Financing for Growth: Private and Public Company Alternatives

1. Financing for Growth: Private and Public Company Alternatives April 23rd, 2014

2. Introduction: Brendan Maher, Partner, TMT National Industry Leader, KPMG Moderator: Chris Chapman, National Leader, Growth Companies, KPMG Speakers: Dave Brennan, CFO/COO, Achievers, Toronto David Charron, CFO, Redknee, Toronto David Greenberg, Principal, JMI Equity, Baltimore Paul Sparkes, Executive Vice-Chairman, Difference Capital, Toronto Shari Mager, Managing Director, KPMG in the US, Silicon Valley Financing for Growth: Private and Public Alternatives

3. US Venture Capital Industry and IPOTrends Shari Mager

4. Deal flow fell in 2013 but capital invested held steady at $34B. U.S. VC Deal flow Source: PitchBook

5. The breakdown of deals by stage in 2013 was nearly identical to 2012. U.S. VC Deals by stage Source: PitchBook

6. 500 Starups (131) Y Combinator (66) TechStars (66) SV Angel (33) Andreessen Horowitz (32) Google Ventures (27) Connecticut Innovations (25) High-Tech Grunderfonds (22) Lerer Ventures (21) Rothenberg Ventures (21) 2013 VC Investors by deal stage Most Active Seed/Angel Most Active Early Stage Most Active Late Stage • Andreessen Horowitz (49) • 500 Startups (47) • Google Ventures (43) • Accel Partners (42) • Finnevera Venture Capital (42) • First Round Capital (41) • Connecticut Innovations (39) • High-Tech Grunderfonds (36) • New Enterprise Associates (36) • Intel Capital (35) • Sequoia Capital (40) • Intel Capital (34) • KPCB (32) • Draper Fisher Jurvetson (26) • New Enterprise Associates (23) • Index Ventures (22) • Accel Partners (21) • Battery Ventures (20) • Highland Capital Partners (20) • Norwest Venture Partners (20) Source: Pitchbook 2013 Global PE & VC League Tables Investor Name (Number of Deals)

7. Non-software IT companies are seeing fewer deals as investors explore other sectors. U.S. VC Deals by sector Source: PitchBook

8. Exit activity started slow in 2013 but gradually accelerated throughout the year. U.S. VC Exit flow Source: PitchBook

9. The proportion of IPOs nearly doubled in 2013, reaching the highest level since 2007. Exits (#) by type Source: PitchBook

10. IPO market records best year since 2004 Monthly U.S. IPO Execution New issuance activity in 2013 sprang back after nearly four years of subdued activity as 253 issuers debuted for a total of $75.9B in proceeds Includes closed-end funds Source: Ipreo CONFIDENTIAL 9 Permission granted from the New York Stock Exchange. CONFIDENTIAL

11. Technology closes out 2013 in top spot U.S. IPO Execution by Industry – 2013 Deal Count Tech powered past their Healthcare brethren to finish first in number of deals for the year, repeating their 2012 feat Source: Ipreo CONFIDENTIAL 10 Permission granted from the New York Stock Exchange. CONFIDENTIAL

12. IPOs maintain healthy price performance IPO Performance by Industry – Offer/Current 2013 *Deal Count The average IPO returned 41.4% after listing, a considerable improvement from 2012’s 24.2% Source: Ipreo CONFIDENTIAL 11 Permission granted from the New York Stock Exchange. CONFIDENTIAL

13. IPO performance remains healthy (continued) IPO Industry Pricing Statistics – 2013 Individually, 26 IPOs have doubled since listing last year, while on the flip-side, 45 deals are now trading below their offer prices Data excludes closed-end funds, equity unit offerings, and blank checks Source: Ipreo CONFIDENTIAL 12 Permission granted from the New York Stock Exchange. CONFIDENTIAL

14. Smaller deals dominate pipeline activity IPO Backlog by Sector Healthcare pulled ahead in December and now leads on deal count as the sector accounted for half of December’s total filings to finish the year strong CONFIDENTIAL 13 Source: Ipreo Permission granted from the New York Stock Exchange. CONFIDENTIAL

15. Scale and liquidity of recent IPO companies $ in thousands

16. A Canadian PerspectiveChris Chapman

17. Profile of Canadian Private Growth Companies Number of Companies & Estimated Enterprise Value +300 +$500M +100 +25 +10 EV $150-500M EV $50-150M EV $20-50M SaaS, mobile, social media & e-commerce marketplace companies continued to be valued at high times revenue multiples. The IPO market on both sides of the boarder is positive but with very different dynamics and metrics. M&A activity remains very strong Source: Thompson Reuters, KPMG TMT Analysis

18. Current financing & liquidity environment Growth & private equity interest remains high • Inbound interest from US growth and private equity investors remains high • As do valuations for double digit reoccurring revenue growth • Competition for startup and growth stage deals positive • Cdn. & US co-investments increasing awareness of Canadian companies Strong US IPO & promising Canadian market • US IPO market strong, but threshold is beyond most Cdn. firms • TSX appearing viable option for the 1st time in over a decade • Public company costs, governance & post listing liquidity still a concern Seed & venture capital alternatives encouraging • Seed investment activity is encouraging • Series A venture limited & to post product, revenue firms • Pre-IPO financing and secondary alternatives available but limited to very specific situations

19. High Growth Rates Really Matter • SaaS companies have valuations more than double enterprise firms AND SaaS companies with +20% growth rate are double their lower growth rate peers SaaS companies should focus on getting MRR (monthly recurring revenue) growth rate above 10% while ‘enterprise evolvers’ should aim to show rapid growth in % of SaaS revenue Source: Martinwolf MW IT Index

20. Financing for Growth: Private and Public Company Alternatives April 23rd, 2014

21. Growth and Valuation Relationship

22. Thank you ! Q & A