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AOL Time Warner Ventures Presentation to Federal Reserve Conference May 3, 2002 Ronald H. Peele, Vice President Presentation to Federal Reserve Conference.

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Presentation on theme: "AOL Time Warner Ventures Presentation to Federal Reserve Conference May 3, 2002 Ronald H. Peele, Vice President Presentation to Federal Reserve Conference."— Presentation transcript:

1 AOL Time Warner Ventures Presentation to Federal Reserve Conference May 3, 2002 Ronald H. Peele, Vice President Presentation to Federal Reserve Conference May 3, 2002 Ronald H. Peele, Vice President

2 Page 2 Presentation Agenda I.Investing Themes II.Driving Strategic Value III.Lessons Learned IV.Summary

3 Page 3 I. Investing Themes

4 Page 4 The Ventures group has targeted its investments in areas strategic to AOLTW. Convergence Devices Home Networking Integrated Services VoIP/Voice Commerce Interactive Multi- Media Platforms Broadband VOD/PVR/iTV Content Digitization/ Delivery Streaming DRM/ DAM/ MAM Ubiquity AOL Anywhere Wireless Other Access Devices Personalization and Productivity Search Community Operating Efficiencies Network Infrastructure Enterprise Software Security and Storage Billing Systems AOLTW Ventures

5 Page 5 The Ventures group has refined its strategic investing themes through an ongoing screening process. AOLTW Ventures International VCs VCs StrategicInvestingThemes US VCs Corporate Investors AOLTW Operating Businesses Industry Players Players Office of CTO InvestmentCmte. AOLTW Strategy Group

6 Page 6 II. Driving Strategic Value

7 Page 7 AOLTW Ventures drives strategic value from investments in a number of ways. Screen and introduce innovative companies to AOLTW. Secure funding to stabilize and strengthen prospective partners. Monitor industry developments and transfer information to AOLTW. Facilitate and champion technology trials. Steer or prioritize research or product direction. Position AOLTW for favorable operating deals. Preserve flexibility in business relationships with prospective partners. Screen and introduce innovative companies to AOLTW. Secure funding to stabilize and strengthen prospective partners. Monitor industry developments and transfer information to AOLTW. Facilitate and champion technology trials. Steer or prioritize research or product direction. Position AOLTW for favorable operating deals. Preserve flexibility in business relationships with prospective partners.

8 Page 8 III. Lessons Learned

9 Page 9 AOLTW Ventures constantly monitors the market, gathers intelligence, and identifies lessons learned. Internal ConstituenciesInternal Constituencies –Formal presentations to operating groups. –Identified key contacts and established feedback mechanisms. External ConstituenciesExternal Constituencies –Met with fund investment managers and agreed upon feedback mechanisms. –Presentations and meetings to other VC Funds. Existing Portfolio InvestmentsExisting Portfolio Investments –Constantly reassess successes and failures. –Periodic review with corporate finance group. Internal ConstituenciesInternal Constituencies –Formal presentations to operating groups. –Identified key contacts and established feedback mechanisms. External ConstituenciesExternal Constituencies –Met with fund investment managers and agreed upon feedback mechanisms. –Presentations and meetings to other VC Funds. Existing Portfolio InvestmentsExisting Portfolio Investments –Constantly reassess successes and failures. –Periodic review with corporate finance group.

10 Page 10 Corporate Investing Lessons Learned – External Relationships Institutional VCs are hesitant to work with corporate investors who are slow to make decisions and secretive about their investing rationale.Institutional VCs are hesitant to work with corporate investors who are slow to make decisions and secretive about their investing rationale. –Approval process is nimble, streamlined, timely, and does not require sign-off from an operating division. Unlike Institutional VCs who are driven purely by financial performance, corporate investors are often perceived to demonstrate unfocused investing criteria.Unlike Institutional VCs who are driven purely by financial performance, corporate investors are often perceived to demonstrate unfocused investing criteria. –AOLTW Ventures investment focus is re-enforced through our investing discipline and consistent message to the market. The strategic value of many corporate investors is diminished by an absence of post-investment support.The strategic value of many corporate investors is diminished by an absence of post-investment support. –AOLTW Ventures works diligently with management, other investors, and operating divisions to derive value and maximize the companies attractiveness to AOLTW after an investment is funded. Institutional VCs are hesitant to work with corporate investors who are slow to make decisions and secretive about their investing rationale.Institutional VCs are hesitant to work with corporate investors who are slow to make decisions and secretive about their investing rationale. –Approval process is nimble, streamlined, timely, and does not require sign-off from an operating division. Unlike Institutional VCs who are driven purely by financial performance, corporate investors are often perceived to demonstrate unfocused investing criteria.Unlike Institutional VCs who are driven purely by financial performance, corporate investors are often perceived to demonstrate unfocused investing criteria. –AOLTW Ventures investment focus is re-enforced through our investing discipline and consistent message to the market. The strategic value of many corporate investors is diminished by an absence of post-investment support.The strategic value of many corporate investors is diminished by an absence of post-investment support. –AOLTW Ventures works diligently with management, other investors, and operating divisions to derive value and maximize the companies attractiveness to AOLTW after an investment is funded.

11 Page 11 Corporate investing groups can often be perceived as a threat to operating divisions.Corporate investing groups can often be perceived as a threat to operating divisions. –AOLTW Ventures is positioned to be complementary to operating divisions, succeeding only when they succeed and demonstrating a good record of value creation. Communication among operating divisions and corporate investing groups is often diminished or lacking altogether.Communication among operating divisions and corporate investing groups is often diminished or lacking altogether. –AOLTW Ventures actively engages divisions to refine its understanding of their priorities and strategic directions and works with appropriate AOLTW functional and operating groups to facilitate mutual information flow. Corporate investing groups can impose an undue burden on operating divisions, disrupting their ability to accomplish necessary operating goals.Corporate investing groups can impose an undue burden on operating divisions, disrupting their ability to accomplish necessary operating goals. –While AOLTW Ventures maintains an active dialogue with operating groups, we are easy to work with, interacting only when appropriate and necessary, and providing cross-divisional intelligence to operating groups. Corporate investing groups can often be perceived as a threat to operating divisions.Corporate investing groups can often be perceived as a threat to operating divisions. –AOLTW Ventures is positioned to be complementary to operating divisions, succeeding only when they succeed and demonstrating a good record of value creation. Communication among operating divisions and corporate investing groups is often diminished or lacking altogether.Communication among operating divisions and corporate investing groups is often diminished or lacking altogether. –AOLTW Ventures actively engages divisions to refine its understanding of their priorities and strategic directions and works with appropriate AOLTW functional and operating groups to facilitate mutual information flow. Corporate investing groups can impose an undue burden on operating divisions, disrupting their ability to accomplish necessary operating goals.Corporate investing groups can impose an undue burden on operating divisions, disrupting their ability to accomplish necessary operating goals. –While AOLTW Ventures maintains an active dialogue with operating groups, we are easy to work with, interacting only when appropriate and necessary, and providing cross-divisional intelligence to operating groups. Corporate Investing Lessons Learned – Internal Relationships

12 Page 12 Summary Tuned into AOLTWs strategies and market trends.Tuned into AOLTWs strategies and market trends. Actively investing in companies that improve our competitive positioning and business prospects.Actively investing in companies that improve our competitive positioning and business prospects. Practicing disciplined and proactive portfolio management to mine and manage strategic value from portfolio companies.Practicing disciplined and proactive portfolio management to mine and manage strategic value from portfolio companies. Applying lessons learned every step of the way.Applying lessons learned every step of the way. As a corporate investor with rich resources (i.e., great brands and wide subscriber base), a crisp investing strategy, and an experienced team, AOLTW Ventures is well-positioned to capitalize on current venture investment opportunities.As a corporate investor with rich resources (i.e., great brands and wide subscriber base), a crisp investing strategy, and an experienced team, AOLTW Ventures is well-positioned to capitalize on current venture investment opportunities. Tuned into AOLTWs strategies and market trends.Tuned into AOLTWs strategies and market trends. Actively investing in companies that improve our competitive positioning and business prospects.Actively investing in companies that improve our competitive positioning and business prospects. Practicing disciplined and proactive portfolio management to mine and manage strategic value from portfolio companies.Practicing disciplined and proactive portfolio management to mine and manage strategic value from portfolio companies. Applying lessons learned every step of the way.Applying lessons learned every step of the way. As a corporate investor with rich resources (i.e., great brands and wide subscriber base), a crisp investing strategy, and an experienced team, AOLTW Ventures is well-positioned to capitalize on current venture investment opportunities.As a corporate investor with rich resources (i.e., great brands and wide subscriber base), a crisp investing strategy, and an experienced team, AOLTW Ventures is well-positioned to capitalize on current venture investment opportunities.


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