James Hogan Paul McLellan DAC 2011

Is this a system or chaos? Aggregate: “… the properties of components sum to the whole ”

Expectation of Each Phase Seed – System Architecture – Marketing Specification – Proof of Concept (Core Algorithms) Round A - Validation – Build System Infrastructure (DB, UI, etc.) – Customer validation - Alpha/Technology Partners – Feature focused Round B - Production – Productization - stability – Beta customer program – Performance and usability focused Round C - Scalability – Support focused – Broader product proliferation IPO - Growth – Focus - shareholder value – Growth Revenue +20% EPS 20% – New follow on products – Global expansion

RoundTime 0 to 6 years $ Invest $ Outgoing Rev Heads R&D Heads Marketing Sales Key Hires Seed Tech Validation 0 – 18 months 500K to 1.5M 0 - 1M Min 1 Alpha Customers Less than 10 Min salary 0Architect, only R&D typically technical founders Round A Feature Validation months 2 To 5M 2-5M 2 – 3 Beta Customers CEO 1 Bus Dev 2 to 3 FAEs Round B Stability & performance 18 to 36 Months 5 To 10M 5-10M 10’s of customer logos CFO 1 VP Marketing 5 to 8 FAEs Round C Proliferation Channel 12 to 24 Months 10 To 20M 20-40M Multiple sales/year VP Sales 3 to 4 sales 10 to 20 FAEs IPO /Public Continual Growth in shareholder value 48- ongoing 0Growth of +20% Revenue & EPS 3040 to 60G&A for public company Customer Support

Nominal Return Expectations Companies Expected ROI At Exit ExitMarket Value Seed Round 100NegativeN/A$0M Round A 201:1 3:1 Asset sale Co. Sale $2-10M $ M Round B 10Negative 5:1 Asset sale Co. Sale $2-10M $50-100M Round C 5Negative 10:1 Asset Sale Co. Sale $2-10M $ M IPO 2DependsPublic$+250M

Success Attributes of Software Start-Up Enterprise Luck Raise minimum cash, a low burn – never run out of cash! Adaptable and scalable founding and executive team – Always better if the team has had prior success – Need for staying power – it might take six + years Capitalization structure allows room for qualified investors and employee stock option pool. Typical A round target ownership: – Investors 40 to 60% (preferred), typically 50% – Employee pool 15 to 25%(common), depends on the founders backgrounds, typically 20%. – Founders and seed capital 15 to 40%, typically 20 to 30%

Success Attributes of Software Start-Up Enterprise An adaptable business plan – it always changes – Doesn't use a lot of cash to get to technology and market validation Core competencies that need to be there by Round C – Market specification & solution architecture – Product specification & technical architecture – Product development – Integration & test – Packaging & field deployment Quality of the investment group that brings : – Marketing and operational expertise – A network that can help recruit and introduce to customers – An ability to funded over multiple horizons

Success Attributes of Software Start-Up Enterprise Discrete and defendable market niche – Technology discontinuity – Supply chain dis-aggregation – Fast growing segment – Market segment not adequately served A differentiated technology that has a sustainable competitive advantage – Patented where it can add value Timing – More EDA startups fail by being to early to market than too late – Old technology/methodology often lasts one more process generation than you expect – Being early by one process node is two more years of cash

Success Attributes of Software Start-Up Enterprise Attractive areas for EDA – Analysis of something that was always second-order before – The “ends”: system-level design and software, DFM and yield optimization – IP, chips are not so much designed as assembled What customers will pay for: – IP, it ends up “in” the chip so it’s mission critical – Optimization, especially power. It shows through to the end-user – Verification and other productivity tools: affects bottom line and can be quantified (ROI easy to establish) – Cheaper: not so much (“cut-rate heart surgeon”)