Vertex Management Israel Venture Capital Funds January 18

Vertex Management Israel Venture Capital Funds January 18, 2001 1

The Vertex Group Manages over US$ 1 B in 7 VC funds since 1983 Offices in: Redwood City, CA Singapore Taipei Tel Aviv Beijing London Hong Kong Invested in over 245 companies of which 82 have exited via M&A or IPO on: NASDAQ Nouveau Marché EASDAQ Singapore Stock Exchange Neuer Markt Taiwan Stock Exchange Vertex Israel manages US$ 250 M in 3 Israeli VC funds 2

Investment Strategy - General Focus on seed & early stage Israeli / Israeli-related Target investment transactions leadership Investment size of US$ 2 M to US$ 5 M and up to US$ 10 M per company (in special cases upper limit is higher) Invest in companies that contribute to the growth of the Internet Economy and Information Networking: Bitways Communications Software & Enhanced Services Internet and E-commerce Applications Emerging IT Technologies 3

Investment Strategy – Portfolio Focus Bitways: Intelligent networks Broadband access (Cable, x. DSL, fixed wireless) Broadband networking Photonics (components & systems) Internet appliances Voice & data convergence Communications Software & Enhanced Services: Services OSS Streaming & Compression Security Qo. S and Traffic Management Enhanced services enabling software platforms Applications: Content delivery networks Peer to Peer distributed processing Mobile-commerce enabling technologies Emerging image and video distribution technologies Special opportunities in core Information Technologies 4

Exits Statistics for the last 5 years in Israel : 60 -80% Mergers & Acquisitions (M&A) 20 -40% Initial Public Offerings (IPO) 5

M&A Activity in Israel *FY 2000 is calculated until December Statistics from Dolev&Abramovitch 6

IPO Activity in Israel * FY 2000 is calculated until December Statistics from Dolev&Abramovitch 7

Israeli Hi-Tech M&A and IPO Activity 1995 -2000 Year No of deals Amount in $M Year Aggregate 1995 1996 1997 1998 120 559 190 413 6 19 9 9 1999 2000 1797 4290 16 26 1995 1996 1997 1998 1999 4 6 3 11 16 168 633 543 2527 2812 2000* 25 11627 Amount Raised No. IPOs Statistics from Dolev&Abramovitch 8

M&As An M&A is a real alternative M&A is not a default to IPO In the long term, failure rate is high for both 9

Factors for M&As Management difficulties Distance from markets Availability of resources Political situation 10

M&As- Best of Both Worlds The acquired company becomes the Israeli arm of this larger, established foreign company and enjoys the following benefits: Financial backing Name recognition Market and distribution channels that would have been next to impossible to have achieved alone 11

Best of Both Worlds cont’d Increased employment in Israel Increased economic activity in Israel Increased opportunities for stakeholders Revenues for shareholders 12

M&As Stock or Cash? 13

Telegate Develops and markets “Multi. Gate” which enables CATV operators to offer telephone and data services over their HFC infrastructure Current customers in Belgium, Germany & Pacific Rim with an aggregate sales potential of US$ 150 M ECI and GI were strategic partners and shareholders Exit: Company sold to Terayon Inc. for US$ 400 M 14

Telegate Ltd. sold to Terayon December 1999 100 employees $3 M sales 15

Tradeum XML-based Software engine for hosted on-line exchanges Seed investment Company recruited a US-based management team In 8 months the company staff grew from 10 to 100 Exit: Company was sold to Vertical. Net Inc. for US$ 478 M 16

Tradeum sold to Vertical. Net April 2000 60 employees (of 150 int’l) $ 0 sales 1999 17

More. Com Interactive TV infrastructure software The President was a senior executive in GI and Philips in the Cable and HDTV businesses Strategic investments by Divicom/C-Cube Invested in seed & 2 follow-on investments Exit: Company was sold to Liberate for US$ 561 M 18

Morecom sold to Liberate April 2000 46 employees $100 K revenues 1999 19

Vision. Tech Develops and markets advanced MPEG-2 Coding VLSI components for PVR, DVR, Pause. TV and Internet STBs Highest quality MPEG-2 encoding silicon realization Major design wins and customer signup with: Web. TV AOL-TV GI Scientific Atlanta Haupauge Vestel Replay. TV Panasonic Fast Exit: Company was sold to Broadcom Corp. 20

Vision. Tech sold to Broadcom December 2000 37 employees $1. 5 M sales 1999 21

Portfolio Companies

Contact Information: www. vertexisrael. co. il 1 Ha’Shikma St. P. O. Box 89 Savyon 56530 Israel Tel: +972 3 535 7621 Fax: +972 3 535 7622 Mr. Yoram Oron, President yoron@vertexmgt. co. il Dr. Gideon Shichman, VP gideon@vertexmgt. co. il