AI, Autonomous Cars, Drones and MoreHow tech innovation is transforming the world

and generating investment returnsPresented by: Brijesh Jeevarathnam / Adams Street Partners

2

Confidentiality Statement and Other Important Considerations

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This Presentation is not investment advice or an offer or sale of any security or investment product or investment advice. Offerings are made only pursuant to a private offering memorandum containing important information. Statements in this Presentation are made as of the date of this Presentation unless stated otherwise, and there is no implication that the information contained herein is correct as of any time subsequent to such date. Projections or forward looking statements contained in the Presentation are only estimates of future results or events that are based upon assumptions made at the time such projections or statements were developed or made. There can be no assurance that the results set forth in such forward looking statements will be attained. General economic factors, which are not predictable, can have a material impact on the reliability of projections or forward looking statements.

Introduction

3

Today’s Discussion

4

1. Technology advances are accelerating, rapidly transforming the world

3. Venture Capital represents an excellent way to invest in emerging Tech innovation

2. Investors can access this transformation to generate strong financial returns

1. Tech Advances Are Accelerating, Transforming the World

5

6

Early Technology Eras Lasted Millennia

Stone Age

2,000,000 BCE

Bronze Age

3300 BCE

Iron Age

1200 BCE

7Source: 2017 PBS & WGBH Educational Foundation

Until James Watt’s Steam Engine Changed the World,…

Late Eighteenth Century

8

…Catalyzed A Revolution That Lasted Centuries,…

9Source: The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies.

….And, Bent the Curve of Human Development

Industrial Revolution

1775

10

Subsequent Technological Progress Keeps Accelerating – Eras Last Decades, Not Centuries

Information Age

1990s

Electrification/Mass Production

1870

ElectronicsAge

1969

11

We are now in the

Information Technology Age

12

Information Technology (IT) Advances Have Built on a Long History of Innovation

Punch Cards

Electric Computer (ENIAC)

PortableComputer

Touch-BasedComputing

QWERTY Keyboard

MainframeComputer

Mobile Computing

Voice-BasedComputing

1832 1872 1943 1948 1975 1996 2007 2014

13

And Exceeded the Expectations of Some of the World’s Brightest Minds

"I think there is a world market for maybe five computers.”Thomas Watson, president of IBM, 1943

"There is no reason anyone would want a computer in their home."Ken Olsen, founder of Digital Equipment Corporation, 1977

"I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse.”Robert Metcalfe, 3Com founder and inventor of Ethernet, 1995

"No one will need more than 637KB of memory for apersonal computer." Bill Gates,1981

14

Today, Information Technology Seems Pervasive in the Headlines…

Ford just invested $1 billion in self-driving cars

15

…And in Our Everyday Lives

Circa 2007

Purchased something

Made a phone call

Accessed emailHailed a Taxi

Ordered out/ate out

Made a reservation

Navigated using GPS

16

Moore’s Law Predicted Exponential Gains in Compute Power Over Time

In 1960 Gordon

Moore, a founder

of Intel, accurately

predicted that

processing power

for computers

will double every

two years

17Source: http://pointsandfigures.com/2015/04/18/moores-law/

Moore’s Law Predicted Exponential Gains in Compute Power Over Time

In 1960 Gordon Moore, a founder of Intel, accurately predicted thatprocessing power for computers will double every two years

18*Million standardized operations per secondSource: GP Presentation. Nordhaus, William, The Progress of Computing, Version 4.4, Appendix Table 2, 2001.

The Cost of Compute and Storage Has Collapsed

$0.01

$0.10

$1.00

$10.00

$100.00

$1,000.00

$10,000.00

$100,000.00

$1,000,000.00Storage (Average Cost Per GB)

$0.00000001

$0.00000010

$0.00000100

$0.00001000

$0.00010000

$0.00100000

$0.01000000

$0.10000000

$1.00000000

$10.00000000

$100.00000000

$1,000.00000000

$10,000.00000000

$100,000.00000000

$1,000,000.00000000

Processor Speed ($ per MSOPS*)

19Source: ZME Science.

Household Electronics Today Generally Have as Much Compute Power as the Computers that Landed Apollo 11 on the Moon

1969 2017

20Source: ZME Science.

The Compute Power of An iPhone7 Overwhelmingly Exceeds That of Apollo 11 Computers

Launched in 1969 Launched in 2016>80 Million Times Faster

Major Tech Trends Are Converging

21

■ Increase in compute power and availability fueling mega trends in technology

1. Internet everywhere

2. Mobile everything

3. Cheaper, more efficient storage

4. Massive amounts of data

5. Machine learning

6. Cloud computing

■ Technology is becoming more ingrained in everyday life, and leading companies / figures in the technology industry have become household names

22Source: NY Times

Consumers Are Adopting Technologies Faster Than Ever

60

40

20

10

Telephone Washing Machine Cellphone Internet

Years to 50% US Market Penetration

~1870’s ~1925 ~1980s ~1990sTime PeriodIntroduced:

23Source: comScore MobiLens, U.S., Age 13+, 3 Mo. Avg. Ending Dec 2005 – 3 Mo. Avg. Ending Dec 2016

Smartphones Everywhere, Internet Access Ubiquitous

2% 3%6%

11%17%

27%

42%

54%

65%

75%79% 81%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Smartphone Penetration of Mobile Phone Market

24Source: Internet World Stats.

Providing Affordable Access to Technology for the World

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Inte

rnet

Use

rs W

orld

wid

e (B

illio

ns)

50%of World

Population

<5%of World

Population

Source: Statista Digital Market OutlookNote: Figures account for total world population using the internet / a smartphone within the last 12 months 25

The World is More Connected Than Ever, a Development Which Looks Set to ContinueShare of world population connected to the internet from 2016 to 2021

+5.7 p.a.

+3.7 p.a.

53.2% 55.4% 57.5% 59.7% 61.8% 63.9%

38.2%41.6% 44.5%

46.9%48.8% 50.5%

2016 2017 2018 2019 2020 2021Internet penetration Mobile penetration

Source: U.S. Bureau of Labor Statistics. 26

“Information Technology Is Eating the World”Disrupting every piece of the consumer pie

Housing

TransportationFood

Pensions andSocial Security

Healthcare

Entertainment

ApparelEducation

Other

Distribution of Consumer Wallet by Category (1)

27Source: Public Sources.

AirBnB vs Traditional Hospitality Companies

100

79

94

190

Starwood

Mariott

Hilton

AirBnB

# of Countries

348,000

710,000

721,000

1,000,000

Starwood

Mariott

Hilton

AirBnB

# of Rooms

14

22

29

31

Starwood

Mariott

Hilton

AirBnB

Valuation (USD Bn)

28Source: GP Presentation.

Transforming the Enterprise

Only 6% of the

$4 Trillion in

IT spend today

is spent on

cloud software

29Source: Internet World Stats.

Providing Affordable Access to Technology for the World

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0 Billions of Internet Users Worldwide

Delivering More Apps and Services Over the Internet

Scalable Public Cloud Infrastructure

Private Cloud Infrastructure

30

Technology is Transforming Every Major Industry

Lets Take a Closer Look at Technology’s Impact on Three Big Industries:

Automotive1Healthcare2

Manufacturing& Logistics3

Ride-SharingNetwork

Autonomous

ElectricVehicles

31

Automotive: Three Major Forces Transforming This Massive Industry

Private CarOwnership

HumanDriving

CombustionEngine

1

32Source (# of rides, left to right): Business Insider; The Verge (as of June 2016); The Verge.

Private Car Ownership Giving Way to Shared / On Demand

2,000,000,000Total Rides

1,000,000,000Rides in 2015

162,600,000Rides in 2016

On Demand Transportation

New Ways of Renting Cars

33Source: GP Presentation.

Autonomous Driving

MONITORED DRIVING

DRIVERONLY

ASSISTED PARTIALAUTOMATION

CONDITIONALAUTOMATION

HIGHAUTOMATION

FULLAUTOMATION

NON-MONITORED DRIVING

34Source: Uber; Google.

Autonomous Driving

35

Autonomous Driving

Source: Yahoo! Finance, CB Insights, livemint Note: Market cap as of 04-20-2017 36

Market Valuation of New Entrants to Auto Industry Rival Those of IncumbentsMarket cap/valuation of selected companies in 2017 (in US$ billion)

147.3

75.3

74.3

68.0

51.0

49.8

33.8

6.9

3.0

3.0

Toyota Motor Corp.

Daimler AG

Volkswagen AG

Uber Technologies Inc.

General Motors Co.

Tesla Motors Inc.

Didi Chuxing

Lyft Inc.

ANI Technologies Pte Ltd. (Ola)

Grab Taxi Holdings Pte Ltd.

Automobile Manufacturers New Entrants

Source: WSJ. 37

The Automobile and Tech Industries Are CollidingAuto makers have come to Silicon Valley

38

Ripple Effects from Auto Transformation

Retail Delivery

Rental CarIndustry

Auto Insurance

Urban Planning

Autonomous, Electric,

Shared Automobiles

39

Technology is Transforming Every Major Industry

Lets Take a Closer Look at Technology’s Impact on Three Big Industries:

Healthcare2

40* The cost of determining one megabase (Mb; a million bases) of raw, unassembled DNA sequence data.Source: https://www.genome.gov/sequencingcostsdata/

Healthcare: Moore’s Law is Transforming Life Sciences2

$0.01

$0.10

$1.00

$10.00

$100.00

$1,000.00

$10,000.00

$100,000.00

$1,000,000.00

$10,000,000.00

$100,000,000.00

Sep-

01Fe

b-02

Jul-0

2D

ec-0

2M

ay-0

3O

ct-0

3M

ar-0

4Au

g-04

Jan-

05Ju

n-05

Nov

-05

Apr-0

6Se

p-06

Feb-

07Ju

l-07

Dec

-07

May

-08

Oct

-08

Mar

-09

Aug-

09Ja

n-10

Jun-

10N

ov-1

0Ap

r-11

Sep-

11Fe

b-12

Jul-1

2D

ec-1

2M

ay-1

3O

ct-1

3M

ar-1

4Au

g-14

Jan-

15Ju

n-15

Cost per Mb* Cost per Genome Sequenced

Cost of Gene Sequencing

41

Convergence of Advances in IT and Life Sciences Are Transforming Healthcare

IT Advances Life Science Advances

■ Gene Sequencing

■ Gene Editing

■ Targeted Therapeutics

■ Behavioral Medicine

■ Data Science

■ Machine Learning

■ Computer Vision

■ Consumerization of Healthcare

■ Prevention■ Diagnosis■ Treatment

42

Disease Prevention: Using Data and Behavioral Medicine

43

Diagnosis: Deep Learning Algorithms and Computer Vision Leading to Better Anomaly Detection

44

Diagnosis: Deep Learning Algorithms and Computer Vision Leading to Better Anomaly Detection

45

Using Big Data and Machine Learning to Diagnose Earlier and Treat Better

46

Treatment: Gene Editing Has Potential to Eliminate Certain Diseases

47

Technology is Transforming Every Major Industry

Lets Take a Closer Look at Technology’s Impact on Three Big Industries:

Manufacturing& Logistics3

48

■ Advanced Materials

Manufacturing & Logistics: Multiple Vectors of Change3

■ Drones

■ 3-D Printing

49

Logistics: Drones

50

Logistics: Drones

51

Logistics: Delivery Robots

Robots to deliver Yelp Eat24 dinners in two SF neighborhoods

52

Manufacturing & Logistics: 3-D Printing

2. Investors Can Access this Transformation to Generate Strong Financial Returns

53

Search

eCommerce

1999

Source: Pitchbook 54

New Technology Trends are Creating New MarketsCompanies organized by year of founding

Sharing Economy

Communicationsand Social Media

1991 1993 1995 1997 20052003 2007 2009 2013 20152001 2011 20171999

55Source: CapitalIQ, as of March 2017.

Tech is Becoming a Larger Portion of the Economy

15.1% 18.6% 20.8%

12/31/2005 12/31/2010 12/31/2016

15.9% 17.4% 19.4%

Tech Companies % of S&P 500 Revenues

Tech Companies % of S&P 500 Market Cap

56CapitalIQ as of May 1, 2017

Tech has Performed Well in the Public Markets

0%

50%

100%

150%

200%

250%

300%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

S&P 500 Russell 2000 IT

57Chart reflects total return over respective periods. Source: CapitalIQ as of May 1, 2017

Tech has Performed Well in the Public Markets

16%

27%

70%

59%

24% 25%

72% 69%

34%

57%

92%

147%

0%

20%

40%

60%

80%

100%

120%

140%

160%

1 Year Return 3 Year Return 5 Year Return 10 Year Return

S&P 500 Russell 2000 IT

58Market capitalizations as of December 31st for each respective year; 2017 market capitalization as of May 9, 2017.

Tech Companies Now Among Largest by Market Capitalization

Inte

llect

ual &

Hum

an C

apita

lPh

ysic

al C

apita

l Top 5 Publicly Traded Companies (by Market Cap)

Tech Other

2006

2011

2001

$406B

$446B

$406B $277B

$327B

$272B $261B $260B

$273B

$228B$237B

$356B

$293B

$376B

2017

$803B $653B $533B $455B $436B

$383B

3. Venture Capital Represents an Excellent Way to AccessEmerging Tech Innovation

59

60

What is Venture Capital?

Venture Capital Growth Equity LBO or IPO

Time

Rev

enue

61Source: Pitchbook as of 4Q 2016.

Some Famous Venture Backed Companies

62Source: Pitchbook* 2017 represents annualized data as of May 1, 2017

US Venture Fundraising

0

50

100

150

200

250

300

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*

$ Raised in Billions Fund Count2017 Run Rate

*Reflects Microsoft’s purchase price in June 2016.Source: Capital IQ as of 5/1/2017. 63

Private Investors Have Benefitted from Pre-IPO Value CreationMarket capitalization at IPO vs. today

$19Billion

$26Billion*

$442Billion

Today$170Billion

$453Billion

$536Billion

Today

Cisco Amazon Microsoft Workday LinkedIn Facebook

$225 Million$560 Million $690 Million

$82 Billion

$8.9 Billion$8.3 Billion

1980’s – 1990’s 2010 – Present

Source: Pitchbook as of 4Q 2016. 64

Median Time from Initial Venture Capital Equity Funding to ExitAs of December 31, 2016

Companies are staying private longer

7.7 7.9

8.3

9.9

9.5

8.5 8.6

9.49.6

8.8

9.6

7.3

8.1

8.0

7.6 7.6 7.6 7.7

6.8

7.57.3 7.4

6

7

7

8

8

9

9

10

10

11

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Num

ber o

f Yea

rs

IPO M&A

Source: The Burgiss data presented here includes a set of funds in Asia, Europe, and US regions with vintage years 2002-2016 which are invested on a primary basis in venture capital and buyout partnerships, and excludes secondary investments. Numbers are subject to updates by Burgiss. Burgiss is a recognized source of private equity data, and the Burgiss Manager Universe includes funds representing the full range of private capital strategies. All net IRRs are net of GP fees, carried interest, and expenses. Calculations by Burgiss. Data sourced on May 02, 2017. Performance as of December 31, 2016. 65

Venture Industry Has Attractive Returns, With Wide Dispersion Between QuartilesAs of December 31, 2016

Dispersion of Burgiss Returns – Net IRR

Small LBO (<$1.0bn) Medium LBO ($1.0bn -$3.0bn) Large LBO ($3.0bn+) Venture

38.9%

17.4%

8.7%

(1.1%)

(31.5%)

31.3%

14.8% 8.8% 3.3%

(15.3%)

28.5%

15.9% 10.1% 5.2%

(10.1%)

42.5%

15.9%

7.1%

(3.0%)

(20.3%)

(40.0%)

(30.0%)

(20.0%)

(10.0%)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

95th Percentile75th PercentileMedian25th Percentile5th Percentile

Active manager returns by quartile for period ending June 30, 2012. Fixed income and marketable equity performance based on annualized ten-year returns of BNY Mellon manager universes, adjusted for fees. Venture capital and LBO based on annualized since-inception IRRs of Cambridge Associates manager universes.Source: Yale Endowment, 2012 Report. 66

Venture Industry Has an Attractive Dispersion of Returns

25th Percentile 75th PercentileMedian

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

U.S. Fixed Income U.S. LargeCapitalization Equity

U.S. SmallCapitalization Equity

U.S. LeveragedBuyouts

U.S. Venture Capital

Dis

pers

ion

of R

etur

ns

Source: Burgiss; “Has Persistence Persisted in Private Equity? Evidence From Buyout and Venture Capital Funds” 67

Access to Top Performers is ImportantPersistence of returns in venture capital

Top 5%

1st Quartile

2nd Quartile

3rd Quartile

Bottom 5%

42.5%

15.9%

7.1%

(3.0)%

(20.3)%

49%Of 1st Quartile Funds Generate

A Subsequent 1st Quartile Performing Fund

65%Of 1st Quartile Funds Generate A Subsequent 1st Quartile or 2nd Quartile Performing Fund

Keys to Building a High Performing Venture Capital Portfolio

68

■ Manager selection, access, and portfolio construction are paramount

■ Build a high-quality, concentrated portfolio of Venture managers

■ Keep a long-term investment horizon

■ Manage consistent exposure across time (and cycles)

Summary

69

■ Technology advances are accelerating, rapidly transforming the world

■ Investors can access this transformation to generate strong financial returns

■ Venture Capital represents an excellent way to invest in emerging Tech innovation

70

Additional Questions?Brijesh JeevarathnamPartner & Co-Head of Global Venture Fund Investments650 331 4869 / brijesh@adamsstreetpartners.com

Steven Wilde, CFAPartner, Client Service312 553 7867 / swilde@adamsstreetpartners.com