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State of Venture Capital
& Angel Markets 2015
STARTUP
CAPITAL VENTURES
What’s Going On In The US VC Cycle?
	
  	
  
	
  Page	
  2	
  
VCs
Invest In
Startups
Startups
Exit Via
M&A or
IPO
VCs
ret...
Strongest Venture Investing, Exit
& Angel Market In A Decade
•  Strong LP investment VC asset class
•  VCs investing more ...
Agenda
LP Investments In VC
VC Investing Activity
Angel, Accelerator & Crowdfunding
Exit Activity
Conclusions
Silicon Vall...
VC Fundraising Market Is Healthy
	
  
	
  Page	
  5	
  
.com boom
& bust
Silicon Valley Honolulu
Source: Thomson Reuters /...
Number Of Funds Raised Increased Again
Silicon Valley Honolulu Page 6
Source: Thomson Reuters / PwC / NVCA
New Funds Raised Exceeded 30%
For First Time In Years
Source: Thomson Reuters / NVCA
Silicon Valley Honolulu Page 7
• VC Returns Continue to Outperform
• Public MarketsVenture Returns Continue To Exceed
Public Market Returns
Source: NVCA,...
Agenda
Silicon Valley Honolulu
	
  	
  
	
  Page	
  9	
  
LP Investments In VC
VC Investing Activity
Angel, Accelerator & ...
$49B Of Venture Capital Invested In 2014
Is Highest Since 2000
Silicon Valley Honolulu Page 10
Source: Thomson Reuters / P...
US Corporate VC Also at a Decade High
Silicon Valley Honolulu Page 11
Source: PWC Moneytree Report
Number of US VC Deals Remains
Essentially Flat For 15 Years
Silicon Valley Honolulu Page 12
Source: Thomson Reuters / PwC ...
Silicon Valley Dominates US VC With CA
Making Up Almost 60% of Total $
Silicon Valley Honolulu Page 13
Source: Thomson Reu...
Software Is Eating The $ While Industrial &
Energy Is Bouncing Back
Silicon Valley Honolulu Page 14
Source: Thomson Reuter...
Software Represents Nearly 50%
Of Deals With Biotech #2 and Down To ~10%
Silicon Valley Honolulu Page 15
Source: Thomson R...
Seed Stage Rounds Continued To Decline
As Series A & B Rounds Increase
Silicon Valley Honolulu Page 16
Source: Thomson Reu...
Seed And Expansion Stage
Deal Sizes Close To .com highs*
Silicon Valley Honolulu Page 17
Source: Thomson Reuters / PwC / N...
79% Of Round Valuations Were Up While
Just 6% Were Down-Rounds
Silicon Valley Honolulu
Source: Fenwick
Page 18
Software & Internet / Media Had Greatest % Of
Up-Rounds With Life Science Continuing To Lag
Silicon Valley Honolulu Page 1...
Round To Round Price Increases At
Post .com Record Levels
Silicon Valley Honolulu Page 20
Source: Fenwick
Bullish VC Sentiment As Measured By Low
Senior Liquidation Preferences
Silicon Valley Honolulu Page 21
Source: Fenwick
Venture Investment Environment Is At
Highest Levels Since .com Era
However the comparison is unfair
•  Still just 40% of ....
Agenda
Silicon Valley Honolulu
	
  	
  
	
  Page	
  23	
  
LP Investments In VC
VC Investing Activity
Angel, Accelerator &...
Technology Angel Funding Strong But
Disconnected From Venture
Angel funding at highest levels in years
•  $1.65B invested ...
Crowdfunding Industry Still Dominated By
Project & Lending Sectors
Project funding (e.g. Kickstarter: $1.4B funded to
date...
Average Tech. Angel Round Size
At All Time High
Silicon Valley Honolulu Page 26
Source: ARI Halo Report
Tech. Angel Deal Size
Up Across All Sectors
Silicon Valley Honolulu Page 27
Source: ARI Halo Report
Tech. Angel Valuations At All Time High
Silicon Valley Honolulu Page 28
Source: ARI Halo Report
Tech. Angel Deals Approximately
Proportional To Population
(Different Than CA-Centric VC)
Silicon Valley Honolulu Page 29
...
Angel Investing Continues To Be Centered On
Consumer & Mobile Internet
Silicon Valley Honolulu Page 30
Source: ARI Halo Re...
Big Takeaway: Angels Invest (Much) More
In Consumer & Less In Software Than VCs
Silicon Valley Honolulu Page 31
Source: Th...
Why Are Tech. Angels Investing So
Differently Than Venture?
Many possibilities or combinations
•  Investing in concepts th...
Agenda
LP Investments In VC
VC Investing Activity
Angel, Accelerator & Crowdfunding
Exit Activity
Conclusions
Silicon Vall...
Page 34
Venture M&A and IPO Markets Continue
Healthy Levels Of Activity
Silicon Valley Honolulu
Source: Thomson Reuters / ...
VC-backed IPO and M&A Valuations
Remain Strong
Silicon Valley Honolulu Page 35
Facebook, Groupon,
Twitter, Zynga
Source: T...
Agenda
LP Investments In VC
VC Investing Activity
Angel, Accelerator & Crowdfunding
Exit Activity
Conclusions
Silicon Vall...
VCs Invested
$49B In
Portfolio
~$100B In
Venture Exits
(IPO + M&A)
LPs
Invested
$30B In VCs
VCs (Still) Investing More In ...
Better Angel & VC Investing Synchronicity
Could Improve Startup & Angel Yields
Startups and angels are dependent upon
subs...
Page 39
Author: Tim Dick
General Partner, Startup Capital Ventures
–  Boards: PlayFab, SilverTail (acquired by EMC), TuneI...
www.startupcv.com
STARTUP
CAPITAL VENTURES
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Venture Capital & Angel Markets 2015

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US Venture Capital Climate 2015 including Angel Investing. The emerging disconnect between angel investors and VCs reduces returns for angels and the chance for startups to succeed.

Published in: Business

Venture Capital & Angel Markets 2015

  1. 1. State of Venture Capital & Angel Markets 2015 STARTUP CAPITAL VENTURES
  2. 2. What’s Going On In The US VC Cycle?      Page  2   VCs Invest In Startups Startups Exit Via M&A or IPO VCs return capital to LPs LPs Invest In VCs Silicon Valley Honolulu
  3. 3. Strongest Venture Investing, Exit & Angel Market In A Decade •  Strong LP investment VC asset class •  VCs investing more actively than in the past 15 years (although at just 40% of .com era) •  Strong exit market producing good returns •  Strongest angel market in 15 years •  Challenge: angel investing concentrated in different sectors than venture Silicon Valley Honolulu      Page  3  
  4. 4. Agenda LP Investments In VC VC Investing Activity Angel, Accelerator & Crowdfunding Exit Activity Conclusions Silicon Valley Honolulu      Page  4  
  5. 5. VC Fundraising Market Is Healthy    Page  5   .com boom & bust Silicon Valley Honolulu Source: Thomson Reuters / PwC / NVCA
  6. 6. Number Of Funds Raised Increased Again Silicon Valley Honolulu Page 6 Source: Thomson Reuters / PwC / NVCA
  7. 7. New Funds Raised Exceeded 30% For First Time In Years Source: Thomson Reuters / NVCA Silicon Valley Honolulu Page 7
  8. 8. • VC Returns Continue to Outperform • Public MarketsVenture Returns Continue To Exceed Public Market Returns Source: NVCA, Cambridge Associates Silicon Valley Honolulu      Page  8  
  9. 9. Agenda Silicon Valley Honolulu      Page  9   LP Investments In VC VC Investing Activity Angel, Accelerator & Crowdfunding Exit Activity Conclusions
  10. 10. $49B Of Venture Capital Invested In 2014 Is Highest Since 2000 Silicon Valley Honolulu Page 10 Source: Thomson Reuters / PwC / NVCA 2015 = Q1 annualized For comparison: Apple 2015Q1 revenue $74.6B
  11. 11. US Corporate VC Also at a Decade High Silicon Valley Honolulu Page 11 Source: PWC Moneytree Report
  12. 12. Number of US VC Deals Remains Essentially Flat For 15 Years Silicon Valley Honolulu Page 12 Source: Thomson Reuters / PwC / NVCA 2015 = Q1 annualized
  13. 13. Silicon Valley Dominates US VC With CA Making Up Almost 60% of Total $ Silicon Valley Honolulu Page 13 Source: Thomson Reuters / PwC / NVCA LA / Orange County
  14. 14. Software Is Eating The $ While Industrial & Energy Is Bouncing Back Silicon Valley Honolulu Page 14 Source: Thomson Reuters / PwC / NVCA
  15. 15. Software Represents Nearly 50% Of Deals With Biotech #2 and Down To ~10% Silicon Valley Honolulu Page 15 Source: Thomson Reuters / PwC / NVCA
  16. 16. Seed Stage Rounds Continued To Decline As Series A & B Rounds Increase Silicon Valley Honolulu Page 16 Source: Thomson Reuters / PwC / NVCA
  17. 17. Seed And Expansion Stage Deal Sizes Close To .com highs* Silicon Valley Honolulu Page 17 Source: Thomson Reuters / PwC / NVCA * Driven by two billion $ deals and several multi-hundred $ deals
  18. 18. 79% Of Round Valuations Were Up While Just 6% Were Down-Rounds Silicon Valley Honolulu Source: Fenwick Page 18
  19. 19. Software & Internet / Media Had Greatest % Of Up-Rounds With Life Science Continuing To Lag Silicon Valley Honolulu Page 19 Source: Fenwick Q4 2014 * Cleantech & Other were statistically insignificant with two deals each
  20. 20. Round To Round Price Increases At Post .com Record Levels Silicon Valley Honolulu Page 20 Source: Fenwick
  21. 21. Bullish VC Sentiment As Measured By Low Senior Liquidation Preferences Silicon Valley Honolulu Page 21 Source: Fenwick
  22. 22. Venture Investment Environment Is At Highest Levels Since .com Era However the comparison is unfair •  Still just 40% of .com highs •  Most funded companies have revenue and strong growth •  Investing sectors are more tech. heavy (e.g. software, cloud) vs. internet and media •  Business models are more sophisticated AND more capital-efficient •  Cheap cloud services (e.g. AWS) reduce capital needed Silicon Valley Honolulu      Page  22  
  23. 23. Agenda Silicon Valley Honolulu      Page  23   LP Investments In VC VC Investing Activity Angel, Accelerator & Crowdfunding Exit Activity Conclusions
  24. 24. Technology Angel Funding Strong But Disconnected From Venture Angel funding at highest levels in years •  $1.65B invested in 870 deals Deal size and valuations very strong But disconnected from venture capital •  Investing in different sectors than VC •  Most active angel syndicates are outside major VC markets Silicon Valley Honolulu      Page  24  
  25. 25. Crowdfunding Industry Still Dominated By Project & Lending Sectors Project funding (e.g. Kickstarter: $1.4B funded to date) and lending (e.g. Lending Club) dominate Angel.co is largest equity funder at $100M in 2014 SEC has still not finalized unaccredited investor equity crowdfunding regulations •  Adverse selection remains an unresolved issue •  e.g. crowdfunders mostly get the deals rejected by angels, accelerators & VCs Silicon Valley Honolulu      Page  25  
  26. 26. Average Tech. Angel Round Size At All Time High Silicon Valley Honolulu Page 26 Source: ARI Halo Report
  27. 27. Tech. Angel Deal Size Up Across All Sectors Silicon Valley Honolulu Page 27 Source: ARI Halo Report
  28. 28. Tech. Angel Valuations At All Time High Silicon Valley Honolulu Page 28 Source: ARI Halo Report
  29. 29. Tech. Angel Deals Approximately Proportional To Population (Different Than CA-Centric VC) Silicon Valley Honolulu Page 29 Source: ARI Halo Report
  30. 30. Angel Investing Continues To Be Centered On Consumer & Mobile Internet Silicon Valley Honolulu Page 30 Source: ARI Halo Report
  31. 31. Big Takeaway: Angels Invest (Much) More In Consumer & Less In Software Than VCs Silicon Valley Honolulu Page 31 Source: Thompson-Reuters NVCA, ARI Halo Report
  32. 32. Why Are Tech. Angels Investing So Differently Than Venture? Many possibilities or combinations •  Investing in concepts they understand •  Investing proportional to applicant pool •  Consumer internet has lower tech. barriers •  Angels unaware of VC funding patterns •  Newsmaking consumer IPOs (TWTR) create observational bias vs. broad exit market (7X more M&A than IPO, etc.) •  ? Silicon Valley Honolulu      Page  32  
  33. 33. Agenda LP Investments In VC VC Investing Activity Angel, Accelerator & Crowdfunding Exit Activity Conclusions Silicon Valley Honolulu      Page  33  
  34. 34. Page 34 Venture M&A and IPO Markets Continue Healthy Levels Of Activity Silicon Valley Honolulu Source: Thomson Reuters / PwC / NVCA 2015 = Q1 annualized
  35. 35. VC-backed IPO and M&A Valuations Remain Strong Silicon Valley Honolulu Page 35 Facebook, Groupon, Twitter, Zynga Source: Thomson Reuters / PwC / NVCA FB acquisition of WhatsApp for $19.5BN
  36. 36. Agenda LP Investments In VC VC Investing Activity Angel, Accelerator & Crowdfunding Exit Activity Conclusions Silicon Valley Honolulu      Page  36  
  37. 37. VCs Invested $49B In Portfolio ~$100B In Venture Exits (IPO + M&A) LPs Invested $30B In VCs VCs (Still) Investing More In Startups Than LPs Are Investing Back Into VC Page  37   Sources: NVCA, Thomson Reuters, Cambridge Silicon Valley Honolulu
  38. 38. Better Angel & VC Investing Synchronicity Could Improve Startup & Angel Yields Startups and angels are dependent upon subsequent venture funding Angel investing patterns do not appear to influence VC investing patterns –  Angel investing sectors has stayed consistent for 5 years whereas VC investing evolves with market VCs are focused on investing in active exit markets Silicon Valley Honolulu      Page  38  
  39. 39. Page 39 Author: Tim Dick General Partner, Startup Capital Ventures –  Boards: PlayFab, SilverTail (acquired by EMC), TuneIn, Adama Materials, TagArray (acquired MXIM) Investor / Founder / CEO: Match.Com (Angel, acquired by IAC), WorldPages.com (Founder, CEO, IPO NYSE:WPZ acquired by BT), TRUSTe.org / Privacy Assured (Internet privacy standard), Accept.com (advisor, acquired by Amazon), Grassroots Enterprise (Founding President, acquired by Edelman), Hawaii Superferry (founding CEO), Dali Wireless (turnaround CEO) Boston Consulting Group – cofounded West Coast technology practice Beckman Instruments: invented first “instrument on a chip” & first ICU usable speech synthesizer for intubated patients MBA, Stanford University, BSEE, University of California
  40. 40. www.startupcv.com STARTUP CAPITAL VENTURES

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