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The Notation Annual Meeting - 2019

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The Notation Annual Meeting - 2019

  1. 1. Notation Annual Meeting - 2019
  2. 2. 2 We invest on day 0:00 in exceptional technical teams building capital-efficient internet companies.
  3. 3. 3 2019 Review and looking to 2020 AGM Agenda • Team Update • Notation I Review + Value Drivers • Notation II Review + Case Studies • NYC Update • Reviewing 2018 AGM goals • 2019 Strategy Updates and Looking to 2020
  4. 4. 4 A unique set of skills to help founders succeed Team Update Alex Lines Partner Katherine Wu Principal Nicholas Chirls Partner Thomas Bailey Partner Expertise: Infrastructure, hard tech & product. Engineer experienced in distributed systems & scalability, building products and companies in NY for over 10 years. Expertise: Product, growth, and capital raising. Previously Head of Seed Investing at betaworks and led product for several betaworks projects and previous startups. Expertise: Financial, data and network analysis for blockchain projects. Leads cryptocurrency and blockchain investing. Angel investor and has built large-scale crypto-mining facilities. Expertise: Business development, marketing, regulatory and communications. Legal background and fmr. operator at Messari, a NYC seed-stage blockchain startup.
  5. 5. 5 In the top quartile, almost fully invested, with a lot of room still to grow Notation I is maturing... 28 Investments made $175k Median initial investment 4.8% Median initial ownership 2.1x TVPI net multiple 1.2x 1.5x 1.9x 2.2x Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Notation I 1st Quartile (Cambridge)TVPI multiple as of Q2 2019 94.9% Percentage of fund dollars invested 1st Quartile (Cambridge) illustrates the top quartile TVPI progression for Cambridge's set of US venture funds with 2015 vintages. 13.5% Company Y % of total port. value 14.5% Company X % of total port. value 12.0% Company Z % of total port. value Notation I TVPI drivers $Y Company Y post- money valuation $X Company X post- money valuation $Z Company Z post- money valuation
  6. 6. 6 Lots of potential fund returners and value drivers Notation I Value Drivers Notation I potential fund returners Other Notation potential value drivers Redacted Redacted
  7. 7. 7 Timber is developing Vector, a rapidly growing open source logging project Timber builds observability infrastructure for managing the incredible amount of systems data produced by modern web stacks. The team recently launched Vector, a high- performance open-source router for logs, metrics, and events. The project is getting a lot of traction and growing quickly. $200k Initial investment Firstmark Lead Series A investor A% Initial ownership $B Latest valuation I can honestly say that Timber would not be here without Nick and Alex (and the Notation family). They understood the problems we were trying to solve on a deep level before any other investors did, and have been in our corner ever since. They're never pushy and are always willing to dig in with us on tough problems when we need it. I would work with them again in a heartbeat. Zach Sherman “ CEO Timber Notation I - Case Study
  8. 8. 8 Podia is building a next gen platform for online creators to run their businesses Podia is everything you need to sell online courses, downloads, and memberships without worrying about the tech. On less than $X raised, the company surpassed $Y ARR, growing Z% MoM, and expects to be profitable in 2020. $150k Initial investment Steadfast Lead Seed investor C% Initial ownership $D Latest valuation I had no plans to raise venture capital when first starting Podia. When I met Nick and Alex, their thinking around venture and company building immediately resonated with me. They were the first investors I’d met where I felt as if they were working with me from the start, all the way to where we are today. They’ve always been there to pick up the phone and help through all of the ups and downs a startup goes through in the early years. Spencer Fry “ CEO Podia Notation I - Case Study
  9. 9. 9 Still a baby, but some encouraging signs... Notation II Indify Nemedio Amperon StreetCred 15 Core investments $410k Median initial investment 83.0% Raised follow- on financing 9.5% Median initial ownership Core Investments Unannounced Texino Talos* Unannounced ChargeLab* Unannounced Seasons* Gen0 Redesign Science* Bison Trails* Non-Core Investments Redacted Liquid Crypto Investments Redacted *2019 Investments 44.8% Dollars called as % of the fund 1.5x Net TVPI multiple
  10. 10. 10 Notation II - Case Study Indify is disrupting the music financing business Indify uses a proprietary data product to find up and coming musicians earlier than anyone, including the traditional music labels. In exchange for a percentage of streaming revenue, Indify funds early artist growth. We led the first pre-seed round, and have helped them navigate towards growth and capital. $400k Initial investment Unannounced Lead seed investor E% Initial ownership $F Latest seed valuation It is safe to say we would not be where we are without Notation. They believed in us first, coached us consistently, and helped us build something users love. There is no better team to be your first investor. Keshav Garg “ CEO Indify
  11. 11. 11 Notation II - Case Study Bison Trails has built a world-class blockchain infrastructure business Bison Trails provides best in class blockchain infrastructure for proof-of-stake crypto networks, quickly becoming the go- to provider in the space, and one of the fastest growing companies we've ever worked with. We co-founded the company and it's raised over $30M in capital in the past year. $G Initial investment Blockchain Cap Lead Series B investor H% Initial ownership $I Latest valuation In a short list of VCs who will actually bust their asses for you, Nick, Alex, Thomas, and Katherine share spots. Unreal grit and unrivaled humility on this team. Joe Lallouz “ CEO Bison Trails
  12. 12. 12 Core areas of interest Spruce uses real-estate data in novel ways to offer title insurance at a fraction of the historical cost, and delivers this through an innovative new product experience and API. The product represents a fundamentally better experience for customers at lower cost and friction. Infrastructure Blockchain & Open Source ML / CV / AR Fintech Healthcare Education Energy ProptechBio / Chem Active industry verticals Marketplace Technical founding teams combining data & software to create fundamentally new customer experiences How we invest Sample company highlight
  13. 13. 13 The NYC tech opportunity set and talent pool continues to grow Where we’re going $2B $4B $6B $8B $10B 2010 2013 2016 NYC annual exit outcomes 2014 2019 138 46 NYC startup valuations > $200M "Since 2015, New York-area pre- seed investments represents 19.4% of all pre-seed activity across the U.S., whereas NY represents only 10.5% of overall activity across stages." NYC pre-seed activity NYC talent growth Source: Pitchbook NYC engineering driven companies NYC Top market for tech degree completions 17.2% Growth in total tech occupations 48.6% Growth in tech degree completions 17.1% Growth in average wage for tech occupations Source: Stack Overflow NYC Eng reportSource: 2019 Primary NYC summitSource: 2019 Primary NYC summit
  14. 14. 14 Lots of late-stage capital flowing into NYC, but angel / seed categories still green field Where we’re going NYC VC activity Institutional NYC Tech VCs Graduated Above $100M+ Institutional NYC Tech VCs That Lead - Sub $50M Source: Pitchbook
  15. 15. 15 Notation AGM Our 2019 goals in review Maintain our focus on technical founding teams in NYC in our core areas of interest, but dip our toes in other geos and themes Bison Trails Co project Lighten blockchain exposure as % of portfolio Maintain focus on 3 pre-seed investment types Actively consider more opportunistic investments Reviewing our 2019 goals from last year's AGM
  16. 16. 16 2019 in review – The good stuff Notation AGM Our core team is now the foundation for success into 2020 and beyond. We may add one more technical analyst in 2020 We are more balanced across the portfolio in terms of time spent, allocations, and core areas of interest Although still super early, there are some very solid signs of growth and follow-on financings in Notation II (earlier than we had in Notation I) We put "network check" investing on hold for now and instead Thomas is leading the way on a liquid crypto allocation - We've made two small investments to date here
  17. 17. 17 Addressing Challenges and Looking ahead to 2020 Notation AGM Valuations continue to creep up and it's harder than ever to find opportunities below $4M pre. We have a number of options available to us (none of them necessarily mutually exclusive): • Bigger initial checks • More incubation • Scale people investing • Go deeper on other Tier 2 geos Pro-rata continues to be a significant challenge at Series A and beyond (and sometimes even at seed) We're making a concerted effort to re-vamp our dealflow strategy and system for 2020 and beyond, given some of the recent dynamics in the market: • VC dealflow tends to be high noise / low signal • Need to be more systematic about fostering unique deals within our network and with angels • Continue to expand F&F fund effort in Notation III • Consider re-orienting part-time partner program • More systematic data tracking * We will have more to report on our progress and strategy here in the coming quarters
  18. 18. 18 Questions + Feedback! Notation AGM
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