GCTH, Inc. - Site License

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NY Art Exchange What Do We Do? | Apply a Fractional Model to the Art Market | Aggregate Demand | Create Comprehensive Index of Supply | “Meta-Market” Indexed Supply | Enable Cooperative Purchase and Enjoyment of Works Why are We Doing it? | $60 Billion + Market | Fractional model has proved successful in analogous markets | Nobody else is doing it | Capital efficient | Smart people have confirmed various components of thesis | Art is interesting Who Are We? | Jordan Cooper – founder (outward) z General Catalyst Partners z SPP Capital Partners z Dartmouth College | Andy Lawrence – founder (inward) z McMaster-Carr z Dartmouth College Geographic Distribution of Global Art Market UK | Total Market = $68.5B 27% | U.S. = $31.5 Billion Unites States 46% z NY = 42% of Domestic Transactions z More than 42% of Domestic $ Volume (NY > $15B due to concentration of high ticket sales) Rest of EU 27 8% France Rest of World 6% China 3% 5% Sw itzerland Germany 2% 3% Source: Art Economics (2007) Pricing and Target Market Fine Art Dealer Channel 60.00% | Avg. Fine Art Transaction 52.30% 50.00% z Dealer = $136,834 z Auction = $75,655 Tranactions (Not $ Volume) 40.00% 33.60% | Auction/Dealer is 48/52 % 30.00% of $ Volume 20.00% | Target Transactions 12.10% z $150K - $1.5M is target 10.00% 2.10% z % $ Volume in 0.00% Segment is higher than $0-15K $15-150K $150K-1.5M >$1.5M Price Buckets % of transactions, but Art Economics 2007 no data available Go To Market Strategy | Start in New York (~$15B market), then expand z Physical customer acquisition: art fairs, auctions, gallery openings, charity events • manual acquisition and brokerage while we scale z Market to existing fractional buyers: NetJets, Marquis, etc.. z Focus on getting thought leaders onto platform: collectors will follow z Business development with galleries: acquire as many customer lists as possible, cross market z Traditional ad buys in High Net Worth channels | Key Issues / Challenges z Branding/Positioning: tension between co-ownership and prestige z Chicken and egg: better then most marketplaces, mitigated by manual brokerage z Staying ahead of inventory in the dealer channel may require substantial BD effort How Do We Do It? Competitive Landscape Auction Fractional Art Dealers Houses Companies Funds The Art Trading Fund Artvest The Collector’s Fund Key Partner Pipeline PARTNER STATUS COMMENTS / NEEDS Sotheby’s - Extensive discussions with # 3 at Sotheby’s and They’ll likely give us a feed, explore BD Head of New England - First contact with head of Los Angeles Christie’s VP level contacts, need better Need warm intro at higher level Phillips No contact yet 1 degree of separation from CEO NetJets Relationship with CEO Convert into syndicate Marquis Jet - Extensive contact Convert CEO to syndicate - Employee #1 interested in a job Mei/Moses Moses advising Not an investor, good resource on art as Index investment Ebay Relationship with CEO Convert into syndicate Dealers - First contact with multiple dealers Need to find more business savvy in this - Extensive contact with 1 group for BD NTM Planning QTR Product Hiring Bus Dev Marketing / PR | Name / brand | Close funding | Productspec, hire | Senior Engineer | Corporate presentation Q2/Q3’08 | Dealer discussions engineers, and go | Board | Warm press channels | Feeds from auction houses within industry | Beginning planning PR | Develop backbone | Pool customer lists | Word of Mouth through Q3/Q4’08 | Develop initial front- | Jr. Developer | Marketing deals with physical channel end fractional companies | Raise VC round | Blog push around Beta | LaunchFull Beta in | Controller | Add new dealers | PR launch – aggressively Q1’09 NY with front-end, | VP Marketing | All auction houses on in New York back-end data mgt | Sr. Sales platform | Significant online market | Takecustomer | Develop exclusive | Customer testing feedback, relationships with Auction Q2’09 Support | Start testing traditional ad add/modify features Houses, exclusive channels inventory, etc… Budget: May – Dec 2008 NY Art Exchange Year 1 Monthly Build ($ in thousands) Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Year 1 Revenue Total Transaction Volume $0 $0 $0 $0 $0 $0 $0 $0 $137 $137 $137 $137 $547 Average Transaction Fee % 0% 0% 0% 0% 0% 0% 0% 0% 10% 10% 10% 10% 10% Total 0 0 0 0 0 0 0 0 14 14 14 14 55 Cost of Sales Insurance 0 0 0 0 0 0 0 0 2 2 2 2 8 Shipping 0 0 0 0 0 0 0 0 2 2 2 2 8 Total 0 0 0 0 0 0 0 0 4 4 4 4 16 Gross Profit 0 0 0 0 0 0 0 0 10 10 10 10 38 % Margin N/M N/M N/M N/M N/M N/M N/M N/M 70% 70% 70% 70% 70% Operating Expenses Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Marketing 0 0 0 0 0 0 1 1 1 1 1 1 6 Technology 0 0 0 0 0 22 27 22 22 22 22 22 159 G&A/Overhead 0 0 0 0 0 34 22 27 19 19 19 20 159 Total 0 0 0 0 0 56 50 50 42 42 42 43 324 EBITDA $0 $0 $0 $0 $0 ($56) ($50) ($50) ($32) ($32) ($32) ($33) ($286) Margin N/M N/M N/M N/M N/M N/M N/M N/M N/M N/M N/M N/M N/M Cash Flow EBITDA $0 $0 $0 $0 $0 ($56) ($50) ($50) ($32) ($32) ($32) ($33) ($286) Less Capex 0 0 0 0 0 (30) 0 0 0 0 0 0 (30) Cash Flow $0 $0 $0 $0 $0 ($86) ($50) ($50) ($32) ($32) ($32) ($33) ($316) Cumulative 0 0 0 0 0 (86) (136) (186) (218) (251) (283) (317) (316) Revenue Projections NY Art Exchange Projected Five Year P&L ($ in thousands) 2008 2009 2010 2011 2012 Revenue Total Transaction Volume $547 $7,339 $40,955 $122,864 $327,637 Average Transaction Fee % 10% 10% 10% 10% 10% Total 55 734 4,095 12,286 32,764 Cost of Sales Insurance 8 110 614 1,843 4,915 Shipping 8 110 614 1,843 4,915 Total 16 220 1,229 3,686 9,829 Gross Profit 38 514 2,867 8,600 22,935 % Margin 70% 70% 70% 70% 70% Operating Expenses Sales $0 $261 $689 $1,298 $2,375 Marketing 6 659 978 1,343 2,616 Technology 159 303 473 492 512 G&A/Overhead 159 809 1,030 1,235 1,349 Total 324 2,031 3,170 4,368 6,852 EBITDA ($286) ($1,517) ($303) $4,232 $16,082 Margin N/M N/M N/M 34% 49% Cash Flow EBITDA ($286) ($1,517) ($303) $4,232 $16,082 Less Capex (30) (45) (60) (60) (60) Cash Flow ($316) ($1,562) ($363) $4,172 $16,022 Cumulative (316) (1,878) (2,241) 1,931 17,954 Fundraising | Raising ~$500K z $ toward headcount, legal, platform development, sub-lease space | Milestones for seed round z Completion of web platform z Completion of legal structure z 3rd party insurance, crating, shipping relationships in place z Launch of Beta in NY z Single digit transaction volume | Who we need z Smart investors like you z The more active the better