David Blumberg, Founding Partner Blumberg Capital talk on Entrepreneurship, Innovation & Venture Funding. 1) David brings twenty-five years of experience in funding committed entrepreneurs and helping them execute their transformative ideas into commercially successful companies. With team members located in the world’s top three funding centers – Silicon Valley, New York and Tel Aviv – Blumberg Capital has the perspective for helping their portfolio firms reach global success.Blumberg Capital prefers taking the lead in a funding round, assuring founders the attention they need to take their business model to the next level. For further info check out http://www.pitchperfectsv.com

1. Entrepreneurship, Innovation & Venture Funding
For PitchPerfect
May 13, 2015
David J. Blumberg
Managing Partner
Fueling Innovation

2. Blumberg Capital Mission
We help innovative entrepreneurs
transform early stage
information technology companies
into large scale businesses.

3. Blumberg Capital Overview
 8 Investment professionals with entrepreneurial experience
 ~$500M assets under management across 4 funds
 Focus on capital efficient Information Technology companies
 Disciplined strategy of leading Seed and Series A investments
 Investing in tech hubs (US, Israel, Germany, Canada…)
 Large and sustainable funnel of proprietary deal flow
 Chief Information Officer Council & Chief Marketing Officer Council
 Talent Lead for recruiting assistance
 Solid track record: current funds in top decile
CONFIDENTIAL 3

4. Blumberg Capital Investment Strategy
Growth Capital
Angels
Early Stage Lead
Key Tenets:
 Go early; go big
 Target 15-25% equity in seed or
series A round
 Follow on with winners
CONFIDENTIAL 4
Our “lead the early stage” strategy fills a funding gap in the market
Differentiated Financial Strategy:
 BC owns ~15% of the average
portfolio company
 BC serves on ~90% of company
boards

5. Selected Blumberg Capital Portfolio
CONFIDENTIAL 5
Financial
Services
Social Media &
E-commerce
Enterprise
Software & SaaS
Acquired (PANW)

6. Best Time Ever For Entrepreneurs - Why Now?
 Dramatic decline in CapEx for startups
 Rise of efficient distribution channels: SaaS,
Mobile Apps, Social Media
 Growth of emerging markets
 Access to education, formal / informal, models
 Growth / professionalization of angel investors
 Large companies seek partners for innovation
CONFIDENTIAL

7. Accelerating Prosperity: 2000 Years GDP Growth

8. $0
$5
$10
$15
$20
$25
$30
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Billions
US Venture Capital: $ Invested by Quarter
Seed Stage Early Stage Expansion Stage Later Stage
Source: PWC Moneytree as of Q2 2014
Monitoring VC Activity Levels
CONFIDENTIAL 8
Venture capital investments hit a frenzy in 2000; today’s level more sober.
Seed stage is
2% of total in
past year

9. Technology is Continuing Secular Growth
Source: KPCB, Morgan Stanley, Bloomberg, CapIQ
Technology Company Market Capitalization as % of S&P 500
CONFIDENTIAL 9
In 2000, technology stocks represented 35% of the S&P index. Recent
levels below 20% while post crash growth has been significant and steady.

10. 3.2 5.96.9
11.3
16.3
28.1
34.9
62.3
40.4
155.0
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*
Series Seed Series A Series B Series C Series D or Later
Median Company Valuation by Funding Stage ($M)
Source: Pitchbook
Early Stage Investing is Stable and Attractive
CONFIDENTIAL 10
Late stage market valuations have increased substantially and are more
volatile, while Seed and Series A stages have been impacted less.

11. Blumberg Invests in Top VC Markets
Note: Survey of 331 venture capital, private equity, and growth equity investors
Source: WSJ, 8/13/2014, based on data from the National Venture Capital Association and Deloitte
11CONFIDENTIAL

12. Entrepreneurship Requirements
 Passion / Commitment / Persistence
 Vision
 Credibility / Integrity
 Domain expertise
 Functional skill set
 Supportive peer group / mentors
CONFIDENTIAL

13. The Six T’s VCs Use To Evaluate Startups
TeamTerms
TerrainTiming
Technology
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Theme

14. Innovation: Why, What, How, Who, When ?
 Why
 Pain / Necessity
 Lack of alternatives
 Value proposition
 What
 Market size / Risk factors
 Differentiated advantages / Competitive landscape
 Customer feedback / External validation
 How
 Technological edge / Intellectual property
 What is in the secret sauce?
 Who
 Right team – mix of skills, compatibility
 When
 Market timing, channels
CONFIDENTIAL

15. Due Diligence – Trust But Verify!
 Take nothing for granted; expect the unexpected
 Market checks – consulting with industry experts
 Customer checks – yours and ours (via CIO / CMO
/ CISO Counsels)
 Founder checks – formal and informal references
 Financial checks - analysis and review of
assumptions
 Legal checks - use a good attorney/solicitor
15CONFIDENTIAL

16. Post-investment Support
 Network introductions
 Sales
 Business development
 Recruiting
 Financing
 Operational expertise
 Strategic/financial consulting
 Follow-on investing, based on merit
16CONFIDENTIAL

17. Accelerating Change – Risks/Opportunities
 McKinsey estimates the economic impact of the Digital /
Mobile revolution will be 5-10X Internet in the 1990s
 All business models are at risk
 Major corporations are desperate for innovation
 40% of existing companies will fail in this transition
 8 trends: Distributed co-creation; Consumers as
innovators; Distributed talent management; Higher value
interactions; Expanding automation; Unbundling
production from delivery; Analytics for management; Data
businesses
17CONFIDENTIAL

18. Entrepreneurs Opportunity Knocks; Carpe Diem!
 Developed economies high consumer income, rule of
law, low corruption
 Natural trade bridge between EU and US and ROW
 Strong digital / mobile infrastructure
 Leading universities & research institutions
 World class centers for international finance, logistics,
manufacturing, fashion, automotive, machinery, etc.
 Polyglot, educated workforce
 Too much government intervention; work rules, taxation
and regulation; slow growth; demographics
18CONFIDENTIAL

19. Year In Review: Significant Macro Changes
CONFIDENTIAL 19
 Mobile permeates all sectors
 Crowdsourcing/social/cloud is disrupting many industries
 Big Data 2.0 (algorithms and machine learning)
addressing the application layer
 Turnover in large VC firms and more first time funds
 Increasing corporate venture activity
 Increasing regulation and taxation burden
 Emerging markets are still growing, but also riskier
 Geo-political tensions – Iran, Islamic State, Russia, China,
Nigeria

20. Richer World Is Happier World

21. Newsflash: Capitalism Works!
1949
 Typewriter
 35mm camera
 AM FM table radio
 3-speed phonograph
2009
 Laptop PC
 Color ink jet printer, scanner, copier
 8Mpixel digital camera
 Portable GPS
 32” color HDTV
 8GB iPod Nano
 Microwave
 Refrigerator freezer combo
 DVD/DVR
 Home theatre system
 Cordless phone
 AM/FM radio
 Camcorder
 Playstation II
 7 more things…
Source: G.Beck
Average summer student earnings at minimum $US wage

22. Wrap-up
www.blumbergcapital.com
Fueling Innovation
We fund great entrepreneurial teams, and many
portfolio companies are hiring
www.blumbergcapital.com/portfolio
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