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What’s Happening in Digital…Including NYC
November 13, 2013
Agenda
I.

Setting the Stage

II. Key Digital Sector Trends
III. Digital NY

IV. Quick Gridley Commercial

© 2013 Gridley & Company LLC

2
I. Setting the Stage
Broad Market Glance YTD 2013
Market Index Performance
60%

Key Themes in Internet/Digital Media
Performance of Internet Bellwethers

+30.5% YTD

YTD

Since 2008

44.6%

284.5%

65.2%

41.4%

4.5%

60.5%

84.5%

20%

47.9%

42.0%

40%

NA

0%

+23.6% YTD
(20%)

Strong Market Despite Headwinds
•

High unemployment: 7.2% in September

(40%)

•

Fiscal ceiling uncertainty / government
shutdown

(60%)

•

Record amount of cash on corporate balance
sheets

Jan-08 Sep-08 Jun-09 Feb-10 Nov-10 Jul-11 Apr-12 Jan-13 Sep-13

Source: PriceWaterhouse Coopers; National Venture Capital Association (2013); Capital IQ.

© 2013 Gridley & Company LLC

4
M&A and VC Volume Appear to Be In Line with Prior Years
M&A and Venture Funding Volume Since 1995 ($ in billions)
$45.0

$200.0

$40.0

$180.0
VC

$35.0

$160.0

M&A

$140.0
$120.0
$25.0

$100.0
$20.0

$80.0
$15.0

$60.0
$10.0

$40.0

$5.0

$20.0

$0.0

$0.0

Source: PriceWaterhouse Coopers; National Venture Capital Association (2013); Capital IQ. As of November 8, 2013.
© 2013 Gridley & Company LLC

5

M&A Volume

Venture Funding

$30.0
Billion Dollar Valuations with Little to No Revenue
-Are We in a Bubble?
“Big companies are scarcely growing, and interest rates remain near zero, boosting
zeal for investment opportunities in companies with high-growth potential.” -WSJ
10/27/13
“The price tag… is determined by the market, which right now
is starting to look like the housing bubble of the mid-2000s.
-NYT 10/31/13

Billion Dollar Valuations ($ millions)
M&A

Private Placement

IPO
$13,600

$4,000
$1,000

Tumblr

Waze

$0

$13

$0

$3,400

$966

Instagram

LTM Revenue

$1,100

$3,800

$1,160
Snapchat

$0

$0

Source: Capital IQ, TechCrunch, Wall Street Journal article dated 10/27/2013
© 2013 Gridley & Company LLC

Pinterest

6

Uber

$125

Rocketfuel

$107

$1,062
Twitter

$82

RetailMeNot

$145
Performance for Digital Media Related IPOs have been
Strong This Year
2013 YTD Internet IPOs
($ in millions, except per share figures)
Pricing
Date

Company

Market
Cap
Performance Current
@ IPO
Since IPO Market Cap

02/14/13

Xoom Corporation

$509.4

03/04/13

Professional Diversity Network LLC50.4

03/21/13

Marin Software Incorporated

05/16/13

Marketo, Inc.

05/16/13

Tableau Software, Inc.

05/22/13

$1,102.1

7.8x

NM

NM

(38.1%)

33.2

3.1x

NM

NM

432.8

(23.6%)

366.3

3.3x

NM

NM

465.2

161.5%

1,384.6

12.6x

NM

NM

1,088.0

107.9%

3,852.6

16.3x

NM

NM

ChannelAdvisor Corporation

286.6

158.8%

849.2

10.0x

NM

NM

06/26/13

Tremor Video, Inc.

494.2

(52.8%)

502.9

4.7x

NM

NM

07/18/13

RetailMeNot, Inc.

1,662.2

9.7x

24.7x

38.7x

08/06/13

YuMe, Inc.

286.2

(30.4%)

255.7

1.9x

NM

NM

08/08/13

Cvent, Inc.

812.0

53.0%

1,317.3

11.5x

111.1x

NM

09/17/13

Benefitfocus, Inc.

644.3

74.6%

1,182.3

11.1x

NM

NM

09/19/13

Rocket Fuel Inc.

942.3

30.6%

1,538.6

6.8x

NM

NM

10/30/13

Criteo SA

1,714.2

10.9%

1,901.2

NA

NA

0.0x

11/07/13

Twitter, Inc.
Mean
Median

14,162.1

72.7%
45.9%
49.9%

24,456.9

37.9x
10.5x
9.7x

NM
67.9x
67.9x

NM
19.4x
19.4x

1,054.3

71.3%

2013E Rev. 2013E EBITDA 2013E P/E
Multiples
Multiples
Multiples

46.8%

Source: Capital IQ. Prices as of November 8, 2013.
© 2013 Gridley & Company LLC

7
However, The IPO Market Appears To Be Rational
Relative to 1999
• Market much more selective vs. 1999 in terms of business model and growth
characteristics

1999

2013 YTD

# of IPOs

368

32

Mean first-day return

87%

26%

4 years

13 years

# that doubled in price on first day

114

1

% with <$50 million LTM Revenue (2005 dollars)

84%

22%

% that were unprofitable LTM

86%

66%

Median ratio of market value to sales, at IPO

26.5x

5.6x

Median age of company

Source: Wall Street Journal article dated 10/27/2013
© 2013 Gridley & Company LLC

8
Consumer Monetization Models Today Are More Easily
Understood…
Revenue Jumps When Revenue Models are
“Turned On”

Valuation tied to User Adoption

($ in Millions)

(Monthly Active Users, in Millions)
150

$317

100

Facebook
acquisition of
Instagram

$150
$106

30
10

$52

© 2013 Gridley & Company LLC

9

Aug-13

Jun-13

Apr-13

Feb-13

Dec-12

Oct-12

Aug-12

138

Jun-12

68

Apr-12

30

Feb-12

40

2012

Dec-11

12

2011

Oct-11

2

2010

Aug-11

2007

Jun-11

2006

Feb-11

2005

Dec-10

#
Users:

5

1

Apr-11

$28

$6
…And Higher Growth Profiles in Digital Marketing are
Coming to Market
Public Comp Universe at End of 2012
’12-’13 Revenue Growth

Average :

24.5%

Millennial Media Inc.
38.5%

ValueClick, Inc.

Constant Contact, Inc.
Bankrate, Inc.
QuinStreet, Inc.

Median:

2013E
Revenue
Multiple

Average :

24.2%

21.0%
17.2%
10.6%
-15.0%

21.0%

3.2x

3.9x

3.9x

2.3x

2.9x

0.6x

0.5x
2.5x

YuMe, Inc.

4.1x

4.1x

Marin Software Inc.

1.0x

1.0x

2.3x

2.0x

* Criteo 2013E revenue growth is based on 2013 1H run rate

© 2013 Gridley & Company LLC

117.0% 4.9x

Marketo, Inc.

2.8x

10

Twitter, Inc.

102.2%

Criteo SA*

Tremor Video, Inc.

Median:

2013E
Revenue
Multiple

62.0%

Rocket Fuel Inc.

76.1% 4.8x

ExactTarget, Inc.

ReachLocal, Inc.

2012
Revenue
Multiple

New Public Comps in 2013
’13-’14 Revenue Growth

71.6%

61.5%
33.3%
28.9%
19.3%

61.5%

NM
2.6x
12.3x
1.6x
3.1x
1.1x

2.9x
Key Themes in Strategic M&A and Funding Market
•

Consolidation still quiet in fragmented sectors such as Adtech
‒ Complicated cap structures with multiple layers of institutional capital
‒ Investors with different time horizons and priorities on same deals

‒ Lots of strategics holding on to cash
• M&A as a recruiting tool is here to stay – didn’t exist five years ago
‒ Yahoo, Google, Twitter, Facebook all compete with hiring talent
‒ Still primarily a B2C concept, few examples of enterprise software
companies employing this tactic
‒ From banker’s perspective, no company is too small
• VC/PE investors reluctant to triage their portfolios, believe all will be home runs

© 2013 Gridley & Company LLC

11
Key 2013 Digital M&A and Private Financings
Notable M&A
Target

Acquirer
Jun. 2013

May 2013

Aug. 2013

Notable Private Financings
Company

$1.1BN
Jul. 2013
$1.1BN

Aug. 2013

$405MM

Apr. 2013
Oct. 2013

$350MM

Sep. 2013
Jul. 2013

Aug. 2013
Feb. 2013
Feb. 2013

$361MM
$250MM
$225MM
$225MM

Feb. 2013

$316MM

Jun. 2013
Aug. 2013

$750MM

$261MM

$206MM
$200MM

Feb. 2013
$180MM
Jan. 2013

$68MM

$155MM

May 2013

$125MM

© 2013 Gridley & Company LLC

$75MM

Jun. 2013

12

$60MM
Digital Leaders Are Known to Overpay into Platform
Shifts
Desktop Chews into
Traditional Media

Internet Becomes
Scalable Transaction
Medium

Consumers Move
to Social Channels

Mobile Overtakes
Desktop for
Consuming Content

Sale Price

$1,561

$1,433

$745

$966

LTM Rev.
Multiple

NA

8.25x

18.63x(1)

NA

Sale Price

$850

$3,727

$400

$350

LTM Rev.
Multiple

NA

NA

NA

NA

$5,000

$410

$1,100

$1,000

NA

NA

73.33x(2)

NA

Sale Price
LTM Rev.
Multiple

(1) BuddyMedia rumored LTM revenue is $40 MM
(2) Tumblr’s rumored LTM revenue is $15 MM based on 2013 Q1 run rate 13
Internet Leaders Have and Will Continue to Make
Transformational Business Moves Through M&A

Search solutions provider

Online CD and video
retailer

Online seller-bid auction

Pay-per-click advertising

Online audio entertainment

Digital transactions
platform

Ad exchange

Mobile operating system

Online shoe and apparel
retailer

VOIP and IM client

Job search engine

Online video-sharing
website

Online daily deals

Online payment system

Web hosting

Handset manufacturing
division

Online baby product
retailer

Digital commerce services
provider

Microblog and social
network

Smartphone navigation app

Social book cataloguing

Digital payments processer

Internet radio

Social media marketing

© 2013 Gridley & Company LLC

14
eBay Has Systematically Built A Multi-Channel
Commerce Capability Through M&A
eBay made a series of acquisitions, most notably of PayPal, GSI Commerce, Red Laser, Zong, and Milo,
that enabled eBay to become a front-runner in the race to become the next generation in-store leader
Discover

Pay
Nearby

Retailer
Store locator
and locationbased deals

Used, online

In-store
scanner

Card-in-cloud
Online
retail
Virtual goods

Better
Merchandising
At Home

Local Retailers
/ SMB

Nearby
Used, online
Online retail
Online social retail

© 2013 Gridley & Company LLC

15

Any product
Growth and Scale are Primary Factors in Valuations
Today
2013E Revenue Growth Rate vs. 2013E Revenue Multiple
140%

Legend
Adtech

120%

Enterprise

$225MM

2013E Revenue Growth

Consumer Internet
100%
$124MM

$615MM

80%

$345MM
$243MM

60%

$269MM

$204MM
$10.4BN

40%
$894MM

20%

$532MM

$77MM
$175MM

0%
0.0x

$5.2BN

5.0x

10.0x

15.0x

2013E Revenue Multiple
© 2013 Gridley & Company LLC

16

20.0x

25.0x
II. Key Digital Sector Trends
Summary of 2013 Deal Trends
M&A

VC/PE Funding

•

Ad Tech

Consolidation has been needed in Adtech for five
years, still very fragmented

•

Chatter around merger discussions up; remains to
be seen if there is action
Continue to see large scale deals as mobile
applications, complimented by tech/team and tuck
in deals

•

Mobile
•

Content deal market remains quiet overall

Many VCs have moved away from Adtech, those
that remain are very selective
‒

•

Clear path to IPO

‒ New data models that create unique value
Aggressive VC market across the spectrum

Yahoo has built a large mobile team through ~20
acquisitions in past year

•

•

‒

Content

‒

•

Few buyers in the market for digital
content assets
No material change in behavior in past 3
years

Renewed excitement for vertically focused
publishers
‒

Multiple $15mm+ capital raises

•

Relatively harder to secure earlier stage funding
vs. other digital segments

•

Social

LOTS of tech & team, smaller deals

•

•

Continued premiums paid for perceived market
leaders

$50 million is the new $20 million and $20
million is the new $10 million

•

High valuations paid for experienced teams in
uncrowded markets

•

Continued investor interest in new commerce
models

•
•

eCommerce

Social moving deeper into the enterprise, opening
up the buyer universe
Most M&A focused on B2B as software
companies like IBM and Netsuite expand retail
capabilities into digital

© 2013 Gridley & Company LLC

18

‒

Rent the Runway, Birchbox, etc
Sector
AdTech
Mobile

Content
Social
eCommerce

© 2013 Gridley & Company LLC

19
Key Trends in Adtech
• Recent IPOs have brought new life into the Adtech community
‒ Creating urgency to get scale
‒ Establishing clarity around value for high growth advertising stories

• Noise level on Privacy/Cookie debate up; although still very exploratory in
terms of going forward models
• Category leaders getting funding, but otherwise hard market for new capital

‒ Understanding and executing on data is actually very hard!
• Convergence of marketing and advertising technologies not leading to
considerable strategic activity yet

© 2013 Gridley & Company LLC

20
The CMO’s Dilemma – Multiple, Disconnected Channels
Capabilities within Digital Channels Continue to Expand
Display
Mobile
• Advertising
• Marketing
• LBS

• Networks

Social

• DSPs
• Direct Sold

• Word of mouth

• Various capabilities (e.g.
retargeting)

• Paid

CMO

• Campaigns
• Owned
• Earned

Video
• Pre vs. post roll

• Networks
• Direct Sold

© 2013 Gridley & Company LLC

Email
Search
• Google vs. others
• Bid optimization
solutions
21

• Mass branding
• One-to-one (rules
based)
The Buy-side Value Chain – Race to Build Value
Through Use of Data
• Strategic value is moving to the middle of the value chain as the value of data
becomes better understood
Value Chain

DSP/Network

Social
Publishing

Self Serv.

Adserving

LBS

Email

Execution

Planning

Creative

Attribution

Analytics

Modeling

Optimization

Scoring

Data Mgmt

Warehouse

Normalize

Segment

Database

CRM
Workflow/Mgmt

© 2013 Gridley & Company LLC

MRM

22

Ops

MAM
Sector
AdTech
Mobile

Content
Social
eCommerce

© 2013 Gridley & Company LLC

23
Mobile Is the Most Important Broad Theme in 2013
Driven by A Rapid Shift in Consumer Behavior
3.0

Global Installed Base (Billions)

Desktops+Notebooks
Smartphones+Tablets
2.5

Q2:13E: Projected Inflection
Point Smartphones + Tablet
Installed Base > Total PCs
Installed Base

2.0

1.5

1.0

0.5

0.0
2009

2010

2011

2012E

2013E

2014E

2015E

Note: Notebook PCs include Netbooks. Assumes the following lifecycles: Desktop PCs – 5 years: Notebook PCs – 4 years; Smartphones – 2 years; Tablets – 2.5 years.
Source: Morgan Stanley Research, 2012.

© 2013 Gridley & Company LLC

24
Key Trends in Mobile
• 2013 is the year of mobile from many perspectives
‒ Positive mobile consumption trends, quickly overtaking
desktop
‒ Internet bellwethers have executed multiple large scale M&A
deals
‒ Scaled consumer adoption of vertical specific application such
as Uber and Waze
• Facebook and Twitter are educating the broader market on value of
mobile marketing

• Mobile driving much of the innovation in the payments sector today
‒ Exciting opportunity in the convergence between marketing
and payments

© 2013 Gridley & Company LLC

25
POS – A Major Battleground in Mobile
Market Research /
Data Analytics

Account Marketing

Digital Commerce

Consumer

Payments

eReceipts

© 2013 Gridley & Company LLC

26
Massive Strategic Opportunity with Mobile + Local
Higher Banner Ad CTR for Local Businesses

Rise of Localized Mobile Marketing

Local vs. National Mobile Ad Spend ($ in billions)

CTR Lift
48%

$9.9

CTR Lift
40%

$8.1

$5.8
$6.0

CTR Lift
26%

$4.5
$4.3

$3.1
$2.7
$1.7
CTR Lift
5% 41% $0.7
$1.0

<1 Mile

2011

1 to 2 Miles 2 to 5 Miles 5 to 10 Miles

$2.1

$1.2

$3.6
$2.9
$2.2

$1.5

2012

2013
National

Sources: BIA Kelsey, “From National to Local: Mobile Advertising Zeroes In,” Jan. 2013; BI Intelligence; Balihoo, “Micro Study:
National Brand Use of Digital in Local Marketing,” Oct. 30, 2012.

27

$4.1

2014

2015
Local

2016

58%
Sector
AdTech
Mobile

Content
Social
eCommerce

© 2013 Gridley & Company LLC

28
Change in Content Consumption Behavior Has Been a
Driving Factor in Digital Content Landscape
Browsing and Consuming Behavior
Since the 1950’s…
Gridley Has Been Observing These Trends
in Content For Several Years…

New Content Consumption Model

• The Network
• Science
• Curation
• Incentives
• Location

• Converse
• Opine
• Review
• Rank

Tweet

• Play
“Like”
• Watch
Tag
• Read

Check-in

Revenue Acclaim Loyalty Intelligence

© 2013 Gridley & Company LLC

29
Key Trends in Content
• Healthy valuations in content enablement (e.g. Wordpress) and big
vertical niche properties (e.g. Houzz)
• Ongoing pressure from traditional ad models has forced some innovation
in consumer acquisition/retention, revenue models,
integration/coordination across channels
‒ Deeper integration into social channels
‒ New advertising formats such as native advertising
‒ Better mobile consumption experiences
‒ More integrated use of user generated content
• Most traditional media companies still on the sidelines from an M&A
perspective
• Few good public comparable market for digital content businesses

© 2013 Gridley & Company LLC

30
Sector
AdTech
Mobile

Content
Social
eCommerce

© 2013 Gridley & Company LLC

31
Key Trends in Social
• Platform shift to social has created a lot of success stories and exposed a
few vulnerabilities
‒ Positive: Consumer monetization models, value of network effects

‒ Negative: Can a sustainable business be built in social media
management? eCommerce on social doesn’t work, long-term ability
to create a “platform” around users in question
• Fickle users drive consumer businesses, creating new opportunities and
risks
• Social creating positive impact across the digital ecosystem
‒ Content, commerce and mobile big beneficiaries

© 2013 Gridley & Company LLC

32
As the Channel Matured, Social Has Started to Have
Broad Reaching Implications
Social Will Increasingly Play a Role Across the Digital Ecosystem
Mobile

Commerce

• Mobile only
social solutions
are gaining
mass adoption,
bypassing
desktop entirely

• Developing models
that tie social
connectivity into the
path to purchase
• Solving consumer
discovery challenges
via social curation

Content

Adv/Mkt.
• Considerable inventory
controlled by social
platforms opening up
this year

• Maturing models
around advertising
in user generated
content

• Social remains a key
strategic channel for
CMOs

© 2013 Gridley & Company LLC

33
Sector
AdTech
Mobile

Content
Social
eCommerce

© 2013 Gridley & Company LLC

34
eCommerce has Very Strong Growth Dynamics
Digital is “10 – 50 – 100”

Forecast: US Online Retail Sales 2012 to 2017

10%
• ~10% total retail sales are eCommerce sales

50%
eBusinesses are Shifting Spending to
Commerce-Related Technologies

• Development of “omnichannel” experiences open
opportunities in mobile and marketing
• 50% total retail sales are estimated to be influenced
by digital
‒

Showrooming, research, planning

100%
• Digital has an impact on 100% of the modern
shopping experience
Source: Kantar Retail “Digital Power 2013” report

Source: Forrester Reports dated March 13, 2013 and July 25, 2013

© 2013 Gridley & Company LLC

35
Key Trends in eCommerce
• eCommerce tech platforms are complex and expensive
• eCommerce business models are in experimental phase
‒ Flash sales, subscription commerce, social commerce, in-store all
developing
‒ Started to see scaleable + sustainable models emerge this year
• Content + Commerce did not pane out across demographics
• Online/Offline convergence still early, but viewed as strategically
important

• eCommerce is a CEO level strategic focus

© 2013 Gridley & Company LLC

36
III. Digital New York
Gridley’s Guide to Digital NY

•

Unique and comprehensive report for investors, buyers and entrepreneurs looking for one place to quickly
get up to speed on New York’s exciting, explosive digital ecosystem

•

We decided to put together this report published originally in Oct. 2011 after people kept asking us about
all of the “digital momentum” in NY. There was a feeling that lots was going on, but people didn’t really
understand just what “it” was and how extensive “it” was. We aim to answer those questions here

•

Digital New York report is updated on a quarterly basis and sent to 1,500+ senior executives and investors

•

For an “easy to use” website that lays out the information in this report (and more) in a fun, creative way,
visit www.gridleyco.com or www.gridleydigitalny.com

© 2013 Gridley & Company LLC

38
NY’s Emergence as a Tech Hub - $7.2BN Raised Since 2006
• New York City has become a true digital media innovation center
NY Tech Investment Over Time

$1,384
$1,141
$922
$791

$688
$608

$453

2007

2008

2009

2010

2011

2012

2013YTD

(1)

Source: PriceWaterhouse Coopers “MoneyTree Report 2013”, Media & Entertainment and Software investments; Capital IQ.
(1) Gridley estimate. Includes Internet-related companies based in the New York Metropolitan area. Companies in our database either have raised at least $5 million of outside
capital or are prominent enough in the Digital NY scene to merit inclusion.

© 2013 Gridley & Company LLC

39
A Word About the New York Scene in 2013
• Largest financing and largest venture-backed exit ever for New Yorkbased startups

‒ In April,

raised $250 million at a ~$1.0 billion valuation

‒ In May,

purchased

for $1.1 billion

• New York is the only hub to grow its share of the VC financing market
over the past 5 years
‒ Now second in deal volume behind Silicon Valley for over two years
‒ $7.2 billion invested in Digital NY companies since 2006
• New York now a hub for seed and angel investing
‒ 34% of deals in 2012 were seed stage
‒ Angel investors like David Tisch’s Box Group, NY Angels, and Chris
Dixon have given legs to the early stage community

© 2013 Gridley & Company LLC

40
NY Ecosystem Has Very Different Roots and Growth
Opportunities Than Silicon Valley
Internet Services

Wall Street

Operational
Efficiencies

Leadership
Talent

Engineering
Talent

Data Services

Advertising
Key
Customers

Fashion

© 2013 Gridley & Company LLC

Creative
Talent

Strategic
Acquirers

Strategic
Partnerships

Business
Development

41

Media
The Past Six Years Have Shaped Much of NY’s
Digital Media and Technology Landscape
• Notable events in NY since 2007:
Development of brand
names across broad set of
verticals

/

/

Closes deal and
announces HQ move
to NY in September

($3.1 billion)

/

July

($680 million)

2007

April
2007

January
2007

is founded

September
2007

Raises series A
round
December 2007

November
2007

Raises series A
round
announces spin-offs of:

announces
acquisition
of
For $183 million

2009

Acquire
s

May 2013
American
wireless
business
for $134 billion

March 2011

June 2013
August
2008

Acquires

For $125 million

Raises series
A round

Raises Series A
round

Raises series A round

for $1.1 billion

2011

September

October
2007

Raises Series B
round

in tech VC funding
and deal quantity
January

opens a
Googleplex in
New York City
June
Mayor Bloomberg
2008
starts up city-funded
business incubator
programs

($275 million)

announces
acquisition of

leads

Raises series
A round
December
2009

September

announces
acquisition of

July 2013

2010

for $745 million
June 2011
Acquires
Mayor Bloomberg
April 2013
for $22 billion
comes to New York offers $100 million and
September
land to develop a top
2013
engineering school to
encourage tech
for $30 billion
development, to bring
Raises series D
Raises series B
New York City to the
round
round
forefront of innovation.
$250
$100
million
announces
million
acquisition of
Announces
acquisition of

42
Major Disruption is Happening Across All Sectors
Advertising / Marketing

eCommerce

Content

43

Finance
NY Area Private Digital Companies by Sector
Digital
Content

Digital
Marketing

eCommerce

Mobile

Social

SpotOn

Electric Sheep

Note: More companies illustrated on the following sector breakdown pages

44
NY Area Private Digital Companies by Equity
Raised (243)
$5M-$10M 67

$10M-$20M 63

$20M-$30M 37

$30M-$50M 41
$30-$50

$50M-$100M 22
$50-$100

>$100M

Sources: Capital IQ and TechCrunch, October 2013

45

13
“The All-Stars” - VC/PE Firms with at Least 5 NY
Area Digital Investments
“The Locals”

30

“The Satellites”

Seed

Early Stage

Growth

Source: Capital IQ, TechCrunch, public filings, and press releases

46

9

“The Outsiders”

13
Public Companies with a NY Area Presence by
Industry (51)
Data

eCommerce

Digital Media

9

Marketing

14

6

47

10

Traditional Media

12
Key Digital NY Private Financings & IPOs
Notable Fundraises
Financing
Size

IPOs

Company

IPO Size

Apr. 2013 $250MM
Jul. 2012 $120MM
$166MM
Dec. 2007

Current
Company Market Cap

Apr. 2007

Apr. 2011 $138MM
Aug. 2009 $78MM
$100MM
Sep. 2013

$2,534MM

$143MM

$610MM

$217MM

$422MM

$234MM

$34MM

$73MM

$60MM

Apr. 2010

May 2012 $150MM
May 2009 $100MM
$150MM
Oct. 2013

$77MM

$75MM

May 2012

$22MM

May 2013
Nov. 2011

$85MM
Aug. 2011
Sep. 2011
Jan. 2013
Aug. 2012

Jan. 2010

$84MM
$75MM

$91MM

Jul. 2012
$68MM

© 2013 Gridley & Company LLC

48

Acquired
Private Digital NY Sale Transactions >$100 million
Since January 2010 (Disclosed deals / rumored pricing available)
Date

Acquirer/Target

Source: Capital IQ, TechCrunch, public filings, and press releases. *rumored value
© 2013 Gridley & Company LLC

49

Transaction
Value ($MM)
V. Quick Gridley Commercial
Gridley Overview
Gridley & Company LLC, a New York-based boutique investment bank, provides advisory
services to companies in the Information Services industry

Gridley & Company LLC

Leading Boutique

• Sharp focus provides clients with valuable strategic insights and perspectives
• Specialize in Internet Services, Digital Media & Marketing Services, Data
Services, Financial Technology, and SaaS & Outsourcing Services
• Founded in 2001
• Headquartered in New York, NY

Strong Reputation

• Strong industry reputation on assignments led by senior bankers
• Experienced, bulge-bracket trained M&A bankers – The “A” Team

Trusted Advisor

• Thoughtful ideas – not just logical combinations
• Deliver value to buyers, sellers, and investors alike
• Broad industry network developed over 25+ years with industry leaders,
emerging growth companies, and senior investors

© 2013 Gridley & Company LLC

51
12+ Years of Strategic Thought Leadership
Quarterly Publications

Industry
Guides

Frequent
Industry Speaker

• Highly respected
newsletter about industry
trends and corporate
finance / M&A activity

• January Conference

• In-depth review of the
digital NY ecosystem,
including recent startups
and the firms investing in
them

© 2013 Gridley & Company LLC

Annual Gridley Hosted
Events

• Summer Networking
Event & Golf Outing

52
Host of Leading Annual Industry Conference for
13 years
• Bellwether event focused on our targeted industries
• Approximately 500 senior-level executives from over 300 companies

• Differentiated audience and participants vs. other conferences
• Highly personalized with Gridley arranged “1-on-1”s for clients, presenters, sponsors
• Presentations by approximately 40 private companies and industry panels addressing
timely topics

January 14, 2014

The Westin New York Grand
Central
(Invitation Only)

© 2013 Gridley & Company LLC

53
Event History – Track Record of Finding Highly
Successful Companies Early
• 218 private companies have presented since 2004

• Over 70% have completed liquidity transactions
Selected Past Conference Presenters

© 2013 Gridley & Company LLC

54
Selected Recent Gridley Transactions
Gridley clients include industry leaders and premier emerging growth companies

© 2013 Gridley & Company LLC

55
Selected Recent Gridley Transactions cont.

© 2013 Gridley & Company LLC

56
QUESTIONS?

Linda Gridley
President & CEO
212-400-9710
linda.gridley@gridleyco.com

Pratik Patel
Managing Director
212-400-9712
pratik.patel@gridleyco.com

Gridley & Company LLC
10 East 53rd Street, 24th Floor
New York, NY 10022
212.400.9720 tel
212.400.9717 fax
Twitter: @gridleyco
www.gridleyco.com

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2013 Whats Happening In Digital-- Including NYC

  • 1. What’s Happening in Digital…Including NYC November 13, 2013
  • 2. Agenda I. Setting the Stage II. Key Digital Sector Trends III. Digital NY IV. Quick Gridley Commercial © 2013 Gridley & Company LLC 2
  • 4. Broad Market Glance YTD 2013 Market Index Performance 60% Key Themes in Internet/Digital Media Performance of Internet Bellwethers +30.5% YTD YTD Since 2008 44.6% 284.5% 65.2% 41.4% 4.5% 60.5% 84.5% 20% 47.9% 42.0% 40% NA 0% +23.6% YTD (20%) Strong Market Despite Headwinds • High unemployment: 7.2% in September (40%) • Fiscal ceiling uncertainty / government shutdown (60%) • Record amount of cash on corporate balance sheets Jan-08 Sep-08 Jun-09 Feb-10 Nov-10 Jul-11 Apr-12 Jan-13 Sep-13 Source: PriceWaterhouse Coopers; National Venture Capital Association (2013); Capital IQ. © 2013 Gridley & Company LLC 4
  • 5. M&A and VC Volume Appear to Be In Line with Prior Years M&A and Venture Funding Volume Since 1995 ($ in billions) $45.0 $200.0 $40.0 $180.0 VC $35.0 $160.0 M&A $140.0 $120.0 $25.0 $100.0 $20.0 $80.0 $15.0 $60.0 $10.0 $40.0 $5.0 $20.0 $0.0 $0.0 Source: PriceWaterhouse Coopers; National Venture Capital Association (2013); Capital IQ. As of November 8, 2013. © 2013 Gridley & Company LLC 5 M&A Volume Venture Funding $30.0
  • 6. Billion Dollar Valuations with Little to No Revenue -Are We in a Bubble? “Big companies are scarcely growing, and interest rates remain near zero, boosting zeal for investment opportunities in companies with high-growth potential.” -WSJ 10/27/13 “The price tag… is determined by the market, which right now is starting to look like the housing bubble of the mid-2000s. -NYT 10/31/13 Billion Dollar Valuations ($ millions) M&A Private Placement IPO $13,600 $4,000 $1,000 Tumblr Waze $0 $13 $0 $3,400 $966 Instagram LTM Revenue $1,100 $3,800 $1,160 Snapchat $0 $0 Source: Capital IQ, TechCrunch, Wall Street Journal article dated 10/27/2013 © 2013 Gridley & Company LLC Pinterest 6 Uber $125 Rocketfuel $107 $1,062 Twitter $82 RetailMeNot $145
  • 7. Performance for Digital Media Related IPOs have been Strong This Year 2013 YTD Internet IPOs ($ in millions, except per share figures) Pricing Date Company Market Cap Performance Current @ IPO Since IPO Market Cap 02/14/13 Xoom Corporation $509.4 03/04/13 Professional Diversity Network LLC50.4 03/21/13 Marin Software Incorporated 05/16/13 Marketo, Inc. 05/16/13 Tableau Software, Inc. 05/22/13 $1,102.1 7.8x NM NM (38.1%) 33.2 3.1x NM NM 432.8 (23.6%) 366.3 3.3x NM NM 465.2 161.5% 1,384.6 12.6x NM NM 1,088.0 107.9% 3,852.6 16.3x NM NM ChannelAdvisor Corporation 286.6 158.8% 849.2 10.0x NM NM 06/26/13 Tremor Video, Inc. 494.2 (52.8%) 502.9 4.7x NM NM 07/18/13 RetailMeNot, Inc. 1,662.2 9.7x 24.7x 38.7x 08/06/13 YuMe, Inc. 286.2 (30.4%) 255.7 1.9x NM NM 08/08/13 Cvent, Inc. 812.0 53.0% 1,317.3 11.5x 111.1x NM 09/17/13 Benefitfocus, Inc. 644.3 74.6% 1,182.3 11.1x NM NM 09/19/13 Rocket Fuel Inc. 942.3 30.6% 1,538.6 6.8x NM NM 10/30/13 Criteo SA 1,714.2 10.9% 1,901.2 NA NA 0.0x 11/07/13 Twitter, Inc. Mean Median 14,162.1 72.7% 45.9% 49.9% 24,456.9 37.9x 10.5x 9.7x NM 67.9x 67.9x NM 19.4x 19.4x 1,054.3 71.3% 2013E Rev. 2013E EBITDA 2013E P/E Multiples Multiples Multiples 46.8% Source: Capital IQ. Prices as of November 8, 2013. © 2013 Gridley & Company LLC 7
  • 8. However, The IPO Market Appears To Be Rational Relative to 1999 • Market much more selective vs. 1999 in terms of business model and growth characteristics 1999 2013 YTD # of IPOs 368 32 Mean first-day return 87% 26% 4 years 13 years # that doubled in price on first day 114 1 % with <$50 million LTM Revenue (2005 dollars) 84% 22% % that were unprofitable LTM 86% 66% Median ratio of market value to sales, at IPO 26.5x 5.6x Median age of company Source: Wall Street Journal article dated 10/27/2013 © 2013 Gridley & Company LLC 8
  • 9. Consumer Monetization Models Today Are More Easily Understood… Revenue Jumps When Revenue Models are “Turned On” Valuation tied to User Adoption ($ in Millions) (Monthly Active Users, in Millions) 150 $317 100 Facebook acquisition of Instagram $150 $106 30 10 $52 © 2013 Gridley & Company LLC 9 Aug-13 Jun-13 Apr-13 Feb-13 Dec-12 Oct-12 Aug-12 138 Jun-12 68 Apr-12 30 Feb-12 40 2012 Dec-11 12 2011 Oct-11 2 2010 Aug-11 2007 Jun-11 2006 Feb-11 2005 Dec-10 # Users: 5 1 Apr-11 $28 $6
  • 10. …And Higher Growth Profiles in Digital Marketing are Coming to Market Public Comp Universe at End of 2012 ’12-’13 Revenue Growth Average : 24.5% Millennial Media Inc. 38.5% ValueClick, Inc. Constant Contact, Inc. Bankrate, Inc. QuinStreet, Inc. Median: 2013E Revenue Multiple Average : 24.2% 21.0% 17.2% 10.6% -15.0% 21.0% 3.2x 3.9x 3.9x 2.3x 2.9x 0.6x 0.5x 2.5x YuMe, Inc. 4.1x 4.1x Marin Software Inc. 1.0x 1.0x 2.3x 2.0x * Criteo 2013E revenue growth is based on 2013 1H run rate © 2013 Gridley & Company LLC 117.0% 4.9x Marketo, Inc. 2.8x 10 Twitter, Inc. 102.2% Criteo SA* Tremor Video, Inc. Median: 2013E Revenue Multiple 62.0% Rocket Fuel Inc. 76.1% 4.8x ExactTarget, Inc. ReachLocal, Inc. 2012 Revenue Multiple New Public Comps in 2013 ’13-’14 Revenue Growth 71.6% 61.5% 33.3% 28.9% 19.3% 61.5% NM 2.6x 12.3x 1.6x 3.1x 1.1x 2.9x
  • 11. Key Themes in Strategic M&A and Funding Market • Consolidation still quiet in fragmented sectors such as Adtech ‒ Complicated cap structures with multiple layers of institutional capital ‒ Investors with different time horizons and priorities on same deals ‒ Lots of strategics holding on to cash • M&A as a recruiting tool is here to stay – didn’t exist five years ago ‒ Yahoo, Google, Twitter, Facebook all compete with hiring talent ‒ Still primarily a B2C concept, few examples of enterprise software companies employing this tactic ‒ From banker’s perspective, no company is too small • VC/PE investors reluctant to triage their portfolios, believe all will be home runs © 2013 Gridley & Company LLC 11
  • 12. Key 2013 Digital M&A and Private Financings Notable M&A Target Acquirer Jun. 2013 May 2013 Aug. 2013 Notable Private Financings Company $1.1BN Jul. 2013 $1.1BN Aug. 2013 $405MM Apr. 2013 Oct. 2013 $350MM Sep. 2013 Jul. 2013 Aug. 2013 Feb. 2013 Feb. 2013 $361MM $250MM $225MM $225MM Feb. 2013 $316MM Jun. 2013 Aug. 2013 $750MM $261MM $206MM $200MM Feb. 2013 $180MM Jan. 2013 $68MM $155MM May 2013 $125MM © 2013 Gridley & Company LLC $75MM Jun. 2013 12 $60MM
  • 13. Digital Leaders Are Known to Overpay into Platform Shifts Desktop Chews into Traditional Media Internet Becomes Scalable Transaction Medium Consumers Move to Social Channels Mobile Overtakes Desktop for Consuming Content Sale Price $1,561 $1,433 $745 $966 LTM Rev. Multiple NA 8.25x 18.63x(1) NA Sale Price $850 $3,727 $400 $350 LTM Rev. Multiple NA NA NA NA $5,000 $410 $1,100 $1,000 NA NA 73.33x(2) NA Sale Price LTM Rev. Multiple (1) BuddyMedia rumored LTM revenue is $40 MM (2) Tumblr’s rumored LTM revenue is $15 MM based on 2013 Q1 run rate 13
  • 14. Internet Leaders Have and Will Continue to Make Transformational Business Moves Through M&A Search solutions provider Online CD and video retailer Online seller-bid auction Pay-per-click advertising Online audio entertainment Digital transactions platform Ad exchange Mobile operating system Online shoe and apparel retailer VOIP and IM client Job search engine Online video-sharing website Online daily deals Online payment system Web hosting Handset manufacturing division Online baby product retailer Digital commerce services provider Microblog and social network Smartphone navigation app Social book cataloguing Digital payments processer Internet radio Social media marketing © 2013 Gridley & Company LLC 14
  • 15. eBay Has Systematically Built A Multi-Channel Commerce Capability Through M&A eBay made a series of acquisitions, most notably of PayPal, GSI Commerce, Red Laser, Zong, and Milo, that enabled eBay to become a front-runner in the race to become the next generation in-store leader Discover Pay Nearby Retailer Store locator and locationbased deals Used, online In-store scanner Card-in-cloud Online retail Virtual goods Better Merchandising At Home Local Retailers / SMB Nearby Used, online Online retail Online social retail © 2013 Gridley & Company LLC 15 Any product
  • 16. Growth and Scale are Primary Factors in Valuations Today 2013E Revenue Growth Rate vs. 2013E Revenue Multiple 140% Legend Adtech 120% Enterprise $225MM 2013E Revenue Growth Consumer Internet 100% $124MM $615MM 80% $345MM $243MM 60% $269MM $204MM $10.4BN 40% $894MM 20% $532MM $77MM $175MM 0% 0.0x $5.2BN 5.0x 10.0x 15.0x 2013E Revenue Multiple © 2013 Gridley & Company LLC 16 20.0x 25.0x
  • 17. II. Key Digital Sector Trends
  • 18. Summary of 2013 Deal Trends M&A VC/PE Funding • Ad Tech Consolidation has been needed in Adtech for five years, still very fragmented • Chatter around merger discussions up; remains to be seen if there is action Continue to see large scale deals as mobile applications, complimented by tech/team and tuck in deals • Mobile • Content deal market remains quiet overall Many VCs have moved away from Adtech, those that remain are very selective ‒ • Clear path to IPO ‒ New data models that create unique value Aggressive VC market across the spectrum Yahoo has built a large mobile team through ~20 acquisitions in past year • • ‒ Content ‒ • Few buyers in the market for digital content assets No material change in behavior in past 3 years Renewed excitement for vertically focused publishers ‒ Multiple $15mm+ capital raises • Relatively harder to secure earlier stage funding vs. other digital segments • Social LOTS of tech & team, smaller deals • • Continued premiums paid for perceived market leaders $50 million is the new $20 million and $20 million is the new $10 million • High valuations paid for experienced teams in uncrowded markets • Continued investor interest in new commerce models • • eCommerce Social moving deeper into the enterprise, opening up the buyer universe Most M&A focused on B2B as software companies like IBM and Netsuite expand retail capabilities into digital © 2013 Gridley & Company LLC 18 ‒ Rent the Runway, Birchbox, etc
  • 20. Key Trends in Adtech • Recent IPOs have brought new life into the Adtech community ‒ Creating urgency to get scale ‒ Establishing clarity around value for high growth advertising stories • Noise level on Privacy/Cookie debate up; although still very exploratory in terms of going forward models • Category leaders getting funding, but otherwise hard market for new capital ‒ Understanding and executing on data is actually very hard! • Convergence of marketing and advertising technologies not leading to considerable strategic activity yet © 2013 Gridley & Company LLC 20
  • 21. The CMO’s Dilemma – Multiple, Disconnected Channels Capabilities within Digital Channels Continue to Expand Display Mobile • Advertising • Marketing • LBS • Networks Social • DSPs • Direct Sold • Word of mouth • Various capabilities (e.g. retargeting) • Paid CMO • Campaigns • Owned • Earned Video • Pre vs. post roll • Networks • Direct Sold © 2013 Gridley & Company LLC Email Search • Google vs. others • Bid optimization solutions 21 • Mass branding • One-to-one (rules based)
  • 22. The Buy-side Value Chain – Race to Build Value Through Use of Data • Strategic value is moving to the middle of the value chain as the value of data becomes better understood Value Chain DSP/Network Social Publishing Self Serv. Adserving LBS Email Execution Planning Creative Attribution Analytics Modeling Optimization Scoring Data Mgmt Warehouse Normalize Segment Database CRM Workflow/Mgmt © 2013 Gridley & Company LLC MRM 22 Ops MAM
  • 24. Mobile Is the Most Important Broad Theme in 2013 Driven by A Rapid Shift in Consumer Behavior 3.0 Global Installed Base (Billions) Desktops+Notebooks Smartphones+Tablets 2.5 Q2:13E: Projected Inflection Point Smartphones + Tablet Installed Base > Total PCs Installed Base 2.0 1.5 1.0 0.5 0.0 2009 2010 2011 2012E 2013E 2014E 2015E Note: Notebook PCs include Netbooks. Assumes the following lifecycles: Desktop PCs – 5 years: Notebook PCs – 4 years; Smartphones – 2 years; Tablets – 2.5 years. Source: Morgan Stanley Research, 2012. © 2013 Gridley & Company LLC 24
  • 25. Key Trends in Mobile • 2013 is the year of mobile from many perspectives ‒ Positive mobile consumption trends, quickly overtaking desktop ‒ Internet bellwethers have executed multiple large scale M&A deals ‒ Scaled consumer adoption of vertical specific application such as Uber and Waze • Facebook and Twitter are educating the broader market on value of mobile marketing • Mobile driving much of the innovation in the payments sector today ‒ Exciting opportunity in the convergence between marketing and payments © 2013 Gridley & Company LLC 25
  • 26. POS – A Major Battleground in Mobile Market Research / Data Analytics Account Marketing Digital Commerce Consumer Payments eReceipts © 2013 Gridley & Company LLC 26
  • 27. Massive Strategic Opportunity with Mobile + Local Higher Banner Ad CTR for Local Businesses Rise of Localized Mobile Marketing Local vs. National Mobile Ad Spend ($ in billions) CTR Lift 48% $9.9 CTR Lift 40% $8.1 $5.8 $6.0 CTR Lift 26% $4.5 $4.3 $3.1 $2.7 $1.7 CTR Lift 5% 41% $0.7 $1.0 <1 Mile 2011 1 to 2 Miles 2 to 5 Miles 5 to 10 Miles $2.1 $1.2 $3.6 $2.9 $2.2 $1.5 2012 2013 National Sources: BIA Kelsey, “From National to Local: Mobile Advertising Zeroes In,” Jan. 2013; BI Intelligence; Balihoo, “Micro Study: National Brand Use of Digital in Local Marketing,” Oct. 30, 2012. 27 $4.1 2014 2015 Local 2016 58%
  • 29. Change in Content Consumption Behavior Has Been a Driving Factor in Digital Content Landscape Browsing and Consuming Behavior Since the 1950’s… Gridley Has Been Observing These Trends in Content For Several Years… New Content Consumption Model • The Network • Science • Curation • Incentives • Location • Converse • Opine • Review • Rank Tweet • Play “Like” • Watch Tag • Read Check-in Revenue Acclaim Loyalty Intelligence © 2013 Gridley & Company LLC 29
  • 30. Key Trends in Content • Healthy valuations in content enablement (e.g. Wordpress) and big vertical niche properties (e.g. Houzz) • Ongoing pressure from traditional ad models has forced some innovation in consumer acquisition/retention, revenue models, integration/coordination across channels ‒ Deeper integration into social channels ‒ New advertising formats such as native advertising ‒ Better mobile consumption experiences ‒ More integrated use of user generated content • Most traditional media companies still on the sidelines from an M&A perspective • Few good public comparable market for digital content businesses © 2013 Gridley & Company LLC 30
  • 32. Key Trends in Social • Platform shift to social has created a lot of success stories and exposed a few vulnerabilities ‒ Positive: Consumer monetization models, value of network effects ‒ Negative: Can a sustainable business be built in social media management? eCommerce on social doesn’t work, long-term ability to create a “platform” around users in question • Fickle users drive consumer businesses, creating new opportunities and risks • Social creating positive impact across the digital ecosystem ‒ Content, commerce and mobile big beneficiaries © 2013 Gridley & Company LLC 32
  • 33. As the Channel Matured, Social Has Started to Have Broad Reaching Implications Social Will Increasingly Play a Role Across the Digital Ecosystem Mobile Commerce • Mobile only social solutions are gaining mass adoption, bypassing desktop entirely • Developing models that tie social connectivity into the path to purchase • Solving consumer discovery challenges via social curation Content Adv/Mkt. • Considerable inventory controlled by social platforms opening up this year • Maturing models around advertising in user generated content • Social remains a key strategic channel for CMOs © 2013 Gridley & Company LLC 33
  • 35. eCommerce has Very Strong Growth Dynamics Digital is “10 – 50 – 100” Forecast: US Online Retail Sales 2012 to 2017 10% • ~10% total retail sales are eCommerce sales 50% eBusinesses are Shifting Spending to Commerce-Related Technologies • Development of “omnichannel” experiences open opportunities in mobile and marketing • 50% total retail sales are estimated to be influenced by digital ‒ Showrooming, research, planning 100% • Digital has an impact on 100% of the modern shopping experience Source: Kantar Retail “Digital Power 2013” report Source: Forrester Reports dated March 13, 2013 and July 25, 2013 © 2013 Gridley & Company LLC 35
  • 36. Key Trends in eCommerce • eCommerce tech platforms are complex and expensive • eCommerce business models are in experimental phase ‒ Flash sales, subscription commerce, social commerce, in-store all developing ‒ Started to see scaleable + sustainable models emerge this year • Content + Commerce did not pane out across demographics • Online/Offline convergence still early, but viewed as strategically important • eCommerce is a CEO level strategic focus © 2013 Gridley & Company LLC 36
  • 38. Gridley’s Guide to Digital NY • Unique and comprehensive report for investors, buyers and entrepreneurs looking for one place to quickly get up to speed on New York’s exciting, explosive digital ecosystem • We decided to put together this report published originally in Oct. 2011 after people kept asking us about all of the “digital momentum” in NY. There was a feeling that lots was going on, but people didn’t really understand just what “it” was and how extensive “it” was. We aim to answer those questions here • Digital New York report is updated on a quarterly basis and sent to 1,500+ senior executives and investors • For an “easy to use” website that lays out the information in this report (and more) in a fun, creative way, visit www.gridleyco.com or www.gridleydigitalny.com © 2013 Gridley & Company LLC 38
  • 39. NY’s Emergence as a Tech Hub - $7.2BN Raised Since 2006 • New York City has become a true digital media innovation center NY Tech Investment Over Time $1,384 $1,141 $922 $791 $688 $608 $453 2007 2008 2009 2010 2011 2012 2013YTD (1) Source: PriceWaterhouse Coopers “MoneyTree Report 2013”, Media & Entertainment and Software investments; Capital IQ. (1) Gridley estimate. Includes Internet-related companies based in the New York Metropolitan area. Companies in our database either have raised at least $5 million of outside capital or are prominent enough in the Digital NY scene to merit inclusion. © 2013 Gridley & Company LLC 39
  • 40. A Word About the New York Scene in 2013 • Largest financing and largest venture-backed exit ever for New Yorkbased startups ‒ In April, raised $250 million at a ~$1.0 billion valuation ‒ In May, purchased for $1.1 billion • New York is the only hub to grow its share of the VC financing market over the past 5 years ‒ Now second in deal volume behind Silicon Valley for over two years ‒ $7.2 billion invested in Digital NY companies since 2006 • New York now a hub for seed and angel investing ‒ 34% of deals in 2012 were seed stage ‒ Angel investors like David Tisch’s Box Group, NY Angels, and Chris Dixon have given legs to the early stage community © 2013 Gridley & Company LLC 40
  • 41. NY Ecosystem Has Very Different Roots and Growth Opportunities Than Silicon Valley Internet Services Wall Street Operational Efficiencies Leadership Talent Engineering Talent Data Services Advertising Key Customers Fashion © 2013 Gridley & Company LLC Creative Talent Strategic Acquirers Strategic Partnerships Business Development 41 Media
  • 42. The Past Six Years Have Shaped Much of NY’s Digital Media and Technology Landscape • Notable events in NY since 2007: Development of brand names across broad set of verticals / / Closes deal and announces HQ move to NY in September ($3.1 billion) / July ($680 million) 2007 April 2007 January 2007 is founded September 2007 Raises series A round December 2007 November 2007 Raises series A round announces spin-offs of: announces acquisition of For $183 million 2009 Acquire s May 2013 American wireless business for $134 billion March 2011 June 2013 August 2008 Acquires For $125 million Raises series A round Raises Series A round Raises series A round for $1.1 billion 2011 September October 2007 Raises Series B round in tech VC funding and deal quantity January opens a Googleplex in New York City June Mayor Bloomberg 2008 starts up city-funded business incubator programs ($275 million) announces acquisition of leads Raises series A round December 2009 September announces acquisition of July 2013 2010 for $745 million June 2011 Acquires Mayor Bloomberg April 2013 for $22 billion comes to New York offers $100 million and September land to develop a top 2013 engineering school to encourage tech for $30 billion development, to bring Raises series D Raises series B New York City to the round round forefront of innovation. $250 $100 million announces million acquisition of Announces acquisition of 42
  • 43. Major Disruption is Happening Across All Sectors Advertising / Marketing eCommerce Content 43 Finance
  • 44. NY Area Private Digital Companies by Sector Digital Content Digital Marketing eCommerce Mobile Social SpotOn Electric Sheep Note: More companies illustrated on the following sector breakdown pages 44
  • 45. NY Area Private Digital Companies by Equity Raised (243) $5M-$10M 67 $10M-$20M 63 $20M-$30M 37 $30M-$50M 41 $30-$50 $50M-$100M 22 $50-$100 >$100M Sources: Capital IQ and TechCrunch, October 2013 45 13
  • 46. “The All-Stars” - VC/PE Firms with at Least 5 NY Area Digital Investments “The Locals” 30 “The Satellites” Seed Early Stage Growth Source: Capital IQ, TechCrunch, public filings, and press releases 46 9 “The Outsiders” 13
  • 47. Public Companies with a NY Area Presence by Industry (51) Data eCommerce Digital Media 9 Marketing 14 6 47 10 Traditional Media 12
  • 48. Key Digital NY Private Financings & IPOs Notable Fundraises Financing Size IPOs Company IPO Size Apr. 2013 $250MM Jul. 2012 $120MM $166MM Dec. 2007 Current Company Market Cap Apr. 2007 Apr. 2011 $138MM Aug. 2009 $78MM $100MM Sep. 2013 $2,534MM $143MM $610MM $217MM $422MM $234MM $34MM $73MM $60MM Apr. 2010 May 2012 $150MM May 2009 $100MM $150MM Oct. 2013 $77MM $75MM May 2012 $22MM May 2013 Nov. 2011 $85MM Aug. 2011 Sep. 2011 Jan. 2013 Aug. 2012 Jan. 2010 $84MM $75MM $91MM Jul. 2012 $68MM © 2013 Gridley & Company LLC 48 Acquired
  • 49. Private Digital NY Sale Transactions >$100 million Since January 2010 (Disclosed deals / rumored pricing available) Date Acquirer/Target Source: Capital IQ, TechCrunch, public filings, and press releases. *rumored value © 2013 Gridley & Company LLC 49 Transaction Value ($MM)
  • 50. V. Quick Gridley Commercial
  • 51. Gridley Overview Gridley & Company LLC, a New York-based boutique investment bank, provides advisory services to companies in the Information Services industry Gridley & Company LLC Leading Boutique • Sharp focus provides clients with valuable strategic insights and perspectives • Specialize in Internet Services, Digital Media & Marketing Services, Data Services, Financial Technology, and SaaS & Outsourcing Services • Founded in 2001 • Headquartered in New York, NY Strong Reputation • Strong industry reputation on assignments led by senior bankers • Experienced, bulge-bracket trained M&A bankers – The “A” Team Trusted Advisor • Thoughtful ideas – not just logical combinations • Deliver value to buyers, sellers, and investors alike • Broad industry network developed over 25+ years with industry leaders, emerging growth companies, and senior investors © 2013 Gridley & Company LLC 51
  • 52. 12+ Years of Strategic Thought Leadership Quarterly Publications Industry Guides Frequent Industry Speaker • Highly respected newsletter about industry trends and corporate finance / M&A activity • January Conference • In-depth review of the digital NY ecosystem, including recent startups and the firms investing in them © 2013 Gridley & Company LLC Annual Gridley Hosted Events • Summer Networking Event & Golf Outing 52
  • 53. Host of Leading Annual Industry Conference for 13 years • Bellwether event focused on our targeted industries • Approximately 500 senior-level executives from over 300 companies • Differentiated audience and participants vs. other conferences • Highly personalized with Gridley arranged “1-on-1”s for clients, presenters, sponsors • Presentations by approximately 40 private companies and industry panels addressing timely topics January 14, 2014 The Westin New York Grand Central (Invitation Only) © 2013 Gridley & Company LLC 53
  • 54. Event History – Track Record of Finding Highly Successful Companies Early • 218 private companies have presented since 2004 • Over 70% have completed liquidity transactions Selected Past Conference Presenters © 2013 Gridley & Company LLC 54
  • 55. Selected Recent Gridley Transactions Gridley clients include industry leaders and premier emerging growth companies © 2013 Gridley & Company LLC 55
  • 56. Selected Recent Gridley Transactions cont. © 2013 Gridley & Company LLC 56
  • 57. QUESTIONS? Linda Gridley President & CEO 212-400-9710 linda.gridley@gridleyco.com Pratik Patel Managing Director 212-400-9712 pratik.patel@gridleyco.com Gridley & Company LLC 10 East 53rd Street, 24th Floor New York, NY 10022 212.400.9720 tel 212.400.9717 fax Twitter: @gridleyco www.gridleyco.com