1

Seed Investing Scotland

May 2012

Dangerous Liaisons

2

GP BULLHOUND YEAR IN REVIEW 2011 M

&A

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

PR

IVA

TE

PL

AC

EM

EN

TS

SECONDARY SALE

March

SOLD TO

April

SALE OF

MINORITY STAKE

May

MANAGEMENT

BUYOUT

August

ACQUIRED

PORTFOLIO OF

September

SEARCH UNIT

SOLD TO

November

SALE OF GIMV STAKE

& PRIMARY CAPITAL

RAISE

November

SALE OF STAKE TO

December

COMMON STOCK

OFFERING

April

PRIVATE

PLACEMENT

UNDISCLOSED

October

CONVERTIBLE

BOND PLACEMENT

November

PRIVATE

PLACEMENT

QUALCOMM

PENTECH

July

PRIVATE

PLACEMENT

KTH CHALMERS CAP.

SIXTH AP FUND

July

PRIVATE

PLACEMENT

ETF

June

CONVERTIBLE

DEBT PLACEMENT

December

PRIVATE

PLACEMENT

UNDISCLOSED

May

RE

SE

AR

CH

RE

PO

RT

S

EV

EN

TS

January

Technology

Predictions

for 2011

April

Social

Commerce

May

Russian

Internet

June

Mobile

Payments

October

Market

Update

October

Mobile

Gaming

November

Water

November

eBooks

8 Breakfast

Roundtables

throughout year

3

Revenue

Time Valley of Death

Angels Founders

Venture Capital Strategic Investors

Public Markets

Seed Capital

A

B

C

Mezzanine

Early Stage Later Stage

IPO

Secondary Offerings

The Chasm The Wall

Seed or Start-up: Market research and product development. Little or no revenues Early Stage: Funding full-scale operations and selling products/services. Not yet profitable Later Stage: Funding expansion and new products. Near break-even

THE FINANCING LIFECYCLE

4

TYPICAL FINANCING ROUND COMPANY REQUIREMENTS

Impressive team of founders

Go to market strategy

Credible business plan

Clear value proposition

Early proof of concept

Experienced management team

Strong sales capabilities

Successful execution of business plan

Scalability

Commercialisation strategy

Proven senior management with an experienced second

line

Developed sales channels

Plan to move the business to the next level

Defined market offering

Fully developed business model

Seed/Round A Financing Expansion Round Late Stage Round

Time

Value

5

TECH PRIVATE PLACEMENT SECTOR ACTIVITY

TRANSACTION VALUE AND NUMBER

Source : GP Bullhound, Capital IQ. European private targets only. As of 23 January 2012.

» Cleantech sector up 109% in

2011 vs. 2010, driven by an

increase in average

transaction size (e.g. Grupo T-

Solar $182m and Sorgent.e

Holding $50m)

» Digital media sector attracting

less capital in 2011 vs. 2010,

but more active with 297

transactions

» Semiconductor sector

considerably down, due to

large transactions in 2010

» Software sector down nearly

flat

AVERAGE TRANSACTION SIZE

$340m

$755m $650m

$203m

$3,533m

$2,368m

$613m

$971m

$399m

$860m

$433m$203m

$3,927m$4,099m

$1,470m$1,747m

2007 2008 2009 2010

Cleantech Digital Media Semiconductor Software

Mergers & Acquisitions

$2,597m $4,198m $2,006m $4,680m $2,770m Total TV:

6

23.6%

48.5%

12.5%

76.8%

(10.0%)

(40.8%)

3.4%

(11.4%)

(46.5%)

121.2%

0.5

50.5

100.5

150.5

200.5

250.5

300.5

May-11 Jun-11 Jun-11 Jul-11 Aug-11 Sep-11 Sep-11 Oct-11 Nov-11 Nov-11 Dec-11 Jan-12 Jan-12 Feb-12 Mar-12 Mar-12 Apr-12

TripAdvisor Inc. Yelp, Inc. Angie's List, Inc. Demandware, Inc. Zynga, Inc.

Groupon, Inc. Yandex N.V. HomeAway, Inc. Pandora Media, Inc. LinkedIn Corporation

RECENT TMT IPO PERFORMANCE – VERY MIXED

Source: Capital IQ

Rebased to

100

IPOs performance from the +122% for Linkedin since IPO to the (41%) and (47%) for

Groupon and Pandora Media. Facebook next.

7

Date Amount Raised

($m) EV/LTM

Revenue(1)

Jan-12 230 27.2x

Dec-11 228 7.5x

Nov-11 107 15.7x

Aug-11 114 8.5x

Jul-11 88 15.4x

Jul-11 1,000 4.1x

Jun-11 700 4.0x

Apr-11 1,304 12.9x

Mar-11 216 7.7x

Feb-11 235 4.8x

Jan-11 353 18.4x

SELECTED RECENT TMT IPOS IN THE US AND EUROPE

Source: Capital IQ

1) As at 23 April 2012

IPOs on US Stock Exchanges IPOs on European Stock Exchanges

US superstar TMT IPOs raise more and happen more often than in Europe

Date Amount Raised

($m) EV/LTM

Revenue(1)

Apr-12 20 n.a.

Mar-11 239 6.0x

Dec-10 11 1.9x

Jun-10 15 2.8x

Feb-10 893 4.2x

Sep-09 158 1.9x

8 Source: Preqin

55.9 53.1 48.9 51.1

62.2

97.8

81.4

107.5

121.7

141.3

149.2

128.7 126.5

211.7

123.7

194.9

173.6

206.1

124.1

166.0

77.2

94.8

54.8

69.3

77.0

54.8

72.5

53.8

64.9

82.8

44.8

52.4 46.3

0

50

100

150

200

250

Q12004

Q22004

Q32004

Q42004

Q12005

Q22005

Q32005

Q42005

Q12006

Q22006

Q32006

Q42006

Q12007

Q22007

Q32007

Q42007

Q12008

Q22008

Q32008

Q42008

Q12009

Q22009

Q32009

Q42009

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

All Private Equity Fundraising by Quarter (Q1 2004 – Q1 2012) Aggregate Capital

Raised ($bn)

PE FUNDRAISING FAR FROM PEAK…YOUR CHANCE

9

THE INTERNET IS A WAVEY SPACE…TIMING IS EVERYTHING

Source: ComScore

2008 2007 2006 2009 2010 2011

Widgets / Personalised

home pages

“Personalise

your web”

“Too slow

and clunky”

“Only private

equity geeks

use it”

Video Sharing Local Group Buying

“Tremendous

viral growth”

“Crap videos”

“Legal

concerns”

“You Tube

kills all the

others” ?

“Finally

cracked local

monetisation

”

“Groupon is

killing

competition”

“Unsustainable

margins”

Interest /

Valuations

Why it happens…

Audience before business model (video sharing, social networks)

Business model before audience (mobile data)

“Rush to Oklahoma" turns into "winner-takes-it-all“ (search, social networks, group - vouchering?)

“Fear of Missing Out”: crowd psychology of investors

10

THE EVOLUTION IN ECOMMERCE

Bricks and Mortar E-Commerce

Generalist Etailing Specialist Etailing

“Traditional” E-Commerce Social E-Commerce

Private Sales Daily Deals

Retail

11

E-COMMERCE 2.0 FUELLING M&A MARKET

$146bn

$150bn

$162bn

$183bn

$203bn

2008 2009 2010 2011 2012

Consolidation of established online sectors, expansion into new product retail and evolution of business models driving exits

Flash Sales

New

models

Mature

models

Shop $112m

$200m

$318m

WESTERN EUROPEAN ECOMMERCE REVENUES

Source: eMarketer, Capital IQ, GP Bullhound

Note: excludes financial services and event ticket sales

KEY TRANSACTIONS

Tailored eCommerce

$195m

$200m

Group Shopping

Undisclosed

12

$639m

$826m

$1,025m

$1,213m

$1,372m

$1,526m

2009 2010 2011 2012 2013 2014

FUNDAMENTAL SHIFT IN WEB USAGE - SEARCH TO SOCIAL

Media /

Entertainment

Video

Social Gaming

$550m

Music

Source: eMarketer, Capital IQ, GP Bullhound

Note: excludes financial services and event ticket sales

Broad consumer base, new monetisation strategies and cross-platform opportunities – key drivers for M&A activity in the casual

gaming space

GLOBAL SOCIAL GAMING REVENUES KEY TRANSACTIONS

$308m

$100m

$85m

13

MOBILE TO OVERTAKE DESKTOP BY 2014

mCommerce

Mobile

$240m

$41m $115m

$12bn

0.0

0.5

1.0

1.5

2.0

2.5

2007 2009 2011 2013 2015

Internet Users (bn)

Desktop Internet users Mobile Internet users

2008 2010 2012 2014

Source: Morgan Stanley Research, Capital IQ, GP Bullhound

Infrastructure for commercial mobile business models finally established

GLOBAL MOBILE AND DESKTOP INTERNET USERS KEY TRANSACTIONS

IPO

$150m

Mobile

Advertising $200m

Private Placement

$119m

$100m

14

RECOMMENDATION ENGINES GET PERSONAL

15

HARDWARE AND CONTENT CONVERGENCE WILL ACCELERATE

Amazon’s Kindle Fire and Apple’s iPad

16

GLOBAL APPEAL

Foreign acquirers re-entering European markets /

North American acquisitions now exceeding 2007 levels

84% 83%

87%

82% 80%

14% 14%

10%

14% 18%

1% 2% 2% 3%

1% 1% 1% 1% 1% 1%

Europe North America Asia Other

Source: Capital IQ, GP Bullhound. Represents announced transactions with European target

2007 2008 2009 2010 2011

17

CASH RESERVES DRIVING M&A

CASH & ST INVESTMENTS FOR KEY TECHNOLOGY PLAYERS ($m)

Source: US Federal Reserve, Capital IQ, press as of January 2012

US NONFARM NONFINANCIAL CORPORATE BUSINESS – TOTAL LIQUID ASSETS ($bn)

» The amount of cash and

marketable securities large

corporations hold has been

on the rise over the last three

years

» In the US, the amount of

liquid assets held by

nonfinancial corporations is

the highest to date, at c.$2.1

trillion

0

10,000

20,000

30,000

40,000

50,000

60,000Jan-12

Jan-11

Jan-10

0

500

1,000

1,500

2,000

2,500

2005 2006 2007 2008 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011

18

FIND OUT WHO’S BUYING

Source: Deutsche Bank, Mergerstat, CapitalIQ, GP Bullhound

Top Technology Acquirers, 2005 - 2010

Apple, $29

Dell, $731

Cisco, $534

EMC, $750

HP, $2,016

Google, $649

Intel, $1,461

IBM, $1,021

Microsoft, $918 Oracle, $2,156

Qualcomm, $144

0

10

20

30

40

50

60

70

80

0 2 4 6 8 10 12

Nu

mb

er

of

Tra

ns

ac

tio

ns

Bubble size corresponds to average deal size of disclosed transactions ($,M)

19

PRIVATE TECH M&A SECTOR ACTIVITY

» Cleantech sector up

considerably in 2011 2010,

mainly due to larger

transactions (for example

Iberdrola’s acquisition of

Iberdrola Renovables)

» Digital media sector flat

» Semiconductor sector down

considerably driven by smaller

acquisitions

» Software sector slightly up,

with larger average

transaction size

$340m

$755m $650m

$203m

$3,533m

$2,368m

$613m

$971m

$399m

$860m

$433m$203m

$3,927m$4,099m

$1,470m$1,747m

2007 2008 2009 2010

Cleantech Digital Media Semiconductor Software

Mergers & Acquisitions

TRANSACTION VALUE AND NUMBER

AVERAGE TRANSACTION SIZE

$21,908m $36,469m $13,988m $7,220m $8,043m Total TV:

Source : GP Bullhound, Capital IQ. European private targets only. As of 23 January 2012.

20

WHEN TO SELL?

21

Disclaimer: Information contained in this slide deck does not constitute an offer to buy or sell or the solicitation of any offer to buy or sell any securities. This document is made available for general information purposes only

and is intended for institutional investors who have a high degree of financial sophistication and knowledge. This document and any of the products and information contained herein are not intended for the use of private

investors in the UK. Although all reasonable care has been taken to ensure that the information contained in this document is accurate and current, no representation or warranty, express or implied, is made by GP Bullhound

LLP. as to its accuracy, completeness and currency. This slide deck contains forward-looking statements, which involve risks and uncertainties. Actual results may differ significantly from the results described in the forward-

looking statements. In particular, but without limiting the preceding sentences, you should be aware that statements of fact or opinion made, may not be up-to-date or may not represent the current opinion (whether public or

confidential) of GP Bullhound LLP. In addition, opinions and estimates are subject to change without notice. This slide deck does not constitute a specific investment recommendation or advice upon which you should rely based

upon, or irrespective of, your personal circumstances. Use of this slide deck is not a substitute for obtaining proper investment advice from an authorized investment professional. Potential private investors are therefore urged

to consult their own authorized investment professional before entering into any investment agreement. Past performance of securities is not necessarily a guide to future performance and the value of securities may fall as well

as rise. In particular, investments in the technology sector can involve a high degree of risk and investors may not get back the full amount invested.

GP Bullhound LLP is authorised and regulated by the Financial Services Authority and is registered in England No. OC 352 636

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