DE-MYSTIFYING TECHNOLOGY VENTURE CAPITAL 2000 Arjun Gupta Founder & Chief Believer (CEO)

1. DE-MYSTIFYING TECHNOLOGY VENTURE CAPITAL 2000 Arjun Gupta Founder & Chief Believer (CEO) TeleSoft Partners www.telesoftvc.com

2. KEY MESSAGES • No better time to start a solid communications company – phenomenal infrastructure build-out worldwide. Carrier capital expenditures worldwide exceeded $100+BN in 1999. • Plenty of diverse sources of capital at all stages – angels, traditional VCs, industry focused funds, mega-funds, hedge funds, corporate funds, buyout funds, etc. • There are mega opportunities to build high-quality, large companies, either independently or with strategic acquisitions. • Stick-to-the-knitting • Do-your-own-homework • Blow-it-out-of-the-ballpark www.telesoftvc.com

3. THE MACRO TELECOM OPPORTUNITY Source: International Telecommunications Union; McKinsey; World Bank ~1995-1996. From TeleSoft-I Investment Proposal (8/1/98). www.telesoftvc.com

4. KEY SEGMENTS IN COMMUNICATIONS ROUTING & SWITCHING SEMICONDUCTORs , TOOLs , OTHER • Core • Edge • QoS BROADBAND SERVER & STORAGE WIRELESS ARCHITECTURES NEXT • p - t - p • QoS GENERATION • p - t - m - p • SAN & NAS NETWORKS • Qwest, Level 3, Hermes • LMDS, MMDS, PCS TRANSMISSION NETWORK • CLECs , CAPs SYSTEMS APPLICATIONS • DWDM • New s/w category • Opto - electronics • Internet NETWORK MIDDLEWARE TERMINATION & SERVICES • Integrated Access • NMS & OSS • CPE/CTE/NTE • “ Black hole” www.telesoftvc.com

5. RECENT TECHNOLOGY VC INDUSTRY DYNAMICS HEDGE FUNDS: $10BN-$20+BN CORPORATES: $5BN-$10+BN • Pequot • Soros • Galleon • Microsoft • Cisco • Intel • MCI • Frontier • BT/AT&T CROSSOVER FUNDS: $15BN-$20+BN • Meritech • Bowman • Seligman • Attractor • TCV • ICP • General Atlantic • Amerindo • Madison Dearborn • $50~$100BN ENTREPRENEURS ANGELS: ~$1+BN MEGA-VCs: $10BN-$15+BN • Oak • Spectrum • Battery • Benchmark • Kleiner Perkins • Redpoint • Sequioa • Accel LBOs: $20+BN • Forestman Little • TPG • KKR • Hickes Muse • Thomas Lee • Carlyle Group • Welsh Carson TRADITIONAL VCs: ~$5+BN • <$250MM funds www.telesoftvc.com

6. COMPETITIVE POSITIONING MATRIX FOR EXISTING PLAYERS www.telesoftvc.com

7. KEY VALUE FROM YOUR VC • $$$$$$ follow-on financings • Recruiting management, board and advisors • Product roadmap • Corporate partnerships • Anchor carrier customers & beta sites INCREASING IMPORTANCE www.telesoftvc.com

8. EXAMPLE VC INVESTMENT STRATEGY & PHILOSOPHY www.telesoftvc.com

9. THE VC’S CHALLENGE AT A GOOD COMMUNICATIONS FUND TeleSoft Guess Estimate: Funnel = ~100% or ~700 deals Explored = ~20% or ~140 deals Pursued = ~10% or ~70 deals Consummated = ~5% or ~30 deals Lost = ~5% or ~30 deals ENORMOUS DEAL FLOW OF GREAT IDEAS + GREAT TEAMS www.telesoftvc.com

10. CAPITAL SHOULD BE ONE OF SEVEN LEVERS FROM YOUR VC www.telesoftvc.com

11. FOCUS ON BUILDING A GREAT COMPANY, DON’T WORRY ABOUT EXITS 1,243 = 100% U.S. PUBLIC MARKETS & QUALITY ACQUIRORS LIKE CISCO OR NT WILL BE THERE FOR HIGH-QUALITY COMPANIES 70% 16,528 private companies funded 22% Public Companies 8% Acquired Out-of-Biz Tech IPOs 1/1/80 – 3/31/98 3/31/99 Snapshot Source: Morgan Stanley www.telesoftvc.com

12. KEY SUCCESS FACTORS IN CHOOSING YOUR VC • $$$ Capital (all the same!) • Knowledge in your space • Contacts in your space • Chemistry with your team INCREASING IMPORTANCE www.telesoftvc.com