OKLAHOMA CITY (January 6, 2003) — In a terrible year nationally for public companies and venture capital, Chisholm Private Capital Partners enjoyed its most successful year of venture financing as five early-stage Oklahoma-based private companies — including Tulsa-based Incentus — attracted more than $55 million. Three companies attracted new investments and two secured follow-on rounds. The financings came through the Chisholm II Fund and the Oklahoma Life Sciences Fund managed by Chisholm. Co-investor syndicates included seven other venture capital firms, six of which had never invested in Oklahoma before.

"The five companies thought they needed $31 million dollars to fully fund their business plans to reach EBITDA profitability," says John Frick, General Partner. "Not only did these companies raise more than $55 million, in every single case our portfolio companies turned away additional investment." Paiva says this follows the national trend in venture financing whereby the initial funding syndicate must have the intention and capacity to fund 100 percent of a company's development through the exit strategy."

The Chisholm portfolio companies involved in the record-setting year are:

• ForHealth Technologies ($17.5 million) — a manufacturer of robotic technologies for hospital pharmacies.
• Inoveon ($17.5 million) — a medical services company specializing in detecting, staging and monitoring diseases of the eye.
• Incentus, formerly Cemara, ($8 million) – an online third-party healthcare benefits administration firm.
• Advanced Academics ($7.5 million) — an online educational company for grades seven through 12.
• Critical Technologies ($1 million) — a developer of online records management solutions.

"Today you either get more money than you need or not any at all," says Frick. "From venture capital investors’ perspectives this means financing risk is off the table with the focus on management execution. It also means nearly all of the investors’ money is being invested when valuations are lowest."

Frick says the most encouraging trend is that all co-investors for these companies came from out of state. During 2002, Chisholm invested $8.8 million in Oklahoma, while co-investors invested $42.3 million in Oklahoma. Currently, 80 percent of Chisholm investments are in Oklahoma companies, which have given many entrepreneurs the chance to succeed until outside investors can be brought in for follow-on rounds. Oklahoma Life Sciences Fund companies raised $35 million, of which $30 came from investors other than OLSF.

Even in a continued difficult environment, Paiva says there are three solids reasons to invest in private ventures.

First, except for political factors ranging from corporate accounting scandals to impending wars, the economy is fundamentally quite sound. Interest rates are at 45-year lows. Productivity continues to increase regularly. After three years of pain for investors, unemployment is under 6 percent; a level that used to be viewed as a trigger for inflation. Lots of great robust new technology is maturing enough to go to market. Just one example is the increase to $15 billion of annual NIH research spending, up from only $5 billion a few years ago.

Second, investment diversification works and is more critical than ever. In this type of down market there is no place to hide. Venture capital remains attractive with good long-term returns. The best time to invest in venture capital over the past three recessions was during the recession and immediately thereafter. Three or four years later both the absolute and relative returns were compelling.

Third, there are still many compelling value propositions with passionate, experienced management teams leading the way. Health care is a huge market, which is rapidly growing and is both highly fragmented and technology starved. Information technology, which is a huge, volatile market, is rapidly moving from a select the best of breed technology approach to outsourcing and only buying tools with quick starts, easily measured cost reductions and usage based pricing.

"Oklahoma should be proud of these companies that are helping forge a stronger new economy in the state," says Paiva. "But the key is to keep the momentum going so we can celebrate this kind of success for years to come."

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To learn more about Chisholm Private Capital Partners and The Oklahoma Life Sciences Fund, please visit www.chisholmvc.com.