Atlas Venture Announces Reduction of Atlas Venture VI to $600 Million; Firm to Focus on Europe and Boston.

Business Editors

BOSTON and LONDON--(BUSINESS WIRE)--Dec. 16, 2002

Atlas Venture today announced that it has proposed to reduce the size of its most recent fund, Atlas Venture VI, to $600M to better align with current market conditions. This represents a 38% total reduction in the fund from its original size of $967M.

Atlas Venture VI has made investments in 16 companies since its launch in August 2001, representing approximately a third of the total number of investments targeted for the fund. While the fund is still at an early stage, the current companies in the portfolio are performing well and in line with expectations. Deal flow remains strong both in Europe and the US, and across the communications, information technology and life sciences sectors in which the firm specializes.

"There will continue to be opportunities for attractive venture capital returns as corporate capital spending on technology recovers, but only once the current 'overhang' of venture capital is removed from the market," said Christopher Spray, Senior Principal at Atlas Venture. "In the past several years, Atlas Venture and many other leading VC firms have structured themselves to manage funds in the $1 billion range, but we now believe that these large fund sizes are out of step with a venture capital marketplace characterized by a more measured investment pace, a reduced capital requirement per investment, and lower overall exit valuation expectations than we saw in 1999, 2000 and early 2001 when most of these funds were raised."

Spray added, "We believe that we will generate better returns for our Limited Partners by focusing a smaller fund on the core geographic markets where we have the most firmly established track record and the strongest competitive position. This is the approach that has allowed Atlas Venture to deliver attractive returns over the past twenty years."

Atlas Venture will now also refocus its operations and investment activity on the markets where it has strong market presence: Europe and Boston. The firm will close its two offices on the West Coast in early 2003. However, it will continue to support existing investments on the West Coast, and the Senior Principals responsible for those offices will retain a continued interest in the firm, with continued responsibility for certain portfolio investments. Atlas Venture also intends to reduce the size of its Paris, Munich and London offices. Three European Senior Principals will transfer their responsibilities, and leave the firm in 2003. The firm will continue to focus on the communications, information technology and life sciences sectors and expects new investments to be evenly balanced between the US and Europe.

"Those of us remaining with the firm face the departure of friends and colleagues with great regret," Spray continued. "We are very grateful for their contributions to Atlas Venture and expect to continue to work with each of them over the coming years."

Laura Jennings, the Senior Principal responsible for Atlas Venture's Seattle office, offered her support for the closure of the West Coast offices. "Although the West Coast offices are making a positive contribution to the firm's deal flow and overall activities, I believe that, over the long run, superior venture capital returns will be realized by firms with critical mass in focused, strategic markets. It is for the benefit of both our Limited Partners and our portfolio companies that the firm concentrate on its core competencies in the Boston and European markets rather than spreading our resources across nine time zones," Jennings said.

About Atlas Venture

Atlas Venture is the leading international early-stage venture capital firm, investing in communications, information technology and life sciences companies. With investment offices in Boston, London, Munich and Paris, Atlas Venture divides its investments between the United States and Europe.

Founded in 1980, Atlas Venture has organized six international funds, and currently manages $2.1 billion in committed capital. The Atlas Venture investment team is comprised of seasoned operating executives and career venture capitalists who have been deeply involved in the formation and development of more than 300 companies worldwide. For more information about Atlas Venture, go to www.atlasventure.com.