Znak it! investor deck june 2013

Copyright (C) 2009 by Znak, Inc. 1

“Information wants to be free, and it wants to be expensive.”

the WWW as a marketplace; not a billboard or soc net;

Fair to everyone;

Based on the natural dynamics of free market

Solves the old dilemma:

Disruptive Monetization & Payment Pathways for Creative Content, Virtual Goods and Services

Make the WWW free Fair

Copyright (C) 2009 by Znak, Inc.

Billboard

Social Net

Marketplace

The WWW Evolves

2


Paid Content Ecosystem

3

http://imgur.com/qjjlkGm

Three proven solutions in one


Three Major Stakeholders

premium content curation and monetization platform

frictionless access to paid content, also for “free”

direct-to-user advertising opportunity & a data collection toolMarketers &

Advertisers

Content Providers

Web Users

4


Links and widgets, embeddable as payment gateways.

Customizable shapes/colors.

Easy, copy-and-paste insertion of JS codes or API.

Two mouse clicks to access and pay for selected content.

Real time payment authorization & fund transfer; SSL-encrypted; CPI-compliant.

5

Content Providers, Large & Small


User Choice

6

Purchase subscription; (micro)pay on demand, make a donation, or

Earn Free Access through opt-in advertising


Award-winning “Earn Free Access”

7

No registration needed!

No PINs! No User IDs – quick, safe and private

High (19.6%) conversion rate (vs. 1-2% conversion by paywalls)

Ability to bypass in-app payment fees charged by Apple, Google, etc. Up to 30%


A Win-Win-AND-Win Solution

8

Open – platform agnostic;

Flexible – multiple payment methods;

Universal – any type/format of premium content or service;

Simple to implement (SaaS) and use; frictionless for the Web user;

Efficient and viable – up to 20% conversion; 94% return.

Marketers & Advertisers

Solves the Brand Dilemma – makes the WWW a marketplace, fair and beneficial to everyone

Copyright (C) 2009 by Znak, Inc. 9 /

Market Potential and Trends

Market SizeUSD 2 700 000 000 000

40 times bigger than Apple’s annual revenue;

90 times Google

1,350 times bigger than Facebook

Source: ZenithOptimedia ; est . for 2015


1/5 of online content is paid now – 139% increase

By 2016, 90% of online content will be paid.

Simon-Kucher & Partners

Online Revenue Growth

Internet

Offline Publishing


From Public Beta to BEP

11

Aug. 2011

2011

2012

2012

320 content providers, 55,,000 users, in the first 3 months

Pilot projects with5 large publishers

Developed in 2007-08 with

200,000 users, 1.4M EUR volume

Five additional publishers, LoI

Q1 2013

2010 2011 2012 -

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

361 8,095

110,240 80,968

109,230

159,470

Revenue from Commision Exspenses/ Cost of Goods

Beta

Ask me about results!


Competition

Google e-Wallet

PayPal Press+Piano

TinyPass

Flattr Znak it!

Off line

On line

Subscription

Micropayments

Donations

Earn Free Access

Transferable Credits


Business Model Options & Benefits

Paywalls vs. Znak it! SaaS -- no setup and system maintenance

costs; up to 94% return; can bypass app fees;

Also for the “long tail;” truly World Wide;

Technology- and portal-agnostic; Flexible, a la carte, on-demand access;

Supports different payment methods, incl. donations and ad-sponsored access;

User-centric, payment as social engagement, content sharing & P2P recommendations;

Private, intrinsically safe; can be used for anonymous access – without registration; frictionless.

13

Expensive, low ROI;

Require large scale; convert only about 1% of users

Create ‘silo effect;’

Closed, rigid, might cannibalize other sources of revenue;

Media/publisher-centric , not engaging ; “exploit” most loyal users


Major Clients and Partners

14 /

Existing Clients Partners Prospects with LoI


2008

2009

2010

2011

Web 2.0 Expo in San Francisco – first public show

German Publishers’ Assoc. Award

Developed in 2007-08 with Developed in 2007-08 in collaboration withIdeo of Palo Alto, CA

EU Grant for Innovation167,000 EUR

EPCA Florin Award

Public BetaLaunched

Aug. 2011

Barriers to Entry

IP – patent pending

CPI–SSD compliance

Industry standards

Learning curve

Scale

Sunk costs


Znak it! Finances in EUR

16 /

2009 2010 2011 2012 2013 -

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Seed & Angel Capital

Revenue from Commision

Operational Exspenses

Estimated

900,000 EUR Invested

Does not include the new round.


Financial Projections

17

2010 2011 2012 2013

Revenue from Commision 360.5 8095 110240 746000

Exspenses/ Cost of Goods 80967.5 109230 159470 185000

50,000

150,000

250,000

350,000

450,000

550,000

650,000

750,000

With 1,500,000 EUR of additional capital:

FY 2014 Projected Revenue – 3,035,000 EUR; EBITDA – 660,000 EUR

FY 2015 Projected Revenue -- 10,275,000 EUR; EBITDA – 3,075,000 EUR


Needs and Opportunities

18

1,500,000 EUR -- Series A, equity, convertable

Mobile apps

Sales & marketing

Administration, new hires

Working capi-tal

New Capital Allocation

ROI – open to IPO with additional rounds, M&A or licensing

Excellent perspective: average multiple of 4.9 x revenue, as reported by Berkery Noyes, (based on 60 M&A deals in 2012)


With Znak it! information can be “free,” easy to access and share; AND, it can be “expensive,” high-quality and profitable.

Enormous opportunity ; huge marketplace;

Fair and beneficial to everyone;

Customer is King

Business model driven by the real market dynamics

Disruptive Monetization & Payment Pathways for Premium Content

Let’s Make the WWW free Fair!

AppendixPilot Study Results

Znak, Inc . Sunnyvale CA, USA

Warsaw, Poland

20


User Characteristics, by Gender & Age

58.9%

41.1% Males Females

13.8%

16.5%

23.1%

22.4%

24.2%

18 to 24

25 to34

35 to 44

45 to 54

55+

Based on a sample of 43 299 Unique Users – Pilot Project Results

The sample represents gender and age distribution typical for online sites with high-quality news/magazine content, with a majority of users being male and older.


Males Females 18 - 24 25 - 34 35 - 44 45 - 54 55+

58.9%

41.1%

13.8% 16.5%23.1%

22.4%

24.2%

65.3%

34.7%

20.6%

29.0%

21.0%16.5%

12.9%

Unique Users Unique Buyers

Number of Unique Buyers – 1 281

Younger users more likely to convert into Buyers, using Znak it!

Znak it! vs. paywalls – sustainable, viable system

User Characteristics, by Gender & Age

50% under 34 yrs old


Conversion Rates by Gender and Age

23

Total Males Females 18 - 24 25 - 34 35 - 44 45 - 54 55+

3.0% 3.3%2.5%

4.4% 5.2%

2.7%2.2%

1.6%

8.7%10.3%

6.4%

14.5%15.6%

8.2%

6.3%

3.3%

Conversion Rate (Buyers/Uniques) Conversion Rate (Buys/Uniques)

Conversion rates 9 to over 15 times higher than those generated by metered pay-walls (1 - 2%)


Znak it! Market Niche

Znak it! Payment Niche

24

0%

20%

40%

60%

80%

100%

120%

6.00%3.90%

0.216666666666667

0.0884615384615385

1.02899999999999

0.529

0.279

0.179

0.0540000000000004

Per

cen

tag

e C

om

mis

sio

n

Znak it! standard commission as compared to PayPal charges

Transaction value

PayPal Regular

Znak it!

PayPal Micropayments