CFO/GC Deep Dive

1. Closing Reception Breakfast Sponsor CFO/GC Deep Dive

2. Taking A White Sheet of Paper to the Back Office of the VC Firm

3. Kay Burgess Brett Suchor Chad Dyer President Shareholder InSite Jayne Thompson CFO Intersouth Partners Founder Q-Biz Solutions VP of IT Sequoia Capital Gene Trainor COO Foundation Capital

4. What is the “Cloud”? • Broad, vague and often overused for Marketing purposes. • Cloud concepts relevant to us: • Infrastructure As AService (IAAS): • Power, Cooling, Connectivity, Physical Space & Security, Storage, CPU & RAM, OS Licensing • Software As AService (SAAS): • Email/Calendar/Contacts (Office365, Google Apps) File Server (Dropbox, Box), PBX (RingCentral, ThinkingPhones), CRM (Salesforce) • Multi-tenant: sharing infrastructure and application resources with other customers • Capex->Opex: replacing big capital costs with ongoing annual costs • Cloud concepts likely not relevant to us: • Infrastructure Automation, Management via API, streamlining software development, quickly scaling resources up and down, one-click deployment of entire application stacks.

5. When to migrate? • Some natural times to migrate to cloud services: • When an upgrade of an on premise system is required. • When you are moving to a new office. • When you are deploying new features & systems. • When a software license renewal is due. • If your current infrastructure is unreliable. • If you’re growing or shrinking substantially.

6. What's left? • Minimum (typical) office setup after cloud migration: • Even if everything else is moved off-premise you still need these in the office: • Physical Ethernet Cabling & Patch Panels, Server Room, Power & AC, Racks, Phones, Network Switches, Wireless APs, Internet Firewall, AD/Domain Controller, File Server, Print Server, DHCP Server, DNS Server. • New things you need that you might not have now: • Redundant Internet Firewall, (Robust) Redundant Internet connection.

7. Is it cheaper? • The cost difference depends on your situation and how you think about capex vs opex. $ Cost Reduction opportunities • Legacy Microsoft Software licensing & software assurance • Maintenance & Support on servers, storage, and other hardware • Backup and DR are typically easier and more cost effective with IAAS and SAAS • Reduce capex if hardware and software upgrades are imminent • Reduce the cost of moving offices if you don’t have to move servers • Rent/space - you may need less space if you eliminate servers on prem • Power & Cooling if you eliminate servers on prem • Support labor costs may go down if you spend a lot on infrastructure maintenance • Home support labor costs may be reduced if you spend a lot on supporting remote access

8. Other costs $ Cost Increases • Cloud services are predicated on recurring costs, so opex will be higher • The Internet connection becomes more important, you may need more speed • The Internet connection becomes more important, you may need redundant hardware • One-time cost labor associated with projects to migrate services • New IT expertise may be needed for cloud strategy, change management & training $ no cost change • You still need: • End user support • IT administration for SAAS products & remaining in-house services

9. What are the risks and benefits? • There is no one-size-fits-all answer to whether to move services to the cloud. • Things to consider: • Where are you now?  Are things working well or do they break a lot? • You still need human capital to manage technology. (But they can focus on business impact instead of keeping the lights on.) • Security and stability are likely better than what you have now. • If you’re concerned about law enforcement access to your records, keep them on premises. • Understand data portability & avoid vendor lock-in. • If you have international locations, consider bandwidth/performance implications for those users. • You still need backup & continuity solutions for critical services & data.

10. Back-office Automation

11. Outsourcing / Staff Augmentation • Different motivations for outsourcing / staff augmentation: • Tap in to industry best practices • Stay abreast of latest requirements • Save money via internal staff minimization • Address special projects • Assure knowledge/operational continuity via partnering relationship • All of the above • Outsourcing considerations • Preparing for the transition: Similar issues to succession planning • Agreement: Deliverables, deadlines and division of responsibilities • Reporting: Retain access or specify standard set of periodic reports?

12. Data management is evolving… • A Spreadsheet for every deal • Centralized Data/Document Management • Publishing from a Centralized Source • Leading to an Evolution of the Role of the CFO

13. Institutions / Investors Requiring Robust Portfolio Company Valuations Overview of Fund’s Lifecycles Traditional Functions Investment Mgmt. Emerging due to Industry Pressure • Historically, investment portfolio carried at cost • Mark-to-market valuations not a core function • Demand for accurate valuations a result of 2008 financial crisis and Dodd-Frank legislation • Phases that involve valuation to some extent but not on a consistent / regular basis • Very infrequent with inconsistent methodologies Investment Mgmt. Deal-making Exit Stage Fundraising Traditionally served by legacy methods / technologies Firms need solution for consistent / accurate valuations Source: “Tools and Best Practices for Improving the Valuation Process.” eFront. December, 2013.

14. Valuation is evolving as well… • Valuation is No longer a “Year-end Process” • Hunch vs. Data Investing • Book value to fair value is not an overnight transition • Standards are coalescing nationally