LinkedIn Series D Opportunity - Investment Recommendation

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Series D Opportunity – March 2008
Total round size: $85-125M

2
Why LinkedIn?
• Large “exit ready” social network for professionals
• One of three elite social networks and clear leade...

3
Executive Summary
Company Information
– Founded in 2002 and launched in 2003
• HQ in Mountain View, CA
• Revenues: ’05 $...

4
Valuation and Exit Potential
Valuation and
Deal Terms
• Exit very likely to be IPO, not likely to raise another round un...

5
Management Team
Reid Hoffman
Chairman and
President, Products
• Founding CEO
• EVP of PayPal
• BoD for SixApart and Mozi...

7
LinkedIn Business Framework – Just the Beginning
Software
licensing
Contextual
advertising
Marketplace
Subscriptions
Job...

8
Large Addressable Market Segment
Users of social networks:
506 million monthly unique visitors in
20071
Advertising on s...

9
LinkedIn vs. Facebook
Types of
uses and/or
applications
Photo
Sharing
Top
Friends
Super
Wall
Movie
Tastes
Bumper
Sticker...

10
Opportunities: Disruptions to Landscape?
$0 CPA
User-generated content (scale)
Profiles for best ad products
User to Us...

11
FINANCIAL ANALYSIS

12
Company Financials
Year % Growth
FY05 FY06 FY07 FY08 FY09 FY10 FY06 FY07 FY08 FY09 FY10
Revenue
Online Subscriptions 38...

13
LT Forecast - Sensitized
Income Statement ($M) 2007 2008 2009 2010 2011 2012
Revenue $32.2 $72.6 $192.0 $330.6 $379.9 $...

14
CF Forecast - DCF
Cash Flow Statement ($M) 2007 2008 2009 2010 2011 2012
Net Income $1.1 $3.9 $18.9 $38.6 $44.2 $50.7
D...

15
Comps (M&A/Funding Activity)
Company Name Acquirer Date Price ($M)
Revenue
($M)
Uniques
(M)
Monthly
Page
Views (M)
Valu...

16
Implied Valuation - Forecasts
Valuation ($M) 2007 2008 2009 2010 2011 2012
Conservative Forecast
Comp Median Price/'07 ...

17
SUMMARY OF VALUATION ANALYSIS
• P/S metric (median of comp – SocNW segment):
– ’08 forecast implies valuation of $1.75B...

18
Exit Analysis
M&A
$1,800.0 $2,100.0 $2,400.0 $2,700.0 $3,000.0 $3,300.0 $3,600.0 $3,900.0 $4,200.0 $4,500.0
$900.0 22.6...

19
Deal Summary
Other names and brands may be claimed as the property of third parties
LinkedIn’s Desires [INVESTOR X] Pro...

20
Recommendation
Proceed to due diligence & negotiate/issue term sheet for [Investor X]
lead of $85-125M as part of $100-...

22
Board of Directors
Reid Hoffman (Chairman)
Mark Kvamme (Sequoia Capital)
Software and services investments at Sequoia C...

23
Business Models – A Comparison
Licensing/subscriptions
40% Operating margins
Digital goods—no
inventory
Massive scale
N...

24
Subscription Offerings

25
The LinkedIn Value Chain*
*Based on January 2008 run-rate - Monthly growth relative to December 2007

26
Why Will LinkedIn [Continue To] Win?
NEW BUSINESS LINES
Key Differentiation:
• New Businesses grow
organically from the...

27
Largest Professional Network
Domestic
Growth Days
0 to 1MM members 477
1 to 2MM members 181
5 to 6MM members 102
9 to 1...

28
Best and Broad Demographics
School: 58K
HBS: 17K
School: 50K
GSB: 8K
13K
32K
19K
13M University Alumni
31K
Employees: 5...

29
Growing Across Industries
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
May-03 Jan-04 Sep-04 May-05 Jan-06 Sep-...

30
Best of Class Audience
Property Average Age
% Comp
College Grad Average HHI
%Comp
EVP/SVP/VP
% Comp
Business
Decision
M...

31
Recruiting Bookings
Bookings tripled from $5.7MM in 2006 to
$17.3MM in 2007
Forecast bookings of $32.7MM in 2008
Revenu...

32
Platform for New Businesses
Subscriptions business serves broad set of needs
outside networking and recruiting
• Sales
...

33
$28.37
$26.68
$23.86
$4.45
$30.08
$24.04
$9.13
$7.32
$13.73
0
5
10
15
20
25
30
35
40
45
$100
Dice Career
Builder
M onst...

34
Summary of Prior Preferred Terms

35
[sensitized]LT Balance Sheet Forecast
Balance Sheet ($M) 2007 2008 2009 2010 2011 2012
Assets
Cash & Cash Equivalents $...

36
Sensitized Forecasts and Implied P/S ratios
2007 2008 2009 2010 2011 2012
Sensitized MU Growth% 220.5% 110.3% 55.1% 27....

37
Price/Sales Comps
2007 2008
Price/Sales Comp Median** 9.2x 6.6x
Conservative Valuation ($K) $295,429.6 $449,109.5
Mediu...

38
Comps - Ratios
Valuation
Price/'07
Est Sales
Price/'08
Est Sales
Price/
EBITDA
Price/
Earning
Price/
Unique
Price/Pg
Vi...

39
Ratio Analysis
Liquidity Ratio Profitability Ratio
Ratio Analysis
C
urrentR
atio
Q
uick
R
atio
C
ash
Flow
R
atio
N
etW
...

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