US VC Industry Rightsizing and Protective Investing in 2009
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US VC Industry Rightsizing and Protective Investing in 2009
- 1. JVCA 勉強会 2009 年 米国の VC 投資動向 This document is not intended to be an offering or solicitation of any kind in relation to the activities of SunBridge Partners or any of its affiliated companies. Any such offering will be represented exclusively by an official Private Placement Memorandum. January 22, 2010
- 16. Surpassed Software investment for first time in Q3
- 17. Next Industry Focus of Silicon Valley Through the 1950s, Silicon Valley was the 10 th largest AGRICUTURAL region in the US.
- 18. Next Industry Focus of Silicon Valley Today, employment is concentrated (about 30%) in IT and Venture services
- 19. Silicon Valley – Now attempting to lead the Next Big Thing – “Cleantech”
- 24. “ Asia” = China? Plus $2.6B in Q3
- 28. China IPOs rising The Number of Exit Deals Fell Slightly; IPOs Are on the Rise The global financial tsunamis delivered a death blow to Chinese VC market, especially the exits on the market. In H1'09, capital markets abroad were in persistent depression while Chinese A-share Market suspended the issuance of new stocks, leading to a narrower exit channel via IPOs; in H2'09, the number of IPOs and financing amount in overseas markets soared in companion with the rebound of the economies worldwide, as well as the domestic market experienced a turnaround coupled with the reopening of exit channel via IPOs, because of the stable growth of Chinese economy, launch of ChiNext, and reform of issuance of news stocks. 2009 witnessed 123 exit deals, falling by 12 from that in 2008, a decrease of 8.9%. As for exit option, 82 exit deals completed via IPOs , accounting for 66.7% of the total, up by 39 or 34.8% over 31.9% in the prior year. There were 24 exit deals taking place via trade sale, a slightly fall from 23 in 2008, and six via M&As as the same as that in 2008. (See Chart 10)
- 30. Chinese Company IPOs in USA > Silicon Valley IPOs?!?
Notes de l'éditeur
- Venture-Backed Exit Market Improves Marginally at Year End M&A Exits See Highest Average Value Since Fourth Quarter 2007 While IPO Market Shows Preliminary Signs of Life New York, New York, January 4, 2010 – Venture-backed company exit activity showed promising signs of life during the fourth quarter of 2009 but fell far short of historical norms for the year, according to the Exit Poll report by Thomson Reuters and the National Venture Capital Association (NVCA). The year ended with 13 venture-backed Initial Public Offerings (IPOs) and 262 M&A transactions. While there were five venture-backed IPOs in the fourth quarter, a slight uptick from the third quarter of 2009, the last two years have been the slowest consecutive years for US venture-backed IPO activity since 1974-1975. The tally of M&A exits as of the last day of the quarter was 67 with 36 disclosed deals averaging $215.9 million, the highest quarterly average since the fourth quarter of 2007. “ While 2009 was a year many venture capitalists and entrepreneurs would choose to soon forget, the fourth quarter offered signs of hope for the coming year in terms of improved exit activity,” said Mark Heesen, president of the NVCA. “Clearly, we have a long way to go towards a full recovery but we are encouraged by the increasing acquisition values and the number of companies that have filed a registration with the SEC to go public. We expect to see a gradual but marked improvement in 2010 and hope to have exponential improvements this time next year.” CONTACTS Emily Mendell NVCA 1.610.565.3904 [email_address] Daniel Billings Thomson Reuters 1.646 223 5985 [email_address] Page 2 of 5 January 4, 2009 Venture-Backed Liquidity Events by Year/Quarter, 2003-2009 Quarter/Year Total M&A Deals M&A Deals with Disclosed Values *Total Disclosed M&A Value ($M) *Average M&A Deal Size ($M) **Number of IPO's Total Offer Amount ($M) Average IPO Offer Amount ($M) 2003 285 120 7,521.1 62.7 29 2,022.7 69.8 2004 348 188 16,043.8 85.3 94 11,378.0 121.0 2005 350 164 17,342.6 105.7 57 4,485.0 78.7 2006-1 107 52 5,607.5 107.8 10 540.8 54.1 2006-2 107 40 4,018.5 100.5 19 2,011.0 105.8 2006-3 96 44 3,538.0 80.4 8 934.2 116.8 2006-4 65 27 5,745.8 212.8 20 1,631.1 81.6 2006 375 163 18,909.8 116.0 57 5,117.1 89.8 2007-1 88 31 4,640.3 149.7 18 2,190.6 121.7 2007-2 90 37 3,912.1 105.7 25 4,146.8 165.9 2007-3 107 54 11,113.7 205.8 12 945.2 78.8 2007-4 93 45 9,645.8 214.4 31 3,043.8 98.2 2007 378 167 29,312.0 175.5 86 10,326.3 120.1 2008-1 108 42 4,885.2 116.3 5 282.7 56.6 2008-2 87 27 3,321.2 123.0 0 0.0 0.0 2008-3 89 32 3,080.2 96.3 1 187.5 187.5 2008-4 64 18 2,390.9 132.8 0 0.0 0.0 2008 348 119 13,677.4 114.9 6 470.2 78.4 2009-1 63 14 657.3 46.9 0 0.0 0.0 2009-2 64 13 2,570.1 197.7 5 720.7 144.1 2009-3 68 22 1,262.4 57.4 3 572.1 190.7 2009-4 67 36 7,765.4 215.9 5 649.3 129.9 2009 262 85 12,255.18 144.2 13 1,942.1 149.4 Thomson Reuters & National Venture Capital Association *Only accounts for deals with disclosed values **Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges, regardless of domicile. IPO Activity Overview There were five venture-backed IPOs valued at $649.3 million in the fourth quarter of 2009, a slight increase from the third quarter of 2009. With 13 venture-backed initial public offerings during full year 2009, the annual total more than doubles activity in seen 2008, by Page 3 of 5 January 4, 2009 dollars raised and number of offerings. However, the last two years have been the slowest consecutive years for US venture-backed IPO activity since 1974-1975. Two of the five IPO exits for the quarter were in the information technology sector, accounting for a total of $236.2 million. Within this sector, Sunnyvale, California-based, Fortinet, Inc, a developer of network protection systems, raised $156.3 million. Echo Global Logistics, a Chicago-based provider of transportation management solutions began trading on October 2nd and raised $79.8 million in the communications and media sector. Venture-Backed IPO Industry Breakdown Q4 2009 Industry *Number of Venture- Backed IPO's in the U.S. Total Venture- Backed Offering Size ($M) Computer Software/Services 1 156.3 Information Communications and Media 1 79.8 Technology TOTAL 2 236.1 Medical/Health 1 45 Life Biotechnology 1 68.2 Sciences TOTAL 2 113.2 Non-High Other Products 1 300 Technology TOTAL 1 300 TOTAL 5 649.3 *Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges, regardless of domicile In the biggest IPO of the quarter, KAR Auction Services, an automotive services holding company based in Carmel, Indiana raised $300 million via a listing on the New York Stock Exchange. There were no initial public offerings by US venture-backed companies on a foreign exchange in the third quarter. Of the five IPOs in the third quarter, two were trading at or above their offering prices as of 12/30/2009. For the year, nine out of the thirteen IPOs were trading at or above their offering. Twenty-nine venture-backed companies are currently filed for an initial public offering with the SEC. Mergers and Acquisitions Overview Page 4 of 5 January 4, 2009 As of December 30, 2009, 67 venture-backed M&A deals were reported for the fourth quarter, 36 of which had an aggregate deal value of $7.8 billion. The average disclosed deal value was $215.7 million. The information technology sector led the venture-backed M&A landscape, with 48 deals and a disclosed total dollar value of $4.7 billion. Within this sector, internet specific and communications and media companies accounted for the bulk of the targets, with 26 and 11 transactions, respectively, across these sector subsets. The life sciences sector saw the next highest level of activity with 14 deals and a combined disclosed value of $2.8 billion. Venture-Backed M&A Industry Breakdown Q4 2009 Industry Number of Venture- Backed M&A deals Number of Venture- Backed M&A deals with a disclosed value Total Disclosed Venture- Backed Deal Value ($M) Internet Specific 15 7 2238.1 Communications and Media 11 9 1352.0 Computer Software and Services 17 7 629.9 Semiconductors/Other Elect. 4 3 467.1 Information Computer Hardware 1 - - Technology TOTAL 48 26 4,687.1 Biotechnology 9 4 1773.3 Medical/Health 5 4 1061.0 Life Sciences TOTAL 14 8 2,834.3 Industrial/Energy 2 1 120.0 Non-High Other Products 3 1 124.0 Technology TOTAL 5 2 244.0 TOTAL 68 37 7,803.7 Source: Thomson Reuters & National Venture Capital Association In the biggest venture-backed deal of the quarter and the year, Amazon.com Inc acquired Zappos.com Inc, a Henderson, Nevada-based online shoe retailer for $930 million. In the year’s second biggest M&A deal, Onyx Pharmaceuticals acquired Proteolix, Inc., a biotechnology company specializing in cancer and immune diseases, for $851 million in October. Deals bringing in the top returns, those with disclosed values greater than four times the venture investment, accounted for 20 percent of the total in the fourth quarter of 2009, Page 5 of 5 January 4, 2009 Venture-backed M&A deals returning less than the amount invested accounted for 23 percent of the quarter’s total, compared to 50 percent of the total in the previous quarter. Analysis of Transaction Values versus Amount Invested Relationship between transaction value and investment Q309 M&A** Q409 M&A** Deals where transaction value is less than total venture investment 11 8 Deals where transaction value is 1-4x total venture investment 2 9 Deals where transaction value is 4x-10x total venture investment 7 10 Deals where transaction value is greater than 10x venture investment 2 7 Total Disclosed Deals 22 34 Source: Thomson Reuters & National Venture Capital Association ** Disclosed deals that do not have a disclosed total investment amount are not included. About Thomson Reuters Thomson Reuters is the world's leading source of intelligent information for businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world's most trusted news organization. With headquarters in New York and major operations in London and Eagan, Minnesota, Thomson Reuters employs more than 50,000 people and operates in over 100 countries. Thomson Reuters shares are listed on the Toronto Stock Exchange and New York Stock Exchange. For more information, go to www.thomsonreuters.com. About National Venture Capital Association The National Venture Capital Association (NVCA) represents more than 400 venture capital firms in the United States. NVCA's mission is to foster greater understanding of the importance of venture capital to the U.S. economy and support entrepreneurial activity and innovation. According to a 2008 Global Insight study, venture-backed companies accounted for 12.1 million jobs and $2.9 trillion in revenue in the United States in 2008. The NVCA represents the public policy interests of the venture capital community, strives to maintain high professional standards, provides reliable industry data, sponsors professional development, and facilitates interaction among its members. For more information about the NVCA, please visit www.nvca.org.
- DESPITE FOURTH QUARTER INCREASE VENTURE CAPITAL INDUSTRY EXPERIENCES SLOWEST ANNUAL PERIOD FOR DOLLARS COMMITED SINCE 2003 New York, January 11, 2010 – US venture capital firms raised $3.8 billion in the fourth quarter of 2009 from 32 funds, according to Thomson Reuters and the National Venture Capital Association (NVCA). For full year 2009, venture capital fundraising totaled $15.2 billion from 120 funds, a 47% decline by dollars committed and slowest year for fundraising since 2003. By numbers of funds, fundraising activity in 2009 will mark the slowest annual period since 1993. Fundraising by Venture Funds Year/Quarter Number of Funds Venture Capital ($M) 2004 218 19,154.4 2005 242 28,962.7 2006 242 31,964.9 2007 250 36,131.4 2008 223 28,571.3 2009 120 15,220.2 4Q'07 86 12,322.5 1Q'08 74 7,228.5 2Q'08 82 9,284.5 3Q'08 63 8,497.4 4Q'08 48 3,560.9 1Q'09 53 5,173.8 2Q'09 29 4,127.4 3Q'09 25 2,094.2 4Q'09 32 3,824.8 Source: Thomson Reuters & National Venture Capital Association CONTACTS Channa Brooks Tenor Communications for NVCA 1.302 368 2345 [email_address] Daniel Billings Thomson Reuters 1.646 223 5985 [email_address] Page 2 of 3 January 11, 2009 "Many venture firms voluntarily stayed out of the fundraising market in 2009, a dynamic that clearly is reflected in the lower volumes,” said Mark Heesen, president of the NVCA. “ However, most of these firms will not be afforded the luxury of continuing to wait for market conditions to improve in 2010. They will be out in the market raising funds alongside firms that were already scheduled to raise this year. It promises to be a defining period as we will gain a better sense as to what the venture capital industry will resemble in the next decade. All signs point to a leaner, more capital efficient asset class comprised of firms with proven track records of delivering value to limited partners. Not all firms will make that cut, but the ones that do will be very well positioned to invest.” There were seven new funds and 25 follow-on funds raised in the fourth quarter of 2009, a ratio of over 3.5 -to-1 of follow-on to new funds. The ratio of follow-to-new funds for full year 2009 was 4.5-to-1 with 22 new funds this year and 98 follow-on funds. The largest new fund reporting commitments during 2009 was Andreessen Horowitz Fund I, L.P, which raised $300 million in its inaugural fund. A “new” fund is defined as the first fund at a newly established firm, although the general partner of that firm may have previous experience investing in venture capital. VC Funds: New vs. Follow-On No. of New No. of Followon Total 2004 63 155 218 2005 67 175 242 2006 56 186 242 2007 61 189 250 2008 49 174 223 2009 22 98 120 4Q'07 27 59 86 1Q'08 12 62 74 2Q'08 22 60 82 3Q'08 14 49 63 4Q'08 11 37 48 1Q'09 4 49 53 2Q'09 8 21 29 3Q'09 7 18 25 4Q'09 7 25 32 Source: Thomson Reuters & National Venture Capital Association The largest funds raised during 2009 were New Enterprise Associates 13, L.P. raising $2.46 billion for a follow-on fund, followed by Norwest Venture Partners XI, L.P. which saw $1.2 billion in fund commitments during the fourth quarter of 2009. Page 3 of 3 January 11, 2009 About Thomson Reuters Thomson Reuters is the world's leading source of intelligent information for businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world's most trusted news organization. With headquarters in New York and major operations in London and Eagan, Minnesota, Thomson Reuters employs more than 50,000 people and operates in over 100 countries. Thomson Reuters shares are listed on the Toronto Stock Exchange and New York Stock Exchange (symbol: TRI). For more information, go to www.thomsonreuters.com. About National Venture Capital Association The National Venture Capital Association (NVCA) represents more than 400 venture capital firms in the United States. NVCA's mission is to foster greater understanding of the importance of venture capital to the U.S. economy and support entrepreneurial activity and innovation. According to a 2009 Global Insight study, venture-backed companies accounted for 12.1 million jobs and $2.9 trillion in revenue in the United States in 2008. The NVCA represents the public policy interests of the venture capital community, strives to maintain high professional standards, provides reliable industry data, sponsors professional development, and facilitates interaction among its members. For more information about the NVCA, please visit www.nvca.org.
- Contacts: Clare Chachere, PricewaterhouseCoopers, 512-867-8737, clare.chachere@us.pwc.com Lisa Peterson, Porter Novelli for PricewaterhouseCoopers, 512-241-2233, lisa.peterson@porternovelli.com Emily Mendell, National Venture Capital Association, 610-565-3904, emendell@nvca.org VENTURE CAPITAL INVESTMENT INCREASES IN Q3 2009 DRIVEN BY CLEAN TECHNOLOGY SECTOR Software Sector Falls in Industry Ranking While Life Sciences Remains Strong WASHINGTON, October 20, 2009 – Venture capitalists invested $4.8 billion in 637 deals in the third quarter of 2009, according to the MoneyTree™ Report from PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters. Quarterly investment activity increased 17 percent in terms of dollars, but fell 3 percent in number of deals compared to the second quarter of 2009 when $4.1 billion was invested in 657 deals. The increase in dollars invested was driven by several large rounds in the Clean Technology sector, one of which is the ninth largest deal since 1995. The Life Sciences sector (biotechnology and medical device industries combined) also had a solid quarter relative to other industry sectors, leaving Software as the third highest investment sector, a notable decline in industry ranking. "The increase in venture capital investing this quarter is very encouraging," noted Tracy T. Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers LLP. "With the signs pointing to an economic recovery, albeit a slow one, we're likely to see the pace of investing continue to strengthen over the next several quarters as long as the IPO markets begin to open up and M&A activity increases. And, as predicted last quarter, we expect to see annual investments for 2009 exceed the $15 billion mark given the continued strength we saw in investing this quarter." "The third quarter illustrates a gradual and deliberate industry shift towards a longer term venture capital investment strategy," said Mark Heesen, president of the NVCA. "Venture capitalists are becoming increasingly focused on industry sectors which require multiple rounds of financing for an extended time horizon. Companies in areas such as Clean Technology and Life Sciences require significant capital and expertise often over a 10 - 12 year period, resulting in more follow on rounds, higher average investment levels, and a longer average time to a successful exit. This is not to suggest that the venture capital industry will abandon shorter term IT investment. Rather, the mix of investments will become much more balanced.” Industry Analysis The Biotechnology industry received the highest level of funding for all industries in the quarter with $905 million going into 104 deals. This level of investment represents a 4 percent decrease in dollars and a 16 percent increase in deals compared to the second quarter when $947 million went into 90 deals. Medical Devices and Equipment saw a 6 percent decline in dollars and 15 percent decline in deal volume in the third quarter with $617 million going into 71 deals. This sector ranked fourth overall for the quarter. While the Software industry had the most deals completed with 128 rounds, it fell to third place in terms of dollars invested at $622 million, representing a 9 percent decrease in both dollars and deal volume from the second quarter when $680 million went into 141 rounds. The drop in dollars in the third quarter puts Software at its lowest level of investment since the third quarter of 1996. The Clean Technology sector, which crosses traditional MoneyTree industries and comprises alternative energy, pollution and recycling, power supplies and conservation, saw an 89 percent increase in dollars over the second quarter to $898 million. The number of deals completed in the third quarter increased 16 percent to 57 deals compared with 49 deals in the second quarter. The increase in Clean Technology investments was driven by several large rounds, including three of the top 10 deals. Internet-specific companies received $843 million going into 148 deals in the third quarter, a 42 percent increase in dollars and a 15 percent increase in deals over the second quarter of 2009 when $594 million went into 129 deals. ‘Internet-Specific’ is a discrete classification assigned to a company with a business model that is fundamentally dependent on the Internet, regardless of the company’s primary industry category. Ten of the 17 MoneyTree sectors experienced dollar declines in the third quarter, including Semiconductors (14 percent decline to another 10-year low), Healthcare Services (57 percent decline), Computers and Peripherals (40 percent decline) and Telecommunications (17 percent decline). Sectors which saw increases in dollars included Media and Entertainment (269 percent increase), Networking and Equipment (18 percent increase), and Electronics/Instrumentation (55 percent). Stage of Development Seed and Early stage investments continued to grow in the third quarter in terms of number of deals, with $1.6 billion going into 284 rounds. This represents an 11 percent increase in deal volume and a 4 percent decrease in dollars over the second quarter when $1.66 billion went into 255 deals. Seed/Early stage deals accounted for 45 percent of total deal volume in the third quarter, compared to the second quarter when it accounted for 39 percent of all deals. The average Seed deal in the third quarter was $5.9 million, down significantly from $9.6 million in the second quarter; however, the Q2 average Seed deal size was skewed due to a single large deal. The average Early stage deal was $5.5 million in Q3, down slightly from $5.6 million in the prior quarter. Expansion stage dollars increased 27 percent in the third quarter, with $1.6 billion going into 185 deals. Overall, Expansion stage deals accounted for 29 percent of venture deals in the third quarter, roughly the same percentage as in the second quarter of 2009. The average Expansion stage deal was $8.7 million, up from $6.6 million in the second quarter of 2009. Investments in Later stage deals increased 35 percent in dollars but fell 20 percent in deals to $1.6 billion going into 168 rounds. Later stage deals accounted for 26 percent of total deal volume in Q3, compared to 32 percent in Q2 2009 when $1.2 billion went into 210 deals. The average Later stage deal in the third quarter was $9.6 million, which increased significantly from $5.7 million in the prior quarter. First-Time Financings First-time financing (companies receiving venture capital for the first time) dollars decreased 20 percent while the number of first-time deals remained flat with $633 million going into 155 deals. This represents the lowest dollar level of first-time deals in survey history. First-time financings accounted for 13 percent of all dollars and 24 percent of all deals in the third quarter, compared to 19 percent of all dollars and 24 percent of all deals in the second quarter of 2009. Companies in the Software, Biotechnology, and Industrial/Energy industries received the highest level of first-time dollars. The average first-time deal in the third quarter was $4.1 million compared to $5.1 million one quarter ago. Seed/Early stage companies received the bulk of first-time investments, garnering 66 percent of the dollars and 68 percent of the deals, but fell short of second quarter percentages when they accounted for 76 percent of the dollars and 73 percent of the deals MoneyTree Report results are available online at www.pwcmoneytree.com and www.nvca.org. Note to the Editor Information included in this release or related venture capital investment data should be cited in the following way: “The MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters” or “ PwC/NVCA MoneyTree™ Report based on data from Thomson Reuters.” After the first reference, subsequent references may refer to PwC/NVCA MoneyTree Report, PwC/NVCA or MoneyTree Report. Charts and tables displaying the data are sourced to “ PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters.” After the first reference, subsequent references may refer to PwC/NVCA MoneyTree Report, PwC/NVCA, MoneyTree Report or MoneyTree. About the PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report The MoneyTree™ Report measures cash-for-equity investments by the professional venture capital community in private emerging companies in the U.S. It is based on data provided by Thomson Reuters. The survey includes the investment activity of professional venture capital firms with or without a U.S. office, SBICs, venture arms of corporations, institutions, investment banks and similar entities whose primary activity is financial investing. Where there are other participants such as angels, corporations, and governments, in a qualified and verified financing round the entire amount of the round is included. Qualifying transactions include cash investments by these entities either directly or by participation in various forms of private placement. All recipient companies are private, and may have been newly-created or spun-out of existing companies. The survey excludes debt, buyouts, recapitalizations, secondary purchases, IPOs, investments in public companies such as PIPES (private investments in public entities), investments for which the proceeds are primarily intended for acquisition such as rollups, change of ownership, and other forms of private equity that do not involve cash such as services-in-kind and venture leasing. Investee companies must be domiciled in one of the 50 U.S. states or DC even if substantial portions of their activities are outside the United States. Data is primarily obtained from a quarterly survey of venture capital practitioners conducted by Thomson Reuters. Information is augmented by other research techniques including other public and private sources. All data is subject to verification with the venture capital firms and/or the investee companies. Only professional independent venture capital firms, institutional venture capital groups, and recognized corporate venture capital groups are included in venture capital industry rankings. The National Venture Capital Association (NVCA) represents more than 400 venture capital firms in the United States. NVCA's mission is to foster greater understanding of the importance of venture capital to the U.S. economy, and support entrepreneurial activity and innovation. According to a 2009 Global Insight study, venture-backed companies accounted for 12.1 million jobs and $2.9 trillion in revenue in the U.S. in 2008. The NVCA represents the public policy interests of the venture capital community, strives to maintain high professional standards, provides reliable industry data, sponsors professional development, and facilitates interaction among its members. For more information about the NVCA, please visit www.nvca.org. The PricewaterhouseCoopers Private Equity & Venture Capital Practice is part of the Global Technology Industry Group, www.pwcglobaltech.com. The group is comprised of industry professionals who deliver a broad spectrum of services to meet the needs of fast-growth technology start-ups and agile, global giants in key industry segments: networking & computers, software & Internet, semiconductors, life sciences and private equity & venture capital. PricewaterhouseCoopers is a recognized leader in each industry segment with services for technology clients in all stages of growth. PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for our clients and their stakeholders. More than 163,000 people in 151 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity. © 2009 PricewaterhouseCoopers LLP. All rights reserved. About Thomson Reuters Thomson Reuters is a leading source of information for businesses and professionals. Through a wide range of products and services, Thomson Reuters helps clients make better decisions, be more productive and achieve superior results. Thomson Reuters has headquarters in New York and employs more than 50,000 people worldwide.
- Contacts: Clare Chachere, PricewaterhouseCoopers, 512-867-8737, clare.chachere@us.pwc.com Lisa Peterson, Porter Novelli for PricewaterhouseCoopers, 512-241-2233, lisa.peterson@porternovelli.com Emily Mendell, National Venture Capital Association, 610-565-3904, emendell@nvca.org VENTURE CAPITAL INVESTMENT INCREASES IN Q3 2009 DRIVEN BY CLEAN TECHNOLOGY SECTOR Software Sector Falls in Industry Ranking While Life Sciences Remains Strong WASHINGTON, October 20, 2009 – Venture capitalists invested $4.8 billion in 637 deals in the third quarter of 2009, according to the MoneyTree™ Report from PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters. Quarterly investment activity increased 17 percent in terms of dollars, but fell 3 percent in number of deals compared to the second quarter of 2009 when $4.1 billion was invested in 657 deals. The increase in dollars invested was driven by several large rounds in the Clean Technology sector, one of which is the ninth largest deal since 1995. The Life Sciences sector (biotechnology and medical device industries combined) also had a solid quarter relative to other industry sectors, leaving Software as the third highest investment sector, a notable decline in industry ranking. "The increase in venture capital investing this quarter is very encouraging," noted Tracy T. Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers LLP. "With the signs pointing to an economic recovery, albeit a slow one, we're likely to see the pace of investing continue to strengthen over the next several quarters as long as the IPO markets begin to open up and M&A activity increases. And, as predicted last quarter, we expect to see annual investments for 2009 exceed the $15 billion mark given the continued strength we saw in investing this quarter." "The third quarter illustrates a gradual and deliberate industry shift towards a longer term venture capital investment strategy," said Mark Heesen, president of the NVCA. "Venture capitalists are becoming increasingly focused on industry sectors which require multiple rounds of financing for an extended time horizon. Companies in areas such as Clean Technology and Life Sciences require significant capital and expertise often over a 10 - 12 year period, resulting in more follow on rounds, higher average investment levels, and a longer average time to a successful exit. This is not to suggest that the venture capital industry will abandon shorter term IT investment. Rather, the mix of investments will become much more balanced.” Industry Analysis The Biotechnology industry received the highest level of funding for all industries in the quarter with $905 million going into 104 deals. This level of investment represents a 4 percent decrease in dollars and a 16 percent increase in deals compared to the second quarter when $947 million went into 90 deals. Medical Devices and Equipment saw a 6 percent decline in dollars and 15 percent decline in deal volume in the third quarter with $617 million going into 71 deals. This sector ranked fourth overall for the quarter. While the Software industry had the most deals completed with 128 rounds, it fell to third place in terms of dollars invested at $622 million, representing a 9 percent decrease in both dollars and deal volume from the second quarter when $680 million went into 141 rounds. The drop in dollars in the third quarter puts Software at its lowest level of investment since the third quarter of 1996. The Clean Technology sector, which crosses traditional MoneyTree industries and comprises alternative energy, pollution and recycling, power supplies and conservation, saw an 89 percent increase in dollars over the second quarter to $898 million. The number of deals completed in the third quarter increased 16 percent to 57 deals compared with 49 deals in the second quarter. The increase in Clean Technology investments was driven by several large rounds, including three of the top 10 deals. Internet-specific companies received $843 million going into 148 deals in the third quarter, a 42 percent increase in dollars and a 15 percent increase in deals over the second quarter of 2009 when $594 million went into 129 deals. ‘Internet-Specific’ is a discrete classification assigned to a company with a business model that is fundamentally dependent on the Internet, regardless of the company’s primary industry category. Ten of the 17 MoneyTree sectors experienced dollar declines in the third quarter, including Semiconductors (14 percent decline to another 10-year low), Healthcare Services (57 percent decline), Computers and Peripherals (40 percent decline) and Telecommunications (17 percent decline). Sectors which saw increases in dollars included Media and Entertainment (269 percent increase), Networking and Equipment (18 percent increase), and Electronics/Instrumentation (55 percent). Stage of Development Seed and Early stage investments continued to grow in the third quarter in terms of number of deals, with $1.6 billion going into 284 rounds. This represents an 11 percent increase in deal volume and a 4 percent decrease in dollars over the second quarter when $1.66 billion went into 255 deals. Seed/Early stage deals accounted for 45 percent of total deal volume in the third quarter, compared to the second quarter when it accounted for 39 percent of all deals. The average Seed deal in the third quarter was $5.9 million, down significantly from $9.6 million in the second quarter; however, the Q2 average Seed deal size was skewed due to a single large deal. The average Early stage deal was $5.5 million in Q3, down slightly from $5.6 million in the prior quarter. Expansion stage dollars increased 27 percent in the third quarter, with $1.6 billion going into 185 deals. Overall, Expansion stage deals accounted for 29 percent of venture deals in the third quarter, roughly the same percentage as in the second quarter of 2009. The average Expansion stage deal was $8.7 million, up from $6.6 million in the second quarter of 2009. Investments in Later stage deals increased 35 percent in dollars but fell 20 percent in deals to $1.6 billion going into 168 rounds. Later stage deals accounted for 26 percent of total deal volume in Q3, compared to 32 percent in Q2 2009 when $1.2 billion went into 210 deals. The average Later stage deal in the third quarter was $9.6 million, which increased significantly from $5.7 million in the prior quarter. First-Time Financings First-time financing (companies receiving venture capital for the first time) dollars decreased 20 percent while the number of first-time deals remained flat with $633 million going into 155 deals. This represents the lowest dollar level of first-time deals in survey history. First-time financings accounted for 13 percent of all dollars and 24 percent of all deals in the third quarter, compared to 19 percent of all dollars and 24 percent of all deals in the second quarter of 2009. Companies in the Software, Biotechnology, and Industrial/Energy industries received the highest level of first-time dollars. The average first-time deal in the third quarter was $4.1 million compared to $5.1 million one quarter ago. Seed/Early stage companies received the bulk of first-time investments, garnering 66 percent of the dollars and 68 percent of the deals, but fell short of second quarter percentages when they accounted for 76 percent of the dollars and 73 percent of the deals MoneyTree Report results are available online at www.pwcmoneytree.com and www.nvca.org. Note to the Editor Information included in this release or related venture capital investment data should be cited in the following way: “The MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters” or “ PwC/NVCA MoneyTree™ Report based on data from Thomson Reuters.” After the first reference, subsequent references may refer to PwC/NVCA MoneyTree Report, PwC/NVCA or MoneyTree Report. Charts and tables displaying the data are sourced to “ PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters.” After the first reference, subsequent references may refer to PwC/NVCA MoneyTree Report, PwC/NVCA, MoneyTree Report or MoneyTree. About the PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report The MoneyTree™ Report measures cash-for-equity investments by the professional venture capital community in private emerging companies in the U.S. It is based on data provided by Thomson Reuters. The survey includes the investment activity of professional venture capital firms with or without a U.S. office, SBICs, venture arms of corporations, institutions, investment banks and similar entities whose primary activity is financial investing. Where there are other participants such as angels, corporations, and governments, in a qualified and verified financing round the entire amount of the round is included. Qualifying transactions include cash investments by these entities either directly or by participation in various forms of private placement. All recipient companies are private, and may have been newly-created or spun-out of existing companies. The survey excludes debt, buyouts, recapitalizations, secondary purchases, IPOs, investments in public companies such as PIPES (private investments in public entities), investments for which the proceeds are primarily intended for acquisition such as rollups, change of ownership, and other forms of private equity that do not involve cash such as services-in-kind and venture leasing. Investee companies must be domiciled in one of the 50 U.S. states or DC even if substantial portions of their activities are outside the United States. Data is primarily obtained from a quarterly survey of venture capital practitioners conducted by Thomson Reuters. Information is augmented by other research techniques including other public and private sources. All data is subject to verification with the venture capital firms and/or the investee companies. Only professional independent venture capital firms, institutional venture capital groups, and recognized corporate venture capital groups are included in venture capital industry rankings. The National Venture Capital Association (NVCA) represents more than 400 venture capital firms in the United States. NVCA's mission is to foster greater understanding of the importance of venture capital to the U.S. economy, and support entrepreneurial activity and innovation. According to a 2009 Global Insight study, venture-backed companies accounted for 12.1 million jobs and $2.9 trillion in revenue in the U.S. in 2008. The NVCA represents the public policy interests of the venture capital community, strives to maintain high professional standards, provides reliable industry data, sponsors professional development, and facilitates interaction among its members. For more information about the NVCA, please visit www.nvca.org. The PricewaterhouseCoopers Private Equity & Venture Capital Practice is part of the Global Technology Industry Group, www.pwcglobaltech.com. The group is comprised of industry professionals who deliver a broad spectrum of services to meet the needs of fast-growth technology start-ups and agile, global giants in key industry segments: networking & computers, software & Internet, semiconductors, life sciences and private equity & venture capital. PricewaterhouseCoopers is a recognized leader in each industry segment with services for technology clients in all stages of growth. PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for our clients and their stakeholders. More than 163,000 people in 151 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity. © 2009 PricewaterhouseCoopers LLP. All rights reserved. About Thomson Reuters Thomson Reuters is a leading source of information for businesses and professionals. Through a wide range of products and services, Thomson Reuters helps clients make better decisions, be more productive and achieve superior results. Thomson Reuters has headquarters in New York and employs more than 50,000 people worldwide.
- Contact: Emily Mendell, NVCA, emendell@nvca.org, 610-565-3904 Channa Brooks, Tenor Communications for NVCA, channa@tenorcom.com, 302-368-2345 VENTURE CAPITALISTS ARE OPTIMISTIC FOR 2010 DESPITE PREDICTIONS FOR INDUSTRY CONTRACTION NVCA Venture View Survey Forecasts Improvement in Investments and Exits Amidst Fewer and Smaller VC Funds Washington D.C., December 16, 2009 – Venture capitalists are cautiously optimistic about the improving nature of their ecosystem in the coming year, yet are realistic about an inevitable contraction of industry resources, according to Venture View 2010, the annual predictions survey conducted by the National Venture Capital Association (NVCA). According to respondents, the venture industry will begin to see gradual increases in investment levels and exit transactions in 2010, but the asset class will continue to shrink in size over the next five years. Specific areas of optimism include clean technology investing, growth equity and later stage companies, and ongoing opportunities overseas. “ It is readily understood by the venture capital community that our industry is going to contract in size going forward,” said Mark Heesen, president of the NVCA. “That will mean fewer firms, for sure, but not necessarily fewer companies funded. There is a great deal of innovation taking place and venture capitalists who have the track record to raise funds will be well positioned to build companies. Most venture capitalists will agree that a smaller industry is a better one.” The NVCA survey was conducted from November 30 – December 8, 2009 and includes responses from more than 325 venture capitalists across the United States. 2010 Investment: More Dollars into More Companies Most respondents predict more venture dollars going into more portfolio companies in 2010. Sixty-three percent of all respondents expect venture investment dollar levels to remain the same or increase from 2009 with 44 percent forecasting a level between $21-25 billion. Half of the respondents predict more companies will receive venture financing, while one-third believes the number of portfolio companies will remain the same. Clean Technology Continues to Garner Optimism Clean Technology is the industry where most VCs predict growth with 54 percent forecasting higher investment levels in 2010. Other favorable industries include Internet (46 percent predicting higher investment levels), Media and Entertainment (33 percent) and Software (32 percent). Opinions on life sciences investing in 2010 are closely split, both in Medical Devices and Biotechnology. Respondents are almost equally divided as to whether investment in Biotechnology will increase, decrease, or stay the same. In Medical Devices, 38 percent expect investment levels to stay the same while roughly one-third each predict levels to increase or decrease. The Semiconductor industry is the sector in which most VCs believe we'll see a decrease next year. Sixty-four percent predict lower investment levels in 2010. Many venture capitalists believe that the Wireless sector will experience declines with 37 percent predicting lower levels for next year as well. More Venture Dollars to Flow to Asia A majority of respondents believe that there will be more investment in Asia with 70 percent of VCs anticipating growth in China-based investments and 58 percent seeing greater investment levels in India in 2010. To the contrary, most VCs (53 percent) believe investments in Israel will decline in the coming year. Forty-five percent of respondents believe that VC investment in Europe will remain the same. Later Stage Investment Predicted to Increase According the survey, most VCs expect the Growth Equity stage of development to increase with 55 percent of all respondents predicting increased investment there in 2010. Fifty-three percent see growth in Later Stage investing; 49 percent in Expansion stage investing. Fewer VCs think the number of younger company investments will grow with 45 percent of respondents predicting growth in Early and Seed stage investments. “ Of all the predictions put forth this year, a collective lack of enthusiasm for seed and early stage investing is the most concerning,” said Heesen. “The weak exit market combined with proposed tax policy which would discourage long term investment puts tremendous pressure on our industry to move towards later stage investing. Yet, seed and early stage companies represent a pipeline that must be supported if our country is to continue building new and innovative companies. We need the environment to improve for these early stage investors.” Improving Exit Signs On the exit market front, most VCs predict a mild improvement in the number of venture-backed IPOs in 2010. Seventy-four percent of the respondents believe there will be more than 20 IPOs next year with the average forecasted IPO volume at 26.3 offerings. Only 10 percent of VCs predict more than 50 IPOs. More VCs are optimistic about the acquisitions market with 91 percent believing the number of deals will increase and 63 percent of respondents predicting the value of those deals will be higher. A Contracting Industry Respondents were consistent in their predictions for a smaller venture capital industry over time. Eighty-seven percent believe that funds raised in 2010 will be on average smaller than previous funds. Respondents also predict a changing limited partner base with 48 percent predicting more foreign LPs investing in U.S. venture funds in the coming year. An overwhelming percentage of VCs (90 percent) predict that the number of venture capital firms will decline over the next five years. Most of these respondents (72 percent) believe the industry will contract between one and 30 percent. Despite these longer term predictions for consolidation, most VCs do not anticipate significant “ in-house” changes during the next year. Sixty-three percent believe the number of investment professionals within their firms will stay the same and 71 percent say there will be no change in staffing at the administrative level. “ The consolidation of the venture industry will not occur overnight,” said Heesen. “This process will be a gradual one as fewer firms than has been the case historically will be able to raise funds. Those funds that are raised will generally be smaller and over time, the firms will contract accordingly. Venture capitalists will have to do more with less.” Most venture capitalists predict that they will remain in their geographic footprint in 2010, with only 20 percent predicting an increased number of deals outside their immediate region. Seventytwo percent expect to maintain their current investment strategy from a geographical standpoint. For More Information As part of this year’s survey, the NVCA asked the respondents to share something the VC or firm will do differently in 2010, in 140 characters or less. Read selected responses here: www.nvca.org/predictions2010_quotes.pdf. For complete survey results including charts, please visit: www.nvca.org/predictions2010_presentation.pdf About the National Venture Capital Association The National Venture Capital Association (NVCA) represents more than 400 venture capital firms in the United States. NVCA's mission is to foster greater understanding of the importance of venture capital to the U.S. economy and support entrepreneurial activity and innovation. According to a 2008 Global Insight study, venture-backed companies accounted for 12.1 million jobs and $2.9 trillion in revenue in the United States in 2008. The NVCA represents the public policy interests of the venture capital community, strives to maintain high professional standards, provides reliable industry data, sponsors professional development, and facilitates interaction among its members. For more information about the NVCA, please visit www.nvca.org.
- Contact: Emily Mendell, NVCA, emendell@nvca.org, 610-565-3904 Channa Brooks, Tenor Communications for NVCA, channa@tenorcom.com, 302-368-2345 VENTURE CAPITALISTS ARE OPTIMISTIC FOR 2010 DESPITE PREDICTIONS FOR INDUSTRY CONTRACTION NVCA Venture View Survey Forecasts Improvement in Investments and Exits Amidst Fewer and Smaller VC Funds Washington D.C., December 16, 2009 – Venture capitalists are cautiously optimistic about the improving nature of their ecosystem in the coming year, yet are realistic about an inevitable contraction of industry resources, according to Venture View 2010, the annual predictions survey conducted by the National Venture Capital Association (NVCA). According to respondents, the venture industry will begin to see gradual increases in investment levels and exit transactions in 2010, but the asset class will continue to shrink in size over the next five years. Specific areas of optimism include clean technology investing, growth equity and later stage companies, and ongoing opportunities overseas. “ It is readily understood by the venture capital community that our industry is going to contract in size going forward,” said Mark Heesen, president of the NVCA. “That will mean fewer firms, for sure, but not necessarily fewer companies funded. There is a great deal of innovation taking place and venture capitalists who have the track record to raise funds will be well positioned to build companies. Most venture capitalists will agree that a smaller industry is a better one.” The NVCA survey was conducted from November 30 – December 8, 2009 and includes responses from more than 325 venture capitalists across the United States. 2010 Investment: More Dollars into More Companies Most respondents predict more venture dollars going into more portfolio companies in 2010. Sixty-three percent of all respondents expect venture investment dollar levels to remain the same or increase from 2009 with 44 percent forecasting a level between $21-25 billion. Half of the respondents predict more companies will receive venture financing, while one-third believes the number of portfolio companies will remain the same. Clean Technology Continues to Garner Optimism Clean Technology is the industry where most VCs predict growth with 54 percent forecasting higher investment levels in 2010. Other favorable industries include Internet (46 percent predicting higher investment levels), Media and Entertainment (33 percent) and Software (32 percent). Opinions on life sciences investing in 2010 are closely split, both in Medical Devices and Biotechnology. Respondents are almost equally divided as to whether investment in Biotechnology will increase, decrease, or stay the same. In Medical Devices, 38 percent expect investment levels to stay the same while roughly one-third each predict levels to increase or decrease. The Semiconductor industry is the sector in which most VCs believe we'll see a decrease next year. Sixty-four percent predict lower investment levels in 2010. Many venture capitalists believe that the Wireless sector will experience declines with 37 percent predicting lower levels for next year as well. More Venture Dollars to Flow to Asia A majority of respondents believe that there will be more investment in Asia with 70 percent of VCs anticipating growth in China-based investments and 58 percent seeing greater investment levels in India in 2010. To the contrary, most VCs (53 percent) believe investments in Israel will decline in the coming year. Forty-five percent of respondents believe that VC investment in Europe will remain the same. Later Stage Investment Predicted to Increase According the survey, most VCs expect the Growth Equity stage of development to increase with 55 percent of all respondents predicting increased investment there in 2010. Fifty-three percent see growth in Later Stage investing; 49 percent in Expansion stage investing. Fewer VCs think the number of younger company investments will grow with 45 percent of respondents predicting growth in Early and Seed stage investments. “ Of all the predictions put forth this year, a collective lack of enthusiasm for seed and early stage investing is the most concerning,” said Heesen. “The weak exit market combined with proposed tax policy which would discourage long term investment puts tremendous pressure on our industry to move towards later stage investing. Yet, seed and early stage companies represent a pipeline that must be supported if our country is to continue building new and innovative companies. We need the environment to improve for these early stage investors.” Improving Exit Signs On the exit market front, most VCs predict a mild improvement in the number of venture-backed IPOs in 2010. Seventy-four percent of the respondents believe there will be more than 20 IPOs next year with the average forecasted IPO volume at 26.3 offerings. Only 10 percent of VCs predict more than 50 IPOs. More VCs are optimistic about the acquisitions market with 91 percent believing the number of deals will increase and 63 percent of respondents predicting the value of those deals will be higher. A Contracting Industry Respondents were consistent in their predictions for a smaller venture capital industry over time. Eighty-seven percent believe that funds raised in 2010 will be on average smaller than previous funds. Respondents also predict a changing limited partner base with 48 percent predicting more foreign LPs investing in U.S. venture funds in the coming year. An overwhelming percentage of VCs (90 percent) predict that the number of venture capital firms will decline over the next five years. Most of these respondents (72 percent) believe the industry will contract between one and 30 percent. Despite these longer term predictions for consolidation, most VCs do not anticipate significant “ in-house” changes during the next year. Sixty-three percent believe the number of investment professionals within their firms will stay the same and 71 percent say there will be no change in staffing at the administrative level. “ The consolidation of the venture industry will not occur overnight,” said Heesen. “This process will be a gradual one as fewer firms than has been the case historically will be able to raise funds. Those funds that are raised will generally be smaller and over time, the firms will contract accordingly. Venture capitalists will have to do more with less.” Most venture capitalists predict that they will remain in their geographic footprint in 2010, with only 20 percent predicting an increased number of deals outside their immediate region. Seventytwo percent expect to maintain their current investment strategy from a geographical standpoint. For More Information As part of this year’s survey, the NVCA asked the respondents to share something the VC or firm will do differently in 2010, in 140 characters or less. Read selected responses here: www.nvca.org/predictions2010_quotes.pdf. For complete survey results including charts, please visit: www.nvca.org/predictions2010_presentation.pdf About the National Venture Capital Association The National Venture Capital Association (NVCA) represents more than 400 venture capital firms in the United States. NVCA's mission is to foster greater understanding of the importance of venture capital to the U.S. economy and support entrepreneurial activity and innovation. According to a 2008 Global Insight study, venture-backed companies accounted for 12.1 million jobs and $2.9 trillion in revenue in the United States in 2008. The NVCA represents the public policy interests of the venture capital community, strives to maintain high professional standards, provides reliable industry data, sponsors professional development, and facilitates interaction among its members. For more information about the NVCA, please visit www.nvca.org.