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First-Stage Technology Venture Capital
First-Stage Technology Venture Capital
First-Stage Technology Venture Capital
First-Stage Technology Venture Capital
First-Stage Technology Venture Capital
First-Stage Technology Venture Capital
First-Stage Technology Venture Capital
First-Stage Technology Venture Capital
First-Stage Technology Venture Capital
First-Stage Technology Venture Capital
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First-Stage Technology Venture Capital

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  • 1. The View from the Valley CalPERS/CalSTRS Diversity Conference April 2006 San Jose CA First-Stage Technology Venture Capital ALTOS | Ventures
  • 2. 3 Themes
    • California continues to enjoy a venture capital boom
    • But the demographics and funding profile of Silicon Valley companies have changed
    • This creates new opportunities for smaller, diverse private equity firms
  • 3. VCs are Spending Again $21.7 billion of venture capital invested in 2005 March 20, 2006 “… how desperate some venture capitalists have become to find homes for the huge amounts of cash they have raised, and how few companies there are that really deserve their money.”
  • 4. California is Still the Venture “Capital” Source: 2005 Q4 PWC MoneyTree Survey Silicon Valley, and the rest of California, continue to garner a disproportionate share of U.S. VC investment Silicon Valley 35% Other CA 11% New England 14% Texas 6% Other 34%
  • 5. Valley Demographics Have Changed Source: JointVenture Silicon Valley 2005 index 2003 37% 36% 23% 4% 61% 1993 19% 15% 5% White Asian Hispanic Black/Other Start more than 50% of all new tech companies
  • 6. Venture Investment Has Changed Too 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 % VC Dollars Invested in seed/startup companies Source: PWC MoneyTree Quarterly Survey VCs are investing less at the earliest stages of company development Funds are simply too big to focus on smaller deals
  • 7. Diversity Drives Innovation Source: Stanford University A/PARC March 2002, survey of 10,000 Chinese and Indian engineers Some examples of diverse leadership: Highly entrepreneurial Asian engineers: 46% involved in founding/running startup company 53% of those not currently involved intend to start one 65% cite “access to investors” as #1 obstacle
  • 8. The Opportunity For Venture Firms
    • Deal characteristics
    • Outside of the venture mainstream
    • First-time CEOs (often first generation immigrants)
    • Often outside the Valley
    • Bootstrapped
    • Capital-efficient
  • 9. The Opportunity For Limited Partners
    • Manager characteristics:
    • Small funds – as measured by capital per partner
    • Culturally connected – formally and informally
    • Experienced as institutional leads
    • Established co-investor relationships
  • 10. Or More Simply… Then Now

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