VCVILLAGE COM OPPORTUNITY FUND LLC, N-2/A, 2000-10-25

VCVILLAGE COM OPPORTUNITY FUND LLC
N-2/A, 2000-10-25

Previous: GABRIEL COMMUNICATIONS INC /DE/, S-4/A, EX-23.2, 2000-10-25

Next: VCVILLAGE COM OPPORTUNITY FUND LLC, N-2/A, EX-99.B, 2000-10-25

As filed with the Securities and Exchange Commission on October 25, 2000

1933 Act File No. 333-40382
1940 Act File No. 814-221

U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-2

(Check appropriate box or boxes)

|_| REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
|X| Pre-Effective Amendment No. 1
-----
|_| Post-Effective Amendment No.______
and
|_| REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
|_| Amendment No._______

VCVillage.com Opportunity Fund, LLC
Exact Name of Registrant as Specified in its Certificate of Formation

325 W. 38th Street, Suite 1504
New York, New York 10018
Address of Principal Executive Offices (Number, Street, City, State, Zip Code)

(212) 736-2223
Registrant's Telephone Number, including Area Code

Corporation Service Company
1013 Centre Road
Wilmington, DE 19805
Name and Address (Number, Street, City, State, Zip Code) of Agent for Service

Copies of Communications to:

Lawrence P. Stadulis
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, D.C. 20036

Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement

----------

If any of the securities being registered on this form are offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act of
1933, other than securities offered in connection with a dividend reinvestment
plan, check the following box. |X|

<PAGE>

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

<TABLE>
<CAPTION>
================================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount Being Offering Price Aggregate Amount of
Being Registered Registered Per Unit Offering Price(1) Registration Fee
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares, No Par Value $100,000,000 $__.00 $100,000,000 $26,400
================================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.

The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such dates as the Commission, acting pursuant to said Section 8(a),
may determine.

ii
<PAGE>

CROSS REFERENCE SHEET

Part A

<TABLE>
<CAPTION>
Items in Part A of Form N-2 Location in Prospectus
--------------------------- ----------------------

<S> <C>
Item 1. Outside Front Cover ...................................... Cover Page

Item 2. Cover Pages; Other Offering Information .................. Cover Page

Item 3. Fee Table and Synopsis ................................... Fee Table; Prospectus Summary

Item 4. Financial Highlights ..................................... Not Applicable

Item 5. Plan of Distribution ..................................... Cover Page; Prospectus Summary; Plan of Distribution;
How to Invest

Item 6. Selling Shareholders ..................................... Not Applicable

Item 7. Use of Proceeds .......................................... Prospectus Summary; Use of Proceeds

Item 8. General Description of the Registrant .................... Prospectus Summary; Business of the Fund

Item 9. Management ............................................... Prospectus Summary; Management of the Fund

Item 10. Capital Stock, Long-Term Debt, and Other Securities ...... Prospectus Summary; Description of Limited Liability
Company Interests

Item 11. Defaults and Arrears on Senior Securities ................ Not Applicable

Item 12. Legal Proceedings ........................................ Legal Matters

Item 13. Table of Contents of the Statement of
Additional Information ............................... Not Applicable
</TABLE>

iii
<PAGE>

Part B

<TABLE>
<CAPTION>
Location in Statement of
Items required by Part B of Form N-2 Additional Information
------------------------------------ ------------------------

<S> <C>
Item 14. Cover Page ................................................ Not Applicable

Item 15. Table of Contents ......................................... Not Applicable

Item 16. General Information and History ........................... Not Applicable

Item 17. Investment Objective and Policies ......................... Prospectus Summary; Business of the Fund; Investment
Restrictions

Item 18. Management ................................................ Prospectus Summary; Management of the Fund

Item 19. Control Persons and Principal Holders of Securities ....... Management of the Fund

Item 20. Investment Advisory and Other Services .................... Management of the Fund

Item 21. Brokerage Allocation and Other Practices .................. Management of the Fund

Item 22. Tax Status ................................................ Tax Information

Item 23. Financial Statements ...................................... Not Applicable
</TABLE>

Part C - Other Information

Items 24-33 are answered in Part C of this Registration Statement

iv
<PAGE>

File Numbers: 33-40382, 814-221

SUBJECT TO COMPLETION - October 25, 2000

THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THE FUND MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.

$100,000,000

SHARES OF LIMITED LIABILITY COMPANY INTERESTS IN

VCVILLAGE.COM OPPORTUNITY FUND, LLC

VCVillage.com Opportunity Fund, LLC, or the Fund, is offering up to $100,000,000
in limited liability company interests. The Fund, a Delaware limited liability
company, is a non-diversified closed-end management investment company that has
elected to be regulated as a business development company under the Investment
Company Act of 1940. Investors will be permitted to participate in voting and
other matters regarding Fund governance only to the extent required by law or
expressly stated in the Fund's Operating Agreement. The Fund will dissolve on
December 31, 2008, subject to the right of the Fund's directors to extend the
term for up to two additional two-year periods.

Our investment objective is long-term capital appreciation from investments in
emerging growth companies. We will not select our investments based on their
ability to generate current income for distribution. VCVillage.com Advisors,
Inc., or the Investment Manager, will be responsible for managing our
investments. The Investment Manager is a wholly owned subsidiary of
VCVillage.com Holdings, Inc.

VCVillage.com Securities, Inc., or the Broker-Dealer, is offering the shares in
the Fund on a "best efforts" basis. There is no set termination date for the
offering, no minimum amount of shares to be purchased before the Fund will begin
operations and no shares will be placed in an escrow or trust account. The
offering will remain open so long as shares of the Fund remain available, unless
prior to such time the Investment Manager terminates the offering at its own
discretion or the Fund dissolves. The Broker-Dealer is a wholly owned subsidiary
of VCVillage.com Holdings, Inc. and is a member of the National Association of
Securities Dealers, Inc. ("NASD").

You must purchase shares worth a minimum of $100 to participate in this
offering. There is no public or secondary market for such shares, and we do not
expect any to develop. Resale of your shares will be severely restricted. You
may transfer your shares only with the written consent of the Investment Manager
and in accordance with the terms of the Operating Agreement. As a result, you
will not be able to withdraw your investment before the dissolution of the Fund.
However, we may, from time to time, offer to repurchase some of the shares of
the Fund. See "Distributions" and "Description of Limited Liability Company
Interests - Share Repurchases."

1
<PAGE>

For a variety of reasons, including our lack of prior operating history, the
substantial risk associated with the portfolio companies in which we intend to
invest, the illiquid nature of a substantial majority of our investments, the
risks related to leverage, and the uncertainty associated with valuing our
investments, an investment in the Fund involves a high degree of risk. You could
lose some or all of your investment. See "Risks of the Fund."

Neither the Securities and Exchange Commission (SEC) nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

This prospectus contains concisely the information about the Fund that you ought
to know before investing. You should retain this prospectus for future
reference. Additional information about the Fund has been filed with the SEC,
which is available upon oral or written request and without charge. The SEC
maintains a website (http://www.sec.gov) that contains additional information
about the Fund.

--------------------------------------------------------------------------------
Per Share (1) Total Minimum Total Maximum

Public offering price [ ] N/A $100,000,000
Sales load $0 $0 $0
Proceeds, before expenses,
to the Fund (2) [ ] N/A $100,000,000

(1) This column represents the initial price per share of the Fund. The price
per share will vary depending on the net asset value, or NAV, of the Fund's
investments, which will be determined weekly. Accordingly, the number of shares
that you receive for a $100 investment will depend on the share price the week
your investment is accepted.

(2) We will reimburse the Investment Manager and its affiliates for the
organizational expenses they incur on our behalf, which we estimate to be
approximately $500,000. We will reimburse the Broker-Dealer and its affiliates
for their marketing and distribution expenses, which we estimate to be
$6,000,000 or 6% of the aggregate offering price, assuming the offering is fully
subscribed. We will cap the above reimbursement of the Broker-Dealer at 10% of
the proceeds of the offering, in accordance with NASD regulations.
Reimbursements for operating costs will be limited annually to 1.25% of our net
asset value.
--------------------------------------------------------------------------------

2
<PAGE>

TABLE OF CONTENTS

PAGE
----

Fee Table......................................................................4
Prospectus Summary.............................................................5
Plan of Distribution...........................................................9
How to Invest.................................................................10
Use of Proceeds...............................................................11
Business of the Fund..........................................................11
Investment Objective..........................................................12
Portfolio Strategy and Policies...............................................13
Investment Restrictions.......................................................17
Venture Capital Operations....................................................18
Risk Factors..................................................................20
Forward-Looking Statements....................................................29
Distributions.................................................................30
Dividend Reinvestment Plan....................................................30
Portfolio Valuation...........................................................31
Management of the Fund........................................................31
The Fund Directors............................................................33
The Investment Manager........................................................34
Compensation of the Investment Manager, Its Affiliates,
and the Independent Directors................................................34
Conflicts of Interest.........................................................36
Description of Limited Liability Company Interests............................38
The Operating Agreement.......................................................40
Tax Information...............................................................44
ERISA Considerations..........................................................46
Investment Company Act Regulation.............................................47
Reports, Accounting, and Audit................................................49
Selling Materials.............................................................49
Legal Matters.................................................................50
Accounting Matters............................................................50

3
<PAGE>

THIS PROSPECTUS WILL BE AVAILABLE AT HTTP://WWW.VCVILLAGE.COM/ PROSPECTUS AND IS
ALSO AVAILABLE ON THE SEC'S WEBSITE AT HTTP://WWW.SEC.GOV. THE INFORMATION ON
THE WEBSITE OF THE PARENT COMPANY OF THE INVESTMENT MANAGER AND THE
BROKER-DEALER, HTTP://WWW.VCVILLAGE.COM, IS NOT A PART OF THIS PROSPECTUS.

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR IN THE
AUTHORIZED SELLING MATERIALS AVAILABLE AT HTTP://WWW.VCVILLAGE.COM. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT OR ADDITIONAL INFORMATION. YOU
SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY
DATE OTHER THAN THE DATE SET FORTH ON THE FRONT COVER OF THIS PROSPECTUS. WE
WILL FURNISH YOU WITH ALL REPORTS REQUIRED BY APPLICABLE LAW.

FEE TABLE

<TABLE>
<CAPTION>
<S> <C>
Shareholder Transaction Expenses

Sales Load.............................................................None
Reimbursement of Organizational Expenses...............................Actual expenses as incurred (1)
Reimbursement of Distribution Expenses.................................Actual expenses as incurred (1)
Dividend Reinvestment and Cash Purchase Plan Fees......................None

Annual Expenses (as a percentage of NAV, and assuming the offering is fully subscribed)

Management Fees (2)....................................................2.5%
Other Expenses (3).....................................................1.25%
Total Annual Expenses..................................................3.75%
</TABLE>

(1) The Fund has agreed to reimburse the Investment Manager for the Fund's
Organizational Expenses and the Broker-Dealer for its Distribution
Expenses. The estimated dollar amount for the Fund's Organizational and
Distribution Expenses is $500,000 and $6 million, respectively. These
expenses, as a percentage of the Fund's NAV, may be significantly higher
if sales of shares of the Fund are less than projected. For more detailed
information, see "Compensation of the Investment Manager, its Affiliates,
and the Independent Directors."

(2) The above chart and the example below do not include the quarterly
incentive fee payable to the Investment Manager, which is equal to 20% of
the Fund's realized capital gains, net of realized and unrealized capital
losses. For more detailed information, see "Compensation of the Investment
Manager, Its Affiliates and the Independent Directors."

(3) "Other Expenses" includes the reimbursement of the Investment Manager for
operating expenses, as well as professional fees and other expenses that
the Fund will incur directly. The figure is based on estimated amounts for
the current fiscal year. Reimbursements for operating costs will be
limited annually to 1.25% of our net asset. "Other Expenses" expressed as
a percentage will be higher with lower proceeds of this offering. "Other
Expenses" does not

4
<PAGE>

include the reimbursements to the Investment Manager and Broker-Dealer
described in footnote (1) above.

EXAMPLE OF COSTS AND EXPENSES CALCULATION

1 3 5 10
YEAR YEARS YEARS YEARS

You would pay the
following expenses on a
$1,000 investment, assuming
a five percent annual return......... $[ ] $[ ] $[ ] $[ ]

The example should not be considered a representation of future expenses.
Actual expenses may be greater or less than those shown above.

The purpose of the above table is to assist you in understanding the
various costs and expenses that you will bear directly or indirectly. The Fund's
actual rate of return may be greater or less than the hypothetical 5% return
used above. The 5% return is merely a hypothetical return required by law to
demonstrate the costs and expenses of an investment, and does not reflect our
expectation of the actual return that you may or may not realize from an
investment in the Fund.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this
prospectus, including the Operating Agreement of the Fund, which is attached as
Exhibit A. This summary is not complete and is not intended to contain all the
information that you should consider before investing in the Fund. You should
read this entire prospectus and the Operating Agreement carefully before
purchasing shares in the Fund.

THE OFFERING. We are offering shares of limited liability company
interests in an aggregate amount of up to $100,000,000. We will adjust the price
of the shares on a weekly basis based on the net asset value of our investments.
We will admit new investors to the Fund on a weekly basis after that week's
determination of net asset value and the subsequent adjustment to the share
price. The initial price per share is $[ ].

The minimum purchase price for any investor is $100, payable by debit card
or electronic funds transfer upon application. We have applied to the SEC for
exemptive relief to allow investors to pay by credit card. The Broker-Dealer
will sell the shares in the Fund on a "best efforts" basis and you will not pay
any sales load. The Broker-Dealer will only sell shares to you if you confirm
that you have reviewed the suitability considerations contained in this
prospectus and acknowledge that you meet or exceed the suggested suitability
standards. See "Plan of Distribution" on page 6 of this prospectus.

No money has been invested in the Fund to date and there is no minimum
amount of shares to be purchased before the Fund will begin operations. We
expect that the offering will be fully subscribed within two years of the date
of this prospectus. The offering will remain open so long as shares of the Fund
remain available, unless prior to such time the Investment Manager terminates
the offering at its own discretion or the Fund dissolves. The Fund's
distribution method is largely

5
<PAGE>

unproven. If the Fund cannot raise the $100,000,000 contemplated by this
offering, the Fund may have less diversification and a higher expense ratio.

THE FUND. We are a newly organized entity established to provide investors
with the opportunity to participate in venture capital investments that are
generally only available to "accredited investors" and require substantially
larger financial commitments. We will provide you with professional management
and administration that you may not otherwise have access to if you invest
directly. We have not yet made any investments in portfolio companies, but
expect to make our first investment soon after commencement of the offering.
During the course of this offering, we will post a listing of all our portfolio
companies on the website of the parent company of the Investment Manager and the
Broker-Dealer at http://www.vcvillage.com as we commit capital to such
companies. For each portfolio company, the website will disclose;

o its name and address

o the nature of its business

o the title, class, percentage of class and value of the securities
held by the Fund,

o the amount and general terms of all loads to the portfolio
companies, and

o the relationship of the portfolio company to the Fund.

We were formed as a Delaware limited liability company on June 13, 2000,
and as such we are governed by an Operating Agreement that defines many of your
rights and responsibilities as an investor in the Fund. The Directors have
elected to treat the Fund as a corporation for tax purposes, and the Fund
intends to qualify for pass-through tax status as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986 ("Internal Revenue
Code"). Until that time, the Fund will elect to be treated as a C corporation
for federal tax purposes. We will not seek a ruling from the Internal Revenue
Service concerning our tax status.

THE DIRECTORS. The Operating Agreement provides that the Directors will
manage the administrative affairs of the Fund. We will initially have five
Directors, consisting of three Independent Directors (i.e., not "interested
persons" of the Fund or its affiliates as that term is defined in the Investment
Company Act) and two Affiliated Directors (i.e., persons affiliated with the
Investment Manager). The Directors have given the Investment Manager the
authority, subject to the supervision of the Directors, to manage the
investments for the Fund, as well as to manage the day-to-day operations of the
Fund. See "The Fund Directors" on page 26 of this prospectus.

THE INVESTMENT MANAGER. The Investment Manager will implement our
investment objective and will set our strategic and operational directive. In
particular, the Investment Manager will identify, structure and negotiate
investments for the Fund, as well as monitor and assist our portfolio companies.
There can be no assurance that the investments it selects will be successful.
The Investment Manager will also manage our day-to-day operations, including our
accounting, finance, record-keeping and regulatory compliance. See "The
Investment Manager" on page 34 of this prospectus.

INVESTMENT OBJECTIVE. Our investment objective is long-term capital
appreciation from venture capital investments in emerging growth companies.
Venture capital investments are

6
<PAGE>

typically long-term illiquid investments in companies with high growth potential
whose shares are not publicly-traded. We intend to invest in private companies
in various stages of development. We expect our venture capital investments
primarily to take the form of common stock, preferred stock, or debt securities
convertible into common stock or warrants or options exercisable for preferred
or common stock.

We will seek to provide returns to you through long-term appreciation in
the value of our portfolio companies. We will not select our investments based
on their ability to generate current income for distribution. There is no
assurance that we can achieve our investment objective or that the performance
of companies in which we make investments will be as anticipated. See "Business
of the Fund" on page 11 of this prospectus.

INVESTMENT STRATEGY. As a key element of our investment strategy, we will
seek to take equity positions in pre-IPO companies, especially those involved in
(directly or indirectly) marketing goods and services to consumers, that the
Investment Manager believes have outstanding growth and profit potential. Such
companies need to raise capital to fund their marketing and other operational
costs. We believe that such companies will view the Fund as an attractive source
of capital, because the community of investors in the Fund can serve as a pool
of potential customers of or advocates for such companies. As investors, you
will have an economic interest in helping our portfolio companies succeed. The
more value our investors add to portfolio companies, the more attractive the
Fund will become to other pre-IPO companies. There can be no assurance, however,
that the Fund will attract a critical mass of investors, that start-up companies
will view the Fund as an attractive source of capital or that our investors will
have any impact on the ultimate success of any of our portfolio companies.

After investing in portfolio companies, we will offer to provide
significant managerial assistance. Such assistance may include help in preparing
for future rounds of private or public financing, recruiting management,
refining business strategies, assisting with general business operations and
making introductions to venture firms, investment banks and other potential
sources of capital.

We do not have any current plans to issue senior interests or debt
securities or to use significant leverage. However, in order to maximize the
internal rate of return of the Fund or to qualify for pass-through tax treatment
as a regulated investment company, we may elect to increase its leverage,
including by use of a line of credit secured by the assets of the Fund. In any
case, debt incurred by the Fund will not exceed 50% of net asset value, unless
otherwise permitted under the Investment Company Act. See "Risk Factors -- Debt
Incurred by the Fund Could Affect Distributions and Exaggerate Decreases in Net
Asset Value" on page 24 of this prospectus.

COMPENSATION OF THE INVESTMENT MANAGER AND THE BROKER-DEALER. We will pay
the Investment Manager an annual management fee equal to 2.5% of the Fund's
average net assets, payable in monthly installments. The Investment Manager may
waive all or a portion of the management fee. In addition, we will pay the
Investment Manager an incentive fee as described in detail below. We will also
reimburse the Investment Manager for organization expenses incurred in setting
up the Fund and for ongoing operational costs incurred by it on our behalf.
Reimbursements for such operational costs will be limited annually to 1.25% of
our net asset value. The terms of the Investment Manager's compensation are set
forth in detail in the Operating Agreement.

7
<PAGE>

Each quarter, 20% of the Fund's realized capital gains, net of realized
and unrealized capital losses, will be paid to the Investment Manager as an
incentive fee.

The incentive fee, referred to as a "carried interest," is a typical
incentive compensation used in the venture capital industry and provides an
economic incentive for venture capital fund managers to select investments with
the potential to achieve the greatest increase in value over time. However, the
incentive fee may also encourage the Investment Manager to make investments that
are subject to greater risk. The Investment Manager may waive or defer all or
any portion of the incentive fee.

The Broker-Dealer will not receive any commission for selling shares in
the Fund. However, we will reimburse the Broker-Dealer and its affiliates for
actual costs incurred in the marketing and distribution of the Fund's shares,
subject to certain legal limits. See "Compensation of the Investment Manager,
Its Affiliates and the Independent Directors" on page 34 of this prospectus.

DISTRIBUTIONS. In order to qualify for pass-through tax treatment, we
intend to distribute at least annually a minimum of 90% of the net dividend and
interest income we receive from short-term investments. During the period in
which we are evaluating and selecting portfolio companies, we will invest our
capital primarily in short-term investment grade securities. These investments
will generate interest income for distribution to investors. However, as we
invest the proceeds of this offering in portfolio companies, we will have less
interest income available for distribution to you. We also intend to distribute
any realized capital gains that the Fund generates, net of realized and
unrealized capital losses. In addition, if a portfolio company is sold, merged
or goes public, we may distribute cash or stock in either the portfolio company
or the acquiring company. The timing of capital gains distributions will vary
depending on when we liquidate our investments in individual portfolio companies
and the fiscal year of the Fund.

SUITABILITY CONSIDERATIONS. An investment in the Fund may be appropriate
if you want to place a small portion of your investment portfolio in an
aggressive growth fund to diversify your holdings. Professionally managed
venture capital funds that invest in emerging companies entail significant
risks. Significant restrictions constrain your ability to transfer shares, and
therefore an investment in the Fund is only appropriate for you if you have no
need for liquidity of your investment for a number of years. You should not
invest more than 5% of your net worth (exclusive of home, furnishings, and
automobiles and any liabilities secured by those assets) in the Fund.

TAX CONSIDERATIONS. The "Tax Information" section in this prospectus
applies mainly to individuals and not to trusts, pension and profit-sharing
plans, or corporations. An investment in the Fund may entail income tax
reporting issues important to you, and you should consider these issues
carefully before investing in the Fund. Because actual tax consequences will
depend on your unique circumstances, we advise you to seek independent tax and
financial counsel in evaluating the individual merits and suitability of this
investment.

RISK FACTORS; CONFLICTS OF INTEREST. Purchasing shares of the Fund carries
significant risk of losing some or all of your investment. Prior to investing in
the Fund, you should consider the risk factors described on pages 20 to 29 of
this prospectus and the impact of events that could adversely affect our
business, many of which may be events beyond our control or the control of the
Investment Manager. In addition, pages 30 to 31 of this prospectus set forth
some of the potential conflicts of interest that arise based on the structure of
the Fund.

8
<PAGE>

ADDITIONAL INFORMATION. Our executive offices are located at 325 W. 38th
Street, Suite 1504, New York, NY 10018. The Fund is required to file annual and
quarterly reports with the SEC. This prospectus and the Fund's most current
annual and quarterly reports can be found at http://www.vcvillage.com. The
information contained on the website of the parent company of the Investment
Manager and the Broker-Dealer, http://www.vcvillage.com, is not part of this
prospectus.

PLAN OF DISTRIBUTION

VCVillage.com Securities, Inc., or the Broker-Dealer, is distributing up
to $100,000,000 worth of shares of the Fund on a best efforts basis through its
website at HTTP://WWW.VCVILLAGE.COM/ SECURITIES. Currently, you may only
purchase such shares through the Broker-Dealer's website, although we reserve
the right in our sole discretion to allow one or more investors to purchase
other than through this website if we so choose. The Broker-Dealer will sell
shares to those of you who represent that you meet the suitability standards set
forth under "Suitability Considerations." The Broker-Dealer is a member of the
NASD.

The initial price per share is $[ ]. The price per share will vary
depending on the net asset value, or NAV, of the Fund, so that the price per
share will be equal to the per share NAV of the Fund. See "Portfolio Valuation".
We will admit new investors to the Fund on a weekly basis after that week's
determination of net asset value and the subsequent adjustment of share price.
The Broker-Dealer may determine to subsidize the first [ ] investors in the Fund
by contributing a portion of the share price to the Fund for the account of such
investors. Any subsidies will not be reimbursed to the Broker-Dealer by the
Fund. In addition, the Broker-Dealer may pay referral bonuses to investors in
the Fund or to others in certain circumstances.

You may pay for your shares by debit card or electronic funds transfer
upon application. We have applied to the SEC for exemptive relief to allow
investments to be made by credit card. We may reject a subscription for any
reason, in whole or in part, at any time. We may not necessarily accept
subscriptions in the order we receive them. We reserve the right to reduce any
subscription and to allocate subscriptions received in the event that this
offering is oversubscribed. Shares will be paid for, and you will be admitted to
the Fund on a weekly basis, after your subscriptions are accepted. The risks
associated with the purchase of shares by credit card are set forth in the "Risk
Factors" section.

We have agreed to indemnify the Broker-Dealer or contribute to its losses
arising out of certain liabilities, including liabilities under the Securities
Act of 1933. The Investment Manager will determine the net asset value, or NAV,
of the Fund on a weekly basis. While valuations are inherently subjective, the
Investment Manager will make its valuation in good faith under guidelines
established by the Directors. During the course of this offering, we will adjust
the share price on a weekly basis.

9
<PAGE>

given to such companies in subsequent rounds of third-party financings. Upon the
occurrence of a significant development or other factor affecting a portfolio
company, including results of operations, changes in general market conditions,
subsequent financing or the availability of market quotations, the Investment
Manager will determine whether such events provide a basis for valuing such
investment at a different number. Such valuations may be based on a variety of
assumptions and may vary significantly over time.

In general, the Investment Manager will value securities with legal,
contractual, or practical restrictions on transfer at a discount to their value
determined by the foregoing methods in order to reflect the effect of such
restrictions.

Personnel performing functions for the Broker-Dealer will receive salaries
in connection with their distribution activities. The Investment Manager will
receive an investment management fee and an incentive fee in connection with its
management of the assets of the Fund. Certain Broker-Dealer personnel will
overlap with Investment Manager personnel in their performance of services to
the Fund.

The Broker-Dealer and the Investment Manager are both wholly owned
subsidiaries of VCVillage.com Holdings, Inc. This relationship may lead to
certain conflicts of interest that are described below under "Conflicts of
Interests". The address of the Broker-Dealer is 325 W. 38th Street, Suite 1504,
New York, NY 10018.

HOW TO INVEST

In order to invest, you will need to complete, execute, and submit to the
Broker-Dealer the Application located on the Fund's website and authorize
payment for the shares you intend to purchase. As of now, payments may only be
made by debit card or electronic funds transfer. We intend to allow you to
purchase shares by credit card in the future, and we may introduce other payment
mechanisms over time. All payments will be deposited into the Fund's custodial
account immediately upon acceptance of a subscription.

The minimum amount you may invest in the Fund is $100. The number of
shares that you will receive for a $100 investment will depend on the share
price at the time we accept your application. At any time during the course of
this offering you may purchase additional shares by executing a new on-line
application.

Each purchase will be processed at the NAV next calculated after your
application is received and accepted by the Broker-Dealer. The Fund's NAV is
calculated each Thursday at the close (normally 4 p.m. EST) of the regular
trading session of the New York Stock Exchange (NYSE) on each Thursday that the
NYSE is open for business. The NAV of the Fund's shares is not determined on any
Thursday on which the NYSE is closed (e.g., Thanksgiving Day). In such a case,
the Fund's NAV will be determined at the close of the regular NYSE trading
session on the next day that the NYSE is open.

Please note that the price per share will vary depending on the NAV of the
Fund's investments, which will be determined once a week. YOU SHOULD NOTE THAT
THE PRICE PER SHARE WILL LIKELY BE DIFFERENT AT THE TIME OF EACH SUBSEQUENT
INVESTMENT YOU MAKE IN THE FUND. If we receive your application in good form by
the close (4 p.m. EST) of the regular NYSE trading session on a Thursday, your
purchase will receive the NAV calculated for the

10
<PAGE>

Fund that day. If we receive your application after 4 p.m. on Thursday, your
purchase will receive the NAV calculated on Thursday on the following week.

We will keep confidential all the information you provide to us and will
disclose your personal information only to the Investment Manager and its
affiliates, consultants, or service providers, except as required by appropriate
governmental, administrative, or regulatory authorities, or except if you
otherwise consent. We reserve the right to disclose general information about
the Fund's investors as a group.

USE OF PROCEEDS

We will apply the proceeds of this offering (up to $100,000,000) to make
investments in portfolio companies as well as to pay any fees or reimbursements
due to the Broker-Dealer and the Investment Manager. See "Compensation of the
Investment Manager, Its Affiliates, and the Independent Directors".

Pending our investment of funds in portfolio companies, we will invest the
proceeds of this offering in interest-bearing bank accounts, money market mutual
funds, Treasury securities and/or certificates of deposit with maturities of
less than one year. We may also invest such proceeds in commercial paper (rated
or unrated) and other short-term securities. Cash, cash items, securities issued
or guaranteed by the United States Treasury or United States government agencies
and high quality debt securities with maturities of less than one year at the
time of investment will qualify for determining whether the Fund has 70% of its
total assets invested in the types of assets specified in Section 55 of the
Investment Company Act.

In accordance with SEC staff interpretations of the Investment Company
Act, we intend to invest at least 50% of the money invested in the Fund within
the earlier of:

o two years after termination or completion of sales and

o two-and-one-half years of the commencement of this offering.

It may take a long time for the Investment Manager to find investments, as it
intends to undertake a rigorous effort to select the best possible portfolio
companies for investment. Depending on opportunities for investment, we may
invest a significant portion of our capital in the temporary investments set
forth above during such period.

BUSINESS OF THE FUND

The Fund is a Delaware limited liability company that was established on
June 13, 2000. The Fund is a non-diversified, closed-end management investment
company that has elected to be treated as a business development company under
the Investment Company Act. A business development company is an investment
company organized under the laws of, and having its principal place of business
in, the United States that is operated for the purpose of making investments
primarily to foster smaller, developing businesses. The Investment Company Act
requires business development companies to make available significant managerial
assistance to the businesses in which they invest.

Among other things, all investments are subject to the restrictions set
forth in Section 55 of the Investment Company Act. Section 55 generally provides
that the Fund may not make an investment

11
<PAGE>

unless, at the time of the acquisition, at least 70% of the Fund's total assets
(adjusted) are invested in assets specified in that section.

In the past twenty years, the business of providing capital to emerging
companies has grown to a multi-billion dollar industry. Venture capital funds
seek to provide a high investment rate of return while at the same time
mitigating the high risks of loss inherent in investing in unproven companies by
investing in a balanced portfolio of such companies. Historical industry
performance is not an indication of future industry performance or Fund
performance.

Our investment adviser is VCVillage.com Advisors, Inc., or the Investment
Manager. The Investment Manager will identify, structure and negotiate our
investments, as well as monitor and offer to assist our portfolio companies. The
Investment Manager intends to utilize many of the risk management and investment
strategies common to the venture capital industry. The Investment Manager will
also manage our day-to-day operations, including our accounting, finance,
recordkeeping and regulatory compliance efforts.

There is no public or secondary market for the Fund's shares, and we do
not expect any to develop. An affiliate of the Broker-Dealer will act as
transfer agent for the Fund shares, but will not engage in any market-making or
secondary market purchases or sales of such shares. The Fund will dissolve on
December 31, 2008, subject to the right of the Directors to extend the term for
up to two additional two-year periods.

INVESTMENT OBJECTIVE

CAPITAL APPRECIATION. Our investment objective is long-term capital
appreciation from venture capital investments in pre-IPO companies. We will
invest in companies that we believe have high growth potential over the long
term. We will not consider the generation of current income for distribution as
a factor when selecting investments.

Our investment objective is fundamental to the Fund, and may not be
changed without a vote of the holders of a majority of the interests in the
Fund.

WE MAY NOT SUCCEED IN ACHIEVING OUR INVESTMENT OBJECTIVE. Any single
venture capital investment is risky. Many will not provide any gain, and some
will be complete losses. Further, venture capital investments in general may be
riskier than other types of investments, and our risk management efforts do not
affect this overall systemic risk. Our goal is that the gains on our successful
investments will offset the losses on the others and provide you with a
satisfactory overall return.

12
<PAGE>

PORTFOLIO STRATEGY AND POLICIES

To meet our investment objective, the Investment Manager must identify and
invest in prospective portfolio companies with the potential for significant
appreciation. Pending such investments, Fund proceeds also may be temporarily
invested in money market securities, publicly-traded securities, mutual funds
and other investments. However, at the time of acquisition of any portfolio
company, no more than 30% of the Fund's assets will be invested in
publicly-traded securities, mutual funds and other such investments.

PORTFOLIO COMPANIES. We will seek to take equity positions in pre-IPO
companies, especially those marketing goods and services to consumers, that the
Investment Manager believes have outstanding growth and profit potential. We may
also invest in established publicly-held or privately-held companies that the
Investment Manager believes constitute special situations offering opportunities
for capital appreciation. As a business development company, the Investment
Company Act limits the proportion of our assets represented by publicly-traded
securities.

Such companies often raise capital for the purpose of funding their
marketing and other operational costs. We believe that such companies will view
the Fund as an attractive source of capital, because the community of investors
in the Fund can serve as a pool of potential customers for such
consumer-oriented companies. For instance, assuming that the offering is fully
subscribed and the average investor subscribes for $500 worth of shares, the
Fund will have a community of 200,000 investors.

INDUSTRY FOCUS. We expect many of our venture capital investments will be
in companies in the Internet, e-commerce, telecommunications, software and
information services industries. We believe that these sectors offer outstanding
growth opportunities and many new markets in which emerging companies can
thrive. Companies in these industries compete to meet the growing demand for
technologically advanced applications and services, and may value the Fund's
investors as potential customers. We do not intend to concentrate in any one
industry (i.e., invest more than 25% of the Fund's assets in a particular
industry). However, if the most attractive investments available to the Fund are
in a small number of industries, the Fund's exposure to the risk of adverse
developments in or affecting any single industry may be increased.

Not only will these investors have an economic incentive to help our
portfolio companies succeed, but also we may enter into arrangements with our
portfolio companies to further encourage such investors to become customers. We
cannot assure you, however, that the offering will be fully subscribed, that
start-up companies will view the Fund as an attractive source of capital, or
that investors will have any impact on the ultimate success of any portfolio
company.

STRUCTURE OF INVESTMENTS. We will seek to structure our typical venture
capital investments as negotiated, private transactions directly with the
issuer, or as a part of larger private transactions led by co-investors. We will
primarily seek to acquire common stock and securities convertible into common
stock, but may also acquire a combination of equity and debt securities and
warrants, options, and other rights to acquire such securities, or limited
partnership or joint venture interests. Finally, we may also make loans to our
portfolio companies to address temporary cash flow problems and may provide
guarantees to creditors of such companies. We will seek to make most of our
venture capital investments in private companies or restricted securities of
publicly-traded companies, and therefore we will tend to hold illiquid
securities subject to resale restrictions.

13
<PAGE>

SIZE OF INVESTMENTS. The amount of funds we commit to a portfolio company
and the ownership percentage we receive will vary depending on the maturity of
the company, the quality and completeness of its management team, the perceived
business opportunity, the capital it requires, and the potential return. To
ensure that we have the freedom to select investments in companies that meet our
investment objective, we have no formal limits on the amount of capital that we
may invest in any individual portfolio company. In the event that the Fund is
not fully subscribed, no specific percentage limit will be placed on investment
in any single company. We note that the Fund intends to meet the diversification
requirements of Subchapter M of the Internal Revenue Code. See "Tax
Information".

INVESTMENT PERIOD. We intend to invest the proceeds of the offering
(including money invested by the Investment Manager as part of the offering) as
rapidly as is consistent with our investment objective. If we are not able to
invest at least 50% of the Fund's total assets in certain securities by the
earlier of:

o two years after termination or completion of sales and

o two-and-one-half years after the commencement of this offering,

we may make a distribution of capital to you so that least 50% of the Fund's
remaining assets are invested or committed for investment, or we may seek to
obtain your approval for a change in our business purpose, if required to do so
by the SEC. We expect that it may take up to three years or longer from the
termination of the offering for us to complete the investment of the Fund's
initial capital (other than reserves maintained for follow-up investments or
operating expenses).

FOLLOW-ON INVESTMENTS. After making our initial investments, we will often
provide additional or "follow-on" financings for our portfolio companies. We may
provide follow-on investments for a number of reasons, including providing
additional capital to a portfolio company to implement the company's business
plan, to develop a new line of business, or to recover from unexpected business
problems. Follow-on investments may increase our ownership position in a
successful or promising portfolio company.

INDEBTEDNESS. Although we do not currently contemplate it, in the future
we may use leverage (i.e., borrowed funds or senior securities) for any Fund
purpose, including making follow-on investments. Such borrowing would normally
occur in the later years of Fund operations when our portfolio may have
significant value but no liquidity. We also may borrow funds during the offering
period to allow us to participate in investment opportunities in anticipation of
additional capital contributions or to qualify for pass-through tax treatment
under Subchapter M of the Internal Revenue Code. Otherwise, we will only incur
debt as a temporary measure for extraordinary or emergency purposes. Unless
otherwise permitted by the Investment Company Act, the amount of borrowing may
not exceed 50% of the net asset value of the Fund.

RESERVE MANAGEMENT. We intend to retain significant reserves for a number
of years in order to have sufficient funds for equity-oriented follow-on
investments in portfolio companies and to pay Fund operating expenses. In order
to enhance the rate of return on these reserves and increase the amounts
ultimately available, we will engage in a reserve management strategy that may
include making secured loans to our portfolio companies, potential portfolio
companies, or other entities. We expect to invest some portion of these reserves
either in publicly-traded securities or in mutual funds, subject to applicable
legal limits.

14
<PAGE>

PORTFOLIO MANAGEMENT. We regard a balanced portfolio as an essential part
of our strategy. The Investment Manager expects to balance the Fund's portfolio
in the following ways:

o INDUSTRY. The Investment Manager will consider an investment in any
company in any industry that presents a good investment opportunity.
Our ability to invest in a wide range of industries will reduce the
potential impact of adverse developments in a particular industry.

o COMPANY. Assuming the offering is fully subscribed, the Investment
Manager expects that we will invest in at least 50 portfolio
companies. In that case, the Investment Manager does not expect that
the failure of any single portfolio company will materially affect
the success of the Fund. However, the actual number of portfolio
companies, and the size of such investments, will depend on the
amount of funds available and the Fund's need to meet the
diversification requirements of Subchapter M of the Internal Revenue
Code.

o MATURITY OF PORTFOLIO COMPANIES. We will seek a range of maturities
for our portfolio companies. As a general matter, we do not intend
to make seed-level investments, because we believe that a Fund
investment may be less advisable in the case of a very early-stage
company that does not yet offer products or services. In addition,
more mature companies often represent less risk, as they have
already survived many of the hazards of growth. However, such
companies' equity typically costs more than that of earlier-stage
companies that have greater risk but higher appreciation potential.

Actual portfolio composition will depend on market conditions and funding
opportunities beyond the Investment Manager's control. Consequently, we cannot
assure that these portfolio management objectives will be met.

CO-INVESTMENT. We expect that we will make most of our investments in
conjunction with other venture capital funds, including venture capital funds
that are affiliates of, or entities that have indirect ownership interests in,
the Investment Manager. Later-stage start-up companies often require levels of
funding in excess of what the Fund could prudently provide on its own. In
early-stage investments, co-investment allows for a larger aggregate investment,
the sharing of necessary follow-on investment requirements, and joint
involvement by venture capital firms in building a company. The Fund, along with
its co-investors, will typically have a substantial, and maybe even controlling,
interest in its portfolio companies. By making co-investments, the Fund not only
expands the financial and managerial resources available to its portfolio
companies, but also increases its network of venture investors that may come to
the Fund with future investment opportunities. The Investment Company Act
generally prohibits the Fund from co-investing with any entity that is a Fund
"affiliate" as defined in the Investment Company Act. We may request exemptive
relief from the SEC to allow co-investments with our affiliates but there is no
assurance that such relief will be granted.

PORTFOLIO TURNOVER; CHANGE OF POLICY. We expect a low rate of portfolio
turnover among our venture capital investments. However, with respect to
publicly-traded securities, mutual funds and other temporary investments in
which we will invest, there likely will be a higher portfolio turnover in that
segment of the portfolio. Our election to be treated as a business development
company will limit our choice of investments. We may only elect to withdraw our
status

15
<PAGE>

as a business development company with the authorization of a majority in
interest of the Fund's shareholders.

DEBT SECURITIES. Our investments in portfolio companies are not limited to
common and preferred stock. We have the investment flexibility to invest in
portfolio companies through other types of instruments if we believe that such
alternative investments are in your best interests. Such other investments might
include debt securities (which may or may not be convertible into equity
securities) and structured debt securities whose value is linked to the sales of
a particular product. Debt securities in which we may invest may be unsecured or
they may be collateralized by other assets owned or controlled by the issuing
company.

WARRANTS AND OTHER RIGHTS TO PURCHASE EQUITY OR DEBT SECURITIES. When we
believe it appropriate, we may acquire warrants and other rights to purchase at
a later date equity or debt securities of our portfolio companies. Warrants are
securities permitting, but not obligating, their holder to subscribe for other
securities. Warrants typically do not carry with them the right to dividends or
voting rights with respect to the securities that they entitle their holder to
purchase, and they do not represent any rights in the assets of the portfolio
company. As a result, warrants may be considered more speculative than certain
other types of investments. In addition, the value of a warrant does not
necessarily change with the value of the underlying securities and a warrant
ceases to have value if it is not exercised prior to its expiration date.

TEMPORARY INVESTMENTS. When Fund proceeds are invested temporarily in
mutual funds or other pooled investment vehicles, the Fund will bear the costs
associated with these investments. Thus, these temporary investments may entail
higher indirect expenses to Fund investors, including layered management and
other fees. The Fund will not invest more than 5% of its total net assets in any
one investment company or more than 10% of its total net assets in investment
companies in the aggregate. Pending investments in the types of securities
described above, we will invest our cash in, among other things,

o Money market securities;

o U.S. Government securities;

o Repurchase agreements with federally-insured banks with a maturity
date of seven days or less, the underlying instruments of which are
securities issued or guaranteed by the federal government;

o Certificates of deposit in a federally insured bank with a maturity
date of one year or less and in a maximum amount equal to the limit
on federal deposit insurance;

o Deposit accounts maintained in a federally insured bank subject to
withdrawal restrictions of one year or less, up to the limit of
federal deposit insurance;

o Certificates of deposit or deposit accounts in federally insured
banks in excess of the maximum amount of deposit insurance if the
insured bank is deemed to be well-capitalized by the Federal Deposit
Insurance Corporation; and

o Mutual funds and other publicly-traded securities.

16
<PAGE>

CERTAIN INVESTMENT TECHNIQUES FOR HEDGING PURPOSES. We may use certain
investment techniques to provide hedging with respect to investments in our
portfolio. We will engage in such hedging transactions in an effort to protect
the value of our investment portfolio from changes in the market value of
securities in which we have invested, or in the value of securities into which
securities in our portfolio are convertible. There can be no assurance that our
hedging activities will be successful, or that losses will be avoided, and the
cost of hedging activities may result in lower profits than would have been
realized if we did not engage in hedging at all.

We may engage in the following hedging transactions:

o Short Sales. We may make short sales of securities. A short sale is
a transaction in which the Fund sells a security in anticipation
that the market price of that security will decline. We may make
short sales as a form of hedging to offset potential declines in
long positions in securities that we own, or anticipate acquiring,
or in similar securities.

o Options. We may use options on securities to attempt to hedge
against the overall level of investment risk associated with the
Fund's portfolio investments. We may purchase or sell put and call
options on equity and debt securities to hedge against the risk of
fluctuations in the prices of securities held by the Fund or that we
intend or have the right to include in the Fund's portfolio
holdings.

INVESTMENT RESTRICTIONS

FUNDAMENTAL INVESTMENT LIMITATIONS. The following are the Fund's
fundamental investment limitations which, along with the Fund's investment
objective, cannot be changed without shareholder approval. To obtain approval, a
majority of the Fund's outstanding voting shares must vote for the change. A
majority of the Fund's outstanding voting securities means the vote of the
lessor of: (1) 67% or more of the voting securities present, if more than 50% of
the outstanding voting securities are present or represented by proxy, or (2)
more than 50% of the outstanding voting shares.

Unless indicated otherwise below, the Fund:

1. May (1) borrow money from banks, and (2) make other investments or engage
in other transactions permissible under the Investment Company Act which
may involve a borrowing, provided that immediately after such borrowing,
the borrowing has an asset coverage of at least 200%, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) from a bank for temporary or emergency purpose (but not
for leverage or the purchase of investments).

2. May not issue senior securities, except as permitted under the Investment
Company Act.

3. May not act as an underwriter of another issuer's securities, except to
the extent that the Fund may be deemed to be an underwriter within the
meaning of the Securities Act of 1933 in connection with the purchase and
sale of portfolio securities.

4. May not purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the Fund from purchasing or selling

17
<PAGE>

options, futures contracts, or other derivative instruments, or from
investing in securities or other instruments backed by physical
commodities).

5. May not make loans, except in accordance with the Investment Company Act.

6. May not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prohibit
the Fund from purchasing or selling securities or other instruments backed
by real estate or of issuers engaged in real estate activities).

NON-FUNDAMENTAL OPERATING POLICIES. The following are the Fund's
non-fundamental operating policies which may be changed by the Directors without
shareholder approval.

Unless indicated otherwise below, the Fund may not:

1. Sell securities short, unless the Fund owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short, or
unless it covers such short sale as required by the current rules and
positions of the SEC or its staff, and provided that transactions in
options, futures contracts, options on futures contracts, or other
derivative instruments are not deemed to constitute selling securities
short.

2. Purchase securities on margin, except that the Fund may obtain such
short-term credits as are necessary for the clearance of transactions; and
provided that margin deposits in connection with futures contracts,
options on futures contracts, or other derivative instruments shall not
constitute purchasing securities on margin.

3. Purchase securities of other investment companies except in compliance
with the Investment Company Act and applicable state law.

4. Engage in futures or options on futures transactions except in accordance
with Rule 4.5 under the Commodity Exchange Act for bona fide hedging
transactions (within the meaning of the Commodity Exchange Act), provided,
however, that the Fund may, in addition to bona fide hedging transactions,
use futures and options on futures transactions if the aggregate initial
margin and premiums required to establish such positions, less the amount
by which any such options positions are in the money (within the meaning
of the Commodity Exchange Act), do not exceed 5% of the Fund's net assets.

Unless noted otherwise, if a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage resulting from a change
in the Fund's assets (i.e., due to cash inflows or redemptions) or in market
value of the investment or the Fund's assets will not constitute a violation of
that restriction.

VENTURE CAPITAL OPERATIONS

Our venture capital operations will consist of the following basic
activities:

o INVESTMENT DEVELOPMENT. The Investment Manager will receive
investment proposals from many sources, including unsolicited
proposals from the public, postings on the Fund's or its affiliates'
websites, personal contacts of the Investment Manager, and referrals
from banks, lawyers, accountants, and other

18
<PAGE>

members of the financial community. However, we expect other
professional venture capital firms, including those that have
ownership interests in the Investment Manager, to serve as the
primary source of investments.

o INVESTMENT RESEARCH. Prior to committing funds to an investment
opportunity, the Investment Manager will conduct research to assess
the prospects and risks of the potential investment. The officers of
the Investment Manager, with the help of its co-investors, will
evaluate the products, markets, industry trends, financial
requirements, competition, and the entrepreneurial group associated
with a prospective investment. Where appropriate, the Investment
Manager may hire, on behalf of the Fund, outside consultants to
provide expertise in specialized areas.

o INVESTMENT STRUCTURING. We expect to make our venture capital
investments along with co-investors through private transactions
negotiated directly with the subject company. The Investment Manager
will represent the Fund in the negotiations, and will seek to
structure the terms of the investment so as to maximize the Fund's
opportunity for long-term capital appreciation. Where appropriate
and in compliance with applicable law, the Fund, the Investment
Manager, or any co-investors may receive structuring fees,
transaction fees, breakup fees, workout fees, or other similar fees
for providing services to potential portfolio companies. We do not
expect to receive significant fees or compensation directly or
indirectly from our portfolio companies, and all payments will be
made in accordance with applicable law.

o INVESTMENT MANAGEMENT. Representatives of the Investment Manager
and/or representatives of the Fund's co-investors will seek to serve
as members of the boards of directors of portfolio companies. This
board representation, as well as our close working relationships
with the management teams of our portfolio companies, should enable
us to provide assistance with respect to such matters as capital
structure, budgets, profit goals, diversification strategy,
financing requirements, management additions or replacements, and
disposition strategy. The close tracking of internal financial
statements and progress reports, as well as an active working
relationship with management teams, form the essential ingredients
of effective monitoring and risk control. We will not completely
rely on our co-investors to provide managerial assistance to our
portfolio companies.

o INVESTMENT LIQUIDATION AND EXIT. We intend to sell our venture
capital investments in order to realize capital gains within the
limited duration of the Fund. We expect to liquidate our investments
through a variety of transactions, including mergers, acquisitions
of our portfolio companies by third parties, sales in registered
underwritten offerings, sales in the public market pursuant to
exemptions from registration, and negotiated private sales to our
portfolio companies, other investors in such companies, or other
venture capital investors.

The Operating Agreement provides that we may make distributions, at the
election of the Investment Manager, in cash or securities. We may seek an
exemptive order under Section 206A of the Investment Advisers Act that will
permit us to distribute any in-kind portfolio securities traded on any
nationally recognized exchange or market that are no longer considered venture
capital investments. We will value such in-kind securities distributed at the
average of their closing bid and asked prices on

19
<PAGE>

the relevant exchange or market during the five trading days immediately
preceding the distribution. You may sell any in-kind securities distributed
subject to the extent of liquidity available on such exchange or market.

The Investment Manager anticipates that the Fund may enter into
arrangements to facilitate the eventual sale of securities distributed in-kind
at reduced transaction costs. However, you may prefer to receive cash
distributions that represent the proceeds of a sale of a block of securities by
the Fund. If you receive distributions in-kind, you may be able to affect both
the amount and timing of the recognition of any gain or loss on the security for
income tax purposes. For each distribution that we could make partly or wholly
in-kind, the Investment Manager will weigh our ability to liquidate stock
efficiently against your opportunity to control the timing and amount of any
gain or loss on the securities.

RISK FACTORS

You should carefully consider the following risk factors in addition to
the other information set forth in this prospectus before purchasing any shares.
Investing in the Fund involves a high degree of risk, and you should consult
with your financial, tax or legal advisors before making an investment. We have
classified the various risks factors below into "venture capital risks" (i.e.,
risks inherent in equity investments in emerging growth companies), "risks of
the Fund" (i.e., risks that arise from the proposed structure of the Fund and
the nature of its investments) and "credit card risks".

VENTURE CAPITAL RISKS

VENTURE CAPITAL INVESTMENTS ARE SPECULATIVE IN NATURE AND YOU COULD LOSE
ALL OR SOME OF THE AMOUNT YOU INVEST.

The statistical success rate for start-up venture capital enterprises is very
low. Each venture capital investment involves several business and financial
risks that may result in substantial losses. These include risks associated with
investing in:

o companies in an early-stage of development with little or no
operating history,

o companies operating at a loss or with substantial variations in
operating results from period to period, and

o companies that need substantial additional capital to support
expansion or to achieve or maintain a competitive position.

In addition, we expect to make significant equity investments in companies in
rapidly changing high-technology fields that face special risks of product
obsolescence and intense competition from other companies.

EARLY STAGE COMPANIES MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP THEIR
PRODUCTS OR SERVICES

Early-stage companies are often unable to commercialize their technology
or product concepts with the resources that they have available. Even
later-stage companies that have developed products need to continue to create
new products and improve existing ones in order to succeed. Our portfolio

20
<PAGE>

companies may not succeed in their development efforts, and, even if successful,
may not complete their development within the budget or time period originally
estimated. Such companies may require additional investments by the Fund or
other sources in order to complete such development, and there is no assurance
that such investments will be available.

VENTURE CAPITAL INVESTMENTS TEND TO BE IN COMPANIES THAT ARE IN
COMPETITIVE AND CHANGING MARKETS

The markets for new products and services tend to be highly competitive
and rapidly changing. Nearly all of our portfolio companies will face intense
competition, including competition from companies with greater financial
resources, more extensive development, manufacturing, marketing, and service
capabilities, and a larger number of qualified managerial and technical
personnel. Commercial success often depends on marketing and support resources.
The marketing efforts of any of our portfolio companies may not succeed and such
companies may not be able to sell their products or services at a profitable
price and volume. The products or services of a particular portfolio company may
become obsolete or require significantly more capital to obtain or maintain an
adequate market share in order to succeed.

THE SUCCESS OF OUR PORTFOLIO COMPANIES WILL DEPEND ON THE TALENTS AND
EFFORTS OF THEIR MANAGEMENT AND PERSONNEL

The success of our portfolio companies depends in great part upon the
abilities of their management, as the day-to-day operations of each such company
will be in the hands of its own management team. The success of any venture also
depends upon the availability of qualified employees. High turnover of personnel
has become endemic in many rapidly growing industries and could severely disrupt
a company's implementation of its business plan. Our portfolio companies may not
succeed in attracting and retaining qualified personnel. In addition, a
company's personnel, particularly its founders, may have difficulty accepting
and making the transitions that occur as a company matures. As our portfolio
companies have yet to be identified, you must rely upon the Investment Manager
to select companies that have, or can obtain, the necessary management and
personnel.

OUR PORTFOLIO COMPANIES WILL LIKELY REQUIRE ADDITIONAL CAPITAL AND EXPECT
FOLLOW-ON INVESTMENTS FROM THE FUND

Most of our portfolio companies will require additional equity financing
to satisfy their working capital requirements. The amount of additional equity
financing will depend upon the maturity and objectives of each particular
company. If the funds available are not sufficient, a company may have to raise
additional capital at a price unfavorable to its existing investors, including
the Fund. The availability of capital depends on capital market conditions that
are beyond the control of the Investment Manager or any portfolio company, and
our portfolio companies may not be able to predict accurately their future
capital requirements. We expect our portfolio companies to call upon the Fund to
provide additional capital. If the Fund is unwilling or unable to make a
follow-on equity investment, it may have a negative impact on a portfolio
company in need of such investment. Further, the Fund's decision not to make a
follow-on investment in a portfolio company may cause the Fund's ownership
interest in the company to be diluted if others make follow-on investments in
the company. Dilution of the Fund's ownership interest in a portfolio company
may result in a dilution of the Fund's

21
<PAGE>

board representation and a decrease in the Fund's ability to provide managerial
assistance to the company.

VENTURE CAPITAL INVESTMENTS TYPICALLY ARE ILLIQUID

Substantial portions of the returns of venture capital funds are realized
through the initial public offerings of their portfolio companies. The market
for initial public offerings is cyclical in nature. An adverse change in the
market for public offerings could significantly impact the Fund's ability to
realize its investment objective. Even if our portfolio companies become
publicly-traded, most of the securities we hold will be subject to restrictions
on resale. We will not be able to sell such securities unless we meet the
conditions of Rule 144 or otherwise qualify for an exemption from registering
the securities under the Securities Act of 1933. Absent an available exemption,
we may be deemed an "underwriter," or possibly a controlling person, for the
purpose of the Securities Act of 1933 and may be subject to liability as such.

Our ability to achieve attractive investment returns will also depend upon
the availability of strategic or financial buyers for our portfolio companies.
The interest of potential purchasers in our portfolio companies will vary with
general economic conditions. The valuation of our portfolio companies will vary
with the valuations of comparable publicly-traded companies.

There can be no assurance that there will be sufficient investor interest
in the Fund's portfolio companies. IPOs by the Fund's portfolio companies may be
unable to attract the level of investor interest obtained by similar IPOs in the
past. Investor interest in IPOs generally had decreased significantly by October
1, 2000 as compared with previous periods.

Other practical limitations may inhibit our ability to sell or distribute
the securities of our portfolio companies. For example, we may own a relatively
large percentage of a portfolio company's outstanding securities, and customers,
other investors, financial institutions, or management may rely on our continued
investment. The overall condition of the securities market may also hinder our
ability to sell securities, as the market price for our portfolio companies may
be adversely affected by factors unrelated to their actual operating
performance. In the past few years, the market for equity securities has been
volatile, especially for securities of high-technology companies. The above
limitations could prevent a successful sale of portfolio securities, result in
delay of a sale, or reduce the proceeds that we receive from a sale.

THERE IS OFTEN A LACK OF AVAILABLE INFORMATION RELATING TO PRIVATELY HELD
COMPANIES

We will invest primarily in privately held companies. Generally, very
little public information exists about these companies. We will rely on the
ability of the Investment Manager to obtain adequate information to evaluate the
potential returns from investing in these companies.

RISKS OF THE FUND

WE EXPECT TO INCUR SUBSTANTIAL INITIAL LOSSES

We anticipate that most of the capitalization of the Fund, except for
operating cash reserves and funds set aside for follow-on investments in our own
portfolio companies, will be expended or committed by the end of the year 2003.
We do not expect to receive any substantial gains during that

22
<PAGE>

period. In addition, the Investment Manager anticipates that a number of our
portfolio companies will sustain substantial losses in their initial years of
operation. There can be no assurance that the Fund will ever be profitable.

AN INVESTMENT IN THE FUND CANNOT BE READILY SOLD

We do not expect any public or secondary market for the shares of the Fund
to develop. In addition, the Operating Agreement places restrictions on the
transferability and sale of shares, including the requirement that the admission
of a "substituted investor" may occur only with the consent of the Investment
Manager. Consequently, an investment in the Fund will have little, if any,
collateral value or liquidity and should be made only as a long-term investment.

Being a closed-end Fund, we will not be able to redeem your shares, as is
typical practice for mutual funds. Even if the Fund initiates a repurchase offer
for shares, it will only be for a small portion of each investor's shares. In
case a repurchase offer is over-subscribed, your participation in such
repurchase offer will be further limited.

WE HAVE NOT YET MADE ANY INVESTMENTS

As of the date of this prospectus, we have not made any venture capital
investments. If you invest in the Fund before it makes any investments, you will
not have an opportunity to evaluate specific portfolio companies and will have
to depend upon the Investment Manager to select and negotiate with potential
portfolio companies. To the extent we make material financing commitments to
portfolio companies during the period of the offering, such investments will be
disclosed on our website and in our annual or quarterly report as required by
the Securities Exchange Act of 1934.

OUR ABILITY TO MAKE VENTURE CAPITAL INVESTMENTS WILL DEPEND ON OUR ABILITY
TO RAISE FUNDS IN THIS OFFERING

We will begin investment operations immediately. The number of
investments, portfolio balance, and potential profitability of the Fund will
depend on the amount of funds at our disposal. The less funding we receive, the
fewer investments the Fund will make and its investment return might be
adversely affected by a single investment decision. In addition, expenses that
we express as a percentage of Fund assets will be higher the less money we
raise.

WE EXPECT TO FACE SIGNIFICANT COMPETITION FOR VENTURE CAPITAL INVESTMENTS

The Fund expects to encounter competition from other entities having a
similar investment objective. Historically, the primary competition for venture
capital investments has been from venture capital funds and corporations,
venture capital affiliates of large industrial and financial companies, small
business investment companies, and wealthy individuals. Additional competition
is anticipated from foreign investors and from large industrial and financial
companies investing directly rather than through venture capital affiliates.
Many of the Fund's competitors are subject to regulatory requirements
substantially different from those to which the Fund is subject, and, as a
consequence, they may have a competitive advantage to the extent that the
regulations under which the Fund operates restrict its abilities to take certain
actions. The Fund will frequently be a co-investor with other professional
venture capital groups, and will rely on its relationships with other groups to
expand

23
<PAGE>

the Fund's access to investment opportunities. However, to date the Fund has
made no arrangement to co-invest with any other venture capital firm.

OUR SUCCESS MAY DEPEND GREATLY ON THE FUTURE OF THE INTERNET INDUSTRY AND
NEW TECHNOLOGY COMPANIES

To the extent that we invest in a significant number of Internet-related
or other cutting edge technology companies, the success of the Fund will depend
on the increase in use of the Internet and cutting-edge technology by businesses
and individuals. Commercial use of the Internet, in particular, is still at an
early stage of development and we cannot guarantee the future success of
Internet-related companies. If use of the Internet fails to grow sufficiently,
our returns will be negatively impacted. In addition, because of the Internet's
popularity and increasing use, new laws and regulations may be adopted that
relate to privacy, pricing, content, taxation or other issues. The enactment of
new laws or regulations could impede the growth of the Internet and affect our
returns.

THE FUND'S DISTRIBUTIONS MAY NOT EXCEED YOUR INVESTMENTS IN THE FUND

We anticipate that it will take a significant period of time (up to three
or four years) before we complete the initial selection of our portfolio
companies for our first round of equity investments. Venture capital investments
typically take at least two years from the date of initial investment to reach a
state of maturity for a possible liquidation. In light of the foregoing, we
don't expect to make any significant distributions of the proceeds from the
liquidation of equity investments during the early years of the Fund. Even if we
eventually make significant distributions, the aggregate distributions may never
equal or exceed your investment in the Fund.

VALUING OUR PORTFOLIO WILL BE DIFFICULT AND INEXACT AND MAY NOT REFLECT
THE TRUE VALUE OF OUR INVESTMENTS

The Investment Manager, under guidelines established by the Directors,
will determine the net asset value of the Fund based on its best estimate of the
value of the individual investments in our portfolio companies. There is
typically no public market for the securities of small, privately held
companies. Accounting firms, investment banks and other consulting firms may
assist in valuation of our investments. Portfolio valuations, however, are
inherently subjective. The net asset value of the Fund may not reflect the price
at which you could sell shares if they could be sold on an open market.

THE FUND MAY NOT ACHIEVE THE HISTORICAL RATE OF RETURN OF THE VENTURE
CAPITAL INDUSTRY

Past performance of the venture capital industry is not indicative of the
future performance of the Fund or the industry in general. We cannot guarantee
that the Fund will meet or exceed the rates of return historically realized in
the venture capital industry. Additionally, our structure as a business
development company will almost certainly reduce our overall returns, because
of:

o the lower returns on our short-term liquid investments during the
period in which we identify potential investments, and

24
<PAGE>

o the periodic disclosure requirements for business development
companies, which may result in the Fund being less attractive as a
source of capital to potential portfolio companies.

DEBT INCURRED BY THE FUND COULD AFFECT DISTRIBUTIONS AND EXAGGERATE
DECREASES IN NET ASSET VALUE

We may borrow money and, in connection with loans, may mortgage, assign,
or otherwise encumber any Fund asset. We may use such borrowings for any Fund
purpose, including working capital or follow-on investments in our portfolio
companies or to qualify under Subchapter M of the Internal Revenue Code. Any
borrowings by the Fund must be repaid from Fund assets, which would reduce the
cash available for distribution to investors and could result in taxable income
to investors without cash distributions. In fact, the costs of borrowing may
exceed the income from the portfolio securities purchased with the borrowed
money. The use of such leverage would also exaggerate increases or decreases in
the Fund's net asset value as contrasted to the value of its total assets. If
the Fund's asset coverage ratio declines to less than 200%, it will affect our
ability to distribute Funds to our investors.

BOTH THE FUND AND THE INVESTMENT MANAGER ARE NEWLY FORMED ENTITIES

Although we expect that some key personnel of the Investment Manager may
have prior venture capital investment experience, neither the Fund nor the
Investment Manager has any operating history. The success of the Fund and the
Investment Manager in identifying and pursuing investment opportunities and
managing such investments will, to a large part, depend upon the expertise and
experience of the Investment Manager as well as the relationships that the
Investment Manager has within the venture capital community. The Investment
Manager has no prior venture capital experience, which may affect that Fund's
ability to meet its investment objective.

THE PARENT COMPANY OF THE INVESTMENT MANAGER MAY BE UNABLE TO RAISE
SUFFICIENT CAPITAL, WHICH MAY ADVERSELY AFFECT THE FUND

The parent company of the Investment Manager and the Broker-Dealer is a
start-up company. The parent company's primary source of income is from the fees
payable by the Fund to the Investment Manager, and the parent company expects to
recognize losses for at least the next two years. There is no assurance that the
parent company will be able to raise sufficient capital to continue operations
over the life of the Fund. If the parent company is unable to raise sufficient
capital, the Investment Manager will be forced to cease its operations and the
Fund may be forced to liquidate. If the Fund is forced to liquidate, there is no
assurance that investors will be able to get back their initial investment
immediately, if at all.

THE RELATIONSHIP BETWEEN THE FUND AND THE INVESTMENT MANAGER MAY CREATE
POTENTIAL CONFLICTS OF INTEREST

The Investment Manager may be subject to various conflicts of interest in
managing the investments of the Fund. Affiliates of, or entities that have
significant ownership interests in, the Investment Manager may also have
organized venture capital funds or similar investment vehicles. Such funds may
have a similar investment objective as the Fund and may compete with the Fund.
The

25
<PAGE>

Fund may co-invest in portfolio companies with such other funds and may
participate in follow-on investments in such portfolio companies of such funds,
subject to a majority vote of the Independent Directors and, if necessary, an
exemptive order from the SEC. (The personnel of the Investment Manager and its
affiliates will not necessarily devote their entire time to the portfolio
companies or the Fund).

In addition, the attorneys and other professionals who perform services
for the Fund (including in connection with this offering) also perform services
for the Investment Manager and its affiliates. If a conflict of interest arises
and cannot be resolved, or if the consent of the respective parties cannot be
obtained to the continuance of such dual representation after full disclosure of
such conflict, such professionals will have to withdraw from the representation
of one or both of the conflicting interests.

INDIVIDUAL INVESTORS HAVE NO RIGHT TO TAKE PART IN MANAGING THE FUND

The Directors will make all decisions with respect to the management of
the Fund. While the Fund's website may contain chat rooms, hyperlinks and other
information relating to its portfolio companies, individual investors will have
no right or power to take part in the management of the Fund. In addition, you
will not receive any of the detailed financial information issued by our
portfolio companies that is available to the Directors.

Although the Operating Agreement provides that the Fund's investors may
remove the Investment Manager under certain circumstances, such removal may
require substantial expenditures and could have negative financial and other
consequences for the Fund. The removal of the Investment Manager and several of
the other rights of Fund investors under the Operating Agreement require an
investor vote to accomplish.

OUR INVOLVEMENT IN PORTFOLIO COMPANIES MAY EXPOSE US TO POTENTIAL
LIABILITIES

We will offer to participate actively in the management of many of our
portfolio companies, and as a result may have representatives serve as members
of their boards of directors. Consequently, the Fund may expose itself to
liability from lawsuits against its representatives as directors. The Investment
Manager will try to limit Fund exposure to such claims and liabilities where
practical, but such efforts may not be successful. Liabilities related to
portfolio companies would adversely affect the amount of cash available for
distribution.

THE FUND'S TEMPORARY INVESTMENTS MAY POSE ADDITIONAL RISKS.

As noted earlier, pending investment in pre-IPO emerging growth companies,
Fund proceeds may be temporarily invested in money market securities,
publicly-traded securities, mutual funds and other investments. These
investments involve risks that may affect the Fund's ability to achieve its
investment objective. The price of equity securities rise and fall in response
to events that affect entire financial markets or industries, and to events that
affect a particular issuer. The prices of fixed-income securities respond to
economic developments, particularly interest rate changes and changes in the
perceived creditworthiness of the issuer of the fixed income security.

26
<PAGE>

IF WE ARE UNABLE TO COMPLY WITH SUBCHAPTER M OF THE INTERNAL REVENUE CODE
IN ANY GIVEN YEAR, WE WILL LOSE PASS-THROUGH TAX TREATMENT FOR THAT YEAR

To the extent we so qualify, we intend to elect to be treated as a
regulated investment company under Subchapter M of the Internal Revenue Code. To
qualify for Subchapter M status, we must meet qualifying income distribution and
asset diversification requirements. In each year in which we are able to meet
the requirements of Subchapter M, we generally will not be subject to federal
taxation on net investment income and net capital gains that we distribute to
investors. The Fund intends to borrow money, if necessary, to qualify for
Subchapter M tax status, however borrowing by the Fund is limited by the
Investment Company Act, and there is no assurance that such borrowing will be
available on acceptable terms.

If we are not able to meet the requirements of Subchapter M in any given
year, however, our income would be fully taxable at the federal level, which
could result in a substantial reduction in income available for distribution. If
the Fund fails to meet the requirements of Subchapter M in its first taxable
year or, with respect to later years, for more than two consecutive years and
then seeks to requalify under Subchapter M, it would be required to recognize
gain to the extent of any unrealized appreciation on its assets. In that case,
any gain recognized by the Fund likely would be distributed to investors as a
taxable distribution. In addition, the Fund may be subject to a 4% excise tax if
it fails to distribute a sufficient portion of its net investment income and net
realized capital gains. For additional information regarding federal income tax
consequences of an investment in the Fund, see "Taxation".

BY INVESTING IN THE FUND YOU MAY BE EXPOSED TO FEDERAL INCOME TAX RISKS

The Directors have elected to treat the Fund as a corporation for federal
tax purposes. It is not anticipated, and the Directors do not foresee the
possibility, of making an alternative election. The principal tax risks are
that:

o for taxable periods during which the Fund does not satisfy the
requirements of subchapter M, the Fund will be subject to corporate
income tax on its taxable income and distributions it makes to
investors may be taxable as dividends.

o if for any reason the Fund is unable to qualify as a "publicly
offered regulated investment company," all or a portion of the
Fund's expenses could be considered either investment expenses
(which would be deductible by an investor only to the extent the
aggregate of such expenses exceeded 2% of such investor's adjusted
gross income) or as nondeductible items that must be capitalized,

o the purchase of shares by a tax-exempt investor through the use of a
credit card may also cause the investment to produce unrelated
business taxable income,

The IRS may audit the Fund's tax returns. Any audit issues will be
determined at the Fund level. If the IRS makes any adjustments, you will have to
make corresponding adjustments to your own federal income tax returns, which may
require payment of additional taxes, interest, and penalties. Audit of a Fund
return may result in examination and audit of an investor's return that
otherwise might

27
<PAGE>

not have occurred, and such audit may result in adjustments to items in your
return that are unrelated to the Fund. You must bear the expenses associated
with an audit of your own return.

In considering an investment in the Fund by a tax-exempt entity such as an
employee benefit plan or individual retirement account subject to the
requirements of the Employee Retirement Income Security Act of 1974 (ERISA), the
fiduciary acting on behalf of such entity should be satisfied that such an
investment is consistent with Sections 404 and 406 of ERISA and that the
investment is prudent in light of the entity's cash flow and other objectives.
The Department of Labor has issued regulations that would characterize the
assets of certain entities in which tax-exempt entities invest as "plan assets."
Because the Fund is expected to qualify as a "venture capital operating company"
and the shares are "publicly offered securities" within the meaning of the
regulations, the Fund assets should not be considered plan assets. However,
fiduciaries of tax-exempt entities are urged to consult their own advisers prior
to investing in the Fund. See "ERISA Considerations".

The foregoing summarizes certain significant federal income tax risks
relating to an investment in the Fund. This summary is not a representation that
these matters are the only tax risks involved in this investment or that the
magnitude of such risks is necessarily equal. The "Tax Information" section of
this prospectus contains a more detailed discussion of these and other federal
income tax risks of an investment in the Fund. We urge you to consult your own
tax advisor prior to investing in the Fund.

THE FUND IS SUBJECT TO EXTENSIVE REGULATION UNDER THE INVESTMENT COMPANY
ACT

The Fund has elected to be regulated as a "business development company"
under the Investment Company Act. The Investment Company Act imposes numerous
restrictions on the activities of the Fund, including restrictions on the nature
of its investments, its use of leverage, and its issuance of securities,
options, warrants, or rights. In addition, a majority of the Directors must be
individuals who are not "interested persons" of the Fund as defined in the
Investment Company Act. The Fund generally must invest at least 70% of its
assets in securities of nonpublic companies or shares of public companies which
shares are not eligible for margin loans under the rules of the Federal Reserve
Board. Finally, a business development company must make significant managerial
assistance available to its portfolio companies. Such constraints could prohibit
the Fund from investing in some potentially attractive situations.

Because there are no judicial and few administrative interpretations of
portions of the Investment Company Act legislation applicable to the Fund, the
legislation may not be interpreted or administratively implemented in a manner
consistent with the Fund's objective and intended manner of operation. In the
event the Directors determine that the Fund cannot operate effectively under the
Investment Company Act, it may at some future date decide to transform the Fund
into an operating company not subject to regulation under the Investment Company
Act or cause the Fund to liquidate. These changes require the approval of the
Fund's investors.

CREDIT CARD PAYMENT METHOD RISK

We have submitted a request for exemptive relief from the SEC to allow you
to purchase shares in this offering by credit card. Even if the SEC grants such
relief, the Fund and the Broker-Dealer strongly recommend against short-term
borrowing to fund speculative long-term investments such as venture capital. The
Fund and the Broker-Dealer advise you not to maintain a balance on a

28
<PAGE>

credit card used to purchase Fund shares or to obtain new credit cards to
purchase such shares as the cost of borrowing money would reduce your potential
return.

You should review the following example: Assume that you bought [ ] shares
for $[ ] on a credit card that charged interest of [18]% per annum. If you take
one year to pay off the balance, you would pay the credit card issuer $[ ] in
finance charges, bringing the total cost of your investment to $[ ]. If,
instead, you bought [ ] shares for $[ ] in the first month, and then (assuming
the per share price remained the same) bought four shares per month for the next
nine months at $[ ] per month, and paid each credit card bill as it came due,
your total investment of $[ ] would purchase [ ] shares instead of [ ] shares.

FORWARD-LOOKING STATEMENTS

This prospectus may include forward-looking statements. These statements
are based largely on current expectations and projections about future events
and trends in the technology sector, the venture capital industry and the state
of the financial markets and the economy in general. These forward-looking
statements are subject to a number of risks, uncertainties and assumptions about
the Fund, including, among other things:

-- general economic and business conditions and the general state of
the financial markets;

-- expectations and estimates concerning the future growth and
performance of the venture capital sector;

-- expectations and estimates concerning the future growth and
performance of information technology companies, particularly
Internet companies;

-- existing and future laws and regulations imposed on information
technology companies, including future laws and regulations
governing the Internet;

-- the Investment Manager's ability to successfully implement its
investment objective and strategies;

-- the Investment Manager's relationship with other venture capital
firms;

-- technological changes in the Internet industry; and

-- other risk factors described under "Risk Factors" in this
prospectus.

In addition, in this prospectus the words "believe," "may," "will,"
"estimate," "continue," "anticipate," "intend," "expect," and similar
expressions, as they relate to the Fund or the Investment Manager and their
respective investment objective, business or management, are intended to
identify forward-looking statements.

Neither the Fund nor the Investment Manager has undertaken any obligation
to publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise after the date of this
prospectus. Because of these risks and uncertainties, the forward-

29
<PAGE>

looking events and circumstances discussed in this prospectus may not occur and
actual results could differ materially from those anticipated or implied in the
forward-looking statements.

DISTRIBUTIONS

At least one time per year we expect to make distributions of cash or
securities to you of at least 90% of the net investment income we receive from
interest and dividends plus net short-term capital gains. We intend to make the
first distribution, which will likely be comprised entirely of investment income
from short-term investments, by December 31, 2001. We will also distribute from
time to time any capital gains, net of realized and unrealized capital losses,
we realize from our investments in portfolio companies. The timing of capital
gains distributions will vary depending on when we liquidate our investments in
individual portfolio companies and the Fund's fiscal year.

Subject to receiving SEC exemptive relief, we may make distributions in
kind rather than in cash. If any of our portfolio companies elects to sell its
shares in an initial public offering, or if we receive publicly traded stock
from an acquirer of one of our portfolio companies, we may distribute a portion
of our shares of that company's capital stock. Any shares we distribute may be
subject to certain transfer restrictions, including a lock-up period which may
prohibit you from selling the distributed shares for up to six months.

We intend to qualify for the special tax treatment provided under
Subchapter M of the Internal Revenue Code. To qualify for such treatment, we
must distribute to you for each taxable year at least 90% of our investment
company taxable income (consisting generally of net investment income and net
short-term capital gains). These distributions will be taxable to you as
ordinary income. If we incur indebtedness, however, the Investment Company Act
limits our ability to make distributions if at any time our "asset coverage
ratio" is below 200%. We will inform you annually of the amount and nature of
our income and gains. A more detailed discussion of the federal income tax
considerations applicable to an investment in the Fund is under "Taxation".

DIVIDEND REINVESTMENT PLAN

All dividends and any distributions will automatically be invested in
additional shares of the Fund through our Dividend Reinvestment Plan, or the
Plan, unless you affirmatively elect to have amounts of more than $10 dollars or
more paid in cash. Investors will have their cash dividends and distributions
automatically reinvested by [____________], or the Plan Agent, in additional
shares of the Fund. To receive your dividends and distributions in excess of $10
in cash, you may notify the Plan Agent at any time in writing at the address
below.

______________________________

The Plan Agent serves as agent for you in administering the Plan. When we
declare a dividend or distribution payable in cash or in additional shares of
our common stock, Plan participants will receive their dividend or distribution
in newly issued shares of the Fund having a net asset value equal to the value
of the dividend or distribution. The Plan Agent will maintain all accounts in
the Plan and furnish confirmation of all transactions. There is no charge to you
for participating in the Plan or for the reinvestment of dividends and
distributions.

30
<PAGE>

We may terminate the Plan at any time. We may also amend the Plan upon
providing written notice to Plan participants at least thirty days prior to such
amendment. You may obtain additional information about the Plan from the Plan
Agent.

PORTFOLIO VALUATION

The Investment Manager will determine the net asset value, or NAV, of the
Fund on a weekly basis. While valuations are inherently subjective, the
Investment Manager will make its valuation in good faith under guidelines
established by the Directors. During the course of this offering, we will adjust
the share price on a weekly basis.

The Investment Manager will value securities for which market quotations
are readily available and that are freely marketable and transferable at the
closing price on the day of valuation (or at the bid/ask price that is available
on a national securities exchange or over-the-counter market) for the last five
trading days. For publicly-traded equity investments with selling restrictions,
a discount will apply to reflect the illiquidity. The fair market value for
equity venture capital investments for which no market exists cannot be
determined precisely. For companies in the early stages of development, the
Investment Manager will value investments based upon their original cost to the
Fund. Subsequently, the Investment Manager will value these investments based on
the valuations given to such companies in subsequent rounds of third-party
financings. Upon the occurrence of a significant development or other factor
affecting a portfolio company, including results of operations, changes in
general market conditions, subsequent financing or the availability of market
quotations, the Investment Manager will determine whether such events provide a
basis for valuing such investment at a different number. Such valuations may be
based on a variety of assumptions and may vary significantly over time.

MANAGEMENT OF THE FUND

GENERAL. The Directors will manage the Fund. We will initially have five
Directors, consisting of three Independent Directors (i.e., not "interested
persons" of the Fund or its affiliates as that term is defined in the Investment
Company Act) and two Affiliated Directors. The resignation or withdrawal of a
Director could temporarily reduce the number of Directors and the Operating
Agreement permits the addition of further Directors. However, we do not expect
any such changes. Subject to the authority and supervision of the Directors, the
Investment Manager will take responsibility for

o analyzing and selecting our portfolio companies,

o negotiating and structuring our venture capital investments,

o overseeing our portfolio companies, and

o managing our day-to-day affairs.

31
<PAGE>

The Investment Manager will continue to serve in such capacity until our
investors have elected a successor.

The day-to-day operations of our portfolio companies will be the
responsibility of the management of each respective portfolio company. We will
offer to provide assistance to such companies when needed, particularly in the
areas of management selection, market analysis, business review, and the
formulation of marketing and financing strategies. Where appropriate,
representatives of the Fund or its co-investors will serve on the boards of
directors or management committees of our portfolio companies.

Your rights to participate in the control of the Fund will be limited. You
will have only those rights specifically granted to you under applicable federal
and state law. We anticipate that our website will contain certain content that
will allow you to engage in chat rooms, informal polls and other interactive
features with respect to the Fund and our individual portfolio companies. We
have designed such features for entertainment purposes, and none of them will
allow you the right to control or manage the operations of the Fund.

The following sets forth certain information regarding the directors and
officers of the Fund:

--------------------------------------------------------------------------------
Name, DOB Address Position(s) Held Principal Occupation(s)
with Registrant During Past 5 years
--------------------------------------------------------------------------------
Daniel M. Bendheim, President and Co-founder, Chief
DOB Director Executive Officer and a
director of VCVillage.com
Holdings, Inc., President
of the Investment Manager
and the Broker-Dealer. Mr.
Bendheim was an executive
at Mineral Resources
Technology, a
manufacturing start-up,
from 1997 to 1999. Prior
to that, Mr. Bendheim was
a research analyst at
Southcoast Capital, an
investment bank, from 1996
to 1997. Mr. Bendheim
received his B.A. in
political science, with
highest honors, from
Yeshiva University and his
J.D. with honors from
Harvard Law School.
--------------------------------------------------------------------------------
[Director 2]

--------------------------------------------------------------------------------
[Director 3]

--------------------------------------------------------------------------------
[Director 4]

--------------------------------------------------------------------------------

32
<PAGE>

[Director 5]

--------------------------------------------------------------------------------

Since we are newly incorporated, we have not paid any compensation to any
of our directors or officers. See "Compensation of the Investment Manager, its
Affiliates and the Independent Directors".

<TABLE>

<CAPTION>
---------------------------------------------------------------------------------------------------
Name Position Aggregate Pension or Estimated Total
Compensation Retirement Annual Compensation
From Fund Benefits Benefits Upon From Fund
Accrued As Retirement and Fund
Part of Fund Complex Paid
Expenses to Directors
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Daniel M. Bendheim President
and
Director
---------------------------------------------------------------------------------------------------
[Director 2]

---------------------------------------------------------------------------------------------------
[Director 3]

---------------------------------------------------------------------------------------------------
[Director 4]

---------------------------------------------------------------------------------------------------
[Director 5]

---------------------------------------------------------------------------------------------------
</TABLE>

THE FUND DIRECTORS

The Directors will have exclusive management and control of the business
of the Fund, and are responsible for providing overall guidance and supervision
of the Fund. The Directors have the authority, on behalf of the Fund, to do all
things necessary or appropriate to carry out their duties, except as the
Operating Agreement may expressly limit such powers. Subject to the Investment
Company Act, the Directors have the power and authority to authorize the
Investment Manager to:

o borrow on behalf of the Fund on such terms as it deems appropriate
and to secure such borrowings by granting security interests in any
Fund assets, including securities of portfolio companies,

o invest Fund capital as it deems appropriate,

o sell, trade or exchange any Fund assets (including the Fund's
interests in its portfolio companies), or

o abandon any Fund assets at such times and for such consideration as
it deems appropriate.

There will initially be three Independent Directors. The number of
Independent Directors may be fixed from time to time by the Independent
Directors at that time, provided that such number will not be less than three or
more than nine. If at any time the Independent Directors constitute less than a
majority of the Directors, the remaining Directors will, within 90 days,
designate such additional

33
<PAGE>

Independent Directors so that the Independent Directors constitute a majority of
the Directors. Any successor Independent Director will hold office until his or
her successor has been approved and elected or until his or her removal or
withdrawal. In the event that no Directors remain, the Investment Manager will,
within 90 days, call a meeting of Fund investors for the purpose of approving
and electing successor Independent Directors.

THE INVESTMENT MANAGER

The Investment Manager is a newly formed Delaware corporation formed to
act as the investment adviser to the Fund. Its address is 325 W. 38th Street,
Suite 1504, New York, NY 10018. The Investment Manager currently employs [ ]
persons, including [ ] senior officers, whose biographical information is set
forth below. The Investment Manager may use consultants and outside counsel to
provide expertise in certain areas. The Fund will look to the Investment
Manager, as well as its co-investors, to provide assistance to its portfolio
companies with respect to such matters as capital structure, budgets, profit
goals, diversification strategy, financing requirements, management additions or
replacements, and disposition strategy.

The Investment Manager is a wholly owned subsidiary of VCVillage.com
Holdings, Inc., a newly formed Internet-based financial services company. Daniel
M. Bendheim holds approximately 40% of the common stock, on a fully diluted
basis, of VCVillage.com Holdings, Inc. and is its President and Chief Executive
Officer.

The following is certain information regarding the key personnel of the
Investment Manager:

[TO COME]

COMPENSATION OF THE INVESTMENT MANAGER, ITS AFFILIATES, AND THE
INDEPENDENT DIRECTORS

INVESTMENT MANAGER. The Investment Manager will receive the following fees
and compensation:

o ORGANIZATIONAL EXPENSE REIMBURSEMENT. We will reimburse the
Investment Manager for actual expenses paid or incurred by it or its
affiliates in connection with organizing the Fund, including any
legal and accounting expenses incurred in connection with the
formation of the Fund.

o OPERATIONAL EXPENSE REIMBURSEMENT. We will reimburse the Investment
Manager for all operational costs incurred by it for the benefit of,
or on behalf of, the Fund, which will be limited annually up to
1.25% of our net asset value. We will base the reimbursement upon
the lower of the Investment Manager's cost or the amount the Fund
would be required to pay to independent parties for comparable
services in the same geographic location. The "operational costs" of
the Fund include consultants' fees, legal and accounting fees, and
the costs of goods, materials, and services used for the benefit of
the Fund and obtained from entities unaffiliated with the Investment
Manager.

o DISTRIBUTION EXPENSE REIMBURSEMENT. We will reimburse the
Broker-Dealer for expenses incurred in distributing shares of the
Fund. Amounts that may be

34
<PAGE>

reimbursed to the Broker-Dealer include all payment processing fees,
such as debit card, credit card or electronic funds transfer fees.

o MANAGEMENT FEE. We will pay the Investment Manager an annual
management fee equal to 2.5% of the Fund's average net assets,
payable on a monthly basis. These fees are higher than comparable
fees paid to other investment managers. To the extent we have
insufficient cash reserves to pay the entire management fee when
due, we may carry forward the unpaid fee and pay it when we have
sufficient cash reserves. The Investment Manager may elect to waive
the management fee for any period of time.

o INCENTIVE FEE. Each quarter, 20% of the Fund's realized capital
gains, net of realized and unrealized capital losses, will be paid
to the Investment Manager as an incentive fee. The Investment
Manager may waive or defer all or any portion of the incentive fee.

We will not reimburse the Investment Manager for expenses of a general and
administrative nature incurred by the Investment Manager solely for its own
account and not attributable to services provided to, or for the benefit of, the
Fund. The audited financial statements of the Fund will include all costs
reimbursed to the Investment Manager and its affiliates. The terms
"organizational expenses" and "operational costs" are defined in detail in the
Operating Agreement contained in Exhibit A.

The following chart summarizes the compensation of the Investment Manager:

<TABLE>
<S> <C>
Reimbursement of Organizational Expenses Actual expenses as incurred
Reimbursement of Operational Costs Actual expenses as incurred (annual cap of
1.25% of our net
asset value)

Management Fees 2.5% of average net assets
Incentive Fee 20% of monthly realized net capital
gains, net of any realized and
unrealized capital losses
</TABLE>

INDEPENDENT DIRECTORS. Each Independent Director will receive the
following fees and compensation from the Fund:

o An annual fee of $10,000 per year, payable in quarterly
installments,

o A meeting fee of $1,000 per meeting of the Independent Directors
attended, up to an annual limit of $4,000,

o A committee meeting fee of $1,000 per meeting of a committee of the
Independent Directors attended (unless the committee meeting is held
on the same day and place as an Independent Directors meeting), up
to an annual limit of $4,000, and

o An expense reimbursement for out-of-pocket expenditures incurred
relating to meetings of the Directors or any separate committee
meeting.

35
<PAGE>

The Operating Agreement allows the Independent Directors to increase their
compensation only with the approval of a majority in interest of the investors.

CODE OF ETHICS. The Fund has adopted a code of ethics that governs the
personal trading activities of its officers, directors and certain other persons
who have access to proprietary information regarding the Fund's trading
activity. The Investment Manager and Broker-Dealer have adopted substantially
similar codes. The code of ethics places certain restrictions on the personal
trading of all such persons. Each of these codes of ethics may be reviewed and
copied at the SEC's Public Reference Room in Washington, D.C. Information
regarding the SEC's Public Reference Room may be obtained by calling (202)
942-8090. The codes of ethics are also available on the SEC's Internet site at
http://www.sec.gov and copies of these codes of ethics may be obtained for the
price of duplicating fees by electronic request at the following e-mail address:
[email protected] or by writing the SEC's Public Reference Room, Washington,
D.C. 20549-0102.

OTHER EXPENSES OF THE FUND. The Fund may have to pay a "finder's fee" in
connection with making its investments in its portfolio companies, and may incur
brokerage fees or other costs to enable it to sell its investments in such
portfolio companies. The Fund expects such expenses, if any, to be in line with
the market for finder's and brokerage fees. Some of these fees may be payable to
affiliates of the Fund and the Investment Manager.

CUSTODIAN. The Fund has entered into a Custody Agreement with [ ] to
serve as custodian for the Fund. [ ]'s principal business address is [ ].

CONFLICTS OF INTEREST

The relationship between the Fund and its affiliates may lead to some
potential conflicts of interest. Because the Investment Manager will manage the
operations of the Fund (subject to the supervision of the Directors) and
determine the NAV of the Fund (subject to the guidelines set by the Directors),
the Fund will depend on the Investment Manager's exercise of its judgment
consistent with its fiduciary responsibilities to the investors in the Fund. The
potential conflicts include the following:

RELATIONSHIP WITH THE INVESTMENT MANAGER.

o COMPENSATION. The Fund will compensate the Investment Manager with a
management fee, an incentive fee and the reimbursement of
operational costs. The Directors believe that such compensation, as
well as the other terms and conditions of the Investment Manager's
relationship with the Fund, are reasonable and fair to the Fund.

o TRANSACTIONS WITH THE FUND. The Investment Manager may use the
Fund's assets to co-invest with its affiliates in certain venture
capital investments. However, the Operating Agreement imposes
various constraints on the Investment Manager in its dealings with
the Fund. Moreover, the Investment Manager will be subject to a
fiduciary duty to the Fund in evaluating the capabilities, services,
and compensation of persons rendering service to the Fund. Finally,
the Investment Company Act contains restrictions as to certain
transactions between the Fund and its affiliates. In general,
transactions involving the Fund and its affiliates require the prior
approval of the SEC and/or the Independent Directors.

36
<PAGE>

o ACTIVITIES OF THE INVESTMENT MANAGER. We will not have independent
management or employees and therefore we will rely upon the
Directors and Investment Manager for management and administration
of the Fund and its assets. While the Investment Manager does not
currently engage in any other activities, the Operating Agreement
provides that the Investment Manager only needs to devote such
amount of time as it deems necessary to the Fund. Thus, we have no
contractual right to such services prior to any other party.

o TIMING OF DISPOSITION OF FUND INVESTMENTS. The Investment Manager
will determine the timing of the liquidation of the Fund's portfolio
securities. Because of its incentive fee based on the performance of
the Fund, the Investment Manager has an interest in the net capital
gains of the Fund. The Investment Manager's interests may in some
cases conflict with the interests of the Fund's investors with
respect to when to recognize gain or loss. However, the acts of the
Investment Manager are subject to supervision by the Directors, and
the Directors are subject to a fiduciary duty to the Fund.

o LEGAL AND ACCOUNTING REPRESENTATION. We have generally used the same
counsel and accountants as the Investment Manager and its
affiliates, and expect to continue to do so in the future. If a
conflict arises that the parties cannot resolve and such
professionals cannot obtain the consent of the respective parties to
the continuance of such dual representation, such professionals will
withdraw from the representation of one or both of the parties with
conflicting interests with respect to the matter involved. Our
counsel and accountants have not acted on behalf of you or conducted
a review or investigation on your behalf. You should consult with
your own counsel and investment advisors with respect to an
investment in the Fund.

RELATIONSHIP WITH THE BROKER-DEALER. The Broker-Dealer, an affiliate of
the Investment Manager, will manage the distribution of the Fund's shares on a
"best efforts" basis. The Broker-Dealer will not receive any commission for such
distribution, but we have agreed to reimburse the Broker-Dealer and its
affiliates for their marketing and distribution costs (up to 10% of the proceeds
of the offering), which we expect to be substantial. See "Compensation of the
Investment Manager, Its Affiliates and the Independent Directors."

RELATIONSHIP WITH OTHER VENTURE CAPITAL FIRMS. Affiliates of, or entities
that have indirect ownership interests in the Investment Manager, may be
organized venture capital funds or similar investment vehicles. Such entities
may have a similar investment objective as the Fund and may compete with the
Fund. We may co-invest in portfolio companies with such other funds and may
participate in follow-on investments in such portfolio companies of such funds,
subject to a majority vote of the Independent Directors and, if necessary, an
exemptive order from the SEC. While we expect such entities to serve as a source
of venture capital investments for the Fund, such entities might not include the
Fund as a co-investor in their more attractive investments, if at all. In any
case, we anticipate that any co-investments with our related entities will be
made on substantially the same terms and conditions. We may apply for exemptive
relief from the SEC to allow the Fund to co-invest with its affiliates.

37
<PAGE>

DESCRIPTION OF LIMITED LIABILITY COMPANY INTERESTS

The shares offered in this offering are limited liability company
interests in the Fund, and they are currently the only outstanding securities of
the Fund. The shares will be priced weekly based on the net asset value of the
Fund, as determined in accordance with the procedures set forth above under
"Portfolio Valuation". We will make distributions to holders of such shares as
set forth above under "Distributions". Certain other properties of the shares
offered in this offering are set forth below.

VOTING RIGHTS. The holders of the shares offered hereby cannot participate
in the management or control of the Fund. However, the Operating Agreement
provides that, subject to certain conditions described below, such holders may
vote on or approve certain Fund matters. Each limited liability company interest
entitles its holder to one vote. Upon notification to the Investment Manager,
holders of such shares, at their own expense, may obtain a list of the names and
addresses (if known) of all the holders of Fund shares for a purpose reasonably
related to such holder's interest as a holder of limited liability company
interests of the Fund.

Subject to the provisions described below, the holders of Fund shares may:

o approve and elect or disapprove and remove Directors and the
Investment Manager,

o approve or disapprove proposed changes in the nature of the Fund's
business so as to cause the Fund to cease to be, or to withdraw its
election as, a business development company under the Investment
Company Act,

o approve or disapprove any proposed investment advisory contract or
management agreement or disapprove and terminate any such existing
contracts; provided, however, that a majority of the Directors also
approve such contracts,

o approve and ratify or disapprove and reject the appointment of the
independent accountants of the Fund; provided, however, that a
majority of the Directors also approve or reject such appointment,

o approve or disapprove the appointment of any successor Investment
Manager, and

o approve any other material matters related to the business of the
Fund that the Investment Company Act requires to be approved by its
investors so long as the Fund is a business development company
subject to the provisions of the Investment Company Act, provided,
however, that, prior to the exercise of any such right of approval,
the Directors amend the Operating Agreement to reflect such
additional voting right.

Notwithstanding any other provisions of the Operating Agreement,
unless the Fund obtains an opinion of counsel for the Fund (or counsel
designated by investors owning an aggregate of at least 50% of the Fund's
shares) to the effect that neither the possession of such right nor the
exercise thereof will:

o violate the provisions of the Investment Company Act or the laws of
the other jurisdictions in which the Fund is then formed or
qualified; or

38
<PAGE>

o adversely affect the limited liability of the Fund's investors
(including the Investment Manager).

TRANSFERABILITY OF SHARES. Shares generally are not transferable, and may
only be transferred with the written consent of the Investment Manager and in
accordance with the terms of the Operating Agreement.

INVESTMENTS. You are not entitled to receive interest on any investment
contribution you make to the Fund. In addition, except as otherwise provided in
the Operating Agreement and subject to our ability to launch a repurchase offer
for our shares, you have no right to withdraw, or to receive any return of, your
capital contributions. Unless we make a distribution of securities to all Fund
investors, without the consent of all Fund investors no individual investor has
the right to receive property other than cash in return for a capital
contribution. You will not be required to make any additional capital
contributions to the Fund after making your initial investment.

SHARE REPURCHASES. We may, from time to time after the termination of this
offering, offer to repurchase some of the shares of the Fund. The Directors, in
the exercise of their fiduciary duty, will consider several factors in
determining when and if to make such repurchases, including the amount of cash
in the Fund and the success of prior repurchases. Shares will be repurchased at
their net asset value as of the commencement of the share repurchase. However,
we may apply an "early withdrawal charge" or a "repurchase fee" (not to exceed
2%) in connection with any share repurchase. This fee will be paid for the Fund
and will be used solely to cover expenses incurred in the repurchase.

Prior to launching a repurchase offer, we will provide notice to all
holders of Fund interests of the proposed offer. The notice will contain
information that shareholders should consider in deciding whether or not to
participate in the repurchase offer (including the existence and amount of any
fee that may be charged) and detailed instructions on how to tender shares. To
the extent we engage in share repurchases, our expense ratios are likely to rise
and we may not be able to achieve our objectives as the diminution in the size
of the Fund may decrease our investment opportunities.

LIMITED LIABILITY OF FUND INVESTORS. A Fund investor's liability under the
Delaware Limited Liability Act will be limited, subject to certain possible
exceptions, to the amount of capital such investor is obligated to contribute to
the Fund plus such investor's share of any assets and undistributed profits of
the Fund.

DISSOLUTION AND LIQUIDATION. The Fund will be dissolved on the first to
occur of:

o December 31, 2008 (or such later date to which the Directors extend
the Fund up to a limit of two additional two-year terms),

o the incapacity of all Directors and the Investment Manager,

o the vote of a majority in interest of the Fund's investors,

o the withdrawal, retirement, or removal of the Investment Manager,

o the sale at any one time of all or substantially all the assets of
the Fund, or

o the date on which the Fund is dissolved by operation of law or
judicial decree,

39
<PAGE>

provided that, upon the occurrence of an event described in the fourth bullet
above, the Fund will not dissolve if within 90 days after such event, all
Directors agree in writing to continue the business of the Fund and appoint,
effective as of such date, a successor Investment Manager.

Upon dissolution of the Fund, the affairs of the Fund will be wound up and
its assets distributed as provided in the Operating Agreement. The Operating
Agreement provides, in general, that in the event of dissolution and
liquidation, the assets of the Fund will be sold, and the Fund investors will
receive the net proceeds in proportion to their share of ownership.
Distributions may be made in-kind if a sale would cause an undue loss. Investors
may look only to the assets of the Fund, not the assets of the Directors,
officers or Investment Manager, for payment on liquidation.

THE OPERATING AGREEMENT

The Operating Agreement governs the relationships, rights, and obligations
of the Fund's investors. We have provided the following summary of certain
provisions of the Operating Agreement not discussed elsewhere in this
prospectus. This summary is not complete and is qualified in its entirety by
reference to the Operating Agreement. You should read the entire Operating
Agreement (attached as Exhibit A) before signing the Application.

COVENANTS OF FUND INVESTORS. Article [ ] of the Operating Agreement
contains various covenants and agreements that each investor in the Fund must
make. The covenants and agreements concern the transfer of shares in the Fund
and an agreement by each investor to advise the Fund of a breach of any
representations or warranties in the Operating Agreement or the application.

WITHDRAWAL AND REMOVAL OF THE INVESTMENT MANAGER. The Investment Manager
may withdraw from the Fund only if a majority in interest of the Fund's
investors has consented to the appointment of a successor investment adviser. A
majority in interest of the Fund's investors or a majority of the Directors may
remove the Investment Manager. In case of such a removal, or in the event of the
incapacity of the Investment Manager, a majority in interest of the Fund's
investors may admit another entity to be a successor to the Investment Manager
concurrently with such removal or incapacity, as the case may be.

In the event of the removal of the Investment Manager, the venture capital
investments of the Fund will be appraised by two independent appraisers, one
chosen by the Investment Manager and one by the Directors. Assuming the Fund
receives a favorable exemptive order from the SEC to permit distributions in
kind, the Investment Manager will receive securities representing a final
incentive fee determined as if all unrealized capital gains or losses were
realized.

INDEMNIFICATION AND LIMITATION OF LIABILITY OF THE INVESTMENT MANAGER AND
THE DIRECTORS BY THE FUND. The Fund's Operating Agreement and the Investment
Advisory Agreement between the Fund and the Investment Manager provide for
indemnification by the Fund for losses incurred by the Investment Manager, the
Fund's Directors and certain of the officers, employees and affiliates.

The federal and state securities laws impose liabilities, under certain
circumstances, on persons who act in good faith. Nothing in the Operating
Agreement should be construed to relieve the Investment Manager or its
affiliates of such liabilities. Investors should closely review the
indemnification provisions in the Operating Agreement.

40
<PAGE>

AMENDMENTS TO THE OPERATING AGREEMENT. The Investment Manager, as managing
the affairs of the Fund, may amend the Operating Agreement under certain
circumstances without the consent of the Fund's investors, subject to
authorization by the Directors.

OTHER PROVISIONS OF THE OPERATING AGREEMENT. Each investor in the Fund
must give the Investment Manager a personal power of attorney to execute
documents on such investor's behalf, including the Operating Agreement and
amendments thereto. The books and records of the Fund must be kept in accordance
with generally accepted accounting practices and principles. Such books and
records must be made available, upon request by a Fund investor, for review for
any purpose reasonably related to such investor's investment, including without
limitation any suit or other action by such investor against the Fund. However,
the Investment Manager, to the extent permitted under applicable law, may in its
sole discretion elect not to provide a list of Fund investors if in its opinion
provision of such a list for a commercial purpose might jeopardize the Fund's
status for tax purposes.

TAX INFORMATION

The following discussion summarizes the significant federal income tax
considerations in connection with an investment in the Fund by individuals who
are United States citizens or resident aliens. It is not feasible to comment on
all of the federal, state, and local income tax consequences resulting from the
organization of the Fund and the conduct of its contemplated operations. THESE
TAX CONSEQUENCES CAN VARY SIGNIFICANTLY WITH THE PARTICULAR SITUATION OF EACH
INVESTOR. MOREOVER, THE RELEVANT TAX PROVISIONS ARE COMPLEX AND SUBJECT TO
CHANGE. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE INCOME AND OTHER TAX
CONSEQUENCES TO YOU OF AN INVESTMENT IN THE FUND.

This discussion was reviewed by Morgan, Lewis & Bockius LLP (Morgan
Lewis), counsel for the Fund. Morgan Lewis believes that the discussion
addresses the significant federal income tax aspects of an investment in the
Fund. However, Morgan Lewis expresses no opinion regarding the outcome of
specific issues, except where opinions are expressly stated. This discussion is
based on the relevant provisions of the Internal Revenue Code of 1986 and on the
applicable Treasury regulations thereunder (including proposed regulations),
administrative rulings and procedures, and judicial decisions. New legislation
or regulations could affect Fund investors adversely. In the future, the IRS may
not agree with the interpretation of the current federal income tax laws and
regulations summarized below.

We intend to elect regulated investment company tax treatment under
Subchapter M of the Internal Revenue Code of 1986, as amended, when we are able
to satisfy the applicable diversification requirements. Until that time, we will
elect to be treated as a C corporation for federal income tax purposes. We
expect to be able to satisfy the regulated investment company diversification
requirements within 12 months after we begin to receive contributions from
investors. For any period of time that we are treated as a C corporation for
federal income tax purposes, we would not be able to deduct distributions to
stockholders, nor would they be required to be made. Distributions would be
taxable to our stockholders as ordinary dividend income to the extent of our
current and accumulated earnings and profits. Subject to certain limitations
under the Code, corporate distributees would be eligible for the
dividends-received deduction. Distributions in excess of current and accumulated
earnings and profits would be treated first as a return of capital to the extent
of the stockholder's tax

41
<PAGE>

basis, and any remaining distributions would be treated as a gain realized from
the sale or exchange of property. At the time our tax status changes from that
of a C corporation to that of a regulated investment company, we will be
treated, for purposes of computing a tax on the C corporation"s net built-in
gains, as if we had sold all of our assets at their respective fair market
values on the last day of our C corporation taxable year and immediately
liquidated. As an alternative to this deemed sale and liquidation treatment, we
may make an irrevocable election to become subject to the rules under section
1374 of the Code and the regulations thereunder. Under these rules, we would be
subject to corporate-level taxation on the net built-in gain recognized during a
10-year period on assets held by us on the last day of our last taxable year as
a C corporation.

If, for any taxable year, we qualify as a regulated investment company and
distribute to stockholders at least 90% of our "investment company taxable"
income as defined in the Code, we will not be subject to federal income tax on
the portion of that taxable income and gains we distribute to stockholders for
that year. We will be subject to regular corporate income tax (currently at
rates up to 35%) on any undistributed net investment income and undistributed
net capital gain. In addition, if we distribute in a timely manner the sum of at
least (i) 98% of our ordinary income for each calendar year, and (ii) 98% of our
capital gain net income for the one-year period ending October 31 in that
calendar year plus, (iii) any income not distributed in prior years, we will not
be subject to the 4% nondeductible federal excise tax on certain undistributed
income of regulated investment companies. We will be subject to alternative
minimum tax, but any tax preference items would be apportioned between us and
our stockholders in the same proportion that dividends (other than capital gain
dividends) paid to each stockholder bear to our taxable income determined
without regard to the dividends paid deduction.

If we acquire debt obligations that were originally issued at a discount,
or that bear interest at rates that are not fixed (or certain "qualified
variable rates") or that is not payable at regular intervals over the life of
the obligation, we will be required to include in taxable income each year a
portion of the "original issue discount" that accrues over the life of the
obligation, regardless of whether the income is received by us, and we may be
required to make distributions to continue to qualify for treatment as a
regulated investment company or to avoid the 4% excise tax on certain
undistributed income. In that event, we might be required to sell temporary
investments or other assets to meet the distribution requirement.

For any period during which we qualify for treatment as a regulated
investment company for federal income tax purposes, distributions to
stockholders attributable to our ordinary income (including dividends, interest
and original issue discount) and net short-term capital gains generally will be
taxable as ordinary income to stockholders to the extent of our current or
accumulated earnings and profits. Distributions in excess of our earnings and
profits will first be treated as a return of capital which reduces the
stockholder's adjusted basis in his or her shares of common stock and then as
gain from the sale of shares of our common stock. Distributions of our net
long-term capital gains (designated by us as capital gain dividends) will be
taxable to each stockholder as long-term capital gains regardless of the
stockholder's holding period for his or her common stock. Corporate stockholders
generally will be eligible for the 70% dividends-received deduction with respect
to ordinary income (but not capital gain) dividends to the extent of the
dividends we received from domestic corporations. Any dividend declared by us in
October, November or December of any calendar year, payable to stockholders of
record on a date in such a month and actually paid during January of the
following year, will be treated as if it were paid by us and received by the
stockholders on December 31 of the previous year. In addition, we may elect to
relate a dividend back to the prior taxable year if we (i) declare such dividend
prior to the due date for filing our return for that taxable

42
<PAGE>

year, (ii) make the election in that return, and (iii) distribute the amount in
the 12 month period following the close of the taxable year but not later than
the first regular dividend payment following the declaration. Any such election
will not alter the general rule that a stockholder will be treated as receiving
a dividend in the taxable year in which the distribution is made (subject to the
October, November, December rule described above).

To the extent that we retain any net long-term capital gains, we may
designate them as "deemed distributions" and pay tax thereon for the benefit of
our stockholders. In that event, each stockholder will report his or her share
of the retained long-term capital gains on his or her individual tax returns as
if that share had been received and will be entitled to a credit for the tax
paid thereon by us. The amount of the deemed distribution net of such tax then
will be added to the stockholder's cost basis for his or her common stock. Since
we expect to pay tax on capital gains at regular corporate tax rates and the
rate payable by individuals on those gains generally would be at the rate of
20%, the amount of credit that individual stockholders may take is expected to
exceed the amount of tax they would be required to pay on capital gains.
Stockholders who are not subject to federal income tax or tax on capital gains
should be able to file a return on the appropriate form or a claim for refund
that allows them to recover the taxes paid on their behalf.

Section 1202 of the Code permits the exclusion, for federal income tax
purposes, of 50% of any gain (subject to certain limitations) realized upon the
sale or exchange of "qualified small business stock" held for more than five
years. Generally, qualified small business stock is stock of a domestic
corporation acquired on original issue (directly or through an underwriter) from
the issuing corporation, which must (i) at all times up to the date of issuance
and immediately thereafter have assets of not more than $50 million and (ii)
throughout substantially all of the holder's holding period for the stock be
actively engaged in the conduct of a "qualified trade or business." If we
acquire qualified small business stock, hold that stock for at least five years
and dispose of that stock at a profit, a stockholder who held business shares of
our Common Stock at the time we purchased the qualified small business stock and
at all times thereafter until we disposed of that stock would be entitled to
exclude from taxable income 50% of that stockholder's share of such gain. 42%
(28% for stock the holding period for which begins after December 31, 2000) of
any amount so excluded would be treated as a tax preference item for alternative
minimum tax purposes. Comparable rules apply under the qualified small business
stock "rollover" provisions of Section 1045 of the Code, under which gain
otherwise reportable by individuals with respect to sales by us of qualified
small business stock held for more than six months can be deferred if we
reinvest the sales proceeds within 60 days in other qualified small business
stock.

A stockholder may recognize taxable gain or loss if the stockholder sells
or exchange shares of our common stock. Any gain or loss from the sale or
exchange of common stock generally will be treated as capital gain or loss if
the common stock is held as a capital asset and will be treated as long-term
capital gain or loss if the stockholder has held the common stock for more than
one year. Once the Fund qualifies for treatment under Subchapter M of the
Internal Revenue Code, any capital loss from a sale or exchange of shares of
common stock held for six months or less will be treated as a long-term capital
loss to the extent of the amount of capital gain dividends (or undistributed
capital gains) received with respect to those shares of common stock.

We may be required to withhold federal income tax at the rate of 31% of
all taxable distributions payable to certain non-corporate stockholders who fail
to provide us with their correct taxpayer identification number or a certificate
that the stockholder is exempt from backup withholding,

43
<PAGE>

or if the IRS notifies us that the stockholder is subject to backup withholding.
Any amounts withheld may be credited against a stockholder's U.S. federal income
tax liability.

Federal withholding taxes at a 30% rate (or a lesser treaty rate) may
apply to distributions to stockholders that are nonresident aliens or foreign
partnerships, trusts or corporations. Foreign stockholders should consult their
tax advisers with respect to the possible U.S. federal, state and local and
foreign tax consequences of an investment in the Fund.

Unless an exception applies, we will mail or e-mail to each stockholder,
as promptly as possible after the end of each taxable year, a notice detailing,
on a per distribution basis, the amounts includible in the stockholder's taxable
income for that year as ordinary income, as net realized capital gains (if
applicable) and as "deemed" distributions of capital gains, including taxes paid
by us with respect thereto. In addition, absent an exemption, the federal tax
status of each year's distributions will be reported to the IRS. Distributions
may also be subject to additional state, local and foreign taxes depending on
each stockholder's particular situation. Stockholders should consult their own
tax advisers with respect to the particular tax consequences to them of an
investment in the Fund.

Under our Dividend Reinvestment Plan, all cash distributions to
stockholders will be automatically reinvested in additional whole and fractional
shares unless you elect to receive cash. For federal income tax purposes,
however, you will be deemed to have constructively received cash and the amount
thereof should be included in your income to the extent the constructive
distribution otherwise represents a taxable dividend for the year in which such
distribution is credited to your account. The amount of the distribution is the
value of the shares acquired through the Plan.

The use of hedging strategies, such as purchasing options, involves
complex rules that will determine for income tax purposes the amount, character
and timing of recognition of the gains and losses we realize in connection
therewith. Gains from options we derive with respect to our business of
investing in securities will be treated as qualifying income under the
90%-of-gross-income requirement outlined above.

Certain listed nonequity options (such as those on a securities index) in
which we may invest will be subject to section 1256 of the Code ("section 1256
contracts"). Any section 1256 contracts we hold at the end of our taxable year
generally must be "marked-to-market" (that is, treated as having been sold at
that time for their fair market value) for federal income tax purposes, with the
result that unrealized gains or losses will be treated as though they were
realized. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net realized gain or loss from any actual sales of section
1256 contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 1256
contracts also may be marked-to-market for purposes of the excise tax on certain
undistributed income and gains mentioned above. These rules may operate to
increase the amount that we must distribute (i.e., with respect to the portion
treated as short-term capital gain), which will be taxable to stockholders as
ordinary income, and to increase the net capital gain we recognize, without in
either case increasing the cash available to us. We may elect not to have the
foregoing rules apply to any "mixed straddle" (that is, a straddle, clearly
identified by us in accordance with the regulations under the Code, at least one
(but not all) of the positions of which are section 1256 contracts).

Code section 1092 (dealing with straddles) also may affect the taxation of
certain options in which we may invest. That section defines a "straddle" as
offsetting positions with respect to actively

44
<PAGE>

traded personal property; for these purposes, options are positions in personal
property. Under that section, any loss from the disposition of a position in a
straddle generally may be deducted only to the extent the loss exceeds the
unrealized gain on the offsetting position(s) of the straddle. In addition,
these rules may postpone the recognition of loss that otherwise would be
recognized under the market-to-market rules discussed above. The regulations
under section 1092 also provide certain "wash sale" rules, which apply to
transactions where a position is sold at a loss and a new offsetting position is
acquired within a prescribed period, and "short sale" rules applicable to
straddles. If we make certain elections, the amount, character and timing of
recognition of gains and losses from the affected straddle positions would be
determined under rules that vary according to the elections made. Because only a
few of the regulations implementing the straddle rules have been promulgated,
the tax consequences of straddle transactions are not entirely clear.

If a call option we purchased lapses, we will realize short-term or
long-term capital loss, depending on our holding period for the security subject
thereto. If we exercise a purchased call option, the premium we paid for the
option will be added to the basis of the subject securities.

If we have an "appreciated financial position" - generally, an interest
(including an interest through an option or short sale) with respect to any
stock, debt instrument (other than "straight debt") or partnership interest the
fair market value of which exceeds its adjusted basis - and enter into a
"constructive sale" of the position, we will be treated as having made an actual
sale thereof, with the result that we will recognize gain at that time. A
constructive sale generally consists of a short sale or an offsetting notional
principal contract entered into by us or a related person with respect to the
same or substantially identical property. In addition, if the appreciated
financial position is itself a short sale or such a contract, acquisition of the
underlying property or substantially identical property will be deemed a
constructive sale. The foregoing will not apply, however, to any transaction
during any taxable year that otherwise would be treated as a constructive sale
if the transaction is closed within 30 days after the end of that year and we
hold the appreciated financial position unhedged for 60 days after that closing
(i.e., at no time during that 60-day period is our risk of loss regarding that
position reduced by reason of certain specified transactions with respect to
substantially identical or related property, such as having an option to sell,
being contractually obligated to sell, making a short sale or granting an option
to buy substantially identical stock or securities).

TAXATION OF FUND OPERATIONS

One of the Fund's principal sources of income is expected to be from the
sale of equity interests in its portfolio companies. The sale by the Fund of any
equity interest purchased from one of its portfolio companies should result in
capital gain or loss to the Fund. Long-term capital gains distributed to an
individual shareholder of a regulated investment company are currently taxed at
a preferential maximum rate of 20%. Net capital gains recognized by entities
taxed as a C corporation are taxed at the same rate as ordinary income.

POSSIBLE CHANGES IN FEDERAL INCOME TAX LAWS

The federal income tax matters discussed herein are based on the laws in
effect on the date of this prospectus. However, tax laws are subject to frequent
changes. When these changes occur, the adopted statutes, regulations, rulings,
and judicial decisions may also be made retroactive. Accordingly, there can be
no assurance that future changes in the IRC, Treasury regulations, IRS rulings,
or judicial decisions will not adversely affect your investment in the Fund. The
content of any

45
<PAGE>

future tax legislation is impossible to predict. Therefore, you are urged to
consult your own tax advisor regarding the possible tax consequences of future
legislation on your investment in the Fund.

STATE TAX LAW CONSIDERATIONS

In addition to the federal income tax consequences described above, the
investors, as well as the Fund itself and the entities in which the Fund
invests, may be subject to various state, local and non-U.S. taxes.

ERISA CONSIDERATIONS

The provisions of the Employee Retirement Income Security Act of 1974, as
amended (ERISA), are extremely complex. Consequently, if you are subject to
ERISA you should consult with your own advisors prior to investing in the Fund.

A fiduciary of a pension, profit-sharing or other employee benefit plan,
or an Employee Plan, subject to ERISA should consider fiduciary standards under
ERISA in the context of such Employee Plan's particular circumstances before
authorizing an investment of all or any portion of such Employee Plan's assets
in shares of the Fund. Among other factors, such fiduciary should consider:

o whether the investment satisfies the prudence requirements of
Section 404(a)(1)(B) of ERISA,

o whether the investment satisfies the diversification requirements of
Section 404(a)(1)(C) of ERISA,

o whether the investment is in accordance with the documents and
instruments governing the Employee Plan as required by Section
404(a)(1)(D) of ERISA,

o whether a prohibited transaction in violation of Section 406 of
ERISA or Section 408(e)(2) or 4975 of the IRC will occur and

o how the definition of the term "plan assets" under ERISA and the
Department of Labor regulations regarding the definition of "plan
assets" affect the proposed investments.

In addition, persons who control the investments of individual retirement
accounts (IRAs) should consider the applicable items listed above.

Neither ERISA nor the IRC defines "plan assets." However, under
regulations promulgated by the Department of Labor, the assets of certain pooled
investment vehicles, including certain partnerships, may be treated as "plan
assets." If the assets of the Fund were deemed to be "plan assets" of Employee
Plans or IRAs that owned shares,

o the prudence standards and other provisions of ERISA will extend to
investments made by the Fund,

o the person or persons who have investment discretion over the assets
of Employee Plans that invest in the Fund will be liable under ERISA
for investments made by the Fund that do not conform to such ERISA
standards, and

46
<PAGE>

o certain transactions that the Fund might enter into in the future in
the ordinary course of its business and operation might constitute
prohibited transactions of an Employee Plan or IRA under ERISA and
the IRC. A prohibited transaction, in addition to imposing potential
personal liability upon fiduciaries of Employee Plans or IRAs, may
also result in the imposition of an excise tax under the IRC upon
the disqualified person participating in the prohibited transaction,
or result in disqualification of the IRA.

The Fund's assets would not be considered to be "plan assets" under ERISA
and the Department of Labor regulations so long as, inter alia, the Fund's
shares are "publicly-offered securities" or the Fund qualifies as a "venture
capital operating company" within the meaning of such regulations. Under the
regulations, an interest, such as a share, will be considered a
"publicly-offered security" if:

o such security is widely held, freely transferable, and either:

o part of a class of securities registered under Section 12(b) or
12(g) of the Securities Exchange Act of 1934 or

o sold to a plan pursuant to an effective registration statement under
the Securities Act of 1933, provided that such securities sold are
thereafter registered under the Securities Exchange Act of 1934
within a specified time period.

The Investment Manager believes that, under the regulations, Fund shares
will be deemed "publicly-offered securities." Moreover, the Investment Manager
also expects the Fund to qualify as a "venture capital operating company."
Therefore, the Fund's underlying assets should not be deemed to be "plan
assets."

INVESTMENT COMPANY ACT REGULATION

The Small Business Investment Incentive Act of 1980 became law on October
21, 1980. This law modified the provisions of the Investment Company Act
applicable to an entity, such as the Fund, that elects to be treated as a
business development company, or a BDC. The Fund elected to be treated as a
"business development company" on June 28, 2000. The Fund may not withdraw its
election without first obtaining the approval of a majority in interest of its
investors. The following is a brief description of certain provisions of the
Investment Company Act. For more details, you should refer to the full text of
the Investment Company Act and the rules thereunder.

A business development company must be operated for the purpose of making
investments in certain types of securities as required by the Investment Company
Act. Such types include certain present and former "eligible portfolio
companies" and certain bankrupt or insolvent companies. A business development
company need not invest in all of the possible types of securities. Business
development companies must also make available significant managerial assistance
to their portfolio companies.

An "eligible portfolio company" generally is a United States company that
is not an investment company (except for wholly-owned Small Business Investment
Companies licensed by the Small Business Administration) and that:

47
<PAGE>

o does not have a class of securities registered on a national
securities exchange or included in the Federal Reserve Board's
over-the-counter margin list,

o is actively controlled by the relevant business development company
either alone or as part of a group acting together and as an
affiliate of such business development company is a member of the
portfolio company's board of directors, or

o meets such other criteria as may be established by the SEC.

Control, under the Investment Company Act, is presumed to exist where a business
development company owns 25% of the outstanding voting securities of a portfolio
company.

The Investment Company Act prohibits or restricts business development
companies from investing in certain types of companies, such as brokerage firms,
insurance companies, and investment banking firms. Moreover, according to the
Investment Company Act, a business development company may only acquire
"qualifying assets" and certain assets necessary for its operations (such as
office furniture, equipment, and facilities) if, at the time of the acquisition,
less than 70% of the value of its assets consists of qualifying assets.
"Qualifying assets" include:

o securities of companies that were eligible portfolio companies at
the time that the business development company acquired their
securities,

o securities of bankrupt or insolvent companies that are not otherwise
eligible portfolio companies,

o securities acquired as follow-on investments in companies that were
eligible at the time of the business development company's initial
acquisition of their securities but are no longer eligible (provided
that the business development company has maintained a substantial
portion of its initial investment in those companies),

o securities received in exchange for or distributed on or with
respect to any of the foregoing, and

o cash items, government securities, and high-quality, short-term
debt.

The Investment Company Act also places restrictions on the nature of the
transactions in which, and the persons from whom, a business development company
may purchase securities in order for the securities to be considered qualifying
assets.

A business development company may, under specified conditions, issue a
single class of senior debt and a single class of senior equity if its asset
coverage ratio is at least 200% after the issuance of such debt or equity. As a
result, distributions to Fund investors or the repurchase of any of the Fund's
shares will be prohibited if the asset coverage ratio does not exceed 200% at
the time of the distribution or repurchase, unless otherwise permitted under the
Investment Company Act.

After this offering, the Fund may sell its shares below the prevailing net
asset value per share only with the approval of the holders of a majority of the
Fund's voting securities (including a majority of the voting securities held by
nonaffiliated persons) at an annual meeting. The Fund may repurchase

48
<PAGE>

its shares from time to time, subject to the restrictions of the Operating
Agreement and the Investment Company Act. See "Description of Limited Liability
Company Interests -- Share Repurchases".

In accordance with the Investment Company Act, certain transactions
involving the Fund and its affiliates (and affiliates of such affiliates) may be
consummated only with the prior approval of a majority of the Independent
Directors, including a majority of the Independent Directors having no financial
interest in the transactions. Certain transactions involving closely affiliated
persons of the Fund, including the Investment Manager, will require the prior
approval of the SEC. In general, the following people must obtain the prior
approval of a majority of the Independent Directors and, in some situations, the
prior approval of the SEC, before engaging in certain transactions involving the
Fund or any portfolio company controlled by the Fund:

o any person who owns, controls, or holds with power to vote, more
than 5% of its outstanding shares,

o any director, executive officer, or general partner of that person,
and

o any person who directly or indirectly controls, is controlled by, or
is under common control with, that person.

The Investment Company Act generally does not restrict transactions
between a business development company and its portfolio companies.

In accordance with the Investment Company Act, a majority of the Directors
are not "interested persons" as defined in the Investment Company Act.

REPORTS, ACCOUNTING, AND AUDIT

We will furnish to each of you all reports required by applicable laws.
You will be asked to consent to receiving these reports and all other
communications of the Fund by either having access to such reports on the Fund's
web site or by receiving them via electronic mail. We reserve the right to not
accept the subscription of any potential investor who does not so consent. Upon
receipt of such consent we will furnish you with all communications
electronically until you notify us of your desire to rescind that election. Even
if you initially consent, you may at any time make an affirmative election not
to receive information electronically. In that case, we will deliver, without
penalty, by first class mail, only those items required by statute or the
Operating Agreement. We will file all such reports with all governmental
authorities as required.

SELLING MATERIALS AND MARKETING

We are making this offering only by means of this prospectus and any
advertisements distributed by the Fund that comply with applicable securities
laws. We will only distribute to you selling materials that indicate that they
are being distributed by the Fund or the Broker-Dealer. Use of any materials
will be conditioned, if required, on filing with and clearance by appropriate
regulatory authorities. Such clearance does not mean that any such regulatory
authority has passed on the merits of this offering or the accuracy or adequacy
of the selling materials.

The Broker-Dealer expects to use various means to market and promote the
Fund. Such means may include direct mail, telemarketing, banner advertisements
and various media channels. We will

49
<PAGE>

reimburse the Broker-Dealer and its affiliates for their marketing and
promotional expenses, which we estimate to be 6% of the aggregate offering
price, assuming the offering is fully subscribed. NASD rules cap our
reimbursement for marketing and distribution expenses at 10% of the actual
proceeds of the offering.

LEGAL MATTERS

Morgan, Lewis & Bockius LLP, which has been retained as counsel to the
Fund, has passed upon certain legal matters relating to the shares offered
hereby. None of the Fund, the Investment Manager or the Broker-Dealer is subject
to any material pending legal proceedings.

ACCOUNTING MATTERS

The Fund has retained Deloitte & Touche LLP to audit the Fund and assist
in the preparation of quarterly and annual reports. Deloitte & Touche's
principal business address is Two World Financial Center, New York, New York
10281.

50
<PAGE>

VCVILLAGE.COM OPPORTUNITY FUND LLC
PART C: OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

1. Financial Statements:

Not Applicable.

All financial statements, schedules and historical financial information
have been omitted as the subject matter is not required, not present, or not
present in amounts sufficient to require submission.

2. Exhibits

a. Certificate of Formation dated June 13, 2000, as filed with
the State of Delaware on June 13, 2000 [previously filed].

b. Revised Form of Operating Agreement is filed herewith.

c. Not Applicable.

d. Not Applicable.

e. Not Applicable.

f. Not Applicable.

g. Form of Investment Advisory Agreement with VCVillage.com
Advisors, Inc. [previously filed].

h. Form of Distribution Agreement with VCVillage.com Securities,
Inc. [previously filed].

i. Not Applicable.

j. Custody Agreement [to be filed by amendment].

k. Not Applicable.

l. Morgan, Lewis & Bockius Opinion [to be filed by amendment].

m. Not Applicable.

n. Not Applicable.

o. Not Applicable.

51
<PAGE>

p. Not Applicable.

q. Not Applicable.

r. Code of Ethics [to be filed by amendment].

Item 25. Marketing Arrangements.

Not Applicable.

Item 26. Other Expenses of Issuance and Distribution.

The following table sets forth the estimated expenses expected to be incurred in
connection with the offering described in this Registration Statement:

Registration fees 26,400
Printing 1,000
Fees and expenses of qualification under state
securities laws (including fees of counsel) 15,000
Accounting fees and expenses 0
Legal fees and expenses 100,000
NASD Fees 5,000
Reimbursement of Broker-Dealer's Expenses 24,000
Miscellaneous

Total

Item 27. Persons Controlled by or under Common Control with Registrant.

Prior to the date of the offering, VCVillage.com Holdings, Inc., a
Delaware corporation, may be deemed to control the Registrant. VCVillage.com
Advisors, Inc., the Investment Manager, and VCVillage.com Securities, Inc., the
broker-dealer and also a Delaware corporation, are wholly-owned subsidiaries of
VCVillage.com Holdings, Inc.

Item 28. Number of Holders of Securities.

Not Applicable.

Item 29. Indemnification.

Under the Registrant's Operating Agreement neither the Directors nor any
of their Affiliates shall be liable, responsible, or accountable in damages or
otherwise to the Fund or any Fund investor for any loss or damage incurred by
reason of any act performed by or omission of the Directors or such Affiliates
in good faith in the furtherance of the interests of the Fund and in a manner
reasonably believed by them to be within the scope of the authority granted to
the Directors by this Agreement or by the Fund investors, provided that the
Directors or such Affiliates were not guilty of wilful malfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office with respect to such acts or omissions. The Fund, out of its assets
and, subject to the Operating Agreement, not out of the assets of the Directors,
shall, to the full extent permitted by law,

52
<PAGE>

indemnify and hold harmless any Director and any Director Affiliate who was or
is a party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (including any action by or in the right of the Fund), by
reason of any acts or omissions or alleged acts or omissions arising out of such
Person's activities as a Director or as an Affiliate of a Director, if such
activities were performed in good faith in furtherance of the interests of the
Fund and in a manner reasonably believed by such Person to be within the scope
of the authority conferred to the Directors by the Operating Agreement or by the
Fund investors against losses, damages, or expenses for which such Person has
not otherwise been reimbursed (including attorneys' fees, judgments, fines, and
amounts paid in settlements) actually and reasonably incurred by such Person in
connection with such action, suit, or proceeding, so long as such Person was not
guilty of malfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office with respect to such acts or
omissions and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such Person's conduct was unlawful, and provided
that the satisfaction of any indemnification and any holding harmless shall be
from and limited to Fund assets and no investor shall have any personal
liability on account thereof.

Notwithstanding the foregoing, none of the indemnified parties shall be
indemnified for any loss or damage incurred by them in connection with any
judgment entered in or settlement of any lawsuit for violations of federal or
state securities laws by the indemnified parties in connection with the offer or
sale of Fund Interests unless: (i) there has been a successful adjudication on
the merits as a result of a trial; or (ii) such claim has been dismissed with
prejudice on the merits by a court of competent jurisdiction that has been
apprised of the SEC's position on indemnification. In addition, a court of
competent jurisdiction must approve any such indemnification for securities law
violations. The Fund may purchase liability insurance that insures the
indemnified parties against any liabilities as to which such parties are
permitted to be indemnified pursuant to the provisions of Section [ ] of the
Operating Agreement. However, the Fund may not incur the cost of that portion of
liability insurance which insures the indemnified parties for any liability as
to which the indemnified parties are prohibited from being indemnified under
Section [ ] of the Operating Agreement.

In accordance with Section 17(i) of the Investment Company Act of 1940, no
investment adviser to, or principal underwriter for the Fund may be protected
against any liability to the Fund or any Fund investor to which he would
otherwise be subject by reason of wilful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.

Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

53
<PAGE>

Item 30. Business and Other Connections of Investment Advisers.

[Bios of officers and Directors to be inserted by amendment.]

Item 31. Location of Accounts and Records.

Records are located at the offices of the Fund: 325 W. 38th Street, Suite
1504, NY, NY 10018

Item 32. Management Service.

Not Applicable.

Item 33. Undertakings.

1. Registrant hereby undertakes to suspend offering of the shares covered
hereby until it amends its prospectus contained herein if (1) subsequent to the
effective date of this Registration Statement, its net asset value per share
declines more than 10 percent from its net asset value per share of the
effective date of this Registration Statement, or (2) its net asset value
increases to an amount greater than its net proceeds as stated in such
prospectus.

2. Not Applicable.

3. Not Applicable.

4. Registrant hereby undertakes:

a. to file, during any period in which offers or sales are being
made, a post-effective amendment to the registration
statement:

i. to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933,

ii. to reflect in the prospectus any facts or events after
the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement, and

iii. to include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;

b. that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of those
securities at that time shall be deemed to be the initial bona
fide offering thereof; and

54
<PAGE>

c. to remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.

5. Not Applicable.

6. Not Applicable.

55
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, and the State
of New York, on the 28th day of June, 2000.

VCVillage.com Opportunity Fund. LLC

/s/ Daniel Bendheim
------------------------------
Name: Daniel Bendheim
Title: President

56
<PAGE>

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

/s/ Daniel Bendheim June 28, 2000
------------------------------ --------------------------------
Name: Daniel Bendheim Date:
Title: President

57
<PAGE>

Exhibit Index

a. Certificate of Formation dated June 13, 2000, as filed with the State of
Delaware on June 13, 2000 [previously filed].

b. Revised Form of Operating Agreement is filed herewith.

c. Not Applicable.

d. Not Applicable.

e. Not Applicable.

f. Not Applicable.

g. Form of Investment Advisory Agreement with VCVillage.com Advisors, Inc.
[previously filed].

h. Form of Distribution Agreement with VCVillage.com Securities Inc.
[previously filed].

i. Not Applicable.

j. Custody Agreement [to be filed by amendment].

k. Not Applicable.

l. Morgan, Lewis & Bockius Opinion [to be filed by amendment].

m. Not Applicable.

n. Not Applicable.

o. Not Applicable.

p. Not Applicable.

q. Not Applicable.

r. Code of Ethics [to be filed by amendment].