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San Diego Venture GroupVC Outlook 2012January 24, 2012
Mark G. HeesenNVCA President
The Number of US VC Firms Has Peaked ... Thankfully
At Year End
# Active Firms
Capital Managed
1970 28 $1B 1980 87 $4B 1990 96 $28B
2000 1,022 $220B 2010
462 $177B
Source: 2011 NVCA Yearbook, prepared by Thomson Reuters, figure 1.04
VC Fundraising Has Slowed Down – New commitments continue below company investment
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
$B 10 12 18 31 58 107 38 4 11 19 31 32 31 26 16 14 18
0
20
40
60
80
100
120
Source: Thomson Reuters/NVCA
Does not include Corporate Venture groups.
The Vast Bulk of the Capital Goes to Existing Managers Raising a Follow-On Fund
2005 2006 2007 2008 2009 2010 2011$B First 2.4 1.4 2.9 2.2 0.9 1.6 1.9$B Follow On 27.9 30.5 27.7 23.2 15.5 12.2 16.9
0
5
10
15
20
25
30
35
$B
Ra
ise
d b
y F
irs
t-T
ime
Ma
na
ge
rs v
s. F
oll
ow
-On
Source: Thomson Reuters/National Venture Capital Association
Investment Marches On -The industry is in a new size band but it is very much
open for business!
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$10019
88
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
$ B
illi
on
Inve
ste
d
VC Investment Peaked in 2000; Industry is Smaller Now
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters
$99b
$31b
$28b
Despite economic turbulence and uncertainty, VCs funded Over 1100 in 2011; 1000-1300 is typical
-
500
1,000
1,500
2,000
2,500
3,000
3,500
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011# Cos 1,428 2,459 3,388 1,236 840 768 950 1,067 1,259 1,361 1,281 795 1,047 1,159
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters
First Fundings of Life Sciences Companies is Way Down…
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
# LS FF 153 192 202 166 192 167 173 165 185 206 268 259 242 157 188 153
0
50
100
150
200
250
300
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters
SoCal under a Microscope…
Note that data “cuts” can be done from the historical trend data section of www.pwcmoneytree.com or from the
National Aggregate Spreadsheet which can be downloaded from that site.
10
So. California Investing Generally Tracked National Trends …
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
$M Inv 1,171 1,081 1,298 1,707 4,539 8,591 3,583 2,158 1,783 2,441 2,588 3,112 3,704 3,136 1,921 2,493 2,805
# Deals 165 240 264 333 505 751 402 275 268 274 313 354 394 375 277 341 315
0
100
200
300
400
500
600
700
800
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$ M
illion
s I
nveste
d in
C
om
pan
ies
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters
… and first time funding are rebounding nicely
-
50
100
150
200
250
300
350
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011# 1st Fundings 102 127 228 323 110 63 65 82 119 122 131 126 61 84 95
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters
SoCal’s 37% focus on life sciences is higher than national; clean tech makes up the bulk of Ind/Energy
Bio22%
Ind/Energy22%
Med Dev15%
SW12%
Media/Ent5%
Consumer5%
IT Services5% Semi
2% Other12%
$ Invested 2009 through 2011
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters
The Exit Scene - the importance of acquisitions has become clear
over the past several years
but the IPO market remains the key!
IPO Levels Far Below What is Needed
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
$Offer B 12.01 5.00 3.54 18.75 22.96 3.41 2.07 2.01 10.48 4.48 4.48 10.33 0.47 1.64 7.02 9.88
Count 281 142 78 271 263 41 22 29 94 57 57 86 6 12 75 52
0
50
100
150
200
250
300
0.00
5.00
10.00
15.00
20.00
25.00
Nu
mb
er o
f IP
Os
Off
er
$B
Source: Thomson Reuters/National Venture Capital Association
Median Age at IPO is Off Its Peak – but Still Historically High
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Med Age - Yrs 5.78 6.54 4.74 4.29 5.26 7.15 7.93 7.70 6.86 6.20 8.02 8.78 9.59 10.30 9.18 8.30
0.00
2.00
4.00
6.00
8.00
10.00
12.00
Off
er
$B
Med Age - Yrs
Source: Thomson Reuters/National Venture Capital Association, As of 5/27/2011
What’s in the Venture-Backed IPO Pipeline?IPOs During Period and Registration Counts at
Period End; Are we seeing a comeback?
2003 2004 2005 2006 2007 2008 2009 2010 2011
IPOs Done 29 94 57 57 86 6 12 75 52
In Reg on last day 31 57 16 36 60 28 29 42 60
0
10
20
30
40
50
60
70
80
90
100
# o
f C
om
pan
ies
Source: Thomson Reuters/National Venture Capital Association
As of 11/4/2011, there were 65 port cos in registration with 3 IPOs QTD including Groupon.
Volume of M&A Exits has Increased to Record Levels
Source: Thomson Reuters/National Venture Capital Association
Venture Exit Counts- IPOs and M&A by Year
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
#M&A 100 97 116 164 209 240 317 353 319 284 349 350 378 382 348 273 436 429
#IPO 166 202 270 136 77 260 264 41 24 29 94 57 57 86 6 12 75 52
0
100
200
300
400
500
600
700
Nu
mb
er
of
Iss
ue
s
#M&A
#IPO
Source: Thomson Reuters/National Venture Capital Association