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play a critical role in enabling the necessary structural changes to the healthcare system. The HITECH Act created a $25.9 billion13 Federal Government funded catalyst for the adoption of information technology in healthcare in the U.S., and this is stimulating significant investment in upgrading the information infrastructure at the provider level. This industry-wide technology upgrade moves the vast majority of providers onto electronic systems, which offers immediate efficiencies to their businesses and lays the foundation for the adoption of new targeted information based applications in the future. These investments and legislative actions by the U.S. government, and the subsequent response by insurers, providers and patients, are driving a dramatic increase in spending on healthcare information technology (HIT), benefitting the companies providing technology solutions that reduce cost and waste, drive efficiency, and improve the quality of patient care.

The opportunity in information convergence also benefits significantly from the technologies and infrastructure that have been developed and implemented outside of healthcare, such as cloud computing, wireless communications, web-delivered software-as-a-service, and sensor technology. Small companies drawing heavily off these existing technologies are able to optimize their product through rapid iterations driven by user feedback, thereby reducing risk and capital requirements, and leading to more predictable timelines, similar to what has been seen in the broader information technology arena. The Fund Managers believe that smaller, focused companies will play a key role in developing and deploying information based products that address discrete problems within the U.S. healthcare market, and that a large number of these will be compelling investment opportunities for NLV-III.

Medical Devices: Given the Fund Managers’ view that the operating and exit environment for companies in this sector will be more challenging due to increased regulatory and reimbursement uncertainty, NLV-III will have somewhat less exposure to this sector than previous funds. The Fund will focus on investments in companies that are developing innovative and differentiated medical devices, targeting large market opportunities that offer the potential to meaningfully reduce overall patient treatment costs in high morbidity disease settings through substantial efficacy and safety benefits versus existing standards of care. Importantly, the focus will be on opportunities that have established regulatory approval pathways and clear regulatory precedents, or are already at the commercial stage at the time of initial investment. The objective will be to identify investment opportunities with later stage risk profiles that can be expected to thrive in the current environment. Although the number of deals in this sector is likely to be somewhat lower than in previous funds, with the later stage focus, it is likely that the size of investments in this sector will be larger.

Biological Research Tools & Infrastructure: The rapid growth of this sector is being fuelled by many of the same biomedical advances that are impacting health care more broadly, such as personalized medicine and DNA sequencing. Smaller companies have always been a prolific source of innovative new research tools, leading to high M&A interest among the large commercial players in this sector. Moreover, because new reagents and research tools are not subject to the risks of clinical trials, regulatory approvals or payer reimbursement it is possible to build high-gross margins businesses that reach break-even on manageable timelines and budgets. The Fund will approach this sector opportunistically and will seek to invest in a small

13 U.S. Department of Health and Human Services. Actuarial estimate as of January 2012.

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