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                                                                    Exhibit 10.3


                              MANAGEMENT AGREEMENT

         THIS AGREEMENT (this "Agreement") is made as of ______________, 2000,
between VENTURE LENDING & LEASING III, INC., a Maryland corporation ("Fund"), on
the one hand, and WESTECH INVESTMENT ADVISORS, INC., a California corporation
("Westech Advisors"), and SIGULER GUFF ADVISERS, LLC, a Delaware limited
liability company ("Siguler Guff Advisers"), on the other hand. Westech Advisors
is sometimes referred to herein as the "Manager"; Siguler Guff Advisers is
sometimes referred to herein as the "Adviser to the Manager".

         WHEREAS, the Fund is a newly organized, non-diversified closed-end
management investment company that has elected status as a business development
company ("BDC") under the Investment Company Act of 1940 ("1940 Act"), whose
sole shareholder is Venture Lending & Leasing III, LLC, a California limited
liability company (the "LLC");

         WHEREAS, the Manager and the Adviser to the Manager are each investment
advisers registered as such under the Investment Advisers Act of 1940 ("Advisers
Act"); and

         WHEREAS, the Fund desires to retain the Manager and the Adviser to the
Manager to furnish certain investment advisory, portfolio management and
administrative services to the Fund, and the Manager and Siguler Guff Advisers
are willing to furnish such services;

         NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties as follows:

         1.       Appointment. The Fund hereby appoints Westech Advisors as
Investment Manager and Siguler Guff Advisers as Adviser to the Manager for the
period and on the terms set forth in this Agreement. Westech Advisors and
Siguler Guff Advisers each accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.

         2.       Investment Duties. Subject to the supervision of the Fund's
Board of Directors ("Board"), the Manager will provide a continuous investment
program for the Fund and will determine from time to time what securities and
other investments will be purchased, retained or sold by the Fund. Subject to
investment policies and guidelines established by the Board, the Manager will
identify, evaluate, structure and close the investments to be made by the Fund,
arrange debt financing for the Fund, provide portfolio management and servicing
of loans or leases held in the Fund's portfolio, and administer the Fund's
day-to-day affairs. The Adviser to the Manager will advise the Manager
concerning the organization of the Fund, oversight of Fund administration, and
shareholder relations.

         3.       Administrative Duties. The Manager will administer the affairs
of the Fund under the supervision of the Board and subject to the following:

                  (a)      The Manager will supervise all aspects of the
operations of the Fund, including oversight of transfer agency, custodial and
accounting services; provided, however, that nothing contained herein shall be
deemed to relieve or deprive the Board of its responsibility for and control of
the conduct of the affairs of the Fund.




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                  (b)      The Manager will arrange, but not pay, for the
periodic preparation, updating, filing and dissemination (as required) of the
Fund's registration statement under the Securities Exchange Act of 1934, proxy
material, tax returns and required reports to the Fund's shareholders and the
Securities and Exchange Commission ("SEC") and other appropriate federal or
state regulatory authorities.

                  (c)      The Manager will oversee the computation of the net
asset value and the net income of the Fund in accordance with procedures adopted
by the Board.

                  (d)      The Manager will maintain or oversee the maintenance
of all books and records with respect to the Fund, and will furnish the Board
with such periodic and special reports as the Board reasonably may request. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, the Manager
hereby agrees that all records, which it maintains for the Fund, are the
property of the Fund, agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act any records, which it maintains for the Fund and which
are required to be maintained by Rule 31a-1 under the 1940 Act, and further
agrees, upon request by the Fund, to surrender promptly to the Fund any records
that it maintains for the Fund.

                  (e)      All cash, securities and other assets of the Fund
will be maintained in the custody of one or more banks in accordance with the
provisions of Section 17(f) of the 1940 Act and the rules thereunder; the
authority of the Manager to instruct the Fund's custodian(s) to deliver and
receive such cash, securities and other assets on behalf of the Fund will be
governed by a custodian agreement between the Fund and each such custodian, and
by resolution of the Board.

         4.       Further Duties. In all matters relating to the performance of
this Agreement, the Manager and Siguler Guff Advisers will act in conformity
with the Articles of Incorporation and Bylaws of the Fund and with the
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable federal and
state laws and regulations.

         5.       Services Not Exclusive.

                  (a)      The services furnished by the Manager and the Adviser
to the Manager hereunder are not to be deemed exclusive and the Manager and the
Adviser to the Manager, except as otherwise expressly provided in this Section
5, shall be free to furnish similar services to others so long as its services
under this Agreement are not impaired thereby. Except as otherwise expressly
provided in this Section 5, nothing in this Agreement shall limit or restrict
the right of any director, officer or employee of the Manager or of the Adviser
to the Manager, who may also be a director, officer or employee of the Fund, to
engage in any other business or to devote his or her time and attention in part
to the management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.

                  (b)      Until the Fund has called and invested at least 75%

of the total amounts subscribed for by the investors in the LLC, except as
provided below, neither the Manager nor the Adviser to the Manager nor any
"Controlled Person" of either will, without the consent of the Fund, sponsor,
distribute or act as investment adviser or manager to any pooled investment
vehicle other than the Fund, Venture Lending & Leasing, Inc., a Maryland
corporation or Venture Lending &



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Leasing II, Inc., a Maryland corporation or act as investment adviser or
manager to any client if the investment program of such pooled investment
vehicle or client includes, as a primary or major component, the provision of
asset-backed financing to venture capital-backed companies. If (i) the LLC
elects irrevocably to release the Members from any uncalled portion of their
subscription obligations or (ii) the Fund elects irrevocably to release the LLC
from any uncalled portion of its capital commitment to the Fund, then the "total
amount subscribed for" shall be deemed reduced to reflect such release. The
foregoing restriction shall not be deemed to prohibit the Manager, the Adviser
to the Manager, or any Controlled Person of either from acting as investment
adviser or manager with respect to any existing client of such party as of
__________, 2000; provided, however, that, until the 75% investment threshold
described above has occurred, such party shall not, without the consent of the
Fund, accept from such existing clients any additional investment funds (other
than amounts required for follow-on investments to existing investments) beyond
the funds invested or committed by such existing clients as of __________, 2000.
A "Controlled Person" of the Manager or the Adviser to the Manager as used in
this paragraph means any entity (i) 50% or more of whose voting securities are
beneficially owned by the Manager or (ii) 50% or more of whose voting securities
are controlled by any of the "Key Executives" of the Manager or the Adviser to
the Manager. For purposes of this paragraph, the "Key Executives" of the Manager
are Ronald W. Swenson and Salvador O. Gutierrez; the "Key Executive" of the
Adviser to the Manager is George W. Siguler.

         6.       Expenses.

                  (a)      The Fund will pay all expenses (including, without
limitation, accounting, legal, printing, clerical, filing and other expenses)
incurred by the Fund or either of the Manager or the Adviser to the Manager, or
their affiliates on behalf of the Fund in connection with the organization of
the Fund and the initial offering of its shares. Except as otherwise expressly
provided for in Section 6(b), during the term of this Agreement, the Fund will
bear all of its expenses incurred in its operations including, but not be
limited to, the following: (i) brokerage and commission expense and other
transaction costs incident to the acquisition and dispositions of investments
and the creation and perfection of security interests with respect thereto, (ii)
federal, state and local taxes and fees, including transfer taxes and filing
fees, incurred by or levied upon the Fund, (iii) interest charges and other fees
in connection with borrowings, (iv) SEC fees and expenses and any fees and
expenses of state securities regulatory authorities, (v) expenses of printing
and distributing reports and notices to shareholders, (vi) costs of proxy
solicitation, (vii) costs of meetings of shareholders and the Board, (viii)
charges and expenses of the Fund's custodian, transfer and dividend disbursing
agents, (ix) compensation and expenses of the Fund's directors who are not
interested persons of the Fund, the Manager, the Adviser to the Manager or the
Placement Agent, and of any of the Fund's officers who are not interested
persons of the Manager or the Adviser to the Manager, and expenses of all
directors in attending Board or shareholder meetings, (x) legal and auditing
expense, including expenses incident to the documentation for, and consummation
of, venture lending and leasing transactions and legal actions to enforce the
Fund's rights under such loans and leases, (xi) costs of any certificates
representing the Shares, (xii) costs of stationery and supplies, (xiii) the
costs of membership by the Fund in any trade organizations and (xiv) expenses
associated with litigation and other extraordinary or non-recurring expenses.

                  (b)      The expenses to be borne by the Manager and the
Adviser to the Manager in connection with their duties to the Fund hereunder are
limited to the following: (i) all costs and fees



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incident to the selection and investigation of prospective Fund investments,
such as travel expenses and professional fees (but excluding legal and
accounting fees and other costs incident to the closing, documentation or
consummation of such transactions), (ii) the cost of adequate office space for
the Fund and all necessary office equipment and services, including telephone
service, heat, utilities and similar items and (iii) the cost of providing the
Fund with such corporate, administrative and clerical personnel (including
officers and directors of the Fund who are interested persons of the Manager or
the Adviser to the Manager and are acting in their respective capacities as
officers and directors) as the Board reasonably deems necessary or advisable to
perform the services required to be performed by the Manager and the Adviser to
the Manager under this Agreement.

                  (c)      The Fund may pay directly any expenses incurred by it
in its normal operations and, if any such payment is consented to by the Manager
and acknowledged as otherwise payable by the Manager or the Adviser to the
Manager pursuant to this Agreement, the Fund may reduce the fee payable to the
Manager and the Adviser to the Manager pursuant to Section 7 hereof by such
amount. To the extent that such deductions exceed the fee payable to the Manager
and the Adviser to the Manager on any quarterly payment date, such excess shall
be carried forward and deducted in the same manner from the fee payable on
succeeding quarterly payment dates.

                  (d)      The payment or assumption by the Manager or the
Adviser to the Manager of any expense of the Fund that the Manager or the
Adviser to the Manager is not required by this Agreement to pay or assume shall
not obligate the Manager or the Adviser to the Manager to pay or assume the same
or any similar expense of the Fund on any subsequent occasion.

         7.       Management Fee.

                  (a)      For the services provided and the expenses assumed
pursuant to this Agreement, the Fund or its successor trustees will pay, whether
before or after dissolution of the Fund, to the Manager and the Adviser to the
Manager, together, a management fee ("Management Fee"), computed and paid
quarterly for the first two years following the first closing of the initial
offering of the Fund's shares, at an annual rate of 2.5% of the amount of the
Member Committed Equity Capital (as defined below) (regardless of when or if
such committed capital is called) as of the last day of each such fiscal
quarter; and computed and paid quarterly for each quarter thereafter, at an
annual rate of 2.5% of the Fund's total assets (including amounts derived from
borrowed funds) as of the last day of each such fiscal quarter. For purposes of
calculating the Management Fee, any capital committed to the LLC at a closing
subsequent to the first closing (regardless of when or if such committed capital
is called) shall be deemed to have been committed to the LLC as of the first
closing. The "Member Committed Equity Capital", as of the end of any fiscal
quarter, shall be the aggregate amount of subscription obligations for the
purchase of interests in the LLC (including any amounts of such obligations that
have been satisfied) as of the end of such fiscal quarter.

                  (b)      If this Agreement becomes effective or terminates
before the end of any fiscal quarter, the Management Fee for the period from the
effective day to the end of the fiscal quarter or from the beginning of such
fiscal quarter to the date of termination, as the case may be, shall be prorated
according to the proportion which such period bears to the full fiscal quarter
in which such effectiveness or termination occurs.



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                  (c)      If (i) the Manager or the Adviser to the Manager,
(ii) an officer, director or employee of the Manager or the Adviser to the
Manager, (iii) a company controlling, controlled by or under common control with
the Manager or the Adviser to the Manager, or (iv) an officer, director or
employee of any such company receives any compensation from a company whose
securities are held in the Fund's portfolio in connection with the provision to
that company of significant managerial assistance, the compensation due to the
Manager and the Adviser to the Manager hereunder shall be reduced by the amount
of such fee. If such amounts have not been fully offset at the time of
termination of this Agreement, the Manager and the Adviser to the Manager shall
pay such excess amounts to the Fund upon termination.

         8.       Limitation of Liability of Manager and the Adviser to the
Manager. Neither the Manager nor the Adviser to the Manager shall be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates except a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from its reckless disregard of its obligations
and duties under this Agreement. Any person, even though also an officer,
director, employee or agent of the Manager or the Adviser to the Manager, who
may be or become an officer, director, employee or agent of the Fund shall be
deemed, when rendering services to the Fund or acting with respect to any
business of the Fund, to be rendering such service to, or acting solely on
behalf of, the Fund and not as an officer, director, employee, or agent or one
under the control or direction of the Manager or the Adviser to the Manager even
though paid by it.

         9.       Duration and Termination.

                  (a)      This Agreement shall become effective upon the date
hereabove written provided that this Agreement shall not take effect unless it
has first been approved (i) by a vote, of a majority of those directors of the
Fund who are not parties to this Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by vote of a majority of the Fund's outstanding voting
securities.

                  (b)      Unless sooner terminated as provided herein, this
Agreement shall continue in effect for two years from the above written date.
Thereafter, regardless of the dissolution of the Fund, if not terminated, this
Agreement shall continue automatically for successive periods of twelve months
each, provided that such continuance is specifically approved at least annually
(i) by a vote, of a majority of those directors of the Fund who are not parties
to this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by the Board
or by vote of a majority of the outstanding voting securities of the Fund.

                  (c)      Notwithstanding the foregoing, this Agreement may be
terminated: (i) by vote of the Board or by a vote of a majority of the
outstanding voting securities of the Fund at any time, without the payment of
any penalty, on sixty days' written notice to the Manager and the Adviser to the
Manager or (ii) by the Manager and the Adviser to the Manager at any time,
without the payment of any penalty, on sixty days' written notice to the Fund.
This Agreement will automatically terminate in the event of its assignment.



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         10.      Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no amendment of this
Agreement shall be effective until approved by vote of a majority of the Fund's
outstanding voting securities.

         11.      Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Maryland, without giving effect to the conflicts
of laws principles thereof, and in accordance with the 1940 Act. To the extent
that the applicable laws of the State of Maryland conflict with the applicable
provisions of the 1940 Act, the latter shall control.

         12.      Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities",
"affiliated person", "interested person", "assignment", "broker", "investment
adviser", "national securities exchange", "net assets", "security" and
"significant managerial assistance" shall have the same meaning as such terms
have in the 1940 Act, subject to such exemption as may be granted by the
Securities and Exchange Commission by any rule, regulation or order. Where the
effect of a requirement of the 1940 Act reflected in any provision of this
Agreement is relaxed by a rule, regulation or order of the Securities and
Exchange Commission, whether of special or general application, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.

         IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.

VENTURE LENDING & LEASING III, INC.      WESTECH INVESTMENT ADVISORS, INC.


By:                                      By:
   --------------------------------         ---------------------------------
         Salvador O. Gutierrez,                     Ronald W. Swenson
         President                                  Chief Executive Officer


                                         SIGULER GUFF ADVISERS, LLC


                                         By:
                                            ---------------------------------
                                                    George W. Siguler,
                                                    Managing Director



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