An iBelay UpdateAn iBelay Update
January 27, 2000
AgendaAgenda
• iBelay
• FastIdeas
• Colorado
• Market focus for investing
• Investments Status
P4 P15P3P2
6 Month Execution
Venture Accelerator
$100 M Fund
iBelay StrategyiBelay Strategy
• 15 portfolio companies in 2000• Position as public operating company• 10 of 15 companies will fit the
operating model• 2 liquidity events in 2000• Position for exit by Q4 2000
– IPO of operating company– sell to ICG, CMGI, Safeguard– long term hold
StructureStructure
iBelay, LLC•Fund of Limited Partners
FastIdeas, LLCPete Estler, Managing Member
P4 P15P3P2
FastIdeas, Inc.Data centerTechnical consultingRecruitingFinance/admin and legalPhysical real estateBusiness planning and strategyMarketing communications
P1
Employees
Cash Cash Services Services Common SharesCommon Shares Preferred SharesPreferred Shares Non-Statutory OptionsNon-Statutory Options
iBelay Partners, LLCPete Estler & John
Moinester
Status of FundingStatus of Funding
• Closed on $45 M - Dec. 6th
• 2nd Closing Scheduled Feb. 16th
• $55 M Targeted for 2nd Round– Shaw Comm. = $10 M– Shaw Family = $5 M– Tango = $??– Barnard = $50 M
• Possible Debt Financing for 2nd Round Deals
• Re-Investment Strategy
Deals StatusDeals Status
Deals done
• DataPlay
• Epidemic Marketing
• NetLibrary
• Productbuzz
• Ereo
Deals pending
• FastIdeas• Grant Seekers• Contact Zone• Sub-Prime• Advantage
PEO• RT/One
Target Deal StructuresTarget Deal Structures
Our Idea Their IdeaiBelay 70% 60%
Founder 0% 20%
CEO 15% 10%
Mgt/Emp* 15% 10%
*Includes FastIdeas Portion
THE iBELAY THE iBELAY ACCELERATORACCELERATOR
Accelerator Business ModelAccelerator Business Model
• Funded and 100% owned by iBelay
• $2M invested
• Break even on services delivered
• Focus– support execution of 6 month acceleration plan– success = 1st round funding within 6 months
= company stands on its own
Accelerator ServicesAccelerator ServicesAccelerator ServicesAccelerator Services
• Data center• Technical consulting• Recruiting• Finance/admin and legal• Physical real estate• Business planning and strategy• Marketing communications• Networking/Rolodex
Acceleration ProcessAcceleration Process6 month focus on four objectives
–prove the business model; rigorous metrics
–1st Customer–management team –scalable systemwrite
biz planprove business model
scale business
1 mo.$25 k 4-6 mo.
$1.5 M 3-12 mo.$15+ M
IPO/Exit
Accelerator ManagementAccelerator Management
Options Pool
P1 P2 P3 P4 P15
Tom Ball
Data Center
TBD
Staffi ng
J ohn H ickey
Operations
Larry Engle
Fin/Lgl/Adm
TBD
Marketing
P ete Es tler
CEO/P res ident
5%5% 5% 5% 5%
COLORADOCOLORADO““The Wild Wired West”The Wild Wired West”
COLORADO: COLORADO: The Wild Wired WestThe Wild Wired West
• job growth• educational attainment• economic vitality
The nation’s leader in...
• 2nd highest concentration of hi-tech workers• 2nd highest percentage of population online• 3rd highest percentage of PC households
• 3rd highest percentage of Web-enabled businesses
A wired work force...
COLORADO: COLORADO: The Wild Wired WestThe Wild Wired West
• #3 domestic relocation destination• Governor’s Commission on Science and
Technology• Colorado Institute of Technology
– $250M initiative to build the “MIT of the West”
• Reasonable cost of living– Denver: 90% San Francisco, 67% Boston– Boulder: 68% Menlo Park, 84% Cambridge
Future forces...
COLORADO: COLORADO: The Wild Wired WestThe Wild Wired West
COLORADO: COLORADO: The Wild Wired WestThe Wild Wired West
Future forces…VC investment in formative stage Internet ventures: Q1-3, 1999
COLORADO: COLORADO: The Wild Wired WestThe Wild Wired West
COLORADO: COLORADO: The Wild Wired WestThe Wild Wired West
Per Capita
0 5 10 15 20 25 30
CA
MA
CO
WA
TX
NY
NJ
PA
VA
FL
$58.1 M invested in 1st three Quarters of 1999
Colorado’s Anchor Colorado’s Anchor Technology CompaniesTechnology Companies
Colorado’s Anchor Colorado’s Anchor Technology CompaniesTechnology Companies
THE DIRECT MARKETING THE DIRECT MARKETING OPPORTUNITYOPPORTUNITY
DM &Brand Advertising: $370B in 2003DM &Brand Advertising: $370B in 2003
1999 $107.9
$173.7
2003 $148.5
$221.6
Brand AdvertisingDirect Marketing
• iBelay will capitalize on shifts within DM
7.1% CAGR
2003
$52.7
$26.3 $84.5
$21.7$11.5$7.9$5.5$17
Direct Mail DR TVTelemarketing NewspaperMagazine RadioInternet Other
1999
$41.8
$20 $66.2
$17.1$9
$6.1$0.75
$13.5
DM Break Out: $222B in 2003 DM Break Out: $222B in 2003
• iBelay focuses on the Internet channel
6.2% CAGR
Online Advertising Media Online Advertising Media Spending TrendsSpending Trends
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
1999 2000 2001 2002
Jupiter
Forrester
YankeeGroup
• 51% CAGR over the next 3 years
2003
35%
65%
Online Shift to DM: $5.5B in 2003Online Shift to DM: $5.5B in 20031999
75%
25%
• DM share of Interactive advertising swells from 25% in 1999 to 65% in 2003
64.3% CAGR
2004
$365
$1,300
$114
$16.8
Advertising EcommerceEBPP CRM
Email the DM ‘Killer App’Email the DM ‘Killer App’
• Email poised to become the cornerstone of multiple high-growth markets
1999
$255
$51$15 $3.7
Email TrendsEmail Trends
• The most widely used Internet application• 99M Americans sent 335M emails daily in
‘99– number of boxes will double within 3 years– daily volume will quadruple
• Distinction between email messaging, marketing and customer service blurring
OPPORTUNITIES RESULTING OPPORTUNITIES RESULTING FROM BROADBANDFROM BROADBAND
Shift in Consumer BehaviorShift in Consumer Behavior
• Effects– More Time Online– Access from
Anywhere– More Online
Spending
• Causes:– Lower Cost– Availability– Ease of Installation– Consistency of
Promotion
•Consumers get What they want, When they want , Where they want
Why Broadband?Why Broadband?
• Today vs. Tomorrow– Which would you choose?
• 56.6kbps vs. 36mbps Connections• Dial-up vs. Always on • Text based vs. Rich, Interactive Content• Expensive vs. Cheap Broadband Access• Lines at the Mall vs. e-Commerce
Anywhere
AT&T Projection :
253% CAGR
DLJ Projection : 76% CAGR
100
1,000
10,000
100,000
1,000,000
1998 1999 2000 2001 2002 2003
Gig
ab
its p
er
Seco
nd
Internet Network capacity doubles every 9 monthsInternet Network capacity doubles every 9 monthsInternet Traffic doubles every 100 daysInternet Traffic doubles every 100 days
Source: Red Herring Feb. 2000Source: Red Herring Feb. 2000
Bandwidth Demand ProjectionsBandwidth Demand Projections
OPPORTUNITIES RESULTING OPPORTUNITIES RESULTING FROM THE SHIFT FROM PCs FROM THE SHIFT FROM PCs TO INTERNET APPLIANCESTO INTERNET APPLIANCES
Information Explosion not Just Information Explosion not Just for PCsfor PCs
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1995 1996 1997 1998e 1999e 2000e 2001e
Millions of Content Windows
Includes Web pages and cable and broadcast TV channelsSource: McKinseye=estimated CAGR 150%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1995 1996 1997 1998e 1999e 2000e 2001e
Millions of Content Windows
Includes Web pages and cable and broadcast TV channelsSource: McKinseye=estimated CAGR 150%
84.7% CAGR for Internet Appliances84.7% CAGR for Internet Appliances
Market Shifts away from PCsMarket Shifts away from PCs• Mobility revolution
– more mobile devices than PCs connected in 2003– 1Billion handsets by 2003– 51% growth in Personal Companions
• Device independence– browser access to data and applications
• Home networks– 10 M U.S. homes will be digitally remodeled by ‘02
$35 B Wireless Data Rev. in Europe by 2003$35 B Wireless Data Rev. in Europe by 2003
Wireless Internet AccessWireless Internet AccessPortable
PCs37%
Handheld Devices
7%Smart
phones56% Portable
PCs24%
Handheld Devices
6%Smart phones
70%
17.2 M Wireless Data
Computing Devices in
2000
134.3 M Wireless Data
Computing Devices in 2004
2 Billion Short Messages per Month in Europe2 Billion Short Messages per Month in Europe
Wireless Data RevenueWireless Data RevenueEuropean Market Forecast by ApplicationEuropean Market Forecast by Application
services/e-commerce = $18 Bservices/e-commerce = $18 Bcorporate extensions = $12 Bcorporate extensions = $12 B
2003
Device IndependenceDevice Independence
Hardware:cell phone
PDA
television
pager
radio
Application:voice
management
video
music
Home NetworksHome NetworksPenetration and RevenuesPenetration and Revenues
0
10
20
30
40
50
60
70
80
1999 2000 2001 2002 2003
Mill
ion
s o
f U
S H
ou
seh
old
s
0
200
400
600
800
1,000
1,200
1,400
1,600
Mill
ion
s o
f $
Networked HouseholdsOn-line Households
PC HouseholdsRevenues from Home Networking
Why One Market Segment?Why One Market Segment?
Convergence of course• Phones were used for talking• Pagers were used for paging• PDAs were used for information
Shift to application centric - platform independence
• Phone, pager, PDA - just a device to run applications that–carry voice, message, store information
Wireless Data EnvironmentWireless Data Environment
Wireless data
Software
Content
Wireless
op
erators E
qu
ip.
and
dev
ices
iBelay’s Focus
Opportunities/ConclusionOpportunities/Conclusion
• Applications that take advantage of information explosion served to all Internet/Information Appliances
• Applications that take advantage of mobile platforms/carrier technologies/protocols
• Sharpest focus on intersection with direct marketing, broadband, and e-commerce
CAPITALIZING ON BUSINESS CAPITALIZING ON BUSINESS TO BUSINESS (B2B) TO BUSINESS (B2B)
COMMERCE SHIFTING FROM COMMERCE SHIFTING FROM OFF-LINE TO ON-LINEOFF-LINE TO ON-LINE
B2B Market SpaceB2B Market Space
• 1/4 of all B to B purchases made online by 2003
• Software spending to support B2B commerce– $1.65B in 1999 – $22.5B in 2004
• $43 B online trade of hard goods in 1998, will surge to $1.3 T by 2003 – an annual growth rate of 99%.
Reasons for ShiftReasons for Shift
• Attracts new customers
• Reinforces customer relationships
• Improves sales channels
• Improves post-sale services
• Removes inefficient distribution
TrendsTrends
TrendsTrends
0
200
400
600
800
1000
1200
1400
B2C 8 18 33 52 76 108
B2B 43 109 251 499 843 1331
1998 1999 2000 2001 2002 2003
E-commerce Breakout (B $)E-commerce Breakout (B $)
STATUSSTATUSDeals Done
•DataPlay
•Epidemic Marketing
•NetLibrary
•Productbuzz
•Ereo
Business ConceptBusiness Concept
• Web enabled digital content distribution media and storage device for portable information appliances and hand-held consumer entertainment devices
• Drive and Media will be about the size of a match book
Deal StructureDeal Structure
• Deal
Business ConceptBusiness Concept
• Viral Email Marketing
• Email That Pays
• True One-to-One Marketing
• B-to-C Affiliate Model
• Launched in November
Deal StructureDeal Structure
Shares Ownership
• Founders 5,350,000 39.95%• Sequel VP 3,501,406 26.14%• World VP 1,250,000 9.33%• Option Pool 3,000,000 22.40%• Other 291,867 2.18%
Business ConceptBusiness Concept
• E-books for institutions and individuals
• $32 B U.S. and $100 B non-U.S. English publishing market
• Targeting 50 Million U.S. Library patrons
• Launched product in mid ‘99
• iBelay can help create Internet and data industry partnerships
Funding SummaryFunding Summary
Funding History• Series A 8/98
– $5 M
• Series B 5/99– $25 M
• Series C 10/99– $72 M
• Series D 1/00– $15-20 M
iBelay’s Investment• Series D• $5 M• x,xxx,xxx Preferred
Shares• Y.Y% diluted
ownership
Business ConceptBusiness Concept
• Become the Internet’s largest and most robust provider of product information-focused business communities.
• Our content aggregation and ecommerce referral strategy uniquely positions us to become the leading infomediary in the emerging $1.5 trillion online B2B ecommerce market
Deal StructureDeal Structure
• Series A Convertible Preferred• Funding Sought $10 to $12 million• max. $4 million Co-Investment by Current
Sareholders (pari passu)
Ereo? - No infoEreo? - No info
STATUSSTATUSPending Deals
•FastIdeas
•Grant Seekers
•Contact Zone
•Sub-Prime
•Advantage PEO
•RT/One