Uncle California bridges Budapest with the Silicon Valley.

1. {
UNCLE CALIFORNIA
San Francisco – Boston – Budapest
2014

2. Silicon Valley
Hungarian Accelerator
“a bridge between Hungary'ʹs innovation and a
successful US business”
“reverse brain drain in a smart way”

3. Only in Silicon Valley…

4. Ñ Founded in 2013, Uncle California is a San Francisco-­‐‑based
accelerator structured around two investment themes with
strong pipelines in both:
Ó No 1: assist Hungarian start-­‐‑ups to access the Silicon Valley and
Boston ecosystems
Ó No 2: match American founders with Hungarian technical
background
Ñ We have a team in place in Silicon Valley, Boston, and
Budapest with an established professional network in the
Silicon Valley and Boston start-­‐‑up, accelerator, and venture
capital communities coupled with 50+ years of experience in
Central Europe
Ñ We are currently fundraising for a small private fund to be
matched by a generous matching grant from the Hungarian
government’s Gazella program
Uncle California

5. Ñ Balazs Laszlo Karafiath is an entrepreneur & communication
researcher. His current venture is Culture2 Inc. based in San
Francisco. He is the co-­‐‑founder of Darwin’s Marketing
Evolution, a research & consulting company successfully
incorporating meme science into marketing practice. He was a
World Fellow of 2006 at Yale University. In 1997, he founded
Carnation, Inc., a start-­‐‑up internet consulting and marketing
company. Laszlo co-­‐‑founded Central Europe’s biggest week-­‐‑
long music and arts festival, Sziget at the age of 20. Laszlo is
an active angel investor in Budapest and San Francisco. He is
based in San Francisco.
Meet the Team

6. Ñ Barnabas Gero is a corporate finance professional with over
10 years experience in M&A, equity fundraising, and project
finance. Barnabas has received his Mphil in Management from
Columbia Business School and afterward worked for an
incubator called IronStreetLabs in New York. After returning
to Hungary, Barnabas worked for Citigroup and Deloiae in
corporate finance. In the last five years, Barnabas has been an
independent advisor to numerous companies such as Lapker,
Richmond Capital Partners, or Helit, while acting as the head
of corporate finance at PannErgy, a Budapest Stock Exchange-­‐‑
listed geothermal developer. Since moving back to the United
States in 2012, Barnabas has been focusing exclusively on
building Uncle California. He is based in San Francisco.
Meet the Team

7. Ñ The objective of the program is to support the development of
the Hungarian start-­‐‑up ecosystem and promote Budapest to
become the start-­‐‑up center of Central Europe
Ñ The program includes selection of accredited accelerators
(“Gazellas”) which invest private funds along a generous non-­‐‑
refundable matching grant in promising start-­‐‑ups and seek to
accelerate them toward international prominence
Ñ The goal of the program is to seed start-­‐‑ups that could be
successful internationally, while keeping technical operations
in Hungary
Ñ In the first round of the program (“G1”) four accredited
accelerators (the “Gazellas”) were selected, while the second
round of the program (“G2”) is to be announced shortly.
The Gazella Program

8. Ñ The amount of matching grant allocated to each
Gazella is approximately $2.5 million, while up to $1
million of private capital is required to trigger
disbursement of the above matching grant
Ñ Although the non-­‐‑refundable matching grants are
disbursed directly to start-­‐‑ups, Gazellas have
complete discretion in their selection of recipients
and will act as private investors, using customary
private investment processes and corporate control
techniques
Ñ Finally, Gazellas are allowed to acquire up to 20%
stakes in the start-­‐‑ups in exchange for the above
services.
A balanced system of matching
grants and private investments

9. Ñ Uncle California will apply for accredited accelerator status in
the upcoming G2 and seeks to raise soft commitments from a
group of venture capital and angel investors in the Bay Area,
Boston, and Hungary
Ñ The investors will invest directly into start-­‐‑ups sponsored by
Uncle California and no investor is under obligation to invest
Ñ Given the parameters of the program, private ticket sizes for
each start-­‐‑ups will be between $100,000 to $200,000
Ñ In each transaction, the private investors would receive
warrant coverage for 50 percent their investment, while Uncle
California will provide up to 5 times the private investment
amount using the grant received as part of G2
Bridging Silicon Valley angels
and Budapest startups with a
+50% Warrant Coverage

10. Ñ In addition to applying to G2, Uncle California also
plans to explore the acquisition of one of the
accredited accelerators from G1
Ñ The advantage of acquiring such a vehicle is the
increased certainty of access to the generous
matching grant, while the downside is the required
upfront cash outlay
Ñ We are in preliminary negotiations with owners of
the G1 Gazellas and expect to negotiate a purchase
price in the region of $500,000 to $750,000 depending
on the increase in the non-­‐‑refundable matching
grant as part of G2
Headstart: buyout of an
existing player

11. Investment structure at G2
Founders (74%)
Uncle
California
UC
(17%)
Angels 9%
$250K
$2.5M
Angel
#1
$250K
$250K
Angel
#3
Angel
#2
Ñ Uncle California makes 5-­‐‑10
investments totaling $3.25 million of
which it contributes $2.5 million
Ñ Angels contribute the balance of
$750,000
Ñ Angels’ share is 30% of California’s
investment
Ñ Angels receive 50% warrant
coverage premium at their
investment
Ñ Angels are under no obligation to
invest in each deal, only the ones
they like
Investment portfolio

12. Investment returns at G2
Founders (74%)
Uncle
California
UC
(17%)
Angels 9%
$940K
$5.3M
Angel
#1
$940K
$940K
Angel
#3
Angel
#2
Ñ Assuming a 2.5 times increase in
the portfolio, Angels receive a
total value increase of 3.75 times
Investment portfolio

13. Investment structure at G1
Founders (74%)
G1 Gazella
Angels 26%
$400K
$4M
Angel
#1
$400K
$400K
Angel
#3
Angel
#2
Ñ Angels acquire G1 Gazella for
$700,000
Ñ G1 Gazella makes 10-­‐‑15 investments
in the amount of $5.2 million of
which it contributes $4 million
Ñ Angels contribute an additional $1.2
million for a total investment of $1.9
million including the purchase price
Ñ Uncle California acts as advisor to
Angels in arranging the acquisition
of a G1 Gazella and originating and
structuring investments
$700K
Investment portfolio
Uncle
Cali
origination and deal structuring

14. Investment returns at G1
Ñ Angels have two alternatives for compensation:
Ó #1: Increased warrant coverage for their private
investments in particular start-­‐‑ups
Ó Returns from the whole portfolio
Ñ The above structure allows angels to be selective if they
prefer increased exposure to particular start-­‐‑ups
Ñ In this case, they receive higher warrant coverage, but
their stake in G1 Gazella will decrease
Ñ Uncle California will be compensated by options in the
start-­‐‑ups
Ñ Preliminary terms:
Ñ 8% Preferred returns for Angels with catch-­‐‑up for Uncle California
Ñ Equal split of returns after preferred returns and catch-­‐‑up
Ñ At 2.5 times portfolio return, the above structure would
provide Angels 4X times return on their total
investment

15. Investment returns at G1
Ñ Given the amount of non-­‐‑refundable grant
money and the preferred returns, Angels are
protected on the downside, while receive
highly aaractive returns if the investment
performance is above 1.5 times at the portfolio
level
Portfolio(return(multiple 0.50((( 0.75((( 1.00((( 1.25((( 1.50((( 2.00((( 2.50((( 3.00((( 3.50((( 4.00(((
Angel(return(multiple 1.39((( 1.54((( 1.89((( 2.24((( 2.59((( 3.29((( 3.98((( 4.68((( 5.38((( 6.07(((
Portfolio(IRR =12.9% =5.6% 0.0% 4.6% 8.4% 14.9% 20.1% 24.6% 28.5% 32.0%
Angel(IRR 6.9% 9.1% 13.6% 17.5% 21.0% 26.9% 31.8% 36.2% 40.0% 43.4%

16. Ñ Mobile workflow process management app
developer
Ñ Cloud-­‐‑based enterprise software development
company
Ñ Real-­‐‑time virtual reality software developer
Ñ Digital personal trainer software start-­‐‑up
Ñ 3D printer developer start-­‐‑up
Ñ Virtual CRO start-­‐‑up
Ñ Retail coupon management company
Ñ Visual geocaching start-­‐‑up
Ñ Gamified talent screening start-­‐‑up
Our pipeline in
investment theme #1

17. Ñ Home inventory management start-­‐‑up (Boston)
Ñ High-­‐‑tech camera hardware company (San
Francisco)
Ñ Health-­‐‑tech start-­‐‑up developing a smart
thermometer using the BLE standard (Los
Angeles)
Ñ Embedded advertising start-­‐‑up (Los Angeles)
Ñ Camera based parking app start-­‐‑up (San
Francisco)
Our pipeline in
investment theme #2

18. Appendices

19. Ñ Csaba Csoma: CTO, HealthExpense, focus: enterprise
software, healthcare applications
Ñ Tamas Henning: business development, Skype; focus:
enterprise software, communication applications
Ñ Sandor Nagy: COO, McGraw-­‐‑Hill Education; focus: education
applications
Ñ Janos Veres: program manager, XEROX PARX, focus:
hardware, internet of things
Ñ Tibor Mozes: SVP, Engineering at InfoScout, focus: mobile, big
data, gaming, adtech
Ñ Paul Cheng: founder and CEO, Phigital; focus: mobile, adtech
Ñ David Varnai: ecommerce manager, Zenni; focus: ecommerce
Ñ Gabor Csele: founder and CEO, Namo Media, focus: adtech
Ñ Laszlo Horvath: president, ActiveMedia; focus: SEO
Ñ Aaila Toth: C3 Energy, SVP Worldwide sales; focus:
renewables and big data
Ñ Peter Gajdos: portfolio manager, CMEA Capital; focus:
renewable energy, venture capital
Ñ Andras Forgacs: CEO, Modern Meadow, focus: biotech
Our Mentor Network

20. Ñ Zsolt Krajcsik: animation professional; founder, Setec; focus: film
and entertainment application, personal quantification and
wearables
Ñ Viktor Bullain: project manager, virtual application, Turner
Construction; focus: enterprise software
Ñ Tibor Kozek: CEO, Imagize LLC; focus: hardware/software
applications
Ñ Andras Toth: Associate, Plug & Play Ventures; focus: venture
capital and business development
Ñ Zoli Piroska, Founder and CEO, Secret Sauce Partners; focus: retail
applications
Ñ Daniel Yoon: finance at Tapingo; focus: hospitality, online travel
applications
Ñ Michael Globits: marketing manager, SF Fitness; focus: personal
quantification, ecommerce
Ñ Zoltan Szendroi: founder, RealBird; focus: real-­‐‑estate applications,
personal quantification and wearables
Ñ Oren Knopfmacher: post-­‐‑doc, Stanford; focus: medtech
Ñ Patrick Vlaskovits: founder, Superpowered, mentor 500startups;
focus: lean entrepreneurship
Our Mentor Network

21. Ñ The Gazella program was established by Hungary’s National innovation
Agency in 2013
Ñ The objective of the program is to support the development of the Hungarian
start-­‐‑up ecosystem and promote Budapest to become the start-­‐‑up center of
Central Europe
Ñ In the first round of the program (“G1”) four accredited accelerators (the
“Gazellas”) were selected
Ñ The Gazellas invest private funds along a generous non-­‐‑refundable matching
grant in promising start-­‐‑ups and seek to accelerate them toward
international prominence
Ñ In exchange for their role as accelerators and gatekeepers to public funds,
Gazellas are allowed to acquire ownership stakes in the start-­‐‑ups
Ñ The goal of the program is to seed start-­‐‑ups that could be successful
internationally, while keeping technical operations in Hungary
Ñ The accredited accelerators of G1 are currently finalizing the funding
contract with the Hungarian government
Ñ 2nd round of the Gazella program (“G2”) is expected to be announced shortly
with submission deadline in early summer and final selection during the
summer
Ñ Four new Gazellas are expected to be selected in G2, while matching grants
are expected to be increased for the G1 winners
The Gazella Program

22. Ñ The amount of matching grant allocated to each Gazella in G1 is
approximately $2.5 million, while $0.5 million of private capital is required to
trigger disbursement of the above matching grant
Ñ Gazellas also receive a non-­‐‑refundable grant for operating expenses in the
amount of $250,000 which requires $150,000 in matching private funds to be
triggered
Ñ At the same time, due to the rigid disbursement of the matching grants, up
to $0.5 million in private funds will be required to provide the necessary
liquidity to allow for smooth operations
Ñ Four new Gazellas are expected to be selected in the upcoming G2, while
matching grants are expected to be increased for the G1 round winners to ~
$4 to $5 million
Ñ In case of each start-­‐‑up, the maximum amount of non-­‐‑refundable public
grant is ~$500,000, thus requiring ~$100,000 in private funds and up to an
additional $100,000 in necessary liquidity
Ñ Although the non-­‐‑refundable matching grants are disbursed directly to start-­‐‑
ups, Gazellas have complete discretion in their selection of recipients and
will act as private investors, using customary private investment processes
and corporate control techniques
Ñ Finally, Gazellas are allowed to acquire up to 20% stakes in the start-­‐‑ups in
exchange for the above services
The Gazella program (cont.)

23. Ñ Do or do not. Don’t try.
Ñ Continuous presence, no ‘pop-up stores’
Ñ Local companies, American leaders
Ñ Local business propositions
Ñ THROW A BETTER PARTY*
Ñ Success
The way to get traction
in the Valley
* The answer to the question: What is the best way to get access to best young
business leaders and the most connected VCs and business angels in the Valley?

24. Ñ “Uncle Cali - Your portal to The Valley”
Ñ B. Laszlo Karafiath
Ñ Barnabas Gero
Ñ hello@unclecalifornia.com
Join us in Cali!