2008 Scorecard SDForum Quarterly Venture Breakfast with PWC Steve Bengston [email protected] 650 281 9843 PricewaterhouseCoopers/ National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters.
Download ReportTranscript 2008 Scorecard SDForum Quarterly Venture Breakfast with PWC Steve Bengston [email protected] 650 281 9843 PricewaterhouseCoopers/ National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters.
2008 Scorecard SDForum Quarterly Venture Breakfast with PWC Steve Bengston [email protected] 650 281 9843 PricewaterhouseCoopers/ National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters MoneyTree Total Investments: Q1 2000 – Q3 2008 ($ in billions) $28.3 $28.1 $26.4 $30.0 $22.1 $25.0 $20.0 Q1 Q2 Q3 Q4 $7.8 $7.7 $7.1 $5.5 2005 $7.6 $7.4 $7.8 $8.1 2004 $6.4 $7.1 $6.7 $6.4 2003 $5.1 $6.4 $5.9 $5.8 2002 $5.3 $6.3 $5.0 $5.9 $5.0 $4.3 $5.0 $4.9 $5.6 $8.3 $8.1 $10.0 $6.9 $6.0 $4.6 $4.5 $12.8 $11.4 $15.0 2007 2008 $0.0 2000 2001 2000 # 2001 2002 2003 2006 2004 2005 2006 2007 2008 of Deals Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2128 2105 1927 1743 1283 1218 1004 980 839 853 690 719 700 740 715 785 713 846 691 840 731 825 788 810 873 948 904 936 863 1036 983 1049 990 1033 907 PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters Q2 Q3 Q4 Q1 Q2 Q3 Q3 2008 Slide 2 MoneyTree Total Investments: 1980 – YTD Q3 2008 Annual Venture Capital Investments 1980 to YTD Q3 2008 ($ in billions) $105.0 $120 $100 $3.3 $3.3 $2.8 $2.2 $3.5 $3.7 $4.1 1988 1989 1990 1991 1992 1993 1994 $28.0 $26.7 $21.1 $14.9 $23.1 $3.3 1987 2005 $3.0 1986 $22.5 $2.8 1985 2004 $3.0 1984 $19.8 $3.0 1983 2003 $1.6 1982 $22.0 $1.2 1981 $11.3 $0.6 1980 $20 $8.0 $40 2002 $40.6 $60 $30.8 $54.0 $80 PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters 2008 2007 2006 2001 2000 1999 1998 1997 1996 1995 $0 Q3 2008 Slide 3 Investments by Region: Q3 2008 ($ in millions) Upstate NY $31.9 M 5 Deals Northwest $295 M-4% 44 Deals Sacramento/N. CA $20.6 M 6 Deals Midwest $395 M-6% 60 Deals Colorado $196.0 M 21 Deals LA/Orange County $573 -8% 54 Deals San Diego $178 -2% 22 Deals Southwest $59.2 M 17 Deals South Central $7.5 M 9 Deals Texas $276 M-4% 38 Deals K AU A I AK/HI/PR $12.0 M 1 Deal NY Metro $546 M-8% 71 Deals North Central $235.2 M 19 Deals Silicon Valley $2,773 -39% 292 Deals New England $834 M-12% 117 Deals Philadelphia Metro $268 M-4% 36 Deals DC/Metroplex $180.6 M 44 Deals Southeast $250.1 M 51 Deals N I I U HA OA HU M O L O KA I M UA I L AN AI K AH O O W LE A H AW A I I Q3 2008 Total Investments - $7,131.3 million in 907 deals PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters Q3 2008 Slide 4 Investments by Region: Q3 2008 ($ in millions ) $2,773.4 Silicon Valley New England $834.1 LA/Orange County $572.5 NY Metro Region $546.2 Midwest $395.1 Northwest $294.9 Texas $275.5 Philadelphia Metro $268.1 Southeast $250.1 North Central $235.2 Colorado $196.0 DC/Metroplex $180.6 San Diego $178.4 Southwest $59.2 # of % Change $ Deals from Q2’08 Silicon Valley 292 -10.75% New England 117 -2.31% LA/Orange County 54 -3.59% NY Metro 71 35.97% Midwest 60 0.20% Northwest 44 -15.57% Texas 38 -4.59% Philadelphia Metro 36 25.15% Southeast 51 -25.41% North Central 19 27.74% Colorado 21 6.69% DC/Metroplex 44 -16.61% San Diego 22 -52.31% Southwest 17 -41.35% Upstate NY Upstate NY 5 76.15% $31.9 Sacramento/N.Cal 6 1254.04% Sacramento/N.Cal $20.6 AK/HI/PR 1 96.72% South Central 9 -81.80% 907 -6.96% AK/HI/PR South Central $12.0 Total $7.5 $0 $500 $1,000 $1,500 $2,000 Q3 2008 Total: $7,131.3 million in 907 deals PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters $2,500 $3,000 Q3 2008 Slide 5 Investments by Industry: Q3 2008 ($ in millions) Biotechnology $1,349.8 Software $1,342.9 $1,191.5 Industrial/Energy $896.4 Medical Devices and Equipment Media and Entertainment $409.2 IT Services $402.7 Semiconductors $395.9 $322.8 Telecommunications $178.3 Networking and Equipment $141.7 Financial Services $120.0 Electronics/Instrumentation Business Products and Services $94.0 Consumer Products and Services $91.5 $73.1 Computers and Peripherals Industry # of % Change $ Deals from Q2 ’08 Biotechnology 114 20.37% Software 214 6.31% Industrial/Energy 96 3.32% Medical Devices and Equipment 93 -3.57% Media and Entertainment 92 -36.67% IT Services 62 -33.24% Semiconductors 50 7.39% Telecommunications 45 -37.71% Networking and Equipment 21 11.32% Financial Services 18 0.66% Electronics/Instrumentation 18 -6.48% Business Products and Services 29 -47.86% Consumer Products and Services 18 -29.92% Computers and Peripherals 14 -51.18% Healthcare Services 13 -9.42% Healthcare Services $55.9 Retailing/Distribution 6 -55.09% Retailing/Distribution $49.2 Other 4 n/a TOTAL 907 -6.96% $16.4 Other $0 $900 $1,800 Q3 2008 Total: $7,131.3 million in 907 deals Visit www.pwcmoneytree.com for Industry definitions PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters Q3 2008 Slide 6 Investments by Stage of Development: Q3 2008 ($ in millions) Later Stage $2,810.2 Expansion $2,650.6 Early Stage Stage of Development $1,227.1 Startup/Seed $443.4 $0 $1,000 Later Stage 294 -14.09% Expansion Stage 263 3.61% Early Stage 223 -13.91% Startup/Seed 127 8.15% Total 907 -6.96% $2,000 Q3 2008 Total: $7,131.3 million in 907 deals PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters % Change in $ Amount Deals from Q2 2008 # of $3,000 Q3 2008 Slide 7 Median Deal Size vs. Mean Deal Size – Quarterly Total U.S. Investments $10 $8.8 $8 $7.4 $7.2 $7.1 $7.5 $7.4 $7.7 $7.9 $7.9 $7.4 $7.1 $6.8 $3.9 Q3 2003 $4.7 $4.4 $4.8 $4.5 $4.5 $4.0 $4.5 $4.0 $4.0 $4.0 $4.3 $4.4 $4.0 $4.0 Q4 2007 $4.0 Q2 2003 $4.0 $4.5 Q3 2007 $4.6 Q4 2006 $5.0 $4.5 $3.2 $7.0 $7.4 $6.2 $6 $4 $7.1 $8.0 $7.5 Q3 2006 $6.3 $7.2 $7.7 Q2 2006 $6.6 $6.7 $6.8 $7.4 $3.8 $3.5 $4.0 Median Deal Size Q3 2008 Q2 2008 Q1 2008 Q2 2007 Q1 2007 Q1 2006 Q4 2005 Q3 2005 Q2 2005 Q1 2005 Q4 2004 Q3 2004 Q2 2004 Q1 2004 Q4 2003 Q1 2003 Q4 2002 $0 Q3 2002 $2 Mean Deal Size PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters Q3 2008 Slide 8 Top 10 Deals : Q3 2008 ($ Millions) Solar Reserve Santa Monica Cleantech 140 AVA Solar Ft. Collins, CO Cleantech 104 Pacific Biosciences Silicon Valley Cleantech 100 CVRx Minneapolis Med Device 84 Proteolix Silicon Valley Biotech 79 Recurrent Energy Silicon Valley Cleantech 75 Trion World Silicon Valley Software 70 Proto Labs Maple Plain, MN Cleantech 67 Fisker Automotive Irvine Cleantech 65 Biotech 60 Portola Pharmaceuticals Silicon Valley PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters Q3 2008 Slide 9 Q3 2008 – Most Active Venture Investors Venture Capital Firm Location Draper Fisher Jurvetson Menlo Park, California 26 Intel Capital Santa Clara, California 20 New Enterprise Associates Baltimore, Maryland 19 Kleiner Perkins Caufield & Byers Menlo Park, California 18 Sequoia Capital Menlo Park, California 17 U.S. Venture Partners Menlo Park, California 17 Greylock Partners Waltham, Massachusetts 14 InterWest Partners Menlo Park, California 14 Polaris Venture Partners Waltham, Massachusetts 14 Sigma Partners Menlo Park, California 14 Menlo Ventures Menlo Park, California 13 Accel Partners Palo Alto, California 12 Advanced Technology Ventures Waltham, Massachusetts 12 Canaan Partners Westport, Connecticut 11 CMEA Ventures San Francisco, California 11 Venrock Associates Palo Alto, California 11 PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters Total Deals Q3 2008 Slide 10 Thomson Reuters’ U.S. Private Equity Performance Index (PEPI) (Investment Horizon Performance through 06/30/2008) Fund Type 1 Year 3 Year 5 Year 10 Year 20 Year Early/Seed VC 2.1 4.9 5.0 32.9 21.4 Balanced VC 2.5 10.8 11.9 14.4 14.7 Later Stage VC 15.3 12.4 11.1 8.5 14.5 All Venture (through 03/31/08) 13.3 9.6 9.0 17.2 16.8 All Venture (through 06/30/07) 25.5 11.3 5.1 19.3 16.4 NASDAQ -11.1 3.6 7.0 1.9 9.2 S&P 500 -13.8 2.4 5.5 1.2 8.0 Source: Thomson Reuters/National Venture Capital Association *The Private Equity Performance Index is based on the latest quarterly statistics from Thomson Reuters’ Private Equity Performance Database analyzing the cashflows and returns for over 1941 US venture capital and private equity partnerships with a capitalization of $828 billion. Sources are financial documents and schedules from Limited Partner investors and General Partners. All returns are calculated by Thomson Reuters from the underlying financial cashflows. Returns are net to investor after management fees and carried interest. PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters Q3 2008 Slide 11 Annual VC Returns (IRR), 1983-2002 Source: Venture Economics 35 30 25 20 15 10 5 0 Top Quartile 2nd Quartile 3rd Quartile S&P 500 -5 4th Quartile -10 VC Funds PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters Q3 2008 Slide 12 Analysis of Venture-Backed IPO and M&A Activity Total VentureBacked Offering Size ($M) Average VentureBacked Offering Size ($M) Number of Venture-backed M&A deals Average M&A deal size** Date Number of IPOs* 2003 29 2,022.7 69.8 284 62.7 2004 94 11,378.0 121.0 345 85.1 2005 57 4,485.0 78.7 351 104.9 2006 57 5,117.1 89.8 369 116.8 2007 Q1 18 2,190.6 121.7 83 156.6 2007 Q2 25 4,146.8 165.9 86 110.3 2007 Q3 12 945.2 78.8 102 207.9 2007 Q4 31 3,043.8 98.2 88 211.3 2007 86 10,326.3 120.1 359 177.5 2008 Q1 5 282.7 56.6 70 128.7 2008 Q2 0 0.0 n/a 71 197.7 2008 Q3 1 187.5 187.5 58 146.4 * Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges, regardless of domicile **Only accounts for deals with disclosed values Source: Thomson Reuters and National Venture Capital Association PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters Q3 2008 Slide 13 Venture Capital Fundraising* Year First Time Funds Follow-On Funds Total Number of Funds VC Raised ($M) 2003 53 98 151 10,622.8 2004 56 154 210 19,144.8 2005 61 171 232 28,557.0 2006 53 185 238 31,756.4 2007 60 190 250 36,105.7 YTD 2008 36 142 178 24,326.1 Q1 ’07 21 62 83 6,636.8 Q2 ’07 16 67 83 8,641.9 Q3’ 07 16 62 78 8,595.5 Q4’ 07 25 60 85 12,231.5 Q1’ 08 10 60 70 6,959.2 Q2’ 08 22 54 76 9,247.7 Q3’08 10 45 55 8,119.2 43 3,400.0 Quarter Q4’ 08 *These figures take into account the subtractive effect of downsized funds Data current as of October 13, 2008 Source: Thomson Reuters & National Venture Capital Association PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters Q3 2008 Slide 14 Summary: Best of Times Cisco acquiring again… Full Year 2008 $28B, 5th biggest ever 30 straight quarters from $4.3-8.3 B/qtr Advertising $ to Internet/Mobile just begun (7%) • Worldwide Ad Spending $600B • 21% media time Internet/Mobile • Top 100 US Adv. Moved $1B from TV/news to Web in ‘07 • Primary News Source: 48% Internet, 29% TV, 11% radio, 10% newspaper • US Media Mkt-Growth %: • TV 70B:1%, Newspaper 42B:-(7)%, Radio 24B:5% • Internet 19B:19%, Magazines 14B:7% • No huge advertiser has switched yet • 13% US marriages 2005 met online PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters SignalWorks Linksys Arroyo Video Solutions Actona Reactivity P-Cube Navini Networks Pure Networks Post Path Securent NetSolve FineGround Networks Dynamicsoft IronPort Systems Perfigo Meetinghouse Orative Protego Networks Sheer Networks Airespace Scientific Atlantic Topspin $ 14M 500M 92M 82M 135M 200M 330M 120M 215 M 100M 128M 70M 55M 830M 74M 44m 31m 65M 97M 450M 6900M 250M Q3 2008 Slide 15 Summary: Not So Good Times • • • • • • IPO mkt weak 6 vc backed IPO’s in US in ’08, lowest since 1977, down 93% vs ’07, raised $0.5B vs $10.3B 0 vc backed IPO’s in Q2’08 & Q4’08 1 vc backed IPO in Q3’08 2002-08: 19,300 companies received funding, 351 IPO’s Time to IPO: ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 # Years from Series A: 4.5 3.3 5.7 5.7 5.6 6.2 7.1 8.3 M&A weak 260 deals (down 27%), $13.9B (down 51%) in ’08 vs. ‘07 40% drop in ’08 to $300B 32 deals >$1B in ’08 vs 80 in ‘07 Median M&A about $80M $24 B exit value ’08 vs $58 B in ’07, lowest since ‘03 $4 Trillion mkt cap lost on US exchanges in last 12 months, e.g. Citigroup: $130B gone, AIG: $150B Fannie Mae/Freddie Mac: $105B ($1B left) US Homeowners lost $2 Trillion equity last 12 months 12 Million homes worth less than mortgage PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters Q3 2008 Slide 16 Summary/Facts/Predictions • • • • • VC’s stop funding many portfolio companies More layoffs/cost cutting, unemployment up New Deals must be perfect All Deals Series A, lots of down rounds Fewer Deals per fund, higher reserves PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters Q3 2008 Slide 17 Globalization Marches On • • • • • • China VC$ up 50% =$2.5B 2007, 10% of US, 73% $ foreign % Int’l: 70% PC, 86% Internet, 92% Mobile China surpass US for most Internet users in ’08 In China: Ten Cent, Baidu, Sina > Microsoft, Google, Yahoo India VC$ up 500% in ’07 to $1.0B, $200M ’06, $320M ’05 Top GDP & Est. ’09 % Change: US 0.2%, Japan 0.8%, China8.5%, Germany 0.6%, UK 0%, France 0.8%, Italy 0% • India population surpass China by 2020 PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters Q3 2008 Slide 18 Steve Bengston 650-281-9843 [email protected] © 2008 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP (a Delaware limited liability partnership) or, as the context requires, other member firms of PricewaterhouseCoopers International Ltd., each of which is a separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers LLP. SJ_07_0080