© vSpring Capital, 7/15/04 All Rights Reserved.

July 15, 2004

Introduction to vSpringMike Connolly

2 © vSpring Capital, March 26, 2004 All Rights Reserved.

Firm Overview

Offices: Salt Lake City, Los Alamos

Fund I: $120M, established in 2000• Top quartile performance• 24 portfolio companies• 3 exits to date (2 acquisitions, 1

IPO)• several others profitable / poised for

exit

Fund II: $150M target• beginning to invest• final close this fall

3 © vSpring Capital, March 26, 2004 All Rights Reserved.

"Typical" deal profile

Early-stage Focus: IT & life sciences

• but will consider promising opportunities in any area, e.g. energy, nanotech, security, communications

Region: 75% of deals within Utah or NM Lead investor

• recruit strong co-investors for funding continuum Pre-money valuation < $6M (typical, but varies widely) Initial investment of $1-2M and ownership >20% (" " " ")

• will make smaller seed investments in select cases• deploy $4-6M over life of deal (i.e. prior to exit)

4 © vSpring Capital, March 26, 2004 All Rights Reserved.

How do we assess an opportunity?

Market• Large market size and market pain• Pros/cons of each competing solutions -- available or under

dvlpt Management

• Passionate entrepreneur -- experienced or coach-able• We can help recruit other key players

Technology• Risk that it will work vs. investment required to find out• Strength of proprietary position

Financial• Attractive valuation• Ability to attract quality co-investors as needed/appropriate

5 © vSpring Capital, March 26, 2004 All Rights Reserved.

New Mexico activities

Los Alamos office opened 8/03 by vSpring founder Paul Ahlstrom and associate Clarke Miyasaki• Mike Connolly assumed primary responsibility

in 5/04 (continue to be assisted by Paul/Clarke) 2 NM investments to date

• Exagen Diagnostics -- $5.4M round 1/04– prognostic cancer tests using genomic markers

• Protalex -- led $12.7M round 9/03– therapeutic drugs for autoimmune disease

• additional opportunities in diligence

6 © vSpring Capital, March 26, 2004 All Rights Reserved.

The vSpring Team

Extensive start-up / operating experience

Strong and broad industry relationships Deep domain knowledge Stable team with successful history of

working together High ratio of professionals to funds

under management• Individual attention to companies

7 © vSpring Capital, March 26, 2004 All Rights Reserved.

Directors/Principal are successful serial entrepreneurs

Paul Ahlstrom Founder/CEO of Knowlix -- acq'd by Peregrine Systems

Chair of Utah Technology AllianceEd Ekstrom Founder of Cericor -- acq'd by HP

Intel VP; Chairman of Utah IT Assoc.Dinesh Patel Cofounder/CEO of TheraTech -- acq'd by Watson

PharmCofounder/Chair of Salus Therapeutics -- acq'd by Genta

Scott Petty COO of Zuka Juice -- acq'd by Jamba JuiceBain & Co.

Greg Warnock Founded Precision Data Link -- acq'd by Profit Recovery

Founder of Advion BioScience, Texsem LabsMike Connolly

8 © vSpring Capital, March 26, 2004 All Rights Reserved.

Mike Connolly, Principal in New Mexico office

Experience• Cofounded 7 biomedical companies worth >$400M

– Novacept acquired for $325M– Cohesion acquired for $40M

• Tech Commercialization Executive at Los Alamos Nat'l Lab– Founded Tech Mat Fund -- an internal “venture” fund to mature

early-stage Lab technologies with strong commercial potential• Navy officer (Lt. Commander) for 7 years• Taught physics at U.S. Naval Academy for 3 years• Licensed Professional Engineer (P.E.)

Education• Stanford MBA, M.I.T. MSME, Naval Academy BSME

9 © vSpring Capital, March 26, 2004 All Rights Reserved.

Strong support team of investment professionals

JD Gardner, Associate• Goldman Sachs, McKinsey, Harvard

MBA Clarke Miyasaki, Associate

• Ford Motors, Freeport, Connect2.com Gavin Christensen, Associate

• Monitor Group, Fidelity Investments Ken Krull, Associate

• Knowlix, Folio, Trend Micro Matt Hoffman, Analyst Dennis Wood, Director of Human Capital

• Diestel Group, Prince Perelson & Assoc. David Anderson, CFO

• Ernst & Young, CFO of 3 prior cos.

10 © vSpring Capital, March 26, 2004 All Rights Reserved.

Utah market in 1990’s

• Few early-stage investments; disconnected angel community

• Unsophisticated entrepreneurs .

• Lack of qualified management .

• Infrastructure gaps, e.g. legal

• Not leveraging research institutions

• Need for community development

vSpring contribution

Partners brought deep experience in both operations & angel investing

Active mentoring of entrepreneurs throughout investment process

Hired top recruiter in Utah to assist portfolio companies

Recruited Wilson Sonsini to Utah

Partners experienced in tech transfer

Aided UTA, et. al. reg'l dvlpt orgs

Emerging Markets: Utah in 1990s ~ NM in 2000s

11 © vSpring Capital, March 26, 2004 All Rights Reserved.

Portfolio value-add: management recruiting

17 senior execs (CEO, CTO, CFO)

17 vice presidents 10 other company

positions 12 board of directors

12 © vSpring Capital, March 26, 2004 All Rights Reserved.

Portfolio value-add: co-investor network

13 © vSpring Capital, March 26, 2004 All Rights Reserved.

For more info

www.vspring.com

1200 Trinity Drive, Suite 420 (in Los Alamos National Bank

bldg.)Los Alamos, NM 87544 tel: 505.663.4030 fax: 505.663.4034

Mike Connolly mike@vspring.com