1.
Private and ConfidentialPrivate and Confidential May 2020
NOW WHAT?
RAISING LARGER ROUNDS IN A
RECESSION

2.
IF YOU ARE LOOKING FOR THIS, YOU ARE IN
THE WRONG WORKSHOP
2

3.
PREVIOUS TRANSACTIONS
3
Investment by
$35m
Capital Raised
ca. $50m
Capital Raised
Investment by Investment by
$65m
Capital Raised
£60m
Capitalization /
Expansion
Investment by
Strategic
Acquisition
Sold to

4.
KEY MESSAGES
4
Markets were strongest
pre-Covid
With valuations resetting,
the value of preparation is
rising weekly
…requiring companies
raising anytime next 12
months to adapt, fast
Investor mindsets have
already changed…
1 2
43

5.
WE ARE IN A RECESSION
5

6.
% of fundraises between $50-150M
IN THE WORLD PRE RECESSION,
FUNDRAISING PREDOMINATED
Source: Pitchbook as of February 2020; European Tech Fundraisings between $25m and $300m; M&A between $50m and $500m (where disclosed)
Companies opted for larger
rounds rather than selling
“early”
Because ‘they could’, rather
than ’they should’
Many of these rounds involve
secondary
That’s why M&A is much flatter
than fundraising
The cycle must cool, though fund $ are at an all time high
29%
38%
35
63
99
74
108
175
214
45
50
82
70 71
79
54
2013 2014 2015 2016 2017 2018 2019
European Fundraises ($25-300m)
European Exits ($50-500m)
6

7.
GOING FORWARD M&A WILL RISE,
SIGNIFICANTLY AND FAST
7
Source: Pitchbook, accessed 16 April 2020
Note: Global Exits $50-500m, Global Fundraises $25-100m; shaded areas denote recessionary periods and their near term aftermaths
Ratio of Number of Exits to Fundraises
0.5x
0.7x
0.9x
1.1x
1.3x
1.5x
1.7x
1.9x
2.1x
2.3x
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Post financial crashPost the dotcom crash

8.
Growth Funds Raised in 2020
RECORD LEVELS OF ‘DRY POWDER’
STILL AVAILABLE
8Source: Investor Press Releases, Press Reports, The Wall Street Journal, Pitchbook
Note: 2019 Venture Capital Dry Powder as of June 2019
2009 c.$120bn
2010 c.$115bn
2011 c.$115bn
2012 c.$110bn
2013 c.$115bn
2014 c.$115bn
2015 c.$125bn
2016 c.$150bn
2017 c.$140bn
2010 2019
Median B Round
US $7m $19m
Europe $5m $21m
Median C Round
US $10m $30m
Europe $11m $37m
2018 c.$160bn
2019 c.$190bn
Venture Capital Dry Powder

9.
GLOBALLY, DIFFERENT SEGMENTS WILL BE
MORE/LESS ATTRACTIVE
9
Online
Recruitment
Gig Economy
(ex. Ride Sharing)
Ride Sharing
Co-working
Spaces
Online
Travel
Video/Music
Streaming
Remote Working
Software
Digital Health
Gaming
Home Fitness
Online
Groceries
Food Delivery
EdTech
Classifieds
CYCLICAL NEGATIVE
CYCLICAL POSITIVE
STRUCTURAL
NEGATIVE
STRUCTURAL
POSITIVE
Fintech
Hosting &
Co-Location
Offline Events
(Ticketmaster)
SME services
(Vistaprint)
Off-Grid SolarAdTech
Digital
Logistics
E-Commerce

10.
10
LOWER VALUES + UNCERTAINTY
= (MUCH) MORE PREPARATION”

11.
FLIGHT TO ‘UNCERTAINTY-PROOF’
A clear path to
profitability
Demonstrate
(relative) benefit
from uncertainty
Demonstrate
team adaptation
11
Already a
flight to
‘uncertainty-
proof’, not
absolute size
or growth
Growth is no longer the governing metric

12.
THESE WILL BECOME FUNDAMENTAL
12
Key Metrics Issues To Consider
Unit Economics
▪ Decreasing CAC critical as LTV becomes more uncertain
▪ Contribution margin of new / existing customers (marketing is a semi-variable cost)
▪ Churn evolution, churn mgmt. strategies (customer success, cross-sell / upsell trends)
▪ Relative gain in share / attract new customers
Capital Efficiency
▪ Historic & future capital efficiency (<1 for sure, 0.8x is the objective)
▪ In terms of debt, repayment management, covenants
Cash-flow /
Liquidity
▪ Net working capital focus
▪ Evolution of payment cycles, ability to adapt / take advantage if possible

13.
THE RULE OF 40 PRE-COVID
13Source: Keybanc Private SaaS Companies Survey 2019

14.
THE NEW RULE OF 40 + MIN FCF
14Source: Keybanc Private SaaS Companies Survey 2019, Magister estimates
Illustrative recut
Rule of 40% with
focus on burn rate
40% Growth + 0% FCF Margin > 60% Growth + (20%) FCF Margin

15.
Board
Dynamics
Full Ratchet
Anti-Dilution
TERM SHEETS PRE AND POST-COVID
15
Interest /
PIK
Governance /
Reserved
Matters
New founder,
ESOP equity
>1x
Liquidation,
Participation
Tranches
Exit
Legislation
Pay to Play
$ / Share
& Proceeds
AVP = ‘Truth’
Founder
Share Sale
Negative
Control
Rights
Tranches
Valuation
Ratchets

16.
LIKELY 3 WAVES OF M&A
16
▪ Sellers who have limited runway
▪ Opportunistic acquirers targeting strategic sectors which are re-rating (e.g. AI,
Fintech)
Near Term Deals ‘corona-prices’ + affordable/strategic1
▪ Companies whose equity story benefits (relatively) from recession generally, Covid-
19 specifically (e.g. Health Tech, EdTech, Remote Working)
▪ Buyers finally being able to afford key technology and market share
Strategic Deals in the Medium Term3
▪ Fragmented markets should aggregate
▪ Cost consolidation
▪ Sponsors naturally reaching roll-off, hence exit portfolio mgmt.
Consolidation Over the Medium Term2

17.
CASH IS THE CURRENCY OF EXITS, AND
COMPANIES HAVE MORE THAN EVER
17
Source: Capital IQ, accessed 17 April 2020
Note: Cash and cash equivalents (including long-term investments of the Top 100 companies in the information technology (excl. telecom) sector globally, by market capitalisation)
– FT, 07 December 2017
Cash Balances of Global Top 100 Public
Tech Companies(1) (all values in US$bn)
329 339
398
507
689
952
1,218
1,598
1,487

18.
WHAT DOES BACK TO BASICS MEAN
18
Suppliers, customers
and other stakeholders
are more flexible in
times of crisis
You have, or are,
reviewing every
aspect of the
business
Your 2020 budget is
now irrelevant
Customer retention and
unit economics are more
important than ever
“You never let a crisis go to waste”
-Rahm Emmanuel

19.
“SUCCESS IS 90% PREPARATION”
- ALEXANDER GRAHAM BELL
19
ITS VALUE IS GOING UP EVERY WEEK

20.
BASIC REQUIREMENT FOR A CEO
20
10–20%
Time Should be Invested Preparing for a Large Round in the Year Before
Challenge, refine and articulate growth drivers
Define and articulate what you do that’s “really hard”
Ramp corporate marketing, news-flow
‘Date’ large investors
Get the help that will make a difference early
How?
Start uncomfortably early
Do a structured project plan, key actions and milestones
When?
Effects of Covid-19
The process will take
twice as long
Investors will need
more engagement
Due Diligence will
be more detailed