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Instant ChemistryVenture Capital

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Overview - Instant Chemistry

Viability Assessment Market & Competition Product & Strategy Management Team

Deals Terms Sought Current and Desired Financing, and Financing Efforts Valuation Assessment

Financing Structure Recommendations & Risks

Agenda

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Instant Chemistry - Overview

Instant Chemistry is seeking to become a leader in the Non-Health Genomics space

Need- Plethora of dating websites but low success rates of 10 –

15%- Research shows that 40% of physical attraction can be

predicted based on genetic factors

Solution- Products to determine your genetic match based on cheek

swabs- Kits sold both via matchmakers/dating sites and directly to

consumers Scope outside Dating Industry- Idea can be extended to :

• corporate team building • military individual/team effectiveness tests

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Viability Assessment

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Dating Industry - Market Size

$2 B

Size of North American Dating Market

• Number of Singles – 60M• People who have used dating service - 40M• Average $ spent by a dating site user- $238/year

$4 B Size of Global Dating Market

Assistive technologies becoming less taboo, may drive sales

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Personal Genomics

Market Research Methodology

• Dependant on own research – Surveys through Google Ads and Social Media

• Supplementary research - data from 100 relationship kits

Personal Genomics Space

• Our research shows no mention of non-health genomics, only Health-based genomics - an industry worth approximately $3.3 billion

Non-Health Genomics?

• Offers Gene testing kit similar to Instant Chemistry’s relationship kit, priced at $249

• Research on 6 of its dating company partners revealed that the product wasn’t viable

• Lacks a good business model. Poor marketing

Competition

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Viability - Market

• Novel product idea, attempts to solve an industry wide problem

• No big competitors

Assessment Red Flag! Potentially High Adoption and Education Costs.

• Preliminary research indicates high marketing costs for increasing adoption and educating consumers.

• Lacks data on commercialization potential

• Unreliable market research methodology

• Bad precedent in GenePartner

Positives Negatives

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Product

Relationship Kit

Get kit via matchmakers

/dating websites

Collect Sample Send it to the lab who analyzes your

DNA (Time?)

Register Kit &view your results

on IC’s website

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Rapid Home Test Kit - test for compatibility genes on the spot

Instant Chemistry needs money for the Rapid Home Test kit which makes genomic testing simple and affordable

Order kit via dating websites or buy it at

a pharmacy

Place cotton pad in mouth to get your

Genetic Score

(Under Development)

OIEQ

Feed the code into an app or website to

view results

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Business Model

Relationship Kit Rapid Home Test

• Sold via Matchmakers + Dating platforms

• Sold via partner dating websites as a value added service and via drug stores

• Also co-branded and sold with Wendy Walsh’s books

Pack of 2 for $x (tentative) $y(tentative)

Go-to-Market

Strategy

Pricing

B2B B2C + B2BBusines

sModel

$x with scale $y with scaleCost

1 2

IPApplied for 2 utility patents : 1. Matching algorithm based on genes

and 2. Speedier method for gene evaluation in lab

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Viability - Product

• Low cost product – rapid test

• Cost control advantage

Potential due to partnerships. Some perceived redundancy & product risk associated with relationship kit.

• Possible redundancy and risks in dual product offering.

• Both require huge infrastructure investments ($260K for relationship kit and $360K for rapid test)

Positives Negatives

Assessment

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Management Team

Core Management Team

Scientific Advisory Board

All PhDsJeremy Bluvol

Full Time Huan Xie, CFO

Full Time

Ron GonzalezFounder

Mariana G. ConiPart-time

Carmelia Ray, CMOSara Seabrooke, Founder

MBABioengineering

MBA

Accounting

MBA

PhDNeuroscience

Biz Dev

Biz Dev

Biz Dev

20+ yrs dating

industry

Industrial Design

PhDGenetics

Viability – Management Team

• Strong Executive Team & Scientific Board with industry connections

• Pertinent Scientific knowledge and business expertise

• Investments from founders total $67k ( 61% of total investments) – shows commitment

• Carmelia Ray - conduit for further partnerships

Good Potential.

• Direct entrepreneurial/ startup experience lacking

Positives Negatives

Assessment

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Current Deal Terms

Instant Chemistry is looking for funds to develop its rapid test kit and commercialize it

Now

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Founded in 2013 To transition to full commercialization, IC needs

Capital Requirement :$xM over 16 months

Type of financing : Convertible Note

4 Months

16 MonthsPhase I : $yK Phase II : $zK

Total Current Investments :

$xK

Valuation Cap : $yM

OwnershipInstant

Chemistry

100%

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Valuation : Using Tool developed by Bill Payne

Approach 1 : Pre-revenue business valuation tool developed by renowned Angel Investor Bill Payne

$X M

MeanPre-Money Valuation

$y M

MeanPost-Money Valuation

After Market Research this Pre-Money Valuation went up by $xk to yM and share preserved by 15% (detail in appendix)

Strength of Management

Team

Product /Technology

Competitive Environment

Marketing/Sales

/Partnerships

Need for additional

Investment

Size of Opportunity

(Market Validation/Brand

)

75%

50%

50%

25%

100%

50%

50%

Factors impacted by Market Research

% Percent of Ideal

Cash Flows : Monte-Carlo Simulation

Approach 2 : Monte Carlo Simulations for Cash Flows

Our Simulations indicate that Instant Chemistry without Market research would require an additional $xK in cash flows due to

higher variability in the initial deal terms assumptions

Assessment

Poor. Deal terms do not correspond with pre-money valuation.

• Clear that the deal terms requested are not suitable

• Valuation Cap ($xM) of approximately 26% much too low

• A pre-money valuation cap would require at least a 68%

valuation cap based purely on financials alone

Negatives

Assessment

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Recommendations

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Scenario 1: Adjust Valuation Cap

Raise Funds with the Company As-Is Using a Convertible Note, however with Adjusted Pre-Money Valuation Cap of $xM

Deal RiskVery High

Now 4 Months

16 Months

First Tranche: $xK Second Tranche: $yM

• Significant risk - requires VC to believe in idea despite lack of market research

• Costs to educate and incite adoption may too high• Risks of dilution due to business uncertainty

Capital Requirement :$xM over 16 months

Type of financing : Convertible Note

Valuation Cap (Post Money) : $y M

Funding Source: Seed VC Investor

32%

68%

VC

New OwnershipInstant

Chemistry

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Scenario 2 : Conduct Professional Research to Validate Concept

Use Professional Research to Validate Concept, After Which Raise Funds through Convertible Note

Deal RiskMedium

• IC doesn’t need the additional $600K here because the initial assumptions hold• Better pre-money valuation cap of $1.1M• Risk of potential cash burnout and $$ to fund market research• Mitigate some risk by tying up with a dating partner & using their customer base

4 Months

16 Months

Second Tranche: $yK

Third Tranche: $zK

First Tranche:

$xK

Capital Requirement :$x M over 16 months

Type of financing : Convertible Note

Valuation Cap (Post Money) : $y M Funding Source: Seed VC Investor

Now

Internal Investment$x

K

1-2 Months

We recommend convertible note post market research approach due to its medium risk and ability to achieve a better valuation cap

47%53%

Instant Chemistry

VC

New Ownership

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Summary

We recommend that Instant Chemistry perform Market Research, Adjust Valuation Cap to $ X M and then seek funds This enables Instant chemistry to retain higher share of

company (Increase of y%) in the case of further needed financing or exit

If third-party market research is deemed unfeasible, we recommend term Scenario 1.

Questions?