Venture view 2011

Venture View 2011Venture View 2011

Venture Capital Predictions Venture Capital Predictions SurveySurvey

December 2010December 2010

Draft: Not for distribution. All materials under embargo until 6:00 a.m. on December 21, 2010

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSourceSource: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 22

Venture View 2011Venture View 2011

55thth annual venture capital predictions annual venture capital predictions surveysurvey

Conducted November 29 – December 12 Conducted November 29 – December 12 20102010

Surveyed venture capitalists and venture-Surveyed venture capitalists and venture-backed CEOs across the United Statesbacked CEOs across the United States

More than 500 responsesMore than 500 responses

Venture InvestmentsVenture Investments


In 2011, total U.S. venture investment will:In 2011, total U.S. venture investment will:

51%

24% 24%

58%

14%

28%

0%

10%

20%

30%

40%

50%

60%

VCs CEOs

Increase Decrease Remain Same


VCs: How will U.S. VC investment dollars fare VCs: How will U.S. VC investment dollars fare by industry in 2011?by industry in 2011?

11%

18%

15%

23%

40% 9%

11%

8%

2%

7%

51%

66%

77%

80%

82%

0% 20% 40% 60% 80% 100%

Software (SaaS)

Mobile Telecom

Healthcare IT

Software (Cloud)

Consumer Internet

Same Decrease Increase


30%

34%

34%

34%

22%

35%

33%

38%

55%

40%

33%

28%

10%

35%

38%

0% 20% 40% 60% 80% 100%

Hardware

Fin Serv

Biopharma

Med Devices

Energy


VCs: How will U.S. VC investment dollars fare VCs: How will U.S. VC investment dollars fare by industry in 2011?by industry in 2011?


VCs: In which industries to you expect to see VCs: In which industries to you expect to see investment “froth” in 2011investment “froth” in 2011

2%3%

4%6%

17%

19%

28%

29%

47%

69%

0% 10% 20% 30% 40% 50% 60% 70%

Hardware

Med Devices

Financial Services

Biotech

Health IT

Software (SaaS)

Clean Tech

Mobile Telecom

Software (Cloud)

Consumer Internet


VCs: Do you plan to invest in any of the VCs: Do you plan to invest in any of the following global regions in 2011?following global regions in 2011?

53%

26%

19% 18%13% 11%

7%2%

0%

10%

20%

30%

40%

50%

60%

VCs

None China Western Europe IndiaCanada Latin America Eastern Europe Africa


25%

29%

35%

35%

16%

14%

25%

26% 49%

46%

49%

51%

0% 20% 40% 60% 80% 100%

Late

Expansion

Early

Seed


VCs: How will U.S. VC investment dollars fare VCs: How will U.S. VC investment dollars fare by company stage in 2011?by company stage in 2011?


42%

65%

68%

63%

20%

29%

35%

16%

12%

6%

23%

21%

0% 20% 40% 60% 80% 100%

Series C andBeyond

Series B

Series A

Seed

Very/Somewhat Difficult Neutral Very/Somewhat Easy

VCs: How difficult will it be for companies to VCs: How difficult will it be for companies to raise the following rounds? raise the following rounds?


VCs: In 2011 the number of investments I will VCs: In 2011 the number of investments I will make into new (vs. follow on) companies will:make into new (vs. follow on) companies will:

44%

12%

43%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Increase Decrease Same


VCs: For early stage investors: How will you VCs: For early stage investors: How will you invest with angels in 2011?invest with angels in 2011?

30%

5%

47%

18%

0%

10%

20%

30%

40%

50%

More Less Same Not at all


How will term sheets be structured in 2011?How will term sheets be structured in 2011?

VCs

16%

42%

42%

More favorable to entrepreneurs

More favorable to VCs

Equally favorable

CEOs

22%

61%

17%

More favorable to entrepreneurs

More favorable to VCs

Equally favorable


How will company valuations fare in 2011?How will company valuations fare in 2011?

VCs

50%

13%

37%


CEOs

77%

8%

15%


Venture ExitsVenture Exits


31% 25%

19%

5%

34%

24%

28%

45%

5%

36%

72%

67%

0% 20% 40% 60% 80% 100%

Clean Tech

Life Sciences

Tech IPOs

Overall


VCs: How will venture backed IPO VCs: How will venture backed IPO volumevolume fare fare in 2011?in 2011?


53%

51%

39%

39%

16%

12%

9%

6%

31%

37%

52%

55%

0% 20% 40% 60% 80% 100%

Clean Tech

Life Sciences

Tech IPOs

Overall


VCs: How will venture backed IPO VCs: How will venture backed IPO qualityquality fare fare in 2011?in 2011?


43%

35%

14%

15%

21%

6%

36%

59%

84%

82%

2%

3%

0% 20% 40% 60% 80% 100%

Clean Tech

Life Sciences

Tech IPOs

Overall


VCs: How will venture backed acquisition VCs: How will venture backed acquisition volume volume fare in 2011?fare in 2011?


55%

52%

44%

45%

19%

8%

5%

26%

40%

51%

51%4%

0% 20% 40% 60% 80% 100%

Clean Tech

Life Sciences

Tech IPOs

Overall


VCs: How will venture backed acquisition VCs: How will venture backed acquisition quality quality fare in 2011?fare in 2011?


44%

33%

31%

8%

14%

14%

48%

53%

55%

0% 20% 40% 60% 80% 100%

Private to Private

SecondaryMarket

Sales to PE


VCs: How will alternative venture-backed exits VCs: How will alternative venture-backed exits fare in 2011?fare in 2011?


CEOs: How will venture-backed IPO CEOs: How will venture-backed IPO volume volume fare in 2011?fare in 2011?

58%

10%

32%



CEOs: How will venture-backed IPO CEOs: How will venture-backed IPO quality quality fare in 2011?fare in 2011?

44%

12%

44%



CEOs: How will venture-backed acquisition CEOs: How will venture-backed acquisition volumevolume fare in 2011? fare in 2011?

81%

4%

15%



CEOs: How will venture-backed acquisition CEOs: How will venture-backed acquisition qualityquality fare in 2011? fare in 2011?

52%

8%

40%



VCs: From which exits do you think the best VCs: From which exits do you think the best returns will come?returns will come?

65%

29%

1% 2%3%

Acquisitions IPOs Secondary Sales

Sales to PE Private to Private


VCs: How will funding rounds address VCs: How will funding rounds address founder’s liquidity?founder’s liquidity?

38%

22%

40%

More partial liquidity Less partial liquidity Same partial liquidity


CEOs: Do you anticipate your company CEOs: Do you anticipate your company engaging in any of the following in 2011engaging in any of the following in 2011

52%

37%

28%

9%4% 4%

0%

10%

20%

30%

40%

50%

60%

None Acquisition by Public Co Acquisition by Private CoAcquisition by PE IPO Secondary market sale

Venture FundraisingVenture Fundraising


VCs: How will US venture capital fundraising VCs: How will US venture capital fundraising fare in 2011?fare in 2011?

38%

32%

30%



VCs: In 2011, US VC funds will see foreign VCs: In 2011, US VC funds will see foreign limited partners in:limited partners in:

48%

27%

25%

More funds Fewer funds Same funds


VCs: How will limited partner agreements be VCs: How will limited partner agreements be structured in 2011? structured in 2011?

76%

3%

21%

More favorable to LPs More favorable to VCs

Equal favor to LPs and VCs

The EconomyThe Economy


How will the U.S. economy fare in 2011? How will the U.S. economy fare in 2011?

VCs

63%4%

33%

Improve Decline Same

CEOs

64%6%

30%



CEOs: How will corporate technology CEOs: How will corporate technology spending fare in 2011? spending fare in 2011?

66%5%

29%



How will these start-up ecosystems fare in How will these start-up ecosystems fare in 2011?2011?

47%

10%

43% 44%

16%

40%

0%

10%

20%

30%

40%

50%

VCs CEOs

Silicon Valley




36%

15%

49%

39%

19%

42%

0%

10%

20%

30%

40%

50%

VCs CEOs

New England




45%

12%

43% 43%

15%

43%

0%

10%

20%

30%

40%

50%

VCs CEOs

New York



VCs: Name a U.S. region other than Silicon VCs: Name a U.S. region other than Silicon Valley, New England or NY that is poised for Valley, New England or NY that is poised for

growth in 2011.growth in 2011.

21%

16%14%

12% 11% 11%8%

6%

2%

0%

5%

10%

15%

20%

25%

VCs

So Cal Rocky Mountain Mid AtlanticSouthwest Southeast MidwestNone Northwest Texas


CEOs: Name a U.S. region other than Silicon CEOs: Name a U.S. region other than Silicon Valley, New England or NY that is poised for Valley, New England or NY that is poised for

growth in 2011.growth in 2011.15% 15%

14%

11% 11%10% 10% 10%

2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

CEOs

Southwest Midwest SoutheastSo Cal Rocky Mountain NorthwestMid Atlantic None Texas

This or ThatThis or That


THIS OR THAT?THIS OR THAT?(Who will fare better in 2011?)(Who will fare better in 2011?)

64%

36%

59%

41%

0%

10%

20%

30%

40%

50%

60%

70%

VCs CEOs

China or India

China India


THIS OR THAT?THIS OR THAT? (Who will fare better in 2011?) (Who will fare better in 2011?)

69%

12%19%

32%39%

29%

0%

10%

20%

30%

40%

50%

60%

70%

VCs CEOs

Infotech or Cleantech or Biotech

Info Tech Clean Tech Biotech



70%

30%

48%52%

0%

10%

20%

30%

40%

50%

60%

70%

VCs CEOs

Small VC firms or Large VC firms

Small VC Firms Large VC Firms



62%

38%

56%

44%

0%

10%

20%

30%

40%

50%

60%

70%

VCs CEOs

Entrepreneurs or VCs

Entrepreneurs VCs



20%

50%

30%33%

29%

38%

0%

10%

20%

30%

40%

50%

VCs CEOs

Angels or VC or PE

Angels VC PE



79%

21%

68%

32%

0%

20%

40%

60%

80%

VCs CEOs

Silicon Valley or Silicon Alley

Silicon Valley Silicon Alley

Company OperationsCompany Operations


CEOs: Does your company plan to raise CEOs: Does your company plan to raise additional funding in 2011?additional funding in 2011?

64%

36%

Yes No


CEOs: Compared to 2010, how difficult will it CEOs: Compared to 2010, how difficult will it be for companies to raise VC in 2011?be for companies to raise VC in 2011?

17%

36%

35%

11% 1%

Very difficult Somewhat difficult Neutral

Somewhat easy Very easy


CEOs: What is your prediction for your CEOs: What is your prediction for your company’s headcount in 2011?company’s headcount in 2011?

82%

3%

15%



CEOs: In terms of global activity in 2011, my CEOs: In terms of global activity in 2011, my company willcompany will

60%

0%

12%

28%

0%

10%

20%

30%

40%

50%

60%

Increase revenues overseas Decrease revenues overseas

Maintain revenue levels overseas No business overseas


CEOs: How do you predict your total CEOs: How do you predict your total compensation package will fare in 2011?compensation package will fare in 2011?

50%

3%

47%



CEOs: Do you plan to cash out a portion of CEOs: Do you plan to cash out a portion of your equity in 2011? your equity in 2011?

10%

90%

Yes No


In 2011, I will use social media:In 2011, I will use social media:

VCs

47%

1%

41%

11%


CEOs

53%

1%18%

28%



For more information:

Emily Mendell, NVCA, [email protected], 610-565-3904

Kim Gagliardi, Dow Jones, [email protected], 603- 864-8873

Documents

Venture view 2011