Growth Company Investing with a Difference

April 2013

2

This presentation is not, and under no circumstances is to be construed as, a prospectus, offering memorandum, or

advertisement or a public offering of securities. This presentation is for information purposes only and does not

constitute an offer to sell or a solicitation to buy the securities described herein, but is solely for purposes of

providing information regarding Difference Capital Funding Inc. (“Difference Capital”).

This presentation is for the confidential use of only those persons to whom it is provided. By their acceptance of this

presentation, recipients agree that they will not transmit, reproduce or make available to any person, this

presentation or any of the information contained herein.

Certain information included in this presentation, including any information as to future financial or operating

performance and other statements that express expectations or estimates of future performance, constitute

'forward-looking statements' within the meaning of applicable securities laws. Forward-looking statements are

necessarily based upon a number of estimates and assumptions that, while considered reasonable by management,

are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-

looking statements involve known and unknown risks, uncertainties and other factors that may cause actual financial

results, performance or achievements to be materially different from the estimated future results, performance or

achievements expressed or implied by those forward-looking statements and that the forward-looking statements are

not guarantees of future performance. Difference Capital disclaims any obligation to update or revise any forward-

looking statements, whether as a result of new information, events or otherwise. Readers are cautioned not to put

undue reliance on these forward-looking statements.

Disclaimer

3

Why Difference Capital Funding?

Opportunity

Tax efficient structure,

transparency and liquidity

of a publicly listed entity

Structure

Focused on diversified investing

in non-resource, high-growth

sectors

Attractive cash flow to

shareholders through

investment structures and

advisory services

Strategy Cash Flow

Proprietary

Executing a unique strategy

with experienced

management with specialty

finance and advisory

solutions

Exposure to investments, deal structures

and valuations not readily available to public

A publicly listed merchant bank focused on creating shareholder value through strategic

investment and advisory services in growth companies

4

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$0

$50

$100

$150

$200

$250

$300

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Opportunity to profit from supply/demand

of growth investments TEN YEARS FROM PEAK OF BULL MARKET PRESENTS OPPORTUNITIES

Investment

Capital

Growth

company

funding

plummeting

Venture Capital Funding Raised in Canada N.A. Retail E-Commerce

Internet

economy

North

American

retail

e-commerce

UP

675

%

In $ billions

DOWN up to

80%

Source: Statcan Source: CVCA

OPPORTUNITY

5

Canadian Public Markets are Underweight

Non-Resource Stocks

Growth Companies28%

Resources 28%

Financial Services22%

Real Estate & Other22%

Growth Companies

3%

Resources 49%

Financial Services

34%

Real Estate & Other 14%

TSE 300 Composite Weighting

December 31, 2000

S&P/TSX Composite Index

April 12, 2013

Sector rotation to Growth would result in a capital influx of $200 billion

Growth Companies 31%

Resources 24%

Real Estate & Other 30%

Financial Services 16%

S&P 500 Index

April 12, 2013

Growth Companies

Technology, Media, Healthcare

Resources

Mining, Oil &Gas

OPPORTUNITY

6

Now is the time to capitalize

0

50

100

150

200

250

NASDAQ Index S&P/TSX Capped Information Technology Index

Canada lags the U.S. but we believe Canada will increase weightings in the

technology and other non-resource sectors

OPPORTUNITY

Heavy weight RIM-T

drops 89%

7

FO

CU

S

The only Canadian public company focused

on non-resource, mid-market opportunities

Small- and

mid-cap

companies

Large-cap

companies

Early stage

micro- and

small-cap

companies

Natural

resources

Non-resource

sectors

INDUSTRY

OPPORTUNITY

8

We are investing internationally in companies with the following:

• IP (Intellectual Property) rich companies

• Clear competitive advantages in large and growing markets

• Proven Business Models with visibility to $10 million+ of revenue and positive EBITDA

• Companies with solid credible customer traction

We take an active role in the major positions we have and derive fees from our

broad based advice

Current portfolio has exposure to major trends such as:

• Next generation media technologies, content and gaming

• Social commerce tools and analytics

• IP-rich sustainable technologies

• Advanced medical technologies

• Recovering U.S. real estate market

Executing a unique strategy STRATEGY

9

Head of European Investment Banking and

Head of Technology, Canaccord Genuity

“#3 – 50 most important people in the

growth company sector” - Growth Company Investor Magazine, UK

Director and Vice President Enforcement at IIROC

Department of Justice, Counsel

“Top Enforcement official at Canada’s investment industry regulator”

- Financial Post

A senior team built on extensive experience

PAUL SPARKES

MICHAEL WEKERLE NEIL JOHNSON

Capital Markets

Media/

Government

Investment

Banking

Europe

Legal/

Compliance

EVP, CTVglobemedia, Director of

Operations PMO

“One of Canada’s top 100 lobbyists” - Hill Times

Co-founder & Vice Chairman, GMP

“One of Bay Street’s legendary

investment traders.”

- The Globe and Mail

TOM ASTLE

Research Analyst at Merrill Lynch

and National Bank Financial

“Top analyst in technology sector”

- Brendan Woods

Sector

Expertise

JAMIE BROWN

President of Canaccord

Genuity U.S., Head of

Investment Banking U.S.

“Top 40 under 40 Investment

Banker”

- Investment Dealers’ Digest

2007

CEO, Abria Financial Group & Maple Securities

Ltd. (Aggregate assets $3 billion)

“Best Fund of Hedge Funds” – CIA 2004

Fund

Management

HENRY KNEIS

JEFF KEHOE

Investment

Banking

North

America

STRATEGY

10

Our approach to creating value

IDENTIFY

OPPORTUNITIES

Find attractively

priced growth

companies - public

or private - looking

for capital

STRUCTURE

INVESTMENT

Preserve downside and

capture upside via

convertible debt structures

Take “influential” stake

Board seat (or observer

status) for significant

investments

Earn interest through

convertible debt structures

+

ADVISORY &

STRATEGIC

DEVELOPMENT

Provide long-term

growth planning and

strategic development

Transactional financing

support

Communications,

government and regulatory

advice

Leverage into our networks

40% of investee advisory

services earned are

remitted back to DCF

+

+

+

MONETIZATION

Provide multiple

liquidation and exit

strategies

Prepare private portfolio

companies for IPO or sale

Assist management teams

to evaluate proposals to

maximize shareholder

value

Work with investment

banks for efficient

transaction completion

Monetization in 2 -3 years

ideally

+

+

+ +

+

+

+

STRATEGY

11

ADVISORY &

STRATEGIC

DEVELOPMENT

Virgin Gaming now

de-facto standard in

the industry

Exclusive partnership

with Xbox Live

Tournaments app and

Electronic Arts

Virgin Gaming is

exclusive partners

with:

Virgin Gaming The world’s largest destination for competitive console tournaments

IDENTIFY

OPPORTUNITIES

A company with IP, a

large database of

players and the Virgin

brand.

But needed capital for

marketing and

continued roll out

STRUCTURE

INVESTMENT

Raised $58 million

in five separate

financings over

past 3.5 years

Every deal was lead

by principals of

DCF for either DCF

or prior firms

MONETIZATION

Rise in valuation

from $25 million

to $150 million in

36 months

DCF is largest

shareholder with

16% ownership

Latest $10 million

investor is a global

institution who

paid a 20%

premium 7 months

after DCF’s

investment

CASE

STUDY

STRATEGY

12

Technology and IP based companies are underserved by traditional lending

sources

In Canada specifically, a wide gap exists between angel/VC funding and

institutional financing sources

Convertible debentures provide additional funding for growth companies

without suffering unnecessary dilution

DCF provides this specialty financial product which accelerates the growth of

our companies, while protecting our capital by having security over assets

Convertible debt structures STRATEGY

DCF expects to receive approximately $3.0 million in interest payments

over the next 12 months

13

Investment portfolio, Fair Value $89.8 million

Marketable Securities (incl. Cash), Fair Value $25.0 million

Real Estate Holdings, Fair Value $10.4 million

Total Convertible Debt Investments, Fair Value $36.3 million

Total Equity Investments, Fair Value $12.6 million

Total Straight Debt Investments, Fair Value $5.1 million

Total Warrant Positions, Fair Value $385,000

Number of Investments 19

Average Investment Size $3.4 million

Overview of Investment Portfolio

(December 31, 2012)

Diversification

(% of fair value)

Equity, 23%

Convertible Debentures, 67%

Straight Debt, 9%Warrants, 1%

Asset Allocation

(% of fair value)

Cleantech, 18% Education, 6%

Gaming, 40%Healthcare,

10%

Online Marketing, 4%

Online Media, 8%

Remote Monitoring, 1%

Traditional Media, 7%

Transaction Processing, 6%

STRATEGY

14

Company Location DCF

Ownership Co-investors

New York, NY 15.4% Larry Levy (Semagix, bought by Warburg Pincus),

Dennis Bennie (Delrina, bought by Symantec)

Founded in Toronto, Ontario

2.4

Madison Dearborn Partners

Multibillion dollar PE firm based in Chicago

Bethesda, Maryland 6.2% Revolution LLC (created by AOL co-founder Steve

Case), ZG Ventures

Burlington, Massachusetts Variable

Conversion

Sanderling Ventures

Dr. James E. Muller, founder and Nobel Peace Prize

Winner

Much of the value creation in our focus sectors occurs in take-outs or before an IPO – i.e.

Radian6 and Facebook

DCF has deep relationships with VC investors in the U.S. and Canada for mid-late stage

companies to co-invest with

Access to the U.S. private company universe STRATEGY

15

Investments are considered Core if:

• DCF holds a significant interest of approximately over 3% of fund NAV

• DCF takes active ownership role

• DCF invests and works with trusted partners

Core investments

U.S. Real Estate

PROPRIETARY

16

Smaller investments in the portfolio are considered strategic because:

• Adhere to our investment principles and investable themes

• Investments can be made at very attractive valuations

• They are unique situations that are presented to us on a proprietary basis

• DCF can make a larger investment at our option in the future

Strategic investments PROPRIETARY

Example:

• Brainscope (DCF: 6.2% ownership) - $1 million at $16 million post-money valuation.

Company in FDA trials for patented concussion detection technology. We are only

Canadian investor, others include senior executives of America Online

17

Selected investments

Company %

Shareholding $ Invested Sector Description

14% $16,881,660 Technology

World's largest destination for competitive console

gamers to meet, challenge and play in tournament

challenges for cash, points and prizes

15% $4,000,000 Media Multiplatform media production, distribution and

rights management company

26% $7,800,000 Biofuel

A leading technology company in the advanced

biofuels and renewable chemicals sector

6.2% $986,200 Healthcare

Developing a new generation of portable and simple-

to-use tools to rapidly and objectively assess brain

function at the initial point of care

15.4% $2,805,000 Technology Innovative provider of influencer information for

brands, agencies and online publishers

Variable

Conversion

$2,000,000 Healthcare

Medical device company dedicated to helping provide

practitioners with the information needed for

enhanced clinical decision making in treating

coronary artery disease

2.5% $2,400,000 Technology

Provider of cloud-based infrastructure for premium

media services that is used by the world's largest

communication companies

12% $500,000 Media

World leader in ‘Participation TV’, deals with ESPN,

Fox, CBC, Australian Channel 7. Over $8 million

invested over 7 years, now Canadian private company

10% $600,000 Technology Online video production company with $13 million

invested over 8 years.

PROPRIETARY

18

Group structure and money flows

Difference Capital

Management Inc.

(Private)

Difference Capital

Funding Inc.

(DCF:TSXV) Management Agreement

Dividend during 2013

● 2% of NAV

● 20% of yearly increase

over hurdle rate of 2

year bond rate

● 40% of Advisory Fees

● 100% of Board Member

fees

● Merchant Banking

operations

● Portfolio manager and

Exempt Market Dealer

● Investment vehicle with

capital tax losses

Public Shareholders of DCF

CASH FLOW

Our structure allows transparency and certainty and cash out flows to the manager, while

participating in growth of business through non-capped cash inflows

19

Broad spectrum of advisory services

Regulatory &

Government

Relations Advice

• Regulatory/Financial

/securities advice

• Strategic

government

relations advice

• Transaction

structuring and

financing support

• Institutional relations

and targeting

• Market intelligence

Capital Markets

Advice

• Strategic acquisition and

growth advice

• Investment banking

relations

• IPO listing advice in North

America and European

markets

• Strategic communications

advice

• Stakeholder engagement

strategies

• Media relations strategies

Strategic

Advice

Media &

Communications

Advice

Our senior team provides a broad spectrum of advisory services demanded by growth companies

CASH FLOW

20

Capital structure – DCF:TSXV

Symbol DCF-TSXV

Market Cap $106 million

Share Price (April 4, 2013) $0.39

Shares Outstanding 273 million

Insider Ownership 24.73%

Warrants Outstanding 77 million

Manager Difference Capital Management Inc.

Management Agreement 2% of NAV + Annual Performance Fee equal to 20% of NAV increase per year over 2 year bond Hurdle Rate

Management Company Fee Sharing Agreement

100% of Board related fees 40% of all other fees paid by investee companies

DCF has over $150 million of capital tax losses, a liquid stock, and

significant insider ownership aligning interests

Capital Tax Losses $153 million

Operating Tax Losses $13 million

Average Daily Volume 230,000

STRUCTURE

21

Align interests between

management company and public

shareholders through stock

ownership and sharing of all fees

from investee companies

Build shareholder value through

growth in Net Asset Value and

stock price

Targeting 2013 to start regular

dividend to shareholders and apply

for full TSX listing

Our commitment to public shareholders STRUCTURE

22

Virgin Gaming

Effective ownership

14%

Cumulative investment

$19 million

Acquisition Date

June 2012 / January

2013 / February 2013

Terms 5.0% convertible

debentures and

common shares

Realized return 35% IRR on $3 million

World’s largest destination for competitive

console gamers to play in tournament

challenges for cash, points and prizes

DCF’s management has been involved with

the company since 2010

Recently launched Xbox Tournaments by

Virgin Gaming, an app built-into the Xbox

LIVE system.

Official and exclusive provider of tournaments

for EA Sports

As of January 2013 had over two million

registered users

23

Thunderbird Films

Effective ownership 15%

Cumulative investment

$4 million

Acquisition Date December 2012

Terms Common Shares

Other investors Frank Giustra

and Francesco

Aquilini

Multiplatform media production, distribution

and rights management company with over

500 hours of television content airing globally

Recently launched a joint TV partnership with

Lionsgate (Sea to Sky Entertainment)

Owns a 50% stake in the Blade Runner

franchise and developing a sequel

New Chairman - Ivan Fecan (former CEO of

CTVglobemedia and VP Creative Affairs of

NBC)

Recent acquisition of Reunion Pictures

(Continuum, Butterfly Effect, Final

Destination)

24

Lignol Energy Corporation

(LEC:TSXV)

Effective ownership

26%

Cumulative investment

$4 million equity plus

$3.8 million in line of

credit

Acquisition Date August 2012, December

2012 and March 2013

Terms Common Shares and

Warrants – line of credit

at 8% p.a.

Other Investors Wasabi Energy

A leading technology company in the

advanced biofuels and renewable chemicals

sector

Difference Capital’s principals identified the

opportunity for Lignol to undertake a

recapitalization and pursue consolidation in

the sector

Implementing a cash-flow positive strategy by

investing in Biodiesel assets and using those

cashflows to fund plant development

Have completed the majority of pre-

commercial development work with full plant

launch in progress

25

US Real Estate

Effective ownership

50%

Cumulative investment

$13 million

Acquisition Date Ongoing

Terms Joint-venture

Investments in undervalued/opportunistic

land and residential housing assets in urban

areas of South Eastern U.S.

Working with established, knowledgeable

partners to extract value and benefit from

the housing market recovery

Due to current market inefficiencies, we are

able to purchase properties at significant

discounts to both replacement cost and

current market value, with an interim

strategy of renovating and leasing the

properties to qualified tenants

Capitalize on housing market recovery and

economies of scale