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Deer Valley IPO Summit
December 4, 2015
1
Offerings Volume Average Average Aftermarket Performance
Month (#) ($B) Pricing vs. Range Midpoint / Offer Offer / 1-Day...
2
$1.2
$5.7
$12.8
$7.2
$0.1
$3.6
$4.9 $5.5 $5.7
$7.2 $6.8
$4.8
$6.6
$14.5
$10.9
$15.3
$29.4
$37.5
$6.5
$30.9
$41.2
$8.5
$2...
3
Investments by Industry ($MM)Monthly “Pre-IPO” Private Placements
Source: Pitchbook as of 11/27/15
Note: Data based on l...
4
Investor Company
Purchase
Date
Valuation
Paid ($MM)
Valuation
Today ($MM)
%
Change
Evernote Nov-12 $21.4 $17.0 (20.5%)
G...
5
Disclaimer
This document and any other materials accompanying this document (collectively, the “Materials”) are provided...
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Schar_Deer Valley IPO Summit Discussion Materials

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Deer Valley IPO Summit from Tim Schar from Wells Fargo

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Schar_Deer Valley IPO Summit Discussion Materials

  1. 1. Deer Valley IPO Summit December 4, 2015
  2. 2. 1 Offerings Volume Average Average Aftermarket Performance Month (#) ($B) Pricing vs. Range Midpoint / Offer Offer / 1-Day Offer / 30-Day Offer / Current November 2015 9 $1.3 (11.7%) 19.1% - 27.8% October 2015 11 $5.2 (18.0%) 2.9% 11.2% 20.6% September 2015 6 $1.1 (11.5%) 19.9% 15.2% 21.5% August 2015 6 $1.3 7.0% 23.2% 29.7% 18.8% July 2015 14 $3.0 3.3% 21.2% 14.4% (15.8%) June 2015 27 $6.2 1.0% 27.4% 25.6% (1.1%) May 2015 15 $4.4 (2.7%) 7.6% 25.4% (7.4%) April 2015 13 $2.7 (6.0%) 25.6% 22.8% 1.4% March 2015 7 $1.6 7.0% 6.2% 6.3% 3.2% February 2015 6 $2.4 3.1% (0.1%) 2.6% (29.5%) January 2015 10 $1.7 13.1% 34.4% 33.1% 28.6% Average: 11 $2.8 (1.3%) 19.0% 20.3% 4.2% 50% 50% 29% 15% 33% 30% 43% 33% 33% 30% 17% 57% 54% 33% 44% 43% 50% 18% 56% 20% 33% 14% 31% 33% 26% 14% 17% 67% 82% 44% Above In Range Below $9.6 $15.4 $13.0 $4.8 $10.2 $5.2 $2.4 $7.2 $2.3 $25.0 $0.9 $3.1 $0.2 Q1 '14 Q2 '14 Q3 '14 Q1 '15 Q2 '15 Q3 '15 Other Sectors Tech Source: Dealogic as of 11/27/15 Note: Data includes IPOs greater than or equal to $50MM in base deal size; volume figures include overallotment 1 Q3 ’14 average excludes Alibaba IPO 190 233 124 58 71 55# of IPOs: 44 57 23 14 21 11Tech IPOs: 23 4 IPO Launches Have Returned with Subdued Volatility $47.4 $52.3 $22.6 $10.6 $14.4 $25.0 $8.4 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100.0 2013 2014 2015 YTD Volume($B) $281.4$235.2 $293.0$166.9 Avg. Tech Deal Size ($MM) 1 Avg. Tech Deal Size ($MM) $325.0 $91.8 46 8 26 2 IPO Issuance 2013 – 2015YTD Issuance by Sector 3 13 26 30 34 42 80 129 (0) (5) (13) (10) (8) (12) (23) (53) Media & Telecom Real Estate Consumer & Retail Industrials Financials Energy & Power Technology Healthcare 2014-2015 YTD IPO Offerings (# of Offerings in 2015 YTD) Recent Negative Pricing Performance Driven Primarily by Healthcare Sector Aftermarket Performance (31.7%) (4.7%) 3.0% 4.0% 11.0% 14.3% 14.8% 43.8% Energy & Power Real Estate Industrials Media & Telecom Financials Technology Consumer & Retail Healthcare 2014-2015 YTD IPO Offer/Current (%) (Offer/Current for 2015 IPOs) (+12.1%) (+2.4%) (+6.3%) (+7.6%) (N/A) (-2.9%) (+2.5%) (-29.5%)
  3. 3. 2 $1.2 $5.7 $12.8 $7.2 $0.1 $3.6 $4.9 $5.5 $5.7 $7.2 $6.8 $4.8 $6.6 $14.5 $10.9 $15.3 $29.4 $37.5 $6.5 $30.9 $41.2 $8.5 $2.3 $2.5 $9.2 $6.0 $5.0 $11.0 $0.8 $7.6 $9.0 $11.9 $21.4 $9.9 $38.1 $8.4 FB, $16.0 BABA, $25.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD '15 47 222 191 17 14 16 49 46 41 75 4 16 36 30 37 48 57 23 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 VC Investments ($B) IPO Vol. ($B) Source: Dealogic and PitchBook as of 11/27/15 Note: Includes VC investments in Tech greater than $10MM and IPOs with base deal sizes greater than $50MM Recent late stage private investments have been 2x-3x vs. historical levels # Tech IPOs YTD 2015, private investments have outpaced IPOs ~4:1 Late Stage Private Tech Investments vs. Tech IPOs by Year Active Crossover Private Placement Market Has Muted IPO Volumes
  4. 4. 3 Investments by Industry ($MM)Monthly “Pre-IPO” Private Placements Source: Pitchbook as of 11/27/15 Note: Data based on late stage private placements with deal sizes greater than $30MM Software $13,417 47% Internet $10,915 39% FinTech $3,135 11% Hardware $926 3% 2014 2015 YTD Most Active Late Stage Investors Since 2014 Recent Pre-IPO Private Deals >$100MM $1,029 $2,608 $1,804 $2,150 $3,274 $3,551 $2,816 $2,695 $2,256 $1,370 $4,841 19 21 29 34 21 25 34 26 31 18 24 0 10 20 30 40 50 60 0 1,000 2,000 3,000 4,000 5,000 6,000 Total Invested Capital Deal Count 24 27 28 29 29 31 43 46 49 53 0 20 40 60 Greylock Bessemer Insight Vent. Khosla NEA IVP Accel KPCB A16Z Sequoia # of Deals Issuer Date Deal Size ($MM) # Round Post-Money Valuation ($MM) 1 Airbnb 20-Nov-15 $1,583 7th Round $25,500 CloudFlare 22-Sep-15 109 4th Round 3,187 DocuSign 8-Oct-15 310 11th Round 3,077 Avant 29-Sep-15 325 5th Round 2,000 Jet 24-Nov-15 350 3rd Round 1,400 AppDirect 7-Oct-15 140 6th Round 1,350 Thumbtack 28-Sep-15 125 5th Round 1,300 Udacity 11-Nov-15 105 4th Round 1,105 Docker 6-Nov-15 113 5th Round 1,100 Zscaler 23-Sep-15 110 4th Round 1,000 Kabbage 14-Oct-15 150 6th Round 875 Tenable Network Security 10-Nov-15 250 2nd Round N/A Traditional VC: Crossover Institutional: Software $9,876 49% Internet $6,168 30% FinTech $2,162 11% Hardware $2,041 10% 5 5 5 5 10 10 11 19 20 25 0 20 40 60 Baillie Gifford Brookside Passport Sands Capital Coatue Fidelity BlackRock Wellington T. Rowe Price Tiger Global # of Deals The Tech Private Placement Market Has Been Very Active in 2015
  5. 5. 4 Investor Company Purchase Date Valuation Paid ($MM) Valuation Today ($MM) % Change Evernote Nov-12 $21.4 $17.0 (20.5%) Glam Media Mar-08 12.0 2.3 (80.6%) LivingSocial Apr-11 24.7 0.8 (96.9%) Average Markdown for Selected Investments (66.0%) Appirio Feb-15 $4.4 $3.1 (30.1%) AppNexus Aug-14 19.5 18.8 (3.2%) Apptio May-13 20.0 17.1 (14.4%) Blue Bottle May-15 21.1 12.0 (43.3%) Dataminr Mar-15 3.5 2.3 (35.0%) MongoDB Oct-13 32.0 14.8 (53.8%) Snapchat Mar-15 20.3 15.2 (25.4%) Turn Dec-13 8.2 4.4 (45.9%) Zenefits May-15 86.9 45.2 (48.0%) Average Markdown for Selected Investments (33.2%) The Pre-IPO “Crossover” Investor Market Has Slowed of Late  Increasing velocity of negative sentiment about private valuations  Lead crossover investors, such as Fidelity and T. Rowe, have announced negative markdowns of private company valuations  Slower deal velocity  Lead investors are slower to commit  Valuations are less frothy than in 2014 – H1 2015  A number of recent high profile IPOs have been “Down Round” IPOs Recent Publicly Announced Valuation Markdowns ¹ QoQ Private Placement Deal Volume ² $5.4 $6.0 83 64 0 20 40 60 80 100 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 Q4'14 Q4'15 Deal Value ($B) # of Deals (23%) drop in number of deals YoY; increased dollar volume solely due to a handful of higher profile deals (AirBnB’s $1.5B round, Jet.com’s $350MM round) Recent “Down Round” IPOs Company IPO Date Prior Round ($MM) IPO Val. ($MM) % Change Square 11/19/15 $6,030.0 $4,200.0 (30.3%) Strongbridge Biopharma 10/15/15 272.0 187.1 (31.2%) Pure Storage 10/06/15 3,570.0 3,150.0 (11.8%) Mirna Therapeutics 09/30/15 126.5 96.7 (23.6%) Ooma 07/16/15 242.5 220.4 (9.1%) Invuity 06/16/15 119.2 104.4 (12.4%) Apigee 04/23/15 671.2 494.5 (26.3%) Box 01/22/15 2,400.0 1,630.0 (32.1%) Source: Company Reports and PitchBook as of 11/27/15 ¹ Note: Current valuations for T. Rowe Price are reported as of 6/30/15; current valuations for Fidelity reported as of 9/30/15; ² Data based on late stage private placements with deal sizes greater than $30MM
  6. 6. 5 Disclaimer This document and any other materials accompanying this document (collectively, the “Materials”) are provided for general informational purposes. By accepting any Materials, the recipient thereof acknowledges and agrees to the matters set forth below in this notice. Wells Fargo Securities makes no representation or warranty (express or implied) regarding the adequacy, accuracy or completeness of any information in the Materials. Information in the Materials is preliminary and is not intended to be complete, and such information is qualified in its entirety. Any opinions or estimates contained in the Materials represent the judgment of Wells Fargo Securities at this time, and are subject to change without notice. Interested parties are advised to contact Wells Fargo Securities for more information. The Materials are not an offer to sell, or a solicitation of an offer to buy, the securities or instruments named or described herein. The Materials are not intended to provide, and must not be relied on for, accounting, legal, regulatory, tax, business, financial or related advice or investment recommendations. No person providing any Materials is acting as fiduciary or advisor with respect to the Materials. You must consult with your own advisors as to the legal, regulatory, tax, business, financial, investment and other aspects of the Materials. Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A. Wells Fargo Securities, LLC and Wells Fargo Prime Services, LLC are distinct entities from affiliated banks and thrifts. Notwithstanding anything to the contrary contained in the Materials, all persons may disclose to any and all persons, without limitations of any kind, the U.S. federal, state or local tax treatment or tax structure of any transaction, any fact that may be relevant to understanding the U.S. federal, state or local tax treatment or tax structure of any transaction, and all materials of any kind (including opinions or other tax analyses) relating to such U.S. federal, state or local tax treatment or tax structure, other than the name of the parties or any other person named herein, or information that would permit identification of the parties or such other persons, and any pricing terms or nonpublic business or financial information that is unrelated to the U.S. federal, state or local tax treatment or tax structure of the transaction to the taxpayer and is not relevant to understanding the U.S. federal, state or local tax treatment or tax structure of the transaction to the taxpayer. IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in the Materials is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax penalties or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. ©2015 Wells Fargo. All Rights Reserved.

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