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CANADA-UNITED STATES  LAW INSTITUTE Private Financing of Entrepreneurships: Sources of Private Financing
ALL SBIC PROGRAM LICENSEES Financing to Small Businesses Reported between October 2005 and September 2006 <ul><ul><li>  Nu...
NVCA  National Venture Capital Association <ul><li>Venture Capital Investment By Year – Money Tree </li></ul><ul><li>Co. D...
NVCA  National Venture Capital Association <ul><li>Venture Capital Investment By Quarter – Money Tree </li></ul><ul><li>Co...
Venture Capital Management – Summary Statistics <ul><ul><ul><ul><ul><li>1980  1994  2005 (est.) </li></ul></ul></ul></ul><...
VENTURE CAPITAL INVESTMENTS January 1, 1990 - September 30, 2005 Capital Invested ($ billions) Average Capital Invested Pe...
VENTURE CAPITAL DISBURSEMENTS BY FINANCING STAGE Percentage of Total Disbursements Dollars Invested ($ billions)
Distribution of Venture Capital Disbursements By Industry <ul><li>Percentage of U.S. Dollars Invested </li></ul><ul><li>In...
Distribution of Venture Capital Disbursements By Region <ul><li>Percentage of U.S. Dollars Invested </li></ul><ul><li>Regi...
NUMBER OF VENTURE-BACKED INITIAL PUBLIC OFFERINGS  AND MERGERS AND ACQUISITIONS  January 1, 1992 - December 31, 2006
NUMBER OF VENTURE-BACKED INITIAL PUBLIC OFFERINGS  AND MERGERS AND ACQUISITIONS  January 1, 1992 - December 31, 2006 Sourc...
PlacementTracker <ul><li>With transaction data as of December 29, 2006, PlacementTracker is reporting 2006 full-year PIPE ...
SPAC’s (Specialized Acquisition Companies) <ul><li>In all, more than 50 SPAC’s filed to go public in 2005.  About half of ...
CAPITAL COMMITMENTS TO PRIVATE EQUITY FUNDS January 1, 1984 - November 30, 2006 ($ billions) Sources:  Asset Alternatives,...
CAPITAL COMMITMENTS TO DOMESTIC LEVERAGED BUYOUT FUNDS January 1, 1985 - February 28, 2007 ($ billions) Source:  Buyouts
COMPARISON OF POOLED MEAN RETURNS OF VARIOUS PRIVATE EQUITY CATEGORIES END-TO-END RETURNS (%) NET TO LIMITED PARTNERS Peri...
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  1. 1. CANADA-UNITED STATES LAW INSTITUTE Private Financing of Entrepreneurships: Sources of Private Financing
  2. 2. ALL SBIC PROGRAM LICENSEES Financing to Small Businesses Reported between October 2005 and September 2006 <ul><ul><li> Number of Dollar Amount </li></ul></ul><ul><ul><li> Financings of Financing </li></ul></ul><ul><ul><li>SBIC Program Totals 3,674 $2,897,242,934 </li></ul></ul><ul><ul><li>Regular SBICs 3,573 2,882,152,803 </li></ul></ul><ul><ul><li>Bank-Owned/Non-Leveraged 128 187,817,112 </li></ul></ul><ul><ul><li>Debenture SBICs 1,614 1,207,318,648 </li></ul></ul><ul><ul><li>Participating Security 1,831 1,487,017,043 </li></ul></ul><ul><ul><li>Specialized SBICs 101 15,090,131 </li></ul></ul><ul><ul><li>Change from Fiscal Year 2005 </li></ul></ul><ul><ul><li>SBIC Program Totals (9%) 0% </li></ul></ul><ul><ul><li>Regular SBICs (8%) 1% </li></ul></ul><ul><ul><li>Bank-Owned/Non-Leveraged (48%) (13%) </li></ul></ul><ul><ul><li>Debenture SBICs (9%) 10% </li></ul></ul><ul><ul><li>Participating Security (5%) (5%) </li></ul></ul><ul><ul><li>Specialized SBICs (17%) (108%) </li></ul></ul>
  3. 3. NVCA National Venture Capital Association <ul><li>Venture Capital Investment By Year – Money Tree </li></ul><ul><li>Co. Disbursement Avg. per Deal Sum Investment </li></ul><ul><li>Year Number of Deals (USD Mil) (USD Mil) </li></ul><ul><li>1996 2469 4.36 10762.30 </li></ul><ul><li>1997 3080 4.74 14591.99 </li></ul><ul><li>1998 3550 5.84 20718.89 </li></ul><ul><li>1999 5396 9.91 53487.98 </li></ul><ul><li>2000 7812 13.36 104379.88 </li></ul><ul><li>2001 4451 9.11 40537.78 </li></ul><ul><li>2002 3053 7.11 21692.88 </li></ul><ul><li>2003 2876 6.82 19613.81 </li></ul><ul><li>2004 2991 7.28 21768.86 </li></ul><ul><li>2005 3027 7.35 22261.59 </li></ul><ul><li>Source: PricewaterhouseCoopers/National Venture Capital Association Money Tree TM Report </li></ul><ul><li>Data: Thomson Financial – Updated 12/3105 </li></ul><ul><li> </li></ul>
  4. 4. NVCA National Venture Capital Association <ul><li>Venture Capital Investment By Quarter – Money Tree </li></ul><ul><li>Co. Disbursement Avg. per Deal Sum Investment </li></ul><ul><li>Quarter Number of Deals (USD Mil) (USD Mil) </li></ul><ul><li>2004-1 695 7.47 5191.44 </li></ul><ul><li>2004-2 836 7.45 6230.87 </li></ul><ul><li>2004-3 677 7.13 4824.19 </li></ul><ul><li>2004-4 808 7.13 5760.75 </li></ul><ul><li>2005-1 713 7.07 5040.82 </li></ul><ul><li>2005-2 806 7.83 6307.82 </li></ul><ul><li>2005-3 767 7.32 5613.52 </li></ul><ul><li>2005-4 791 7.19 5690.66 </li></ul><ul><li>2006-1 821 7.52 6173.78 </li></ul><ul><li>2006-2 892 7.52 6711.24 </li></ul><ul><li>Source: PricewaterhouseCoopers/National Venture Capital Association Money Tree TM Report </li></ul><ul><li>Data: Thomson Financial – Updated 6/30/96 </li></ul>
  5. 5. Venture Capital Management – Summary Statistics <ul><ul><ul><ul><ul><li>1980 1994 2005 (est.) </li></ul></ul></ul></ul></ul><ul><li>Number of VC Firms in Existence 89 395 915 </li></ul><ul><li>Number of Professionals 1,308 4,345 9,250 </li></ul><ul><li>Number of First-Time VC Funds Raised 21 16 40 </li></ul><ul><li>VC Capital Under Management ($bn) 4.0 35.1 285 </li></ul><ul><li>Sources: National Venture Capital Association Yearbook (2004) and Cambridge Associates LLC estimates. </li></ul>
  6. 6. VENTURE CAPITAL INVESTMENTS January 1, 1990 - September 30, 2005 Capital Invested ($ billions) Average Capital Invested Per Company ($ millions)
  7. 7. VENTURE CAPITAL DISBURSEMENTS BY FINANCING STAGE Percentage of Total Disbursements Dollars Invested ($ billions)
  8. 8. Distribution of Venture Capital Disbursements By Industry <ul><li>Percentage of U.S. Dollars Invested </li></ul><ul><li>Industry Group 2001 2002 2003 2004 2005 </li></ul><ul><li>Biotechnology 8.2 14.4 18.5 18.8 16.8 </li></ul><ul><li>Business/Financial 6.3 4.1 5.6 4.1 6.0 </li></ul><ul><li>Communications 27.7 23.1 18.3 16.3 17.2 </li></ul><ul><li>Computer Hardware & Services 7.5 6.8 5.9 5.6 6.4 </li></ul><ul><li>Computer Software 25.5 24.2 22.2 24.0 21.6 </li></ul><ul><li>Health Care-Related 6.2 10.4 9.5 10.0 11.2 </li></ul><ul><li>Industry/Energy 3.1 3.3 3.9 2.9 3.2 </li></ul><ul><li>Retailing & Media 8.8 5.3 6.0 6.9 7.8 </li></ul><ul><li>Semiconductors & Electronics 6.7 8.5 10.1 11.4 9.7 </li></ul><ul><li>Total 100.0 100.0 100.0 100.0 100.0 </li></ul><ul><li>Sources: Money Tree Survey, National Venture Capital Association, PricewaterhouseCoopers, and Thomson Venture Economics. </li></ul>
  9. 9. Distribution of Venture Capital Disbursements By Region <ul><li>Percentage of U.S. Dollars Invested </li></ul><ul><li>Region 2001 2002 2003 2004 2005 </li></ul><ul><li>Northern California 31.8 33.6 33.7 36.2 35.7 </li></ul><ul><li>Northeast 30.5 27.7 30.8 29.4 27.4 </li></ul><ul><li>Midwest 17.0 15.3 16.0 12.5 12.3 </li></ul><ul><li>Southern California 8.8 10.1 9.6 9.8 11.6 </li></ul><ul><li>Southeast 6.9 8.2 5.5 5.9 6.1 </li></ul><ul><li>Northwest 3.4 3.4 3.1 4.5 3.9 </li></ul><ul><li>Southwest 1.1 1.7 1.2 1.5 2.9 </li></ul><ul><li>Alaska/Hawaii/Puerto Rico 0.4 0.0 0.1 0.1 0.0 </li></ul><ul><li>Unknown 0.2 0.0 0.0 0.0 0.0 </li></ul><ul><li>Total 100.0 100.0 100.0 100.0 100.0 </li></ul><ul><li>Sources: MoneyTree Survey, National Venture Capital Association, PricewaterhouseCoopers, and Thomson Venture Economics. </li></ul>
  10. 10. NUMBER OF VENTURE-BACKED INITIAL PUBLIC OFFERINGS AND MERGERS AND ACQUISITIONS January 1, 1992 - December 31, 2006
  11. 11. NUMBER OF VENTURE-BACKED INITIAL PUBLIC OFFERINGS AND MERGERS AND ACQUISITIONS January 1, 1992 - December 31, 2006 Sources: National Venture Capital Association Yearbook and Venture Economics
  12. 12. PlacementTracker <ul><li>With transaction data as of December 29, 2006, PlacementTracker is reporting 2006 full-year PIPE market issuances of $27.83 billion. This represents a 39% increase over the 2005 total of $20.01 billion and a 14% increase over the previous one-year issuance record set in 2000 with $24.34 billion. The fourth quarter of 2006 also set a new fourth-quarter record with $6.98 billion in PIPE Market issuances. All totals exclude Structured Equity Lines and Canadian-domiciled issuers. </li></ul><ul><li>Source: http://www.primenewswire.com </li></ul>
  13. 13. SPAC’s (Specialized Acquisition Companies) <ul><li>In all, more than 50 SPAC’s filed to go public in 2005. About half of these, including Cold Spring Capital, have made it to market, raising around $1.2 billion that can be used for acquisitions. By comparison, only 11 deals went public in 2004, and those raised less than $500 million. </li></ul><ul><li>Source: http://www.usnews.com </li></ul>
  14. 14. CAPITAL COMMITMENTS TO PRIVATE EQUITY FUNDS January 1, 1984 - November 30, 2006 ($ billions) Sources: Asset Alternatives, Inc. and The Private Equity Analyst. 332a 191.0 Sources: Asset Alternatives, Inc. and The Private Equity Analyst. 332a 191.0 Sources: Asset Alternatives, Inc. and The Private Equity Analyst
  15. 15. CAPITAL COMMITMENTS TO DOMESTIC LEVERAGED BUYOUT FUNDS January 1, 1985 - February 28, 2007 ($ billions) Source: Buyouts
  16. 16. COMPARISON OF POOLED MEAN RETURNS OF VARIOUS PRIVATE EQUITY CATEGORIES END-TO-END RETURNS (%) NET TO LIMITED PARTNERS Periods Ended September 30, 2006 <ul><li>Average Annual Compound Returns (%) </li></ul><ul><li>Q3 One Three Five Ten Fifteen </li></ul><ul><li>Asset Class 2006 Year Years Years Years Years </li></ul><ul><li>U.S. Venture Capital 2.22 9.95 10.93 -1.65 37.00 29.83 </li></ul><ul><li>U.S. Private Equity 3.98 22.56 26.05 15.20 13.18 14.68 </li></ul><ul><li>U.S. Buyouts 3.66 25.98 30.47 18.45 16.54 18.63 </li></ul><ul><li>U.S. Buyouts $0 - $150M -0.09 19.85 17.03 8.68 10.57 20.81 </li></ul><ul><li>U.S. Buyouts $150 - $750M 4.75 22.08 26.79 15.40 18.60 20.88 </li></ul><ul><li>U.S. Buyouts >$750M 3.49 21.22 25.46 15.46 11.89 12.97 </li></ul><ul><li>U.S. Mezzanine Funds 2.84 16.55 15.01 9.42 11.80 12.76 </li></ul><ul><li>Top Two Quartiles Only </li></ul><ul><li>U.S. Venture Capital 3.32 15.29 19.17 5.15 67.28 40.88 </li></ul><ul><li>U.S. Private Equity 5.56 29.67 34.25 23.05 22.21 23.07 </li></ul><ul><li>S&P 500 5.67 10.79 12.30 6.97 8.59 10.76 </li></ul><ul><li>Russell 2000 R 0.44 9.92 15.48 13.78 9.06 11.25 </li></ul><ul><li>Dow Jones U.S. Small Cap 0.07 9.39 16.00 15.03 10.49 n/a </li></ul><ul><li>Nasdaq Composite 1 3.97 4.96 8.12 8.55 6.29 10.19 </li></ul><ul><li>Wilshire 5000 4.32 10.48 13.28 8.64 8.63 10.81 </li></ul><ul><li>Sources: Cambridge Associates LLC Non-marketable Alternative Assets Database, Dow Jones & Company, Inc., Standard & Poor's, Thomson Datastream, The Wall Street Journal , and Wilshire Associates, Inc. </li></ul><ul><li>Notes: Returns are end-to-end pooled means net of management fees, expenses, and carried interest. The pooled means represent the end-to-end rates of </li></ul><ul><li>return calculated on the aggregate of all cash flows and beginning and ending market values as reported by the General Partners to Cambridge </li></ul><ul><li>Associates LLC in their quarterly and annual audited financial reports. The U.S. Venture Capital sample represents over 80% of the total dollars raised by U.S. venture managers between 1981 and 2005. The U.S. Private Equity sample represents over 70% of the total dollars raised by funds formed between 1986 and 2005. U.S. Private Equity includes buyout, special equity expansion, special situations, restructuring and mezzanine funds. </li></ul><ul><li>1 Data are price returns only. </li></ul>
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