Business Process Outsourcing:

Business Process Outsourcing ("BPO") occurs when companies focus on core competencies while outsourcing less critical functions to value added experts. These experts utilize "best practices", global resources, industry relationships, proprietary technologies, and focused efficiencies to save customers money while providing excellent, high value services to customers. The available market for BPO companies in multiple industry verticals is growing rapidly, estimated to reach almost $650 billion by 2009 after experiencing approximately 11% compounded annual growth since 2004. River Cities seeks industry veteran-led scaleable companies with strong value propositions, recurring revenues, high margins, and a clear exit path.

CrossMedia Services, a Fund III company, works with large retailers to transform their existing physical advertisements in newspapers, magazines and catalogs into online searchable location-based advertisements on their websites. The daily uploading, conversion and location-based search technology platform allows large national retailers to advertise locally online to compete with online only retailers. The value proposition drove the joint venture group of Knight Ridder, Gannett and the Tribune Company to acquire CrossMedia in 2004 for $73 million giving River Cities a 6X return and a 122% IRR on Fund III's investment.

Health Personnel Options, a Fund I portfolio company, is a classic example of business process outsourcing in healthcare. HPO was a nurse staffing business founded in 1997. The company was built at a time when the nurse shortage was beginning to manifest itself and it rapidly became a market leader by meeting a growing need. River Cities worked with an experienced team to build the company through organic growth and acquisition. In April, 2002, HPO was acquired by On Assignment, Inc. (Nasdaq:ASGN) for $150 million, which is believed to be one of the highest multiples that had yet been achieved in the industry. For a total investment of $3.6 million, River Cities received proceeds of $41.2 million, or a return multiple of approximately 12X its investment. HPO was one of the top fifteen M&A exits in 2002 achieved by any venture fund, a tribute to the Firm's disciplined approach to investing in fundamental businesses that continue to prosper even in dire capital market climates.