Presented by David Scholtz 26th May 2011

Nice idea, or nice little earner?

Ariadne Capital’s view on equity investments in the Creative Sector

Building Great Businesses

• What is Ariadne Capital?

• Themes & Future Developments

• Ariadne Exits

• Architecting for Success

• Stages of Company Growth

• Creative Sector Opportunities

• What We Look For

• Our ACE 1 Fund

What is Ariadne Capital?

• Founded in 2000 by Entrepreneurs Backing Entrepreneurs

• Building the bridge between start-up and corporate• Three closely linked business units:

• ACE1 Fund• £20m early stage fund focused on Digital Enablers

• Corporate Advisory:• Capital Placement (later stage)

• Business Development (Corporates and high-growth companies)

• Strategic Advisory (Corporates and high-growth companies)

• Entrepreneur Country:• Online community of Entrepreneurs and Corporates

• Events aimed at raising the profile of Entrepreneurialism

BeatThat Quote sold to Google in 2011 Product Comparison

AIM listed in 2007; current market cap ~£160m (2011)

Mobile banking*

Stan James acquired 50% Racing Today, Nov 2010

Online Gambling*

Acquired by EMI, August 2010 Viral Widget Distribution*

70% acquired by Powwownow, July 2010 SaaS Collaboration Tools*

Acquired by Nuance for $102m, Dec 2009 Voice-as-a-Service*

Acquired by EMC for $153m, May 2006 Data Protection

Acquired by eBay for $2.6bn, Sep 2005...(Microsoft 2011 for $8.5bn )

VoIP

Acquired by Miva for $183m, June 2004 Pay-Per-Click

Acquired by Vendare Media in 2004, then to Connexus and Epic Advertising

Search Relevancy

Ariadne Exits 2000-2011: Early Market Exits

New.Net

Five Stages of Company Growth

1. Concept Stage

o Insight into a behaviour

o Initial alpha to closed beta

2. Product Stage

o Open Beta

o Define Go-To-Market strategy

3. Biz Model Validation

o Building traction

o Establish channels

4. Scale

o Fully funded at ~£5m

o Scale through partnerships

5. Exit

o Sustainable business

o Consolidate or get consolidated

5

Creative Industry Opportunities

• Great opportunity to enable the eco-system economics model

• Leverage digital opportunities to scale• Service industries have shifted to online• Leverage tools that enable co-creation, distributed

roles & lean operations• Focus on creation and benefit from process from

digital efficiencies• Value attributed to:

• Insights• Processes• Team• Clients

• Innovative business models• Turn insight into a process / framework• Get paid for value• Systematise low-value / best practice• Value created not only in the service but in the provision• Companies that become a ‘must have acquisition’• Examples of key deal flow of interest in creative sectors:

• Advertising creative process• Fashion (e.g. design)• Creative process workflow management (e.g. architecture

sector)• Digital media (video, music, ebooks, etc.) distribution, co-

creation and data• Hospitality sector automated data services

What we look for in the Creative Sector

ACE Fund I

• Focus

• £20m venture fund (LLP) for seed / early stage “digital enabler” businesses

• Looking for businesses that can scale through partnerships and “open markets”

• Typical Deal

• £250K - £500K with potential to co-invest

• £3m - £6m fully funded model

• Strong management team, relevant expertise / track record

• Game changing models in sector i.e. “digitally enabled” new “ecosystem economic”

• No pre-beta technology risk; will take market execution risk

david@ariadnecapital.com

www.ariadnecapital.com

Thank You