1. Compaq Computer Corporate Venture Capital March 3, 2001

2. Overview  Corporate venture trends  Rationale for corporate venture capital  Why Compaq invests  How to approach a strategic investor

3. Corporate venture capital soars YEARCORPORATE COMPANIESTOTAL ANNUAL VENTURE RECEIVING CORPORATE PROGRAMSFUNDS INVESTMENT 1995 45 65 $370M 1999370936$10.8B 2000*3851635$15.7B * Estimate Corporate Venture Capital growth has surpassed the growth in overall VC spending

4. Corporate VC spending Compaq invested approximately $500M in 2000 Source: Venture Economics

5. Typical corporate venture funds  Corporate venture funds typically only invest with a major VC; Series B or later  Investments meant to supplement or lead global product group strategies  Most funds are primarily focused on creating opportunities for their firms to capitalize on technology developed outside the firm - Financial return is secondary  Most corporate funds are independent - no other limited partners nor investment banking firms  Typical average investments are under $10M

6. Factors driving the trend toward corporate venture capital Outsourced R&D model (Leverage innovation in startup community) $103B US VC spending in 2000 vs. $1.7B Compaq R&D Need for speed Internet driving rapid, fundamental change (Commerce, Entertainment, Education, Government) Quest for knowledge of disruptive technologies/industry trends Use venture fund as early warning system -Lead product group strategies Client cultivator Squeezing additional value out of relationship with a client Securing sell to, through, or with opportunities Profit motive - ROI

7. Why Compaq Invests  Access to technology –Differentiation –New markets –White space  Compaq as a technology provider

8. Making a good impression  Clearly identify the customer’s pain  How you will solve it  What it means for your strategic partner  Know your value proposition to your customers, investors and strategic partners  Have a dedicated senior person who can build a trusted relationship with the partner

9. When the discussion turns to equity –Don’t lead with this discussion  Let the value of the alliance to your partner set the stage –Be prepared to discuss why equity makes sense  Exclusivity  Time - to - Market advantage  Joint product development –Control  Board seat? –Where could the investment ultimately lead?  Merger or acquisition

10. What are we seeking? Something unique, innovative  Technology which will help Compaq serve new or existing customers; enter new markets; competitive advantage  Products or services that help Compaq differentiate its offerings  Differentiating technologies –Performance, reliability, scalability, availability, cost savings  Wireless technology and applications  Technology to improve the out of box experience for our consumer customers

12. Backup

13. Venture capital investment trends Total venture capital has skyrocketed Average venture investment also increasing Silicon Valley continues to dominate *Venture capital invested in the US was $103B in 2000 (2X 1999’s amount) Venture Capital Investments by Geography 01/01/2000 through 11/07/2000 Geography Investment ($M) % of Investment Northern CA$28,611.0 31.1% New York$13,072.6 14.2% New England$8,607.9 9.4% Southern CA$7,183.8 7.8% South East$6,484.2 7.1% South West$6,138.2 6.7% Mid Atlantic$5,342.6 5.8% Rocky Mtn.$4,864.6 5.3% North West$3,244.7 3.5% Great Lakes$3,204.1 3.5% Ohio Valley$2,207.3 2.4% Great Plains$1,935.5 2.1% South $948.3 1.0% Alaska&Hawaii$9.5 0.0% Totals$91,854.2100% Source: Venture Economics

14. What does a potential partner need to know about you?  How much of a risk am I taking on this start-up? –Can you clearly describe the company’s business in 3 sentences - “Elevator pitches” –What type of relationship are you seeking?  Co-Marketing, Discount equipment, Customer, technology licensing, Online services aggregation, product integration –What is the possible sustainable value proposition? –Who are your competitors, customers, partners? –What is your key competitive advantage? –What stage of financing are you in? –What are the firm’s revenues/business model –What is the path to profitability