Communicating with Investors

1. Communicating with Investors September 9, 2008 Lance Weatherby

2. Agenda • Investor Toolkit • Presentation Deep Dive • Top Tips

3. Agenda • Investor Toolkit • Presentation Deep Dive • Top Tips

4. Tools for Telling the Story • One-liner • Positioning Statement • 60-second Pitch • Executive Summary • Business Model • Business Plan • Presentation

5. Executive Summary • One page summary of your business • Same “storyline” as presentation • Easy read to determine if they want more information • Must be compelling enough to stand alone • Makes you focus on the most important points • What you send

6. Business Model • It’s a spreadsheet • Lots of assumptions • Identifies key business drivers • Answers the “how much” question • Feeds other docs

7. Business Plan • Good exercise to make you think through the business • Won’t be read cover to cover • 20 pages maximum • Financials • Put details in appendix

8. Agenda • Investor Toolkit • Presentation Deep Dive • Top Tips

9. Investor Presentation • Used for forums, large audiences • Tells a story • Same story is used in executive summary and business plan

10. The Storyboard • Need consistent, compelling story • Format, length, and emphasis vary based on the audience • Order of contents should be changed to highlight strengths of the business • Tell what you are going to say • Tell the story • Tell them what you said

11. 13 Ingredients of Presentation • The Hook • Market pain • Solution • Competitive advantage • Market size • Competition • Business Model • Go to market • Team • Financials • Current Status • Summary • Billboard

12. The Hook :: Overview • Use a hook: an exciting statistic or story to get the audience engaged • But get to the point • One-liner to clarify what you do • Set the context for the remainder of the story • Optional overview slide “80% of all telecommunications bills are inaccurate and customers are typically overcharged by 20%!!”

13. Overview Overview • DeepDive Vision • Address the huge untapped opportunity to secure the iPhone and Android mobile environments • Founded by a world-class team of Internet security entrepreneurs and technologists with successful startup experience • Meaningful development & customer traction • Product trials secured • Beta released Seeking funding to accelerate the vision by building out the technology and securing the customer base

14. Market Pain • Identify a large, costly pain that must be addressed • Use statistics or customer quotes to validate • Use illustrations or examples

15. Market Pain • 80% of all telecom invoices are incorrect • Typical enterprises over spend for telecom services by at least 20% • 10% of services they don’t need • 10% from billing errors • US businesses spend over $50B more than they should for telecom services *Source: Gartner Group – 2007 State of Telecom Report

16. Your Solution • How are you solving this problem in a unique way • Use illustrations or examples • Show before vs. after charts/stats/illustrations

17. DeepDive Solution D2 EnterpriseEmail Environment Secure Platform Anti-Spam Proxy Anti-Virus Policy & Content Secure Delivery FirstAct Services D2 Solution Typical EnterpriseEmail Environment MailSweeper TrendMicro Tumble-weed Sendmail Mail Servers Perimeter Proxy Anti-Virus Policy & Content Secure Delivery

18. Competitive Advantage • What is your unique solution that allows you to solve this problem • Use diagrams/illustrations • Avoid industry jargon • Sources of the intellectual property • How is it protected or protectable • Resist temptation for Geek Speak! • They assume technology works

19. DeepDive Competitive Advantage D2Act Updates * Policies * Signatures D2 Secure Platform Mail Firewall -Mail IPS Lists “Automated white listing” • Quarantine • Admin • End-user Content Analysis “Bayesian” Spam CorrelationEngineEnterprise Spam Profiler EMAIL Accept Heuristics “SLS Bulk Email Detection” Label Limit Rate Reject Anomaly Detection Engine Drop Block attacks Determine email attributes Generate spam score Enforce policy Get feedback Adapt and update Accurate, effective, low administration

20. Market Size • Show that this problem is large and effects many • Validate with statistics and sources • Be sure to segment your target market properly • Pie charts • Demonstrate market growth • Charts • Analyst quotes or stats

21. Market Sizing • 66 million people in the highly engaged category • Extrapolated the Pew audience to the Parks research “likely to subscribe” percentages • Results in market of $1.6 billion Source: Digital Divisions. Pew Internet & American Life Project Source: Making the Network Work, Parks Associates Market is significant and poised for growth

22. Competition • Identify competitors and potential competitors • Include alternate methods to solve the problem • Position yourself vs. your competitors • Identify your unique, defensible competitive advantage • Don’t say “no competition”

23. Competitive Analysis Competitive Analysis • DeepDive Core Competitive Strengths • Unique insight into wide range of mobile security environments • Unmatched credibility and respect within Internet security ecosystem • Proven ability to deliver massively scalable and reliable solutions 23

24. Business Model • How is your product/service delivered? • Requires professional installation • Self serve • How is revenue generated? • License • Subscription/recurring revenue • Maintenance

25. Current monthly burn rate: $30K Revenue split: 67% security provider, 33% carrier Total cash needed to breakeven: $4.5 million Success-based expense controls: capital, headcount, support Business Model Highlights DeepDive’s straightforward business model taps into well-known existing mobile models and allows for great growth opportunity 25

26. Go To Market Strategy • How will you market your product? • Partnerships • PR • How will your product be sold? • Direct sales • Channels • OEM

27. Marketing Strategic partnerships Apple AppStore Open Handset Alliance Sales Leverage Apple relationship AT&T AppStore developers Domestic carriers Verizon trial in process Target enterprises with security concern Passive sales to ISVs Go To Market Strategy

28. The Team • Mention key team members • Show their relevance to this business • Serial entrepreneurs • Sales experience • Managerial and finance experience • Industry/market knowledge • Include key advisors and Board members • Identify gaps and next hires

29. The Team • Lance Weatherby - Cofounder & CEO • General manager of EarthLink’s mobile wireless business unit • Led business development, marketing, product management & product development at MindSpring • CipherTrust CMO • Robert Sanders - Cofounder & CTO • CTO at MindSpring, cBeyond, & Vitrue • Proven expertise in designing and implementing scalable systems for Internet services • Architected EarthLink’s mobile wireless services • Guru Rajan - Cofounder & VP Engineering • Vice President of Messaging Security at Secure Computing • Cofounder and Chief Architect of CipherTrust • Cofounder of S1 • Additional Early Hires: • Developers • BizDev lead • Board of Advisors • Merrick Furst - Professor of Computing at Georgia Tech • Phil Schiller - SVP Product Marketing, Apple

30. Financials • Provide high level 3-5 year projections • Revenue, expenses, and net income • Cash flow forecasts • How much funding will you need, now and in the future? • Uses of funds • Derived from business model

31. Financials

32. Financials • Seeking $1.5M • Complete version 1.0 • Hire devs, VP BizDev & Sales • Milestone: Launch v1.0 with 3 Beta customers • Raise $3M in Year 3

33. Current Status • Highlight milestones and successes • Show customer traction • Previous investments received • Upcoming milestones

34. Status & Roadmap 2008 2009 2010 Development and initial customer traction • + Build out core end to end system • + 2-4 representative trials • + Build initial data center(s) • + 10 – 20 mobile apps General launch initial product offering + Market core service offering + First big deployments + Expand system scalability + 100’s of mobile apps Roll out advanced services + Premium subscription svcs + Personal Protection + Killer apps 34

35. Summarize • Summarize 3 main points you want the audience to remember • Be prepared to answer questions • Brainstorm and anticipate questions beforehand • Have backup materials ready to support your answers

36. Summary • DeepDive poised to address huge untapped opportunity to bring Internet security to mobile applications • No company adequately addressing the needs of the market • Management has relevant experience • Mobile Internet & security pioneers • Built scalable systems and businesses to successful exits • Right opportunity • Secured trial customers • Immediate customer needs • Scalable model Now is the time to accelerate the vision by building out the technology and securing the customer base

37. Lance Weatherby Venture Catalyst lance@atdc.org www.atdc.org www.peachseedz.com

38. Agenda • Investor Toolkit • Presentation Deep Dive • Top Tips

39. Presentation Tips • Use bullets, not sentences • Speak to the back of the room • Show passion and energy • How you say it is more important then what you say • Get to the point • Put detailed slides in Appendix • Do not read slides! • Practice, practice, practice

40. Don’t You Dare Say! • “We don’t have any competition” • “These estimates are conservative” • “Our exit will be an IPO or an acquisition” • “I need you to sign an NDA” • “Based on our projections, your investment of $2M will give you a return of $30M in 3 years!!”

41. 10 - 20 - 30 Rule 10 slides 20 minutes 30 point typeface This line is 28 point, anything smaller is a mistake http:www.presentationzen.com

42. Writing Tips • Clearly explain • The market • Your unique/innovative technology • Management team • Financials, stage of company and use of funds • Be concise • 1 page is 1 page • More is less, a lot less • Spell check! • Make sure the documents are consistent

43. Q & A Tips Answer the question, bridge to your pitch and shut up! “Yes” and “No” are answers Be honest, not defensive You don’t say… “Well honestly” “That’s a good question” Or any variants thereof Have a teammate take notes The CEO directs others Practice, practice, practice

44. Be Found • Put contact info on every document • Include company name in all files • Include company name in email subject lines

45. Lance Weatherby Venture Catalyst lance@atdc.org www.atdc.org www.peachseedz.com