2. What’s Going On In The US VC Cycle?
Page
2
VCs
Invest In
Startups
Startups
Exit Via
M&A or
IPO
VCs
return
capital to
LPs
LPs
Invest In
VCs
• Silicon Valley • Honolulu
3. An Outstanding Market For
Entrepreneurs & VCs
• US VC fundraising returning to strength in 2014
on back of strong exit markets
• Highest level of VC investment since 2003
• Highest levels of IPO activity since 2003
• Investment shifted from seed to later stages
• California & software sector taking growing
share of VC $ and deals
• Angel investors concentrating on different
sectors than VC, presenting challenges to
entrepreneurs
• Silicon Valley • Honolulu
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9. $29B Of Venture Capital Invested In 2013 Is
At Post .com High
• Silicon Valley • Honolulu
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Page 9"
Source: Thomson Reuters / PwC / NVCA
10. VC Dollars Concentrating In
Software, Biotech. & Media / Entertain
• Silicon Valley • Honolulu
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Source: Thomson Reuters / PwC / NVCA
11. Number Of Deals Also Concentrating
In Software
• Silicon Valley • Honolulu
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Source: Thomson Reuters / PwC / NVCA
12. California Makes Up Over 50% of US VC $
• Silicon Valley • Honolulu
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Source: Thomson Reuters / PwC / NVCA
LA / Orange County
13. 2013 Saw More Expansion Rounds While
Seed Stage Rounds Continued To Fall
• Silicon Valley • Honolulu
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Source: Thomson Reuters / PwC / NVCA
14. Q1 Seed Deal Size Fell After a “Big” 2013
While Later Round Sizes Grew
• Silicon Valley • Honolulu
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Source: Thomson Reuters / PwC / NVCA
15. 71% Of New Venture Financings Were
Up-Rounds…
• Silicon Valley • Honolulu
Source: Fenwick
"
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16. …But Less Than 40% of Series-C Or Later
Deals Were Up-Rounds
• Silicon Valley • Honolulu
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Source: Fenwick
17. Media And Software Have Greatest % Of
Uprounds (i.e. lower risk)
• Silicon Valley • Honolulu
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Page 17"
Source: Fenwick
18. Venture Investment Environment Is
Evolving
• “Seed and early stage financing numbers are
down, but expansion stage dollars invested are
up. This was to be expected when you consider
the domination by seed and early stage deals in
2012 and 2013” - Bobby Franklin, CEO NVCA
• “Investments into the Software sector continue to
remain healthy as investors look for companies
with disruptive technology.” - Mark McCaffery,
PwC
• Silicon Valley • Honolulu
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20. Tech. Angel Funding Is More Difficult To
Decipher
• UNH Angel report estimates 2013 angel
funding grew 5% to $24B for ~70,000
companies funded
– However many companies are not tech.
– Average deal size of $342,000
• TechCrunch estimates Just $700M was
invested in technology angel deals [which
feels low – Ed.]
• Silicon Valley • Honolulu
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Source: UNH Angel Report, TechCrunch, NVCA
21. Average Tech. Angel Round Size Remains
Flat
• Silicon Valley • Honolulu
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Page 21"
Source: SVB / Angel Resource Institute
22. Adding Co-investors To Angels
Substantially Increases Round Size
• Silicon Valley • Honolulu
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Page 22"
Source: SVB / Angel Resource Institute
$ M
23. Healthcare Draws Largest Angel /
Coinvestor Rounds
(But Is Most Capital-Intensive)
• Silicon Valley • Honolulu
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Page 23"
Source: SVB / Angel Resource Institute
$ M
24. Angel Investing Mix Different From Venture
Funding: Software Just 4%
• Silicon Valley • Honolulu
"
Page 24"
Source: SVB / Angel Resource Institute
25. Angel Funding Is Balanced Vs Population
• Silicon Valley • Honolulu
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Source: SVB / Angel Resource Institute
26. Accelerators Funded Over 1,000
Companies In 2013
• Silicon Valley • Honolulu
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Page 26"
High risk: just 36% of portfolio companies received additional
funding within 3 years
27. Crowdfunding Industry Reported Few
Numbers for 2013…
Deloitte estimates over $700M was raised from
product crowdfunding in 2013 (e.g. Kickstarter)
SEC has still not finalized equity crowdfunding
rules
Last industry numbers from 2012
• $2.8B worldwide according to Massolution
• $300M equity worldwide (crowdfunding.org)
• Silicon Valley • Honolulu
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31. 18% Of VC M&A Produces 10X Returns
While 22% Produces < 1X *
• Silicon Valley • Honolulu
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Page 31"
Source: Thomson Reuters / PwC / NVCA * Excludes unvalued deals (70% of total)
32. • VC Returns Continue to Outperform
• Public MarketsVC Returns Typically Exceed Public
Markets Over Long Term
Source: NVCA, Cambridge Associates
• Silicon Valley • Honolulu
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32
34. VCs Invested
$29B In
Portfolio
$134B In
Venture Exit
Liquidity (IPO
+ M&A)
LPs
Invested
$16B In VCs
Despite Strong Returns VC Is Not
Receiving Enough Capital To Sustain
Today’s Venture Market
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34
Sources: NVCA, Thomson Reuters, Cambridge
• Silicon Valley • Honolulu
35. Market Equilibrium Will Return
(One Way Or Another)
• Good exit markets create strong returns for LPs
• VCs continue to fund new deals at high levels
• LP funding declining and lagging VC investment
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35
Venture capital shrinks
to match LP
investment in VC
VC funding grows as
LPs increase VC
funding
• Silicon Valley • Honolulu
36. Page 36
Author: Tim Dick
• General Partner, Startup Capital Ventures
– Boards: SilverTail (acquired by EMC), TuneIn, Adama Materials,
TagArray
• Entrepreneur, angel and advisor has raised over $300M in early stage
capital with over $1.2B of exits
– Match.Com (Angel, acquired by IAC)
– WorldPages.com (Founder, CEO, IPO NYSE:WPZ acquired by BT)
– TRUSTe.org / Privacy Assured (Internet privacy standard)
– Accept.com (mentor capitalist, acquired by Amazon)
– Grassroots Enterprise (Founding President, acquired by Edelman)
– Hawaii Superferry (founding CEO)
– Dali Wireless (turnaround CEO)
• Boston Consulting Group
• Beckman Instruments: invented first “instrument on a chip” (1985) &
first ICU usable speech synthesizer for intubated patients (1981)
• MBA, Stanford University
• BSEE, University of California