Vertex Management Israel Venture Capital Funds January 18,

T he Vertex Group Manages over US$ 1B in 7 VC funds since 1983 Offices in: Redwood City, CA Singapore Tel Aviv London Invested in over 245 companies of which 82 have exited via M&A or IPO on: NASDAQ EASDAQ Neuer Markt Vertex Israel manages US$ 250M in 3 Israeli VC funds Taipei Beijing Hong Kong Nouveau Marché Singapore Stock Exchange Taiwan Stock Exchange 2

Focus on seed & early stage Israeli / Israeli-related Target investment transactions leadership Investment size of US$ 2M to US$ 5M and up to US$ 10M per company (in special cases upper limit is higher) Invest in companies that contribute to the growth of the Internet Economy and Information Networking:Bitways Communications Software & Enhanced Services Internet and E-commerce Applications Emerging IT Technologies Investment Strategy - General 3

Bitways: Intelligent networks Broadband networking Internet appliances Communications Software & Enhanced Services Communications Software & Enhanced Services : OSS Security Enhanced services enabling software platformsApplications: Content delivery networks Mobile-commerce enabling technologies Emerging image and video distribution technologies Special Special o pportunities in core Information Technologies Investment Strategy – Portfolio Focus Broadband access (Cable, xDSL, fixed wireless) Photonics (components & systems) Voice & data convergence Streaming & Compression QoS and Traffic Management Peer to Peer distributed processing 4

Exits Statistics for the last 5 years in Israel : 60-80% Mergers & Acquisitions (M&A) 20-40% Initial Public Offerings (IPO) 5

M&A Activity in Israel * FY2000 is calculated until December Statistics from Dolev&Abramovitch 6

* FY2000 is calculated until December IPO Activity in Israel Statistics from Dolev&Abramovitch 7

Israeli Hi-Tech M&A and IPO Activity YearNo of deals Amount in $M * Year Aggregate Amount Raised No. IPOs Statistics from Dolev&Abramovitch 8

M&As An M&A is a real alternative M&A is not a default to IPO In the long term, failure rate is high for both 9

Factors for M&As Management difficulties Distance from markets Availability of resources Political situation 10

M&As- Best of Both Worlds The acquired company becomes the Israeli arm of this larger, established foreign company and enjoys the following benefits: Financial backing Name recognition Market and distribution channels that would have been next to impossible to have achieved alone 11

Best of Both Worlds cont’d Increased employment in Israel Increased economic activity in Israel Increased opportunities for stakeholders Revenues for shareholders 12

M&As Stock or Cash? 13

Telegate Develops and markets “MultiGate” which enables CATV operators to offer telephone and data services over their HFC infrastructure Current customers in Belgium, Germany & Pacific Rim with an aggregate sales potential of US$ 150M ECI and GI were strategic partners and shareholders Exit: Company sold to Terayon Inc. for US$ 400M 14

Telegate Ltd. sold to Terayon December employees $3M sales 15

Tradeum XML-based Software engine for hosted on-line exchanges Seed investment Company recruited a US-based management team In 8 months the company staff grew from 10 to 100 Exit: Company was sold to VerticalNet Inc. for US$ 478M 16

Tradeum sold to VerticalNet April employees (of 150 int’l) $ 0 sales

MoreCom Interactive TV infrastructure software The President was a senior executive in GI and Philips in the Cable and HDTV businesses Strategic investments by Divicom/C-Cube Invested in seed & 2 follow-on investments Exit: Company was sold to Liberate for US$ 561M 18

Morecom sold to Liberate April employees $100K revenues

VisionTech Develops and markets advanced MPEG-2 Coding VLSI components for PVR, DVR, PauseTV and Internet STBs Highest quality MPEG-2 encoding silicon realization Major design wins and customer signup with: WebTV AOL-TV GI Exit: Company was sold to Broadcom Corp. Scientific Atlanta Haupauge Vestel ReplayTV Panasonic Fast 20

VisionTech sold to Broadcom December employees $1.5M sales

Portfolio Companies

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