Tech Trends, Unicorns and Clustersebanmalaga2017.com/wp-content/uploads/2017/06/EBAN...8 Confidential E-sports is becoming $1bn industry with the rise of gaming groups and contests

GP.Bullhound

Tech Trends, Unicorns

and Clusters

7 June 2017

Strictly private and confidential

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# Tech

Cos.

The rise of technology

Source: Capital IQ, Financial Times Global 500

1996 2001 2006 2011 2017

0 2 1 3 5

0

5

10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36

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Number of years to become a billion dollar revenue company

$bn

5years

35 years

15 years

5 years

8 years

Disruption is increasing in velocity and magnitude

Confidential

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A Recap of GP Bullhound’s 2017 Predictions

1. THE NEXT GENERATION OFArtificial Intelligence

2. CORDLESS CONTENTAnywhere and Everywhere

4. THE DAWN OFV R / A R Content

3. E-SPORTS TAKESCenter Stage

10. YEAR OF THEEuropean Decacorn

8. SaaS SOFTWAREReigning Supreme

5. DRIVERLESS CARS STILLRequire H u m a n Direction

6. FINTECHShifting Tectonic Plates

9. TECH IPOS SETFor Take Off

7. SOCIAL MEDIATransformation

1 THE NEXT GENERATION OF ARTIFICIAL INTELLIGENCE

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Confidential

2016 posted record levels of investment in the industry

» 635 deals totaling $4.9bn led by Khosla Ventures, Intel, Google, a16z and NEA

» 40+ AI acquisitions in 2016, led by Google, Apple, Intel, Salesforce, Microsoft and Samsung

AI pioneers help enterprises reduce costs and optimize data analysis

» Starts at non-core administrative tasks and services before moving to CRM and marketing

» Disruptive AI developers Cylance, iCarbonX and Sentient have raised over $500m in total

AI-powered Virtual Personal Assistants (“VPA”) will increase in sophistication

» Tech giants continue to develop VPAs, such as Siri, Cortana, Alexa and Google Now

» Innovation in VPA will be driven by third-party developers

THE NEXT GENERATION OF ARTIFICIAL INTELLIGENCE1

E-SPORTS TAKES CENTER STAGE3

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Confidential

E-sports is becoming $1bn industry with the rise of gaming groups and contests

» Grew at 50%+ CAGR from 2014-2016, with 250m+ followers and $493m revenue in 2016

» 112 major e-sports events globally in 2015, $21m+ in ticket sales and $61m in prize money

» 36m viewers for the 2015 League of Legends Final vs. 30.8m for game 7 of 2016 NBA Final

Millennials are the most important generation for the growth of e-sports

» Millennials make up 53% of e-sports fans, the highest concentration of any sport supporters

» Major tech and media companies are looking to connect with their millennial audience

E-sports is expanding into mobile gaming

» Super Evil Megacorp, Twitch and Supercell hosted a Clash Royale tournament in Helsinki

Significant investment expected to flow into the industry

» Media groups attracted to the vast advertising and sponsorship opportunities

» Corporate and financial investors seeking the next blockbuster game

E-SPORTS TAKES CENTER STAGE3

DRIVERLESS CARS STILL REQUIRE HUMAN ATTENTION5

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Confidential

By 2035, 12m+ driverless cars will be sold yearly as the industry grows to $77bn

» Autonomous cars can solve safety and efficiency issues in transportation

» Human errors alone account for approximately 1.3m fatalities and 50m causalities a year

» Uber tested driverless car in Pittsburgh and Tesla sold cars with autopilot technology

Tech players & carmakers explore self-driving tech via Invts, P'ships and R&D

» Samsung acquired Harman for $8bn

» Volvo and Uber agreed to develop hardware and software for self-driving cars

» Toyota and General Motors have invested in Uber and Lyft, respectively

Fully autonomous cars have a long way to go before widespread adoption

» Tech at a nascent stage, with technological, safety, security, insurance & regulatory issues

» The biggest obstacle that driverless cars face is the need for regulatory clarification

» Adoption will be determined by customer acceptance vs. the pace of tech development

DRIVERLESS CARS STILL REQUIRE HUMAN ATTENTION5

SOCIAL MEDIA TRANSFORMATION7

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Confidential

Western social media players dominate technological innovation

» Globally social networks have demonstrated a clear shift from desktop to mobile

» Race for innovation driven by high smartphone & internet usage and fierce competition

» Asia presents a huge opportunity as its smartphone ownership & internet accessibility climb

Asian players have developed an edge on user retention and monetization

» Monetized quicker than Western players due to less competition & low innovation pressure

» Pioneered the model of messaging app as a gateway to all consumer services

» Actively acquiring tech-oriented firms in the US and EU to strengthen their Int'l. position

Expect Western and Asian social media giants to offer vastly similar features

» Asian platforms continue to pursue cross-border M&A for Western expansion

» Western platforms integrate value added services into their existing products

» Chatbot is expected to play a key differentiating role in the future battle for user control

SOCIAL MEDIA TRANSFORMATION7

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The increasingly crowded Unicorn club

Source: CBInsights – Private Unicorns since 2011

Date of $1bn Valuation

UNICORN

HUNTING PERMIT

MUST CHECK SPECIMEN FOR SLOWING GROWTH

RATES, WEAK FUNDAMENTALS, AND HIGH CASH BURNS

SEASON

START

2016

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Unicorn hunting season – justified?

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European Unicorns make money…

Source: Company data, Capital IQ, Mergermarket, press articles, GP Bullhound analysis as at April 2016

Note: CAGR is calculated based on data available, the amount of years taken into account varies across data set; (1) % of sample, sample includes 37 of the 47 companies; (2) company profitability based of EBITDA

» Unprofitable Unicorns

sacrifice profit for

growth

» Average CAGR for

unprofitable Unicorns

141% vs 49% for

profitable Unicorns

» Unprofitable companies

are on average 4 years

younger

(2)

(2)

(2)

(2)(2)

(2)

(2)

60%of unicornsare profitable(1)

PROFITABLE UNICORNS UNPROFITABLE UNICORNS

40%of unicorns

are unprofitable(1)

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Unicorns are being built everywhere


» 10 new Unicorns spread across 7 different countries; US created 30

» Denmark and Switzerland created their first Unicorn

EUROPE US

SWEDEN

LUXEMBOURG

DENMARK

SWITZERLAND

ISRAEL

GERMANY

UK

30

10

18

Country

Cumulative

Value$39.6bn $31.1bn $20.8bn $4.7bn $7.2bn $3.4bn $9.3bn $8.0bn $4.0bn $2.3bn $1.6bn $1.1bn $1.1bn $1.0bn

No. of

Unicorns18 7 6 4 3 3 2 2 1 1 1 1 1 1

LTM

Additions2 1 2 1 0 2 0 0 0 0 0 1 1 1

Which country is the Unicorn champ?


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European Unicorns maturing to decacorns?


$1bn - $2bn

$2bn - $5bn

>$5bn

2015 2016

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Educating investors and market

Key value drivers of Unicorns


Network Effect Uber – Free Rides / Blitz on SF

Fintech – P2P to I2P – loss of 50% of network effect ?

Decisiveness

Data, Data, Data Uber, Avito, Delivery hero

Hiring Obsess about star talent – no boundaries – Bla Bla – US

Hyper growth – take 6 month view

Acquisitions Just Eat, Delivery Hero, Bla Bla Car

Dropbox, Airbnb

Attack core weakness Farfetch - stock risk and multi channel opportunity vs Netaporter

King.com – Switch off old revenue (60m) to create social games

60m lost – replaced with 190m 1 year later

Access to Capital ABC

Foster understanding of fast-growth businesses – Hello Fresh

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Mega-successful Founders 22

Listed Leaders 23

Savvy Sellers 24

+ paragraph

Fast Followers 25

` `

`

` ``

` `

`

Local Dragons 26

Local Dragons – Angels / city 27

2,125

420383

325270 250

196168 161 153 147 130 124

050

100150200250300350400450500

#

Skilled Scientists 28

Electro Men 29

People Mashups 30

Transport 31

Barmen and Baristas 32

Dynamic Talent 33

Our next challenge...

Cumulative value of European unicorns ($bn)

Source: Company data, Capital IQ, Mergermarket, press articles, GP Bullhound analysis.

Note: valuations as of June 2017 34

815

451

116

6331 24

Apple Facebook Europe Uber Airbnb Snap

LONDONtel. +44 207 101 7560

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London, SW1Y 6LX

United Kingdom

SAN FRANCISCOtel. +1 415 986 0191

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USA

STOCKHOLMtel. +46 8 545 074 14

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Sweden

BERLINtel. +49 30 610 80 600

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Berlin, 101 17

Germany

PARIStel. +33 1 82 88 43 40

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France

MANCHESTERtel. +44 161 413 5030

1 New York Street

Manchester, M1 4HD

United Kingdom

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Tech Trends, Unicorns and Clustersebanmalaga2017.com/wp-content/uploads/2017/06/EBAN...8 Confidential E-sports is becoming $1bn industry with the rise of gaming groups and contests