Venture Capital Industry Overview. Powered By:

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1 Venture Capital Industry Overview Powered By:

2 U.S.

3 U.S. Fundraising

4 Fundraising Slows in 1Q 05 Commitments to Venture Capital Funds $80 $83.5 Funds Raised ($B) $60 $40 $20 $0 $58.8 $50.5 $26.9 $17.1 $17.7 $12.7 $13.1 $7.0 $9.4 $5.4 $ Q05

5 Median Fund Size Increases Median VC Fund Size (for funds greater than $20M) $200 $185 $160 Median Fund Size ($M) $150 $100 $50 $53 $67 $83 $76 $97 $110 $100 $105 $75 $100 $ Q05

6 Half of Funds Closed > $100M in Size Allocation of Fund Size by Number of Funds Raised per Vintage Year 100% 80% 50% Under $100M 60% 75% 70% $100M-$249M 40% 20% 0% 25% 25% 21% 16% 25% 10% 2% Q05 $250M-$499M $500M-$999M $1B+

7 $6 Fundraising Drops in 1Q 05 Commitments to Venture Capital Funds $5.4 $5.6 Funds Raised ($B) $4 $2 $3.1 $4.8 $1.8 $3.3 $1.5 $2.3 $1.4 $4.2 $2.3 $4.5 $3.0 $0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

8 U.S. Investment: Overall

9 $100 Deal Flow and Investment Dips in 1Q 05 Deal Flow and Equity into Venture-Backed Companies 6295 $94.7 6,000 Amount Invested ($B) $75 $50 $25 $ ,000 4,000 $ ,000 $ ,000 $21.9 $17.9 $19.0 $20.9 $13.1 $6.4 $ ,000 $ Q05 Amount Invested ($B) Number of Deals Number of Deals

10 Activity Slows in 1Q 05 Deal Flow and Equity into Venture-Backed Companies Amount Invested ($B) $8 $6 $4 $ $ $5.9 $ $5.3 $5.5 $5.0 $4.8 $5.0 $4.8 $4.5 $4.8 $4.6 $ Number of Deals $0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 0 Amount Invested ($B) Number of Deals

11 Healthcare s Portion of Deals Falls in 1Q 05 Deal Flow Allocation by Industry Sector 100% 2% 15% 18% 4% 5% 14% % of Total VC Rounds 80% 60% 40% 20% 61% 22% 27% 63% 61% 20% Other Products & Services IT Healthcare 0% 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05

12 100% IT Draws Larger Share of Dollars in 1Q 05 16% 1% 10% Investment Allocation 16% by Industry Sector 3% 13% 12% 5% 12% % of Dollars Invested 80% 60% 40% 20% 66% 23% 65% 36% 58% 26% Other Products & Services IT Healthcare 0% 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05

13 Investment in IT Steady in 1Q 05 Equity Investment in Information Technology Companies Amount Invested ($B) $5 $4 $3 $ $ $3.4 $3.1 $2.9 $2.8 $2.7 $ $2.8 $ $ $2.7 $2.8 $ Number of Deals $1 75 $0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Amount Invested ($B) Number of Deals 0

14 Communications Share of Pie Rises in 1Q 05 IT Investment Allocation by Sector t9% 100% 80% 8% 4% 6% 18% 8% 13% 11% Semiconductors % of Dollars Invested 60% 40% 20% 44% 39% 34% 48% 14% 8% 23% 46% Information Services Electronics Communications Software 0% 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05

15 Amount Invested ($B) $3 $2 $1 Healthcare Investment Slows in 1Q 05 Equity into Venture-Backed Healthcare Companies $ $1.3 $1.4 $1.1 $1.1 $ $1.7 $1.8 $1.9 $1.7 $1.6 $ $ Number of Deals 25 $0 0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Amount Invested ($B) Number of Deals

16 Biopharm & Devices Dominate HC Investment Healthcare Investment Allocation by Sector 100% 8% 11% 8% 80% 30% 35% 31% Medical IS % of Dollars Invested 60% 40% 20% 5% 58% 10% 78% 5% 56% Medical Devices Healthcare Services Biopharm 0% 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05

17 Early and Later Stage Rounds Prevail in 1Q 05 Deal Flow Allocation by Round Class 100% 4% 10% 8% % of Total VC Rounds 80% 60% 40% 20% 34% 32% *30% 29% 39% *36% 40% 19% *33% Restart Later Second First Seed 0% 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 *Seed and First Rounds Combined

18 100% Round Allocation Mirrors Mid- 90s Levels Deal Flow Allocation by Round Class (Annual) 9% 11% 8% 80% Restart % of Total VC Rounds 60% 40% 39% 39% 40% 33% 20% 19% *54% Later Second First 20% *32% *33% Seed 0% Q05 *Seed and First Rounds Combined

19 Most Dollars Directed at Later Rounds Investment Allocation by Round Class (Annual) 100% 9% 7% 80% 33% Restart % of Dollars Invested 60% 40% 20% 25% *43% *42% 36% 46% 56% 17% Later Second First Seed *20% 0% Q05 *Seed and First Rounds Combined

20 Capital Allocation to Later Rounds Continues Investment Allocation by Round Class 100% 4% 10% 7% 80% 47% Restart % of Dollars Invested 60% 40% 20% 31% *18% 31% 47% *25% 56% 17% *20% Later Second First Seed 0% 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 *Seed and First Rounds Combined

21 Median Deal Sizes Relatively Consistent Median Amount Invested Per Financing Round $8 Median Amount Invested ($M) $6 $4 $2 $6.0 $6.0 $6.0 $6.3 $5.6 $6.0 $6.7 $6.0 $7.0 $7.0 $7.0 $6.2 $7.0 $0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

22 Median Round Size Up Slightly in 1Q 05 Median Amount Invested Per Financing Round, VC Only Median Amount Invested ($M) $8 $6 $4 $2 $6.5 $6.3 $6.4 $6.6 $6.0 $6.0 $7.0 $6.3 $7.2 $7.3 $7.0 $6.5 $7.2 $0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

23 $14 Financing Sizes Pick Up in 1Q 05 Median Amount Invested by Round Class, VC Only Median Amount Invested ($M) $12 $10 $8 $6 $4 $2 $0 $10.0 $10.0 $8.2 $7.1 $6.0 $4.5 $1.5 $0.7 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Later Round Second Round First Round Seed Round

24 Amount Invested in Rounds at Late 90 s Levels Median Amount Invested by Round Class (Annual), VC Only $20 Median Amount Invested ($M) $15 $10 $5 $0 $10.0 $8.2 $5.0 $6.0 $4.0 $2.9 $1.0 $ Q05 Later Round Second Round First Round Seed Round

25 U.S. Investment: Regions

26 Bay Area Dominates Venture Investment Regional Investment in the United States 1Q 05 Research Triangle 2% All Other US 23% Bay Area 35% Potomac 2% Washington State 2% Texas 6% New York Metro 8% Southern California 8% New England 14%

27 Bay Area Also Drives Deal Flow Regional Deal Flow in the United States 1Q 05 All Other US 28% Bay Area 30% Research Triangle 2% Potomac 2% Washington State 3% Texas 6% Southern California 7% New York Metro 8% New England 14%

28 100% 80% 60% 40% More Investors Go It Alone in 1Q 05 Number of Investors Per Round 23% 9% 16% 30% 19% 15% 18% 16% 16% 22% 23% 20% 5+ Investors 4 Investors 3 Investors 2 Investors 20% 30% 34% 31% 1 Investor 0% Q05

29 U.S. Investment: Valuations

30 Valuations Continue Upward Trend Median Premoney Valuation by Year Median Premoney Valuation ($M) $25 $20 $15 $10 $5 $10.0 $9.3 $11.1 $12.9 $15.5 $21.1 $25.5 $16.0 $10.7 $10.0 $13.0 $15.0 $ Q05

31 1Q 05 Valuations Highest Since 2001 Median Premoney Valuation Median Premoney Valuation ($M) $15 $10 $5 $10.9 $12.3 $10.0 $10.3 $10.0 $9.1 $10.1 $12.0 $12.2 $13.8 $13.3 $12.0 $15.0 $0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

32 2 nd and Later Stage Valuations Dip in 1Q 05 Median Premoney Valuations by Round Class (All Industries) $40 Median Premoney Valuation ($M) $30 $20 $10 $0 $31 $24 $12 $12 $5 $7 $3 $3 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Later Stage Second Round First Round Seed Round

33 HC Valuations Continue to Outpace IT in 1Q 05 Median Premoney Valuations by Industry $25 Median Premoney Valuation ($M) $20 $15 $10 $5 $0 $19 $14 $16 $10 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Healthcare Information Technology

34 U.S. Liquidity

35 M&As Remain Primary Exit Option Percentage Breakdown of Venture Backed Liquidity Events: IPO vs. M&A 1Q % 20% 40% 60% 80% 100% IPOs M&As

36 M&A Activity Steady in 1Q 05 Transactions and Amount Paid in M&As Amount Paid ($B) $100 $80 $60 $40 $ $ $ $ $ $ $ $ $ $ $ $ Number of Transactions $ Q05 Amount Paid ($B) Number of Transactions 0

37 But M&A Prices Highest Since 2000 Transactions and Amount Paid in M&As Amount Paid ($B) $8 $6 $4 $2 88 $ $ $ $ $ $ $ $ $ $ $ $4.3 $ Number of Transactions $0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 0 Amount Paid ($B) Number of Transactions

38 Gains from M&A Exits Pick Up in 05 Median Amount Paid in M&As vs. Median Amount Raised Prior to M&A Median Amount Raised Prior to M&A ($M) $100 $75 $50 $25 $0 $25 $5 $40 $6 $33 $6 $31 $7 $55 $11 $100 $10 $26 $15 $18 $17 $23 $19 $40 $21 $60 $24 $100 $75 $50 $25 $0 Median Amount Paid ($M) Q05 Median Equity Raised Prior to M&A Median Amount Paid ($M)

39 60% of 1Q 05 M&As Initially Financed in Median Time From Initial Equity Funding to M&A Number of Years Q05

40 IPO Activity Slows in 1Q 05 Deals and Amount Raised Through IPOs $ Amount Raised ($B) $25 $20 $15 $ $ $ $ Venture-Backed IPOs $5 $0 $5.0 $4.6 $5.0 $ $1.8 $1.6 $1.4 $ Q05 Amount Raised ($B) Venture-Backed IPOs 50 0

41 Fewest Venture-Backed IPOs in Six Quarters Deals and Total Amount Raised Through IPOs $ $ Amount Raised ($B) $1.5 $1.2 $0.9 $0.6 $0.3 $0.0 4 $0.4 $ $ $0.4 2 $0.2 6 $ $ $0.7 $ $1.2 8 $ Venture-Backed IPOs 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Amount Raised ($B) Venture-Backed IPOs

42 Half of 1Q 05 IPOs from Vintage Years Median Time From Initial Equity Funding to IPO Number of Years Q05

43 1Q 05 IPOs Raised Less Prior to Going Public Median Amount Raised Prior to IPO Median Amount Raised Prior to IPO ($M) $75 $50 $25 $0 $73.2 $60.2 $56.0 $46.9 $47.8 $49.0 $31.3 $22.4 $15.0 $13.0 $ Q05

44 And Went Out at Lower Valuations Median Pre-Valuation at IPO $375 $363 Median Pre-Valuation at IPO ($M) $300 $225 $150 $75 $67 $79 $105 $172 $314 $281 $229 $233 $224 $151 $ Q05

45 Smaller Offering Sizes Seen in 1Q 05 Median Amount Raised at IPO vs. Median Pre-Valuation at IPO $350 $314 $363 $350 Median Pre-Valuation at IPO ($M) $300 $250 $200 $150 $100 $50 $79 $32 $105 $32 $172 $42 $62 $76 $281 $60 $229 $80 $233 $66 $224 $50 $150 $41 $300 $250 $200 $150 $100 $50 Median Amount Raised ($M) $0 $ Q05 Median Pre-Valuation at IPO ($M) Median Amount Raised at IPO ($M)

46 Israel

47 Israeli Investment on Pace to Match 04 Levels Deals and Amount Invested in Venture-Backed Companies with Offices in Israel $5 584 Amount Invested ($B) $4 $3 $2 $1 348 $ $ $ $1.2 $1.2 $1.0 $0.6 $ Number of Transactions $0 $ Q05 Amount Invested ($B) Number of Deals

48 Israeli Activity Holds Steady in 1Q 05 Equity into Venture-Backed Companies with Offices in Israel Amount Invested ($M) $450 $300 $ $370 $ $328 $338 $292 $303 $305 $290 $268 $251 $222 $204 $ Number of Deals $0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Amount Invested ($M) Number of Deals 0

49 IT Still Driving Force Despite Jump in HC Equity Investment by Industry Sector in Venture-Backed Companies with Offices in Israel 100% 3% 12% 9% % of Dollars Invested 80% 60% 40% 20% 90% 26% 90% 55% 35% Products & Services IT Healthcare 0% 7% 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05

50 Investors Continue to Favor Later Stage Deals Equity Investment by Round Class in Venture-Backed Companies with Israeli Offices 100% 80% Later % of Dollars Invested 60% 40% 20% 56% 29% 49% *37% 62% 76% 7% Second First Seed 0% *15% *18% 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 *Seed and First Rounds Combined

51 Israeli Round Sizes at Historical Highs Median Amount Invested in Venture-Backed Companies with Offices in Israel Median Amount Invested ($M) $5 $4 $3 $2 $1 $2.2 $2.4 $2.5 $3.5 $3.0 $3.0 $3.5 $5.0 $4.5 $ Q05

52 European Fundraising

53 European Fundraising on Pace to Surpass 2004 Commitments to European Funds ( B)* Funds Raised ( B) Q05 * includes venture capital, other private equity, and buyout firms

54 Fundraising Jumps in 1Q 05 Commitments to European Funds ( )* Funds Raised ( B) Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 * includes venture capital, other private equity, and buyout firms

55 European Investment: Overview

56 Perspective on European Market Equity Investment in Venture-Backed Companies, US vs. Europe ( ) 6 Amount Invested ( B) 4 2 U.S. Equity Investment Overall Investment European Equity Investment 0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

57 Perspective on European Market Equity Investment in Venture-Backed Companies, US vs. Europe ($) $7 $6 Amount Invested ($B) $5 $4 $3 $2 U.S. Equity Investment Overall Investment $1 European Equity Investment $0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

58 2.0 Activity Slows, Investment Holds in 1Q 05 Equity Investment in European Venture-Backed Companies Amount Invested ( B) Number of Deals 0.0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 0 Amount Invested ( B) Number of Deals

59 Biopharm & Software Lead 1Q 05 Investing Equity Investment in European Venture-Backed Companies by Industry, 1Q 05 Retail 0.5% Services Products 3% 1% Software 18% Semiconductors 14% Prod. & Serv. 6% Info. Tech. 49% Healthcare 45% Biopharmaceuticals 44% Information Services 5% Electronics 3% Communications 7% Medical IS 0.4% Medical Devices 5%

60 IT Investment Up in 1Q, Deal Flow Drops Equity Investment in European Venture-Backed Information Technology Companies 1, Amount Invested ( M) Number of Deals 0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 0 Amount Invested ( M) Number of Deals

61 100% Semiconductors Take Larger Share IT Investment Allocation by Sector % of Euros Invested 80% 60% 40% 20% 0% 39% 55% 57% 16% 4% 30% 10% 16% 19% 6% 10% 34% 7% 22% 14% 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Communications Electronics Information Services Semiconductors Software

62 Amount Invested ( M) Q 05 HC Deal Flow Lowest Since 99 Equity into European Healthcare Companies Number of Deals 0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Amount Invested ( M) Number of Deals 0

63 Biopharm Attracts Majority of HC Investment European Healthcare Investment Allocation by Sector 100% 2% 19% 8% 23% 1% 11% 75% 1% 7% %of Euros Invested 50% 25% 77% 87% 88% 0% 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Biopharmaceuticals Healthcare Services Medical Devices Medical IS

64 3 Median Round Sizes Double in 1Q 05 Median Amount Invested in European Venture-Backed Companies 3.0 Median Amount Invested ( M) Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

65 100% Share of Later Rounds Picks Up in 1Q 05 European Deal Flow Allocation by Round Class 80% 28% 45% 41% Later % of Total VC Rounds 60% 40% 33% 36% 28% Second First 20% *40% *40% *31% Seed 0% 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 *Seed and First Rounds Combined

66 Top European Investors, 1Q 05 Number of Equity Investments in European Venture-Backed Companies 3i Group 22 SPEF Venture 6 CDC Entreprises Innovation 6 Atlas Venture 6 Societe Generale Asset Management 5 Siparex Group 5 MTI Partners 5 ACE Management 5 Life Sciences Partners BV 5 I-Source Gestion 5

67 European Investment: Geographic Perspective

68 UK & France Represent Half of Deal Flow Total Deals in Europe by Country, 1Q 05 Switzerland 3% Ireland 4% Other 16% United Kingdom 30% Denmark 6% Sweden 9% Germany 13% France 19%

69 UK Leads 1Q 05 European Investment Investment in Europe by Country, 1Q 05 Ireland 5% Sweden 7% Other 13% United Kingdom 30% Switzerland 8% Denmark 9% France 12% Germany 16%

70 Investment in Germany & Ireland Picks Up in 1Q Equity Investment by Country Amount Invested ( M) Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 U.K. France Germany Sweden Ireland

71 Amount Invested ( M) UK Deal Flow Continues Slide in 1Q 05 Equity into Venture-Backed Companies in the United Kingdom Number of Deals 0 0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Amount Invested ( M) Number of Deals

72 Amount Invested ( M) Deal Flow and Investment Pick Up in Germany Equity into German Venture-Backed Companies Number of Deals 0 0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Amount Invested ( M) Number of Deals

73 Deal Flow in Sweden Contracts Sharply in 1Q 05 Equity into Swedish Venture-Backed Companies Amount Invested ( M) Number of Deals 0 0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Amount Invested ( M) Number of Deals

74 French Deal Flow & Investment Flat with 1Q 04 Equity into French Venture-Backed Companies Amount Invested ( M) Number of Deals 0 0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Amount Invested ( M) Number of Deals

75 Irish Investment Climbs in 1Q 05 Equity into Irish Venture-Backed Companies Amount Invested ( M) Number of Deals 0 0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Amount Invested ( M) Number of Deals

76 European Liquidity

77 1Q 05 IPO Offering Sizes Increase Amount Raised through IPOs by European Venture-Backed Companies Amount Raised ( M) Number of IPOs Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Euros (M) # of IPOs

78 Slow Start to IPOs in 2005 IPOs Per Quarter, US vs. Europe Number of IPOs Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 European IPOs US IPOs

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