PricewaterhouseCoopers/ National Venture Capital Association MoneyTree™ Report based on data from...

PricewaterhouseCoopers/ National Venture PricewaterhouseCoopers/ National Venture Capital Association MoneyTree™ ReportCapital Association MoneyTree™ Reportbased on data from Thomson Financialbased on data from Thomson Financial

Shaking the MoneyTree™™

Raleigh, NCRaleigh, NCMay 2007May 2007

Q1 2007 UpdateMay 2007

PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Financial

May 2007

Today’s program

The MoneyTree Report – Q1 2007 Analysis• presented by Laura Hoke, PricewaterhouseCoopers LLP

Venture Capital Panel• Michael Elliott, Noro-Moseley• Steve Nelson, Wakefield Group

Question and Answer Session

1)

2)

3)


May 2007

Speaker Bios


May 2007

Laura Hoke

Laura is a senior manager in the Raleigh office of PricewaterhouseCoopers ("PwC"), where she

is responsible for providing a range of audit, business advisory and consulting services. She

has extensive experience in the software industry, as well as other technology-backed

industries including biotech, pharmaceutical and professional services. In addition to her audit

and business advisory services, Laura has significant SEC experience, including several initial

public offerings. She has been involved in numerous Sarbanes Oxley projects and has led the

404 implementation efforts at several organizations. Laura rejoined PwC’s Raleigh office after

serving as the Corporate Controller for a global software company, where she was responsible

for the domestic and international accounting functions, as well as the development,

implementation and maintenance of the internal control structure. Laura has extensive

experience in mergers and acquisitions and was responsible for the integration of acquisitions

for a global distribution and manufacturing company.

Laura’s primary client is Lenovo Group, Limited although she participates on several other

technology-backed engagements throughout the Carolinas. Laura graduated with a B.S. from

Virginia Tech, is a member of the AICPA and the North Carolina Association of Certified Public

Accountants. She also serves on the Board of Directors of Artspace, a nonprofit visual arts

center in downtown Raleigh.


May 2007

Mike Elliott

Mike Elliott joined NMP in early 2005 with 21 years of successful venture capital investment experience. Mike spent the last eight years as a Managing Director of The Wakefield Group, a private venture firm based in Charlotte, North Carolina with an investment focus similar to that of NMP. Mike invested primarily in technology and business services companies, at early and growth stages of development, and will continue that focus in his deployment of Fund VI. Several of The Wakefield Group’s investments were syndicated co-investments with several of the Prior Funds.

Prior to his service at The Wakefield Group, Mike was a Managing Director of NationsBank Capital (now Bank of America Capital Investors), Bank of America’s private equity investment arm, where he managed large financings of later-stage growth companies. He began his venture investment career as a founding partner of NCNB Venture Co., L.P., the venture investment arm of NCNB, the predecessor of Bank of America. During his venture career, Mike has been an active board member and sponsor of several highly successful ventures, including Affiliated Managers (NYSE: AMG), Redgate Communications (sold to AOL), Medic Computer Systems (sold to Misys), OpenSite Technologies (sold to Siebel Systems), SciQuest (Nasdaq: SQST) and Serologicals (Nasdaq: SERO).

During his nine years as a partner at NCNB Ventures starting in 1985, Mike returned 3.4x capital, generating a 29% gross IRR for investments he sponsored. During his three years as a Managing Director at NationsBank Capital, he led growth company financings generating a 25% gross IRR and returning 2.1x capital. While at The Wakefield Group, he sponsored transactions generating a 37% gross IRR, returning 1.5x capital. Mike’s experience and known culture fit with the NMP team make him an ideal addition to the Firm and the Fund VI team.

Mike is extensively involved in North Carolina’s entrepreneurial community, having served in many leadership roles, including the Executive Committee of the NASBIC Board of Governors and as a board member of the Council for Entrepreneurial Development in Research Triangle Park. Mike received a BS in mathematics and an MBA from the University of North Carolina, where he was both a Morehead Scholar and Maurice Lee Fellow.


May 2007

Steve Nelson

Steve Nelson joined Wakefield Group in October 1999 as Managing Director and Partner. He established the venture capital firm’s Research Triangle Park, NC office.

Steve joined Wakefield after 19 years of executive and general management experience in technology, software and Internet-based businesses. During the last three years of his career before starting in venture capital, Steve was at Quokka Sports, a digital media company, in several executive capacities. Quokka raised over $140m in capital and successfully completed an IPO in July, 1999. Steve served as chief executive of a joint venture company between NBC Sports and Quokka Sports, NBC/Quokka Ventures, LLC.

Prior to Quokka, Steve served as a Vice President with Informix Software, based in Menlo Park, CA. His first business experience was 14-plus years at IBM, ultimately as Vice President and General Manager in San Francisco where he had executive and P&L responsibility for all customers in the eleven western states, all IBM products and services, 800 employees, $2.2B in revenues and several hundred million dollars in profit.

Steve is a member of the board of directors and the executive committee at Motricity. He is also Wakefield’s board representative for Liquidia Technologies where he is also interim CEO, Integrian, Constella Group, Near-Time, rPath, APEX Analytix, and BlueCross BlueShield of North Carolina. He was a past Chairman of North Carolina’s Council for Entrepreneurial Development (CED), and is a member of the Investment Advisory Committee for the State Treasurer of North Carolina and helps oversee their $74B portfolio.

Steve received his B.S. degree in Business from Wake Forest University.


May 2007

About The Report

• PricewaterhouseCoopers and the National Venture Capital Association produce the MoneyTree Report™ based on data from Thomson Financial

• ‘Core’ measure of equity investments in venture-backed companies in the United States

• Companies have received at least one round of financing involving a professional VC firm or equivalent

• Captures: tranches, not term sheets, foreign VCs, qualified private placement

• Excludes: debt, bridge loans, recaps, roll-ups, IPOs, PIPEs, leasing, etc.

• MoneyTree™ Report in its 13th year

• Results online at www.pwcmoneytree.com, www.nvca.org, www.venturexpert.com


May 2007

The National Picture

Historical Trends


May 2007

MoneyTree Total Investments: Q1 1998 – Q1 2007($ in billions)

$4.1

$6.6

$28.

4

$12.

8

$6.8

$4.3 $5

.2

$5.1 $6

.3 $7.1

$5.7

$11.

0

$28.

1

$11.

4

$6.0

$5.0 $6

.3

$6.3

$6.9

$5.3

$13.

2

$26.

4

$8.4

$4.5

$4.8

$4.8 $5

.7 $6.6

$6.0

$23.

4

$22.

2

$8.1

$4.5 $5

.6

$5.8

$5.7

$6.2

$0.0

$8.0

$16.0

$24.0

$32.0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

#

of

Deals

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

843 901 910 990 916 1304 1422 1868 2131 2105 1933 1745 1289 1225 1002 977 831 846 687 722 690 735 705 774 702 844 678 817 720 812 774 801 853 910 875 884 778


May 2007

MoneyTree Total Investments: 1980 – YTD Q1 2007

($ in billions)

$0.6

$1.2

$1.6

$3.0

$3.0

$2.8

$3.1

$3.3

$3.3

$3.3

$2.8

$2.2

$3.5

$3.7

$4.1 $8

.1 $11.

3

$14.

9

$21.

1

$54.

2

$105

.0

$40.

7

$21.

8

$19.

7

$22.

2

$22.

8

$26.

1

$7.1

$0

$20

$40

$60

$80

$100

$120

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Annual Venture Capital Investments 1980 to YTD Q1 2007


May 2007

HA W AII

MA UI

KAHOOL A WE

LANAI

MOLOKAI

OAHU

KAU AI

NIIHA U

Investments by Region: Q1 2007

Texas$277.6

34 Deals

Silicon Valley$2,165.1

244 Deals

New England$975.5

95 Deals

Midwest$280.5

43 Deals

South Central$3.0

3 Deals

Northwest$456.7

42 DealsSacramento/N. CA

$30.1 6 Deals

San Diego$686.3

44 Deals

Southeast$579.3

54 Deals

Southwest$121.8

22 Deals

LA/Orange County$526.0

40 Deals

DC/Metroplex$197.2

41 Deals

NY Metro$360.5

48 Deals

Philadelphia Metro$204.8

34 Deals

North Central$79.8

10 Deals

Q1 2007 Total Investments - $7,056 in 778 Deals

Colorado$100.4

13 Deals

AK/HI/PR$0.2

1 Deal

Upstate NY$11.1

4 Deals


May 2007

Investments by Region: Q1 2007($ in millions)

$0.2

$3.0

$100.4

$121.8

$197.2

$204.8

$277.6

$280.5

$360.5

$456.7

$526.0

$579.3

$686.3

$975.5

$2,165.1

$79.8

$30.1

$11.1

$0 $700 $1,400 $2,100

AK/HI/PR

South Central

Upstate NY

Sacramento/N.Cal

North Central

Colorado

SouthWest

DC/Metroplex

Philadelphia Metro

Texas

Midwest

NY Metro

Northwest

LA/Orange County

Southeast

San Diego

New England

Silicon Valley

Region# of

Deals

% Change $

from Q4 ‘06

Silicon Valley 244 -7.28%

New England 95 29.14%

San Diego 44 73.91%

Southeast 54 54.05%

LA/Orange County 40 26.51%

Northwest 42 52.30%

NY Metro 48 -39.90%

Midwest 43 15.13%

Texas 34 61.06%

Philadelphia Metro 34 48.81%

DC/Metroplex 41 5.29%

South West 22 127.38%

Colorado 13 35.85%

North Central 10 -18.07%

Sacramento/N.Cal 6 329.78%

Upstate NY 4 -71.45%

South Central 3 -83.10%

AK/HI/PR 1 -98.36%

Total 778 13.47%

Q1 2007 Total: $7,056 in 778 Deals

NM = Not Meaningful


May 2007

Investments by Region – Quarterly Percent of Total U.S. Investments

Top U.S. Regions Q1 ‘06– Q1’07(% of Total Dollars)

38

.4%

15

.0%

5.1

%

4.1

% 6.0

%

35

.2%

10

.7%

3.3

%

4.3

% 7.3

%

33

.9%

9.9

%

4.4

%

5.1

% 8.5

%

37

.6%

12

.2%

6.4

%

6.1

%

6.7

%

30

.7%

13

.8%

9.7

%

8.2

%

7.5

%

0%

10%

20%

30%

40%

Silicon Valley New England San Diego Southeast LA/Orange County

Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07


May 2007

Q1 2007 Top 10 States Garnering Venture FundsQ1 2007 Top 10 States Garnering Venture Funds

State Deals Investment Amount

1.California 334 $ 3,407,455,800

2.Massachusetts 84 $ 901,224,000

3.Washington 33 $ 365,881,600

4.Texas 34 $ 277,607,300

5.New York 34 $ 261,279,800

6.North Carolina 16 $ 224,816,300

7.Pennsylvania 34 $ 199,643,300

8.Florida 13 $ 150,833,600

9.Illinois 17 $ 134,887,000

10. New Jersey 18 $ 108,627,900


May 2007

Investments by Industry: Q1 2007($ in millions)

$0.4

$75.4

$161.5

$176.6

$212.3

$274.7

$288.1

$358.1

$489.4

$501.2

$588.1

$1,078.4

$1,097.9

$1,488.8

$77.3

$93.4

$93.9

$0 $900 $1,800

Undisclosed/Other

Consumer Products and Services

Financial Services

Computers and Peripherals

Retailing/Distribution

Healthcare Services

Electronics/Instrumentation

Business Products and Services

Networking and Equipment

IT Services

Semiconductors

Media and Entertainment

Industrial/Energy

Telecommunications

Medical Devices and Equipment

Software

Biotechnology

Industry# of

Deals

% Change $

from Q4 ‘06

Biotechnology 102 19.65%

Software 193 -10.29%

Medical Devices & Equipment 96 59.83%

Telecommunications 63 27.19%

Industrial/Energy 44 20.50%

Media & Entertainment 72 16.47%

Semiconductors 42 -26.07%

IT Services 38 7.60%

Networking & Equipment 29 31.45%

Business Products and Services 22 37.12%

Electronics/Instrumentation 16 77.64%

Healthcare Services 10 20.86%

Retailing/Distribution 12 56.71%

Computers and Peripherals 9 61.92%

Financial Services 17 20.43%

Consumer Products and Services 12 -67.91%

Undisclosed/Other 1 NM

TOTAL 778 13.47%

Q1 2007 Total: $7,056 in 778 DealsVisit www.pwcmoneytree.com for Industry definitions

NM = Not Meaningful


May 2007

Investments by Industry – Quarterly Percent of Total U.S. Investments

Top 5 Industries – Q1 ‘06 to Q1 ‘07(% of Total Dollars)

13.9

%

21.7

%

11.5

%

9.2%

4.5%

19.6

%

19.9

%

8.2% 9.

2%

8.1%

17.4

%

17.2

%

10.4

%

13.9

%

9.5%

20.0

%

19.7

%

10.9

%

7.4%

6.7%

21.1

%

15.6

%

15.3

%

8.3%

7.1%

0%

5%

10%

15%

20%

25%

30%

Biotechnology Software Medical Devices andEquipment

Telecommunications Industrial/Energy

Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07


May 2007

Life Science Investments – Percent of Total U.S. Investments*

(% of Total Dollars)

13

.9%

11

.5%

25

.4%

19

.6%

8.2

%

27

.8%

17

.4%

10

.4%

27

.8%

20

.0%

10

.9%

30

.9%

21

.1%

15

.3%

36

.4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Biotechnology Medical Devices and Equipment Life Sciences

Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07

Life Science Sectors – Q1 ’06 to Q1 ‘07


May 2007

Investments by Stage of Development: Q1 2007

($ in millions)

$169.3

$962.7

$2,875.1

$3,048.5

$0 $1,000 $2,000 $3,000

Startup/Seed

Early Stage

Expansion

Later Stage

Stage of Development

# of

Deals

% Change in $ Amount

from Q4 2006

Later Stage 245 56.72%

Expansion Stage 274 8.57%

Early Stage 188 -28.48%

Startup/Seed 71 -39.29%

Total 778 13.47%

Q1 2007 Totals: $7,056 in 778 Deals


May 2007

Stage of Development – Quarterly Percent of Total First Sequence Dollars

(% of first sequence dollars)

15

.1%

37

.8%

35

.0%

12

.1%17

.2%

30

.1%

40

.9%

11

.8%

38

.7%

27

.6%

13

.5%

17

.4%

49

.5%

24

.9%

8.2

%

8.1

%

39

.5%

34

.8%

17

.6%

20

.2%

0%

10%

20%

30%

40%

50%

60%

70%

Startup/Seed Early Stage Expansion Later Stage

Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07

Stage Development – Q1 2006 to Q1 2007


May 2007

Stage of Development – Quarterly Percent of Total First Sequence Deals

(% of first sequence deals)

21

.2%

44

.4%

29

.3%

5.0

%

22

.9%

43

.9%

24

.9%

8.3

%

32

.1%

40

.1%

20

.4%

7.4

%

22.6

%

57.1

%

14.3

%

6.0%

26.0

%

45.7

%

21.5

%

6.7%

0%

10%

20%

30%

40%

50%

60%

70%

Startup/Seed Early Stage Expansion Later Stage

Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07

Stage Development – Q1 2006 to Q1 2007


May 2007

Investments by Sequence of Financing: Q1 2007

($ in millions)

$950.5

$1,194.8

$1,297.4

$1,536.1

$2,076.7

$0 $500 $1,000 $1,500 $2,000 $2,500

Fourth

Third

Second

First

5th and Beyond

Financing# of

Deals

% Change in

$ Amount from

Q4 2006

Fifth & Beyond 192 23.39%

First 223 6.09%

Second 163 4.30%

Third 115 18.87%

Fourth 85 13.41%

Total 778 13.47%

Q1 2007 Totals: $7,056 in 778 Deals


May 2007

First Sequence Financing – Investment Amount

($ in billions)

$8

.8

$2

.9

$1

.3

$0

.8

$1

.0 $1

.4

$1

.3

$1

.5$2

.0

$1

.2

$1

.0

$1

.3

$1

.5

$1

.6

$6

.3

$1

.3

$1

.0

$1

.1

$1

.2

$1

.3

$1

.5

$5

.4

$1

.3

$0

.8 $1

.1

$1

.2

$1

.4

$1

.4

$8

.5

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

2000 2001 2002 2003 2004 2005 2006 2007

Q1 Q2 Q3 Q4

First Sequence Investments


May 2007

First Sequence Financing – Number of Deals

95

6

38

5

22

5

17

0

19

0 22

9 25

9

22

3

94

5

32

9

24

1

18

6 24

5 30

1

80

0

26

5

18

5

17

9 21

9 24

8 29

9

66

7

23

6

18

6 21

3 25

0 27

9

26

6

23

9

0

200

400

600

800

1000

2000 2001 2002 2003 2004 2005 2006 2007

Q1 Q2 Q3 Q4

First Sequence Deals($ in billions)


May 2007

First Sequence Financing –Percent of Total U.S. Investments

30.1%

23.8%24.4%22.3%

17.6%15.2%16.0%

19.6%20.3%22.4%

17.8%17.3%

20.7%21.9%

20.3%20.0%19.9%

25.4%

21.1%

28.4%

23.3%22.4%

25.1%23.0%23.3%

21.8%

44.9%

41.4%

38.2%

29.9%

26.9%26.4%24.2%

27.1%28.5%

26.9%25.8%24.6%25.3%25.4%

27.5%27.1%29.0%

32.3%30.6%

31.8%29.4%

32.0%

34.8%33.1%

34.2%

30.1%28.7%

31.0%

20.8%22.6%

44.9%

30.4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

Q1

2000

Q2

2000

Q3

2000

Q4

2000

Q1

2001

Q2

2001

Q3

2001

Q4

2001

Q1

2002

Q2

2002

Q3

2002

Q4

2002

Q1

2003

Q2

2003

Q3

2003

Q4

2003

Q1

2004

Q2

2004

Q3

2004

Q4

2004

Q1

2005

Q2

2005

Q3

2005

Q4

2005

Q1

2006

Q2

2006

Q3

2006

Q4

2006

Q1

2007

% of Total Dollars % of Total Deals


May 2007

First Sequence Deals in Startup & Early Stage Companies

728 81

1 943

1,75

6

905

606

579 68

3

160

799

2,49

9

689

538

28.3%

22.2% 22.7%

20.6%

25.9%

29.1%

25.7%

31.9% 31.6%

20.1%

19.6% 19.9%

22.5%

0

1000

2000

3000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

YTD 200

7

0%

5%

10%

15%

20%

25%

30%

35%

40%

Seq 1 Deals in Startup/Early Stage% of Total US Deals


May 2007

Median Deal Size vs. Mean Deal Size –Quarterly Total U.S. Investments

$7.0$6.5 $6.2 $6.0

$5.0 $5.0

$4.0$4.6 $4.5

$4.0 $4.0$3.2

$3.7 $4.0 $4.0$4.5

$5.0 $4.7 $4.5 $4.8 $4.5 $4.6$4.0

$4.8 $4.5 $4.2 4.1 4.04.5

$13.3 $13.3 $13.6

$12.7

$8.2

$7.1$6.7 $6.8 $6.9 $7.2 $7.1 $7.1 $7.1

$7.8$7.3 $7.1 $7.4 $7.6 7.6

7.0

9.1

$8.4

$10.0$9.3

$8.3

$6.3 $6.2

$7.5 $7.5

$0

$2

$4

$6

$8

$10

$12

$14

Q1

2000

Q2

2000

Q3

2000

Q4

2000

Q1

2001

Q2

2001

Q3

2001

Q4

2001

Q1

2002

Q2

2002

Q3

2002

Q4

2002

Q1

2003

Q2

2003

Q3

2003

Q4

2003

Q1

2004

Q2

2004

Q3

2004

Q4

2004

Q1

2005

Q2

2005

Q3

2005

Q4

2005

Q1

2006

Q2

2006

Q3

2006

Q4

2006

Q1

2007

Median Deal Size Mean Deal Size


May 2007

Post-Money Valuations – Early Stage Companies 1997 to 2006

$12.

8

$17.

9

$17.

6

$26.

1

$19.

3

$10.

1

$8.7

$9.6

$8.6

$6.9

$5

.8

$5

.4

$8

.6

$1

0.2

$7

.8

$5

.4

$4

.2

$6

.9

$6

.4

$4

.8

$0

$5

$10

$15

$20

$25

$30

$35

$40

Q4 97 Q4 98 Q4 99 Q4 00 Q4 01 Q4 02 Q4 03 Q4 04 Q4 05 Q4 06

Pre-money Valuation Investment Amount

Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Total $17.55 $24.30 $25.41 $36.22 $27.92 $15.41 $14.13 $15.37 $15.52 $11.13

12 Month Average


May 2007

Post-Money Valuations – Expansion Stage Companies 1997 to 2006

$30.

8

$34.

3

$62.

9

$87.

3

$48.

5

$33.

4

$32.

1

$48.

5

$46.

4

$54.

9

$1

2.4

$1

1.3

$1

3.8

$2

1.7

$1

6.5

$1

2.5

$1

4.0

$1

4.2

$8

.8

$8

.1

-$10

$10

$30

$50

$70

$90

$110

Q4 97 Q4 98 Q4 99 Q4 00 Q4 01 Q4 02 Q4 03 Q4 04 Q4 05 Q4 06


12 Month Average

Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Total $38.88 $43.02 $79.43 $108.99 $62.33 $45.89 $43.46 $60.87 $60.62 $68.90


May 2007

Post-Money Valuations – Later Stage Companies 1997 to 2006

$60.

8

$55.

3

$105

.3

$130

.5

$78.

4

$48.

7

$54.

4

$56.

4

$80.

2

$81.

3

$1

6.7

$1

4.3

$2

0.5

$2

8.9

$2

0.6

$1

6.7

$1

4.1

$1

5.1

$1

0.6

$9

.8

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

Q4 97 Q4 98 Q4 99 Q4 00 Q4 01 Q4 02 Q4 03 Q4 04 Q4 05 Q4 06


Year1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Total $70.58 $65.97 $125.87 $159.40 $98.87 $65.44 $68.71 $73.17 $95.29 $95.33

12 Month Average


May 2007

Q1 2007 – Most Active Venture Investors

Venture Capital Firm LocationTotal Deals

Alta Partners San Francisco, California 18

New Enterprise Associates Baltimore, Maryland 18

Draper Fisher Jurvetson Menlo Park, California 17

Canaan Partners Westport, Connecticut 16

Intel Capital Santa Clara, California 15

Menlo Ventures Menlo Park, California 15

Sequoia Capital Menlo Park, California 15

ARCH Venture Partners Chicago, Illinois 14

Venrock Associates New York, New York 14


May 2007

Thomson FinancialU.S. Private Equity Performance Index (PEPI)

Fund Type 1 Year 3 Year 5 Year 10 Year 20 Year

Early/Seed VC 9.9 6.5 -3.0 36.4 20.5

Balanced VC 20.5 11.7 4.1 17.6 14.6

Later Stage VC 25.2 9.4 3.7 9.0 14.0

All Venture 16.4 9.1 1.0 20.3 16.6

All Buyouts 24.5 14.6 10.4 8.5 12.9

Mezzanine 12.6 5.0 4.1 6.1 8.5

All Private Equity 23.3 12.7 7.5 11.0 13.9

NASDAQ 4.7 6.2 4.3 6.4 10.1

S&P 500 10.8 8.2 4.2 6.6 9.2

(Investment Horizon Performance as of 12/31/2006)

Source: Thomson Financial/National Venture Capital Association *Data as of 4/13/2007--The Private Equity Performance Index (PEPI) is based on the latest quarterly statistics from the Thomson Financial Private Equity Performance Database analyzing the cashflows and returns for over 1860 US venture capital and private equity partnerships with a capitalization of $679 billion. Sources are financial documents and schedules from Limited Partners investors and General Partners. All returns are calculated by Thomson Financial from the underlying financial cashflows. Returns are net to investors after management fees and carried interest.


May 2007

Analysis of Venture-Backed IPO and M&A Activity*

Date Number of IPOs**

Total Venture-Backed Offering Size ($M)

Average Venture-Backed Offering Size ($M)

Number of Venture-backed M&A deals

Average M&A deal size***

2003 29 2,022.7 69.8 291 62.8

2004 93 11,014.9 118.4 339 83.0

2005 56 4,461.0 79.7 347 95.8

2006 Q1 10 540.8 54.1 104 112.2

2006 Q2 19 2,011.0 105.8 92 101.3

2006 Q3 8 934.2 116.8 87 95.6

2006 Q4 20 1,631.1 81.6 57 165.3

2006 57 5,117.1 89.8 340 113.3

2007 Q1 17 2,091.9 123.1 62 161.2

2007 17 2,091.9 123.1 62 161.2

* Q1 2007 M&A data, current as of April 2, 2007, is preliminary and subject to change** Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges, regardless of domicile***Only accounts for deals with disclosed valuesSource: Thomson Financial/ National Venture Capital Association


May 2007

Venture Capital Fundraising*

Year First Time Funds

Follow-On Funds

Total Number of Funds

VC Raised ($M)

2002 57 115 172 3,767.4

2003 50 97 147 10,622.3

2004 56 149 205 18,566.0

2005 55 163 218 27,957.3

2006 44 168 212 30,260.4

2007 YTD 13 43 56 4,939.8

Quarter

Q1 ‘06 17 55 72 6,640.1

Q2 ‘06 13 59 72 14,050.9

Q3 ‘06 13 52 65 5,426.0

Q4 ‘06 14 42 56 4,143.4

Q1 ‘07 13 43 56 4,939.8

Source: Thomson Financial/National Venture Capital Association

*These figures take into account the subtractive effect of downsized funds Date current as of 4/16/07


May 2007

North Carolina Picture

Historical Trends


May 2007

MoneyTree Total North Carolina InvestmentsMoneyTree Total North Carolina Investments2000 – Q1 20072000 – Q1 2007

2000 2001 2002 2003 2004

# of Deals

2005 2006 2007

$408

$622

$497

$303

$224

$140$144$158

$40

$123

$163

$108 $93$119

$83$102

$29

$97

$175$128

$83$56

$82

$225

$114$119 $91$141

$153

$0

$100

$200

$300

$400

$500

$600

$700

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

34 31 24 15 18 1542 38 40 22 14 20 23 22 20 14 28 14 20 9 11 13 18 19 16 1510 20 16

($ in millions)


May 2007

$417

$225

$1,830

$553$510

$337$356$590

1.7%

1.4%

1.8%2.0%

3.5%

1.5%

1.8%

2.5%

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

2000 2001 2002 2003 2004 2005 2006 Q1 2007

0%

1%

2%

3%

4%

Total NC Investments NC % of U.S. Total Amount# of Deals

154 91 85 76 57 1652 70

MoneyTree Total North Carolina Investments – MoneyTree Total North Carolina Investments – 2000 – Q1 20072000 – Q1 2007($ in millions)


May 2007

85

70

57

76

91

154

52

16

2.0%

2.1%

1.9%1.7%

2.8%2.0% 2.6%

2.0%

$0

$20

$40

$60

$80

$100

$120

$140

$160

2000 2001 2002 2003 2004 2005 2006 Q1 2007

0%

1%

2%

3%

Total # NC Deals NC % of U.S. Total DealsAmountInvested

(in millions)

$1,830 $590 $553 $356 $337 $225$417 $510

MoneyTree Total North Carolina Deals– MoneyTree Total North Carolina Deals– 2000 – Q1 20072000 – Q1 2007

($ in millions)


May 2007

$6.7

$7.3

$16.0

$50.0

$52.0

$87.5

$0 $20 $40 $60 $80 $100

Electronics/Instrumentation

Software

IT Services

Industrial/Energy

Telecommunications

Medical Devices &equipment

Biotech

Total Deals

Q1 2007

% Change in $ Amount from

Q1 2006($ in millions)

2

Total North Carolina Investments by Industry –Total North Carolina Investments by Industry –Q1 2007Q1 2007

Q1 2007 Total: $224.8

1$5.2

7

1

2

1

2

45.5%

100.0%

142.2%

138.1%

845.5%

100.0%

(40.2%)


May 2007

$166$162

$108$123$121$141

$227

$88

12.4%

2.3%2.9%4.3%5.0%5.3%

4.1% 3.3%

23.9%

39.8%36.5%

29.2%

21.2%

35.0%

34.1%

$0

$50

$100

$150

$200

$250

2000 2001 2002 2003 2004 2005 2006 Q1 2007

0%

10%

20%

30%

40%

50%

Total # NC Deals % of Total U.S. Investment in Biotech % of Total NC Investments

($ in millions)

Biotechnology Investments in NC vs. U.S.Biotechnology Investments in NC vs. U.S.2000 – Q1 20072000 – Q1 2007

21 17 17 17 20 715 17# of Deals

5.9%


May 2007

$82

$24

$54$43

$154

$323

$23

17.8%

0.5%1.0% 0.5%1.6%1.3% 1.5% 1.0%

14.9%

4.7%

16.1%

5.6%

12.2%

2.7%

26.1%

$0

$50

$100

$150

$200

$250

$300

$350

2000 2001 2002 2003 2004 2005 2006 Q1 2007

0%

10%

20%

30%

Total # NC Deals % of Total U.S. Investment in Software % of Total NC Investments

($ in millions)

Software Investments in NC vs. U.S.Software Investments in NC vs. U.S.2000 – Q1 20072000 – Q1 2007

36 25 24 21 18 28 11# of Deals

0.4%$7


May 2007

Average Deal Size – NC vs. U.S.Average Deal Size – NC vs. U.S.2000 – Q1 20072000 – Q1 2007

$7.4

$9.1

$13.3

$9.1

$7.1$6.8 $7.3 $7.3

$11.9

$6.5 $6.5

$4.7$5.9

$8.0$7.3

$14.1

$0

$5

$10

$15

2000 2001 2002 2003 2004 2005 2006 Q1 2007

U.S. Average Deal Size NC Average Deal Size

($ in millions)


May 2007

6th Sense Analytics, Inc. Software $

5,000,000

AlphaVax, Inc.Biotechnology $ 12,650,000

Chimerix, Inc.Biotechnology $ 23,099,900

HyperBranch Medical Technology, Inc. Medical Devices & Equipment $

2,000,000

InnerPulse, Inc.Medical Devices & Equipment $ 50,000,500

Liquidia Technologies, Inc. Industrial/Energy $

15,999,900

Motricity Telecommunications $ 50,000,000

Nextreme Thermal Solutions, Inc. Electronics/Instrumentation $

5,292,000

Phase Bioscience, Inc. Biotechnology $

1,250,100

Regado Biosciences, Inc. Biotechnology $

23,000,200

rPath, Inc .Software $ 1,749,900

Serenex, Inc.Biotechnology $ 13,999,800

StrikeIron, Inc.IT Services $ 5,000,000

Tranzyme Pharma, Inc. Biotechnology $

11,000,000

Unit Dose Solutions, Inc. Biotechnology $

2,500,000

XDS, Inc. IT Services IT Services $

2,274,000

$

224,816,300

North Carolina Companies Funded in Q1 2007North Carolina Companies Funded in Q1 2007

Company Name AmountIndustry


May 2007

VC Funds Active in North CarolinaBancAmerica Capital Investors

BB&T Capital Partners

CapitalSouth Partners LLC

Carolina Financial Group

Carousel Capital Partners

Centura SBIC Inc.

Core Capital

Fairview Capital LLC

First Union Ventures Group

Franklin Street Partners

Frontier Capital LLC

Gardiner Capital

Glenwood Venture Partners

Golden Pine Ventures

Grotech Capital Group

Halifax Group

Hatteras BioCapital

H.I.G. Ventures

Intersouth Partners

Kodiak Venture Partners

Lovett Miller & Company, Inc.

Massey Burch

NC IDEA

New Enterprise Associates

Noro-Moseley Partners

Novak Biddle Venture Partners

Pappas Ventures

Piedmont Angel Network

Remington Capital Partners

Research Triangle Ventures

River Cities Capital Funds

SJF Ventures

Southern Capitol Ventures

Southeast Interactive Technology Funds

The Atlantis Group

The North Carolina Enterprise Fund

The Aurora Funds

The Trelys Funds

TriState Investment Group

Wachovia Capital Partners

Wakefield Group

Venture First Associates


May 2007

Entrepreneurs and Venture Capital On-Line Resource ListEntrepreneurs and Venture Capital On-Line Resource Listwww.pwc.com - The PricewaterhouseCoopers Global website.

www.pwcmoneytree.com, www.nvca.org, www.ventureeconomics.com - The PricewaterhouseCoopers/National Venture Capital Association MoneyTree TM Report based on data from Thomson Financial is a quarterly study of equity investments made by the venture capital community in private companies in the U.S. The survey identifies regional and national trends, entrepreneurial developments and promising industry segments.

www.pwcnextwave.com - PricewaterhouseCoopers’ thought leadership articles for the world of private equity.

www.cfodirect.com - CFOdirect Network – PricewaterhouseCoopers’ online accounting, finance and business resource for senior financial executives.

www.pwcV2R.com - The Vision to Reality Entrepreneur Resource Center site offers proven business plan templates, financial models, technology-specific ratios, benchmarks and more.

www.pwcvc.com - The VC BestPractices site serves to provide an aggregate, comparative view of key issues and activities impacting the venture capital community, and to identify best practices.

www.barometersurveys.com - PricewaterhouseCoopers’ Trendsetter and Technology Barometers site – result & analysis of the quarterly survey of fast-growth and large company CEO’s.

www.cednc.org - The Council for Entrepreneurial Development

www.nc-tech.org - North Carolina Technologies Association


May 2007

For more information, contact:

Jeff Barberor

Peter Coode

Carolinas Technology Industry GroupPhone 919 755-3000

[email protected]@us.pwc.com

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