EGL Ventures IV Private and Confidential. 2 EGL Ventures Confidential EGL Ventures IV Target: $100 million in capital. Balanced: Early- and later-stage.
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EGL Ventures EGL Ventures IVIV
Private and ConfidentialPrivate and Confidential
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EGL Ventures IVEGL Ventures IV
Target:Target: $100 million in capital. $100 million in capital. Balanced:Balanced: Early- and later-stage.Early- and later-stage. Geography:Geography: Southeast U.S. focus. Southeast U.S. focus. Sectors:Sectors: Balanced between Balanced between
information technology, information technology, telecomm, and health care.telecomm, and health care.
Management:Management: 50+ years 50+ years experience.experience.
IntroductionIntroductionIntroductionIntroduction
PeoplePeople
PerformancePerformance
PortfolioPortfolio
ProcessProcess
OpportunityOpportunity
SummarySummary
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EGL-IV HistoryEGL-IV History
Aggregate 50+ years of Aggregate 50+ years of successful private equity successful private equity investing.investing.– Two General Partners have worked Two General Partners have worked
together for 15 years in three together for 15 years in three predecessor funds.predecessor funds.
– New GP has eight years experience New GP has eight years experience in three funds totaling $260 million. in three funds totaling $260 million.
– Fourth fund in the Southeast for all Fourth fund in the Southeast for all General Partners.General Partners.
The right team with the right The right team with the right strategy at the right time.strategy at the right time.
IntroductionIntroductionIntroductionIntroduction
PeoplePeople
PerformancePerformance
PortfolioPortfolio
ProcessProcess
OpportunityOpportunity
SummarySummary
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Private Equity SectorPrivate Equity Sector
19.1%19.1%Early-stage VCEarly-stage VC
13.3%13.3%Balanced VCBalanced VC
13.8%13.8%Later-stage VCLater-stage VC
12.4%12.4%Buyout FundsBuyout Funds
13.6%13.6%All Private EquityAll Private Equity
23.5%23.5%EGL GP NetEGL GP NetReturnsReturns
IntroductionIntroductionIntroductionIntroduction
PeoplePeople
PerformancePerformance
PortfolioPortfolio
ProcessProcess
OpportunityOpportunity
SummarySummary
12.9%12.9%S&P 500S&P 500
12.4%12.4%NASDAQNASDAQ
Venture Economics:Venture Economics:20-year net returns20-year net returns
through 12/31/03 through 12/31/03
15-year net returns15-year net returnsthrough 12/31/03through 12/31/03
$107M $107M invested;invested;
$170M $170M returned;returned;
$14M $14M unrealized.unrealized.
All returns shown net of management fees and carried All returns shown net of management fees and carried interest.interest.
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Regional OpportunityRegional Opportunity
Regional advantages:Regional advantages:–$1.5 trillion economy$1.5 trillion economy–Low taxes, low cost of livingLow taxes, low cost of living–Deep pool of human capitalDeep pool of human capital– Intellectual capital anchored Intellectual capital anchored by universities and Federal by universities and Federal R&DR&D
–Other pieces are in place Other pieces are in place (legal, banking, accounting, (legal, banking, accounting, etc.)etc.)
IntroductionIntroductionIntroductionIntroduction
PeoplePeople
PerformancePerformance
PortfolioPortfolio
ProcessProcess
OpportunityOpportunity
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Technology in the Technology in the SoutheastSoutheast
IntroductionIntroductionIntroductionIntroduction
PeoplePeople
PerformancePerformance
PortfolioPortfolio
ProcessProcess
OpportunityOpportunity
SummarySummary
Multiple Multiple
technology technology
centers.centers.
Anchored by:Anchored by:
Atlanta, Atlanta,
Research Research
Triangle, Triangle,
Florida.Florida.
Pockets of Pockets of
innovation:innovation:
Universities, Universities,
Federal Federal
R&D centers.R&D centers.Biggest challenge:Biggest challenge: Lack of local venture Lack of local venture capital.capital.
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Regional Regional UndercapitalizationUndercapitalization
Venture firms do not offer Venture firms do not offer adequate leverage for local adequate leverage for local R&D.R&D.
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10
15
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25
30
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Bay Area Northeast Southeast
University R&D ($B)Venture Investment ($B)
1.6 1.6
99 2121
Substantial Substantial room for room for improvemenimprovement!t!
Source:Source: Venture Venture Economics and the Economics and the
Center for R&DCenter for R&D
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PerformancePerformance
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The EGL AdvantageThe EGL Advantage
Substantial operational experience Substantial operational experience at CXO levels.at CXO levels.
15 years of investing in the 15 years of investing in the Southeast.Southeast.
Staying the course:Staying the course: Technology- Technology-oriented growth companies.oriented growth companies.
A record of leadership.A record of leadership.
IntroductionIntroductionIntroductionIntroduction
PeoplePeople
PerformancePerformance
PortfolioPortfolio
ProcessProcess
OpportunityOpportunity
SummarySummary
EGL was EGL was first first outside outside investor in investor in 20 out of 20 out of 31 deals.31 deals.
EGL held EGL held board seats board seats in 26 out of in 26 out of 31 deals.31 deals.
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Management TeamManagement Team
Three General Partners:Three General Partners:– David EllisDavid Ellis– Stephen FlemingStephen Fleming– Salvatore MassaroSalvatore Massaro
Two Senior Associates Two Senior Associates already identified.already identified.
Advisory Board.Advisory Board.
IntroductionIntroductionIntroductionIntroduction
PeoplePeople
PerformancePerformance
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David EllisDavid Ellis
27+ years investment 27+ years investment experience.experience.– Oversight of 100+ Oversight of 100+
investments at 3i.investments at 3i.– 13 investments at EGL.13 investments at EGL.– Commercialization of superconducting magnet Commercialization of superconducting magnet
technology, leading to creation of MRI industry.technology, leading to creation of MRI industry.
Ph.D., Biophysics;Ph.D., Biophysics;BS, Chemistry (both St. Andrews).BS, Chemistry (both St. Andrews).
Georgia Tech Advisory Board Georgia Tech Advisory Board memberships.memberships.
Substantial CXO operations Substantial CXO operations experience.experience.
15-year partnership with Sal Massaro.15-year partnership with Sal Massaro.
IntroductionIntroductionIntroductionIntroduction
PeoplePeople
PerformancePerformance
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OpportunityOpportunity
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Stephen FlemingStephen Fleming
8+ years investment8+ years investment experience. experience.– General Partner, Alliance General Partner, Alliance
Technology Ventures.Technology Ventures.– 18 investments as lead 18 investments as lead
investor, 15 exits to date.investor, 15 exits to date. BS, Physics, Ga. Tech BS, Physics, Ga. Tech (Highest Honors).(Highest Honors). 15 years operational experience at AT&T 15 years operational experience at AT&T
Bell Labs, Nortel, LBell Labs, Nortel, LICOMICOM (venture-backed (venture-backed startup).startup).– Supervised startups developing first ADSL Supervised startups developing first ADSL
modem and one of the first cablemodems in early modem and one of the first cablemodems in early 1990s.1990s.
Multiple advisory boards at Georgia Tech; Multiple advisory boards at Georgia Tech; endowed chair in telecomm; instructor in endowed chair in telecomm; instructor in MBA entrepreneurship program.MBA entrepreneurship program.
Strong regional technology leader.Strong regional technology leader.
IntroductionIntroductionIntroductionIntroduction
PeoplePeople
PerformancePerformance
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OpportunityOpportunity
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Salvatore MassaroSalvatore Massaro
20+ years investment 20+ years investment experience.experience.– 13 investments, 13 exits.13 investments, 13 exits.
Prudential-Bache Prudential-Bache Venture Capital, Price Waterhouse.Venture Capital, Price Waterhouse.
CFO through IPO of Telesphere Int’l.CFO through IPO of Telesphere Int’l. MBA, Harvard University;MBA, Harvard University;
BSBA, Georgetown BSBA, Georgetown (High Honors).(High Honors). Former Member of Former Member of NASBICNASBIC Board of Board of
Governors.Governors. 15-year partnership with David Ellis.15-year partnership with David Ellis.
IntroductionIntroductionIntroductionIntroduction
PeoplePeople
PerformancePerformance
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AdvisorsAdvisors
Ian ArmitageIan Armitage Founder & Managing Partner, HgCapitalFounder & Managing Partner, HgCapital
Mark BraunsteinMark Braunstein Founder & CEO, Patient Care Founder & CEO, Patient Care TechnologiesTechnologies
Jean-Lou Jean-Lou ChameauChameau Provost, Georgia Institute of TechnologyProvost, Georgia Institute of Technology
Michael CroninMichael Cronin Founder & Managing Partner, Weston Founder & Managing Partner, Weston PresidioPresidio
Joseph ForgioneJoseph Forgione VP, Net Solutions, Novell; former CEO, VP, Net Solutions, Novell; former CEO, EpriseEprise
James KrugmanJames Krugman Former CEO, Meadox Medicals (Boston Former CEO, Meadox Medicals (Boston Sci.)Sci.)
John LappingtonJohn Lappington VP, Broadcom; founder, Digital FurnaceVP, Broadcom; founder, Digital FurnaceDoug McMahonDoug McMahon VP, Global Accounts, Hewlett-PackardVP, Global Accounts, Hewlett-PackardHoward Howard MorrisonMorrison Retired VP, Bank of AmericaRetired VP, Bank of America
Barrett Barrett O’DonnellO’Donnell Former Chairman & CEO, CareCentricFormer Chairman & CEO, CareCentric
Bill WoulfinBill Woulfin Former CEO, LecStarFormer CEO, LecStar
IntroductionIntroductionIntroductionIntroduction
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EGL PerformanceEGL Performance
Net IRR Net IRR (annualized)(annualized):: 23.5%23.5%Net Multiple: Net Multiple: 1.5 1.5 All returns shown net of management fees and carried All returns shown net of management fees and carried
interest.interest.
31 investments 31 investments over 15 years over 15 years (1989–2003)(1989–2003)
$107M $107M invested;invested;$170M $170M returned;returned;$14M $14M unrealized.unrealized.
PerformancePerformance
PortfolioPortfolio
ProcessProcess
SummarySummary
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OpportunityOpportunity
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EGL PerformanceEGL Performance
$107M invested, $170M realized.$107M invested, $170M realized.$14M still unrealized at current valuations.$14M still unrealized at current valuations.
MultipleMultiple IRRIRR
Gross ReturnsGross Returns
Realized ReturnRealized Return 1.6x1.6x 29.4%29.4%
Realized, plus Unrealized Realized, plus Unrealized ValuationsValuations 1.7x1.7x 30.1%30.1%
Net ReturnsNet Returns (net of management fees and carried (net of management fees and carried interest)interest)
Realized ReturnRealized Return 1.4x1.4x 22.5%22.5%
Realized, plus Unrealized Realized, plus Unrealized ValuationsValuations 1.5x1.5x 23.5%23.5%
PerformancePerformance
PortfolioPortfolio
ProcessProcess
SummarySummary
IntroductionIntroduction
PeoplePeople
OpportunityOpportunity
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Previous Portfolio Previous Portfolio CompaniesCompanies
Successful IPOs and M&As.Successful IPOs and M&As.
ADS NetTools (EGL)ADS NetTools (EGL)Artcraft (EGL)Artcraft (EGL)Astracom (SRF)Astracom (SRF)At Work (EGL)At Work (EGL)Boca Photonics (SRF)Boca Photonics (SRF)BroadRiver (SRF)BroadRiver (SRF)Care Centric (SRF)Care Centric (SRF)Checkmate (EGL)Checkmate (EGL)Digital Furnace (SRF)Digital Furnace (SRF)Eprise (SRF)Eprise (SRF)Fluid Data (EGL)Fluid Data (EGL)Home Wireless (SRF)Home Wireless (SRF)iFleet (EGL)iFleet (EGL)iPower (SRF)iPower (SRF)The Learning Co. (EGL)The Learning Co. (EGL)Pathfire (SRF) Pathfire (SRF) Physician Health Corp. Physician Health Corp.
(EGL)(EGL)Pi Holdings (EGL)Pi Holdings (EGL)Quokka Sports (EGL)Quokka Sports (EGL)Renaissance Int. (EGL)Renaissance Int. (EGL)RF Micro Devices (SRF)RF Micro Devices (SRF)RF Solutions (SRF)RF Solutions (SRF)SecureWorks (SRF)SecureWorks (SRF)Simione Central (EGL)Simione Central (EGL)Sportsline (SRF)Sportsline (SRF)Synchrologic (SRF)Synchrologic (SRF)Telaxis (SRF)Telaxis (SRF)ValuBond (SRF)ValuBond (SRF)Verifiber (SRF)Verifiber (SRF)ZapMedia (SRF)ZapMedia (SRF)Zarina (EGL)Zarina (EGL)
IntroductionIntroductionIntroductionIntroduction
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Previous Syndicate Previous Syndicate PartnersPartners
Followed OurFollowed OurOriginationOriginationAT&T VenturesAT&T VenturesBank of AmericaBank of AmericaCharles SchwabCharles SchwabCordova Cordova VenturesVenturesCrystal VenturesCrystal VenturesFT VenturesFT VenturesGE CapitalGE CapitalGrotech CapitalGrotech CapitalHalpern DennyHalpern DennyImlay Imlay InvestmentsInvestmentsIntelligent Intelligent Systems Systems ITC Holdings ITC Holdings IVP / RedpointIVP / RedpointJK&B CapitalJK&B CapitalKinetic Ventures Kinetic Ventures Kitty Hawk Kitty Hawk CapitalCapitalMellon VenturesMellon VenturesNBC NBC Noro-MoseleyNoro-MoseleyPanAmSat PanAmSat
IntroductionIntroductionIntroductionIntroduction
PeoplePeople
PerformancePerformance
PortfolioPortfolio
ProcessProcess
OpportunityOpportunity
SummarySummary
Quadrangle Capital Quadrangle Capital Riggs CapitalRiggs CapitalRobinson Humphrey Robinson Humphrey Sand Hill Capital Sand Hill Capital Sevin Rosen FundsSevin Rosen FundsUS Venture PartnersUS Venture PartnersVantage PointVantage PointWeston PresidioWeston Presidio
Invited Us to Invited Us to LeadLeadSubsequent Subsequent RoundRoundAdvanced Tech Advanced Tech VenturesVenturesAllen TelecomAllen TelecomCBSCBSCoral Ventures Coral Ventures Domain AssociatesDomain AssociatesEMC VenturesEMC VenturesKleiner PerkinsKleiner PerkinsLucent VenturesLucent VenturesPrism Ventures Prism Ventures ReutersReutersUS WestUS West
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Classic Fund StructureClassic Fund Structure
Limited Partnership.Limited Partnership. 2.5% management fee.2.5% management fee. 80/20 carried interest after 80/20 carried interest after
payback of committed payback of committed capital.capital.
Intent to comply with Intent to comply with ERISA regulations.ERISA regulations.
ProcessProcess
SummarySummary
IntroductionIntroduction
PeoplePeople
OpportunityOpportunity
PerformancePerformance
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Why Us? Why Now? Why Us? Why Now?
A team that:A team that:– Transcends adversityTranscends adversity– Seizes opportunitiesSeizes opportunities– Delivers on expectationsDelivers on expectations
…… with the experience to with the experience to make it make it happen.happen.
SummarySummary
IntroductionIntroduction
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OpportunityOpportunity
PerformancePerformance
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EGL Ventures EGL Ventures IVIV
EGL VenturesEGL Ventures3495 Piedmont Road 3495 Piedmont Road Ten Piedmont Ten Piedmont CenterCenterSuite 412Suite 412Atlanta, Georgia Atlanta, Georgia 30305 30305 (404) 949-8303(404) 949-8303www.eglventures.cowww.eglventures.comm
Placement Agent:Placement Agent:
Ariane Capital PartnersAriane Capital Partners
501 Candace Lane501 Candace Lane
Suite 100Suite 100
Villanova, Pennsylvania Villanova, Pennsylvania 1908519085
(610) 525-0749(610) 525-0749
www.arianepartners.comwww.arianepartners.com
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