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  • 1. Innovation Thursday Presentation February 2008 v1.07 - In Commercial Confidence - Page 1 of 15
  • 2. Yoav Andrew Leitersdorf What I Have Done n Founded, grew and successfully sold 3 tech businesses n Movota (London) – Cofounder, MD and CEO § Identified opportunity & conceived mobile product § Sourced, negotiated & closed equity & debt capital in 3 rounds; signed up top 5 customers in Europe § Negotiated a multi-million € exit to Bertelsmann AG n ExchangePath (New York) – Cofounder and CTO § Invented, patented & productized payment service § Partnered with content providers and MasterCard § Completed a €25MM trade sale to CMGI (NASDAQ) n VC Associate at Draper Fisher Jurvetson § Sourced wireless deals in New York region and Israel § Evaluated hundreds of companies & assisted portfolio cos. n 15 yrs coding, engineering & telecom experience § Networking, database, financial and multimedia software development § 3 registered international patents: 2 in authentication, 1 in mobile apps n MBA (Columbia University); studied at IMD, Switzerland In Commercial Confidence - Page 2 of 15
  • 3. YL Ventures What I Am Doing Now YL Ventures is a value-oriented venture capital fund with unique and differentiated deal flow that invests in European and Israeli Internet, telecom and digital media software companies, accelerates their evolution via value-added governance and business development, and arranges their rapid acquisitions based on exit strategies conceived prior to investment, while reserving capital for ‘home run’ scenarios. € Invested: €500K-€1MM €500K-€1M €500K € Exit: €20MM-€50MM Earn Out Risk Expansion Stage – Bridge Management Period Sourcing & deployments, Earn Out – Control Funding Negotiations US presence, Stage acquirer synergies, Stage more features revenue growth Q-2 Q-1 t0 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 In Commercial Confidence - Page 3 of 15
  • 4. What Are Innovative Businesses? n YL Ventures perspective n Creative entrepreneurs who strive to win no matter what n Deep technology in the form of proprietary software n Differentiated products or services n Efficient use of capital – bootstrapped operations / low burn- rate n The fund can establish a clear exit route within 2 years n The broader view n IT, healthcare, clean-tech, and everything under the sun n Better mousetrap; evolutionary / revolutionary n Change the world – the bigger picture n How have these businesses been innovative? In Commercial Confidence - Page 4 of 15
  • 5. Innovation in the United States and in Israel n ‘Entrepreneur is a hero’ mentality n Abundant role models n Ecosystem for innovation n Serial entrepreneurs, experienced venture capitalists n Lawyers, accountants, intermediaries, press, blogs, events n Excellent academic institutions n Government support – the way it all begins n Direct investments in small to medium size businesses n Leverage to venture capitalists in the form of debt n Tax incentives in underserved regions and to multinationals n Stock option legislation n Investment in education n Relaxed labour laws n Multinational funds and treaties In Commercial Confidence - Page 5 of 15
  • 6. What Innovation Can Do to a Small Country n In proportion to its population, Israel has the largest number of startups in the world. In absolute terms, Israel has the largest number of startups than any other country in the world, except the US (3,500 hi-tech companies). n Outside the United States and Canada, Israel has the largest number of NASDAQ listed companies. n Israel is ranked #2 in the world for venture capital funds right behind the US. Israel has the third highest rate of entrepreneurship in the world. n Motorola’s commercial cell phone was developed in Israel. n Intel has four major development centers in Israel. n Microsoft has one of its three “strategic development centers” outside the US in Israel. It is based on several startup companies that Microsoft has acquired in Israel, which are now part of this development center. n SAP AG, the enterprise software leader, has its larger development center outside Germany in Israel – also based on startup acquisitions. n IBM, Kodak, Cisco, HP, Google, Novell, AOL and many others, also have large scale research and development centers in Israel. In Commercial Confidence - Page 6 of 15
  • 7. European Challenges and Opportunities n Cultural stigma attached to failure n Low allure for stock options (avg. EU allocation: 5%) n Only 897 start-ups funded in 2007 (lowest # since 1999) n Weak local market for IPOs and M&A deals n 2007 European IPOs: 38 (in 2006: 89) n 2007 M&A deals: 136, lowest figure this decade (in 2006: 219) n Positive European trends n Increasing Internet penetration and high mobile usage n Companies require less capital and fewer employees n Rational going-in valuations (on average 70% lower than U.S.) n Central and Eastern Europe – fertile and growing! n Rapid, U.S.-centric exit approaches such as YL Ventures’ Sources: VentureSource, BusinessWeek In Commercial Confidence - Page 7 of 15
  • 8. Innovation Building To-Do List n Respect the entrepreneurs; they grow the economy n Encourage risk taking – reduced taxes, stock options n Invest in education; especially engineering n Make it easy to find, deploy and dismiss talent n Allocate state budget to SMB investments & loans n Boost foreign investment: tax breaks, treaties, bridges n Open borders to skilled immigration n Seek exit opportunities in the U.S. via M&A Contact Yoav Leitersdorf Managing Partner yoav@YLVentures.com In Commercial Confidence - Page 8 of 15
  • 9. Innovation Thursday Presentation February 2008 v1.07 - In Commercial Confidence - Page 1 of 15
  • 10. Yoav Andrew Leitersdorf What I Have Done n Founded, grew and successfully sold 3 tech businesses n Movota (London) – Cofounder, MD and CEO § Identified opportunity & conceived mobile product § Sourced, negotiated & closed equity & debt capital in 3 rounds; signed up top 5 customers in Europe § Negotiated a multi-million € exit to Bertelsmann AG n ExchangePath (New York) – Cofounder and CTO § Invented, patented & productized payment service § Partnered with content providers and MasterCard § Completed a €25MM trade sale to CMGI (NASDAQ) n VC Associate at Draper Fisher Jurvetson § Sourced wireless deals in New York region and Israel § Evaluated hundreds of companies & assisted portfolio cos. n 15 yrs coding, engineering & telecom experience § Networking, database, financial and multimedia software development § 3 registered international patents: 2 in authentication, 1 in mobile apps n MBA (Columbia University); studied at IMD, Switzerland In Commercial Confidence - Page 2 of 15
  • 11. YL Ventures What I Am Doing Now YL Ventures is a value-oriented venture capital fund with unique and differentiated deal flow that invests in European and Israeli Internet, telecom and digital media software companies, accelerates their evolution via value-added governance and business development, and arranges their rapid acquisitions based on exit strategies conceived prior to investment, while reserving capital for ‘home run’ scenarios. € Invested: €500K-€1MM €500K-€1M €500K € Exit: €20MM-€50MM Earn Out Risk Expansion Stage – Bridge Management Period Sourcing & deployments, Earn Out – Control Funding Negotiations US presence, Stage acquirer synergies, Stage more features revenue growth Q-2 Q-1 t0 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 In Commercial Confidence - Page 3 of 15
  • 12. What Are Innovative Businesses? n YL Ventures perspective n Creative entrepreneurs who strive to win no matter what n Deep technology in the form of proprietary software n Differentiated products or services n Efficient use of capital – bootstrapped operations / low burn- rate n The fund can establish a clear exit route within 2 years n The broader view n IT, healthcare, clean-tech, and everything under the sun n Better mousetrap; evolutionary / revolutionary n Change the world – the bigger picture n How have these businesses been innovative? In Commercial Confidence - Page 4 of 15
  • 13. Innovation in the United States and in Israel n ‘Entrepreneur is a hero’ mentality n Abundant role models n Ecosystem for innovation n Serial entrepreneurs, experienced venture capitalists n Lawyers, accountants, intermediaries, press, blogs, events n Excellent academic institutions n Government support – the way it all begins n Direct investments in small to medium size businesses n Leverage to venture capitalists in the form of debt n Tax incentives in underserved regions and to multinationals n Stock option legislation n Investment in education n Relaxed labour laws n Multinational funds and treaties In Commercial Confidence - Page 5 of 15
  • 14. What Innovation Can Do to a Small Country n In proportion to its population, Israel has the largest number of startups in the world. In absolute terms, Israel has the largest number of startups than any other country in the world, except the US (3,500 hi-tech companies). n Outside the United States and Canada, Israel has the largest number of NASDAQ listed companies. n Israel is ranked #2 in the world for venture capital funds right behind the US. Israel has the third highest rate of entrepreneurship in the world. n Motorola’s commercial cell phone was developed in Israel. n Intel has four major development centers in Israel. n Microsoft has one of its three “strategic development centers” outside the US in Israel. It is based on several startup companies that Microsoft has acquired in Israel, which are now part of this development center. n SAP AG, the enterprise software leader, has its larger development center outside Germany in Israel – also based on startup acquisitions. n IBM, Kodak, Cisco, HP, Google, Novell, AOL and many others, also have large scale research and development centers in Israel. In Commercial Confidence - Page 6 of 15
  • 15. European Challenges and Opportunities n Cultural stigma attached to failure n Low allure for stock options (avg. EU allocation: 5%) n Only 897 start-ups funded in 2007 (lowest # since 1999) n Weak local market for IPOs and M&A deals n 2007 European IPOs: 38 (in 2006: 89) n 2007 M&A deals: 136, lowest figure this decade (in 2006: 219) n Positive European trends n Increasing Internet penetration and high mobile usage n Companies require less capital and fewer employees n Rational going-in valuations (on average 70% lower than U.S.) n Central and Eastern Europe – fertile and growing! n Rapid, U.S.-centric exit approaches such as YL Ventures’ Sources: VentureSource, BusinessWeek In Commercial Confidence - Page 7 of 15
  • 16. Innovation Building To-Do List n Respect the entrepreneurs; they grow the economy n Encourage risk taking – reduced taxes, stock options n Invest in education; especially engineering n Make it easy to find, deploy and dismiss talent n Allocate state budget to SMB investments & loans n Boost foreign investment: tax breaks, treaties, bridges n Open borders to skilled immigration n Seek exit opportunities in the U.S. via M&A Contact Yoav Leitersdorf Managing Partner yoav@YLVentures.com In Commercial Confidence - Page 8 of 15