Ensuring Your Success in The European Marketplace

Jacques PutzeysFreddy Nurski

San FranciscoMarch 1-2, 2004

Mission Statement

“Our mission is to provide our clients with a highly cost effective sales and market presence in Europe by helping them to accelerate their growth through the opening of new markets or by strengthening their position in current markets.”

Via creation, execution, and management services:

From seed beginning to a full European subsidiary Minimal upfront capital investmentShorten time for customer traction & revenue generationLower social liabilitiesAvoid negative effect on net equity

Cultural differences between USA and Europe: risk perception and decision making

USA Europe • Decision making

framework Cost-benefit/ risk based Cost-effectiveness

precautionary • Public decision making Crossfire Consensus

building • Role of science Argument Truth • Trust in government Low High • Media Drama Information • Influence of lobbies on

politics High Moderate

• Resource use attitude Frontier Scarcity • Environmental protection

Health oriented Ecologically oriented

• Sensitivity to doom Low High • Risk perception Controlable Thresholds

Trojan Horse Approach

Conquer Europe in a way that will not negatively affectyour net equity position, on a variable cost basis

rapid growth, new revenue streams,

no negative impact on equity position

N2Euro is your Business Unit in Europe

Reasons to grow a business in Europe

Source: Cal-IT / Copan Study Q2 2003

Technology Funding

Represents more then 30% of global IT market

Additional revenue growth

Facing increasing competition & globalization

New sources of funding

New partnerships

Additional R&D resources

Facilitate entry to geographically related markets• Middle East• Africa

Reasons to grow a business in Europe

Key Success Factors in Europe

Pan European Market knowledge

Products and services

Customer traction

Route to market and partnerships

Local presence

Senior management commitment

Fully Owned Subsidiary : Time, Costs & Risks

T0

Analysis Logistics Recruitment & launch Marketing&Sales

+4 +9 +24

StrategyMarketsTechnologyProducts

LegalSocialLocations

Suitable staffTargetingPartner strategySupport services

Marketing&PRSales readinessExecution

All of these stages

$ take time, $ increase overall costs,

$ take focus away from home market, $ have negative impact on net equity position

$ introduce new risk factors and uncertainty

N2Euro: Minimizing Time, Costs, Risks

T0 +3 +12

AnalysisSales & Marketing planLaunch

First european sales in key targeted accounts Development of key european partnerships Business development in Europe

Use of existing resources and presence in EuropeUse of existing Pan European staff and expertise

• Business Development• Sales• Alliances• Technical• Logistical

Use of European funding

• Products

• Market knowledge

• Presence

• Awareness

International Revenue = ƒ Main Factors

• Products

• Market knowledge

• Presence

• Awareness

• Feasibility in Europe• Homologation, pricing,

competitiveness

International Revenue = ƒ Main Factors

• Products

• Market knowledge

• Presence

• Awareness

• Specific European markets, regulations, business cultures

• Intimate knowledge of market potential, politics and players

International Revenue = ƒ Main Factors

• Products

• Market knowledge

• Presence

• Awareness

• In some cases, local presence is a go/no go factor

• Established trust relationships• Languages• Time difference• Support

International Revenue = ƒ Main Factors

• Products

• Market knowledge

• Presence

• Awareness• European and local events and

publication• In major languages• Close to the eye, close to the heart.

International Revenue = ƒ Main Factors

Solution 1 : Minority investment in subsidiary

We create your subsidiary in Europe and you ( the parent company) put up the seed money for a minority stake in the subsidiary.

A put and call option is signed between the parties in order to give the parent company the right to buy back the subsidiary in the future.

A commercial agent or distribution agreement is signed between the subsidiary and the parent.

The N2E team takes responsibility for the management of the subsidiary and the execution of the business plan.The parent company is represented on the Board of the subsidiary.

Solution 2 : No investment in subsidiary

We create a new Company in Europe and funding will be obtained from our proprietary N2E Invest vehicle

A put and call option is signed between parties in order to give the parent company the right to buy back the company in the future.

A commercial agent or distribution agreement is signed between the subsidiary and the parent.

The N2E team takes responsibility for the management of the subsidiary and the execution of the business plan.

Solution 3 : Phased investment in european company

We create your subsidiary in Europe and you ( the parent company) put up the seed money and at a later stage the total funding. The timing of this second round of funding will be function of successful sales and of execution of the business plan.

A commercial agent or distribution agreement is signed between the subsidiary and the parent.

The N2E team takes responsibility for the start-up management of the subsidiary and the execution of the business plan.Core members of the execution team of N2E are represented on the Board of the subsidiary.

Business Innovation CentresIncubators

FEASIBILITY EUROPE COMPANY SALES REVENUES BUYBACK

INCREASEVALUATION

CONSULTING & MANAGEMENT HELP

INVESTING

Business Process

STRATEGIC ALLIANCES

INVESTEuropean VC’s,

Business AngelsIncubators

Parent Company

Easy Package

Management & Team

Building A Team Of Locally Based Managers

Management & Management & TeamTeam

Building A Team Of Locally Based Managers

LogisticsProviding Easy Logistics

LogisticsLogisticsProviding Easy Logistics

Funding & Capital Access

Financing Needs & Corporate Structuring

FundingFunding & & Capital AccessCapital Access

Financing Needs & Corporate Structuring

SalesBuilding The Best Sales Channels And Achieving

Sales Growth

SalesSalesBuilding The Best Sales Channels And Achieving

Sales Growth

An Easy Package / Tool To Bring Your Com

pany From

USA

To Europe

An Easy Package / Tool To Bring YourCom

pany

Fro

m U

SA T

o E

urop

e

Business Incubation Services

TechnologyProductsServicesStrategy

You N2EuroExpertise

Creation/FundingDevelopment

Growth

Flawless execution

Case Study

Jacques PutzeysFreddy Nurski

San FranciscoMarch 1-2, 2004

US Company

VC funded Total funding of $ 20 mActivity : internet appliances for SME’s40 ISP resellersSlow growthDifficult to raise more moneyNumbers below expectations

How to achieve new growth

New distribution model ?New partners ?International expansion ?

Going international

Interest from companies in France, Portugal, Greece and GermanyHigh interest from France in pastOffer of distributors ( multi-products )Preference for own subsidiaryToo high investmentBurden on equity

Europe –how to move forward

Same distribution channels as in US ?Rather Telco’s?Alliance with new kind of partners?Best geographical location ?Preliminary market studyAdvice on best sales channelsCosts and equity investment ( at least $ 2 m)

European subsidiary with N2E

Pre-seed to fund feasibilitySeed money of $ 100,000 by US company30% ownership for US companyBuy back option of 100% within 2 yearsBoard seatBrand protectionCommercial agent agreement with parent

Seed money

Low investment for tasks executed by N2E executives :

• Creation of subsidiary• Funding of initial marketing and sales effort• Funding of offices and travel• Funding of business plan development• Initial European branding• First sales by N2E executives : success fee

First sales

Funding round in Europe with preferred VC relations of N2E and N2E InvestFees for fund raising based on successAdditional funding of € 2 MFull deployment of subsidiarySales executed by N2E executives continue on success fee basis ( € 5 m )Positive effect on consolidated P&L in US

After 2 years

US parent buys back an additional 70% of EU subsidiary from European VC’s and N2EContinuing implication of N2E on Board Gradual transfer of sales responsibilities from N2E to own staff in subsidiary

Faster to Market

A team in the field, up-and-running

- Proven and tested individuals• Typically, 40% of start-up hires do

not fulfill their expectations in the first 12 months

• Fully focused on business from day one

- Full European coverage- Existing infrastructure

Able to leverage existing channels partners & relationships- Building relationships with a large SI

with the right managers in the right verticals and region can take years,rather than months

Networked - With customers of other clients- Other technology partners for morecomprehensive solutions

Flexible & Efficient

Client company lifecycle is reflected in multiple transition options

- Transition into wholly owned operation when critical mass is reached

- Multi-year business plan can be agreed upfront

- Transition of key individuals can be part of agreement

Staff assignment can be adjusted to actual needs on short notice

- offshore project delivery capability

Flexible services portfolio- Sales, sales support, professional

services independently contractible

N2Euro Team fully identifies with client company

- Reward model aligned with client company success•Fully ”branded“appearance

Cost Effective

Economies of Scales: representing more clients at the same time

- Reduces management overhead- Increases Professional Services utilization- Allows for better arrangements with

subcontractors and external services- More efficient usage of infrastructure

and office space

Reduces large initial investment and fixed cost

- Technical and office infrastructure existing - No recruitment fees

Leverage off-shore resources- High quality customer projects or

Proof-of-concepts at very competitive prices

- Leverages costs efficiencies of offshore model

The Advantages of N2Euro

N2Euro in Brief

Offices in UK, Monaco, France, Belgium

Seasoned executives, consultants, partners

Existing infrastructure and alliances

Pan-European expertise & savoir-faire

Strong links to European financial community

Conclusion

We ensure your success in Europe via:

Time-to-market reduction

Upfront capital investment minimization

ROI maximization