SAMS

Startup Asset Management Servicefor InvestorsFebruary 21, 2013

SAMSStartup Reality Check

11 out of 12 startups fail.

The dominant reason for failure is the startup’spremature scaling in one or more of 5 dimensions: - customer - product - team - business model - funding

Source: 2011 Startup Genome Infographics

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SAMSIntroducing …

Silicon Alley Startup AssetManagement Service (SA|SAMS)

We manage your tech start-upideas, investment and processfrom concept to market.

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SAMS

Silicon Alley Startup AssetServices (SA|SAMS) assistsaccredited investors who want toinvest in a particular startup butwho do not have the time tomanage their startup investments.

About SA|SAMS

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SAMSAbout SiliconAlley.com

Since 1996, SiliconAlley.com has been dedicatedto the growth and evolution of the Internet industry.It is both a community and a resource. A center ofexcellence where industry best practices can beexplored and where vision and innovation are sharedto build new Internet businesses. It is a commonground for both people providing services and thosein need of them.

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SAMS

• Second Opinion Service (SOS): an unbiased, objective, independent assessment of your proposed startup investment

• Startup Daily Management Services: hands-on management of your startup’s daily activities including: business strategy, product architecture, design/development, customer development and support services

• Investment Opportunities: selected opportunities to invest in Silicon Alley endorsed startup companies

What We Provide to Investors

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SAMSSilicon Alley’s Second Opinion Service

OBJECTIVE    |    UNBIASED    |    INDEPENDENT

We offer an unbiased objective assessment of your current or proposedstart up investment. By written report, we provide an independent objectiveand unbiased report on your investment, both pros and cons relating toyour current stats and the accomplishment of startup milestones.

Our fee for our SA Second Opinion Service (SA|SOS) is $2500 and isusually recoupable from other fees within a 90-day period. It takes a weekto generate the SOS and is delivered in writing and additional verbalpresentation by phone call discussion after receipt of SOS.

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SAMSStartup Daily Management Services

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SAMSOur Key Startup Deliverables

BusinessStrategy

ProductDevelopment

CustomerDevelopment

SupportServices

･ Go-to-market strategy･ Investor documents･ Investor intro and negotiation･ Board member selection

･ Wireframing･ MVP* design･ MVP* build･ MVP* testing

･ Brand strategy･ Marketing strategy･ SEO/Social media plan･ Business development･ Public relations

･ Education･ Real estate･ Legal･ Accounting･ HR & recruitment

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* MVP is the Minimum Viable Product, the most pared down version that can still be released. An MVP has three key characteristics: a. It has enough value that people are willing to use it or buy it initially. b. It demonstrates enough future benefit to retain early adopters. c. It provides a feedback loop to guide future development.

• MVP* Design• MVP* build• MVP* testing• Product (language) localization

• Business analysis• Go-to-market strategy• Investor documents• Investor intro and negotiation• Board member selection

• Reference accounts• Sales strategy• Marketing strategy• Business development• Public relations• Product videos

• Education• Real estate• Legal• Accounting• HR & recruitment

SAMSOur Best Practices / What We Believe In #1:Pivot* & Achieve Market Validation Early!

• Release the product sooner and confirm datamatches expectations.

• If data does not match expectations, pivot*until traction and market validation is obtained.

• Scale at the appropriate points only after datavalidation.

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* A pivot is where a start-up company decides to switch direction in how they make their revenue. This is often after their first plan results in failure.

SAMSOur Best Practices / What We Believe In #2:Don’t Waste Time; Speed-to-Market is Key

• It’s not cool, it’s cool work.

• Mentor employee relationship.

• The episodic nature ofdifferent time zones workingtogether.

• Start building the idea rightaway, not sitting in classes.

24-HourWork Cycle

On- Off- Shore Shore

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SAMSOur Best Practices / What We Believe In #3:A Concurrent Product & Customer Development Process

Week 1 2 3 4 5 6 7 8 9 10 11 12

Wire-framing

MVP Design:2-3 Rounds of

Development, Testing& Pivots

MVPTesting

MVPLaunch

BrandStrategy

MarketingStrategy

SEO /SocialMediaPlan

BusinessDev.

PublicRelations

Customer Development:

Product Development:

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Strategy/Planning

Note: For most startups, Customer Development is almost an afterthought. We recognize that the businessand marketing functions of a startup is as important as engineering and product development, and thereforedeserves an equally rigorous methodology to guide them.

SAMSA Typical Process for Most Startups:Lengthy, Inefficient and Expensive

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SAMSOur Way vs. The Traditional Way

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SAMSOur Best Practices / What We Believe In #4:Localization for Technology That Will Be Sold Globally

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Technology localization is more than just traditionallanguage translation.

We use an intensive localization process basedon our assessment of the various requirementsof the local market, including:

TechnicalRequirements

CulturalRequirements

LinguisticRequirements

SAMSOur Tech Skill Sets

Mobile:･ Android･ Windows Phone･ PhoneGap･ HTML5･ jQuery Mobile

Process:･ Lean UX･ Pen Testing･ SCRUM/Kanban･ threat modeling･ wireframing･ Growth Hacking

Databases:･ mySql･ sqlLite･ mongoDB･ ravenDB･ noSql

Framework:･ Backbone.JS･ jQuery･ Zend･ ASP.NET･ Spring

Languages:･ Java･ C#･ PHP･ Ruby･ JS･ C/C++

MarketValidation:･ Google Analytics･ SEO･ Copy Writing･ Blog･ Social Marketing

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SAMSStartup Selection Criteria:

What We Look for in Startups

Products which can be built quickly at low cost

Reasonable flexible valuations

Low maintenance principals; ability to listen well

Innovative technology - not just better mousetrap

Credentials and track record

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SAMSOur Universe

ReportersPR

& SocialMedia

Contacts

Academia&

ResearchOrgs

VCsPEsFAMOffice

Institut.Angels

OurNetwork

andContacts

LawyersAccountants

andPSO’s

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SAMSOur Liquidity Opportunities

VendorFinance

JointVenture

CashFlow

Sale

Refinance

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IPO

SAMSInvestment Fee Structure

81/19 !

QuarterlyRetainer

MilestoneBonus

ProfitShare

OptionalMilestone

BonusFee

A quarterlyretainer that’sless than whatprofessionalservice firms

charge

Series A,Vendor Finance,

Joint Venture, Sale,Cash Flow,

Refinance, IPO

Investor gets100% return ofthe capital first.Then split thebalance 81/19

Optional based ontype of servicesrendered to the

startup

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SAMSIllustrative Calculations

Potential Return on Investment:

Investment= $100k

Investor’s 81% Profit Share = $729k(In this scenario, investor makes 8.2x his original investment.

SA’s 19%Profit Share

= $171k

Investment:

$100k $200k $300k $400k $500k $600k $700k $800k $900k $ 1 mil

Capital: $80k

Retainer: $20k

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SAMSOur Core Team

Miles J. Rose

･ Founded SiliconAlley.com in 1996･ Liquidity events: Consumer Search (sold to NYTimes 2006); Squashware software to Adobe･ Advisor to Oddcast, the Humo Network･ Guest lecturer at NYU･ Named to Silicon Alley Top 100･ Received Mayor of New York’s citation for hosting WWWAC BizSig meeting during Internet World･ Featured in articles in New York Times, Wall Street Journal and other business publications

Arthur Bierer

･18 years of experience at Microsoft as a Software Developer and Product Guy･ Built Internet Explorer 1.0･ Worked as Windows developer, worked with Anders Hejlsberg on the C# language･ Founded the NY International Technology Meetup which sponsors monthly events for technologists･ Founded abDevLabs along with 3 companies in the past year since leaving Microsoft

Norman S. Rosenthal

･ Over 25 years management and technical experience in technology companies ･ Positions included VP of Sales, CMO, COO, VP of BusDev and President ･ Presently CEO of Tempest Systems, a cutting edge technology-consulting/ advisory firm providing business development services to 100+ hardware and software vendors.

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SAMSWhy Partner with Us

• SiliconAlley.com Startup Asset Management Service is forinvestors who don’t have time to manage their investmentswith turnkey services to ensure success (Go-to-market strategy, Investordocuments, Investor intro and negotiation, Board member selection, Wireframing, MVP design, MVPbuild, MVP testing, Brand strategy, Marketing strategy, SEO/Social media plan, Business development,Public relations, Education, Real estate, Legal, Accounting, HR & recruitment)

• Proven best practices get things done faster and cheaper

• Access to an extraordinary large set of tri-state area angel, VC,institutional and strategic investors

• Founders have combined 50+ years of relevant experience

• SiliconAlley.com’s long-standing reputation assisting Startupsto investment capital

• Hybrid resource teams and offices (faster, lesser cost)

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SAMSNext Steps…

• Do you have a startup in whom you arecontemplating an investment?

• Would you like an unsanitized and objective 2ndopinion from a recognized authority in the industryin order to make a more informed decision?

• Are you seeking ways to ensure that your investmentprovides an ROI in line with your expectations?

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SAMSContact Info

If you are an investor and need a "2nd opinion" on acompany in which you are contemplating a cash infusion,please contact:

Miles J. RoseMiles@SiliconAlley.com646-961-3827

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