We believe that the next few years is an exceptionally attractive period for venture capital with the adoption of Internet technologies creating huge new disruptions and opportunities in the areas of:

• Wireless and IP convergence technologies
• Media, entertainment and lifestyle applications
• Plug-and-play via appliance or service models

These sectors will drive tremendous returns for investors for three reasons. First, broadband penetration has reached a critical mass, reaching more than 60% of US homes, enabling the efficient delivery and marketing of IP-based applications that was not economically viable in the 1990s and earlier this decade. Second, companies developing products in today’s environment can purchase or license “best of breed” components available at a fraction of the cost in the past, allowing them to focus on developing their core business in a more capital efficient manner. Third, the communications, media and IT communities have recently coalesced around a number of technical standards for the secure and efficient delivery of applications and content over IP-based networks, creating interoperability between vendors and service providers in a way not experienced in the past.

Opportunities include the continued evolution of pervasive computing which uses the Internet as a business environment where large successful companies can be built to address new markets in a relatively short period of time. Growth opportunities abound for developing next generation on-demand, business enterprise applications, improved Internet infrastructures, consumer Internet sites and other security and storage oriented solutions that support this ongoing revolution.

Analysts predict that a few years from now, more data will be delivered to wireless than wired devices. Couple this with the billions of dollars invested by carriers in additional spectrum licenses and their need to monetize these assets and there should be many opportunities for new companies to provide the equipment and services to address these two simultaneous trends.

In networking and data communications, data traffic continues to grow at an exponential rate and “pipelines” are being continually expanded so that ever larger streams of digital information can be delivered. The convergence of voice and data to IP through MPLS offer significant venture opportunities. While carrier spending will be slower in the near term, enterprises supporting remote work forces and managing massive data centers will continue to require solutions that make the enterprise more competitive and cost effective.