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Entrepreneurship, Innovation & Venture Funding For PitchPerfect May 13, 2015 David J. Blumberg Managing Partner Fueling Innovation

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Entrepreneurship, Innovation & Venture Funding

For PitchPerfectMay 13, 2015

David J. Blumberg Managing Partner

Fueling Innovation

Blumberg Capital Mission

We help innovative entrepreneurstransform early stage

information technology companiesinto large scale businesses.

Blumberg Capital Overview

8 Investment professionals with entrepreneurial experience

~$500M assets under management across 4 funds

Focus on capital efficient Information Technology companies

Disciplined strategy of leading Seed and Series A investments

Investing in tech hubs (US, Israel, Germany, Canada…)

Large and sustainable funnel of proprietary deal flow

Chief Information Officer Council & Chief Marketing Officer Council

Talent Lead for recruiting assistance

Solid track record: current funds in top decile

CONFIDENTIAL 3

Blumberg Capital Investment Strategy

Growth Capital

Angels

Early Stage Lead

Key Tenets: Go early; go big Target 15-25% equity in seed or

series A round Follow on with winners

CONFIDENTIAL 4

Our “lead the early stage” strategy fills a funding gap in the market

Differentiated Financial Strategy: BC owns ~15% of the average

portfolio company BC serves on ~90% of company

boards

Selected Blumberg Capital Portfolio

CONFIDENTIAL 5

Financial Services

Social Media & E-commerce

Enterprise Software & SaaS

Acquired (PANW)

Best Time Ever For Entrepreneurs - Why Now?

Dramatic decline in CapEx for startups

Rise of efficient distribution channels: SaaS, Mobile Apps, Social Media

Growth of emerging markets

Access to education, formal / informal, models

Growth / professionalization of angel investors

Large companies seek partners for innovation

CONFIDENTIAL

Accelerating Prosperity: 2000 Years GDP Growth

$0

$5

$10

$15

$20

$25

$30

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Billion

s

US Venture Capital: $ Invested by Quarter

Seed Stage Early Stage Expansion Stage Later Stage

Source: PWC Moneytree as of Q2 2014

Monitoring VC Activity Levels

CONFIDENTIAL 8

Venture capital investments hit a frenzy in 2000; today’s level more sober.

Seed stage is 2% of total in past year

Technology is Continuing Secular Growth

Source: KPCB, Morgan Stanley, Bloomberg, CapIQ

Technology Company Market Capitalization as % of S&P 500

CONFIDENTIAL 9

In 2000, technology stocks represented 35% of the S&P index. Recent levels below 20% while post crash growth has been significant and steady.

3.2 5.96.911.3

16.3

28.134.9

62.3

40.4

155.0

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

Series Seed Series A Series B Series C Series D or Later

Median Company Valuation by Funding Stage ($M)

Source: Pitchbook

Early Stage Investing is Stable and Attractive

CONFIDENTIAL 10

Late stage market valuations have increased substantially and are more volatile, while Seed and Series A stages have been impacted less.

Blumberg Invests in Top VC Markets

Note: Survey of 331 venture capital, private equity, and growth equity investorsSource: WSJ, 8/13/2014, based on data from the National Venture Capital Association and Deloitte

11CONFIDENTIAL

Entrepreneurship Requirements

Passion / Commitment / Persistence

Vision

Credibility / Integrity

Domain expertise

Functional skill set

Supportive peer group / mentors

CONFIDENTIAL

The Six T’s VCs Use To Evaluate Startups

TeamTerms

TerrainTiming

Technology

13

Theme

Innovation: Why, What, How, Who, When ? Why

Pain / Necessity Lack of alternatives Value proposition

What Market size / Risk factors Differentiated advantages / Competitive landscape Customer feedback / External validation

How Technological edge / Intellectual property What is in the secret sauce?

Who Right team – mix of skills, compatibility

When Market timing, channels

CONFIDENTIAL

Due Diligence – Trust But Verify!

Take nothing for granted; expect the unexpected

Market checks – consulting with industry experts

Customer checks – yours and ours (via CIO / CMO / CISO Counsels)

Founder checks – formal and informal references

Financial checks - analysis and review of assumptions

Legal checks - use a good attorney/solicitor

15CONFIDENTIAL

Post-investment Support

Network introductions Sales Business development Recruiting Financing

Operational expertise

Strategic/financial consulting

Follow-on investing, based on merit

16CONFIDENTIAL

Accelerating Change – Risks/Opportunities

McKinsey estimates the economic impact of the Digital / Mobile revolution will be 5-10X Internet in the 1990s

All business models are at risk

Major corporations are desperate for innovation

40% of existing companies will fail in this transition

8 trends: Distributed co-creation; Consumers as innovators; Distributed talent management; Higher value interactions; Expanding automation; Unbundling production from delivery; Analytics for management; Data businesses

17CONFIDENTIAL

Entrepreneurs Opportunity Knocks; Carpe Diem! Developed economies high consumer income, rule of

law, low corruption

Natural trade bridge between EU and US and ROW

Strong digital / mobile infrastructure

Leading universities & research institutions

World class centers for international finance, logistics, manufacturing, fashion, automotive, machinery, etc.

Polyglot, educated workforce

Too much government intervention; work rules, taxation and regulation; slow growth; demographics

18CONFIDENTIAL

Year In Review: Significant Macro Changes

CONFIDENTIAL 19

Mobile permeates all sectors

Crowdsourcing/social/cloud is disrupting many industries

Big Data 2.0 (algorithms and machine learning) addressing the application layer

Turnover in large VC firms and more first time funds

Increasing corporate venture activity

Increasing regulation and taxation burden

Emerging markets are still growing, but also riskier

Geo-political tensions – Iran, Islamic State, Russia, China, Nigeria

Richer World Is Happier World

Newsflash: Capitalism Works!

1949 Typewriter 35mm camera AM FM table radio 3-speed phonograph

2009 Laptop PC Color ink jet printer, scanner, copier 8Mpixel digital camera Portable GPS 32” color HDTV 8GB iPod Nano Microwave Refrigerator freezer combo DVD/DVR Home theatre system Cordless phone AM/FM radio Camcorder Playstation II 7 more things…

Source: G.Beck

Average summer student earnings at minimum $US wage

Wrap-up

www.blumbergcapital.com

Fueling Innovation

We fund great entrepreneurial teams, and many portfolio companies are hiring

www.blumbergcapital.com/portfolio

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