MARKET_CLAMP_PRESENTATION

Marketing Software Market Clamp

Market Clamp Marketing Software

Matt Marshall Founder [email protected] (651) 333-4515

Gust


Vision: Enter the Marketing Software Industry

2

RECENT INDUSTRY EXITS Sale Price Revenue Sale Date Age VC Capital Raised

Marketo 1.32 billion 75 million 8/21/2013 6 107 million

Eloqua 871 million 90 million 12/27/2012 14 41 million

Pardot 95 million 7 million 10/11/2012 6 0

The high valuations indicate high expected industry growth Industry growth = “free” sales growth

Customers are new (not taken from existing businesses)

Market Clamp will enter the industry predicted by the stock market to grow the fastest in the economy. It will sell software that manages marketing operations as a service to businesses.

Marketo is public (5/17/2013 with 65 million in sales and a 724 million valuation) Eloqua was acquired by Oracle Pardot was acquired by Salesforce.com


Opportunity = New Customers

3

Marketo Sales 75 million Industry Size 32 billion

Price to Sales Ratio 17.6

17.6x Stock Market Average Price to Sales Ratio 1

Projected Future Marketo Sales 1.32 billion Potential Industry Size 563 billion

Due to the fact that the industry is relatively new and small, limited data exists on its potential size. The only existing method of projecting the potential industry size is to calculate the sales growth baked into Marketo’s Stock and apply it to the industry.

$-

$100,000,000,000

$200,000,000,000

$300,000,000,000

$400,000,000,000

$500,000,000,000

$600,000,000,000

Now Industry Maturity

New Customers

Current Industry

531 billion


Business Model

4

Increase Sales

Market Clamp will increase companies sales and/or decrease companies

expenses to a greater extent than the corresponding operating profits lost to

the purchase of Market Clamp.

Value Proposition Market Clamp will be a business to business software as a service company. It will sell its

software, like a service, to businesses.

Decrease Expenses

MARKETO BUSINESS MODEL

Average Amount Paid to Distribution Partner per Customer $ 14,479

Average Annual Sales Per Customer $ 27,989

Marketo Price to Sales Ratio 17.6

Value per Customer $ 492,609

ROI on Distribution Partners 34

Market Clamp will purchase customers (through distribution partners), obtain significant sales then

sell the company. Customers will cost around $15,000 and have a value of $400,000 to

$500,000.


Magic – Why the business will succeed

5

The business is likely to succeed because it is entering the right industry.

Characteristics of the industry include: Rapid growth Large potential size High Valuations Fragmentation Early in the product lifecycle indicating a long period of growth and sustained high valuations

Known Competitors Sales Growth

MARKETO 2009 2010 2011 2012 ELOQUA 2009 2010 2011 Sales $4,478,000 $14,032,000 $32,392,000 $58,413,000 $40,958,000 $50,799,000 $71,348,000 % Growth 213% 131% 80% 24% 40%


Financial Projections

6

MARKETO 2009 2010 2011 2012 ELOQUA 2009 2010 2011

Subscription & Support (% of Sales) 48% 33% 29% 28% 16% 19% 17%

Professional Services 0% 18% 17% 14% 13% 14% 15%

Sales & Marketing 110% 79% 71% 65% 42% 44% 41%

General & Administrative 27% 15% 19% 19% 18% 16% 17%

Research & Development 57% 39% 33% 32% 21% 20% 16%

Operating Margin -142% -84% -69% -59% -10% -12% -7%

AVERAGES

Subscription & Support (% of Sales) 27%

Professional Services 13%

Sales & Marketing 65%

General & Administrative 19%

Research & Development 31%

Operating Margin -55%

Sales projections assume year one sales of three million that double annually Market Clamp will not conduct R&D Market Clamp projects three rounds of financing Averages are used for projections

MARKET CLAMP PROJECTED Year 1 Year 2 Year 3 Year 4 Year 5 Sales $ 3,000,000 $ 6,000,000 $ 12,000,000 $ 25,000,000 $ 50,000,000 Subscription & Support $ 809,685 $ 1,619,371 $ 3,238,741 $ 6,747,378 $ 13,494,755 Professional Services $ 391,322 $ 782,644 $ 1,565,288 $ 3,261,016 $ 6,522,031 Sales & Marketing $ 1,935,321 $ 3,870,641 $ 7,741,283 $ 16,127,673 $ 32,255,346 General & Administrative $ 941,008 $ 1,882,016 $ 3,764,033 $ 7,841,735 $ 15,683,470 Operating Loss $ (1,077,336) $ (2,154,672) $ (4,309,345) $ (8,977,802) $ (17,955,603) Total Operating Loss $ (1,077,336) $ (3,232,009) $ (7,541,353) $ (16,519,155) $ (34,474,758) Operating Margin -36% -36% -36% -36% -36%


Competition

7

Cloud Based Competitors Monthly Fee Owned By Marketo $1,195 to $3,195 Public Eloqua $2,000 to $4,000 Oracle Partdot $1,000 to $3,000 Salesforce.com HubSpot $200 to $1,000 Act-On $500

Database Competitors Monthly Fee Owned By Aprimo Customized & Expensive Teradata SAS Institute Customized & Expensive Unica Customized & Expensive IBM

$1,995

$4,000

$2,000

$600 $500

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

Most Popular Package Monthly

Fee

Every competitor charges for the storage of contacts or records in addition to the monthly fee. A contact/record is any information about someone such as a name, email address, phone number, etc.

Marketo Standard Package Fees by Number of Contacts # Contacts < 10k 10k-30k 30k-100k 100k-250k 250k-500k Price $ 1,995 $ 2,995 $ 3,995 $ 5,395 $ 7,195

Marketo had 2,300 customers at the time of its IPO on 5/17/2013. Marketo’s estimated sales at this time were 65 million. Marketo’s average customer spent $2,300 monthly or $28,000 annually.

Traditional database software marketing companies are an indirect potential source of competition


Sales & Marketing

8

Marketo's Top Distribution Partners Market Clamp's Leading Distribution Partner Prospects

Capgemini CDW

Century Link Dell

Citrix En Pointe Technologies

Gannett ePlus

General Electric Insight

Medtronic SHI International

Moody’s Softchoice

Panasonic

Symantec

Universal Music Group

Marketo primarily sells its software through distribution partners. Eloqua primarily sells its software through a direct sales force (91% of 2011 revenue). Selling software through distribution partners allows for faster sales growth. Selling software through a direct sales force allows for lower costs. Market Clamp will primarily sell its software through distribution partners to maximize sales in minimal time. This strategy will is more likely to produce a quick exit maximizing investor IRR. Marketo pays an estimated average 52% of sales to distribution partners. Marketo and Market Clamp will purchase customers.

Market Clamp has chosen to raise capital then find its first distribution partner sales manager. The purpose of this is to use investor resources (connections, collaboration, possible head hunter) to help find Market Clamp’s first salesperson.


Use of Funds

9

Timeline

Capital at High Risk

STARTUP EXPENSES

Two Year Operating Loss $ 3,232,009 See slide 7 – Financial Projections

Software Subscriptions $ 122,340 Marketo, Eloqua & Pardot for one year (minimum term)

Development Phase $ 77,660 Software Copyright Attorney, Payroll, Office and Equipment

Total Capital Needed $ 3,500,000

3 months 2 Years Software Development Phase Launch Market Clamp

CAPITAL AT HIGH RISK

3 Month Development Phase $ 200,000 Marketo, Eloqua and Pardot Subscriptions ($122,340), Software Copyright Attorney, Founder and Software Developer

Payroll $ 300,000 Two Years Salary for Salesperson, Founder and Software Developer

Total $500,000 The Decision to Continue is up to the Investors.


Valuation

10

Exit The exits of Marketo, Eloqua and Pardot were examined in the Vision section. Marketo, the public company, has the highest valuation. Therefore, going public is the preferred exit option. Marketo had 58 million in sales when it conducted its IPO. If Market Clamp can reach sales of 50 million within five years and Marketo’s valuation has not decreased, an IPO would likely yield shareholders the highest valuation. However, shareholders may sell Market Clamp at anytime for a favorable valuation. The industry’s M&A market is active.

PROJECTED VALUATION Year 1 Year 2 Year 3 Year 4 Year 5

Revenue $ 3,000,000 $ 6,000,000 $ 12,000,000 $ 25,000,000 $ 50,000,000

# Customers 107 214 429 893 1786

Valuation $ 52,800,000 $ 105,600,000 $ 211,200,000 $ 440,000,000 $ 880,000,000

Revenue projections double annually with year one revenues of three million. Valuations are sales multiplied by Marketo’s price to sales ratio of 17.6. All industry participants have large operating losses.


Summary

11

64

8 2

0

10

20

30

40

50

60

70

First Round Second Round Third Round

ROI

Round of Financing Beginning of Year Capital Needed First 1 $ 3,500,000 Second 3 $ 10,000,000 Third 4.5 $ 21,500,000

EQUITY AT EXIT Round 1 Round 2 Round 3 Exit Value Founder 70% 63% 60% $ 526,680,000 First Round 30% 27% 26% $ 225,720,000 Second Round 10% 10% $ 83,600,000 Third Round 5% $ 44,000,000

Dilution projections assume Market Clamp can raise ten million dollars for 10% and twenty million for 5%. Exit Values, ROI and IRR assume a year five exit of $880,000,000.

Market Clamp assumes it will acquire 34.5 million in operating losses over five years and $500,000 in software development costs.

130%

103%

43%

0%

20%

40%

60%

80%

100%

120%

140%

First Round Second Round Third Round

IRR


End User License Agreements

12

Market Clamp will design software based on Marketo’s and Eloqua’s form 424B4 documents and websites. Then enter into contracts with Marketo, Eloqua and Pardot stating they own any derivatives or improvements to their software. Then improve Market Clamp’s software based on Marketo’s, Eloqua’s and Pardot’s software. The contracts are called end user license agreements. No court has ruled on the validity of end user license agreements generally or pertaining to Market Clamp’s future actions. Other specific rulings to end user license agreements are mixed by different federal appeal courts. Functions used by two or more companies do not breach the contract. Market Clamp is improving its existing software as opposed to making derivatives or improvements to competitor’s software. However, investors’ should be aware of possible breach of contract lawsuits.

Software Copyrights Software copyright law is extremely unclear. The primary test is called the abstract filtration comparison test. It compares the elements of software at increasing levels of abstraction. Market Clamp will retain a software copyright lawyer during its development phase to ensure Market Clamp’s software will hold up to a copyright infringement lawsuit. Software copyright attorneys will be continually consulted as competitors make improvements to their software and Market Clamp makes corresponding improvements.

The Industry & Intellectual Property The following is taken from Marketo’s form 424B4. “From time to time, third parties, including certain of these leading companies, have asserted patent, copyright, trademark, trade secret and other intellectual property rights within the industry. Any of these third parties might make a claim of infringement against us at any time.”

Documents

MARKET_CLAMP_PRESENTATION