VENTURE CAPITAL ADAMS CAPITAL MANAGEMENT FUND IV

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1) I believe that ACM should start raising their fund IV now, since the markets are just stabilising and there is a discontinuity in investments for the past 5 years. By raising a fund, ACM will be able to capture the upcoming businesses and stay true to their rst into markets strategy.

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Even though the rm has not been able to make frequent distributions from the fund, its is clearly seen that the fund is performing pretty well. The portfolio for fund 3, looks promising as all the companies seem to be in a good position to either enter an IPO or a M&A. Therefore, the rm can use their track record and their discontinuity strategy to raise another fund. With the rms policy of having, two partners per deal, the investment will always be in control and hence reduce risks.

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Also, they should position their fund as a long term fund which will hold higher stakes in fewer companies and concentrate and help these companies grow into better ones and then nd an exit rather than going for a home run. The fund would be one which would concentrate on the present discontinuities in the market and so this would be a right time to invest.

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The fund should be one that focusses not only on companies in early stages of the industry but also companies that have a newer and unfamiliar business idea. Since, the IT, semiconductor and networking infrastructure companies were already funded and many in number, the chances of more success would be limited and hence this fund should shift

focus to another industry, which will also diversify the portfolio of existing LPs and give them a chance to reap benets of a newer industry.

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2) ACM should denitely expand into life sciences, the reason being that there are huge opportunities in this eld. There are so many discontinuities in this industry and the changing trend means there are high probabilities of market changing business ideas, like that of dell.

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The rm, in my opinion has to make the following amendments to reap the benets of this discontinuity: Firstly, the rm has to gather expertise in this area, has their key strength thus far has been its general partners who have been knowledgable in the eld and have been able to make decisions that aren't swayed by the emotions of the entrepreneurs. Secondly, the already existing GPs should be playing a different role in the investments to be made in life sciences. As in, it should be left to the life guys to make a decision on the rms they would want to invest in but the existing GPs could advise them on the terms of the investment.

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These changes will require that the rm invest a lot of time and money into the process and it might slow down the pace of investments and quality of monitoring in the already existing investments. But I consider it a worthwhile investment to reap future prots. The rm to strike a balance and ensure that the implementation and execution are precise and dont harm the existing portfolio. Expanding into a new industry will give the rm more chances of making prots and also portray it a rm hungry for growth and change. Sweekruthi Kaveripatnam A0119990U