Michael Tharp, AIF Fund Manager – 501.223.3284

ADFA Makes First Venture Capital Commitment

AIF Invests $4M in SSM Venture Partners III

December 18, 2003 | Little Rock, AR -- The Board of Directors of the Arkansas Development Finance Authority (ADFA) today accepted the recommendation to conditionally commit to invest $4 million in SSM Venture Partners III, L.P., a private, professionally managed, venture capital firm that has committed to include Arkansas in their deal prospecting. This capital pledge is the first to be made since the passage of the Venture Capital Investment Act (The Act) in 2001.

The Act authorizes ADFA to capitalize the $70 million Arkansas Institutional Fund (AIF) for the State of Arkansas. Additional investments will be made by the AIF over the next several years. The AIF, a fund of funds investment model, is authorized to invest in professionally managed venture capital funds that in turn make investments in young, rapidly growing companies that have the potential to develop into significant economic contributors.

The principal office of SSM Venture Partners III is located in Memphis, TN. The company’s Principals have committed to hiring an Arkansas Regional Advisor to their team and to recruiting and using an Arkansas Advisory Board made up of at least three prominent Arkansas business people with access to private equity deal flow. The investments are anticipated to be 25% in early stage and 75% in expansion and later stage technology and non-technology deals. AIF's $4 million investment will bring SSM Venture Partners III’s investment fund total to $57 million.

"We have been working to build the private equity investment side of capital formation equation in Arkansas for many years. Through this effort we hope to build and grow many more successful business enterprises in Arkansas. This is a great start for the ADFA Venture Capital Investment Program," said Gene Eagle, ADFA Vice President of Development Finance.

“Commitments to venture capital firms will generally be in the $2 million to $7 million range," said Michael Tharp, AIF Fund Manager. "It is hoped that over time the AIF, supported by ADFA, will help build a vigorous venture capital industry in Arkansas – an industry of proven professionals that actively serve the state’s most promising entrepreneurs.”

ADFA President Mac Dodson called the investments "a fabulous example of the way government can partner with private enterprise to generate real growth opportunities for new businesses.”

About the Arkansas Development Finance Authority

The Arkansas Development Finance Authority is committed to responding to the changing needs of Arkansas’ growing, increasingly diverse population and business community. Since its creation in 1985, ADFA has become the state’s largest source of low-cost financing for low-to-moderate income housing development, small industries, government, education, agricultural business enterprises and healthcare. Through the issuance of taxable and tax-exempt bonds and notes, the administration of private and public grants and partnerships with state and federal agencies, ADFA gives Arkansans the most cost-effective financing choices possible. In 2001, bond guaranty legislation was modified to allow ADFA to utilize credit enhancement and state tax credits to finance “fund of funds” venture capital investments. At this time the $70 million Arkansas Institutional Fund (AIF) was created.

About the Arkansas Institutional Fund

In an effort to strengthen the venture capital network in Arkansas and promote economic growth within the State, the Arkansas Institutional Fund (AIF) is authorized to invest in professionally managed venture capital funds that in turn make risk capital more accessible to promising Arkansas firms.