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WOODSIDE FUND IV ANNUAL MEETING 2001

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  1. WOODSIDE FUND IV ANNUAL MEETING 2001

  2. Agenda • Overview • Management Team • Strategic Partners • Investment Strategies • Portfolio Companies • Marketing and Branding • Deal Flow Development • Conclusion • Questions and Answers

  3. Overview • The Fund closed in March 2000, with $140 million • Invested $42 million, with $26 million reserved for follow on financings • Has 13 portfolio companies with 11 Board seats • Approximately 5 or 6 new investments remain • No write-offs or B2C investments • Most portfolio companies have at least 12 months of cash • Seven investment professionals • Strategic relationships • Acuitive • Industry and Technology Advisory Board (ITAB) Woodside Fund IV Summary

  4. Overview • Two exits in less than one year from final close • HotRail, Inc. (acquired by Conexant Systems, Inc.) • Fund IV’s value of distribution was $14.1 million, 4.6 times its cost basis of $3.0 million • Gross IRR was 627% • IRR net of carried interest was 434% • Myelos Corporation (acquired by Bio-Technology General Corporation) Woodside Fund IV Summary

  5. Overview Acuitive, Inc. American Pacific Ventures, Inc. Avista Ventures, Inc. BP/AMOCO Corporation Master Trust Broadview, SLP CIT Group/Equity Investments, Inc. City Public Service of San Antonio, Texas Employees’ Pension Trust Institutional Investors

  6. Overview Desjardins Pension Fund Equifax, Inc. U.S. Retirement Plan Finama Private Equity Global FCPR Ontario Teachers’ Pension Plan Board Rollins Investment Fund Royal Bank of Canada Sentry Insurance a Mutual Company Trinity University Institutional Investors

  7. Overview Chris G. Allen, Great American Ventures, Inc. Kenneth J. Fiedler, City Public Service of San Antonio, Texas Employees’ Pension Trust Richard Laflamme, Desjardins Pension Fund Craig McCoy, Trinity University John S. Ruey, BP/AMOCO Corporation Master Trust Michael G. Schirk, Equifax, Inc. U.S. Retirement Plan Susan M. Smith, Royal Bank of Canada Gregory T. Williamson Rosemary Zigrossi, Ontario Teachers’ Pension Plan Board Advisory Board

  8. Management Team • The three Managing Directors founded the Fund in 1983 • Each Managing Director has served as a chief executive officer of a technology company • The team has 100 years of entrepreneurial and management experience Vincent M. Occhipinti, Managing Director Robert E. Larson, Managing Director Charles E. Greb, Managing Director Daniel H. Ahn, Principal John C. Occhipinti, Principal Rick Shriner, Venture Partner Matthew J. Bolton, Analyst Angelos M. Kottas, Analyst Gary T. Tyrrell, Chief Financial Officer A Cohesive, Experienced Team

  9. Management Team • Thirty years of experience in developing technology and new businesses • President and CEO of two portfolio companies: • HotRail, a network infrastructure IC company that was sold to Conexant, Inc., for $400 million • Exponential Technologies, a high-performance semiconductor company • Vice President of Core Technology at Apple Computer, General Manager with Intel Corporation, and senior management positions with Motorola and Wang Laboratories. • MBA from College of St. Thomas and BS in Engineering from Carnegie-Mellon Rick Shriner, Venture Partner

  10. Management Team • Assists in deal flow development and processing, due diligence, market and competitor analysis, and financial and business model reviews on investment opportunities • Worked for Double Impact, a San Francisco-based management and strategy consulting firm focusing on high tech start-ups • Headed the research group • Aided in capital advisory and business development projects • BA cum laude with a concentration in Computer Science from Harvard College Angelos M. Kottas, Analyst

  11. Strategic Partners • Team of 15 senior executives formerly with leading telecom and networking companies, such as Bay Networks, Cisco, AT&T, and SynOptics • Provide deep domain expertise • Serve as interim senior management at client companies • Acuitive provides strategic management and technical guidance for developing companies in: • Networking • Communications • E-business • They assist companies in many areas, such as product management, strategic positioning, and product development Acuitive, Inc.

  12. IPO and acquired by Nortel Acquired by Cisco IPO Acquired by Conexant Acquired by Nortel Acquired by PMC-Sierra NASDAQ: AVNX Acquired by Cisco Strategic Partners Select Acuitive Clients

  13. Strategic Partners Industry and Technology Advisory Board The Woodside Fund Industry and Technology Advisory Board (ITAB) is a group of industry pioneers, company founders, and seasoned executives who advise the Fund on trends in technology and attractive investment opportunities. Woodside Fund Benefits – ITAB: • Discusses industry and technology trends • Refers and sources new investment opportunities • Shares contacts and makes introductions to relevant companies and individuals • Assists Woodside Fund in evaluating investment opportunities • Can provide value-added assistance and/or serve on the Board of appropriate portfolio companies

  14. Current Members: Bradley Allen Carlton Amdahl Glen Anderson Daniel Fu Michael Hackworth Mark Hoover John Jaeger Jim Kubinec Chris Marino Hank Nothhaft Robert Selinger Strategic Partners Industry and Technology Advisory Board

  15. Strategic Resources Entrepreneurs

  16. Strategic Resources Entrepreneurs WF Team

  17. Strategic Resources VenturePartners Entrepreneurs WF Team

  18. Strategic Resources Acuitive VenturePartners Entrepreneurs WF Team

  19. Strategic Resources PortfolioCompanies Acuitive VenturePartners Entrepreneurs WF Team

  20. Strategic Resources PortfolioCompanies Acuitive VenturePartners ITAB Entrepreneurs WF Team

  21. Strategic Resources PortfolioCompanies Acuitive VenturePartners ITAB Entrepreneurs ExecutiveSearch WF Team

  22. Strategic Resources PortfolioCompanies Acuitive VenturePartners ITAB Entrepreneurs ExecutiveSearch WF Team Co-investors

  23. Strategic Resources PortfolioCompanies Acuitive VenturePartners ITAB Entrepreneurs ExecutiveSearch WF Team Co-investors IndustryAnalysts

  24. Strategic Resources PortfolioCompanies Acuitive VenturePartners ITAB Entrepreneurs ExecutiveSearch WF Team Co-investors IndustryAnalysts ServiceProviders

  25. Strategic Resources PortfolioCompanies Acuitive VenturePartners ITAB Entrepreneurs ExecutiveSearch WF Team CorporateNetwork Co-investors IndustryAnalysts ServiceProviders

  26. Strategic Resources PortfolioCompanies Acuitive VenturePartners ITAB Entrepreneurs LimitedPartners ExecutiveSearch WF Team CorporateNetwork Co-investors IndustryAnalysts ServiceProviders

  27. Strategic Resources PortfolioCompanies Acuitive VenturePartners ITAB Entrepreneurs LimitedPartners ExecutiveSearch WF Team CorporateNetwork Co-investors IndustryAnalysts ServiceProviders

  28. Investment Strategies • The Fund invests in 6 to 8 companies per year • The Fund expects to invest in 20 companies over its lifetime • Total investment target range in a single company is $5 million to $12 million, with an initial commitment of $3 million to $8 million Building a Solid Portfolio Diversifying the portfolio The Fund is an active investor • Fund IV is the lead or co-lead in 77% of its portfolio companies • Fund IV has Board seats in 11 of its 13 portfolio companies

  29. Investment Strategies Building a Solid Portfolio Early Stage Emphasis • Primary emphasis is to be the first venture capital investor in a company that has demonstrated progress • Selective seed investments at founders’ stock valuations • Also invests in select later-stage companies to balance its early-stage emphasis • A significant fraction of the Fund’s dollars will be invested as the portfolio companies exhibit progress

  30. Investment Strategies Industry Focus Communications and Networking • Focus: IP Infrastructure • Telecom software and hardware; semiconductors; storage; optical components and systems

  31. Investment Strategies Industry Focus Enterprise Software and Electronic Commerce • Focus: Business to business infrastructure • E-commerce technology and software; supply chain engineering

  32. Investment Strategies Internet Router PublicTelephone Network Gateway Switch AccessOC-3/OC-12 MetroOC-12/OC-48 Long HaulOC-48/OC-192 Storage

  33. Portfolio Companies

  34. Portfolio Companies • Fund III obtained 10% Founders’ Stock for its value added assistance: • Advised on technology development and IP protection • Developed a strategic partnership with AMD • Recruited a CEO with experience at Apple, Intel and Motorola • Co-led two venture rounds with Gordon Campbell, the Founder of Chips and Technologies and the Managing Partner of Techfund • Fund IV invested $3.5 million in the second round and owned 6.5% of the company. • HotRail was acquired by Conexant Systems Inc. Fund IV’s proceeds were valued at $15.7 million on August 31, 2000, a rate of return (IRR) of 627% gross and 434% net of carried interest. On that date, the Fund distributed shares valued at $14.1 million to its Partners with the remainder to be distributed after escrow. HotRail, Inc. is a network infrastructure IC company that develops high-speed CMOS interconnects and switch fabrics that enable intelligent networks

  35. Portfolio Companies • The company’s leading peptide, prosaptide, has successfully completed Phase I and Phase II clinical trials for diabetic pain and neuropathy. • On February 22, 2001, the company entered into a definitive agreement to be acquired by Bio-Technology General Corp. (NASDAQ: BTGC). • The acquisition is for a combination of stock and cash payments totaling $35 million at the close of the transaction, $30 million after successful completion of Phase III clinical trials, and 15% of third year sales. • Fund IV invested $500,000 and owned 1.6% of the company. Myelos Corporation has patented technology that is a breakthrough in the application of peptides to replace full-length proteins as therapeutic drugs.

  36. Portfolio Companies • The technology enables quality of service, directory services, operator services, IP telephony, unified personal communications, remote user service control, service provisioning and other functions for real-time voice and video over the Internet. • The analogy is the SS7 signaling system for the Public Switched Telephone Network (PSTN). • The company has an experienced management team and now has over 150 employees. The CEO has been successful in three previous networking start-ups where he was the founder. • Woodside Fund led a $10 million Series A round of financing. The company closed a $25 million Series B round. Co-investors include Kleiner Perkins, Onset Ventures, CIT Group and Sofinov. The Fund owns 15.8% of the company. SS8 Networks is developing an Internet Protocol (IP) signaling switch and service platform that enables advanced intelligent network services and guaranteed quality of services over the Internet.

  37. Portfolio Companies • TrueSAN’s storage architecture and software technology provide Internet businesses, service providers, and growing enterprises with a scalable, fault-tolerant and cost-effective solution for storing a virtually unlimited amount of information. • The company recently launched its Paladin product line, which features a distributed and parallel design that breaks through the current technology barriers by a factor of 6 times. • The company was founded in 1997. The Founder bootstrapped the company to 35 people and $1.4 million in revenues with no venture financing. • Woodside Fund led a $27 million round of financing that included Merrill Lynch, QLogic Corporation, Spring Creek Partners, JT Venture Partners, CS First Boston, and Finisar Corporation. The Fund invested $8.7 million and owns 10.9% of the company. TrueSAN Networks, Inc., delivers enterprise storage networking systems, software, and services for building scalable, intelligent, and universally accessible storage infrastructures.

  38. Portfolio Companies • The company has a strategic relationship with IBM who has advanced the company $5 million against future revenues. • IDC, Giga and other analysts have estimated interactive knowledge management to be one of the fastest growing sectors of information technology. • The company has hired a new CEO who has experience from companies such as Digital Equipment, Sun Microsystems, Informix, Silicon Graphics (SGI) and Lotus Development. • Woodside Fund is limiting its investment exposure until the company increases its order backlog and proves its revenue model. • The Fund has invested $735,000 in the company. Sharing Technologies has Internet and Intranet solutions that permit dynamic, real-time knowledge management across multiple sources and formats.

  39. Portfolio Companies • The company will offer its services primarily as licensed software to single dealer systems, independent exchanges and dealer consortium exchanges across the financial and commodity markets. • The company successfully launched its technology through a wholly owned subsidiary called Buyside Direct, the first open exchange system for convertible bonds allowing full trading functionality. • The senior management team has extensive experience in a broad range of financial markets and has assembled an outstanding software development team with proven experience in building intelligent systems. • The Fund has invested $5 million as part of a $10 million Series B financing with Oak Hill Ventures and owns approximately 14.1% of the company. Intelligent Markets is an e-commerce infrastructure software company for financial and commodities markets.

  40. Portfolio Companies • The company Service Control Platform (SCP) controls and provisions multi-vendor, multi-technology networks through a unified, distributed control platform that allows constant innovation in the network, both at the switch/router/optical layer, and at the services layer. • Alpha testing and lab trials are underway with Sprint, Concert and others. • CPlane is comprised of seasoned telecom and networking professionals with extensive expertise in software development and hardware integration from AT&T Labs, Sprint, IBM and HP. • The Fund invested $5 million in a Series C financing along with Pequot Capital, Amerindo Ventures and existing investors Onset Ventures and CMEA Ventures, and owns 5.8% of the company. CPlane is a telecommunication software company that has developed an IP services platform that allows service providers to control and develop new, revenue-generating IP services.

  41. Portfolio Companies • The company has already developed a gigabit switching controller for high performance server connectivity. The chips will support full 10Gbps TCP/IP termination and protocol translation. • The company’s founders include a top team of engineers who developed supercomputer processors at Silicon Graphics (SGI). • Acuitive executives are working closely with the company. • The Fund has made a $500,000 bridge loan convertible at a 20% discount into the Series A financing. ASIC Designers is a fabless semiconductor company developing a modular chip core that supports TCP/IP termination, translation and acceleration for networking and storage applications.

  42. Portfolio Companies • Production homebuilders represent a $120 billion segment of the residential construction industry. • USBuild has exclusive partnerships with four of the largest production homebuilders in the world including Pulte, Kaufman and Broad, Centex and US/Lennar Homes. • USBuild has launched a pilot in Denver and expects to be profitable and cash flow positive by year end 2002. • The company’s business model is compelling in that the revenues from its seven current customers alone can support the company (e.g., Pulte builds about 26,000 homes per year). • Woodside Fund was the lead investor in a $12.4 million first round financing for the company. The Fund owns 17.5% of the company for its $5 million investment. USBuild is a leading e-commerce technology firm focused on providing Internet supply chain solutions for the production homebuilding industry.

  43. Portfolio Companies • NetFlip is taking advantage of the massive downturn in CRM-based banner advertising by delivering a true Cost-Per-Action (CPA) distribution network. • The company launched its network in March 2000 and has quickly become a Top 100 web site, according to PC Data. • NetFlip is cash flow positive, with $2.2 million in revenues in the first quarter 2001, over 3.5 million registered members, and over 9,000 partner sites. • Woodside Fund received Founders’ Stock, invested $500,000 in the company’s first round of venture capital funding, and currently owns approximately 6.4% of the company. NetFlip is a performance-based marketing and distribution network for online and offline advertisers.

  44. Portfolio Companies • The company’s founder pioneered the concept of exchanges for electricity transactions, and the company has developed significant technology for both physical network and financial aspects of the trades. • The company has strengthened management by hiring John Yurkanin, an industry veteran (and most recently, COO of the California Public Exchange) as its full-time CEO. • The chaotic situation in California has slowed business on the APX exchange in the state; the company is exploring a number of strategic initiatives to grow revenues. • The company completed purchase of a major brokerage operation in Norway to facilitate entrance into the Scandinavian and German markets. • The APX exchange in London has opened, and early results are encouraging. • Woodside Fund co-led a $15 million round with Kinetic Ventures, Onset Ventures, and strategic utility investors. The company then closed a $36 million round at a 5 times increase in valuation. The Fund owns 4.8% of the company. Automated Power Exchange provides technology and services related to the trading of electricity in deregulated markets.

  45. Portfolio Companies • The company is delivering online models and real-time data over the Internet to support load prediction and price discovery, as well as enterprise software products for risk management and asset valuation. • The company has recently hired a Chief Executive Officer who brings new products, improved technology and strengthened management to the company. • Ten customers are using the company’s online software, and revenue for the first quarter of 2001 exceeded $1 million. • General Electric has invested in the company with the goal of forming a strategic partnership. • The Fund obtained Founders’ Stock in the company and owns 15.5% of the company for its investment of $1.2 million. E-Acumen provides decision support systems to buyers and sellers of electricity in deregulated markets.

  46. Portfolio Companies • The core optical switch is targeted to scale to multi-Petabit per second through-put with complete fiber-and-wavelength interconnectivity, optical time-domain multiplexing, and signal regeneration. • The company’s founder is one of the preeminent experts in optical systems. • The Fund co-founded the company with an investment $500,000 in a seed Series A financing at a $1.5 million pre-money valuation. Its owns 24.8% of the company. General Nutronics is developing a next generation optical switch for ultra high through-put applications in core and metro area networks.

  47. Marketing and Branding • Continue to build on Woodside Fund’s brand and reputation among entrepreneurs and other constituencies • Drive quality deal flow Market Leadership Objectives Strategic Initiatives • New and improved web site • Public Relations • Speaking Engagements • Early Stage Venture Capital Alliance (ESVCA) • Strategic Partnering • Online Programs

  48. Marketing and Branding Market Recognition

  49. Marketing and Branding Speaking Engagement Examples Entrepreneurial, Venture Capital and Private Equity Industry Events: • SRI: Chairing Private Equity Roundup 2001; Tech Deal Makers Forum • IBF Events: Chairing Early Stage Investing Conference 2001; Venture Investing 2001 • Early Stage Venture Capital Alliance (ESVCA): Chairing Conference XIII in June, 2001 • Upside Events: Showcase; VC Theatre • Opal: Private Equity Summit • IIR: Deal Quest Insider’s Roundtable • KPIX, Channel 5, San Francisco News • Alley to the Valley • SVASE: Monthly Breakfasts, VC Luncheons • Software Development Forum: VC 1on1; Executive Series • CCSBI: Keynote speaker at 925TEC; VC Lecture Series • Asia-Silicon Valley Connection: Panelist at Investor Series • Stanford Graduate School Business: Guest Lecturer • UC Berkeley Walter A. Haas School of Business: Guest Lecturer • Golden State Capital Network: Moderator and panelist at multiple conferences • Silicon Valley World Internet Center: What’s Hot, What’s Not – A VC’s Perspective

  50. Deal Flow Development • Focused approach on building resources around core investment focus • Weekly reporting by each investment professional Focused Strategy Produces Superior Deal Flow Individual deal flow development plans Sources of deal flow • Entrepreneurs and portfolio companies • Seed and early stage funds (ESVCA) • Strategic relationships: Acuitive, ITAB • Attorneys focused on corporate formations and venture capital financings • Limited Partners • Conferences and exhibitions • “Angel” venture capitalists, consultants, and other professional contacts • Bankers and CPAs focused on early-stage private companies Results • The best deal flow in the Fund’s history