final-präsentation german racing concept challenge - 2. platz: "digital natives"

Concept Challenge Digital Innovations in the Horse-Racing Industry Digital Natives Baden-Baden, August 2012 Sebastian Walther, Philipp Wunderlich, Anna Heid

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid

Contents Page

A. Introduction 3

B. Business Models and Recommendation 4

C. Product Design and Functionalities 11

D. Market Research 13

E. Value Creation 16

F. Marketing 20

G. Financials, Roadmap and Success Factors 22

Contents


The horse-racing industry has constantly lost revenues, attraction and customer reach during the last 10 years.

Introduction

All important indicators for the viability of the German horse breeding, training, racing

and betting went down during the last few years.

It is difficult to get

engaged/attract new persons

into horse-racing

Horse-racing only accounts

for a small proportion of the

sports broadcasting time

3

Business Models and Recommendation


In the initial phase three business models were developed which transfer current digital mega trends into the horse-racing industry.

buyyourhorse.com

• The race-club enables customers to buy micro-shares of specific horses.

• Owners of micro-shares can participate in the success or failure of the horses by receiving

part of the price money in accordance to their amount of shares.

• Owners can follow their feedings and meet the horses “live”.

• The concept is based on a mingle of crowdfunding and classic investment.

bettingpool.com

• The race club collects bets from distinct betting-interested members.

• The bets are pooled into one bet, including all information given from the single bets.

• The diverse information possibly has higher predictive quality and therefore raises the

overall profits.

• The concept is based on the “wisdom of the crowds”.

wikihorse.com

• The race club offers persons interested in horses the opportunity to create profiles on a

central webpage, ranking from amateurs to professionals.

• The platform allows interchange in the community between the different parties.

• Members can publish self-written news about regional horsing-competitions similar to

netzathleten.de

Business Model Overview 5

Business Model Assessment


Business Models

Innovativeness

Profit Potential

Implementation

Result

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Qualitative Assessment

Even though buyyourhorse.com is difficult to implement, it shows the highest potential to be successful.

1

2

3

hard easy

low high

low high

buyyourhorse.com

bettingpool.com

wikihorse.com

1 2 3

1 2

1

3

3 2

buyyourhorse.com

7


To study the end-user acceptance of the business models a survey was conducted supporting the results of the previous assessment.

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Quantitative Assessment

• Participants were end-users.

• Participants were interviewed via phone.

• Business model descriptions were read to

the participants.

• Intention to Use was measured with a 7-

Point Likert Scale (Davis 1989).

• Perceived Interest included as possible

antecedent of usage behavior, also

measured with a 7-Point Likert Scale.

• Participants were given the possibility to

comment on the business models.

Description of the Study

• n = 21

• buyyourhorse.com has the highest

intention to use, followed by

predictiveanalytics.com

• Perceived interest correlates highly with

intention to use, indicating a high external

validity of the measurement.

Results of the Study

Means of Perceived Interest and Intention to Use

buyyourhorse.com

bettingpool.com

wikihorse.com

8

Business Model


buyyourhorse.com enables customers to buy micro-shares of competitive racing-horses.

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid buyyourhorse.com

• The race-club enables customers to buy

micro-shares of specific horses. Owners

of micro-shares can then participate in the

success or failure of the horses, can

follow their feedings, meet the horses

“live” or get tickets to races, depending on

their sum invested. The profits of the

customers depend on the success or the

failure of the horses. Micro-shares can

be bought as gift or for personal usage.

Name: buyyourhorse.com

Description

Customer Segments

Value Proposition Key Activities and Partners

• Running website as main platform.

• Filming horses and races.

• Enabling customers to “meet” the horses

“live”.

• Developing and supervising the complex

investment-

• Promotion of Platform.

• Facebook as primary technological

partner.

• Stakeholders in the horse-racing

ecosystem.

Infrastructure

Industry: Horse-Racing / Crowdfunding / Internet

Value Propositions Customer:

• “Own” horse for relatively little money,

especially interesting as gift for children

and teenagers.

• Profit expectation.

• Low financial barrier and ease of use.

• Excitement in following the “own” horse

in races.

Value Propositions from Studs:

• Shift of risk of financial investment from

provider to customer.

• New source of funding.

• Relatively low financial investments for a

large scale customer reach.

• Children, teenagers and generally young

people which are interested in horses.

• Young people which do not want to bet,

but still want to feel the excitement of

horse racing.

• All age ranges which are interested in

innovative, high-risk investment

strategies.

• Development of a service-oriented IT

infrastructure platform to enable smooth

integration of different components.

• Development of an easy-to-use plug-in for

Facebook access .

• Development of a trading system with

legal compliance.

10

Revenue Generation

• Revenues are generated through

transaction fees based on the transaction

volume.

Functionalities and Product Design


Live Meeting

Name as Sponsor

on Jockey*

Tickets

The mashup shows the design of the webpage inspired by the principles simplicity and intuitive usage.

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Mashup 12

FURY

Play

FURY is a strapping, healthy looking gelding that will participate in many races this year.

source of webdesign: kickstarter.com

Horses Baden-Baden

Video Access

Micro Share

Personal

Certificate

Live Meeting

1 2 3 4

€1

€10

€25

€75

Rewards

5 6

€150

€500

*1,5 x 1 cm

Market Research


Crowdfunding is one of the emerging global mega trends, with an worldwide crowd funding volume of €1.2B in ´11.

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Secondary Market Research

“A new and emerging way of funding new ideas or projects by borrowing funding from the crowds.

In these markets, any individual can propose an idea that requires funding, and interested others can

contribute funds to support the idea. These markets have recently emerged as a viable alternative for sourcing

capital to support innovative, entrepreneurial ideas and ventures.” (Financial Times Dictionary)

fuer-gruender.de

Average funding volume per

project is € 3.7T

Kickstarter.com has raised

€235M of funding until 2012

for 63,382 projects fuer-gruender.de

14


There are five competitors with similar business models, however they all focus on classical investment, not on crowdfunding.

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Primary Market Research

• Investments as low as €1 to highlight the

crowdfunding character of the business

model.

• Integration of key partners by providing a

clear value proposition to the breeders and

studs.

• Similar functionalities as

ownaracinghorse.co.uk, except for live

transmission of feeding sessions.

• Customer profiles to strengthen the

community-like characteristics, eventually

micro-decisions with “horse communities”.

buyyourhorse.com • Investments start at €114.

• 6-15 available race horses in training.

• Functionalities like gift, horse visiting, etc.

ownaracehorse.co.uk

15

• Up front costs of €2550 plus €255 per month.

• 16 race horses in training with six trainers.

• No special functionalities, only information.

favourites.co.uk

• Yearly costs of €3200.

• 19 race horses in training with eight trainers.

• Owner’s badges, full involvement, etc.

henryponsonby.com

Value Creation


The platform will have significant direct and indirect impacts on the horse-racing ecosystem by reaching new customer segments.

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Value Propositions 17

Customer

Platform brings studs

and customers

together by providing

two-sided value

Studs

• Easy way to raise money

for new horses

• Shift of risk to the

customers

• Higher interest on equity

capital due to leverage

effect

• Realisation economies of

scale by fully using the

stud‘s capacities

• Raising the stud‘s

competitiveness on the

global market

• Possibility to “own“ a race

horse

• Customers which do not

like to bet can indirectly

“bet“ by investing into one

horse

• Specials like visiting the

studs or races where your

horse lives

• Feeling as part of a

community

• Personal footprint


The business case for customers and studs suggests financial benefits for both sides.

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid ROI Calculation 18

• Starting investment of €70T

• Lineage is important in breeding –

even less successful mares can

return profits

• Product (conservative):

• .5% of earnings in races per 1%

of shares

• 1% of earnings in breeding per

1% of shares

• 1% of earnings of sale per 1%

of shares

Mares

• Starting investment of €70T

• Breeding fees highly dependent on

the success of the stallion

• Product (risky):


of shares


1% of shares

• 0.5% of earnings of sale per 1%

of shares

Stallions

• Starting investment widely ranging

depending on parents’ bloodlines

• Even the best parents don’t

guarantee for a good racer

• Product (high risk):


of shares


1% of shares

• .5% of earnings of sale per 1%

of shares

Foals

ROI*: 0.6 to 4.3 ROI*: 0.1 to 6.7 ROI*: 0.1 to 164

*Top 50 studs have about 20% winning horses in their stables with the top 100 race horses earning about €56T

a year in German price money – this does not include international price money (Source: www.galopp-sport.de)


Besides the advantages for both directly involved sides, the concept adresses the major key indicators of horse racing.

• More horses will be breeded

• Possibility to breed with high quality stallions

financing the projects by crowdsourcing

• More horses in training

• Higher competition in Germany and worldwide

• More and new racing enthusiasts through

involvement with their own horse

• Search of new outlets to compete in

• More horses are breeded, trained and traded

• Through crowdsourcing higher budgets are

available and prices could rise

• All four key indicators

will be positively

influenced

• Money from new interest

group for the community

• Larger community and

more interested parties

could raise TV coverage

of major events

• Possibility to escape the

“cycle of death“

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Horse-Racing Ecosystem 19

Marketing


To establish high customer reach our marketing plan consists of four general building blocks.

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid ROI Calculation 21

104 weeks Follow Up

Establishment Mainstream Fame

Phase I Phase II

• Affiliate Marketing with

other horse-racing sites

• Sponsorship of regional

tournaments

• Advertisements in

specialized journals

• Facebook plugin

• Cooperation with

betting portals – bet on

your “own” horse

• Sponsorship of

national tournaments

• Sponsorship of jockeys

• Sponsorship of international tournaments

• TV – advertisement during horse racing events

Underlying effects

Building Awareness 3 1 2

• Reporting about the concept

• Social networking

Financials, Implementation Roadmap and Success Factors


In the base case scenario, buyyourhorse.com reaches the break even point in 2016.

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Business Case

• Revenues

– Revenues are generated through fixed

purchasing fee of 7% of the trade volume with

an average investment of €30.

– We assume 40.000 transactions in 2014, after

the platform has been implemented, with a

CAGR of ~50%.

• Costs

– Professional Fees: Attorneys, etc.

– Technology Costs: Hosting, Computers, etc.

– Administrative Costs: Rent, Desks, etc.

– Sales and Marketing Costs

– Wages and Benefits

Revenue and Cost Calculation

23

Scenario Analysis

• Best Case

– 35 % higher revenues and constant costs.

– Break even in 2015.

• Worst Case

– 30 % lower revenues and 30 % higher wages

and marketing costs.

– No break even in investigated time-frame.

Fcast Fcast Fcast Fcast Fcast

L.C. in €T 2013 2014 2015 2016 2017

Revenue - 84,0 168,0 226,8 306,2

Cost of sales - - - - -

Gross profit - 84,0 168,0 226,8 306,2

Professional Fees (1,4) (0,2) (0,2) (0,2) (0,2)

Technology Costs (13,8) (8,5) (9,7) (10,9) (10,8)

Administrative Costs (6,4) (5,2) (5,2) (6,5) (6,3)

Sales and Marketing Costs (7,5) (10,0) (27,0) (27,0) (27,0)

Wages and Benefits (66,0) (66,0) (66,0) (85,5) (85,5)

EBITDA (95,1) (5,8) 60,0 96,8 176,4

Financial income/(expense) (5,5) (6,0) (3,0) - -

Depreciation and goodwill amortisation (0,9) - - (0,3) -

Income before taxes (101,5) (11,9) 57,0 96,5 176,4

Provision for corporation tax - - - - (24,7)

Net income (101,5) (11,9) 57,0 96,5 151,7

Key ratios

Sales growth % 100,0 35,0 35,0

EBITDA margin % (7,0) 35,7 42,7 57,6

Financing/Debt (i=0,05) 110,0 120,0 60,0 - -

Income Statements


It will approximately take 1 year to go live with buyyourhorse.com.

Phases Time required Project features

Design of Market Plattform Marketing and Sales Phase I

Conceptual

Phase

Phase II

Implemen-

tation

Phase

Implementation

Go Live Phase III

Go Live

35

weeks

10

weeks

4

weeks

• Market Mechanism

• Layout / Ease of Use

• Service Consumerization

• Legal Compliance

• Revenue Generation

• Distribution Channels

• Partnering

• Marketing Campaign

• Installation IT Services

• Development of Facebook Plug-In

• Programming of Plattform

• Legal Contracts

• Servers Running

• Services Running

1 2

3

4

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Implementation Roadmap 24


Winning the studs to cooperate with the platform is crucial to succeed.

Success factors

Convince Studs to lower

risk of imitation

Bring customers and

studs together

Perfect user experience

/ Features

Gaining market share

quickly

Managing these factors will improve the chances that buyyourhorse.com will be successful.

Gaining affiliates for

marketing

Gaining successful

studs as premium

partners

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid Conclusion 25

Thank you for your attention!


APPENDIX

27


predictivebettingpool.com collects bets from distinct members and places one mass bet including the information from all single bets.

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid bettingpool.com

• The race club collects bets from distinct

betting-interested members. These bets

are then mingled and pooled into one bet,

including all information given from the

single bets. The diverse information

possibly has higher predictive quality and

therefore raises the overall profits. This

concept is based on the “wisdom of the

crowds”, which has been shown to be a

powerful tool for predictions.

Name: bettingpool.com

Description

Customer Segments

Value Proposition

Key Activities and Partners

• Bringing people together on a platform.

• Bringing the right people together.

• Setting up betting rules and analytic

design.

• Finding algorithms for better predictive

quality.

• Giving people a nice lounge for trading

thoughts.

• Cooperating with other betting platforms.

Infrastructure

Industry: Horse-Racing / Betting / Internet

• Profits from higher predictive quality.

• Low initial investments for participating in

the community.

• Innovative social get-together.

• Interesting results.

• Betting interested male persons above 18

years of age.

• No age limit.

• The IT infrastructure is not trivial to

establish, as it several legal issues have

to be included into the automatisms of the

system. For instance the allowance to

mingle the single bets has to be granted

in advance. Additionally one infrastructure

difficulty is the integration of the system

with other betting platforms.


amateurhorseracing.com is a social networking platform organizing amateur tournaments.

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid wikihorse.com

• The race club offers persons interested in

horses the opportunity to create profiles on

a central webpage. The participants can

range from amateurs to professionals. The

platform allows interchange in the

community between the different parties

and offers participants the possibility to

publish articles on the topic, with the most

interesting being published in the news

section and/or specialized magazines.

Further amateur racing series can be

organized for members to build up a talent

pool.

Name: wikihorse.com

Description

Customer Segments

Value Proposition Key Activities and Partners

• Offering the community a central platform

to stay connected.

• Bringing the right people together.

• Ensuring the future of German horse

racing sport by building up a talent pool.

• Importance to get all players at one table

ranging from amateurs to professionals

and officials.

• Partnership with major studs and

breeders.

Infrastructure

Industry: Horse-Racing / Wikimedia / Internet

Value Propositions from Customer

Perspective:

• Possibility to easily get connected in the

German horse racing community.

• Opportunity to find sponsors

• Opportunity to stay in touch with the

community.

• No financial barrier and ease of use.

• Excitement in feeling “in touch” with

popular jockeys and officials.

Value Propositions from Provider

Perspective:

• Opportunity to heighten the community’s

loyalty.

• New source of promoting minor events

attracting more (paying) customers.

• Advertisement platform for betting

platforms and producers of horse racing

accessories etc..

• Creation of a web based platform similar

to netzathleten.de.

• Setting high standards on profile safety

and credibility to allow for recruiting and

networking in a professional way.

• Importance to get officials and

professionals on the platform

• Everyone interested in horses

• Young amateurs looking for sponsors

• Horse owners looking for talented riders

• Professional jockeys who are willing to

share their experience and that are

looking for sponsors and/or fans


Revenue Estimation

Average Price:

Share of overall

transactions

Age Range Average

Transaction

25 % 18-27 €15

50% 28-37 €30

25 % 28-80 €45

0.25 x 15 € + 0.5 x 30€ + 0.25 x 45€ = 30€

# of Transactions Estimation:

Segment

Estimation in Mio.*

Age Range Market

Penetration**

# of

Transactions

10 18-27 0.1 % 10000

10. 28-37 0.2 % 20000

43 38-80 ~0.023 % 10000

10000+20000+10000 = 40000 Transactions p.a.

* Assumption: Equal Distribution

** Assumption: Reference Crowdsourcing Market

*** ~ 50 transactions per day (conservative calculation)

30 €/Transaction x 40000*** Transaction x 0.07 = 84000


Break-Even Analysis Best Case


L.C. in €T 2013 2014 2015 2016 2017

Revenue - 113,4 226,8 306,2 413,3


Gross profit - 113,4 226,8 306,2 413,3






EBITDA (95,1) 23,6 118,8 176,1 283,6



Income before taxes (101,5) 17,6 115,8 175,9 283,6

Provision for corporation tax - - (4,5) (24,6) (39,7)

Net income (101,5) 17,6 111,3 151,3 243,9

Key ratios

Sales growth % 100,0 35,0 35,0

EBITDA margin % 20,8 52,4 57,5 68,6

Financing/Debt (i=0,05) 110,0 100,0 - - -

Income Statements


Break Even Point Worst Case


L.C. in €T 2013 2014 2015 2016 2017

Revenue - 58,8 117,6 158,8 214,3


Gross profit - 58,8 117,6 158,8 214,3






EBITDA (117,2) (53,9) (18,4) (5,0) 50,8



Income before taxes (123,6) (59,9) (21,4) (5,3) 50,8

Provision for corporation tax - - - - -

Net income (123,6) (59,9) (21,4) (5,3) 50,8

Key ratios

Sales growth % 100,0 35,0 35,0

EBITDA margin % (91,6) (15,6) (3,2) 23,7

Financing/Debt (i=0,05) 130,0 190,0 210,0 220,0 170,0

Income Statements


CAGR Estimation - Hints

Average Price: Crowdfunding market 2011 – 2012 growth over 700 %

Even E-Commerce as saturated market 9% CAGR

40% CAGR for Big Data Market From 2010 to 2015


Legal Form

• Limited Corporation Liability

• Registered Office in Germany

• Only German Company and Tax Law

• Only German Formalities

• High Acceptance and Trustworthiness within Germany

• High Credibility for Investors

GmbH

• No Tax Advantages if Business mainly in Germany

• Registered Office in GB or Wales

• In between two legal Company and Tax Systems

• Lawsuits in UK (expensive)

• Both, German & UK Formalities

• Low Acceptance and Trustworthiness in Germany

• Low Credibility for Investors

Limited

• Equity 25.000€

• Minimum Deposit 12.500€

• Higher Costs Foundation

• Equity 100£

• Minimum Deposit 1 £

• Lower Costs Foundation

• Limited Corporation Liability


Risks

Growth Risk

• Studs concerned about their

Reputation

• Small Market

• Trust in Investment

• Feasibility of predicted Sales

• Subsitution Products &

Competitors

• Leasing Contract

• Major Maintenance/Repairs

• Loss of Receivables

Operating Risk

• Horse Injury & Performance

• Lawsuits

• Natural Hazards

• Human Risks

Team & Management Risk

• Illness

• Inability to work

• ‘Getting Oder ‘

Legal Risks

• Revolution of Gambling

Regulations & Laws

Technology & Marketing Risk

• Less likely

Financial Risk


Professional Fees


Expenses in € 2013 2014 2015 2016 2017

Lawyer/Consultant/Tax Accountant 500 200 200 200 200

OHIM 900 0 0 0 0

Professional Expenses 1400 200 200 200 200

Professional Expenses


Technology Expenses


Expenses in € 2013 2014 2015 2016 2017

Computers 2100 0 0 700 0

Printers 400 0 0 0 0

Software Applications 1400 0 0 0 0

Hosting 1200 1440 1728 2070 2484

Website Development 5000 1200 2000 2000 2000

Internet Access 1200 1360 1472 1630 1816

Cameras 2500 2500 2500 2500 2500

Maintance 0 2000 2000 2000 2000

Technology Expenses 13800 8500 9700 10900 10800

Technology Expenses


Administrative Expenses


Expenses in € 2013 2014 2015 2016 2017

Rent 4200 4200 4200 5040 5040

Insurance 599 599 599 699 699

Stationary 720 360 360 480 480

Office Supplies 900 50 50 250 70

Administrative Expenses 6419 5209 5209 6469 6289


Marketing and Sales

Expenses in € 2013 2014 2015 2016 2017

Affiliate Marketing 0 2000 2000 2000 2000

Regional Tournaments 2500 2500 2500 2500 2500

Ads in specialized Journals 2500 2500 2500 2500 2500

Facebook Plugin 0 0 0 0 0

Cooperation Betting Portals 0 0 0 0 0

National Tournaments 2500 3000 3000 3000 3000

Sponsorship Jockeys 0 0 2500 2500 2500

Sponsorship International Tournaments 0 0 2500 2500 2500

TV Ads 0 0 12000 12000 12000

Reporting about Concept 0 0 0 0 0

Social Networking 0 0 0 0 0

Technology Expenses 7500 10000 27000 27000 27000


Wages


Expenses in € 2013 2014 2015 2016 2017

Salaries 60000 60000 60000 78000 78000

Workers Insurance & Payroll Taxes 6000 6000 6000 7500 7500

Wages 66000 66000 66000 85500 85500

Wages


ROI

Products Best Worst Best Worst Best Worst

Investment1 70 70 70 70 5 5

Race Earnings² 100 0 150 0 150 0

Breeding³ 200 20 600 10 600 0

Sales4 50 20 40 5 70 1

ROI 4,3 0,6 6,7 0,1 164,0 0,2

Average ROI*

1) According to Mr. Eisele

2) Top 100 race horses earning about €56T a year in German price money – this does not include international price money (Source: www.galopp-sport.de)

3) According to Mr. Eisele

4) According to bbag-sales.de

* According to Mr. Eisele and galopp-sport.de about 20% of professionally selected horses will be successful and about 1% of German foals are successful

Administrative Expenses

Mares Stallions Foals

1,3 1,4 1,8


The business has low initial investments with decent profit potential.

• Revenues

– Revenues from yearly membership fee of 10 €

– We assume a customer base of 15.000 in the first year,

with a CAGR of 20%.

• Cost Structure

– Development of the betting system, integration into

other betting systems, personnel etc. will account for the

highest costs with around 100.000 € in the first year.

– Initial IT investment costs are low as service is running

on cloud product enabling quick scaling and high

elasticity “on-demand”. Assuming all-in-all transaction

costs of 2 € per customer per year (activity accounting).

L.C. in Thousand 2013 2014 2015 2016 2017

Revenue 0.0 150.0 180.0 216.0 259.2

Cost of sales (0.0) (30.0) (36.0) (43.2) (51.8)

Gross profit 0.0 120.0 144.0 172.8 207.4

Expenses (100.0) (50.0) (75.0) (75.0) (100.0)

EBITDA -100.0 70.0 69.0 97.8 107.4

Earnings in Equity investments -15 -15

Financial income/(expense) 0 0

Exceptional items 0 0

Depreciation and goodwill amortisation 0 0 0

Income before taxes -115.0 55.0 59.0 92.8 107.4

Keyratios

Sales growth %

20

20

20

Profit margin %

20

27

35

34

30

Income Statements and Financing*

-10

0

0

-5

0

0

0

0

0

Financing

Debt

Interest (i=10%)

100 50 0 150 150 10 5 0 15 15

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid bettingpool.com

* Tax for profit margin /cash flow calculation estimated with 0.035*4*EBT

4

2

Comments

0 0


The business case shows relatively low profit potential, however, the business model is associated with little initial inivestments.

• Revenues

– Monthly revenues are mainly generated through

advertisement on the platform (0.2€ per user)

– After going live we expect about 20.000 profiles in the

first year. Exponential growth during the first 5 years,

following an s curve reaching a market share of 20% of

horse enthusiasts (about 200.000).

– Further revenues are generated by the amateur racing

series through starting fees and advertisements on the

tournaments (20 participants, 50€ starting fee, 20

tournaments each year, 1.500€ advertisements).

• Cost Structure

– Development of the social networking platform will

attribute for 25.000€ one-time costs.

– Monthly server and traffic costs in the cloud dependent

on the usage (0.1€ per user).

– Marketing and networking to establish

amateurhorseracing.com as a social network for horse

riding enthusiasts of 50.000€ in the first year.

– Price money for tournaments (1.000€).Tournament

organization costs are born by the racing tracks.

– Staff to manage the platform and tournaments (50.000€)

L.C. in Thousand 2013 2014 2015 2016 2017

Revenue 0.0 . 98.0 117.2 144.1 181.7

Cost of sales (0.0) (24.0) (33.6) (47.0) (65.9)

Gross profit 0.0 74.0 83.6 97.1 115.2

Expenses (75.0) (70.0) (70.0) (70.0) (70.0)

EBITDA -75.0 4.0 13.6 27.1 35.2

Earnings in Equity investments -10 -10

Financial income/(expense) 0 0

Exceptional items 0 0

Depreciation and goodwill amortisation 0 0 0 0

Income before taxes -85.0 -6.0 3.6 17.1 26.2

Keyratios

User growth %

40

40

40

Profit margin %

40

3

10.4

12.7

-6

-10

0

0

-10

0

0

-9

0

0

Financing

Debt

Interest (i=10%)

100 90 0 100 100 10 9 7 10 10

Team Digital Natives: Sebastian Walther, Philipp Wunderlich, Anna Heid wikihorse.com

0

70

* Tax for profit margin /cash flow calculation estimated with 0.035*4*EBT

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Comments Income Statements and Financing*

final-präsentation german racing concept challenge - 2. platz: "digital natives"

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