Alta Group's Emerging Market Research - "Why Mexico?"

ALTA VENTURES MEXICOIGNITING INNOVATIONSummary of EmergingMarket ResearchROGELIO DE LOS SANTOS, MANAGING DIRECTOR, ALTA VENTURES MEXICOPAUL AHLSTROM, MANAGING DIRECTOR, ALTA VENTURES MEXICO Q2 2012

Outline: Emerging Market Research2 ¨  AVM Research Timeline and Team ¨  Emerging Market Research ¨  Investment Hypothesis - Mexico ¨  Drill down Primary Market Research ¨  Investment thesis is working… ¨  Behind the Scenes at Alta ¨  Appendix

Alta Market Research Timeline 2005-20103 2005 2006 2007 2008 Industry Emerging Select Indentify Advocacy- Capital Formation Market Mexico as Partners and and Innovation Research Top Choice, Launch Alta Report; International Started Research PE Growth Investor Summit; Market Capital Key Relationships

Alta Market Research Timeline 2005-20104 2009 2010 •  U.S. Ecosystem Tours and Best Practice Transfers •  Rogelio and Paul Partnership Build sustainable deal flow systems, •  What about VC? VC Market distribution and exit paths. Drill Down and Strategy •  E|100, MVCC, iTuesday, WIN Formulation Kickstart, etc. •  Key Partner Identification •  Building the team •  Open Office in Monterrey, U.S. Team Moves to Mexico Launch Alta Ventures Mexico 2/11/11

Alta Ventures - Team5 Paul Ahlstrom, Managing Partner l  Co-Founder & Managing Partner, Alta Ventures l  Co-Founder, Alta Growth Capital and Kickstart Seed Fund, Co-Founder vSpring Capital l  Business Dev. Director Folio Corporation division of Lexis-Nexis/Reed Elsevier l  Founder/CEO of Knowlix sold to Peregrine Systems 1999 (now HP NYSE: HPQ) l  Other Exits include: MyFamily.com/Ancestry.com (NASDAQ: ACOM), GlobalSim www.globalsim.com sold to Kongsberg Maritime (KOG - Oslo Stock Exchg), Senforce sold to Novell (NASDAQ: NOVL) Altiris IPO (NASDAQ:ATRS) Altiris was then bought by Symantec (NASDAQ: SYMC), Aeroprise sold to BMC (NASDAQ: BMC), Rhomobile sold to Motorola Solutions (NYSE: MSI) l  Advisory boards: Univ of Utah Tech Commercialization, (Previously Motorola VRB), Endeavor Mentor l  BA, Brigham Young University, Honorary Doctorate Netanya Academic College l  Venture Investments: The American Academy, Public Engines, Convert.com, Juxta Labs Rogelio de los Santos Calderon, Managing Partner l  Co-Founder & Managing Partner, Alta Ventures l  Co-Founder, Kickstart Mexico l  Founder of 7 startups; exits Xtreme Cinemas, Dalus l  Co-founder and CEO of Generacion Empresarial Mexicana l  Master in Business Leadership, DUXX Graduate School of Business Leadership l  BS, Instituto Tecnologico y de Estudios Superiores de Monterrey l  Directorships: Energryn, Diverza, Juxta Labs, MFM l  Boards: Babson College, Tech de Monterrey - ITESM, Endeavor, Enlace E+E

Alta Ventures - Team6 Rob McMillen, Principal l  VP Sales Rhomobile l  Associate, vSpring Capital l  JD MBA Brigham Young University l  BA Liberal Arts & Sciences Utah State University l  v100 member Alem Muminovic, Associate l  MBA; International University of Monaco, with Honors l  Experienced entrepreneur; sold to Strategic Buyer l  Managing Director for Guadalajara Angel Investor Network l  Founding member and Team leader for iTuesday and E|100 in the western region of Mexico Christian Aguirre, Senior Analyst l  Founding Member and Team Leader for E|100 Program l  Research and consultancy assistant at SME chair in EGADE l  MS in Finance; EGADE Business School with Honors l  BS Mechatronics; ITESM Magna Cum Laude Lorenzo Barrera, Analyst l  Consultant at SINTEC l  Experience in the snack & confectionary, processed meats and steel industries l  BS Mechanical Engineering; University of Notre Dame

The Ring of Fire8 Macroeconomic Fundamentals (2011) Norway 12.5% 10.0% 7.5% Public Sector Deficit (% of GDP) 5.0% 2.5% Chile Portugal 0.0% Sweden Finland Germany Colombia -2.5% Brazil Australia Canada Italy -5.0% Argentina Netherlands France -7.5% Spain Mexico USA UK -10.0% Ireland Greece Japan Denmark -12.5% -15.0% 0.0% 50.0% 100.0% 150.0% 200.0% 250.0% Public Sector Debt (% of GDP) Source: Data from World Economic Outlook Database 2012, The Ring of Fire, PIMCO, 2009

Gross External Debt as a Percent of GDP: Averages for Selected 59 Countries, 2003-2009 (in percent) 9Sources: International Monetary Fund, World Economic Outlook, World, Bank, Quarterly External Debt Statistics (QUEDS).

Continued Growth in Emerging Markets Supports Private Equity 10 Emerging Markets GDP Growth In Emerging Markets GDP Growth Predicted to Predicted to Outperform Developed Remain Positive in Most Countries Emerging MarketsSource: IMF, World Economic Outlook Database, 2009

Continued Growth in Emerging Markets Supports Private Equity 11 Emerging Markets Developed vs Emerging Markets 12 8 10 6 8 4 6 2 4 0 2010 2011 2012 2 -2 0 United States 2010 2011 2012 Euro Zone Africa Central & Eastern Europe Emerging & Developing Economies Commonwealth of Independent States Developing Asia Latin America Middle East GDP Growth Predicted to Remain Positive GDP Growth In Emerging Markets Predicted in Emerging Markets to Outperform Developed CountriesSource: IMF, World Economic Outlook Database, April 2012

Emerging Markets Pace Global Economic Growth12 The centers of rapid wealth creation are shifting from Developed to Emerging Markets Contribution to Global GDP Growth (Share of World Total) 70% 65% 60% Key Drivers are: •  Rapid industrialization 55% •  Significant income growth 50% •  Improved long-term 45% household financial confidence 40% 35% 30% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Advanced Economies Emerging & Developing Economies Source: IMF, World Economic Outlook Database, April 2012, Data for years 2012-‐2019 are esBmates

Countries of the World13 Albania Chad Grenada Lesotho Papua New Guinea Swaziland Algeria Chile Guatemala Liberia Paraguay Sweden Angola China Guinea Libya Peru Switzerland Antigua and Barbuda Colombia Guinea-Bissau Lithuania Philippines Syrian Arab Republic Argentina Comoros Guyana Luxembourg Poland Taiwan Province of China Armenia Costa Rica Haiti Madagascar Portugal Tajikistan Australia Croatia Honduras Malawi Qatar Tanzania Austria Cyprus Hong Kong SAR Malaysia Republic of Congo Thailand Azerbaijan Czech Republic Hungary Maldives Republic of Yemen The Bahamas Bahrain Dem. Rep. of Congo Iceland Mali Romania The Gambia Bangladesh Dem. Rep. of Timor-Leste India Malta Russia Togo Barbados Denmark Indonesia Mauritania Rwanda Tonga Belarus Djibouti Iraq Mauritius Samoa Trinidad and Tobago Belgium Dominica Ireland Mexico Saudi Arabia Tunisia Belize Dominican Republic I. Rep. of Afghanistan Moldova Senegal Turkey Benin Ecuador I. Rep. of Iran Mongolia Serbia Turkmenistan Bhutan Egypt Israel Montenegro Seychelles Uganda Bolivia El Salvador Italy Morocco Sierra Leone Ukraine Bosnia and Herzegovina Equatorial Guinea Jamaica Mozambique Singapore United Arab Emirates Botswana Eritrea Japan Myanmar Slovak Republic United Kingdom Brazil Estonia Jordan Namibia Slovenia United States Brunei Darussalam Ethiopia Kazakhstan Nepal Solomon Islands Uruguay Bulgaria Fiji Kenya Netherlands SÒo TomÚ and PrÝncipe Uzbekistan Burkina Faso Finland Kiribati New Zealand South Africa Vanuatu Burundi F. Y. Rep. of Macedonia Korea Nicaragua Spain Venezuela Cote dIvoire France Kosovo Niger Sri Lanka Vietnam Cambodia Gabon Kuwait Nigeria St. Kitts and Nevis Zambia Cameroon Georgia Kyrgyz Republic Norway St. Lucia Zimbabwe Canada Germany Lao Peoples D.R. Oman St. Vincent &Grenadines Cape Verde Ghana Latvia Pakistan Sudan Central AfricanRepublic Greece Lebanon Panama Suriname

Narrow the Field: Emerging Markets Per capita GDP below $14k in 200914 Albania Chad Grenada Lesotho Papua New Guinea Swaziland Algeria Chile Guatemala Liberia Paraguay Angola China Guinea Libya Peru Antigua and Barbuda Colombia Guinea-Bissau Lithuania Philippines SyrianArabRepublic Argentina Comoros Guyana Poland Armenia Costa Rica Haiti Madagascar Tajikistan Honduras Malawi Tanzania Malaysia Republic of Congo Thailand Azerbaijan Hungary Maldives Republic of Yemen Dem. Rep. of Congo Mali Romania The Gambia Bangladesh Dem. Rep. of Timor-Leste India Russia Togo Barbados Indonesia Mauritania Rwanda Tonga Belarus Djibouti Iraq Mauritius Samoa Dominica Mexico Tunisia Belize DominicanRepublic I. Rep. of Afghanistan Moldova Senegal Turkey Benin Ecuador I. Rep. of Iran Mongolia Serbia Turkmenistan Bhutan Egypt Seychelles Uganda Bolivia El Salvador Morocco Sierra Leone Ukraine Bosnia and Herzegovina Equatorial Guinea Jamaica Mozambique Botswana Eritrea Myanmar Brazil Jordan Namibia Ethiopia Kazakhstan Nepal SolomonIslands Uruguay Bulgaria Fiji Kenya SÒoTomÚ and PrÝncipe Uzbekistan Burkina Faso Kiribati South Africa Vanuatu Burundi F. Y. Rep. of Macedonia Nicaragua Venezuela Cote dIvoire Niger Sri Lanka Vietnam Cambodia Gabon Nigeria St. Kitts and Nevis Zambia Cameroon Georgia KyrgyzRepublic St. Lucia Zimbabwe Lao Peoples D.R. St. Vincent &Grenadines Cape Verde Ghana Latvia Pakistan Sudan Central African Republic Lebanon Panama Suriname *Based on IMF Information

Narrow the Field: Larger Economies GDP over $75 billion in 200915 Algeria Chile China Peru Colombia Philippines Argentina Poland Malaysia Thailand Hungary Romania Bangladesh India Russia Indonesia Mexico Turkey I. Rep. of Iran Egypt Morocco Ukraine Brazil Kazakhstan South Africa Venezuela Vietnam Nigeria Pakistan *Based on IMF Information

Narrow the Field: Larger Populations Population over 50 million in 200916 China Philippines Thailand Bangladesh India Russia Indonesia Mexico Turkey I. Rep. of Iran Egypt Brazil Vietnam Nigeria Pakistan *Based on IMF Information

Narrowed Field 17 Country Population GDP 2009 (billion) GDP per capita China 1,334.74 $ 4,909 * $ 3,678 India 1,199.06 $ 1,236 * $ 1,031 Indonesia 231.55 $ 539 $ 2,329 Brazil 191.48 $ 1,574 $ 8,220 Bangladesh 165.71 $ 95 * $ 574 Pakistan 163.77 $ 167 * $ 1,017 Nigeria 151.87 $ 173 * $ 1,142 Russia 141.39 $ 1,229 * $ 8,694 Mexico 107.55 $ 875 $ 8,135 Philippines 92.23 $ 161 $ 1,746 Vietnam 87.21 $ 92 * $ 1,060 Egypt 76.70 $ 188 * $ 2,450 Iran 74.10 $ 330 * $ 4,460 Turkey 70.54 $ 615 $ 8,723 Thailand 66.98 $ 264 $ 3,940*Estimated Source: International Monetary Fund

Narrow the Field Goldman Sachs Growth Environment Score18 BRICS and N-11 Goldman Sachs Growth Environment Score (GES) 2009 ¨  Launched in 2005, GES was developed to capture the factors that crucially affect the ability of an economy to grow. ¨  This tool helps Goldman to predict if their BRIC theory will become a reality in the next 20-40 years. (Variables include inflation, government deficit, external debt, investment rate, penetration of phones, PC’s, and Internet, education, life expectancy, political stability, rule of law and corruption) Source: Goldman Sachs

Analysis of Key Indicators (as of 2005)19

Ease of Doing Business (updated 2011 Analysis) 20 Ease of Doing Business Rank 2011 (Higher = worse) Brazil 126 Russia 120 India 132 China 91 Mexico 53 Dealing with Protectin Trading Getting Registering Getting Paying Enforcing Resolving Starting a Construction g Across Country Electricity Property- Credit- Taxes- Contracts – Insolvency Business-Rank Permits – Investors- Borders - -Rank Rank Rank Rank Rank - Rank Rank Rank Rank Brazil 120 127 51 114 98 79 150 121 118 136 China 151 179 115 40 67 97 122 60 16 75 India 166 181 98 97 40 46 147 109 182 128 Russia 111 178 183 45 98 111 105 160 13 60 Mexico 75 43 142 140 40 46 109 59 81 24Source: World Bank; Ease of Doing Business Rank Data for 2011

Latin American Consumer 21 CONSUMER Personal Disposable Income 2010Source: Frontier Strategy Group, 2010 figuresDisposable Income: The amount of money that households have available for spending and saving afterincome taxes have been accounted for

Other markets we considered…22

Summary Analysis: India*23 ¨  Strengths/Opportunities ¤  Economic stability ¤  Political stability ¤  Market opportunity n  Demand for Telecom products and services n  Cost reduction n  Many US businesses use India as tech support/call center ¤  Skilled labor n  SW development Center n  Managerial and manufacturing expertise ¤  Ease to transfer profits back to US headquarters ¨  Weaknesses/Risks ¤  Social issues n  Poverty level n  Infra-structure n  Corruption ¤  Competitive Market * Snapshot of 2005 analysis

Summary Analysis: China 24 ¨  Strengths/Opportunities ¤  Market Size ¤  Fast paced economy ¤  Low cost of labor ¤  Time required to start a business (48 days) ¨  Weaknesses/Risks ¤  Political regime ¤  Hostility against US ¤  Social issues n  Severe human rights issues including child exploitation n  Corruption ¤  Trade barriers ¤  Severe Intellectual Property/Copyright issues ¤  Competition – local and foreign* Snapshot of 2005 analysis

Summary Analysis: Russia 25 ¨  Strengths/Opportunities ¤  Improving economy ¤  Political stability ¤  Infra-structure ¤  High literacy rate (99.4%) ¤  Time required to start a business (36 days!) ¨  Weaknesses/Risks ¤  Payment terms and collection risks ¤  Work ethics ¤  High taxes n  Large corporations not affected as much ¤  Social Issues n  Corruption still a serious problem n  10% of population suffers from alcoholism n  Violence directly related to alcoholism (33% of violent crime) ¤  Slow decision making process n  Deadline is a foreign concept* Snapshot of 2005 analysis

Latin America Region26 ¨  Overview ¤  Vast territory n  Each country has a unique set of values n  Two predominant languages n  Two large markets n  Several smaller markets with high opportunities ¤  Fertile Soil n  Rapid Infrastructure build up n  Flourishing IT and Telecom sectors n  Solid US business presence n  Overall economic growth n  Gradual political stabilization n  Commodity markets play well into trends * Snapshot of 2005 analysis

Latin America Rank27 ¨  The Two Giants ¤  Brazil ¤  Mexico ¨  Small Market ROI Opportunities ¤  Chile ¨  Up and Coming ¤  Argentina ¤  Colombia ¤  Peru ¨  Other Options to Be Evaluated ¤  Ecuador, Venezuela ¤  Central America & Caribbean* n  Panama, Dominican Republic, Guatemala, El Salvador, Costa Rica ¤  *= Puerto Rico not included (US Hispanic market) * Snapshot of 2005 analysis

Summary Analysis: Brazil 28 ¨  Strengths/Opportunities ¤  Market Size (largest in LAR) ¤  Economic stability n  Economic indicators improving considerably ¤  Political stability ¤  Trained IT labor ¤  Strong US business presence ¤  Strong exit markets/liquidity ¨  Weaknesses/Risks ¤  Regulated economy ¤  Bureaucratic government and legal system ¤  Time required to start a business (58 days) ¤  Difficulty to transfer profits back to US headquarters ¤  Trade barriers (high import taxes, etc.) ¤  Cost of capital ¤  Government is the largest IT/Telecom customer – via bids ¤  Social discrepancies and high crime rate* Snapshot of 2005 analysis

Latin America: Best ROI Mexico29 ¨  Pros ¤  Best ROI, Relatively low competition ¤  Fast-growing IT/Telecom market, Skilled labor ¤  Open to foreign investment, Friendly nation ¤  On par with regional leaders in its tax treatment, corporate governance requirements, protection of minority shareholder rights and restrictions on local institutional investors ¤  Strong public and private universities ¤  Huge capital gap for small to medium size companies ¨  Cons ¤  Weak framework for fund activity, with larger funds setting up offshore ¤  Bankruptcy procedures & judicial system remains inefficient ¤  Perceptions of corruption and concerns about ongoing drug trade which affect FDI confidence * Snapshot of 2005 analysis

Summary Analysis: Chile30 ¨  Strengths/Opportunities ¤  Ease to do business ¤  Very low trade barriers ¤  Economic stability ¤  Political stability ¤  Highly trained IT/Telecom labor ¤  Strong US business presence ¤  US dollar largely accepted ¤  Channel of distribution follows US models ¤  Port of entry for Asian parts, components, products ¤  Great base of operations for South America ¨  Weaknesses/Risks ¤  Small Internal Market ¤  High shutdown costs ¤  Business permitting process * Snapshot of 2005 analysis

Summary Analysis: Argentina31 ¨  Strengths/Opportunities ¤  Market opportunity n  Demand for technology/telecom products & services ¤  Undergoing positive economic changes ¤  US business presence (although growing leftist leaning sentiments) ¤  World class software and design talent ¤  High level of sophistication and quality of life ¨  Weaknesses/Risks ¤  Relatively small corporate market in spite of US presence ¤  Current economic situation n  Currency fluctuation n  Government debt & perceived government corruption ¤  Bureaucratic environment ¤  Social Issues n  Social discrepancies n  High crime rates * Snapshot of 2005 analysis

Summary Analysis: Columbia32 ¨  Strengths/Opportunities ¤  Market opportunity n  Demand for technology/telecom products & services n  Government sector offers good opportunities ¤  Channel of distribution ¤  Some US business presence ¤  Dramatically improved public safety (addressed drug cartels) ¨  Weaknesses/Risks ¤  Social issues n  Social discrepancies ¤  Columbian peso fluctuations ¤  Relatively high cost of labor ¤  Perception of safety (although it is not the reality) * Snapshot of updated analysis

Summary Analysis: Peru, Ecuador, CA&C 33 ¨  Strengths/Opportunities ¤  Low competition ¤  Some US business presence ¤  Governments open to foreign investments ¨  Weaknesses/Risks ¤  Small markets ¤  Social issues n  Social classes discrepancies ¤  Weak economies ¤  Infrastructure Note: some LAR prospective customers have subsidiaries or sales offices in CA and other smaller markets. In some cases, contracts include support to those offices.* Snapshot of 2005 analysis

Summary Analysis: Venezuela34 ¨  Strengths/Opportunities ¤  Market opportunity n  Demand for technology/telecom products & services n  Government opportunities – large deals ¤  Skilled labor ¤  Bright engineering talent ¤  Some US business presence ¤  Proximity to US (Miami) ¨  Weaknesses/Risks ¤  Small market ¤  Foreign exchange controls (Impossible to transfer money in and out of the country) ¤  Social issues n  Social discrepancies n  Violence, poverty, crime rate ¤  Political instability n  Leftist/dictator president` * Snapshot of 2005 analysis

Top Choices: Mexico + the BRICS36 ¨  Trending First choice*: Mexico ¨  Second place: Brazil ¨  Solid option: India ¨  Largest market: China ¨  Trending: Russia * based on market PE/VC attractiveness and underserved capital

Mexico Market Increased Purchasing Power MX Stability and37 Mexico’s rising GDP is paralleled by an improving political and regulatory environment First wave of OECD NAFTA; Central Peso crisis; floats AFOREs; stricter Sale of troubled EFTA; Calderon Privatizations entry bank currency; receives accounting standards; portfolios and Investment elected independence US bail-out; repays U.S. bailout intervened banks Grade Global Recession 15500 (US$) 14500 13500 GDP (PPP) per Capita from 1990-2010: 3.32% CAGR 12500 11500 10500 9500 8500 7500 6500 5500 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 First PAN governor Independent PRI loses majority in PRD wins Fox elected; First 30-year elected; Electoral Institute Chamber of Deputies D.F. vote PRI loses majority in fixed rate Peso PRD created established Senate bond issueSource: IMF World Economic Outlook Database, April 2012 Note: Data for 2011 is an estimate

Mexico within the Regional Sovereign Risk Environment38 Sovereign Debt Rating (2012) Russia Mexico China India Brazil Mexico is tied for the second best Sovereign Debt Rating in Latin America and is also tied for second best among the BRICsSource: Fitch analysis

Mexico within the Regional Sovereign Risk Environment39 Sovereign Debt Ra/ng as of 2012 Investment Grade Non-Investment Grade Country Debt Rating Country Debt Rating Chile A+ Paraguay BB- Mexico BBB Venezuela B+ Brazil BBB Bolivia B+ Peru BBB Argentina B Columbia BBB- Ecuador B- Uruguay BBB- Non-Latin America Countries Country Debt Rating China AA- Russia BBB India BBB-Source: Standard & Poor’s

Mexico’s Solid Foundation Mexico’s growth expected to continue40 Fast and sustainable growth Healthy population pyramid with increased aging Increasing Spending Power GDP (USD tr) 100+ 95-99 GDP /capita (USD thds) 2010 2030 90-94 85-89 17.6 1.43 80-84 6% 11% 75-79 16.4 1.29 70-74 65-69 15.1 1.17 60-64 14.2 13.7 Age ranges 55-59 50-54 12.5 1.04 45-49 55% 59% 40-44 0.85 0.88 35-39 30-34 25-29 20-24 15-19 39% 30% 10-14 5-9 0-4 05 07 09 11 13 15 05 07 09 11 13 15 10% 5% 5% 10% Percentage of total population Inflation (Avg CPI) Savings rate 5.3% Growing Population and Urbanization Total popula/on Urban popula/on 25.9% 24.7% 25.6% (million) growth (million) 4.0% 4.0% 25.8% 2.5 23.9% 3.6% 112 114 2.4 2.4 23.2% 107 110 2.2 2.3 2.3 3.0% 3.0% 103 105 05 07 09 11 13 15 05 07 09 11 13 15 05 07 09 11 13 15 05 07 09 11 13 15 Source : IMF Outlook April 2011, CIA World Fact book, EIU

Mexico’s New Advantage in three key manufacturing areas (cost-time-quality) Mexico’s export oriented manufacturing industry will continue to fuel growth41 Mexico’s Export Products and Partners With Significant Export Upside Mexico’s export partners (2011 in %) Mexico’s Export Advantages Mexico China 100% Transporta/on cost* 81% USDs $3058 $5239 80% Lead /me* 60% Days 5 22 40% Labor Unit Cost 15% USDs $4.40 $4.50 20% 4% 0% * 2010. 53 foot container from Mexico to Chicago and 40 foot US Canada Other container from China to Chicago Mexico’s export products In % Labor unit cost (37%): Other manufactured USDs (23%): TVs, goods 6.00 40% (18%): oil, mobile phones, fruits and (22%): vehicles, refrigerators & Mexico 30% vegetables, auto parts appliances 4.00 coﬀee, coAon 20% China 2.00 10% 0% 0.00 Commodities Automotive Electronics Other 01 03 05 07 09 Source: Worldbank, 2012

Opportunity Gap 2010 Capital Mexico has low private equity participation compared to the BRIC’s. 42 Private Equity Penetration, 2010 1.6% 1.41% 1.4% PE Investment / GDP (%) 1.2% 1.06% 1.03% 1.0% 0.8% 0.61% 0.58% 0.6% 0.41% 0.37% 0.37% 0.4% 0.27% 0.29% 0.21% 0.14% 0.15% 0.15% 0.16% 0.2% 0.04% 0.05% 0.0%Source: Emerging Markets Private Equity Association, IMF

Opportunity MX PE Penetration dropped in 2011 Mexico has low private equity participation compared to the BRIC’s. 43 Private Equity Penetration, 2011 .33% .75% .98% … 2.05% … … … 0.30% PE Investment / GDP (%) 0.20% 0.14% 0.13% 0.12% 0.10% 0.10% 0.10% 0.10% 0.09% 0.08% 0.04% 0.01% 0.01% 0.00% Mexico MENA S Russia SSA Brazil Japan Turkey S Poland China India UK US Israel Korea AfricaSource: Emerging Markets – EMPEA, United Kingdom – Centre for Management Buy-Out Research, United States – PitchBook, Israel – Israel Venture Capital Research Center,Japan – Asia Private Equity Review, All GDP data – International Monetary Fund

E&Y VC/PE Country Attractiveness Score 2011 44 VCPE Country Attractiveness Score 2011 USA (1) UK (2) South Korea (17) China (20) Chile (29) India (30) Mexico (42) Brazil (43) Colombia (47) Argentina (66) Kyrgyzstan (80) 0 20 40 60 80 100Source: The Global Venture Capital and Private Equity Country Attractiveness Index 2011, Ernst & Young

2010 AT Kearney FDI Confidence Mexico #8 Jumps 11 Places45 * Mexico dropped significantly in 2012 rankings

2010 LAVCA Scorecard Results Over Time 46 INT’L BENCHMARKS Total Scorecard ratings UK 93 (Select Latin American Countries) Israel 81 78 Spain 76 80 76 76 76 Taiwan 61 74 75 75 75 75 SCORECARD COUNTRIES 70 Total Scores (Max = 100) Chile Chile 76 65 65 Brazil Brazil 75 Mexico 63 59 Mexico 60 Colombia 60 Colombia Uruguay 57 55 Latam Average Trinidad & Tobago 56 50 Costa Rica Latin America Average 55 Peru Costa Rica 54 45 Argentina Peru 51 40 Panama 49 Argentina 43 35 El Salvador 43 2006 2007 2008 2009 2010 Dominican Republic 38Source: 2010 LAVCA – EIU Scorecard Report.

2012 LAVCA Scorecard47 Evolution of Select PE/VC Markets

2010 LAVCA Scorecard Results48Rank / Y-o-Y (scores) 1 a UK 93 2 ↔ Israel 81 3 ▼2 Spain 76 4 ↔ Chile 76 5 ↔ Brazil 75 6 ▲5 Mexico 63 7 ▼2 Taiwan 61 8 ▲3 Colombia 60 9 ▲3 Uruguay 57 International 10 ▼7 Trinidad & Tobago 56 Benchmarks 11 ▲1 Costa Rica 54 Latin America 12 ▲1 Peru 51 13 ↔ Panama 49 =14 ▼3 Argentina 43 =14 ▼3 El Salvador 43 16 ▲5 Dominican Republic 38 0 10 20 30 40 50 60 70 80 90 100 Chile, Brazil and more recently Mexico have been able to break out of the pack and get closer to the international benchmarks from more developed markets. Source: 2010 LAVCA – EIU Scorecard Report.

2012 LAVCA Scorecard49

Structural Transformations and Shifting Consumer Habits Creating Click to edit Master title style Significant Opportunities & Challenges for PE/VC investments in MX50 Rapid Structural Growing Infra. Development Transformation Consumption •  Investment expected to remain •  Rapidly growing middle class •  Per Capita Income expected to at 26% of GDP (highest in and upper class grow at 4% over next 5 years Latin America after Chile •  Maturing population pyramid •  Continued willingness to spend •  Increased urbanization will (pop. above 65 years old will reflected in stable savings rate drive the need for housing, be 11% in 2030) •  55% of the population is transportation and •  Technology orientation currently in active economic infrastructure life •  Growing environmental •  The 2012 5-year plan includes awareness $88 bn investments in energy Opportunities: Opportunities: Opportunities: •  Non Banking Finance to •  Healthcare, Housing •  Leisure & Lifestyle business •  Advertising •  Education •  Services to manufacturing •  Consumer goods •  Non banking Financial industry •  Logistics/transportation Services to consumers •  Tech manufacturing

Mexico within the Regional PE/VC Attractiveness Environment Mexico is very underpenetrated despite its overall good business environment to conduct PE and VC 51 80 Business Environment vs. PE Penetration 0.20% Business environment for PE/VC 70 0.18% 60 0.16% 0.14% 50 Avg. 2008-2010 PE/VC penetration 0.12% Score (0 to 100) 40 0.10% 30 0.08% 0.06% 20 0.04% 10 0.02% 0 0.00% Chile Brazil Mexico Colombia Uruguay Peru Argentina ** In addition, bank credit* in Mexico is much lower than in the region. Bank credit was 12% of GDP in 2010, vs 51% for Brazil and 37% average for Latin America* Bank credit in Latin America weighted by GDP share. Includes mortgages, credit to consumers and to firmsSource: EMPEA, EIU, LAVCA, Banco de México and S&P Ratings Service; Vander Capital Partners analysis;

Significant Business Lending & Investment Gap52 Business lending has experienced negative growth and has not kept pace with consumer credit. Companies are starved for growth capital to keep up with the market demand. SOURCE: Comision Nacional Bancaria y de Valores

Still significant Lending Gap for SME’s53 Companies are starved for growth capital to keep up with the market demand. As a rule consumer lending has far outstripped new business lending save for a short period during the financial crisis. Loan Growth in the Mexican Banking System 60% 50% Business Year-over-year growth 40% Consumer 30% Housing 20% 10% 0% -10% -20% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 SOURCE: Comision Nacional Bancaria y de Valores

Mexico’s Current Situation – Only large Mexican businesses have access to financing 54 BANK CREDIT TO MEXICAN FIRMS BY SIZE $80 $70 12% 13% $60 13% 12% $50 US$ Billion 12% $40 Other Large $30 $20 $10 $- 2006 2007 2008 2009 2010Source: AMB Report: “Lending in Mexico” February 2011 and Banco de México; Vander Capital Partners analysis.

No Financing for Small & Medium Mexican Businesses 1% of firms get 87% of the financing 55 BANK CREDIT TO MEXICAN FIRMS BY SIZE $100 $90 408,884 small and med firms $80 12% $11.16 13% $70 13% 12% 3,033 large firms $US Billion $60 $8.38 12% $50 Small & Med $40 Large $74.69 $30 $56.07 $20 $10 $0 ABM CNBV Source: AMB Report: “Lending in Mexico” February 2011 and Banco de México; Base de datos ahorro y financiamiento CNBV, diciembre 2010; Endeavor Mexico; VanderCapital Partners analysis.

Mexico’s Current Situation 56 BANK CREDIT TO MEXICAN FIRMS BY SIZE IN 2010 Firm size Loan per ﬁrm Loan per ﬁrm Distribu/on % of GDP Employees ABM CNBV S & M US$20.5K US$27.3k 13% 40% 5-‐499 Large US$18.5Mn US$24.6Mn 87% 54% 500+ Source: AMB Report: “Lending in Mexico” February 2011 and Banco de México; Base de datos ahorro y financiamiento CNBV, diciembre 2010; Endeavor México; VanderCapital Partners analysis.

On-The-Ground Research58

There Are Many Mexicos59

Border Issues Obscure America’s view of Mexico6060 ¨  Violence ¨  Drug Cartels ¨  Immigration

Market Drill Down Process On-The-Ground Research61The Alta team has held 100+ meetings that have enabled us to understand the opportunities and challenges of doing business in Mexico. Below are a few representative meetings… •  Federal Competition Commission; Economic Bureau; Undersecretary of the Treasury; ProMexico; Economic Bureau, Foreign Investment; Telecommunications and Transportation Government Bureau; Mexican Senators; Governor of State of Mexico; Former Ambassador to US; Mayor of Mexico City; Undersecretary of North America; Mexican Legislature; Executive Director, NAFINSA; ProMexico; FOCIR •  GE Mexico, Cisco, Corporate and Investment Bank of Banamex (Citigroup), Intel Capital Mexico, IXE Grupo Industry Financiero, American Chamber of Commerce—Mexico, Cavlemas, US Hispanic Chamber of Commerce; Banorte Insurance, Deutsche Bank Mexico

Market Drill Down Process On-The-Ground Research62 •  Visited with more than 12 Mexican Mexican families who are among the most Families influential in Mexico. Research/ •  Tecnologico de Monterrey (TEC) , UNAM, Universities CEPII, Conacyt, Pan American Univ (CEPii) Limited •  More than 20 limited partners and 3 Partners, institutional investors and multilaterals Financial including IFC, NAFIN, CMIC, IADB/MIF

Widespread Development63 Tijuana Population: 750,000 Ciudad Juárez Key Industries: beverages, processed foods, Torreón Population: 800,000 Population: 880,000 metalworking, radio and television Key Industries: electrical machinery, transport equipment, meat, electronics, Key Industries: automotive, bricks, clay, refractory, Hermosillo manufacture, electrical machinery dairy products general machinery, cement and derivatives Population: 600,000 Key Industries: automotive, meat, cement Chihuahua and derivatives, electrical machinery Population: 650,000 Monterrey Key Industries: electrical machinery, automotive, Population: 3 million meat, electronics, dairy products, timber Key Industries: oil refining, iron and steel, Culiacán electrical machinery, glass and derivatives, Population: 600,000 breweries, meat products, cement, banking Key Industries: food processing, cereal milling, sugar, beverages, edible oils and fats Veracruz Aguascalientes Population: 450,000 Population: 500,000 Tampico-Madero-Senderomira Key Industries: petrochemicals, Key Industries: electronics, automotive, dairy, Population: 340,000 refining, basic chemicals, iron and textiles, carpets Key Industries: chemical, industrial steel, sugar, beef, processed foods, machinery, electronic & electrical tourism, transportation services León equipment, oil and refinery, agriculture, (maritime) Population: 1 million cattle, fishing Key Industries: refining, footwear, leather and tanning, bakery goods, beverages Guadalajara Population: 4 million Key Industries: high-technology, edible oils and fats, plastic products, chemicals, dairy products, processed foods, textiles, footwear San Luis Potosí Toluca Population: 670,000 Population: 850,000 Key Industries: iron and steel, non- Key Industries: automotive, plastics, Mexico City ferrous metallurgy, tobacco products, paper and cellulose, chemical electrical machinery, automotive, Population: 20 million derivatives, basic chemicals Key Industries: retail, financial services, livestock food, automotive, plastic products, paper and cellulose, chemical Puebla derivatives, basic chemicals Population: 1.5 million Key Industries: automotive, textiles, iron Source: SE-NAFTA. and steel, bottled water, chemicals, meat * Snapshot of 2005 analysis processing

Major Oil Suppliers of the United States 64 ¨  1. Canada – 2.53 million barrels per day (bpd) ¨  2. Mexico – 1.26 ¨  3. Saudi Arabia – 1.08 ¨  4. Venezuela – 1.07 ¨  5. Nigeria – 1.05 ¨  6. Algeria – .512 ¨  7. Iraq – .464 ¨  8. Angola – .422 ¨  9. Colombia – .360 ¨  10. Brazil – .289Source US Department of Energy: ftp://ftp.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html

Electronics Industry in Mexico65 Tijuana Mexicali Juárez Chihuahua Reynosa  SANYO  SONY  TOSHIBA  SONY  MOTOROLA  PHILIPS  DELCO (Automotriz)  DAEWOO(SLRC)  ALTEL  HITACHI  MITSUBISHI  THOMSON  PHILIPS  MATSUSHITA  KIOCERA  KENWOOD  SONY  JVC  GOLDSTAR  JABIL  ELECTROLUX  MATSUSHITA (Automotriz)  SAMSUNG Saltillo 7 ACER  VITROMATIC  PIONNER  ELAMEX  MABE  NOKIA  MITSUBISHI  PLEXUS  HAMILTON  LUCENT TECHNOLOGIES  SHARP BEACH*  FUJITSU (Automotriz)  SANYO ELECTRODOMÉSTICOS Torreón  CONDURA (Automotriz)  PHILIPS  THOMSON  DELNOSA (Automotriz)  CASIO  KODAK  CANON  KIOCERA Monterrey  INTERNACIONAL RECTIFIER  AUDIO & VIDEO  PIONNER  DANFOSS COMPRESSORS  VITROMATIC (3)  Home Appliance Aguascalientes SanLuis Potosí  MABE (2)  MABE GE  KODAK 7 Computer Equipment  WHITE  NIPPON DENSO (Automotriz)  WESTINGHOUSE  MABE SANYO ( Telecommunications  MEX*  AXA YAZAKI (Automotriz)  TEXAS INTS.  Other  XEROX Cuernavaca  SIEMENS Querétaro  NEC  VISTAR  VITROMATIC (2) Estado de México Guadalajara  PANASONIC 7 I.B.M  ELECTROLUX 7 H.P. Querétaro  FILTER QUEEN  NEC  CLARION  HOOVER  LUCENT TECHNOLOGIES  DAEWOO Estado de Mexico  IMAN  MOTOROLA  BLACK & DECKER  MABE  KOBLENZ  KODAK  MABE (2)  BRAUN  MABE  CUMEX  SINGER  ELECTROLUX Puebla  PHILIPS  SIEMENS  SIEMENS  SUNBEAM  GESTAR  SUNBEAM  SOLECTRON DE MEXICO  KOBLENZ  SINGER  OLIVETTI  FLEXTRONICS  ERICSSON  VITROMATIC  OLIMPIA  JABIL CIRCUIT  ALCATEL/INDETEL  MTI ELECTRONICS  AMP  SCI SANMINA * Snapshot of 2005 analysis

Mexico’s Dynamic & Growing Industrial Base66 •  40+ Home appliance manufacturers Merrytech TIMCO •  Dozens of automobile manufacturers and parts suppliers •  World Class Mexican Companies

Merging of Consumer Habits67

The U.S. exports more to Mexico than to any other country besides Canada 68 U.S Exports in 2007 1.Canada 2. Mexico 3. China 4. Japan 5. U.K. $248.9B $136.5B $65.2B $62.7B $50.3B Not in the Top 10 Brazil India Russia $24.6B $17.6B $7.4B

Mexico, China & Brazil increase purchase of US goods and all others flat69 U.S Exports in 2010 1.Canada 2. Mexico 3. China 4. Japan 5. U.K. $248B $163B $91.9B $60.5B $51B BRICS 2010 Brazil India Russia $35B $19.2B $6B Source: http://www.ustr.gov/countries-regions

Heavy Trade and Growing70 ¨  There is more than $1 billion in trade every single day between the U.S. and Mexico. ¨  $400 billion of imports and exports between the US and Mexico each year.

Mexico is the Number One Foreign Market for California Goods71 California Exports in 2007 1. Mexico 2.Canada 3. Japan 4. China 5. South Korea $16.1B $13.5B $10.6B $18.3B $7.4B Not in the Top 5 Brazil India Russia $2B $1.9B $.5B

8 Californian Industries Sold Over $1B in Goods to Mexico in 2007 72 $4.4B •  Computers and Electronic Products $2.1B •  Transportation Equipment $1.8B •  Machinery Manufacturers $1.1B •  Fabricated Metal Products $1.1B •  Processed Foods $1.0B •  Chemical Manufacturers $1.0B •  Plastic and Rubber Products $1.0B •  Electronic Equipment, Appliances and Parts

Large, stable and growing economy. Mexico’s Huge Potential73 ¨  Large and growing market ¤  113,000,000 inhabitants, half of the population under the age of 26 ¤  High rate of new family formation and emergent middle class. ¤  GDP (PPP): $1.74 trillion; world’s 11th largest economy ¤  Forecasted to be 6th largest by 2050 (Goldman) ¨  Macroeconomic stability ¤  Stable macroeconomic policies and pro-growth political leadership ¤  5%+ GPD Growth, Low public sector deficit, debt and 3-5% inflation rate over the last decade ¤  Goldman Sachs Growth Environmental Score (3 out of 15, BRICS and N-11) and AT Kearney FDI Confidence Index (jumped from 19 to 8 place) ¤  Stability and growing middle class has increased consumer-oriented lifestyles

In 2005 Venture Capital in Mexico was almost Non Existent74 # of Local VC firms by Country 120 100 80 60 100 40 20 40 16 10 0 2 China India Brazil Russia Mexico *In 2009 limited early-stage VC or seed capital in Mexico SOURCE: Capital IQ, country websites (5 VC firms as of 2011 and four in fundraising mode)

Mexico VC Precedents75 2000 2010 Lack of a clear policy ~ Government innovation committee run by SE Inadequate legal frame work ü  Amendment to Mexican Securities Law in 2006, SAPI structure Limited industry knowledge within the country and ü  Growing interest: University VC Classes, limited number of specialists MVCC, Capital Emprendador Conf DF, Incubators/accelerators Limited impact in the market of the efforts ü MIF Inter American Development Bank, done by development banks IFC World Bank, CAF Few institutional investors ü  Fondo de Fondos, CMIC, NAFIN, AFORES/CKDs, LAFP, & other Int’l Funds Lack of deal flow and venture capital oriented ~ Early, but growing interest and entrepreneurial culture sophistication

U.S. VC History76¨  Influential Families (1900-1960) ¤  Pre WWII- Wealthy families begin conducting first PE transactions: Carnegie and Phipps (Bessemer Ventures), Vanderbilts, Whitneys (Whitney and Co.), Rockefellers (Venrock) and Warburgs (Warburg Pincus) ¤  1957- Georges Doriot- “Father of Venture Capital”, Dean of HBS and founder of ARDC invests in DEC which returns 500X ¤  1958- Small Business Investment Act ¤  1959- Rockefeller family (later Venrock) funds Fairchild Semiconductors and launches the integrated circuit industry

U.S. VC History77¨  Institutional Capital (1960-2010) ¤  1960s- PE/VC Industry formalizes and develops fund model ¤  1972- KPCB and Sequoia launch in Silicon Valley, built deal flow, distribution and exit networks and sustainable competitive advantage ¤  1978- Allows pension funds to invest in the asset class; fundraising jumps 14X in one year ¤  1980-2000- Apple, Genentech, FedEx, Cisco, Microsoft, Amazon, Ebay, Intuit, Sun Micro ¤  2000+ Tech bubble bust, beginning expansion to emerging markets in search of growth ¤  1997-2007- Average early-stage venture returns were *40% compounded annually * Thomson Venture Economics – NVCA (early stage Funds)

Impact: VC-Backed Job Creation78 Job Growth ’06 - ’08 Sector Jobs % 1.80% 1.60% 1.60% Software 817,166 80.99% 1.40% Telecom 736,961 74.08% 1.20% Semiconductors 309,437 73.85% 1.00% 0.80% Networking and 392,505 58.75% 0.60% Equipment 0.40% 0.20% Electronics and 271,224 51.35% 0.20% Instrumentation 0.00% VC-Backed Total Private Sector • 11% of all private sector jobs Source: NVCA Venture Impact 5th Edition

Impact: VC-Backed Revenues79 Revenue Growth ’06 - ’08 6.0% Sector Rev. % 5.3% 5.0% Electronics/ $129.6 B 67.00% Instrumentation 4.0% 3.5% Semiconductors $86.8 B 55.04% 3.0% Telecom $256.1 B 51.05% 2.0% Biotech $209.4 B 47.15% 1.0% Computers and $315 B 44.29% 0.0% Peripherals VC-Backed Total Private Sector Source: NVCA Venture Impact 5th Edition

Impact: New Industry Creation80 ¨  Industries Created with VC ¤  InformationTechnology ¤  Biotechnology ¤  Medical Devices ¤  Network Security ¤  Online Retailing ¨  Newest Creations ¤  SocialMedia ¤  Clean Technology

Impact: U.S. VC in 200881 “Opportunity and Innovation defines America’s advantage” - David McCullough

Impact: U.S. VC in 200882 Economic Comparison and VC Impact (2008) $16.00 $14.30 $14.00 $12.00 $10.00 USD (Trillions) $8.00 $6.00 $4.00 $2.90 21% $2.00 $1.09 $- Mexico GDP U.S. VC-Backed Revenue U.S. GDP Source: NVCA Venture Impact 5th Edition, IMF

Enterprises by size and participation (2008)83 Source: INEGI Preliminary 2009 results

All US Job Growth is from Startups84 Source: http://www.kauffman.org/newsroom/u-s-job-growth-driven-entirely-by-startups.aspx

Funding Continuum – Mexico’s Funding Gap85 ANGELS, FOUNDERS & SEED FUNDS VENTURE CAPITAL – GROWTH EQUITY PE - PUBLIC MARKETS OPPORTUNITY SEED/START-UP DEVELOPMENT EXPANSION CONTINUED DEVELOPMENT FUNDING FUNDING FUNDING GROWTH Sweat $50K-500K $500K-5M $5M-20M >$20M Financing Gap in Mexico MENTORING NEEDS DECREASE VALUATIONS INCREASE BUSINESS RISKS DECREASE

Funding Continuum – Filling the Gap86 ANGELS, FOUNDERS & SEED FUNDS VENTURE CAPITAL – GROWTH EQUITY PE - PUBLIC MARKETS OPPORTUNITY SEED/START-UP DEVELOPMENT EXPANSION CONTINUED DEVELOPMENT FUNDING FUNDING FUNDING GROWTH Sweat $50K-500K $500K-5M $5M-20M >$20M MEXICO MENTORING NEEDS DECREASE VALUATIONS INCREASE BUSINESS RISKS DECREASE

Alta’s Target Investment Region87 GROUP AMERICAS Alta Group Americas Alta Ventures Mexico Fund I •  Headquartered in Salt •  Headquartered in Monterrey Lake City, Utah •  Regional Office Mexico City Alta Growth Capital •  Headquartered in Mexico City MEXICO •  Regional Office in Monterrey Kickstart Seed Program •  Support for Alta Ventures Mexico •  Headquartered in Monterrey •  Guadalajara program Q3 ’12

Alta Ventures Mexico Focuses on high growth Mexican sectors88 Technology Consumer Clean/Energy Security Non-banking Healthcare

Alta Portfolio by Investment Focus90 Technology Non-banking Clean/Energy Financial

Wave 1: Technology 91 Mexico Leapfrogging to Next Generation Technologies •  Mobile and internet penetration growing quickly •  Leapfrog to cloud computing SaaS, other on demand services •  New Hacienda Electronic Invoice •  Need to automate in order to reduce corruption 83528 85277 88797 90000 100% 75303 80000 Mobile Users in Mexico Number of Users (Thousands) 66559 80% 70000 60000 55395 Penetration Rate 47129 60% 50000 38451 40000 30098 25928 40% 30000 21758 20000 14078 20% 10000 0 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 # of Total Users 14078 21758 25928 30098 38451 47129 55395 66559 75303 83528 85277 88797 Penetration Rate 14% 22% 25% 29% 36% 45% 53% 63% 70% 77% 78%* 80%*Source: COFETEL. *Penetration rate for Apr-10, self calculated

Wave 2: Clean Tech92 High Potential in Clean Energy Production •  Current law prohibits private sale of energy •  Pending shift in law will allow for private generation and sale of clean energy. •  President Calderon is pushing for 8% of power to come from renewable sources by 2012 •  Solar potential: 3rd in world •  3rd largest geothermal producer in world •  High potential in wind, biomass & Solar

Wave 3: Non Banking Financial93 Small and Medium Enterprises (SME) lack access to financial services•  Business lending has been growing negatively and companies are starvingfor capital to keep up with market demand•  Banks have strict and bureaucratic lendingprocesses•  Specialized financial services entities areoffering agile and flexible valuepropositions to the underserved SMEmarket

Wave 4: Consumer94 10+ Million entering working in next decade •  Rapid family formation •  Family size dropping •  Disposable income rising •  Growing demand for : •  Education •  Healthcare •  Housing/appliances •  Consumer products •  Entertainment

Wave 5: Healthcare (US Grey Hair Tsunami)95 Retiring US Baby Boomers Creating Insatiable Demand for HC Services •  California and Texas alone have over 14 M baby boomers •  Concerned with retirement budgets and healthcare •  Mexico can deliver services under a more cost effective system; this will require more nurses and lower cost infrastructure •  Changes to US healthcare will be a huge win for Mexico

Entrepreneur Ecosystem Support97 Entrepreneur activity 1.  E|100 www.e100.mx 2.  Endeavor and Enlace mentor networks www.enlacee.org, www.endeavor.org.mx 3.  NISI – MX Entrepreneur education 4.  Business plan competitions: Clean Tech Challenge, Estudiante Emprendedor Innovation capacity 1.  iTUESDAY www.ituesday.mx 2.  Western Innovation Network www.sci.utah.edu Investment capacity 1.  MVCC – Mexico Venture Capital Conference www.mvcc.mx 2.  MX Kickstart Seed Program MEXICO 3.  Mexican Family Offices & Strategic Partnerships 4.  Strategic Corporate Partnerships: Spin-Ins/Spin-Outs

Venture Capital: Version1.0 - Silicon Valley98

Everyone Wants to be Silicon Valley99 ¨  Silicon Alley – New York, England ¨  Silicon Sloboda - Moscow ¨  Silicon Gulf – Davao Philippines ¨  Silicon Slopes, Utah ¨  Silicon Oasis- Dubai ¨  Silicon Wadi – Israel ¨  Silicon Beach – Australia, Brighton England ¨  Silicon Glen – Scottland ¨  Silicon Gorge – Bristol, England ¨  Silicon Forrest – Portland Oregon ¨  Silicon Prairie – Illinois, Dallas ¨  Silicon Sandbar – Cape Cod ¨  Silicon etc…. ¨  But can Silicon Valley be replicated?

What Makes Silicon Valley work?100 1.  Critical Mass of Capital, Human Capital and Innovation Capacity tied together with 2.  Trusted Informal Networks in an 3.  Entrepreneur Friendly Environment ¨  Innovation Capacity. Significant Intellectual Capital (Stanford, Xerox PARC, IBM Research Labs) ¨  Capital. Robust Investment Capacity (Full Funding Continuum) ¨  Human Capital. Critical Mass (Significant Entrepreneurial Activity & Culture, Deep Bench Strength, Social Dynamics: OK to Fail, OK to be Rich) ¨  Trusted informal Networks (Trusted Service Providers, Shared Community Vision, Predictable & Supportive Government)

Trusted Informal Networks Drive Positive Outcomes (can we bring the best of SV to LA?)101

MX Entrepreneurial Ecosystem Stakeholders102 Entrepreneurs Industry Entrepreneur Activity Research Universities Innovation Investment Financial Capacity Capacity Government

The US VC Industry Correction104

Alta Ventures Mexico105 Rogelio de los Santos Paul Ahlstrom Alta Ventures Mexico Alta Ventures Mexico rogelio@altaventures.com paul@altaventures.com

Summary Research of Emerging Markets107

Mexico & the BRICs108 BRICs vs Mexico (2011 Values) 2011 GDP (PPP) Population GDP/POP Country ($bn) (mm) (usd) Brazil 2,493 195 12,789 Russia 1,850 142 12,993 India 1,676 1,207 1,389 China 7,298 1,348 5,414 BRIC Mean 3,329 723 8,146 Mexico 1,155 113 14,708 Mexico/BRIC 50% 16% 181% Source: World Economic Outlook Database, April 2012, Alta Ventures Calculations

Brazil vs. Mexico109 Indicator Brazil Mexico Population (Millions) 194.0 113.7 GDP PPP Per capita 12,789 14,708 Exports $250B $336B Unemployment 5.97% 5.23% Days Required to Start a Business 119 9 Inflation 6.5% 3.5% Homicide Rates (per 100,000 People) 21.97 11.59 GDP Real Growth Rate 2.7% 3.8%

Mexico & the BRICs110 Market Performance YTD Country 2007 2008 2009 2010 2011 (2012) 5 Years MSCI EM -66% -66% -66% -66% -66% 14% -66% MSCI EMEA 26% -57% 63% 21% -23% 14% -5% MSCI Asia 38% -54% 70% 17% -19% 13% 14% MSCI LatAm 47% -53% 98% 12% -22% 15% 35% Source: Bloomberg; The Rohatyn Group. Data as February 9,2012

Mexico & the BRICs111 Source: The Rohatyn Group, 2012

Exits: M&A Sources112 Acquirers of Mexican Companies (’07-‐’09) 6% 5% 36% Mexico 21% U.S./Canada 33% Europe Source: Zephyr

Publicly Traded Mexican Companies113 The Mexican market for traded securities remains relatively small and concentrated: Its largest three companies (America Movil, Walmex and Telmex) account for 37% of the total market capitalization. Publicly Traded Companies by Market Cap Other (45) Specialized Retail Food 14 Housing develop. 13 6 Conglomerates 10 3 Telecom Mining 9 130 Companies 7 Financial US$310 bn Market Cap 4 Media 6 # of companies 4 8 Const. Matls. Beverage Retail Source: IXE

Exits: Mexico IPO114 The Mexican IPO market has traditionally been very limited and not a viable exit option for most PE investments, however… •  Potential for a new small-cap online Mexican stock exchange to provide liquidity to early-stage investors and expansion funds for growing companies • Triple B rated companies can raise debt on the Bolsa today

Build regional innovation capacity and link to global networks115 •  Mexican business opportunities with local and international distribution partners (Leveraging national & international IP) •  With limited IP in Mexico, how do we make Mexican companies more competitive?

Sources116 o  IDC o  Bloomberg o  World Bank o  USDOC o  AMB Report o  LAVCA - Latin America Venture Capital Association o  EMPEA – Emerging Market Private Equity Association o  CIA World Fact book o  DOE o  US State Department o  CNBV o  International Monetary Fund o  IMF o  Goldman Sachs Economic Research o  Amnesty International o  Latin Trade Magazine o  Core Strategies o  Taminez Marketing International, The Rohatyn Group o  Vander Capital Partners, Alta Ventures Mexico, Alta Growth Capital * All rights reserved. Brands above are trademarks or registered trademarks of their respective companies.

https://twitter.com	38
http://us-w1.rockmelt.com	18
https://twimg0-a.akamaihd.net	10
http://www.twylah.com	6
https://si0.twimg.com	3
http://www.onlydoo.com	2
http://www.mefeedia.com	1

Alta Group's Emerging Market Research - "Why Mexico?"

by Alta Ventures México

Accessibility

Categories

Upload Details

Usage Rights

7 Embeds 78

Statistics