Four months in, 2017 is shaping up to be a year of harvesting and replanting for the innovation economy. The SVB Analytics team examined the private-company growth propelled by the large capital raises of 2014-15 and the subsequent plunge in large investments and exits in 2016. Given the activity we’ve seen in the first quarter of 2017, we are forecasting significant harvesting of returns resulting from the last decade of sweeping innovations.

1. State of the
Markets 2017
The Early Harvest: IPOs Spring to Life
Second Quarter 2017
Written by
SVB Analytics:
Steve Allan, CFA
Head of External
Insights & Analytics
Sean Lawson
Senior Manager
Steven Pipp
Senior Associate
Visit www.svb.com
Twitter @SVB_Financial
Engage #SVBSOTM

2. State of the Markets: Second Quarter 2017
State of the Markets 2
Four months in, 2017 is shaping up to be a year of harvesting and replanting for the innovation economy.
The SVB Analytics team examined the private-company growth propelled by the large capital raises of 2014-15
and the subsequent plunge in large investments and exits in 2016. Given the activity we’ve seen in the first
quarter of 2017, we are forecasting significant harvesting of returns resulting from the last decade of sweeping
innovations.
We predict many private companies will find numerous avenues open in 2017 for raising cash. For those
companies with the strongest growth stories ― those who are reaching their previously frothy valuations ― the
public equity market, sparingly available in 2016, is opening to new issuances. For companies still growing into
their private valuations, yet in need of capital, there are exceedingly well-capitalized private equity firms
seeking buyout opportunities.
Further, as technology accelerates disruption of incumbent business models, we expect an increase in strategic
corporate acquisitions — designed in many cases to help the corporates stay relevant in the 21st century.
But 2017 isn’t only about harvesting returns. Venture capitalists, flush with cash after raising $42 billion in
2016, will have many opportunities to fund the next crop of innovative companies that are poised to drive
disruption for the next decade.
Steve Allan, CFA
Head of External Insights & Analytics

3. State of the Markets: Second Quarter 2017
State of the Markets 3
1 Predictions: Year to Date
2 Market Dynamics
3 Decisions Ahead for Late Stage
4 The Early Harvest: IPO Conditions
5 Closing Thoughts

4. Preliminary Grades on 2017 Predictions
State of the Markets 4
The themes of 2016 have provided reliable insight into what 2017 holds for the venture landscape.
But risks remain: Unexpected economic or geopolitical events could shock the innovation economy.
Q1 Predictions Q2 Updates
With plenty of capital in VC war chests, valuations
remain stable across early stages but fall in later
stages without crossover participation.
Valuations
Early indications for 2017 point toward a
plateau in valuations, as comparable capital
levels flow to fewer deals.
With public company valuation confidence
restored and a stable of maturing unicorns, 2017
sees 2 to 3 times the number of IPOs as 2016.
IPOs
After a slow start to 2017 following the U.S.
presidential election, IPOs have picked up steam.
Bellwether Snap Inc. successfully listed in March.
Tech giants’ spending spree reaches the
VC-backed ecosystem but with mixed success
compared to the most recent private valuation.
M&A
Two unicorns were acquired in Q1’17 — as many as
went public. Expect future deals both explosive
(AppDynamics, $3.6B) and tame (SimpliVity, <$1B).
With full coffers, fundraising in 2017 falls from the
2016 high, but interest from LPs stays high. Fundraising
After peak fundraising in 2016, Q1’17 saw the
fewest VC funds closed since Q3’15. LPs seem to
have turned their attention to private equity firms.
With rates rising, asset managers look for growth
elsewhere. This helps deflate the overheated
market for late-stage capital.
Crossovers
Late-stage mega-rounds appear to be a thing of
the past. The Fed raised rates again in March, and
expectations are high for additional hikes.
Sources: S&P Capital IQ, The Wall Street Journal, Bloomberg and PitchBook.

5. State of the Markets 5
Market
Dynamics

6. Post-Election Rally Reaches New Peaks
State of the Markets 6
Nasdaq Composite Index: Q2’16–Q1’17
The bull run in U.S equities showed no signs of slowing post-election, touching all-time highs even in the
face of fiscal policy stumbles and geopolitical uncertainty.
• U.S. investment
incentives
• Tax reform
• Geopolitical
concerns
• Reduced trade
and/or immigration
• Rising rates
Source: S&P Capital IQ.
4000
4500
5000
5500
6000
6500
7000
Post 2016 Election:
+14%
Year 2000 Peak
April May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.
2016 2017

7. The Federal Reserve Tightens Monetary Policy
State of the Markets 7
Fed Funds Effective Overnight Rate: Q2’07–Q1’17
Strong economic growth indicators in the United States have led the Fed to hike rates three times since
October 2015, departing from a decade of dovish interest rates. The market believes there are more to come.
Sources: S&P Capital IQ and Bloomberg.
Probability of a Rate Hike based on Fed Funds Futures:
As of 3/31/2017
13.3%
56.7%
63.0%
80.0%
May June July Sept.
0%
1%
2%
3%
4%
5%
6%
Three rate hikes
in the last 18 months
April Jan. Jan. Jan. Jan. Jan.
2007 2009 2011 2013 2015 2017

8. Rising Rates Lead to Real Capital Movement
State of the Markets 8
Quarterly Volume of Corporate Leveraged-Loan Repricing: Q1’02–Q1’17
$0B
$50B
$100B
$150B
$200B
$250B
As the sun sets on an era of historically low rates, fund managers are once again able to find yields in
debt instruments. Investors in Q1’17 clamored for floating-rate corporate loans, which perform well in
rising interest rate environments, with outsized demand actually reducing the cost of borrowing for
firms. This led to the highest quarterly volume of repricings in the last 15 years.
Adopted from: Wirz, Matt. “U.S. Firms Slash Interest Tab in $100 Billion Refinancing Blitz.” The Wall Street Journal. Feb. 8, 2017.
https://www.wsj.com/articles/u-s-firms-slash-interest-tab-in-100-billion-refinancing-blitz-1486549801
Data source: Leveraged Commentary and Data, an offering of S&P Global Market Intelligence.

9. State of the Markets 9
Decisions Ahead
for Late Stage

10. $0B
$2B
$4B
$6B
$8B
$10B
$12B
$14B
$16B
$18B
$20B
Froth Subsides from an Otherwise Healthy Ecosystem
State of the Markets 10Source: PitchBook.
Venture Capital Invested in Information Technology by Round Size: 2012–Q1’17
As crossover investors chase returns elsewhere, $100M-plus rounds are again something of a rarity.
Late-stage companies, which may have otherwise continued to rely on growth capital, will face
decisions as to how to adapt to a shifted landscape.
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2012 2013 2014 2015 2016 2017
Split by Round Size:
$100–999M $1B+
$25–50M $50–100M
$0–9M $10–24M
$100M+ Rounds

11. Options Available to the Late Stage
State of the Markets 11
Lacking the crossover mega-rounds of 2014 and 2015, which extended private runway, today’s late-stage
ventures face a familiar assortment of possibilities worth exploring ― some more lucrative than others.
$100M+
Rounds
Strategic
Buyers IPO
Financial
Buyers

12. Turning to Strategic Investors ― Sell or Raise?
State of the Markets 12
1. Mobileye, NXP and Quip had been announced but had not closed as of March 31, 2017.
Sources: S&P Capital IQ and PitchBook.
Notable Strategics’ $200M+ Acquisitions: 2016–Q1’17
Consolidation continues as tech giants look for inorganic growth and accelerated access to hot
markets — particularly autotech and developer tools. Many of these acquisitions were of publicly
traded companies, including the four largest: NXP, LinkedIn, Mobileye and NetSuite.1
Apple Alphabet Microsoft
Oracle Intel Cisco
Qualcomm Adobe Salesforce
Most Active CVC’s Deal Participation: 2016–Q1’17
0
10
20
30
40
50
60
70
80
90
GV Intel
Capital
Qualcomm
Ventures
Salesforce
Ventures
Comcast
Ventures
Deals $50M+ Deals <$50M
Split by Total Round Size:
1
1
1

13. Names to Know in Private Equity
State of the Markets 13
1. According to The PE Hub; March 7, 2017.
2. Denotes participation.
Sources: Company websites, Crunchbase, Bloomberg, The PE Hub, S&P Capital IQ and PitchBook.
Notable Private Equity Firms: Technology
Private equity took notice of steep declines in tech valuations in mid-2016, prompting a string of
acquisitions. Be on the lookout for more investment following new fundraising in 2016 and 2017.
Vista
Equity Partners
KKR Insight
Venture Partners
Thoma Bravo Silver Lake
HQ
Austin, TX New York, NY New York, NY Chicago, IL Menlo Park, CA
Fundraise
$10.5B
March 2017
$13.9B
March 2017
$6.0B
In Process1
$7.6B
Sept. 2016
$15.0B
April 2017
NotableInvestments
$1.8B Acquisition
May 2016
$1.6B Acquisition
April 2016
$1.5B Acquisition
Sept. 2016
Series G2
Apr. 2017
Series C2
Feb. 2016
Series D2
June 2016
Series F
Jun. 2014
Series D
Oct. 2015
Series C
April 2017
Minority Investment
Apr. 2017
$3.0B Acquisition
June 2016
$2.4B Acquisition
Dec. 2014
$24B MBO2 / $67B Acq.2
Feb. 2013 / Oct. 2015
Series G
March 2017
Growth Financing
Aug. 2015

14. What Does It Take to Go Public Today?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-80% -70% -60% -50% -40% -30% -20% -10% 0%
State of the Markets 14
*The “Rule of 40” is a guideline for software-as-a-service companies to manage growth (approximated by revenue) in
sacrifice of profitability (approximated by operating margin). Growth rate + profitability should exceed 40%.
For further reading: http://feld.com/archives/2015/02/rule-40-healthy-saas-company.html
Source: Company SEC filings.
Selected Metrics from Last 11 SaaS S-1 Filings: 2016–Q1’17
Despite investor sentiment shifting away from “growth at all costs,” all 11 of the most recently
announced cloud software offerings were unprofitable as of their S-1 filing. In fact, just two exceeded
the “Rule of 40”* guideline for measuring software-as-a-service company growth vs. profitability.
Operating Margin
RevenueGrowth
Twilio5
Yext3
Alteryx2
MuleSoft2
AppDynamics3
Okta3
Apptio4
Everbridge4
Coupa4
BlackLine4
Notes:
1. Growth: Fiscal Year 2017 vs. Fiscal Year 2016; Margin: Fiscal Year 2017
2. Growth: Full Year 2016 vs. Full Year 2015; Margin: Full Year 2016
3. Growth: 9 months ended Oct. 31, 2016 vs. 9 months ended Oct. 31, 2015; Margin: 9 months ended Oct. 31, 2016
4. Growth: 6 months ended June 30, 2016 vs. 6 months ended June 30, 2015; Margin: 6 months ended June 30, 2016
5. Growth: Full Year 2015 vs. Full Year 2016; Margin: Full Year 2015
Cloudera1
Listed
Filed
Acquired

15. State of the Markets 15
The Early Harvest:
IPO Conditions

16. 0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
Multiples Climb Following 2016 M&A Blitz
State of the Markets 16
1. NTM revenue multiples for IPOs based on earliest estimates, adjusted to IPO date.
2. Multiples above 10x at IPO are represented with an arrow.
Sources: S&P Capital IQ and Bessemer Venture Partners.
Atlassian: 12x
Restored
Confidence
“Good Times”
6-Month Gap
Between IPOs
Cloud software companies continue to ride a wave of restored confidence in valuation metrics as they
enter the public market. After a post-election pause at the start of the year, as of March 31, 2017 two
cloud software companies had successfully listed and three more had filed: Okta, Yext and Cloudera.
NTM Revenue Multiples1
Twilio: 10xShopify: 11x
Q2-Q3 Cloud M&A
Box
ApptioInstructure
Xactly
Cloud IPOs2
BVP Cloud Index
Constituents (Median)
Demandware
LinkedIn
Opower
Jan. ’15 April ’15 July ’15 Oct. ’15 Jan. ’16 April ’16 July ’16 Oct. ’16 Jan. ’17
Coupa: 12x
Alteryx
MuleSoft: 12x

17. Recent Listings Exceed Their Private Values
State of the Markets 17
Includes venture-backed technology companies with available private valuation data within five years of IPO.
Sources: PitchBook and S&P Capital IQ.
Market Cap Relative to Last Private Round for Venture-Backed Tech Companies Listing in 2016–Q1’17:
As of 3/31/2017
The success of recent IPOs serves as an indication of public market confidence. These companies
represent a diverse range of sectors ― from social media and adtech to communications hardware.
-50%
0%
50%
100%
150%
200%
Acacia
.Comm.
Impinj Twilio MuleSoft The Trade
Desk
Quantenna
.Comm.
Coupa Nutanix Snap Everspin
.Tech.
Alteryx Apptio
IPO Date: 2016
2017
+1061% +423%

18. Markets’ Calm Waters Ideal for IPO Plunges
State of the Markets 18Sources: S&P Capital IQ and Yahoo! Finance.
23 25 2 1 4 2 13 11 16 10 20 10 16 16 23 9 10 7 3 13 4
After the 2016 U.S. election, the VIX experienced its longest streak of sub-15 closes since 2007.
Despite this period of calm, just two technology companies priced in the three months following the
election. Snap broke that streak with its $3.4 billion capital raise in early March.
0
10
20
30
40
50
60
70
80
90
Jan/07 Jan/08 Jan/09 Jan/10 Jan/11 Jan/12 Jan/13 Jan/14 Jan/15 Jan/16 Jan/17
VIX Volatility Index (Daily) vs. U.S. Tech IPO Count (Semiannual): 2007–Q1’17
2016
Election
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1’17
IPO
Count

19. Q3
Field of $1B+ IPO Candidates Remains Crowded
State of the Markets 19
U.S. Tech IPOs with Market Caps $1B+ Sized by First-Day Market Cap or Last Private Valuation: 2012–Q1’17
1. For illustrative purposes only.
Sources: S&P Capital IQ and The Wall Street Journal.
Snap’s IPO was just the third U.S. tech debut greater than $10 billion since Facebook’s 2012 offering.
Seven others have attained that lofty valuation through private funding, with another 82 above $1 billion.
2017 …and Beyond12012 2013 2014 2015 2016
Q1
Q4 x13
x35
x30

20. State of the Markets 20
Closing Thoughts

21. Tech Drives Overall Economic Growth
State of the Markets 21
Since the hype and collapse of the dot-com era almost two decades ago, technology has steadily
increased in importance (and value) for the U.S. economy. Tech companies comprise nearly one-quarter
of the S&P 500 index value. As a consequence, all industries face disruption from tech-native companies.
1. Amazon.com has been included in the technology sector.
2. Value change for Marriott is based on stock price. Marriott acquired Starwood for $13B in cash and stock in September 2016.
3. Airbnb value is based on most recent private valuation (March 2017).
Sources: Company websites, PitchBook, Siblis Research, CNBC and S&P Capital IQ.
S&P 500 Technology Sector1 Weighting: 1995–2016
LodgingAutos
Tech-Native Other
0%
5%
10%
15%
20%
25%
30%
35%
1995 1998 2001 2004 2007 2010 2013 2016
Technology
Trigger
Peak of
Inflated
Expectations
Trough of
Disillusionment
Slope of
Enlightenment
23%
Largest U.S. Companies by Market Cap as of 3/31/2017
with Value Change Since 3/31/2015
-13%
-28%
+91%
-34%
+17%2
+210%
-19%
-19%
3

22. Corporates Take up the Innovation Imperative
0
200
400
600
800
1000
1200
1400
1600
0
20
40
60
80
100
120
State of the Markets 22
Old-guard companies have recognized and embraced the need to innovate — from soup to nuts and
bolts, no sphere of the global economy has been unaffected by this next generation of technology.
1. Denotes launch of CVC and/or first investment.
2. Denotes announcement of corporate initiative (accelerator, research facility, etc.)
Sources: Company websites, Crunchbase, Fortune, Bloomberg, The Wall Street Journal, Star Tribune, Xconomy, Skift and CB Insights.
Number of New Corporate Venture Capital Groups: 2011–2016 Deals with CVC Participation: 2011–2016
2011 2012 2013 2014 2015 2016 2017
1
1
2
2
1
1
1
1
2
2
2
1
1
2
2
1
2
1
1
1
1
1
11

23. Updated: SVB’s Interactive Unicorn Navigator
State of the Markets 23
Use our Unicorn Navigator to follow the journeys of the billion-dollar club as they traverse the venture
landscape toward an eventual exit – now updated with 2017 entrants: C3 IoT, View and Zoom Video.
Sources: The Wall Street Journal, PitchBook and S&P Capital IQ.
https://www.svb.com/state-of-the-markets-report/

24. Report Authors
State of the Markets 24
Steve Allan, CFA
Head of External
Insights & Analytics
sallan@svb.com
Sean Lawson
Senior Manager
SVB Analytics
selawson@svb.com
Steve Allan, CFA is the Head of External
Insights & Analytics and Strategic Advisory,
responsible for the three areas of information
services provided to the innovation economy:
Strategic Advisory Services, Compliance
Valuations and Insights. Strategic Advisory
Services provides consultative guidance
around valuations, benchmarking and
inorganic growth strategies.
Sean Lawson is a Senior Manager with
SVB Analytics and SVB Securities, responsible
for leading research and insights spanning
early- and growth-stage venture-backed
technology companies.
Steven Pipp
Senior Associate
SVB Analytics
spipp@svb.com
Steven Pipp is a Senior Associate with
SVB Analytics and SVB Securities, responsible
for valuation, research and strategic advisory
engagements for venture-backed technology
companies.
Special Thanks
Tim Lee, CFA
Senior Credit Analyst
SVB Asset Management
Daeyoung Choi, CFA
Credit Analyst
SVB Asset Management
Steven Kakowski
Senior Associate
SVB Analytics
Natalie Dillon
Senior Associate
SVB Analytics
Drew Gonzales
Associate
SVB Analytics
Melina Bergkamp
Associate
Silicon Valley Bank

25. About Silicon Valley Bank
For more than 30 years, Silicon Valley Bank has helped
innovative companies and their investors move bold ideas
forward, fast. SVB provides targeted financial services and
expertise through its offices in innovation centers around the
world. With commercial, international and private banking
services, SVB helps address the unique needs of innovators.
State of the Markets 25
This material, including without limitation to the statistical information herein, is provided for informational purposes only. The material is based in part on information
from third-party sources that we believe to be reliable, but which have not been independently verified by us and for this reason we do not represent that the information
is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decision.
You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation,
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About SVB Analytics
SVB Analytics, a non-bank affiliate of Silicon Valley Bank, serves the
strategic business needs of entrepreneurs, corporates and investors
in the global innovation economy. For more than a decade, SVB
Analytics has helped global business leaders make informed
decisions by providing market intelligence, research, and consulting
services. Powered by proprietary data, SVB Analytics has a unique
view into the technology and life science sectors.