EFTA02005667.pdf

CLEARS TONE ONLINE GAMING FUND PRIVATE AND CONFIDENTIAL EIFTA_R1,050.753 EFTA02005667 DISCLAIMER THESE MATERIALS ARE PROVIDED FOR CONVENIENCE ONLY AND MAY NOT BE RELIED UPON. PROSPECTIVE INVESTORS IN ANY FUTURE CLEARSTONE FUND MAY RELY ONLY UPON THAT FUND'S PRIVATE PLACEMENT MEMORANDUM OR AN OFFICIAL SUPPLEMENT THERETO. EXISTING INVESTORS MAY ONLY RELY ON EACH FUND'S OFFICIAL FINANCIAL REPORTS. AND ONLY TO THE EXTENT SPECIFIED IN THAT FUND'S LIMITED PARTNERSHIP AGREEMENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ANY PROJECTIONS OR OTHER FORWARD LOOKING STATEMENTS CONTAINED HEREIN ARE BASED UPON CLEARSTONE MANAGEMENT'S CURRENT BELIEFS AND EXPECTATIONS AND ARE NOT GUARANTEES OF FUTURE PERFORMANCE. PROSPECTIVE AND EXISTING INVESTORS MAY NOT RELY ON, AND CLEARSTONE MANAGEMENT UNDERTAKES NO OBLIGATION TO UPDATE ANY SUCH PROJECTIONS OR FORWARD LOOKING STATEMENTS. Copyright 2011 1 Private and Confidential 2 CLEARSTONE ONLINE GAMING FUND EFTA_R1_00504754 EFTA02005668  STATE OF VENTURE CAPITAL @Copyr,g1.2.011 ,1,...d.s.MIJ CLEARSTONE rUNn EIFIA,_0050.755 EFTA02005669 A DECADE AFTER THE DOT COM BUBBLE BURST, THE VENTURE CAPITAL MARKET IS NOW POISED FOR BREAKOUT PERFORMANCE CLEARSTONE EFFA,1_00504758 EFTA02005670 CONDITIONS HAVE IMPROVED CONSIDERABLY, HELPED BY A REDUCTION IN CAPITAL AND FIRMS... CLEARSTONE EFFA,1_00504757 EFTA02005671  VENTURE CAPITAL FUNDRAISING IS DOWN 67% IN 2010 VS 2007 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 » VC IT funding commitments back to 1996 levels Source: DowJones VentureSource (D Copyright 201 1 1 Private and Confidential CLEARSTONE 6 ONl INE GAMING FUND EFTA_R1_00504758 EFTA02005672  ONLY THE STRONGEST FIRMS SURVIVED THE POST BUBBLE SHAKE OUT Active Information Technology Investors # of Active Firms 1500 Hum 1000 • ■ >3 Deals/yr 500 ■ <=3 Deals 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 » Active Investors Down - 712 active investors in 2000 versus 313 in 2009, a 56% decline » Average Fund Size Increased $165MM in 2000 versus $200MM in 2009 Source: DowJones VentureSource (D Copyright 201 1 1 Private and Confidential 7 CLEARSTONE ONLINE GAMING FUND EFTA_R1_00504759 EFTA02005673  STRONG PUBLIC MARKET APPETITE FOR GROWTH STORIES No. of Venture-Backed OPO's 100 90 86 80 80 70 60 57 57 50 40 30 20 12 10 0 ■ 2005 2006 2007 2008 2009 2010 2011E A new generation of large market cap tech companies will increase the field of potential acquirers Source' NVCA and Clearstone analysis. Selected IPO's shown in 2011. Linkedln and Skype have filed for IPO. Facebook, Zynga and GroupOn IPO are market speculation. CLEARSTONE CD Copyright 201 1 I Private and Confidential 8 ONLINE GAMING FUND EFTA_R1_00504760 EFTA02005674  MORE SO THAN EARLIER TECH CYCLES, PRIVATE INVESTORS ARE BEING REWARDED FOR POTENTIAL BREAK OUT VALUE AT IPO CLEARSTONE EFFA,1_00504761 EFTA02005675 MORE VALUE ACCRUING TO VENTURE INVESTORS, NOT PUBLIC SHAREHOLDERS Pre-Money IPO Valuations $70 $70 Public investors $50 participated in 99% of the $40 terminal value of these $30 companies $12 $10 $0.23 $0.44 $0.70 Cisco Ammon M iansoft V Mman Goode Factook Earlier Tech New Tech Cycles Cycle Source: Facebook Pre-Money IPO valuation $70B per SharesPost private market exchange - February 2011 Copyright 2011 1 Private and Confidential CLEARSTONE 10 ONLINE GAMING FUND EFTA R1_00504782 EFTA02005676 WHY ARE EARLY STAGE COMPANIES CAPTURING MORE VALUE? CLEARSTONE EIFTA_R1_005WEI3 EFTA02005677  CAPITAL MARKETS ARE MUCH BETTER INFORMED Hedge Fund Industry Growth 12,000 10,000 8,000 `) 6,000 4,000 2,000 r. 0 6.>) q?' 4° 4° 6.;\ 00 45 C:5 e?' 4° C! 45 =Number of Hedge Funds SAUM Better informed investors driving efficiency in the pricing of growth stories Source: Hedge Fund Research CD Copyright 201 1 I Private and Confidential 12 CLEARSTONE ONLINE GAMING FUND EFTA_R1_00504764 EFTA02005678  COMPANIES HITTING CRITICAL MASS FASTER DUE TO INTERNET GROWTH c1/0 Global Users 1998 vs. 2008 Number of Internet Users (millions) 2.1 19.0% China I 298.0 84.6 14.7% United States 230.6 16.9 6.1% Japan 96.0 2.5 4.6% Brazil 72.0 8.1 3.9% Germany 62.0 • 1998 I 1.4 • 2008 3.3% India 51.8 8.0 3.0% Britain m 46.7 1.2 45.3 2.9% Russia 1. 2.7% France 42.3 3.1 2.3% South Korea 36.8 Source: International Telecommunication Union. World TelecommunicationllCT Development Report ID Copyright 201 1 1 Private and Confidential CLEARSTONE 13 ONI.INE GANIING FUND EFTA_R1_00504765 EFTA02005679  GLOBAL GAINS ARE CAUSING COMPANIES TO GO GLOBAL EARLIER IN THEIR LIFECYCLE $5.7 $1.2 \\ ........1000 ‘ 2010 •China GDP $2.0 $0.0 2000 2010 I/Brazil GDP 31L, $0.5 2000 2010 •India GDP » 2.5 year old GroupOn already has 35 international offices ..rmrce: International Monetary Fund Amounts in (STrillions) (di Copyright 201 1 1 Private and Confidential 14 CLEARSTONE EFTA_R1_00504706 EFTA02005680 CLEARSTONE WAS THE EARLIEST AND MOST SUCCESSFUL FUND TARGETING THE CONSUMER INTERNET SECTOR CLEARSTONE 15 1• 11'," "" EFFA,1_00504787 EFTA02005681  FORTUNE MAGAZINES TOP FIVE PERFORMING PRIVATE EQUITY FUNDS Fortune magazine produced an article on September 171h, 2010 presenting "The 5 best and 5 worst private equity funds" The source for the article was the California Public Employees Retirement System (CaIPERS) - CaIPERS is the nations largest private investor — Funds judged by net IRR >> Top 5 performing private equity funds — Clearstone Venture Partners 1-B (1999): 154.7% — T3 Partners II (2001): 95.6% — GCP California Fund (2003): 91.9% - WLR Recovery Fund II (2002): 79.5% - Permira Europe I (1997): 74.5% CD Copyright 201 1 I Private and Confidential CLEARSTONE 16 ONLINE GAMING FUND EFTA_R1_00504768 EFTA02005682  WHY WAS THE FIRST CLEARSTONE SECTOR FOCUSED FUND SO SUCCESSFUL? 17 CL EA RSTONE EFTA_R1_00504789 EFTA02005683  A DIFFERENT INVESTMENT APPROACH Conventional Fund Strategy — Invest across a range of sectors, with capital weightings for each sector determined ad hoc and post closing of the fund — Rely on a few mega hits to drive fund returns — Fund's investment focus heavily dependent on each partner's personal interests, network, and capacity to do more deals >> Clearstone Sector Fund Approach — Become `hub of the wheel' for all investments by positioning the entire fund's resources around one sector — Switch from `wild-catting' for big hits to funding numerous ideas within a known big hit market — Combine traditional venture capital investing with a highly successful incubation practice CD Copyright 201 1 I Private and Confidential CLEARSTONE 18 ONLINE GAMING FUND EFTA_R1_00504770 EFTA02005684  MANY BENEFITS ACCRUE TO SECTOR FOCUSED FUNDS >) First fund in the sector which caused the fund to become synonymous with the sector Always on the short list of the best entrepreneurs and fellow venture firms Sector focused meant sector smart - Assembled the nascent industry's best advisors and thinkers — Developed deep and comprehensive understanding of the industry eco- system — Anticipated the industry's future needs — and funded those opportunities early >> Knew the acquirers and their strategic priorities >) Nature of sector focused fund allows for stage agnostic investing providing a balanced portfolio with providing earlier liquidity — Seed (up to 10 year liquidity cycle), Series A/B (up to 7 year liquidity cycle), and Pre-IPO (under 24 months) © Copynght 201 1 1 Private and Confidential CLEARSTONE 19 ONLINE GAMING FUND EFTA_R1_00504771 EFTA02005685 THE CLEARSTONE ONLINE GAMING FUND IS APPLYING THE SAME STRATEGY FOR AN EQUALLY INTERESTING MARKET CLEARSTONE 20 EIFT,,0050.772 EFTA02005686  THE CLEARSTONE ONLINE GAMING FUND >) Investment focus — Online gaming sector — Primarily private companies (15+ investments) — 3 year investment time frame >7 Fund size - $150M cap — $50M first close (5+ investment opportunities identified) Key Terms - 2.5% management fee with 20% carried interest 2% general partner contribution — Key man provision — No fault divorce clause CD Copyright 201 1 I Private and Confidential 21 CLEARSTONE ONLINE GAMING FUND EFTA_R1_00504773 EFTA02005687  RATIONALE FOR A FUND TARGETING THE ONLINE GAMING MARKET Participate in the massive value creation — and value shifts — created by the explosive growth in online gaming Represents the biggest near term investment opportunity known to the fund's principals No gaming focused funds with few venture capitalists deeply familiar with the sector Global investment opportunities with robust exit options Ability to create a concentrated global stage agnostic portfolio designed to capture the value caused by the industry's growth while providing greater liquidity than typical venture funds - Clearstone has a presence in most major gaming markets allowing us to invest globally (Southern California, Northern California, Europe, Middle East, Asia and India) CD Copyright 201 1 I Private and Confidential 22 CLEARSTONE ONLINE GAMING FUND EFTA_R1_00504774 EFTA02005688  CLEARSTONE ONLINE GAMING FUND PRINCIPALS William Quigley (Los Angeles) — Managing Director — 14 years experience as venture capitalist and board member — co-founder of Clearstone Venture Partners (successor firm to idealab Capital Partners) — Invested in numerous seed and early stage companies. IPOs include eMachines, eMusic, Meru Networks, MP3.com, PeopleSupport, Tickets.com — USC, Disney, HBS, Kauffman Fellow, Mid Atlantic VC >) Brock Pierce (Los Angeles) — Managing Director - 13 years experience as an entrepreneur raising more than $200m - Founded Affinity Media, IGE, ZAM, Titan Gaming, EverTune, RevenueAPEX, Digital Entertainment Network, myTaste — Acquired more than 30 companies including Xfire, IMI, SkyHi, Thottbot, Wowhead, Allakhazam, Player Auctions, Mysupersales - Advisor to the China Youth League CD Copyright 201 1 I Private and Confidential CLEARSTONE 23 ONLINE GAMING FUND EFTA_R1_00504775 EFTA02005689  CLEARSTONE ONLINE GAMING POTENTIAL FUND PRINCIPALS Keith McCurdy (Bay Area) — Managing Director 23 years experience in the game business as a senior executive EA, board member of game companies (both public and private), and CEO of multiple game startups 12 years at industry leader Electronic Arts as VP Online, VP Technology, VP Product Development, and Director of Advanced Technology Group Direct operating experience in console, PC, MMO, mobile, casual, and social games Raised venture capital from five venture funds as CEO and several more as a board member (all gaming based startups) Michael Robertson (San Diego) — Venture Partner Raised more than $100M and orchestrated transactions with a combined value of nearly a billion dollars in public and private markets Founded MP3.com (sold to UMG), DAR.fm, Linspire (sold to Xandros), Gizmo5 (sold to Google) CD Copyright 201 1 I Private and Confidential 24 CLEARSTONE ONLINE GAMING FUND EFT&.R1_00504778 EFTA02005690  CLEARSTONE ONLINE GAMING POTENTIAL FUND PRINCIPALS Rachid Sefrioui (Paris) — Venture Partner 12 years experience as venture capitalist and board member — founder of Fina Ventures Invested in New.net, RF Magic, asip, Reef, Entropic, Apogee, CyOptics, Atrenta, General Photonics, OEwaves, Sequoia Communications University of Cleveland, McKinsey, Bowco Investment Management, Wafabank Louis Hsieh (Beijing) — Venture Partner 20 years experience as private equity investor, investment banker, CFO, and board member President of New Oriental Education (NYSE: EDU) Former UBS MD and Head of TMT Asia Pacific, board member of Perfect World (NASQAD: PWRD) MBA HBS, JD Berkeley, Stanford, JP Morgan, Credit Suisse First Boston, White & Case ›, Jim Armstrong (Los Angeles) — Member of the Investment Committee CD Copyright 201 1 1 Private and Confidential 25 CLE A RST O NE ONLINE GANIING I EFTA_R1_00504777 EFTA02005691  POTENTIAL VENTURE ADVISORS John Pleasants — President of Disney Interactive, Former CEO of Playdom, COO of Electronic Arts John Schappert— COO of Electronic Arts Sean Ryan — Head of Facebook Games Steve Chang — President of Zynga Game Studio Neil Young — President of Ngmoco/DeNA John Batter— Co-President of Dreamworks Interactive David Wallerstein— EVP International of Tencent Ed Fries — Founder of Xbox Howard Marks — Founder of Activision, Acclaim, Former SVP for Playdom Nolan Bushnell — Founder of Atari and Chuck E Cheese Jeffrey Pollack — Former Commissioner of the World Series of Poker © Copyright 201 I 1 Private and Confidential 26 EFTA_R1_0050477$ EFTA02005692  POTENTIAL VENTURE ADVISORS Wade Davis — Chief Strategic Officer of Viacom, Co-Founder of Think Equity, Lazard Jack Kennedy— EVP of Digital Media for News Corp Steve Eskenazi — Former Managing General Partner of Walden Ventures Shawn Fanning — Founder of Napster, Snowcap, Path Brad Serwin — COO of Playdom, Former General Counsel of Sands Resorts Karl Meta — Founder of Playspan Shervin Pishevar— Founder of SGN and prominent angel investor John Borthwick— Founder of Betaworks, EVP of Time Warner Mike Huskins — Executive Recruiter for Facebook, Zynga, Glam Ross Levinsohn — EVP of Yahoo Americas © Copyright 201 I 1 Private and Confidential ( 1 \ 27 EFTA_R1_00504779 EFTA02005693  TRENDS DRIVING GROWTH IN THE ONLINE GAMING MARKET Copy,51.1011 CLEARSTONE 28 rUN. EIFIA,1_0050.780 EFTA02005694  GLOBAL GAMING MARKET IS EXPECTED TO HIT $87 BILLION BY 2014 Global Video Games Sector Revenue ($B) 100 90 80 70 Clearstone 60 "-- Online Gaming 50 Fund focus area 40 30 20 10 0 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F 2013F 2014F ■Console games ■Online games ■ Mobile games 0 PC games ■ In-game Advertising The console gaming market is flat, with overall market growth being driven by online and mobile games Source: Digi-Capital CD Copyright 201 1 I Private and Confidential 29 CLEARSTONE ONLINE GAMING FUND EFTA_R1_00504781 EFTA02005695 ONLINE GAMING IS CREATING MASSIVE VALUE, FASTER THAN EVER IN HISTORY facebook. zynga STEAM Valued at $67B Valued at VIM B in Game Sales 40% Traffic Game-related 275M Monthly Actives 30M Users (Social Network) (Social Game Publisher) (Etailer of Games) Tencentaill MEXCIN DeNA® $55B Market Cap Valued at $10B (est.) Valued at $5.5B $3.2B 2010 Run-rate Revenue 2010: $860M (est.) $1.50 2010 Run-rate (Social Gaming Network) (Game Publisher) (Mobile Game Publisher) Copyri.10Il l Pivate and co men. 30 CLEARSTONE ONLINE GAMING FUND EIFIA_.31_0050.782 EFTA02005696  DISTRIBUTION AND BUSINESS MODEL UNDERGOING MAJOR TRANSITION The Old Model (1980+) Console/PC 0:1 Played On 72-roc Consoles e"'N (Ni tido) ..,14.44). • SONY Ze rliMpe Retail SPA 9INARE ENIX AtItYir4o•4 Packaged Software umartrz- The NEW Model (2010+) 4 zynga ekt4-... 1+4, rtf.t.t T wont :r • GAM( 0 (C) play f ish 0 DeNA 0 il,, Ill JAOC: Played On 0 facebook MIXON Internet P e ar spilgames NW is. the,:w-ff. 131 W,rack M.MIIIMI ‘e -.. C'`'`Nk : — - "lexHca? Omayoral ( . rencrot Mt G O1Z Nrritaga ... JOY PORT Free-to-Play Web/Mobile Virtual Goods Source: OFC Intelligence & iGaming Business Copyright 201 I 1 Private and Confidential 31 CLEARSTONE ONI.INE GAMING 11:ND EFTA_R1_00504783 EFTA02005697 THE MARKET HAS REALIZED THE VALUE SHIFT FROM RETAIL TO FREEMIUM 0 Tencentaill zynga Year Founded 1982 1998 2007 Value $7B Market Cap $55B Market Cap Valued at $10B Revenue $3.7B $3B $1.8B* Source. CrunchBase, Goo& Finance. Forbes, company filings, equity research Forecast 2011 Revenue Copynght 2011 1 Private and Confidential 32 CLEARSTONE [)MANE GAMING FUND EFTA_R1_00504784 EFTA02005698  SOCIAL NETWORKING AND ONLINE GAMING NOW ACCOUNT FOR 33% OF TIME ONLINE Share of Time Online Classified/ Auction 3% E-mail 8% Multi-category Entertainment 3% Portals Software 4% Manufacturers Instant 3% Messaging Search 4% ideos/Movies 4% 4% » Social networks and online games grew 31% in 2010 and now account for 33% of all time online Source: Nielsen as of June 2010 (D Copyright 201 1 1 Private and Confidential 33 CLEARSTONE ONLINE GAMING FUND EFTA_R1_00504785 EFTA02005699  SOCIAL NETWORKING DRIVING MASS MARKET ADOPTION OF ONLINE GAMES Rank Name Category Monthly Active Users (MAUs) 1 City Ville Games 93M 2 Farm Ville Games 50M 3 Badoo Dating 46M 4 Texas Hold'Em Poker Games 38M 5 Causes Philanthropy 22M 6 BandPage Utility 19M 7 FrontierVille Games 19M » Facebook's userbase is 662MM » 4 of the top 7 and half of the top 40 Facebook applications are games Source: AppData, March 2011 CD Copyright 201 1 I Private and Confidential 34 CLEARSTONE ONLINE GAMING FUND EFTA_R1_00504786 EFTA02005700  MOBILE GAMING IS THE FASTEST GROWING SEGMENT OF THE ONLINE GAMING INDUSTRY Cumulative Units Shipped: Apple's iOS & Google's Android iOS 500 Android (1) 400 Total .O 300 200 100 O cz,c; „,co 0 2' co° e .O° coe' Smart-phone proliferation is putting a "game console" in millions of consumers' pockets Apple has generated over 10 billion app downloads; over 70% of all mobile consumer applications downloaded are mobile games Source: Gartner CD Copyright 201 1 I Private and Confidential 35 CLEARSTONE ONLINE GAMING FUND EFTA_R1_00504787 EFTA02005701  CONNECTED TVs - GROWING OPPORTUNITY FOR ONLINE GAMING 70% 40% 60% 35% 30% 50% Connected TVs as a 25% percent of HDTVs sold 40% each year 20% 30% —Percent of total US 15% households with 20% connected TVs 10% (cumulative) 10% 5% 0% 0% 2009 2010 2011 2012 2013 2014 2015 1.6 5.0 9.9 16.0 23.3 32.2 43.2 » One third of US households are expected to have connected TVs by 2015 opening up a large potential market for online gaming US connected TV households (millions) Source: Forrester © Copyright 201 I 1 Private and Confidential CLEARSTONE 36 ONLINE GAMING FUND EFTA_R1_00504788 EFTA02005702  REPRESENTS A WORLDWIDE PHENOMENON •••,• • ••• iff zynga . FULL 744 ILN . EXCIN ) PakerStars NHN oPiaYlech SONY GameStop TriQ PartvGANiim; (Nintendo) Microsoft DeNA. O UBISOFT. 5173.COM TencentNig cki4com 7wx1412' f-O.G PIIVWCT .11091.0 facebook lernios. SHAMA GAMES OA NrrEase viottoifirrnov_z _ . ww••1113•co• CD Copyright 201 1 I Private and Confidential 37 CLEARSTONE ONLINE GAMING FUND EFTA_R1_00504789 EFTA02005703  CHINESE FIRMS BECOME MORE ACQUISITIVE DUE TO GOVERNMENT'S 5-YEAR PLAN >> China recently released its 12th 5-year plan covering 2011 to 2015 )) The new plan contains a huge push towards globalization, with a provision for 500,000 Chinese companies to have international offices by 2015 >) Government wants creative companies (including gaming firms) to increase share of GDP from less than 2% today to 5% by 2015 Creative )) Chinese gaming companies likely enter global Industries Share of GDP markets via acquisition - This trend has already begun with Tencent's 5% $472M acquisition of Riot Games 2% I II 2011 2015 Source: China Daily CD Copyright 201 1 I Private and Confidential CLEARSTONE 38 ONLINE GANIING FUND EFTA_R1_00504790 EFTA02005704  TARGET RICH ENVIRONMENT WITH A DIVERSE GROUP OF ACQUIRERS Company Acquired By Category Acquisition Price Playdom Disney Casual Gaming $763.2M Riot Games Tencent Free-to-Play Developer $472M ngmoco DeNA Mobile Gaming Platform $400M Playfish EA Casual Gaming $300M Playspan Visa Payment System $190M Slide Google Casual Gaming $182M Wagerworks IGT Online Casino Gaming $90M Mochi Media Shanda Casual Gaming Network $80M Jambool Google Payment System $70M $2B in M&A and financing in the trailing 12 months with activity accelerating Source; TheFunded CD Copyright 201 1 I Private and Confidential 39 CLEARSTONE ONLINE GANIING FUND EFT&.R1_00504791 EFTA02005705  HISTORY OF CLEARSTONE Copy,51.1011 CLEARSTONE 40 EIFTA,1_00506792 EFTA02005706  SOME OF OUR NOTEWORTHY INVESTMENTS Pa,yPal B i I I Desk idealab ALPTX vast rubcori EINETZERO Kazeon CIO o ve * v erture eToys Cigihetr. Wedding GMMiStiihIl Apture? O -1 . frame • ibrzr S A $9 NOVARIANT. Meru 60 PEOPLE SUPPORT emachines COMPOSITE sui ©Copyright 201 1 I Private and Confidential 41 CLEARSTONE GAMING 1TND EFTA_R1_00504783 EFTA02005707  THE CLEARSTONE TEAM Team of 13 investment professionals with significant venture, operating and technical experience - William Quigley— Fund I, II, Ill, Online Gaming Fund - Jim Armstrong — Fund I, II, Ill, Online Gaming Fund — 15 yrs VC exp, UCLA, U of Texas MBA, Austin VC — Bill Elkus — Fund I, II, Ill — 28 yrs PE/VC exp, Harvard JD, MIT Sloan MBA, BCG - Brock Pierce — Online Gaming Fund - Sumant Mandal — Fund II, Ill - 10 yrs VC exp, 7 yrs operating exp in India, Kellogg MBA - Keith McCurdy — Online Gaming Fund - Michael Robertson — Online Gaming Fund - Rachid Sefrioui— Online Gaming Fund - Louis Hsieh — Online Gaming Fund — Vish Mishra — Fund II, Ill President of TiE - David Stern — Fund III — 4 yrs VC exp, Idealab, Universal, various Bay Area startups © Copyright 2011 1 Private and Confidential 42 LEARSTONE ONLINE GAMING POND EFTA_R1_00504794 EFTA02005708  HISTORICAL PERFORMANCE OF THE CLEARSTONE FUNDS Portfolio Investments Made 83 Number of Exits 36 Aggregate Cost of Exits $ 217M Aggregate Proceeds on Exits $ 942M Portfolio Companies Today 20 Aggregate Cost of All Investments $628M Value/Cost $ 1.233B / $ 628M IRR (Gross) Greater than 100% Source: Overall fund performance as of December 2010 CD Copyright 201 1 I Private and Confidential 43 CLEARSTONE ONLINE GAMING FUND EFTA_R1_00504795 EFTA02005709  RECENT CLEARS