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Final-Präsentation GERMAN RACING Concept Challenge - 2. Platz: "Digital Natives"
 

Final-Präsentation GERMAN RACING Concept Challenge - 2. Platz: "Digital Natives"

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Präsentation der Finalteams der GERMAN RACING Concept Challenge. Studentischer Konzeptwettbewerb. Weitere Infos unter www.concept-challenge.de. ...

Präsentation der Finalteams der GERMAN RACING Concept Challenge. Studentischer Konzeptwettbewerb. Weitere Infos unter www.concept-challenge.de.

Das Team "Digital Natives" (Anna Heid, Sebastian Walther, Philipp Wunderlich) belegte den 2. Platz.

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    Final-Präsentation GERMAN RACING Concept Challenge - 2. Platz: "Digital Natives" Final-Präsentation GERMAN RACING Concept Challenge - 2. Platz: "Digital Natives" Presentation Transcript

    • Concept ChallengeDigital Innovations in the Horse-Racing IndustryDigital NativesBaden-Baden, August 2012Sebastian Walther, Philipp Wunderlich, Anna Heid
    • Contents PageA. Introduction 3B. Business Models and Recommendation 4C. Product Design and Functionalities 11D. Market Research 13E. Value Creation 16F. Marketing 20G. Financials, Roadmap and Success Factors 22 Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Contents
    • The horse-racing industry has constantly lost revenues, attractionand customer reach during the last 10 years.All important indicators for the viability of the German horse breeding, training, racingand betting went down during the last few years. Horse-racing only accounts It is difficult to get for a small proportion of the engaged/attract new persons sports broadcasting time into horse-racingTeam Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Introduction 3
    • Business Models and Recommendation
    • In the initial phase three business models were developed whichtransfer current digital mega trends into the horse-racing industry. • The race-club enables customers to buy micro-shares of specific horses. • Owners of micro-shares can participate in the success or failure of the horses by receivingbuyyourhorse.com part of the price money in accordance to their amount of shares. • Owners can follow their feedings and meet the horses “live”. • The concept is based on a mingle of crowdfunding and classic investment. • The race club collects bets from distinct betting-interested members. • The bets are pooled into one bet, including all information given from the single bets.bettingpool.com • The diverse information possibly has higher predictive quality and therefore raises the overall profits. • The concept is based on the “wisdom of the crowds”. • The race club offers persons interested in horses the opportunity to create profiles on a central webpage, ranking from amateurs to professionals.wikihorse.com • The platform allows interchange in the community between the different parties. • Members can publish self-written news about regional horsing-competitions similar to netzathleten.deTeam Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Business Model Overview 5
    • Business Model Assessment
    • Even though buyyourhorse.com is difficult to implement, it showsthe highest potential to be successful. Business ModelsInnovativeness 3 1 2 low highProfit Potential 3 2 1 low high 1 buyyourhorse.com 1 2 3 Implementation hard easy 2 bettingpool.com buyyourhorse.com 3 wikihorse.com Result Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Qualitative Assessment 7
    • To study the end-user acceptance of the business models a survey was conducted supporting the results of the previous assessment. Description of the Study Means of Perceived Interest and Intention to Use• Participants were end-users.• Participants were interviewed via phone.• Business model descriptions were read to the participants. buyyourhorse.com• Intention to Use was measured with a 7- Point Likert Scale (Davis 1989). bettingpool.com• Perceived Interest included as possible antecedent of usage behavior, also wikihorse.com measured with a 7-Point Likert Scale.• Participants were given the possibility to comment on the business models. Results of the Study• n = 21• buyyourhorse.com has the highest intention to use, followed by predictiveanalytics.com• Perceived interest correlates highly with intention to use, indicating a high external validity of the measurement. Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Quantitative Assessment 8
    • Business Model
    • buyyourhorse.com enables customers to buy micro-shares of competitive racing-horses. Name: buyyourhorse.com Industry: Horse-Racing / Crowdfunding / Internet Description Value Proposition Key Activities and Partners• The race-club enables customers to buy Value Propositions Customer: • Running website as main platform. micro-shares of specific horses. Owners • “Own” horse for relatively little money, • Filming horses and races. of micro-shares can then participate in the especially interesting as gift for children • Enabling customers to “meet” the horses success or failure of the horses, can and teenagers. “live”. follow their feedings, meet the horses • Profit expectation. • Developing and supervising the complex “live” or get tickets to races, depending on • Low financial barrier and ease of use. investment- their sum invested. The profits of the • Excitement in following the “own” horse • Promotion of Platform. customers depend on the success or the in races. • Facebook as primary technological failure of the horses. Micro-shares can Value Propositions from Studs: partner. be bought as gift or for personal usage. • Shift of risk of financial investment from • Stakeholders in the horse-racing provider to customer. ecosystem. • New source of funding. Customer Segments • Relatively low financial investments for a large scale customer reach. Infrastructure• Children, teenagers and generally young people which are interested in horses.• Young people which do not want to bet, Revenue Generation • Development of a service-oriented IT but still want to feel the excitement of infrastructure platform to enable smooth horse racing. integration of different components. • Revenues are generated through• All age ranges which are interested in • Development of an easy-to-use plug-in for transaction fees based on the transaction innovative, high-risk investment Facebook access . volume. strategies. • Development of a trading system with legal compliance. Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid buyyourhorse.com 10
    • Functionalities and Product Design
    • The mashup shows the design of the webpage inspired by the principles simplicity and intuitive usage. FURY Rewards Baden-Baden Horses 1 2 3 4 €1 Video Access €10 Micro Share €25 Personal Play Certificate €75 Live Meeting Live Meeting 5 6 €150 Tickets FURY is a strapping, healthy looking Name as Sponsor €500 gelding that will participate in many on Jockey* races this year. *1,5 x 1 cmsource of webdesign: kickstarter.com Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Mashup 12
    • Market Research
    • Crowdfunding is one of the emerging global mega trends, with anworldwide crowd funding volume of €1.2B in ´11. “A new and emerging way of funding new ideas or projects by borrowing funding from the crowds. In these markets, any individual can propose an idea that requires funding, and interested others can contribute funds to support the idea. These markets have recently emerged as a viable alternative for sourcing capital to support innovative, entrepreneurial ideas and ventures.” (Financial Times Dictionary) fuer-gruender.de Kickstarter.com has raised €235M of funding until 2012 Average funding volume per for 63,382 projects project is € 3.7Tfuer-gruender.de Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Secondary Market Research 14
    • There are five competitors with similar business models, howeverthey all focus on classical investment, not on crowdfunding. ownaracehorse.co.uk buyyourhorse.com • Investments start at €114. • 6-15 available race horses in training.• Investments as low as €1 to highlight the • Functionalities like gift, horse visiting, etc. crowdfunding character of the business model.• Integration of key partners by providing a favourites.co.uk clear value proposition to the breeders and studs. • Up front costs of €2550 plus €255 per month. • 16 race horses in training with six trainers.• Similar functionalities as • No special functionalities, only information. ownaracinghorse.co.uk, except for live transmission of feeding sessions.• Customer profiles to strengthen the henryponsonby.com community-like characteristics, eventually micro-decisions with “horse communities”. • Yearly costs of €3200. • 19 race horses in training with eight trainers. • Owner’s badges, full involvement, etc. Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Primary Market Research 15
    • Value Creation
    • The platform will have significant direct and indirect impacts on thehorse-racing ecosystem by reaching new customer segments. Customer Studs • Possibility to “own“ a race • Easy way to raise money horse for new horses • Customers which do not • Shift of risk to the like to bet can indirectly customers “bet“ by investing into one Platform brings studs • Higher interest on equity horse and customers capital due to leverage • Specials like visiting the together by providing effect studs or races where your two-sided value • Realisation economies of horse lives scale by fully using the • Feeling as part of a stud‘s capacities community • Raising the stud‘s • Personal footprint competitiveness on the global marketTeam Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Value Propositions 17
    • The business case for customers and studs suggests financialbenefits for both sides. Mares Stallions Foals• Starting investment of €70T • Starting investment of €70T • Starting investment widely ranging• Lineage is important in breeding – • Breeding fees highly dependent on depending on parents’ bloodlines even less successful mares can the success of the stallion • Even the best parents don’t return profits guarantee for a good racer• Product (conservative): • Product (risky): • Product (high risk): • .5% of earnings in races per 1% • .5% of earnings in races per 1% • .5% of earnings in races per 1% of shares of shares of shares • 1% of earnings in breeding per • 1% of earnings in breeding per • 1% of earnings in breeding per 1% of shares 1% of shares 1% of shares • 1% of earnings of sale per 1% • 0.5% of earnings of sale per 1% • .5% of earnings of sale per 1% of shares of shares of shares ROI*: 0.6 to 4.3 ROI*: 0.1 to 6.7 ROI*: 0.1 to 164 *Top 50 studs have about 20% winning horses in their stables with the top 100 race horses earning about €56T a year in German price money – this does not include international price money (Source: www.galopp-sport.de)Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid ROI Calculation 18
    • Besides the advantages for both directly involved sides, theconcept adresses the major key indicators of horse racing. • More horses will be breeded • Possibility to breed with high quality stallions financing the projects by crowdsourcing • All four key indicators will be positively • More horses in training influenced • Higher competition in Germany and worldwide • Money from new interest group for the community • Larger community and more interested parties • More and new racing enthusiasts through could raise TV coverage involvement with their own horse of major events • Search of new outlets to compete in • Possibility to escape the “cycle of death“ • More horses are breeded, trained and traded • Through crowdsourcing higher budgets are available and prices could riseTeam Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Horse-Racing Ecosystem 19
    • Marketing
    • To establish high customer reach our marketing plan consists offour general building blocks. Phase I Phase II1 2 3 Building Awareness Establishment Mainstream Fame• Affiliate Marketing with • Cooperation with • Sponsorship of jockeys other horse-racing sites betting portals – bet on • Sponsorship of international tournaments• Sponsorship of regional your “own” horse • TV – advertisement during horse racing events tournaments • Sponsorship of• Advertisements in national tournaments specialized journals• Facebook plugin Underlying effects• Reporting about the concept• Social networking 104 weeks Follow Up Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid ROI Calculation 21
    • Financials, Implementation Roadmap and Success Factors
    • In the base case scenario, buyyourhorse.com reaches the break even point in 2016. Revenue and Cost Calculation Income Statements• Revenues Fcast Fcast Fcast Fcast Fcast L.C. in €T 2013 2014 2015 2016 2017 – Revenues are generated through fixed purchasing fee of 7% of the trade volume with Revenue - 84,0 168,0 226,8 306,2 an average investment of €30. Cost of sales - - - - - – We assume 40.000 transactions in 2014, after the platform has been implemented, with a Gross profit - 84,0 168,0 226,8 306,2 CAGR of ~50%. Professional Fees (1,4) (0,2) (0,2) (0,2) (0,2)• Costs Technology Costs (13,8) (8,5) (9,7) (10,9) (10,8) – Professional Fees: Attorneys, etc. Administrative Costs (6,4) (5,2) (5,2) (6,5) (6,3) – Technology Costs: Hosting, Computers, etc. Sales and Marketing Costs (7,5) (10,0) (27,0) (27,0) (27,0) – Administrative Costs: Rent, Desks, etc. Wages and Benefits (66,0) (66,0) (66,0) (85,5) (85,5) – Sales and Marketing Costs – Wages and Benefits EBITDA (95,1) (5,8) 60,0 96,8 176,4 Financial income/(expense) (5,5) (6,0) (3,0) - - Depreciation and goodwill amortisation (0,9) - - (0,3) - Scenario Analysis Income before taxes (101,5) (11,9) 57,0 96,5 176,4 Provision for corporation tax - - - - (24,7)• Best Case Net income (101,5) (11,9) 57,0 96,5 151,7 – 35 % higher revenues and constant costs. – Break even in 2015. Key ratios• Worst Case Sales growth % 100,0 35,0 35,0 – 30 % lower revenues and 30 % higher wages EBITDA margin % (7,0) 35,7 42,7 57,6 and marketing costs. – No break even in investigated time-frame. Financing/Debt (i=0,05) 110,0 120,0 60,0 - - Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Business Case 23
    • It will approximately take 1 year to go live with buyyourhorse.com. Phases Project features Time required 1 2 Design of Market Plattform Marketing and Sales Phase I • Market Mechanism • Revenue Generation 35Conceptual • Layout / Ease of Use • Distribution Channels weeks Phase • Service Consumerization • Partnering • Legal Compliance • Marketing Campaign 3 Implementation Phase II • Installation IT Services 10 Implemen- • Development of Facebook Plug-In weeks tation • Programming of Plattform Phase • Legal Contracts 4 Go Live Phase III 4 • Servers Running weeks Go Live • Services RunningTeam Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Implementation Roadmap 24
    • Winning the studs to cooperate with the platform is crucial tosucceed. Gaining successful Gaining market share studs as premium quickly partners Bring customers and Perfect user experience studs together / Features Convince Studs to lower Gaining affiliates for risk of imitation marketing Success factors Managing these factors will improve the chances that buyyourhorse.com will be successful.Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Conclusion 25
    • Thank you for your attention!
    • APPENDIXTeam Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid 27
    • predictivebettingpool.com collects bets from distinct members and places one mass bet including the information from all single bets. Name: bettingpool.com Industry: Horse-Racing / Betting / Internet Description Value Proposition Infrastructure• The race club collects bets from distinct • Profits from higher predictive quality. • The IT infrastructure is not trivial to betting-interested members. These bets • Low initial investments for participating in establish, as it several legal issues have are then mingled and pooled into one bet, the community. to be included into the automatisms of the including all information given from the • Innovative social get-together. system. For instance the allowance to single bets. The diverse information • Interesting results. mingle the single bets has to be granted possibly has higher predictive quality and in advance. Additionally one infrastructure therefore raises the overall profits. This difficulty is the integration of the system concept is based on the “wisdom of the Key Activities and Partners with other betting platforms. crowds”, which has been shown to be a powerful tool for predictions. • Bringing people together on a platform. • Bringing the right people together. • Setting up betting rules and analytic design. Customer Segments • Finding algorithms for better predictive quality.• Betting interested male persons above 18 • Giving people a nice lounge for trading years of age. thoughts.• No age limit. • Cooperating with other betting platforms. Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid bettingpool.com
    • amateurhorseracing.com is a social networking platform organizing amateur tournaments. Name: wikihorse.com Industry: Horse-Racing / Wikimedia / Internet Description Value Proposition Key Activities and Partners• The race club offers persons interested in Value Propositions from Customer • Offering the community a central platform horses the opportunity to create profiles on Perspective: to stay connected. a central webpage. The participants can • Possibility to easily get connected in the • Bringing the right people together. range from amateurs to professionals. The German horse racing community. • Ensuring the future of German horse platform allows interchange in the • Opportunity to find sponsors racing sport by building up a talent pool. community between the different parties • Opportunity to stay in touch with the • Importance to get all players at one table and offers participants the possibility to community. ranging from amateurs to professionals publish articles on the topic, with the most • No financial barrier and ease of use. and officials. interesting being published in the news • Excitement in feeling “in touch” with • Partnership with major studs and section and/or specialized magazines. popular jockeys and officials. breeders. Further amateur racing series can be Value Propositions from Provider organized for members to build up a talent Perspective: pool. • Opportunity to heighten the community’s loyalty. Infrastructure • New source of promoting minor events Customer Segments attracting more (paying) customers. • Creation of a web based platform similar • Advertisement platform for betting to netzathleten.de.• Everyone interested in horses platforms and producers of horse racing• Young amateurs looking for sponsors • Setting high standards on profile safety accessories etc.. and credibility to allow for recruiting and• Horse owners looking for talented riders• Professional jockeys who are willing to networking in a professional way. share their experience and that are • Importance to get officials and looking for sponsors and/or fans professionals on the platform Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid wikihorse.com
    • Revenue EstimationAverage Price: # of Transactions Estimation:Share of overall Age Range Average Segment Age Range Market # oftransactions Transaction Estimation in Mio.* Penetration** Transactions 25 % 18-27 €15 10 18-27 0.1 % 10000 50% 28-37 €30 10. 28-37 0.2 % 20000 25 % 28-80 €45 43 38-80 ~0.023 % 10000 0.25 x 15 € + 0.5 x 30€ + 0.25 x 45€ = 30€ 10000+20000+10000 = 40000 Transactions p.a. 30 €/Transaction x 40000*** Transaction x 0.07 = 84000 * Assumption: Equal Distribution ** Assumption: Reference Crowdsourcing Market *** ~ 50 transactions per day (conservative calculation) Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid
    • Break-Even Analysis Best Case Income Statements Fcast Fcast Fcast Fcast Fcast L.C. in €T 2013 2014 2015 2016 2017 Revenue - 113,4 226,8 306,2 413,3 Cost of sales - - - - - Gross profit - 113,4 226,8 306,2 413,3 Professional Fees (1,4) (0,2) (0,2) (0,2) (0,2) Technology Costs (13,8) (8,5) (9,7) (10,9) (10,8) Administrative Costs (6,4) (5,2) (5,2) (6,5) (6,3) Sales and Marketing Costs (7,5) (10,0) (27,0) (27,0) (27,0) Wages and Benefits (66,0) (66,0) (66,0) (85,5) (85,5) EBITDA (95,1) 23,6 118,8 176,1 283,6 Financial income/(expense) (5,5) (6,0) (3,0) - - Depreciation and goodwill amortisation (0,9) - - (0,3) - Income before taxes (101,5) 17,6 115,8 175,9 283,6 Provision for corporation tax - - (4,5) (24,6) (39,7) Net income (101,5) 17,6 111,3 151,3 243,9 Key ratios Sales growth % 100,0 35,0 35,0 EBITDA margin % 20,8 52,4 57,5 68,6 Financing/Debt (i=0,05) 110,0 100,0 - - -Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid
    • Break Even Point Worst Case Income Statements Fcast Fcast Fcast Fcast Fcast L.C. in €T 2013 2014 2015 2016 2017 Revenue - 58,8 117,6 158,8 214,3 Cost of sales - - - - - Gross profit - 58,8 117,6 158,8 214,3 Professional Fees (1,4) (0,2) (0,2) (0,2) (0,2) Technology Costs (13,8) (8,5) (9,7) (10,9) (10,8) Administrative Costs (6,4) (5,2) (5,2) (6,5) (6,3) Sales and Marketing Costs (9,8) (13,0) (35,1) (35,1) (35,1) Wages and Benefits (85,8) (85,8) (85,8) (111,2) (111,2) EBITDA (117,2) (53,9) (18,4) (5,0) 50,8 Financial income/(expense) (5,5) (6,0) (3,0) - - Depreciation and goodwill amortisation (0,9) - - (0,3) - Income before taxes (123,6) (59,9) (21,4) (5,3) 50,8 Provision for corporation tax - - - - - Net income (123,6) (59,9) (21,4) (5,3) 50,8 Key ratios Sales growth % 100,0 35,0 35,0 EBITDA margin % (91,6) (15,6) (3,2) 23,7 Financing/Debt (i=0,05) 130,0 190,0 210,0 220,0 170,0Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid
    • CAGR Estimation - HintsAverage Price: Crowdfunding market 2011 – 2012 growth over 700 %Even E-Commerce as saturated market 9% CAGR40% CAGR for Big Data Market From 2010 to 2015 Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid
    • Legal Form GmbH Limited • Limited Corporation Liability • No Tax Advantages if Business mainly in Germany • Registered Office in Germany • Registered Office in GB or Wales • Only German Company and Tax Law • In between two legal Company and Tax Systems • Only German Formalities • Lawsuits in UK (expensive) • High Acceptance and Trustworthiness within Germany • Both, German & UK Formalities • High Credibility for Investors • Low Acceptance and Trustworthiness in Germany • Low Credibility for Investors • Equity 25.000€ • Equity 100£ • Minimum Deposit 12.500€ • Minimum Deposit 1 £ • Higher Costs Foundation • Lower Costs Foundation • Limited Corporation LiabilityTeam Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid
    • Risks Growth Risk Operating Risk Legal Risks• Studs concerned about their • Horse Injury & Performance • Revolution of Gambling Reputation • Lawsuits Regulations & Laws• Small Market • Natural Hazards• Trust in Investment • Human Risks• Feasibility of predicted Sales• Subsitution Products & Competitors Financial Risk Team & Management Risk Technology & Marketing Risk• Leasing Contract • Illness • Less likely• Major Maintenance/Repairs • Inability to work• Loss of Receivables • ‘Getting Oder ‘ Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid
    • Professional Fees Professional Expenses Fcast Fcast Fcast Fcast Fcast Expenses in € 2013 2014 2015 2016 2017 Lawyer/Consultant/Tax Accountant 500 200 200 200 200 OHIM 900 0 0 0 0 Professional Expenses 1400 200 200 200 200Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid
    • Technology Expenses Technology Expenses Fcast Fcast Fcast Fcast Fcast Expenses in € 2013 2014 2015 2016 2017 Computers 2100 0 0 700 0 Printers 400 0 0 0 0 Software Applications 1400 0 0 0 0 Hosting 1200 1440 1728 2070 2484 Website Development 5000 1200 2000 2000 2000 Internet Access 1200 1360 1472 1630 1816 Cameras 2500 2500 2500 2500 2500 Maintance 0 2000 2000 2000 2000 Technology Expenses 13800 8500 9700 10900 10800Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid
    • Administrative Expenses Fcast Fcast Fcast Fcast Fcast Expenses in € 2013 2014 2015 2016 2017 Rent 4200 4200 4200 5040 5040 Insurance 599 599 599 699 699 Stationary 720 360 360 480 480 Office Supplies 900 50 50 250 70 Administrative Expenses 6419 5209 5209 6469 6289Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid
    • Marketing and Sales Expenses in € 2013 2014 2015 2016 2017 Affiliate Marketing 0 2000 2000 2000 2000 Regional Tournaments 2500 2500 2500 2500 2500 Ads in specialized Journals 2500 2500 2500 2500 2500 Facebook Plugin 0 0 0 0 0 Cooperation Betting Portals 0 0 0 0 0 National Tournaments 2500 3000 3000 3000 3000 Sponsorship Jockeys 0 0 2500 2500 2500 Sponsorship International Tournaments 0 0 2500 2500 2500 TV Ads 0 0 12000 12000 12000 Reporting about Concept 0 0 0 0 0 Social Networking 0 0 0 0 0 Technology Expenses 7500 10000 27000 27000 27000Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid
    • Wages Wages Fcast Fcast Fcast Fcast Fcast Expenses in € 2013 2014 2015 2016 2017 Salaries 60000 60000 60000 78000 78000 Workers Insurance & Payroll Taxes 6000 6000 6000 7500 7500 Wages 66000 66000 66000 85500 85500Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid
    • ROI Administrative Expenses Mares Stallions Foals Products Best Worst Best Worst Best Worst Investment 1 70 70 70 70 5 5 Race Earnings² 100 0 150 0 150 0 Breeding³ 200 20 600 10 600 0 Sales 4 50 20 40 5 70 1 ROI 4,3 0,6 6,7 0,1 164,0 0,2 Average ROI* 1,3 1,4 1,8 1) According to Mr. Eisele 2) Top 100 race horses earning about €56T a year in German price money – this does not include international price money (Source: www.galopp-sport.de) 3) According to Mr. Eisele 4) According to bbag-sales.de * According to Mr. Eisele and galopp-sport.de about 20% of professionally selected horses will be successful and about 1% of German foals are successfulTeam Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid
    • The business has low initial investments with decent profit potential. Comments Income Statements and Financing*• Revenues L.C. in Thousand 2013 2014 2015 2016 2017 – Revenues from yearly membership fee of 10 € Revenue 0.0 150.0 180.0 216.0 259.2 – We assume a customer base of 15.000 in the first year, Cost of sales (0.0) (30.0) (36.0) (43.2) (51.8) with a CAGR of 20%. Gross profit 0.0 120.0 144.0 172.8 207.4• Cost Structure Expenses (100.0) (50.0) (75.0) (75.0) (100.0) – Development of the betting system, integration into EBITDA -100.0 70.0 69.0 97.8 107.4 other betting systems, personnel etc. will account for the -10 0 Earnings in Equity investments -15 -15 -5 highest costs with around 100.000 € in the first year. Financial income/(expense) 0 0 0 0 0 – Initial IT investment costs are low as service is running Exceptional items 0 0 0 0 0 on cloud product enabling quick scaling and high Depreciation and goodwill amortisation 0 0 0 0 0 elasticity “on-demand”. Assuming all-in-all transaction -115.0 55.0 59.0 92.8 107.4 costs of 2 € per customer per year (activity accounting). Income before taxes Keyratios Sales growth % 20 20 20 20 Profit margin % 30 27 35 34 Financing Debt 150 150 100 50 0 Interest (i=10%) 15 15 10 5 0 * Tax for profit margin /cash flow calculation estimated with 0.035*4*EBT Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid bettingpool.com 4
    • The business case shows relatively low profit potential, however, the business model is associated with little initial inivestments. Comments Income Statements and Financing*• Revenues L.C. in Thousand 2013 2014 2015 2016 2017 – Monthly revenues are mainly generated through advertisement on the platform (0.2€ per user) Revenue 0.0 98.0 . 117.2 144.1 181.7 Cost of sales (0.0) (24.0) (33.6) (47.0) (65.9) – After going live we expect about 20.000 profiles in the first year. Exponential growth during the first 5 years, Gross profit 0.0 74.0 83.6 97.1 115.2 following an s curve reaching a market share of 20% of Expenses (75.0) (70.0) (70.0) (70.0) (70.0) horse enthusiasts (about 200.000). EBITDA -75.0 4.0 13.6 27.1 35.2 – Further revenues are generated by the amateur racing Earnings in Equity investments -10 -10 -10 -10 -9 series through starting fees and advertisements on the Financial income/(expense) 0 0 0 0 0 tournaments (20 participants, 50€ starting fee, 20 Exceptional items 0 0 0 0 0 tournaments each year, 1.500€ advertisements). Depreciation and goodwill amortisation 0 0 0 0 0• Cost Structure Income before taxes -85.0 -6.0 3.6 17.1 26.2 – Development of the social networking platform will Keyratios attribute for 25.000€ one-time costs. User growth % 40 40 40 40 – Monthly server and traffic costs in the cloud dependent Profit margin % -6 3 10.4 12.7 on the usage (0.1€ per user). Financing – Marketing and networking to establish 100 100 100 90 70 0 Debt amateurhorseracing.com as a social network for horse 10 10 10 7 Interest (i=10%) 9 riding enthusiasts of 50.000€ in the first year. – Price money for tournaments (1.000€).Tournament organization costs are born by the racing tracks. * Tax for profit margin /cash flow calculation estimated with 0.035*4*EBT – Staff to manage the platform and tournaments (50.000€) Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid wikihorse.com 43