U.S. Venture Capital Investment

February 2007

U.S. Venture Capital Investment

$22.1$19.7

$22.4$23.8

$25.72,425

2,219 2,328 2,422 2,454

2002 2003 2004 2005 2006

Amount Invested ($B) Number of Deals

U.S. Seed/First Round Investment

$4.2$3.7

$4.8

$5.5 $5.3686645

754838 846

2002 2003 2004 2005 2006

Amount Invested ($B) Number of Deals

U.S. Venture Capital Regional InvestmentBy Dollars Invested in 2006

All Other US12.0%

Bay Area35.1%

Southern California

12.1%New England11.9%

NY Metro8.1%

Texas4.8%

Potomac4.4%

North Carolina1.9%

Pennsylvania3.7%

Washington State4.2%

Colorado1.8%

2006 Venture Capital GrowthTop 5 States, 2006 versus 2005 Dollar Investment Growth

Southern California$621 million

MT

WY

ID

WA

OR

NV

UT

CA

AZ

ND

SD

NE

CO

NM

TX

OK

KS

AR

LA

MO

IA

MN

WI

IL IN

KY

TN

MS AL GA

FL

SC

NC

VAWV

OH

MI

NY

PA

MD

DE

NJCT

RI

MA

ME

VTNH

Maryland$189 million

Washington$239 million

Northern California$567 million

Texas$176 million

Pennsylvania$528 million

Colorado Venture Capital Investment

$657

$359 $364

$664

$464

5560

47

55

72

2002 2003 2004 2005 2006

Amount Invested ($M) Number of Deals

2006 Colorado Venture Capital Financing

$464 Million Invested 55 Deals

Software 25%

Cons/Bus Services 5%

Biopharmaceuticals 13%

Communications7%

Media/Content 2%

Medical Devices 7%

Cons/Bus Products 21%

Healthcare Services 1%

Energy 1%Electronics

12%

InformationServices 6%

Software 35%

Cons/Bus Services 9%

Biopharmaceuticals 11%

Communications7%

Media/Content 5%

Medical Devices 11%

Cons/Bus Products 4%

Healthcare Services 4%

Energy 4%

Electronics 5%

InformationServices 5%

U.S. Venture Backed IPOs

$3.7

$2.3

$5.0

$1.5$1.6

56

42

67

2320

2002 2003 2004 2005 2006

Amount Raised in IPO ($B) Number of Deals

M&As Remain Primary Exit OptionPercentage Breakdown of Venture Backed Liquidity Events: IPO vs. M&A

0% 20% 40% 60% 80% 100%

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

IPOs M&As

U.S. Venture Capital M&A Activity

$31.2$30.1

$24.0

$13.3$10.9

404407422

346383

2002 2003 2004 2005 2006

Amount Invested ($B) Number of Deals

M&A: Median Amount Paid vs. Median VC Invested

($ M)

$52$47

$39

$24

$18$23$21

$17$19 $20

$0

$25

$50

2002 2003 2004 2005 2006

M&A Median Amount PaidMedian VC Invested To Exit

U.S. Venture Capital Median Round Size

$7.0$6.5$6.7

$6.0$6.0

2002 2003 2004 2005 2006

U.S. Venture Capital Median Pre-Money Valuation

$18.8

$15.0$13.0

$10.0$10.8

2002 2003 2004 2005 2006 (Q1-Q3)

U.S. Venture Capital FundraisingCommitments to Venture Capital Funds

$13

$9

$18

$25

$20

2002 2003 2004 2005 2006 (Q1-Q3)

Amount Invested ($B)

PE Fundraising: Another Record Breaking Year• 2006 was another record-breaking fundraising year for PE, with LBO and mezzanine

funds raising $197.6B, up 7.5% compared to 2005 when $183.8B was raised.(1)

• Some were skeptical that 2006 could not reach 2005 levels, but PE firms quickly returned to the market after blowing through their last capital raise. Also, LPs increased their allocations to the asset class looking for a greater piece of the high returns.(1)

• Similar to 2005, the mega-funds accounted for the majority of the funds raised.• A select group of mega funds raised during 2006 include:

- Blackstone closed the largest buyout fund in history in Q3 with $15.6B in capital commitments. Blackstone soon reopened its fund to raise an additional $4B, bringing its total fund size to approximately $20B.(1)

- Texas Pacific closed its fifth fund during Q4 with $15.2B in capital commitments.(1)

- In the beginning of 2006, Apollo closed the first buyout fund in history over $10B when it closed its sixth fund with $10.1B in commitments. This record has since been exceeded by KKR, Blackstone, Texas Pacific and Permira.(1)

• While fundraising should continue to be strong in 2007 as LPs still have plenty of cash to spend, many LPs have reached their target allocations to the asset class.(2)

Sources: (1) “Another Blockbuster Year in Fundraising”, Buyouts, pg. 46, January 8, 2007; (2) “LP Appetite Holds, Though Some Start to Top Out,” Buyouts, pg. 28, January 22, 2007.

U.S. Buyout Fundraising Since 2000*

020406080

100120140160180200

in $

Bill

ions

2000 2001 2002 2003 2004 2005 2006

$54

$36

$10$21

$42

$183.8**$197.6

* Includes buyout and mezzanine funds

Source: Buyouts, January 8, 2007.

U.S. PE Returns Exceed Public Markets(1)

(IRR %) 1 Yr 3 Yr 5 Yr 10 Yr 20 Yr

13.2U.S. Buyout All Quartile (1) 23.6 15.6 9.2 8.8

NASDAQ (1) 5.5 7.8 8.7 7.1 11.4

S&P 500 (1) 9.7 9.9 5.2 7.5 9.7

DJIA (2) 8.5 7.5 1.2 7.0 9.3

Russell 3000(2) 7.6 10.6 1.8 6.8 8.4

U.S. Buyout Top Quartile (2) 40.6 26.8 18.6 24.8 48.0$2B + Top Quartile (3) 52.2

Sources: (1) Thomson Venture Economics, PE data as of 9/30/06 and for partnerships and investment bank affiliate or subsidiary partnerships; Bloomberg, market data as of 6/30/06; (2) Thomson Venture Economics, PE data as of 6/30/06.(3) Data as of 3/31/06;

• As a result of outsized returns, pension funds have increased their average allocation to PE from 4% to 6% over the last 4 to 5 years.(1) Some have even increased their allocations as high as 10%-15%, even 16%.- Teachers’ Retirement System of Illinois increased its allocation to PE from

6% to 8%.(2)

- Indiana Public Employees Retirement Fund voted to increase allocation from 5% to 15%.(2)

- The Louisiana State Employees’ Retirement System doubled its target PE allocation to 10%.(3)

- The Ohio Public Employees Retirement System is increasing its PEallocation from 1% to 5%.(3)

- Washington State Investment Board allocates 16% to PE; Michigan and Oregon State Treasuries each allocate 15%.

• As some have already met their target allocations to the asset class and some still have plenty to spend, the amount of money that will be invested in PE during 2007 may depend greatly on how much money LPs see in distributions. As distributions come in, those LPs who have fully deployed their capital will have more to invest.(4)

LPs Want a Larger Piece of PE Returns

Sources: (1) “Private Equity in 2007,” Nicholas Varchaver, Fortune, January 22, 2007; (2) “Another Blockbuster Year in Fundraising,” Buyouts, pg. 46, January 8, 2007; (3) “LPs Set Up Roomier Private Equity Allocations,” Private Equity Analyst, pg. 14, October, 2006 (4) “LP Appetite Holds, Though Some Start to Top Out,” Buyouts, pg. 28, January 22, 2007.

Investors Increasing Already Large Allocations($ mil)

Total Assets Allocation

$12,42611,52010,835

ABP Investments 209,143 10,457 5%

GIC Special Investments 100,000 10,000 10%

Michigan Department of Treasury 50,000 7,500 15%

Canada Pension Plan Investment Board 80,891 8,089 10%Ontario Teachers’ Pension Plan Board 79,241 7,924 10%

10,400

10,000

7,920

$207,100128,000

69,900

130,000

56,000

132,000

% To PE

6%9%

16%

8%

15%

6%

California Public Employees’ Retirement SystemNew York State Common Retirement FundWashington State Investment Board

Florida State Board of Administration

Oregon State Treasury

California State Teachers’ Retirement System

Institution

Source: Dow Jones – Private Equity Analyst, data as of July 2006

U.S. LBO Deal Volume Since 2000

0

50

100

150

200

250

300

350

2000 2001 2002 2003 2004 2005 2006

In B

illio

ns

$42$24

$41

$94

$137

$199.4*

$314.8

Source: Buyouts, January 8, 2007.