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Liquidity & Returning Capital

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At SuperReturn International 2016, the world’s largest private equity & venture capital conference, John Gabbert discussed liquidity & returning capital. Including spotlights on global VC exit trends, IPO's, and European exits.

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Liquidity & Returning Capital

  1. 1. Liquidity & Returning Capital Request a free trial demo@pitchbook.com John Gabbert Founder & CEO john@pitchbook.com
  2. 2. THE PITCHBOOK PLATFORM The financial information technology trusted by leading investors, companies and advisors 21,860 LPs 94,438 Commitments 150,137 GPs/Investors 33,460 Funds 514,170 Performance Data Lines 696,194 Portfolio Companies 491,333 Transactions 124,748 Valuations 25,463 Advisory Firms 1,097,011 People
  3. 3. VC fundraising & deal trends
  4. 4. LPs have been optimistic on the VC asset class, therefore fundraising benefits Globa l VC fundraising *Through 12/31/2015 $53B $22B $48B 392 318 393 363 0 50 100 150 200 250 300 350 400 450 $0 $10 $20 $30 $40 $50 $60 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total capital raised ($B) U.S. ($B) Europe ($B) RoW ($B) Fund count $53B
  5. 5. Lots of capital being invested… but in fewer and bigger deals Global VC de al flow *Through 2/17/2016 $46B $35B $99B $21B 5,596 5,703 12,511 10,088 973 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 $0 $20 $40 $60 $80 $100 $120 $140 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Capital invested ($B) U.S. ($B) Europe ($B) RoW ($B) Deal Count $119B
  6. 6. $45.8B $42.2B $59.3B $99.4B $119.0B $44.3B $39.0B $42.9B $35.3B $38.7B $0 $20 $40 $60 $80 $100 $120 $140 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total capital invested ($B) Total VC fund LP contributions ($B) “Tourists” filling VC funding gap Globa l VC fund contr ibutions vs . globa l VC ca pita l inve ste d *Through 12/31/2015 Non-traditional VC investors account for an increasing share of VC $ spend (about 66%)
  7. 7. $0.03B $0.3B $1.3B $2.6B $1.2B $4.8B $2.1B $4.1B $19.9B $29.8B 1 4 7 7 8 24 19 26 86 113 0 20 40 60 80 100 120 $0 $5 $10 $15 $20 $25 $30 $35 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Capital Invested ($B) Deal count 68 US 31 Asia 12 Europe 2 ROW =113 “Unicorn” rounds have skyrocketed VC rounds va lue d ove r $ 1 billion *Through 12/31/2015 $66.1B invested across only 189 companies since 2006 (11% of $).
  8. 8. Big increase in seed rounds over last 5 yrs. G loba l VC de a l count by ty pe *Through 12/31/2015 528 1,144 4,027 3,921 2,870 3,368 3,785 5,311 5,747 4,777 1,700 2,099 2,585 2,843 2,441 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Seed Early stage VC Later stage VC
  9. 9. Seed round valuations reach levels previously seen at series A Me dia n pre -money va luation ($ M) by s e r ie s *Through 12/31/2015 $3.2 $4.8 $4.9 $5.5 $7.3 $6.7 $9.6 $12.7 $15.4 $22 $19 $26 $34 $42 $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Seed Series A Series B
  10. 10. $45.2 $38.1 $56.7 $60.2 $78.3 $80.0 $65.8 $99.0 $136.4 $184.0 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Series C Series D+ 2.8X Median late stage valuations more than double from 2010 levels Me dia n pre -money va luation ($ M) by s e r ie s *Through 12/31/2015
  11. 11. 11,721 15,844 21,280 29,565 34,389 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2011-2015 2005-2010 Pre-2005 Year of Investment Explosion in # of funded companies require exits at some point, big % not likely to find it Globa l VC compa ny inve ntor y *Through 12/31/2015 Nearly 11,000 companies with backing for more than 5 years. ~23,000 more seeking exit in the next 5 years
  12. 12. 1.5% 2.0% 3.2% 7.8% 21.7% 35.1% 49.7% 0% 10% 20% 30% 40% 50% 60% Under $5M $5M - $10M $10M - $20M $20M - $50M $50M - $75M $75M - $100M $100M+ Total VC Capital Raised A glut of heavily funded companies will be seeking public market exits % of VC Ba cke d Cos to IPO by VC Ca pita l Ra is e d (2 0 0 6 -2 01 5) *Through 12/31/2015 800+ co’s raised $100M+ yet to be exited. 850 462 co’s respectively
  13. 13. VC exit trends
  14. 14. 2014 was a banner year for VC exit activity, 2015 still very strong Globa l VC exit flow *Through 2/17/2016 Avg. exit sz: $104M Avg. exit sz: $180M $60B $23B $112B $6B 984 716 1,702 1,520 141 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 $0 $20 $40 $60 $80 $100 $120 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total exit value ($B) U.S. ($B) Europe ($B) RoW ($B) Exit count $71.3B
  15. 15. 2015 exits gradually cooled off as public markets slowed Globa l VC exit flow by qua r te r *Through 12/31/2015 $8B $15B $11B $12B $20B $46B $16B $23B 262 328 358 344 441 387 330 0 50 100 150 200 250 300 350 400 450 500 $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2010 2011 2012 2013 2014 2015 Total Exit Value ($B) Exit Count
  16. 16. After rebounding post financial crisis, IPOs fell out of favor sharply in 2015 Globa l VC exit count by ty pe & IPO % of exits *Through 2/17/2016 20.8% 10.3% 16.2% 9.7% 4.3% 779 1,039 1,427 1,373 135 205 119 275 147 6 0% 5% 10% 15% 20% 25% 0 200 400 600 800 1,000 1,200 1,400 1,600 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 IPOs as % of VC exits Acquisition/buyout count IPO count
  17. 17. IPO values down, Acq. values fairly steady Me dian exit valuation ($M) by exit type *Through 2/17/2016 $286.0 $363.1 $210.4 $240.2 $160.6 $51.0 $51.2 $50.1 $41.2 $49.0 $0 $50 $100 $150 $200 $250 $300 $350 $400 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 IPO Acquisition/buyout
  18. 18. Top quartile exit valuations have steadily increased over the decade G loba l VC exit s ize qua r tile s *Through 2/17/2016 $17.2 $14.4 $17.5 $13.6 $18.0 $49.3 $50.0 $54.0 $47.7 $50.0 $111.3 $120.3 $125.8 $125.0 $130.0 $0 $20 $40 $60 $80 $100 $120 $140 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 25th percentile Median 75th percentile
  19. 19. European exits seem to be more capital efficient in recent years Me dia n exit va luation/ total ca pita l ra is ed by exit ye a r *Through 12/31/2015 4.56x 2.13x 4.58x 3.91x 4.84x 3.27x 6.69x 6.29x 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 North America Europe Median unicorn: 5.67x Last 4 years Ave. VC ownership at exit: 51%
  20. 20. 2014 returned record $54 billion to LPs, 2015 likely to be similar Globa l VC fund ca s hflows *Through 6/30/2015 $12B $13B $13B $27B $39B $54B $35B -$15B -$17B -$30B $5B -$60 -$40 -$20 $0 $20 $40 $60 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Contributions ($B) Distributions ($B) Net Cashflow
  21. 21. Recent vintages’ IRRs are way up… G loba l VC fund IRR qua r tiles *Through 6/30/2015 -7.7% 1.0% 4.8% 6.6%2.3% 0.4% 8.9% 19.6% 18.4% 7.0% 6.3% 16.1% 34.9% 38.9% -20% -10% 0% 10% 20% 30% 40% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 IRR 25th IRR Median IRR 75th …however…
  22. 22. Recent vintages hold large majority of value in current portfolio Globa l VC fund avg. T V PI & RV PI % of T V PI *Through 6/30/2015 1.15 1.13 1.56 1.50 1.33 1.15 26.4% 55.3% 62.8% 72.3% 89.9% 96.9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0.0x 0.2x 0.4x 0.6x 0.8x 1.0x 1.2x 1.4x 1.6x 1.8x 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Avg. TVPI Avg. RVPI % of TVPI
  23. 23. 11,721 15,844 21,280 29,565 34,389 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2011-2015 2005-2010 Pre-2005 Year of Investment Explosion in # of funded companies require exits at some point, big % not likely to find it Globa l VC compa ny inve ntor y *Through 12/31/2015 Nearly 11,000 companies with backing for more than 5 years. ~23,000 more seeking exit in the next 5 years
  24. 24. Top exiters 2014 & 2015 – European HQd companies Firm Name Exit Count High-Tech Gründerfonds 12 Enterprise Ireland 9 Deutsche Telekom Strategic Invs. 8 KfW IPEX-Bank 8 Life Sciences Partners 8 Holtzbrinck Ventures 8 Vækstfonden 7 Tekes 7 Seventure Partners 7 Gimv 7 Almi Invest 7 Firm Name Exit Count Scottish Enterprise 11 Enterprise Ireland 9 Verdane Capital 8 High-Tech Gründerfonds 8 CM-CIC Capital Privé 6 Albion Ventures 6 Seventure Partners, SEED Capital Denmark, Kreos Capital, KfW IPEX- Bank, Index Ventures, Draper Esprit, Edmond de Rothschild Investment Partners, Bonsai Venture Capital, Amadeus Capital Partners, Acton Capital Partners, Almi Invest Tied at 5 2014 2015
  25. 25. Top exiters 2014 & 2015 – U.S. HQd companies Firm Name Exit Count New Enterprise Associates 30 SV Angel 29 Kleiner Perkins Caufield & Byers 29 Accel Partners 27 Y Combinator 25 GV 24 Techstars 22 Western Technology Investment 21 Battery Ventures 21 Greylock Partners 20 Bessemer Venture Partners 20 2014 2015 Firm Name Exit Count SV Angel 31 New Enterprise Associates 25 500 Startups 25 Western Technology Investment 24 Y Combinator 19 Kleiner Perkins Caufield & Byers 19 Intel Capital 19 Greylock Partners 19 Techstars, Sequoia Capital, Khosla Ventures, Great Oaks Venture Capital Tied at 15
  26. 26. US +1 206.623.1986 UK +44 207.190.9809 Test drive PitchBook demo@pitchbook.com
  27. 27. Software companies consistently account for over 1/3 of VC exits Globa l VC exit count by industr y *Through 12/31/2015 28.0% 35.2% 36.2% 34.3% 35.3% 11.6% 8.7% 9.8% 12.8% 12.9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Commercial Svcs. Consumer Goods & Rec. Energy Healthcare IT Hardware Media Pharma & Biotech Software Other
  28. 28. SaaS and mobile models are driving software exits for VCs 2 0 1 4 – 2 0 1 6 YT D s oftwa re exits by ve r tica l *Through 2/17/2016 45.6% 24.3% 5.8% 4.6% 4.5% 4.0% 3.1%2.9% 5.2% SaaS Mobile Security Marketing Tech Big Data FinTech E-Commerce AdTech Other

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