Introduction to vSpring
Mike Connolly
July 15, 2004
© vSpring Capital, 7/15/04 All Rights Reserved.
Firm Overview
 Offices: Salt Lake City, Los
Alamos
 Fund I: $120M, established in
2000
• Top quartile performance
• 24 portfolio companies
• 3 exits to date (2 acquisitions, 1
IPO)
• several others profitable / poised for
exit
© vSpring Capital, March 26, 2004 All Rights Reserved.
 Fund II: $150M target
• beginning to invest
• final close this fall
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"Typical" deal profile
 Early-stage
 Focus: IT & life sciences
• but will consider promising opportunities in any area,
e.g. energy, nanotech, security, communications
 Region: 75% of deals within Utah or NM
 Lead investor
• recruit strong co-investors for funding continuum
 Pre-money valuation < $6M (typical, but varies widely)
 Initial investment of $1-2M and ownership >20% (" " " ")
• will make smaller seed investments in select cases
• deploy $4-6M over life of deal (i.e. prior to exit)
© vSpring Capital, March 26, 2004 All Rights Reserved.
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How do we assess an opportunity?
 Market
• Large market size and market pain
• Pros/cons of each competing solutions -- available or under dvlpt
 Management
• Passionate entrepreneur -- experienced or coach-able
• We can help recruit other key players
 Technology
• Risk that it will work vs. investment required to find out
• Strength of proprietary position
 Financial
• Attractive valuation
• Ability to attract quality co-investors as needed/appropriate
© vSpring Capital, March 26, 2004 All Rights Reserved.
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New Mexico activities
 Los Alamos office opened 8/03 by vSpring founder Paul
Ahlstrom and associate Clarke Miyasaki
• Mike Connolly assumed primary responsibility in 5/04
(continue to be assisted by Paul/Clarke)
 2 NM investments to date
• Exagen Diagnostics -- $5.4M round 1/04
– prognostic cancer tests using genomic markers
• Protalex -- led $12.7M round 9/03
– therapeutic drugs for autoimmune disease
• additional opportunities in diligence
© vSpring Capital, March 26, 2004 All Rights Reserved.
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The vSpring Team
 Extensive start-up / operating
experience
 Strong and broad industry
relationships
 Deep domain knowledge
 Stable team with successful
history of working together
 High ratio of professionals to
funds under management
• Individual attention to
companies
© vSpring Capital, March 26, 2004 All Rights Reserved.
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Directors/Principal are successful serial entrepreneurs
Paul Ahlstrom Founder/CEO of Knowlix -- acq'd by Peregrine
Systems
Chair of Utah Technology Alliance
Ed Ekstrom
Founder of Cericor -- acq'd by HP
Intel VP; Chairman of Utah IT Assoc.
Dinesh Patel
Cofounder/CEO of TheraTech -- acq'd by Watson
Pharm
Cofounder/Chair of Salus Therapeutics -- acq'd by
Genta
Scott Petty
COO of Zuka Juice -- acq'd by Jamba Juice
Bain & Co.
Greg Warnock Founded Precision Data Link -- acq'd by Profit
Recovery
Founder of Advion BioScience, Texsem Labs
Mike Connolly  
© vSpring Capital, March 26, 2004 All Rights Reserved.
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Mike Connolly, Principal in New Mexico office
Experience
• Cofounded 7 biomedical companies worth >$400M
– Novacept acquired for $325M
– Cohesion acquired for $40M
• Tech Commercialization Executive at Los Alamos Nat'l Lab
– Founded Tech Mat Fund -- an internal “venture” fund to mature
early-stage Lab technologies with strong commercial potential
• Navy officer (Lt. Commander) for 7 years
• Taught physics at U.S. Naval Academy for 3 years
• Licensed Professional Engineer (P.E.)
Education
• Stanford MBA, M.I.T. MSME, Naval Academy BSME
© vSpring Capital, March 26, 2004 All Rights Reserved.
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Strong support team of investment professionals
© vSpring Capital, March 26, 2004 All Rights Reserved.
 JD Gardner, Associate
• Goldman Sachs, McKinsey, Harvard MBA
 Clarke Miyasaki, Associate
• Ford Motors, Freeport, Connect2.com
 Gavin Christensen, Associate
• Monitor Group, Fidelity Investments
 Ken Krull, Associate
• Knowlix, Folio, Trend Micro
 Matt Hoffman, Analyst
 Dennis Wood, Director of Human Capital
• Diestel Group, Prince Perelson & Assoc.
 David Anderson, CFO
• Ernst & Young, CFO of 3 prior cos.
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Emerging Markets: Utah in 1990s ~ NM in 2000s
Utah market in 1990’s
vSpring contribution
• Few early-stage investments;

disconnected angel community
• Unsophisticated entrepreneurs
.

Active mentoring of
entrepreneurs throughout
investment process

Hired top recruiter in Utah to
assist portfolio companies

Recruited Wilson Sonsini to Utah

Partners experienced in tech
transfer

Aided UTA, et. al. reg'l dvlpt orgs
• Lack of qualified management
.
• Infrastructure gaps, e.g. legal
• Not leveraging research
institutions
• Need for community
development
© vSpring Capital, March 26, 2004 All Rights Reserved.
Partners brought deep
experience in both operations &
angel investing
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Portfolio value-add: management recruiting
 17 senior execs (CEO, CTO,
CFO)
 17 vice presidents
 10 other company positions
 12 board of directors
© vSpring Capital, March 26, 2004 All Rights Reserved.
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Portfolio value-add: co-investor network
© vSpring Capital, March 26, 2004 All Rights Reserved.
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For more info
www.vspring.com
1200 Trinity Drive, Suite 420
(in Los Alamos National Bank
bldg.)
Los Alamos, NM 87544
tel: 505.663.4030
fax: 505.663.4034
© vSpring Capital, March 26, 2004 All Rights Reserved.
Mike Connolly
mike@vspring.com
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