<p>GP Bullhound Technology Predictions 2016 January 21st 2016 DESIGNIT WIPRO Sold to €85 million PRODIGY FINANCE BALDERTON, CREDIT SUISSE, DEUTSCHE BANK Expansion raise $123.5 million SIGNAVIO SUMMIT PARTNERS Private Placement €31 million ESSENCE WPP Sold to Undisclosed MOBICA INFLEXION Private Placement $82.9 million GLISPA MARKET TECH Sale of majority stake $67.3 million SEREN EY Sold to $43.3 million BRIDGEPOINT MVF Private Placement $60 million 27 Successful Transactions Completed in 2015 Our Northern Transactions 2015 Mobica INFLEXION PRIVATE EQUITY Private Placement RealityMine Private Placement KENNET Loqate Sold to GB GROUP PLC Coming Up in 2016 And more successful transactions… Northern Tech Awards Digital Healthcare Roundtable March April Recap of GP Bullhound’s 2015 Predictions End-To-End Service Disruption Goes Beyond Uber & AirBnB The Wave of Technology & Product Exits Will be Strong in 2015 Comprehensive Cybersecurity Protection Will Become the Norm Internet of Things to Move from Smart to Intelligent Major Landscape Changes in the World of Payments 3D Printing Moves from Prototyping to End-Products New Media Outlets Taking Off Returned Focus on Customer Long-Term Value in Mobile Gaming SaaS Adoption Permeates Throughout the Enterprise Continued Emergence of One-Stop Shops in Ad-Tech 1 2 3 4 5 6 7 8 9 10 P P P P P P P P 2016 Virtual Reality Becomes Reality 1 Virtual Reality Becomes Reality 1 • Virtual reality headsets launching to consumers in 2016 – Facebook Oculus Rift, Sony PlayStation VR, HTC Vive/Steam VR • Potentially revolutionize wide array of industries – media, sports, gaming, entertainment, education, etc. – pegged to be $150bn market – Gaming and media sectors will be first to capitalize • Massive opportunity on software and content side of virtual reality – Large investments taking place – Magic Leap ($800M+), Jaunt ($67M) • Still missing “must have” element to make it truly mainstream Northern companies Virtual Reality Becomes Reality 1 It won’t be long before Hugh has bought one! “Quantified Self” Transitions from Niche to Mainstream 2 “Quantified Self” Transitions from Niche to Mainstream 2 • “Quantified Self” movement gaining momentum from two primary tailwinds – Rise of mobile devices, social media, and big data (HOW) – Increasing societal consciousness towards health and wellness (WHY) • First serious wave of consolidation in digital fitness and wearables in 2015 – Endomondo ($85M) and MyFitnessPal ($475M) acquired by Under Armour – Runtastic ($246M) acquired by Adidas – Misfit ($260M) acquired by Fossil Group • Expect to see major sports apparel triumvirate of Nike, Under Armour, and Adidas to leverage marketing clout to push digital fitness further • Next evolution of wearables is to get them woven into everyday fashion Northern companies Automotive Industry Ripe for Innovation 3 Automotive Industry Ripe for Innovation 3 • Automotive industry serves as next frontier for innovation • Connected car features will become major consideration in consumer purchases and help drive new car sales • Connected car operating system software to be dominated by third party tech players, led by Apple CarPlay and Google Android Auto • Traditional auto component manufacturers – Bosch, Harman, and Visteon – will also continue to develop solutions to innovate and reimagine driving experience • Expect to see consolidation as smaller software players are acquired by larger companies looking to continue to build out their respective connected car offerings Northern companies Alternative Lending Continues to Shine Brightly in Fintech Sector 4 Alternative Lending Continues to Shine Brightly in Fintech Sector 4 • Massive investment into alternative lending companies in 2015 • Streamlining antiquated and complex lending process – long overdue for innovation • Multiple lending verticals – student, auto, mortgage, business, personal – collectively form trillion dollar plus market opportunity • Traditional banks getting nervous about success of alternative lending will start to partner with emerging platforms or potentially acquire • Still some concerns – new regulatory burdens, performance in a recession, operational trustworthiness Northern companies Gaming Giants Fortify Positions in Top Grossing Charts 5 Gaming Giants Fortify Positions in Top Grossing Charts 5 • Mobile becoming priority – traditional publishers finally starting to relent − Activision Blizzard acquired King Digital ($5.9bn) − Nintendo partnered with DeNA for new mobile games (Nintendo’s stock jumped 36% after announcement) • Top 15 grossing mobile gaming titles owned by small group of players – Owned 80% of top 15 grossing titles in 2015 − Supercell, King Digital, MachineZone, Kabam, Playtika, EA, Big Fish Games, Glu • Top gaming consolidators currently own more than 93% of top 30 grossing titles and nearly 70% of top 100 grossing titles • Any independent gaming players left in top grossing charts most likely target for acquisition or investment Northern companies Digital Video Becomes More Measured to Keep Growing Up 6 Digital Video Becomes More Measured to Keep Growing Up 6 • Digital video now 64% of all consumer internet traffic worldwide − In 2015, first time U.S. adults spent more time with digital video (1.9 hours) than social media (1.7 hours) daily • Already witnessed two major waves of consolidation in past decade − Video Anchor Platforms – YouTube, Maker Studios, Ooyala, Dailymotion, etc. − Video Ad Tech Platforms – Unruly, mDialog, LiveRail, Brightroll, etc. • Next wave most likely to acquire strategic assets and teams to help with analytics and measurement to keep bolstering video platforms • Digital video ad spend has yet to shift proportionately to match demand − Brands and marketers still weary of measuring audiences and campaigns on video, desiring more sophisticated tools (“total video views” won’t cut it) Northern companies “Deskless” Workers Come to Forefront in Enterprise Mobility Shift 7 “Deskless” Workers Come to Forefront in Enterprise Mobility Shift 7 • First SaaS, Bring Your Own Device (BYOD)… next enterprise shift is towards mobile − Majority of workforce now tech savvy Millennials expecting ability to access and to act upon critical business information from anywhere • New generation of enterprise mobile app companies emerging − Strong focus in creating apps with simple and intuitive interfaces to help foster increased collaboration, flexibility, and productivity • Tremendous opportunity to create apps geared towards “deskless” workers − 80% of global workforce (3 billion) is deskless – healthcare, construction, farming, field services, etc. • Winners will be those executing with top notch mobile development prowess and deep domain expertise in the specific verticals they seek to address Northern companies Cybersecurity Continues Soul Searching 8 Cybersecurity Continues Soul Searching 8 • High-profile security breaches unfortunately continued in 2015 e.g. Ashley Madison • Dedicated chief information security officers (CISOs) and significant security budgets becoming absolutely essential within enterprise • Urgency behind prevention coming from the Board as careers threatened by damaging attacks • Cybersecurity protection not an exact science – need talent & software • Cybersecurity funding very hot right now – may see some burnout in 2016 with the smaller players getting acquired Northern companies Drones Will Fly Into Headwinds of Uncertainty 9 Drones Will Fly Into Headwinds of Uncertainty 9 • 4.3 million consumer drones shipped in 2015 (167% increase from 2014) – 181,000+ drone users registered with Federal Aviation Administration (FAA) • DJI – world’s largest drone manufacturer – reportedly valued at $8bn • Current focus on use cases around autonomous delivery and consumer use – Applicability to other potential use cases in film, telecom, agriculture, and many other industries make research pundits wonder how big market truly is • Uncertainty of drones primarily around laws and regulation – FAA looking to establish rules for commercial drone use this year – Concerns about “rogue” drone users, and increasing cases of incidents – Environmental, safety, and privacy issues yet to be fully understood • Technology in drones still surprisingly immature – limited battery life, durability issues, connectivity issues Northern companies Drones Will Fly Into Headwinds of Uncertainty 9 Unicorn Hunting Now in Season UNICORN HUNTING PERMIT MUST CHECK SPECIMEN FOR SLOWING GROWTH RATES, WEAK FUNDAMENTALS AND HIGH CASH BURNS SEASON START 2016 10 Unicorn Hunting Now in Season 10 • Currently 140+ private unicorns in existence – 54 created in 2015 alone! • Shaky IPO market – Square, Box, Etsy – all trading below IPO prices • First visible strains of unicorn valuations in 2015 – Fidelity marked down 25% • Most would-be acquirers or secondary buyers may now find it tough to justify price expectations of unicorns • Challenging near-term exit environment will expose weaknesses of many tech unicorns – slowing growth, weak fundamentals & high cash burns • The US are more exposed to the potential for downward valuations than Europe A Recap of GP Bullhound’s 2016 Predictions 29 “Quantified Self” Transitions from Niche to Mainstream Unicorn Hunting Now in Season Automotive Industry Ripe for Innovation Virtual Reality Becomes Reality Drones Will Fly Into Headwinds of Uncertainty Cybersecurity Continues Soul Searching Digital Video Becomes More Measured to Keep Growing Up Alternative Lending Continues to Shine Brightly in Fintech Sector “Deskless” Workers Come to Forefront in Enterprise Mobility Shift Gaming Giants Fortify Positions in Top Grossing Charts 1 2 3 4 5 6 7 8 9 10 LONDON SAN FRANCISCO STOCKHOLM BERLIN MANCHESTER tel. +44 207 101 7560 52 Jermyn Street London, SW1Y 6LX United Kingdom tel. +1 415 986 0191 One Maritime Plaza Suite 1620 San Francisco, CA 94111 USA tel. +46 8 545 074 14 Birger Jarlsgatan 5 Stockholm, 111 45 Sweden tel. +49 30 610 80 600 Oberwallstrasse 20 Berlin, 101 17 Germany tel. +44 161 667 2290 1 New York Street Manchester, M1 4HD United Kingdom </p>