State of the state in the NW

1
State of the state in the NW

• Legacy portfolio companies troubles dramatically
  slowing new investment from VCs
• Angels licking their wounds and now overly
  conservative and with less to invest
• Customers freezing capital budgets or
  dramatically slowing expense spending as a result
  of .com meltdown, slowing economy and the
  tragedy. A little panic has set in.

2
State of the state in the NW and elsewhere

• Critical Infrastructure technologies, necessary
  to revitalize platforms, and spawn new killer
  apps are in a major deployment or investment
  trough
• E.g. Broadband to the desktops (DSL, Cable
  modem, satellite)---stalled PC growth
• Wireless data/mobile office (2.5G/3G infra and
  handsets a real GUI after WAP giant debt loads
  from spectrum and acquisitions)---stalled
  mobility growth
• Enterprise web app solutions cost/pricing/difficul
  ty of deployment---.NET will help
• Satellite broadband seriously slowed by
  investment climate after Motorola debacle.

3
State of the state in the Oregon

• Not enough seed capital in Oregon
• There is plenty of VC money here considering
  increases in local capital over last two years,
  AND good deals ability to pull Seattle and bay
  area VCs (Cenquest, Webridge, FIOS, etc)
• Biosciencesnew area of growth for Portland
  metro (OHSU, Oregon Oppty, leadership)Following
  U of W curve of NIH RD. OHSU now 29th in USA or
  200M NIH. Need more seed money to incubate
  early stage deals.

4
State of the state in Oregon

• Oregon waking up to need for larger higher ed
  commitment to science and engineering
• 2X graduates by 2005 funded 20M incremental
• University Tech transfer funded 10M
• Oregon Opportunity funded OHSU 165-200M plus
  300M private funding
• Top tier engineering funded--5M operating 60M
  capital PSU/PSU

5
It takes a long time to be an overnight success.
Is Oregon on the verge?

• Critical mass of expertise has been reached in
  several pockets----Semiconductors (Intel,
  TriQuint, Lattice, LSI logic Display
  technologyInFocus, Planar, Pixelworks
  InstrumentsTektronix Specialty softwareCAE
  Mentor Graphics, Synopsis, PC
  subsystems----Intel, Radisys, HP printers, Xerox
  printers Specialty HW---FEI, Credence/IMS,
  IBM/Sequent, ESI.
• Several high potential emerging areas seem
  pregnant due to IP treasures---biosciences fed
  and incubated from OHSU. Software growing
  rapidly as shown in AEA benchmarks.
• Lack of top rated engineering school and business
  school still thwarting our efforts to breed more
  entrepreneurs who can grow a large company.
  Imports are helping.

6
High-Tech in Oregon at a Glance

• 2000 1994
• Permanent 77,400 51,200 Employment
• Total Payroll 5.3 Billion 2 Billion
• Average Wage 68,876 39,500
• Export Revenue 6.2 Billion 2.6 Billion
• RD Spending 2.4 Billion 0.9 Billion

7
Strong Industry Diversity
Estimate Total 77,400
Employment by SegmentFull-Time Employment
Year-End Totals Source Oregon Employment
Department
8
Oregons Competitive Advantage

• High Industry Concentration
• Rapid Employment Growth
• High Average Wages
• Technology Exports
• Home Computer and Internet Access
• 8th Grade Math Scores
• Computer Use in K-12

9
Oregons Competitive Disadvantage

• Per Capita Spending on Higher Education
• Technology Degrees Granted vs. Technology
  Employment