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3. PwC Getting that VC Round of Funding Best of Times…Worst of Times NBIA - May 2001 Steve Bengston steve.bengston@us.pwcglobal.com 650 281 9843 Managing Director Emerging Company Services PricewaterhouseCoopers PricewaterhouseCoopers MoneyTree  Survey in partnership with VentureOne

4. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 3 About The Survey Designed to measure ‘core’ Venture Capital investing in the United States Firms included in the survey are: Professional Venture Capital Firms, Limited Partners, Investment Banks, Venture Leasing and SBICs Electronic questionnaire is available to download from the website Reports are issued nationally and locally on trends in investing MoneyTree ™ survey is in its 7th year, 1st year with Venture One Results available online (www.pwcmoneytree.com)

5. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 4 Venture Capital Dictionary - Updated Momentum Investing has become... Buy High, Sell Low Broker means... Poorer than you were in 2000 Standard & Poor is... Your life in a nutshell Stock Split is when... Your ex spouse and lawyer split your assets

6. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 5 MoneyTree Total Investments Q1 1995 - Q1 2001 ($ in billions) 19951996 1997 1998 1999 # of Deals 267 354 315 369 429 514 436500 469 535 511 592 508 631 616 638 722 1,022 2000 1,372 1,5691,192 1,0501,0721,429 705 2001

7. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 6 Texas $1,025 48 Deals Silicon Valley $3,060 189 Deals New England $1,139 85 Deals Midwest $428 47 Deals South Central $8 3 Deals Northwest $273 31 Deals Sacramento/N. CA $24 1 Deal San Diego $595 28 Deals Investments by Region Q1 2001 Southeast $467 54 Deals Southwest $66 10 Deals Estimate / Other $579 9 Deals LA/Orange County $329 34 Deals DC/Metroplex $594 44 Deals NY Metro $875 65 Deals Philadelphia Metro $129 18 Deals North Central $188 19 Deals Q1 2001 Total Investments - $10,175 ($ in millions) Upstate NY $25 4 Deals Colorado $373 16 Deals

8. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 7 37 35 Investments by Industry Q1 2001 # of deals $ Decrease from Q4 00 ($ in millions) 116 170 163 55 41 17 14 21 8 6 17% 28% 39% 43% 25% 37% 16% 13% 36% (11%) 33 % (28%) Please visit www.pwcmoneytree.com for Industry Definitions Q1 2001 Totals: $10,175 705 28% 21 (8%)

9. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 8 Investments by Type of Financing Q1 2001 Q1 2001 Total Investments - $10,175 % of Total Investments ($ in millions) First $2,050 20% Third $1,547 15% Fourth & Beyond $1,355 13% Corporate $165 2% Other $1,675 17% Seed $33 0% Second $3,349 33%

10. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 9 Investments in Technology Companies 1,505 deals 995 deals ($ in millions) 651 deals

11. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 10 1,268 Deals 473 Deals 787 Deals ($ in millions) Investments in Internet Companies

12. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 11 ($ in millions) Investments in Technology & Internet-Related Companies

13. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 12 ($ in millions) Software Investments Q1 1997 - Q1 2001

14. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 13 ($ in millions) Communications & Networking Investments Q1 1997 - Q1 2001

15. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 14 ($ in millions) Consumer & Business Services Investments Q1 1997 - Q1 2001

16. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 15 # of deals in Q1 2001 $ Decrease from Q400 ($ in millions) 197 84 134 21 24 Q1 2001 Internet Total: $7,558 473 44% Q400 Q101 12 52% 56% 51% (44%) 26% 33% Internet Investments by Subcategory Q1 2001 vs. Q4 2000 Please visit www.pwcmoneytree.com for Internet Subcategory Definitions

17. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 16 Percentage of Total Investments in Formative* Stage Companies * Formative Stage includes companies in the Start-up and Early Stages of Development

18. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 17 ($ in millions) Median Deal Size - Internet & Total Investments

19. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 18 Venture Capital FirmLocationTotal Deals Bessemer Venture PartnersWellesley Hills, MA 17 New Enterprise Associates Menlo Park, CA 17 J.P. Morgan Partners Baltimore, MD 13 Mayfield FundMenlo Park, CA 10 BancBoston Ventures Boston, MA 10 Sequoia CapitalMenlo Park, CA 10 SOFTBANK Venture Capital Mountain View, CA New York, NY 13 11 ABS Ventures Q1 2001 Most Active Venture Firms Menlo Park, CA Interwest Partners

20. PwC Global Private Equity 2000 A Review of the Global Private Equity and Venture Capital Markets

21. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 20 The World View: Top 20 Countries by Investment - 1999 Asia Pacific 9. Hong Kong 11. Taiwan 12. Japan 15. Korea 17. Singapore 19. Australia 2. United Kingdom 3. Germany 4. France 5. Italy 7. Netherlands 8. Sweden 13. Spain 14. Belgium 16. Switzerland 20. Norway Western Europe North America 1. USA 6. Canada Middle East & Africa 10. Israel 18. South Africa 73% 20% 1% 4% Less than 1%

22. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 21 The World View: Top 20 Countries by Investment - 1999 North America #1 in 1999: –$99 billion invested (73% of global investments), virtually all in US UK, #2, eight times smaller with $12 billion invested. Remaining top 10 (in order) are: –Germany – France – Italy – Canada – Netherlands – Sweden – Hong Kong – Israel

23. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 22 The World View: Top 20 Countries Based on Investment Growth (Five Years) - % North America 7. USA (40%) 15. Canada (24%) Middle East & Africa 6. Israel (54%) 1. Sweden (201%) 2. Switzerland (119%) 4. Italy (59%) 5. Belgium (58%) 8. Germany (42%) 9. Spain (41%) 10. UK (39%) 11. Netherlands (32%) 12. France (30%) 14. Norway (25%) Western Europe 3. Taiwan (60%) 13. Singapore (28%) 16. Hong Kong (13%) 17. Korea (4%) Asia Pacific

24. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 23 The World View: Top 20 Countries Based on Investment Growth Over the last five years, investment in Western Europe and North America has grown at around the same rate, an average of 40% Eight countries are growing faster than the USA: the topfive are: –Sweden (201%) –Switzerland (119%) –Taiwan (60%) –Italy (59%) –Belgium (58%)

25. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 24 Summary: Half Full/Half Empty $10.2B Q1 ‘01 vc spending 6th highest qtr in history, > all ’96 Q1 ‘01 39% lower Q4 ‘00, 61% lower Q1 ‘00 2001 vc spending likely 3rd highest year ever –30% decline Q2-Q4 = $26B ‘01 vs. $17B in ‘98 $9.5M ave deal size 5th highest ever B2B=Back to Basics: Technology, Team, Revenues, Profits Hot: Nothing! Warm: Infrastructure, Wireless (short list) Cold: ASP, Consumer, Exchanges (long list)

26. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 25 Summary VC Spending likely decline 15-30%/qtr thru 2001 –Portfolio problems –Future Vision Cloudy –Valuations continue to decline: Why invest now? 80 Internet stocks <$1 –LP funds drying up for some firms - need to stretch out fund –Liquidity horizon ugly: 5 IPO’s (1 IT) in Q1 vs 16 Q4, 70 Q3, 40 Withdrawn Q1 $ Value of all tech M&A down 45% in Q1 ‘01 vs Q4 ‘00 with # deals down 10% $2B in Internet M&A YTD ‘01 vs $52B in same period ‘00 Q1 2001 $100M+ deals –Telseon-Gigabit Bandwidth Fiber-Based Data Services –Giantloop Network-Optical Network Services –SANrise-Secure Data Management Services –Xtera Communications-Technologies for Long-Haul Fiber Optics Systems –Sigma Networks-Operate Broadband Metro Interconnect Networks –Multiplex-Optoelectronics for Telecommunications sub-systems

27. PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne 26 Summary/Predictions IPO mkt may be essentially closed till 2003- M&A is King Revenge of VC’s: Valuations Down 50%, Term Sheets Tougher –Many vc’s in denial about quality their own portfolio –Many vc’s focusing on doing Series B/C deals at Series A prices Bankruptcy Attorneys in Demand: More Closings Coming –147 Internet closings in Q1 ‘01 vs 5 in Q1 ‘00 –20% of vc firms gone in 1 year, 50% in 3 years VC’s have record $ to invest –$35B raised in ‘00 not invested yet –Fundraising still vibrant, $16B in Q1 ‘01, exceeds spending –Returns to LP’s still likely to exceed other asset classes: Where else 30%? –Spending decline 10-30%/qtr this year, flat in 2002 3 Drivers of VC Activity Still in Place –Money, Talent, Disruptive Technologies

28. PwC Steve Bengston Managing Director Emerging Company Services PricewaterhouseCoopers 650 281 9843 steve.bengston@us.pwcglobal.com

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