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Back 2 BusinessB2B is Back…StarVest never left!

Larry Bettino January 15, 2013

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STARVEST PARTNERS OVERVIEW• Established 1998; Two funds – $400 million

• Technology - enabled business services (B2B)

• Software-as-a-Service (SaaS)

• Internet Marketing

• Data/Information-based businesses

• eCommerce (technology and infrastructure)

• Security and Compliance

• Expansion stage ($2m - $20 million revenue)

• Workflow, transaction - based revenue, network effects

• Invest nationwide (30% NY, 30% Silicon Valley)

• “Where can we add value” – Service Provider

VENTURE B2C INVESTMENTS

2005 Q1

2005 Q2

2005 Q3

2005 Q4

2006 Q1

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2009 Q3

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2010 Q1

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2011 Q1

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2011 Q3

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2012 Q1

2012 Q2

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

0

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300

Source: PitchBook Data, Inc.Total Capital Invested Deal Count

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ATTRACTIONS OF B2C• Small upfront development investment• Consumers willing to try new things• Can generate many users quickly (viral)• Generate initial revenue quickly (Google Ad

Exchange)• Rapid valuation increases possible!

B2C VALUATIONS: PRE IPO PERFORMANCE

$0.00

$5.00

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$40.00$38.00

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$17.20

$0.00

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$17.20

COMMENTS ON B2B INVESTMENTS

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• “Let’s face it, business to business is DEAD.” BusinessWeek, August 2011

• “The Death of B2B Venture Capital” Prominent VC, October 2009

• “VC’s have given up on [B2B].” Andy Bechtolsheim, Founder, Sun Microsystems

WSJ May 2011

BUT…

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Attracting Consumers is Unpredictable (Read: Expensive)

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BUT…

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Monetization is Hard

$ GENERATED PER USER$190.00 $190.00

Amazon eBay Google Facebook Other $-

$20.00

$40.00

$60.00

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$120.00

$140.00

$160.00

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$200.00 $190.00 $190.00

$24.00

$4.00 $0.25

BUT…

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Consumers are Fickle

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• AOL• eBay• 4Square• Path• OMG POP

- 66 months- 24 months- 13 months- 15 days- ? days

TIME TO 1 MILLION USERS

B2C VALUATIONS: POST IPO PERFORMANCE

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$20.00

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$17.20

$19.64

$2.48

$4.80

$9.11

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• “Enterprise software is the hottest thing!” Business Insider, April 2012

• “Businesses are increasingly turning to startups and small companies for new technology for competitive advantage.” WSJ, August 23, 2012

• YCombinator this round – 50% is B2B

• “Recent survey of CIO’s: 73% say they must embrace new technology, or risk losing market share.” Harvey Nash Group

Flavor of the Month – B2B!

B2B ATTRACTIONS

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• B2B Building is Formulaic• Buyers are economically driven (ROI)• Happy customers are sticky (low churn)• Economic model (SaaS) getting greater traction• Consumerization of B2B (big trend)• Valuations/Outcomes can be excellent, too!

B2B SHARE PRICE PERFORMANCE$62.70

$52.12$34.31

$32.00

$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00

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$10.00

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$45.00

IPO= $17.00Price as of Jan 2012 = $41.88

IPO=$18.00

$25.00

$30.00

$35.00

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$45.00

$50.00

$55.00

$60.00

IPO=$28.00 $28.0000

- Public Value $4 Billion+- $400m to Hearst- $212 to Madison Dearborn- $180m to DELL- $117m to IronMountain- Private; Revenue >$200m

• NetSuite• iCrossing• FieldGlass• MessengerOne• Connected• Newgistics

STARVEST - EXPERIENCED B2B INVESTORS

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• NewComLink• IRON Solutions• Transactis• PrecisionDemand• The Receivables Exchange

• Veracode• Switchfly• Xignite• RAMP• Host Analytics

CURRENT STARVEST II B2B PORTFOLIO

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