www.dealystrategy.com, lisa.ghezzi@dealystrategy.com The Dealy Strategy Group LLC Presentation to Health TechNet March 21, 2000 by Lisa Marie Ghezzi www.dealystrategy.com, lisa.ghezzi@dealystrategy.com The DEALY STRATEGY GROUP LLC, March 21, 2000

Venture Capital Investment Trends Increasing Funds Raised and Invested Internet-related firms receive a majority of funds Healthcare Industry related investments increase over 1998 Venture Capital increasingly important to driving economic development The DEALY STRATEGY GROUP LLC, March 21, 2000

Venture Capital Funds Raised Source: National Venture Capital Association The DEALY STRATEGY GROUP LLC, March 21, 2000

Companies Receiving Funding Source: National Venture Capital Association, Venture Economics The DEALY STRATEGY GROUP LLC, March 21, 2000

Venture Capital Investments 1999 Total Investments 2.5 times Investments in 1998 Source: National Venture Capital Association The DEALY STRATEGY GROUP LLC, March 21, 2000

Venture Capital Financing by Industry Sector Source: National Venture Capital Association, Venture Economics * Internet Specific - companies that would not exist without the Internet and that would not fit in any other industry sector; Internet related companies are found in all industry sectors; total investment $31.9B compared to $7.0B in 1998. The DEALY STRATEGY GROUP LLC, March 21, 2000

Venture Capital Investment in Healthcare Industry Source: National Venture Capital Association, Venture Economics The DEALY STRATEGY GROUP LLC, March 21, 2000

Venture Capital Financing by Region Every region experienced a minimum of 60% growth. Leaders: Northern California -- 215% Northwest - 210% Mid-Atlantic -- 180% Average venture size varies by region (1/99 - 9/99): Mid-Atlantic led with $13M Southern California -- exceeding $12M Northern California, NE and Rocky Mt -- $11M SW, NW, Midwest and SE -- range from $8 to $9.5M Growth in investments is indicative that the entrepreneurial communities are maturing -- supported by strong technology community, educated workforce and efficient infrastructure Source: National Venture Capital Association, Venture Economics The DEALY STRATEGY GROUP LLC, March 21, 2000

Internet vs. Non-Internet Venture Capital Investments by Region Internet-related Venture Capital financing in the Mid-Atlantic ranked 4th with $2.2B (roughly 55%); non-Internet investments -- $1.8B, or 45%. Mid-Atlantic ranked among the highest for non-Internet-related investments. Source: National Venture Capital Association, Venture Economics The DEALY STRATEGY GROUP LLC, March 21, 2000

VC Investment Increases Drive Economic Growth Greater number of Venture-backed companies go public in 1999 compared to earlier years -- 50% vs. 21% and 22% in 1998 and 1997 respectively. Median age of venture-backed company was 4 years compared to 4.5 years in 1998; 5 years in 1997 -- compare to 10.5 years in 1994; Internet company short life is greatly contributing to this -- in 1999, the Internet-related company was 4.3 years to IPO, vs. the Non-Internet-related company at 7.6 years. Increasing number of IPOs allows for quicker liquidity and reinvestment into new opportunities. Source: National Venture Capital Association, Venture Economics The DEALY STRATEGY GROUP LLC, March 21, 2000

Average Offering and Valuation of Venture-backed Companies Increasing Average offering size was 77% greater than in 1998 Average post offer valuation was over 2x that of 1998 Note: numbers may be slightly off due to rounding Source: National Venture Capital Association, Venture Economics The DEALY STRATEGY GROUP LLC, March 21, 2000

Top Venture Capital Firms Source: National Venture Capital Association, Venture Economics The DEALY STRATEGY GROUP LLC, March 21, 2000

Top Venture Capital Firms Investing in Healthcare/Medical/Biotech Chase Hambrecht & Quist primary venture investing vehicle is Access Technology Partners, L.P., $330M fund health/bio: biotechnology, bio-informatics, pharmaceuticals, medical devices, and drug delivery, and information, management, and outsourcing services The DEALY STRATEGY GROUP LLC, March 21, 2000

Top Venture Capital Firms Investing in Healthcare/Medical/Biotech New Enterprise Associates investment focus: medical and life sciences -- biotechnology, pharmaceuticals, healthcare services, medical devices, instrumentation and information management stage: principally in early stage companies Three Primary questions asked: Will the company change the way people behave, via a unique product or service? Is there an unbounded opportunity, reflected by a large potential market, manageable competition and reasonable capital requirements? Is there a quality management team with experience and breadth? Are they people NEA can work with "through thick and thin" - especially thin? The DEALY STRATEGY GROUP LLC, March 21, 2000

Top Venture Capital Firms Investing in Healthcare/Medical/Biotech Sequoia investment focus: biotechnology, medical devices, services (primarily B2B), software instrumentation and information management) makes 8 to 10 investments each year along with 12 to 15 follow-on investments stage: very early stages investing partners include: Kleiner, Perkins, Caulfield & Byers The DEALY STRATEGY GROUP LLC, March 21, 2000

Top Venture Capital Firms Investing in Healthcare/Medical/Biotech Kleiner, Perkins, Caulfield & Byers investment focus: life sciences -- medical devices and diagnostics, drug discoveries and therapeutics, health care services and informatics investing partners include: Sequoia, Weiss Peck & Greer Venture Partners corporate partners through JAVA fund “Keiretsu” approach -- shared information and knowledge, network of 175 companies and 1000s executives The DEALY STRATEGY GROUP LLC, March 21, 2000

Top Venture Capital Firms Investing in Healthcare/Medical/Biotech Integral Partners: investment focus: life sciences sector -- emerging medical technologies and health care information systems; diseases -- particularly active with companies targeting the cardiology and oncology markets. stage: expansion-stage private and growth-stage public investing partners include: Kleiner, Perkins, Caulfield & Byers, Silver Lake Partners The DEALY STRATEGY GROUP LLC, March 21, 2000