Transcript COMPANY NAME HERE

Growth Strategies in a Tough Economy
Venture Association of New Jersey
February 17, 2009
Chris Sugden, Managing Partner
Chris Sugden, Managing Partner
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7 years with Edison
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Entrepreneur previously – “walked the walk”
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25 financings
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16 initial investments
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Past Director of 15 companies
 8 Currently
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Fintech and E-Commerce
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NY/NJ Region
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Lead investor/advisor
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About Edison
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Founded 1986, honoring America’s greatest inventor
and entrepreneur
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11 investment professionals
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20 specialists in origination, diligence, tracking & exits
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5 offices: NJ, NY, MA, PA and VA
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6 partnerships totaling $650M

166 investments, 102 exits
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59 active portfolio companies
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Consistent 3+X fund returns
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Typical Edison Company Profile
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$5-20M Revenue
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Early Leader in Emerging Market
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Incomplete Management
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Insufficient Sales and Marketing
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Lack Equity, Bank and other Financing Sources
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Accelerate Growth: 30-60%
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Potential 15+% EBITDA Margin
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Edison’s Active Role in Portfolio

Sole/lead investor: largest shareholder
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Source additional financing: next equity round,
bank, leasing, etc.
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Principal business advisor
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Referrals of employees, distributors, vendors,
partners and customers
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Organize and guide Board of Directors
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Prepare for optimal exit
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Flexible Uses of Capital
Expansion Capital
Secondary Stock Purchases: Existing Shareholder Liquidity
Management Buyouts
Recapitalizations
Late
stage
 Corporate Spinouts
 Rollups/Consolidations
Flexible structure:
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Early
economics
stage
Focus on
vs. control
Participating preferred
Convertible preferred
Common stock
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Market Specialties: 10+ Edison Investments

Financial Technology
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Pharma and Healthcare Business Services
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Interactive Marketing
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Communications & Enabling Technology
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Education
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Business Services and E-commerce
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Customer Relationship Management
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Supply Chain and Logistics
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Human Resources and Payroll
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Government
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Low Capital Intensive Business
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Previously self-financing
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<$10M financing round
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Valuation discipline
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Build business over 3-7 years
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Low/optional follow-on requirement
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Debt financing for working capital
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Consistent Returns
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Successful on 1-3X revenue exit
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Sell company to Fortune 2000
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Reaching $30+M revenue yields 3-5X
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$100M revenue generates 10+X return

3-5 big winners per Edison partnership
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“10+X Return Model”
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Increase size of business
 40% growth over 5 years
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5X
Increase valuation multiple
 Invest at 1.5X revenue
2X
 Sell company at 3.0X revenue
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Current model challenged by slowing growth,
lengthening exit timetable and sharply reduced
revenue multiples
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Current Exit Liquidity Challenges
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IPOs shut off
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Public comparables plunged by 20 – 80%
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Fortunes 500 acquirors distracted
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Credit crunch
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Private equity firms bargain hunting
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Edison proactively cultivates strategic buyers
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Until M&A market resumes, Edison team focused on
building company value
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Severe Reaction to 2008 Meltdown
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Silicon Valley VCs worried about survival. Slash
headcount and spending. Outsourced development.
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Banks and Private Equity firms worried about debt
service. Slash headcount and spending to generate
cash flow.
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Edison leader in growth equity. Concerned about
expansion pace of top companies?!?
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2008 Edison Results
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$23+ million median revenue
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30% organic growth
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22% companies declined in revenue
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30% expanded over 40%
10% soared by over 100%
Sustaining rapid growth of top companies = greatest
challenge
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How Top Edison Cos. Grow Over 40%?
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Spend for 25% growth
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Recurring revenue model (SaaS, subscription)
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Market your installed base aggressively for up-sells/
expansion
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Metrics and leading indicators frequently reforecast
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Web marketing and search engine optimization critical
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Inside sales, lead generation/qualification
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4 to 1 pipeline coverage
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Attack your weakest competitors
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Rebalance expenses
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Top grade every year; prune bottom 10-20% of
employees
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Eliminate bottom 20% of least important projects
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Spend on revenue generation
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Upgrade team at all levels
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Boost commissions and incentives
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Zero based budgeting; set priorities with entire team
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Everybody Sells Culture
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CEO drives 20% of revenue
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All executives assigned to key and new accounts
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Incent employees for uncovering revenue opportunities
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Incent your business partners
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Add dollars on an open project PO (industry specific)
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Sell what is in the briefcase
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Sell to operating budget and avoid capital approval
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“Ring the bell”; celebrate every win
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Selling in a Tough Environment
Customer/Prospects
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ROI is key - Companies look to save money
 But, don’t forget about driving revenue either
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Sell high early; more approval levels
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Make your product and/or team irreplaceable!
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Selling in a Tough Environment
Sales Strategies
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Protect your base
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Be 3-4 months ahead of renewals
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Existing accounts are gold: sell/up-sell
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Improve your talent
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Activity levels matter; adopt system to track
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Repositioning Products and Services
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Every pitch focus on quantifiable benefit to the client
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Easier, less expensive alternative than competitors
 Fast implementations, low use of customer resources
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Sell training and service
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Companies have money for compliance solutions
(fines, penalties, etc.)
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Don’t forget new product development
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Advance product leadership
Examine development pipeline; focus on revenue
generation
Customer funded or advance orders
Acquire/license products from cash strapped
competitors
Upgrade development talent
Pay on time delivery bonus
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Evolve Business Model and Strategy
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Utilize new technologies
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Deepen applications
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Broaden sales channels
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Drive out cost
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Outperform competitors best practices
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Raise prices
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Act like the market leader!
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Aim for major win!
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Growth Advantage During Down Economy
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Market trends more important
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Weaker competition
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Performance and cost-based decisions
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Fewer decision makers
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Modest employee turnover
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Top sales talent available
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Success is sweeter!
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Edison is actively investing
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Nearly all Edison’s largest returns were made
during soft/slow economic period
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11 new investments in 2008
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14 follow-on investments
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Edison plans to invest $100M in 2009
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