Helping Georgia entrepreneurs build

great technology companies

Communicating with Investors

September 9, 2008
Lance Weatherby
Agenda
• Investor Toolkit
• Presentation Deep Dive
• Top Tips
Agenda
• Investor Toolkit
• Presentation Deep Dive
• Top Tips
Tools for Telling the Story
• One-liner
• Positioning Statement
• 60-second Pitch
• Executive Summary
• Business Model
• Business Plan
• Presentation
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
Business Model
• It’s a spreadsheet
• Lots of assumptions
• Identifies key business drivers
• Answers the “how much” question
• Feeds other docs
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
Agenda
• Investor Toolkit
• Presentation Deep Dive
• Top Tips
Investor Presentation
• Used for forums, large audiences
• Tells a story
• Same story is used in executive
summary and business plan
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
13 Ingredients of Presentation
1. The Hook • Business Model
2. Market pain • Go to market
3. Solution • Team
4. Competitive • Financials
advantage • Current Status
5. Market size • Summary
6. Competition • Billboard
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%!!”
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
Market Pain
• Identify a large, costly pain that must be
addressed
• Use statistics or customer quotes to
validate
• Use illustrations or examples
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

Your Solution
• How are you solving this problem in a
unique way
• Use illustrations or examples
• Show before vs. after
charts/stats/illustrations
DeepDive
D2 SolutionSolution

D2 Enterprise
Typical Enterprise
Email Environment

Trend Mail Tumble-

Sendmail Micro Sweeper weed

Secure Anti-
Platform Spam Mail Servers

Anti- Policy & Secure

Perimeter Proxy
Virus
Anti- Content
Policy & Delivery
Secure
Proxy
Virus Content Delivery

FirstAct Services
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
DeepDive Competitive Advantage
Block Determine email Generate spam Enforce Get Adapt and
attacks attributes score policy feedback update

D2 D2Act
Updates * Policies * Signatures
Secure
Platform
Lists
“Automated white
listing”
Quarantine
• Admin
Content • End-user
Analysis
“Bayesian” Spam
EMAIL Accept
Correlation
Heuristics Label
“SLS Bulk Email Engine
Mail Detection” Limit Rate
Firewall Enterprise Spam Reject
- Anomaly
Profiler
Mail IPS Detection Drop
Engine

Accurate, effective, low administration

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
Market Sizing

Mobile Application Use

Appeal of Service
Discrete
40%
Remote
Never Access
22% Consider Appealing

Online Likely to Subscribe at

$5/month
Backup

0% 10% 20% 30% 40%

Highly Percentage of Broadband
Engaged Households
33%

Source: Digital Divisions. Pew Internet & American Source: Making the Network Work, Parks
Life Project Associates

• 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
Market is significant and poised for growth
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”
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

Competitor Comments
MobileTopia •No meaningful Internet security experience
•Significant credibility problems, not scalable
IC Secure •No knowledge of mobile technologies
•Limited capacity to do software development
Akamobile •Want to only sell data center servers
•No on handheld experience
SecMob •Immature
•Limited security industry experience
•Solutions generally carrier specific
SecureStream •No knowledge of mobile technologies
•No experience
23
scaling
Business Model
• How is your product/service delivered?
– Requires professional installation
– Self serve
• How is revenue generated?
– License
– Subscription/recurring revenue
– Maintenance
Business Model Highlights

Revenue Streams Price Ranges

Carriers •$2.95
• Rev Share
Enterprise •$15K – 25K/unit
• SaaS • $0.10 - $1.00/sub/mo
• Professional services
Software Developers • $0.20 - $1.00/sub/mo
• SaaS

• 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

DeepDive’s straightforward business model taps into well-known

existing mobile models and allows for great growth opportunity
25
Go To Market Strategy
• How will you market your product?
– Partnerships
– PR
• How will your product be sold?
– Direct sales
– Channels
– OEM
Go To Market Strategy
• 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
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
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
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
Financials
2002 2003 2004 2005 2006
(dollars in 000's)

Revenues
Software $13 $443 $4,709 $14,213 $27,577
Services 5 738 2,867 7,512 13,911
Other 74 81 36 21 18
Total Revenues 91 1,262 7,612 21,746 41,506
Implementation and Operation Costs 45 380 1,914 4,590 7,411
Gross Profit 46 882 5,698 17,156 34,094
Gross Margin 50.3% 69.9% 74.9% 78.9% 82.1%

Operating Expenses
General & Administrative 241 366 1,923 4,281 7,166
Selling & Marketing 131 272 1,853 5,191 9,071
Product Development 5 413 966 2,075 3,437
Total Operating Expenses 377 1,050 4,742 11,547 19,675
Operating Income (331) (168) 956 5,609 14,420
Operating Margin NM NM 12.6% 25.8% 34.7%
Net Income (329) (147) 756 4,054 10,383

New Accounts
Total New ASP Accounts 12 25 44 67
Total New License Accounts 2 20 68 124
Total new Accounts 14 45 112 191
Financials
Year 1 Year 2 Year 3
Revenue $50,000 $250,000 $1,500,000
Expenses $300,000 $1,400,000 $3,500,000
Net ($250,000) ($1,150,000) ($2,000,000)

• 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

Current Status
• Highlight milestones and successes
• Show customer traction
• Previous investments received
• Upcoming milestones
 Status & Roadmap
2008 2009 2010

Development and initial customer traction

+ Build out core end to end
ials
center(s)
e apps

General launch initial product offering

Market core service offering

+ First big deployments

Roll out advanced services
+ Expand system scalability

+ 100’s subscription
Premium of mobile apps
svcs

+ Personal Protection
34
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
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
Helping Georgia entrepreneurs build
great technology companies

Lance Weatherby
Venture Catalyst
lance@atdc.org
www.atdc.org
www.peachseedz.com
Agenda
• Investor Toolkit
• Presentation Deep Dive
• Top Tips
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
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!!”
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
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
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
Be Found
• Put contact info on every document
• Include company name in all files
• Include company name in email subject
lines
Helping Georgia entrepreneurs build
great technology companies

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