Herald Investment Management Limited manages two venture capital funds investing in unquoted companies in the technology, communications and media sectors (specifically excluding biotechnology and pharmaceuticals):

• Herald Ventures I - raised in September 1999, this £20.25m fund is fully invested in 20 companies across the TMT sectors. Initial investments were between £250,000 and £1.5m. Seven portfolio companies are now quoted, and the fund is showing a positive return (valued according to BVCA guidance) with an IRR of 11% as at 31 January 2006.

• Herald Ventures II - a final close was held in June 2005 (see press release) for £30.5m. The fund makes investments of between £250,000 and £3m, with the potential for further follow-on funding, in companies in the TMT sectors.

Both funds invest only in the UK, and normally only for new capital rather than to buy out existing shareholders. They are prepared to lead or follow in an investment syndicate, or act as sole investor. Herald Ventures will generally take a minority stake in its investee companies, and will normally seek Board representation and other terms typical of a venture capital investment.

Herald Ventures intends to use a pro-active approach to the exit strategy, using both trade sales and the public markets to realise its investments. In particular, it is expected that industry contacts made by the existing team at HIML, the Manager of Herald Ventures, will be utilised to aid in the exit. This will ensure that realisation opportunities are not limited to the UK, but can be effected on a global basis.