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The State of Venture Capital [Reformatted]
 

The State of Venture Capital [Reformatted]

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For the narrated version with original fonts, visit: ...

For the narrated version with original fonts, visit:
http://venturecompany.com/videos/sovc

After the preeminent presentation on The State of Venture Capital has been viewed (bullet-by-bullet) by close to 11,000 people, we revised The State of Venture Capital, narrated and updated it with the latest findings from 2012.

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  • Full Name Full Name Comment goes here.
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  • SlideShare modifies fonts, so visit venturecompany.com for a fully narrated and visually correct representation of The State of Venture Capital. Then connect through Twitter, Facebook or LinkedIn to stay tuned for more.
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  • It is a very thoughtful approach, I was waiting for the sell and I got it at the end, we all have to make money. I concur with much of the analysis, and the symptoms it describes. But what is the disease? The underlying causes? After 30 years in the business, in the '90's, I saw money that needs a better return than Tbills, a lot of money. Pension plans began investing heavily in the '90's. I see a limited supply of deals worthy of venture investment (2500 a year +- 500) that has persisted for almost 2 decades. I see a value added investment philosophy changed to a transaction philosophy. By in large the people running the VC firms are transaction people, the great VC's of the '70's & '80's are long gone, and due to the tidal wave of LP money were swept away, the baby that was thrown out with the bath water. I see lack of exit opportunities and a government hostile to such and innovation in general. Maybe all I have are more symptoms. VC as an asset class has lost its way and has few if any Icons to lead it back.
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  • Cool !!
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  • This is a very thoughtful approach and many of the top plan sponsors and LPs are aggressively looking at ways to address the gap you've outlined. This is very well done.
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The State of Venture Capital [Reformatted] The State of Venture Capital [Reformatted] Presentation Transcript

  • The State ofVentureCapitalby Georges van HoegaerdenVERSION 3.031998-2012 © All rights reserved
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 This presentation has been reformatted automatically by Slideshare. For the full narrated presentation with proper fonts, visit: http://venturecompany.com/videos/sovc2
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Focus on economics3
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 innovation = ∞4
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 venture capital arbitrage = ∑5
  • “Who the[expletive] is this guy?”
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 “Fred Wilson and Tim Draper used to be “Georges is a first-rate truth teller, and guiding lights within the industry. Georges, unlike anyone else Ive met in the VC youve cut the legs out from under it, and community so far.” replaced the gas lamp with neodymium- Researcher Harvard Business School focused xenon torch.” CEO “You are the subject-matter 180+ expert of Venture.” "Your state of VC along with many of Finance Journalist your posts have been great guides for wisdom in this industry." Principal, China VC Fund "Absolutely the most rational piece that has been written onthe reasons why the VC industry “This is a very thoughtful approach and will need to incorporate some many of the top plan sponsors and LPs changes going forward." are aggressively looking at ways to Politician address the gap you’ve outlined. This is very well done." Fund-of-Funds manager “Your insight and analyses are the best. “Really Outstanding Vision of The Industry. Every LP should read Georges articles!” You should be running things in Washington, Chairman, Investment firm DC.” Chief Technology Officer7
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.038
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Reach of 45,000+8
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Georges van Hoegaerden Managing Director, The Venture Company Founded in 1998 in Palo Alto, California Hindsight, insight and foresight ‣ Raised over $15M in Venture Capital, produced triple digit returns ‣ 4 time startup entrepreneur, CEO and board director ‣ 17 years in Silicon Valley ‣ 30 years of complete spectrum and global experience in Engineering, Sales, Business Development, Product Marketing, Management ‣ Venture Catalyst Worldwide New Media products at Oracle Corporation, sold first release products ‣ Venture Partner, Private Investor ‣ New Age Economist (by fate)9
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.0310
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.0310
  • Who cares aboutVenture Capital?
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 2012
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 20 % of GDP contribution Source: NVCA12
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Venture Capital was born in 1946 with the founding of American Research and Development Corporation by Georges Doriot First home run: 10 years later >70,000% ROI with Digital Equipment Corporation13
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Superior economics of technology14
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Superior economics of technology Software is an intellectual Low-cost manufacturing arrangement of bits Zero-cost distribution The Internet is “free” Taps into a global Immediate global market impact meritocracy and reach14
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Superior economics of technology Software is an intellectual Low-cost manufacturing arrangement of bits Zero-cost distribution The Internet is “free” Taps into a global Immediate global market impact meritocracy and reach14
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Superior economics of technology Software is an intellectual Low-cost manufacturing arrangement of bits Zero-cost distribution The Internet is “free” Taps into a global Immediate global market impact meritocracy and reach14
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Superior economics of technology Software is an intellectual Low-cost manufacturing arrangement of bits Zero-cost distribution The Internet is “free” Taps into a global Immediate global market impact meritocracy and reach14
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Superior economics of technology Software is an intellectual Low-cost manufacturing arrangement of bits Zero-cost distribution The Internet is “free” Taps into a global Immediate global market impact meritocracy and reach14
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Superior economics of technology Software is an intellectual Low-cost manufacturing arrangement of bits Zero-cost distribution The Internet is “free” Taps into a global Immediate global market impact meritocracy and reach14
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 After 60+ years of Venture Capital investing:15
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 1B people without fresh water Source: 2010 ITU/UNESCO estimates worldwide high-speed internet access to be roughly 8%16
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 1B 6.4B people without people without fresh water high speed internet Source: 2010 ITU/UNESCO estimates worldwide high-speed internet access to be roughly 8%16
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Health Knowledge 1B 6.4B people without people without fresh water high speed internet Source: 2010 ITU/UNESCO estimates worldwide high-speed internet access to be roughly 8%16
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 The internet is the foundation of a new global meritocracy17
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 The internet is the foundation of a new global meritocracy17
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 The internet is the foundation of a new global meritocracy Economy > Technology17
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Our economic competitiveness is at stake18
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 So, how we develop, discover and promote technology innovation should be embedded in an intelligent, renewable and accountable economic construct19
  • Venture Mania s
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 What is Venture Capital?21
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Anything developed Anything developed Anything funded in Silicon Valley? by an entrepreneur? by a VC firm? What is Venture Capital? A small business (SME) Small Private Equity? Voodoo? with big aspirations?21
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 The art ofmakingpromises Social Startup Economic Value22
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 keeping The art ofmakingpromises Social Startup Economic Value22
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Venture Capital is a financial system and arbitrage designed to deploy high-risk / high-yield from groundbreaking innovation23
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Venture Capital Arbitrage24
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.0325
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Money Idea Arbitrage Venture CapitalistLimited EntrepreneurPartner25
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 VC Limited arbitrage Entrepreneur Partners by General Partners26
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Innovation marketplace VC Limited arbitrage Entrepreneur Partners by General Partners26
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Innovation marketplace VC Limited arbitrage Mone Entrepreneur Partners by General Partners26
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Innovation marketplace VC Limited arbitrage Mone Idea Entrepreneur Partners by General Partners26
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Innovation marketplace Commitments Allocations Capital calls Investments VC Limited arbitrage Mone Idea Entrepreneur Partners by General Partners26
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Innovation marketplace Commitments Allocations Capital calls Investments VC Limited arbitrage Mone Idea Entrepreneur Partners by General Partners Liquidity Equity26
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 It is the theory which decides what can be observed "Whether you can observe a thing or not depends on the theory which you use.” - Albert Einstein27
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 “GPs Are Essentially Service Providers” Eric Hirsch, Chief Investment Officer at Hamilton Lane January 28th, 201028
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Is the performance of the “service provider” or derivative indicative of the potential of the “GPs Are Essentially underlying asset? Service Providers” Eric Hirsch, Chief Investment Officer at Hamilton Lane January 28th, 201028
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Venture Capital Financial system29
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Horizontal diversification in Asset Management Emerging Real Estate markets Fixed Assets Public Equity Private Equity Buyout Venture30
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Horizontal diversification in Asset Management Emerging Real Estate markets Fixed Assets Public Equity Private Equity Buyout Venture30
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.0331
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 1: LP diversifies in Alternative assets 2: Diversified in Direct and Fund-of-funds 3: Diversified in Venture, PE, Buyout, Hedge... 4: Diversified in multiple VC Firms 5: Diversified in multiple Funds 6: Diversified in multiple GPs 7: Diversified in many Companies 8: Diversified in multiple Rounds 9: Syndicated with multiple Peers 10: Split up in Tranches31
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 1: LP diversifies in Alternative assets 2: Diversified in Direct and Fund-of-funds 3: Diversified in Venture, PE, Buyout, Hedge... 4: Diversified in multiple VC Firms 5: Diversified in multiple Funds 6: Diversified in multiple GPs 7: Diversified in many Companies 8: Diversified in multiple Rounds 9: Syndicated with multiple Peers 10: Split up in Tranches31
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 1: LP diversifies in Alternative assets 2: Diversified in Direct and Fund-of-funds 3: Diversified in Venture, PE, Buyout, Hedge... 4: Diversified in multiple VC Firms 5: Diversified in multiple Funds Venture 6: Diversified in multiple GPs 7: Diversified in many Companies 8: Diversified in multiple Rounds 9: Syndicated with multiple Peers 10: Split up in Tranches31
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 1: LP diversifies in Alternative assets 2: Diversified in Direct and Fund-of-funds 3: Diversified in Venture, PE, Buyout, Hedge... 4: Diversified in multiple VC Firms 5: Diversified in multiple Funds Venture 6: Diversified in multiple GPs 7: Diversified in many Companies 8: Diversified in multiple Rounds 9: Syndicated with multiple Peers 10: Split up in Tranches31
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 1: LP diversifies in Alternative assets 2: Diversified in Direct and Fund-of-funds 3: Diversified in Venture, PE, Buyout, Hedge... 4: Diversified in multiple VC Firms 5: Diversified in multiple Funds Venture 6: Diversified in multiple GPs 7: Diversified in many Companies 8: Diversified in multiple Rounds 9: Syndicated with multiple Peers 10: Split up in Tranches31
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 1: LP diversifies in Alternative assets 2: Diversified in Direct and Fund-of-funds 3: Diversified in Venture, PE, Buyout, Hedge... 4: Diversified in multiple VC Firms 5: Diversified in multiple Funds Venture 6: Diversified in multiple GPs 7: Diversified in many Companies 8: Diversified in multiple Rounds 9: Syndicated with multiple Peers 10: Split up in Tranches31
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 1: LP diversifies in Alternative assets 2: Diversified in Direct and Fund-of-funds 3: Diversified in Venture, PE, Buyout, Hedge... 4: Diversified in multiple VC Firms 5: Diversified in multiple Funds Venture 6: Diversified in multiple GPs 7: Diversified in many Companies 8: Diversified in multiple Rounds 9: Syndicated with multiple Peers 10: Split up in Tranches31
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 1: LP diversifies in Alternative assets 2: Diversified in Direct and Fund-of-funds 3: Diversified in Venture, PE, Buyout, Hedge... 4: Diversified in multiple VC Firms 5: Diversified in multiple Funds Venture 6: Diversified in multiple GPs 7: Diversified in many Companies 8: Diversified in multiple Rounds 9: Syndicated with multiple Peers 10: Split up in Tranches31
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 1: LP diversifies in Alternative assets 2: Diversified in Direct and Fund-of-funds 3: Diversified in Venture, PE, Buyout, Hedge... 4: Diversified in multiple VC Firms 5: Diversified in multiple Funds Venture 6: Diversified in multiple GPs 7: Diversified in many Companies 8: Diversified in multiple Rounds 9: Syndicated with multiple Peers 10: Split up in Tranches31
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 1: LP diversifies in Alternative assets 2: Diversified in Direct and Fund-of-funds 3: Diversified in Venture, PE, Buyout, Hedge... to the investment thesis Lack of accountability 4: Diversified in multiple VC Firms 5: Diversified in multiple Funds Venture 6: Diversified in multiple GPs 7: Diversified in many Companies 8: Diversified in multiple Rounds 9: Syndicated with multiple Peers 10: Split up in Tranches31
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 LP1 LP2 LP3 LP4 LP5 LP... Investor socialism FoF hybrid FoF hybrid Vague PPMs: Investment networks? No critical PIPES in a Venture path Fund? Who is responsible? VC firm VC firm VC Syndication? Define early-stage? Greener pastures? Fund Fund Fund Fund GP GP GP GP GP GP GP GP GP GP GP32
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 LP1 LP2 LP3 LP4 LP5 LP... Investor socialism FoF hybrid FoF hybrid Vague PPMs: Investment networks? No critical PIPES in a Venture path Fund? Who is responsible? VC firm VC firm VC Syndication? Define early-stage? Greener pastures? Fund Fund Fund Fund GP GP GP GP GP GP GP GP GP GP GP32
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 I have been a victim of VC’s ‘moving goalposts’ - it cost me years, a million + dollars and damaged my credibility! President, software company33
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Venture Capital High risk34
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 $25M+ The cost to produce a technology company with any meaningful Social Economic Value capable of producing a viable Venture return35
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 The MoneyTree (*) hides an ugly reality:36
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 The MoneyTree (*) hides an ugly reality: Not everything that can be counted, can be counted on. (*) The MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters36
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Idea is Idea is Technology A customer born feasible works buys Original Venture Capital by Vinod Khosla Capital Seed R&D Go-to- Expansion capital capital market capital capital37
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Idea is Idea is Technology A customer born feasible works buys Valuation Original Venture Capital by Vinod Khosla Capital Seed R&D Go-to- Expansion capital capital market capital capital37
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Idea is Idea is Technology A customer born feasible works buys Valuation Original Venture Capital by Vinod Khosla Risk Capital Seed R&D Go-to- Expansion capital capital market capital capital37
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Idea is Idea is Technology A customer born feasible works buys Valuation The wrath of “capital efficiency” Risk Capital Seed R&D Go-to- Expansion capital capital market capital capital38
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Idea is Idea is Technology A customer born feasible works buys Subprime Risk Venture Capital deferral & deflation Return deflation Valuation The wrath of “capital efficiency” Risk Capital Seed R&D Go-to- Expansion capital capital market capital capital38
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Technology Marketplace execution M&A IPO SEV Downside Upside SEV=Social Economic Value39
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Technology Marketplace execution M&A IPO SEV Uniform funding trajectory of innovation = subprime $250K $1M $5M $20M Downside Upside SEV=Social Economic Value39
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Technology Marketplace execution M&A IPO SEV Uniform funding trajectory of innovation = subprime $250K $1M $5M $20M downside risk Downside Upside SEV=Social Economic Value39
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Technology Marketplace execution M&A IPO SEV Uniform funding trajectory of innovation = subprime $250K $1M $5M ? $20M ? ? downside risk Downside Upside SEV=Social Economic Value39
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Technology Marketplace execution M&A IPO SEV Uniform funding trajectory of innovation = subprime $250K $1M $5M ? $20M ? ? downside risk upside risk Upside Upside Upside Upside discount-1 discount-2 discount-n discount Downside Upside SEV=Social Economic Value39
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Venture Capital trending model (*) Venture Capital fund vintage Standard deviation of risk Amount of money (*) based on witnessed VC deal selection and intake criteria, standardized deal terms and syndicates40
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Venture Capital trending model (*) Venture Capital fund vintage 1980 Standard deviation of risk Amount of money (*) based on witnessed VC deal selection and intake criteria, standardized deal terms and syndicates40
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Venture Capital trending model (*) Venture Capital fund vintage 1980 1990 Standard deviation of risk Amount of money (*) based on witnessed VC deal selection and intake criteria, standardized deal terms and syndicates40
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Venture Capital trending model (*) Venture Capital fund vintage 1980 1990 2000 Standard deviation of risk Amount of money (*) based on witnessed VC deal selection and intake criteria, standardized deal terms and syndicates40
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Venture Capital trending model (*) Venture Capital fund vintage 1980 1990 2000 2010 Standard deviation of risk Amount of money (*) based on witnessed VC deal selection and intake criteria, standardized deal terms and syndicates40
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Venture Capital trending model (*) Venture Capital fund vintage 1980 1990 2000 2010 Standard deviation of risk Amount of money Innovation Innovation outliers outliers (*) based on witnessed VC deal selection and intake criteria, standardized deal terms and syndicates40
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Venture Capital trending model (*) Venture Capital fund vintage 1980 1990 2000 2010 2020 Standard deviation of risk Amount of money Innovation Innovation outliers outliers (*) based on witnessed VC deal selection and intake criteria, standardized deal terms and syndicates40
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Posted Feb 29th, 2012 on Walt Mossberg’s All Things To many investors, visionary entrepreneurs come off as naïve or worse — isn’t it safer/ easier/more profitable to create a(nother) social network for cat fanciers than to try to cure cancer, defeat terrorism, or organize the world’s information? — Bruce Gibney, in a post on the Founders Fund Web site entitled “What Happened to the Future?”41
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Venture Capital High yield42
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Constituent Measurement Capital calls Investments Limited VC Money Ideas Entrepreneurs Partners arbitrag Liquidity Equity43
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Constituent Measurement 3. Venture Capital 3. Fund returns Capital calls Investments Limited VC Money Ideas Entrepreneurs Partners arbitrag Liquidity Equity43
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Constituent Measurement 2. Asset Management 2. IRRs 3. Venture Capital 3. Fund returns Capital calls Investments Limited VC Money Ideas Entrepreneurs Partners arbitrag Liquidity Equity43
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Constituent Measurement 1. Public 1. 360˚ Trust 2. Asset Management 2. IRRs 3. Venture Capital 3. Fund returns Capital calls Investments Limited VC Deploy reserves Money Ideas Entrepreneurs Buy products Partners arbitrag Liquidity Equity43
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Constituent Measurement ROI 1. Public 1. 360˚ Trust 2. Asset Management 2. IRRs 3. Venture Capital 3. Fund returns Capital calls Investments Limited VC Deploy reserves Money Ideas Entrepreneurs Buy products Partners arbitrag Liquidity Equity Buy shares43
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Metric 3: U.S. Venture Capital, 10 year trailing performance (post bubble) 0% * Source: IRRs from Feb 2012, Cambridge Associates44
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Metric 3: U.S. Venture Capital, 10 year trailing performance (post bubble) VC -4.6%* 0% * Source: IRRs from Feb 2012, Cambridge Associates44
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Metric 3: U.S. Venture Capital, 10 year trailing performance (post bubble) VC 2.6%* 0% * Source: IRRs from Feb 2012, Cambridge Associates44
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Metric 3: U.S. Venture Capital, 10 year trailing performance (post bubble) Consumer adoption 7% VC 2.6%* 0% * Source: IRRs from Feb 2012, Cambridge Associates44
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Metric 3: U.S. Venture Capital, 10 year trailing performance (post bubble) Consumer Apple adoption 400% 7% VC 2.6%* 0% * Source: IRRs from Feb 2012, Cambridge Associates44
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Metric 2: Limited Partner narrowing confidence Some 80% of all capital committed to VC in 2011 went to just 7 large funds * Source: 2011 Ernst & Young45
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Metric 1: Public confidence Average last two year post- Venture Style IPOs depressed IPO performance -30% Source: 2012 The Courtney Group Source: 2012 Capital Mind46
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 More highly More Money skilled people + + Limited Partners Entrepreneurs47
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 More highly More Money skilled people + More opportunity 83% of world population un(der)-served by technology and even 7% growth in adoption + during economic crisis Limited Partners Entrepreneurs47
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 More highly More Money skilled people + More opportunity 83% of world population un(der)-served by technology and even 7% growth in adoption + during economic crisis Limited Partners - years of More than 10 Entrepreneurs mediocre VC performance47
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Conclusion48
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Not the concept, our but implementatio n of Venture Capital is economically incompatible with needs of groundbreaking innovation.49
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 We need to fix the economic model under which Venture Capital operates if we want innovation and our economy to perform50
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Only economic change leads to the discovery of new outlier assets51
  • 1998 - 2012 © All Rights Reserved by The Venture Company | version 3.03 Question yourself Limited Partner Venture Capitalist Entrepreneur Why do you expect to Why do you submit to a generate outlier asset class Why do you expect prime marketplace of innovation in returns from 10 levels of returns from the deployment which only your vision and bottom heavy of subprime risk? merit is challenged? diversification?52
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