Investment Criteria
The private equity investment sector has emerged from a fledging segment of the capital markets to become a major asset class. It is a discipline that requires a wide range of skills and functional expertise to manage consummate and manage investments to liquidity. The Fund focuses on companies with the potential to become major enterprises that can produce liquidity in three to five years.

Geographic Scope
The Fund's geographic scope includes the 50 states of the United States, Puerto Rico, other U.S. territories, and Canada.

Industry Criteria
The Fund seeks investments in basic industries, in companies with goods and services that consumers and businesses use regularly. We seek to invest in high growth industries without significant technology risks or high growth segments within mature industries. Consideration will be given to companies in fragmented industries, which offer the potential for consolidation that can lead to large-scale businesses with strong economics. Among the industries we will consider are:

· Communications and media
· Consumer products
· Financial services
· Food service
· Health care
· Information technology and services
· Light manufacturing
· Specialty retail

Transaction Size & Investment Stage
The Fund invests primarily in later stage growth companies, preferably those exceeding $10 million in profitable revenues. It also seeks to purchase mature businesses with the opportunity to significantly improve performance. The Fund prefers to invest in transactions that support a minimum of $1 million in equity and may seek equity co-investors and leverage.

Seasoned Management
The Fund seeks to invest in companies with strong management. In some cases the Fund will work with the existing management team to round out key functions critical to the success of the portfolio company.

Exit Strategy
The Fund invests for long-term capital appreciation. It will generally hold investments for at least three years. The general partners work with portfolio company management to set the strategy for achieving liquidity in each portfolio investment. Among the options we pursue are public offerings, sale, recapitalization and mergers.

© Ark Capital Management 2005