Heesen san diego venture group - 2012-01-24

San Diego Venture GroupVC Outlook 2012January 24, 2012Mark G. HeesenNVCA President

The Number of US VC Firms Has Peaked ... Thankfully At Year # Active Capital End Firms Managed 1970 28 $1B 1980 87 $4B 1990 96 $28B 2000 1,022 $220B 2010 462 $177B Source: 2011 NVCA Yearbook, prepared by Thomson Reuters, figure 1.04

VC Fundraising Has Slowed Down – New commitments continue below company investment 120 100 80 60 40 20 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $B 10 12 18 31 58 107 38 4 11 19 31 32 31 26 16 14 18 Does not include Corporate Venture groups. Source: Thomson Reuters/NVCA

The Vast Bulk of the Capital Goes to Existing Managers Raising a Follow-On Fund 35 $B Raised by First-Time Managers vs. Follow-On 30 25 20 15 10 5 0 2005 2006 2007 2008 2009 2010 2011 $B First 2.4 1.4 2.9 2.2 0.9 1.6 1.9 $B Follow On 27.9 30.5 27.7 23.2 15.5 12.2 16.9 Source: Thomson Reuters/National Venture Capital Association

Investment Marches On -The industry is in a new size band but it is very much open for business!

VC Investment Peaked in 2000; Industry is Smaller Now $100 $99b $90 $80 $31b $ Billion Invested $70 $60 $28b $50 $40 $30 $20 $10 $0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters

Despite economic turbulence and uncertainty, VCs funded Over 1100 in 2011; 1000-1300 is typical 3,500 3,000 2,500 2,000 1,500 1,000 500 - 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 # Cos 1,428 2,459 3,388 1,236 840 768 950 1,067 1,259 1,361 1,281 795 1,047 1,159Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters

First Fundings of Life Sciences Companies is Way Down… 300 250 200 150 100 50 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 # LS FF 153 192 202 166 192 167 173 165 185 206 268 259 242 157 188 153 Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

SoCal under a Microscope… Note that data “cuts” can be done from the historical trend data section of www.pwcmoneytree.com or from theNational Aggregate Spreadsheet which can be downloaded from that site.

So. California Investing Generally Tracked National Trends … $ Millions Invested in Companies $10,000 800 $9,000 700 $8,000 600 $7,000 $6,000 500 $5,000 400 $4,000 300 $3,000 200 $2,000 $1,000 100 $0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0 $M Inv 1,171 1,081 1,298 1,707 4,539 8,591 3,583 2,158 1,783 2,441 2,588 3,112 3,704 3,136 1,921 2,493 2,805 # Deals 165 240 264 333 505 751 402 275 268 274 313 354 394 375 277 341 315Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters 10

… and first time funding are rebounding nicely 350 300 250 200 150 100 50 - 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 # 1st Fundings 102 127 228 323 110 63 65 82 119 122 131 126 61 84 95Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters

SoCal’s 37% focus on life sciences is higher than national; clean tech makes up the bulk of Ind/Energy $ Invested 2009 through 2011 IT Services 5% Semi 2% Other Consumer Bio 5% 12% 22% Media/Ent 5% Ind/Energy SW 22% 12% Med Dev 15%Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters

The Exit Scene -the importance of acquisitions has become clear over the past several years but the IPO market remains the key!

IPO Levels Far Below What is Needed 25.00 300 250 20.00 200 Number of IPOs 15.00Offer $B 150 10.00 100 5.00 50 0.00 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $Offer B 12.01 5.00 3.54 18.75 22.96 3.41 2.07 2.01 10.48 4.48 4.48 10.33 0.47 1.64 7.02 9.88 Count 281 142 78 271 263 41 22 29 94 57 57 86 6 12 75 52 Source: Thomson Reuters/National Venture Capital Association

Median Age at IPO is Off Its Peak – but Still Historically High 12.00 Med Age - Yrs 10.00 8.00Offer $B 6.00 4.00 2.00 0.00 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Med Age - Yrs 5.78 6.54 4.74 4.29 5.26 7.15 7.93 7.70 6.86 6.20 8.02 8.78 9.59 10.30 9.18 8.30 Source: Thomson Reuters/National Venture Capital Association, As of 5/27/2011

What’s in the Venture-Backed IPO Pipeline?IPOs During Period and Registration Counts at Period End; Are we seeing a comeback? 100 90 # of Companies 80 70 60 50 40 30 20 10 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 IPOs Done 29 94 57 57 86 6 12 75 52 In Reg on last day 31 57 16 36 60 28 29 42 60 As of 11/4/2011, there were 65 port cos in registration with 3 IPOs QTD including Groupon. Source: Thomson Reuters/National Venture Capital Association

Volume of M&A Exits has Increased to Record Levels Source: Thomson Reuters/National Venture Capital Association

Venture Exit Counts- IPOs and M&A by Year 700 #M&A 600 #IPO 500Number of Issues 400 300 200 100 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 #M&A 100 97 116 164 209 240 317 353 319 284 349 350 378 382 348 273 436 429 #IPO 166 202 270 136 77 260 264 41 24 29 94 57 57 86 6 12 75 52 Source: Thomson Reuters/National Venture Capital Association

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Heesen san diego venture group - 2012-01-24

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