Seed Capital Fund Shay Garvey 5th October 2011

1. Seed Capital Fund Shay Garvey 5th October 2011

2. Delta at a Glance Delta I InishTech Beta Delta II Delta III BIEF Plus: New Seed Fund

3. New Seed Fund (BOISES) • €17m sponsored by BOI and EI • Many investments of up to ~€600,000 • Focused to a large degree on HPSU-type companies • Aimed to be invested quickly over the next 2-3 years • Basic criteria: • Good people • Business concepts that can get to revenue fairly quickly • Not capital consumptive companies • Our capital can last 12+ months

4. Old World of Technology Investing Stage 4 Exit Stage 3 Expansion Stage 3 Third round Early lighthouse customers Stage 2 Second round Stage 1 Beta product • Investors committed for long haul • Big, upfront bet on market • Different roles for different investors along the way First round Startup Seed round investment

5. New world of investing Expansion Stage 2 Proven consumer proposition/business model Stage 1 • ‘Giving it a go’ is cheap: • Technology / cloud • Early market impact • Lots of try-it-and-see seed investments • Then big expansion rounds in winners at high valuations Startup Very small seed rounds

6. Key ingredients of a seed investment • Small amount of capital; essentially a valuable option • Major proof points can be achieved • # 1: cost of acquiring a customer is a lot less than value of customer • #2: lots of potential customers • And many other proof points……….. • A workable, sensible business model lies ahead • Not an arms race versus other well capitalised competitors So….design your seed plan around gathering proof

7. Meeting a VC – How it works Meet someone from Delta at event or ask someone to introduce you or cold call us Typically provide us with a short summary If within our range of interest, you will meet with one of the Delta team If that person finds it interesting, then generally meet larger group of Delta team If still interesting, we start doing basic DD – some calls, some desk research Then, peel back the onion on DD Eventually leading to a term sheet (4+ weeks) and legals (another 4+ weeks)

8. What’s Going on in Investor’s Head at First Meeting When the investor meets you, they are (almost) as keen to invest as you are to get investment Investor goes through a really quick mental assessment (good person with real depth? interesting / different angle on market? Something defensible? big market?) Most important – can I deal with this person for next X years? Will they listen? Are they adaptable? Will they give it straight? If quick assessment is positive, then investor moves onto gathering evidence to prove the case to themselves and colleagues. Hard to turn a ‘no’ into a ‘yes’. Don’t try. At end of first meeting, if it looks somewhat promising, then ask the investor: ‘what would I need to convince you of?’

9. Hardest Part of VC’s Life Lemons ripen early Every company goes through valley of death ……… • Typical Situation • Sales below target, but pipeline ok • Team a bit deflated • Rumblings at the board • Cash almost gone • No new investors willing to invest • But, market opportunity 12-24 months away looks good ? Follow your money

10. What should a promoter look for in a VC? Legs Deep pockets to fund your ambition Arms Strong trade and investment links/network Mind Vision/common purpose Strong analytical skills/corporate governance Heart A friend when the going gets tough The Full Body VC

11. A Good Time to be Starting a Company • New seed funds • Right time in business cycle • Cost base for labour, rent, etc lower • Technology costs almost irrelevant • Lots of help available • No jobs available anyway!

12. Delta Partners We are interested in talking to backable people with interesting businesses/business ideas. Shay Garvey Delta Partners Media House South County Business Park Leopardstown Dublin 18 Ph: 294 0870 Fax: 294 0877 E-mail:seedfund@deltapartners.com E-mail: shay@deltapartners.com Web:www.deltapartners.com