SMART MONEY FOR SMART STARTUPS
www.runacap.com © 2013, Runa Capital
RUNA CAPITAL PRE-HISTORY
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
Ilya Zubarev
Senior P...
2010
RUNA CAPITAL 4 YEARS IN ACTION
Jun 2010
1st term-sheet
Jelastic
Feb 2011 Andre Bliznyuk
joins Runa
as Investment Part...
““
TEAM Operating Partner/CFO, CTO in residence
HR Director, PR Director
PORTFOLIO
$135M fund raised
$78M Invested (incl. ...
“
“
“““ “ “
RUNA CAPITAL WHY WE ARE SPECIAL?
ENTREPRENEURIAL
HANDS-ON EXPERTISE
Positioning Runa as co-founders – more tha...
RUNA CAPITAL #1 CLOUD COMPUTING
Network 250+ professionals
Ecosystem leading firms in Cloud SMB
Rafael
Laguna
Andreas
Gauge...
MOBILE DEVICES
P2P INTERNET
CLOUD COMPUTING
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
TH...
THE OPPORTUNITY PERFECT STORM
NO ONE
IS SAFE
Apple –
what‟s next?
Facebook –
expectations, expectations…
HP – nobody
needs...
INVESTMENT THEME 1 SMALL BUSINESS – BIG MONEY
Hosting and Telco providers are building a
complete Cloud ecosystem of mass-...
EDUCATION
IMPROVEMENT POTENTIAL
Healthcare, Education and
Finance are among the
major sectors to benefit
from new IT servic...
Access to top engineering and scientific expertise for making sound judgment about
the viability of technology & provide va...
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
PREFERED RANGE
$1-10M INVESTMENTS FOR
10-40% O...
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
PREFERED RANGE
$0.5-1M INVESTMENTS FOR
10-40% ...
CASE STUDY
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
High performance web-server, hosts ...
CASE STUDY
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL
Jelastic is PaaS software which arms Java developers wit...
CASE STUDY
Full-fledged shopping cart solution implemented as embeddable AJAX
widget – cross-platform and fully integrated ...
EVEN MORE CASE STUDIES
COMPANY DESCRIPTION
Dnevnik provides a comprehensive educational platform for schools, including a ...
HOW WE HELP PRODUCT DEVELOPMENT #1
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL
• Assessment of development team...
HOW WE HELP PRODUCT DEVELOPMENT #2
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL
• Implementing an efficient engi...
HOW WE HELP PRODUCT DEVELOPMENT #3
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL
• Reviewing and commenting on pr...
HOW WE HELP BUSINESS DEVELOPMENT #1
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL
• Developing efficient and prof...
HOW WE HELP BUSINESS DEVELOPMENT #2
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL
• Finding key technology and Go...
HOW WE HELP BUSINESS DEVELOPMENT #3
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL
• Involving international exper...
HOW WE HELP OPERATIONS #1
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL
• Support in setting up the right company...
HOW WE HELP OPERATIONS #2
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL
• Support in setting you physical office ...
HOW WE HELP OPERATIONS #3
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL
• Support in filing domestic and foreign ...
HOW WE HELP TAKING TO THE NEXT LEVEL #1
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL
• Development of a long-ter...
HOW WE HELP TAKING TO THE NEXT LEVEL #2
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL
• Establishing stock-based ...
HOW WE HELP TAKING TO THE NEXT LEVEL #3
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL
• Introducing the necessary...
HINT #1 RECRUIT ONLY A+ PEOPLE
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
HINT #1 RECRUIT ONLY A+ PEOPLE
HINT #2 ADDRESS MASSIVE & PAINFUL PROBLEM
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
400,...
HINT #3 KEEP NARROW FOCUS
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
HINT #4 PEACEFULLY SOLVE INTERNAL PROBLEMS
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
HINT #5 SEEK ADVICE AND FEEDBACK
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
HINT #6 LEARN TO WORK WITH INVESTOR
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
HINT #7 CARE ABOUT BUSINESS PROCESSES
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
HINT #8 PAY ATTENTION TO COMPETITION
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
$68.99 + ...
HINT #9 IT IS NOT AN EASY WALK IN A PARK!
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
INVESTMENT PHILOSOPHY STRATEGY & PRIORITIES
We select projects were substantial value is created
through software engineer...
TEAM FOUNDING PARTNERS
Serguei Beloussov
Founding Partner
Sergey advises on key deals including
Nginx, DMS Technosoft and ...
TEAM INVESTMENT PARTNERS
FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
Dmitry
Chikhachev
And...
WELCOME TO
RUNA CAPITAL!
Email: dc@runacap.com
Twitter: @RunaCapital
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Smart Money for Smart Start-ups

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In his presentation, Mr. Beloussov underscored some key issues for successful start-ups, such as the importance of a well-organized and dedicated team, good strategy and detailed analysis of competitiveness. The meeting was attended by more than 100 participants, mostly from the IT sector.

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    1. 1. SMART MONEY FOR SMART STARTUPS www.runacap.com © 2013, Runa Capital
    2. 2. RUNA CAPITAL PRE-HISTORY FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital Ilya Zubarev Senior Partner Dmitry Chikhachev Managing Partner Serguei & Ilya founded the consumer electronics manufacturer; now the largest in Russia with a $500M/year turnover Serguei & Ilya founded SWSoft, later acquired Plesk and Parallels and re-baptized SWSoft to Parallels. With over 1,000 employees and $130M+ revenue, the company is the market leader in Automation for Cloud Service Providers, Container-based server and Desktop virtualization. Serguei & Ilya acquired assets that became Acronis, specializing in physical and virtual data management and disaster recovery software, the company employs 850+ people and generates over $139M revenue. Dmitry started his career in LM ERICSSON, where he managed all HR-related processes across 7 CIS countries. After completing MBA Dmitry moved to Head of Business Development role at Ritzio Entertainment Group, top gaming operator in Eastern Europe, with $800M in revenue, leading international expansion projects: greenfield in Kazakhstan (scaled to $15M), in Romania (scaled to $25M), and acquisitions in Peru, Bolivia, Germany, Belarus, Czech Republic for over $20M Serguei & Ilya invested $800K in GFI, the provider of a complete set of IT solutions for SMB. Investment is partly exited, with 5x ROI and IRR 40% Serguei & Ilya invested a total of $3M in AutomatedQA provider of tools for managing software development and testing. The investment is partly exited with implied ROI in excess of 7.5x and more than 44% IRR 1995-2000 2001-2005 2005-2009 Serguei Beloussov Senior Partner Dmitry started up and led Uvenco: a spin- off of Ritzio Entertainment and grew it to $25M in revenue, thus becoming the leading operator of automated trade in Eastern Europe Serguei & Ilya founded the leading accounting and ERP software distributor in SEA Serguei & Ilya founded Acumatica, leading cloud ERP systems provider; $55M company valuation based on recent transaction
    3. 3. 2010 RUNA CAPITAL 4 YEARS IN ACTION Jun 2010 1st term-sheet Jelastic Feb 2011 Andre Bliznyuk joins Runa as Investment Partner Aug 2012 First exit 4x ROI Jul 2013 Peter Bauert joins Runa as Investment Partner Aug 2013 raised Round B for 4x Round A Oct 2010 1st deal closed Apr 2010 –Runa GP incorporated, fundraising started Dec 2010 2nd closing $50M Dec 2012 33 companies $47M invested Aug 2013 42 companies $75M invested Sep 2010 1st closing $20M Dec 2010 4 companies $3M invested Apr 2011 3rd closing $75M Dec 2011 12 companies $10M invested Apr 2012 Final closing $135M Dec 2009 - inception “Cloud Incubator” $30M seed fund FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital 2011 2012 20132010 2011 2012 2013 RUNA CAPITAL 3 YEARS IN ACTION Jun 2010 1st term-sheet Jelastic Feb 2011 Andre Bliznyuk joins Runa as Investment Partner Aug 2012 First exit 4x ROI Jul 2013 Peter Bauert joins Runa as Investment Partner Aug 2013 – Nginx raised Round B at 4x valuation to that of Round A Oct 2010 1st deal closed Apr 2010 –Runa GP incorporated, fundraising started Dec 2010 2nd closing $50M Dec 2012 33 companies $47M invested Aug 2013 42 companies $75M invested Sep 2010 1st closing $20M Dec 2010 4 companies $3M invested Apr 2011 3rd closing $75M Dec 2011 12 companies $10M invested Apr 2012 Final closing $135M Dec 2009 - inception “Cloud Incubator” $30M seed fund FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa CapitalFUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital Oct 2013 42 Second exit 1.7x ROI Serguei Beloussov Ilya Zubarev Dmitry Chickhachev 2012 2013 Aug 2012 First exit 4x ROI Jul 2013 Peter Bauert joins Runa as Investment Partner Aug 2013 – Nginx raised Round B at 4x valuation to that of Round A Oct 2013 Second exit 1.7 ROI 011 2012 2013 eb 2011 Andre Bliznyuk ins Runa s Investment Partner Aug 2012 First exit 4x ROI Jul 2013 Peter Bauert joins Runa as Investment Partner Dec 2012 33 companies $47M invested Aug 2013 42 companies $75M investedd Apr 2011 3rd closing $75M Dec 2011 12 companies $10M invested Apr 2012 Final closing $135M Oct 2013 42 Second exit 1.7x ROI
    4. 4. ““ TEAM Operating Partner/CFO, CTO in residence HR Director, PR Director PORTFOLIO $135M fund raised $78M Invested (incl. $9M in seed stage) $32M reserved for follow-ons 32 portfolio companie (excl. seed) 12 seed stage investments 3.6x realized return based on 2 exits 1.4x unrealized ROI 22% unrealized IRR on invested capital 2 Founding Partners 3 Investment Partners 2 Investment Directors 2 Analysts POWERFUL BRAND The list of venture investors in Russia is led by Runa Capital - September, 2012 Featured in top analytical, venture social media FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital RUNA CAPITAL VALUE CREATEDRUNA CAPITAL 4 YEARS IN ACTION TEAM Operating Partner/CFO, CTO in residence HR Director, PR Director $135M $78M $32M 32 12 3.6x 1.4x 22% fund raised Invested (incl. $9M in seed stage) reserved for follow-ons portfolio companies (excl. seed) seed stage investments realized return based on 2 exits unrealized ROI on invested capital unrealized IRR on invested capital D II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital 2 Founding Partners 3 Investment Partners 2 Investment Directors 2 Analysts D II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital Carried multiple by investments POWERFUL BRAND The list of venture investors in Russia is led by Runa Capital - September, 2012 Featured in top analytical, venture social media “ “ 2,4x 1,6x 4,7x 1,5x 2,5x 3,1x 3,9x 3,5x 1,4x Portfolio average
    5. 5. “ “ “““ “ “ RUNA CAPITAL WHY WE ARE SPECIAL? ENTREPRENEURIAL HANDS-ON EXPERTISE Positioning Runa as co-founders – more than just investor Lending our own expertise to portfolio companies > product, business development, operations, fundraising Enabling business growth of our portfolio companies: recommend good people, introduce right partners, bring to new markets UNIQUE ABILITY TO GENERATE PIPELINE Active PR efforts and high visibility > investment in Runa brand and brand of porfolio companies Our reputation of “partner of choice” for most foreign and local funds and IT corporations > easy syndication Active presence in regions of Russia and Ukraine Access to many best industry experts and academia from leading universities SPECIFIC AREAS OF EXCELLENCE #1 VC firm in Cloud solutions for SMB: 35 industry insiders as LP‟s, 10x more – advisors and friends. Strong affiliation with major players: United Inter- net, Go Daddy, Endurance, Parallels etc. #1 VC firm in Russia and CIS: 100% brand aware- ness, strong presence in regions of Russia We are very good in several other areas: complex software/strong engineering expertise, specific regions – SEA/LatAm, specific verticals – sci- ence/education/government Brought 10+ partners (Wix, GoDaddy, 1&1, Endurance, Verio etc). Recruited president & GM North America. Jim O’Hara (ex. LiveOffice) As an entrepreneur you look for inves- tors who can bring real value to your company, [the] team at Runa Capital are exactly this type of investor. Gus Robertson, CEO Egor Rudi, Founder and CEO Eruditor had a deal with Intel Capital Runa fully appreciates how to build on the table, when I decided I want products that satisfy customers, [this] Runa Capital to join the round, so I had makes Runa a truly special partner for to persuade Intel to give part of it to any early stage technology company. Runa... Jeremy Levine, partner at BVP FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital “
    6. 6. RUNA CAPITAL #1 CLOUD COMPUTING Network 250+ professionals Ecosystem leading firms in Cloud SMB Rafael Laguna Andreas Gauger Thomas Strohe Oleg Tscheltzoff Jochen Berger Reed J. Caldwell Thomas Gorny Patrick Pulvermüller Warren Adelman Michael Choupak Achim Weiss Tracy Conrad Portfolio cloud companies 6 venture partners Seasoned IT Entrepreneurs and Investors (Igor Borovikov, Alexander Galitsky, Igor Daniloff, Al- exander Katalov, Achim Weiss, Oleg Tscheltsoff) 45 limited partners 35 successful IT entrepreneurs + 10 asset man- agement /investment boutiques 200+ industry experts professionals from leading companies in cloud software, virtualization, IT security, hosting and many more FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
    7. 7. MOBILE DEVICES P2P INTERNET CLOUD COMPUTING FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital THE OPPORTUNITY TRIPLE TSUNAMI LANDSCAPE IS CHANGING iPhones sold iPads sold Smartphones Sold Facebook users Facebook revenue Internet users Amazon AWS Revenue Salesforce.com Revenue Cloud market 2007 3.3M 0 120M 3.3M 0 120M 3.3M 0 120M 2012 130M 60M 650M 130M 60M 650M 130M 60M 650M 2017 500M? 400M? 2B? 500M? 400M? 2B? 500M? 400M? 2B? MOBILE DEVICES P2P INTERNET CLOUD COMPUTING
    8. 8. THE OPPORTUNITY PERFECT STORM NO ONE IS SAFE Apple – what‟s next? Facebook – expectations, expectations… HP – nobody needs desktops Dell – where to buy your server? Google – becoming a platform Cisco - Software-Defined Networking Intel vs. Qualcomm Microsoft – not a default FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
    9. 9. INVESTMENT THEME 1 SMALL BUSINESS – BIG MONEY Hosting and Telco providers are building a complete Cloud ecosystem of mass-market cloud applications for SOHO/SMB, as the market is set to explode over the next years: - 48% was the growth in new data creation in 2012, reaching 2.7 Zettabytes - SMB IT budgets are experiencing 4x growth vis-à-vis all IT budgets - 4M SMBs entered cloud market in 2012 - Global SMB cloud market will grow by 28% year over year through 2015 Business software on a subscription basis; $3bln in sales in 2012 46M reviews $137M in 2012 sales Cloud ERP for SMB and enterprises; $120M in 2012 sales TOTAL GLOBAL IT SPENDING Enterprise $780bln SMB $510bln 60% 40% GLOBAL CLOUD MARKET DEC 12 DEC 13 EXAMPLES FROM RUNA I PORTFOLIO Business applications Hosted communication & collaboration Web presence and web applications Infrastructure as a service FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital $45bln $96bln
    10. 10. EDUCATION IMPROVEMENT POTENTIAL Healthcare, Education and Finance are among the major sectors to benefit from new IT services (bubble size – worldwide industry size in US$ bln) FINANCE doubled the number of users to 2M in 1H 2012 the largest P2Plender in US, has loans for $2.3B+ as of Aug 2013 HEALTHCARE provider or rapid genetic testing, accumulated a database of more than 100,000 individuals after 4 years since launch, and raised 50M+ in financing in 12/12 offering online courses. In 2 years since its launch, it has 62 leading American universities among its partners EXAMPLES FROM RUNA I PORTFOLIO FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital INVESTMENT THEME 2 VERTICALS DISRUPTED Next generation IT services bring new opportunities into many traditional verticals: Finance, Healthcare, Education, Public sector – largest demand for improvement and growth potential: disruptive innovation in such segments is leveraged by Social & Mobile penetration
    11. 11. Access to top engineering and scientific expertise for making sound judgment about the viability of technology & provide valuable advice to developers. Very few VC look at complex SW – less competition, best deals at unique terms. No amateur investors – no inflated valuations. Founded in 2008 Cloudera reached $100M in revenues in 2012 raised $65M in series E in 12/12 10gen - the company behind MongoDB, the leading NoSQL database - raised $42M in series E in 5/12 In 2009 VMware acquired SpringSource – an application de- velopment framework for enterprise Java - for $362M Cisco acquired Israel‟s IntuCell, developer of advanced self-optimizing network (SON) software, for $475M Michael Widenius Paul Maritz Bertrand Serlet Michael Dell EXAMPLES FROM RUNA I PORTFOLIO FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital System Software, Big Data, Distributed Processing Middleware, PaaS (Platforms as a Service), Development Tools – in demand because of infrastructure changes. Massive growth applications usage requires strong underlying technologies. Advanced science requires complex algorithms and distributed data processing OUR AREA OF EXCELLENCE AND COMPETITIVE ADVANTAGE INVESTMENT THEME 3 COMPLEX SOFTWARE
    12. 12. FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital PREFERED RANGE $1-10M INVESTMENTS FOR 10-40% OF THE COMPANY INVESTMENT FOCUS SUMMARY CLOUD SOLUTIONS FOR SMB IT FOR EDUCATION, FINANCE AND HEALTHCARE COMPLEX SOFTWARE FOR DEALS LESS $1M Runa team is a unique combination of IT expertise, investment instinct, operational excellence, experience of international business development and knowledge of local tech industry – absolutely perfect set of competence for early stage tech investments in Russia – Runa is our partner of choice. Michael Triplett, Partner of Insight Venture Partners ($3bln+ top-10 US VC)
    13. 13. FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital PREFERED RANGE $0.5-1M INVESTMENTS FOR 10-40% OF THE COMPANY SEED STAGE DEALS PHYSTECH VENTURES FUND anchored in Dolgoprudny, Russia is a $30M seed fund focused on incubating and growing MIPT-related technology companies that solve a measurable customer problem in a large or rapidly growing and sizable markets in IT, energy & cleantech, new materials and high-tech devices. The MIPT-related companies will represent up to 60% of portfolio – rest are high-quality start-ups founded by students and grads of world’s best technology universities B2P SOFTWARE AND SERVICES TO FINANCIAL SERVICES HEALTHCARE IT 3D PRINTING & INFRASTRUCTURE TECHNOLOGIES IN OIL & GAS SECTOREFFICIENT ENERGY USE EDUTECH WHY DIFFERENT LARGE AMOUNT OF QUALIFIED SCIENCE AND BUSINESS EXPERTS Connected by MIPT Alumni network GOAL INVEST IN NUMBER OF COMPANIES WHICH ARE CAPABLE TO BECOME INDUSTRY LEADERS SUCH AS PARALLELS, ACRONIS, ABBYY, VEEAM, AELITA SOFTWARE ETC
    14. 14. CASE STUDY FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital High performance web-server, hosts 22% of TOP 1M sites worldwide (web-server #1 across top-1000). Rapidly gaining market share (number of NGINX websites tripled last year). Powered by NGINX: Facebook, Netflix, CNN, Techcrunch,Yandex, Wordpress, Groupon 2002-2004 Igor Sysoev creates NGINX to solve Rambler‟s dial-up clients problem 2009 the problem becomes massive with mobile smart devices usage 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0 2006 2013 Concurrency Image / Video Delivery Distributed Architecture Lightweight Apps Mobile 2011 $3M Series A closed 2012 Gus Robertson from RedHat recruited as CEO. HQ is to move to USA. 2013 $10M Series B closed. NGINX- PLUS sales to Enterprise started 2014 NGINX becomes N1 web server for Top-10,000 busiest websites
    15. 15. CASE STUDY FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL Jelastic is PaaS software which arms Java developers with a set of services that can be used both for the development of new and existing applications any complexity. Over 30000 developers subscribed, partnerships with 15 hosting providers globally. 2009 Ruslan Synytsky develops Hivext.“Cloud IDE” 2010 Seed round 500K Java PaaS instead of IDE: Jelastic 2011 Dmitry Sotnikov is hired as COO (based in the U.S. LA) 2012 $2.5 Round B + $1M R&D grant 2012 Launching commercial product for hosting providers 2013 John Derrick (Intel, IBM) hired as CEO. Pivot to Enterprise/OEM (private cloud) 2014 Jelastic raising series B in US. First Enterprise and OEM sales. 2013 PHP added to the stack. 9000 developers, 12 partners, 5 continents. Backed by James Gosling & Rasmus Lerdorf
    16. 16. CASE STUDY Full-fledged shopping cart solution implemented as embeddable AJAX widget – cross-platform and fully integrated with all major payment & delivery systems. Powers 400 000+ store-fronts in 175 countries, processing 10M+ transactions per month 2000 Ruslan Fazlyev word‟s first PHP shopping cart (inspired Roy Rubin) 2009 new generation e-commerce SW as spin-off from X-cart. FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL 2011 $1,5M Series A closed 2012 Jim O‟Hara from Live Office hired as President. San Diego branch is opened. 2012 Sridhar Nagarajan joins ECWID as CMO 2013 Channel strategy – first success stories 2014 ECWID raising Series B in the U.S. Massive scaling of the business. 2013 Direct/freemium results: 350,000 storefronts, 175 countries, 45 languages
    17. 17. EVEN MORE CASE STUDIES COMPANY DESCRIPTION Dnevnik provides a comprehensive educational platform for schools, including a learning management system, school document flow management and a social network. It is used in more than 29 000 Russian schools (52% market share in Russia). Help to get $1,5M convertible debt from VEB Innovations venture fund and $6M private equity investment company. Online language learning service using game mechanics to engage users into the learning process. It provides web service and mobile applications, which are user by over 7 000 000 registered users total in Russia and Brasil. Runa Capital hired COO Dmitry Staviskiy, ex-VP of International Operations at Evernote. Provider of cloud-based business management software for automotive dealerships, which is based on Microsoft Dynamics CRM and covers end-to-end dealers' operations from vehicle sales to workshop activities. Coordinated signing of $3M-contract with Nissan in 2012. Next gen web security solution to protect online businesses from application level hackers attacks, which is used by some of the top 50 web sites globally. Assisted with NGINX integration. FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
    18. 18. HOW WE HELP PRODUCT DEVELOPMENT #1 FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL • Assessment of development team skills, hiring assistance, recommendations for competence development • Parallels/Acronis/Acumatica/United Internet and other created by us companies (PORTFOLIO) products are global leaders at scale, with lots of proof and 10s of millions of users • We have developed a very sophisticated process of recruiting, assessing, improving skills of our global and specifically Russian teams – relations with top Universities, specific recruiter relationship, tests, PR, direct access to talent pools we know and more • Management and Motivation of extensive development teams in Russia, what works what does not • PORTFOLIO employs several 1000s of world class engineers, working at large teams for long periods of time on release of broad products, specifically in Russia but also US, Europe, Asia. • We would provide direct access to key, relevant Human Resources and Engineering manager in those teams, including outside of Russia to discuss specifics of how engineers are motivated and managed.
    19. 19. HOW WE HELP PRODUCT DEVELOPMENT #2 FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL • Implementing an efficient engineering process – Planning, Program Management, Quality Assurance, Documentation, Release Cadence • Russia/CIS still produces significant number of high quality educated engineers and scientists. However there is very few teams / people with world engineering management and engineering culture • We have those teams in our Portfolio and could help to share best practices, processes, tools, give access to proven consultants, recommend vendors. Again direct access to our contacts and people would be provided. Especially Program Management • Help on scalable, reliable, maintainable, extendable, secure, available, efficient, fast and such more product architecture • It is only possible to succeed with products which scale to 10s of millions of users, in 100+ countries, grown over 10+ years – hence with changing tech landscape and against very strong competitors • This puts very serious strain on well thought product and technology architecture. We believe we have that expertise/expirience and understanding on where to get it for you
    20. 20. HOW WE HELP PRODUCT DEVELOPMENT #3 FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL • Reviewing and commenting on product development plans, setting priorities, following up, structured feedback on the features and parameters of the product • Product management and Product completeness are the hardest things to grasp. We will involve best and relevant experts from our Portfolios to provide such feedback in real time • Weekly or Monthly, monitoring product development process – pointing out mistakes, recommendations on fixing them, practical help • As a part of product development involvement we could assign part-time professional engineering / product development expert, to meet on weekly basis and help structure the things above in real time and over the development of the company • While building companies in our portfolio with bare hands we paid 100s of millions of $$ for mistakes in product development – there is no need to repeat our mistakes
    21. 21. HOW WE HELP BUSINESS DEVELOPMENT #1 FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL • Developing efficient and profitable business model for target markets • Establishing the right business model for your project is about reducing friction; it‟s about knowing how customers want to buy, who they want to buy from, and how everyone should get paid. • The Runa Capital team provides hands-on expertise with a global perspective. We know what works and if we don‟t have the answer, we have access to the right expert. • Example: Thinkgrid (cloud hosting) plan & business model was reviewed by Andreas Gauger, former CEO of 1&1, the largest hosting company in the world. • Search of key management positions for international development of your business • Hiring key business development talent is like betting on horses; you pay upfront and you don‟t know the outcome until after the race. • The Runa Capital team can help you find the right talent, connect you with right/best recruiters and we have access to back-channel references – you will have better odds at succeeding and you will increase your speed to market. • Example: Ezequiel Steiner, CEO of Acumatica, is former VP Corporate & Business Development @ Parallels.
    22. 22. HOW WE HELP BUSINESS DEVELOPMENT #2 FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL • Finding key technology and Go-To-Market partners for target markets, facilitating negotiations • Leveraging partners is a key method to accelerating your project. Picking the wrong partners and/or ending up in protracted negotiations is the most common obstacle. • The Runa Capital team has hands-on experience and we can help you avoid the pitfalls. • Example: Connected Ruslan Synytskiy, CEO/Founder Jelastic with key contact @ HostEurope Germany, ServInt USA, Tsukaeru Japan, Go Daddy USA and more • Practical help in getting first customer traction, references in each vertical & geographical market • Getting market acceptance is a key milestone; the quicker you have validation the faster you can sell. • The Runa Capital team has access to 100s of companies globally who would be eager to become your first referencable customer. • Example: Nginx secured commercial relationship with Dell and an investment from Michael Dell, based on recommendation from Serguei Beloussov. • Reviewing and commenting business plans, particularly in relation to global expansion, specific to every market
    23. 23. HOW WE HELP BUSINESS DEVELOPMENT #3 FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL • Involving international experts from network of Runa Capital • Runa Capital and its investors are made up of successful entrepreneurs. What is most special is expertise in building business not only in US/Russia, but also all over Europe, Asia including Japan and China, Africa, South America • Example: Serguei Beloussov & Ilya Zubarev have built two $150M+ software companies in 10 years (Once is hard – twice has never been done) • Advice on developing specific marketing plans for target markets • Marketing plans are about positioning, messaging, pricing, etc. All investors have read the “books”, but the Runa Capital team has executed and can bring hands-on expertise. • Example: John Howell, former President of Solomon Software International (sold to MSFT) invested a substantial amount of time to review & improve marketing plans for Acumatica. • Building and monitoring global sales channels • Scaling your business through a repeatable sales process executed on a global basis is critical in the later stages of your project. The Runa Capital team is made up of individuals that have run companies with $100M+ revenue on a global scale.. • Example: As CEO of Parallels, Serguei Beloussov personally hired the majority of the sales force and put in place repeatable sales processes.
    24. 24. HOW WE HELP OPERATIONS #1 FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL • Support in setting up the right company structure to ensure maximum value for shareholders / founders and compliance with international tax regulations. • Setting up the company correctly during its early stages can avoid substantial tax charges and liabilities for the company / founders down the road. Global have highly optimized tax structures which provides them significant long term advantage • The Runa Capital team has substantial hands on experience with properly structuring companies to take advantage of global tax regimes. • Example: Swiss parent company with negotiated 10 year tax holiday plus Russia based development entity and USA based sales entity, with proper IP transfer, resell agreements, tax opinions, pricing studies and more • Registering companies and help with corporate/legal issues. • It‟s a daunting task to deal with legal issues – patents, immigration, corporate, employee and finance on a global basis for entrepreneurs who do not have much experience; plus it can be a major drain on time & money. • The Runa Capital team has the expertise and will be helping you and your team every step along the way. • Examples: We helped Jelastic secure a USA H1B visa for Dmitry Sotnikov, Parallels has 150+ US and EU patents filed
    25. 25. HOW WE HELP OPERATIONS #2 FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL • Support in setting you physical office in various parts of the world, administration, IT • Setting up an office sounds simple, but site selection, negotiating with landlords and laying out work space to ensure highest level of productivity are activities prone to trial and errors. • These errors can be costly and we can help you avoid such mistakes. Collectively, our team has setup 100s of offices in 50+ countries and you can tap into our wealth of knowledge and expertise. • Examples: Acumatica just expanded its USA presence with new office outside Washington D.C., Parallels has significant offices in 18+ countries. • Financial planning, accounting and reporting, tax advice • As your company evolves, so does the need for proper financial management and reporting, which would be crucial in making business ready for the next stage • Our vast network of experts have experience with financial planning, budgeting, reporting, and tax at all levels. • Example: Helped TravelMenu prepare its financial forecast for its next round of funding; or helped Ezequiel Steiner, CEO of Acumatica, improve financial reporting capabilities and prepare for audit with big4 accounting firms
    26. 26. HOW WE HELP OPERATIONS #3 FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL • Support in filing domestic and foreign patents, scientific consultancy for patents • Protecting you intellectual property (patents, trademarks, etc.) is a critical element to support your long-term competitive strategy. • The Runa Capital team has the collective experience of 1000s of patent/trademark filings. We can provide the know-how that allows you to make this process easy and quick. • Example: Leverage Parallels‟ long-term relationship with George Bardmesser, a Russian speaking Patent attorney in the USA. • Support in recruitment and executive search, other HR consulting • Ensuring you hire the right talent, eliminate non-performers quickly, and retain your best employees for the long-run are critical success factors that will determine your company‟s success. • The Runa Capital team has hired 1000s of individuals – we have a vast network for you to tap into and we can help you identify the right fit. We can also help you deal with current employees (good or bad). • Example: Piggy-back on long-term relationship and favorable terms & conditions for good recruiters such as Heidrick and Struggles, and Lee Silver • Reconciling cost structures and negotiating with key vendors
    27. 27. HOW WE HELP TAKING TO THE NEXT LEVEL #1 FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL • Development of a long-term equity story, finding next round of investors and preparing for an IPO / trade-sale • Getting additional funding (public/private) and/or getting acquired is about selling the story. It‟s not about the best product/service. • The Runa Capital team has extensive experience in crafting the story and selling it. We have access to a almost any imaginable investors in the world (financial/corporate), more importantly we could find the right fit for you • Example: Helped secure corporate financing from Visma (KKR portfolio company) for Acumatica at valuation > 5x prior round. • Establishing corporate governance framework: Board of Directors, split of responsibilities between management (CEO/CFO/CTO/etc.) • As your company grows, so does the complexity around proper decision making and separation of duties. Scaling your company is about removing friction and frication exists where there is uncertainty about responsibilities / accountability. • Many of the Runa Capital team members have been in CEO, CFO, CTO, and other executive roles as well as served as board members for companies of various size. • Example: you will have direct access to Serguei Beloussov, a CEO/Entrepreneur and Peter Bauert, a CFO/COO, each with 20+ years experience and $2B+ in shareholder value creation.
    28. 28. HOW WE HELP TAKING TO THE NEXT LEVEL #2 FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL • Establishing stock-based management and employee incentive schemes • As you expand the team beyond the founders, it will become critical to have the right employee incentive schemes. Do you know what compensation (base/bonus), option package / acceleration / severance / perks you should offer a CEO/CFO/etc? • The Runa Capital team has been in your shoes and knows first hand what is common practice vs. what is best practice. Closing the right candidate at the right price is critical – don‟t learn the hard way. • Example: Helped shape an equity incentive scheme for Alawar and Badoo.com. • Example: ask for a verbal record of hiring some of the top executives and related pricing • Building the internal infrastructure: finance function, internal audit, investor relations • Do you know the difference between FP&A and Accounting? Do you know when you should bring in a CFO vs. Group Controller vs. Local Controllers? Do you have templates for budgets? • The Runa Capital team has answers to each and every one of these and much more. Let them help you take the guess work out of the equation with practical / tactical support and advise. • Example: Helped Mikhail Ushakov, CEO Metabar, improve his periodic report and budgeting process through the use of a standard template.
    29. 29. HOW WE HELP TAKING TO THE NEXT LEVEL #3 FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL • Introducing the necessary accounting and reporting systems: audited IFRS accounts, IFRS-based management accounts, 5- year business plan and investment program • As your business gets traction and revenue increases substantially, you will need to introduce much more formal / rigorous financial systems, processes, and procedures. • Are you dealing with your first external audit? Have you been asked to produce a detailed long-range financial mode? Irrespective of what is being asked off you, the Runa Capital team can help with practical/tactical support that draws upon its vast network of operations/finance experts. • Example: In process of helping Acumatica convert from cash accounting to accrual accounting, as it gets ready for the audit. • Involving third-party consultants: independent auditors, tax and legal advisers • At times, you will have to involve 3rd party service providers to help you with a project. Do you know which firm you should work with? Have you worked with partners / associates at that firm? • The Runa Capital team draws upon a large network of 3rd party professionals that can help you with legal, tax, accounting, and audit needs. • Example: You can leverage long-term relationship and favorable pricing with lawyers such as Craig Sherman @ Wilson Sonsini, auditors such as Mike Bentley @ E&Y, or tax experts like Jeremy Skogsbergh @ PWC
    30. 30. HINT #1 RECRUIT ONLY A+ PEOPLE FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
    31. 31. FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital HINT #1 RECRUIT ONLY A+ PEOPLE
    32. 32. HINT #2 ADDRESS MASSIVE & PAINFUL PROBLEM FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital 400,000,000 pet dogs in the world X 20% small dogs X $68.99 = $5.5 Billion Market!$68.99 + tax
    33. 33. HINT #3 KEEP NARROW FOCUS FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
    34. 34. HINT #4 PEACEFULLY SOLVE INTERNAL PROBLEMS FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
    35. 35. HINT #5 SEEK ADVICE AND FEEDBACK FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
    36. 36. HINT #6 LEARN TO WORK WITH INVESTOR FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
    37. 37. HINT #7 CARE ABOUT BUSINESS PROCESSES FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
    38. 38. HINT #8 PAY ATTENTION TO COMPETITION FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital $68.99 + tax
    39. 39. HINT #9 IT IS NOT AN EASY WALK IN A PARK! FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
    40. 40. INVESTMENT PHILOSOPHY STRATEGY & PRIORITIES We select projects were substantial value is created through software engineering or other related domain ex- pertise We aim to efficiently utilize the resources of existing portfo- lio and other related companies (e.g. Parallels, Acronis, Acumatica, 1&1/United Internet, etc.) – as an intellectual resource, technological partner and sales channel. We look for projects with a high degree of „hard-to-clone‟ or „long-to-clone‟, potentially patentable IP – as a natural barrier against competition and our team‟s area of excel- lence. We aim to invest on co-founder terms and prioritize proj- ects with sensible development and marketing timeframes and budgets, and clear breakeven points We pro-actively enable growth of our portfolio investments through putting them into right business environment and providing practical support/guidance in engineering, opera- tions, marketing strategy, finance and, ultimately, obtaining liquidity. FOCUS ON KEY TEAM COMPETENCIES PORTFOLIO SYNERGIES AND LEVERAGE BARRIERS AGAINST COMPETITION EFFICIENT USE OF CAPITAL ENABLING GROWTH FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
    41. 41. TEAM FOUNDING PARTNERS Serguei Beloussov Founding Partner Sergey advises on key deals including Nginx, DMS Technosoft and ECWID; value added to Runa: - International network - Technology vision - Entrepreneurial spirit Ilya Zubarev Founding Partner Ilya focuses on key deals, including Dnevnik, LinguaLeo and Eruditor; value added to Runa: - Deep operational experience - Deal structuring - Entrepreneurial spirit 1995-2000 2001-2005 2005-2009 Serguei & Ilya founded SWSoft, later acquired Plesk and Parallels and re-baptized SWSoft to Parallels. With over 1,000 employees and $150M+ revenue, the company is the market leader in Automation for Cloud Service Providers, Container-based server and Desktop virtualization Serguei & Ilya acquired assets that became Acronis, specializing in physical and virtual data management and disaster recovery software, the company em- ploys 850+ people and generates over $150M revenue Serguei & Ilya founded the consumer electronics manufacturer; now the largest in Russia with a $500M/year Turnover Serguei & Ilya founded the leading ac- counting and ERP software distributor in SEA Serguei & Ilya invested $800K in GFI, the provider of a complete set of IT solutions for SMB. Investment is partly exited, with 5x ROI and IRR 40% Serguei & Ilya invested a total of $3M in Au- tomatedQA provider of tools for managing software development and testing. The in- vestment is partly exited with total implied ROI in excess of 7x and more than 40% IRR FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital
    42. 42. TEAM INVESTMENT PARTNERS FUND II The Cloud and beyond RUNA CAPITAL CONFIDENTIAL © 2013, Runa Capital Dmitry Chikhachev Andre Bliznyuk Peter Bauert • Business executive with 18+ years of broad cross-functional experience: CEO/COO in Uvenco (scaled from $0 to $25M in revenue), Head of international business development in Ritzio Entertainment Group ($600M revenue/$75M overseas operations), HR Director of LM Ericsson CIS. • MSc Moscow Institute of Physics and Technology (PhysTech), MBA American Institute of Business and Economics • Dmitry‟s investment focus is SMB cloud, complex SW, mobile • Special expertise: M&A, Greenfield project management, HR management • Investment and corporate finance professional with over 10 years of experience: Goldman Sachs, UBS, Sistema. Over 20 IPOs and other fundraising projects for a total amount of tens of US$bn – including Mail.ru, Comstar, Sistema IPOs on the LSE. • MA Moscow State University • Andre‟s investment focus is vertical markets + international opportunities • Special expertise: • Financial sector • Investor relations • Public capital markets • Finance and Operational executive with 20+ years experience. Recent roles include CFO/COO at Parallels ($150M+ Revenue) and EVP at FAST (Acquired by MSFT for $1.3B). • BS Computer Science + MBA (Dartmouth College - Highest Distinction) • Peter focuses on cloud-solutions for SMBs, as well as North American opportunities • Special expertise: • Tax structuring • Financial mgmt/reporting • Recruiting
    43. 43. WELCOME TO RUNA CAPITAL! Email: dc@runacap.com Twitter: @RunaCapital

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