Shaking the Money Tree Q4, 2010, presented by Owen Davis

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Owen Davis - Partner, PricewaterhouseCoopers presented this at the April 12, 2011 CVG Crossroads Connection Series Breakfast, Exits & Trends, in Stamford CT.

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  • PricewaterhouseCoopers is one of the largest professional services firms in the world, with more than 160,000 people located in 150 countries. Provide audit, tax and business advisory services. Locally we have offices in Hartford and Stamford. We have over 700 professionals based in Connecticut. We serve sectors shown on this slide among others , including Private Equity and Venture Capital firms. Now to the Report. . . .
  • See above.
  • Fourth qtr. 2010, $5 billion was invested in the U.S. While we will touch on the quarterly results, we will focus more on the 2010 Annual Results.
  • Despite a Sluggish Economy For the full year 2010 , venture capital investments totaled $21.8 billion in almost 3,300 deals , 19% increase over 2009 levels in dollars invested and the first year of increases in funding since 2007. 2. 2010 investments reflect a 12% increase in number of deals over prior year.
  • This chart for 4Q is consistent with the annual results showing approx. 60% of Venture Capital funds are invested in 3 regions: Silicon Valley, New England and NY Metro.
  • Although, we only track US investments, venture capital is borderless. 2. The Report tracks 18 regions in the US. 6 regions experienced investment levels of $1 billion or more in 2010 and 11 regions recorded more than 100 deals.
  • 39% of venture investments in the US (over $8.5 billion) were made in Silicon Valley based companies . The New England region ranks second , with 12% - $2.5 billion and 387 deals . NY Metro ranks third with 8.6% - $1.9 billion and 350 deals. The top ten regions attracted over 92% of the US invested dollars.
  • The Report tracks 17 industries. Nationally, in 2010, the Life Sciences sector (which includes Biotechnology and Medical Devices industries, together) raised $6.0 billion in 784 deals. For the year, Life Sciences accounted for 27.5% of all venture capital investments and 24% of all deals. Individually, the Software industry ranked first, with approximately $4.0 billion in 835 deals , a 20% increase over 2009. Once again, software holds its position as the largest single industry category with 18% of total dollars and 25% of all deals. Industrial and Energy attracted approximately $3.4 billion. IT Services industry ranked fifth in 2010 with $1.7 billion invested, a 44% decrease over 2009. BIO 16.9% MD 10.6 % 27.5% See item 3 above.
  • 1. Looking at the top 5 industries by quarter, Software, E&M and IT Services are trending up.
  • Venture investing in CT companies totaled $200 million in 2010 , a three year high, and a 27% increase over last year. Average deal size in 2010 stayed fairly consistent with 2009 at $3.8 million. Investments in CT companies exceeded the $200 million level for the first time since 2007 . Number of deals in-state experienced an increase of 33 % in 2010.
  • CT had a poor funding performance in 4Q 2010. $12.5 million in 9 deals.
  • For full year 2010 , $64 million was invested in 20 Life Sciences (Biotechnology and Medical Devices industries, together) companies. These Life Sciences investments are largely focused on technologies and companies resident in and around New Haven. However, in 2010, Financial Services companies took a larger percent of the investment dollars in CT , raising $94 million on only 4 deals. Software raised $23 million on 12 deals.
  • The sustained shift towards Expansion and Later stage investing over the past 8 years reflects: (a) venture capitalists continued support of existing portfolio companies via additional follow-on rounds; (b) their interest in more mature companies; and (c) extended periods of time to exits. 2. Given the selectivity in the venture-backed IPO market, portfolio companies are reaching more mature phases of development before an IPO or M&A transaction. 3. For full year 2010, Later stage and Expansion stage received 68% of all funding.
  • In 2010, Startup/Early stage investments have decreased 56% to $48 million from 2009 levels, while Later/Expansion stage investments have increased 300% from 2009.
  • 6 Biotech cos. in the top 10 deals followed by financial services with 2. Open Solutions, SS&C, Best Friends Petcare, Cidra, Proton Energy, Women’s Health USA, Achillion, Priceline, Higher One, Kayak, Tangoe, Reb-X.
  • CT is well below the National Average in deals in the $3.3 - $4.0 million per deal in the last 3 years.
  • Highest level of IPO activity since 2007. Highest level of M&A activity since 2005.
  • * Tough market for fund raising.
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