Chairman-elect US National Venture Capital Association; Cofounder and General Partner, DCM

1. Chairman-elect US National Venture Capital Association; Cofounder and General Partner, DCM 35 years of US Venture Capital — A Historical Perspective for China 2007 CVCA Annual Meeting& China Venture Capital/Private Equity Summit November 2, 2007 Dixon Doll

2. Agenda • Evolution of U.S. VC industry, why a flourishing VC industry is important for China • Proper role of public policy • Putting U.S. lessons learned in context for China going forward – key messages Confidential & Proprietary 2

3. US Venture Capital Investment in Perspective • US GDP $12.5 trillion annually • Hedge fund intake $1.5 trillion over last 3 years estimated • Mutual fund intake $158 billion in 2006 • Buyout intake $103 billion in 2006 • Venture capital intake $28.6 billion in 2006 • Venture capital fundraising & investment Is 0.2% of total GDP Source: BLS website, Investment Company Institute, Thomson Financial, NVCA 3

4. Venture-Backed Employment VC-Backed US Jobs (millions) As a % of total US Pvt Jobs in 2006 VC-Backed Jobs = 9% Outpaces 2003 - 2006 Total US Job Growth Source: Venture Impact 2006 by Global Insight 4

5. Global Insight Study • In 2006, venture backed companies: • Provided 10.4 million U.S. jobs • Had sales of $2.3 trillion • Represents 17.6% of GDP • Still dominated venture-created sectors • 56% of biotech revenue • 78% of computer and peripherals revenue • 94% of computer and peripherals jobs • 88% of software sector jobs • Outgrew the economy 2003-2006 in every sector Source: Venture Impact 2006 by Global Insight Confidential & Proprietary 5

6. “Buy Low… Sell High” Is Easier if You Really Buy Low! Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Financial Confidential & Proprietary 6

7. VC Investment Peaked in 2000; Recently 20-23% of Peak; 2006 Was Higher Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Financial 7

8. IPO Levels Jumped in 2004 but not Sustained; New Hope in 2007? Source: Thomson Financial/National Venture Capital Association 8

9. State of Venture Capital – at Steady State Deal Flow and Equity into Venture-Backed Companies $87.7 Dollars Raised by U.S. VC Funds ($B) Amount Invested ($B) $46.3 $36.4 $26.7 $24.0 $22.5 $22.2 $19.7 $12.5 $11.2 $9.2 Source: PricewaterhouseCoopers – NVCA Moneytree™ report, Data: Thomson Financial 9

10. Key U.S. VC Building Blocks… • Capital formation • Prudent man rule – enabled pension investment • LP laws • Capital gains tax reduction • Empowered entrepreneurs • Capital gains tax reductions • Stock options/team building tools • Reasonable bankruptcy laws • Protect companies – IP laws • Abundant customers willing to do business with SMEs • Exit markets – the NASDAQ • Face-to-face investing/proximity • Cultural acceptance 10

11. Building Blocks of the U.S. Venture Capital Industry • Unparalleled university research • High quality universal education • Proximity to talented entrepreneurs and engineers • Deep, liquid transparent capital markets 11

12. The Number of U.S. VC Firms has Peaked . . . Thankfully Source: 2007 NVCA Yearbook, prepared by Thomas Financial 12

13. Number of Active IT VC Firms Declining Europe- 60% Since 2000 Israel - 65% Since 2000 United States- 56% Since 2000 974 376 2206 862 299 1767 661 556 1364 221 205 205 1157 420 1012 391 960 130 Note: Chart scales vary for clarity Source: Ernst & Young/Dow Jones Venture One 13

14. Globalization of VC and Technology VC is truly a global business Entrepreneurs live and start companies everywhere Low-cost centers of technological excellence distributed globally Other potential markets to emerge (India, Eastern Europe, Russia) Portfolio companies are increasingly global Companies must utilize global centers of technological excellence International markets more important for select disruptive technologies Companies must access many international markets from the get go Emergence of many new important sectors like Cleantech 14

15. Cleantech Investments (US $M) 21% CAGR 25% CAGR 195% CAGR Source: Dow Jones VentureOne and Ernst & Young 15

16. Important VC – Related Public Policy Issues • Tax policy encouraging risk taking and company formation • Long-term support for University, government R&D • Creating entrepreneur friendly • Legal system (creating law) • Court system (enforcement) • Intellectual property protection • Investor friendly, confidence inspiring, securities regulatory system 16

17. Government Policies Can Be Harmful to VC • Misguided overreaching U.S. government policies, regulations, like Sarbox have harmed domestic VC industry by • Sharply reducing IPOs • Increasing costs of going public, ongoing compliance Beware of Unintended Consequences 17

18. A Tale of Two Markets There are significant disparities between tech markets and capital markets in general Dow NASDAQ + 11% 13,063 11,723 5,049 (50%) 2,525 2000 Peak (1/14/2000) 4/30/2007 2000 Peak (3/10/2000) 4/30/2007 18

19. Tech IPOs Continue to Decline # of U.S. VC Backed Tech IPOs Amount Invested ($B) $90B $87.7 180 $80B $70B $60B 108 105 $50B $46.3 $40B $36.4 60 $26.7 $30B $22.2 $24.0 $22.5 46 $19.7 $20B $14.5 20 18 $10B 17 $12.5 11 10 10 $11.2 6 $9.2 0 Source: VentureSource and National Venture Capital Association MoneyTree™ Report 19

20. M&A Has Become the Primary Venture Exit M&A IPO Number of Exits Annualized Source: Thomson Financial/National Venture Capital Association 20

21. Global Private Equity Market More U.S. Companies Have Gone Private but Q3’07 May See a Slowdown 25% 20% 15% Private Equity Volume ($USB) % of U.S. M&A Volume 10% 5% 0% Source: Marketview 21

22. Weak US Capital Markets Offset by Global Strength North America 4 Exchanges $19.9 Trillion NYSE $14.4TNASDAQ $3.7T Europe 18 Exchanges $13.4 Trillion London $3.4T Euronext $3.4T Asia-Pacific 17 Exchanges $10.2 Trillion* Tokyo $4.4T Hong Kong $1.4T Middle East &Africa 4 Exchanges $0.8 Trillion Latin & SouthAmerica 7 Exchanges $1.1 Trillion Source: World Federation of Exchanges, 10/23/06 * Osaka & the National Stock Exchange of India are not included in the total for Asia-Pacific to avoid double counting Tokyo & Bombay 22

23. Capitalization of Global Markets Development of Markets Abroad is Healthy 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: World Federation of Exchanges, 2006 23

24. Tax Policy is an Important Lever Capital gains tax revenue forecast vs actual in billions Bush tax cuts 2003 Tax Revenue in Billions Latest CBO estimates Source: Treasury Department and Congressional Budget Office Confidential & Proprietary 24

25. Individual Long-Term Capital Tax Rates 2005-2006 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 10% 12.5% 14.5% Currently 15% 15% 17.6% 19% After Lapse (2011) 20% 20% * 20% 20% 23.5% 25% 26% 28% 28% 30% 32% 43% The rates are based on long-term capital gains tax rates applicable to gains on sales of share. *Long-term capital gains listed securities are exempt. Source: Individual Taxes 2004-2005, Worldwide Summaries (PricewaterhouseCoopers), European Tax Handbook 2005 (International Bureau of Fiscal Documentation) and various government web sites. 25 Confidential & Proprietary

26. Total U.S. Tort Costs Cost of Litigation is Growing in the U.S. 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 300 250 200 150 100 50 0 Tort Costs as % of GDP Tort Costs ($B) Source: Towers Perrin, 2006 26

27. Percentage of World Population % of World Population 20.35 19 4.81 4.35 U.S. China U.S. China Source: Stocks for the Long Run and Future For Investors, Jeremy J. Siegel 27

28. Percentage of World’s GDP % of World’s GDP 21 19 14 10 U.S. China U.S. China Source: Stocks for the Long Run and Future For Investors, Jeremy J. Siegel 28

29. Top Markets Where the Cost of Complying With Corporate Governance Regulation is Too High U.S UK & Ireland Canada India Austria, Germany, Liechtenstein, Switzerland Israel China Nordic Countries France, Italy, Monaco, Portugal, Spain Benelux 29

30. Top Markets Where Regulation is Too Lax and Creates Additional Business Risk India Central/ Eastern Europe China CIS & Russia Latin America Other Asia Middle East (excl Israel) Africa Israel South Korea 30

31. Top Markets Where Intellectual Property Laws Create Additional Financial Risk China India U.S. Israel Other Asia Canada South Korea Latin America Middle East (excl. Israel) Central & Eastern Europe 31

32. Public Policy Implications for China • Establishment of one industry voice, CVCA, is an important positive step • Creation of the domestic Shenzhen, Shanghai Exchanges also desirable • Caution against overregulation which could discourage new company formation and restrict foreign capital inflows • Importance of strong capital market oversight and governance agencies like CSRC 32

33. Key Messages Summarized • China VC industry today still in very early stage (roughly same as U.S. in late 70’s) • Industry always has been cyclical – new cycle every 10-12 years. Anticipate downturns. • Flourishing VC industry a crucial element for leveraged job creation, innovation, and long-term economic growth 33

34. Key Messages Summarized (cont.) • Public policy plays major role in successful evolution of VC industry • Taxation, Legal, R&D Support, Governance, Etc. • Excessive government intervention has periodically damaged U.S. VC industry (Sarbox) • NVCA in U.S. has played important role in influencing public policy - I strongly encourage CVCA to do the same in China Thank You. 34