Page 1 DE-MYSTIFYING TECHNOLOGY VENTURE CAPITAL 2000 Arjun Gupta Founder & Chief Believer (CEO) TeleSoft Partners

Page 2 KEY MESSAGES  Stick-to-the-knitting  Do-your-own-homework  Blow-it-out-of-the-ballpark  No better time to start a solid communications company – phenomenal infrastructure build-out worldwide. Carrier capital expenditures worldwide exceeded $100+BN in  Plenty of diverse sources of capital at all stages – angels, traditional VCs, industry focused funds, mega-funds, hedge funds, corporate funds, buyout funds, etc.  There are mega opportunities to build high-quality, large companies, either independently or with strategic acquisitions.

Page 3 THE MACRO TELECOM OPPORTUNITY Source: International Telecommunications Union; McKinsey; World Bank ~ From TeleSoft-I Investment Proposal (8/1/98).

Page 4 KEY SEGMENTS IN COMMUNICATIONS NEXT GENERATION NETWORKS ROUTING & SWITCHING SERVER & STORAGE ARCHITECTURES TRANSMISSION SYSTEMS BROADBAND WIRELESS NETWORK TERMINATION MIDDLEWARE & SERVICES Core Edge QoS QoS SAN & NAS DWDM Opto-electronics NMS & OSS “Black hole” Integrated Access CPE/CTE/NTE NETWORK APPLICATIONS New s/wcategory Internet p-t-p p-t-m-p Qwest, Level 3, Hermes LMDS, MMDS, PCS CLECs,CAPs SEMICONDUCTORs, TOOLs, OTHER

Page 5 RECENT TECHNOLOGY VC INDUSTRY DYNAMICS Oak Spectrum Battery Benchmark Kleiner Perkins Redpoint Sequioa Accel <$250MM funds Forestman Little TPG KKR Hickes Muse Thomas Lee Carlyle Group Welsh Carson Meritech Bowman Seligman Attractor TCV ICP General Atlantic Amerindo Madison Dearborn  $50~$100BN ENTREPRENEURS Microsoft Cisco Intel MCI Frontier BT/AT&T Pequot Soros Galleon ANGELS: ~$1+BN HEDGE FUNDS: $10BN-$20+BN CROSSOVER FUNDS: $15BN-$20+BN CORPORATES: $5BN-$10+BN MEGA-VCs: $10BN-$15+BN LBOs: $20+BN TRADITIONAL VCs: ~$5+BN

Page 6 COMPETITIVE POSITIONING MATRIX FOR EXISTING PLAYERS

Page 7 KEY VALUE FROM YOUR VC  $$$$$$ follow-on financings  Recruiting management, board and advisors  Product roadmap  Corporate partnerships  Anchor carrier customers & beta sites INCREASING IMPORTANCE

Page 8 EXAMPLE VC INVESTMENT STRATEGY & PHILOSOPHY

Page 9 THE VC’S CHALLENGE AT A GOOD COMMUNICATIONS FUND Funnel=~100%or~700 deals Explored=~20%or~140 deals Pursued=~10%or~70 deals Consummated=~5%or~30 deals Lost=~5%or~30 deals TeleSoft Guess Estimate: ENORMOUS DEAL FLOW OF GREAT IDEAS + GREAT TEAMS

Page 10 CAPITAL SHOULD BE ONE OF SEVEN LEVERS FROM YOUR VC

Page 11 Tech IPOs 1/1/80 – 3/31/98 Public Companies FOCUS ON BUILDING A GREAT COMPANY, DON’T WORRY ABOUT EXITS 16,528 private companies funded 70% 1,243 = 100% Source: Morgan Stanley 22% 8% Acquired Out-of-Biz U.S. PUBLIC MARKETS & QUALITY ACQUIRORS LIKE CISCO OR NT WILL BE THERE FOR HIGH- QUALITY COMPANIES 3/31/99 Snapshot

Page 12 KEY SUCCESS FACTORS IN CHOOSING YOUR VC  $$$ Capital (all the same!)  Knowledge in your space  Contacts in your space  Chemistry with your team INCREASING IMPORTANCE