Magazine http://cdn3.inc42.com/magazine/wpcontent/uploads/2013/05/how-startupfunding-works-infographic.png

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Canadian Exit Landscape

The Canadian exit landscape is still significantly behind the U.S., but improving

183 high-tech Canadian companies were acquired over the past five years, versus 2,300 US companies. Of these 183 Canadian companies, nearly 70% were acquired by US corporates. The median exit valuation for Canadian companies was approximately $32MM, compared with $82MM in the U.S. The average number of years to acquisition was approximately eight (compared to five in the U.S.)

*Based only on reported data. Undisclosed valuation amounts were not taken into consideration. Source: MaRS Commons, 2013

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Presentation Outline My Background Rho Canada Ventures Overview What is Venture Capital? What do we look for in an investment? Ownership Breakdown Investment Process

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Investment Process (1 3 months)

Terminate deal based on findings? A) Partner Go/No-Go Decision

B) Partnership Go/No-Go Decision

D) Partnership Go/No-Go Decision (FINAL)

1. Track Deal in Salesforce.com [SFDC]

2. DD OnePager & Initial Write-Up

3. Rho Canada Ventures Partnership Review

4. Detailed Write-Up

5. Reference Calls & Request for Information

6. Term Sheet (socializing)

7. Group Working Session

8. Financing Sheet

C) Entire Partnership Meeting with Entrepreneur

Log into SFDC and input Company, Contacts, Deals, Activities, etc. Upload pitch decks and other relevant documentation to Rho Canada Ventures (RCV) share drive. If the deal team finds a company compelling, they will create a 5 10 page DD write-up. Create a one-pager including deal description, initial thoughts, SWOT analysis, and issues/concerns. Team will review and discuss the one-pager and initial write-up at the weekly partnership meeting Team will make a decision on the deal next steps Include Open Items and Questions columns for all write-up sections In-depth due diligence incl. deep primary and secondary research (20 100 pages) Based on remaining open items , request any necessary documentation from startup Reference calls with startup references and individuals / companies in Rhos network Socialize deal Cap Table Term Sheet Investment amount, purchase price, closing, terms of stock, liq pref, voting and approval rights, anti-dilution, conversion, redemption, etc. Book a full-day workshop to cover open items such as 1- In-depth Product Demos 2- Review of Audited Financials and accounts (e.g. Google Analytics) 3Extended Team Interviews, etc. Present findings to Rho team Work with partners and Rho GC to put terms in the Financing Sheet and get money wired to new portfolio company account

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