1. Angel Investor Summit, 2001 Overview of Venture & Angel Investor Market John Eckert Managing Partner McLean Watson Capital Toronto, October 2001

2. Overview Institutional VC market in Canada What we know (& don’t know) about Canadian angels Panel discussion on issues facing angel investors today

3. John F. Eckert Co-founder & Managing Partner, McLean Watson Capital President, Canadian Venture Capital Association Chairman, Capital Markets Committee of Canadian E-business Opportunities Roundtable

4. Pool of Capital Growing $ Amount in Millions $7,097 $8,408 $10,071 $12,135 $18,875 * As of beginning of year Source: Macdonald & Associates Limited Capital Under Management by Investor Type* - Canada

5. 2001 - $18,875M Source: Macdonald & Associates Limited Capital Invested in Central Canada Capital Under Management by Province

6. Canadian VC Disbursements Still Strong $612 $610 $471 $1,027 $1,151 $1,205 $1,088 $2,875 $1,119 $1,381 240 222 231 296 369 314 330 428 294 227 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2 199920002001 0 100 200 300 400 500 # Financings $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $ Invested (Millions) # Financings $ Invested (Millions) Source: Macdonald & Associates Limited Quarterly Investment Activity

7. U.S. Industry Moved Back to 1999 Levels $12 $13 $14 $25 $27 $29 $20 $12 $11 874 1201 1317 1609 1751 1863 1790 1495 1072 982 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2 199920002001 0 500 1000 1500 2000 # Financings $0 $5 $10 $15 $20 $25 $30 $ Invested (Millions) # Financings $ Invested (Millions) Source: Macdonald & Associates Limited Quarterly Investment Activity

8. More Capital Going to Follow-Ons $0.7B $1.1B $1.8B $1.7B $2.7B $6.3B $5.0B * Annualized Based on 1 st Six Months Source: Macdonald & Associates Limited New vs. Follow-On Activity - Canada

9. New Deals Harder To Do 465 632 931 1,074 989 1,441 1,042 * Annualized Based on 1 st Six Months Source: Macdonald & Associates Limited New vs. Follow-On Investments - Canada

10. Breakdown of Capital Sources 2000 - $6,319M Q2, 2001 - $2,500M Source: Macdonald & Associates Limited Big Players in Canada

11. What We Know About Canadian Angels Scant data available about size & nature VCs supply data to Macdonald & Assoc; angels wealthy individuals - low profile Carleton University Professor Allan Riding estimates angels invest $1- 5B per year About half the $6.3B deployed by VCs in 2001

12. Same Market – Different Focus Angels & VCs both invest in young, high growth companies in IT & life sciences Angels focus on early stage – seed financing, start-ups Institutions increasing seed & start-up activity (45% of disbursements in 2000), activity across spectrum Average angel investment approx. $100,000 (Riding, 2001) Average VC investment in 2000 - $2.5M, 2% in deals less than $500,000

13. Angels & VCs – Where They Meet Angels & VCs complement each other. Both bring resources – along with value-added management, expertise & networks Angels also intersecting with VCs by: 1.Participating in large investor syndicates; 2.Forming institutional pools (Celtic House) & informal organizations (Band of Scoundrels); 3.Committing resources to VC LPs. In 2000, 13% of VC disbursements came from “other” investors outside industry – significant fraction from angels Angel/VC interaction important in key centres (Ottawa Valley)

14. Angel Investor Summit, 2001 Overview of Venture & Angel Investor Market Toronto, October 2001