1. Contacts: Jeanne Metzger, NVCA, 703-524-2549 ext. 116, jmetzger@nvca.org Jesse Reyes, Thomson Venture Economics, 973-645-9734, jesse.reyes@tfn.comPRIVATE EQUITY RETURNS CONTINUE TO REFLECT FALLING VALUATIONS AND LIMITED EXIT OPPORTUNITIESApril 21, 2003--Newark, NJ--Annual private equity returns continued to be negative for the eighth straight quarter, according to the year-end 2002 Private Equity Performance Index results released today by Thomson Venture Economics and the National Venture Capital Association. Venture capital funds have been impacted most severely with back to back 20 percent or more losses for two years in a row. Valuations of high technology companies continue to fall and exit opportunities remain scarce, negatively impacting short-term private equity performance. However, this performance must be taken in context that the overall equity markets have all been adversely impacted by the 1995-2000 technology boom. As a result, private equity performance has outpaced NASDAQ, which is the venture industrys most relevant public market benchmark since most public exits of VC investments are traded on NASDAQ.Figure 1. Venture Economics' US Private Equity Performance Index (PEPI) Investment Horizon Performance as of 12/31/2002 Fund Type 1 Yr3 Yr 5 Yr10 Yr20 Yr Early/Seed VC-27.6 -4.7 51.434.9 20.4 Balanced VC-22.8 -8.0 20.920.9 14.3 Later Stage VC -15.7 -8.5 10.621.615.3 All Venture-23.3 -6.8 28.326.316.6 All Buyouts -5.5 -5.6 1.18.712.3 Mezzanine -1.7 1.26.39.8 10.3 All Private Equity -11.0 -5.4 7.8 14.814.3 Source: Thomson Venture Economics/National Venture Capital Association *The' Private Equity Performance Index is based on the latest quarterly statistics from Thomson Venture Economics Private Equity Performance Database analyzing the cashflows and returns for over 1600 US venture capital and private equity partnerships with a capitalization of $534 billion. Sources are financial documents and schedules from Limited Partners investors and General Partners. All returns are calculated by Thomson Venture Economics from the underlying financial cashflows. Returns are net to investors after management fees and carried interest.Figure 2. Public Equity Returns as of 12/31/20021 Yr3 Yr5 Yr10 Yr 20 Yr NASDAQ -31.6%-31.0% -3.2%7.0% 7.1% Source: Thomson Venture Economics/National Venture Capital AssociationPrivate equity returns are derived from distributions back to investors and interim valuations. With valuations continuing to fall since 1999 and distributions back to investors scarce due to the lifeless IPO and M&A markets, short-term returns have been negatively impacted. In an effort to reverse the current negative trend, venture capitalists have been working to restructure their portfolios. This has entailed searching for new companies that meet the core competencies of their firms' strategies, restructuring existing companies through recapitalizations and turnarounds, and in the worse case scenario closing failing companies. Fortunately, private equity funds have a lifespan of, on average 10-12 years, which

2. allows the fund managers to weather downturns and invest throughout business cycles, which has historically resulted in strong returns over the long-term.According to Jesse Reyes, Vice President at Thomson Venture Economics, The two and a half year downturn in venture and private equity returns are not surprising, given what has been going on in the public markets. The tide seems to have lowered all ships. The inevitable winnowing process that this will create will ultimately leave a much leaner but probably more robust investment market for private equity investing. The fact that 20 year returns for early and seed stage funds are still above 20 percent demonstrates that it is not an investment asset class for the short-term mind set. While their returns are probably the most volatile, they ultimately have demonstrated the best long term performance.This should set the stage for a better investment environment in the next few years. Like investors in the public markets, I expect that both limited partner investors and general partners have a longer investment horizon in mind now when investing in this asset class. And just like investors in the public markets the biggest negative impact will be for those investors who thought they could time the market but ultimately invested at the peak of the market. .Venture capitalists have been diligently working with their portfolio companies while searching for new opportunities in a wide range of sectors in an effort to position their portfolios to take advantage of the inevitable strengthening of the markets and business climate. Although no one can predict when the business environment will improve, all down business cycles eventually turn upwards, commented Mark Heesen, President of the National Venture Capital Association.Figure 2. Fourth Quarter Company ValuationsTime PeriodAvg Val ($Millions)Median ($Millions)2000-4 85.8338.752001-4 51.9830.072002-4 34.9618.4 Comparison of Recent Funds to Their Predecessors After 3 Years of Activity Venture funds have a life span on average of 10-12 years. Performance of funds, during the first three years of investment activity, are difficult to measure and tend to be quite volatile. Investments being made in young companies have not generated sufficient revenue to be profitable and many younger companies are still trying to establish themselves in their respected niche markets. Overall venture capital funds should be judged on their long term performance not the immediate short-term gains and loss. Generally venture funds are expected to generate 15 to 20% returns over the life of the fund. As the 20 year performance of venture capital returns dips closer to the 15% threshold, venture capital funds are still out performing the public markets during the same time span.However, the venture capital industry is in a state of flux with falling portfolio company valuations and limited exit opportunities as seen when early performance of recent funds are compared to early performance of earlier vintage year funds. For example, after 3 years of activity, 1996 vintage year funds had returned 1.11 times the original investment to the investors. In addition, companies remaining in the portfolios had a remaining combined valuation of 3.85 times the original investment. The consensus across the industry is that the 1996 vintage year funds as a group exceeded all expectations.In contrast to the 1996 vintage year funds the younger funds of today are challenged. The vintage year 1998 funds have returned 57 cents on the original investment dollar and the remaining portfolio companies have a valuation of 94 cents on the dollar at the 3-year mark. The vintage year 1999 funds have returned 20 cents on the original investment dollar with remaining portfolio companies having a valuation of 43 cents on the dollar at the 3-year mark. Only time will tell if these younger funds will meet the expected long- term return threshold of 15-20%. 3. Figure 3. Results for Selected Vintage Years--Three Years from Inception Venture Funds MeasurementRealized UnrealizedTotal Return (Vintage Year)Date (3 years TVPI=DPI +RVPIfrom inception)(times) Year ofReturn ReturnFund(DPI)(RVPI)Formation (times)(times)198412/31/1987 0.051.001.05199012/31/1993 0.121.021.14199612/31/1999 1.113.854.96199812/31/2001 0.570.941.51199912/31/2002 0.200.430.63 Source: Thomson Venture Economics/National Venture Capital Association DPI (distributed to paid-in) = ratio of distributions paid out to investors to the original invested capital RVPI (residual value to paid-in) = ratio of remaining portfolio holdings as valued by the venture firm to the original invested capital TVPI (total value to paid-in) = ratio of distributed and undistributed portfolio value to the original invested capitalThe National Venture Capital Association (NVCA) represents over 470 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.Thomson Venture Economics, a Thomson Financial company, is the foremost information provider for equity professionals worldwide. Venture Economics offers an unparalleled range of products from directories to conferences, journals, newsletters, research reports, and the Venture Expert 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 a long-standing relationship 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. For more information about Venture Economics, please visit www.ventureeconomics.com. Thomson Financial Thomson Financial (www.thomsonfinancial.com), is a US$1.6 billion provider of information and technology solutions to the worldwide financial community. Through the widest range of products and services in the industry, Thomson Financial helps clients in more than 70 countries make better decisions, be more productive and achieve superior results. 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