ENHANCED CAPITAL PARTNERS DC FUND DC ECONOMIC PARTNERSHIP BUSINESS 2.0 PRESENTATION

WHO IS ENHANCED CAPITAL PARTNERS State Focused Investment Funds ECP manages investment funds in seven states that were formed through public-private partnerships and are enhanced by state tax credits. ECP raised funds from private sector sources to invest through these funds, which have a dual bottom line focus of investment returns and economic development in targeted areas. These programs create jobs, increase tax revenues, establish local venture capital infrastructure and in some cases, reward states through participation in a fund’s investment performance. Several universities, economic research groups and state auditors have analyzed the economic impact of these programs. Among their conclusions, the studies find that every dollar of subsidized capital attracts an additional six dollars or more of outside institutional capital. In addition, in nearly all cases, the revenue created from job creation far outweighs the cost of the tax credits. These and other positive findings have led several states to enact multiple programs. ECP currently manages funds in New York, Texas, Colorado, Alabama, Louisiana, Tennessee and the District of Columbia. The company has local investment professionals in these states who work together with the New York-based investment team on all transactions. ECP is actively seeking new investment opportunities in small businesses with excellent growth prospects across the country. ECP is a generalist investor and is willing to consider businesses in any industry that exhibit strong fundamentals.

CAPCO OVERVIEW Overview: Business owners seeking financing through the D.C. CAPCO program should be aware that the CAPCO funds are not grant programs, but are venture capital funds that invest private investment dollars into select qualified businesses in the District. These venture capital funds are managed by professional investors with strict investment requirements. The CAPCO funds will only consider qualified businesses as defined by the CAPCO statute, but qualification is just the first step in the analysis. The businesses are then rigorously analyzed by the venture capital funds, with only the best businesses ultimately receiving funding. Businesses are analyzed based on growth prospects, market dynamics, management strength, potential to generate strong investment returns, and potential to generate economic development in the District.

TIMING From initial contact by a business owner to funding, the process typically takes between 90 and 120 days. This is faster than the average venture capital fund, which typically takes between four to six months or longer to complete a transaction. The CAPCO funds try to expedite this process in order to aggressively invest capital into the District, but still need time to properly analyze potential investments, complete due diligence, and execute sometimes complicated financial transactions.

SELECTIVITY Typical venture capital funds can evaluate as many as one thousand businesses for each business that they ultimately fund. The DC CAPCO venture funds complete a much higher percentage of transactions that they analyze, but still turn down many more companies than they ultimately fund. This is the nature of venture investing, as the venture funds are seeking to most efficiently allocate capital to the best businesses that have the highest potential for growth, returns and job creation.

TRANSACTION TYPE CAPCO funds, by statute, do not invest in companies that can obtain conventional bank financing, but only in companies that have a higher risk profile and need to access capital from non-conventional sources, such as venture capital funds. Accordingly, the transactions typically involve the qualified businesses either selling shares to the venture fund, selling warrants to acquire shares sometime in the future, or issuing debt. In the case of debt, rates are generally higher than bank rates to reflect higher risk, but lower than what a business would find in other potential debt sources. Transactions are structured to generate investment returns but also to provide flexibility to the qualified businesses in their ability to repay obligations, and to align incentives among the investors, business owners and the District, so that all parties benefit if a business venture is successful.

POST FINANCING INVOLVEMENT Providing the financing is just the first step in the relationship between the qualified businesses and the CAPCO venture funds. Post financing, the investment professionals from the CAPCOs will take an active involvement with the businesses by offering strategic advice on operational improvements, financial advice, and access to a broad network of business relationships. This involvement is particularly helpful in raising follow-on capital from non-CAPCO sources, and in making contingency plans to survive difficult economic times.

FINANCING PROCESS Step One--Initial Screening and Information Submission (One to Two Weeks) – Business Plan or Executive Summary submitted by business owner with initial inquiry (Between 5 to 20 pages examining the business opportunity, market, competitors and growth strategy) – Detailed management bios or resumes of key management submitted – Three years of historical financial results, and pro forma four year financial projections (Income statement, balance sheet, cash flow statements) submitted – Basic CAPCO qualification information submitted (25% of employees must currently reside in D.C. and 75% of employees must currently work in D.C.; the company headquarters must be in D.C.) – Fund professional will be in contact with business owner with initial feedback within two weeks of submission of information.

Business Due Diligence and CAPCO DISB Approval (Four to Six Weeks) Step Two -- In person meeting with CAPCO fund representatives to discuss the business in more detail and to develop working relationship. Site visit completed to view business in operation and meet additional employees Development of description of what the CAPCO investment would be used for (New hires, sales and marketing expense, capital improvements or purchases) Description of how the CAPCO investment would contribute to the District’s economic development (Job creation, neighborhood improvement, etc.) Customer references provided for CAPCO professional to speak with Negotiation of potential transaction structure and terms Company must submit CAPCO application to the DISB for approval Company must provide verification that 25% of employees are D.C. residents (two forms of proof per employee—valid Driver’s license or passport, utility bill, etc.) Company payroll report provided to verify that75% of employees work in D.C. Bank turn-down letter provided Signed CEO certification provided to DISB as to qualification requirements provided

Step Three--Legal and Accounting Due Diligence (Four Weeks) Law firms are engaged to complete equity or debt agreements Business tax returns for the last three years requested Financial statements for the last years requested Copies of existing contracts requested Partnership agreement or articles of incorporation requested Lease for any rental property requested Description of any past, current or pending legal or tax issues requested Management background checks completed CAPCO funds investment committees approve transaction

Step Four--Funding (Three Days) Executed legal documents are exchanged, and funds are wired to the qualified business.