Investing inHealthcare Innovation

MANAGED BY TRISTAR TECHNOLOGY VENTURES, LLC

Investing inHealthcare Innovation2

1. Introduction

2. TriStar Focus

3. TNInvestco – Fund I

4. Southeast Opportunities

5. Appendix: TriStar Fund I Portfolio Companies

TABLE OF CONTENTS

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INTRODUCTION

• Founder or co-founder of ten companies– Renal Care Group sold to Fresenius in 2006 for $4 billion.– Contact Software developed Act! contact management software.

• Former Vice Chancellor of Health Affairs, Vanderbilt University Medical Center– Grew VUMC revenues to $2.2 billion1

– Helped the NIH research program move from 24th to top ten in the country1

– Opened approximately $1 billion of newly constructed research and patient care facilities2

• Board member of several public and private companies– Merck & Co. (NYSE:MRK)– Kinetic Concepts (NYSE:KCI)– CeloNova– Ingram Industries

HARRY R. JACOBSON, M.D.

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INTRODUCTION

• Former Manager of New Venture Development, Vanderbilt Universityo Managed the Vanderbilt start-up portfolio (including Chancellor Fund and the Office of Technology Transfer

and Enterprise Development (OTTED) activity) from 2007 -2009; part of investment team since 2004o Over $10 million3 was invested into 274 different Vanderbilt-related companies, which made up the portfolioo Directly assisted in the formation of 15 Vanderbilt spin-out companieso Represented Vanderbilt on the Boards of five of those companies

• Board member of several private companies and entrepreneurial non-profits

• Former Assistant Director of Technology Transfer & Enterprise Development, Vanderbilt Universityo Numerous exclusive and non-exclusive licensing deals and research agreements for more

than $10 million in cash and $110 million in milestones5

o Assisted in the formation of Vanderbilt spin-out companieso Led creation of complex collaborative relationships with industrial partners

• Former Board Member, Current Associate Vice President, Association of University Technology Managers (AUTM)

CHRISTOPHER P. RAND, CFA

BRIAN P. LADEN, PH.D.

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• Our mission is to:– Create and invest in truly early stage “Healthcare Innovation” companies arising from

either university research, corporate research or entrepreneurs themselves– Help foster the growth of the medical technology industry in the Southeast United

States– Produce outstanding financial returns for our limited partners

• “Healthcare Innovation” includes:– Medical Technologies - Pharma/Bio, Personalized Medicine

(Diagnostics/Theranostics) and Medical Devices– Healthcare IT and Services – Clinical Informatics, Operational Improvement Tools,

Evidence-based Tools and Delivery System Opportunities

• Very few other funds are investing in this industry and at this early stage, especially in the Southeast.

TRISTAR FOCUS

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• TriStar was one of the six original TNInvestco recipients out of 25 applicant groups. This created Fund I.

• TNInvestco is a statutory program established by the Tennessee legislature to award $120 million in tax credits to six venture firms.

• Each individual $20 million tax credit was then monetized by each of the awardees to establish their fund.

• TriStar’s unique experience with pre-seed/seed Healthcare Innovation companies and technologies set it apart from other applicants.

VALIDATION OF TRISTAR STRATEGY AND TEAM: TNINVESTCO

TNINVESTCO – FUND I

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SOUTHEAST OPPORTUNITIES

RESEARCH IN THE SOUTHEAST IS SIGNIFICANT; VENTURE FUNDS ARE NOT.

• On the Coasts (CA and MA), for every $1 of research funding, there is about $1 of Bioscience venture funding.

• In the Southeast, for every $1 of research funding, there is $0.10 of Bioscience venture funding.

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1. http://www.mc.vanderbilt.edu/about/factbook_2009.pdf2. http://businesstn.com/content/the-2007-power-100http://www.mc.vanderbilt.edu/reporter/index.html?ID=27193. http://www.mc.vanderbilt.edu/reporter/index.html?ID=2719, http://www.mc.vanderbilt.edu/reporter/index.html?ID=4122,

http://www.mc.vanderbilt.edu/vumcpub/index.html?pubID=10&articleID=201 http://www.venturenashville.com/vanderbilt-venture-developer-notes-disconnect-with-venture-capital-cms-342

4. http://www.mc.vanderbilt.edu/reporter/index.html?ID=2719,http://otted.vanderbilt.edu/investors/portfolio_companies/, http://www.mc.vanderbilt.edu/reporter/index.html?ID=4122 http://www.venturenashville.com/vanderbilt-venture-developer-notes-disconnect-with-venture-capital-cms-342

5. http://online.wsj.com/article/SB123146452536666743.html6. http://www.redorbit.com/news/health/1595307/pathfinder_lands_5_million_series_a_round__financing_led/index.html ,

http://nashcapital30.bondwaresite.com/photos/NCN_Summer_Newsletter_2006.pdf7. http://www.mc.vanderbilt.edu/reporter/index.html?ID=2719,8. http://www.mc.vanderbilt.edu/vanderbiltmedicine/vumc_winter05/assets_winter05/spring03.pdf9. http://www.venturenashville.com/vu-portfolio-company-tyratechs-relocation-suspended-but-not-dead-cms-14910. http://www.stemcellinnovations.com/investors/index.php?investors,

http://webcache.googleusercontent.com/search?q=cache:_Cs0MF-LS7kJ:yahoo.brand.edgar-online.com/EFX_dll/EDGARpro.dll%3FFetchFilingHTML1%3FID%3D4212693%26SessionID%3DrFiYHjaYAmmW027+%22Amphioxus+Cell+Technologies%22+vanderbilt&cd=16&hl=en&ct=clnk&gl=us&client=firefox-a, http://www.nashvillepost.com/news/2006/4/7/vanderbilt_tie_is_a_driver_in_thinklink_sale_to_discovery

11. http://venturebeat.com/2007/07/10/nephrogenex-raises-33m-for-kidney-disease/

REFERENCES

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APPENDIX:TRISTAR FUND I PORTFOLIO COMPANIES

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Summary: VenX is developing a revolutionary disposable nanophlebectomy device to treat spider and reticular veins by piercing the vein and disrupting the layers of the vein such that the vein coagulates and then undergoes a wound healing response

that results in its elimination.

Deal Source: Dr. Jacobson has known the co-founder, Navroze Mehta for several years through a former company that Mr. Mehta founded.

Industry: Medical Devices

University Tie: N/A

TriStar Involvement: Dr. Laden to serve on Board and provide interim management services.

Stage: Seed

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Summary: The thesis is to identify medical device concepts that serve a true unmet medical need, but are overlooked by traditional venture firms due to the modest capital needs or early-stage nature.

Given the size of Fund I, modest investments (such as $1M) work well within the Fund’s economics (not true for larger venture funds). Additionally, we believe that many of these medical devices only have modest regulatory and R&D risk which can be validated during diligence (the perception is that the risk is much higher).

Deal Source: The founders of VenX (a Fund I portfolio company) are the principals involved in this concept.

Industry: Medical Devices

University Tie: Over 100 device concepts have already been identified from institutions such as Partners/Harvard, Johns Hopkins, Cleveland Clinic, and the University of Florida.

TriStar Involvement: TriStar as co-founder and Board member

Stage: Pre-Seed/Seed

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Summary: onFocus | Healthcare is a vertically focused healthcare Enterprise Performance Management (EPM) software and consulting company that

specializes in the development of performance management solutions for hospitals and other healthcare organizations.

Deal Source: Round led by Clayton Associates. Management specifically wanted TriStar as investor.

Industry: Healthcare IT

University Tie: N/A

TriStar Involvement: Dr. Jacobson helped Management create what is now its EPM product. Dr. Jacobson to serve as a close advisor.

Stage : A Round

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Summary: PATHFINDER Therapeutics, Inc. is a medical device company dedicated to increasing the number and effectiveness of surgeries on abdominal and

other soft tissue organs. Pathfinder improves surgical precision by allowing surgeons to "see through" the organ they are operating on

by registering the surgical instrument in three-dimensional space onto pre-operative

patient medical images.

Deal Source: Long relationship with company and investor group. Deal not broadly marketed, as Management

specifically wanted TriStar as investor.

Industry: Medical Devices/Imaging

University Tie: Vanderbilt University (research and patents)

TriStar Involvement: Mr. Rand helped write the first business plan and invested via the Chancellor Fund. Mr. Rand to serve on the Board, and Dr. Jacobson to serve on Medical Advisory Board.

Stage: B Round

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Summary: Goba.mobi, which stands for “Get Out Be Active,” is a mobile-based, social media start-up company dedicated to connecting people in person through shared interests. Goba.mobi creates a way for people to efficiently schedule real life activities, enabling a more meaningful and rewarding experience.

Deal Source: Long relationship with Company founder; Management specifically wanted TriStar involved as an investor.

Industry: Healthcare IT- Wellness

University Tie: Vanderbilt Dayani Center as beta customer and development partner

TriStar Involvement: Dr. Laden to serve on Board, and Dr. Jacobson to serve as advisor.

Stage: Seed

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Summary: MedCenterDisplay provides digital communication solutions for direct marketing and education of patients and staff in high-traffic areas in provider settings.

Deal Source: Long relationship with company founder. Company was not doing a capital raise, but approached TriStar for an investment due to strategic value.

Industry: Healthcare IT- Digital Communications

University Tie: Vanderbilt University Medical Center was first beta customer.

TriStar Involvement: Mr. Rand to serve on Board, and Dr. Jacobson to serve on Advisory Board.

Stage: Seed

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Summary: Diabetes Care Group is dedicated to improving the health and quality of life of individuals with diabetes. The company utilizes a comprehensive team approach that incorporates state of the art medical management, education, and behavioral modifications to help individuals achieve superior diabetes outcomes in the most cost effective manner possible.

Deal Source: Long relationship with company founder. Mr. Rand helped write first business plan. Company was not doing a capital raise, but approached TriStar for an investment due to strategic value.

Industry: Healthcare Services

University Tie: Company spun out of research from Ole Miss Medical Center.

TriStar Involvement: Dr. Jacobson serves on Board of Directors.

Stage: Seed