Digitzs Investor FAQ 07.11.16

Making Payments Painless FOR APPS, MARKETPLACES, AND PLATFORMS. NOW THAT ROCKS. FAQWhat is Digitzs?Digitzs is a new global payments API for the massive yet underserved app, marketplace and platform space.Who is on the team?We come from Visa, PayPal and Apple and we are here to make payments painless for apps, marketplaces andplatforms.Where does Digitzs fit in the $5 trillion US payment space?Donations Tickets Fines Rent DuesBoth the left (cards swiped) and the right (e-commerce) focus on single merchant solutions. Digitzs targetsthe middle where marketplaces like Uber exist and white label platforms abound that process, for example,ticket, donation and rent payments for event companies, non pro ts and property management companies.How big is Digitzs' niche market of marketplaces and platforms?Approximately $5 trillion in US Visa, MasterCard and American Express card payments were processed in2015; $3 trillion occurred where cards were swiped face-to-face (in stores and on cell phones), $1 trillionoccurred where cards were entered into e-commerce shopping carts.Between where merchants swipe cards and use shopping carts, a massive $1 trillion platform economyawaits. Here, single merchants (like schools, city governments, associations, hotels, marathon racepromoters, non pro ts and apartment complexes) who need to process online payments for tuition, nes,dues, reservations, tickets, donations and rent payments use cloud-based, shared white label platforms tobetter manage their individual niche business via their individual niche brands.Also in this middle market is the growing peer-to-peer shared economy platforms where Uber, AirBnB andTask Rabbit have made their mark.How fast is Digitzs’ niche market growing?Historical data is limited in the new shared economy and transactional platform space. That said, PWCestimates that sharing economy platforms where consumers get instant rides (Uber), housekeepers(TaskRabbit), loans (LendingClub) and a great place to stay for the night (AirBnB) will generate $530 billion inrevenue this year.Accenture's CTO says platforms are one of 5 technology trends in 2016 and goes further to say “I can’tunderscore how important (platforms) will be to our changing tech economy. According to PWC, 19% of theUS population has engaged in some form of shared economy via cloud-based platforms.Why are payments such a pain for platforms?Platforms that process ticket payments for events, fine payments for city governments and tuition paymentsfor schools have three (common) basic issues; first, they must ask merchants (the marathon race promoter,the city of Los Angeles, UCLA and others) to “go get” a merchant account so the merchant’s name (not theplatform’s name) appears in the payees' bank statement. Often times, the merchant is interested in using theplatform, however, is too busy to hassle with getting a merchant account, thus, the platform’s sale stops deadin its tracks.Next, payment processors don’t let platforms add platform fees to the merchant fees, forcing the platformsto invoice merchants separately for their (example) $2 or 2% per transaction value-added platform fees.Finally, though platforms refer thousands of merchants each year to new age payment processors, theytypically earn zero commission on the average 2.9% merchant fees charged to the platform’s merchants bythe payment processor.Where there’s a will, there’s a way, thus, many platforms build work-arounds to speed the above processusing legacy payment processors, yet, payments still remain a huge pain point for platforms andmarketplace providers.How does Digitzs make payments painless for platforms?With a single integration to Digitzs’ API, platform users can obtain a merchant account in seconds withoutever leaving the platform’s site, the platform’s fees are added to each transaction and the platform earnscommission for life on Digitzs’ typical 2.9% merchant fees. All via a white label risk free solution that works in160 countries and local currencies.Why hasn’t this problem been (easily) solved before now?Due to legacy issues and outdated business practices in the payments space, nearly all of the top ten USpayment processors are ill equipped to support new age platforms and marketplaces.Digitzs’ cutting edge (risk free) global payments API was designed specifically with marketplaces andplatforms in mind. Digitzs is strategically partnered with one of the largest US payment processors uniquelysuited to support Digitzs’ needs on the back-end such as (realtime) underwriting and moving of monies. Inaddition, reaching and e ciently pitching CEOs of marketplaces and platforms is neither easy norinexpensive. Digitzs' team of prior executives from Visa, PayPal and Apple is augmented by top internationalbranding and online marketing experts. Digitzs’ unique combination of in-house, hands-on technology,payment and marketing chops, in addition to our strategic back-end partnership, sets us apart in the newage, grossly underserved marketplace and platform space.How many providers can compete with Digitzs in the marketplace and platform space?Less than 5% of last years $5 trillion in US card payments was processed by (new age) payment providers.More than 95% of last years $5 trillion in US card payments was processed by (old school) providers. The factis, marketplaces and platforms are a recent phenomenon that 95% of the top US payment providers are notable (or willing) to support. Digitzs intends to carve its niche in the marketplace and platform space withoriginal content like its new online show “Platforms Rock” hosted by our very own COO Ben Way.What kind of market validation has Digitzs received?Digitzs management interviewed 50 platform CEOs (currently using new age payment providers) to createthe perfect payment API for the marketplace platform space. We have an impressive library of live recordedcalls where you can hear each CEO's initial (very positive) reaction to Digitzs’ unique value proposition.We have a clear path to $1 billion in annual processing for 2017 and believe we can reach $10 billion per yearin processing by 2020 (1% of the $1 trillion middle-market between where cards are swiped and shoppingcarts are used).What are platform CEOs saying about Digitzs?Mark Miller, CEO - http://www.ticketsocket.comIn order to facilitate payments on our platform, we had to integrate into virtually every gateway around.Needless to say, payments are a painful yet necessary evil. I am so impressed with how Digitzs is solving allour problems in a single API that I am considering an investment in this round.Deanna Bennett, CEO - https://www.rentmonitor.comWe did a deep dive into nearly every modern payment solution, but never found a great t for our credit anddebit card needs until Digitzs. Digitzs nailed our three major pain points in a single minimal API that worksworldwide. We look forward to a long and mutually beneficial relationship with a payment partner.Kent Comfort, President - http://www.inntender.comAFTER building a white label room reservation platform we discovered the barriers on the payment side. Iwould encourage everyone in our space to do your research on this pain point rst! With Digitzs, we cane ortlessly add our fee to each transaction and get paid next day. Digitzs rocks.Steve Roderick, CEO - http://www.gotobilling.comUnlike most white label platform founders, I actually come from 20 years in payments. When Laura rst toldme of her solution, my rst reaction was “this is too good to be true.” I soon discovered the API was a breezeand provides for every function \"as advertised.”How does Digitzs make money?We charge an average of 3% to merchants using marketplaces and platforms (2.9% and $.30). We payapproximately 2% out to Visa, MasterCard and American Express, leaving 1% (100 basis points) of the TPV(Total Processing Volume) as gross revenue. We share this 1% gross revenue with our strategic processingpartner and with our platform partners. We estimate EBITDA to be 25% of 1% (25 basis points) of the monthlytotal processing volume.For example, $1 billion per year in annual TPV (our current pipeline for 2017 with less than 20 platformscombined) x 1% = $10 Million in gross revenue for 2017 x .25% = $2.5 Million in EBITDA (net) revenue for2017. It’s important to note that we’ll only need to add two new support sta per $1 billion per year in TPV.What is Digitzs’ end game?47% of fintech M & A transactions last year were payment company acquisitions. Clearly, a trend exists wherelegacy processors have chosen to acquire niche technology and market penetration rather than build theseassets from scratch. Our goal is to process $10 billion in card payments per year by 2020 (1% of the $1 trillionUS marketplace and platform space) and to sell Digitzs for $300 million to $1 billion by 2020.Where does Digitzs stand today and how will it use the funds from this round?Our platform partners are actively processing live transactions and we have $1 billion in the pipelinefor 2017, thus, we are post product and starting to generate some revenue in private beta mode. Thecurrent $3 Million equity round will be used to solidify traction with the 20 + platforms in our pipelineand to prepare for a $30 Million Reg A raise in 2017 (where non-accredited investors can buy shares inDigitzs). With celebrity investors like Kevin Harrington (Shark Tank), Barbara Lazaro (Spago /Wolfgang Puck) and Mark C. Thompson (CEO coach to Virgin, Pinterest, AMX and Apple) we believe ourReg A raise may be very newsworthy in the start-up and investment community.Here is a link to our press release.What are the terms (and timing) of this round?We are raising $3 million at $15 million valuation (20% equity). $750k of this $3 Million is currently beingo ered at a $25k minimum on our Crowdfunder pro le - more than half of this $750k was reserved in lessthan one week). See our investor video.To learn more, please schedule a call with Laura Wagner (CEO) by choosing a convenient time herehttp://j.mp/digitzs or email [email protected]. Thank you for your interest in Digitzs!