State Of Venture Capital and Angel Markets 2016

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Startup Capital Ventures annual analysis of the venture capital and angel investing markets for startups, VCs, LPs and angels.

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State Of Venture Capital and Angel Markets 2016

  1. 1. State of Venture Capital & Angel Markets 2016 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. Significant Changes From Last Year & Signs of Curves Ahead •  Strong LP investment in VC •  VCs investing more than at any time since .com era •  Signs valuations & $ will decline •  California & software still dominate •  Exit market off highs but still strong •  Strongest angel market in 15 years •  Angels investing differently than VC 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 VC Funds Raised Declined But Still Robust Silicon Valley Honolulu Page 6 Source: Thomson Reuters / PwC / NVCA
  7. 7. New Funds Represent Over 30% Of Total Funded Source: Thomson Reuters / NVCA Silicon Valley Honolulu Page 7
  8. 8. • VC Returns Continue to Outperform • Public MarketsVC 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. $59B Of Venture Capital Invested In 2015 Is Highest Since 2000 Silicon Valley Honolulu Page 10 Source: Thomson Reuters / PwC / NVCA
  11. 11. $7B Of Corporate VC Is Highest in 10 Yrs Focused On Software & Biotech 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
  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 Consumer Products Bumped Up Silicon Valley Honolulu Page 14 Source: Thomson Reuters / PwC / NVCA
  15. 15. Software Represents 40% Of Deals With Biotech #2 at ~10% Silicon Valley Honolulu Page 15 Source: Thomson Reuters / PwC / NVCA
  16. 16. Seed Stage Investment Continues To Be Scarce Silicon Valley Honolulu Page 16 Source: Thomson Reuters / PwC / NVCA
  17. 17. 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. Valuations (All Rounds Combined) Dropped Significantly In Q4 Silicon Valley Honolulu Page 18 Source: Dow Jones VentureSource
  19. 19. Venture Investment Environment Is At Highest Levels Since .com Era However the comparison is unfair •  Still just 50% of .com highs •  Most funded companies have revenue and growth •  Investing sectors are more tech. heavy (e.g. software, cloud) vs. internet and media •  Business models are more sophisticated AND more capital-efficient •  Cloud services (e.g. AWS) reduce capital needed Silicon Valley Honolulu      Page  19  
  20. 20. Agenda Silicon Valley Honolulu      Page  20   LP Investments In VC VC Investing Activity Angel, Accelerator & Crowdfunding Exit Activity Conclusions
  21. 21. 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 strong but also falling But disconnected from venture capital •  Investing in different sectors than VC •  Most active angel syndicates are outside major VC markets Silicon Valley Honolulu      Page  21  
  22. 22. Crowdfunding Industry Still Dominated By Project & Lending Sectors Project funding (e.g. Kickstarter: $2.2B funded to date) and lending (e.g. Lending Club) dominate Angel.co is largest equity funder at $160M in 2015 SEC unaccredited investor equity crowdfunding regulations remain limiting •  Remains nascent with no dominant platform yet Silicon Valley Honolulu      Page  22  
  23. 23. Average Tech. Angel Round Size At All Time High Silicon Valley Honolulu Page 23 Source: ARI Halo Report
  24. 24. Tech. Angel Valuations At All Time High (2013 Median Was $2.5M) Silicon Valley Honolulu Page 24 Source: ARI Halo Report
  25. 25. Tech. Angel Dollars More Democratic Than CA-Centric Venture Capital Silicon Valley Honolulu Page 25 Source: ARI Halo Report
  26. 26. Angel Dollars Are Less Software & More Healthcare Than VC Silicon Valley Honolulu Page 26 Source: ARI Halo Report
  27. 27. Why Are Tech. Angels Investing Differently Than Venture? Many possibilities or combinations •  Investing in concepts angels understand •  Investing proportional to applicant pool •  Consumer internet has lower entry barriers •  Angels unaware of VC funding patterns •  News making consumer IPOs (TWTR) create observational bias •  ? Silicon Valley Honolulu      Page  27  
  28. 28. Agenda LP Investments In VC VC Investing Activity Angel, Accelerator & Crowdfunding Exit Activity Conclusions Silicon Valley Honolulu      Page  28  
  29. 29. Page 29 Venture M&A and IPO Markets Activity Are Off Highs Silicon Valley Honolulu Source: Thomson Reuters / PwC / NVCA Slowest M&A market since 2009
  30. 30. VC-backed IPO and M&A Valuations Are Also Down Silicon Valley Honolulu Page 30 Source: Thomson Reuters / PwC / NVCA FB acquisition of WhatsApp for $19.5BN
  31. 31. Agenda LP Investments In VC VC Investing Activity Angel, Accelerator & Crowdfunding Exit Activity Conclusions Silicon Valley Honolulu      Page  31  
  32. 32. VCs Invested $59B In Portfolio ~$90B In Venture Exits (IPO + M&A) LPs Invested $20B In VCs VCs Invested Far More In Startups Than LPs Are Investing Back Into VC Page  32   Sources: NVCA, Thomson Reuters, Cambridge Silicon Valley Honolulu VC will decline unless LP investment into VC grows
  33. 33. Better Angel & VC Investing Synchronicity Could Improve Angel Returns Startups and angels are dependent upon follow-on venture funding Angel investing patterns do not appear to influence VC investing patterns VCs are focused on investing in active exit markets Silicon Valley Honolulu      Page  33  
  34. 34. www.startupcv.com STARTUP CAPITAL VENTURES

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