1. NAIC Annual Meeting 2000 Private Equity Update 2000 Steven P. Galante Publisher, The Private Equity Analyst October 16, 2000

2. NAIC Annual Meeting 2000 2 ‘Nirvana’ versus ‘New Reality’ Rapid PE growth Remarkable VC returns Increasing institutional demand Re-entry of HNW investors Rapid economic growth PE growth stabilizes VC returns return to earth Institutional allocations sated HNW demand satisfied? Slowing economy 1995-19992000-????

3. NAIC Annual Meeting 2000 3 Presentation Overview Commitments Investments Valuations Exits Performance Funding Sources

4. NAIC Annual Meeting 2000 4 US Private Equity Committed Capital Year-End Estimate Source: Venture Economics / NVCA

5. NAIC Annual Meeting 2000 5 US Private Equity Committed Capital Source: Venture Economics / NVCA

6. NAIC Annual Meeting 2000 6 US Venture and Buyouts Investments Source: Venture Economics / NVCA

7. NAIC Annual Meeting 2000 7 U.S. Venture Investing Total Investment by Quarter Source: Venture Economics / NVCA

8. NAIC Annual Meeting 2000 8 U.S. Venture Investing Avg Invested per Company Source: Venture Economics / NVCA

9. NAIC Annual Meeting 2000 9 2000ytd Venture Investments By Industry ($Bill) Source: Venture Economics / NVCA

10. NAIC Annual Meeting 2000 10 2000 ytd Venture Investments by Stage ($Bill) Source: Venture Economics / NVCA

11. NAIC Annual Meeting 2000 11 Average Post Investment Enterprise Valuation of Venture Backed Companies Source: Venture Economics / NVCA

12. NAIC Annual Meeting 2000 12 2000 Median Post Investment Valuation of Venture Backed Internet Related Companies By Internet Sector Source: Venture Economics / NVCA

13. NAIC Annual Meeting 2000 13 Venture Backed IPOs Issues by Year Source: Venture Economics / NVCA

14. NAIC Annual Meeting 2000 14 Venture Backed IPOs Issues by Month January 1995- September 2000 Source: Venture Economics / NVCA

15. NAIC Annual Meeting 2000 15 Percent of IPOs Profitable at Issue Venture Backed Versus All Issues Source: Venture Economics / NVCA

16. NAIC Annual Meeting 2000 16 Public Market Returns: Venture-Backed Stocks vs. Indices As of December 31, 1999 As of September 15, 2000 Source: Venture Economics / NVCA

17. NAIC Annual Meeting 2000 17 US Private Equity Performance Benchmarks US Limited Partnerships Formed 1969-1999 Cumulative Performance Net to Investors as of 3/31/00 Source: Venture Economics / NVCA

18. NAIC Annual Meeting 2000 18 Rolling Five Year IRRs Venture vs Buyouts Source: Venture Economics / NVCA

19. NAIC Annual Meeting 2000 19 So Where Will Money Come From?

20. NAIC Annual Meeting 2000 20 Four Sources U.S. Institutions (but in smaller quantities) Foreign Institutions (just starting) Funds of funds (but mainly established ones) High-net-worth investors

21. NAIC Annual Meeting 2000 21 Heyday for Funds of Funds Commitments to Funds of Funds Est.

22. NAIC Annual Meeting 2000 22 ‘Market Share’ of Funds of Funds Five-Year Moving Averages

23. NAIC Annual Meeting 2000 23 Conclusions Money remains available You must expand universe of contacts Track record is still important Differentiation and relevant skill set are critical