PricewaterhouseCoopers/ National Venture Capital Association MoneyTree

1
Q1 2007 Update May 2007
Shaking the MoneyTree Raleigh, NC May 2007

• PricewaterhouseCoopers/ National Venture Capital
  Association MoneyTree Report
• based on data from Thomson Financial

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Todays program

• The MoneyTree Report Q1 2007 Analysis
• presented by Laura Hoke, PricewaterhouseCoopers
  LLP
• Venture Capital Panel
• Michael Elliott, Noro-Moseley
• Steve Nelson, Wakefield Group
• Question and Answer Session

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2)
3)
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Speaker Bios
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Laura Hoke
Laura is a senior manager in the Raleigh office
of PricewaterhouseCoopers ("PwC"), where she is
responsible for providing a range of audit,
business advisory and consulting services. She
has extensive experience in the software
industry, as well as other technology-backed
industries including biotech, pharmaceutical and
professional services. In addition to her audit
and business advisory services, Laura has
significant SEC experience, including several
initial public offerings. She has been involved
in numerous Sarbanes Oxley projects and has led
the 404 implementation efforts at several
organizations. Laura rejoined PwCs Raleigh
office after serving as the Corporate Controller
for a global software company, where she was
responsible for the domestic and international
accounting functions, as well as the development,
implementation and maintenance of the internal
control structure. Laura has extensive
experience in mergers and acquisitions and was
responsible for the integration of acquisitions
for a global distribution and manufacturing
company. Lauras primary client is Lenovo
Group, Limited although she participates on
several other technology-backed engagements
throughout the Carolinas. Laura graduated with a
B.S. from Virginia Tech, is a member of the AICPA
and the North Carolina Association of Certified
Public Accountants. She also serves on the Board
of Directors of Artspace, a nonprofit visual arts
center in downtown Raleigh.
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Mike Elliott
Mike Elliott joined NMP in early 2005 with 21
years of successful venture capital investment
experience. Mike spent the last eight years as a
Managing Director of The Wakefield Group, a
private venture firm based in Charlotte, North
Carolina with an investment focus similar to that
of NMP. Mike invested primarily in technology
and business services companies, at early and
growth stages of development, and will continue
that focus in his deployment of Fund VI. Several
of The Wakefield Groups investments were
syndicated co-investments with several of the
Prior Funds. Prior to his service at The
Wakefield Group, Mike was a Managing Director of
NationsBank Capital (now Bank of America Capital
Investors), Bank of Americas private equity
investment arm, where he managed large financings
of later-stage growth companies. He began his
venture investment career as a founding partner
of NCNB Venture Co., L.P., the venture investment
arm of NCNB, the predecessor of Bank of America.
During his venture career, Mike has been an
active board member and sponsor of several highly
successful ventures, including Affiliated
Managers (NYSE AMG), Redgate Communications
(sold to AOL), Medic Computer Systems (sold to
Misys), OpenSite Technologies (sold to Siebel
Systems), SciQuest (Nasdaq SQST) and
Serologicals (Nasdaq SERO). During his nine
years as a partner at NCNB Ventures starting in
1985, Mike returned 3.4x capital, generating a
29 gross IRR for investments he sponsored.
During his three years as a Managing Director at
NationsBank Capital, he led growth company
financings generating a 25 gross IRR and
returning 2.1x capital. While at The Wakefield
Group, he sponsored transactions generating a 37
gross IRR, returning 1.5x capital. Mikes
experience and known culture fit with the NMP
team make him an ideal addition to the Firm and
the Fund VI team. Mike is extensively involved
in North Carolinas entrepreneurial community,
having served in many leadership roles, including
the Executive Committee of the NASBIC Board of
Governors and as a board member of the Council
for Entrepreneurial Development in Research
Triangle Park. Mike received a BS in mathematics
and an MBA from the University of North Carolina,
where he was both a Morehead Scholar and Maurice
Lee Fellow.
6
Steve Nelson
Steve Nelson joined Wakefield Group in October
1999 as Managing Director and Partner. He
established the venture capital firms Research
Triangle Park, NC office. Steve joined
Wakefield after 19 years of executive and general
management experience in technology, software and
Internet-based businesses. During the last three
years of his career before starting in venture
capital, Steve was at Quokka Sports, a digital
media company, in several executive capacities.
Quokka raised over 140m in capital and
successfully completed an IPO in July, 1999.
Steve served as chief executive of a joint
venture company between NBC Sports and Quokka
Sports, NBC/Quokka Ventures, LLC. Prior to
Quokka, Steve served as a Vice President with
Informix Software, based in Menlo Park, CA. His
first business experience was 14-plus years at
IBM, ultimately as Vice President and General
Manager in San Francisco where he had executive
and PL responsibility for all customers in the
eleven western states, all IBM products and
services, 800 employees, 2.2B in revenues and
several hundred million dollars in profit. Steve
is a member of the board of directors and the
executive committee at Motricity. He is also
Wakefields board representative for Liquidia
Technologies where he is also interim CEO,
Integrian, Constella Group, Near-Time, rPath,
APEX Analytix, and BlueCross BlueShield of North
Carolina. He was a past Chairman of North
Carolinas Council for Entrepreneurial
Development (CED), and is a member of the
Investment Advisory Committee for the State
Treasurer of North Carolina and helps oversee
their 74B portfolio. Steve received his B.S.
degree in Business from Wake Forest University.
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About The Report

• PricewaterhouseCoopers and the National Venture
  Capital Association produce the MoneyTree Report
  based on data from Thomson Financial
• Core measure of equity investments in
  venture-backed companies in the United States
• Companies have received at least one round of
  financing involving a professional VC firm or
  equivalent
• Captures tranches, not term sheets, foreign
  VCs, qualified private placement
• Excludes debt, bridge loans, recaps, roll-ups,
  IPOs, PIPEs, leasing, etc.
• MoneyTree Report in its 13th year
• Results online at www.pwcmoneytree.com,
  www.nvca.org, www.venturexpert.com

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The National PictureHistorical Trends
9
MoneyTree Total Investments Q1 1998 Q1 2007

of Deals 1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000 2001 2001 2001 2001 2002 2002 2002 2002 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007
of Deals Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
of Deals 843 901 910 990 916 1304 1422 1868 2131 2105 1933 1745 1289 1225 1002 977 831 846 687 722 690 735 705 774 702 844 678 817 720 812 774 801 853 910 875 884 778
10
MoneyTree Total Investments 1980 YTD Q1 2007
Annual Venture Capital Investments 1980 to YTD Q1
2007
11
Investments by Region Q1 2007
Upstate NY 11.1 4 Deals
New England 975.5 95 Deals
Northwest 456.7 42 Deals
Sacramento/N. CA 30.1 6 Deals
NY Metro 360.5 48 Deals
North Central 79.8 10 Deals
Philadelphia Metro 204.8 34 Deals
Silicon Valley 2,165.1 244 Deals
Midwest 280.5 43 Deals
Colorado 100.4 13 Deals
LA/Orange County 526.0 40 Deals
DC/Metroplex 197.2 41 Deals
Southwest 121.8 22 Deals
South Central 3.0 3 Deals
San Diego 686.3 44 Deals
Southeast 579.3 54 Deals
Texas 277.6 34 Deals
AK/HI/PR 0.2 1 Deal
Q1 2007 Total Investments - 7,056 in 778 Deals
12
Investments by Region Q1 2007
Region of Deals Change from Q4 06
Silicon Valley 244 -7.28
New England 95 29.14
San Diego 44 73.91
Southeast 54 54.05
LA/Orange County 40 26.51
Northwest 42 52.30
NY Metro 48 -39.90
Midwest 43 15.13
Texas 34 61.06
Philadelphia Metro 34 48.81
DC/Metroplex 41 5.29
South West 22 127.38
Colorado 13 35.85
North Central 10 -18.07
Sacramento/N.Cal 6 329.78
Upstate NY 4 -71.45
South Central 3 -83.10
AK/HI/PR 1 -98.36
Total 778 13.47
NM Not Meaningful
Q1 2007 Total 7,056 in 778 Deals
13
Investments by Region Quarterly Percent of
Total U.S. Investments
Top U.S. Regions Q1 06 Q107
14
Q1 2007 Top 10 States Garnering Venture Funds
State Deals Investment
Amount 1. California 334 3,407,455,800 2. Mas
sachusetts 84 901,224,000 3. Washington 33
365,881,600 4. Texas 34
277,607,300 5. New York 34 261,279,800 6. Nor
th Carolina 16 224,816,300 7. Pennsylvania 34
199,643,300 8. Florida 13 150,833,600 9. I
llinois 17 134,887,000 10. New
Jersey 18 108,627,900
15
Investments by Industry Q1 2007
Industry of Deals Change from Q4 06
Biotechnology 102 19.65
Software 193 -10.29
Medical Devices Equipment 96 59.83
Telecommunications 63 27.19
Industrial/Energy 44 20.50
Media Entertainment 72 16.47
Semiconductors 42 -26.07
IT Services 38 7.60
Networking Equipment 29 31.45
Business Products and Services 22 37.12
Electronics/Instrumentation 16 77.64
Healthcare Services 10 20.86
Retailing/Distribution 12 56.71
Computers and Peripherals 9 61.92
Financial Services 17 20.43
Consumer Products and Services 12 -67.91
Undisclosed/Other 1 NM
TOTAL 778 13.47
NM Not Meaningful
Q1 2007 Total 7,056 in 778 Deals
Visit www.pwcmoneytree.com for Industry
definitions
16
Investments by Industry Quarterly Percent of
Total U.S. Investments
Top 5 Industries Q1 06 to Q1 07
17
Life Science Investments Percent of Total U.S.
Investments
Life Science Sectors Q1 06 to Q1 07
18
Investments by Stage of Development Q1 2007
Stage of Development of Deals Change in Amount from Q4 2006
Later Stage 245 56.72
Expansion Stage 274 8.57
Early Stage 188 -28.48
Startup/Seed 71 -39.29
Total 778 13.47
Q1 2007 Totals 7,056 in 778 Deals
19
Stage of Development Quarterly Percent of
Total First Sequence Dollars
Stage Development Q1 2006 to Q1 2007
20
Stage of Development Quarterly Percent of
Total First Sequence Deals
Stage Development Q1 2006 to Q1 2007
21
Investments by Sequence of Financing Q1 2007
Financing of Deals Change in Amount from Q4 2006
Fifth Beyond 192 23.39
First 223 6.09
Second 163 4.30
Third 115 18.87
Fourth 85 13.41
Total 778 13.47
Q1 2007 Totals 7,056 in 778 Deals
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First Sequence Financing Investment Amount
First Sequence Investments
23
First Sequence Financing Number of Deals
( in billions)
First Sequence Deals
24
First Sequence Financing Percent of Total U.S.
Investments
25
First Sequence Deals in Startup Early Stage
Companies
26
Median Deal Size vs. Mean Deal Size Quarterly
Total U.S. Investments
27
Post-Money Valuations Early Stage Companies
1997 to 2006
12 Month Average
Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Total 17.55 24.30 25.41 36.22 27.92 15.41 14.13 15.37 15.52 11.13
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Post-Money Valuations Expansion Stage Companies
1997 to 2006
12 Month Average
Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Total 38.88 43.02 79.43 108.99 62.33 45.89 43.46 60.87 60.62 68.90
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Post-Money Valuations Later Stage Companies
1997 to 2006
12 Month Average
Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Total 70.58 65.97 125.87 159.40 98.87 65.44 68.71 73.17 95.29 95.33
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Q1 2007 Most Active Venture Investors
Venture Capital Firm Location Total Deals
Alta Partners San Francisco, California 18
New Enterprise Associates Baltimore, Maryland 18
Draper Fisher Jurvetson Menlo Park, California 17
Canaan Partners Westport, Connecticut 16
Intel Capital Santa Clara, California 15
Menlo Ventures Menlo Park, California 15
Sequoia Capital Menlo Park, California 15
ARCH Venture Partners Chicago, Illinois 14
Venrock Associates New York, New York 14
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Thomson FinancialU.S. Private Equity Performance
Index (PEPI)
(Investment Horizon Performance as of 12/31/2006)
Fund Type 1 Year 3 Year 5 Year 10 Year 20 Year
Early/Seed VC 9.9 6.5 -3.0 36.4 20.5
Balanced VC 20.5 11.7 4.1 17.6 14.6
Later Stage VC 25.2 9.4 3.7 9.0 14.0
All Venture 16.4 9.1 1.0 20.3 16.6
All Buyouts 24.5 14.6 10.4 8.5 12.9
Mezzanine 12.6 5.0 4.1 6.1 8.5
All Private Equity 23.3 12.7 7.5 11.0 13.9

NASDAQ 4.7 6.2 4.3 6.4 10.1
SP 500 10.8 8.2 4.2 6.6 9.2
Source Thomson Financial/National Venture
Capital Association
Data as of 4/13/2007--The Private Equity
Performance Index (PEPI) is based on the latest
quarterly statistics from the Thomson Financial
Private Equity Performance Database analyzing the
cashflows and returns for over 1860 US venture
capital and private equity partnerships with a
capitalization of 679 billion. Sources are
financial documents and schedules from Limited
Partners investors and General Partners. All
returns are calculated by Thomson Financial from
the underlying financial cashflows. Returns are
net to investors after management fees and
carried interest.
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Analysis of Venture-Backed IPO and MA Activity
Date Number of IPOs Total Venture-Backed Offering Size (M) Average Venture-Backed Offering Size (M) Number of Venture-backed MA deals Average MA deal size
2003 29 2,022.7 69.8 291 62.8
2004 93 11,014.9 118.4 339 83.0
2005 56 4,461.0 79.7 347 95.8
2006 Q1 10 540.8 54.1 104 112.2
2006 Q2 19 2,011.0 105.8 92 101.3
2006 Q3 8 934.2 116.8 87 95.6
2006 Q4 20 1,631.1 81.6 57 165.3
2006 57 5,117.1 89.8 340 113.3
2007 Q1 17 2,091.9 123.1 62 161.2
2007 17 2,091.9 123.1 62 161.2
Q1 2007 MA data, current as of April 2, 2007,
is preliminary and subject to change Includes
all companies with at least one U.S. VC investor
that trade on U.S. exchanges, regardless of
domicile Only accounts for deals with
disclosed values Source Thomson Financial/
National Venture Capital Association
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Venture Capital Fundraising
Year First Time Funds Follow-On Funds Total Number of Funds VC Raised (M)
2002 57 115 172 3,767.4
2003 50 97 147 10,622.3
2004 56 149 205 18,566.0
2005 55 163 218 27,957.3
2006 44 168 212 30,260.4
2007 YTD 13 43 56 4,939.8
Quarter
Q1 06 17 55 72 6,640.1
Q2 06 13 59 72 14,050.9
Q3 06 13 52 65 5,426.0
Q4 06 14 42 56 4,143.4
Q1 07 13 43 56 4,939.8
These figures take into account the subtractive
effect of downsized funds Date current as of
4/16/07
Source Thomson Financial/National Venture
Capital Association
34

North Carolina PictureHistorical Trends
35
MoneyTree Total North Carolina Investments2000
Q1 2007
( in millions)
2003
2002
2007
2004
2005
2006
2000
2001

of Deals
34
31
24
15
18
15
42
38
40
22
14
20
23
22
20
14
28
14
20
9
11
13
18
19
16
15
10
20
16
36
MoneyTree Total North Carolina Investments
2000 Q1 2007
( in millions)

of Deals
154
91
85
76
57
16
70
52
37
MoneyTree Total North Carolina Deals 2000 Q1
2007
( in millions)

Amount Invested (in millions)
1,830
590
553
356
337
225
417
510
38
Total North Carolina Investments by Industry Q1
2007
Change in Amount from Q1 2006
Total Deals Q1 2007
( in millions)
142.2

7
845.5
2
138.1
1
1
100.0
2
45.5
(40.2)
2

1
5.2
100.0
Q1 2007 Total 224.8
1
100
2
(41.2)

Q3 2003 Total
98.5
Industry Definitions _at_ www.pwcmoneytree.com
39
Biotechnology Investments in NC vs. U.S. 2000
Q1 2007
( in millions)

5.9
21
17
17
17
20
7
15
17
of Deals
Amount Invested (in millions)
44
368
272
822
1,877
367
641
622
40
Software Investments in NC vs. U.S. 2000 Q1 2007
( in millions)

7
0.4
of Deals
36
25
24
21
18
2
8
11
Amount Invested (in millions)
44
368
272
822
1,877
367
641
622
41
Average Deal Size NC vs. U.S.2000 Q1 2007
( in millions)

42
North Carolina Companies Funded in Q1 2007
Company Name
Industry
Amount
6th Sense Analytics, Inc. Software 5,000,000 Alp
haVax, Inc. Biotechnology 12,650,000 Chimerix,
Inc. Biotechnology 23,099,900 HyperBranch
Medical Technology, Inc. Medical Devices
Equipment 2,000,000 InnerPulse, Inc. Medical
Devices Equipment 50,000,500 Liquidia
Technologies, Inc. Industrial/Energy 15,999,900
Motricity Telecommunications 50,000,000 Nextrem
e Thermal Solutions, Inc. Electronics/Instrumentat
ion 5,292,000 Phase Bioscience,
Inc. Biotechnology 1,250,100 Regado
Biosciences, Inc. Biotechnology 23,000,200 rPath
, Inc . Software 1,749,900 Serenex,
Inc. Biotechnology 13,999,800 StrikeIron,
Inc. IT Services 5,000,000 Tranzyme Pharma,
Inc. Biotechnology 11,000,000 Unit Dose
Solutions, Inc. Biotechnology 2,500,000 XDS,
Inc. IT Services IT Services 2,274,000 224
,816,300
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VC Funds Active in North Carolina

• BancAmerica Capital Investors
• BBT Capital Partners
• CapitalSouth Partners LLC
• Carolina Financial Group
• Carousel Capital Partners
• Centura SBIC Inc.
• Core Capital
• Fairview Capital LLC
• First Union Ventures Group
• Franklin Street Partners
• Frontier Capital LLC
• Gardiner Capital
• Glenwood Venture Partners
• Golden Pine Ventures
• Grotech Capital Group
• Halifax Group
• Hatteras BioCapital
• H.I.G. Ventures
• Intersouth Partners

Massey Burch NC IDEA New Enterprise
Associates Noro-Moseley Partners Novak Biddle
Venture Partners Pappas Ventures Piedmont Angel
Network Remington Capital Partners Research
Triangle Ventures River Cities Capital Funds
SJF Ventures Southern Capitol
Ventures Southeast Interactive Technology
Funds The Atlantis Group The North Carolina
Enterprise Fund The Aurora Funds The Trelys
Funds TriState Investment Group Wachovia Capital
Partners Wakefield Group Venture First Associates

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Entrepreneurs and Venture Capital On-Line
Resource List
www.pwc.com - The PricewaterhouseCoopers Global
website. www.pwcmoneytree.com, www.nvca.org,
www.ventureeconomics.com - The PricewaterhouseCoop
ers/National Venture Capital Association
MoneyTree TM Report based on data from Thomson
Financial is a quarterly study of equity
investments made by the venture capital community
in private companies in the U.S. The survey
identifies regional and national trends,
entrepreneurial developments and promising
industry segments. www.pwcnextwave.com -
PricewaterhouseCoopers thought leadership
articles for the world of private
equity. www.cfodirect.com - CFOdirect Network
PricewaterhouseCoopers online accounting,
finance and business resource for senior
financial executives. www.pwcV2R.com - The Vision
to Reality Entrepreneur Resource Center site
offers proven business plan templates, financial
models, technology-specific ratios, benchmarks
and more. www.pwcvc.com - The VC BestPractices
site serves to provide an aggregate, comparative
view of key issues and activities impacting the
venture capital community, and to identify best
practices. www.barometersurveys.com -
PricewaterhouseCoopers Trendsetter and
Technology Barometers site result analysis of
the quarterly survey of fast-growth and large
company CEOs. www.cednc.org - The Council for
Entrepreneurial Development www.nc-tech.org -
North Carolina Technologies Association
45
For more information, contactJeff
BarberorPeter CoodeCarolinas Technology
Industry GroupPhone 919 755-3000jeff.barber_at_us.
pwc.competer.j.coode_at_us.pwc.com