Have you ever wondered what it is you need to do to increase the valuation of your company to get the best payout when you exit? This panel will discuss many ways of upping your valuation and how to start the process in the early days as well as improving it in the latter days of the life of the company. For example, adding high profile industry experienced people to your team, buying or developing really interesting patents, creating channels, a brand, relationships that matter. Other ways include increasing your customer base and creating products that fit the gaps which larger competitors possess. When an acquiring company looks at you, what constitutes your value drivers? Join a distinguished panel comprising entrepreneurs and acquirers as well as financial experts who can give you an idea of how to best increase your company’s valuation.

1. UNLOCKING THE VALUE OF YOUR IPUNLOCKING THE VALUE OF YOUR
Creative Venturing:
Upping your Valuation
Moderator: Fas Mosleh, SVP, IP M&A
Panelists: Praveen Gupta, VP, SK Telecom
Tony Quintong, CEO, Securieon
Clive Surfleet, Former IBM Executive
Mark Heyl, Partner, M&A, Hopkins & Carley
1
Rights to trademarks referenced
herein, other than Kanzatec
trademarks, belong to their
respective owners. We disclaim
proprietary interest in the marks
and names of others.

2. UNLOCKING THE VALUE OF YOUR IP
• Introduction
• Panelist views
• Questions
• Open session
2
Agenda
Kanzatec is a leading Patent Research and Transaction
Advisory firm serving private and public high tech
companies to help drive greater business success
through high-performance patent strategies. Our senior
consultants combine operating company experience in
business management, information systems, patent
strategy and operations, with analysis and research
capabilities spanning many high tech segments. The
company collaborates with a wide range of high tech
companies, from startups to the Fortune 500.

3. UNLOCKING THE VALUE OF YOUR IP
Corporate Introduction
• Founded in 2008 to focus on IT analysis and research – grew into IT product and
system research, prototyping for F500 for IP projects – IT systems heritage
• Emerging, SMB & Fortune 500 companies in high tech – imaging, web, software,
enterprise datacenter, systems, semiconductors, mobile/wireless telecom
• IP Brokerage Palo Alto, CA - Sales, Acquisitions, Valuation, Research/Analysis
• Global team members and Subject Matter Expert network
– Silicon Valley, NY, Kansas, San Diego, London, Netherlands, Korea, China
– India, Europe, SMEs
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What Kanzatec Does – R&R
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IP M&A and Patent Sales

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Example Industries We Serve
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Energy
Transport
Networking
Medical
Imaging
Mobile
Data Center Semiconductor Cloud
Social Web E-Commerce Software

6. UNLOCKING THE VALUE OF YOUR IP
The Value in a Tech Company
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Products &
Technology
Management
Processes &
Operations
Customers and
Channels
Team & Brand
Patents

7. UNLOCKING THE VALUE OF YOUR IP
The Value in a Tech Company
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Products &
Technology
Management
Processes &
Operations
Customers and
Channels
Team & Brand
Patents

8. UNLOCKING THE VALUE OF YOUR IP
• Situation
– Need another round of funding
• Challenges
– Business doing poorly
– New funding hard to get at reasonable valuation
• Action
– Divest patents with a license grant back
• Results
– Obtained $2M to extend runway another 18 months
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Upping Valuation– IP Funding

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• Situation
– $1B+ revenues semi company
• Challenges
– Unnecessary IP found every year
• Action
– Create a regular revenue stream
• Results
– Sell $1M of patents every quarter garnering 75% margins
– Healthy, dynamic IP strategy
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Upping Valuation– IP Income

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Why Do Companies Patent?
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Source: HIGH TECHNOLOGY ENTREPRENEURS AND THE PATENT SYSTEM: RESULTS OF THE 2008 BERKELEY PATENT SURVEY

11. UNLOCKING THE VALUE OF YOUR IP
Praveen Gupta
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Creative
Venturing
Upping Valuation
Creative Exits
Creative Funding

12. UNLOCKING THE VALUE OF YOUR IP
Upping the Valuation:
 When do I start?
 What can I do early on?
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Praveen Gupta
Vice President – Corporate Business Development
October 4, 2013

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When do I start? – At Idea Conception Stage
Source: Wikipedia - derived from work by Kompere
Goals to get from Idea Conception to Exit:
 Maximize Value (Wealth) at Exit
 Minimize Time to Exit at the peak of growth curve
 Target IPO, but Position for Getting acquired not sold
Idea Conception

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What can I do early on?
• Fundamental
• Identify and Focus on Value Drivers
• Be driven by Passion not Emotion
• Selfless Leader - Think Team not individual
• Flexible and Realistic
• Don’t be blinded by your own thoughts
• Open mind - No Tunnel Vision
• Excellent Listener – Open to Criticism and act on it appropriately
• Admit mistakes, learn from them, fix, and execute
• Strategic
• Build A-Team – Core expertise and relationships in your target area
• Solve a real problem not a me-too solution
• Get on the Radar of potential acquirers and investors
• Tactical
• Understand market, competition, & Customers – Outside-In
• Seek Value add Partners and relationships
• Build fundamental IP – Tweaks are not differentiators
• Create work environment that encourages creativity

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Examples: Good, Bad, & Tough-Luck
• Good
• GSM Switch Company
• Decided to focus on 2nd and 3rd tier markets
• Built a highly reliable full feature GSM switch at affordable prices
• Avoided competition with big guys
• Fast revenue growth as 3G market took-off
• Sold to a US based company focused on Asia market to enable their expansion in emerging markets
• Very good returns for investors
• Bad
• VoD server Company
• Focused on serving VoD Applications over DSL
• Great vision but too many bells & whistles
• Great strategy but very low flexibility on tactical side
• Targeted very small size customers without fully validating their financial credentials
• By year 3, broke-even on booked revenue, but mostly turned out to be uncollectible
• Company shut-down – tried to sell but no buyers
• Tough-Luck
• Enterprise Software Company
• Built A-Team
• Focus on CRM with defensible IP and Fortune 500 customer base
• Positioned to price at $1+ Bn for IPO but market crashed that day
• Sold 6 months later for low valuation due to ongoing Stock market issues

16. UNLOCKING THE VALUE OF YOUR IP
Tony Quintong
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Creative
Venturing
Upping Valuation
Creative Exits
Creative Funding

17. UNLOCKING THE VALUE OF YOUR IP
Upping Valuations Without Emotions
“Everything in life is for sale except for your family, friends and your
soul” Izzy Orin

18. UNLOCKING THE VALUE OF YOUR IP
Value is often in the eyes of the beholder

19. UNLOCKING THE VALUE OF YOUR IP
Pre 2008-A false sense of value was masked by great waves
of optimism and available credit. You just had to be at the
right place and the right time to catch a wave of success.

20. UNLOCKING THE VALUE OF YOUR IP
The Reality-Fault lines eventually cracked and a tsunami of
economic waves of disaster caused wipeouts

21. UNLOCKING THE VALUE OF YOUR IP
Insert Graph of Historic Market Performance

22. UNLOCKING THE VALUE OF YOUR IP
Connecting the Dots for Higher Values-Milk Shakes and Life
What is the real value you are delivering to the client?
RFP-reading between the lines-Medical Sterilization
Knowing the IP value of your employees
Bentleys-M5s-S55-Posers-Furniture
Lipstick on a Pig
Fire-Ready-Aim Is not Sustainable-Used Tech Equipment
Radura is not a river in Italy-NAFTA
Cows, Spinach and the FDA
The difference between Arrogance and Confidence is-Competence
Ballast Water

23. UNLOCKING THE VALUE OF YOUR IP
We deviate from the norm and quickly look at the systemic
issues preventing real value

24. UNLOCKING THE VALUE OF YOUR IP
Systemic Challenges to Value
Revenue Sustainability and Scalability Masked
Misalignment of Culture and Infrastructure from the top
False Sense of Core Expertise-Ego
What markets can you win?
Who are the top three companies that would buy your firm?
Silos and misalignment
Investor Fatigue/Founder Fatigue

25. UNLOCKING THE VALUE OF YOUR IP
Decision Points to Upping Your Valuation
Why sell or buy today?
What would your customers says?
Blunt Employee Feedback
Competitive Market Position and Differentiation
Growth by Acquisition or by Execution?
Valuations you can justify

26. UNLOCKING THE VALUE OF YOUR IP
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27. UNLOCKING THE VALUE OF YOUR IP
Clive Surfleet
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Creative
Venturing
Upping Valuation
Creative Exits
Creative Funding

28. UNLOCKING THE VALUE OF YOUR IP
BLADE NETWORK TECHNOLOGY
(BNT) VALUATION STORY
Clive Surfleet – Former BNT SVP, HP & IBM Executive
October 4, 2013
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29. UNLOCKING THE VALUE OF YOUR IP
• Technology from Alteon & Nortel
• Business Started at Nortel in 2003
– Networking switches for Blade Server market
• By 2006, business was struggling due to lack
of focus in Nortel
• Spun out as a private company in 2006
• Acquired by IBM in 2010
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BNT Background

30. UNLOCKING THE VALUE OF YOUR IP
• Valuation Measures
– Revenue, Growth, Margins, Expenses, etc.
– Perception of Value by the Buyer
• Valuation Issues
– Weak Gross Margins
– Product Breadth
– Route to Market – Direct, Reseller, OEM
– Customer Breadth
– Perception of Low Value Add
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BNT Valuation Issues

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• What we did
– Very tight operational management
– Technical Field Sales Engagement
– Product Expansion – First to market with new
technology
– New Routes to Market
– New Product Categories
– Make yourself look bigger than you really are
– Customer Intimacy
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Steps Taken to Improve Valuation

32. UNLOCKING THE VALUE OF YOUR IP
• Build exceptionally close relationships with a few
large customers
– Long Term Relationships
– Daily, weekly, monthly interaction at all levels
– Multi-function relationships – R&D, Support, Sales,
etc.
• Build a strategic alignment
– If your customer wins, you win
• Allow them to help guide your product and
business plans.
• Continually bring new ideas to your customer.
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Customer Intimacy

33. UNLOCKING THE VALUE OF YOUR IP
• Displaced Cisco in a large number of accounts
• Grew to 70% market share in Blade server
networking
• Several customers became minority
shareholders
• Eventually sold the company to our largest
customer
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Results

34. UNLOCKING THE VALUE OF YOUR IP
Mark Heyl
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Creative
Venturing
Upping Valuation
Creative Exits
Creative Funding

35. UNLOCKING THE VALUE OF YOUR IPUNLOCKING THE VALUE OF YOUR
Upping Valuation:
Pre-Exit Considerations
Presented
by
Mark A. Heyl
Hopkins & Carley, A Law Corporation

36. UNLOCKING THE VALUE OF YOUR IP
Priorities of a Founder
Develop Product or Service
Raise Capital
Minimize Operating Expenses
Minimize Taxes

37. UNLOCKING THE VALUE OF YOUR IP
Priorities of a Founder
Develop Product or Service
Raise Capital
Minimize Operating Expenses
Minimize Taxes

38. UNLOCKING THE VALUE OF YOUR IP
Priorities of a Founder
Develop Product or Service
Raise Capital
Minimize Operating Expenses
Minimize Taxes

39. UNLOCKING THE VALUE OF YOUR IP
Priorities of a Founder
Develop Product or Service
Raise Capital
Minimize Operating Expenses
Minimize Taxes

40. UNLOCKING THE VALUE OF YOUR IP
Priorities of a Founder
Develop Product or Service
Raise Capital
Minimize Operating Expenses
Minimize Taxes

41. UNLOCKING THE VALUE OF YOUR IP
Paradigm Shift
Preparing for the Exit
• Financial Statements
• Establishing a Consensus
• Timing
• Consult with Advisors

42. UNLOCKING THE VALUE OF YOUR IP
Paradigm Shift
Preparing for the Exit
• Financial Statements
– Profits Most Substantial Factor in Determination Price
– Shift Focus from Reducing Taxes to Maximizing Profits
– Remove Unnecessary / Inappropriate Expenses
• Take Non-Contributing Family Members off Payroll
• Take Personal Items off Balance Sheet (i.e., cars, boats, 2nd homes)
• Establishing a Consensus
• Timing
• Consult with Advisors

43. UNLOCKING THE VALUE OF YOUR IP
• Financial Statements
– Profits Most Substantial Factor in Determination Price
– Shift Focus from Reducing Taxes to Maximizing Profits
– Remove Unnecessary / Inappropriate Expenses
• Take Non-Contributing Family Members off Payroll
• Take Personal Items off Balance Sheet (i.e., cars, boats, 2nd homes)
Paradigm Shift
Preparing for the Exit
• Establishing a Consensus
• Timing
• Consult with Advisors
– Dissenting Family Members
– Identify Key Employee
– Retention Bonuses
– Stock Options

44. UNLOCKING THE VALUE OF YOUR IP
• Financial Statements
• Establishing a Consensus
– Dissenting Family Members
– Identify Key Employee
– Retention Bonuses
– Stock Options
Paradigm Shift
Preparing for the Exit
• Timing
– Health Considerations
– Economic Considerations
– Transition
• Consult with Advisors

45. UNLOCKING THE VALUE OF YOUR IP
• Financial Statements
• Establishing a Consensus
• Timing
– Starting or Buying Another Business
– Retirement
– Funding the Plan
Paradigm Shift
Preparing for the Exit
• Consult with Advisors
– Corporate Transaction Attorney
– Business/Industry/Valuation Consultants
– Estate Planning Attorney
– CPA
– Financial Advisor
– Business Broker / Intermediary

46. UNLOCKING THE VALUE OF YOUR IP
Thank you.
Mark Heyl
mheyl@hopkinscarley.com
Hopkins & Carley, A Law Corporation
70 S. First Street
San Jose, CA 95113
200 Page Mill Road, Suite 200
Palo Alto, CA 94306
(408) 286-9800
hopkinscarley.com

47. UNLOCKING THE VALUE OF YOUR IP
Thank You
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Creative
Venturing
Creative Exits November 8
Creative Funding December 6

48. UNLOCKING THE VALUE OF YOUR IP
What’s Your V?
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VALUE
V
V
V
V