Private Holdings (6/30/2000):
Private Company Equity Holdings of Comdisco Ventures Group
as of June 30, 2000
Commitments Greater than $3 million
Communications & Networking
2Wire, Inc.
AccessLan Communications, Inc. Mahi Networks, Inc.
MainStreet Networks, Inc.
Mapletree Networks, Inc.
Accordion Networks, Inc.
Agility Communications, Inc.
Airspan Communications Corporation MimEcom, Inc.
New Edge Networks, Inc.
Applicast, Inc. Octave Communications, Inc.
Atmosphere Networks, Inc. Optical Micro-Machines, Inc.
Avici Systems, Inc. Optical Solutions, Inc.
Bandwidth9 Optimight Communications, Inc.
Oresis Communications, Inc.
BridgeWave Communications, Inc.
BrightLink Networks, Inc. Pluris, Inc.
Caly Networks, Inc. Positive Communications, Inc.
Chorum Technologies, Inc. ProactiveNet, Inc.
Cinta Corporation QuantumShift
COLO.COM Quintessent Communications, Inc.
Corvis Corporation Santera Systems, Inc.
Shoreline Teleworks, Inc.
Crescent Networks, Inc.
eConvergent, Inc.
Endgate Corporation SingleSourceIT, Inc.
Equinix, Inc. Speedera Networks, Inc.
eVoice, Inc. dba TalkStar.com Telegis Networks, Inc.
Exterprise, Inc. Telencomm, Inc.
Telera, Inc.
Flashcom, Inc. Tellium, Inc.
Geyser Networks, Inc.
Urban Media, Inc.
Gigabit Wireless, Inc.
Gotham Networks, Inc. Vectris Communications, Inc.
Indus River Networks, Inc. Vertical Networks, Inc.
Video Networks, Inc.
iPass, Inc. Wavtrace, Inc.
Jetstream Communications, Inc.
White Rock Networks, Inc.
Lantern Communications, Inc. Yipes Communications, Inc.
LGC Wireless, Inc. Zaffire, Inc.
Computer Hardware & Semiconductors
Aptix Corporation Silicon Spice, Inc.
Censtor Corporation Siros Technologies
Chip2Chip, Inc. Stream Machine, Inc.
Cielo Communications, Inc. Transmeta Corporation
Gemfire, Inc.
Monterey Design Systems Veridiem, Inc.
Volterra Semiconductor Corporation
Silicon Access Technology, Inc. ZettaCom, Inc.
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Internet
Affinia, Inc. Impresse Corporation
Agillion.com, Inc. Indulge.com, Inc.
Andale, Inc.
Asera, Inc. InPurchase, Inc.
Interactive Transaction Services, Inc.
Autodaq Corporation iOwn Holdings, Inc.
BenefitPoint, Inc.
iProperty.com, Inc.
Bestoffer.com, Inc. IQ commerce Corporation
Bigstep.com
Kinzan.com
BlackHog, Inc.
Blue Nile, Inc. Liaison Technology, Inc.
Lipstream Networks, Inc.
Bowstreet.com, Inc. living.com Inc.
Lucy.com, Inc.
Bravanta.com, Inc. (formerly
BravoGifts.com, Inc.) MetaTV, Inc.
Brigade Solutions, Inc. Miadora, Inc.
Brightware, Inc Mobshop.com, Inc. (formerly
Broadband Sports, Inc. Accompany, Inc.)
Carstation.com, Inc. MoneyLine Network, Inc.
Celarix, Inc.
myCFO, Inc.
Cereva Networks, Inc. Myplay, Inc.
Chip Shot Golf Corporation Myteam.com, Inc.
Christianity.com, Inc. Naisa Systems, Inc.
Naxon Corporation
Circline, Inc.
NetFlix.com, Inc.
ClickRadio, Inc.
NONSTOP Solutions, Inc.
Cohera Corporation
Collabria, Inc. NowDocs.com, Inc.
Obongo, Inc.
comScore Networks, Inc.
Dental X Change, Inc.
Desktop.com, Inc. Ofoto, Inc.
DoughNET Inc. OpenTable.com, Inc.
OurHouse.com, Inc.
Dunk.Net
eBates Shopping.com, Inc. PayMyBills.com, Inc.
perksatwork.com, Inc.
eCoverage, Inc.
eGroups, Inc. Petopia.com, Inc.
Pogo.com Inc.
ePhysician, Inc. Primary Knowledge, Inc.
Embark.com, Inc. PurchasingCenter.com, Inc.
Qpass, Inc.
EqualFooting.com, Inc.
Quickdot Corporation
eSprocket Corporation
essential.com, Inc. Resonate, Inc.
e-STEEL Corporation RocketTalk, Inc.
EthnicGrocer.com, Inc. Sameday.com
Firedrop, Inc.
Firstlook.com, Inc. Scale Eight, Inc.
ServiceLane.com, Inc.
Food.com, Inc. ShoppingList.com, Inc.
Furniture.com, Inc. Shutterfly.com, Inc.
Gator.com Corporation SocialNet.com
Great Entertaining, Inc. StockPower, Inc.
Topica, Inc.
Greenlight.com
HomeGain.com, Inc. Vividence Corporation
WebSwap, Inc.
Homes.com, Inc.
HomeWarehouse.com, Inc. Xtra On-line Corporation
IAM.com, Inc.
iExchange.com, Inc. Zambeel, Inc.
Zoho Corporation
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Life Sciences
Accumetrics, Inc. Eos Biotechnology, Inc.
Acusphere, Inc. FeRx Incorporated
Adesso Specialty Services Idun Pharmaceuticals, Inc.
Advanced Medicine, Inc. Inspire Pharmaceuticals, Inc.
Align Technology, Inc. InterVentional Technologies, Inc.
American WholeHealth, Inc. Kelson Physician Partners, Inc.
PercuSurge, Inc.
Anadys Pharmaceuticals, Inc.
Radiant Research, Inc.
(formerly ScriptGen
TheraSense, Inc.
Pharmaceuticals, Inc.)
Argonaut Technologies, Inc. XenoPort, Inc.
asterion.com, Inc.
Cryogen, Inc.
Cytokinetics, Incorporated
Software & Computer Services
2Bridge Software Luminate Software Corporation
Acta, Inc. MarketTools, Inc.
Allegrix, Inc. Market-Touch Corporation
Angara E-Commerce Software, Inc. NewChannel, Inc.
Annuncio Software, Inc. NightFire Software, Inc.
Arbortext, Inc.
NUASIS Corporation
Broadsoft, Inc. Portera Systems
Corio, Inc.
DataCore Software Corporation Pretzel Logic, Inc.
Docent, Inc. Shym Technology, Inc.
Support.com, Inc. (formerly Tioga
eALITY, Inc. Systems, Inc.)
eDocs, Inc. TANTAU Software, Inc.
Efficient Market Services Torrent Systems, Inc.
Flashpoint Technology, Inc. Trellix Corporation
Instill Corporation TriStrata, Inc.
Integral Development Corporation ValiCert, Inc.
Linguateq, Incorporated
LinuxCare, Inc. Virtual Growth Incorporated
Worldstreet Corporation
Yantra Corporation
LiveCapital, Inc.
Other Products & Services
Advantage Schools, Inc.
AnyTime Access, Inc. cEverything Corporation
Gazoontite
Hybrid Fund
Comdisco formed Hybrid Venture Partners, L.P., a Delaware limited
partnership, in October 1999 to fund venture debt and direct equity financing
products for the benefit of Comdisco Ventures group. Comdisco committed $250
million as a limited partner to Hybrid Fund, all of which has been invested in,
or committed to, customers. The Hybrid Fund is now closed and will not seek
additional capital commitments beyond that $250 million. Hybrid Fund began
funding direct equity financings in the second quarter of fiscal 2000 and began
funding venture debt during the third quarter of fiscal 2000. Comdisco Ventures
group intends to transfer those venture debt transactions it originated during
the second and third quarters of fiscal 2000 to Hybrid Fund in the fourth
quarter.
Comdisco Ventures group intends to continue to fund venture leases and
equipment loans directly.
As the sole limited partner, Comdisco has committed 99% of the capital of
Hybrid and receives 99% of that part of the profits and losses allocated based
on capital commitments. Comdisco has
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allocated its interests in Hybrid Fund to Comdisco Ventures group as part of
the implementation of the tracking stock structure. Items of profit and loss of
Hybrid Fund attributable to the short-term investment of idle cash will be
allocated among the partners of Hybrid Fund in proportion to their respective
capital commitments. All other items of net profit of Hybrid Fund will be
allocated among Comdisco, the sole limited partner and the general partner, as
follows:
. First, 100 percent to all the partners in proportion to their
respective capital commitments until each partner has been
allocated net profits representing an 8 percent priority return on
its unreturned capital contributions.
. Next, 100 percent to the general partner until cumulative
allocations of net profit over the term of Hybrid Fund have been
made:
(1) 80 percent to all the partners in proportion to their
respective capital commitments; and
(2)20 percent to the general partner as a carried interest.
. Next, 80 percent to all the partners in proportion to their
respective capital commitments and 20 percent to the general
partner as a carried interest.
Net losses of Hybrid Fund will be allocated first to reverse prior
allocations of net profits and thereafter to the partners in proportion to
their respective capital commitments.
Distributions by Hybrid Fund to its partners may be made in cash or in
securities.
The general partner of Hybrid Fund is Rosemont Venture Management I,
L.L.C., a Delaware limited liability company. The managing members of the
general partner primarily responsible for Hybrid Fund's investment activities
initially will include James P. Labe and Geoffrey L. Tickner, members of
management of Comdisco Ventures group. Comdisco also holds a non-managing
membership interest in this general partner, an interest it has allocated to
Comdisco Ventures group as part of the implementation of the tracking stock
structure, and is entitled to participate in the general partner's profits and
losses. Prior to the offering of Comdisco Ventures group stock, Comdisco
generally receives 30% of the profit and losses of the general partner. After
the offering of Comdisco Ventures group stock, Comdisco generally will receive
49% of the profits and losses of the general partner. In addition to its share
of the profits and losses of Hybrid Fund, the general partner will receive an
annual management fee equal to 2% of the aggregate committed capital of Hybrid
Fund. Beginning in 2005, this fee will be equal to 2% of the aggregate cost
basis of securities held by Hybrid Fund and reasonable reserves for the payment
of fund expenses and the purchase of portfolio securities under pre-existing
binding commitments.
Comdisco has the right to participate in a manner and on an economic
level similar to its participation in Hybrid Fund in any fund in which any of
the members of current senior management responsible for its investment
activities are substantially involved in the future, provided that Comdisco
Ventures group stock remains outstanding and Comdisco commits to provide at
least 25% of the committed capital of that subsequent fund. Comdisco intends to
allocate these interests to Comdisco Ventures group should they become
available.
Instead of receiving payments of principal and interest and loan fees
associated with venture debt and the payments of sales proceeds associated with
its direct equity holdings, Comdisco, Inc. will receive, and has allocated to
Comdisco Ventures group, returns from venture debt and direct equity financings
held by Hybrid Fund through its limited partnership interests in Hybrid Fund
and membership interests in the general partner.
Financing Procedures
The successful execution of Comdisco Ventures group's business and
operating strategy is dependent upon its underwriting and investment policies
and procedures.
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Comdisco Ventures group reviews business plans generated by its referral
network in order to identify potential customers. After identifying potential
customers that it believes merit further investigation, Comdisco Ventures group
evaluates those potential customers in more depth. This review process,
described below, forms the basis of Comdisco Ventures group's decision to fund
or reject a lease, loan and/or direct equity financing.
Preliminary Evaluation
Comdisco Ventures group meets with the potential customer's management
and performs a preliminary investigation of its management, business
operations, and prospects. Comdisco Ventures group generally consults with and
gathers information from a wide variety of industry sources to assess the
prospects of a potential customer and its industry. Comdisco Ventures group
reviews the commitments of the existing venture capitalists (including their
intention to participate in future financing rounds) and the potential
customer's capital structure. The customer also provides projected financial
statements, a description of its market and competitive landscape, and a
description of operations (marketing and sales, research and development,
employee issues, and so forth). If Comdisco Ventures group is satisfied with
its preliminary investigation of management, operations and prospects, it
typically issues a term sheet outlining a proposed transaction. After reaching
an agreement on the term sheet, Comdisco Ventures group begins due diligence.
Due Diligence
Comdisco Ventures group's due diligence may initially include on-site
visits to the potential customer's headquarters and other facilities,
interviews with key management and board members, references for senior
management and discussions with industry research analysts, other industry
participants, customers and suppliers where appropriate. Comdisco Ventures
group may also review the potential customer's charter, capital structure,
subsidiaries, assets, liabilities, employee plans, litigation, tax matters and
other relevant legal documentation.
Portfolio Monitoring and Risk Management
Comdisco Ventures group has three primary tools to monitor the
performance and quality of its financings:
. Comdisco Ventures group monitors the progress of product
development, cash burn and overall adherence to the business plan;
. Comdisco Ventures group maintains regular contact with management
teams to discuss business enrichment, cash flow needs and
potential financing and other capital structure issues; and
. Comdisco Ventures group reviews various financial statements
received from its customers on a quarterly basis.
Workouts
All loans that are 60 days or more overdue are classified as a work-out
account. Whenever feasible, Comdisco Ventures group attempts to use its
position as a lender and equity investor to work with other investors and
lenders to rehabilitate, rather than liquidate, defaulted loans. Comdisco
Ventures group's primary objective at this stage is to minimize its loss on the
lease and loan obligations.
Loss experience
Since the initiation of its financing activities, credit losses have been
less than 3% of Comdisco Ventures group's total commitments originated. This
percentage does not reflect any significant loss experience from Comdisco
Ventures group's subordinated debt products, which were only first introduced
on a large scale beginning in fiscal 1998.
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Comdisco Ventures group believes that its low level of credit losses are
largely a result of its (1) transaction structuring experience, (2) due
diligence procedures specifically designed to analyze transactions with
emerging growth companies, (3) extensive monitoring and review of these
transactions, and (4) corrective approach to addressing delinquency. Comdisco
Ventures group's loss experience has also benefited from the experience and
diligence of those established venture capital firms that typically precede
Comdisco Ventures group into a financing relationship with its customers.
Competition
Comdisco Ventures group's primary competitors include financial
institutions, equipment lessors and manufacturers, venture capital firms, and
non-traditional lenders that provide debt and/or equity financing to emerging,
high technology companies. The competition that Comdisco Ventures group faces
is situation-specific and depends, in part, on the issues that concern the
customer. For example, a customer that has a financing need of several hundred
thousand dollars, or that is unconcerned about restrictive covenants, may find
a venture-oriented bank more attractive. Or, a customer that needs a large
quantity of equipment from one specific vendor may be able to negotiate vendor
financing that is more attractive than alternative financing offered by
Comdisco Ventures group. Some non-traditional funding sources, such as
distribution channel partners, joint venture partners, and owners of
complementary technologies, may be motivated to provide attractive financing as
one part of a larger collaboration. An increasing number of public companies
also provide substantial capital to companies who might otherwise be candidates
for Comdisco Ventures group's financing products. Comdisco Ventures group
believes it competes effectively with these competitors based on its creative
deal structuring and flexibility, willingness to craft individual solutions to
financing needs, reputation, quality of service, ability to leverage its
relationship with Comdisco, and ability to respond rapidly. |
