ABOUT VMF

The Michigan Opportunity

The Customized Fund Investment Group ("CFIG") of Credit Suisse Private Equity ("CS Private Equity"), which is the manager of the fund and the fund investment group of Credit Suisse, believes that attractive opportunities for private equity investment exists in the State of Michigan (or the "State"). CFIG has analyzed the opportunity for an in-state private equity program in Michigan. This analysis reflects our understanding and knowledge of Michigan's government incentives, start-up opportunities, university participation and private equity activity as well as the state of the venture capital market in Michigan, and the opportunities and challenges that it is currently facing.

CFIG's research-driven analysis identified sectors, stages and geographic areas within Michigan that could be targeted by an in-state private equity program. We began with an economic analysis of the State, identifying historical trends as well as future opportunities, and looked at factors such as employment trends, average wages, export activity and regional growth. Second, we analyzed private equity activity in Michigan and reviewed the venture capital and buyout investment activity in this region over the past decade. In the process, we also examined a number of specific transactions and emerging companies based in Michigan. We then looked at various public and private initiatives that support economic development and venture capital growth in the State. Lastly, CFIG identified a number of industry clusters in which Michigan has significant expertise and resources, and which are potentially attractive for venture capital investment.

Based on our analysis, we believe that a strong opportunity for private equity investment exists in Michigan given the State's strong capital and resource base, a vibrant infrastructure of government, industry and academic constituencies that supports venture capital, and the increasing number of start-up companies that require financing for growth. While Michigan has historically been dependent on manufacturing, the State, under the guidance of Governor Jennifer M. Granholm, is steadily transforming into a key technology center of the Midwest. Information technology, life sciences, advanced manufacturing and homeland security sectors have been growing significantly in the State over the past few years and will require additional equity capital for future growth. The multitude of technologically advanced companies in need of private equity financing presents an opportunity for private equity firms from across the nation to participate in a Michigan-based program.

Michigan's various economic development organizations, private and non-profit institutions, and its network of public and private universities make up a strong infrastructure for the further development of venture capital community in Michigan. Michigan has an academic community of over 90 colleges, universities and institutions with excellent research and technology transfer capabilities. The University of Michigan ranked second in the nation in terms of research, with $840.0 million spent on research in 2005. The State also has strong, established economic development organizations and various programs such as the Michigan Economic Development Corporation, Michigan Venture Capital Association, Michigan SmartZones, Michigan Renaissance Zones and Michigan Technology Tri-Corridor that are dedicated to the growth of local businesses. Established in 1996, Michigan Renaissance Zones were the nation's first state tax-free regions and are now emulated by a number of other states, reflecting the State's commitment to taking innovative approaches to economic development. The State has successfully brought these organizations and initiatives together to promote and develop entrepreneurship and venture capital. Michigan received $29,292 as average Small Business Innovation Research award during 2001-2003 and ranked 13th among U.S. states.

Given the multitude of emerging companies in need of equity financing, the increased technology transfer activity at the university level and the strong economic development programs in place across the State, we believe Michigan is ripe for a successful in-state venture capital program.