Social Media Software Market Update


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Social Media Software Market Update

  1. 1. SOCIAL MEDIA SOFTWARE INDUSTRY UPDATE 2014 DAVID GROVE STEFAN GERHARD IRFAN IQBAL Managing Partner (415) 798-2303 Managing Director (415) 539-0688 (415) 798-2301 AMISH PATEL JARED MELILLO TERRY JIANG Associate Analyst Analyst 2/10/2014 11 Principal
  2. 2. Vaquero: Solutions for the Entire Life Cycle Solutions for life cycle Vaquero Exceptional execution and service Domain expertise and relationships Full suite of products Superior results Middle market, growth focused Best-in-Class advisory Proven Results Growth Capital Private Equity 2/10/2014 Private Debt Advisory Pre-IPO & IPO 21 Sell Side M&A Buy Side M&A
  3. 3. Deep Domain Expertise in Relevant Sectors Vaquero has unparalleled experience in SaaS $166,250,000 Not Disclosed $50,000,000 Exclusivity February 2012 & Social Content Second Rounds $38,000,000 $35,000,000 Exclusivity January 2014 DIAMONDBACK TIGRIS EQUUS Social Media Analytics Mobile Energy Software & Data Leading Social Media Software Vendor Sale to Pre IPO Crossover Round Sale to Initial Public Offering 2/10/2014 Initial Public Offering Initial Public Offering 31 Leading Software PE Firm Recapitalization Growth Capital
  4. 4. Massive Social Media Marketing Market Ad spend will follow engagement Underpenetrated Market $600Bn $10Bn Ad Spend Social Ad Spend Gap in Social Engagement v. Ad Spend 27% VS Time Spent on Social Media 2% Social Media Ad Spend Brand Marketers Focused on Social Media 70% U.S. Brand Marketers Plan to use Social Media more 2/10/2014 69% U.S. brand marketers would spend more online if there was visibility on ROI 41 45% Cite Branding as Primary objective of Social Media Advertising Spend
  5. 5. Massive Social Media Marketing Market Social media is changing the tools marketers need for success Then Information From Broadcast to Engagement Consumers love to hate advertising and interact with brands according to personal preferences From Campaigns to Real-Time Fragmentation of channels and content require constant monitoring of trending topics in order to capitalize on opportunities MOST BRANDS ARE NOT PREPARED Need tools to create value in this new paradigm where the most valuable audiences are consuming social media, not measured media. 2/10/2014 Scarce Abundant Power From Mad Men to Math Men A quantitative revolution replacing “gut feel” decision making Now Sellers Buyers Broadcast 1:1 Targeting Intuitive, Campaigns Data Driven, Real Time Engagement Measurement 51
  6. 6. Social Media Marketing Market Landscape Monitor Manage Crimson Hexagon Suite Vendors Other Buyers 2/10/2014 61 Measure
  7. 7. Potential Strategic Partner Landscape Marketing/Analytics Social 2/10/2014 Enterprise Software Agencies/ Services 71
  8. 8. Additional Vaquero Qualifications 2/10/2014 81
  9. 9. inPowered: A Strategic Divestiture TRANSACTION SUMMARY May 2013 Strategic advisor Vaquero Capital acted as financial advisor to inPowered in connection with the sale of its subsidiary, NetShelter, to Ziff Davis COMPANY OVERVIEW  A leading platform for helping brands discover and deliver expert content to enable consumers to make informed decisions.  Serves large enterprise and SMB customers across multiple industries Has sold TRANSACTION DETAIL  Divested NetShelter to raise capital to fund its rapidly growing earned media advertising platform  The Board and Management did not want to incur dilution associated with a new capital raise to  Vaquero believed that NetShelter was a scarce asset and would bestow market leadership in technology upon the buyer  Executed a targeted process focused on the key strategic buyers that achieved a premium valuation -- several times greater than the seller’s expectation  Vaquero developed tactics to create and maintain competitive tension despite a very limited universe of buyers  Ziff Davis will combine NetShelter with its BuyerBase unit to enable advertisers to use its targeting product across the entire portfolio 2/10/2014 91
  10. 10. DIAMONDBACK: A Strategic Sale TRANSACTION SUMMARY Vaquero Capital acting as exclusive advisor to DIAMONDBACK on its strategic sale process In Exclusivity Strategic advisor COMPANY OVERVIEW  Leading cloud-based social analytics platform helping companies to design, develop, manage and measure their social performance in the marketplace  Real-time analytic platform tracking 36,000 brands running 860 trillion data permutations daily DIAMONDBACK  Hybrid services and subscription software business model TRANSACTION DETAIL  Company had been approached by strategic buyers with interest in parts of the company, but unable to consummate a transaction Sell Side M&A  Board and management believed that customers would increasingly need integrated campaign management and analytics solutions  Company faced strong financial headwinds due to strategic mis-steps and faced a liquidity crunch Top-tier Social Media Software Vendor  Vaquero believed developing a strong bidding-pair for this strategic asset could overcome the challenges associated with a deteriorating financial condition  Executed a rapid sale process targeting strategic buyers — went to market in 15 days and 3 months from launch to close  Achieved a valuation of 2x higher than initial bid and found a solution for both the services and software businesses 2/10/2014 1 10
  11. 11. Selected Vaquero Case Studies December 2012 August 2013 January 2014 Financial and strategic advisor Has been acquired by $35,000,000 Recapitalization $50,000,000 $35,000,000 Growth Capital TRANSACTION SUMMARY TRANSACTION SUMMARY TRANSACTION SUMMARY $35M recapitalization Financial advisor to StreetEasy $35M Senior & Mezzanine Debt round COMPANY OVERVIEW COMPANY OVERVIEW COMPANY OVERVIEW  Safety and compliance SaaS for food production vertical  De facto online real estate marketplace for New York City  Leading provider of fully-hosted, all-in-one eCommerce solution designed for internet businesses TRANSACTION DETAIL TRANSACTION DETAIL TRANSACTION DETAIL  30% premium to publicly-traded peers  Gives Zillow market leadership in the country's largest real estate market  Founders wanted to explore Pre-IPO financing alternatives  Ran competitive process, yielded multiple bids  Vaquero believed that debt markets would offer an efficient & flexible source of capital  Massive increase in value from initial bids  Highly efficient process: 6 days from launch to 1st bid, 7 term sheets  Highly efficient closing process – 28 days  Vaquero invested in Alchemy 2/10/2014 1 11
  12. 12. Selected Vaquero Case Studies September 2011 March 2012 Financial and strategic advisor Financial advisor $33,000,000 $44,000,000 Series B Preferred Equity February 2012 Financial and strategic advisor $166,250,000 Series A Preferred Equity Secondary Offering TRANSACTION SUMMARY TRANSACTION SUMMARY TRANSACTION SUMMARY $33M Series B $44M secondary offering $166M Series A COMPANY OVERVIEW COMPANY OVERVIEW COMPANY OVERVIEW  Largest online tech media publisher  Largest small business online community  Leading SaaS analytics for Oil & Gas TRANSACTION DETAIL TRANSACTION DETAIL TRANSACTION DETAIL  Executed dual track sell side & growth equity process  Executed secondary capital process  Executed a full process, received 20+ bids  Multiple bids at highly strategic values  Vaquero recommended expanding to other financial partners  Found optimal partner with Board’s designed structure  Achieved premium valuation and clean terms in a majority recapitalization  Improved bid valuations by over 45% 2/10/2014 1 12  Vaquero invested in Drilling Info