1. Ohio Venture Association The Quiet Recovery – the Regional Core Competencies of Our Expanding Venture Community September 12, 2008 Mark G. Heesen President

2. Venture Capital – Barely a macroeconomics rounding error in the world of US finance….

3. US Venture Capital Investment in Perspective US GDP $12.5 trillion annually Hedge fund intake $1.5 trillion over last 3 years estimated Buyout equity intake $168 billion in 2007 Mutual fund intake $92 billion in 2007 Venture capital intake $37 billion in 2007  Venture capital fundraising & investment Is 0.3% of total GDP Source: BLS website, Investment Company Institute, Thomson Reuters, NVCA

4. Global Insight Study In 2006, venture backed companies:  Provided 10.4 million US jobs  Had sales of $2.3 trillion Represents 17.6% of GDP  Still dominated venture-created sectors 56% of biotech revenue 78% of computer and peripherals revenue 94% of computer and peripherals jobs 88% of software sector jobs  Outgrew the economy 2003-2006 in every sector Source: Venture Impact 2006 by Global Insight

5. Venture Capital Investment is Productive... For VC every dollar invested in 1970-2001, there was $7.90 in US revenue during 2006 For every $28,463 of venture capital invested in 1970- 2001, there was one job in the year 2006 Note these ratios are based on investment through 2001 ($296B) because investment after that time has likely had little effect on 2006 jobs and revenues. If investment through 2006 ($421B) is used, the ratios would be $5.55 and $40,364 respectively Source: Venture Impact 2006 by Global Insight

6. Fundraising & Resources

7. The Number of US VC Firms Has Peaked.. Thankfully Source: 2008 NVCA Yearbook, prepared by Thomson Reuters, figure 1.04

8. VC Fundraising Was Strong Thru 2000 - Recent Increase Way Below Bubble Levels Source: Thomson Reuters/NVCA Does not include Corporate Venture groups.

9. Investment Marches On - Rumors that the Venture Industry has stopped investing are greatly exaggerated

10. VC Investment Peaked in 2000; Recently 20-23% of Peak; Recent Steady Increases Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

11. Most Recent Quarters Have Been Consistent – What is the “Right” Level? Some Recent Growth Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

12. In 1H 2008, Life Sciences drew 28% of Funding but Medical Devices comprises an ever- growing proportion Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

13. Clean Technology grows significantly: In First Half 2008, $1.8B in 125 Deals Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

14. Average Clean Tech Deal Size is Increasing Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

15. Number of First Time Fundings (New Projects) is At Post-Bubble High! Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

16. The Buckeye State Stats and Sectors …

17. Ohio Tracks Below National Trends (National: 1/3 of peak, now at 1998 levels) Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

18. Ohio Sector Splits Medical Devices Lead the Way! (Most recent 8 quarters) Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

19. The Exit Scene - the importance of acquisitions has become clear over the past several years

20. IPO Levels Were Good in 2004 and Okay in 2007; Awful Now Source: Thomson Reuters/National Venture Capital Association

21. The Most IPOs Were in 1996 & 2000; Then 2004 & 2007 Showed Promise; 2008 is Awful Source: Thomson Reuters/National Venture Capital Association

22. 2007 Set A Median Valuation Record; The Handful of 2008 IPOs Show Some Strength Source: Thomson Reuters/National Venture Capital Association

23. IPOs YTD 2008: Bleak!!! Only 5 IPOs in Q1 and 0 in Q2! Last zero IPO quarter was in 1978 … 30 years ago! IPO in context:  Approached 90/quarter in 1999  25/quarter is typical  35/quarter suggested by historical levels 1,000 new port cos/year x 14% historical IPO rate = 140/year Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

24. What’s in the IPO Pipeline? IPOs During Period and Registration Counts at Period End Source: Thomson Reuters/National Venture Capital Association

25. IPOs Don’t Happen Overnight – and Sometimes Don’t Seem to Happen Year# IPOsIPOs $B Median Val $M Median Age Yrs 20049311.01254.906.75 2005564.46203.356.13 2006575.12255.268.20 20078610.33346.018.65 1H0850.28236.998.56 Source: Thomson Reuters/National Venture Capital Association

26. VB Acquisition Counts had been Steady; Low in 2008 Source: Thomson Reuters/National Venture Capital Association

27. M&A Proceeds Vary Greatly As the Mix between “Good” Exits and Fire Sales Shift; Now low Source: Thomson Reuters/National Venture Capital Association

28. Venture Exit Counts- IPOs and M&A by Year - 2008 is Dismal! Source: Thomson Reuters/National Venture Capital Association

29. Public Policy Big Wins and Bigger Challenges

30. No one has repealed the business cycle or the nature of failure …

31. Key US VC building blocks... Capital formation  Prudent man rule – enabled pension investment  LP laws  Capital gains tax reduction Empowered entrepreneurs  Capital gains tax reductions  Stock options/team building tools  Reasonable bankruptcy laws Protect companies – IP laws Abundant customers willing to do business with SMEs Exit markets – the NASDAQ Face-to-face investing/proximity Cultural acceptance

32. For First Fundings From 1991 to 2000, Approximately 33% Were Acquired and 14% Went Public [11,686 Companies Total] Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

33. Mark G. Heesen President