1999 Arizona Venture Capital Impact Study About to Make Waves in State; State Lawmakers Targeted for Real Investment Impact.

PHOENIX and TUCSON, Ariz.--(BUSINESS WIRE)--June 10, 1999--

The waves of venture capital investments are sweeping the Silicon Desert, and they're heading right for state lawmakers.

The Greater Phoenix Chamber of Commerce and the Arizona Department of Commerce are ready to educate state legislators on the importance of venture capital as a viable investment tool, and an economic development strategy that generates value far beyond the initial return on investment. Moreover, that this value exists statewide and affects multiple industries.

Currently, Arizona is one of only a handful of states in the country that does not invest in venture capital as an asset class.

Today at press briefings in Phoenix and Tucson, the final results from the 1999 Arizona Venture Capital Impact Study were presented by The Zermatt Group, in conjunction with its advisory partner, Dr. Ian MacMillan, director of the Snider Entrepreneurial Center at the Wharton School of the University of Pennsylvania.

The Zermatt Group is a consulting firm that specializes in the analysis of issues relating to venture capital. Today's final report was presented by Sean Young, CEO of The Zermatt Group, and associate Justin Cook.

An analysis of 1997's $122 million of venture capital investment in Arizona(a) showed the following:

-- These investments had an "economic multiplier" effect of $6.54

for every dollar invested, generating an aggregate economic

impact in revenue realized by the state of nearly $800 million. -- More than 3,400 new jobs were created by these investments, with

most of these anticipated to be higher paying than the average

Arizona job. -- As a result of these investments, the earnings of Arizona

households are projected to increase by approximately $290

million.

Jackie Vieh, director of the Arizona Department of Commerce, said the time has arrived for the state to recognize the considerable impact of venture capital. She noted that venture-backed companies have a much higher success rate than non-venture backed companies.

According to the study and a PricewaterhouseCoopers finding, the typical five-year-old venture-backed company generates nearly 100 jobs. However, that venture backed company needs $18.5 million to reach that five-year milestone.

"Arizona currently does not have a venture capital industry that can support this level of investment," Vieh said. "Arizona must get behind the venture capital industry in order to support the state's entrepreneurial economy, which is critical to Arizona's future."

Imperial Bank's Steve Wallis, a past chairman of the Arizona Venture Capital Conference (AVCC), announced the following recommendations based on the study's findings that will be championed by the conference's committee, the Greater Phoenix Chamber, and a coalition of public and private sector organizations:

-- As already provided for in existing legislation, encourage state

to invest up to the 1% of the $19.5 billion state pension fund in

venture capital. More than 40 other states either invest pension

fund moneys or have publicly funded state initiatives to provide

for venture capital investments. These funds would be invested

directly in venture capital limited partnerships or in so called

"fund of funds," which invests in several venture capital limited

partnerships. -- Encourage state lawmakers to enact new legislation to facilitate

direct investment in venture capital funds, comparable to the

U.S. Partnership for State Investment in Oklahoma. -- Encourage state to enact new tax legislation to provide favorable

treatment for venture capital gains. This state legislation would

parallel the existing federal Internal Revenue Code Sections 1202

and 1045 that provide tax exemption for gains from long-term

investments in qualified small business.

Various state legislators and political leaders present at today's briefing included Senator Mark Spitzer, Representatives Barry Wong, Richard Kyle, Roberta Voss and Ken Cheuvront, and Maricopa County Supervisor Fulton Brock.

Other supporters present included Robert Blaney, district director of the U.S. Small Business Administration; Steve Harris with TDH Ventures, and William Verdini with Arizona State University, both of whom served in an advisory capacity to the AVCC.

The Tucson briefing was sponsored by the University of Arizona and the Greater Tucson Economic Council. Larry Hecker, partner with the law firm Hecker, Phillips and Zebb, was an additional featured speaker at the Tucson briefing.

Valerie Manning, president and CEO of the Greater Phoenix Chamber, said "venture capital is the fuel that feeds the 'entrepreneurial economy' in our state. The dramatic results highlighted by this study make it impossible for Greater Phoenix and Arizona's business and political leadership to continue to ignore the existing and potential impact of this economic development strategy."

The following agencies and firms supported this study: Greater Phoenix Chamber of Commerce; Arizona Department of Commerce; Arizona Venture Capital Conference; Arizona State University; University of Arizona; Arthur Andersen; Deloitte & Touche; Ernst & Young; KPMG; PricewaterhouseCoopers; Tucson Electric Power; Snell & Wilmer; O'Connor Cavanagh; Bank One; Imperial Bank; LaSalle Business Credit; Pima Community College; Bowne of Phoenix; and the Enterprise Network.

The Arizona Venture Capital Conference is a program of the Greater Phoenix Chamber of Commerce held annually in December in cooperation with numerous public and private companies.

Business Wire, the global leader in corporate news dissemination, has been named official wire service for the 1999 Arizona Venture Capital Conference. Business Wire will issue news to the investment community and post related information on a special Web page for the show via the Business Wire Trade Show and Conference News site (http://www.tradeshownews.com).

(a) 1998 saw $141 million in venture capital investment in Arizona. -0-

(See following bio list for follow up interviews)

                 Page 2 of 1
               1999 Arizona Venture Capital Impact Study
                   Media Briefing - Phoenix & Tucson
                        Thursday, June 10, 1999
           Greater Phoenix Chamber of Commerce / Arizona Inn

                          Speaker Biographies

Robert Blaney is a district director of the U.S. Small Business
Association and works from the SBA's Phoenix office. He can address
questions about the SBA's SBIC program and its New Markets
initiatives. Blaney may be reached at 602/640-2288.

Justin Cook is an associate with The Zermatt Group. Based in
Philadelphia, Pennsylvania, The Zermatt Group is a consulting firm
that specializes in the analysis of issues relating to venture
capital. The Zermatt Group prepared the 1999 Arizona Venture Capital
Impact Study, along with its advisory partner, Dr. Ian MacMillan,
director of the Snider Entrepreneurial Center at the Wharton School of
the University of Pennsylvania. Cook may be reached at 215/735-7326.

Steve Harris is a managing partner with TDH Private Equity Management
and helped advise the state of Pennsylvania with respect to venture
capital investment. He served as an advisor to The Zermatt Group.
Harris may be reached at 610/526-9970.

Larry Hecker is a senior partner with the law firm Hecker, Phillips &
Zebb in Tucson. He is a past chairman of the Greater Tucson Economic
Council, and the recent chair of GTEC's Business Finance Forum. He can
answer questions about the venture capital industry's impact in
southern Arizona. Hecker is speaking at the Tucson briefing and may be
reached at 520/798-3803.

Paul Huleatt is vice president of business development for LaSalle
Business Credit, Inc. He served as the AVCC's liaison to The Zermatt
Group in coordinating the development of the 1999 Arizona Venture
Capital Impact Study. Huleatt is speaking at the Tucson briefing and
may be reached at 602/263-4124.

Valerie Manning is president & CEO of the Greater Phoenix Chamber of
Commerce. She has played a leading role in both the creation of the
Arizona Venture Capital Conference and the economic development of the
greater Phoenix region. She may be reached at 602/495-6460.

Russell Mitchell is director of the Arizona Venture Capital Conference
and director of business capital for the Greater Phoenix Chamber of
Commerce. He played a leading role in coordinating the development of
the 1999 Arizona Venture Capital Impact Study. Mitchell is speaking at
the Tucson briefing and may be reached at 602/495-6488.

Sean Nevins is CEO of The Zermatt Group. Based in Philadelphia,
Pennsylvania, The Zermatt Group is a consulting firm that specializes
in the analysis of issues relating to venture capital. The Zermatt
Group prepared the 1999 Arizona Venture Capital Impact Study, along
with its advisory partner, Dr. Ian MacMillan, Director of the Snider
Entrepreneurial Center at the Wharton School of the University of
Pennsylvania. Nevins may be reached at 215/735-7326.

Jackie Vieh is the director of the Arizona Department of Commerce. An
advocate of the venture capital industry's impact on the state's
entrepreneurial business community, Vieh coordinated the ADOC's
support of both The Zermatt Group and the AVCC. Vieh may be reached at
602/280-1306.

Steve Wallis is a senior vice president with Imperial Bank - Arizona,
and a past AVCC Chairman. He played a leading role in coordinating the
development of the 1999 Arizona Venture Capital Impact Study. Wallis
may be reached at 602/417-1102.