My overview of trends in the creative software market, including market sizing, a summary of the vendor ecosystem, valuation and exit highlights.

1. Creative Software
Crystal Huang
@CrystalHuang
Jan 2018

2. Highlights
• Creative software (including design and editing applications for graphics, video, illustration, industrial and 3D) is
estimated to be a >$10B revenue market
• There are nearly 20M creative software users globally, ranging from hobbyist to professional
• In the United States there are are nearly 500,000 professionals (employed or freelancer) in creative jobs, yielding
a $2.2-$4.5B SaaS revenue opportunity just in this segment
• Incumbents such as Adobe, Autodesk, Corel and Dassault dominate the graphic, CAD/CAM and video editing
software markets, and have historically been the primary acquirors as well
• Further, incumbents have transitioned relatively smoothly to SaaS delivery and pricing without losing market
share to new entrants
• Given these observations, we believe the best opportunities for investing in creative software lie in:
1. Collaboration or version control capabilities, that complement existing creative software suites (e.g.
Abstract, Frame.io)
2. Tools that focus on software design and user experience, where incumbents lack competitive products (e.g.
InVision)
3. Tools that better serve the casual/hobbyist community with improved ease of use and/or off the shelf
template/asset catalogues to make design more accessible (e.g. Canva)
2

3. Market Sizing

4. Market Size: Industry Research
4
$7.7 $8.0 $8.8 $9.0
$1.6 $1.7
$2.0
$2.4$1.6
$1.8
$2.3
$2.4
2013 2014 2017E 2018E
Computer Graphics Software Market ($ Billions)
CAD/CAM Software Imaging (Raster & Vector) Software Digital Video Software
Source: Peddie Research, 2015.

5. Market Size: Total # of Creative Software Users
5
According to Trefis, a financial research firm, the total number of creative software licenses sold globally was 16.9M in 2015 and 19.5M in 2016. This growth
forecast is based on: 1) the proliferation of digital devices, such as smartphones, that drive demand for creative editing tools, 2) the growth in internet adoption
and therefore in web designers as well as web content consumption and 3) the expansion of product functionality to support a broader range of users from
hobbyist to professional.
Source: Trefis Research, March 21st 2017.

6. $2.2B - $4.5B US TAM(3)
Market Size: Professional Creative Users
6
Employed Professionals(1) Freelancers / Contractors
261,600 Graphic Designers
148,500 Web Developers
64,400 Multi-Media Artists
14,800 Desktop Publishers
9,721 Industrial Designers
According to the US Department of Labor, in 2014 there were nearly
500K creative professionals employed by firms in the US:
According to a 2014 survey by the Freelancers’ Union, there are 53M
independent workers in the US. About 34% of these are creative
professionals.(2)
10,800,000 (20%) Designers
2,400,000 (4.5%) Web Developers
2,300,000 (4.3%) Marketers
1,000,000 (1.9%) Illustrators
740,000 (1.4%) Videographer/ Editors
690,000 (1.3%) Photographers
100,000 (0.2%) Fashion Designers
100,000 (0.2%) Animators
(1) US Department of Labor, 2014. Includes total employment count for the NAICs descriptions included.
(2) “Freelance Industry Report 2012,” International Freelancers Day. 1,491 freelancers provided their profession for this survey, and we used the percentages from the survey
to estimate total creative freelancers out of a reported US-wide freelancer population of 53 million.
(3) Does not account for perpetual license revenue or the addressable opportunity with hobbyists, students, academic institutions or in-house design professionals who do not
work at dedicated agencies, as such figures were unavailable. True TAM beyond the professional buyer is likely significantly greater than $2.2-$4.5B.
$10-$20 / User / Month

7. Creative Software Ecosystem
7
Product Roadmap & Management
Cloud Design Tools
Wireframing
Graphic
Video (General)
Photography
AI-Based Automation
3D / Animation
Prototyping / Interaction
Outsourcing / CrowdsourcingDesign Assets
Web Design
Video (Mobile Specific)
Crystal Huang, GGV Capital
@CrystalHuang

8. Industry Trends / Update

9. Creative Software Market Dominated by Adobe…
9Source: Trefis Research, March 21st 2017.
According to Trefis, Adobe’s share of the creative software market (software used by graphic designers, production artists, web designers, photographers,
photographers, animators, publishers and writers) was just under 50% in 2016. This share is forecast to grow over time to nearly 80% by 2023.

10. …And Video is Similarly Led by Incumbents
10
Market Share of Non-Linear Video Editing Software ,2014(1)
The video editing market is dominated by Adobe’s Premier Pro and Apple’s Final Cut Pro. For both non-linear editing (NLE) and encoding/transcoding software,
these two vendors lead in usage.
(1) “Video Editing NLE Market Share,” Learning Video, 2014. http://www.learningvideo.com/nle-market-share-breakdown/
(2) “2014 Online Video Production Trends Report,” Web Video Marketing Council, 2014.
Most Used Software for Editing, Encoding, Transcoding Video(2)

11. Adobe Made a Successful Cloud Transition…
11
Adobe, the leader in design/editing software, stopped sales of its perpetual license-based Creative Suite in 2013 and has successfully transitioned most of its
creative revenue to the cloud-based Creative Cloud. This has been one of the most successful SaaS transitions of any public software company, and presents
challenges for new companies that were hoping to win market share from Adobe in the cloud.
Source: Adobe Financial Analyst Meeting Presentation, November 6th 2016.

12. …And AutoDesk is On the Same Path
12
Autodesk’s “New SaaS ARR” (the value of subscriptions on its cloud-only
product suite) is growing quickly while its “Maintenance ARR” (the
recurring services revenue it gets for supporting legacy packaged
software) has decreased.
$1,104 $1,121 $1,071
$152 $255
$529
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
CY2014 CY2015 CY2016
Maintenance ARR vs. New SaaS ARR
Maintenance ARR New SaaS ARR
Subscription (including cloud software + recurring maintenance revenues)
is increasing as a share of total revenue, growing from 47% in 2014 to
64% in 2016.
46.6% 51.0%
63.5%
53.4% 49.0%
36.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CY2014 CY2015 CY2016
% Subscription vs. Perpetual Revenue
% Subscription Revenue % Perpetual & Service Revenue
Note: AutoDesk’s fiscal year ends in January so CY2016 = FY2017.

13. A Few Incumbents Drive M&A Activity
13
Buyers
Notable
Acquisitions
Strategic Buyers Financial Buyers
Nov 5, 2015
Undisclosed Price
Apr 20, 2005
$3.4B Deal
Dec 20, 2012
$150M Deal
Dec 11, 2014
$800M Deal
Aug 22, 2014
Undisclosed Price
Apr 18, 2016
Undisclosed Price
Sep 23, 2015
$44M Deal
Jun 27, 2016
~$25M Deal
Nov 5, 2014
$60M Deal
Acquisitions in the design software space (inclusive of graphic, illustration, video, 3D and industrial) have typically been done by Adobe, Autodesk and Dassault
Systemes, some of the major incumbents in the space. Only one deal, Macromedia, exceeded $1B. Consumer internet/video companies such as Google have
opportunistically made acquisitions to engage their communities, and private equity firms have periodically acquired legacy solutions, but big strategic M&A is
relatively rare given the small universe of deep-pocketed buyers.
Nov 7, 2013
$277M Deal
Jun 10, 2003
$124M Deal
Nov 26, 2009
Take Private Deal
Undisclosed Price
Nov 5, 2015
Undisclosed Price
Dec 18, 2014
Undisclosed Price
Jun 24, 1997
$310M Deal

14. Public Co’s Trade at ~8x Forward Revenue
14
Public Market Valuations
Today, design and simulation/modeling software companies tend to trade at ~8x next 12 months’ revenue in the public markets, with a range of 6.2x – 9.9x. This
is slightly up compared to the years preceding 2016, where the average was closer to 6x (range of 4 – 8x).
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
Enterprise Value / Forward Revenue Multiple
Adobe AutoDesk Dassault Systemes Ansys
Date: Dec 04, 2017
Company Founded IPO'ed Mkt. Cap TEV Gross EBITDA FY2016 NTM FY2017E FY2018E FY2019E FY2020E '15-'16 '16-'17 '17-'18
Design & Simulation Software
Adobe Systems 1982 1986 $83,031 $79,552 86.0% 32.3% 13.6X 9.6X 11.0X 9.1X 7.8X 6.7X 23.8% 20.3% 17.6%
Dassault Systèmes SE 1981 1996 $27,194 $25,076 84.8% 30.1% 7.8X 6.2X 6.6X 6.1X 5.7X 5.3X 18.1% 7.9% 7.5%
Autodesk, Inc. 1982 1985 $23,662 $23,793 83.2% -13.8% 9.5X 9.9X 11.7X 11.6X 9.3X 7.3X -19.1% 1.0% 24.6%
Ansys, Inc. 1970 1996 $12,051 $11,124 89.0% 45.1% 11.3X 9.6X 10.3X 9.5X 8.8X 8.1X 9.7% 8.1% 8.4%
Mean 85.8% 23.4% 10.5X 8.8X 9.9X 9.1X 7.9X 6.8X 8.1% 9.3% 14.5%
Median 85.4% 31.2% 10.4X 9.6X 10.6X 9.3X 8.3X 7.0X 13.9% 8.0% 13.0%
Revenue GrowthLTM Margins TEV / Revenue Multiples