Houston Technology Center

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Houston Technology Center

• May 20, 2003

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• Agenda
• Austin Ventures Overview
• VC Market Trends - Know Your Audience
• Raising Capital Today

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AV Vital Statistics

• Founded in 1979
• Largest and most active venture investor in the
  Southwest
• 2.4 billion of capital under management across 8
  funds
• 220 investments 70 IPOs or successful
  acquisitions
• 15 investment professionals 15 venture partners
• Extensive network of talented local executives

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AV Investment Focus

• AV invests nationally in three practice areas
• Software and Services
• Communications
• Semiconductors
• And at all stages of company development
• Seed First-round Financings
• Expansion Financings
• Active Participants
• Lead or originate 75 of our deals
• Board seat in 80 of investments

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AV Practice Areas
Practice Area
Comments
Examples
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Going Up

• IT spending. nothing but growth
• NASDAQ keeps climbing
• IPO market increasingly robust
• VC investments followed the markets

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The Venture Capital Perfect Storm
Down to earth

• Double-digit decline in IT spending
• NASDAQ craters
• IPO window closes
• VCs react

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The VC Reaction
VC Investments in the U.S.
Year
Billions
2000
106.6
2001
41.3
2002
21.2
Down 80!
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Where Are VCs Investing Today?
Change in Amount from Q4 02
of Deals
( in millions)
166
(12.9)

49
(2.1)
67
(11.2)
(13.5)
38
34
1
Q1
2003 Totals 3,842
623 (10)
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What Stage Are VCs Investing In Today?
Change in Amount from Q4 02
of Deals
( in millions)
29.2
115

173
(22.8)
(8.7)
131
(21.9)
122
82
(18.8)
Q1
2003 Totals 3,842
623 (10)
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What is AV Looking For?

• Experienced teams, domain expertise, history of
  execution
• Vision to deliver world class technology
• Prospects for market dominance
• Viable business model
• Capital efficiency
• Valuation will be 20-50 vs. peak
• Customer validation is a key milestone

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Acorn Systems

• AV led the companys 9M Series B financing in
  April
• Seasoned management team
• Leland Putterman (CEO) BMC, Oracle, Bindview
• Alex Fernandez (COO) Scalable, BMC, IBM
• Robert Kaplan (Board Member) HBS Prof.,
  pioneered Activities Based Costing
• Unique solution focused on profit analysis and
  optimization
• Consistently replacing homegrown and competitive
  solutions
• Growing list of Fortune 1000 customers
• Fully implemented at over 50 companies