James F. Kenefick — Azafran Capital INSIGHTS

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Azafran Capital Partners

INSIGHTS Welcome to Azafran INSIGHTS “We are solving problems with AI that were in the realm of science fiction for the past several decades. Natural language understanding, machine vision. It really is an amazing renaissance.” - Jeff Bezos The Azafran Capital Partners team is excited to present you with our first INSIGHTS monthly newsletter, Vol. 1, No. 1, February 2019. The intent, content and distribution of INSIGHTS is focused to our LP, incubator, research and partner ecosystem, as we are looking to build a two-way dialogue benefitting our collective efforts. Each month, we will be highlighting our approach to the emerging intersection of deep technology and end to end solutions generating insights and value from voice and acoustics all driven by machine learning (ML). Recognizing speech recognition as just the gateway, we are in the beginning stages of unlocking all that comes from voice and acoustics and ML-related technologies. At Azafran Capital Partners, we see this as a moment in time where voice and acoustics are center stage, with the billion plus voice assistants already in the market as just a base layer, these are important building blocks opening the door for the next wave of innovation. Beyond simple voice recognition, now we begin to plumb all the nuance, meaning, and added clarity that rides alongside the voice, packed in acoustics and intelligence from the entire vocal instrument. From customer care to health care, entrepreneurs across the globe are developing (today) incredible, groundbreaking solutions and technologies to take advantage of the base layer elements. The Azafran team is hands-on and focused on scouring the world to find the best entrepreneurs and new companies in this space. We recognize the strength of incumbents is their scale and platforms, but they are typically not the innovators, they are buyers. Whereas we are looking to commercialize and bring to the market these opportunities. When we started in 2017, AI and ML had existed in various forms for decades, but was lacking a proper UI. Buttons, typing and other dated means just could not feed the appetite of ML. Now with advances in foundational voice tech we now can focus on pure science and the platforms to scale solutions that expand on this fundamental innovation. INSIGHTS is a platform to open a dynamic dialogue with our partners, towards finding, investing and bringing to market, life-changing companies and solutions.

issue ONE market PREDICTIONS A selection of predictions and wisdom related to the Azafran Capital thesis and focus:

Voice Becomes Ubiquitous

With the fast-growing integration of voice technology, we will experience much more diversified and new product ideas on the market. The next disruption will take place in mobile everyday situations out-of-home. I’m convinced that Amazon will introduce a device with a mobile hotspot on board so that users can be always-on, everywhere.” - Interview with Tim Kahle, 169 Labs (Co-Founder) from Voice Tech - Voicebot, Bret Kinsella, January 1, 2019

communicate, and to be part of that innovation, investment, supporting it, advancing it, What gets us up in the morning? What motivates us and is being part of these young the true passion and purpose behind Azafran Capital companies, to play a part in Partners, it’s not just about the returns. their efforts to put a dent in the universe, wow. Every day, we It’s about our shared passion for being We are seeing the most rapid meet amazing brilliant people part of an experienced and like-minded acceleration of technology the world who are solving real world team, making a difference by has experienced, part of that is the problems and we realize in ten advocating and bringing new and advancement of our connectedness andyears the world is going to be life-changing technologies to humanity consciousness. Advances in ML that willa very very different place. and world, and advance humanity. transform how we live, look, Since the 2008 winter of tech

Our philosophy - the why

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we have seen incredible advancements in social connection but drawbacks as well. More isolation, bad actors manipulating platforms for selfish motives. When we add that with all the data that has been produced in the past 10 years, which is now accelerating as ML and deep tech begin their dance with voice and acoustics, our team confidently advances this mission each and every day. Volume 1 Issue 1 - Page One

The Azafran investment process Our team does a lot of filtering, we look for proprietary opportunities with incubators, seed funds, and other thought leaders around the world. The process starts with the opportunity and individual, usually as a phone interview looking at the founder/team, opportunity and technology fit. Generally, we will take 1 out of 10 of those that make it to the first interview, it there is a general fit we will then have further conversations, with a broader section of the management team and potential customers - we’ll then do analysis, crunch the numbers, test it ourselves, get face to face and speak/meet with other existing investors and gauge their expectations. Deep tech is core, fundamental and solutions based - code level, algorithm level, not about the assembly of pieces and parts. Solutions based on real evidence, real research, heavy data that is transformed in to algorithms that find patterns and extract solutions. Deep tech is not a platform in and of itself. Its not an end product that consumers recognize, but rather, science-based products that integrators take and use, providing a solution to a problem. Once you have deep tech, you wrap those bookends into a platform where the solution can reside - end to end solutions are key when combined or integrated with deep tech. When you combine the two, you have something scalable and appealing to commercial marketplace, as the market has platforms and customers capturing value from all of the touch points from beginning to end. That is why our Azafran Capital Fund One investment thesis is focused now on investing in data driven, machine learning products with voice and acoustics as the user interface. The marketplace is demanding companies that are providing these transformational solutions and our team is all about market timing. We do this alongside our game-changing partners including Stanford, Carnegie Mellon and MIT, where their research and breakthroughs continue to validate our strategy.

market PREDICTIONS More on 2019 and beyond from the experts:

A Unicorn Will Be Born ...but another prediction I have is that a pure play voice-first brand will emerge by the end of the year in a certain category – maybe social, maybe shopping or elsewhere. But by the end of 2019, a unicorn will emerge in the space.” Peter Erickson, MODEV (CEO/Co-Founder) Voicebot, Bret Kinsella, January 1, 2019

This focus is rooted in the transformational nature of the tech, that it’s in almost every home and business and the market and is set to grow exponentially. As we choose to be experts instead of generalists, our strategy is already paying off with our incredible early investments, Yobe and Aspinity. Our philosophy is to own a strategic and pervasive section of the current opportunity, which we will continue on our iterative path, adapting and improvising as Azafran Capital Fund Two comes to market.

NEWSWORTHY On management: “I think it still takes judgment to know what is and what isn’t possible with AI...multiple auto CEOs have promised self-driving car roadmaps that their own engineers think are unrealistic. I feel [CEOs are] being sincere but just not really understanding what can be done in a certain time frame.” Source: Andrew Ng, WSJ interview October 26, 2018

Our team “We are hands on, with deep domain expertise, with great networks and many years experience and have worked together across multiple enterprises. We are global and in the game, not sitting back in an office waiting for the opportunities to come to us.” James Kenefick, Partner

ML impact on jobs: The demand for uniquely human skills will grow, according to the Future of Jobs Report from the World Economic Forum. 75M current jobs will be displaced as ML takes over more routine aspects of work. But, 133M new jobs will be created, and skills in both emotional intelligence and technical intelligence, like technology design and programming, will be key.

The Azafran team has built many companies large and small, we are operators, having been through the full lifecycle time and time again, from raising capital, to hiring and firing, and all aspects of management which we bring to bear every day for our portfolio companies. We have global connections, built up over decades of direct experience, from Google to Dell, and Microsoft, alongside networks borne of years involved with organizations like YPO and AOL alumni that can help quickly connect our portfolio companies to opportunities.

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Volume 1 Issue 1 - Page Two

Wanted: The right stuff “The entrepreneur we look for has a deep understanding of the problem they are solving. In terms of the domain - they understand the players, what needs to be corrected or improved.” - Stephen Candelmo, Partner At a high level and when first looking at an opportunity, we assess the fabric of the CEO/founder, but in the end it’s as much about the problem they are solving as anything. We look for someone who has less ego and more vision, passion and execution chops. Questions we look to answer quickly include: Do they understand the market and ability to recruit and keep their team together? Do they understand the operational aspects? They have to have a sense of the process, how implement quality controls, building the team, rolling out the product and achieving product market fit, what to do when things go wrong and how to recover. We also look for an ability to take advice, as we have learned through our collective decades of experience, the best ideas come from the collective minds you surround yourself with while building an amazing company. Last and simply, do we like and respect them? How do we get along? It’s going to be a long term relationship, and we want them to represent who we are and our world view as well. PASSION Passion is key and brings with it focus. Passion also allows you to get through survival mode when starting the company - without passion, there is no resilience, and it’s also hard to recruit A-players to your team. We are looking for charismatic, unflappable, founders with a hard work ethic, with an ability to delegate, are ambitious and coachable. How have they faced situations like this before, what was their process, do they just rely on their gut or follow more of an objective process? INDUSTRY KNOWLEDGE Understanding of the problem they are solving, in terms of the domain - understand the players, what dynamics need to be corrected or improved. We look for entrepreneurs that have substantial experience and have worked in the industry of the problem they are trying to solve. TEAM PLAYER The ideal CEO/founder has to create a positive environment (team, system, processes) that is focused on the big picture, especially at the stage we invest, which is the beginning of the company. They have to be focused on hiring people better than themselves, especially in the specialized areas of the company (product, technology, operations, finance, human resources etc.) and subsequently understand which lane(s) for them to focus their time and energies in over time.

IN THE KNOW Voice as the interface of tomorrow “The biggest opportunity we see lies in voice and acoustics as a primary driver and input to machine learning for years to come. Up until now there has been no way to easily get the data input for AI and ML, voice and acoustics are the new UI for AI and ML - Google calls it the UX.” - Martin Fisher, Azafran Capital Partner

The market for voice recognition and related technologies is projected to represent a $185B market by 2021. Due to the rapid advancements in machine learning, natural language processing and the proliferation of mobile and IoT devices, voice is fast becoming the most intuitive, frictionless form of human interface with technology and devices. Combined with the growth of communication platforms as a service solutions (CPaaS) within the enterprise, the demand for voice recognition and related ML technologies is accelerating. Voice and ML will transform how we live, work, and experience life. Accordingly, Azafran Capital believes that these underlying trends within this disruptive sector provides attractive private investment opportunities that will drive outstanding returns.

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Feedback, going forward Thank you for the work you are doing in the world and your continued support of Azafran INSIGHTS’ monthly journey into the intersection of machine learning driven by voice, acoustics, language and image data. Our intention is to use this as a vehicle to open a dialogue with each of you, together as a group, and we strongly encourage and welcome your feedback. We’ve made feedback/comments simple, you can quickly and securely leave us a voice message by clicking here. If you are reading in print, please just visit the contact section of our website at AzafranCapitalPartners.com. In either case, just click on the “Start Recording” button and leave your thoughts and suggestions. Or you can always send us an email to insights@azafranpartners.com - thank you. We will be publishing INSIGHTS each month going forward, exploring the opportunity and intersection of voice tech and AI. We look forward to building this sector together and all the benefits for humanity that are soon coming down the road. From the Azafran team, we wish you all the best and a successful year ahead.

voice-techINDUSTRY At a Glance: Top 5 Markets & Global

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