John Gabbert's Presentation
Upcoming SlideShare
Loading in...5

John Gabbert's Presentation






Total Views
Views on SlideShare
Embed Views



0 Embeds 0

No embeds


Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
Post Comment
Edit your comment

John Gabbert's Presentation John Gabbert's Presentation Presentation Transcript

  • The State of Venture Capital
    • March 2, 2002
    • John Gabbert
    • Sr. Director, Worldwide Research
    • VentureOne Corporation
  • Three Key Elements for a Robust Venture Industry
    • Fundraising
    • Investment
    • Liquidity
  • Fundraising
  • Venture Capital Fundraising Healthy in 2001 Commitments to Venture Capital Funds Funds Raised ($B) Source: VentureOne
  • But Momentum is Slowing Commitments to Venture Capital Funds Funds Raised ($B) Source: VentureOne
  • Fundraising Far Outpaces Investment in 2001 Fundraising vs. Amount Invested Amount Invested ($B) Source: VentureOne
  • Fundraising Summary
    • Commitments to venture capital were flat in 4Q01; however, 2001 fundraising was still well above the norm.
    • Fundraising is becoming more difficult, especially for newer or unproven funds.
    • Over half of VC dollars are now in funds greater than $500 M.
    • Greatest amount of VC money in history available to invest in entrepreneurship.
  • Investment: Overall
  • 2001: A Sharp Contrast to 2000’s Boom Equity into Venture-Backed Companies Amount Invested ($B) Number of Deals Source: VentureOne
  • Investment Levels Off at Year’s End Equity into Venture-Backed Companies Amount Invested ($B) Number of Deals Source: VentureOne
  • Median Round Size Gets a Boost in 4Q’01 Median Amount Invested Per Round Median Amount Invested ($M) Source: VentureOne
  • Positively Affecting Later-Stage Rounds Median Amount Invested by Round Class Median Amount Invested ($M) Source: VentureOne
  • Investment Shifts to Second & Later Rounds Deal Flow by Round Class % of Deals Source: VentureOne
  • IT Dominates, Healthcare Recaptures Investor Interest Equity Investment by Industry Sector % of Investment Source: VentureOne
  • IT Investment Still Falling Equity Investment in Information Technology Companies Amount Invested ($B) Number of Deals Source: VentureOne
  • Communications, Software Are Cornerstones of IT IT Investment by Sector % of Internet Investment Source: VentureOne
  • Investment: Valuations
  • 2001 Valuations Fall Below 1999 Levels Median Premoney Valuation by Year Median Premoney Valuation ($M) Source: VentureOne
  • Valuations Recover Somewhat in 4Q’01 Median Premoney Valuation Median Premoney Valuation ($M) Source: VentureOne
  • Later-Round Valuations Boost Overall Numbers Median Premoney Valuations by Round Class Median Premoney Valuation ($M) Source: VentureOne
  • Healthcare Valuations Up Significantly Median Premoney Valuations by Industry Median Premoney Valuation ($M) Source: VentureOne
  • Investment: Regions
  • Texas Edges Out Boston for #3 Spot 2001 Regional Investment in the US Source: VentureOne
  • Bay Area Investment Stabilizes Investment in Bay Area Venture-Backed Companies Amount Invested ($B) Source: VentureOne
  • Equity Financing Summary
    • Equity financing into venture-backed companies leveled off in 4Q’01.
    • Overall equity investment in 2001 was still the third highest amount on record.
    • Valuations and median round sizes recovered slightly at year’s end.
    • Early-stage venture financing has fallen more rapidly than later-stage.
    • The time between financing rounds is expanding.
  • Liquidity
  • M&As Continue to Slip Transactions and Amount Paid in M & As Amount Paid ($B) Source: VentureOne Number of Transactions
  • IPO Liquidity Up Marginally in 4Q01 … Deals and Amount Raised Through IPOs Amount Raised ($B) Venture-Backed IPOs Source: VentureOne
  • Liquidity Summary
    • The IPO and M&A markets for venture-backed companies continued their dramatic declines from the record levels of 1999 and early 2000.
    • IPO volume in 2001 was at its lowest in years.
    • The amount paid in M&A transactions declined throughout 2001, falling to the lowest level since 1995.
    • IPO companies in 2001 were more mature, but the time from initial funding to M&A is still falling.
  • Conclusions & Implications
    • The bad news:
      • Liquidity is extremely difficult
      • VCs are investing much more slowly and cautiously
      • Valuations are down across the board
      • Many VC-funded companies will fail to raise more $
    • The good news:
      • Liquidity windows open and close
      • VCs do have money to invest
      • Expectations are much more realistic
      • Those companies that succeed in raising $ will have more board involvement, better resources, lower costs and less competition
      • Truly great companies will emerge from this period
  • More Information
    • For a copy of this presentation, contact or call +1 (415) 538-2658.
    • Email for:
      • VentureSource: Instant access to venture capital intelligence
      • VentureOne Publications: VentureSource News (daily) and the Venture Capital Industry Report (annual).
      • Custom Report Services: Comparable Valuation Reports and specialized queries