EFTA00810400.pdf

Do Not Copy or Distribute Without Written Permission from Valar Ventures LLC Valar Global Fund IV LP $150,000,000 VALAR Limited Partner Interests Confidential Private Placement Memorandum Valar Ventures LLC Copy # 915 Broadway, Suite 1101 New York, New York 10010 Issued to: 148264373 vl EFTA00810400 VALAR Private Placement Memorandum Confidential Private Placement Memorandum VALAR GLOBAL FUND IV LP $150,000,000 Limited Partner Interests THIS CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM (THE "MEMORANDUM") HAS BEEN PREPARED SOLELY FOR USE BY THE PROSPECTIVE INVESTORS OF VALAR GLOBAL FUND IV LP (THE "FUND" OR THE "PARTNERSHIP") AND SHALL BE MAINTAINED IN STRICT CONFIDENCE. EACH RECIPIENT HEREOF ACKNOWLEDGES AND AGREES THAT (I) THE CONTENTS OF THIS MEMORANDUM CONSTITUTE PROPRIETARY AND CONFIDENTIAL INFORMATION, (II) VALAR VENTURES GP IV LLC (THE "GENERAL PARTNER"), VALAR VENTURES LLC (THE "MANAGEMENT COMPANY') AND THEIR AFFILIATES, INCLUDING WITHOUT LIMITATION THE FUND (COLLECTIVELY, THE "FIRM") DERIVE INDEPENDENT ECONOMIC VALUE FROM SUCH CONFIDENTIAL INFORMATION NOT BEING GENERALLY KNOWN, AND (III) SUCH CONFIDENTIAL INFORMATION IS THE SUBJECT OF REASONABLE EFFORTS TO MAINTAIN ITS SECRECY. THE RECIPIENT FURTHER AGREES THAT THE CONTENTS OF THIS MEMORANDUM ARE A TRADE SECRET, THE DISCLOSURE OF WHICH IS LIKELY TO CAUSE SUBSTANTIAL AND IRREPARABLE COMPETITIVE HARM TO THE FIRM. ANY REPRODUCTION OR DISTRIBUTION OF THIS MEMORANDUM, IN WHOLE OR IN PART, OR THE DISCLOSURE OF ITS CONTENTS, WITHOUT THE PRIOR WRITTEN CONSENT OF THE MANAGEMENT COMPANY, IS PROHIBITED. EACH PERSON WHO HAS RECEIVED THIS MEMORANDUM IS DEEMED TO AGREE TO RETURN THIS MEMORANDUM TO THE MANAGEMENT COMPANY UPON REQUEST. THE EXISTENCE AND NATURE OF ALL CONVERSATIONS REGARDING THE FUND AND THIS OFFERING MUST BE KEPT CONFIDENTIAL. THIS MEMORANDUM HAS BEEN PREPARED IN CONNECTION WITH A PRIVATE OFFERING TO ACCREDITED INVESTORS OF LIMITED PARTNER INTERESTS IN THE FUND (THE "INTERESTS"). EACH INVESTOR WILL BE REQUIRED TO EXECUTE A LIMITED PARTNERSHIP AGREEMENT (AS AMENDED, RESTATED AND/OR OTHERWISE MODIFIED FROM TIME TO TIME, THE "PARTNERSHIP AGREEMENT') AND SUBSCRIPTION AGREEMENT AND INVESTOR QUESTIONNAIRE (THE "SUBSCRIPTION AGREEMENT') TO EFFECT ITS INVESTMENT IN THE FUND. THIS MEMORANDUM CONTAINS A SUMMARY OF THE PARTNERSHIP AGREEMENT, THE SUBSCRIPTION AGREEMENT AND CERTAIN OTHER DOCUMENTS REFERRED TO HEREIN. HOWEVER, THE SUMMARIES IN THIS MEMORANDUM DO NOT PURPORT TO BE COMPLETE AND ARE SUBJECT TO AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE ACTUAL TEXT OF THE RELEVANT DOCUMENT, COPIES OF WHICH WILL BE PROVIDED TO EACH PROSPECTIVE INVESTOR UPON REQUEST. EACH PROSPECTIVE INVESTOR SHOULD REVIEW THE PARTNERSHIP AGREEMENT, THE SUBSCRIPTION AGREEMENT AND SUCH OTHER Confidential & Trade Secret EFTA00810401 VALAR ii Private Placement Memorandum DOCUMENTS FOR COMPLETE INFORMATION CONCERNING THE RIGHTS, PRIVILEGES AND OBLIGATIONS OF INVESTORS IN THE FUND. IF ANY OF THE TERMS, CONDITIONS OR OTHER PROVISIONS OF THE PARTNERSHIP AGREEMENT, THE SUBSCRIPTION AGREEMENT OR SUCH OTHER DOCUMENTS ARE INCONSISTENT WITH OR CONTRARY TO THE DESCRIPTIONS OR TERMS IN THIS MEMORANDUM, THE PARTNERSHIP AGREEMENT, THE SUBSCRIPTION AGREEMENT OR SUCH OTHER DOCUMENTS SHALL CONTROL. THE FIRM RESERVES THE RIGHT TO MODIFY THE TERMS OF THE OFFERING AND THE INTERESTS DESCRIBED IN THIS MEMORANDUM, AND THE INTERESTS ARE OFFERED SUBJECT TO THE GENERAL PARTNER'S ABILITY TO REJECT ANY COMMITMENT IN WHOLE OR IN PART. THE INTERESTS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT), OR ANY UNITED STATES STATE SECURITIES LAWS OR THE LAWS OF ANY FOREIGN JURISDICTION. THE INTERESTS WILL BE OFFERED AND SOLD UNDER THE EXEMPTION PROVIDED BY SECTION 4(2) OF THE SECURITIES ACT AND REGULATION D PROMULGATED THEREUNDER AND OTHER EXEMPTIONS OF SIMILAR IMPORT IN THE LAWS OF THE STATES AND OTHER JURISDICTIONS WHERE THE OFFERING WILL BE MADE. THE FUND WILL NOT BE REGISTERED AS AN INVESTMENT COMPANY UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT COMPANY ACT). CONSEQUENTLY, INVESTORS WILL NOT BE AFFORDED THE PROTECTIONS OF THE INVESTMENT COMPANY ACT. THE INTERESTS DESCRIBED IN THIS MEMORANDUM ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE PARTNERSHIP AGREEMENT AND THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE FUND'S INVESTMENTS WILL BE CHARACTERIZED BY A HIGH DEGREE OF RISK, VOLATILITY AND ILLIQUIDITY. A PROSPECTIVE PURCHASER SHOULD THOROUGHLY REVIEW THE CONFIDENTIAL INFORMATION CONTAINED HEREIN AND THE TERMS OF THE PARTNERSHIP AGREEMENT AND SUBSCRIPTION AGREEMENT, AND CAREFULLY CONSIDER WHETHER AN INVESTMENT IN THE FUND IS SUITABLE TO THE INVESTOR'S FINANCIAL SITUATION AND GOALS. CERTAIN ECONOMIC AND MARKET INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM PUBLISHED SOURCES PREPARED BY OTHER PARTIES. WHILE SUCH SOURCES ARE BELIEVED TO BE RELIABLE, NEITHER THE FUND, THE GENERAL PARTNER, NOR THEIR RESPECTIVE AFFILIATES ASSUME ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. NEITHER DELIVERY OF THIS MEMORANDUM NOR ANY STATEMENT HEREIN SHOULD BE TAKEN TO IMPLY THAT ANY INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY STATEMENT CONCERNING THE FUND OR THE SALE OF THE INTERESTS DISCUSSED HEREIN OTHER THAN AS SET FORTH IN THIS MEMORANDUM, AND ANY SUCH STATEMENTS, IF MADE, MUST NOT BE RELIED UPON. Confidential & Trade Secret EFTA00810402 VALAR iii Private Placement Memorandum PROSPECTIVE INVESTORS ARE CAUTIONED NOT TO RELY ON THE PRIOR RETURN INFORMATION SET FORTH HEREIN IN MAKING A DECISION WHETHER OR NOT TO PURCHASE THE INTERESTS OFFERED HEREBY. THE RETURN INFORMATION CONTAINED HEREIN HAS NOT BEEN AUDITED OR VERIFIED BY ANY INDEPENDENT PARTY AND SHOULD NOT BE CONSIDERED REPRESENTATIVE OF THE RETURNS THAT MAY BE RECEIVED BY AN INVESTOR IN THE FUND. CERTAIN FACTORS EXIST THAT MAY AFFECT COMPARABILITY INCLUDING, AMONG OTHERS, THE DEDUCTION OF FEES AND EXPENSES AND THE PAYMENT OF A CARRIED INTEREST. CERTAIN FACTUAL AND STATISTICAL INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM PUBLISHED SOURCES PREPARED BY OTHER PARTIES AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE GENERAL PARTNER OR ANY OF ITS AFFILIATES. OPINIONS AND ESTIMATES MAY BE CHANGED WITHOUT NOTICE. IN CONSIDERING THE PRIOR PERFORMANCE INFORMATION CONTAINED HEREIN, PROSPECTIVE INVESTORS SHOULD BEAR IN MIND THAT PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS, AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL ACHIEVE COMPARABLE RESULTS. CERTAIN STATEMENTS OF PAST PERFORMANCE OF OTHER INVESTMENT FUNDS MANAGED BY THE MANAGEMENT COMPANY OR AFFILIATES THEREOF AND CERTAIN ECONOMIC AND MARKET INFORMATION, CONTAINED HEREIN INCLUDES PROJECTIONS AND ESTIMATES MADE BY THE MANAGEMENT COMPANY AND OTHER PARTIES. THE PROJECTED RETURNS CONTAINED HEREIN MAY BE CALCULATED ON A COMPANY BY COMPANY BASIS, AND ARE BASED ON ESTIMATES OF THE EVENTUAL MAGNITUDE AND THE TIMING OF THE RETURNS FROM EACH COMPANY MADE BY THE MANAGEMENT COMPANY. THE PROJECTED RETURNS AND ESTIMATES OF ECONOMIC AND MARKET INFORMATION CONTAINED HEREIN INVOLVE RISKS AND UNCERTAINTIES AND: (I) ARE BASED UPON ASSUMPTIONS CONCERNING CIRCUMSTANCES AND EVENTS THAT HAVE NOT YET OCCURRED AND (II) MAY BE SUBJECT TO BEING INFLUENCED BY EVENTS BEYOND THE CONTROL OF THE MANAGEMENT COMPANY. ACTUAL RESULTS COULD DIFFER SIGNIFICANTLY. NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IS MADE BY THE FIRM AS TO THE REASONABLENESS OR ACCURACY OF THE PROJECTIONS OR ESTIMATES AND, AS A RESULT, SUCH PROJECTIONS AND ESTIMATES SHOULD BE VIEWED SOLELY AS AN ORDERLY REPRESENTATION OF ESTIMATED RESULTS IF UNDERLYING ASSUMPTIONS ARE REALIZED. INVESTORS SHOULD SUBJECT THE PROJECTIONS AND ESTIMATES TO REVIEW BY THEIR OWN PROFESSIONAL ADVISERS. UPON REQUEST, THE MANAGEMENT COMPANY WILL PROVIDE INVESTORS WITH THE ASSUMPTIONS AND METHODOLOGIES USED IN PREPARING THE PROJECTIONS AND ESTIMATES. THE MEMORANDUM, TOGETHER WITH ANY AMENDMENTS AND SUPPLEMENTS THERETO, AND ANY OTHER OFFERING MATERIALS DISTRIBUTED TO THE LIMITED PARTNERS (TOGETHER, THE "OFFERING MATERIALS") CONTAIN CERTAIN STATEMENTS WITH RESPECT TO, AND DISCLOSE CERTAIN INFORMATION WITH REGARD, TO THE THIEL PERSONS (AS DEFINED HEREIN). NONE OF THE THIEL PERSONS MAKES ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE CONTENTS OF THE OFFERING MATERIALS. NONE OF THE THIEL PERSONS HAS OR ASSUMES ANY RESPONSIBILITY FOR ANY PART OF THE FORM OR SUBSTANCE OF THE OFFERING MATERIALS, AND THE OFFERING MATERIALS, IN THEIR ENTIRETY, ARE THE RESPONSIBILITY OF THE GENERAL PARTNER AND THE MANAGEMENT COMPANY. THE THIEL PERSONS ARE RELYING, Confidential & Trade Secret EFTA00810403 VALAR iv Private Placement Memorandum WITHOUT INDEPENDENT VERIFICATION, ON THE ACCURACY AND COMPLETENESS OF OFFERING MATERIALS. INVESTORS SHOULD MAKE THEIR OWN INVESTIGATIONS AND EVALUATIONS OF THE FUND, INCLUDING THE MERITS AND RISKS INVOLVED IN AN INVESTMENT THEREIN. PRIOR TO ANY INVESTMENT, THE GENERAL PARTNER WILL GIVE INVESTORS THE OPPORTUNITY TO ASK QUESTIONS OF AND RECEIVE ANSWERS AND ADDITIONAL INFORMATION FROM IT CONCERNING THE TERMS AND CONDITIONS OF THIS OFFERING AND OTHER RELEVANT MATTERS TO THE EXTENT THE GENERAL PARTNER POSSESSES THE SAME OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT OR EXPENSE. INVESTORS SHOULD INFORM THEMSELVES AS TO THE LEGAL REQUIREMENTS APPLICABLE TO THEM IN RESPECT OF THE ACQUISITION, HOLDING AND DISPOSITION OF THE INTERESTS IN THE FUND, AND AS TO THE INCOME AND OTHER TAX CONSEQUENCES TO THEM OF SUCH ACQUISITION, HOLDING AND DISPOSITION. THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, AN INTEREST IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL, STATE OR FOREIGN REGULATORY AUTHORITY HAS APPROVED AN INVESTMENT IN THE FUND. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS MEMORANDUM, NOR IS IT INTENDED THAT THE FOREGOING AUTHORITIES WILL DO SO. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. YOUR INVESTMENT WILL BE DENOMINATED IN UNITED STATES DOLLARS ($) AND, THEREFORE, WILL BE SUBJECT TO ANY FLUCTUATION IN THE RATE OF EXCHANGE BETWEEN UNITED STATES DOLLARS ($), THE CURRENCY OF YOUR OWN JURISDICTION AND THE CURRENCY OF THE JURISDICTION IN WHICH ANY FUND PORTFOLIO COMPANY OPERATES OR GENERATES INVESTMENT PROCEEDS, AS APPLICABLE. SUCH FLUCTUATIONS MAY HAVE AN ADVERSE EFFECT ON THE VALUE, PRICE OR INCOME OF YOUR INVESTMENT. CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS CERTAIN STATEMENTS IN THIS MEMORANDUM CONSTITUTE FORWARD-LOOKING STATEMENTS. WHEN USED IN THIS MEMORANDUM, THE WORDS "MAY,- "WILL," "SHOULD," "PROJECT," "ANTICIPATE," "BELIEVE," "ESTIMATE," "INTEND," "EXPECT," "CONTINUE," AND SIMILAR EXPRESSIONS OR THE NEGATIVES THEREOF ARE GENERALLY INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS, INCLUDING THE INTENDED ACTIONS AND PERFORMANCE OBJECTIVES OF THE GENERAL PARTNER, FUND, OR ANY PORTFOLIO COMPANY REFERENCED HEREIN, INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER IMPORTANT FACTORS THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE, OR ACHIEVEMENTS OF THE GENERAL PARTNER, FUND, OR ANY PORTFOLIO COMPANY TO DIFFER MATERIALLY FROM ANY FUTURE RESULTS, PERFORMANCE, OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD- LOOKING STATEMENTS. NO REPRESENTATION OR WARRANTY IS MADE AS TO FUTURE PERFORMANCE OR SUCH FORWARD-LOOKING STATEMENTS. ALL FORWARD-LOOKING STATEMENTS IN THIS MEMORANDUM SPEAK ONLY AS OF THE DATE HEREOF. THE FUND AND THE GENERAL PARTNER EXPRESSLY DISCLAIM ANY OBLIGATION OR Confidential & Trade Secret EFTA00810404 VALAR V Private Placement Memorandum UNDERTAKING TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD- LOOKING STATEMENT CONTAINED HEREIN TO REFLECT ANY CHANGE IN ITS EXPECTATION WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS, OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED. PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THIS MEMORANDUM AS INVESTMENT, LEGAL, TAX, REGULATORY, FINANCIAL, ACCOUNTING OR OTHER ADVICE, AND THIS MEMORANDUM IS NOT INTENDED TO PROVIDE THE SOLE BASIS FOR ANY EVALUATION OF AN INVESTMENT IN AN INTEREST. PRIOR TO ACQUIRING AN INTEREST, A PROSPECTIVE INVESTOR SHOULD CONSULT WITH ITS OWN LEGAL, INVESTMENT, TAX, ACCOUNTING, AND OTHER ADVISORS TO DETERMINE THE POTENTIAL BENEFITS, BURDENS, AND OTHER CONSEQUENCES OF SUCH INVESTMENT. +++ ANY QUESTIONS REGARDING THIS OFFERING, AND ANY REQUESTS FOR COPIES OF THE MEMORANDUM, THE PARTNERSHIP AGREEMENT AND THE SUBSCRIPTION AGREEMENT SHOULD BE FORWARDED TO: Valar Ventures LLC 915 Broadway, Suite 1101 New York, New York 10010 email: Confidential & Trade Secret EFTA00810405 VALAR vi Private Placement Memorandum TABLE OF CONTENTS 1. EXECUTIVE SUMMARY II. KEY PRINCIPAL TERMS 3 III. INVESTMENT STRATEGY 4 IV. COMPETITIVE ADVANTAGES 7 V. PARTNERSHIP MANAGEMENT 10 VI. INVESTMENT HISTORY 12 VII. FUND PERFORMANCE AND PORTFOLIO COMPANY PROFILES 14 VIII. SUMMARY OF PRINCIPAL TERMS 15 IX. CERTAIN RISK FACTORS 27 X. CERTAIN TAX AND REGULATORY MATTERS 37 XI. ADDITIONAL INFORMATION 47 APPENDIX A: LEGAL NOTICES A-I APPENDIX B: FUND COMPOSITION AND PERFORMANCE B-I Confidential & Trade Secret EFTA00810406  VALAR Private Placement Memorandum I. EXECUTIVE SUMMARY Valar Ventures is a venture capital firm focused on identifying and investing in high-growth, early-stage technology companies with the potential to become multi-billion dollar enterprises within 5.7 years of initial investment. Based in New York City, and with one of the strongest brands and networks in the industry, Valar is uniquely positioned to identify and access exceptional early-stage investment opportunities across geographies — from the Bay Area to New York to Europe. Andrew McCormack and James Fitzgerald (the "Managing Partners") formed Valar Ventures in 2010 while working at Thiel Capital, Peter Thiel's family office. Peter was Valar's initial sponsor and represented over S0% of the firm's capital commitments, on an aggregate basis, in the firm's initial investment vehicles (collectively referred to herein as "Fund I"). Valar Ventures spun-out of Thiel Capital in 2013 and is now backed by a broad range of endowments, foundations, institutional wealth managers, family offices and high net worth individuals. Andrew and James are the sole members of the firm's Investment Committee and are responsible for all of the firm's day-to-day operations. The Firm currently manages over $300 million in capital commitments across all its funds and investment vehicles, and is currently investing out of Valar Global Fund 3, a $100 million fund that is more than 90% invested or reserved for follow-on investments in existing portfolio companies. Valar is now raising a further fund ("Fund 4", the "Fund" or the "Partnership") with targeted capital commitments of $100.150 million. The Fund is expected to emphasize Series A and Series B stage investments in high-growth technology companies based in first-world economies, with a focus on the US, Europe and Canada, where Valar believes the opportunity to build a massive, globally dominant technology company is the highest (the "Strategy"). Since inception, Valar has consistently generated significant returns for its investors, across all of its funds. Fund I has significantly outperformed industry benchmarks. And while Funds 2 and 3 are still too early for industry comps, the net IRRs are evidence of early traction in the firm's major investments in those funds. As of June 30, 2017, Valar has deployed $254.7 million in the Strategy, with a gross asset value of $649.4 million, including realized and unrealized investment gains and losses. Valar Fund I (an aggregation of all funds and investments vehicle managed by Valar prior to the formation of Valar Fund 2) has a current gross multiple of 4.3x since October 2010, which, if treated as a single fund, would place its performance within the top echelon of all venture funds and one that has significantly outperformed common public market index references, such as the S&P 500.1 Out of a total 15 portfolio companies where Valar has invested at least $5 million since inception, two (Xero and TransferWise) have already achieved valuations in excess of a billion dollars and three (Breather, N26 and Stash) have already achieved valuations in excess of a quarter of a billion dollars. Composition of public market indices may not be comparable with composition of Valar's portfolio and past performance may not be an indicator of future performance. Confidential & Trade Secret EFTA00810407 VALAR Private Placement Memorandum RESULTS Inception Capital Current Gross/Net Gross/Net IRR DPI % of Fun Commitments FMV Multiple Invested/ Reserved Fund 1 Oct 2010 $100.0M $411.8M 4.3x / 3.4x 43.7% / 36.3% 1.2x 100% Fund 2 Jan 2015 $102.3M $139.5M 1.6x / I.3x 36.2% / 27.9% N/A 100% Fund 3 July 2016 $103.9M $94.8M 1.4x / I.3x 207.4% / 146.0% N/A 90% - All figure presented are unaudited estimates 'n USD as of 6/30/2017, including signed deals that are expec ed to lose in Q3. Gross figures do not include the impact of fees, expenses and carry, and net figures are calculated by reducing gross investment profits by a flat 25/. for hypothetical management fees, expenses. and carry. Past performance may not be an indicator of future performance. Confidential & Trade Secret EFTA00810408  VALAR 3 Private Placement Memorandum II. KEY PRINCIPAL TERMS The following information is presented as a summary of certain of the Fund's key principal terms only and is qualified in its entirety by the more detailed information contained in "Section VII. Summary of Principal Terms" herein and by the Partnership Agreement, which will be circulated to investors prior to closing. To the extent that this summary conflicts with the Partnership Agreement, the Partnership Agreement will control. Target Size $100 million - 150 million General Partner At least 1% of fee-bearing capital Commitment Term 10 years, subject to two, one-year extensions at the General Partner's discretion and thereafter with the consent of a majority in interest of the Limited Partners Commitment Period 5 years Management Fee 2.5% of Limited Partners' capital commitments until the end of the Commitment Period; reduced thereafter by 0.1% annually, but not below 1.5% of the aggregate capital commitments of the Limited Partners Management Fee 100% of all directors, consulting, management services, transaction, Reduction advisory, break-up or broken deal fees Carried Interest Carried interest is not payable until 100% of capital contributions have been returned to the Partners, and thereafter will be 20% of net profits until the Fund distributes to each Limited Partner an amount equal to 300% of its capital commitment; thereafter 25% ofnet profits until the Fund distributes to each Limited Partner an amount equal to 600% of its capital commitment; thereafter 30% ofnet profits (in each case, with full catch-up for the General Partner) Clawback Yes, with a guaranty by each managing member of its share on a several, but not joint, basis Investment Committee / James Fitzgerald and Andrew McCormack Key Persons No Fault Termination Yes, at any time by the election of eighty percent (80%) in interest of the Limited Partners Organizational Expenses Capped at $500,000 Confidential & Trade Secret EFTA00810409  VALAR 4 Private Placement Memorandum III. INVESTMENT STRATEGY A. CORE STRATEGY Valar's core strategy is to use its strong brand and its execution-oriented team structure to invest in high- growth, early stage technology companies located in North America and Europe. Stage: Valar's typical initial investment is generally sized at $3-$12 million into a company that has an enterprise (pre-money) valuation of between $20 and $100 million (in general, Series A and Series B stage investments). A small amount of each fund (up to 10% of capital commitments) may be invested into earlier, seed stage companies, which are considered non-core to the fund's strategy, but some of which may develop into major investments for a fund. In Funds 2 and 3, the average initial check size for major investments has been approximately $7 million. Before making an initial investment, Valar looks for a company to have achieved some initial product/market fit. This can be evidenced by significant customer engagement, early revenue growth, executed partnership agreements (especially in an enterprise sales distribution model) or other market validation of the company's vision and execution. The amount of traction required prior to the Fund investing may vary depending on the market a company is focused on. For example, fintech companies that are digitizing previously analog or inefficient business processes require less proof points, whereas marketplace businesses or companies that are unlocking previously hidden demand require more evidence of traction prior to Valar investing. The Managing Partners also look to the strength of a company's team (including "founder/market fit") as evidence that it is at an appropriate stage to warrant an investment. Valar is comfortable making sizeable investments at even very early stages where the above dynamics are in place. Sector: Valar is focused on backing companies with the potential to become multi-billion dollar enterprises during the life of the Fund. Valar believes these companies tend to be high-margin businesses focused on massive markets, such as currency transfer (Transferwise), banking (N26, Qonto), commercial real estate (Breather), insurance (Jetty, Coya), investing/retirement savings (Stash), accounting software (Xero), and human resources/compliance software (Kato). Given that the statistical likelihood of success for any individual startup is low, Valar believes that constructing a portfolio of companies that are operating in trillion dollar industries provides the highest potential to produce at least one significant success. In sourcing and filtering investment opportunities, Valar's investment process eliminates companies that do not have a massive Total Addressable Market ("TAM"). Most often, when the firm passes on an investment, it's because it failed this TAM test. Geography: Valar backs companies that are founded in, and focused on, the United States and Europe. Valar believes that these first-world geographies have the highest potential to consistently produce the sort of multi-billion dollar technology companies that Valar seeks to invest in. Valar's headquarters in New York City affords it a key advantage in accessing opportunities on the East Coast and in Europe while still being within reasonable distance (in terms of time zones and flight times) to work with its companies that are based in, or ultimately relocate to, the Bay Area. Within North American and Europe, Valar believes that certain cities have a significant advantage in terms of affording a startup the best chance of success. While in theory, an internet-based business can be started from anywhere in the world, scaling a technology company into a global champion requires access to a deep network of capital, business partners and available talent at all stages of the company's lifecycle. Valar believes that, in the Western World, these dynamics are most prevalent in Silicon Valley, New York, London, Berlin and Paris, and to a lesser extent, in the smaller cities that feed into the larger tech hubs (e.g., Provo, Boulder, Portland, Seattle, Los Angeles, all of which feed into Silicon Valley; Conlidcanal & Trade Secret EFTA00810410 VALAR 5 Private Placement Memorandum Toronto, Montreal, and Boston, which feed into New York; or Amsterdam, Stockholm, Helsinki, and Tallinn, which feed into London). In Fund 4, Valar intends to continue focusing on companies being built in the geographies in North America and Europe where Valar has previously invested and where its brand value, networks and experience give it a significant competitive advantage in terms of accessing the best opportunities. B. TARGET RETURNS & PORTFOLIO CONSTRUCTION Valar intends for each of its flagship funds to realize a 4-6x gross return over the life of the fund. In order to achieve this, Valar places significant importance on the following portfolio construction practices that maximize the potential for outsized returns: High Concentration: Valar believes strongly in the "power law" theory of venture finance, where the single best performing investment tends to generate a greater return than all of the other investments in a fund combined (and where the second-best performing investment contributes more to the fund's performance than all other investment thereafter combined, and so on). Accordingly, Valar expects that a limited number of major investments — companies meriting at least $3M in capital from the fund - will receive 90% of the fund's invested capital on a cost basis (e.g., 6-8 major investments in a $100M fund), and that the top performing two (or sometimes three) best investments will receive more than 50% of a fund's invested capital. For example, in Fund I, two companies, Xero and Transferwise, which make up nearly 100% of Fund l's profits, received approximately 54% of Fund I (based on committed capital). Similarly, approximately 52% of Fund 2 committed capital has been invested in three companies (Breather, N26 and Kalo), with Breather reaching the fund's concentration limit of 25%. And in Fund 3, three companies (Stash, Octane and Qonto) account for 42% of Fund 3's capital commitments, with significant reserves remaining for additional follow-on investment, if warranted. Significant Follow-On Capital into the Best Performers: Valar believes ensuring that the best performing company or companies have received the lion's share of the fund's investment is key to managing a successful, highly concentrated venture fund. Valar works to achieve this by legging into its investments over time, affording the Managing Partners the opportunity to monitor the performance of each company and determine where the fund's incremental dollars are best allocated. For example, in Fund I, Valar made four separate investments into Xero over the span of 3+ years (with the third investment being by far its largest) and three investments into Transferwise, writing larger checks in each subsequent round. Moreover, Valar led Transferwise's Series A and Series B, taking advantage of Valar's position as an insider to identify a business that had extreme traction and velocity and significantly increase Fund l's ownership in the company at the right time. To this day, Valar remains the largest investor in Transferwise, a company now valued at $1.7B. The lessons from Fund I have been applied to Funds 2 and 3, with Valar making three investments into each ofBreather and N26 from Fund 2 (with the majority of Valar's investment into each company coming after Fund 2's first investment into each company) and three investments into Stash Invest from Fund 3 (where Valar co-led the Series A with a $3M investment, and then led the Series B with a $15M investment). Rather than simply taking additional "shots on goal" — a strategy that Valar believes is a common mistake among other venture firms — Valar intends to continue allocating the remaining reserves from both Funds 2 and 3 into its existing portfolio companies that demonstrate the highest expected returns for its investors. In some cases, later follow-on investments, including those at significantly higher valuations, may be made by separate co-investment vehicles or subsequent funds. In addition, Valar may raise a later stage "opportunity fund" in order to take advantage of access to growth stage rounds of companies that have Confidential & Trade Secret EFTA00810411 VALAR 6 Private Placement Memorandum exceeded the fund's early stage mandate (e.g., companies raising follow-on financing at valuations in excess of $250 million). Small Funds: Valar believes that smaller funds are more suited for investors looking to achieve annual returns in excess of a 20% IRR. Accordingly, all of Valar's funds have been relatively small, with Funds 2 and 3 having capital commitments of just over $100M each. The firm is targeting $100M-$150M for Fund 4. Given the firm's investment pace, these smaller funds are expected to be fully deployed in approximately three years, with a new fund being raised every 18.24 months. Venture Math: As a result of Valar's portfolio construction principles (small funds with high concentration and significant follow-on in the best performing companies), any single portfolio company may return a fund multiple times. For example, in Fund 1, Transfenvise (which received 22% of the fund's capital commitments), currently accounts for over 2.5x the fund's capital commitments, a figure which the firm expects could end up being two or even three times higher. Valar expects that this dynamic may be even more manifest in Funds 2 and 3, where Valar has emphasized buying larger stakes of each company in its initial investment, increasing the firm's average ownership percentage in its major investments from 12% in Fund 1 to 16% in Fund 2 and nearly 20% in Fund 3. As a result, the average exit valuation required in order for a single company to return 100% of each fund's respective capital commitments was close to $1 billion for Fund 1, but only $650 million for Fund 2 and closer to $500 million for Fund 3. Valar intends to employ the portfolio concentration principles outlined above in the operation of Fund 4. Confidential & Trade Secret EFTA00810412  VALAR 7 Private Placement Memorandum IV. COMPETITIVE ADVANTAGES A. SUPERIOR DEAL FLOW & ACCESS Early-stage venture capital is fundamentally a people business. Valar's network and reputation are critical to identifying the most promising opportunities, convincing the best entrepreneurs to accept Valar's investment and then helping its companies access smart, down-stream capital. The Managing Partners have spent years building their network and cultivating relationships with key players in each of the venture eco-systems in which they operate. Deal Flow: Valar's superior deal flow comes from three sources: I. Valar/Thiel Proprietary Network: Prior to forming Valar, Andrew and James had already developed strong networks on both Coasts: Andrew in California, as part of the "PayPal Mafia", and James as a lawyer at a top Wall Street law firm in New York. Then, in 2008, the Managing Partners joined Peter Thiel at Clarium (later Thiel Capital), where they worked closely with many of the rising generation of start-ups and investors, including the founders and senior leadership of Palantir, Facebook, Eventbrite, Founders Fund, Tiger Global, Formation8 (now 8VC), 137 Ventures, and Goldcrest Capital, to name just a few. These relationships, together with Peter Thiel's initial support, accelerated the Managing Partners entry into venture capital and directly yielded some of the firm's best investments to date, including Transferwise (an introduction from Max Levchin), Stash Invest (an introduction through Andrew's San Francisco network) and Octane Lending (an introduction from James' former colleagues at Skadden). 2. Local Connections: Similar to Silicon Valley, each of the major cities in which Valar operates has a known circle of top entrepreneurs and investors. The Managing Partners have added to their pre-existing relationships in the Bay Area by spending significant time over the past 5 years developing deep relationships with the major players in each of the other core cities in which it operates (e.g., New York, London, Berlin, Paris). Each of the tech hubs has fairly well established accelerator programs, angel investors and seed-stage investing communities. In particular, seed-stage venture firms that are not positioned to be lifecycle investors are attractive local partners for Valar, as those firms tend to be highly incented to share their best deal flow with deeper pocketed venture funds that can provide Series A, B and later financing to their portfolio companies. These relationships serve to channel deals to Valar as the investor of first choice when companies are looking to raise new financing rounds, particularly in New York (where working with a local investor is preferable to Bay Area money) and in Europe (where partnership with a US firm is viewed as a strong validation of a startups prospects). 3. In-House Research: The Internet, it turns out, is a powerful source of information sharing, and the past few years have seen an explosion of technology-focused news outlets, blogs and daily email circulars that surface even the earliest and geographically most remote of startup financings. Because Valar is not generally the first money invested in a company, and because the best entrepreneurs are often highly attuned to building their online presence early, Valar can identify and monitor startups, even in distant geographies, before they reach an appropriate stage of investment for the Fund. Once a potential portfolio company is identified, Valar can use its local networks in the relevant market to obtain an introduction, or directly contact the company's management team, relying on the Firm's global reputation to access to the best companies. Conlidcnliat & Trade Secret EFTA00810413 VALAR 8 Private Placement Memorandum Access: The best entrepreneurs understand the importance of receiving investment from the most reputable venture firms. Unlike public companies or even later-stage private firms, information about early-stage startup companies is not readily available. As a result, many of the key contributors to a startup's ultimate success (e.g., potential employees, prospective customers and downstream investors) rely heavily on the signaling effect that results from a company receiving investment from a highly respected investor. Setting this virtuous circle in motion is of paramount concern to early-stage founders, and is arguably the single most important "value add" a venture investor can offer. In that regard, the imprimatur of Valar choosing to invest in one company over others has significant and immediate reputational and branding benefits to the chosen company. As a result of Valar's prior successes investing in leading fintech startups (Xero, Transfenvise, N26, Stash), Valar's reputation as a top fintech investor has grown significantly in the past two years. Moreover, Valar has demonstrated its ability to help attract future downstream financing from top funds, with several of the fum's portfolio companies taking subsequent capital from a number of the most respected VCs, including Accel (Xero), Andreesen- Horowitz and IVP (Transfenvise), Coatue Management (Stash Invest), Menlo Ventures and Google Ventures (Breather), and Horizon Ventures (N26). Beyond the social proof the Valar brand provides, the Managing Partners have also cultivated a reputation for adding value by aligning the core terms of the company's governing documents towards growth and removing founder-unfriendly structures that constrain a startup's flexibility and growth. The Firm is known for practicing a high-availability, low-touch style of working with founders; connecting management with the Firm's networks and offering strategic advice and mentoring as needed. The strong referrals provided by Valar's portfolio company CEOs have become an important part of the Finn's ability to get into the best deals. Examples include Breather's Series B and Jetty's Series A, both of which were highly competitive rounds, and where the founders placed significant weight on the input provided by Valar's other portfolio companies. Valar expects that the continued success of its portfolio companies, and the increasing respect earned by the Managing Partners in the startup eco-system, will keep in motion the virtuous circle that helps drive persistence in venture capital returns for the best performing managers. B. WILLINGNESS TO TRAVEL For most Silicon Valley-based funds, making a small, early-stage investment (seed, Series A or even Series B) into an East Coast or European-based startup is simply not practical. The travel required to attend board meetings and work closely with companies at that stage is outside of the historical practice of most Bay Area VCs, a tradition that has been reinforced by both (a) the intense competition among VCs in the Bay Area (there is an important opportunity cost of spending time in other places), (b) the sheer difficulty in traveling from San Francisco to many of the emerging tech hubs (for example, there are no daily non-stop flights from San Francisco to Berlin, and there are no flights under 10 hours from San Francisco to anywhere in Europe), and (c) the simple realities of time zones (Continental Europe is +9.10 hours ahead of California, making scheduling board calls and informal check-ins very difficult). As a result, many of the most prestigious venture firms still remain largely focused on the West Coast at the seed, Series A and Series B stages. This dynamic creates a large and growing opportunity, which Valar has been capitalizing on by identifying and working with promising startups on the East Coast and in Europe before they are even on the radar or within the investment mandate of most West Coast venture capital funds. Confidential & Trade Secret EFTA00810414 VALAR 9 Private Placement Memorandum C. EXECUTION-ORIENTED TEAM Valar's small size and execution-oriented team has been optimized to allow the Firm to move faster and outflank every firm it has competed against to date. The Managing Partners have devoted considerable thought to how to structure its team — an area that it believes has posed significant challenges to the ability of other venture capital firms to access opportunities outside of their home markets. The core dynamic of Valar's investment process is its "perpetual-partner-meeting" model, meaning that Andrew and James generally travel and take all calls and meetings together and thus possess nearly symmetric information and are in constant communication about all opportunities available to Valar. The ability to make partnership level decisions in real-time has been key to Valar's success in securing the best opportunities, even in the face of competition from older, more established venture firms with much larger funds and partnerships. Moreover, the Managing Partners attend board meetings and work on all major investments together, avoiding deal attribution or the political horse-trading that goes along with that (there is no "you support my deal and I will support your deal"). This dynamic is particularly important when determining how to allocate remaining dollars in a fund that are reserved for a limited number of follow-on opportunities. As noted above, Valar has been highly successfully preempting successive financing rounds (e.g., Transferwise, Breather, Stash); the Managing Partners' tight alignment and shared data set was key to those decisions. Valar expects to hire additional investment associates and back office personnel as it expands, but all investment decisions and deal sourcing are expected to be made by the existing Managing Partners for the foreseeable future. Valar believes that its small team and unanimous voting make it more nimble than firms with large investment committees, politicized "Monday meetings", struggles over attribution and economics, and other internal angst caused by large teams operating in an industry where lumpy, large gains, long divorced in time from the investment decision create unhealthy dynamics that erode returns. Confidential & Trade Secret EFTA00810415  VALAR 10 Private Placement Memorandum V. PARTNERSHIP MANAGEMENT A. VOTING PROCESS AND CONTROL The Partnership will be managed by Andrew and James. Investment decisions will be made with the unanimous consent of James and Andrew (the "Investment Committee"). If either James or Andrew is affected by a conflict of interest, the additional consent of the Fund's Advisory Board regarding the proposed transaction will be sought. The General Partner anticipates appointing an advisory board of three to five members, to be selected in its discretion following the closing of the Fund. While Peter Thiel is not a member of the Investment Committee and is not expected to be involved in the day-to-day management of the Firm, he owns 20% of the General Partner and the Management Company and may retain veto rights over certain activities of the General Partner, the Management Company and the Fund. B. STRATEGIC DIRECTION Andrew and James have traveled the world and taken nearly all meetings together for the past seven years. Based on their intensive experience working together with entrepreneurs and portfolio companies on four continents, they have been able to iterate quickly and continuously refine the Strategy to optimize for the markets, stage of investment, founder attributes and firm structure with the highest potential for yielding outsized venture returns. C. TEAM BIOGRAPHIES Andrew McCormack Andrew is a founder and Managing Partner at Valar Ventures. Andrew's career in technology has included business and corporate development roles at eCount (acquired by Citicorp) and Yahoo! He joined PayPal in 2001, where he worked closely with Peter in preparing for the company's IPO. After PayPal's sale to eBay, Andrew helped launch Clarium Capital and later founded a restaurant group in San Francisco. In 2008, Andrew rejoined P