A presentation by Andreas Schulze of Marsa Corporate finance to the DayOne Accelerator discussing Funding opportunities and approaches for startup companies. If you would like a copy of the slides for download please contact andreas.schulze@marsaco.com

1. Marsa Corporate Finance GmbH, Basel Switzerland
Financing of Early-stage Companies
Strictly private andconfidential
April 2019
An Overview of Funding Facilities
to baselarea.swiss DayOne Accelerator, 30.04.2019

2. 1 Introduction and Investment Thoughts
2 Development Stage of Companies
3 Life Cycle
4 Financing Means
4.1 Equity
4.2 Equity Investor Types
4.3 Loans
4.4 Loan Characteristics
4.5 Non-dilutive Funding
5 Investment Size and Expected Returns - IRR
6 Business Case Presentation
7 Contact
Financing of early-stage companies Marsa Corporate Finance GmbH April 2019
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Contents

3. Introduction to Fund Raising for Early-stage
Companies
Valuation of early-stage companies Marsa Corporate Finance
GmbH
April 2019
3
1 Introduction and Investment Thoughts

4. Your Fund Raising Strategy should based on important parameters, such as
• which round of financing is it?
• which development phases is your startup/project in?
• which is the investment size?
• which future funds will the company/project need and when?
• which type of funds should be applied for (Equity, non-Equity)?
• which types of investors are best to approach?
• which is the company’s offer to investors?
Introduction
1 Introduction & InvestmentThoughts
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5. Development stage of young companies
2 Early Stage Companies Role in theEconomy
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Revenues
Business/Product
Idea
No revenues,
Operatinglosses
Start-up companies
No or small revenues,
Increasing losses
2nd stage companies
Growing revenues
move towardsprofits
Losses/earnings

6. ~ 8-14 20 YEARS
RESEARCH & DEVELOPMENT PHASE RETURN PHASE EXPIRY
REGISTRATION
PHASEIII
PHASEII
PHASEI
PRE-CLINICALSAFETY DOSE EFFICACY / APPROVAL
“STAR” “CASH COW” “DOG”~10
%
10 -45% 40 - 65% ~80%
BREAKEVE
N
ß RISK-ADJUSTED DISCOUNTED CASH FLOW à
Chance of
SUCCESS
<5%
ANIMALS ~10s ~ 100s ~ 100s – 1,000s
PTS
COSTS
SALESp<0.05
P/E >20x P/E ~10-15x P/E > 6-10x
“MATURE”
P/E ~ 15x
0
LIFE CYCLE BIOTECHNOLOGY COMPANIES
00
Life cycle of young companies, e.g. Pharmaceutical
2 Early Stage Companies Role in theEconomy
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Valuation Methods DCF, rNPV Multiples, Peer groups, other

7. Paid in at inception of the startup company by the founders:
◦ In GmbH CHF 20k
◦ In AG CHF 100k
◦ From founder shareholders
◦ Possible is some in-kind or partial pay-in (e.g. 50% = «Teil-Liberierung»)
◦ Rapidly consumed
Equity - Initial Share Capital
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4 Financing Means

8. Early Stage: (50k – 500k)
• FFF – pure money
• Seed Investors, some early-stage VC
• Business Angels – often with some «soft money» as contacts and support
Expansion Phase
• Venture Capital Investors
Late Stage
• Venture Capital Investors
• Private Equity Investors
Other types
• Crowd Funding
• Corporate Ventures
• Family Offices
Equity – Investors
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4 Financing Means

9. Loans may come in various constructs with rather different implications and at different stages
• Straight loans e.g. from banks or private investors (rather in a later stage)
• Convertible loans (rather early, e.g. if no meaningful valuation is possible)
• Option Debentures (rather unusual in early stage startups)
• Warrants
• ....
Loans
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4 Financing Means

10. Straight loans
• Interest baring or without interest
• Liabilities in balance sheet
• Subordination possible to cure
Convertible loans
• Compare to straight loans, however can be converted into equity
• Subordination possible to cure
• «switch side» on balance sheet in case of over-indebtedness
• Conversion triggers are important
• Who holds right to convert and when?
Loan Characteristics
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4 Financing Means

11. Option debentures
• Special form of convertible, not very common
• type of debt instrument unsecured by collateral, hence rely on the creditworthiness and
reputation of the issuer for support.
• may pay periodic interest payments
Warrants
• do not represent actual ownership in the stock
• holder has the right to buy stock from the company at a specified price within
a designated time period
• Dilution,because the exercise of a warrant will increase a company's outstanding shares
Loan Characteristics
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4 Financing Means

12. • Governmental or supra-national grants
EU, Innosuisse,
• Foundations offer project funding or individuals’ support
Gebert Ruef, Hasler, etc. ....
• Donations
• Patient organisations
• Refunds or reductions of Development Cost (EMA), Orphan, etc., .....
Non-dilutive Funding
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4 Financing Means

13. Typical Investment Size – IRR Expectations
5 Investment Size and Expected Returns - IRR
Investor Total Investment Size IRR
Business Angel CHF 10k + n.a.
FFF n.a. n.a.
Early-stage VC CHF 0.5 -5.0m > 10%
Late-stage VC CHF 5m + > 10%
Private Equity CHF xxm > 12-16%
Non-dilutive variable n.a.
The internal rate of return (IRR) is the discount
rate providing a net value of zero for a future
series of cash flows.
IRR and net present value (NPV) are used when
selecting investments based on their returns.
The main difference between IRR and NPV is
that NPV is an actual amount while the IRR is
the interest yield as a percentage expected
from an investment.

14. Investors Expectations – ROI - Return
Return in investment is the difference between Profits minus Cost in relation to Cost
or:
Example: Investor puts 50 € and yields at end of investment 70 €; Return = 40 %:
Earnings – Cost Earnings
Return = ---------------------- = -------------- -1
Cost Cost
Profit
Return = --------------------------
Invested Capital
70 – 50 20
Return = -------------- = ------- = 40%
50 50
5 Investment Size and Expected Returns - IRR

15. IRR
Calculating IRR
A company is deciding whether to purchase new equipment that costs $500,000.
Life of the new asset to be 4 years
generate an additional $160,000 of annual profits.
In the 5. year, the company plans to sell the equipment for its salvage value of $50,000.
Meanwhile, another similar investment option can generate a 10% return. This is higher than
the company’s current hurdle rate of 8%. The goal is to make sure the company is making
better use of its cash.
To make a decision, the IRR for investing in the new equipment is calculated below.
IRR of 13%, using the Excel function, =IRR(). From a financial standpoint, the company should
make the purchase, because the IRR is both greater than the hurdle rate and the IRR for the
alternative investment.
5 Investment Size and Expected Returns - IRR
Find IRR and NPV functions as preset functions in MS Excel

16. Business Case Presentation
Fund Raising Document Set consists of
• Pitch Deck
• Business Plan incl. Financial Plan (3+ years) PnL, CF, BS
• IP Situtation and Strategy
• Use of Funds – incl. Scenarios
• Next Financing Needs (Timing, Size)
• Supplement Documents
Important Aspects
• Consistency of all documents and messages
• Be reliable and deliver
• Communicate important events in timely manner – no surprises
6 Investment Size and Expected Returns - IRR

17. Thank you - Your contact at Marsa Corporate Finance GmbH
7 Contact
Andreas J. Schulze, CEO
Marsa Corporate Finance GmbH
4010 Basel
www.marsaco.com
+41 76 341 18 76
andreas.schulze@marsaco.com
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