SVC

application of funds to venture capital social venture capital

typical fund-based VC venue

typically it is limited liability company

shares in limited liability company may be purchased by Fund

Fund invests in shares

Fund issues participation units

the minimum price of single unit = 40.000 EUR

Fund does not have an „European passport”

u nits are offered privately & offline to no more then 100 potential investors ,

or alternatively

units are offered publicly & offline ( as an initial public offering ) to an unlimited number of potential investors

2009 FundLord Venture Capital is an investment venue designed for wealthy investors interested in private companies. Venture Capital communicates with investors offline. Venture Capital does not usually consult its investment choices with private investors.

combined fund-based VC venue 2009 FundLord

Fund M invest s in shares

Fund M issues non-public u nits

Fund F’s units are offered to an unlimited number of potential investors

Fund F’s units are offered online

no need for initial public offering

Fund M’s units are fully purchased by Fund s F

each Fund F issues publicly available u nits

there is no minimum price of Fund F’ unit

new venture turned into limited liability company

shares in limited liability company may be purchased by Fund („eligible assets”)

Venture Capital may be designed to suit needs of small investors, as well. Such Venture Capital would communicate with investors online. Such Venture Capital may consult investment targets with the community of investors.

investment policy of close-ended Fund (Fund M)

- shares in limited liability companies are available

investment target („eligible assets”)

2009 FundLord advantages of combined structure

online transactional capacity of open-ended Fund (Fund F)

- no need for a written agreement to buy a unit

In combined structure VC adapts best features of open/close-ended fund structures:

benefit of close-ended fund - investment policy

benefits of open-ended fund - online transactions and investor profile

investor profile of open-ended Fund (Fund F)

- no minimum price of unit investment

- unlimited number of potential investors

- public offer without initial public offering

2009 FundLord almost the end ? This would be the end, if you were a typical Management Company, creating and managing Funds. In such case , combined structure would be one of your products. However, I have something else in mind. unit-holders into community fund into seed capital for start-ups distribution channel into roadshow for start-ups transform

VC = community + start-ups a seed capital investment tool a platform for internet community a flexible investment vehicle selling units exclusively to community interested exclusively in start-ups 2009 FundLord the Fund appears to be … total demo camp As an owner of VC you design benefits for all, make all players interested, create common goals. This is possible. When you treat internet user as potential investor, startup as potential investment target, and a website as a distribution channel. Fund M Fund F

investment perspectives

legal perspective 2009 FundLord Management Company - private Joint Stock Company - initial capital = 125 000 EUR

close-ended m aster Fund

issues non-public certificates in series

minimal subscription = 900 000 EUR

certificates are sold only to Funds F

open-ended feeder Funds - the number of Funds = number of series - issue publicly available units - no minimal subscription amount From the legal point of view the most adequate is a master-feeder fund structure. However, investors’ community should not be distracted by the legal issues. Their attention will be attracted to startups, investment opportunities and community. Series 1 Series 2 Series 3

Startups are :

p resented to the community on the Website

transformed into limited liability companies

purchased by the Fund M > Fund F > Community

managed by Venture Management

investment – startup perspective 2009 FundLord Series 1 Series 2 Series 3

investment – user perspective 2009 FundLord

Community of investors:

votes, discuss on startups

subscribe units in the Fund F which invests in preferred startups via Fund M

redeem units only when Funds allows

participate in the growth of the startup

investment – VC perspective 2009 FundLord Venture Capital :

provides initial capital to Fund – Fund’s owner

provides investment management of Fund M

provides subscription capital for Fund M + F

provides corporate management of Fund

provides typical seed services for startups

secures the rights of investment community , responsible before the authorities

Series 1 Series 2 Series 3

receives:

community features , entertainment

unique investment opportunity

receives :

seed capital

traffic & attention

as a Fund Manager receive s:

distribution & management fees

as an owner of a community receives:

advertisements revenue

professional reputation

attractive venture

as a seed capital receives :

investment opportunities

2009 FundLord w ho gets what ? Fund F Fund M

2009 FundLord venture capital profits as a Fund Manager receive s investment traffic = fees as a owner of community receives no-investment traffic = advertisements revenue as a seed capital receives investment opportunities e ach Fund F gives VC at least 4% of assets invested by users VC monetize the traffic VC receive typical investment opportunity In case there is no traffic failure scenarios VC receives investment opportunities VC receives investment opportunities + community owner’s benefits success scenario In case there is „investment traffic” + „no-investment traffic ” of community In case there is only „ no-investment ” traffic

how many visitors make the initial investment?

- unique investment opportunity

- unique entertainment feature

- affordable price of initial investment

how many investors make the following investment?

- increasing valuation of investment increases the ratio of following user’s investments

- the offer is targeted to investors with ready cash between 1 00 – 40 000 EUR

traffic – basic conversion s 2009 FundLord Traffic is conversed into initial investment made by user. The initial investment made by user is conversed into following investments of that user. Patronage of professional venture capital company enhance the credibility of investment. conversion ratio I conversion ratio I I INV

2009 FundLord VC’s investment process

investment rules 2009 FundLord

Long list of startups are presented to community which discuss, judge them and share opinion

Short list of best startups is chosen as an investment targets for VC

Both VC and Community invest , according to rules of investment.

There are many possible rules of investment

a n example of rules of investment

During subscription period VC and Community invest 100% of the minimum subscription amount, which is 900 000 EUR

VC may invest no more than 50% own capital, which is 450 000 EUR

Whole Community invests no less than 50%, which is 450 000 EUR

In case the Community fails to collect 50% of subscription capital, VC is entitled to invest the missing capital, to withdraw from Fund, to offer Fund F privately

VC opens a subscription in Fund F which takes max. 2 months.

2009 FundLord example of VC investment

Presumptions:

VC invest 450 000 EUR

Community invest 450 000 EUR

initial investment = 100 EUR

y early management fee = 5 %

o ne-time distribution fee = 5 %

Requirements for success:

at least 400 000 traffic in 2 months time

which brings at least 4000 initial investors

conversion ratio I = 1% (initial investors /traffic)

conversion ratio II = 8% (following investors / initial investors)

Results:

min. 5 startups receive 720 000 EUR

each startup receives max. 144 000 EUR

1 80 000 EUR is deposited as a liquidity security

as a Fund Manager receive s fees as a community owner receives advertisements revenue as a seed capital receives investment opportunities

at least one-time 25 000 EUR distribution fee

y early 25 000 EUR management fee (for 5 years)

VC monetizes monthly traffic of 200 000 users VC invest s own capital and expects typical high returns

3 VC’s FAQ

1. What if there will be less than 4000 initial investors or the traffic will be less than 400 000 traffic in 2 months subscription period?

Fund F is a flexible tool which may be offered publicly via other distribution channels or may be offered privately to big investors. Also VC may invest all the required amount. Finally , VC may withdraw from investment into startups .

2. How will the Fund deal with redemptions of units ?

Fund F will be legally allowed to set up own rules and frequency of redemptions, eg. rules harmonized with the investment schedule based on agreement between VC and startup.

3. What are the costs of creating and managing Fund ?

General rule is that Fund covers its cost with the management & distribution fee. Every additional start-up bring profits while costs do not increase significantly. Finally, there are already VC acting as a Funds (however, close-ended type , without benefits of combined structure).

2009 FundLord