FEBRUARY 25, 2014 © Emergence Confidential SEAN JACOBSOHN | VENTURE

15 years in business cloud: Cornerstone OnDemand (VP Channel Management) Joined at $7M revenue, now $300M revenue & $3B public company WageWorks (VP Sales & Partner Development) Joined at $3M revenue, now $250M revenue & $2B public company Elance (merged with oDesk) Joined at $0 revenue, now $100M revenue Hightail (VP Worldwide Alliances) Emergence Capital portfolio company formerly known as YouSendIt Joined Emergence as Venture Partner Sourcing business cloud startups for $250M fund Work closely with portfolio companies Navera, Intacct, InsideView About Me

Emergence Capital Partners Leading early stage Silicon Valley VC in SaaS and cloud-based services  100% focused on cloud software for business users, including software-as-a-service “SaaS,” mobile and information services.  $575 million under management across 3 funds Building market leaders  First investment: Salesforce.com (market cap today: $36 billion)  SuccessFactors- IPO in 2007, acquired by SAP for $3.4 billion  Yammer – acquired by Microsoft for $1.2 billion  EchoSign – purchased by Adobe  Veeva – IPO (VEEV) in October 2013 (market cap today: $4 billion)  And Box, Lithium, InsideView, Hightail, Intacct, ServiceMax, Doximity, Insightly and many more for

An Inside Look at VC Pipeline Analysis Valuation VC “Value Add”

VC Math InvestmentTotal Value 3 Total Loss $ 15 $ 0 3 Return Investment (1x)$ 15$ 15 3 Sell for profit (4x)$ 15$ 60 1 Home run (10x)$ 5$ 50 $50 $ 125 Typical Results – 10 Investments We are wrong 60% of the time!

Companies 1200 review materials 500face-to-face meetings 40% 50due diligencex 10% 10investmentsx 20% < 1.0% Typical Pipeline for 10 investments VC Math

Examples of 1200 Leads Not competitive with any portfolio company Not leveraging a connection for an introduction Compelling concise elevator pitch Not reading our firm’s website to see our focus area Strong founderNot looking at my LinkedIn bio; call me wrong name

Examples of 500 Meetings Demonstrated product/ market fit; outside testing phase Solves an important problem outside Silicon Valley Well versed on market/competition Don’t know actual numbers or metrics well Not sure how to get to $1M, but expect $50M in 5 years Not strong technical team

Examples of 50 Due Diligence 100%+ annual growth in revenue Positive customer references Positive team references High churn Not met projections from prior meeting Concentration of customer base

Examples of 10 Investments Efficient customer acquisition Strong team, where people followed CEO Strategic to VC Portfolio Market size ($300M vs. $1B) Burn rate (need to raise too soon) Valuation too high

Valuation – Mix of Art & Science

Market Potential to emerge as market leader Hyper growth Replacement market Passionate customers New market High churn

Future Fundraising Needs Capital efficiency 1.5-2X valuation reasonable for next round Risk of down round on morale Focused on % of pie vs. size of pie

Team This is the team who will win the market and hire the best team Strong domain and technical experience of early team No proximity key talent

Comparable Transactions Buyers pay higher multiples on deals below $50M Comparable public companies who are trading at high multiples Proximity of potential acquirers Private transactions above $100M where company didn’t have an option to go public Most startups get one offer

What to Expect from VC Unpacking “VC Value Add” Talent Customer intros Best practices Metrics Good board management Sounding board

QUESTIONS?