LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Why it works for growing technology companies Revenue-Based Financing September 16, 2014

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 About Lighter Capital › Lends $50K-$1M in growth capital › Entrepreneur-friendly structure we call a RevenueLoan (revenue- based finance) › Goal: make funding fast and easy. Tech-enabled analysis, diligence, underwriting and servicing. › Currently 3-4 deals / month › Completed >50 deals: Most active revenue-based finance lender in the country p2

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 About BJ Lackland Lighter Capital, CEO since 2012 Power Efficiency Corporation, CFO & Director Public energy technology company, raised $20M in equity financing, $5M in various debt financings Summit Energy Ventures, VP & Director (Partner) $25M venture capital fund focused on Series A & B rounds, PIPEs, convertible debt Other, Active angel investor and consultant to early stage companies. Senior finance and marketing leader at tech startups, EnCompass Globalization and webStrategic. MBA and MA in International Studies from University of Washington p3 BJ Lackland CEO, Lighter Capital 15 years financing early stage tech companies, either as an entrepreneur or investor. Over $50M raised or invested

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Today’s Agenda What is revenue based financing Who it's designed for How it compares to other funding options: banks, angels, and VCs p4

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 What is it and how it works Revenue-Based Financing

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 How RevenueLoan Works p6 Up to $1M or up to 33% of annualized revenue run rate › No set interest rate, payment, or maturity › Monthly payments are a fixed percent of revenue › Matures in 5 years or when cumulative payments equal a set amount, usually 1.5 – 2.5x principal › Small upside participation Example Loan › Annual Revenues: $1M › Principal: $200K › Maturity: 5 years › Payment: 5% of monthly revenue › Repayment: 1.75x principal ($350K) › Upside Participation: $50K at liquidity event Cumulative Payments Principal Loan Maturity 1.5x to 2.5x Principal

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 p7 Company revenue Loan payment Payments Based on a Percent of the Company’s Revenue

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 › No financial covenants – Payments depend only on company performance. › No loss of control – No board seat, no ability to replace management. › No personal guarantees – Secured only against the assets of the company. › Aligned interest – Our IRR depends on your performance. › Advice – We’re here to help however we can. “VC-Light”. p8 The Best of Equity and Debt

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Early growth stage technology companies Lighter Capital’s Investment Criteria Financials: › Revenue Min: $15k+ / month › Gross Margin: High (50%+) › Profitability: Not required, but clear path to profitability from our funds › Other Debt: Not too high (unless convertible debt) › Customer Base: No major concentration › Recurring Revenue or Repeat Customers Management: › High ownership, full time dedication Geography: › HQ in US or Canada Use of Funds: › Growth: Sales, marketing, product p9 Software, SaaS, digital media, tech services and similar

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Fast Process- Get Funded in a Month! p10 Result: We fund 18% of companies that meet our criteria Company snapshot Create a high level company overview online in 10 minutes. Getting the details We will send you a link to upload and provide financial statements, customer and team information followed by one or two calls with our underwriting team. Closing the deal We issue a Term Sheet for review. Once agreed, you are funded STEP 1STEP 2STEP 3

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Client Case Study- Cloudbilt and Valant 11 › A SaaS company on the Saleforce platform › Bootstrap- the only outside money raised › 4 rounds of funding, totaling $1M › Recently named #227 on Inc. 500 fastest growing private companies, and #15 in the software industry › Grew 1,995% between › A SaaS solution for mental health professionals › Used $250K for product development, sales & marketing › Recently raised a $11M equity round › Monthly revenue grew >10X

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 How to decide if it's for you and how does it compare Revenue-Based Financing

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 World of Funding: Competition is Intense Source: US Census Bureau, Crunchbase, CB Insights ~6 Million US Business 90% of whom have 20 or fewer employees 127,100 small software companies 2,283 Angel and Seed Investments Seed / Angel = 1.8% of small software companies per year 1,009 Series A Investments Series A = 0.8% of small software companies per year p13

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 What Will You Be When You Grow Up? › Different ‘financing roadmaps’ available, depending on the business › Know your business › Know your goals › Choose wisely › Choose a financing path that’s available. Dead ends waste time › Financing financing decisions are hard to reverse p14

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Know Your Business Stage & Capital › What is the current company stage? What is the next stage? › How much capital do you need to get to the next stage? › Existing investors needs? Sales & Marketing › Nailed the target customer? › How big is your target market? Larger than $1B? › Ready for scale? › Product-Market fit? Nailed customer acquisition cost, LTV, churn? › Nailed revenue / pricing model? › What does your sales pipeline look like? How long is sales cycle? Team › Is your team capable of going to the next stage? p15

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 › Long term – Do you want to exit? When? Never? › Control – Who do you want as partners? Who controls big decisions? How is shared control structured? › Equity – What are you willing to give up? › Timeframe – How long will raising funds take? Distraction? › Risk – What are you willing to risk? Will own money? Personal assets? › Flexibility – How do you want to repay the money? › Mentoring – Do you want lots or little guidance? › Aligned interest – Can you align investors’ goals with yours? p16 Know Your Goals

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 A Snapshot of Funding Options by Stage EstablishedIdeationLaunch & Traction Growth & Scale Breakout Bootstrap/Self Family & Friends Angels and Incubators Revenue-Based Financing VC (less pre-product/revenue than in the past, more at later stages) Banks (w/o VC or PG) Strategic Investors Note: These are tendencies, NOT hard and fast rules. Many financings happen outside these bands! $MMs$0$0-$1M$1M-$5M$5M+ p17

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Summary: How Do They Compare? Bank / Debt Revenue-Based Finance Venture Capital Guarantees & Controls Financial Covenants Sometimes Personal Guarantees No Financial Covenants No Personal Guarantees Partner in the Business (Board Seat, voting shareholder) Added Value Low / NoneMediumHigh Dilution None / Low Low: Small Upside Participation High Payment Flexibility Low: Fixed Payments Medium: Variable Payments High: No Payments Speed 4-8 months4 weeks Highly variable. Typical 3-6 months focused effort p18

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Questions? Apply Online for a RevenueLoan from Lighter Capital