SlideShare une entreprise Scribd logo
State of the Venture Capital Industry
1
PreMoney - Dec 5th 2017
Mark Suster, @msuster
Upfront Ventures
Some things
most people
know
2
In 2013-2015,
the VC market overheated,
driving irrational behavior
Valuations up 3x
3
Capital invested up 2x
$6.2B to $16.7B
A) Median pre-money valuation for VC-backed tech startups rose from $17M in 1Q’13 to $68M in 3Q’15, where 4Q’15 dropped to $28M, Dow Jones VentureSource Venture Capital Report 4Q’15
B) Total dollars raised by startups from 1Q’13-3Q’15 grew from $6.2B to $16.7B, where 4Q’15 dropped to $12.3B, PWC National MoneyTree Report 3Q’16
$17M to $68M
4
…and we ushered in
the age of

“the unicorn”*
Illustration by Goran Factory for Fortune
* Credit to Aileen Lee! :)
5
High prices,
often with structure
Art by Freepik
VC: “You name the price,
I name the terms.”
6
We’re starting to see
some correction in the
over-valued companies
7
Many predicted that
winter was coming.
What happened to winter?
8
Twice as many VCs did cut investment pace in 2016.

Winter was real
Made fewer investments Made more investments
16%
31%
Q. What was your deal activity like in 2016 vs. 2015? Excluding follow ons. Excluded 53% of respondents that answered “about the same pace”
Source: Upfront Ventures survey of VCs (N=114), Jan 2017
9
And 76% of VCs reported valuations declined in 2016
Valuations decreased Valuations increased
8%
76%
Q. Would you say valuations in 2016 were higher, lower or remained about the same vs. 2015? Excluded 16% of respondents that answered “about the same.”
Source: Upfront Ventures survey of VCs (N=114), Jan 2017
10
2016 was the year our industry took cost-cutting seriously and
most say this work is behind them
25%
12%
63%
Q. Which statement best describes the spending behavior at most of the more mature companies in which you are on the board or observe (i.e. not super early stage)?
Source: Upfront Ventures survey of VCs (N=114), Jan 2017
Cut costs in 2016
Planning to cut costs in 2017
No change
Just 12%
cutting in
2017
11
Winter DID come.
But it sure was mild!
Blame Global Warming.
Seriously.
12
“Global” warming—part 1: China, Japan, Asia more broadly
“Global” warming —
Influx of foreign capital into US startups
1
13
2009 2010 2011 2012 2013 2014 2015 2016
$29B
$10B$9B
$12B
$7B
$4B$4B
$1B
Note: Includes all FDI in all states and industries excluding real estate
Source: Rhodium Group China Investment Monitor
Chinese Foreign Direct Investment (FDI) has poured into the US.
Tech sector has clearly benefitted
14
The US has FANG, China has BAT: Baidu, Alibaba & Tencent.
All very aggressive in US investments.
15
Baidu launched two major funds in 2016 —
increasing investment pace to match its peers
Baidu Venture
Early-stage fund
AI, AR / VR, next-gen tech
Baidu Capital
Late-stage tech fund
$50-100M checks
$200M
$3B
16
led $800M Series C in
(Feb 2016)
This is like 20
seed funds in just
one deal!
17
But there are a huge number of other Chinese funds now moving into venture
that you’ve never heard of with a mandate to bring innovation back to China
Government-backed funds Cross-Border Funds
Private Corporations
18
invested $690M in
(Mar & Oct 2016)
19
Of course it’s not just China:
SoftBank / Saudi Arabia’s PIF

/ Mubadala
$100B tech fund
(Oct 2016)
&
20
As oil prices have collapsed, the Arab states have been
eager to diversify their assets
$165M
Kuwait
201520142013 2016
$3.5B
Saudi Arabia
21
Temasek (Singapore’s soverign wealth fund)
opened a US venture office & allocated
more capital to US deals
$350M AUM
22
invested $800M in
(Jan 2017)
23
93% of VCs have seen an increase in interest from an
international LP base*
Q. In the last fund you raised, did you see increased interest from international sources of capital to invest as LPs in your fund? *Excluded those that answered “Didn’t reach out, so don’t know”
Source: Upfront Ventures survey of VCs (N=114), Jan 2017
93%
7%
More international LPs
No increase
24 Designed by Freepik
Global warming —
Rise of the corporate VC
2
25
Increasing number of corporates have active venture investing arms
2012 2013 2014 2015 2016
61
131
US Active CVC Investors By Quarter
Source: CBInsights
26
Of course there are the usual suspects…
Source: CBInsights
80-90
deals/year
70-90 50-70 30-50 20-30
27
invested $200M in
(Oct 2016)
Active corporates continue to write large checks…
28
invested $500M in
(Jan 2016)
But large checks are coming from many sources now
29
ramps up venture fund to $530M (Nov 2016)
30
When Sesame Street became a venture investor,
you know the market has moved
31
Unlike VCs, in 2016 twice as many Corporates made more
investments than cut back. They filled in the gap
Made fewer investments Made more investments
34%
18%
Q. What was your deal activity like in 2016 vs. 2015? Excluding follow ons.
Source: Upfront Ventures + CBInsights survey of CVCs (N=40), Jan 2017
32
Global warming —
Exits supported by M&A
from non-traditional buyers
3
33
acquired for $5.8B
acquired for $3.3B
acquired for $1.2B
for $3.5Bacquired
for $1.4Bacquired
New, traditionally non-tech buyers entered the
M&A market, seeking innovation and technology
…
Source: Dow Jones VentureSource
acquired for $1.4B
acquired for $1.0B
is acquiring for $3.7B
34 Source: Aberdeen Assets
Middle-market PE also entered, seeking growth
acquired
35
There is certainly a backlog of scaling companies looking for liquidity
Source: CB Insights
36
Global warming —
VCs have significant dry powder
4
LPs have finally restocked coffers with distributions
(plus many new LPs getting into the game)
37
2012 2013 2014 2015 1H'2016
8
28
32
2223
6
15
17
13
15
Contributions ($B) Distributions ($B)
Source: Cambridge Associates
Only 1H 2016
38
2009 2010 2011 2012 2013 2014 2015 2016
# of funds closed Capital raised ($B)
42
3535
21
2423
20
12
253255
268
204
190
141
153
122122
153
141
190
204
268
255 253
Source: Pitchbook/NVCA Venture Monitor 4Q’16
More LP money = more funds, more dollars = warmer winter
39
2016 saw many megafunds raised. Many back in market in 2018
$1B$1B$1.1B$1.2B$1.2B$1.2B$1.3B
$1.6B
$2B
$2.5B
$3.2B
11 firms raised $1B+
12 firms
raised $500M+
Source: DowJones Venture Source 1Q’16, 2Q’16, 3Q’16; Pitchbook data; represented aggregate sums over funds raised that invest in US tech ecosystem by each VC
40
…and 300+ more!
Source: CBInsights
Microfunds are
now a well-
established market,
with many scaling
fund sizes
41
Low interest rate environment encourages more capital to chase venture
capital yields (cited by 77% of LPs as large driver of VC industry increases)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Q: In 2016 many investors warned “Winter is Coming” referring to a slowdown in venture markets. That slowdown happened but was very short lived. Which of the following are relevant?
Source: Upfront Ventures survey of LPs (N=78), Jan 2017; Federal Reserve
Federal Funds Rate, 2007 to 20165.25%
.25%
.75%
42
Repatriation of offshore capital may fuel more M&A and
investments
$49B
$52B
$62B
$113B
$230B
Note: Cash figures include cash, cash equivalents and liquid marketable securities held offshore
Source: Moody’s Investor Service, as of end of 2016
Top 5 Companies by Offshore Cash
Top 5 alone have
$500+ billion in
offshore cash
So where are we heading?
43
44
Foreign capital
Corporate investors
Increased LP distributions
New VC funds, bigger funds
Repatriation of capital
Likely robust M&A and IPO markets
Good prognosis for venture and

tech market funding 2018
↑
+ ↑
+ ↑
+ ↑
+ ↑
+ ↑
=
45
Unsurprisingly VCs are very bullish about the markets in 2017
Optimistic & bullish Innovations, but uncertainty Concerned
11%
28%
61%
Q. Which of the following statements best describes your personal mood heading into 2017?
Source: Upfront Ventures survey of VCs (N=114), Jan 2017
46
The current category VCs are most interested in funding is
AI / Machine Learning
85% rates it more
interesting than other areas
AI / ML
AR / VR
IoT
Blockchain
Bots-based
commerce
58% rates it the most
important area in next 5-10 years
Q. How do you feel about the following investment areas?
Source: Upfront Ventures survey of VCs (N=114), Jan 2017
47
Of the major emerging venture categories, VCs are most
skeptical about bots-based commerce and blockchain
53% thinks it’s too hyped
Bots-based
commerce
Blockchain
AR / VR
IoT
AI / ML
13% is deeply
skeptical
Q. How do you feel about the following investment areas?
Source: Upfront Ventures survey of VCs (N=114), Jan 2017
48
IC … Whoa!
Largely driven by crypto-gains / diversification / tax avoidance
234
$3.7B
ICOs in 2017
Total raised in 2017
Project Total Raised
Filecoin $257M
Tezos $232M
EOS Stage 1 $185M
Paragon $183M
Bancor $153M
Top Five ICOs of 2017
Source: https://www.coinschedule.com/stats.php
$16m Average
ICO Warnings
49
• Over-capitalization
• Lack of governance
• (Too) early liquidity
• Scams / Long-Term Trust
• Governmental regulations
50
What does this all mean?
Global is likely here to stay
Warming is the forecast for funding the next 2 years
Returns are ultimately what matter.

Over-funding creates new & different challenges.

I suspect we’ll debate over-funding in 2018-2022
I predict ICO backlash
51
Thank you!
52
Mark Suster, @msuster

Contenu connexe

Tendances

The 10 Year Project
The 10 Year ProjectThe 10 Year Project
The 10 Year Project
First Round Capital
 
2016 State of the Venture Capital Industry
2016 State of the Venture Capital Industry2016 State of the Venture Capital Industry
2016 State of the Venture Capital Industry
TrueBridge Capital Partners
 
The Changing Structure of the Venture Capital Industry
The Changing Structure of the Venture Capital IndustryThe Changing Structure of the Venture Capital Industry
The Changing Structure of the Venture Capital Industry
Mark Suster
 
Final san diego venture group keynote 2016
Final san diego venture group keynote   2016Final san diego venture group keynote   2016
Final san diego venture group keynote 2016
Mark Suster
 
SVB China Startup Outlook 2016
SVB China Startup Outlook 2016SVB China Startup Outlook 2016
SVB China Startup Outlook 2016
Silicon Valley Bank
 
First Round State of Startups 2017
First Round State of Startups 2017First Round State of Startups 2017
First Round State of Startups 2017
First Round Capital
 
SVB UK Startup Outlook 2016
SVB UK Startup Outlook 2016SVB UK Startup Outlook 2016
SVB UK Startup Outlook 2016
Silicon Valley Bank
 
UK Startup Outlook Report 2017
UK Startup Outlook Report 2017UK Startup Outlook Report 2017
UK Startup Outlook Report 2017
Silicon Valley Bank
 
Women In UK Venture Capital 2017
Women In UK Venture Capital 2017 Women In UK Venture Capital 2017
Women In UK Venture Capital 2017
Diversity VC
 
Onetti - Marinucci - MTB Job Creator Tour 2014
Onetti - Marinucci - MTB Job Creator Tour 2014Onetti - Marinucci - MTB Job Creator Tour 2014
Onetti - Marinucci - MTB Job Creator Tour 2014
Mind The Bridge Foundation
 
SVB Q3 State of the Markets Report
SVB Q3 State of the Markets ReportSVB Q3 State of the Markets Report
SVB Q3 State of the Markets Report
Silicon Valley Bank
 
ey-capital-insights-download-edition-15
ey-capital-insights-download-edition-15ey-capital-insights-download-edition-15
ey-capital-insights-download-edition-15
jwala P
 
SVB US Startup Outlook 2016
SVB US Startup Outlook 2016SVB US Startup Outlook 2016
SVB US Startup Outlook 2016
Silicon Valley Bank
 
DealMarket digest issue 80_25 january 2013
DealMarket digest issue 80_25 january 2013DealMarket digest issue 80_25 january 2013
DealMarket digest issue 80_25 january 2013
CAR FOR YOU
 
Lessons From the 0.3% Highest Performing Private Companies
Lessons From the 0.3% Highest Performing Private CompaniesLessons From the 0.3% Highest Performing Private Companies
Lessons From the 0.3% Highest Performing Private Companies
Timothy Nordvedt
 
Southern California Startup Outlook 2017
Southern California Startup Outlook 2017 Southern California Startup Outlook 2017
Southern California Startup Outlook 2017
Silicon Valley Bank
 
Us Startup Outlook Report 2017
Us Startup Outlook Report 2017Us Startup Outlook Report 2017
Us Startup Outlook Report 2017
Webrazzi
 
Seed Funding Strategies
Seed Funding StrategiesSeed Funding Strategies
Seed Funding Strategies
Timothy Nordvedt
 
DealMarket DIGEST Issue 140 // 09 May 2014
DealMarket DIGEST Issue 140 // 09 May 2014DealMarket DIGEST Issue 140 // 09 May 2014
DealMarket DIGEST Issue 140 // 09 May 2014
CAR FOR YOU
 
Cb insights asia-tech-investment-report
Cb insights asia-tech-investment-reportCb insights asia-tech-investment-report
Cb insights asia-tech-investment-report
Galen Growth
 

Tendances (20)

The 10 Year Project
The 10 Year ProjectThe 10 Year Project
The 10 Year Project
 
2016 State of the Venture Capital Industry
2016 State of the Venture Capital Industry2016 State of the Venture Capital Industry
2016 State of the Venture Capital Industry
 
The Changing Structure of the Venture Capital Industry
The Changing Structure of the Venture Capital IndustryThe Changing Structure of the Venture Capital Industry
The Changing Structure of the Venture Capital Industry
 
Final san diego venture group keynote 2016
Final san diego venture group keynote   2016Final san diego venture group keynote   2016
Final san diego venture group keynote 2016
 
SVB China Startup Outlook 2016
SVB China Startup Outlook 2016SVB China Startup Outlook 2016
SVB China Startup Outlook 2016
 
First Round State of Startups 2017
First Round State of Startups 2017First Round State of Startups 2017
First Round State of Startups 2017
 
SVB UK Startup Outlook 2016
SVB UK Startup Outlook 2016SVB UK Startup Outlook 2016
SVB UK Startup Outlook 2016
 
UK Startup Outlook Report 2017
UK Startup Outlook Report 2017UK Startup Outlook Report 2017
UK Startup Outlook Report 2017
 
Women In UK Venture Capital 2017
Women In UK Venture Capital 2017 Women In UK Venture Capital 2017
Women In UK Venture Capital 2017
 
Onetti - Marinucci - MTB Job Creator Tour 2014
Onetti - Marinucci - MTB Job Creator Tour 2014Onetti - Marinucci - MTB Job Creator Tour 2014
Onetti - Marinucci - MTB Job Creator Tour 2014
 
SVB Q3 State of the Markets Report
SVB Q3 State of the Markets ReportSVB Q3 State of the Markets Report
SVB Q3 State of the Markets Report
 
ey-capital-insights-download-edition-15
ey-capital-insights-download-edition-15ey-capital-insights-download-edition-15
ey-capital-insights-download-edition-15
 
SVB US Startup Outlook 2016
SVB US Startup Outlook 2016SVB US Startup Outlook 2016
SVB US Startup Outlook 2016
 
DealMarket digest issue 80_25 january 2013
DealMarket digest issue 80_25 january 2013DealMarket digest issue 80_25 january 2013
DealMarket digest issue 80_25 january 2013
 
Lessons From the 0.3% Highest Performing Private Companies
Lessons From the 0.3% Highest Performing Private CompaniesLessons From the 0.3% Highest Performing Private Companies
Lessons From the 0.3% Highest Performing Private Companies
 
Southern California Startup Outlook 2017
Southern California Startup Outlook 2017 Southern California Startup Outlook 2017
Southern California Startup Outlook 2017
 
Us Startup Outlook Report 2017
Us Startup Outlook Report 2017Us Startup Outlook Report 2017
Us Startup Outlook Report 2017
 
Seed Funding Strategies
Seed Funding StrategiesSeed Funding Strategies
Seed Funding Strategies
 
DealMarket DIGEST Issue 140 // 09 May 2014
DealMarket DIGEST Issue 140 // 09 May 2014DealMarket DIGEST Issue 140 // 09 May 2014
DealMarket DIGEST Issue 140 // 09 May 2014
 
Cb insights asia-tech-investment-report
Cb insights asia-tech-investment-reportCb insights asia-tech-investment-report
Cb insights asia-tech-investment-report
 

Similaire à PreMoney SF 2017: State of the Venture Capital Industry by Mark Suster

SVB State of the Markets: Second Quarter 2017
SVB State of the Markets: Second Quarter 2017SVB State of the Markets: Second Quarter 2017
SVB State of the Markets: Second Quarter 2017
Silicon Valley Bank
 
Late Stage AdTech Market Update (Thomvest Ventures)
Late Stage AdTech Market Update (Thomvest Ventures)Late Stage AdTech Market Update (Thomvest Ventures)
Late Stage AdTech Market Update (Thomvest Ventures)
Thomvest Ventures
 
Isvcstillathing final-190204194013
Isvcstillathing final-190204194013Isvcstillathing final-190204194013
Isvcstillathing final-190204194013
BuahNanas1
 
Is vc still a thing you can do it
Is vc still a thing you can do itIs vc still a thing you can do it
Is vc still a thing you can do it
ArulLura
 
Isvcstillathing final-190204194013
Isvcstillathing final-190204194013Isvcstillathing final-190204194013
Isvcstillathing final-190204194013
LoverzAnam
 
Is vc still a thing final
Is vc still a thing   finalIs vc still a thing   final
Is vc still a thing final
Mark Suster
 
Isvcstillathing final-190204194013
Isvcstillathing final-190204194013Isvcstillathing final-190204194013
Isvcstillathing final-190204194013
Amazonkidukaan
 
Isvcstillathing final-190204194013
Isvcstillathing final-190204194013Isvcstillathing final-190204194013
Isvcstillathing final-190204194013
Sirlei de Fatima Barreiro Jabali
 
Isvcstillathing final-190204194013
Isvcstillathing final-190204194013Isvcstillathing final-190204194013
Isvcstillathing final-190204194013
DANIEL BAPTISTA
 
2O19 Fintech Trends To Watch
2O19 Fintech Trends To Watch 2O19 Fintech Trends To Watch
2O19 Fintech Trends To Watch
Peerasak C.
 
2019 Fintech Trends To Watch by CBInsights
2019 Fintech Trends To Watch by CBInsights2019 Fintech Trends To Watch by CBInsights
2019 Fintech Trends To Watch by CBInsights
Roman Pravorskyi
 
SVB State of the Markets Report Q1 2017
SVB State of the Markets Report Q1 2017SVB State of the Markets Report Q1 2017
SVB State of the Markets Report Q1 2017
Silicon Valley Bank
 
Venture Capital trends in the US – Q1 2015
Venture Capital trends in the US – Q1 2015Venture Capital trends in the US – Q1 2015
Venture Capital trends in the US – Q1 2015
PRIME
 
State Of European FinTech: Current Trends & Prediction 2017
State Of European FinTech: Current Trends & Prediction 2017State Of European FinTech: Current Trends & Prediction 2017
State Of European FinTech: Current Trends & Prediction 2017
Innovate Finance
 
2017 VC FinTech Investment Landscape
2017 VC FinTech Investment Landscape2017 VC FinTech Investment Landscape
2017 VC FinTech Investment Landscape
Innovate Finance
 
F-Prime Capital: Market Perspective, 2018
F-Prime Capital: Market Perspective, 2018 F-Prime Capital: Market Perspective, 2018
F-Prime Capital: Market Perspective, 2018
F-Prime Capital
 
Cb insights fintech-trends-2018
Cb insights fintech-trends-2018Cb insights fintech-trends-2018
Cb insights fintech-trends-2018
남억 김
 
Crunchbase 2017-year-in-review
Crunchbase 2017-year-in-reviewCrunchbase 2017-year-in-review
Crunchbase 2017-year-in-review
CHARLES OTIENO
 
Final venture outlook 2016
Final venture outlook 2016Final venture outlook 2016
Final venture outlook 2016
Mark Suster
 
SVB State of the Markets Report
SVB State of the Markets Report SVB State of the Markets Report
SVB State of the Markets Report
Silicon Valley Bank
 

Similaire à PreMoney SF 2017: State of the Venture Capital Industry by Mark Suster (20)

SVB State of the Markets: Second Quarter 2017
SVB State of the Markets: Second Quarter 2017SVB State of the Markets: Second Quarter 2017
SVB State of the Markets: Second Quarter 2017
 
Late Stage AdTech Market Update (Thomvest Ventures)
Late Stage AdTech Market Update (Thomvest Ventures)Late Stage AdTech Market Update (Thomvest Ventures)
Late Stage AdTech Market Update (Thomvest Ventures)
 
Isvcstillathing final-190204194013
Isvcstillathing final-190204194013Isvcstillathing final-190204194013
Isvcstillathing final-190204194013
 
Is vc still a thing you can do it
Is vc still a thing you can do itIs vc still a thing you can do it
Is vc still a thing you can do it
 
Isvcstillathing final-190204194013
Isvcstillathing final-190204194013Isvcstillathing final-190204194013
Isvcstillathing final-190204194013
 
Is vc still a thing final
Is vc still a thing   finalIs vc still a thing   final
Is vc still a thing final
 
Isvcstillathing final-190204194013
Isvcstillathing final-190204194013Isvcstillathing final-190204194013
Isvcstillathing final-190204194013
 
Isvcstillathing final-190204194013
Isvcstillathing final-190204194013Isvcstillathing final-190204194013
Isvcstillathing final-190204194013
 
Isvcstillathing final-190204194013
Isvcstillathing final-190204194013Isvcstillathing final-190204194013
Isvcstillathing final-190204194013
 
2O19 Fintech Trends To Watch
2O19 Fintech Trends To Watch 2O19 Fintech Trends To Watch
2O19 Fintech Trends To Watch
 
2019 Fintech Trends To Watch by CBInsights
2019 Fintech Trends To Watch by CBInsights2019 Fintech Trends To Watch by CBInsights
2019 Fintech Trends To Watch by CBInsights
 
SVB State of the Markets Report Q1 2017
SVB State of the Markets Report Q1 2017SVB State of the Markets Report Q1 2017
SVB State of the Markets Report Q1 2017
 
Venture Capital trends in the US – Q1 2015
Venture Capital trends in the US – Q1 2015Venture Capital trends in the US – Q1 2015
Venture Capital trends in the US – Q1 2015
 
State Of European FinTech: Current Trends & Prediction 2017
State Of European FinTech: Current Trends & Prediction 2017State Of European FinTech: Current Trends & Prediction 2017
State Of European FinTech: Current Trends & Prediction 2017
 
2017 VC FinTech Investment Landscape
2017 VC FinTech Investment Landscape2017 VC FinTech Investment Landscape
2017 VC FinTech Investment Landscape
 
F-Prime Capital: Market Perspective, 2018
F-Prime Capital: Market Perspective, 2018 F-Prime Capital: Market Perspective, 2018
F-Prime Capital: Market Perspective, 2018
 
Cb insights fintech-trends-2018
Cb insights fintech-trends-2018Cb insights fintech-trends-2018
Cb insights fintech-trends-2018
 
Crunchbase 2017-year-in-review
Crunchbase 2017-year-in-reviewCrunchbase 2017-year-in-review
Crunchbase 2017-year-in-review
 
Final venture outlook 2016
Final venture outlook 2016Final venture outlook 2016
Final venture outlook 2016
 
SVB State of the Markets Report
SVB State of the Markets Report SVB State of the Markets Report
SVB State of the Markets Report
 

Plus de 500 Startups

Get on Board
Get on BoardGet on Board
Get on Board
500 Startups
 
Connected Analytics
Connected AnalyticsConnected Analytics
Connected Analytics
500 Startups
 
Sira Medical
Sira MedicalSira Medical
Sira Medical
500 Startups
 
The Atlas
The AtlasThe Atlas
The Atlas
500 Startups
 
Trash Warrior
Trash WarriorTrash Warrior
Trash Warrior
500 Startups
 
Thematic
ThematicThematic
Thematic
500 Startups
 
Shiplyst
ShiplystShiplyst
Shiplyst
500 Startups
 
Renetec
RenetecRenetec
Renetec
500 Startups
 
Predina
PredinaPredina
Predina
500 Startups
 
Pluto
PlutoPluto
Plant an App
Plant an AppPlant an App
Plant an App
500 Startups
 
Pilota
PilotaPilota
Pilota
500 Startups
 
Mero Technologies
Mero TechnologiesMero Technologies
Mero Technologies
500 Startups
 
Omnitron Sensors
Omnitron SensorsOmnitron Sensors
Omnitron Sensors
500 Startups
 
Juked
JukedJuked
GamerzClass
GamerzClassGamerzClass
GamerzClass
500 Startups
 
eino
einoeino
Cenos
CenosCenos
Bliinx
BliinxBliinx
Bliinx
500 Startups
 
Butlr
ButlrButlr

Plus de 500 Startups (20)

Get on Board
Get on BoardGet on Board
Get on Board
 
Connected Analytics
Connected AnalyticsConnected Analytics
Connected Analytics
 
Sira Medical
Sira MedicalSira Medical
Sira Medical
 
The Atlas
The AtlasThe Atlas
The Atlas
 
Trash Warrior
Trash WarriorTrash Warrior
Trash Warrior
 
Thematic
ThematicThematic
Thematic
 
Shiplyst
ShiplystShiplyst
Shiplyst
 
Renetec
RenetecRenetec
Renetec
 
Predina
PredinaPredina
Predina
 
Pluto
PlutoPluto
Pluto
 
Plant an App
Plant an AppPlant an App
Plant an App
 
Pilota
PilotaPilota
Pilota
 
Mero Technologies
Mero TechnologiesMero Technologies
Mero Technologies
 
Omnitron Sensors
Omnitron SensorsOmnitron Sensors
Omnitron Sensors
 
Juked
JukedJuked
Juked
 
GamerzClass
GamerzClassGamerzClass
GamerzClass
 
eino
einoeino
eino
 
Cenos
CenosCenos
Cenos
 
Bliinx
BliinxBliinx
Bliinx
 
Butlr
ButlrButlr
Butlr
 

Dernier

Managing Customer & User Experience of Customers
Managing Customer & User Experience of CustomersManaging Customer & User Experience of Customers
Managing Customer & User Experience of Customers
SalmanTahir60
 
DEKISH ELEVATOR INDIA PVT LTD Brochure.pdf
DEKISH ELEVATOR INDIA PVT LTD Brochure.pdfDEKISH ELEVATOR INDIA PVT LTD Brochure.pdf
DEKISH ELEVATOR INDIA PVT LTD Brochure.pdf
unosafeads
 
A Complete Guide of Dubai Freelance Visa and Permit in 2024
A Complete Guide of Dubai Freelance Visa and Permit in 2024A Complete Guide of Dubai Freelance Visa and Permit in 2024
A Complete Guide of Dubai Freelance Visa and Permit in 2024
Dubiz
 
PETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAA
PETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAAPETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAA
PETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAA
lawrenceads01
 
Mandated reporting powerpoint to help with understanding your role
Mandated reporting powerpoint to help with understanding your roleMandated reporting powerpoint to help with understanding your role
Mandated reporting powerpoint to help with understanding your role
khidalgo2
 
THE IMPORTANCE OF CODING IN DEVOPS EXPLANATION
THE IMPORTANCE OF CODING IN DEVOPS EXPLANATIONTHE IMPORTANCE OF CODING IN DEVOPS EXPLANATION
THE IMPORTANCE OF CODING IN DEVOPS EXPLANATION
hrajkumar444
 
Guide to Obtaining a Money Changer License in Singapore
Guide to Obtaining a Money Changer License in SingaporeGuide to Obtaining a Money Changer License in Singapore
Guide to Obtaining a Money Changer License in Singapore
Enterslice
 
WAM Corporate Presentation July 2024.pdf
WAM Corporate Presentation July 2024.pdfWAM Corporate Presentation July 2024.pdf
WAM Corporate Presentation July 2024.pdf
Western Alaska Minerals Corp.
 
Case study on Indian Ecommerce logistics
Case study on Indian Ecommerce logisticsCase study on Indian Ecommerce logistics
Case study on Indian Ecommerce logistics
UnheardShayari
 
Entrepreneurial mindset: An Introduction to Entrepreneurship
Entrepreneurial mindset: An Introduction to EntrepreneurshipEntrepreneurial mindset: An Introduction to Entrepreneurship
Entrepreneurial mindset: An Introduction to Entrepreneurship
Sanjay Joshi
 
Anton Grutzmache- Ominisient: The Data Revolution in Banking: From Scoring Cr...
Anton Grutzmache- Ominisient: The Data Revolution in Banking: From Scoring Cr...Anton Grutzmache- Ominisient: The Data Revolution in Banking: From Scoring Cr...
Anton Grutzmache- Ominisient: The Data Revolution in Banking: From Scoring Cr...
itnewsafrica
 
TALENT ACQUISITION AND MANAGEMENT LECTURE 5
TALENT ACQUISITION AND MANAGEMENT LECTURE 5TALENT ACQUISITION AND MANAGEMENT LECTURE 5
TALENT ACQUISITION AND MANAGEMENT LECTURE 5
projectseasy
 
Growth Buyouts - The Dawn of the GBO (Slow Ventures)
Growth Buyouts - The  Dawn of the GBO (Slow Ventures)Growth Buyouts - The  Dawn of the GBO (Slow Ventures)
Growth Buyouts - The Dawn of the GBO (Slow Ventures)
Razin Mustafiz
 
NewBase 05 July 2024 Energy News issue - 1736 by Khaled Al Awadi_compresse...
NewBase   05 July 2024  Energy News issue - 1736 by Khaled Al Awadi_compresse...NewBase   05 July 2024  Energy News issue - 1736 by Khaled Al Awadi_compresse...
NewBase 05 July 2024 Energy News issue - 1736 by Khaled Al Awadi_compresse...
Khaled Al Awadi
 
Don’t Get Left Behind: Leveraging Modern Product Management Across the Organi...
Don’t Get Left Behind: Leveraging Modern Product Management Across the Organi...Don’t Get Left Behind: Leveraging Modern Product Management Across the Organi...
Don’t Get Left Behind: Leveraging Modern Product Management Across the Organi...
Aggregage
 
Cheslyn Jacobs- TymeBank: Building Consumer Trust in Digital Banking
Cheslyn Jacobs- TymeBank: Building Consumer Trust in Digital  BankingCheslyn Jacobs- TymeBank: Building Consumer Trust in Digital  Banking
Cheslyn Jacobs- TymeBank: Building Consumer Trust in Digital Banking
itnewsafrica
 
1234567891011121314151617181920212223242
12345678910111213141516171819202122232421234567891011121314151617181920212223242
1234567891011121314151617181920212223242
fauzanal343
 
Innovation Hub_ Spotlight on Toms River's Role as a Beacon for Entrepreneuria...
Innovation Hub_ Spotlight on Toms River's Role as a Beacon for Entrepreneuria...Innovation Hub_ Spotlight on Toms River's Role as a Beacon for Entrepreneuria...
Innovation Hub_ Spotlight on Toms River's Role as a Beacon for Entrepreneuria...
Philip M Caputo
 
MEA Union Budget 2024-25 Final Presentation
MEA Union Budget 2024-25 Final PresentationMEA Union Budget 2024-25 Final Presentation
MEA Union Budget 2024-25 Final Presentation
PhysicsUtu
 
brojjeddah Home Services Company in Saudi Arabia
brojjeddah Home Services Company in Saudi Arabiabrojjeddah Home Services Company in Saudi Arabia
brojjeddah Home Services Company in Saudi Arabia
brojjeddah
 

Dernier (20)

Managing Customer & User Experience of Customers
Managing Customer & User Experience of CustomersManaging Customer & User Experience of Customers
Managing Customer & User Experience of Customers
 
DEKISH ELEVATOR INDIA PVT LTD Brochure.pdf
DEKISH ELEVATOR INDIA PVT LTD Brochure.pdfDEKISH ELEVATOR INDIA PVT LTD Brochure.pdf
DEKISH ELEVATOR INDIA PVT LTD Brochure.pdf
 
A Complete Guide of Dubai Freelance Visa and Permit in 2024
A Complete Guide of Dubai Freelance Visa and Permit in 2024A Complete Guide of Dubai Freelance Visa and Permit in 2024
A Complete Guide of Dubai Freelance Visa and Permit in 2024
 
PETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAA
PETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAAPETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAA
PETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAA
 
Mandated reporting powerpoint to help with understanding your role
Mandated reporting powerpoint to help with understanding your roleMandated reporting powerpoint to help with understanding your role
Mandated reporting powerpoint to help with understanding your role
 
THE IMPORTANCE OF CODING IN DEVOPS EXPLANATION
THE IMPORTANCE OF CODING IN DEVOPS EXPLANATIONTHE IMPORTANCE OF CODING IN DEVOPS EXPLANATION
THE IMPORTANCE OF CODING IN DEVOPS EXPLANATION
 
Guide to Obtaining a Money Changer License in Singapore
Guide to Obtaining a Money Changer License in SingaporeGuide to Obtaining a Money Changer License in Singapore
Guide to Obtaining a Money Changer License in Singapore
 
WAM Corporate Presentation July 2024.pdf
WAM Corporate Presentation July 2024.pdfWAM Corporate Presentation July 2024.pdf
WAM Corporate Presentation July 2024.pdf
 
Case study on Indian Ecommerce logistics
Case study on Indian Ecommerce logisticsCase study on Indian Ecommerce logistics
Case study on Indian Ecommerce logistics
 
Entrepreneurial mindset: An Introduction to Entrepreneurship
Entrepreneurial mindset: An Introduction to EntrepreneurshipEntrepreneurial mindset: An Introduction to Entrepreneurship
Entrepreneurial mindset: An Introduction to Entrepreneurship
 
Anton Grutzmache- Ominisient: The Data Revolution in Banking: From Scoring Cr...
Anton Grutzmache- Ominisient: The Data Revolution in Banking: From Scoring Cr...Anton Grutzmache- Ominisient: The Data Revolution in Banking: From Scoring Cr...
Anton Grutzmache- Ominisient: The Data Revolution in Banking: From Scoring Cr...
 
TALENT ACQUISITION AND MANAGEMENT LECTURE 5
TALENT ACQUISITION AND MANAGEMENT LECTURE 5TALENT ACQUISITION AND MANAGEMENT LECTURE 5
TALENT ACQUISITION AND MANAGEMENT LECTURE 5
 
Growth Buyouts - The Dawn of the GBO (Slow Ventures)
Growth Buyouts - The  Dawn of the GBO (Slow Ventures)Growth Buyouts - The  Dawn of the GBO (Slow Ventures)
Growth Buyouts - The Dawn of the GBO (Slow Ventures)
 
NewBase 05 July 2024 Energy News issue - 1736 by Khaled Al Awadi_compresse...
NewBase   05 July 2024  Energy News issue - 1736 by Khaled Al Awadi_compresse...NewBase   05 July 2024  Energy News issue - 1736 by Khaled Al Awadi_compresse...
NewBase 05 July 2024 Energy News issue - 1736 by Khaled Al Awadi_compresse...
 
Don’t Get Left Behind: Leveraging Modern Product Management Across the Organi...
Don’t Get Left Behind: Leveraging Modern Product Management Across the Organi...Don’t Get Left Behind: Leveraging Modern Product Management Across the Organi...
Don’t Get Left Behind: Leveraging Modern Product Management Across the Organi...
 
Cheslyn Jacobs- TymeBank: Building Consumer Trust in Digital Banking
Cheslyn Jacobs- TymeBank: Building Consumer Trust in Digital  BankingCheslyn Jacobs- TymeBank: Building Consumer Trust in Digital  Banking
Cheslyn Jacobs- TymeBank: Building Consumer Trust in Digital Banking
 
1234567891011121314151617181920212223242
12345678910111213141516171819202122232421234567891011121314151617181920212223242
1234567891011121314151617181920212223242
 
Innovation Hub_ Spotlight on Toms River's Role as a Beacon for Entrepreneuria...
Innovation Hub_ Spotlight on Toms River's Role as a Beacon for Entrepreneuria...Innovation Hub_ Spotlight on Toms River's Role as a Beacon for Entrepreneuria...
Innovation Hub_ Spotlight on Toms River's Role as a Beacon for Entrepreneuria...
 
MEA Union Budget 2024-25 Final Presentation
MEA Union Budget 2024-25 Final PresentationMEA Union Budget 2024-25 Final Presentation
MEA Union Budget 2024-25 Final Presentation
 
brojjeddah Home Services Company in Saudi Arabia
brojjeddah Home Services Company in Saudi Arabiabrojjeddah Home Services Company in Saudi Arabia
brojjeddah Home Services Company in Saudi Arabia
 

PreMoney SF 2017: State of the Venture Capital Industry by Mark Suster

  • 1. State of the Venture Capital Industry 1 PreMoney - Dec 5th 2017 Mark Suster, @msuster Upfront Ventures
  • 3. In 2013-2015, the VC market overheated, driving irrational behavior Valuations up 3x 3 Capital invested up 2x $6.2B to $16.7B A) Median pre-money valuation for VC-backed tech startups rose from $17M in 1Q’13 to $68M in 3Q’15, where 4Q’15 dropped to $28M, Dow Jones VentureSource Venture Capital Report 4Q’15 B) Total dollars raised by startups from 1Q’13-3Q’15 grew from $6.2B to $16.7B, where 4Q’15 dropped to $12.3B, PWC National MoneyTree Report 3Q’16 $17M to $68M
  • 4. 4 …and we ushered in the age of
 “the unicorn”* Illustration by Goran Factory for Fortune * Credit to Aileen Lee! :)
  • 5. 5 High prices, often with structure Art by Freepik VC: “You name the price, I name the terms.”
  • 6. 6 We’re starting to see some correction in the over-valued companies
  • 7. 7 Many predicted that winter was coming. What happened to winter?
  • 8. 8 Twice as many VCs did cut investment pace in 2016.
 Winter was real Made fewer investments Made more investments 16% 31% Q. What was your deal activity like in 2016 vs. 2015? Excluding follow ons. Excluded 53% of respondents that answered “about the same pace” Source: Upfront Ventures survey of VCs (N=114), Jan 2017
  • 9. 9 And 76% of VCs reported valuations declined in 2016 Valuations decreased Valuations increased 8% 76% Q. Would you say valuations in 2016 were higher, lower or remained about the same vs. 2015? Excluded 16% of respondents that answered “about the same.” Source: Upfront Ventures survey of VCs (N=114), Jan 2017
  • 10. 10 2016 was the year our industry took cost-cutting seriously and most say this work is behind them 25% 12% 63% Q. Which statement best describes the spending behavior at most of the more mature companies in which you are on the board or observe (i.e. not super early stage)? Source: Upfront Ventures survey of VCs (N=114), Jan 2017 Cut costs in 2016 Planning to cut costs in 2017 No change Just 12% cutting in 2017
  • 11. 11 Winter DID come. But it sure was mild! Blame Global Warming. Seriously.
  • 12. 12 “Global” warming—part 1: China, Japan, Asia more broadly “Global” warming — Influx of foreign capital into US startups 1
  • 13. 13 2009 2010 2011 2012 2013 2014 2015 2016 $29B $10B$9B $12B $7B $4B$4B $1B Note: Includes all FDI in all states and industries excluding real estate Source: Rhodium Group China Investment Monitor Chinese Foreign Direct Investment (FDI) has poured into the US. Tech sector has clearly benefitted
  • 14. 14 The US has FANG, China has BAT: Baidu, Alibaba & Tencent. All very aggressive in US investments.
  • 15. 15 Baidu launched two major funds in 2016 — increasing investment pace to match its peers Baidu Venture Early-stage fund AI, AR / VR, next-gen tech Baidu Capital Late-stage tech fund $50-100M checks $200M $3B
  • 16. 16 led $800M Series C in (Feb 2016) This is like 20 seed funds in just one deal!
  • 17. 17 But there are a huge number of other Chinese funds now moving into venture that you’ve never heard of with a mandate to bring innovation back to China Government-backed funds Cross-Border Funds Private Corporations
  • 19. 19 Of course it’s not just China: SoftBank / Saudi Arabia’s PIF
 / Mubadala $100B tech fund (Oct 2016) &
  • 20. 20 As oil prices have collapsed, the Arab states have been eager to diversify their assets $165M Kuwait 201520142013 2016 $3.5B Saudi Arabia
  • 21. 21 Temasek (Singapore’s soverign wealth fund) opened a US venture office & allocated more capital to US deals $350M AUM
  • 23. 23 93% of VCs have seen an increase in interest from an international LP base* Q. In the last fund you raised, did you see increased interest from international sources of capital to invest as LPs in your fund? *Excluded those that answered “Didn’t reach out, so don’t know” Source: Upfront Ventures survey of VCs (N=114), Jan 2017 93% 7% More international LPs No increase
  • 24. 24 Designed by Freepik Global warming — Rise of the corporate VC 2
  • 25. 25 Increasing number of corporates have active venture investing arms 2012 2013 2014 2015 2016 61 131 US Active CVC Investors By Quarter Source: CBInsights
  • 26. 26 Of course there are the usual suspects… Source: CBInsights 80-90 deals/year 70-90 50-70 30-50 20-30
  • 27. 27 invested $200M in (Oct 2016) Active corporates continue to write large checks…
  • 28. 28 invested $500M in (Jan 2016) But large checks are coming from many sources now
  • 29. 29 ramps up venture fund to $530M (Nov 2016)
  • 30. 30 When Sesame Street became a venture investor, you know the market has moved
  • 31. 31 Unlike VCs, in 2016 twice as many Corporates made more investments than cut back. They filled in the gap Made fewer investments Made more investments 34% 18% Q. What was your deal activity like in 2016 vs. 2015? Excluding follow ons. Source: Upfront Ventures + CBInsights survey of CVCs (N=40), Jan 2017
  • 32. 32 Global warming — Exits supported by M&A from non-traditional buyers 3
  • 33. 33 acquired for $5.8B acquired for $3.3B acquired for $1.2B for $3.5Bacquired for $1.4Bacquired New, traditionally non-tech buyers entered the M&A market, seeking innovation and technology … Source: Dow Jones VentureSource acquired for $1.4B acquired for $1.0B is acquiring for $3.7B
  • 34. 34 Source: Aberdeen Assets Middle-market PE also entered, seeking growth acquired
  • 35. 35 There is certainly a backlog of scaling companies looking for liquidity Source: CB Insights
  • 36. 36 Global warming — VCs have significant dry powder 4
  • 37. LPs have finally restocked coffers with distributions (plus many new LPs getting into the game) 37 2012 2013 2014 2015 1H'2016 8 28 32 2223 6 15 17 13 15 Contributions ($B) Distributions ($B) Source: Cambridge Associates Only 1H 2016
  • 38. 38 2009 2010 2011 2012 2013 2014 2015 2016 # of funds closed Capital raised ($B) 42 3535 21 2423 20 12 253255 268 204 190 141 153 122122 153 141 190 204 268 255 253 Source: Pitchbook/NVCA Venture Monitor 4Q’16 More LP money = more funds, more dollars = warmer winter
  • 39. 39 2016 saw many megafunds raised. Many back in market in 2018 $1B$1B$1.1B$1.2B$1.2B$1.2B$1.3B $1.6B $2B $2.5B $3.2B 11 firms raised $1B+ 12 firms raised $500M+ Source: DowJones Venture Source 1Q’16, 2Q’16, 3Q’16; Pitchbook data; represented aggregate sums over funds raised that invest in US tech ecosystem by each VC
  • 40. 40 …and 300+ more! Source: CBInsights Microfunds are now a well- established market, with many scaling fund sizes
  • 41. 41 Low interest rate environment encourages more capital to chase venture capital yields (cited by 77% of LPs as large driver of VC industry increases) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q: In 2016 many investors warned “Winter is Coming” referring to a slowdown in venture markets. That slowdown happened but was very short lived. Which of the following are relevant? Source: Upfront Ventures survey of LPs (N=78), Jan 2017; Federal Reserve Federal Funds Rate, 2007 to 20165.25% .25% .75%
  • 42. 42 Repatriation of offshore capital may fuel more M&A and investments $49B $52B $62B $113B $230B Note: Cash figures include cash, cash equivalents and liquid marketable securities held offshore Source: Moody’s Investor Service, as of end of 2016 Top 5 Companies by Offshore Cash Top 5 alone have $500+ billion in offshore cash
  • 43. So where are we heading? 43
  • 44. 44 Foreign capital Corporate investors Increased LP distributions New VC funds, bigger funds Repatriation of capital Likely robust M&A and IPO markets Good prognosis for venture and
 tech market funding 2018 ↑ + ↑ + ↑ + ↑ + ↑ + ↑ =
  • 45. 45 Unsurprisingly VCs are very bullish about the markets in 2017 Optimistic & bullish Innovations, but uncertainty Concerned 11% 28% 61% Q. Which of the following statements best describes your personal mood heading into 2017? Source: Upfront Ventures survey of VCs (N=114), Jan 2017
  • 46. 46 The current category VCs are most interested in funding is AI / Machine Learning 85% rates it more interesting than other areas AI / ML AR / VR IoT Blockchain Bots-based commerce 58% rates it the most important area in next 5-10 years Q. How do you feel about the following investment areas? Source: Upfront Ventures survey of VCs (N=114), Jan 2017
  • 47. 47 Of the major emerging venture categories, VCs are most skeptical about bots-based commerce and blockchain 53% thinks it’s too hyped Bots-based commerce Blockchain AR / VR IoT AI / ML 13% is deeply skeptical Q. How do you feel about the following investment areas? Source: Upfront Ventures survey of VCs (N=114), Jan 2017
  • 48. 48 IC … Whoa! Largely driven by crypto-gains / diversification / tax avoidance 234 $3.7B ICOs in 2017 Total raised in 2017 Project Total Raised Filecoin $257M Tezos $232M EOS Stage 1 $185M Paragon $183M Bancor $153M Top Five ICOs of 2017 Source: https://www.coinschedule.com/stats.php $16m Average
  • 49. ICO Warnings 49 • Over-capitalization • Lack of governance • (Too) early liquidity • Scams / Long-Term Trust • Governmental regulations
  • 50. 50 What does this all mean?
  • 51. Global is likely here to stay Warming is the forecast for funding the next 2 years Returns are ultimately what matter.
 Over-funding creates new & different challenges.
 I suspect we’ll debate over-funding in 2018-2022 I predict ICO backlash 51