PALMETTO ANGEL 2014 FUND

May 2014

South Carolina Angel Network

The South Carolina Angel Network (SCAN) is a network of angel investor dedicated to improving the infrastructure of South Carolinas entrepreneurial ecosystem by providing early stage capital formation to small businesses

Launched in 2008 as the Upstates angel investor group. Over 50 accredited investors that invest in early-stage businesses

CONFIDENTIAL

Invested $9.0 million in 55 rounds over its first six years, primarily in South Carolina companies

Launched in 2013 as Columbias angel investor membership network, focused on startups in the Midlands

Uses processes and structures from the most successful angel groups throughout the country

Fund size Fees

Palmetto Angel 2014 Fund Highlights

Up to $5 million 4 year investment period, 10 year fund life

Commitment period Investment strategy and triggers

Investor commitment $25,000 or more

2.5% management fee, 10% carried interest on profits, per deal (for SCAN members)

Fund manager Target returns

CONFIDENTIAL

50% IRR target for each deal. Target fund return of 20% Also access to state Angel Investor tax credit of 35%

SCAN leadership team may veto or reduce the match

- Will invest in 15-20 southeastern early stage companies - Seed or Series A rounds, usually preferred equity - Defendable, scalable, capital efficient businesses - Primarily manufacturing, logistics, or healthcare companies industries the angels know best - Matches (usually 1:1) investments of $100,000 or more made by 5 or more SCAN affiliate organizations angels

Angel group investments have historically generated impressive returns

Investments by angels in groups

Percent of Exits

50% 40% 30% 20% 10%

60%

Average return: 2.6x investment in 3.5 years = 27% IRR

The most comprehensive study of historical returns to investments made through angel groups found an average 27% annual return (IRR) This compares favorably with other similar alternative investment asset classes Returns for individual deals are highly variable most lose money, so diversification is critical

0%

<1x

Exit Multiple (multiple of invested capital)

1x to 5x

5x to 10x to > 30x 10x 30x

CONFIDENTIAL

UCAN portfolio and track record

Portfolio:

South Carolina:

33 companies 55 investment rounds 64% of investments 81% of capital

Returns:

CONFIDENTIAL

3 full (cash) and 2 stock realizations Multiple companies generating positive partial realizations 9 positive uprounds Only 6 write-downs Others held at cost with upside potential Portfolio in line with industry averages (20% net IRR) for this point in its life cycle
5

1. 2. 3. 4. 5. 6.

Investment Thesis

CONFIDENTIAL

Capital Gap: addresses capital shortage within a proven asset class Due Diligence: good diligence improves returns. Angels and fund team together provide comprehensive diligence Investor Depth: investors avoid gambling on a fund manager picking stocks; fund relies on the aggregate expertise of nearly 70 experienced and successful business leaders and investors Diversification: angel investments often lose money so portfolio diversification is crucial. Fund will invest in 15-20 companies across multiple rounds Professional Fund Structure: dedicated team provides more diligence and investment monitoring and mentoring to enhance returns Community Support: investments aid job creation and foster the entrepreneurial ecosystem, generating financial returns while improving the local economy Investors have an unusual opportunity to achieve attractive returns

Certain information herein may constitute forward-looking statements. Due to various risks, uncertainties, and assumptions made in the analysis, actual events or results or the actual performance of the investments covered by this presentation may differ materially from those described. The information herein is not intended to be promissory or relied upon. An investment in the Fund is speculative, involves a high degree of risk, and is suitable only for sophisticated investors who can bear substantial investment losses and have no need for liquidity. No assurance or guarantees can be given that the Funds investment strategy will prove successful and/or that the investment objectives of the Fund will be achieved or that an investor will receive a return of all or part of its investment.

Information used herein was taken from sources believed to be reliable, but SCAN, UCAN, and all related entities and personnel make no representation, warranty (expressed or implied), or endorsement as to the accuracy, reliability, adequacy, or completeness of any information or analysis contained herein, and expressly disclaims any and all liability that may be based on such information, errors therein, or omissions therefrom.

This presentation is confidential, may not be distributed, was prepared solely for discussion purposes, and was prepared without regard to the specific objectives, financial situation, or needs of any recipient. All information herein, including proposed fund terms, are subject to change without notice, and there is no obligation to update this presentation to reflect subsequent developments. This presentation is qualified in its entirety by the detailed information, including the substantial risks associated with an investment in the Fund, in the Fund Documents. This presentation is not to be relied upon for any investment decision, and this presentation is not, and should not be assumed to be, complete. The contents of this presentation are not to be construed as legal, accounting, business, or tax advice. The Fund may not be a suitable investment for the recipient of this presentation. The Securities are subject to legal restrictions on transfer and resale and investors should not assume they will be able to resell their securities.

The Palmetto Angel Fund is open only to a selected group of sophisticated investors who are accredited investors under federal securities laws. Under no circumstances is this presentation to be used or considered an offer to sell, or a solicitation of an offer to buy, any security or interests in the Fund (Securities). Any offering of Securities may be made only through a Confidential Private Placement Memorandum and the definitive operating documents of the Palmetto Angel 2014 Fund (the Fund, and such documents the Fund Documents). Any offering of Securities may be sold only to accredited investors, which for natural persons are investors who meet certain minimum annual income or net worth thresholds. Any Securities would be offered in reliance on an exemption from the registration requirements of the Securities Act of 1933 and are not required to comply with specific disclosure requirements that apply to registration under the Securities Act. The Securities and Exchange Commission has not passed upon the merits of or given its approval to the Securities, the terms of the offering, or the accuracy or completeness of any offering materials.

Disclaimer and regulatory information

The Fund may invest alongside multiple SCAN affiliate member organizations. The Fund and its General Partner do not control the affiliates of SCAN, which may change over time, so Fund returns may depend upon the investments made by organizations not discussed in this presentation.

CONFIDENTIAL

Performance data herein represents industry data on past performance only; past performance does not guarantee future results (of either the current SCAN portfolios or investments made by the Fund); current performance may be higher or lower than the performance data presented. UCAN and the Fund are not required by law to follow any standard methodology when calculating and representing performance data, and the performance of the fund may not be directly comparable to the performance of other private or registered funds.