California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

According to the MoneyTree Report by PricewaterhouseCoopers and the National Venture
Capital Association (NVCA), based on data from Thomson Reuters, venture investments in
2008 represented an 8 percent decrease in dollars and a 4 percent decrease in deal volume
from 2007.

Venture capitalists invested $28.3 billion in 3,808 deals in 2008, marking the first yearly
decline of total investments since 2003.

The decline in investments over the prior year is spread across industries and stages of
development, with some notable exceptions. Dollars invested in the Clean Technology
sector grew more than 50 percent in 2008. Companies in the Seed Stage of development
also received more money in 2008, reaching the highest level seen since 2000.

Sector and Industry Analysis
The Life Sciences sector (Biotechnology and Medical Device industries together) dropped
15 percent in 2008 to $8.0 billion, compared to $9.3 billion invested in 2007. However, the
number of Life Sciences deals did not experience as big of a decline, dipping only 3 percent
to 853 deals in 2008 from 883 deals in 2007. For the year, Life Sciences accounted for 28
percent of all venture capital invested and retained its position as the number one investment
sector for 2008.

Software sector also declined but were much smaller with $4.9 billion invested into 881
companies in  2008, representing declines of 10 percent and 7 percent, respectively, from
2007.

The Clean Technology sector, which represented seven of the ten largest deals of the year,
experienced significant growth in 2008 with $4.1 billion invested in 277 deals. This investment
level represents a 52 percent growth in dollars and a 16 percent growth in deal volume over 2007
when $2.7 billion was invested in 238 companies. Clean Technology investing accounts for 15
percent of all venture capital investing in 2008 compared to 9 percent in 2007.

Venture investment in Internet-specific companies of $4.9 billion going into 851 deals in 2008
was relatively flat from 2007 when $5.0 billion went into 825 deals. 'Internet-specific' is a discrete
classification assigned to a company whose business model is fundamentally dependent on the
Internet, regardless of the company's primary industry category. These companies accounted for
17 percent of all venture capital dollars in 2008, approximately the same percentage as in 2007.

The Media & Entertainment industry increased 3 percent to $2.0 billion going into 407 deals in
2008, an increase of 9 percent from the prior year. Investments in IT Services also jumped in 2008,
rising 17 percent in 2008 to $1.8 billion invested into 262 deals, a 16 percent increase from 2007.
Both Telecommunications and Semiconductor investing, both at $1.7 billion fell to 11- and 6-year
lows, respectively.

Stage of Development
Investments into Seed Stage companies increased substantially in 2008, jumping 19 percent from
the prior year to $1.5 billion going into 440 companies, compared to $1.3 billion going into 450
companies during 2007. This marks the highest annual total of dollars captured by Seed Stage
companies since 2000.

Early Stage investments remained relatively flat in 2008 with $5.3 billion going into 1,013 deals,
compared to $5.5 billion invested into 1,036 deals in 2007. But despite the drop in investing during
the fourth quarter, the percentage of total deals in Seed and Early Stage investments combined
was 29 percent in 2008, up from 25 percent in 2007.

Later Stage deals in 2008 saw declines of 13 percent and 3 percent respectively, as $10.8 billion
was invested into 1,177 deals.

Expansion Stage investments decreased in 2008 with $10.6 billion going into 1,178 deals, drops
of 9 percent and 6 percent, respectively, from the prior year.

I am Tim Johnson and this has been the California Business Minute.