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Frothy, but…
CB Insights
In God we trust, all others must bring data
@cbinsights
2www.cbinsights.com 2www.cbinsights.com @cbinsights
Backed by the National Science Foundation, CB Insights uses data scien...
3www.cbinsights.com 3www.cbinsights.com @cbinsights
See what other customers have to say at
http://www.cbinsights.com/cust...
4www.cbinsights.com 4@cbinsights
“According to CB Insights…”
From the NY Times to Bloomberg, CB Insights data is used by h...
5www.cbinsights.com 5@cbinsights
Join 82,000+ and subscribe
www.cbinsights.com/newsletter
6www.cbinsights.com 6@cbinsights
Lots of bubble
chatter
7www.cbinsights.com 7@cbinsights
Many smart folks say things are bubbly
From investors to journalists, the cries of a bubb...
8www.cbinsights.com 8@cbinsights
“For me a bubble is simple, it’s when people are paying significantly higher prices for a...
9www.cbinsights.com 9@cbinsights
Other signs
Things that made us go huh?
10www.cbinsights.com 10@cbinsights
Other signs
Things that made us go huh?
11www.cbinsights.com 11@cbinsights
Other signs
Things that made us go huh?
12www.cbinsights.com 12@cbinsights
Other signs
Things that made us go huh?
13www.cbinsights.com 13@cbinsights
In God we trust, all
others must bring data
14www.cbinsights.com 14@cbinsights
Why it’s a bubble
15www.cbinsights.com 15@cbinsights
What’s a unicorn?
Unfortunately, this term was adopted by our industry. I apologize.
Pr...
16www.cbinsights.com 16@cbinsights
Lots of new VC funds being formed
Source: Venture Capital Raising Barbell
17www.cbinsights.com 17@cbinsights
Lots of new unicorns
More and more companies are getting valued at a billion dollars in...
18www.cbinsights.com 18@cbinsights
VC deal and funding activity is down, but…
Deal activity involving VCs has actually dec...
19www.cbinsights.com 19@cbinsights
Investment to private companies hit new highs
Private equity, hedge funds, mutual funds...
20www.cbinsights.com 20@cbinsights
Much easier to raise at a billion than exit at one
Stark difference in the # of compani...
21www.cbinsights.com 21@cbinsights
IPO activity has been blah
Q1 2015 was grim
22www.cbinsights.com 22@cbinsights
But private IPO activity has been increasing
$100M+ financings are increasingly common
23www.cbinsights.com 23@cbinsights
Private + public IPO activity is trending up
An atypical cast of characters has helped ...
24www.cbinsights.com 24@cbinsights
The new cast of characters
Here’s some of the names we’re seeing in the large rounds
25www.cbinsights.com 25@cbinsights
Hedge funds are active and competing
Tiger Management offspring (Tiger Cubs) are gettin...
26www.cbinsights.com 26@cbinsights
Corporate VCs deals & funding are up
Corporates are investing at a fast and furious pac...
27www.cbinsights.com 27@cbinsights
More corporate VCs jumping in
Corporates are investing at a fast and furious pace in pr...
28www.cbinsights.com 28@cbinsights
Find & stalk smart money investors
Monitor strategies and deals of investors and uncove...
29www.cbinsights.com 29@cbinsights
Price/Revenue multiples of unicorns
Some of these companies are being valued at seeming...
30www.cbinsights.com 30@cbinsights
Private & public market multiple disconnect
A look at Dropbox (private) vs Box (public)...
31www.cbinsights.com 31@cbinsights
Wait a minute…
Why it’s NOT a
bubble
32www.cbinsights.com 32@cbinsights
Some more perspective
Unicorns as % of Nasdaq 100 total market cap
33www.cbinsights.com 33@cbinsights
Source: Disrupting Honeywell: The Startups Unbundling Honeywell in the Smart Home
Unbun...
34www.cbinsights.com 34@cbinsights
Source: Unbundling the Automobile
Unbundling the Automobile
Attacking Automobiles
35www.cbinsights.com 35@cbinsights
Source: Disrupting P&G and the Consumer Packaged Goods Industry
Unbundling P&G
Attackin...
36www.cbinsights.com 36@cbinsights
Source: Disrupting Honeywell: The Startups Unbundling Honeywell in the Smart Home
Unbun...
37www.cbinsights.com 37@cbinsights
Source: Disrupting Wells Fargo, Citi and Bank of America
Unbundling Wells Fargo, Bank o...
38www.cbinsights.com 38@cbinsights
Source: Disrupting Wells Fargo, Citi and Bank of America
The old guard are waking up
Te...
39www.cbinsights.com 39@cbinsights
But they’re also not investing in innovation
40www.cbinsights.com 40@cbinsights
Most new VCs are small
70% of new funds are less than $100M in AUM
Source: Venture Capi...
41www.cbinsights.com 41@cbinsights
Every tech unicorn combined is worth < than Facebook
Private markets are frothy but not...
42www.cbinsights.com 42@cbinsights
Some more perspective
Unicorns as % of Nasdaq 100 total market cap
3.5%
43www.cbinsights.com 43@cbinsights
Public markets are not crazy
The lack of IPOs is a good sign that throwing the label “t...
44www.cbinsights.com 44@cbinsights
Ho-hum companies get punished
For all the chatter about retail investors getting shut o...
45www.cbinsights.com 45@cbinsights
A bubble requires rapid expansion AND contraction
And the private markets are seeing th...
46www.cbinsights.com 46@cbinsights
Questions
Want the deck? Disagree? Let’s chat.
@asanwal
asanwal@cbinsights.com
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[PreMoney SF 2015] CB Insights >> "Venture-nomics: A Quantitative Look At Bubbles, Unicorns, Fund Formation, Corporate VC, Int'l Market Opps + More"

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Anand Sanwal, Founder & CEO, CB Insights

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[PreMoney SF 2015] CB Insights >> "Venture-nomics: A Quantitative Look At Bubbles, Unicorns, Fund Formation, Corporate VC, Int'l Market Opps + More"

  1. Frothy, but… CB Insights In God we trust, all others must bring data @cbinsights
  2. 2www.cbinsights.com 2www.cbinsights.com @cbinsights Backed by the National Science Foundation, CB Insights uses data science and machine learning to help our customers predict what’s next—their next customer, their next investment, the next market they should attack, or the next company they should acquire. Cisco, Salesforce, Castrol, Gartner, as well as top tier VCs including, NEA, Upfront Ventures, RRE, and FirstMark Capital rely on CB Insights to make decisions based on data, not decibels. About CB Insights A unique combination of data science and machine learning to help you make data-driven decisions ”A detailed discussion of data collection and how the company parses them is written by CB Insights’ data scientists; it convincingly tells the story of scalability and accuracy for what they call “The Cruncher.” Forbes article “Predictive Analytics And Novel Visualization Draw Customers To 'Must Have' Data” published April 8, 2015
  3. 3www.cbinsights.com 3www.cbinsights.com @cbinsights See what other customers have to say at http://www.cbinsights.com/customer-love “Designed by a VC insider who truly knows the space and understands end-user needs.” Greg Bae Investments & Biz Dev Comcast Ventures Jack Leeney Portfolio Manager Telefonica Ventures “We're using CB Insights at Salesforce Ventures to analyze industry trends that are relevant to our strategy. It's helped improve our efficiency.” Matt Garratt Sr. Director, Corporate Development Salesforce Ventures “CB Insights provides our team with a holistic and thematic approach that really captures market activity….we've found CBI to have the best access for the most accurate market view.” “We have been looking for a tool that could give us the ability to track, research and identify investment opportunities. CB Insights provides this simply and in a simple, easy to use interface. The depth of information that we get is exactly what we need. Great product.” Jonathan Tudor Ventures Director Castrol innoVentures “CB Insights perfectly illustrates what I expect today from such online services to stay tuned to our fast-changing Tech Landscape. Accurate and up-to-date data mash-ups, intuitive UIs, smart data visualization capabilities and direct API access… all packaged together with straightforward pricing.” Simon Mencarelli Senior Manager, Strategic Planning Dassault Systems “CB Insights' intuitive user interface, analytical capabilities, and detailed investment information create a very powerful tool for our team's research needs.” Nate D’Anna Corporate Development Cisco A few of our happy customers The most publicly reference-able customers of anyone in the industry
  4. 4www.cbinsights.com 4@cbinsights “According to CB Insights…” From the NY Times to Bloomberg, CB Insights data is used by hundreds of leading media outlets every week “CB Insights put out an intriguing infographic in which they analyzed the most capital efficient unicorns. That is, the startups with the highest ratio of investment to current estimated valuation.” See our latest media mentions http://www.cbinsights.com/press “London & Partners, working with data from CB Insights, says that money- transfer startup WorldRemit raised the most of any other company in Q1, a $100 million round in February” “The stakes for both exchanges are high. According to the research firm CB Insights, about 588 privately backed companies have valuations of more than $100 million, meaning that they are potential candidates for going public sometime in the next several years.” “Last year, more than $100 million flowed into U.S. drone start-ups, according to CB Insights, double 2013 levels” “About 33 Dallas-based tech companies have been acquired since 2012, including the enterprise cloud company SoftLayer, which was bought by IBM in 2013 for $2 billion, according to data from CB Insights. ”
  5. 5www.cbinsights.com 5@cbinsights Join 82,000+ and subscribe www.cbinsights.com/newsletter
  6. 6www.cbinsights.com 6@cbinsights Lots of bubble chatter
  7. 7www.cbinsights.com 7@cbinsights Many smart folks say things are bubbly From investors to journalists, the cries of a bubble have intensified as of late “Now there is a clear consensus that we are witnessing our second tech bubble in 15 years. What is uncertain is how much further the bubble can expand and what might pop it. In our view the current bubble is an echo of the previous tech bubble, but with fewer large capitalization stocks and much less public enthusiasm. Some indications that we are pretty far along include: •  The rejection of conventional valuation methods; •  Short-sellers forced to cover due to intolerable mark-to-market losses; and •  Huge first day IPO pops for companies that have done little more than use the right buzzwords and attract the right venture capital.” David Einhorn, Greenlight Capital “I think there’s two things are going on: One, there’s quite a bit of capital availability out there, and if you look at how low-interest rates are, and what are the alternatives to invest capital and get return, that causes asset prices to rise. The stock market’s up, as well. You know, this is a cyclical industry, and when times get good, they get really good. Last time we saw that was 1999 and many of the people at this conference might not have been paying attention, because they were in high school. But money is definitely freer flowing today than it was three or four years ago.” Bill Gurley, Benchmark Capital
  8. 8www.cbinsights.com 8@cbinsights “For me a bubble is simple, it’s when people are paying significantly higher prices for any asset class that is in great excess of the underlying value of that asset. (One area that is subject to that definition right now is) late-stage financing of tech companies of companies like ZocDoc, or maybe even Dropbox, AirBnB and Uber. I’m not arguing (late-stage investors) are crazy, I’m arguing they’re irrational.” Mark Suster, Upfront Ventures As with so many of the telltale signs of a bubble, I have seen this before. When times are so good that executives are willing to disregard the difference between ethical and unctuous behavior, it’s just one sign that the end, relatively speaking, is near. It’s not the only sign. The over-supply of journalism jobs covering the technology industry, for example, is a good indicator. Adam Lashinksy, Fortune “It’s been a steady sequence of very large rounds. It means we are in bubble territory…No one wants to say because nobody wants to break it. Everybody wants to cash out before its over. …We are seeing expansion of valuation even from the seed stage all the way up…(There is) desperation to not miss out on what will be the next big thing.” George Zachary, CRV Many smart folks say things are bubbly From investors to journalists, the cries of a bubble have intensified as of late
  9. 9www.cbinsights.com 9@cbinsights Other signs Things that made us go huh?
  10. 10www.cbinsights.com 10@cbinsights Other signs Things that made us go huh?
  11. 11www.cbinsights.com 11@cbinsights Other signs Things that made us go huh?
  12. 12www.cbinsights.com 12@cbinsights Other signs Things that made us go huh?
  13. 13www.cbinsights.com 13@cbinsights In God we trust, all others must bring data
  14. 14www.cbinsights.com 14@cbinsights Why it’s a bubble
  15. 15www.cbinsights.com 15@cbinsights What’s a unicorn? Unfortunately, this term was adopted by our industry. I apologize. Private companies valued at over $1B. Generally refers to companies in high-growth sectors of tech, life sciences and energy. But mostly tech. Unicorn exits are private companies which have exited for over $1 billion via M&A or IPO.
  16. 16www.cbinsights.com 16@cbinsights Lots of new VC funds being formed Source: Venture Capital Raising Barbell
  17. 17www.cbinsights.com 17@cbinsights Lots of new unicorns More and more companies are getting valued at a billion dollars in the private markets
  18. 18www.cbinsights.com 18@cbinsights VC deal and funding activity is down, but… Deal activity involving VCs has actually declined for 3 straight quarters
  19. 19www.cbinsights.com 19@cbinsights Investment to private companies hit new highs Private equity, hedge funds, mutual funds and sovereign wealth funds are all investing big dollars
  20. 20www.cbinsights.com 20@cbinsights Much easier to raise at a billion than exit at one Stark difference in the # of companies raising at a billion dollar valuation vs those which exit at one
  21. 21www.cbinsights.com 21@cbinsights IPO activity has been blah Q1 2015 was grim
  22. 22www.cbinsights.com 22@cbinsights But private IPO activity has been increasing $100M+ financings are increasingly common
  23. 23www.cbinsights.com 23@cbinsights Private + public IPO activity is trending up An atypical cast of characters has helped the “IPO” market stay strong
  24. 24www.cbinsights.com 24@cbinsights The new cast of characters Here’s some of the names we’re seeing in the large rounds
  25. 25www.cbinsights.com 25@cbinsights Hedge funds are active and competing Tiger Management offspring (Tiger Cubs) are getting more and more active and competing with each other
  26. 26www.cbinsights.com 26@cbinsights Corporate VCs deals & funding are up Corporates are investing at a fast and furious pace in private companies Source: 2014 Corporate VC Report
  27. 27www.cbinsights.com 27@cbinsights More corporate VCs jumping in Corporates are investing at a fast and furious pace in private companies Source: 2014 Corporate VC Report
  28. 28www.cbinsights.com 28@cbinsights Find & stalk smart money investors Monitor strategies and deals of investors and uncover new sources of dealflow in your areas of focus Common refrain from some VCs is that many of these investors are “dumb money”. Of course, that also conveniently ignores returns of most VCs.
  29. 29www.cbinsights.com 29@cbinsights Price/Revenue multiples of unicorns Some of these companies are being valued at seemingly eye-popping valuations Source: Uber and Slack have significantly higher valuation multiples than other unicorns
  30. 30www.cbinsights.com 30@cbinsights Private & public market multiple disconnect A look at Dropbox (private) vs Box (public) Source: The Dropbox valuation is irrational
  31. 31www.cbinsights.com 31@cbinsights Wait a minute… Why it’s NOT a bubble
  32. 32www.cbinsights.com 32@cbinsights Some more perspective Unicorns as % of Nasdaq 100 total market cap
  33. 33www.cbinsights.com 33@cbinsights Source: Disrupting Honeywell: The Startups Unbundling Honeywell in the Smart Home Unbundling Honeywell Attacking industrials
  34. 34www.cbinsights.com 34@cbinsights Source: Unbundling the Automobile Unbundling the Automobile Attacking Automobiles
  35. 35www.cbinsights.com 35@cbinsights Source: Disrupting P&G and the Consumer Packaged Goods Industry Unbundling P&G Attacking consumer packaged goods (CPG)
  36. 36www.cbinsights.com 36@cbinsights Source: Disrupting Honeywell: The Startups Unbundling Honeywell in the Smart Home Unbundling FedEx & UPS Attacking logistics
  37. 37www.cbinsights.com 37@cbinsights Source: Disrupting Wells Fargo, Citi and Bank of America Unbundling Wells Fargo, Bank of America, Citi Attacking banking
  38. 38www.cbinsights.com 38@cbinsights Source: Disrupting Wells Fargo, Citi and Bank of America The old guard are waking up Tech is not just attacking tech Goldman Sachs issues this ominous sounding report about an “expanding class of competitors to capture profit pools long controlled by banks.” “Silicon Valley is coming. There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking. The ones you read about most are in the lending business, whereby the firms can lend to individuals and small businesses very quickly and – these entities believe – effectively by using Big Data to enhance credit underwriting. They are very good at reducing the “pain points” in that they can make loans in minutes, which might take banks weeks.” Jamie Dimon, Chairman and CEO JP Morgan Chase & Co.
  39. 39www.cbinsights.com 39@cbinsights But they’re also not investing in innovation
  40. 40www.cbinsights.com 40@cbinsights Most new VCs are small 70% of new funds are less than $100M in AUM Source: Venture Capital Raising Barbell
  41. 41www.cbinsights.com 41@cbinsights Every tech unicorn combined is worth < than Facebook Private markets are frothy but not a material part of tech Source: The Value of Every US Tech Unicorn Combined is Still Less Than One Facebook
  42. 42www.cbinsights.com 42@cbinsights Some more perspective Unicorns as % of Nasdaq 100 total market cap 3.5%
  43. 43www.cbinsights.com 43@cbinsights Public markets are not crazy The lack of IPOs is a good sign that throwing the label “tech” onto something is not enough for a lofty public market valuation Source: The Compression ins SaaS Valuations
  44. 44www.cbinsights.com 44@cbinsights Ho-hum companies get punished For all the chatter about retail investors getting shut out of IPO gains, public market prudishness has protected them as well
  45. 45www.cbinsights.com 45@cbinsights A bubble requires rapid expansion AND contraction And the private markets are seeing the expansion happen. There is no public scorecard to force the contraction. Some investors will lose money on these bets. And they’ll be replaced by new investors who dismiss “those guys” as dumb. The opaqueness of the private markets let you bury the dead very quietly.
  46. 46www.cbinsights.com 46@cbinsights Questions Want the deck? Disagree? Let’s chat. @asanwal asanwal@cbinsights.com

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