Investing in Tech Markets in BrazilCopyright @ 2013 Monashees Capital

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discussion.

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+ Founded in 2005

+ US$ 135 M in capital

commitments

+ 7 partners

+ 27 companies

+ Target sectors include Mobile,

Marketplaces, e-Commerce,

SaaS, EdTech, FinTech,

Healthcare

+ Focus on leading Seed & Series A

rounds, reserving capital for

Series Bs

+ Co-invested with Accel,

Benchmark, Felicis, Insight,

Meritech, Tiger, Valar, 500

Startups, Flybridge, Valiant,

Thrive, Intel Capital, Social +

Capital, among others

3

Timeline of tech VC industry in Brazil

“Nuclear Winter” “Boom” “Correction”

20122005 2009

“First wave”

New local investors

2000“The Burst”

2013

You are here

New localaccelerators

First generation of internet companies

Early internet investors International investors

…

Funded startups

4

MARKETS TEAMS LIQUIDITY

What really matters

5

Large domestic market

Sources: FGV, World Bank, Business Monitor International, Brazil Central Bank, Monashees’ analysis

GDP

[US$ Trillion, 2011]

2002 2012

49.0%

27.0%

38%

52%

13.0%21.0%

Consumption power

Se-ries1

15.0

7.3

5.9

3.62.8 2.5 2.4 2.2 1.9 1.8

2nd Largest beauty market

4thLargest

automotive market

5th

Largest clothing market

2nd Largest pet

supplies market

B2C: 200 M people

B2B: + 5M companies

2002 2012

49%

27%

38%

52%

13%21%

Upper class

Middle class

Lower class

3rd Largest

computer market

On average they invest 5.5% of revenues in IT

For the first time, emerging

middle class that can afford

to buy tech

products & services

Leadership in relevant markets

6

3%

6%

Far from plateau

Sources: eMarketer, New Media Trend Watch, Google Think Mobile Research, Ibope, ebit, Monashees’ analysis

Internet

[% of the population, 2012]

E-commerce

[% of total retail, 2012]

Smartphones

[% of population, 2012]

Online ad spending

[% of total ad spending, 2012]

46%

78%

88.5Minternet users in Brazil

15%

50%

7%

28%

28.5MSmartphones in Brazil

US$11.3B

ecommerce sales in

Brazil

US$3.3B

Spent on online ads in Brazil

7

Large underserved tech markets

Sources: Monashees' analysis

Enterprise tech

E-commerce EduTech

Real Estate

220K brokersMost properties are not online yet

Jobs 80M of operational employees, lack of solutions to recruit these professionals

Services

75% of the employment is in services sector. Information asymmetry makes it hard to match customers and services providers

Mobile FinTech

Marketplaces

Invest-ments

US$ 1 tri AUM only mutual funds, on average Brazilians only use their banks and invest on traditional products

Insu-rance

US$ 10B market, online accounts for less than 5% of the transactions

Credit US$ 1 tri in credit, huge information asymmetry between banks / companies / consumers

Profes. Educa-tion

2.6M students talking online professional coursesLack of top-quality alternatives

TestPrep

12.7M people taking standardized tests, lack of intelligent and scalable solutions

K12 300K K12 schoolsUrgent need to improve quality and efficiency

Mobile-first

28.5M smartphones, the Brazilian AppStore and Google Play lack top localized alternatives

Feature phones

Feature phones and pre-paid plans still dominate the market, 76% and 80% penetration respectively

Furni-ture

US$ 20B market, lack of an alternative with good quality, design and accessible price

Home impro-vement

US$ 25B markettop 10 players accounts for less than 10% of the market

Desin-terme-diation

US$ 6B only apparel market, by cutting the middle man, it is possible to create affordable and aspirational brands

SMBs +5M companies, mostly underserved by technology. Only 26% use any kind of SW for mgt.

Enter-prise

Only 36% of the companies have an ERP and only 27% have a CRM

SaaS 77% of companies will increase their investments in SaaS in the next 2 years

Mobile payment

The proportion of purchases made from mobiles phone is strikingly small, below 1% of total online sales

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Brazilians embrace innovation, specially social - 2nd most Facebook and Twitter users in the world (41.5M and 33.3M respectively)

Favorable timing

Sources: Febraban, eMarketer, ABECS, Gartner, Monashees' analysis

Adoption Infrastructure

Brazilians trust the internet, internet banking is almost at the same levels of developed countries, 46% of transactions (vs US 54%)

Companies are using more technology, 71% of companies already adopted SaaS in Brazil, 27% of them during last year

Payments - high penetration of credit cards in Brazil (53% penetration), 173.2M credit cards accounting for $200B in transactions / year

High-speed internet - Brazil had 25.5M broad-band connections in 2012 (16 M in 2010). 80% of companies already have broad-band internet

Logistics – Still a challenge, high cost, but 79% of deliveries are made on time. Customer satisfaction with handling/shipping is increasing

9

Moving towards innovation

“Imported”Provenmodels

Local innovation

Global innovation

RiskUpsid

e

Time

Sources: Monashees’ analysis

Economic growth

Sources: Brazil Central Bank, Ipeadata, Bradesco, eMarketer, New Media Trend Watch, Google Think Mobile Research, Ibope, Monashees’ analysis

2008 2009 2010 2011 2012 2013 (e)

2014 (e)

5.2%

-0.3%

7.5%

2.7%

0.9%

2.5%

3.2%

GDP Growth [%]

Internet

users

Ecommerce

sales

Spending on online

ads

Smartphone users

8% 22%

21% 88%

Online growth [% vs 2011]

Cost of doing business

Sources: World Bank, Monashees' analysis

Ranking

Country

1 Singapore

2 Hong-Kong

3 New Zealand

4 USA

5 Denmark

… …

129 Bangladesh

130 Brazil

131 Nigeria

132 India

World Bank Ranking - Ease of doing business [2013, 185 Countries]

Starting a business

Protecting investors

Trading across

borders

Getting credit

Complex tax

strucutre and labor

laws

Enforcing contracts

Cost of doing business

Starting a business

Protecting investors

Trading across

borders

Getting credit

Complex tax

strucutre and labor

laws

Enforcing contracts

Cost of doing business

Lower competitive pressure + premium of

scarcityEducation

KrotonIT

Linx

Marketplaces

MercadoLibre

SoftwareTotvs

Growth equity

Time

Revenue Seed/Series A Private EquityGrowth

Sources: Monashees’ analysis

Best companies

US VCs

New local growth investors

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MARKETS TEAMS LIQUIDITY

What really matters

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The rise of the high-impact entrepreneur

Sources: Monashees’ analysis

High-impact

entrepreneurs

Locals

Corporations

Returning expatriates

Tech

Foreigners

Academy

Startups

15

Technical talent

VC are helping on this

❯Talent Management

Active support on head-hunting

❯AdvisorsBring seasoned tech advisors for the companies

❯CommunityShare knowledge among entrepreneurs

Series1

6

25 25

Engineers availability[per 1000 professionals]

2010 2011 2012

16.518.0

21.6

IT manager salaries[Monthly, in 000 BRL]

Sources: Robert Half, Finep, Monashees’ analysis

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MARKETS TEAMS LIQUIDITY

What really matters

Tech exists

Sources: Thomson Reuters, Startup DealBook Brazil, Crunchbase, Monashees’ analysis

Number of VC investments based on “Startup Dealbook Brazil”

Relevant tech exits in emerging markets

2008 2009 2010 2011 2012

6 6

17

45

79

IPO M&A

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Timeline

“Correction”

2015

“Boom” “Virtuous Cycle”

1st wave of tech acquisitions and

IPOs

20122009

Local Investors

International investors

Accelerators

2013

+ 5-7 years

You are here

Many potential acquirers

Role models / angels

…

Funded startups

International Tech Companies

Local incumbents

19

Thank you!

Exchange rate

Sources: World Bank, UBS, Brazil Central Bank, Ipeadata, Bradesco , Monashees’ analysis

Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-130

50

100

150

200

250

300

350

September/11

1998 Russian crisis

2008 Global credit crisis

2002 Presidential election

Nominal rate

* As of June 20th 2013

Foreign Exchange, inflation adjusted [BRL / USD, 1997=100]

1.97

3.52

2.94

2.62

2.31

1.67

1.98

2.26*1.98

1.04