Investment Overview

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US Capital Investment Management

US Capital Investment Management

INVESTMENT OPPORTUNITY

US Capital Global Securities ("USCGS") is offering 50 Membership Units in USCIM Fund XII Senzari, LLC ("Fund XII"), a pooled investment vehicle, on a "best efforts" basis. The Fund XII will be managed by San Francisco-based asset management firm US Capital Investment Management, LLC ("USCIM" or the "Manager"), investing in Convertible Notes in the amount of $5,000,000 of Senzari, Inc. ("Senzari" or the "Company"). The Convertible Note ("Convertible Note" or "Note") will pay a 12% coupon and will have a 10% discount of the per share price of a potential liquidity event such as (a) a Qualified Financing, (b) an IPO or (c) an M&A transaction. The Company will use the new financing for IT expenses, staff and overhead, sales & marketing and working capital for the current and future business needs. Senzari is actively looking to establish a strategic partnership and/or M&A transaction with an industry leading partner to facilitate its continued growth and product line expansion.


COMPANY'S OVERVIEW

Senzari, Inc. is a Delaware Corporation founded in 2010 and is based in Miami, Florida. The Company offers proprietary music and movie datasets, combined with advanced search and recommendation services to a wide array of industry players, from global record labels to end-user streaming platforms that provide both radio and on-demand music and video streaming services across a wide array of devices, such as PC, mobile phones, and Internet appliances. Initially, the Company's core technology was focused on the music industry with its MusicGraph product, however, Senzari is expanding into video with MovieGraph. The Company's robust machine learning and data science technologies synthesize billions of data points across music, TV and film to deliver semantic data, intelligent search and personalized recommendations.


Industry Market

The current industry for providing data science and content knowledge is limited to a few established players that cover a variety of entertainment verticals as well as a number of small to medium sized companies specializing in specific verticals like music, movies, sports, etc. Notable established players include Rovi ($1.59 billion market cap) and Gracenote (~$100M) in revenues. Additionally there have been a few notable acquisitions in this space since 2014 including - The EchoNest acquired by Spotify in 2014, NextBigSound acquired by Pandora and DigitalSmiths acquired by TiVo in 2014. Data science driven insights continue to be an essential component in the operations of a variety of companies in the entertainment space including both consumer facing services (e.g. Spotify, Netflix, Pandora) as well as content producers, licensing players, distribution channels, advertisers and marketers.


Product Offering

Senzari's primary product is MusicGraph, an Application Program Interface (API) platform for music intelligence that provides advance playlisting, search & recommendations. MusicGraph also offers an engineered metadata feed that delivers the latest social trends for music genres, artists, albums, and songs across major social media networks (Facebook, Twitter, Instagram, etc.). Additionally, the Company intends to launch in Q3-2016 MovieGraph, an Application Program Interface (API) platform for film and television, which will provide advanced content discovery solutions across title, actor, director, etc. MovieGraph will also offer an engineered metadata feed providing the latest social trends for film and TV titles, actors across major social media networks (Facebook, Twitter, Instagram, etc.).



US Capital Investment Management


Revenue Model

Senzari originates its revenue from Application Program Interface (API) licensing and custom engineering fees for clients in entertainment and related industries covering music, movies/TV and sports.

  • API licensing. This business line represents the substantial majority of Senzari's revenues with approx. 90% of the total income. It covers a variety of services to entertainment clients which include: search, recommendations, user personalization, social media data and biographies, as well as analytics and reporting.
  • Custom engineering fees. This fees are typically on a one-time basis as client's non-recurring engineering costs and represents approx. 10% of total income. Custom engineering fee sizes vary depending on the size of the client's business as well as the complexity of the tasks requested.

Value Proposition

The Company's products and services provide significant value to clients looking to apply the latest data science and machine learning tools to grow their business. Senzari's offering add value in the following key areas:

  • Time to market. Clients can deploy custom-made streaming within a few hours and utilize a catalog that is larger and with more personalization options.
  • Engineering complexity and cost savings. Clients can avoid spending valuable engineering time in collecting hard-to-find data, deploying machine learning infrastructure and building sophisticated API's layers.
  • Real-time Analytics. Clients can access real-time data on their API usage as well as user-level data. This data can be combined with market metrics to design a 360-degree analysis and identify valuable market niches.
  • Highly Personalize Solutions. Clients can easily personalize its application for a unique user-experience (sub-catalogs, tweaking algorithmic streams, etc.).
  • Core Business Focus. Clients can focus resources in maximizing their business' core competencies and differentiators while assigning the data science and machine learning work to experts.

Exit Strategy

The Company believes that the combination of recent market signals, interest in the Company's services from a wide pool of entertainment stakeholders as well as The Company's traction in serving clients in multiple operational dimensions provides a strong case for exit via a Merger & Acquisition transaction within one year after funding. The Company's focus in 2016 on the broader entertainment industry has garnered significant interest from major players from different entertainment verticals including - a large music label, a major movie producer/distributor, an industry leading advertising and data analytics, a major mobile hardware manufacturer and two of the biggest players in the social media space. The Company is currently working on strategic partnerships and "proof of concepts" with several of the above organizations. Furthermore, the Company has a proven track record in serving complex and multi-dimensional client needs including - back-end analytics, content knowledge and metadata and powering sophisticated customer facing services.

Significant recent events in the market that indicate the growing value of data science and machine learning in the entertainment space. Some notable M&A transactions include:

  • The Echo Nest - Acquired by Spotify in 2014
  • Veveo - Acquired by Rovi in 2014
  • DigitalSmiths - Acquired by Tivo in 2014
  • Semetric - Acquired by Apple in 2015
  • Next Big Sound - Acquired by Pandora in 2015


  • COMPANY'S FINANCIAL SNAPSHOT

    Revenue Growth

    Based on current deal pipeline and ongoing negotiations/conversations with potential clients, the Company's management assumes a monthly growth rate of 5% for the year-end 2016. Going forward, Company expects that new product lines (social data, dynamic bios) as well as new verticals e.g. sports, video games will increase revenue by 603% in 2017 and 435% in 2018 from previous year respectively.


    Income Statement

    US Capital Investment Management


    COMPANY'S MANAGEMENT TEAM

    Bill Hajjar - CEO, Board Member & Founder

    Bill has more than 15 years of international experience in the mobile telecommunications field, working in both sales and business development positions at both public and startup companies. He has a highly successful track record in hardware, software, and service and support channel development. Prior to founding Senzari, Bill founded Blue Wave Wireless, a location-based payment and logistics company. Before Blue Wave, Bill was the International Director of Business Development and Sales at Wherify Wireless (OTB:WFYW), where he lead the team that successfully launched Wherify's product and service in 19 countries and was responsible for executing hardware and services transactions in major emerging markets with major telecom players. Previously, Bill was VP of Western US for eSupportNow, an on-line Customer Relationship Management platform. Bill also served as VP of Worldwide Sales for Verecomm, an industry leading test management software platform.


    Demian Bellumio - COO & Board Member

    As COO and Board Member of Senzari, Mr. Bellumio's responsibilities include overseeing the development of the company's products and services, as well as supporting the CEO in the execution of all licensing and distribution agreements necessary to bring Senzari's products to market. Prior to joining Senzari, Mr. Bellumio was the founder and CEO of Hoodiny, Latin America's leading Internet radio network, where he was responsible for all aspects of the operations, including raising over $20m in capital and closing groundbreaking agreements with Microsoft and Coca-Cola. Prior to Hoodiny, Mr. Bellumio was the vice president of corporate finance & development at Terremark Worldwide, Inc., a leading provider of Internet infrastructure services in the U.S., Latin America and Europe. While at Terremark, he executed over $200 million in financing transactions, including a $45 million secondary offering, an $80 million senior debt financing and an $86 million convertible note financing. Mr. Bellumio was a key contributor to the development of the Company's long-term strategic plan, which eventually led to its sale to Verizon for $1.4b in 2011. In addition, Mr. Bellumio is a founding member and shareholder of BroadSpan Capital, Ltd., an investment-banking firm that specializes in Latin America and the U.S. Hispanic market, with offices in Miami and Rio de Janeiro.


    SOURCES AND USES OF FUNDS


    US Capital Investment Management

    Source Notes:
    (1) Convertible Notes contribution assuming an offering of 50 units with a price per unit of $100,000 and a minimum investment of 1 unit.

    Use Notes:
    (a) Operating expenses breakdown will consist of approx. 75% staff costs, 7% SG&A, 7% rent and lease expenses, 8% legal and professional expenses. The balance of 3% are miscellaneous expenses.
    (b) General working capital for the business operations will consist mostly of IT costs. The Company estimates that this cost will represent approx. 62% of sales by 2016, 13% of sales by 2017 and 3% of sales by 2018. The Company provided estimations based on historical expenditure on technology infrastructure and expected expenditure on continued innovation into latest technology infrastructure.
    (c) Interest reserve assumes a complete offering of $5,000,000 at a 12% annual rate.
    (d) Transaction fees consist of USCGS placement agent fees of 5% of the closing amount raised ($250,000), an annual administrative fee of $20,000 at closing, a registration fee of $15,000 at closing and a second installment of the engagement fee of $25,000 at closing. Additionally, the Company will pay a monthly advisory fee of $5,000 to USCIM after initial closing (fees included in working capital section).



    CAPITALIZATION CHART

    Pre-Money


    US Capital Investment Management

    * Other Investors with less than 2% Fully-Diluted ownership in Company.


    INVESTMENT OPPORTUNITY


    US Capital Investment Management

    DISCLOSURES

    The Manager and USCGS are affiliated entities. Charles Towle is Co-Managing Partner of the Manager, the Division Head and licensed principal of USCGS, and an indirect stockholder and Co-Managing of an affiliate company of the Manager and USCGS. Jeffrey Sweeney is Co-Managing Partner of the Manager and an indirect controlling stockholder of the Manager and USCGS. Conflicts of interest may arise in connection with Mr. Towle's and Mr. Sweeney's indirect control of both the Manager and USCGS. Investors should be aware that these conflicts of interest, and a number of other conflicts of interest relating to the Manager and its affiliates, are permitted under the terms of the Fund's offering documents. You should not invest in the Fund unless you are willing to accept these conflicts of interest and the associated risk.

    This presentation does not constitute an offer to sell or a solicitation of an offer to buy any security and may not be relied upon in connection with the purchase or sale of any security. Any offer would only be made by means of a formal offering memorandum. No offer or solicitation will be made prior to delivery of a confidential information memorandum, private placement memorandum, or similar offering documents ("Offering Documents"). Offers and sales will be made only in accordance with applicable security laws and pursuant to the Offering Documents, operating agreement, subscription agreement, and other definitive documentation.

    This presentation does not purport to be all-inclusive or to contain all of the information that the recipient may require and is qualified in its entirety by reference to the Offering Documents. This presentation is not a part of or supplemental to the Offering Documents or such definitive documentation. The Offering Documents and any supplements will supersede this presentation in its entirety. Projections and other forward-looking information as to events that may occur in the future (including projections of revenue, expense, net income and stock performance) are based on information provided by the Fund and other publicly available information as of the date of this presentation. There is no guarantee that any of these estimates or projections will be achieved. The recipient should not rely on any information contained herein. No investment, divestment or other financial decisions or actions should be based solely on the information in this presentation. Actual results will vary from any projections in this presentation, and such variations may be material, including the possibility that an investor may lose some or all of its invested capital.

    This presentation is confidential. By acceptance hereof, you agree that (i) the information must not be used, reproduced, or distributed to others without prior written consent; (ii) you will maintain the confidentiality of all information herein that is not already in the public domain; and (iii) you will use the information contained herein solely for preliminary informational purposes.

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    BrokerCheck

    Securities offered through US Capital Global Securities, LLC, member FINRA, SIPC.

    IMPORTANT: All investing is risky, and no investor should decide to commit funds without first consulting with a competent professional adviser. Some or all invested funds can be lost. The past performance of any investment, investment strategy or investment style is not indicative of future performance. Future results may vary, and are not guaranteed. The value of investments and their income may increase or decrease, and a loss of principal – including all principal – may occur.

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