The MoneyTree Report. Overview of Venture Capital Investments Second Quarter 2008

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1 The MoneyTree Report Overview of Venture Capital Investments Second Quarter 2008 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report based on data from Thomson Reuters 1

2 Host of the Analyst Call Steve Bengston Director Pricewaterhouse Coopers Steve heads the Emerging Company Services (ECS) group at PricewaterhouseCoopers. ECS acts as mentor capitalists for young, high potential companies and assists them with a variety of services, including: - Reviewing Presentations - Referrals - Raising Money Before joining PwC, Steve had 20 years of experience in a variety of marketing, business development and general management roles at several high tech companies in the Bay Area. Most recently, he was Pres/CEO of ynot.com, a leading international emarketing and greeting card company. Previously, he was VP Marketing & Business Development at Worldview Systems, an Internet travel pioneer. At Worldview, Steve helped launch and market Travelocity with Sabre Interactive. Steve works closely or sits on the Advisory Board at Churchill Club, SVASE, Life Science Angels, and the Stanford/MIT Venture Lab, has taught classes on start ups at UC Berkeley, Santa Clara Law School, Hastings Law School, and Stanford, and is active in a variety of other organizations in the Bay Area targeting entrepreneurs and investors. He also hosts the weekly PricewaterhouseCoopers StartUp radio show at Steve is a member of Entrepreneurs Foundation s Healthcare Development Council, which promotes integrating corporate citizenship, community involvement and philanthropy into emerging companies corporate cultures. He is a frequent moderator/panelist at both university and industry sponsored events. 2

3 Overview National First Quarter Results $ Invested and # Deals by Quarter Investments by Stage of Development Investments by Industry/Sector First-time Financing PricewaterhouseCoopers Commentary on Results NVCA Commentary on Results Flywheel Ventures Bay City Capital MoneyTree Report Q&A 3

4 Thomson Reuters Matthew Toole Research Director, Private Equity Thomson Reuters Matthew Toole is the director of research for Thomson Reuters Investment Banking content, which includes mergers & acquisitions, venture capital, private equity and capital markets. Prior to this appointment, Matthew managed Thomson Financial s capital markets content strategy and development including debt and equity research and banking contributor relations. Matthew started his career as a research analyst in the fixed income group at Thomson Financial Securities Data. Matthew received his Bachelor of Science in Biology from Providence College 4

5 Investments See Slight Decline in Q2 08 Venture Capital Investments Total Amount Invested ($B) 1,200 $6.3 $5.9 $5.8 $6.4 $6.9 $6.8 $6.3 $7.5 $7.4 $7.8 $8.1 $7.5 $7.4 1, # Deals 200 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 0 Average Deal Size ($M) $7.7 $7.5 $7.2 $7.4 $7.4 $7.6 $7.0 $8.7 $7.1 $8.0 $7.7 $7.7 $7.5 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 5 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters

6 Bulk of the $$ Going to Expansion & Later Stage Deals Venture Capital Investments Total Amount Invested ($B) $8 $7 $6 $5 $4 $3 $2 $2.4 $2.5 $3.0 $1.7 $2.3 $2.3 $2.8 $2.6 $2.5 $3.3 $3.2 $3.2 $2.4 $3.2 $2.1 $3.0 $2.6 $2.4 $3.0 $2.9 $3.0 $3.1 $2.7 $3.1 $3.1 $2.6 Last Four Quarters 22% 40% 38% $1 $1.4 $1.2 $1.1 $1.1 $1.2 $1.4 $1.6 $1.3 $1.7 $1.5 $2.0 $1.7 $1.6 $0 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3' 06 Q4 '06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Seed/Early Stage Expansion Later Stage 6 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters

7 22% of dollars in Q2 08 going toward First Sequence Financing Total Amount Invested in First-time Financings ($B) 400 $1.5 $1.4 $1.4 $1.4 $1.5 $1.6 $1.4 $1.6 $1.8 $1.9 $2.1 $1.8 $ # Deals Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2' PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters

8 Software, Biotech, Medical Devices Dominate Investments Investments By Industry Q IT Investments ($M) $1,251.5 IT $3,058.3 Mil $552.6 $506.7 $328.2 $145.6 $141.6 $132.2 Software IT Services Telecom Semiconductors Computers and Peripherals Networking & Equip Electronics & Instrumentation Life Sciences Investments ($M) $1,079.2 $833.4 LS $2,018.7 Mil $106.1 Biotechnology Medical Devices and Equipment Healthcare Services 8 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Financial

9 PricewaterhouseCoopers Tracy T. Lefteroff Global Managing Partner Venture Capital and Life Sciences Industries Services As Global Managing Partner of Private Equity and Venture Capital as well as Life Sciences Industry Services, Mr. Lefteroff is in charge of services provided to the venture capital community, venture-funded technology companies and publicly-held, privatelyowned and venture-funded life sciences companies worldwide. Mr. Lefteroff has been key to the development of strategic collaborative agreements with many of the major international pharmaceutical companies and has recently assisted in several high profile industry mergers. He also co-authored the Firm s Practice Standards and Aids for the Life Sciences Industry. Mr. Lefteroff currently serves on the Board of Directors of the Stanford Venture Laboratory and the California Healthcare Institute. He has served as Treasurer of the Washington State Biotechnology Association, Chairman of the MIT Enterprise Forum of the Northwest and as a Committee Member of the Washington Society of CPA s High Technology Committee. He is also a member of the American Institute of Certified Public Accountants and the California, Washington and Idaho Societies of CPA s. Mr. Lefteroff has been with PricewaterhouseCoopers for approximately 16 years, including three years in the Seattle, Washington office, where he was extensively involved with the Firm s venture capital and life sciences clients. Today he resides in the San Jose, California office. 9

10 Investment Activity Top Industries Q2 2007, Q1 2007, Q Total Amount Invested ($M) $1,550 Q Q $1,355 $1,251 $1,152 $1,255 $1,213 $1,079 $1,026$1,024 Q $915 $833 $571 $478 $469 $586 Softw are Industrial/Energy Biotechnology Medical Devices and Equipment Media and Entertainment 10 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters

11 Life Sciences Investments Q Q Total Amount Invested ($M) $1,534 $1,119 $1,046 $989 $621 $653 $518 $753 $934 $1,336 $1,219 $1,140 $1,207 $827 $732 $622 $1,308 $1,255 $1,213 $1,116 $1,026 $1,021 $1,024 $866 $833 $1,079 Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Medical Devices Biotechnology 11 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters

12 Internet-Specific & Clean Tech Investments Q Q Internet-Specific Investments ($M) $1,004 $1,014 $877 $848 $741 $1,178 $1,076 $1,241 $1,030 $1,197 $1,383 $1,350 $1, Q2'05 Q3'05 Q4'05 Q1'06 Q2 '06 Q3 '06 Q4 '06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 0 $ Invested # of deals Clean Tech Investments ($M) $289 $155 $112 $103 $882 $871 $884 $708 $508 $544 $452 $377 $245 Q2'05 Q3'05 Q4'05 Q1'06 Q2 '06 Q3 '06 Q4 '06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2' $ Invested # of deals 12 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters

13 National Venture Capital Association John S. Taylor Vice President of Research National Venture Capital Association John S. Taylor is Vice President of Research at the National Venture Capital Association (NVCA) which is based in the Washington, DC area. He is responsible for developing and overseeing association data and research efforts. The key element in this effort is the creation of a research consortium which was announced in 1998 involving the NVCA, Thomson Venture Economics, and the Ewing Marion Kauffman Foundation. In December 2001, PricewaterhouseCoopers joined the team and the tri-branded MoneyTree survey became the definitive source for venture capital investment information. This team was created to ensure accurate, impartial, durable, and practical data on the venture capital and private equity industries. He joined the NVCA in Mr. Taylor is frequently quoted by major newspapers and magazines on the subject of venture capital and private equity and has recently provided live commentary on CNBC, CNNfn, Bloomberg radio, and NPR Morning Edition. Mr. Taylor s career began with the company now known as Accenture where he was a senior consultant advising small business clients. He has since held senior product manager and IT positions in both large and small organizations. At a national computer services provider, he helped develop a new generation of minicomputer and microcomputer products for the residential real estate industry. He has served as a board member of both for-profit businesses and non-profit organizations. In 1998, he was awarded the Maryland Governors Citation for outstanding volunteer service. He recently joined the Advisory Board of the Center for Private Equity and Entrepreneurship at the Amos Tuck School. He received an MBA degree from the Amos Tuck School at Dartmouth College, and a BS degree in chemistry from Dickinson College. 13

14 Number of Deals by Stage Q Q Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3' 06 Q4 '06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Seed/Early Stage Expansion Later Stage 14 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters

15 Number of First-Time vs. Follow-On Deals Q Q Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2' 08 First-Time Follow-On 15 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters

16 Flywheel Ventures Trevor Loy Managing Partner Flywheel Ventures Trevor brings 15 years of venture investing, entrepreneurial and operating experience in seed and early-stage technology ventures with particular strengths in corporate strategy, executive leadership, design engineering, and sales and marketing. Over his career, he has founded, managed, advised, invested and participated in the growth and success of more than 20 technology-focused ventures. Trevor founded Flywheel Ventures and has led its growth firm to a full-time staff of 7 people and nearly $40 million under management. He oversees firm strategy, team development and external relationships and leads Flywheel investments in Comet Solutions, Micromanipulator, Tuscany Design Automation, SAMBA Holdings, and Aravo Solutions. He previously led the firm s investments in, and eventual exits from, Rdestiny and WorkingWild. From , Trevor acted as advisor to 16 technology ventures before raising the first Flywheel fund in During this period he also served as a co-founding Director of the Gap Fund at Stanford University s Office of Technology Licensing. Trained as an engineer, Trevor spent 12 years in various entrepreneurial, executive and technical roles including Gigabeat (backed by Kleiner Perkins and acquired by Napster, now Roxio); Brooktree (acquired by Rockwell Semiconductor, now Conexant Systems); ParkingNet, Teradyne, and Intel Corporation, where he managed the team behind Pentium and Pentium II microprocessors and won the Intel Quality Award for his innovations in the semiconductor manufacturing process. Trevor holds a BS Electrical Engineering, MS Electrical Engineering, and MS Management Science & Engineering, all from Stanford University. He also studied at the Stanford Center for Technology & Innovation in Kyoto, Japan and Hong Kong University of Science & Technology in China. 16

17 Bay City Capital Fred Craves Managing Director and Founder Bay City Capital Fred Craves, PhD, is an Investment Partner, Managing Director and Founder of Bay City Capital, and serves as a member of the board of directors and Chairman of the executive committee. Before founding Bay City Capital, he spent over 20 years leading and managing biotechnology and pharmaceutical companies. Previously, he was Executive Vice President of Schering Berlin and Chief Executive Officer and President of Berlex Biosciences, a research, development, and manufacturing organization. He founded Burrill & Craves, a merchant bank focused on biotechnology and emerging pharmaceutical companies. He was also the founding Chairman of the Board and Chief Executive Officer of Codon, and cofounder of Creative Biomolecules. Dr. Craves is a member of the boards of directors of Poniard Pharmaceuticals and VIA Pharmaceuticals. He also serves as a member of The J. David Gladstone Institutes' Advisory Council and is a member of the Board of Trustees of Loyola Marymount University in Los Angeles. Dr. Craves earned a BS in Biology from Georgetown University and a PhD in Pharmacology and Toxicology from the University of California, San Francisco. 17

18 MoneyTree Report Q&A 18