VENTURE CAPITALISTS SEEK OPPORTUNITIES IN LIFE SCIENCES SECTOR
Investment Into Existing Portfolio & New Companies Continues At A Healthy Rate

July 30, 2001, New York, NY - Venture capitalists invested $10.6 billion in 982 companies in the second quarter of 2001 with a notable investment increase in the life sciences sector, according to Venture Economics and the National Venture Capital Association (NVCA). During the quarter, 13.8% of dollars invested went to Medical/Health/Life Science companies, whereas only 11.2% went to such companies in the first quarter of 2001 and only 3.95% went to such companies in the second quarter of 2000. While the $10.6 billion figure represents a 12% decline from Q1 and a 61% decline from one year ago, this quarterís investment pace is on par with the then -record levels set in early 1999.

Expansion stage companies received a greater percentage of the total investment in the second quarter compared to the first quarter of 2001. In the second quarter, 54.9% of all venture capital went to expansion companies versus 47.4% in the first quarter. Both the early and later stage categories saw a slight decrease in terms of percentage of overall investment. This trend can be attributed to the commitment of venture capitalists to their existing portfolio companies.

"This quarterís disbursements statistics reflect the long-term nature of venture investing. With an eye to the future, venture capitalists are working to build the companies in their current portfolio. At the same time, venture capitalists are increasing the diversification of their portfolios, both in terms of industry sectors and stage of development. With valuations at their lowest levels in recent years, this is a very good time for patient investors to find promising opportunities," commented Mark G. Heesen, president of the NVCA.

'The increased focus on the life sciences industry, where it can take several years to develop a product, shows that venture firms are getting comfortable again with long gestation periods for their investments," said Adam Reinebach, vice president with Venture Economics. "The question going forward is, which firms are best equippedóand best fundedóto maintain their portfolio companies in a more challenging economy?"

Industry Breakout
While the Internet Specific category remained at the top of the list of industry categories, attracting $3.0 billion, its piece of the overall pie fell to 28.4% from 34.3% in Q1 2001. The Computer Software and Services sector was second with $2.2 billion invested, or 20.9% of total dollars invested. Communications & Media was third with $1.8 billion, or 17.5% of total dollars invested. Medical/Health (excluding Biotechnology) was fourth with $1.02 billion invested and representing 9.6% of total dollars invested.

Within the Internet-Related sector, which spans all industry categories, E-Commerce and Content companies received the most investment at $2.3 billion. Communications/Infrastructure came in second with $1.98 and Internet Software and Tools came in third with $ 1.95 billion. The only Internet-Related category that saw an increase in dollars invested from Q1 2001 to Q2 2001 was Internet Related Hardware, which saw a 34% increase from $208.7 million to $280 million.

Regional Breakout
Although Northern California remained the leading region for venture capital investment in the second quarter, its share of total dollars invested decreased from 34% one year ago to 29.5%. Today, other regions around the country are accounting for greater percentages of overall investment. The most notable shift was in the Southwest region, which saw a jump from 4.6% in Q2 2000 to 8.9% in Q2 2001. Also, during the past one-year period, New England saw a substantial increase, moving from 9.64% in Q2 2000 to 12.9% in Q2 2001. Similar to California, the New York Tri-State area saw a decrease, from 11.5% in Q2 2000 to 9.8% in Q2 2001. The decrease in California and New York can be attributed to the decrease in investment in the Internet/E-Commerce sectors, an industry sector that remains prevalent in both regions.

Venture Investment By Quarter
Quarter	No. of Companies.	Average Inv. ($M)	Sum Inv. ($M)
1998-1	947	$4.48	$4,243.69
1998-2	1054	$6.06	$6,386.59
1998-3	1032	$5.73	$5,911.19
1998-4	1037	$5.99	$6,213.31
1999-1	879	$8.27	$7,266.70
1999-2	1201	$10.48	$12,592.37
1999-3	1326	$10.61	$14,069.23
1999-4	1623	$15.30	$24,829.26
2000-1	1761	$15.08	$26,556.12
2000-2	1873	$14.51	$27,173.68
2000-3	1814	$15.76	$28,593.12
2000-4	1516	$13.85	$20,999.99
2001-1	1121	$10.82	$12,133.14
2001-2	982	$10.83	$10,630.86

Venture Investment By Year
Year	No. of Comp	Avg Per Comp	Sum Inv. ($mil)
1995	1340	$4.35	$5,831.98
1996	2011	$5.84	$11,734.39
1997	2686	$6.39	$17,172.89
1998	3163	$7.19	$22,754.78
1999	3972	$14.79	$58,757.56
2000	5557	$18.59	$103,322.91
2001	1975	$11.53	$22,763.99

Venture Investment By Industry
Industry	No. of Companies.	Average Per Company ($M)	Total Invested ($M)	Percent of Inv Q2-2001	Percent of Inv Q2-2000
Internet Specific	301	$10.04	$3,022.19	28.43%	48.02%
Computer Software & Services	229	$9.73	$2,228.80	20.97%	16.52%
Communications & Media	135	$13.84	$1,868.83	17.58%	15.69%
Medical/Health	96	$10.64	$1,020.98	9.6%	2.53%
Semiconductors/Other Elect.	52	$16.20	$842.66	7.93%	5.96%
Biotechnology	41	$10.92	$447.72	4.21%	1.42%
Other Products	57	$11.42	$650.77	6.12%	4.47%
Computer Hardware	34	$8.16	$277.52	2.61%	1.92%
Consumer Related	23	$6.72	$154.67	1.45%	1.98%
Industrial/Energy	14	$8.34	$116.72	1.1%	1.48%

**Internet Specific is a very narrow definition of companies that would not exist without the Internet and that
would not fit in any other industry sector category.

Internet Related Investments
Internet Category	No. of Companies.	Average Inv. Per Company ($M)	Total Invested ($M)	Percent of Total
Non-Internet Related	353	$9.52	$3,361.96	31.62%
E-commerce and Content	262	$8.86	$2,322.61	21.85%
Communications/Infrastructure	109	$18.18	$1,981.39	18.64%
Internet Software and Tools	172	$11.36	$1,954.14	18.38%
Internet Services	55	$11.02	$606.16	5.70%
Internet Related Hardware	18	$15.55	$279.98	2.63%
Other Internet Related	13	$9.59	$124.62	1.17%

**Internet-related describes companies that provide content, e-commerce, hardware or services
to the Internet economy. Internet-related companies are found in all industry sectors.

Venture Investment by Stage
Stage	No. of Comp	Avg Per Comp	Sum Inv ($mil)	Pct of Inv
Expansion	495	$11.81	$5,845.59	54.99%
Early Stage	260	$8.15	$2,119.15	19.93%
Later Stage	114	$17.85	$2,034.70	19.14%
Special Situation/Other	100	$4.60	$459.93	4.32%
Buyout/Acq.	16	$10.72	$171.48	1.61%

Venture Investment By Region
Region	No. of Comp.	Avg. Per Comp.	Sum Inv. ($mil)	Pct of Inv Q2 2001	Pct of Inv Q2 2000
N. California	253	$12.42	$3,141.36	29.55%	34.14%
New England	128	$10.44	$1,336.45	12.57%	9.64%
New York Tri-State	89	$11.76	$1,046.81	9.85%	11.53%
Southwest	86	$10.98	$943.98	8.88%	4.60%
S. California	88	$10.37	$912.29	8.58%	8.97%
Mid-Atlantic	60	$12.74	$764.68	7.19%	6.76%
Southeast	82	$9.24	$757.75	7.13%	6.40%
Rocky Mountains	40	$12.83	$513.30	4.83%	5.00%
Northwest	44	$8.66	$381.13	3.59%	3.01%
Ohio Valley	31	$8.39	$260.20	2.45%	2.90%
Great Plains	28	$8.30	$232.49	2.19%	1.78%
Great Lakes	29	$7.07	$205.14	1.93%	4.38%
South	15	$6.33	$94.97	0.89%	.78%

For additional regional information, please visit www.ventureeconomics.com/statshome.htm

The National Venture Capital Association (NVCA) represents over 400 venture capital and private equity organizations. NVCA’s mission is to foster the understanding of the importance of venture capital to the vitality of the U.S. and global economies, to stimulate the flow of equity capital to emerging growth companies by representing the public policy interests of the venture capital and private equity communities at all levels of government, to maintain high professional standards, facilitate networking opportunities and to provide research data and professional development for its members. For more information, visit www.nvca.org.

Venture Economics, a Thomson Financial company, is the foremost information provider for private equity professionals worldwide. Venture Economics offers an unparalleled range of products from directories to conferences, journals, newsletters, research reports, and the VentureXpert database. For over 35 years, Venture Economics has been tracking the venture capital and buyouts industry. Since 1961, it has been a recognized source for comprehensive analysis of investment activity and performance of the private equity industry. Venture Economics maintains long-standing relationships within the private equity investment community, in-depth industry knowledge and proprietary research techniques. Private equity managers and institutional investors alike consider Venture Economics information to be the industry standard.

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