The Current State of the Capital Markets

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Breakfast Forum
The Current State of the Capital Markets
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G-51 CAPITAL MANAGEMENT LLC Presentation to
Boyar Miller Breakfast Forum Current Trends in
Venture Capital
Rudy Garza rudy_at_g51.com
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G-51 Capital Overview

• Founded in 1996
• Seed Early Stage Technology Investments
  Primarily Texas
• (Hardware, Software, Internet, Clean Tech)
• Operating Executives and Professional
  Technologists
• Deep Dell Networks Outstanding National
  Syndication Partners
• Estimated Q4 2007 Portfolio Company Revenues
  48M, 220 Employees
• Five Public Company Acquisitions since 2002
• 2007 Pilot Software by SAP(symbol SAP)
• 2005 Sunset Direct by Rainmaker (symbol RMRK)
• 2005 eRealty by Prudential Financial Group
  (symbol PRU)
• 2002 Psionic Software by Cisco Systems (symbol
  CSCO)
• 2002 Digital Motorworks by ADP (symbol ADP)

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Early-Stage Ventures have Provided Robust
Returns Untapped market opportunity
Source Thomson Financial/ NVCA 10 year net IRR
as of 12/31/06
Early-stage venture investing, which is G-51s
core emphasis, has significantly outperformed its
counterparts within the venture capital universe
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A Glacial Migration away from Early-Stage
Investing Untapped market opportunity
Source Thomson Financial/ NVCA Venture Capital
Deals Only
The early-stage market is increasingly being
ignored. Over the last 5 years, late-stage
investing has witnessed a 5 CAGR while
early-stage investing has witnessed a -11 CAGR.
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Texas an Underserved, Early-Stage Investment
MarketUntapped market opportunity
649M
Source Thomson Financial / NVCA
Source Thomson Financial / NVCA
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Texas Positive Venture Characteristics
Untapped market opportunity

• Lower cost of doing business Texas tax burden
  ranks 42nd in the US and Austin rents are up to
  58 lower than other VC havens (WSJ)
• Skilled workforce employment at Texas-based,
  venture-backed firms is now well over 1 million
  (Venture Impact 2007) Austin ranks 5th in
  college degrees and 2nd in tech workforce per
  capita (Census Bureau)
• Intellectual property Texas ranks 2nd in patents
  granted by state (US Patent and Trademark Office)
  and Austin ranks 3rd in patents granted by city
  (ipIQ)
• Inertia revenue of Texas-based, venture-backed
  firms is growing 11.7 annually and is 2nd only
  to California (Venture Impact 2007)
• Technology center Texas ranks 2nd in both
  high-tech establishments and high-tech exports,
  with 34 billion in 2005
  (American Electronics Association)

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Opportunity

• Result An underserved and less competitive
  early-stage market
• Interesting Facts
• 65 M websites growing 50K per day
• Technology Information 2x every 24 months soon
  every 12 months
• 1 in 8 marriages meet online (Match.com, Facebook
  and Myspace)
• Mobile phones1st B/ 2 decades 2nd B/1400 days
  3rd B 1000 days
• Consumer data storage growing from 700 gigabytes/
  2006 to 4 terabytes/2009
• Internet Anytime, anywhere on any device (Global
  Comm. Mkt. 1 T)
• Capex for Global power generation 2x by 2020 to
  400 B

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Case StudyMarket leader

• Source of Deal Dell network
• Business Description Highly Mobile computing
  solutions for the healthcare market
• Traction
• 0 to 100 million revenue in four years
• Recent product launch in partnership with Intel
• C5 tablet has great potential

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Case StudyMarket leader

• G-51 Role Initial investor, board member, board
  observer, executive team recruiting, fund raising
  strategy
• Series A G-51, Compal Electronics and founders
  (6.5 million)
• Series B NEA and G-51 (10.5 million)
• Series C IVP, NEA and G-51
• (25.5 million)
• Total Raised to Date
• 42.5 million
• 10 million debt
• (Comerica)