Series B&c Investment Discussion

Some of the things on my mind: 1. Organic growth scenarios a. 6, 12, 18 month b. Aggressive approach i. What can we do to turn the dial up? ii.What are the risks of doing so? iii.What are the benefits? c. Conservative approach i. Is growth and market providing steady/stable growth? ii.Does hoarding/saving cash have any benefits? iii.Are there “systemic” risks that may require a rainy day fund? 2. Small cash infusions (<$1M) [let's refer to <$1M as the organic growth plan] a. How can small cash infusions help Kareo? i. Engineering hires ii.Marketing resources iii.Product Marketing Programs 1. Referral programs 2. Other? iv.What kind of head start does a small cash infusion provide? 1. How many months lead time in Cash flow does it provide? b. Are there reasons not to take small cash infusions? i. Dilution ii.Protecting TK’s additional investment money ;) iii.Nothing useful to do with the money? 3. What are the interesting exit scenarios? a. Revenue based scenarios i. $5mm in revs  $30mm exit? ii.$10mm in revs  $50mm exit? iii.$25mm+ in revs $100mm exit? iv.Gut check on possible partners on each scenario. Is it likey, probable, possible, or unlikely? Exit opps may be grouped in certain $$ figure areas, or interest may be well distributed across scenarios b. Who are the potential partners? 4. Serious Investment Option ($5-10mm) a. what are risks of going w/o serious investment i. competition 1. who are our competitors and how do they want to beat US? a. could getting beat shut down our growth? b. OR is getting beat just mean we get a smaller prize? 2. How are we going to keep our competitors from beating us? 3. How well capitalized are our competitors? a. Does significant additional money help us counter their strategies? b. Does significant additional money hinder our ability to maneuver? Is lightness and agility more valuable than size and robustness of organization?

4. On what timescale is our competition operating? Over what time period could they make a significant impact on our business? ii.Missed opportunities 1. Could large cash infusion make serious impact in developing various marketing channels? a. Partnerships b. Referral program c. Other? 2. Are there near-term opportunities to gain and hold large market share? iii.Too much too soon 1. Could money be too much to effectively deploy? 2. Are we taking too much dilution too soon? b. Benefits of taking serious investment i. Near term opportunities to gain market share ii.Company growth rate can be substantially accelerated 1. Define substantial iii.Major blows can be dealt to competition 1. Opportunities to shut them out of certain areas or channels to the marketplace? 2. Does market share have second-order positive effects in how company operates in the marketplace a. Cheaper/better/more compelling economics b. More favorable, larger partnership opportunities? 5. Existing Shareholder concerns a. Dilution concerns i. What kind of dilution are we looking at if we do big infusion today? ii.How does valuation/dilution picture change over time? 1. What kind of valuation is possible now, in 6 months, in 12 months? b. Exit analysis i. What is the likelihood of various exit scenarios? ii.How does large infusion change likelihood of various kinds of exits? iii.Is expected value of exit better off with or without cash infusion? iv.What are the shareholders exit “vision” 1. Are we going for double, homer or grandslam? 6. Founder/Management concerns a. Management Team i. Large infusion will come with expectations of large expansion of executive team ii.Is company better or worse off with expanding executive team? iii.VC’s often want a gray-hair CEO. Where do we stand on this front? b. Founder exit scenarios i. What is founder’s thinking wrt exit scenarios? 1. Are we going for double, homer or grandslam? 2. Is a quicker more likely $30mm exit better than a longer, less likely $100mm exit ii.What is endurance of founder?

1. Can we stick in there for another 3-5 years? a. New money may expect a long commitment 7. I’m SURE that I’ve missed something… fill in below