For Immediate Release
Early Stage Partners Completes First Closing
Cleveland VC Fund To Focus on Investment Opportunities in
Life Sciences, Tech, Materials andAdvanced Manufacturing

Contact: Jamie Ireland
216-781-4600, x. 1
jireland@esplp.com

January 2, 2002,Cleveland, OH—Capital One Partners LLCis pleased to announce the first closing of its newly formed venture capital fund, Early Stage Partners, L.P.,

The Fund, managed by James D. Ireland III, James M. Petras, and Jonathan P. Murray, has been making earlystage investmentsin Ohio for over a year in anticipation of the Fund’s first closing. Early Stage Partners has been actively raising outside investor capital from limited partners for nine months. The Fund’s Cleveland-based parent firm, Capital One Partners,has nearly a decade of successful private equity investment experience.

David Daberko, Chairman and CEO of National City Corporation and Chairman of Cleveland Tomorrow, had this to say. “Just last year, in its strategic plan, Cleveland Tomorrow called for the formation of more early stage capital as a key to future economic growth. The rapid development of Early Stage Partners underscores the commitment of our region to achieving that vision. I am confident that the community will continue to assist Early Stage Partners in the accomplishment of its goals,” he said.

Management of the Fund concurred. “We are very pleased to have completed a first closing in what is probably the most difficult venture capital market in years,” said Jamie Ireland. “The broad base of investor support that we have received from the region indicates the strong desire of Northeast Ohio to focus on forming more technology-based, early stage companies as an engine for regional economic growth.

“Professionally managed, locally based early stage venture capitalis a key ingredientin creatingstate-wide technology-based economic growth. It also will be critical in attracting more national venture capital to the region,” he added.

The fund’s limited partners include major regional and national banks, Fortune 1000 industrial corporations, foundations, private individuals, and the State of Ohio’s Technology Action Fund.

The Early Stage PartnersFund will focus on investments in early stage technology companies with the potential for high growth. Particular areas of emphasis include technologies in which Northeast Ohio and Ohiohave national or international competence, including: life sciences, advanced materials and polymers, information technology, and advanced manufacturing. Technologies that are developed in association with the region’s research institutions and large industrial corporations will receive particular attention.

“In today’s difficult financing market, having an investment or strategic partner with a national or international profile, such as the Cleveland Clinic, University Hospitals, Case Western Reserve University, the University of Akron, or a Fortune 1000 corporation is a key component of success,” said Mr. Petras. "We seek to further develop an active partnering network with these and other institutions."

“The involvement of key strategic partners helps with technology development and deployment, market adoption, and, especially, future fundraising,” he said. "Nationally and internationally recognized institutions also help to attract follow-on capital from venture firms outside of Northeast Ohio."

The fund expects to evaluate hundreds of business plans each year, but generally will focus its activity on those that meet certain defined criteria, including:

- Strong and experienced management teams
- $50 million of annual revenue potential
- Nationally or internationally scalable business potential
- Proprietary technology, market position, or both
- Attractiveness to follow-on capital sources
- Attractiveness to strategic acquirers or public markets
- Potentially attractive financial returns.

“Venture capital is a financial product that is suitable for some early stage companies, but not for all,” said Mr. Murray.
“An early focus of our activities will be in educating the region about the types of opportunities that are consistent with the commitments we have made to our limited partners. Like the companies in which we invest, we have raised money based on a business plan that we will be expected to follow,” he added.

The fund has invested in six companies to date and is in the process of evaluating several other exciting opportunities. The fund’s principals expect to make up to a dozen or so investments per year, depending on available opportunities.

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