Total investment for the year reflects the longest sustained level of activity since TCA was founded in 1997 -- eight years at $10 million or more

From 2013-2017, total investment each year was between $13.7 - $16.7 million

Investment declined to $10.8 million in 2018, driven by concern over higher valuations coupled with concerns over financing risk in the coming cyclical downturn

In previous cycles, TCA investment started to decline in 2000 and 2006, before re covering in 2003 and 2010

The mix into new companies shifted in 2018 to 76% of investment from 57% in 2017

TCA invested in 53 companies in 2018, including 34 new companies which approached the all-time record of 35 in 2016

This total of 53 includes 15 companies in Life Sciences, 13 in Software, and 9 in Internet/Apps, 5 in Cleantech/Industrials, 4 in Consumer, 3 in Financial, 3 in Hard ware and 1 in Business

New companies included 11 companies in Life Sciences, 7 in Software, 7 in Inter net/Apps, 3 in Cleantech/Industrials, 3 in Consumer, 2 in Hardware and 1 in Busi ness

Our 411 members, with their extensive and broad industry experience, help us invest with confidence in this diverse range of industries, which has al ways been part of TCA’s DNA

Of new companies added to the portfolio in 2018, Life Sciences & Software continue to lead

TCA extended its Angel Syndication Network (ASN) to share the best deals for deal syndication among 40+ prominent angel groups. Each angel group nominates their best deals to share with other angel groups for syndication

Each month, ASN hosts a “virtual” web presentation. The live meeting occurs within a state-of-the-art facility (UCI Applied Innovation’s The Cove facility) with multiple cameras and microphones recording attendee interaction and deal deliberation. The purpose of these meetings is to help fill a round, expedite a closing, and save the CEO from extended road shows. The screening sessions are open and viewed by accredited investors from these respective groups. So far, 48% of those presenting have received additional funding (total of $7 million).

Collectively, the angel groups participating in ASN represent over 1,500 angels, and over $1 billion in direct investment.

This greater syndication activity through ASN has shifted the geographic mix to more based outside of Southern California

Traditionally, the mix has been 85% - 90% in Southern California -- with the assumption that companies do better when TCA’s members can be actively involved in mentoring and governing

With ASN, TCA is seeing more good deals that have strong support and local involvement by other prominent angel groups. Thus new investments outside Southern California rose to 37% in 2016, 28% in 2017, and 24% in 2018

This also has been influenced by the investments of TCA’s ACE Fund which have had a larger percentage of investments outside Southern California

TCA had six exits in 2018 and a 4.9x return on all outcomes since 1997

IPO: One Stop Systems (NASDAQ OSS) in which TCA invested originally in 2000. This 12x return is a reminder that angel vesting requires patience

1 private placement in an early stage public company: Envision Solar (NASDAQ EVSL) (2017 investment)

3 acquisitions: CaseStack (another15x return with a long fuse with TCA investing in 2002), Ondax (2010 investment), and Ring Router (2014 investment)

Investors in What Pumpkin Games were bought out by another shareholder This brings the total exits since TCA’s inception in 1997 to 79 exits, and 103 shutdowns. Of the 388 invest ments TCA has made since its founding, 54% are still active. Investing equal amounts across TCA’s entire port folio would have yielded a return of 307% of the initial investment. Counting the highest price achieved after IPOs would increase TCA’s return to 492%. This compares to a 250% benchmark for angels per ARI. Tax bene fits from the write-offs are not included.

TCA funding is more likely when initial products/services are already developed and there is evidence of customer traction

57% of 2018’s investments were in companies with revenue and those seeking expansion capital, although this is down from 69% in 2017. This is driven by:

-- Companies are launching products/services earlier with MVPs (Minimum Viable

Products) before seeking investment

-- Investors at this later stage of the investment cycle expecting companies to be closer to

breakeven in order to survive the inevitable downturn coming

TCA’s investment focus continues to be on early stage companies

89% of investments in 2018 were Seed/pre-Series A, including bridge funding to either Seed equity or Series A. This is a higher mix than in 2016 or 2017

Some of this shift has been due to interest in pursuing lower valuations asssociated with seed activity, since later rounds are increasingly at less attractive valuations

Seed represented 70% of the companies and 76% of the dollars invested

Most investments in 2018 continue to be either Preferred Equity or Con vertible Debt/SAFE (that converts into Preferred Equity)

The 31% invested in Preferred Equity was an increase from 2017 and heading back towards the level of 54% in 2016

However, the prevalence of convertible notes (60% of the investment total) remains concerning to some because it limits long-term returns due to 1) less initial lift in valuation before Series A and 2) fewer deals will realize Section 1202/Section 1244 favorable tax treatment

Common equity deals decreased to a more traditional level of 5% or less

Valuations at time of TCA investment continue their climb to historically uncomfortable levels -- perhaps the biggest factor in less $’s invested

38% of TCA’s investments in 2018 were in companies with valuations below $6 million, compared to 69% in 2017 and 70% in 2016

The median valuation was $6.0 million in 2018, compared to $4.5 million in 2016 and 2017

TCA’s “comfort zone” has been in early stage deals valued at $1-3 million --- declining from 18% in 2016 and 14% in 2017 to a cyclical low of 5% in 2018