This document discusses trends in venture capital and startups. It notes that there are now 50 times more internet users, online speeds are over 180 times faster, and people are connected everywhere via mobile devices. As a result, companies are growing faster than ever before. Venture capital funds are larger before companies go public, and public startups are more mature with higher valuations and revenues. Late-stage private financing now faces competition from new types of investors. While some see signs of a bubble, the startup growth and value is unprecedented due to new entrants paying high prices. The future holds discussion around new models like crowd-funding and their impact on angels, VCs, and founders.

1. Venture Outlook 2015
Goldrush or Fool’s Gold?
Mark Suster - @msuster

2. There are 50x more Internet users today (33% of world population)
Sources: U.S. Bureau of the Census, World Bank. As of Q2 June 2012.
2
World Internet users (M)
1995 2000 2005 2010 2012
2291.2132
2019.2929
1019.086
411.0758
44.3587
1

3. NOW1995
Online speeds are over 180x faster
Source: Akamai ‘s State of the Internet Q1 2014
3
56 Kbps
modems
10.5 Mbps
average U.S.
Internet
connection
speed!
2

4. People are mobile: connected everywhere, all the time
Source: 2014 Statista forecasts
4
• Personal
• Location
aware
• At point of
purchase
2014 US smartphone
users
164m
2014 US tablet users
119m
3

5. Everybody is socially connected driving viral growth at faster rates
5
Monthly active
users255M
Monthly active
users1.3B+
Global registered
members300M+
Hours of video watched
each month by 1B+ users6B+
4

6. We all have credit cards on file with a single click to purchase
Sources: eMarketer, WSJ
6
Global ecommerce spend
$1.5 trillion1 billion
Digital shoppers worldwide
The Apple app ecosystem alone estimated
to be $35 billion in 2014 (from $0 in 2008)
5

7. Industry right sized to pre dot-com levels
Source: Prequin. Includes all LP investment into US VC funds with IT & Digital Media focus. Excludes funds with hardware & nanotech focus, non-$USD funds, funds with undisclosed amounts, & funds without first
close
7
Commitments from LPs to U.S. Tech
VC funds ($B)
1995 2000 2005 2010 2012
15.772
9.306
15.846
50.401
3.09
No. of funds raised by U.S. Tech VC firms
1995 2000 2005 2010 2012
65
50
74
163
33
6

8. Think about it …
8
50x users, 180x bandwidth, 6x time
spent online
Mobile, social, credit-card ready
Global economic pressure
Companies that work are growing faster than
in human history=

9. Market Capitalization at IPO ($B)
Cisco Amazon Microsoft LinkedIn Twitter FB Alibaba (est)
2525
$18
4.25
0.7780.4410.224
Private investors capture more value, encouraging greater pre-IPO funding.
Source: Quigley Report 2011, FLAG Capital
9
Previous Tech Cycle New Tech Cycle
$125B+
Current market cap:
$150B+ $340B+

10. Companies are raising larger amounts of private capital before going public
Source: Dow Jones Venture Source 2014 via EY
10
Median amount raised prior to IPO ($M)
2008 2009 2010 2011 2012 2013
100.9
78.4
82.8
72.1
42.5
48.6

11. Public company startups are significantly more mature than their 1.0 counterparts.
Source: Age from NVCA 2014 Yearbook – Thomson Retuers, Revenue & Multiples from Pitchbook Tech Valuations Presentation (June 2014)
11
Years to IPO
(from 1st financing)
IPO in '00 IPO in '13
7.4
3.1
Revenue ($M)
IPO in '00-01 IPO in '13-'14
101.6
34.8
Valuation/Revenue Multiple
IPO in '00-01 IPO in '13-'14
5.3
13.3

12. • Hedge funds
• Mutual funds
So late-stage private financing now facing unprecedented competition
Source: CB Insights
12
Traditional
public investors
• Growth funds
• Opportunity
funds
Traditional
VC investors
Moving
Later
Moving
Earlier
• Google
• Rakuten
• Alibaba
Corporate
VC Entrants
New

13. Thus valuations at later stage have gone up
the fastest
Source: Source; Q2 2014 PitchBook US Venture Industry Data Sheet, * As of Q1 2014
13
$ 1
$ 10
$ 100
$ 1,000
5.88
11.28
28.1
62.34
155
3.15
6.65
19.9
37.07
66.05
Seed Series A Series B Series C Series D+
24%
14%
9%
14%
17%
Median Pre-Money Valuation ($M)
2010 to 2014 CAGR
2014*
2010

14. But this is not 2000.
14
This is fueling some
discussion of a bubble.
Both trends are real.
The startup value & growth
unprecedented thus new
entrants forward paying
prices for late-stage deals.

15. So what will the future hold? What to expect
as an angel, a founder, a VC?
15
Topic discussion:
1. Crowd-funding (Equity vs. Product Pre-Sale)
2. Angels
3. Venture Capital
4. Founders

16. Venture Outlook 2015
Mark Suster - @msuster