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Social media software industry update
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2/10/2014 1 1
DAVID GROVE Managing Partner
(415) 798-2303
STEFAN GERHARD Managing Director
(415) 539-0688
IRFAN IQBAL Principal
(415) 798-2301
SOCIAL MEDIA SOFTWARE INDUSTRY UPDATE
2014
AMISH PATEL Associate
JARED MELILLO Analyst
TERRY JIANG Analyst
2/10/2014 1 2
Vaquero
Exceptional execution and service
Domain expertise and relationships
Full suite of products
Superior results
Solutions for
life cycle
Middle market,
growth focused
Best-in-Class
advisory
Growth Capital Private Equity Private Debt Pre-IPO & IPO
Proven Results
Advisory
Sell Side M&A Buy Side M&A
Vaquero: Solutions for the Entire Life Cycle
2/10/2014 1 3
Deep Domain Expertise in Relevant Sectors
Vaquero has unparalleled experience in SaaS & Social Content
Sale to
Initial Public
Offering
Initial Public
Offering
Recapitalization
Sale to
Initial Public
Offering
$166,250,000
February 2012
$38,000,000
EQUUS Energy Software & Data
Leading Software
PE Firm
Exclusivity
Growth Capital
$50,000,000
TIGRIS Mobile
Pre IPO Crossover
Round
Second Rounds
Leading Social Media
Software Vendor
Not Disclosed
Exclusivity
DIAMONDBACK Social Media Analytics
$35,000,000
January 2014
2/10/2014 1 4
Massive Social Media Marketing Market
$10Bn Social Ad Spend
$600Bn Ad Spend
27% Time Spent on Social Media
VS 2%
Social Media
Ad Spend
Gap in Social Engagement v. Ad Spend
Brand Marketers Focused on Social Media
U.S. Brand Marketers Plan to use Social Media more
70% 45% Cite Branding as
Primary objective of
Social Media
Advertising Spend
Ad spend will follow engagement
U.S. brand marketers would spend more online if there was
visibility on ROI
69%
Underpenetrated Market
2/10/2014 1 5
Massive Social Media Marketing Market
Social media is changing the tools marketers need for success
Then Now
Information
Power
Engagement
Measurement
Scarce
Sellers
Broadcast
Intuitive,
Campaigns
Data Driven,
Real Time
1:1 Targeting
Buyers
Abundant
From Mad Men to Math Men
A quantitative revolution replacing “gut feel”
decision making
From Broadcast to Engagement
Consumers love to hate advertising and interact
with brands according to personal preferences
From Campaigns to Real-Time
Fragmentation of channels and content require
constant monitoring of trending topics in order
to capitalize on opportunities
MOST BRANDS ARE NOT PREPARED
Need tools to create value in this new paradigm
where the most valuable audiences are
consuming social media, not measured media.
2/10/2014 1 6
Social Media Marketing Market Landscape
Monitor Manage Measure
Suite Vendors
Other Buyers
Crimson Hexagon
2/10/2014 1 7
Potential Strategic Partner Landscape
Marketing/Analytics Enterprise Software
Social Agencies/ Services
2/10/2014 1 8
Additional Vaquero Qualifications
2/10/2014 1 9
inPowered: A Strategic Divestiture
TRANSACTION SUMMARY
Vaquero Capital acted as financial advisor to inPowered in connection
with the sale of its subsidiary, NetShelter, to Ziff Davis
COMPANY OVERVIEW
A leading platform for helping brands discover and deliver expert
content to enable consumers to make informed decisions.
Serves large enterprise and SMB customers across multiple industries
TRANSACTION DETAIL
Divested NetShelter to raise capital to fund its rapidly growing earned
media advertising platform
The Board and Management did not want to incur dilution associated
with a new capital raise
Vaquero believed that NetShelter was a scarce asset and would
bestow market leadership in technology upon the buyer
Executed a targeted process focused on the key strategic buyers that
achieved a premium valuation -- several times greater than the
seller’s expectation
Vaquero developed tactics to create and maintain competitive tension
despite a very limited universe of buyers
Ziff Davis will combine NetShelter with its BuyerBase unit to enable
advertisers to use its targeting product across the entire portfolio
Strategic advisor
May 2013
to
Has sold
2/10/2014 1 10
DIAMONDBACK: A Strategic Sale
TRANSACTION SUMMARY
Vaquero Capital acting as exclusive advisor to DIAMONDBACK on its
strategic sale process
COMPANY OVERVIEW
Leading cloud-based social analytics platform helping companies to
design, develop, manage and measure their social performance in the
marketplace
Real-time analytic platform tracking 36,000 brands running 860 trillion
data permutations daily
Hybrid services and subscription software business model
TRANSACTION DETAIL
Company had been approached by strategic buyers with interest in
parts of the company, but unable to consummate a transaction
Board and management believed that customers would increasingly
need integrated campaign management and analytics solutions
Company faced strong financial headwinds due to strategic mis-steps
and faced a liquidity crunch
Vaquero believed developing a strong bidding-pair for this strategic
asset could overcome the challenges associated with a deteriorating
financial condition
Executed a rapid sale process targeting strategic buyers — went to
market in 15 days and 3 months from launch to close
Achieved a valuation of 2x higher than initial bid and found a solution
for both the services and software businesses
Strategic advisor
Sell Side M&A
In Exclusivity
DIAMONDBACK
Top-tier Social Media
Software Vendor
2/10/2014 1 11
Selected Vaquero Case Studies
TRANSACTION SUMMARY
Financial advisor to StreetEasy
COMPANY OVERVIEW
De facto online real estate marketplace for
New York City
TRANSACTION DETAIL
Gives Zillow market leadership in the
country's largest real estate market
Ran competitive process, yielded multiple
bids
Massive increase in value from initial bids
August 2013
Has been acquired by
$50,000,000
TRANSACTION SUMMARY
$35M Senior & Mezzanine Debt round
COMPANY OVERVIEW
Leading provider of fully-hosted, all-in-one
eCommerce solution designed for internet
businesses
TRANSACTION DETAIL
Founders wanted to explore Pre-IPO
financing alternatives
Vaquero believed that debt markets would
offer an efficient & flexible source of capital
Highly efficient process: 6 days from launch
to 1st bid, 7 term sheets
Growth Capital
$35,000,000
January 2014
TRANSACTION SUMMARY
$35M recapitalization
COMPANY OVERVIEW
Safety and compliance SaaS for food
production vertical
TRANSACTION DETAIL
30% premium to publicly-traded peers
Highly efficient closing process – 28 days
Vaquero invested in Alchemy
Financial and strategic advisor
Recapitalization
$35,000,000
December 2012
2/10/2014 1 12
Selected Vaquero Case Studies
TRANSACTION SUMMARY
$33M Series B
COMPANY OVERVIEW
Largest online tech media publisher
TRANSACTION DETAIL
Executed dual track sell side & growth
equity process
Vaquero recommended expanding to other
financial partners
Improved bid valuations by over 45%
Financial and strategic advisor
Series B Preferred Equity
$33,000,000
September 2011
Financial advisor
Secondary Offering
$44,000,000
March 2012
TRANSACTION SUMMARY
$44M secondary offering
COMPANY OVERVIEW
Largest small business online community
TRANSACTION DETAIL
Executed secondary capital process
Multiple bids at highly strategic values
Found optimal partner with Board’s designed
structure
Series A Preferred Equity
$166,250,000
February 2012
TRANSACTION SUMMARY
$166M Series A
COMPANY OVERVIEW
Leading SaaS analytics for Oil & Gas
TRANSACTION DETAIL
Executed a full process, received 20+ bids
Achieved premium valuation and clean
terms in a majority recapitalization
Vaquero invested in Drilling Info
Financial and strategic advisor