The document proposes a business model called "buyyourhorse.com" for the horse racing industry. It would allow customers to purchase micro-shares of race horses, then participate in the horse's success through potential prize earnings. A financial analysis shows the model could break even in 2016. Key success factors include reaching a large customer base through marketing and partnerships, and creating value for both customers and horse breeders.

1. Concept Challenge
Digital Innovations in the Horse-Racing Industry
Digital Natives
Baden-Baden, August 2012
Sebastian Walther, Philipp Wunderlich, Anna Heid

2. Contents Page
A. Introduction 3
B. Business Models and Recommendation 4
C. Product Design and Functionalities 11
D. Market Research 13
E. Value Creation 16
F. Marketing 20
G. Financials, Roadmap and Success Factors 22
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Contents

3. The horse-racing industry has constantly lost revenues, attraction
and customer reach during the last 10 years.
All important indicators for the viability of the German horse breeding, training, racing
and betting went down during the last few years.
Horse-racing only accounts It is difficult to get
for a small proportion of the engaged/attract new persons
sports broadcasting time into horse-racing
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Introduction 3

4. Business Models and Recommendation

5. In the initial phase three business models were developed which
transfer current digital mega trends into the horse-racing industry.
• The race-club enables customers to buy micro-shares of specific horses.
• Owners of micro-shares can participate in the success or failure of the horses by receiving
buyyourhorse.com part of the price money in accordance to their amount of shares.
• Owners can follow their feedings and meet the horses “live”.
• The concept is based on a mingle of crowdfunding and classic investment.
• The race club collects bets from distinct betting-interested members.
• The bets are pooled into one bet, including all information given from the single bets.
bettingpool.com • The diverse information possibly has higher predictive quality and therefore raises the
overall profits.
• The concept is based on the “wisdom of the crowds”.
• The race club offers persons interested in horses the opportunity to create profiles on a
central webpage, ranking from amateurs to professionals.
wikihorse.com • The platform allows interchange in the community between the different parties.
• Members can publish self-written news about regional horsing-competitions similar to
netzathleten.de
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Business Model Overview 5

6. Business Model Assessment

7. Even though buyyourhorse.com is difficult to implement, it shows
the highest potential to be successful.
Business Models
Innovativeness 3 1 2
low high
Profit Potential 3 2 1
low high
1 buyyourhorse.com
1 2 3
Implementation hard easy
2 bettingpool.com
buyyourhorse.com 3 wikihorse.com
Result
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Qualitative Assessment 7

8. To study the end-user acceptance of the business models a survey
was conducted supporting the results of the previous assessment.
Description of the Study Means of Perceived Interest and Intention to Use
• Participants were end-users.
• Participants were interviewed via phone.
• Business model descriptions were read to
the participants. buyyourhorse.com
• Intention to Use was measured with a 7-
Point Likert Scale (Davis 1989). bettingpool.com
• Perceived Interest included as possible
antecedent of usage behavior, also wikihorse.com
measured with a 7-Point Likert Scale.
• Participants were given the possibility to
comment on the business models.
Results of the Study
• n = 21
• buyyourhorse.com has the highest
intention to use, followed by
predictiveanalytics.com
• Perceived interest correlates highly with
intention to use, indicating a high external
validity of the measurement.
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Quantitative Assessment 8

9. Business Model

10. buyyourhorse.com enables customers to buy micro-shares of
competitive racing-horses.
Name: buyyourhorse.com Industry: Horse-Racing / Crowdfunding / Internet
Description Value Proposition Key Activities and Partners
• The race-club enables customers to buy Value Propositions Customer: • Running website as main platform.
micro-shares of specific horses. Owners • “Own” horse for relatively little money, • Filming horses and races.
of micro-shares can then participate in the especially interesting as gift for children • Enabling customers to “meet” the horses
success or failure of the horses, can and teenagers. “live”.
follow their feedings, meet the horses • Profit expectation. • Developing and supervising the complex
“live” or get tickets to races, depending on • Low financial barrier and ease of use. investment-
their sum invested. The profits of the • Excitement in following the “own” horse • Promotion of Platform.
customers depend on the success or the in races. • Facebook as primary technological
failure of the horses. Micro-shares can Value Propositions from Studs: partner.
be bought as gift or for personal usage. • Shift of risk of financial investment from • Stakeholders in the horse-racing
provider to customer. ecosystem.
• New source of funding.
Customer Segments • Relatively low financial investments for a
large scale customer reach. Infrastructure
• Children, teenagers and generally young
people which are interested in horses.
• Young people which do not want to bet, Revenue Generation • Development of a service-oriented IT
but still want to feel the excitement of infrastructure platform to enable smooth
horse racing. integration of different components.
• Revenues are generated through
• All age ranges which are interested in • Development of an easy-to-use plug-in for
transaction fees based on the transaction
innovative, high-risk investment Facebook access .
volume.
strategies. • Development of a trading system with
legal compliance.
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid buyyourhorse.com 10

11. Functionalities and Product Design

12. The mashup shows the design of the webpage inspired by the
principles simplicity and intuitive usage.
FURY Rewards
Baden-Baden Horses 1 2 3 4
€1 Video Access
€10 Micro Share
€25
Personal
Play Certificate
€75 Live Meeting
Live Meeting
5 6
€150 Tickets
FURY is a strapping, healthy looking Name as Sponsor
€500
gelding that will participate in many on Jockey*
races this year. *1,5 x 1 cm
source of webdesign: kickstarter.com
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Mashup 12

13. Market Research

14. Crowdfunding is one of the emerging global mega trends, with an
worldwide crowd funding volume of €1.2B in ´11.
“A new and emerging way of funding new ideas or projects by borrowing funding from the crowds.
In these markets, any individual can propose an idea that requires funding, and interested others can
contribute funds to support the idea. These markets have recently emerged as a viable alternative for sourcing
capital to support innovative, entrepreneurial ideas and ventures.” (Financial Times Dictionary)
fuer-gruender.de
Kickstarter.com has raised
€235M of funding until 2012 Average funding volume per
for 63,382 projects project is € 3.7T
fuer-gruender.de
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Secondary Market Research 14

15. There are five competitors with similar business models, however
they all focus on classical investment, not on crowdfunding.
ownaracehorse.co.uk
buyyourhorse.com
• Investments start at €114.
• 6-15 available race horses in training.
• Investments as low as €1 to highlight the • Functionalities like gift, horse visiting, etc.
crowdfunding character of the business
model.
• Integration of key partners by providing a favourites.co.uk
clear value proposition to the breeders and
studs. • Up front costs of €2550 plus €255 per month.
• 16 race horses in training with six trainers.
• Similar functionalities as • No special functionalities, only information.
ownaracinghorse.co.uk, except for live
transmission of feeding sessions.
• Customer profiles to strengthen the henryponsonby.com
community-like characteristics, eventually
micro-decisions with “horse communities”. • Yearly costs of €3200.
• 19 race horses in training with eight trainers.
• Owner’s badges, full involvement, etc.
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Primary Market Research 15

16. Value Creation

17. The platform will have significant direct and indirect impacts on the
horse-racing ecosystem by reaching new customer segments.
Customer Studs
• Possibility to “own“ a race • Easy way to raise money
horse for new horses
• Customers which do not • Shift of risk to the
like to bet can indirectly customers
“bet“ by investing into one Platform brings studs • Higher interest on equity
horse and customers capital due to leverage
• Specials like visiting the together by providing effect
studs or races where your two-sided value • Realisation economies of
horse lives scale by fully using the
• Feeling as part of a stud‘s capacities
community • Raising the stud‘s
• Personal footprint competitiveness on the
global market
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Value Propositions 17

18. The business case for customers and studs suggests financial
benefits for both sides.
Mares Stallions Foals
• Starting investment of €70T • Starting investment of €70T • Starting investment widely ranging
• Lineage is important in breeding – • Breeding fees highly dependent on depending on parents’ bloodlines
even less successful mares can the success of the stallion • Even the best parents don’t
return profits guarantee for a good racer
• Product (conservative): • Product (risky): • Product (high risk):
• .5% of earnings in races per 1% • .5% of earnings in races per 1% • .5% of earnings in races per 1%
of shares of shares of shares
• 1% of earnings in breeding per • 1% of earnings in breeding per • 1% of earnings in breeding per
1% of shares 1% of shares 1% of shares
• 1% of earnings of sale per 1% • 0.5% of earnings of sale per 1% • .5% of earnings of sale per 1%
of shares of shares of shares
ROI*: 0.6 to 4.3 ROI*: 0.1 to 6.7 ROI*: 0.1 to 164
*Top 50 studs have about 20% winning horses in their stables with the top 100 race horses earning about €56T
a year in German price money – this does not include international price money (Source: www.galopp-sport.de)
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid ROI Calculation 18

19. Besides the advantages for both directly involved sides, the
concept adresses the major key indicators of horse racing.
• More horses will be breeded
• Possibility to breed with high quality stallions
financing the projects by crowdsourcing
• All four key indicators
will be positively
• More horses in training influenced
• Higher competition in Germany and worldwide • Money from new interest
group for the community
• Larger community and
more interested parties
• More and new racing enthusiasts through could raise TV coverage
involvement with their own horse of major events
• Search of new outlets to compete in • Possibility to escape the
“cycle of death“
• More horses are breeded, trained and traded
• Through crowdsourcing higher budgets are
available and prices could rise
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Horse-Racing Ecosystem 19

20. Marketing

21. To establish high customer reach our marketing plan consists of
four general building blocks.
Phase I Phase II
1 2 3
Building Awareness Establishment Mainstream Fame
• Affiliate Marketing with • Cooperation with • Sponsorship of jockeys
other horse-racing sites betting portals – bet on • Sponsorship of international tournaments
• Sponsorship of regional your “own” horse • TV – advertisement during horse racing events
tournaments • Sponsorship of
• Advertisements in national tournaments
specialized journals
• Facebook plugin
Underlying effects
• Reporting about the concept
• Social networking
104 weeks Follow Up
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid ROI Calculation 21

22. Financials, Implementation Roadmap and Success Factors

23. In the base case scenario, buyyourhorse.com reaches the break
even point in 2016.
Revenue and Cost Calculation
Income Statements
• Revenues Fcast Fcast Fcast Fcast Fcast
L.C. in €T 2013 2014 2015 2016 2017
– Revenues are generated through fixed
purchasing fee of 7% of the trade volume with Revenue - 84,0 168,0 226,8 306,2
an average investment of €30. Cost of sales - - - - -
– We assume 40.000 transactions in 2014, after
the platform has been implemented, with a Gross profit - 84,0 168,0 226,8 306,2
CAGR of ~50%.
Professional Fees (1,4) (0,2) (0,2) (0,2) (0,2)
• Costs Technology Costs (13,8) (8,5) (9,7) (10,9) (10,8)
– Professional Fees: Attorneys, etc. Administrative Costs (6,4) (5,2) (5,2) (6,5) (6,3)
– Technology Costs: Hosting, Computers, etc. Sales and Marketing Costs (7,5) (10,0) (27,0) (27,0) (27,0)
– Administrative Costs: Rent, Desks, etc. Wages and Benefits (66,0) (66,0) (66,0) (85,5) (85,5)
– Sales and Marketing Costs
– Wages and Benefits EBITDA (95,1) (5,8) 60,0 96,8 176,4
Financial income/(expense) (5,5) (6,0) (3,0) - -
Depreciation and goodwill amortisation (0,9) - - (0,3) -
Scenario Analysis Income before taxes (101,5) (11,9) 57,0 96,5 176,4
Provision for corporation tax - - - - (24,7)
• Best Case
Net income (101,5) (11,9) 57,0 96,5 151,7
– 35 % higher revenues and constant costs.
– Break even in 2015.
Key ratios
• Worst Case Sales growth % 100,0 35,0 35,0
– 30 % lower revenues and 30 % higher wages EBITDA margin % (7,0) 35,7 42,7 57,6
and marketing costs.
– No break even in investigated time-frame. Financing/Debt (i=0,05) 110,0 120,0 60,0 - -
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Business Case 23

24. It will approximately take 1 year to go live with buyyourhorse.com.
Phases Project features Time required
1 2
Design of Market Plattform Marketing and Sales
Phase I
• Market Mechanism • Revenue Generation 35
Conceptual • Layout / Ease of Use • Distribution Channels weeks
Phase • Service Consumerization • Partnering
• Legal Compliance • Marketing Campaign
3
Implementation
Phase II
• Installation IT Services
10
Implemen- • Development of Facebook Plug-In
weeks
tation • Programming of Plattform
Phase • Legal Contracts
4
Go Live
Phase III
4
• Servers Running weeks
Go Live • Services Running
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Implementation Roadmap 24

25. Winning the studs to cooperate with the platform is crucial to
succeed.
Gaining successful
Gaining market share
studs as premium
quickly
partners
Bring customers and Perfect user experience
studs together / Features
Convince Studs to lower Gaining affiliates for
risk of imitation marketing
Success factors
Managing these factors will improve the chances that buyyourhorse.com will be successful.
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Conclusion 25

26. Thank you for your attention!

27. APPENDIX
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid 27

28. predictivebettingpool.com collects bets from distinct members and
places one mass bet including the information from all single bets.
Name: bettingpool.com Industry: Horse-Racing / Betting / Internet
Description Value Proposition Infrastructure
• The race club collects bets from distinct • Profits from higher predictive quality. • The IT infrastructure is not trivial to
betting-interested members. These bets • Low initial investments for participating in establish, as it several legal issues have
are then mingled and pooled into one bet, the community. to be included into the automatisms of the
including all information given from the • Innovative social get-together. system. For instance the allowance to
single bets. The diverse information • Interesting results. mingle the single bets has to be granted
possibly has higher predictive quality and in advance. Additionally one infrastructure
therefore raises the overall profits. This difficulty is the integration of the system
concept is based on the “wisdom of the Key Activities and Partners with other betting platforms.
crowds”, which has been shown to be a
powerful tool for predictions. • Bringing people together on a platform.
• Bringing the right people together.
• Setting up betting rules and analytic
design.
Customer Segments
• Finding algorithms for better predictive
quality.
• Betting interested male persons above 18 • Giving people a nice lounge for trading
years of age. thoughts.
• No age limit. • Cooperating with other betting platforms.
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid bettingpool.com

29. amateurhorseracing.com is a social networking platform
organizing amateur tournaments.
Name: wikihorse.com Industry: Horse-Racing / Wikimedia / Internet
Description Value Proposition Key Activities and Partners
• The race club offers persons interested in Value Propositions from Customer • Offering the community a central platform
horses the opportunity to create profiles on Perspective: to stay connected.
a central webpage. The participants can • Possibility to easily get connected in the • Bringing the right people together.
range from amateurs to professionals. The German horse racing community. • Ensuring the future of German horse
platform allows interchange in the • Opportunity to find sponsors racing sport by building up a talent pool.
community between the different parties • Opportunity to stay in touch with the • Importance to get all players at one table
and offers participants the possibility to community. ranging from amateurs to professionals
publish articles on the topic, with the most • No financial barrier and ease of use. and officials.
interesting being published in the news • Excitement in feeling “in touch” with • Partnership with major studs and
section and/or specialized magazines. popular jockeys and officials. breeders.
Further amateur racing series can be Value Propositions from Provider
organized for members to build up a talent Perspective:
pool. • Opportunity to heighten the community’s
loyalty. Infrastructure
• New source of promoting minor events
Customer Segments attracting more (paying) customers. • Creation of a web based platform similar
• Advertisement platform for betting to netzathleten.de.
• Everyone interested in horses platforms and producers of horse racing
• Young amateurs looking for sponsors • Setting high standards on profile safety
accessories etc.. and credibility to allow for recruiting and
• Horse owners looking for talented riders
• Professional jockeys who are willing to networking in a professional way.
share their experience and that are • Importance to get officials and
looking for sponsors and/or fans professionals on the platform
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid wikihorse.com

30. Revenue Estimation
Average Price: # of Transactions Estimation:
Share of overall Age Range Average Segment Age Range Market # of
transactions Transaction Estimation in Mio.* Penetration** Transactions
25 % 18-27 €15 10 18-27 0.1 % 10000
50% 28-37 €30 10. 28-37 0.2 % 20000
25 % 28-80 €45 43 38-80 ~0.023 % 10000
0.25 x 15 € + 0.5 x 30€ + 0.25 x 45€ = 30€ 10000+20000+10000 = 40000 Transactions p.a.
30 €/Transaction x 40000*** Transaction x 0.07 = 84000
* Assumption: Equal Distribution
** Assumption: Reference Crowdsourcing Market
*** ~ 50 transactions per day (conservative calculation)
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid

31. Break-Even Analysis Best Case
Income Statements
Fcast Fcast Fcast Fcast Fcast
L.C. in €T 2013 2014 2015 2016 2017
Revenue - 113,4 226,8 306,2 413,3
Cost of sales - - - - -
Gross profit - 113,4 226,8 306,2 413,3
Professional Fees (1,4) (0,2) (0,2) (0,2) (0,2)
Technology Costs (13,8) (8,5) (9,7) (10,9) (10,8)
Administrative Costs (6,4) (5,2) (5,2) (6,5) (6,3)
Sales and Marketing Costs (7,5) (10,0) (27,0) (27,0) (27,0)
Wages and Benefits (66,0) (66,0) (66,0) (85,5) (85,5)
EBITDA (95,1) 23,6 118,8 176,1 283,6
Financial income/(expense) (5,5) (6,0) (3,0) - -
Depreciation and goodwill amortisation (0,9) - - (0,3) -
Income before taxes (101,5) 17,6 115,8 175,9 283,6
Provision for corporation tax - - (4,5) (24,6) (39,7)
Net income (101,5) 17,6 111,3 151,3 243,9
Key ratios
Sales growth % 100,0 35,0 35,0
EBITDA margin % 20,8 52,4 57,5 68,6
Financing/Debt (i=0,05) 110,0 100,0 - - -
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid

32. Break Even Point Worst Case
Income Statements
Fcast Fcast Fcast Fcast Fcast
L.C. in €T 2013 2014 2015 2016 2017
Revenue - 58,8 117,6 158,8 214,3
Cost of sales - - - - -
Gross profit - 58,8 117,6 158,8 214,3
Professional Fees (1,4) (0,2) (0,2) (0,2) (0,2)
Technology Costs (13,8) (8,5) (9,7) (10,9) (10,8)
Administrative Costs (6,4) (5,2) (5,2) (6,5) (6,3)
Sales and Marketing Costs (9,8) (13,0) (35,1) (35,1) (35,1)
Wages and Benefits (85,8) (85,8) (85,8) (111,2) (111,2)
EBITDA (117,2) (53,9) (18,4) (5,0) 50,8
Financial income/(expense) (5,5) (6,0) (3,0) - -
Depreciation and goodwill amortisation (0,9) - - (0,3) -
Income before taxes (123,6) (59,9) (21,4) (5,3) 50,8
Provision for corporation tax - - - - -
Net income (123,6) (59,9) (21,4) (5,3) 50,8
Key ratios
Sales growth % 100,0 35,0 35,0
EBITDA margin % (91,6) (15,6) (3,2) 23,7
Financing/Debt (i=0,05) 130,0 190,0 210,0 220,0 170,0
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid

33. CAGR Estimation - Hints
Average Price: Crowdfunding market 2011 – 2012 growth over 700 %
Even E-Commerce as saturated market 9% CAGR
40% CAGR for Big Data Market From 2010 to 2015
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid

34. Legal Form
GmbH Limited
• Limited Corporation Liability • No Tax Advantages if Business mainly in Germany
• Registered Office in Germany • Registered Office in GB or Wales
• Only German Company and Tax Law • In between two legal Company and Tax Systems
• Only German Formalities • Lawsuits in UK (expensive)
• High Acceptance and Trustworthiness within Germany • Both, German & UK Formalities
• High Credibility for Investors • Low Acceptance and Trustworthiness in Germany
• Low Credibility for Investors
• Equity 25.000€ • Equity 100£
• Minimum Deposit 12.500€ • Minimum Deposit 1 £
• Higher Costs Foundation • Lower Costs Foundation
• Limited Corporation Liability
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid

35. Risks
Growth Risk Operating Risk Legal Risks
• Studs concerned about their • Horse Injury & Performance • Revolution of Gambling
Reputation • Lawsuits Regulations & Laws
• Small Market • Natural Hazards
• Trust in Investment • Human Risks
• Feasibility of predicted Sales
• Subsitution Products &
Competitors
Financial Risk Team & Management Risk Technology & Marketing Risk
• Leasing Contract • Illness • Less likely
• Major Maintenance/Repairs • Inability to work
• Loss of Receivables • ‘Getting Oder ‘
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid

36. Professional Fees
Professional Expenses
Fcast Fcast Fcast Fcast Fcast
Expenses in € 2013 2014 2015 2016 2017
Lawyer/Consultant/Tax Accountant 500 200 200 200 200
OHIM 900 0 0 0 0
Professional Expenses 1400 200 200 200 200
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid

37. Technology Expenses
Technology Expenses
Fcast Fcast Fcast Fcast Fcast
Expenses in € 2013 2014 2015 2016 2017
Computers 2100 0 0 700 0
Printers 400 0 0 0 0
Software Applications 1400 0 0 0 0
Hosting 1200 1440 1728 2070 2484
Website Development 5000 1200 2000 2000 2000
Internet Access 1200 1360 1472 1630 1816
Cameras 2500 2500 2500 2500 2500
Maintance 0 2000 2000 2000 2000
Technology Expenses 13800 8500 9700 10900 10800
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid

38. Administrative Expenses
Fcast Fcast Fcast Fcast Fcast
Expenses in € 2013 2014 2015 2016 2017
Rent 4200 4200 4200 5040 5040
Insurance 599 599 599 699 699
Stationary 720 360 360 480 480
Office Supplies 900 50 50 250 70
Administrative Expenses 6419 5209 5209 6469 6289
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid

39. Marketing and Sales
Expenses in € 2013 2014 2015 2016 2017
Affiliate Marketing 0 2000 2000 2000 2000
Regional Tournaments 2500 2500 2500 2500 2500
Ads in specialized Journals 2500 2500 2500 2500 2500
Facebook Plugin 0 0 0 0 0
Cooperation Betting Portals 0 0 0 0 0
National Tournaments 2500 3000 3000 3000 3000
Sponsorship Jockeys 0 0 2500 2500 2500
Sponsorship International Tournaments 0 0 2500 2500 2500
TV Ads 0 0 12000 12000 12000
Reporting about Concept 0 0 0 0 0
Social Networking 0 0 0 0 0
Technology Expenses 7500 10000 27000 27000 27000
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid

40. Wages
Wages
Fcast Fcast Fcast Fcast Fcast
Expenses in € 2013 2014 2015 2016 2017
Salaries 60000 60000 60000 78000 78000
Workers Insurance & Payroll Taxes 6000 6000 6000 7500 7500
Wages 66000 66000 66000 85500 85500
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid

41. ROI
Administrative Expenses
Mares Stallions Foals
Products Best Worst Best Worst Best Worst
Investment 1 70 70 70 70 5 5
Race Earnings² 100 0 150 0 150 0
Breeding³ 200 20 600 10 600 0
Sales 4 50 20 40 5 70 1
ROI 4,3 0,6 6,7 0,1 164,0 0,2
Average ROI* 1,3 1,4 1,8
1) According to Mr. Eisele
2) Top 100 race horses earning about €56T a year in German price money – this does not include international price money (Source: www.galopp-sport.de)
3) According to Mr. Eisele
4) According to bbag-sales.de
* According to Mr. Eisele and galopp-sport.de about 20% of professionally selected horses will be successful and about 1% of German foals are successful
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid

42. The business has low initial investments with decent profit
potential.
Comments Income Statements and Financing*
• Revenues
L.C. in Thousand 2013 2014 2015 2016 2017
– Revenues from yearly membership fee of 10 €
Revenue 0.0 150.0 180.0 216.0 259.2
– We assume a customer base of 15.000 in the first year, Cost of sales (0.0) (30.0) (36.0) (43.2) (51.8)
with a CAGR of 20%.
Gross profit 0.0 120.0 144.0 172.8 207.4
• Cost Structure Expenses (100.0) (50.0) (75.0) (75.0) (100.0)
– Development of the betting system, integration into EBITDA -100.0 70.0 69.0 97.8 107.4
other betting systems, personnel etc. will account for the -10 0
Earnings in Equity investments -15 -15 -5
highest costs with around 100.000 € in the first year.
Financial income/(expense) 0 0 0 0 0
– Initial IT investment costs are low as service is running Exceptional items 0 0 0 0 0
on cloud product enabling quick scaling and high Depreciation and goodwill amortisation 0 0 0 0 0
elasticity “on-demand”. Assuming all-in-all transaction -115.0 55.0 59.0 92.8 107.4
costs of 2 € per customer per year (activity accounting). Income before taxes
Keyratios
Sales growth % 20 20 20 20
Profit margin % 30 27 35 34
Financing
Debt 150 150 100 50 0
Interest (i=10%) 15 15 10 5 0
* Tax for profit margin /cash flow calculation estimated with 0.035*4*EBT
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid bettingpool.com 4

43. The business case shows relatively low profit potential, however,
the business model is associated with little initial inivestments.
Comments Income Statements and Financing*
• Revenues
L.C. in Thousand 2013 2014 2015 2016 2017
– Monthly revenues are mainly generated through
advertisement on the platform (0.2€ per user) Revenue 0.0 98.0
. 117.2 144.1 181.7
Cost of sales (0.0) (24.0) (33.6) (47.0) (65.9)
– After going live we expect about 20.000 profiles in the
first year. Exponential growth during the first 5 years, Gross profit 0.0 74.0 83.6 97.1 115.2
following an s curve reaching a market share of 20% of Expenses (75.0) (70.0) (70.0) (70.0) (70.0)
horse enthusiasts (about 200.000).
EBITDA -75.0 4.0 13.6 27.1 35.2
– Further revenues are generated by the amateur racing Earnings in Equity investments -10 -10 -10 -10 -9
series through starting fees and advertisements on the Financial income/(expense) 0 0 0 0 0
tournaments (20 participants, 50€ starting fee, 20 Exceptional items 0 0 0 0 0
tournaments each year, 1.500€ advertisements). Depreciation and goodwill amortisation 0 0 0 0 0
• Cost Structure Income before taxes -85.0 -6.0 3.6 17.1 26.2
– Development of the social networking platform will Keyratios
attribute for 25.000€ one-time costs. User growth % 40 40 40 40
– Monthly server and traffic costs in the cloud dependent Profit margin % -6 3 10.4 12.7
on the usage (0.1€ per user).
Financing
– Marketing and networking to establish 100 100 100 90 70
0
Debt
amateurhorseracing.com as a social network for horse 10 10 10 7
Interest (i=10%) 9
riding enthusiasts of 50.000€ in the first year.
– Price money for tournaments (1.000€).Tournament
organization costs are born by the racing tracks. * Tax for profit margin /cash flow calculation estimated with 0.035*4*EBT
– Staff to manage the platform and tournaments (50.000€)
Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid wikihorse.com 43