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Gridley’s Mobile New York Industry Roadmap
Tips for a Successful
Mobile Fundraise
March 2012
2
13%
48%
74%
56%
2%
29%
8%
27%
9%10%
46%
36%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2005 2006 2007 2008 2009 2010 2011
Africa Arab States Asia & PacificCIS Europe The Americas
Globally, Mobile Penetration is Significantly Higher
than Penetration of Landline Phones or the Internet
Source: International Telecommunication Union, 2011
10%13%
39%
2% 1%
9%
15%
26%23%
46%
29%33%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2005 2006 2007 2008 2009 2010 2011
Africa Arab States Asia & PacificCIS Europe The Americas
53%
74%
143%
12%
27%
97%
23%
60%
120%
92%
52%
103%
0%
20%
40%
60%
80%
100%
120%
140%
160%
2005 2006 2007 2008 2009 2010 2011
Africa Arab States Asia & Pacific CIS Europe The Americas
Mobile phone penetration increased in the Americas from 52% in 2005 to 103% in 2011…
…while landline phone penetration decreased 3%.. . .. and Internet penetration increased to 56% or ~half mobile
Internet User Penetration RatesFixed Telephone Lines Penetration Rates
Mobile Cellular Subscriptions Penetration Rates
3
Conversion from Feature Phones to Smartphones Has
Been Accelerating Over the Past Few Quarters…
…This trend is likely to continue as hardware costs continue to fall. By 2015, over 80% of US
mobile users are expected to have smartphones, up from 48% at the end of 2011
US Smartphone Penetration(1) % of US Users with Smartphones(2)
Note: Dashed lines indicate extrapolated data.
(1) Source: The Nielsen Company.
(2) Source: Goldman Sachs (June 2011).
(3) Source: Forrester Research (2010).
% of US Users with Tablets (3)
52%48%
79%
90%87% 86%
84% 83%81%
77%75%
72%
62%
57%
10%13% 14%
16% 17%19%
21% 23%25%
28%
38%43%
2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
Feature Phone Smartphone
Accelerating User Growth
1-3%
5%
Almost
50/50
8%
15%
20%
25% 25%
2011 2012 2013 2014 2015
48%
64%71%
77% 81%
2011 2012 2013 2014 2015
4
Mobile Ecosystem
Mobile Coupons
e-Commerce Mobilizers
Payments
Digital Inventory Rewards / CLOs
Bar Code Scanners
Marketing Services Integrated Systems
Social
Mobile Discovery
Marketing Services / Advertising / Analytics Content / Social M-Commerce Payments / In-Store
Mobile Ad Networks
AnalyticsDSPs Exchanges
M-Commerce Tech
Content
Gaming
Video
5
The More Developed Japanese Market Gives a Hint
of What To Expect in the US in the Next Few Years
Mobile Activities in the U.S., EU5, and Japan by % Share of Total Mobile Users
Source: comScore MobiLens, 3 month average ending December 2010, Japan data for December 2010 only
23%
21%
20%
18%17%
16% 16%
10% 10%
8%7%
7%6%
4%
25%
15%
26%
13%
14%
12%
25%
8%
7%7%
5% 5%6%
5%
16%
32%
16%
17%
4%
18%
13%
17%
10%
14%
4%
9%
23%
3%
Games Search Capture
Video
Maps Instant
Messaging
Sports Info Music Financial
News / Stock
Quotes
Restaurant
Info
Traffic
Reports
Classifieds Online Retail TV / Video Travel
Service
U.S. EU5 Japan
In the future, US consumers will probably spend more time viewing videos and TV, searching,
and accessing financial news and traffic reports using their mobile devices
Poised for
Growth
Poised for
Growth
6
Sources: (1) Chetan Sharma (January 2011), (2) eMarketer (September 2011)
Breakdown of US Mobile Ad Spending ($MM)(2)
Relative Efficacy of Mobile vs. Other Advertising Media (1)
Mobile Ads Are More Targeted, Making them More
Effective and Compelling Than Other Media
$633
$1,600
$1,767
$396
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
2010 2011 2012 2013 2014 2015
Messaging Display Search Video
US Mobile Ad Spending ($MM)(2)
100 90 70 80 80Mobile
50 50 80 40 60Internet
50 30 901
020TV
401
020
1
0
1
0Print
601
040
1
0Radio
Reach Targeting Engagement Viral Transaction
$4,396
$3,381
$2,523
$1,802
$1,226
$743
79%
65%
47%
40%
34%30%
2010 2011 2012 2013 2014 2015
0 %
1 0 %
2 0 %
3 0 %
4 0 %
5 0 %
6 0 %
7 0 %
8 0 %
9 0 %
7
52% 51%
34%
21%17%
7%
1%
Found it online for a
better price
Found it at another
store for a better price
Saw a negative review
about the item
Bought a similar item
instead
It was not available in-
store
No longer needed item Nove of the above
12%
3%
18%
24%
21%
24%
10% 9%
1%
13-15 16-17 18-19 20-24 25-34 35-44 45-54 55-64 65+
Source: KPMG.
% of Age Group Interested in Mobile TransactionsConsider Mobile Payments Mainstream
9% consider mobile
payments mainstream
globally today
83% believe mobile
payments will be
mainstream globally within
the next four yearsSource: Yankee Group.
Reasons for In-Store Purchase Abandonment Among US Smartphone Users
Mobile Phones Are Creating New In-Store
Purchasing Behavior and Transforming Payments
Source: comScore, US Smartphone User Survey (July 2011).
II. Digital New York
9
80
53
71
62 60
2007 2008 2009 2010 2011
Over 300 NY Digital Start-Ups Founded in the Last
Few Years…
Sources: CapIQ and Gridley estimates
Digital Start-Ups Founded in NY
10
Foster City
3%
McLean
6%
San Mateo
4% Redwood City
4%
Los Angeles
11%
Palo Alto
4%
San Francisco
34%
New York
27%
Chicago
4%
Seattle
3%
Foster City, 2
McLean, 1
San Mateo, 8 Redwood City, 4
Los Angeles, 8
Palo Alto, 11
San Francisco, 44
New York, 59
Chicago, 7
Seattle, 9
NY’s Emergence as a Tech Hub
New York City has become a true digital media innovation center
Source: CB Insights “Venture Capital Activity Report”
Total of Top Cities = $2,165 billion
Total including Others = $2,989 billion
Q3 2011 Internet VC Funding by Top Cities Q3 2011 Internet VC Deals by Top Cities
Total of Top Cities = 153
Total including Others = 308
Bay Area
77
Bay Area
$1,277 bn
11
NY Ecosystem has Very Different Roots and Growth
Opportunities than Silicon Valley
Operational
Efficiencies
LeadershipTalent
Engineering
Talent
Creative
Talent
Strategic
Partnerships
Strategic
Acquirers
Key
Customers
Internet Services
AdvertisingData Services
Wall Street
Business
DevelopmentMediaFashion
12
Source: Capital IQ, TechCrunch, public filings, and press releases
$0
$800
(Enterprise Value
in $M)
$200
$400
2007 2008 2009 2010 2011
$1,000
Top 25 Private Digital NY Sale TransactionsJanuary 2007 – December 2011 (Disclosed deals / rumored pricing available)
13
SocialMarketingeCommerceContent 9 4 15 4
NY Area Private Mobile Companies (32)
14
Source: Capital IQ, TechCrunch, public filings, and press releases. *rumored value
Date
06/15/2011
06/13/2011
02/06/2011
01/19/2011
02/03/2010
01/25/2010
09/08/2011
06/17/2010
08/05/2008
09/07/2010
Acquirer/Target
Transaction
Value (in $M)
$524
400*
315
296
225
200*
151
135
125
120
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
Top 10 Private Digital NY Sale TransactionsJanuary 2008 – December 2011 (Disclosed deals / rumored pricing available)
15
BuyoutGrowth Equity
($10M-$50M)
Seed
(<$2M)
Early Stage
($1M-$10M)23 27 20 7
Note: Firms may be active in more than one category. Source: Capital IQ, TechCrunch, public filings, and press releases
“The Locals” - Digital Focused VC/PE Firms
Headquartered in NY Area (61)
16
Source: Capital IQ, TechCrunch, public filings, and press releases
Seed
Early Stage
Growth
1-3 4-10 >10
Buyout
1-3 4-10 >10 71921
“The Locals” - Digital Focused VC/PE Firms
Headquartered in NY Area
By Number of NY Area Digital Investments January 2008 – December 2011
17
BuyoutGrowth Equity
($10M-$50M)
Seed
(<$2M)
Early Stage
($1M-$10M)9 10 11 5
“The Satellites” - Digital Focused VC/PE Firms
With a NY Office (24)
Note: Firms may be active in more than one category. Source: Capital IQ, TechCrunch, public filings, and press releases
18
“The Satellites” - Digital Focused VC/PE Firms With a NY Area Office
Source: Capital IQ, TechCrunch, public filings, and press releases
Seed
Early Stage
Growth
1-3 4-10 >10 276
By Number of NY Area Digital Investments January 2008 – December 2011
19
Growth Equity ($10M-$50M)
Seed (<$2M)
Early Stage ($1M-$10M)
8 30 27
Note: Firms may be active in more than one category. Source: Capital IQ, TechCrunch, public filings, and press releases
“The Outsiders” - Digital Focused Non-NY VC/PE
Firms (44)
20
“The All-Stars” - VC/PE Firms with at Least 5 NY Area Digital Investments
Source: Capital IQ, TechCrunch, public filings, and press releases
“The Locals” “The Satellites” “The Outsiders”
Seed
Early Stage
Growth
11720
January 2008 – December 2011
21
• Digital NY is getting crowded with lots of startups. Be sure of your objectives and how to
achieve them.
• There is a quality group of NY-based technology focused lawyers, accountants and recruiters –
network into them.
• Not everyone will be able to sell for $100MM+ valuations. Be realistic about where you stand
on your chances.
• The scope of what is "strategic" to a buyer is constantly expanding. Make sure to keep as many
lines of communication open to large organizations.
• There are LOTS of outside capital. Think through what is the
right amount for you.
• Choosing a VC is as important as choosing a co-founder. It
could be a 5+ year relationship, so get as much outside
perspective on them as possible.
− Focus on the partner involved, not the firm overall.
Advice for the Entrepreneur
III. Gridley Overview
23
Gridley Overview
Gridley & Company, a New York-based boutique investment bank, provides advisory
services to companies in the Information Services industry
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
Gridley & Company
24
INDEPENDENT ADVICE
INTEGRITY
Gridley’s Differentiated Strategic Approach
Our broad network allows us to discern important trends early in their development, advise
clients on the best strategies to profit from those trends, and execute successful transactions
Strong Network of Relationships
• Split time 1/3, 1/3, 1/3 between strategics,
VC/PE firms, and private company CEOs
• Built our business by visiting over 400
companies a year annually for 10 years
• Have set up over 1,000 one-on-one “meet
and greet” meetings at our annual January
conference
INDEPENDENT ADVICE
INTEGRITY
Well-Known Thought Leadership
• Often hired by public company leaders to
advise them on major growth initiatives
• Approximately 25% of business is
retained, strategic buy-side work for
industry leaders and selected PE investors
• Use industry overviews to effectively guide
strategic buyers and PE investors
Ability to Strategically Position Companies Impressive Track Record
• Spend more time than our competitors on
the strategic positioning of our clients
• Work together to optimize market
positioning
• Offer strategic insights based on our
understanding and perspective of the
industry
• Over 25 year history of successfully
completing transactions
• Clients like us and the job we do
• Goal is 100% referencable clients
• “No client gets left behind”
25
Strategic Thought Leadership is Well Known
• Highly respected
quarterly newsletter
about industry trends
and corporate
finance/M&A activity
• Received by over 2,200
industry CEOs and
CFOs, investors, and
financial sponsors
• Business Insider:
IGNITION
• OMMA Display
• Capital RoundTable
• SIIA Midmarket Growth
Conference
• IAB Marketplace: Mobile
• OMMA Mobile
• Upstream Seller Forum
• Digital Hollywood NYC:
Media Disruption
• ad:tech NYC 2010
• Digital NY
• January Conference
• Mobile in May
• Annual Golf Outing
• AdTech Cocktail
Party
Quarterly Newsletter:
The Compass
Industry
Guides
Frequent
Industry Speaker
Gridley Hosted
Events
26
Our Team is Experienced, Focused, and Trained for
Success• Gridley’s bankers are experienced, bulge-bracket trained bankers – The “A” Team
• Recent additional hires add execution capability and further outreach
Team Member Background
Linda Gridley
President & CEO
• 25+ years relevant banking experience
• Prior firm experience at Lehman Brothers, Furman Selz, and ING Barings
• In depth knowledge of marketing services sector
– Successful sale transactions with KBM, M/A/R/C Group, PRIMIS, Communifx, and Digitaria
• Frequent industry conferences circuit speaker
Peg Jackson
Managing Director
• Extensive knowledge and experience in digital media and technology sectors as venture capitalist
• Managing Director at NeoCarta Ventures. Served on boards including Data Synapse (Acquired by Tibco),
Silverpop, and Zoom Systems
• Vice President of Business Development at NBC. Responsible for investments including Tivo, Preview
Travel (acquired by Microsoft), Whowhere (acquired by Lycos), Wink (acquired by Liberty)
Pratik Patel
Director
• 9 years banking experience, 5 years covering software and digital media sectors
• Prior firm experience at JPMorgan
Maura O’Neill
Vice President
• 7 years banking experience, extensively working with media and marketing services companies
• Prior firm experience at Lehman Brothers and CDG Group
Michael Lambe
Vice President
• 7 years transaction experience, executing transactions for leading private equity firms
• Prior firm experience at Harris Williams & Co.
Feng Hong
Associate
• 3 years tech banking experience
• Prior firm experience at Credit Suisse
27
Selected Recent Gridley Transactions
Gridley clients include industry leaders and premier emerging growth companies
Advisor
Undisclosed
Acquired by
WPP Group plc
Advisor
Undisclosed
Acquired by
ISIS Equity Partners, Inc.
Advisor
$138,000,000
Acquired
Modem Media, Inc.
Advisor
Undisclosed
Acquired by
ValassisCommunications, Inc.
Advisor
$58,000,000
Acquired
Performics, Inc.
Advisory Communications
Advisor
Acquired by
Systems, Inc. (ACS) d/b/a
Undisclosed
ARAG Group
Advisor
Acquired by
Channel Intelligence, Inc.
Undisclosed
Advisor
Acquired by
Minicom Digital Signage
Undisclosed
Advisor
Acquired by
Oversee.net
Undisclosed
Advisor
Acquired by
TeleTech Holdings
Undisclosed $20,500,000
Advisor
Acquired by
The Dolan Company
Advisor
Acquired by
WPP Group plc
Undisclosed
Advisor
Acquired
M3 Mobile Marketing
Undisclosed
Advisor
Acquired by
MDC Partners Inc.
Undisclosed
Advisor
Acquired
Pepperjam
Undisclosed
Advisor
Acquired
SilverlignGroup Inc.
Undisclosed $20,000,000
Placement Agent
Investment by
TZP Group LLCAcquired by
Roper Industries, Inc.
Advisor
$367,000,000
Advisor
$157,000,000
Acquired
e-Dialog, Inc.
Advisor
Acquired
FetchBack Inc.
Undisclosed
Advisor
SAS
Undisclosed
Acquired by
Advisor
Undisclosed
Acquired bySchulman, Ronca, &
Bucuvalas, Inc..Advisor
Acquired by
Undisclosed
Quest Software
Undisclosed
Email Business of
Advisor
Sold to
One to One Interactive, Inc.
Sold to
Ad Serving Business of
Advisor
Undisclosed
Aegis plcCo-Manager
$113,189,337
Secondary Offering
Issued Fairness Opinion
$17,450,000
Acquired by
Verisign
PrePay Intelligent Network Solutions Business Unit of
Advisor
Undisclosed
Parthenon Capital LLCSold to
$55,200,000
Follow-On Offering
Co-Manager
Undisclosed
Acquired by
Alliance Data Systems, Inc.
Advisor
Undisclosed
Acquired by
Carlson Marketing Group
Advisor
Marketing One to One, Inc. d/b/a
Advisor
GfK
Undisclosed
Acquired by
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