Afternoon Keynote Presentation John Kunschner, Senior Partner and Managing Director, Landmark Ventures (US) MaRS Innovation Summit October 28, 2010

1. Proprietary and Confidential
Toronto Innovation Summit
October 2010

2. Proprietary and Confidential
Who is John Kunschner?
 Senior Partner & Managing Director
 Head of Investment Banking Practice
 Focus on Growth Opportunities Across Information
Technology, Hardware, Media Technology Sectors
 Geography – US, Canada, Europe & Israel
Prior Firm Experience:
Representative Clients:

3. Proprietary and Confidential
The State of Venture Capital….?!?
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4. Proprietary and Confidential
Canadian Funds Investing Less, Domestically & Abroad
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 Smaller scale increases risk from shift to emerging markets
 China, India, Brazil
 Innovation continued despite US Recession – but Canada
remains investment starved

5. Proprietary and Confidential
Israeli High-Tech Companies Raising Less
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 Poster Child for Nurturing Innovation… But not Immune
 Improving activity in Q2 & Q3 of 2010
3092
1985
1138
1011
1465
1137
1622
1759
2076
1122
918
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500
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1500
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
YTD
Capital Raised by Israeli High Tech Companies ($Mn)
Capital Raised

6. Proprietary and Confidential
Reality of Decreased Fundraising Across Industry
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 Fund Sizes Getting Smaller / Fewer Firms Raising Funds
 VC Investments Outpacing Fundraising
 Inevitable Industry Shrinkage in Process
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1,000
2,000
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4,000
5,000
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7,000
8,000
9,000
10,000
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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2008 2009 2010
Fundraising By Venture Funds (U.S.)
Number of Funds Venture Capital ($M)

7. Proprietary and Confidential
The VC/PE Community…Uncertainty & New Focus
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 Capital efficiency is critical
 Priority on Portfolio “Triage”
 Dialing back risk – Invest Early or Late Stage
 Acceptance of a Smaller Industry, New Dynamics
 Active Strategic Investors – Threat or Opportunity?
 New Funding Networks – Super Angels, High Net
Worth, Incubators, Growth PE

8. Proprietary and Confidential
Innovation Continues, but at Expense of
“Let’s Focus on Strategics & High Net Worth”
Earlier Stage / Alternative IPO’s
“We Don’t Want to Go to VCs”
…And Entrepreneurs are Growing Impatient
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 TSX-V, TASE, AIM, etc. – Is it worth it?
 VC world too “Clubby”
 Terms unattractive
 Deal Flow Power Shift?
 Job creation
 Rapid Expansion
 Marketing
 Is there Value Add?

9. Proprietary and Confidential
The “Funding Barbell” Dynamic
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VC’s Managing Current
Portfolio
Family Offices – Lots of Capital
But Fragmented & Disorganized
Look to Strategics EarlierSeed and Early Stage
Incubators
HNW
Super Angels
Late Stage and
Growth Equity
PE moving down
VC moving up
Shorter time to exit
The Mid Stage Funding Gap

10. Proprietary and Confidential
How Has the VC Model Changed?
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 Invest in 10 deals
 2 go to zero
 2 get 10x
 6 get your money back
 3-5 years to IPO or M&A exit
 Deploy capital and take share
across emerging trends and
value creation
 “Big Horizon” deals are very rare
(1 in 300K is a Facebook)
 Less $ to Start Companies
(Open Source, SaaS, Web 2.0, Cloud )
 Shift from “building the
infrastructure” to “soft-tech” and
customer & delivery platforms
 Smaller funds, smaller deals, greater
competition on “marquee deals”
 Forcing rationalization and
consolidation
How it Was The New Reality

11. Proprietary and Confidential
The Path Forward
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 Tax Reform - “116” a step
forward
 R&D incentives – Israel as
the model, but Canada on
the right track
 Angels / Incubators
 Ecosystem for
entrepreneurship
 Proper incentives for
investment professionals
 Collaboration with
professional funds
 But how to reach them?
 Who monitors the
investments, protects
shareholder interests,
ensures follow thru?
 Need to organize channel
to source and manage
investments through the
mid-stage
 Create proper
infrastructure / support
 Capital efficiency and
M&A
 Better returns with
smaller deal sizes and
shorter time frames
 Infrastructure for the
small cap IPO
 Aligning Bankers,
Public Investors,
Corporate & VCs/PE
Government Programs
Super Angels, HNW,
Strategics
Exit Dynamics
Change Thinking

12. Proprietary and Confidential
Recent Exits – Seeing Signs of Life
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*Includes all companies with at least 1 US VC investor that trade on US exchanges, regardless of domicile
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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2008 2009 2010
Venture Backed Liquidity Events
Total M&A Deals Number of IPO's*
 Improving activity in Social Networking, Media Delivery
Platforms, Enterprise 2.0, Clean Tech, Healthcare Services
 A trend emerging… this is a great time to invest

13. Proprietary and Confidential
How Does Landmark Help/Focus?
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14. Proprietary and Confidential
ABC Model for Venture Development
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15. Proprietary and Confidential
Industry Expertise / Focus
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 Networking / Datacenter
 IT Application / Outsourcing
 Info Security & Risk
 Hardware, Semis & Optics
 Alternative Energy / Cleantech
 Business Operations IT
 Media & Marketing
 Legal & E-Discovery
 Finance/Procurement IT
 Supply Chain & Logistics
 Medical Devices
 Biotechnology
 Specialty Pharma
 Healthcare IT
 IT Enabled Services
TECHNOLOGY HEALTHCARE BUSINESS SERVICES

16. Proprietary and Confidential
In the Middle of the Action or Why Do You Care?
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VC / PE Investment
Community
Fortune 500/1000
Initiatives
Emerging Technology Companies
Drivers & Initiatives
Strategic Sourcing &
Expansion
Changing Tides
Investment Focus
Innovation & Technology
Market Traction
Focus on Linking US, Canada and Israel

17. Proprietary and Confidential
How Do We Help Growth Stage Companies?
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 Access to Fortune 500/1000 Customers:
 Big ticket sales to senior level contacts
 Strategic partnerships, Channel partners
 Access to Capital:
 Strategic investors
 Traditional VC and PE
 Alternative financing – High Net Worth, Hedge, Family Offices
 Mergers and Acquisitions:
 Strategic exits
 Strategic buy-side – Innovative ideas for Growth
Redefining How Investment Banks
Serve and Interact with Their Clients

18. Proprietary and Confidential
How Do We Help Investors & Corporations?
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 Corporate & Technology “TAPs”
 Idea sharing and competitive benchmarking
 Trusted channel for innovation led purchasing
 VC/PE Deal Flow
 Non-mainstream deal flow – Israel, Canada, etc.
 Frequent networking forums
 Portfolio support
 Growth Focused Buy-side
 Provide channel into new geographies; new segments; growing
niches

19. Proprietary and Confidential
Key Takeaways
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 We embrace emerging growth companies & segments and
want to help…. and find creative ways to do so
 Cradle to grave approach – adding value over the continuum
 Special focus on linkage of US, Canada & Israel for innovation
and growth

20. Thank You!
Proprietary and Confidential 20