NanoGene Case Study By MTiPO: Desiree Fabunan Yee Han Kuan Svyatoslav Mishchenko Patrick Lin Ngai Lung Wenhan Zhou

Decision Decision Assumptions: Hire Paige Miller as CEO Make Will Tompkins Chief Scientific Officer Assumptions: We want to maximize the strength of the company and the team Paige will accept more responsibilities in exchange for a lot of equity Tompkins will accept relinquishing some of his responsibilities as CEO Co-founders will accept Paige’s leadership Problem: Facebook Growth/Expansion Strategy   Proposed Solutions: - To grow internationally, expanding its user base & to gain foothold in other countries on top of those existing countries. - To open up different categories other than college & high school to boost up its user base in US. - To partner local advertising companies in countries with strong facebook foothold to increase the company revenue. Assumptions: - Establishing a larger user’s base is a higher priority than compared to increasing revenue. - There is significant number of countries which Facebook has a very little penetration with a very small user’s base. Facebook has the ability to expand & customize its website with local language – localization. (http://www.insidefacebook.com/2007/08/06/coming-soon-facebook-in-your-language/) The business can grow virally in a real life social network if it has critical mass (http://weblogs.hitwise.com/to-go-ap/2007/05/facebook_doubles_its_popluarit.html & http://weblogs.hitwise.com/to-go-ap/2007/07/facebook_increasingly_popular.html)

SWOT Analysis Strengths Weaknesses Opportunities Threats Industry experience Experience in diverse roles Experience in later stages of a company (pre-IPO to post-IPO) Weaknesses Never held CEO role No experience raising funds or writing business plans Potential conflict of interest if she consults other startups Opportunities Exploit knowledge of successful pre-IPO firm to make changes Allow Tomkins to avoid dealing with hiring and culture Boost strength of team in VC’s eyes to get higher valuation Threats May turn out to be a poor CEO Co-founders will not recognize her as hew leader VC’s will not like outsider’s leadership How strong a candidate is Paige Miller?   What makes you think so? She has industry knowledge and experience with bio tech startup She has experience in many areas of a company Mainly manufacturing With some experience in marketing and finance Experience in many stages that a startup goes through from Pre IPO to acquisition Consulting provides experience for the industry   Weakness She has never been a CEO before She has not raised funding She has not talked to VC No biz plan writing experience Might be a conflict of interest since she consults for biotech startup

Compensation Details Compensation: Motivation Signals to Paige $175,000 yearly 7.81% post-series A equity (3.15% times 2.5), vested at: 20% at start, 20% at year’s end, 60% at 2% per month Motivation Keeping her responsible by giving ownership of the company Rewards (equity value) based on effort Vesting with milestones so that things get done Signals to Paige Her contribution and value to the company are important She has a lot of responsibility and power in the company Company did its best to provide a fair package given means What compensation package will you offer to Paige Miller? 175K yearly with 7.81% of post series A equity with vesting over 20 % at start, 20 % at end of year 1, 60 % at rate of 2% per month CEO Structure How does a compensation package motivate an executive?  Keeping her responsible and instill a sense of ownership in the company. Incentive to put in a lot more effort with rewards Vesting with milestones so that things get done.   What signals do you want to send Paige with her offer?   Her contribution and value to the company is important She has a lot of responsibility and power in the company The company tries to provide a fair package to her based on the company’s ability

New Capitalization Table 5

Reality Test Risk Mitigation Strategy Contingency Plan Severity Probability Team Co-founders are unhappy with CEO with more money and equity Explain industry standards for CEO’s and motivations for hiring Paige as CEO Increase co-founders’ compensation High Low Performance Paige performs poorly with extensive responsibilities as CEO Clearly outline goals and responsibilities and adopt to difficulties Find another CEO with Tomkins as interim Medium Financial VC’s pull funding due to non-compliance with suggestion to lower compensation for founders Explain to VC’s reasoning behind current compensation and difficulties in lowering compensation Find a new VC What are the risks of this offer once you implement it?   CEO’s performance is unknown Med, high Find another CEO with Tom as interim CEO Happiness of founders and VCs with the offer Founders: less control and less money, equity than them low, high up the compensation plan VC: pull out their offer because of over compensation of salary for founders Low, medium Find new VCs Lower the salary for founders How will Paige, the VCs, the Board of Directors, and your co-founders react to your offer?  Piage: Happy but she might be happy with the extra equity. This can be good challenge for her VC: Might not be happy with higher valuation. Need to do due diligence on her again. More confidence in the team as Paige has biz experience Angel Should be ok as this is a good addition to the team which will increase the chances of success Co founders: surprise and concern over control of company since more equity given to Paige Understanding as CEO has higher equity with higher responsibility Might be unhappy with equity share that page gets Can set a vesting schedule for paige to get the 7.8 %