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NVCA Yearbook 2013: US National Venture Capital Association's Yearbook 2013

The National Venture Capital Association Yearbook 2013 presents insights on the venture capital industry's role in driving economic growth and supporting entrepreneurship in the U.S. It highlights the importance of venture capital as a source of funding for innovation, job creation, and the development of advanced technologies. The yearbook also includes comprehensive statistics on venture capital deals and commitments, reflecting strong industry engagement.

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NATIONAL VENTURE CAPITAL ASSOCIATION YEARBOOK 2013 NATIONAL VENTURE CAPITAL ASSOCIATION YEARBOOK 2013 PREPARED BY 3 Times Square 18th Floor New York, NY 10036 www.thomsonreuters.com 1655 Fort Myer Drive Suite 850 Arlington, VA 22209 www.nvca.org INCLUDING STATISTICS FROM THE PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters
March 2013 Dear Reader: These are interesting times characterized by economic and political uncertainty - and little forward motion. And yet in the entrepreneurial section of the economy, the opportunities to create great companies remain unabated. There is wide agreement among policy makers on the importance of entrepreneurial companies to economic growth and well-being. Venture capital is a major driver of that entrepreneurial economy. The nation continues to look to this sector for job creation, economic development, better healthcare, cleaner technology, and a faster, better, and more secure internet. The NVCA Yearbook 2013, prepared by Thomson Reuters, is the 16th iteration of a series launched in early 1998 by NVCA and what is now Thomson Reuters. Since then we have joined forces with PricewaterhouseCoopers to provide the best possible information on venture capital deals across all 50 states. This investment information is tracked and reported by the PricewaterhouseCoopers/NVCA MoneyTreeTM Report based on data from Thomson Reuters. On behalf of the National Venture Capital Association board of directors and staff, we are pleased to present you with the latest statistics that describe the activity of the venture capital industry in the United States. These statistics reflect strong survey participation by venture capital practitioners. This support has allowed us to bring appropriate transparency to a part of the economy that most people are aware of but few really understand. Your comments are always welcome at research@nvca.org. NVCA believes that it is more important than ever to effectively tell the story of venture capital, differentiate it from other forms of alternative assets, and explain what’s needed to continue creating great, leading-edge companies. We believe that a strong venture capital industry is essential to America’s future and our quality of life. NVCA is proud to be funding innovation and empowering entrepreneurs! Very truly yours Diana Frazier FLAG Capital Management NVCA Director & Chair, NVCA Research Committee Mark G. Heesen NVCA President John S. Taylor NVCA Head of Research
NVCA BOARD OF DIRECTORS 2012-2013 Executive Committee Ray Rothrock Chair Venrock Associates Josh Green Chair-Elect Mohr, Davidow Ventures Michael Greeley Treasurer FlyBridge Capital Partners Jonathan Leff At-Large & Research Committee Deerfield Management Jason Mendelson At-Large Foundry Group Scott Sandell At-Large New Enterprise Associates Research Committee Diana Frazier Chair, Research Committee FLAG Capital Management, LLC Mike Elliott Noro-Moseley Partners Adam Grosser Silver Lake Kraftwerk Board Members At-Large Jonathan Callaghan True Ventures Maria Cirino .406 Ventures David Douglass Delphi Ventures Bruce Evans Summit Partners Claudia Fan Munce IBM Venture Capital Group Norm Fogelsong Institutional Venture Partners Venky Ganesan Menlo Ventures Robert Goodman Bessemer Venture Partners Mark Gorenberg Hummer Winblad Venture Partners Jason Green Emergence Capital Partners Ross Jaffe, MD Versant Ventures Ray Leach Jumpstart, Inc. Sherrill Neff Quaker BioVentures Robert Nelsen ARCH Venture Partners David Lincoln Element Partners James Marver VantagePoint Capital Partners Anne Rockhold Accel Partners 2 Thomson Reuters
2013 National Venture Capital Association Yearbook For the National Venture Capital Association Prepared by Thomson Reuters Copyright © 2013 Thomson Reuters The information presented in this report has been gathered with the utmost care from sources believed to be reliable, but is not guaranteed. Thomson Reuters disclaims any liability including incidental or consequential damages arising from errors or omissions in this report. Thomson Reuters 3
National Venture Capital Association 2013 Yearbook National Venture Capital Association Thomson Reuters 1655 Fort Myer Drive, Suite 850 Arlington, Virginia 22209-3114 Telephone: 703-524-2549 Telephone: 703-524-3940 www.nvca.org 3 Times Square, 18th Floor New York, NY 10036 Telephone: 646-223-4431 Fax: 646-223-4470 www.thomsonreuters.com President Mark G. Heesen Head of Research John S. Taylor Senior Vice President Molly M. Myers Senior Vice President of Federal Policy & Political Advocacy Jennifer Connell Dowling Vice President of Communications Emily Mendell Vice President of Membership & Member Firm Liaison Janice Mawson Vice President of Federal Policy & Political Advocacy Emily A. Baker Chief Marketing Officer Jeanne Lazarus Metzger Vice President of Federal Life Science Policy Kelly Slone Membership and Database Manager Terry Samm Manager of Administration and Meetings Allyson Chappell Accounting Manager Beverley Badley Administrative Assistant Gwendolyn Taylor Global Head of Deals & Private Equity Stephen N. Case II Vice President, Deals and Private Equity Operations Shariq Kajiji Global Business Manager – Private Equity Jim Beecher Editor-in-Charge David Toll Global Private Equity Operations Manager Anna Aquino-Chavez Press Management Matthew Toole Product Manager Lori Ann Silva Content Specialist Paul Pantalla Data Specialist Francis Base Research Editor Eamon Beltran Senior Art Director David Cooke Sales Manager – Publications (Buyouts, VCJ, peHUB) Greg Winterton (646-223-6787) ThomsonONE.com Sales: Dave Sharma (646-223-4048) Research Lab Mavis Moulterd, Thea Shepherd 4 Thomson Reuters
Table of Contents What is Venture Capital? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 11 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Exits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 15 Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 17 Capital Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Investments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Appendix A: Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Appendix B: MoneyTree Report Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Appendix C: MoneyTree Geographical Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Appendix D: Industry Codes (VEICs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Appendix E: Industry Sector VEIC Ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Appendix F: Stage Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Appendix G: Data Sources and Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Appendix H: International Convergence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Appendix I: US Accounting Rulemaking and Valuation Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105 Appendix J: Non-US Private Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Thomson Reuters 5
National Venture Capital Association This page is intentionally left blank. 6 Thomson Reuters
What is Venture Capital? Venture capital has enabled the United States to support its entrepreneurial talent and appetite by turning ideas and basic science into products and services that are the envy of the world. Venture capital funds build companies from the simplest form – perhaps just the entrepreneur and an idea expressed as a business plan – to freestanding, mature organizations. Risk Capital for Business Venture capital firms are professional, institutional managers of risk capital that enables and supports the most innovative and promising companies. This money funds new ideas that could not be financed with traditional bank financing, that threaten established products and services in a corporation, and that typically require five to eight years to be launched. Venture capital is quite unique as an institutional investor asset class. When an investment is made in a company, it is an equity investment in a company whose stock is essentially illiquid and worthless until a company matures five to eight years down the road. Follow-on investment provides additional funding as the company grows. These “rounds,” typically occurring every year or two, are also equity investment, with the shares allocated among the investors and management team based on an agreed “valuation.” But, unless a company is acquired or goes public, there is little actual value. Venture capital is a long-term investment. More Than Money The U.S. venture industry provides the capital to create some of the most innovative and successful companies. But venture capital is more than money. Venture capital partners become actively engaged with a company, typically taking a board seat. With a startup, daily interaction with the management team is common. This limits the number of startups in which any one fund can invest. Few entrepreneurs approaching venture capital firms for money are aware that they essentially are asking for 1/6 of a person! Yet that active engagement is critical to the success of the fledgling company. Many one- and two-person Thomson Reuters Venture Capital Backed Companies Known for Innovative Business Models Employment at IPO and Now As Company The Home Depot Starbucks Corporation Staples Whole Foods Market, Inc. eBay of IPO 650 2,521 1,693 2,350 138 Current 331,000 160,000 89,019 69,500 31,500 # Change 330,350 157 ,479 87 ,326 67 ,150 31,362 Venture Capital Backed Companies Known for Innovative Technology and Products Employment at IPO and Now Company Microsoft Intel Corporation Medtronic, Inc. Apple Inc. Google JetBlue As of IPO 1,153 460 1,287 1,015 3,021 4,011 Current 94,000 100,100 45,000 76,100 53,861 12,070 # Change 92,847 99,640 43,713 75,085 50,840 8,059 Source: Global Insight; Updated from ThomsonOne 2/2013 companies have received funding but no one- or twoperson company has ever gone public! Along the way, talent must be recruited and the company scaled up. Ask any venture capitalist who has had an ultra-successful investment and he or she will tell you that the company that broke through the gravity evolved from the original business plan concept with the careful input of an experienced hand. Deal Flows — Where The Buys Are For every 100 business plans that come to a venture capital firm for funding, usually only 10 or so get a serious look, and only one ends up being funded. The venture capital firm looks at the management team, the concept, the marketplace, fit to the fund’s objectives, the value-added potential for the firm, and the capital needed to build a successful business. A busy venture capital professional’s most precious asset is time. These days, a business concept needs to address world markets, have superb scalability, be made successful in a reasonable timeframe, and be truly innovative. A concept that promises a 10 or 20 percent improvement on something that already exists is not likely to get a close look. 7
National Venture Capital Association Many technologies currently under development by venture capital firms are truly disruptive technologies that do not lend themselves to being embraced by larger companies whose current products could be cannibalized by this. Also, with the increased emphasis on public company quarterly results, many larger organizations tend to reduce spending on research and development and product development when things get tight. Many talented teams have come to the venture capital process when their projects were turned down by their companies. The Exit Funnel Outcomes of the 11,686 Companies First Funded 1991 to 2000 Went/Going Public 14% Still Private or Unknown* 35% Acquired 33% Common Structure — Unique Results While the legal and economic structures used to create a venture capital fund are similar to those used by other alternative investment asset classes, venture capital itself is unique. Typically, a venture capital firm will create a Limited Partnership with the investors as LPs and the firm itself as the General Partner. Each “fund,” or portfolio, is a separate partnership. A new fund is established when the venture capital firm obtains necessary commitments from its investors, say $100 million. The money is taken from investors as the investments are made. Typically, an initial funding of a company will cause the venture fund to reserve three or four times that first investment for follow-on financing. Over the next three to eight or so years, the venture firm works with the founding entrepreneur to grow the company. The payoff comes after the company is acquired or goes public. Although the investor has high hopes for any company getting funded, only one in six ever goes public and one in three is acquired. Economic Alignment of all Stakeholders — An American Success Story Venture capital is rare among asset classes in that success is truly shared. It is not driven by quick returns or transaction fees. Economic success occurs when the stock price increases above the purchase price. When a company is successful and has a strong public stock offering, or is acquired, the stock price of the company reflects its success. The entrepreneur benefits from appreciated stock and stock options. The rank and file employees throughout the organization historically also do well with their stock options. The venture capital fund and its investors split the capital gains per a 8 Known Failed 18% *Of these, most have quietly failed pre-agreed formula. Many college endowments, pension funds, charities, individuals, and corporations have benefited far beyond the risk-adjusted returns of the public markets. Beyond the IPO Many of the most exciting venture capital backed companies left the venture portfolios after they went public. Far from being a destination, the IPO process provides needed growth capital for a growing company. A 2009 analysis by IHS Global Insight shows that more than 90% of the jobs at today’s venture backed public companies were created after it went public. That is, these companies on average are 10% of their mature size at the time they go public. What’s Ahead Much of venture capital’s success has come from the entrepreneurial spirit pervasive in the American culture, financial recognition of success, access to good science, and fair and open capital markets. It is dependent upon a good flow of science, motivated entrepreneurs, protection of intellectual property, and a skilled workforce. The nascent deployment of venture capital in other countries is gated by a country’s or region’s cultural fit, tolerance for failure, services infrastructure that supports developing companies, intellectual property protection, efficient capital markets, and the willingness of big business to purchase from small companies. Thomson Reuters
Executive Summary During 2012, many of the metrics describing the venture capital industry in the United States were similar to those of the prior two years. The decline in the number of firms and capital managed was expected but not as large as some were anticipating. Venture investment focused on companies in the seed and early stages, with many later-stage companies continuing to await a helpful IPO environment. Investment in early-stage life science companies continues to soften. Fundraising remained very challenging for the majority of venture firms, largely because of a dearth of healthy exits that would distribute yet-unrealized returns to current fund investors. The number of initial public offerings in 2012 fell slightly from 2011 levels, but the proceeds and IPO valuation tally were both up significantly, largely as a result of one huge IPO and a handful of large ones. A healthy venture capital ecosystem requires its metrics to be in balance. And while the quality of new business opportunities, known as deal flow, remains very high and the best opportunities are getting funded, stresses remain. Introduction The National Venture Capital Association 2013 Yearbook provides a summary of venture capital activity in the United States. This ranges from investments into portfolio companies to capital managed by general partners to fundraising from limited partners to exits of the investments by either IPOs or mergers and acquisitions. The statistics for this publication were assembled primarily from the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters and analyzed through Figure 1.0 Venture Capital Under Management Summary Statistics No. of VC Firms in Existence No. of VC Funds in Existence No. of Principals No. of First Time VC Funds Raised No. of VC Funds Raising Money This Year VC Capital Raised This Year ($B) VC Capital Under Management ($B) Avg VC Capital Under Mgt per Firm ($M) Avg VC Fund Size to Date ($M) Avg VC Fund Size Raised This Year ($M) Largest VC Fund Raised to Date ($M) Thomson Reuters 1992 2002 2012 358 1,089 841 616 2,119 1,269 4,996 14,541 5,887 13 25 43 78 176 162 4.9 15.7 20.1 28.7 272.1 199.2 80.2 249.9 236.9 39.1 94.4 110.6 62.8 89.2 124.1 1,775.0 6,300.0 6,300.0 the ThomsonONE.com (formerly VentureXpert) database of Thomson Reuters, which has been endorsed by the NVCA as the official industry activity database. Subscribers to ThomsonONE can recreate most of the charts in this publication and report individual deal detail and more granular statistics than provided herein. Industry Resources The activity level of the U.S. venture capital industry is roughly half of what it was at the 2000-era peak. For example, in 2000, 1053 firms each invested $5 million or more during the year. In 2012, the count was less than half that at 522. Venture capital under management in the United States by the end of 2012 decreased to $199.2 billion as calculated using the methodology described below. However, looking behind the numbers, we know that the industry continues to contract from the circa 2000 bubble high of $261.2 billion The slight downtick in number of firms and capital managed in 2012 perhaps understates a consolidating trend. The average venture capital firm shrunk to 7.0 principals per firm from 7.4 in 2011. The corresponding drop in headcount to under 6,000 principals is almost one-third lower than 2007 levels. This 9
10 2 01 0 201 1 201 2 2 00 1 200 2 200 3 2 00 4 200 5 200 6 200 7 2 00 8 200 9 199 8 199 9 200 0 199 6 199 7 199 4 199 5 198 9 199 0 199 1 199 2 199 3 198 8 198 7 198 6 198 5 ($ Billions) 198 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 1993 199 4 199 5 199 6 1997 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 ($ Billions) National Venture Capital Association Figure 2.0 Capital Under Management U.S. Venture Funds ($ Billions) 1985 to 2012 350 300 250 200 150 100 50 0 Year Figure 3.0 Capital Commitments to U.S. Venture Funds ($ Billions) 1985 to 2012 120 100 80 60 40 20 0 Year Thomson Reuters
2013 NVCA Yearbook Figure 4.0 Investments in Portfolio Companies ($ Billions) 1985 to 2012 120 100 ($ Billions) 80 60 40 200 1 200 2 200 3 2 00 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 199 7 199 8 199 9 200 0 199 4 199 5 199 6 198 7 198 8 198 9 199 0 199 1 199 2 199 3 0 198 5 198 6 20 Year Figure 5.0 Venture Capital Investments in 2012 By Industry Group All Investments Industry Group Information Technology Medical/Health/Life Science Non-High Technology Total # Companies 2,130 649 364 3,143 # Deals 2,480 818 425 3,723 meant that there was an increase in the average amount of capital managed by each principal. It is possible going forward, that the number of principals per firm will increase as the number of firms decreases. This is because the bulk of the money being raised today is being raised by larger, specialty, and boutique firms. Commitments New commitments to venture capital funds in the United States increased for the second year in a row, which follows four years of declines. In 2012, commitments totaling $20.1 billion were made to 183 funds. This is roughly two-thirds of the annual levels Thomson Reuters Initial Investments Investment Amt ($Bil) 16.5 6.8 3.4 26.7 # Companies 870 148 156 1,174 # Deals 870 148 156 1,174 Investment Amt ($Bil) 3.0 0.7 0.4 4.1 seen in 2005-2007 and approximately one-fifth of the annual amount raised at the bubble peak. When you look behind the 2012 capital commitments at the specific funds being raised, the 10 largest funds represent 48% of the capital raised, with 173 funds raising the other 52%. This is the sixth consecutive year in which more money was invested by the industry than raised in new commitments. That has been the case in 11 of the past 13 years. While this is not a true apples-toapples comparison, it does explain the industry’s strong interest in raising additional funds in 2013 and beyond. The narrow success of recent IPO and 11
National Venture Capital Association Figure 6.0 Venture Capital Investments in 2012 Stage by Dollars Invested Seed 3% Later Stage 32% Early Stage 30% Expansion 35% Figure 7.0 Venture Capital Investments in 2012 Industry Sector by Dollars Invested Telecommunications 2% Other 0.2% Biotechnology 15% Business Products and Services 0.4% Computers and Peripherals 2% Consumer Products and Services 5% Electronics/ Instrumentation 1% Financial Services 1% Healthcare Services 1% Software 31% Semiconductors 3% Retailing/ Distribution 2% Networking and Equipment 1% Medical Devices and Equipment 9% 12 Industrial/Energy 10% IT Services 7% Media and Entertainment 7% Thomson Reuters
2013 NVCA Yearbook acquisition markets has not enabled most firms to pay out sufficient distributions to their investors to begin raising another fund. For the vast majority of firms, raising additional capital right now is very difficult. Investments Measuring industry activity with the total dollars invested in a given year shows that the industry has remained generally in the $20 billion to $30 billion range since 2002. In 2012, $26.7 billion was invested in 3,143 companies. This is less than 2011 totals and greater than 2010 totals. The number of first-time fundings likewise was less than 2011 and greater than 2010. Further parsing the data shows an increasing portion of the investment dollars going to California companies. Software was the leading sector in 2012, receiving 31% of the total dollars. The second largest sector was Biotechnology which fell to roughly half that amount at 15.4% of total investment The continued interest in Clean Technology investing brought the Figure 8.0 2012 Investments By State State California Massachusetts New York Washington Texas Illinois Colorado Pennsylvania New Jersey Virginia All Others Total Number of Companies 1,280 326 287 101 134 76 85 154 49 62 589 3,143 Pct of Total 41% 10% 9% 3% 4% 2% 3% 5% 2% 2% 19% Investment ($ Millions) 14,128.8 3,067.9 1,856.7 931.5 930.5 570.4 564.2 517.8 429.3 372.3 3,282.8 26,652.4 Pct of Total 53% 12% 7% 3% 3% 2% 2% 2% 2% 1% 12% Figure 9.0 Venture-Backed IPOs Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Num of IPOs 48 104 86 43 42 47 120 150 175 140 184 256 141 79 280 238 37 24 26 82 59 68 92 7 13 68 51 49 Thomson Reuters Offer Amount ($Mil) 763 2,414 2,125 769 873 1,108 3,726 5,431 6,141 4,004 7,859 12,666 5,831 4,221 24,005 27,443 4,130 2,333 2,024 10,032 5,113 7,127 12,365 765 1,980 7,609 10,690 21,451 Med Offer Amt ($Mil) 13 14 17 15 16 20 27 24 24 24 36 35 33 43 70 83 80 89 71 70 68 85 97 83 123 93 106 89 Mean Offer Post Offer Med Post Mean Post Median Age Amt ($Mil) Value ($Mil) Value ($Mil) Value ($Mil) @ IPO (yrs) 16 1,991 32 47 3 23 166,260 53 1889 4 25 10,790 46 150 4 18 20,523 51 555 3 21 5,479 51 166 4 24 5,886 60 178 4 31 14,151 78 168 5 36 15,759 68 147 5 35 14,430 75 129 5 29 9,854 67 91 5 43 17,046 103 136 4 49 40,360 111 191 3 41 17,784 99 146 3 53 9,649 149 214 3 86 86,669 294 425 3 115 63,610 336 464 3 112 15,545 304 576 4 97 8,322 266 347 3 78 7,412 252 285 5 122 50,268 254 613 6 87 39,702 202 673 5 105 71,467 293 1067 5 134 68,282 361 742 6 109 3,645 278 521 7 152 9,192 548 707 6 112 111,386 431 1662 5 210 94,987 606 1862 6 438 122,264 371 2495 7 Mean Age @ IPO (yrs) 4 4 4 4 4 4 5 5 6 5 5 4 6 3 3 4 4 5 6 6 5 6 6 7 7 6 7 8 13
National Venture Capital Association Industrial/Energy sector to 10.5% of the total. Medical Devices rounded out the top four sectors at 9.4%. The life sciences share of the venture capital investment dollars decreased in 2012 to its lowest level since 2002. In 2012, 15.4% of the money went into Biotechnology, 9.4% into Medical Devices, and 1.2% into Healthcare Services, totaling 26.0%. This is down from the 33.1% combined share in 2009. As has been the case for several years, attention has been focused on the two ends of the spectrum. Looking at deal counts, 2012 actually saw the highest percentage of seed- and early-stage deals since at least 1985 (51.8% of total deals). This certainly would challenge the suggestion that the industry’s attention is single-focused on later-stage companies. That said, the 22.4% of deals going to later-stage companies is also toward the top end of the historical range. There remains a record number of companies in portfolios in the later stage of development that in most other positions in the business cycle would have already gone public or otherwise been acquired. With the rule of thumb that a healthy venture capital industry invests in 1,000-1,300 new companies each year, the 1,174 first fundings in 2012 is very much in that range. Not surprisingly, 81% of those first round investments were made at the seed- and early-stage levels. The year 2012 provided an interesting contrast in geographic dispersion. While 53% of all the investment dollars went to California-based portfolio companies, a record for MoneyTree™, companies in 48 states and DC received financing, also a MoneyTree™ record high. Figure 10.0 Venture-Backed M&A Exits Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 14 Number Total 6 8 10 17 20 19 16 69 59 82 92 107 143 189 227 379 384 363 323 402 443 485 488 416 350 521 488 449 Number Known 3 1 4 9 10 7 4 43 36 56 58 76 99 113 154 245 175 165 134 199 198 207 200 134 108 149 169 121 ($ Millions) Price Average 300.2 100.1 63.4 9.1 667.2 111.2 920.7 115.1 746.9 74.7 120.3 10.0 190.5 15.9 2,119.1 81.5 1,332.9 58.0 3,207.1 123.4 3,801.8 111.8 8,230.8 265.5 7,743.6 176.0 8,002.0 105.3 38,688.0 530.0 79,996.4 597.0 25,115.6 120.2 11,913.2 60.2 8,240.8 43.6 28,846.1 142.1 19,600.2 80.0 24,288.5 87.4 30,745.5 106.8 16,236.9 57.6 12,364.9 51.1 17,700.3 47.6 24,093.2 75.5 21,516.2 65.6 Thomson Reuters
2013 NVCA Yearbook Exits ing or seeking to go public were not able to do so. Once successful portfolio companies mature, venture funds generally exit their positions in those companies by taking them public through an initial public offering (IPO) or by selling them to presumably larger organizations (acquisition, or trade sale). This then lets the venture fund distribute the proceeds to investors, raise a new fund for future investment, and invest in the next generation of companies. This chapter considers each type of exit separately. On the market valuation placed on these IPOs at the offer price, 2012 was a very good year. The 49 IPOs had a valuation of $122.3 billion. This is the highest amount since 1986. What is quite striking (Fig 5.03), is the huge gap between median and mean (average) valuation of almost seven times! This suggests a huge outlier effect created by the very large IPOs that succeeded. IPOs in 2012 were a mixed bag at best. On the one hand, the number of venture-backed companies going public actually fell from 2011 from 51 to 49. But the dollars raised in those initial public offerings more than doubled from $10.7 billion to $21.5 billion. But looking behind the numbers, we see that Facebook itself raised $16.0 billion of that $21.5 billion, with a few other high-profile IPOs looming large in the remainder. This meant that many companies attempt- Thomson Reuters In 2012, the acquisition market weakened. There was a slight decrease in the number of acquisitions, or trade sales, of venture-backed companies. We tracked 449 acquisitions, of which we had disclosed deal amounts for 121 of them. The sum of the disclosed values was also down at $21.5 billion. Just over onefifth of them were acquired at 10 times or greater than the cumulative venture capital investment in those companies. We tracked four acquisitions at more than $1 billion. 15
National Venture Capital Association This page is intentionally left blank. 16 Thomson Reuters
Industry Resources The activity level of the U.S. venture capital industry is roughly half of what it was at the 2000-era peak. For example, in 2000, 1053 firms each invested $5 million or more during the year. In 2012, the count was less than half that at 522. Venture capital under management in the United States by the end of 2012 decreased to $199.2 billion as calculated using the methodology described below. However, looking behind the numbers, we know that the industry continues to contract from the circa 2000 bubble high of $261.2 billion The slight downtick in firms and capital managed in 2012 perhaps understates a consolidating trend. The average venture capital firm shrunk to 7.0 principals per firm from 7.4 in 2011. The corresponding drop in headcount to under 6,000 principals is almost one-third lower than 2007 levels. This meant that there was an increase in the average amount of capital managed by each principal. It is possible going forward, that the number of principals per firm will increase as the number of firms decreases. This is because the bulk of the money being raised today is being raised by larger, specialty, and boutique firms. For our purposes here, we define a principal to be someone who goes to portfolio company board meetings. That is, deal partners would be included and firm CFOs would not be included. Geographic location of the largest venture firms is quite concentrated. California domiciled firms manage 47.1% of the industry’s capital although these firms may be actively investing in other states and countries. This concentration has been consistent for several years and may increase going forward, given the movement of some east coast funds westward. Taken together, the top five states (California, Massachusetts, New York, Connecticut, and Illinois) hold 81.4% of total venture capital in this country. METHODOLOGY Historically we have calculated industry size using a “rolling eight years of fundraising” proxy for capital managed, number of funds, number of firms, etc. The number of firms in existence will vary on a rolling eight-year basis as firms raise new funds or do not raise funds for more than eight years. Currently, we know the industry is consolidating, but the eight- year model now includes fund vintage years 2005-2012. However, through 2012, the rolling eight year methodology belies this contraction because the very slow fundraising years of 2002-2004 were rolling out of the calculation. Under this methodology, we estimate that there are currently 841 firms with limited partnerships “in existence.” To clarify, this is actually stating that there are 841 firms that have raised a venture capital fund in the last eight years. In reality, fewer firms are actually making new investments in 2012. added a column to the table to report the number of independent and corporate venture groups actually investing $5 million or more in a given year. These 522 firms are less than half the level of 2000. We expect this statistic to fall further going forward. For this publication, we are primarily counting the number of firms with limited partnerships and are excluding other types of investment vehicles. From that description, it may appear that the statistics for total industry resources may be underestimated. However, this must be balanced with the fact that capital under management by captive and evergreen funds is difficult to compare equitably to typical limited partnerships with fixed lives. For this analysis only, the firms counted for capital under management include firms with fixed-life partnerships and venture capital funds they raised. If a firm raised both buyout and venture capital funds, only the venture funds would be counted in the calculation of venture capital under management. To better report the actual number of active firms, we Thomson Reuters 17
National Venture Capital Association Venture capital under management can be a complex statistic to estimate. Indeed, capital under management reported by firms can differ from firm to firm as there’s not one singular definition. For example, some firms include only cumulative committed capital, others may include committed capital plus capital gains, and still other firms define it as committed capital after subtracting liquidations. To complicate matters, it is difficult to compare these totals to European private equity firms, which include capital gains as part of their capital under management measurements. have completed their life cycle. Typically, venture capital firms have a stated 10-year fixed life span, except for life science funds, which are often established as 12-year funds. Figure 1.08 shows the reality of fund life. Thomson Reuters calculates capital under management as the cumulative amount committed to funds on a rolling eight-year basis. Current capital under management is calculated by taking the capital under management calculation from the previous year, adding in the current year’s funds’ commitments, and subtracting the capital raised eight years prior. For purposes of the analysis in this publication, we have tried to clarify the industry definition of capital under management as the cumulative total of committed capital less liquidated funds or those funds that For this analysis, Thomson Reuters classifies venture capital firms using four distinct types: private independent firms, financial institutions, corporations, and other entities. ‘Private independent’ firms are Figure 1.01 Capital Under Management U.S. Venture Funds ($ Billions) 1985 to 2012 350 300 ($ Billions) 250 200 150 100 50 198 5 198 6 198 7 198 8 198 9 199 0 199 1 1992 1993 199 4 199 5 199 6 1997 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 0 Year 18 Thomson Reuters
2013 NVCA Yearbook made up of independent private and public firms including both institutionally and non-institutionally funded firms and family groups. ‘Financial institutions’ refers to firms that are affiliates and/or subsidiaries of investment banks and non-investment bank financial entities, including commercial banks and insurance companies. The ‘corporations’ classification includes venture capital subsidiaries and affiliates of industrial corporations. In 2013, we will modify the methodology to reflect virtually all direct corporate investment because many of the corporate venture investors do not operate out of a separate fund or group. The capital under management statistics reported in this section consist primarily of venture capital firms investing through limited partnerships with fixed commitment levels and fixed lives and do not include non-vintage “evergreen funds” or true captive corporate industrial investment groups without fixed commitment levels. The term ‘evergreen funds’ refers to funds that have a continuous infusion of capital from a parent organization, as opposed to the fixed life and commitment level of a closed-end venture capital fund. Figure 1.02 Total Capital Under Management By Firm Type 1985 to 2012 ($ Millions) 1985 1986 1987 1988 P vate Independent 11,636 14,574 17,299 18,607 Pri Financial Institutions 3,368 3,508 3,442 3,178 Corporations 1,739 1,709 2,062 2,148 Other 857 909 897 867 Total 1989 1990 22,112 2,714 2,095 779 22,632 2,802 2,142 725 1991 1992 1993 1994 1995 1996 1997 1998 21,805 22,557 25,199 28,528 33,417 2,392 2,220 2,484 2,924 3,758 2,086 2,211 1,526 1,573 1,345 618 313 191 275 380 40,235 5,123 2,032 409 51,877 7,209 2,348 665 76,398 10,382 3,245 3 875 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 120,221 15,466 6,797 1,116 187,475 23,454 11,604 1,467 221,105 24,975 12,787 2,134 221,634 225,208 233,976 242,466 24,453 23,558 22,277 21,634 12,766 12,717 12,245 12,044 2,347 2,317 2,302 2,055 255,714 238,766 18,991 14,384 11,964 8,828 2,031 1,822 194,698 6,263 4,171 1,469 171,713 4,865 2,979 843 175,980 5,266 3,458 3,997 2011 2012 183,482 180,936 9,541 9,670 4,483 4,497 3,995 4,098 17,600 20,700 23,700 24,800 27,700 28,300 26,900 27,300 29,400 33,300 38,900 47,800 62,100 90,900 143,600 224,000 261,000 261,200 263,800 270,800 278,200 288,700 263,800 206,600 180,400 188,700 201,500 199,200 Figure 1.03 Distribution of Firms By Capital Managed 2012 155 160 139 125 140 112 111 120 91 100 80 60 47 60 40 20 10 00 + 50 010 00 25 050 0 10 025 0 -10 0 50 25 -5 0 10 -2 5 010 0 Capital Under Management ($ Millions) This chart shows capital committed to U.S. venture firms in active funds. While much of the capital is managed by larger firms, of the 841 firms at the end of 2012, roughly 60% of them (504) managed $100 million or less. By comparison, just 47 firms managed active funds totaling more than $1 billion. Thomson Reuters 19
National Venture Capital Association Figure 1.04 Fund and Firm Analysis Fund Vintage Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Cumulative Funds 631 707 810 887 979 1,037 1,075 1,147 1,244 1,342 1,497 1,647 1,859 2,096 2,433 2,849 3,092 3,174 3,282 3,447 3,622 3,805 4,019 4,205 4,313 4,439 4,599 4,716 Total Cumulative Firms 323 353 388 406 435 451 458 478 509 542 607 668 760 839 966 1,109 1,191 1,208 1,260 1,328 1,398 1,474 1,558 1,621 1,664 1,725 1,787 1,828 Total Cumulative Capital ($B) 20 23.4 27.4 30.8 35.8 38.3 40.5 44.1 49.4 56.7 66.2 78.6 97.9 129.2 184.1 268.2 310.4 318 330 349.4 376.2 417.9 447.9 474.8 490.7 506.7 531.5 548.6 Existing Funds 532 590 670 700 727 716 639 601 613 635 687 760 880 1,059 1,358 1,702 1,848 1,832 1,785 1,800 1,763 1,709 1,586 1,356 1,221 1,265 1,317 1,269 Firms That Raised Funds in the Last 8 Vintage Years 294 324 353 365 380 383 360 352 370 385 424 469 541 613 733 864 920 918 948 984 1009 1019 1010 879 818 844 868 841 Capital Managed ($B) 17.6 20.7 23.7 24.8 27.7 28.3 26.9 27.3 29.4 33.3 38.9 47.8 62.1 90.9 143.6 224 261 261.2 263.8 270.8 278.2 288.7 263.8 206.6 180.4 188.7 201.5 199.2 Avg Fund Size ($M) 33.1 35.1 35.4 35.4 38.1 39.5 42.1 45.4 48.0 52.4 56.6 62.9 70.6 85.8 105.7 131.6 141.2 142.6 147.8 150.4 157.8 168.9 166.3 152.4 147.7 149.2 153.0 157.0 Avg Firm Size ($M) 59.9 63.9 67.1 67.9 72.9 73.9 74.7 77.6 79.5 86.5 91.7 101.9 114.8 148.3 195.9 259.3 283.7 284.5 278.3 275.2 275.7 283.3 261.2 235 220.5 223.6 232.1 236.9 Firms Actively Investing 92 113 112 118 115 100 80 104 93 110 185 249 342 408 713 1053 759 534 505 575 558 570 627 603 462 509 545 522 The correct interpretation of this chart is that since the beginning of the industry to the end of 2012, 1,828 firms had been founded and 4,716 funds had been raised. Those funds totaled $548.6 billion. At the end of 2012, 841 firms as calculated using our eight-year methodology managed 1,269 individual funds, with each fund typically being a separate limited partnership. Capital under management, again calculated using a rolling eight years of fundraising, by those firms at the end of 2012 was $199.2 billion. However, only 522 independent and corporate venture groups invested at least $5 million in MoneyTree™ deals in 2012. Figure 1.05 Principals Information Year 2007 2008 2009 2010 2011 2012 No. Principals Per Firm 8.7 8.5 8.6 8.0 7.4 7.0 Estimated Industry Principals 8,665 7,293 6,760 6,328 6,231 5,887 Figure 1.06 Top 5 States By Capital Under Management 2012 Avg Mgt Per Principal ($M) 30.0 28.3 26.4 25.7 28.6 33.8 State CA MA NY CT IL Total* ($ Millions) 93,814.8 34,482.3 21,378.0 8,051.2 4,369.0 162,095.4 *Total includes above 5 states states only *Total includes above 5 only The correct interpretation of this chart is that at year end 2012, there were 5,887 principals (people who go to board meetings) in the industry. A principal on average manages $33.8 million and the average firm is made up of 7.0 principals, down from 7.4 principals a year earlier. 20 Thomson Reuters
2013 NVCA Yearbook Figure 1.07 Capital Under Management By State 1985 to 2012 ($ Millions) N O W S N M P W R N W A M U A T State 1985 1986 1987 1988 1989 CA 4,875 5,836 6,493 6,727 7,987 MA 2,331 2,646 3,533 3,886 4,292 NY 3,382 4,421 4,369 4,158 5,589 CT 1,285 1,432 1,917 1,979 1,821 IL 470 490 720 848 804 PA 444 518 548 562 731 DC 3 4 4 3 4 TX 454 488 722 720 792 NJ 610 707 746 734 730 MD 93 97 123 116 158 WA 313 406 384 422 395 VA 72 78 78 84 104 MN 198 294 338 672 743 NC 34 54 87 89 124 CO 361 428 396 513 613 MO 557 581 614 591 599 UT 9 19 19 15 15 MI 111 119 125 122 123 FL 124 131 172 192 194 TN 102 127 191 183 215 GA 88 94 175 257 261 DE 39 40 40 38 47 OH 852 889 969 831 254 AL 125 131 131 127 134 IN 45 55 56 77 96 AZ 40 43 43 73 74 LA 7 7 7 7 7 KY 15 16 16 16 0 WI 181 99 98 95 104 NM 71 100 135 132 168 ID 0 0 0 0 0 ME 1 1 20 25 26 OK 1 29 29 28 37 SD 0 0 0 0 0 HI 2 2 2 2 2 IA 49 51 104 101 80 OR 168 176 203 239 242 VT 0 0 0 0 0 NH 24 25 25 49 50 ND 0 0 0 0 0 KS 0 0 0 0 0 SC 1 1 1 1 15 NE 0 0 0 1 1 MS 0 0 0 0 0 PR 0 0 0 0 0 WY 0 0 0 0 0 RI 15 16 16 36 36 NV 0 0 0 0 0 WV 0 0 0 0 0 AR 2 2 2 2 2 MT 0 1 1 1 1 UN 46 48 48 46 31 AK 0 0 0 0 0 Total 17,600 20,700 23,700 24,800 27,700 Thomson Reuters 1990 7,620 4,414 5,810 1,984 818 772 4 835 950 163 383 91 882 113 572 655 16 38 132 259 275 41 257 136 88 75 5 0 104 255 0 26 38 0 2 82 246 0 51 0 13 15 1 0 9 0 37 0 0 2 1 31 0 28,300 1991 7,732 4,070 5,460 1,840 783 774 4 773 880 98 198 56 810 109 554 653 15 14 110 276 262 41 273 136 80 75 2 0 78 243 0 26 37 0 2 61 228 0 50 0 13 15 1 0 9 0 36 0 0 2 1 21 0 26,900 1992 7,728 4,944 5,314 1,937 886 770 1 805 546 115 241 42 764 110 528 642 10 14 97 270 262 14 303 137 96 34 11 0 78 230 0 28 37 0 0 62 116 0 50 0 13 15 1 0 9 0 36 0 0 0 1 0 0 27,300 1993 8,562 5,136 5,911 2,268 1,148 570 20 936 512 374 227 35 842 108 617 107 10 13 151 200 434 41 427 6 99 44 22 0 81 205 0 29 38 0 0 54 74 0 27 0 14 15 11 0 9 0 22 0 0 0 1 0 0 29,400 1994 9,315 5,645 6,977 2,430 1,220 739 20 1,143 695 784 178 32 896 146 566 137 25 10 223 292 432 51 470 6 109 43 31 7 163 179 0 98 9 0 0 55 74 0 27 0 14 15 11 0 9 0 22 0 0 0 0 0 0 33,300 1995 11,524 6,881 8,268 2,282 1,361 822 123 1,145 958 914 299 48 877 128 475 119 31 41 321 306 434 100 447 6 111 44 49 21 168 154 0 89 10 0 2 5 77 0 47 0 37 29 105 11 9 0 23 0 0 0 0 0 0 38,900 1996 14,797 7,339 9,952 2,397 1,312 1,324 1,670 1,225 1,480 1,514 460 73 511 298 549 124 31 41 303 453 359 121 375 6 192 10 89 21 195 151 0 86 32 10 2 5 30 0 19 0 37 52 136 11 9 0 0 0 0 0 0 0 0 47,800 1997 19,349 10,436 10,286 3,677 1,989 1,743 2,325 1,681 1,557 2,004 677 251 616 618 863 147 94 66 378 463 762 114 689 5 176 9 275 21 180 120 0 88 23 10 2 16 30 0 66 0 56 37 138 11 49 0 2 0 0 0 0 0 0 62,100 1998 26,799 15,737 19,646 4,684 2,245 2,100 2,450 2,994 2,171 2,642 1,078 506 713 804 1,162 111 96 76 688 743 1,074 116 764 24 191 38 366 21 204 12 0 89 67 85 2 17 40 0 67 0 43 37 141 11 40 0 2 0 0 0 0 0 0 90,900 2000 83,652 38,137 38,221 8,913 4,393 3 6,233 3,847 6,871 3,628 3 5,112 2,799 2,520 2,235 1,007 1,365 4,775 307 268 587 1,782 1,235 2,308 113 1,847 107 662 101 476 21 1 245 12 014 202 140 178 1 11 16 100 016 65 00 42 36 175 11 39 0 117 22 223 021 1 19 00 00 00 224,00 2001 102,032 47,762 39,225 11,878 4,805 6,338 4,122 7,994 4,311 5,378 3,684 2,636 2,187 1,36 1,446 5,288 449 475 591 1,749 1,280 2,158 80 1,872 107 662 104 651 21 245 12 1 14 290 139 177 11 60 100 1 43 65 00 42 37 164 39 68 1 117 226 23 221 19 00 00 00 261,300 2002 102,065 49,004 37,658 11,710 5,258 6,231 4,686 7,922 4,226 5,159 3,687 2,649 2,363 1,577 5,432 417 448 589 1,682 1,161 2,151 69 1,873 107 650 145 648 14 152 12 14 218 139 177 11 60 112 43 84 00 42 71 164 39 68 117 226 32 21 19 00 00 00 261,200 2003 105,008 48,678 37,086 11,682 5,616 6,523 4,584 7,799 4,440 5,043 3,566 2,819 2,357 1,776 5,412 407 559 631 1,591 1,150 2,075 28 1,853 155 683 180 631 14 152 33 14 219 139 177 9 55 83 43 65 00 19 58 71 28 68 117 35 32 21 19 00 00 00 263,800 2004 110,920 49,187 36,655 13,333 5,690 6,100 3,373 8,259 4,083 4,811 4,630 2,868 2,361 1,618 5,229 504 589 859 1,577 1,043 2,109 15 1,986 173 593 180 663 14 133 35 14 214 117 175 16 65 85 43 65 00 19 35 38 28 68 117 35 33 21 19 00 00 00 270,800 2005 116,533 50,675 36,182 13,525 5,168 6,506 3,582 8,448 4,073 4,762 4,591 3,338 2,441 1,447 4,882 1,232 546 912 1,802 1,089 1,835 15 1,805 225 595 199 502 18 105 69 14 215 117 175 16 53 85 43 19 00 0 41 38 28 29 118 33 33 21 19 00 00 00 278,200 2006 125,205 55,598 29,295 14,879 5,289 7,033 4,640 8,203 5,159 4,743 4,597 3,367 2,593 1,657 4,663 1,293 651 946 1,525 840 1,697 15 1,721 224 608 171 430 216 205 74 84 276 111 103 16 60 76 43 30 00 0 41 38 29 29 118 33 33 21 19 00 00 00 288,700 2007 2008 2009 2010 113,611 97,099 85,072 88,085 52,312 38,586 32,397 32,001 25,621 14,104 13,156 18,116 13,251 12,165 8,498 9,263 4,235 3,590 3,278 3,060 7,063 4,564 4,399 4,408 5,046 4,835 4,631 4,043 6,550 5,431 4,203 4,061 5,021 4,137 3,916 3,959 4,432 2,936 3,005 2,912 5,173 4,627 3,720 3,684 3,013 1,802 2,225 2,267 2,472 1,640 1,657 1,317 1,542 1,190 1,216 1,696 3,010 1,604 974 1,137 1,384 1,318 1,182 1,187 1,251 1,328 1,136 1,199 685 919 976 1,051 1,283 558 801 864 669 576 565 775 1,686 558 530 533 251 256 394 396 1,329 714 565 521 216 357 361 362 617 136 342 343 173 130 118 263 353 336 196 263 218 223 225 226 213 141 143 170 77 79 80 114 85 72 73 73 160 164 73 73 121 47 47 47 113 32 32 48 7 14 14 43 67 69 39 39 78 34 40 29 57 41 14 19 30 31 31 11 00 013 1 13 14 0 0 0 8 41 42 41 5 38 0 0 2 30 30 1 1 30 31 1 1 119 0 0 0 33 34 10 10 9 10 10 0 21 0 0 0 0 0 0 0 00 00 00 00 00 00 00 00 00 00 00 00 263,800 206,600 180,400 188,700 2011 93,952 31,836 22,380 10,076 4,564 4,123 4,510 4,164 3,554 2,891 3,693 2,073 1,763 1,614 1,144 1,188 1,314 1,244 819 802 646 445 570 387 308 260 279 212 194 84 73 69 47 48 43 39 29 19 11 14 8 5 2 1 1 0 0 0 0 0 00 00 00 201,500 2012 93,815 34,482 21,378 8,051 4,369 4,183 4,165 3,838 3,355 3,010 2,749 1,999 1,862 1,633 1,399 1,315 1,296 1,022 818 763 605 544 439 369 335 309 214 212 199 82 73 69 48 40 36 29 27 19 16 14 8 5 3 1 1 0 0 0 0 0 00 00 00 199,200 21 0 0 0
National Venture Capital Association Figure 1.08 Life of IT Funds in Years Life of IT Funds In Years <= 10 11-12 13-14 15-16 17-18 >=19 % of Funds 7% 20% 27% 22% 14% 10% Source: Adams Street Partners, based on 2010 analysis of dissolved funds. This chart tracks the year in which a 10-year fund is, in fact, dissolved. These later periods are referred to as “out years.” Historically, after the 10th year, only a few companies remain in the portfolios that typically do not have huge upside potential. But the slow pace of exits in recent years has resulted in a number of good, mature companies remaining in portfolios well past the nominal 10-year mark. Life science funds tend to have lives two years longer than typical technology funds. In preparing this chart, partial years are rounded to the nearest whole year. So 10.4 years would round to 10 years, and 10.5 years would round up to 11 years. The median life span of a fund in this analysis is 14.17 years. 22 Thomson Reuters
Capital Commitments New commitments to venture capital funds in the United States increased for the second year in a row, which follows four years of declines. In 2012, commitments totaling $20.1 billion were made to 183 funds. This is roughly two-thirds of the annual levels seen in 2005-2007 and approximately one-fifth of the annual amount raised at the bubble peak. When you look behind the 2012 capital commitments at the specific funds being raised, the 10 largest funds represent 48% of the capital raised, with 173 funds raising the other 52%. This is the sixth consecutive year in which more money was invested by the industry than raised in new commitments. That has been the case in 11 of the past 13 years. While this is not a true apples-to-apples comparison, it does explain the industry’s strong interest in raising additional funds in 2013 and beyond. The narrow success of recent IPO and acquisition markets has not enabled most firms to pay out sufficient distributions to their investors to begin raising another fund. For the vast majority of firms, raising additional capital right now is very difficult. For the seventh year in a row, the top fundraising states were California and Massachusetts. This year, Connecticut replaces New York in the third position. California, with its venture firms raising $13.7 billion, holds the top spot for the tenth year in a row. Firms domiciled in the top five fundraising states in 2012 gathered 88% of the dollars, compared with 91% in 2011, 88% in 2010 and 82% in 2009. Please note that the state of fund domicile matters less than has been true historically. Much of the money is managed by large, national funds that tend to be domiciled in any of several states with a broad geographic investing footprint. Readers should not interpret capital available to entrepreneurs in a given state as being limited to the capital raised in that state. Venture capital fundraising typically makes up 20-25% of private equity fundraising. But in 2012, it represented 16% of total, down from 22% in 2011. Methodology figure 1.04). The data in this chapter is by calendar year and incrementally measures how much in new commitments funds raised during the calendar year. As defined by Thomson Reuters, capital commitments, also known as fundraising, are firm capital commitments to private equity/venture capital limited partnerships by outside investors. For purposes of these statistics, the terms “capital commitments,” “fundraising,” and “fund closes” are used interchangeably. There are three data sources for tracking capital commitments: (1) SEC filings that are regularly monitored by our research staff, (2) surveys of the industry routinely conducted by Thomson Reuters, and (3) verified industry press and press releases from venture firms. Consider, for example, a venture capital firm that announces a $200 million fund in late 2010, raises $75 million in 2011, and subsequently raises the remaining $125 million in 2012. In this chapter, nothing would be reflected in 2010, $75 million would be counted in 2011, and $125 million would be counted in 2012. Assuming it started investing and made its first capital call in 2012, the entire fund would then be considered to be a 2012 vintage year fund. Capital commitments are stated on either (1) a calendar-year basis when committed (for example, throughout this chapter) or (2) a vintage-year basis which is designated once the fund starts investing (for example, Note that fund commitments presented in this publication do not include those corporate captive venture capital funds that are funded by a corporate parent, which do not typically raise capital from outside investors. Thomson Reuters 23
National Venture Capital Association Figure 2.01 Capital Commitments To U.S. Venture Funds ($ Billions) 1985 to 2012 120 100 ($ Billions) 80 60 40 20 2 01 0 201 1 201 2 2 00 1 200 2 200 3 2 00 4 200 5 200 6 200 7 2 00 8 200 9 199 8 199 9 200 0 199 6 199 7 199 4 199 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 199 3 198 5 0 Year Figure 2.02 Capital Commitments To Private Equity Funds 1985-2012 Venture Capital Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 24 Sum ($Mil) 3,727.9 3,584.5 4,379.1 4,209.7 4,918.8 3,222.7 1,900.3 5,223.1 4,489.2 7,636.7 9,387.3 11,550.0 17,741.9 30,641.7 53,597.8 101,417.9 38,923.4 11,867.3 10,586.7 18,137.1 30,627.3 31,371.7 29,378.1 25,577.2 16,194.4 13,519.8 19,296.2 20,065.9 % of Total PE 56% 42% 21% 28% 29% 27% 31% 33% 21% 27% 26% 26% 29% 33% 50% 56% 43% 25% 23% 23% 22% 17% 11% 12% 25% 21% 22% 16% Buyouts and Mezzanine Capital No. Funds 116 101 116 104 106 86 40 80 93 136 161 168 242 290 430 634 324 202 161 212 234 236 235 215 162 175 188 183 Sum ($Mil) 2,971.8 5,043.7 16,234.6 10,946.4 12,068.5 8,831.5 4,242.1 10,752.5 16,961.7 20,457.0 27,040.7 32,981.4 42,803.0 62,023.7 53,720.7 80,614.8 52,523.0 35,076.8 35,913.4 59,878.5 108,249.8 152,566.2 243,264.2 180,923.9 49,871.5 51,674.8 70,103.5 106,249.9 No. Funds 21 32 47 54 78 64 27 58 81 100 108 104 136 173 166 171 137 124 121 158 205 216 264 231 148 173 207 217 Total Private Equity Sum ($Mil) 6,699.7 8,628.2 20,613.6 15,156.1 16,987.3 12,054.3 6,142.4 15,975.6 21,451.0 28,093.7 36,428.0 44,531.3 60,544.9 92,665.4 107,318.5 182,032.7 91,446.4 46,944.0 46,500.1 78,015.6 138,877.1 183,937.9 272,642.3 206,501.1 66,065.9 65,194.6 89,399.6 126,315.7 No. Funds 137 133 163 158 184 150 67 138 174 236 269 272 378 463 596 805 461 326 282 370 439 452 499 446 310 348 395 400 Thomson Reuters
2013 NVCA Yearbook Figure 2.03 Venture Capital Fund Commitments 1985 to 2012 ($ Millions) State CA C MA CT NY NC WA CO TN T FL PA UT MO MN IL NJ AZ VA WI IN OH TX MI MD AL GA NH NE N DE D ND OK O AR A DC D HI H IID IIA KS K KY K LLA ME M MS M NV N NM N OR O PR P RI R SC S SD S VT V WV W WY W Total T 1985 1986 1987 1,250 969 1,159 534 356 973 282 156 420 202 1,460 547 7 7 31 25 126 37 32 71 32 20 23 73 10 0 36 54 73 55 0 11 1 644 0 33 14 110 51 51 47 325 254 61 120 0 0 0 0 4 10 0 0 0 0 10 0 3 0 87 37 33 231 5 0 7 4 7 24 150 0 0 0 0 15 49 0 0 0 0 0 39 0 0 0 0 0 0 32 0 0 0 0 0 0 0 0 0 0 0 0 0 11 0 60 0 0 0 0 0 0 0 0 0 0 0 22 0 0 0 0 0 0 36 28 0 0 0 30 0 0 0 17 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3,728 3,584 4,379 1988 936 582 352 279 23 60 70 0 11 12 0 0 418 158 0 37 13 0 27 75 41 33 0 0 65 40 0 5 0 0 0 0 0 0 0 0 0 0 948 0 0 2 0 0 25 0 0 0 0 0 4,210 Thomson Reuters 1989 1,519 339 66 2,260 38 0 80 34 29 118 0 0 20 26 125 0 15 0 16 0 161 0 49 0 0 0 0 0 0 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 13 0 0 0 0 4,919 1990 831 675 290 490 1 0 0 0 0 45 0 53 162 57 243 0 2 0 5 30 143 0 14 0 14 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 155 0 10 0 5 0 0 0 0 3,223 1991 549 180 150 474 0 5 0 0 35 167 0 0 16 94 75 0 0 0 0 0 50 0 50 0 0 15 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 40 0 0 0 0 0 0 0 0 1,900 1992 1,311 1,051 300 494 0 48 0 40 0 30 0 0 946 247 110 0 17 0 49 67 381 0 0 0 0 0 0 0 0 0 0 0 0 0 56 0 0 11 2 0 0 0 0 0 0 0 0 0 0 0 5,161 1993 1,333 368 473 940 0 40 114 0 59 110 0 64 66 278 177 10 5 0 0 4 137 3 225 0 56 0 0 0 0 0 0 0 0 0 0 0 14 14 0 0 0 0 0 0 0 0 0 0 0 0 4,489 1994 1,764 1,158 388 1,860 63 37 0 116 105 182 27 0 164 183 401 0 0 40 20 86 283 14 479 0 0 0 0 0 0 0 0 25 0 0 0 0 7 169 59 0 0 6 0 0 0 0 0 0 0 0 7,637 1995 3,107 1,955 260 2,364 10 129 19 84 106 114 0 11 7 230 213 0 7 0 0 10 179 0 67 0 74 20 111 130 0 0 0 31 3 0 5 0 15 18 0 12 50 2 32 0 0 14 0 0 0 0 9,387 1996 3,724 1,871 425 1,516 184 239 216 149 0 264 0 6 36 295 606 0 20 31 116 0 326 26 439 0 34 0 36 820 0 24 0 65 0 0 0 0 0 24 22 0 25 0 0 0 0 0 11 0 0 0 11,550 1997 5,463 2,602 1,324 3,609 349 180 253 109 78 784 17 45 208 575 118 0 165 30 0 358 394 11 145 5 41 50 0 668 0 0 0 0 0 0 11 20 42 88 0 0 0 0 0 0 0 0 0 0 0 0 17,742 1998 8,456 5,176 1,068 9,346 174 409 433 266 250 177 50 25 217 466 1,002 0 226 0 13 58 1,330 0 768 30 181 0 0 392 0 45 0 0 0 0 2 0 0 51 0 0 0 0 10 0 0 0 22 0 0 0 30,642 1999 21,891 7,659 2,843 8,945 180 640 1,942 267 326 1,241 62 80 107 1,304 570 29 884 17 20 659 1,803 321 840 0 30 0 0 360 0 0 0 28 10 0 5 0 0 373 127 0 25 0 0 0 0 0 14 0 0 0 53,598 2000 43,485 16,692 2,313 15,400 613 1,175 2,414 262 955 2,751 126 65 1,827 964 1,041 60 2,212 66 103 662 3,615 241 1,990 137 918 0 41 778 0 110 20 0 0 15 21 0 0 70 0 30 0 0 65 0 0 0 131 20 6 26 101,418 2001 13,452 9,783 4 4,164 2,986 105 888 513 82 26 537 232 286 17 1,10 1,103 6 652 21 1 119 14 0 330 2,232 8 340 16 19 0 0 622 0 0 0 0 0 27 26 0 1 135 27 76 0 0 0 0 3 31 2 25 0 1 25 4 0 38,923 2002 154 1,397 24 7,704 55 43 118 22 8 54 0 0 276 478 392 43 37 0 10 102 106 0 381 11 0 1 11 0 315 0 0 0 22 3 0 0 0 8 8 16 0 10 0 14 0 0 3 35 0 0 1 13 0 11,867 2003 4,830 1,597 165 1,233 237 1 94 101 56 388 34 0 26 657 561 41 196 0 36 5 76 65 105 49 0 9 0 0 0 0 0 0 0 0 0 0 2 0 3 0 0 1 18 0 0 0 2 0 0 0 0 10,587 2004 8,645 1,485 1,926 2,149 17 955 84 16 1 451 40 80 50 432 197 0 72 11 17 210 589 63 162 19 55 0 0 299 0 0 0 10 8 0 10 0 0 73 0 0 0 4 2 0 0 0 5 0 0 0 18,137 2005 12,869 9,151 1,143 1,736 108 281 69 84 313 688 24 829 295 80 204 19 419 0 6 558 570 122 433 70 104 0 0 393 0 1 12 0 0 0 0 0 0 5 4 0 0 0 34 0 0 0 6 0 0 0 0 30,627 2006 13,621 4,366 3,136 2,512 401 563 132 62 10 794 170 40 473 422 1,812 0 555 78 24 152 314 23 472 19 103 5 0 896 0 38 0 0 0 0 43 0 65 12 46 1 0 5 0 0 0 0 3 0 0 0 31,372 2007 12,016 5,122 904 4,310 185 1,376 358 100 109 746 213 210 275 545 235 0 582 102 1 81 316 49 783 0 203 7 0 315 0 11 0 0 0 75 0 1 10 98 0 19 0 0 7 2 1 0 0 0 11 0 0 29,378 2008 14,053 2,486 766 1,826 103 492 221 134 25 963 569 54 325 258 53 20 105 15 29 83 1,038 256 369 118 19 0 0 1,123 1 13 0 0 0 6 0 0 20 12 0 0 0 0 0 5 0 0 0 14 3 0 0 25,577 2009 8,635 3,574 158 1,652 5 5 3 89 32 233 33 0 22 216 504 0 14 9 1 4 78 84 484 101 31 0 0 204 0 0 0 0 0 0 15 0 0 0 0 0 0 0 6 0 0 0 0 0 0 0 16,194 2010 6,337 2,779 1,035 1,259 456 0 262 42 75 205 16 72 0 238 112 0 121 27 28 30 83 177 68 2 31 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 35 12 0 0 0 16 0 0 0 13,520 2011 2012 9,790 13,665 2,503 1,410 149 1,388 4,096 758 130 472 0 399 6 280 161 278 2 268 126 183 160 159 0 155 0 150 215 120 100 63 222 54 36 45 0 40 0 39 79 32 210 31 192 20 544 19 58 19 26 13 0 5 0 1 475 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8 0 0 0 0 0 6 0 0 0 0 0 1 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 19,296 20,066 25
National Venture Capital Association Figure 2.04 Top 5 States By Venture Capital Committed 2012 No. of Funds State California Massachusetts Connecticut New York North Carolina Sub-Total Remaining States Total 64 17 4 21 5 111 72 183 Committed ($Mil) 13,665.3 1,409.7 1,388.0 757.7 472.0 17,692.7 2,373.1 20,065.9 280 260 240 220 200 180 160 140 120 100 80 60 40 20 - Venture Capital Buyout and Mezzannine Capital 198 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 199 3 199 4 199 5 199 6 199 7 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 ($ Billions) Figure 2.05 Private Equity Annual Commitment ($ Billions) 1985 to 2012 Year 26 Thomson Reuters
Investments Measuring industry activity with the total dollars invested in a given year shows that the industry has remained generally in the $20 billion to $30 billion range since 2002. In 2012, $26.7 billion was invested in 3,143 companies. This is less than 2011 totals and greater than 2010 totals. The number of first-time fundings likewise was less than 2011 and greater than 2010. Further parsing the data shows an increasing portion of the investment dollars going to California companies. Sectors Software was the leading sector in 2012, receiving 31% of the total dollars. The second largest sector was Biotechnology which fell to roughly half that amount at 15.4% of total investment The continued interest in Clean Technology investing brought the Industrial/Energy sector to 10.5% of the total. Medical Devices rounded out the top four sectors at 9.4%. The life sciences share of the venture capital investment dollars decreased in 2012 to its lowest level since 2002. In 2012, 15.4% of the money went into Biotechnology, 9.4% into Medical Devices, and 1.2% into Healthcare Services, totaling 26.0%. This is down from the 33.1% combined share in 2009. This recent downward life sciences trend is very visible when just looking at first fundings. In 2012, only 149 life science (the three sectors combined) companies received first funding. This is 12.7% of the total. As recently as 2006, the 294 first fundings of life science companies made up 23.0% of total first fundings. Among first fundings, Software led the way with 441 companies getting their initial venture capital rounds. This is more than one-third of the total number of first fundings. The nearest sector to Software was Media and Entertainment with 174 first fundings. Stages and First-Time Fundings Seed stage companies received 3% of total dollars in 2012, with early stage, expansion, and later stage companies roughly splitting the remaining share. More than one-third of the capital went to expansionstage companies. But it is worth looking more closely at those statistics. Thomson Reuters As has been the case for several years, attention has been focused on the two ends of the spectrum. Looking at deal counts, 2012 actually saw the highest percentage of seed- and early-stage deals since at least 1985 (51.8% of total deals). This certainly would challenge the suggestion that the industry’s attention is single-focused on later-stage companies. That said, the 22.4% of deals going to later-stage companies is also toward the top end of the historical range. There remains a record number of companies in portfolios in the later stage of development that in most other positions in the business cycle would have already gone public or otherwise been acquired. With the rule of thumb that a healthy venture capital industry invests in 1,000-1,300 new companies each year, the 1,174 first fundings in 2012 is very much in that range. Not surprisingly, 81% of those first round investments were made at the seed and early stage. Geographical Spread Across the United States The year 2012 provided an interesting contrast in geographic dispersion. While 53% of all the investment dollars went to California-based portfolio companies, a record for MoneyTree™, companies in 48 states and DC received financing, also a MoneyTree™ record high. That said, the five largest states (California, Massachusetts, New York, Washington and Texas) received 78% of all the dollars invested nationally. This compares to 2011, when California companies received a then-record 51.2% of the dollars. That year, companies in a record 47 states and DC received venture capital funding. Together, the top five states (California, Massachusetts, New York, Texas, and Illinois) received 77% of the total dollars. 27
National Venture Capital Association California-domiciled venture capital firms made investments in 39 states in 2012. Approximately 49% of all the money invested in California came from California-domiciled firms. Conversely, Californiabased firms concentrated 71% of their investment power within the state. Corporate Venture Group Involvement The number and reach of corporate venture capital groups increased in 2012. These groups provided 8.2% of the venture capital invested by all venture groups. They were involved in 15.2% of the deals the highest level in four years. Going forward, all signs suggest that these groups are becoming more involved alongside traditional venture firms in deals, as well as initiating corporate venture group syndicates to do deals in lieu of, or in advance of, investment rounds by traditional venture firms. 28 Methodology As calculated by Thomson Reuters, venture capital investment data are derived from several sources. Primarily, survey information is obtained from the quarterly survey that drives the MoneyTree Report™ from PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. This is the official industry database of venture capital investment. Secondly, Thomson Reuters obtains data from SEC filings that are regularly monitored by our research staff. Finally, publicly available sources such as press releases and trade publications are used. For detailed information on which transactions qualify as MoneyTree deals and are therefore counted in this chapter, please refer to Appendix B. Thomson Reuters
2013 NVCA Yearbook Figure 3.01 Venture Capital Investments ($ Billions) 1985 to 2012 120 ($ Billions) 100 80 60 40 20 198 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 199 3 199 4 199 5 199 6 199 7 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 0 Year Figure 3.02 Venture Capital Investments in 2012 By Industry Group All Investments Industry Group Information Technology Medical/Health/Life Science Non-High Technology Total # Companies 2,130 649 364 3,143 # Deals 2,480 818 425 3,723 Initial Investments Investment Amt ($Bil) 16.5 6.8 3.4 26.7 # Companies 870 148 156 1,174 # Deals 870 148 156 1,174 Investment Amt ($Bil) 3.0 0.7 0.4 4.1 Figure 3.03 Venture Capital Investments Top 5 States in 2012 State California Massachusetts New York Washington Texas Total* # Companies 1,280 326 287 101 134 2,128 # Deals 1,532 414 331 117 159 2,553 Amt Invested ($Bil) 14.1 3.1 1.9 0.9 0.9 20.9 *Total includes top 5 states only Thomson Reuters 29
National Venture Capital Association Figure 3.04 Venture Capital Investments in 2012 Industry Sector by Dollars Invested Telecommunications 2% Other 0.2% Biotechnology 15% Business Products and Services 0.4% Computers and Peripherals 2% Consumer Products and Services 5% Electronics/ Instrumentation 1% Financial Services 1% Healthcare Services 1% Software 31% Semiconductors 3% Retailing/ Distribution 2% Networking and Equipment 1% Medical Devices and Equipment 9% Industrial/Energy 10% IT Services 7% Media and Entertainment 7% Figure 3.05 Venture Capital Investments in 2012 Stage By Dollars Invested Seed 3% Later Stage 32% Early Stage 30% Expansion 35% 30 Thomson Reuters
2013 NVCA Yearbook Figure 3.06 Amount of Capital Invested By State in 2012 ($ Millions) 61 NH 932 574 WA WA 6 15 MT MT 124 101 OR OR 15 15 ID ID 7 NV 15 NV 14,129 CA 2 7 ND ND 0 SD WY WY 95 WI 23 5 84 IA IA 304 178 UT UT 111 212 AZ AZ 468 564 CO CO 46 8 KS KS 35 7 NM NM 286 OH 84 IN 429 NJ 11 LA 931 TX TX 18 9 DE DE 169 NC 87 TN 10 0 MS MS 85 RI 158 CT 15 VW 372 VA 23 KY 5 AR 3,068 MA 518 PA AR 645 AK AK 570 IL 21 24 MO MO 34 OK 1,857 NY 232 MI WI 11 NE NE 13 ME 4 VT 243 263 MN MN 302 265 GA GA 23 43 AL AL 277 280 MD MD 6 DC 39 SC 203 FL GU 17 HI HI PR VI Figure 3.07 Number of Companies Invested in By State in 2012 8 12 NH NH 101 WA 3 1 MT MT 24 OR 4 ID 1 2 ND ND 1 SD WY WY 12 WI WI 1 IA 5 NE 1,280 CA 37 31 UT UT 13 AZ 85 56 CO CO 9 15 KS KS 7 OK 12 12 NM NM 134 94 TX TX AK 8 12 MO 76 IL 41 MI 5 KY 3 2 MS MS 6 8 AL AL 44 38 GA GA 12 RI 38 CT 49 NJ 2 WV 62 VA 5 6 DE DE 57 50 MD 25 DC MD 5 SC 31 FL 3 2 HI HI MA 154 PA 33 NC 30 TN 1 AR AR 4 LA 51 44 OH OH 14 IN MO 250 326 MA 287 NY 9 NE 4 NV 5 ME 45 VT VT 26 33 MN MN GU 1 PR VI Thomson Reuters 31
National Venture Capital Association Figure 3.08 Venture Capital Investments in 1985 to 2012 By Region ($ Millions) Region Silicon Valley NewEngland NYMetro LA/Orange County Midwest SanDiego Northwest Texas Southeast DC/Metroplex Colorado SouthWest Philadelphia Metro North Central South Central Upstate NY Unknown Sacramento/N.Cal AK/HI/PR Total 1985 758.8 435.4 221.2 196.5 157.5 99.6 142.2 249.0 166.4 99.1 77.0 40.1 52.6 37.0 13.7 14.2 16.0 2,776.4 1986 1,016.3 436.6 211.0 186.9 139.9 95.4 142.9 228.4 234.2 61.1 113.8 82.5 63.3 44.5 11.4 10.7 45.5 3,124.5 1987 849.9 525.1 273.9 276.9 198.4 107.8 153.3 211.0 271.0 111.8 111.4 57.5 79.2 73.6 19.8 10.2 0.5 32.0 3,363.6 1988 985.9 496.9 308.0 222.5 132.3 149.8 141.2 240.7 266.5 129.9 107.8 59.7 71.8 41.6 11.7 5.3 0.8 33.6 3,406.0 1989 916.5 404.7 360.4 242.1 183.2 145.5 118.0 228.3 224.4 139.5 157.8 50.7 65.3 51.2 14.5 7.3 6.1 4.2 3,319.6 1990 1991 914.1 780.5 425.0 287.0 190.1 181.5 174.7 119.4 155.9 181.4 113.3 115.7 88.2 59.9 141.0 161.4 145.9 109.4 96.9 51.3 93.7 54.2 30.3 49.0 105.9 34.7 92.2 44.9 11.6 4.2 11.1 3.4 13.0 0.2 19.5 15.7 - 0.3 2,822.4 2,254.0 1992 1993 1,119.5 903.2 417.0 358.4 239.0 222.3 179.4 176.4 165.2 276.9 111.2 133.0 252.1 118.4 149.6 240.7 346.6 405.8 65.8 384.1 129.7 135.0 98.4 49.7 168.9 108.3 89.1 109.6 6.5 8.6 9.1 5.7 30.8 0.8 8.5 19.1 0.0 1.0 3,586.3 3,656.8 1994 1,074.4 440.4 283.3 198.4 432.6 220.5 165.7 311.8 362.3 137.8 197.4 38.0 137.6 87.4 15.2 0.7 0.1 20.0 22.0 4,157.6 1995 1,807.8 796.6 509.7 1,004.1 470.3 276.8 379.7 479.2 876.6 420.2 325.1 113.1 220.9 223.8 45.2 35.5 0.3 20.0 7.8 8,012.6 1996 1997 3,417.7 4,632.3 1,159.4 1,606.7 743.2 1,289.4 702.9 875.2 743.3 919.6 485.2 516.0 557.6 564.4 553.4 908.7 1,165.0 1,366.1 586.3 515.1 321.2 405.0 184.6 303.1 349.9 534.2 208.5 341.6 81.1 67.4 22.7 90.3 2.2 4.4 28.6 21.4 28.7 14.0 11,341.5 14,974.9 1998 5,878.3 2,353.4 1,817.6 1,250.6 1,653.5 669.1 820.3 1,205.6 1,794.8 1,148.5 838.9 411.2 703.9 429.6 196.7 195.4 39.1 86.8 5.5 21,489.9 1999 17,801.6 5,641.6 4,532.3 3,596.9 2,729.2 1,429.5 2,877.6 3,162.7 4,831.0 2,395.1 1,845.8 843.1 1,732.6 770.0 360.1 212.4 2.4 119.1 17.4 54,900.3 2000 33,452.0 12,019.9 10,300.4 6,808.1 5,776.7 2,302.3 3,603.4 6,262.9 7,976.1 5,785.3 4,091.9 1,387.5 2,591.5 1,426.7 446.9 293.9 50.4 375.3 248.6 105,200.0 2001 12,599.3 5,431.2 3,512.8 2,285.8 2,182.4 1,579.1 1,426.8 3,104.3 2,684.7 2,103.1 1,244.4 515.1 1,073.3 669.4 110.4 159.1 14.3 203.0 69.8 40,968.3 2002 7,242.9 2,992.3 1,569.4 1,286.8 976.9 996.2 746.4 1,187.6 1,772.7 1,095.6 588.0 393.8 607.8 431.5 69.3 104.5 65.4 4.9 22,132.3 2003 6,755.6 2,990.4 1,422.0 1,069.4 913.6 825.8 643.5 1,221.0 1,117.9 794.6 644.8 220.5 555.1 268.5 65.5 122.7 32.2 17.9 19,681.1 2004 7,999.3 3,345.5 1,648.2 1,319.8 712.5 1,197.8 993.3 1,215.1 1,439.2 1,086.6 363.2 393.6 768.4 464.1 130.1 104.8 38.4 15.1 23,235.1 2005 8,116.3 2,967.1 1,998.5 1,506.1 918.0 1,203.9 1,011.3 1,189.4 1,101.3 1,220.4 653.4 524.8 597.8 367.0 96.1 60.1 37.7 43.3 23,612.5 2006 9,816.8 3,310.8 2,185.5 1,902.7 1,010.1 1,223.6 1,318.2 1,519.7 1,228.2 1,361.6 688.8 526.6 845.5 382.1 64.3 156.2 29.4 47.1 27,617.2 2007 2008 11,554.7 11,436.4 3,964.5 3,788.3 1,902.8 2,148.7 1,906.3 2,041.1 1,167.9 1,364.6 1,844.4 1,209.4 1,636.2 1,134.7 1,496.9 1,122.6 1,812.4 1,389.3 1,443.5 1,145.8 686.3 872.3 577.7 490.1 953.6 861.9 535.7 644.6 152.8 91.3 136.5 92.3 - 82.0 71.3 20.9 21.3 31,871.5 29,925.9 2009 8,220.5 2,577.6 1,737.3 1,060.1 952.8 949.0 678.7 665.5 1,045.0 678.4 623.2 277.5 433.7 400.3 25.0 26.9 0.5 18.8 7.4 20,378.3 2 01 0 9,302.8 2,604.3 1,886.2 1,704.5 1,340.0 896.9 774.9 1,070.9 1,109.4 967.2 447.9 263.8 444.7 343.3 77.7 44.8 22.5 14.0 23,315.7 2 011 11,656.8 3,318.1 2,859.8 2,080.4 1,769.2 926.6 796.6 1,580.2 1,210.2 987.2 615.7 543.1 458.9 392.5 106.2 106.7 88.3 0.6 29,497.2 2 01 2 10,907.4 3,237.4 2,334.6 2,067.2 1,386.7 1,116.7 1,076.0 930.5 796.2 727.4 564.2 558.4 399.0 355.8 95.7 48.7 29.5 20.1 0.7 26,652.4 2 01 1 1,248 448 415 311 233 211 162 167 167 119 113 107 84 70 21 58 8 3 1 3,946 2 01 2 1,160 452 396 300 264 171 163 159 154 118 101 100 77 50 24 22 5 4 3 3,723 Figure 3.08b Venture Capital Investments in 1985 to 2012 By Region (Number of Deals) Region Silicon Valley New England NY Metro Midwest LA/Orange County Southeast DC/Metroplex Texas Northwest Philadelphia Metro San Diego Colorado SouthWest North Central Upstate NY South Central Sacramento/N.Cal AK/HI/PR Unknown Total 32 1985 323 235 89 98 90 91 45 106 47 38 43 43 20 37 17 11 11 1 1,345 1986 340 214 100 116 101 117 45 93 49 35 35 58 30 50 10 10 18 1,421 1987 343 257 131 133 114 134 65 106 62 54 54 62 42 54 10 12 12 1 1,646 1988 362 231 108 101 106 115 59 105 70 44 56 63 26 52 10 6 10 2 1,526 1989 394 222 121 127 112 113 51 91 64 41 56 53 32 39 12 7 6 3 1,544 1990 398 217 90 103 97 130 62 85 48 48 47 49 22 44 6 5 10 1 1,462 1991 337 170 89 99 89 112 54 70 41 43 43 35 30 40 4 4 9 3 1 1,273 1992 421 159 81 93 97 108 48 70 50 65 46 53 34 39 9 5 9 3 2 1,392 1993 316 149 80 85 63 117 41 71 49 47 49 48 30 38 10 6 8 1 4 1,212 1994 336 146 85 83 55 112 47 69 50 46 61 53 29 37 5 9 10 2 2 1,237 1995 509 232 135 132 92 181 72 101 84 78 77 58 37 70 8 15 7 4 2 1,894 1996 771 333 158 192 134 226 113 135 112 91 109 83 55 69 9 22 9 9 7 2,637 1997 867 383 240 239 166 294 135 172 134 142 100 98 71 116 21 25 7 6 7 3,223 1998 1,043 469 274 250 217 308 162 197 132 138 123 127 88 106 31 27 17 5 14 3,728 1999 1,685 663 491 311 356 454 272 318 264 145 161 162 116 114 31 30 19 5 3 5,600 2000 2,159 904 818 515 518 665 510 484 329 231 236 222 146 151 36 50 36 15 16 8,041 2001 1,103 597 448 276 251 391 261 341 192 142 156 115 89 125 29 28 27 10 8 4,589 2002 817 457 232 243 164 270 199 173 140 102 114 91 68 75 24 24 7 3 3,203 2003 874 446 193 174 149 247 183 173 108 88 125 74 55 71 22 21 11 8 3,022 2 004 958 427 227 178 150 246 187 177 148 105 132 72 58 77 29 31 9 6 3,217 2005 1,006 440 192 181 178 198 222 181 160 97 143 93 84 67 28 11 11 8 3,300 2 006 1,236 458 294 230 219 238 220 201 184 116 128 110 93 73 39 26 8 14 3,887 2007 1,305 521 296 272 234 246 220 188 216 138 169 114 106 95 33 31 18 10 1 4,213 2 008 1,290 510 342 304 243 227 208 161 205 153 134 116 84 88 31 40 20 9 4,165 2 0 09 990 387 287 252 170 159 139 123 129 97 115 94 71 68 13 32 9 3 1 3,139 2 01 0 1,092 411 393 272 227 216 152 165 161 124 134 86 59 58 21 42 8 4 1 3,626 Thomson Reuters
2013 NVCA Yearbook Figure 3.09 Venture Capital Investments 1985 to 2012 By Stage ($ Millions) Stage S SSeed Early Stage Expansion LaterStage Total 1985 526.2 517.8 1,245.7 486.8 2,776.4 1986 759.7 620.3 1,198.8 545.7 3,124.5 1987 623.4 750.5 1,495.1 494.6 3,363.6 1988 670.5 714.6 1,563.2 457.7 3,406.0 1989 558.4 737.6 1,595.8 427.8 3,319.6 1990 397.1 684.4 1,269.2 471.7 2,822.4 1991 241.8 548.7 1,100.2 363.3 2,254.0 1992 556.5 566.8 1,778.7 684.3 3,586.3 1993 629.6 575.8 1,866.0 585.4 3,656.8 1994 781.2 839.7 1,539.1 985.7 4,145.7 1995 1,272.9 1,733.4 3,564.2 1,442.2 8,012.6 1996 1,271.7 2,640.5 5,540.4 1,888.9 11,341.5 1997 1,374.2 3,420.5 7,588.6 2,591.6 14,974.9 1998 1,766.2 5,460.1 10,367.0 3,905.5 21,498.9 1999 3,666.2 11,360.2 29,406.8 10,467.0 54,900.3 2000 3,156.1 25,335.4 59,121.5 17,587.0 105,200.0 2001 800.7 8,606.3 22,911.7 8,649.6 40,968.3 2002 340.2 3,935.3 12,135.5 5,721.1 22,132.0 2003 365.7 3,608.5 9,805.5 5,901.4 19,681.1 2004 951.6 4,045.9 9,046.2 9,191.5 23,235.1 2005 1,006.3 4,056.3 8,607.9 9,942.0 23,612.5 2006 1,293.6 4,727.4 11,154.8 10,441.5 27,617.2 2007 2008 1,819.6 1,917.3 6,081.5 5,731.0 11,091.8 10,857.4 12,882.2 11,420.1 31,875.1 29,925.9 2009 1,870.7 4,906.9 6,824.2 6,776.5 20,378.3 2010 1,661.3 5,867.0 8,702.0 7,085.4 23,315.7 2011 2011 1,052.6 8,794.4 9,830.5 9,819.7 29,497.2 2012 2012 726.4 7,876.3 9,376.4 8,673.3 26,652.4 2004 234 899 1,201 883 3,217 2005 264 859 1,116 1,061 3,300 2006 396 1,001 1,380 1,110 3,887 2007 524 1,129 1,277 1,283 4,213 2008 537 1,137 1,242 1,249 4,165 2009 375 973 888 903 3,139 2010 409 1,271 1,074 872 3,626 2011 445 1,562 1,021 918 3,946 2012 280 1,647 962 834 3,723 1988-1Q 164.7 144.0 314.5 135.3 758.5 1988-2Q 150.0 216.6 497.1 105.0 968.6 1988 1988-3Q 1988-4Q 1988 Total 240.6 115.2 670.5 184.7 169.4 714.6 320.2 431.4 1,563.2 151.4 66.0 457.7 896.9 781.9 3,406.0 Figure 3.09b Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) Stage 1985 Seed 357 Early Stage 290 Expansion 525 Later Stage 173 Total 1,345 1986 388 333 504 196 1,421 1987 387 412 616 231 1,646 1988 371 359 614 182 1,526 1989 355 338 664 187 1,544 1990 258 370 603 231 1,462 1991 193 278 544 258 1,273 1992 252 291 606 243 1,392 1993 290 184 515 223 1,212 1994 332 256 429 220 1,237 1995 431 519 706 238 1,894 1996 504 754 1,045 334 2,637 1997 542 896 1,402 383 3,223 1998 670 1,019 1,572 467 3,728 1999 811 1,735 2,445 609 5,600 2000 703 2,855 3,703 780 8,041 2001 279 1,299 2,392 619 4,589 2002 181 875 1,585 562 3,203 2003 216 799 1,355 652 3,022 Figure 3.09c-1 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) 1985 Stage 1985-1Q 1985-2Q 1985-3Q 1985-4Q 1985 Total Seed 153.0 146.5 93.7 133.0 526.2 Early Stage 96.3 185.3 106.3 129.9 517.8 Expansion 219.5 319.6 312.8 393.7 1,245.7 Later Stage 154.4 89.4 164.4 78.5 486.8 Total 623.1 740.8 677.2 735.1 2,776.4 1986-1Q 185.6 129.6 270.0 125.3 710.5 1986 1986-2Q 1986-3Q 270.0 114.7 135.3 176.6 381.4 252.6 93.2 180.4 879.9 724.4 1986-4Q 1986 Total 189.4 759.7 178.7 620.3 294.8 1,198.8 146.7 545.7 809.6 3,124.5 1987-1Q 145.7 170.7 423.3 100.1 839.7 1987-2Q 199.4 183.9 354.2 164.9 902.4 1987 1987-3Q 142.0 205.1 402.5 118.9 868.5 1987-4Q 1987 Total 136.3 623.4 190.8 750.5 315.1 1,495.1 110.7 494.6 752.9 3,363.6 Figure 3.09c-2 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) 1989 Stage 1989-1Q 1989-2Q 1989-3Q 1989-4Q 1989 Total Seed 138.1 174.6 115.4 130.3 558.4 Early Stage 255.9 127.7 163.1 190.9 737.6 Expansion 399.6 434.1 305.5 456.6 1,595.8 Later Stage 95.5 97.7 78.3 156.4 427.8 Total 889.1 834.1 662.2 934.2 3,319.6 Thomson Reuters 1990-1Q 81.9 139.7 307.2 123.1 651.9 1990 1990-2Q 1990-3Q 116.7 114.8 199.1 133.1 356.1 208.0 105.5 126.3 777.4 582.2 1990-4Q 1990 Total 83.8 397.1 212.5 684.4 397.9 1,269.2 116.7 471.7 810.9 2,822.4 1991-1Q 45.8 137.9 249.5 89.5 522.8 1991-2Q 84.6 130.3 276.2 115.8 606.9 1991 1991-3Q 53.4 140.4 262.9 57.9 514.5 1991-4Q 1991 Total 58.0 241.8 140.0 548.7 311.7 1,100.2 100.1 363.3 609.9 2,254.0 1992-1Q 67.6 123.0 496.3 203.2 890.2 1992-2Q 210.2 187.6 434.8 175.3 1,007.9 1992 1992-3Q 71.8 102.7 352.2 107.0 633.8 1992-4Q 1992 Total 206.8 556.5 153.4 566.8 495.4 1,778.7 198.8 684.3 1,054.5 3,586.3 33
National Venture Capital Association Figure 3.09c-3 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) 1993 Stage 1993-1Q 1993-2Q 1993-3Q Seed 139.7 144.1 164.3 Early Stage 164.3 136.8 106.6 Expansion 355.0 412.3 461.3 Later Stage 189.2 111.2 116.8 848.3 804.4 849.0 Total 1993-4Q 1993 Total 181.5 629.6 168.0 575.8 637.3 1,866.0 168.3 585.4 1,155.2 3,656.8 1994 1994-1Q 1994-2Q 1994-3Q 1994-4Q 1994 Total 190.0 225.8 160.2 205.1 781.2 177.6 196.4 157.8 307.9 839.7 325.3 390.5 344.2 479.1 1,539.1 186.6 190.5 262.0 346.6 985.7 879.5 1,003.3 924.2 1,338.7 4,145.7 1995 1995-2Q 1995-3Q 1995-4Q 396.6 229.9 329.8 393.6 366.8 564.1 1,328.2 800.4 815.7 428.0 308.7 361.1 2,546.4 1,705.8 2,070.6 1995-1Q 316.6 408.8 620.0 344.5 1,689.9 1996 1995 Total 1996-1Q 1996-2Q 1996-3Q 1,272.9 322.7 431.9 200.6 1,733.4 597.8 714.0 574.6 3,564.2 1,151.9 1,509.9 1,277.0 1,442.2 346.4 460.3 545.4 8,012.6 2,418.8 3,116.1 2,597.6 1996-4Q 316.5 754.1 1,601.6 536.8 3,208.9 1996 Total 1,271.7 2,640.5 5,540.4 1,888.9 11,341.5 Figure 3.09c-4 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) Stage Seed Early Stage Expansion Later Stage Total 1997-1Q 400.6 769.5 1,358.4 594.7 3,123.3 1997-2Q 330.8 846.8 1,958.5 531.6 3,667.8 1997 1997-3Q 323.3 760.1 1,970.6 669.3 3,723.3 1997-4Q 1997 Total 319.5 1,374.2 1,044.1 3,420.5 2,301.0 7,588.6 795.9 2,591.6 4,460.5 14,974.9 1998-1Q 402.6 1,164.7 1,753.9 854.6 4,175.7 1998-2Q 426.4 1,014.5 3,359.1 973.6 5,773.5 1998 1998-3Q 459.9 1,290.4 2,716.0 949.5 5,415.7 1998-4Q 1998 Total 477.3 1,766.2 1,990.6 5,460.1 2,538.0 10,367.0 1,127.9 3,905.5 6,133.9 21,498.9 1999-1Q 591.5 1,215.0 3,210.3 1,605.2 6,622.0 1999-2Q 840.4 1,993.7 5,498.5 2,999.2 11,331.8 1999 1999-3Q 989.7 2,661.8 7,348.1 2,597.5 13,597.1 1999-4Q 1,244.5 5,489.7 13,350.0 3,265.1 23,349.3 1999 Total 3,666.2 11,360.2 29,406.8 10,467.0 54,900.3 2000-1Q 807.0 7,138.2 16,113.3 4,382.9 28,441.3 2000-2Q 984.1 6,937.9 15,761.4 4,343.2 28,026.6 2000 2000-3Q 878.3 5,912.3 15,263.6 4,572.9 26,627.0 2000-4Q 486.8 5,347.0 11,983.2 4,288.1 22,105.1 2000 Total 3,156.1 25,335.4 59,121.5 17,587.0 105,200.0 Figure 3.09c-5 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) Stage Seed Early Stage Expansion Later Stage Total 2001-1Q 256.6 3,459.5 6,939.3 2,447.6 13,103.0 2001-2Q 265.3 2,102.1 6,622.1 2,513.1 11,502.5 2001 2001-3Q 128.5 1,712.2 4,563.8 1,802.4 8,206.9 2001-4Q 150.3 1,332.5 4,786.5 1,886.5 8,155.9 2001 Total 800.7 8,606.3 22,911.7 8,649.6 40,968.3 2002-1Q 76.4 1,182.2 3,804.8 1,927.7 6,991.1 2002-2Q 93.5 1,134.1 3,544.3 1,339.6 6,111.4 2002 2002-3Q 84.2 827.7 2,462.6 1,094.4 4,468.8 2002-4Q 2002 Total 86.1 340.2 791.4 3,935.3 2,323.8 12,135.5 1,359.4 5,721.1 4,560.7 22,132.0 2003-1Q 84.5 690.0 2,468.7 1,159.6 4,402.8 2003-2Q 95.2 1,015.7 2,513.9 1,368.7 4,993.4 2003 2003-3Q 100.3 806.8 2,202.5 1,520.5 4,630.1 2003 Total 365.7 3,608.5 9,805.5 5,901.4 19,681.1 2004-1Q 104.8 904.9 2,063.3 2,312.6 5,385.6 2004-2Q 124.3 1,030.3 2,680.0 2,481.9 6,316.6 2004 2004-3Q 168.0 1,028.6 2,043.1 1,856.6 5,096.3 2004-4Q 2004 Total 554.5 951.6 1,082.0 4,045.9 2,259.7 9,046.2 2,540.4 9,191.5 6,436.6 23,235.1 2007-4Q 556.0 1,780.0 2,986.9 3,093.8 8,416.7 2007 Total 1,819.6 6,081.5 11,091.8 12,882.2 31,875.1 2008-1Q 459.3 1,376.9 3,427.7 2,813.0 8,076.8 2008-2Q 535.3 1,524.3 2,697.9 3,272.5 8,030.0 2008 2008-3Q 557.9 1,372.6 2,556.8 3,137.7 7,625.0 2008-4Q 2008 Total 364.9 1,917.3 1,457.2 5,731.0 2,175.0 10,857.4 2,197.1 11,420.1 6,194.1 29,925.9 2011-4Q 192.4 2,458.5 2,608.9 2,135.5 7,395.3 2011 Total 1,052.6 8,794.4 9,830.5 9,819.7 29,497.2 2012-1Q 157.9 1,933.7 1,789.2 2,355.8 6,236.6 2012-2Q 230.6 2,190.2 2,715.7 2,187.7 7,324.2 2012 2012-3Q 181.0 1,824.0 2,614.1 1,983.2 6,602.3 2012-4Q 2012 Total 156.9 726.4 1,928.3 7,876.3 2,257.5 9,376.4 2,146.6 8,673.3 6,489.4 26,652.4 2003-4Q 85.8 1,096.0 2,620.3 1,852.6 5,654.7 Figure 3.09c-6 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) 2005 Stage 2005-1Q 2005-2Q 2005-3Q 2005-4Q 2005 Total 2006-1Q Seed 148.5 530.5 165.0 162.2 1,006.3 246.7 Early Stage 867.8 1,001.6 1,192.0 994.8 4,056.3 930.1 Expansion 2,132.9 2,367.4 1,759.6 2,348.1 8,607.9 2,604.7 Later Stage 2,082.1 2,551.8 2,972.5 2,335.5 9,942.0 2,847.4 Total 5,231.3 6,451.3 6,089.1 5,840.7 23,612.5 6,629.0 2006-2Q 374.0 1,018.4 3,211.1 2,793.3 7,396.8 2006 2006-3Q 366.6 1,112.3 2,881.2 2,529.5 6,889.6 2006-4Q 306.2 1,666.6 2,457.7 2,271.4 6,701.9 2006 Total 1,293.6 4,727.4 11,154.8 10,441.5 27,617.2 2007-1Q 319.3 1,337.9 2,646.9 3,108.6 7,412.6 2007-2Q 489.2 1,700.5 2,353.2 3,289.9 7,832.8 2007 2007-3Q 455.0 1,263.1 3,104.8 3,389.9 8,213.0 Figure 3.09c-7 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) 2009 Stage 2009-1Q 2009-2Q 2009-3Q 2009-4Q 2009 Total Seed 319.7 672.4 511.0 367.6 1,870.7 Early Stage 767.3 1,179.6 1,213.6 1,746.5 4,906.9 Expansion 1,223.8 1,770.3 1,824.4 2,005.7 6,824.2 Later Stage 1,531.5 1,606.8 1,844.7 1,793.6 6,776.5 Total 3,842.2 5,229.1 5,393.7 5,913.3 20,378.3 34 2010-1Q 407.9 1,147.8 1,788.9 1,723.4 5,067.9 2010-2Q 687.8 1,740.3 2,796.5 1,925.7 7,150.2 2010 2010-3Q 332.5 1,410.4 1,685.3 1,999.1 5,427.4 2010-4Q 2010 Total 233.1 1,661.3 1,568.5 5,867.0 2,431.3 8,702.0 1,437.1 7,085.4 5,670.2 23,315.7 2011-1Q 225.2 1,830.3 2,257.4 2,220.8 6,533.7 2011-2Q 413.4 2,272.4 2,418.9 3,037.1 8,141.7 2011 2011-3Q 221.7 2,233.2 2,545.3 2,426.3 7,426.5 Thomson Reuters
2013 NVCA Yearbook Figure 3.09d-1 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) Stage Seed Early Stage Expansion Later Stage Total 1985 1986 1987 1988 1985-1Q 1985-2Q 1985-3Q 1985-4Q 1985 Total 1986-1Q 1986-2Q 1986-3Q 1986-4Q 1986 Total 1987-1Q 1987-2Q 1987-3Q 1987-4Q 1987 Total 1988-1Q 1988-2Q 1988-3Q 1988-4Q 1988 Total 110 88 61 98 357 134 107 65 82 388 116 101 85 85 387 120 79 88 84 371 88 69 60 73 290 111 70 72 80 333 131 83 103 95 412 99 94 87 79 359 138 122 114 151 525 166 136 96 106 504 182 139 158 137 616 158 182 133 141 614 65 40 37 31 173 60 55 31 50 196 64 64 51 52 231 54 48 42 38 182 401 319 272 353 1,345 471 368 264 318 1,421 493 387 397 369 1,646 431 403 350 342 1,526 Figure 3.09d-2 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) 1989 1990 1991 1992 Stage 1989-1Q 1989-2Q 1989-3Q 1989-4Q 1989 Total 1990-1Q 1990-2Q 1990-3Q 1990-4Q 1990 Total 1991-1Q 1991-2Q 1991-3Q 1991-4Q 1991 Total 1992-1Q 1992-2Q 1992-3Q 1992-4Q 1992 Total Seed 106 100 77 72 355 60 69 59 70 258 51 49 42 51 193 49 68 49 86 252 Early Stage 101 65 84 88 338 87 97 73 113 370 79 69 60 70 278 73 86 52 80 291 Expansion 215 160 127 162 664 148 153 145 157 603 137 127 126 154 544 156 160 104 186 606 Later Stage 52 33 38 64 187 55 57 48 71 231 49 69 54 86 258 74 47 44 78 243 Total 474 358 326 386 1,544 350 376 325 411 1,462 316 314 282 361 1,273 352 361 249 430 1,392 Figure 3.09d-3 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) 1993 1994 1995 1996 Stage 1993-1Q 1993-2Q 1993-3Q 1993-4Q 1993 Total 1994-1Q 1994-2Q 1994-3Q 1994-4Q 1994 Total 1995-1Q 1995-2Q 1995-3Q 1995-4Q 1995 Total 1996-1Q 1996-2Q 1996-3Q 1996-4Q 1996 Total Seed 69 68 66 87 290 91 67 83 91 332 125 95 95 116 431 130 140 97 137 504 Early Stage 41 49 38 56 184 64 61 54 77 256 130 136 116 137 519 148 206 175 225 754 Expansion 145 121 116 133 515 105 111 98 115 429 187 179 164 176 706 235 247 245 318 1,045 Later Stage 67 53 52 51 223 50 69 43 58 220 61 55 58 64 238 71 82 85 96 334 Total 322 291 272 327 1,212 310 308 278 341 1,237 503 465 433 493 1,894 584 675 602 776 2,637 Figure 3.09d-4 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) Stage Seed Early Stage Expansion Later Stage Total 1997 1998 1999 2000 1997-1Q 1997-2Q 1997-3Q 1997-4Q 1997 Total 1998-1Q 1998-2Q 1998-3Q 1998-4Q 1998 Total 1999-1Q 1999-2Q 1999-3Q 1999-4Q 1999 Total 2000-1Q 2000-2Q 2000-3Q 2000-4Q 2000 Total 163 120 120 139 542 152 162 164 192 670 166 211 249 185 811 196 197 172 138 703 662 1,735 763 793 680 619 2,855 201 208 228 259 896 242 221 243 313 1,019 245 380 448 900 2,445 1,009 981 899 814 3,703 310 361 320 411 1,402 366 407 405 394 1,572 383 567 595 174 150 145 609 192 172 207 209 780 100 87 90 106 383 108 121 114 124 467 140 774 776 758 915 3,223 868 911 926 1,023 3,728 934 1,332 1,442 1,892 5,600 2,160 2,143 1,958 1,780 8,041 Figure 3.09d-5 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) 2001 2002 2003 2004 Stage 2001-1Q 2001-2Q 2001-3Q 2001-4Q 2001 Total 2002-1Q 2002-2Q 2002-3Q 2002-4Q 2002 Total 2003-1Q 2003-2Q 2003-3Q 2003-4Q 2003 Total 2004-1Q 2004-2Q 2004-3Q 2004-4Q 2004 Total Seed 80 73 68 58 279 47 53 40 41 181 57 60 44 55 216 46 75 45 68 234 213 799 207 238 222 232 899 Early Stage 436 338 271 254 1,299 247 242 193 193 875 188 215 183 353 1,355 281 349 261 310 1,201 Expansion 650 670 543 529 2,392 410 447 348 380 1,585 346 320 336 192 652 205 216 194 268 883 Later Stage 155 156 148 160 619 160 136 128 138 562 132 160 168 731 813 3,022 739 878 722 878 3,217 Total 1,321 1,237 1,030 1,001 4,589 864 878 709 752 3,203 723 755 Thomson Reuters 35
National Venture Capital Association Figure 3.09d-6 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) 2005 2006 2007 2008 Stage 2005-1Q 2005-2Q 2005-3Q 2005-4Q 2005 Total 2006-1Q 2006-2Q 2006-3Q 2006-4Q 2006 Total 2007-1Q 2007-2Q 2007-3Q 2007-4Q 2007 Total 2008-1Q 2008-2Q 2008-3Q 2008-4Q 2008 Total Seed 52 68 68 76 264 82 93 121 100 396 90 139 136 159 524 135 134 156 112 537 Early Stage 212 219 214 214 859 205 241 236 319 1,001 257 326 257 289 1,129 265 301 284 287 1,137 275 295 242 304 1,116 328 360 345 347 1,380 277 322 319 359 1,277 344 331 282 285 1,242 Expansion Later Stage 223 280 286 272 1,061 290 314 253 253 1,110 282 326 336 339 1,283 310 338 323 278 1,249 Total 762 862 810 866 3,300 905 1,008 955 1,019 3,887 906 1,113 1,048 1,146 4,213 1,054 1,104 1,045 962 4,165 Figure 3.09d-7 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) 2009 2010 2011 2012 Stage 2009-1Q 2009-2Q 2009-3Q 2009-4Q 2009 Total 2010-1Q 2010-2Q 2010-3Q 2010-4Q 2010 Total 2011-1Q 2011-2Q 2011-3Q 2011-4Q 2011 Total 2012-1Q 2012-2Q 2012-3Q 2012-4Q 2012 Total Seed 70 87 99 119 375 93 119 99 98 409 94 128 114 109 445 61 78 73 68 280 Early Stage 195 213 244 321 973 268 361 308 334 1,271 344 392 401 425 1,562 350 433 411 453 1,647 Expansion 183 217 219 269 888 252 300 244 278 1,074 225 275 277 244 1,021 221 250 244 247 962 Later Stage 229 244 199 231 903 205 239 230 198 872 234 279 212 193 918 229 197 192 216 834 Total 677 761 761 940 3,139 818 1,019 881 908 3,626 897 1,074 1,004 971 3,946 861 958 920 984 3,723 Figure 3.10 Venture Capital Investments 1985 to 2012 By Industry ($ Millions) Industry SSoftware Biotechnology Industrial/Energy Medical Devices and Equipment IT Services Media and Entertainment Consumer Products and Services Semiconductors Telecommunications Retailing/Distribution Computers and Peripherals Networking and Equipment Healthcare Services Financial Services Electronics/Instrumentation Business Products and Services Other Total 1985 1986 1987 1988 1989 1990 1991 1992 1993 612 577 519 482 457 519 463 614 459 136 223 290 369 334 314 287 581 479 201 208 290 222 345 242 183 285 278 181 182 259 340 347 325 235 514 393 26 38 51 39 36 38 41 29 54 101 118 155 166 151 93 69 132 278 69 135 176 153 86 159 126 123 159 253 293 255 294 165 190 90 156 93 178 174 148 161 124 128 117 200 251 32 114 296 232 217 89 48 97 103 449 473 392 370 311 245 174 205 164 224 164 143 137 197 174 140 250 516 81 125 140 97 155 92 72 191 202 81 96 62 209 233 63 25 120 102 120 121 122 77 110 58 74 51 50 29 81 64 53 52 94 77 39 70 3 3 0 6 0 33 0 6 2,776 3,125 3,364 3,406 3,320 2,822 2,254 3,586 3,657 1994 1995 1996 1997 1998 1999 2000 2001 2002 671 1,186 2,350 3,462 4,721 10,690 25,251 10,820 5,509 585 832 1,186 1,368 1,551 2,101 4,270 3,480 3,312 294 527 498 704 1,260 1,464 2,627 1,250 826 439 668 618 1,026 1,256 1,577 2,403 2,046 1,863 119 175 442 640 1,093 4,323 8,890 2,475 978 275 944 1,154 1,056 1,873 7,408 10,598 2,370 784 176 534 510 742 680 2,718 3,220 702 256 157 214 340 597 631 1,380 3,806 2,474 1,654 463 937 1,323 1,562 3,024 8,032 16,468 5,179 2,168 103 303 269 326 769 2,810 3,209 368 139 178 316 363 394 383 939 1,628 693 457 250 372 631 962 1,446 4,658 11,730 5,791 2,671 202 460 734 939 959 1,495 1,386 543 380 123 181 323 385 843 2,215 4,131 1,238 331 65 151 211 307 202 274 797 400 309 40 176 369 434 706 2,590 4,726 1,085 478 6 37 21 71 102 225 60 55 17 4,146 8,013 11,341 14,975 21,499 54,900 105,200 40,968 22,132 2003 4,855 3,745 774 1,613 747 662 157 1,767 1,674 64 360 1,739 229 413 209 673 19,681 2004 5,483 4,388 847 1,905 748 1,410 334 2,166 1,854 217 538 1,559 389 530 395 460 14 23,235 2005 5,144 3,930 1,138 2,209 1,057 1,200 363 1,855 2,150 249 535 1,695 364 903 412 408 23,612 2006 5,449 4,816 1,996 2,778 1,482 1,888 424 2,307 2,414 189 388 1,252 416 528 703 586 27,617 2007 6,124 5,713 3,082 3,759 1,930 2,166 454 2,041 2,191 340 550 1,443 307 580 557 621 18 31,875 2008 6,069 4,970 4,631 3,603 2,108 1,796 418 1,595 1,514 222 470 756 159 464 646 475 30 29,926 2009 4,205 3,972 2,564 2,605 1,228 1,371 489 773 636 156 345 753 171 404 393 260 56 20,378 2010 5,116 3,903 3,465 2,341 1,661 1,572 571 1,046 792 165 408 678 272 408 422 491 4 23,316 2011 7,516 4,825 3,595 2,883 2,264 2,258 1,399 1,345 631 454 494 357 394 394 437 215 37 29,497 2012 8,293 4,115 2,792 2,511 1,993 1,976 1,208 926 582 498 453 316 309 284 244 97 53 26,652 Figure 3.10b Venture Capital Investments 1985 to 2012 By Industry (Number of Deals) Industry SSoftware Biotechnology Media and Entertainment Medical Devices and Equipment IT Services Industrial/Energy Consumer Products and Services Semiconductors Telecommunications Retailing/Distribution Electronics/Instrumentation Computers and Peripherals Financial Services Healthcare Services Networking and Equipment Business Products and Services Other Total 36 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 321 323 307 280 296 302 287 296 243 253 435 686 73 98 138 153 138 145 138 164 136 140 176 236 56 68 92 75 71 58 54 79 82 97 138 191 128 117 166 151 185 191 161 188 148 128 179 212 23 25 33 24 27 31 30 22 19 33 62 127 122 138 162 140 144 157 125 132 102 101 128 155 43 51 72 59 52 67 48 51 54 66 114 132 84 72 92 91 80 78 51 60 45 38 64 74 86 77 94 80 81 63 67 64 73 73 141 211 18 32 71 81 73 46 38 34 35 28 54 70 77 68 70 57 60 50 47 38 27 37 49 47 157 148 131 138 135 104 78 84 65 66 93 95 22 28 36 43 44 25 24 24 31 31 47 61 33 56 56 46 55 41 38 46 52 45 73 139 80 76 73 69 71 74 65 83 65 77 82 123 20 42 51 38 32 28 20 25 32 22 50 69 2 2 2 1 2 2 2 3 2 9 9 1,345 1,421 1,646 1,526 1,544 1,462 1,273 1,392 1,212 1,237 1,894 2,637 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 820 980 1,411 2,165 1,298 1,005 965 949 955 1,027 1,073 1,098 815 1,035 1,178 1,277 242 274 260 355 337 326 357 400 405 483 526 530 458 493 466 463 219 266 701 944 372 167 127 140 209 329 399 400 266 345 441 395 272 294 288 295 257 234 248 280 286 358 399 402 345 349 370 319 162 207 456 687 324 170 147 151 172 236 281 286 221 303 362 315 213 186 205 254 204 131 142 158 154 225 306 365 255 307 311 243 162 163 287 285 119 72 47 67 78 79 110 103 86 114 137 162 116 120 148 256 209 169 214 258 218 266 224 206 132 137 136 108 268 340 529 858 481 275 214 232 236 309 279 230 131 120 124 95 91 121 230 282 83 49 31 38 40 40 41 42 38 33 68 59 54 56 53 76 59 63 55 72 84 96 93 94 63 67 58 51 115 91 104 133 81 59 57 61 65 60 70 61 54 56 61 48 91 115 190 334 137 76 64 68 63 90 85 68 54 74 60 45 152 155 159 165 105 70 70 64 64 51 57 51 40 45 47 43 140 211 279 481 335 232 186 193 186 137 146 106 101 63 49 38 94 139 279 459 177 102 97 83 83 99 113 119 72 75 61 35 12 10 21 12 11 3 1 3 2 2 11 4 8 10 17 27 3,223 3,728 5,600 8,041 4,589 3,203 3,022 3,217 3,300 3,887 4,213 4,165 3,139 3,626 3,946 3,723 Thomson Reuters
2013 NVCA Yearbook Figure 3.11 Venture Capital Investments By State 1985 to 2012 ($ Millions) State 1985 1986 CCA 1,070.9 1,344.1 MA 396.3 379.5 NY 114.5 71.2 WA 55.4 66.1 TX 249.0 228.4 IL 43.7 30.7 CO 77.0 113.8 PA 48.3 43.3 NJ 75.3 116.9 VA 32.3 23.5 UT 6.0 32.8 OH 34.7 55.7 MD 46.8 20.8 GA 55.8 111.4 MN 24.4 29.9 MI 34.8 21.3 AZ 15.2 38.1 FL 31.1 34.5 NC 17.3 17.4 CT 71.6 76.9 OR 84.9 75.0 WI 11.4 13.6 TN 43.5 53.5 RI 12.6 9.9 IN 13.3 16.7 DC 18.9 14.8 NH 5.3 14.8 KS 2.3 2.2 SC 0.9 NM 18.9 9.2 OK 1.5 4.7 AL 15.5 17.3 KY 2.4 2.3 MO 8.8 4.3 ID 0.3 WV 1.1 2.0 ME 19.0 11.6 ME 0.5 LA 9.9 3.3 MS 2.2 0.0 DE 0.3 NV - 2.4 MT 1.6 1.7 AR 1.2 IA 0.7 0.9 VT 6.6 ND - HI PR AK SD UN WY - 0.1 Total 2,776.4 3,124.5 1987 1,266.7 446.8 100.5 98.3 211.0 38.5 111.4 78.0 132.3 76.4 8.3 44.8 30.5 66.6 35.4 59.1 38.6 70.8 20.9 101.3 51.7 16.4 76.1 6.6 17.7 4.7 15.1 3.9 15.3 6.6 14.1 21.3 7.4 11.1 0.1 15.3 1.9 4.5 4.1 3.3 7.8 8.0 14.0 0.5 3,363.6 1988 1,391.8 387.8 112.1 73.3 240.7 42.7 107.8 68.4 99.1 66.6 11.9 53.4 46.1 97.2 26.0 15.7 43.9 82.5 15.7 167.7 66.7 12.8 42.7 14.2 6.4 17.2 27.7 4.6 18.1 3.9 5.3 9.6 2.8 1.6 0.0 8.7 1.5 1.9 0.6 1.4 1.1 1.3 4.5 0.8 3,406.0 1989 1,308.3 296.8 158.7 74.8 228.3 93.4 157.8 56.2 156.6 51.8 4.4 32.7 87.7 53.7 37.6 21.8 37.8 44.3 26.1 89.6 43.2 11.7 73.8 30.9 10.1 0.0 29.5 5.1 23.7 3.0 9.3 2.0 5.8 9.4 17.2 0.9 4.8 5.5 2.0 7.4 6.1 3,319.6 Thomson Reuters 1990 1991 1992 1993 1994 1995 1996 1997 1,221.6 1,031.3 1,418.6 1,231.6 1,513.3 3,108.7 4,634.4 6,044.9 351.5 240.0 366.3 310.9 385.9 697.2 1,053.9 1,438.6 48.8 45.0 143.8 103.9 69.9 303.3 293.3 786.2 55.2 29.2 191.5 85.4 138.6 325.9 466.9 434.2 141.0 161.4 149.6 240.7 311.8 479.2 553.4 908.7 72.0 96.6 73.9 89.5 168.9 198.9 361.1 419.4 93.7 54.2 129.7 135.0 197.4 325.1 321.2 405.0 108.8 35.2 154.0 104.7 148.9 128.0 299.4 540.9 66.5 68.7 106.1 101.2 198.2 241.6 441.8 490.9 46.7 14.0 30.9 39.5 77.6 279.4 440.1 297.9 1.0 9.1 24.4 7.3 1.2 23.2 57.5 90.7 27.9 19.6 27.1 34.3 67.3 68.7 164.5 181.9 47.6 36.4 30.1 343.5 55.9 140.0 139.5 188.3 20.9 47.1 192.7 143.4 93.5 155.8 247.1 371.9 78.7 38.7 64.1 37.1 55.4 192.3 149.9 256.8 26.4 5.7 14.9 58.7 8.6 65.7 79.4 106.2 27.5 33.3 64.9 41.9 35.7 83.4 95.5 170.2 34.6 22.5 71.9 127.7 102.8 270.9 398.9 436.5 36.9 12.1 48.8 22.2 63.6 210.7 179.9 271.8 134.5 86.5 57.8 33.3 82.5 141.3 146.0 264.9 33.0 29.7 55.6 32.8 27.0 38.6 90.5 126.9 10.9 5.5 23.3 32.5 8.5 9.1 26.0 62.9 38.8 21.1 7.0 44.3 40.6 157.7 178.2 106.6 2.7 0.4 5.1 10.5 - 3.5 20.3 11.5 10.5 8.3 0.0 16.6 56.3 15.2 20.8 29.7 2.5 0.8 4.8 1.1 4.3 0.8 6.7 5.2 16.2 29.2 6.8 31.7 7.9 30.5 42.9 53.3 8.9 0.4 1.7 4.8 1.5 8.7 35.7 9.2 7.6 4.0 1.2 11.4 21.8 53.1 100.2 61.0 1.8 4.4 - 0.5 - 3.6 12.9 32.5 2.6 1.5 - 11.0 6.1 31.8 27.8 2.3 0.3 10.6 55.1 25.0 28.5 50.2 109.9 - 8.5 3.9 15.4 11.9 21.6 31.1 35.0 7.5 34.9 25.2 55.1 70.5 98.5 56.1 72.6 5.0 0.2 0.1 15.2 0.1 1.2 0.1 - 0.0 23.8 5.1 4.3 0.5 3.0 - 1.5 1.5 3.7 - 38.0 3.5 0.5 10.4 3.7 - 2.3 3.8 3.8 2.7 25.5 13.7 26.5 4.9 2.4 14.5 1.7 15.0 10.6 8.4 2.3 3.8 9.9 3.0 12.5 4.4 4.7 1.1 0.1 2.2 9.1 - 1.2 2.9 18.7 9.7 - 1.0 - 1.0 5.0 4.0 2.5 0.7 1.6 2.0 19.8 12.1 22.1 17.1 7.2 1.3 3.8 - 5.3 13.0 1.8 4.5 - 0.2 9.8 1.1 - 20.5 1.5 - 0.3 0.0 1.0 22.0 7.8 8.2 12.5 - - 13.0 0.2 30.8 0.8 0.1 0.3 2.2 4.4 2.0 2,822.4 2,254.0 3,586.3 3,656.8 4,145.7 8,012.6 11,341.5 14,974.9 1998 7,884.8 2,002.1 1,402.4 736.5 1,205.6 435.9 838.9 644.9 501.2 749.7 116.2 319.1 349.9 504.5 340.0 122.4 226.1 625.3 326.9 345.2 53.5 51.3 107.3 26.0 44.0 46.9 167.8 10.4 168.0 7.7 115.4 58.3 37.5 611.7 30.3 2.0 59.7 29.1 41.0 4.5 61.2 29.9 8.8 4.2 0.5 4.2 1.3 39.1 21,498.9 1999 22,947.1 5,085.3 5,085 3,428.6 2,343.7 3,162.7 1,243.7 1,845.8 1,763.5 907.8 907 1,238.9 418.4 508.0 616.5 1,164.1 1, 616.5 253.5 365.5 1,697.4 853.6 889.2 501.0 88.5 581.0 35.4 46.7 539.7 233.8 30.2 218.2 12.1 70.0 65.9 65 81.9 309.1 16.5 44.9 57.3 234.0 250.7 2 16.8 16 47.1 16.3 25.9 3.9 3.0 3. 12.8 12 4.6 4. 0.7 2.4 54,900.3 2000 42,937.7 10,576.4 6,715.8 2,767.8 6,262.9 2,382.3 4,091.9 2,911.7 3,162.9 3,325.2 666.9 1,013.6 1,947.3 2,270.7 981.1 356.4 668.6 2,700.1 1,829.8 1,550.8 810.4 259.7 458.3 92.6 273.3 508.3 767.9 264.8 415.2 21.1 44.5 278.5 201.8 655.8 8.5 4.5 140.2 163.1 103.3 23.5 134.7 30.9 16.7 34.3 16.4 46.4 46 6.1 203.0 42.1 3.5 0.3 50.4 105,200.0 2001 16,667.2 4,953.4 1,948.7 1,150.7 3,104.3 998.6 1,244.4 1,084.2 1,544.4 1,004.2 220.1 247.1 935.6 847.9 475.0 154.9 247.5 937.3 585.6 608.2 248.6 92.6 193.3 118.7 56.5 161.8 257.9 40.3 10.1 14.2 13.8 80.3 88.9 267.4 2.7 1.4 3.9 90.1 46.0 30.0 14.6 33.3 24.8 10.4 9.1 11.6 1.0 37.8 32.0 1.6 14.3 40,968.3 2002 9,591.2 2,639.3 767.0 570.7 1,187.6 313.6 588.0 497.8 972.0 429.0 135.7 266.0 627.1 574.9 343.3 109.4 212.4 401.7 557.2 191.9 165.1 51.2 122.5 95.9 40.1 23.5 225.7 8.9 45.3 13.9 33.0 66.1 13.8 81.0 10.6 15.9 16.9 16.9 17.7 5.0 19.4 31.8 9.7 2.0 1.2 4.4 0.5 18.1 22,132.0 2003 8,683.1 2,721.3 669.8 450.8 1,221.0 379.9 644.8 537.6 839.8 397.3 111.8 193.9 328.6 281.5 208.2 95.2 81.9 326.1 379.4 223.6 140.5 37.6 82.6 62.8 24.5 56.1 167.1 27.0 11.8 3.6 35.1 35.7 5.4 79.5 52.2 12.6 2.7 4.6 2.3 0.9 0.4 23.2 1.2 0.5 14.5 17.8 0.1 3.5 19,681.1 2004 10,555.3 3,093.7 786.2 847.0 1,215.1 236.6 363.2 658.8 968.1 291.1 249.8 89.9 709.5 500.5 388.3 134.3 72.2 427.6 327.3 251.6 142.4 66.0 96.2 58.0 67.8 80.2 127.6 48.7 13.6 24.0 68.1 69.2 48.2 26.0 2.5 5.8 26.0 0.2 9.6 4.9 2.1 47.6 3.7 5.3 4.5 2.0 13.7 1.5 2.2 1.5 23,235.1 2005 10,864.0 2,733.8 1,094.7 837.6 1,189.4 320.2 653.4 523.5 925.4 536.7 248.8 136.5 645.0 264.4 274.0 93.3 134.7 346.0 341.6 209.6 132.2 67.8 101.5 72.8 123.7 28.1 97.2 7.2 2.7 76.4 80.8 35.2 32.0 127.7 10.0 10.5 5.1 13.1 3.0 10.0 11.1 64.9 27.4 5.1 12.1 34.8 14.6 28.8 4.1 23,612.5 2006 12,972.4 3,062.6 1,458.1 1,147.2 1,519.7 437.6 688.8 948.7 740.2 461.9 198.1 91.2 848.6 414.1 300.5 131.3 276.7 323.8 410.5 289.0 146.8 72.6 35.2 77.2 32.8 46.2 84.1 31.5 8.3 32.1 14.9 19.9 28.2 57.8 17.8 4.9 39.9 7.5 11.4 16.2 5.3 19.6 6.5 1.5 24.1 32.8 14.3 6.5 27,617.2 2007 15,387.4 3,759.3 1,316.5 1,358.9 1,496.9 459.6 686.3 1,010.7 608.6 644.9 184.7 226.4 727.3 438.0 413.1 109.7 238.2 599.3 522.1 271.0 254.4 90.2 126.7 4.5 70.6 60.5 154.1 123.4 86.9 131.1 8.1 34.4 54.1 47.6 18.7 10.8 7.8 2.9 15.1 5.0 7.3 23.7 4.0 6.2 25.3 17.6 0.2 4.9 16.0 4.0 0.2 31,875.1 2008 14,758.1 3,423.2 1,513.4 942.7 1,122.6 480.0 872.3 808.5 757.7 559.6 199.2 275.8 520.9 418.5 481.0 214.5 228.5 327.5 488.9 236.1 152.2 71.6 84.3 16.1 93.7 35.4 194.8 59.5 21.2 49.8 17.3 48.8 22.8 92.5 22.8 30.0 5.4 27.8 14.5 79.0 12.6 15.6 58.2 42.2 5.5 7.5 13.8 0.5 1.5 29,925.9 2009 10,248.4 2,381.7 1,068.8 582.2 665.5 257.6 623.2 433.6 666.1 240.9 162.7 122.7 386.5 313.6 284.8 178.5 94.0 347.6 254.9 190.2 67.4 25.9 75.0 30.0 232.1 49.2 52.1 7.5 7.1 5.5 4.5 45.4 17.3 17.4 14.6 3.0 11.4 13.0 1.3 20.6 15.4 14.5 84.1 47.1 4.7 7.4 0.8 0.5 20,378.3 2010 11,926.7 2,448.9 1,400.0 621.8 1,070.9 647.6 447.9 517.9 466.0 409.3 139.0 175.2 446.7 337.0 142.1 151.7 78.4 239.4 423.1 133.2 133.4 135.0 67.8 59.3 80.0 107.5 56.9 41.7 41.6 12.4 13.0 0.6 16.7 97.0 7.8 3.8 4.3 11.5 18.0 32.2 33.9 1.9 5.0 51.5 33.1 3.2 9.5 4.5 10.0 23,315.7 2011 14,752.2 3,132.5 2,429.0 551.4 1,580.2 768.7 615.7 509.6 485.9 617.7 239.5 432.5 314.0 383.4 283.1 84.8 229.1 350.2 304.9 156.7 236.8 72.9 107.4 42.2 177.9 53.4 56.3 57.2 59.7 64.9 27.1 3.5 12.5 134.4 5.1 2.1 38.6 21.9 1.0 26.2 9.5 3.2 28.4 24.8 4.0 0.6 4.1 29,497.2 2012 14,128.8 3,067.9 1,856.7 931.5 930.5 570.4 564.2 517.8 429.3 372.3 304.3 285.7 279.6 264.8 242.6 232.3 211.7 202.9 169.0 157.6 123.8 95.2 87.2 85.1 84.1 61.0 60.7 46.2 39.5 35.2 34.0 23.1 23.1 21.2 15.2 14.6 12.8 10.6 10.5 9.8 9.5 7.1 5.6 5.0 5.0 4.4 2.4 0.6 0.1 26,652.4 37
National Venture Capital Association Figure 3.11b Number of Venture Capital Deals by State 1985 to 2012 State CCA MA NY PA TX WA CO IL VA OH GA MD NJ CT MI UT FL NC TN MN OR DC IN AZ NM RI WI KS MO NH DE OK AL KY ME MT ME SC ID LA MS NV VT HI WV AR IA ND PR SD AK UN WY Total 38 1985 467 215 45 34 106 20 43 26 22 26 31 18 45 33 20 3 21 14 16 23 24 4 8 15 2 6 12 1 5 3 1 4 7 2 8 2 1 1 1 6 1 1 1 1 1,345 1986 494 187 46 45 93 21 58 27 22 21 44 17 43 33 24 14 20 20 22 31 24 5 15 11 3 4 16 2 7 9 1 5 10 4 6 3 2 1 2 3 1 1 3 1 1,421 1987 523 224 63 59 106 29 62 31 31 26 45 24 54 41 25 15 29 15 28 34 30 8 15 20 5 7 17 6 13 11 1 4 12 7 5 2 5 1 2 2 3 2 2 1 1 1,646 1988 534 195 48 54 105 30 63 31 26 21 41 28 42 46 12 7 24 11 31 29 34 4 6 13 6 6 15 3 8 10 4 1 4 4 4 6 5 3 2 1 3 1 3 2 1,526 1989 568 182 49 41 91 37 53 61 30 18 31 19 55 48 16 6 22 18 27 30 27 2 6 24 1 7 6 3 11 13 3 4 7 5 6 1 7 1 1 2 2 3 1,544 1990 552 172 31 44 85 26 49 34 27 21 33 29 44 41 15 4 32 28 22 32 22 5 12 14 3 7 10 3 11 18 5 2 7 6 5 3 1 3 1 2 1 1,462 1991 478 136 24 37 70 26 35 44 24 20 36 27 48 36 9 9 19 20 24 31 12 3 8 15 2 4 6 1 9 17 4 1 2 2 4 3 10 2 1 4 3 3 3 1 1,273 1992 573 135 38 61 70 37 53 40 20 21 37 25 44 33 6 8 25 20 11 26 12 3 1 22 2 9 3 9 10 3 4 2 1 7 1 1 4 4 1 1 4 2 1 2 1,392 1993 436 131 37 44 71 32 48 25 20 20 42 18 38 26 12 7 26 22 8 24 15 2 7 21 2 3 8 2 13 10 1 10 2 2 5 7 2 4 2 1 1 1 4 1,212 1994 462 127 38 39 69 36 53 35 21 20 46 22 40 35 3 1 19 20 12 20 13 4 7 25 1 9 2 8 4 3 5 4 3 3 6 1 2 5 2 3 4 1 2 2 1,237 1995 685 197 73 64 101 66 58 44 39 36 49 32 56 43 12 6 61 36 21 50 17 1 8 27 2 3 8 4 19 10 4 2 9 9 2 1 5 1 7 2 5 2 9 2 4 2 1,894 1996 1,023 289 89 85 135 83 83 56 59 57 54 49 68 45 21 16 57 60 29 47 28 5 9 30 5 2 11 11 26 17 4 7 8 7 5 5 15 1 4 3 4 3 3 6 6 7 2,637 1997 1,140 334 156 139 172 89 98 88 82 54 79 49 85 65 28 31 74 80 25 89 41 2 13 29 4 4 19 6 18 17 4 5 17 15 2 3 15 2 12 4 7 3 4 2 2 4 1 2 7 2 3,223 1998 1999 2000 2001 2002 2003 2001 2002 2003 1,400 2,221 2,949 1,537 1,102 1,159 398 592 790 520 387 384 520 38 196 353 611 294 156 120 149 153 261 155 108 106 197 318 484 341 173 173 34 111 208 256 146 110 80 14 127 162 222 115 91 74 74 119 203 128 81 59 99 154 285 145 92 86 66 53 82 45 51 32 98 161 224 138 81 65 58 100 178 92 92 86 83 118 188 157 96 85 15 73 96 123 78 41 38 29 44 55 22 27 18 35 43 58 44 29 24 44 29 70 117 190 113 64 66 11 82 104 154 88 80 76 88 80 76 24 47 50 30 25 24 77 84 107 87 58 57 18 52 67 42 28 23 4 18 45 22 7 6 9 11 28 77 12 12 8 38 57 70 35 27 19 4 6 8 4 6 5 5 11 11 11 14 10 16 19 27 20 11 8 3 8 22 10 8 13 23 29 54 18 29 19 18 24 31 60 39 41 34 39 3 5 1 2 1 12 8 9 5 4 3 14 10 30 15 13 10 16 16 14 5 3 3 14 11 15 9 6 3 2 3 2 5 7 11 10 3 2 17 10 11 4 4 3 3 2 3 2 2 5 9 9 14 10 7 2 3 5 6 3 3 3 11 10 10 6 6 7 3 1 4 3 4 3 3 3 3 5 2 7 1 2 2 8 5 3 5 5 3 5 3 7 2 4 5 1 1 1 1 1 1 2 2 2 11 5 1 1 1 1 2 2 1 1 14 3 16 8 3,728 5,600 8,041 4,589 3,203 3,022 2004 2005 2006 2007 2004 2005 2006 2007 1,249 1,338 1,591 1,727 382 391 412 472 159 132 233 218 114 108 150 178 177 181 201 188 114 123 144 167 72 93 110 114 62 61 67 73 79 91 95 102 37 38 46 67 79 64 91 75 97 115 112 99 94 81 92 101 38 34 30 36 17 21 24 23 31 32 43 37 66 54 60 60 56 47 59 69 27 25 13 23 52 43 45 61 31 28 33 39 8 11 9 14 10 13 14 17 12 28 34 34 8 16 9 27 8 12 7 3 14 18 21 23 13 5 10 16 9 11 14 18 22 21 19 25 1 5 4 5 12 1 8 6 8 5 9 8 6 3 10 9 4 3 7 8 2 1 1 2 3 4 4 5 1 2 10 2 3 5 7 4 3 2 7 5 2 4 1 7 8 7 8 3 4 8 7 5 6 11 6 3 5 4 5 2 2 6 2 4 3 2 3 1 1 1 2 3 4 4 1 3 1 4 1 2 3,217 3,300 3,887 4,213 2008 2008 1,687 456 261 194 161 163 116 76 89 68 80 103 96 42 45 38 45 55 27 51 33 14 14 22 18 6 20 25 25 28 9 5 10 8 4 2 4 10 6 10 6 8 7 2 8 4 2 1 1 4,165 2009 2010 2009 2010 1,284 1,461 342 375 205 296 135 160 123 165 109 120 94 86 54 73 50 58 60 61 46 70 79 74 78 72 42 62 36 31 34 27 37 46 39 58 17 30 39 30 15 33 8 16 15 17 20 16 13 11 15 11 14 21 17 36 12 15 14 10 6 9 4 2 11 2 9 15 4 7 1 3 4 5 10 4 4 11 3 4 4 5 8 7 3 3 3 4 1 9 2 3 1 1 3 1 1 1 3,139 3,626 2011 2011 1,602 395 345 151 167 125 107 99 76 73 60 73 64 56 36 49 57 49 38 48 37 11 14 22 10 14 15 46 22 13 10 4 2 9 5 2 1 4 3 8 1 3 8 3 2 3 1 2 1 3,946 2012 2012 1,532 414 331 179 159 117 100 83 80 60 54 54 54 52 47 44 35 35 32 29 27 26 17 15 14 14 13 10 9 8 7 7 6 6 6 6 5 5 4 4 4 4 4 3 3 1 1 1 1 1 3,723 Thomson Reuters
2013 NVCA Yearbook Figure 3.12 Venture Capital Investments First vs. Follows-on Rounds Total Dollars Invested ($ Millions) Figure 3.14 Venture Capital Investments Number of Companies Receiving 7,000 120,000 6,000 100,000 First 80,000 60,000 40,000 5,000 First Series1 4,000 3,000 2,000 Year Year Figure 3.13 Venture Capital Investments First vs. Follows-on Rounds Total Dollars Invested ($ Millions) Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 First 724.1 898.0 1,009.1 1,101.1 906.1 835.9 552.0 1,284.4 1,273.7 1,652.6 3,976.7 4,196.6 4,838.4 7,174.7 16,362.8 28,632.2 7,347.9 4,321.1 3,703.9 5,444.5 5,955.0 6,329.9 7,719.7 6,556.6 3,622.0 4,287.4 5,437.8 4,177.4 Thomson Reuters Follow-on 2,052.2 2,226.5 2,354.5 2,304.8 2,413.5 1,986.4 1,702.0 2,301.9 2,383.1 2,493.1 4,035.9 7,144.8 10,136.5 14,324.2 38,537.5 76,567.8 33,620.4 17,810.9 15,977.2 17,790.6 17,657.5 21,287.4 24,155.4 23,369.3 16,756.3 19,028.3 24,059.4 22,475.0 '10 '11 '12 0 '07 '08 '09 0 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 1,000 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 20,000 '01 '02 '03 '04 '05 '06 ($ Millions) (Number of Companies) Follow-on Follow-on Series2 Total 2,776.4 3,124.5 3,363.6 3,406.0 3,319.6 2,822.4 2,254.0 3,586.3 3,656.8 4,145.7 8,012.6 11,341.5 14,974.9 21,498.9 54,900.3 105,200.0 40,968.3 22,132.0 19,681.1 23,235.1 23,612.5 27,617.2 31,875.1 29,925.9 20,378.3 23,315.7 29,497.2 26,652.4 Figure 3.15 Venture Capital Investments First vs. Follows-on Rounds Total Number of Companies Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 No. of Cos Receiving Initial Deals Financing 433 506 580 513 450 351 267 392 356 430 901 1,146 1,304 1,431 2,470 3,394 1,236 851 775 971 1,081 1,281 1,416 1,307 830 1,088 1,317 1,174 No. of Cos Receiving Follow-On Financing 756 759 865 800 839 787 717 717 651 628 775 1,171 1,473 1,830 2,442 3,691 2,782 1,972 1,834 1,842 1,853 2,128 2,248 2,343 1,896 2,040 2,158 2,117 No. of Cos Receiving Financing* 1,153 1,226 1,387 1,264 1,239 1,071 942 1,046 950 993 1,571 2,118 2,575 3,030 4,477 6,425 3,855 2,712 2,508 2,707 2,806 3,233 3,493 3,474 2,638 3,006 3,308 3,143 * No. of Cos receiving financing can be less than the sum of the prior two columns because a given company can receive initial and follow-on financing in the same year 39
National Venture Capital Association Figure 3.16 First Sequence by Stage of Development ($ Millions) 1985 to 2012 Stage SSeed Early Stage Expansion LaterStage Total 1985 306.3 112.0 266.8 39.1 724.1 1986 437.6 185.1 211.7 63.6 898.0 1987 353.4 319.2 274.1 62.4 1,009.1 1988 378.1 291.8 324.3 106.9 1,101.1 1989 257.4 215.3 320.0 113.4 906.1 1990 178.2 292.2 278.9 86.7 835.9 1991 102.7 214.6 157.6 77.1 552.0 1992 213.4 255.4 572.5 243.1 1,284.4 1993 356.5 261.1 488.1 168.0 1,273.7 1994 528.1 390.8 493.1 240.5 1,652.6 1995 742.6 898.3 1,644.4 691.5 3,976.7 1996 636.9 1,356.4 1,742.4 460.9 4,196.6 1997 804.9 1,691.8 1,866.5 475.2 4,838.4 1998 1999 1,003.4 2,798.2 2,700.2 6,292.2 2,835.0 5,960.4 636.1 1,311.9 7,174.7 16,362.8 2000 2,520.6 16,472.4 8,715.9 923.3 28,632.2 2001 632.1 4,424.6 1,925.8 365.4 7,347.9 2002 267.1 2,330.5 1,339.1 384.4 4,321.1 2003 304.1 2,135.0 950.4 314.5 3,703.9 2004 828.4 2,610.2 1,294.3 711.6 5,444.5 2005 813.8 2,655.3 1,563.0 922.9 5,955.0 2006 1,078.6 2,553.2 1,908.1 790.0 6,329.9 2007 1,413.8 2,921.1 2,479.8 905.0 7,719.7 2008 1,376.7 2,406.6 1,703.8 1,069.5 6,556.6 2009 1,013.8 1,342.7 790.2 475.3 3,622.0 2010 897.6 1,753.4 913.9 722.5 4,287.4 2011 811.4 2,602.0 1,038.8 985.5 5,437.8 2012 477.2 2,130.5 923.8 645.8 4,177.4 Figure 3.17 First Sequence by Stage of Development (No. of Deals) 1985 to 2012 Stage 1985 1986 1987 Seed 220 247 230 Early Stage 81 118 199 Expansion 108 106 119 Later Stage 24 35 32 Total 433 506 580 1988 211 169 107 26 513 1989 1990 1991 1992 1993 1994 206 119 88 119 145 189 102 121 79 131 71 112 113 88 80 115 106 107 29 23 20 27 34 22 450 351 267 392 356 430 1995 256 281 294 70 901 1996 310 401 360 75 1,146 1997 347 470 419 68 1,304 1998 459 495 412 65 1,431 1999 661 1118 629 62 2,470 2000 584 1919 800 91 3,394 2001 220 693 280 43 1,236 2002 131 465 202 53 851 2003 166 421 142 46 775 2004 2005 2006 2007 2008 178 211 322 425 383 535 543 574 588 551 183 251 273 299 229 75 76 112 104 144 971 1,081 1,281 1,416 1,307 2 009 225 388 142 75 830 2 01 0 281 542 166 99 1,088 2 01 1 355 673 173 116 1,317 2 01 2 198 758 138 80 1,174 2009 791.2 249.8 616.8 326.2 573.1 304.2 125.0 89.4 42.0 54.5 43.1 3.6 22.5 60.0 118.7 50.7 151.2 3,622.0 2010 943.1 442.1 613.9 380.9 440.7 243.5 116.8 173.3 105.6 153.5 65.7 2.0 81.6 66.4 153.0 145.3 159.9 4,287.4 2011 1,603.1 591.8 922.5 468.9 576.2 212.4 353.2 82.3 102.1 98.4 50.0 15.5 79.0 100.8 63.1 59.8 58.7 5,437.8 2012 1,717.8 459.0 441.8 303.0 247.0 233.3 202.0 141.3 79.7 70.6 70.0 52.7 46.8 37.5 27.4 24.4 23.0 4,177.4 Figure 3.18 First Sequence by Industry ($ Millions) 1985 to 2012 Industry SSoftware Media andEntertainment Biotechnology ITServices Industrial/Energy MedicalDevicesandEquipment ConsumerProductsandServices Telecommunications Semiconductors HealthcareServices Electronics/Instrumentation Other Retailing/Distribution ComputersandPeripherals BusinessProductsandServices NetworkingandEquipment Financial Services Total 40 1985 92.3 69.8 34.5 20.8 93.6 41.7 46.8 64.5 46.3 16.5 43.3 0.5 19.7 38.5 12.3 21.9 61.1 724.1 1986 118.6 43.5 54.3 9.6 81.3 75.0 63.9 45.0 22.4 66.1 27.6 2.0 57.0 69.0 48.7 34.1 79.8 898.0 1987 94.6 100.3 66.0 5.5 114.5 85.8 57.9 38.6 38.6 56.4 32.1 137.8 87.0 26.6 23.5 43.9 1,009.1 1988 130.1 114.1 66.9 12.8 123.8 84.8 77.0 33.4 56.7 17.1 25.7 6.0 63.3 70.5 11.3 41.8 165.9 1,101.1 1989 94.3 80.4 53.1 20.6 222.5 74.7 31.1 44.2 14.5 48.8 12.7 22.4 46.3 13.3 55.9 71.4 906.1 1990 167.9 63.7 26.1 18.3 107.2 60.0 77.6 53.6 36.3 31.5 14.7 0.0 13.2 52.4 37.7 40.4 35.3 835.9 1991 106.8 13.9 16.1 10.3 68.4 45.9 53.8 10.8 10.2 31.7 15.1 32.7 25.1 19.1 63.7 19.9 8.3 552.0 1992 149.8 81.3 164.1 8.9 148.9 126.1 76.9 93.5 51.7 66.6 14.2 0.0 52.7 59.9 28.1 61.0 100.6 1,284.4 1993 123.0 195.6 123.9 36.0 147.7 117.2 74.8 64.6 5.1 92.5 16.0 28.4 35.1 61.9 73.0 78.9 1,273.7 1994 296.0 115.3 161.1 93.0 154.4 124.9 113.2 192.8 40.9 109.5 8.6 0.2 60.5 48.5 33.6 37.7 62.4 1,652.6 1995 542.1 775.1 159.3 44.9 434.1 188.4 318.1 365.2 69.5 300.4 67.1 12.0 217.7 148.1 125.2 95.5 114.0 3,976.7 1996 918.7 363.8 206.5 220.8 274.5 210.8 209.5 417.5 130.5 273.9 90.3 0.5 131.0 120.0 243.0 128.0 257.2 4,196.6 1997 1,053.2 392.7 346.2 236.1 361.6 259.8 195.1 387.1 166.2 342.5 123.8 16.1 114.2 110.2 255.3 224.3 254.1 4,838.4 1998 1,372.8 688.4 384.0 377.1 782.4 275.2 246.3 955.6 165.4 239.2 47.5 26.8 355.3 122.1 367.0 325.9 443.6 7,174.7 1999 2,852.6 2,458.4 423.0 1,549.1 744.1 308.1 838.8 1,968.5 290.0 368.5 81.4 92.3 667.1 273.5 990.7 1,604.5 852.0 16,362.8 2000 6,177.6 2,874.8 798.9 2,621.8 1,094.8 335.1 954.3 4,756.8 1,145.2 430.5 153.1 37.0 872.8 348.0 1,921.7 2,624.8 1,484.8 28,632.2 2001 1,636.2 344.6 817.5 291.6 474.8 277.7 131.6 808.4 517.0 84.4 103.3 36.6 59.1 259.8 277.1 896.7 331.4 7,347.9 2002 1,263.6 208.5 698.8 133.1 436.1 250.5 44.9 189.5 344.6 155.1 82.3 17.0 34.7 17.2 120.3 248.5 76.3 4,321.1 2003 900.3 219.2 423.7 163.3 265.4 309.7 78.0 179.5 382.7 70.5 45.8 12.4 83.5 342.6 132.8 94.4 3,703.9 2004 1,232.0 731.5 724.5 198.8 308.9 325.2 126.7 284.2 419.6 94.3 98.8 13.6 118.3 91.1 235.9 193.4 247.6 5,444.5 2005 1,174.1 566.2 615.5 335.0 531.4 409.6 233.2 343.8 269.5 140.7 136.0 135.9 84.4 162.7 173.6 643.3 5,955.0 2006 1,344.7 637.8 1,088.5 347.0 718.7 565.2 126.3 395.9 269.5 118.1 134.9 39.9 55.7 189.3 129.6 168.6 6,329.9 2007 1,483.5 648.3 1,063.8 483.0 1,261.3 786.8 205.9 421.2 200.3 70.2 121.2 15.8 84.5 109.4 262.2 169.7 332.6 7,719.7 2008 1,161.3 504.0 950.2 631.8 1,243.3 691.1 200.4 318.8 162.7 32.0 60.7 55.1 156.3 98.5 50.7 239.8 6,556.6 Thomson Reuters
2013 NVCA Yearbook Figure 3.19 First Sequence by Industry (No. of Deals) 1985 to 2012 Industry 1985 1986 1987 1988 1989 1990 SSoftware 72 75 83 87 68 83 Media and Entertainment 29 34 46 33 33 23 IT Services 12 8 6 9 11 7 Consumer Products and Services 26 30 33 18 23 26 Biotechnology 28 32 57 47 36 26 Industrial/Energy 57 59 73 71 73 51 Medical Devices and Equipment 39 53 61 57 62 37 Telecommunications 26 25 25 21 24 10 Other 1 1 1 2 Retailing/Distribution 13 24 39 26 13 9 Financial Services 14 20 24 22 12 7 Healthcare Services 9 32 19 11 9 7 Business Products and Services 12 26 22 13 9 8 Electronics/Instrumentation 27 18 24 18 15 8 Semiconductors 24 13 16 21 13 14 Computers and Peripherals 27 34 33 35 28 17 Networking and Equipment 17 22 19 23 21 16 Total 433 506 580 513 450 351 Thomson Reuters 1991 61 11 5 18 21 29 28 13 2 6 10 12 9 10 7 11 14 267 1992 66 27 5 21 53 33 44 18 2 12 13 17 10 10 11 27 23 392 1993 51 27 8 19 46 35 41 27 1 13 17 13 17 6 6 15 14 356 1994 98 31 20 28 42 40 36 23 1 9 12 20 11 11 11 20 17 430 1995 223 70 28 57 54 80 55 68 5 36 32 42 31 21 25 42 32 901 1996 324 76 66 53 69 79 84 89 1 36 38 59 39 21 29 36 47 1,146 1997 327 108 63 71 84 98 108 93 6 33 44 53 48 19 54 43 52 1,304 1998 333 114 90 68 107 84 96 140 5 46 63 37 74 18 44 31 81 1,431 1999 591 376 230 140 80 102 87 231 10 115 102 52 148 16 50 35 105 2,470 2000 880 391 327 100 122 123 69 395 9 121 172 58 224 27 116 52 208 3,394 2001 313 73 73 29 110 83 61 128 8 19 41 20 52 25 77 28 96 1,236 2002 268 43 27 24 115 62 62 44 2 9 29 20 26 18 52 11 39 851 2003 228 38 34 20 92 52 76 37 1 5 19 17 29 19 66 21 21 775 2004 250 57 51 31 109 69 79 57 3 20 34 16 38 23 80 18 36 971 2005 289 102 63 43 119 70 88 70 2 23 31 24 39 32 42 19 25 1,081 2006 300 156 91 42 148 115 127 95 10 34 19 41 22 48 12 21 1,281 2007 326 179 100 57 147 150 124 77 9 13 47 19 55 26 38 25 24 1,416 2008 308 165 120 52 148 154 109 49 3 17 31 10 49 29 33 20 10 1,307 2009 218 90 79 31 95 82 76 26 6 11 18 13 27 17 13 17 11 830 2010 319 148 99 41 119 91 70 37 9 17 37 21 29 15 15 14 7 1,088 2011 433 215 137 57 114 87 67 47 12 25 21 12 32 11 21 15 11 1,317 2012 441 174 109 79 73 68 63 37 25 22 17 13 12 12 12 10 7 1,174 41
National Venture Capital Association Figure 3.20 Internet-Related Investments By Year 1995-2012 Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 TOTAL # Companies 427 761 1,027 1,494 3,068 4,611 2,389 1,468 1,249 1,270 1,369 1,678 1,791 1,844 1,428 1,703 2,082 2,050 13,982 ($ Millions) 1,931.0 4,215.3 6,339.7 11,911.9 42,567.5 80,656.8 26,433.4 11,358.8 9,324.1 10,897.8 11,153.3 13,136.8 14,880.7 13,332.5 9,299.5 11,047.0 15,851.2 15,676.0 310,013.3 Figure 3.21 Top Five States By Internet-Related Investments in 2012 State California New York Massachusetts Washington Texas TOTAL* ($ Millions) 8,783.7 1,665.3 1,288.3 671.4 470.2 12,878.8 *Total includes above 5 states only Figure 3.22 2012 Internet-Related Investments By Regions Stage Region Silicon Valley NY Metro New England LA/Orange County Northwest Midwest DC/Metroplex Texas SouthWest Southeast San Diego Colorado Philadelphia Metro North Central South Central Upstate NY Sacramento/N.Cal Alaska/Hawaii/Puerto Rico TOTAL 42 ($ Millions) 7,558.5 1,776.0 1,338.4 950.0 769.1 652.5 493.4 470.2 433.3 409.6 268.2 233.8 147.0 109.8 40.1 18.9 7.1 0.1 15,676.0 Thomson Reuters
2013 NVCA Yearbook Figure 3.23 Sources and Targets of Invested Capital Investments 2012 SOURCE STATE AL AR AZ CA CO CT DC DE FF FL GA HI IA ID IL IN KS KY LA MA MD ME MI MN MO MT NC ND NE NH NJ NM NV NY OH OK OR PA PR RI SC SD TN TX UN UT VA VT WA WI Total AK 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 AL 7.3 0.0 0.0 8.9 0.0 0.0 0.0 0.0 1.1 0.0 2.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.2 0.0 0.0 0.0 0.0 0.0 23.2 AR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.1 0.0 0.0 0.0 0.0 0.0 5.0 AZ CA CO CT DC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.6 0.0 0.0 0.0 11.0 6,966.5 87.2 24.6 20.7 0.0 56.4 83.5 0.0 0.0 4.6 281.7 21.7 26.6 0.0 0.0 18.3 1.4 0.0 2.2 0.0 0.0 0.0 0.0 0.0 20.5 1,191.8 80.1 27.5 0.0 0.0 29.2 0.0 0.0 0.0 0.0 18.4 6.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 5.8 0.0 0.0 50.0 257.2 18.3 0.0 0.0 0.0 10.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.2 0.0 0.0 0.0 0.0 2.9 1.0 6.3 1218.6 24.7 8.0 0.0 46.0 49.4 13.8 0.4 7.3 0.0 0.0 0.0 0.0 0.0 0.0 142.3 0.9 0.0 0.0 2.5 50.6 0.0 0.0 0.0 0.0 55.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 34.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 144.0 0.4 1.9 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.1 0.0 0.0 0.0 32.2 1029.8 31.6 17.9 3.2 0.0 6.8 0.0 2.4 0.0 0.0 2.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.8 104.5 0.9 2.5 7.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.4 0.8 0.0 0.0 2.5 8.1 0.0 0.0 0.0 16.9 51.7 2.5 0.0 0.0 14.0 2227.9 166.8 41.7 17.8 0.5 21.1 0.0 0.0 0.0 0.0 46.1 4.1 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 93.6 10.0 0.0 0.1 0.0 5.5 2.2 0.0 0.0 211.8 14,129.0 564.1 157.6 61.0 DE 0.0 0.0 0.0 7.9 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.1 0.2 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 9.5 FL 2.1 0.0 0.0 48.5 0.0 2.4 0.0 0.0 21.6 6.3 1.8 0.0 0.0 0.0 7.5 0.0 0.0 0.0 1.3 7.2 6.3 0.0 0.0 8.2 2.4 0.0 5.7 0.0 0.0 0.0 0.0 0.0 0.0 31.3 2.3 0.0 0.0 19.6 0.0 0.0 0.0 0.0 0.0 0.0 28.5 0.0 0.0 0.0 0.0 0.0 203.0 GA 4.2 0.0 0.0 101.3 0.0 7.7 4.8 0.0 6.6 3.4 28.1 0.0 0.0 0.0 5.6 0.0 0.0 0.0 0.2 5.0 5.7 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 2.0 0.0 0.0 17.3 0.0 0.0 0.0 3.9 0.0 0.0 0.0 0.0 2.1 18.1 45.1 0.0 1.8 0.0 0.0 0.0 264.9 HI 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.6 Target State IA ID 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 12.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 15.2 IL 0.0 0.0 0.0 134.9 14.7 2.6 5.1 0.0 146.9 0.0 0.0 0.0 0.0 0.0 84.5 0.0 0.0 0.0 1.3 40.2 2.5 0.0 20.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19.6 5.9 0.0 0.0 6.9 0.0 0.0 0.0 0.0 10.0 0.3 65.8 1.7 7.5 0.0 0.0 0.2 570.6 IND 0.0 0.0 0.0 4.3 0.0 0.0 0.0 0.0 0.0 3.5 0.0 0.0 0.0 0.0 0.1 17.0 0.0 0.0 0.0 0.0 0.0 0.0 3.0 0.0 0.0 0.0 10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.2 0.0 0.0 25.0 0.0 0.0 0.0 0.0 0.0 0.0 15.0 0.0 0.0 0.0 0.0 0.0 84.1 KS K 0.0 0.0 0.0 8.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 3.5 0.0 0.0 0.0 2.0 0.3 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.0 8.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 22.2 0.0 0.1 0.0 0.0 0.0 46.3 KY 0.0 0.0 0.0 2.5 0.0 0.2 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 23.0 LA MA 0.0 0.0 0.0 0.0 0.0 21.3 2.3 718.7 0.0 9.8 0.0 58.0 0.0 6.8 0.0 0.0 0.0 308.6 0.0 6.0 0.0 6.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 25.2 0.0 8.9 0.0 0.0 0.0 0.4 0.3 1.0 4.6 903.0 0.0 10.5 0.0 11.0 0.1 0.1 0.0 11.3 0.0 9.5 0.0 0.0 0.0 2.6 0.0 0.0 0.0 0.0 0.0 3.9 0.0 47.2 0.0 0.0 0.0 2.7 2.3 210.1 0.0 9.0 0.0 0.0 0.0 0.0 0.0 25.6 0.0 0.0 0.0 17.0 0.0 0.0 0.0 1.5 0.0 3.0 0.0 13.4 1.0 565.5 0.0 12.0 0.0 10.4 0.0 0.0 0.0 25.3 0.0 2.7 10.6 3,068.0 MD 0.5 0.0 0.0 122.4 7.8 5.1 0.4 0.0 19.4 0.0 1.3 0.0 0.0 0.0 4.3 0.3 0.0 3.1 0.0 16.0 13.4 0.0 0.0 0.0 0.0 0.0 9.8 0.0 0.0 0.0 3.1 0.0 0.0 22.1 0.0 0.0 0.0 3.8 0.0 0.0 0.0 0.0 0.0 0.0 33.5 1.1 9.6 0.0 2.4 0.0 279.4 ME 0.0 0.0 0.0 3.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.2 0.0 0.0 0.0 0.0 0.0 12.8 MI 0.0 0.0 0.0 28.9 0.0 52.4 0.0 0.0 26.2 0.0 0.0 0.0 0.0 0.0 13.8 0.0 0.0 1.9 0.0 8.3 0.0 0.0 34.4 0.0 0.0 0.0 3.7 0.0 0.0 0.0 0.0 0.0 0.0 10.8 4.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 41.9 0.0 0.0 0.0 1.4 4.2 232.2 MN 0.0 0.0 0.0 81.5 0.0 6.0 0.4 0.0 52.0 0.0 2.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.0 7.5 0.0 0.0 7.6 50.0 0.0 0.0 0.0 0.0 0.0 0.0 6.5 0.0 0.0 4.7 0.0 0.0 0.0 0.3 0.0 0.0 0.0 5.2 1.8 0.0 16.3 0.0 0.0 0.0 0.0 0.0 242.4 MO 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8.7 4.8 0.0 0.0 0.0 0.0 0.0 21.3 MS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 1.6 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.4 1.4 3.4 0.0 0.0 0.0 0.0 0.0 9.8 Source State includes U.S. states. FF = other foreign UN = undisclosed or unknown. Thomson Reuters 43
National Venture Capital Association Target State Figure 3.23 (continued) Sources and Targets of Invested Capital Investments 2012 SOURCE STATE AL AR AZ CA CO CT DC DE FF FL GA HI IA ID IL IN KS KY LA MA MD ME MI MN MO MT NC ND NE NH NJ NM NV NY OH OK OR PA PR RI SC SD TN TX UN UT VA VT V WA WI Total MT 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.2 0.0 0.0 0.0 0.0 0.0 5.6 NC 2.4 0.0 0.0 27.3 0.0 5.9 1.2 0.0 34.3 0.8 0.9 0.0 0.0 0.0 7.0 0.8 0.0 0.0 0.0 6.8 2.2 0.0 0.0 0.0 2.9 0.0 42.6 0.0 0.0 0.0 0.0 0.0 0.0 16.9 1.2 0.0 0.0 4.8 0.0 0.0 0.0 0.0 0.0 0.5 9.0 0.0 1.7 0.0 0.0 0.0 169.2 ND 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.4 0.0 0.0 0.0 0.0 0.0 2.4 NE 0.0 0.0 0.0 7.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 10.7 NH 0.0 0.0 0.0 18.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 12.2 0.0 4.4 0.0 0.0 0.0 0.0 0.6 0.0 0.0 1.1 5.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19.1 0.0 0.0 0.0 0.0 0.0 60.6 NJ 0.0 0.0 0.2 62.9 0.0 20.4 0.7 0.0 70.4 0.0 0.0 0.0 0.0 0.0 15.6 0.7 0.0 0.0 0.0 23.3 0.3 0.0 4.4 0.5 0.0 0.0 8.4 0.0 0.0 0.0 27.5 0.0 0.0 39.0 0.0 0.0 0.0 14.1 0.0 0.0 0.0 0.0 0.0 0.3 120.8 0.0 0.0 0.0 19.8 0.0 429.3 NM 0.0 0.0 0.0 3.4 0.1 1.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.0 0.0 0.8 3.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.6 13.6 3.3 0.0 0.0 0.0 0.0 35.1 Target State NV NY OH OK ORE PA PR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.8 422.7 76.1 0.0 46.5 128.7 0.0 0.0 8.4 0.0 0.0 6.6 3.8 0.0 0.0 42.8 27.2 0.0 0.0 10.4 0.0 0.0 5.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.7 0.0 1.0 136.1 17.6 0.0 10.2 35.0 0.0 0.0 0.0 1.9 0.0 5.8 5.2 0.0 0.0 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8.4 2.2 0.0 0.0 5.5 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 3.8 0.0 0.0 0.8 0.0 0.0 2.8 0.0 0.0 0.0 0.6 0.0 0.0 256.9 15.4 13.7 2.3 54.9 0.0 0.0 26.5 1.4 0.0 0.0 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 1.8 0.0 4.6 3.2 0.0 0.0 0.0 1.7 0.0 4.6 3.0 0.0 0.0 1.1 0.9 0.0 2.7 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.0 0.0 0.0 0.0 3.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 16.5 6.5 0.0 0.0 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.0 0.0 440.5 17.8 0.0 4.6 15.9 0.0 0.0 15.3 40.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.7 0.5 0.0 0.0 86.3 9.9 0.0 0.0 95.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.7 0.0 0.0 0.2 0.0 0.0 0.0 7.5 1.0 0.0 0.0 0.1 1.3 333.7 38.2 18.5 20.8 136.3 0.0 0.0 11.3 0.0 0.0 5.1 0.0 0.0 0.0 14.0 0.0 0.0 0.0 5.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 17.4 7.0 0.0 6.4 0.0 0.0 0.0 0.0 4.3 0.0 0.0 0.0 0.0 7.1 1,856.8 285.8 34.0 123.8 518.0 0.1 RI 0.0 0.0 0.0 19.8 0.0 2.8 0.0 0.0 8.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19.3 0.0 0.0 0.0 0.0 0.0 0.0 6.3 0.0 0.0 0.0 0.0 0.0 0.0 2.8 0.0 0.0 0.0 10.5 0.0 5.2 0.0 0.0 0.0 0.0 5.9 0.0 0.0 0.0 3.5 0.0 84.9 SC 1.0 0.0 0.0 11.3 0.0 0.0 0.0 0.0 6.6 0.0 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.8 0.0 0.0 3.3 0.0 0.0 0.0 2.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.6 0.0 0.0 0.0 0.0 0.0 39.6 SD 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TN 0.0 0.0 0.0 16.3 0.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.0 8.5 0.0 0.0 0.1 0.0 1.8 0.0 0.0 0.0 5.0 0.0 0.0 6.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 23.6 0.0 18.3 0.0 0.6 0.0 0.0 0.0 87.1 TX 1.0 0.0 0.0 151.8 11.3 6.0 1.3 0.0 67.9 14.5 0.0 0.0 0.0 0.0 14.2 0.0 0.0 0.0 2.0 102.1 2.5 1.1 0.0 0.0 1.2 0.0 1.5 0.0 0.0 0.0 0.7 0.0 0.0 183.2 0.0 5.0 0.0 17.4 0.0 0.0 0.0 0.0 5.6 150.5 182.7 0.0 0.8 0.0 6.1 0.0 930.4 UN 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 UT 0.0 0.0 1.9 172.5 0.0 0.2 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.9 2.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.0 0.0 0.0 34.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 10.5 45.8 12.5 0.0 0.0 0.0 304.5 VA 4.1 0.0 0.0 24.2 6.7 0.0 27.8 0.0 12.4 0.0 0.0 0.0 0.0 0.0 38.0 0.0 0.0 0.0 0.0 18.5 13.4 0.0 0.0 0.0 0.0 0.0 0.9 0.0 0.0 0.0 0.2 0.0 0.0 7.5 0.0 0.0 0.0 8.4 0.0 0.0 0.0 0.0 0.0 1.1 59.7 0.0 149.4 0.0 0.0 0.0 372.3 VI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 VT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.9 0.0 0.0 0.5 0.0 0.0 4.4 WA 0.0 0.0 0.2 235.5 37.9 21.1 0.8 0.0 57.6 3.0 0.0 0.0 0.0 0.0 32.5 0.0 0.0 0.0 0.0 53.7 1.5 0.0 7.7 2.3 0.0 0.0 0.0 0.0 0.0 0.0 13.7 0.0 0.0 59.9 0.0 0.0 1.1 27.9 0.0 0.0 0.0 0.0 0.0 30.2 156.4 0.8 13.3 0.0 174.1 0.5 931.7 WI 0.0 0.0 0.0 29.6 0.0 0.0 0.0 0.0 0.5 3.8 0.0 0.0 0.0 0.0 22.3 0.0 0.0 1.3 0.0 0.0 0.0 0.0 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8.8 0.0 0.0 0.0 0.0 0.0 0.0 17.4 0.0 0.0 0.0 0.0 9.8 95.3 WV 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 10.7 0.0 3.6 0.0 0.0 0.0 14.6 WY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOT 23 0 27 9,844 247 607 77 3 2,363 83 80 0 0 8 621 41 0 15 35 2,875 206 18 236 142 86 0 147 0 3 6 287 8 3 2,268 99 8 5 490 0 22 0 9 60 307 4,512 102 281 1 367 30 26,653 Source State includes U.S. states. FF = other foreign. UN = undisclosed or unknown. 44 Thomson Reuters
2013 NVCA Yearbook Figure 3.24 2012 Internet-Related Investments By Stage Company Stage Seed Early Stage Expansion Later Stage TOTAL ($ Millions) 243.0 4,297.2 7,089.7 4,046.1 15,676.0 Figure 3.25 2012 Internet-Related Investments By Industry Sector Industry Group Software IT Services Media and Entertainment Consumer Products and Services Telecommunications Retailing/Distribution Computers and Peripherals Semiconductors Networking and Equipment Financial Services Medical Devices and Equipment Healthcare Services Business Products and Services Industrial/Energy Biotechnology Electronics/Instrumentation TOTAL ($ Millions) 7,956.7 1,976.7 1,894.8 1,093.0 574.4 486.7 355.2 353.0 315.0 211.7 146.8 140.1 74.1 48.9 29.5 19.4 15,676.0 Figure 3.26 2012 Internet-Related vs Non Internet-Related Investments By Industry Sector ($ Millions) Industry Software IT Services Media and Entertainment Consumer Products and Services Telecommunications Retailing/Distribution Computers and Peripherals Semiconductors Networking and Equipment Financial Services Medical Devices and Equipment Healthcare Services Business Products and Services Industrial/Energy Biotechnology Electronics/Instrumentation Other Total Thomson Reuters Internet Related 7,956.7 1,976.7 1,894.8 1,093.0 574.4 486.7 355.2 353.0 315.0 211.7 146.8 140.1 74.1 48.9 29.5 19.4 0.0 15,676.0 Non-Internet Related 336.8 16.6 81.4 115.1 7.6 11.6 97.8 573.4 0.9 72.1 2,364.7 169.4 23.3 2,743.5 4,085.2 224.4 52.7 10,976.4 Total 8,293.5 1,993.3 1,976.2 1,208.1 581.9 498.2 453.0 926.4 315.9 283.8 2,511.5 309.5 97.5 2,792.4 4,114.8 243.8 52.7 26,652.4 45
National Venture Capital Association Figure 3.27 2012 Internet-Related vs Non Internet-Related Investments By Industry Sector (Number of Companies) Industry Software Media and Entertainment IT Services Consumer Products and Services Telecommunications Retailing/Distribution Networking and Equipment Financial Services Computers and Peripherals Semiconductors Business Products and Services Industrial/Energy Medical Devices and Equipment Healthcare Services Biotechnology Electronics/Instrumentation Other Total Internet Related 1,038 323 281 114 83 46 32 24 23 19 17 14 14 11 6 5 0 2,050 Figure 3.28 Top Five States By Percentage Invested Within State in 2012 Fund Domicile California Virginia Texas Washington Utah Pct. Invested Within State 71% 53% 49% 47% 45% *Minimum $20 million invested Figure 3.30 Number of States Invested Into in 2012 By State of Venture Firm Location of Venture Firm California Massachusetts New York Pennsylvania Connecticut Illinois Maryland Texas New Jersey Virginia North Carolina Michigan 46 No. of States Invested In 39 33 32 26 23 20 19 19 18 17 17 17 Non-Internet Related 58 11 5 28 4 3 2 16 10 66 16 182 243 29 353 41 26 1,093 Total 1,096 334 286 142 87 49 34 40 33 85 33 196 257 40 359 46 26 3,143 Figure 3.29 Top Five States By Portion Received From In-State Firms 2012 Pct. Invested From State 49% 40% 37% 31% 29% Company Location California Virginia Missouri Alabama Massachusetts *Minimum $20 million invested Figure 3.31 Number of States California Venture Firms Invested Into By Year Year 1992 2002 2012 No. of States Invested In 30 34 39 Thomson Reuters
2013 NVCA Yearbook Figure 3.32 Corporate Investments By Year Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 # All Venture # Deals with CVC Capital Deals Involvement 1,894 145 2,637 224 3,223 346 3,728 501 5,600 1190 8,041 1963 4,589 964 3,203 546 3,022 434 3,217 533 3,300 544 3,887 789 4,213 793 4,165 878 3,139 394 3,626 452 3,946 557 3,723 565 Calculated Percentage of Deals $M Average with Corporate VC Amount of All VC $M Average Amount Involvement Deals of CVC Participation 7.7% $4.23 $3.01 8.5% $4.30 $3.03 10.7% $4.65 $2.73 13.4% $5.77 $3.44 21.3% $9.80 $6.25 24.4% $13.08 $7.64 21.0% $8.93 $4.76 17.0% $6.91 $3.49 14.4% $6.51 $2.94 16.6% $7.22 $2.88 16.5% $7.16 $2.81 20.3% $7.11 $3.22 18.8% $7.57 $3.23 21.1% $7.19 $3.04 12.6% $6.49 $3.35 12.5% $6.43 $4.15 14.1% $7.48 $3.97 15.2% $7.16 $3.86 Total VC Investment $M 8,013 11,341 14,975 21,499 54,900 105,200 40,968 22,132 19,681 23,235 23,612 27,617 31,875 29,926 20,378 23,316 29,497 26,652 Calculated Total CVC Percentage of Dollars Investment $M Coming from CVCs 436 5.4% 679 6.0% 946 6.3% 1,722 8.0% 7,436 13.5% 15,003 14.3% 4,588 11.2% 1,907 8.6% 1,277 6.5% 1,535 6.6% 1,527 6.5% 2,542 9.2% 2,558 8.0% 2,670 8.9% 1,319 6.5% 1,877 8.0% 2,211 7.5% 2,178 8.2% Figure 3.34 California Investments as a Percentage of Overall Investments Figure 3.33 Clean technology Investments By Year 100% Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Clean Technology Investments ($ Millions) 77.0 163.0 180.4 183.9 310.4 629.1 404.2 346.8 229.0 431.1 630.9 1,800.8 3,116.2 4,271.3 2,523.7 4,085.3 4,549.3 3,303.1 Thomson Reuters # Clean Technology Deals 35 47 52 42 56 53 63 50 58 82 98 153 267 313 248 317 349 267 Average Investment Per Deal ($ Millions) 2.2 3.5 3.5 4.4 5.5 11.9 6.4 6.9 3.9 5.3 6.4 11.8 11.7 13.6 10.2 12.9 13.0 12.4 90% 80% 70% 59.6% 56.7% 51.7% 47.0% SoCal 60% NoCal 50% 40% Other 12.0% 11.8% 9.3% 10.3% 33.0% 36.0% 41.0% 31.1% 1997 2002 2007 2012 30% 20% 10% 0% 47
National Venture Capital Association This page is intentionally left blank. 48 Thomson Reuters
Exits: IPOs and Acquisitions Once successful portfolio companies mature, venture funds generally exit their positions in those companies by taking them public through an initial public offering (IPO) or by selling them to presumably larger organizations (acquisition, or trade sale). This then lets the venture fund distribute the proceeds to investors, raise a new fund for future investment, and invest in the next generation of companies. This chapter considers each type of exit separately. IPOs in 2012 were a mixed bag at best. On the one hand, the number of venture-backed companies going public actually fell from 2011 from 51 to 49. But the dollars raised in those initial public offerings more than doubled from $10.7 billion to $21.5 billion. But looking behind the numbers, we see that Facebook itself raised $16.0 billion of that $21.5 billion, with a few other high-profile IPOs looming large in the remainder. This meant that many companies attempting or seeking to go public were not able to do so. The 49 venture-backed IPOs in 2012 are a far cry from the 280 IPOs in 1999. While no one is suggesting that the industry would be well-served by returning to the heady days of the bubble, we know that only 49 IPOs means many companies that would have gone public in more traditional times were frustrated in their efforts/attempts to go public. The venture industry typically invests in 1,000-1,400 new companies each year. In the 1990s, 14% of all first fundings went public. Even if just 10% go public these days, that would suggest an annual run rate of 100 to 140 companies — a far cry from 49. On the market valuation placed on these IPOs at the offer price, 2012 was a very good year. The 49 IPOs had a valuation of $122.3 billion. This is the highest amount since 1986. What is quite striking (Fig 5.03), is the huge gap between median and mean (average) valuation of almost seven times! This suggests a huge outlier effect created by the several large IPOs. In 2012, the provision in the JOBS act took effect which enabled companies to file the documents necessary to go public confidentially. It appears that the majority of companies are electing this option, so it is difficult to report on the IPO pipeline at year end 2012. Nine venture-backed companies went public with an IPO valuation of $1 billion or greater. The bulk of the IPO valuations were in the $100 million to $500 million range. The length of time it takes for a company to go public remains at historically high levels. Those few that were able Figure 4.01 Venture-Backed IPOs 30.00 No of IPOs Offer Amount ($B) 250 25.00 20.00 150 15.00 100 No. of IPOs 200 10.00 Offer ($ Billion) 300 5.00 50 0.00 0 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 Year Thomson Reuters 49
National Venture Capital Association to go public had a median age of seven years. Many companies awaiting their turn to go public are older than that, so as IPO markets reopen, we could see this statistic increase. In 2012, the acquisition market weakened. There was a slight decrease in the number of acquisitions, or trade sales, of venture-backed companies. We tracked 449 acquisitions, of which we had disclosed deal amounts for 121 of them. The sum of the disclosed values was also down at $21.5 billion. Just over one-fifth of them were acquired at 10 times or greater than the cumulative venture capital investment in those companies. We tracked four acquisitions at more than $1 billion. Methodology This chapter focuses on company exits by venture funds through IPO and through acquisition (trade sale, M&A). Some additional charts are provided on private equity backed acquisitions because of the venture industry’s interest in that data. With Thomson Reuters’ expansion of global deals coverage in 2012, the criteria used to report these exits were redefined and refined during 2012. These are explained below. In this chapter and throughout this Yearbook, we use the classic nomenclature for describing the two main types of private equity: Private Equity = Venture Capital + Buyout/Mezzanine Therefore charts describing Private Equity in this chapter and throughout this Yearbook include both buyout/mezzanine activity and venture capital activity. The Thomson Reuters venture capital (private equity) backed exits coverage includes full history for the U.S. and Canada as well as Global Exits from 2005 to the present. Multiple exits per company are now tracked, including IPOs (although secondary offerings are not tracked, since first IPO is considered the exit), Secondary Sales (sponsor to sponsor), Trade Sales (VC (PE) Firm to Non-PE Firm), Buybacks, Reverse Takeovers and Writeoffs. All values are sourced from the industry leading Thomson Reuters Deals database with hyperlinks to the Tearsheets to view the underlying details of the transactions. The PE Backed Exits component in ThomsonONE.com can be used to further analyze all of the VC and PE Exits content herein. Specifically, venture capital IPO exits reported in this chapter are those done on United States stock exchanges/markets with at least one United States domiciled venture fund investor. Specifically, venture capital (private equity) acquisi- Figure 4.02 Number of Venture-Backed IPOs vs. All IPOs Year # of All IPOs # of VentureBacked IPOs 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 347 81 76 67 188 168 167 162 24 39 104 99 113 238 37 24 26 82 59 68 92 7 13 68 51 49 Note: IPO counts reflect IPOs on U.S. stock exchanges and markets. Venture-backed IPOs are those with at least one U.S.-domiciled venture fund investor. 50 Thomson Reuters
2013 NVCA Yearbook tion exits reported in this chapter are secondary sales and trade sales that completed where the company was domiciled in the United States and had at least one United States domiciled venture capital (private equity) investor. Figure 4.03 Venture-Backed IPOs 1985 to 2012 Value and Time to Exit Characteristics Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Num of IPOs 48 104 86 43 42 47 120 150 175 140 184 256 141 79 280 238 37 24 26 82 59 68 92 7 13 68 51 49 Offer Amount ($Mil) 763 2,414 2,125 769 873 1,108 3,726 5,431 6,141 4,004 7,859 12,666 5,831 4,221 24,005 27,443 4,130 2,333 2,024 10,032 5,113 7,127 12,365 765 1,980 7,609 10,690 21,451 Thomson Reuters Med Offer Amt ($Mil) 13 14 17 15 16 20 27 24 24 24 36 35 33 43 70 83 80 89 71 70 68 85 97 83 123 93 106 89 Mean Offer Post Offer Med Post Mean Post Median Time Mean Time Amt ($Mil) Value ($Mil) Value ($Mil) Value ($Mil) to Exit (yrs) to Exit (yrs) 16 1,991 32 47 2.8 3.9 23 166,260 53 1,889 3.9 4.2 25 10,790 46 150 3.7 3.9 18 20,523 51 555 3.2 3.7 21 5,479 51 166 3.9 4.2 24 5,886 60 178 3.6 4.2 31 14,151 78 168 4.7 5.0 36 15,759 68 147 4.5 5.0 35 14,430 75 129 5.4 5.8 29 9,854 67 91 4.7 5.3 43 17,046 103 136 3.8 4.8 49 40,360 111 191 3.2 4.1 41 17,784 99 146 3.0 6.4 53 9,649 149 214 2.5 3.1 86 86,669 294 425 2.9 3.1 115 63,610 336 464 3.1 3.7 112 15,545 304 576 4.0 4.4 97 8,322 266 347 3.3 5.0 78 7,412 252 285 5.4 5.6 122 50,268 254 613 5.5 6.1 87 39,702 202 673 5.2 5.3 105 71,467 293 1,067 5.4 5.6 134 68,282 361 742 6.0 6.0 109 3,645 278 521 7.4 7.3 152 9,192 548 707 5.9 6.9 112 111,386 431 1,662 5.0 5.9 210 94,987 606 1,862 6.3 7.0 438 122,264 371 2,495 7.2 7.8 51
National Venture Capital Association Figure 4.04 Venture-Backed IPOs by MoneyTree™ Industry Total Offering Size ($ Millions) Industry M and Entertainment Media Software Biotechnology IT Services Networking and Equipment Telecommunications Consumer Products and Services Industrial/Energy Financial Services Business Products and Services Semiconductors Medical Devices and Equipment Computers and Peripherals Electronics/Instrumentation Healthcare Services O Other R Retailing/Distribution TTotal 1985 51 52 38 15 25 27 7 29 0 58 15 61 135 7 89 0 154 763 1986 599 270 349 4 105 89 177 58 91 33 47 89 306 60 15 54 67 2,414 1987 22 206 217 32 136 421 7 177 46 0 368 147 267 17 14 0 48 2,125 1988 3 161 26 0 42 79 8 75 10 2 79 22 116 0 0 0 146 769 1989 17 135 51 0 43 30 91 127 47 0 62 71 150 0 14 0 35 873 1990 1991 10 103 192 476 66 964 0 163 82 346 141 22 5 186 242 346 0 21 44 66 29 210 90 241 74 118 48 0 69 435 0 0 18 29 1,108 3,726 1992 253 409 848 48 284 212 240 325 1,248 70 86 601 295 91 144 12 265 5,431 1993 710 846 473 41 233 766 156 670 51 193 311 266 203 372 132 0 718 6,141 1994 562 447 296 68 457 277 58 450 237 70 164 388 122 155 180 0 71 4,004 1995 1996 207 659 2,366 1,869 437 1,250 308 396 313 749 492 1,498 335 177 495 1,064 273 1,597 35 496 696 0 995 1,666 339 357 296 261 162 269 0 0 111 358 7,859 12,666 1997 505 912 590 151 416 379 160 778 209 185 319 444 75 111 235 203 159 5,831 1998 199 953 197 239 235 881 541 138 45 58 37 98 59 76 123 0 344 4,221 1999 2000 2,995 1,243 5,243 4,924 587 4,211 2,146 2,030 3,050 4,339 4,720 5,304 602 295 207 1,107 521 50 1,068 594 221 1,052 0 634 215 617 135 251 458 156 101 177 1,736 459 24,005 27,443 2001 2002 2003 2004 0 353 75 1,422 405 259 330 2,466 353 342 442 1,616 0 0 0 49 275 0 0 69 173 0 175 594 120 39 82 280 747 0 0 638 771 231 353 1,447 0 248 62 0 133 0 381 522 673 456 0 806 0 63 0 0 46 0 0 0 306 83 59 124 100 0 0 0 26 259 65 0 4,130 2,333 2,024 10,032 2005 376 570 897 140 0 651 3 299 706 507 472 380 8 0 77 0 28 5,113 2006 2007 2008 864 209 0 768 1,471 344 957 1,318 6 207 836 0 479 313 0 731 1,591 0 542 154 0 1,114 1,007 0 551 1,178 0 0 1,202 0 136 975 0 633 1,407 134 0 124 188 0 0 0 0 130 94 0 0 0 144 452 0 7,127 12,365 765 2009 0 604 153 0 0 402 163 88 0 0 0 0 0 438 132 0 0 1,980 2010 2011 2012 731 2,210 16,236 1,178 3,310 2,022 1,070 997 854 379 353 636 267 0 316 197 805 305 727 847 262 1,040 984 247 558 0 176 190 322 152 534 255 130 299 145 115 0 367 0 124 95 0 138 0 0 0 0 0 178 0 0 7,609 10,690 21,451 Figure 4.05 Venture-Backed IPOs by MoneyTree™ Industry Total Number of Companies Industry BBiotechnology Software IIT Services M and Entertainment Media CConsumer Products and Services IIndustrial/Energy N Networking and Equipment TTelecommunications FFinancial Services SSemiconductors BBusiness Products and Services M Medical Devices and Equipment CComputers and Peripherals EElectronics/Instrumentation HHealthcare Services OOther RRetailing/Distribution TTotal 52 1985 5 3 1 4 1 3 1 6 0 1 1 3 9 1 4 0 5 48 1986 1987 1988 1989 1990 16 14 2 6 4 15 10 8 8 9 1 3 0 0 0 10 2 1 1 2 5 1 1 3 1 5 13 6 4 6 2 5 2 2 2 6 6 2 1 4 3 3 1 3 0 4 5 5 3 1 2 0 1 0 1 10 8 4 5 8 14 9 5 4 3 6 3 0 0 2 1 1 0 1 3 1 0 0 0 0 3 3 5 1 1 104 86 43 42 47 1991 31 14 5 3 6 10 8 1 1 9 3 12 3 0 13 0 1 120 1992 27 13 1 7 7 9 11 7 6 4 3 27 11 4 6 1 6 150 1993 21 26 1 10 4 19 6 14 2 13 6 15 9 13 4 0 12 175 1994 14 19 3 9 2 15 13 10 8 9 3 17 6 5 4 0 3 140 1995 16 56 5 4 9 11 10 8 5 16 1 20 8 9 3 0 3 184 1996 33 54 9 12 7 18 10 18 10 0 6 44 11 10 5 0 9 256 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 22 7 9 47 4 4 7 26 15 17 21 1 2 12 11 12 26 21 75 58 5 5 4 9 6 7 13 2 5 10 9 9 4 5 29 16 0 0 0 1 1 2 6 0 0 4 3 6 7 3 34 11 0 4 1 6 4 6 2 0 0 5 8 4 6 7 9 3 3 11 22 33 11 44 11 00 11 55 22 33 17 3 3 7 4 00 00 33 33 77 55 00 11 66 33 33 6 5 26 17 2 0 0 1 0 4 3 0 0 3 0 3 7 9 37 33 1 0 2 6 6 3 9 0 2 3 5 3 4 2 7 1 2 22 44 77 22 44 33 00 00 55 00 22 8 1 4 10 2 0 3 6 6 2 10 0 0 6 3 2 3 1 15 8 0 11 11 00 44 00 44 00 00 11 22 11 13 2 0 11 7 4 0 13 8 11 11 2 0 4 2 1 3 3 4 6 0 11 00 00 11 00 11 11 00 00 22 00 3 1 2 3 1 00 00 00 00 00 00 00 11 11 11 00 7 3 7 2 4 11 11 11 11 00 11 11 11 11 00 00 1 0 2 1 1 00 00 00 00 00 00 00 00 00 00 00 4 6 17 4 1 11 11 00 11 11 22 00 00 22 00 00 141 79 280 238 37 24 26 82 59 68 92 7 13 68 51 49 Thomson Reuters
2013 NVCA Yearbook Figure 4.06 Average and Median Years Between First Funding and the IPO by Industry 2000 to 2012 Industry Biotechnology Business Products and Services Computers and Peripherals CConsumer Products and Services Electronics/Instrumentation FFinancial Services Healthcare Services IIndustrial/Energy IT Services Media and Entertainment Medical Devices and Equipment Networking and Equipment Other RRetailing/Distribution SSemiconductors Software Telecommunications 2000 Mean Median 4.5 4.6 2.0 1.7 4.3 2.8 1.4 1.5 3.4 2.7 1.0 1.0 3.3 3.3 3.4 3.2 1.9 1.8 4.3 3.2 5.1 3.9 3.3 3.0 1.3 1.3 1.9 1.8 5.5 3.7 3.5 3.3 3.6 3.1 Thomson Reuters 2001 Mean Median 4.5 4.6 N/A N/A N/A N/A 3.7 4.6 6.3 6.3 12.9 12.9 5.2 5.2 1.1 0.4 N/A N/A N/A N/A 4.8 4.5 4.2 4.2 2.6 2.6 4.3 4.3 2.9 2.9 4.2 4.6 1.4 1.4 2002 Mean Median 8.4 6.7 2.7 2.7 15.7 15.7 4.6 4.6 N/A N/A 1.9 1.9 7.1 7.1 N/A N/A N/A N/A 4.4 3.5 3.7 3.2 N/A N/A N/A 3.4 3.4 3.4 N/A N/A 3.3 3.0 N/A N/A 2003 Mean Median 6.0 5.1 5.7 5.7 N/A N/A 4.3 4.3 N/A N/A 5.0 4.7 5.7 5.7 N/A N/A N/A N/A 5.7 5.7 N/A N/A N/A N/A N/A N/A 4.0 4.0 5.3 4.1 6.1 5.6 6.5 6.5 2004 Mean Median 5.6 5.1 N/A N/A N/A N/A 5.5 5.2 N/A N/A 5.5 5.3 8.9 8.9 7.7 3.4 5.3 5.3 6.1 5.4 8.1 7.3 6.1 6.1 N/A N/A N/A N/A 6.5 6.4 5.3 5.7 5.3 5.1 2005 2006 Mean Median Mean Median 5.6 5.5 5.4 5.1 4.3 4.4 N/A N/A 0.8 0.8 N/A N/A 5.5 5.5 4.9 4.9 N/A N/A N/A N/A N/A N/A 3.0 3.0 4.7 4.8 3.9 3.9 N/A N/A 8.2 7.0 2.1 0.6 3.8 3.8 6.0 6.0 4.6 4.4 8.4 8.2 6.6 7.1 6.9 5.3 N/A N/A 7.70 6.6 N/A N/A N/A N/A N/A N/A 6.1 6.1 1.5 1.5 4.3 5.0 6.7 6.7 5.4 5.6 6.5 6.0 5.0 4.1 4.2 3.9 2007 Mean Median 5.0 5.0 6.1 5.2 6.7 6.7 17.8 17.8 N/A N/A N/A N/A 3.1 3.4 9.9 9.9 1.0 0.9 6.1 6.5 6.4 6.4 6.7 6.6 6.3 6.7 N/A N/A N/A N/A 3.1 3.1 7.9 7.2 6.5 5.9 6.8 7.2 2008 Mean Median 7.0 7.0 N/A N/A 8.7 8.7 N/A N/A N/A N/A N/A N/A N/A N/A 10.2 10.2 N/A N/A N/A N/A N/A N/A 6.0 6.0 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 6.7 6.7 N/A N/A 2009 Mean Median 10.4 10.4 N/A N/A N/A N/A 5.3 5.3 7.78 7.8 N/A N/A 2.0 2.0 1.4 1.4 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 6.4 7.3 10.4 10.4 2010 Mean Median 5.8 4.9 0.6 0.6 N/A N/A 5.1 4.3 3.7 3.7 7.0 8.9 2.6 2.6 3.1 3.1 6.2 6.4 8.7 10.1 5.2 5.2 7.4 7.4 N/A N/A N/A N/A 2.2 2.2 4.9 4.4 7.5 6.3 8.7 9.1 2011 Mean Median 6.6 5.5 4.2 4.2 7.3 7.3 1.9 3.8 12.5 12.5 N/A N/A N/A N/A 7.0 7.2 9.9 11.8 6.7 6.2 5.5 5.5 N/A N/A N/A N/A N/A N/A N/A N/A 7.6 7.6 7.1 5.2 8.0 9.8 2012 Mean Median 5.9 6.0 5.7 5.7 N/A N/A 7.2 8.3 N/A N/A 9.3 9.3 N/A N/A 5.2 5.4 10.1 7.9 6.3 6.4 4.9 4.9 10.1 9.9 N/A N/A N/A N/A N/A N/A 13.1 13.1 8.5 7.6 9.4 8.8 53
National Venture Capital Association Figure 4.07 Venture-Backed Merger & Acquisitions by Year Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Number Total 6 8 10 17 20 19 16 69 59 82 92 107 143 189 227 379 384 363 323 402 443 485 488 416 350 521 488 449 Number Known 3 1 4 9 10 7 4 43 36 56 58 76 99 113 154 245 175 165 134 199 198 207 200 134 108 149 169 121 ($ Millions) Price Average 300.2 100.1 63.4 9.1 667.2 111.2 920.7 115.1 746.9 74.7 120.3 10.0 190.5 15.9 2,119.1 81.5 1,332.9 58.0 3,207.1 123.4 3,801.8 111.8 8,230.8 265.5 7,743.6 176.0 8,002.0 105.3 38,688.0 530.0 79,996.4 597.0 25,115.6 120.2 11,913.2 60.2 8,240.8 43.6 28,846.1 142.1 19,600.2 80.0 24,288.5 87.4 30,745.5 106.8 16,236.9 57.6 12,364.9 51.1 17,700.3 47.6 24,093.2 75.5 21,516.2 65.6 Average acquisition price is calculated by dividing total known acquisition proceeds by the number of transactions where the proceeds are known, not the total number of transactions 54 Figure 4.08 Private Equity-Backed Merger & Acquisitions by Year Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Number Number Total Known 7 3 12 3 14 6 33 19 28 16 29 12 29 11 92 59 100 61 108 70 144 90 158 117 220 150 277 183 307 204 475 304 462 219 444 221 428 201 559 290 680 311 774 333 878 361 669 227 493 162 845 285 836 294 916 288 ($ Millions) Price Average 300.2 100.1 178.9 59.6 1,072.2 178.7 3,839.2 202.1 1,829.8 114.4 929.7 77.5 774.5 70.4 3,450.8 58.5 4,355.0 71.4 7,812.4 111.6 10,452.5 116.1 19,582.9 167.4 31,635.1 210.9 35,142.5 192.0 62,637.2 307.0 134,860.0 443.6 64,040.5 292.4 35,654.9 161.3 25,760.9 128.2 55,117.1 190.1 66,871.1 215.0 111,154.3 333.8 149,705.1 414.7 63,442.3 279.5 55,101.1 340.1 97,165.3 340.9 88,599.3 301.4 125,435.7 435.5 Average acquisition price is calculated by dividing total known acquisition proceeds by the number of transactions where the proceeds are known, not the total number of transactions. Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity financed companies. Therefore, transactions from Figure 5.07 are included here. Thomson Reuters
2013 NVCA Yearbook Figure 4.09 Venture-Backed Acquisitions by MoneyTree™ Industry Total Transaction Values 1985 to 2011 ($ Million) Industry 1985 1986 1987 1988 1989 1990 Software 0 0 25 0 0 22 Biotechnology 0 0 0 0 0 0 0 0 0 0 0 0 M Media and Entertainment 0 0 0 0 0 0 I IT Services Telecommunications 0 0 0 0 0 0 Medical Devices and Equipment 201 0 3 0 317 0 Industrial/Energy 99 63 0 238 59 20 Semiconductors 0 0 0 0 0 0 Computers and Peripherals 0 0 0 149 61 79 Healthcare Services 0 0 0 199 60 0 Business Products and Services 0 0 640 0 0 0 Consumer Products and Services 0 0 0 0 0 0 Financial Services 0 0 0 140 0 0 Networking and Equipment 0 0 0 18 250 0 Electronics/Instrumentation 0 0 0 81 0 0 0 0 0 0 0 0 O Other 0 0 0 95 0 0 R Retailing/Distribution 300 63 667 921 747 120 T Total S 1991 83 68 30 0 0 0 0 0 0 0 0 10 0 0 0 0 0 190 1992 264 33 0 0 4 234 203 0 16 88 0 1 1,204 0 36 0 35 2,119 1993 1994 1995 116 455 617 25 8 89 119 29 38 0 0 15 298 790 328 43 295 110 122 764 53 0 59 84 110 58 140 0 178 475 0 0 0 0 26 23 91 144 734 317 352 1,024 13 49 42 0 0 0 80 0 29 1,333 3,207 3,802 1996 1,228 388 2,160 315 381 298 1,127 54 827 130 109 46 67 1,090 12 0 0 8,231 1997 2,122 265 2,106 80 1,133 507 193 11 373 180 181 237 34 178 105 0 39 7,744 1998 1999 2,888 5,621 5 141 846 343 10,996 523 699 521 2,218 130 298 381 962 627 1,903 422 721 64 0 47 397 388 385 459 1,299 981 11,521 60 133 0 00 28 689 8,002 38,688 2000 23,475 1,206 3,227 2,384 7,528 433 1,396 7,210 4,610 286 1,637 2,611 1,355 18,359 3,456 0 824 79,996 2001 3,689 679 6,315 491 2,630 932 858 2,099 357 177 157 519 617 5,403 189 0 4 25,116 2002 1,886 115 999 612 1,125 414 182 2,703 51 818 870 343 557 818 71 3350 0 11,913 2003 2,098 259 209 1,002 301 580 1,006 359 47 37 151 418 98 813 6 0 857 8,241 2004 4,972 688 3,355 1,999 1,678 1,168 2,128 688 680 6,227 3,024 444 250 1,311 116 0 118 28,846 2005 4,870 2,478 2,980 1,066 1,310 1,268 1,003 575 248 624 132 582 890 1,290 72 212 0 19,600 2006 7,704 2,104 2,771 795 2,287 1,704 1,425 1,029 492 968 409 486 985 628 38 0 463 24,289 2007 6,923 6,050 3,039 2,482 1,785 1,818 1,812 964 6 542 2,124 245 1,896 549 87 246 180 30,746 2008 5,575 1,266 2,251 745 1,789 499 832 664 49 27 570 284 988 609 80 0 10 16,237 2009 1,745 843 892 203 2,205 2,569 886 628 500 5 314 0 0 643 0 0 930 12,365 2010 3,739 3,720 1,088 1,415 826 1,571 1,276 1,040 348 755 181 141 812 678 0 95 14 17,700 2011 6,756 3,948 1,013 2,084 451 3,809 1,674 743 557 601 315 1,143 466 24 510 0 0 24,093 2012 5,199 2,727 2,312 2,072 1,979 1,639 1,141 1,035 764 756 697 615 435 146 0 0 0 21,516 2007 2008 2009 157 147 119 38 27 22 50 36 33 20 22 16 32 24 19 26 13 26 43 30 29 35 14 13 19 24 22 15 25 23 11 11 7 11 12 7 12 10 5 3 7 4 5 7 4 9 5 1 2 22 00 488 416 350 2010 169 45 65 24 38 21 46 14 26 23 7 14 12 6 5 5 1 521 2011 2012 171 152 47 50 64 43 20 31 34 30 37 29 23 29 13 15 15 15 18 13 8 11 15 9 9 8 7 6 4 4 1 4 2 0 488 449 Figure 4.10 Venture-Backed Acquisitions by MoneyTree™ Industry Number of Companies 1985 to 2012 Industry 1985 1986 1987 1988 1989 1990 1991 SSoftware 0 3 2 0 1 6 1 IT Services 0 1 0 1 1 1 0 Media and Entertainment 0 0 0 0 0 0 1 Industrial/Energy 1 2 2 3 3 3 2 Biotechnology 0 0 0 0 1 1 1 Medical Devices and Equipment 2 0 1 2 4 2 0 Telecommunications 0 1 0 0 1 0 1 Business Products and Services 0 0 1 1 0 0 1 Semiconductors 0 0 0 0 0 1 2 Networking and Equipment 0 0 1 2 1 0 0 Consumer Products and Services 0 0 0 0 0 0 1 Healthcare Services 0 1 0 1 2 0 1 Financial Services 0 0 0 1 0 0 0 CComputers and Peripherals 1 0 2 2 4 4 2 EElectronics/Instrumentation 0 0 1 3 2 0 1 R Retailing/Distribution 2 0 0 1 0 1 2 O Other 0 0 0 0 0 0 0 TTotal 6 8 10 17 20 19 16 Thomson Reuters 1992 1993 1994 1995 1996 11 15 24 29 21 0 0 0 2 5 1 4 2 3 7 8 3 9 5 8 4 2 3 10 9 13 4 8 7 6 2 4 5 3 6 1 0 1 0 3 1 1 3 3 2 2 7 8 8 13 2 3 1 1 5 4 1 8 9 4 5 2 4 4 5 9 8 4 5 9 4 2 1 1 4 2 3 1 1 0 0 0 0 1 0 69 59 82 92 107 1997 1998 1999 2000 43 62 59 119 7 11 16 22 11 10 20 40 9 18 11 13 9 11 12 16 13 11 10 9 12 12 18 31 2 4 4 15 2 8 9 21 4 8 22 24 6 7 10 16 3 9 2 9 4 5 13 13 8 7 11 13 6 4 3 4 4 2 7 14 0 0 0 0 143 189 227 379 2001 94 31 51 12 21 19 32 29 14 15 14 5 19 6 7 15 0 384 2002 128 38 27 12 9 12 40 13 14 20 7 13 13 2 7 7 1 363 2003 2004 2005 2006 120 133 162 175 1 25 33 22 30 15 33 31 26 9 12 21 17 15 24 30 32 10 23 27 25 37 25 34 42 15 20 22 26 11 17 17 20 23 30 22 28 11 10 11 10 3 7 12 13 9 14 12 16 8 8 8 10 1 4 5 3 5 7 7 8 10 1 1 1 11 0 323 402 443 485 55
National Venture Capital Association Figure 4.11 Private Equity-Backed Acquisitions by MoneyTree™ Industry Total Transaction Values 1985 to 2012 ($ Million) Industry IIndustrial/Energy M and Entertainment Media Biotechnology Software TTelecommunications Healthcare Services Financial Services Consumer Products and Services Retailing/Distribution Business Products and Services Medical Devices and Equipment Other IT Services Electronics/Instrumentation Networking and Equipment SSemiconductors Computers and Peripherals Total 1985 99 0 0 0 0 0 0 0 0 0 201 0 0 0 0 0 0 300 1986 63 0 0 0 0 0 0 116 0 0 0 0 0 0 0 0 0 179 1987 1988 25 1,490 0 0 0 0 25 16 0 0 0 199 0 140 0 1,444 0 295 640 0 383 0 0 0 0 7 0 81 0 18 0 0 0 149 1,072 3,839 1989 311 32 766 0 0 60 0 33 0 0 317 0 0 0 250 0 61 1,830 1990 20 220 0 22 0 0 0 45 0 263 167 0 0 115 0 0 79 930 1991 1992 1993 102 792 1,881 30 0 213 68 33 25 83 686 128 0 79 298 0 94 0 0 1,204 461 10 30 634 475 96 94 7 12 0 0 373 182 0 0 0 0 0 0 0 36 13 0 0 317 0 0 0 0 16 110 775 3,451 4,355 1994 922 350 80 455 1,042 178 695 1,729 90 0 1,731 0 0 49 352 59 81 7,812 1995 2,490 398 422 629 698 598 2,283 699 472 200 244 0 15 42 1,024 97 140 10,452 1996 2,120 3,428 407 1,228 2,399 1,494 2,728 1,078 452 419 1,000 0 485 375 1,090 54 827 19,583 1997 4,610 3,195 396 2,252 1,187 3,702 2,745 1,360 8,384 207 1,298 0 1,620 107 178 11 384 31,635 1998 1999 4,738 2,841 11,274 19,833 622 879 3,041 10,115 1,331 2,426 317 112 1,520 1,605 1,645 575 3,738 3,265 1,331 694 2,075 1,324 229 0 523 2,834 162 312 1,337 12,000 640 3,066 620 758 35,143 62,637 2000 2,973 42,607 2,102 25,732 11,257 668 1,383 3,612 1,660 2,532 516 0 3,138 3,456 21,167 7,324 4,732 134,860 2001 3,193 6,332 679 3,795 32,034 617 1,116 1,628 2,227 513 1,188 176 533 1,226 6,033 2,224 528 64,041 2002 4,073 4,439 2,540 2,121 7,332 1,237 3,038 2,711 175 1,356 940 350 674 381 818 3,248 223 35,655 2003 7,317 1,612 927 3,983 451 37 292 3,656 3,174 253 1,243 190 1,282 6 934 359 47 25,761 2004 12,455 6,958 1,738 5,574 2,232 7,403 474 5,264 1,042 4,077 2,078 143 2,124 422 1,406 731 995 55,117 2005 21,258 5,379 2,978 5,478 5,731 3,440 2,957 5,981 978 1,238 2,304 1,676 2,192 948 2,348 1,251 735 66,871 2006 2007 24,179 23,751 26,770 8,738 2,104 7,127 9,493 20,762 12,623 4,451 3,643 4,054 985 3,349 10,238 23,880 1,700 30,996 11,642 5,825 2,845 6,073 630 411 929 4,838 72 3,210 1,536 946 1,272 1,266 492 29 111,154 149,705 2008 12,510 3,024 1,443 7,517 2,162 780 3,792 2,242 924 6,504 6,131 8,203 5,509 431 782 719 769 63,442 2009 1,850 1,678 4,857 2,262 31,482 581 3,463 1,451 945 561 3,422 0 203 0 1,218 628 500 55,101 2010 25,115 2,248 7,052 15,688 3,795 8,210 2,271 7,257 6,509 959 7,477 2,865 3,696 1,333 678 1,665 348 97,165 2011 2012 25,706 31,281 4,022 15,097 4,499 13,182 14,348 12,969 3,516 9,295 4,942 8,034 9,887 7,077 2,285 4,297 554 4,259 2,540 3,890 5,660 3,756 871 3,521 2,172 2,685 2,407 2,275 3,838 1,814 743 1,152 609 851 88,599 125,436 Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity financed companies. Therefore, transactions from Figure 5.09 are included here. Figure 4.12 Private Equity-Backed Acquisitions by MoneyTree™ Industry Number of Companies 1985 to 2012 Industry IIndustrial/Energy Software Media and Entertainment IT Services Business Products and Services Medical Devices and Equipment Consumer Products and Services Biotechnology Healthcare Services Telecommunications Financial Services Retailing/Distribution Networking and Equipment Semiconductors Computers and Peripherals Electronics/Instrumentation Other TTotal 1985 1986 1987 1988 1989 1990 1991 1992 1993 2 3 3 9 5 4 9 17 20 0 3 2 1 1 6 2 13 17 0 1 0 0 2 1 1 1 6 0 1 0 3 1 1 0 1 0 0 0 1 3 0 2 2 2 2 2 0 2 2 4 3 0 15 5 0 2 1 3 2 1 2 6 10 0 0 0 0 3 1 1 4 3 0 1 0 1 2 0 1 5 1 0 1 1 0 1 1 1 4 4 0 0 0 1 0 0 0 5 8 2 0 0 3 0 3 5 3 5 0 0 1 2 1 0 0 2 7 0 0 0 0 0 1 2 1 1 1 0 2 2 4 4 2 9 9 0 0 1 3 2 1 1 4 2 0 0 0 0 0 0 0 0 0 7 12 14 33 28 29 29 92 100 1994 1995 1996 12 25 20 26 30 21 8 5 12 0 3 6 1 3 5 9 11 9 4 5 13 6 13 10 9 10 7 8 4 8 6 10 12 2 3 2 8 10 13 3 4 2 5 6 9 1 1 9 0 1 0 108 144 158 1997 1998 1999 2000 35 39 33 37 44 66 67 127 17 19 29 54 12 12 22 25 7 9 7 23 17 17 14 13 13 19 14 23 10 16 14 18 5 12 4 11 14 14 20 38 12 11 17 16 11 8 13 19 4 11 24 26 2 10 11 26 9 8 13 15 8 5 5 4 0 1 0 0 220 277 307 475 2001 35 98 58 32 34 20 25 22 8 35 26 18 16 15 7 12 1 462 2002 2003 33 46 133 127 31 27 41 27 20 18 14 15 22 25 12 17 16 4 45 43 19 13 9 14 20 25 16 11 3 9 9 4 1 3 444 428 2004 65 143 43 36 29 27 39 28 14 29 19 14 31 19 9 10 4 559 2005 126 170 43 26 33 35 33 36 25 37 19 21 28 19 13 1 6 10 1 680 2006 114 197 54 42 44 33 52 33 31 53 21 23 32 21 11 9 4 774 2007 2008 148 114 183 163 86 50 49 30 65 33 40 20 62 39 36 28 30 22 52 36 23 19 29 17 21 30 22 29 5 9 19 16 8 14 878 669 2009 58 131 47 24 19 41 25 26 10 35 14 6 25 22 5 4 1 493 2010 121 200 79 56 30 43 42 48 33 57 27 29 25 29 7 11 8 845 2011 2012 133 209 206 188 84 76 51 62 39 54 55 50 42 44 42 40 38 38 29 38 27 28 14 27 25 18 19 16 9 12 15 9 8 7 836 916 Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity financed companies. Therefore, transactions from Figure 5.10 are included here. 56 Thomson Reuters
2013 NVCA Yearbook Figure 4.13 M&A Transaction Values vs. Amount Invested Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Relationship Between Transaction Values vs. Cumulative Total Venture Investment < TVI 1x-4x TVI 4x-10x TVI >10x TVI 14% 26% 22% 38% 8% 29% 29% 34% 13% 40% 16% 31% 15% 23% 31% 31% 15% 15% 25% 45% 9% 22% 23% 46% 41% 19% 23% 17% 51% 26% 13% 10% 46% 39% 10% 5% 38% 33% 19% 10% 30% 38% 17% 15% 30% 37% 18% 15% 24% 33% 24% 19% 30% 30% 24% 16% 47% 24% 20% 9% 32% 33% 21% 14% 20% 29% 30% 21% 20% 27% 32% 21% This chart is prepared by analyzing all deals where total venture investment and acquisition price are confirmed. Each deal is classified as a ratio of company acquisition (exit) price to total venture investment from all rounds. This chart compares the number of deals in each category. An acquisition where deal price is less than the total venture investment (“<TVI”) clearly did not result in a good return. Four times the investment to 10 times the investment can be a good outcome. An acquisition for more than 10 times venture investment is usually a nice outcome. Figure 4.14 Venture-Backed IPOs Cos. in Registration vs. Number of Venture-Backed IPOs Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 # of Venture Backed IPOs 29 94 57 57 86 6 12 75 53 49 # of Moneytree Cos. in Registration 31 57 16 36 31 20 23 31 60 27* * Beginning in 2012, companies could elect confidential registration. Those, of course, cannot be counted in the number in registration. As of this writing, it appears that half or more of companies seeking to go public are electing confidential registration. Thomson Reuters 57
National Venture Capital Association Figure 4.15 Post-Offer Value Ranges Venture-Backed IPO Post Offer Value Ranges by Number of Companies Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 >$1B 1 4 1 1 16 12 5 4 4 7 15 2 3 20 17 9 $500M-$1B 4 10 3 3 31 25 5 7 2 10 7 11 16 4 6 13 9 $100M-$500M 58 107 55 29 147 96 12 15 22 64 35 45 57 4 6 40 19 29 <$100M 62 89 63 11 10 4 5 2 2 4 13 4 4 1 2 2 2 * Count only includes IPOs with disclosed post-offer values Figure 4.16 M&A Deal Value Ranges Venture-Backed M&A Deal Value Ranges by Number of Companies Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 >$1B 1 2 15 3 1 5 1 2 1 2 1 4 $500M-$1B 1 2 1 12 23 3 3 2 5 3 3 12 4 6 6 10 6 $100M-$500M 10 17 21 27 57 101 44 26 28 44 55 60 71 36 31 50 60 48 <$100M 47 56 77 86 83 106 125 136 104 145 140 142 117 92 72 93 98 64 * Count only includes transactions with disclosed values 58 Thomson Reuters
2013 NVCA Yearbook Figure 4.17 Venture-Backed US Company IPOs By Year By Country Country Argentina Bermuda Bahamas Canada China France Hong Kong India Israel Netherlands Norway Russia South Korea Taiwan US 2005 # Exits 1 5 2 2 1 48 2006 2007 2008 Offer Amt Offer Amt Offer Amt ($ Mil) # Exits ($ Mil) # Exits ($ Mil) 1 332.8 1 137.5 91.1 1 57.5 621.1 5 624.7 12 2,482.5 67.5 1 78.0 1 26.3 1 43.8 1 380.5 190.8 1 144.1 70.4 4,072.5 58 5,718.4 77 9,466.5 # Exits 7 2009 2010 Offer Amt Offer Amt Offer Amt ($ Mil) # Exits ($ Mil) # Exits ($ Mil) --------2 220.0 20 2,738.5 11 103.3 1 11 80.5 8 ------------765.0 11 1,759.8 46 4,686.8 2011 2012 Total Offer Amt Offer Amt Offer Amt # Exits ($ Mil) # Exits ($ Mil) # Exits ($ Mil) ----11 332.8 3 11 621.3 6 1 621.3 ----11 137.5 1 11 54.0 5 3 202.6 8 1,739.7 2 165.7 54 8,592.1 11 77.0 7 1 77.0 1 103.3 1 80.5 ----44 171.8 1 11 304.6 3 1 304.6 ----11 43.8 4 11 1,434.8 1,43 2 1,815.3 ----33 334.9 3 ----11 70.4 7 38 6,458.1 47 21,285.4 332 54,212.6 Figure 4.18 Ratio of IPO Pre-Money Valuation To Amount Invested Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Post Offer Value ($ Billion) 17.0 40.4 17.8 9.6 86.7 63.6 15.5 8.3 7.4 50.3 39.7 71.5 68.3 3.6 9.2 111.4 95.0 122.3 Offer Amt ($ Billion) 7.9 12.7 5.8 4.2 24.0 27.4 4.1 2.3 2.0 10.0 5.1 7.1 12.4 0.8 2.0 7.6 10.7 21.5 IPO Pre Money Valuation 9.2 27.7 12.0 5.4 62.7 36.2 11.4 6.0 5.4 40.2 34.6 64.3 55.9 2.9 7.2 103.8 84.3 100.8 Total Venture Inv ($ Billion) 2.2 3.7 2.7 2.4 11.0 13.0 2.6 1.7 2.4 6.7 3.1 4.3 6.7 0.4 0.6 5.9 6.6 6.7 Ratio 4.2 7.5 4.4 2.3 5.7 2.8 4.4 3.5 2.2 6.0 11.2 15.0 8.3 8.0 12.0 17.6 12.8 15.0 Note: To be included in this chart, non-U.S. based companies must be trading on a U.S. exchange/market and have at least 1 U.S. venture fund investor. Thomson Reuters 59
National Venture Capital Association Figure 4.19 Venture-Backed IPOs Valuations As Of IPO Year of IPO 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 60 Avg Val ($ Mil) 136.4 191.3 145.8 214.4 424.8 464.3 575.7 346.7 285.1 613.0 672.9 1,066.7 742.2 520.7 707.1 1,662.5 1,862.5 2,495.2 Max ($ Mil) 1,068.5 4,548.9 1,106.3 1,116.2 2,970.2 2,767.7 3,464.1 822.4 821.9 23,053.7 22,422.9 39,248.4 14,035.4 1,443.1 1,622.0 23,725.8 16,795.6 81,247.2 Upper Quartile ($ Mil) 144.8 183.1 60.3 226.1 480.5 539.7 723.7 541.0 359.2 391.0 396.8 534.9 762.8 1,011.5 1,089.0 1,414.1 1,514.7 727.2 Median ($ Mil) 103.3 111.1 98.8 148.8 294.4 335.8 303.5 266.2 251.9 254.1 201.9 293.2 360.8 278.5 547.9 430.5 606.3 371.0 Lower Quartile ($ Mil) 60.9 64.2 59.8 101.4 193.0 213.9 141.0 165.7 170.4 151.7 133.0 179.5 268.6 184.4 306.9 223.0 327.1 243.6 Min ($ Mil) 10.4 9.5 6.6 12.5 16.9 18.0 46.6 36.8 41.9 21.6 4.6 70.9 50.0 75.8 212.9 23.4 94.8 75.2 Thomson Reuters
Appendix A: Glossary “A” round – a financing event whereby angel groups and / or venture capitalists become involved in a fast growth company that was previously financed by founders and their friends and families. Accredited investor – a person or legal entity, such as a company or trust fund, that meets certain net worth and income qualifications and is considered to be sufficiently sophisticated to make investment decisions in private offerings. Regulation D of the Securities Act of 1933 exempts accredited investors from protection of the Securities Act. The Securities and Exchange Commission has proposed revisions to the accredited investor qualifying rules, which may or may not result in changes for venture investors. The current criteria for a natural person are: $1 million net worth or annual income exceeding $200,000 individually or $300,000 with a spouse. Directors, general partners and executive officers of the issuer are considered to be accredited investors. Alternative asset class – a class of investments that includes venture capital, leverage buyouts, hedge funds, real estate, and oil and gas, but excludes publicly traded securities. Pension plans, college endowments and other relatively large institutional investors typically allocate a certain percentage of their investments to alternative assets with an objective to diversify their portfolios. Alpha – a term derived from statistics and finance theory that is used to describe the return produced by a fund manager in excess of the return of a benchmark index. Manager returns and benchmark returns are measured net of the risk-free rate. In addition, manager returns are adjusted for the risk of the manager’s portfolio relative to the risk of the benchmark index. Alpha is a proxy for manager skill. Angel – a wealthy individual that invests in companies in relatively early stages of development. Usually angels invest less than $1 million per startup. Anti-dilution – a contract clause that protects an investor from a substantial reduction in percentage Thomson Reuters ownership in a company due to the issuance by the company of additional shares to other entities. The mechanism for making an adjustment that maintains the same percentage ownership is called a Full Ratchet. The most commonly used adjustment provides partial protection and is called Weighted Average. “B” round – a financing event whereby investors such as venture capitalists and organized angel groups are sufficiently interested in a company to provide additional funds after the “A” round of financing. Subsequent rounds are called “C”, “D” and so on. Basis point (“bp”) – one one-hundredth (1/100) of a percentage unit. For example, 50 basis points equals one half of one percent. Banks quote variable loan rates in terms of an index plus a margin and the margin is often described in basis points, such as LIBOR plus 400 basis points (or, as the experts say, “beeps”). Beta – a measure of volatility of a public stock relative to an index or a composite of all stocks in a market or geographical region. A beta of more than one indicates the stock has higher volatility than the index (or composite) and a beta of one indicates volatility equivalent to the index (or composite). For example, the price of a stock with a beta of 1.5 will change by 1.5% if the index value changes by 1%. Typically, the S&P500 index is used in calculating the beta of a stock. Beta product – a product that is being tested by potential customers prior to being formally launched into the marketplace. Board of directors – a group of individuals, typically composed of managers, investors and experts who have a fiduciary responsibility for the well being and proper guidance of a corporation. The board is elected by the shareholders. Book – see Private placement memorandum. 61
National Venture Capital Association Bootstrapping – the actions of a startup to minimize expenses and build cash flow, thereby reducing or eliminating the need for outside investors. Buyout – a sector of the private equity industry. Also, the purchase of a controlling interest of a company by an outside investor (in a leveraged buyout) or a management team (in a management buyout). Bp – see Basis point. Bridge financing – temporary funding that will eventually be replaced by permanent capital from equity investors or debt lenders. In venture capital, a bridge is usually a short term note (6 to 12 months) that converts to preferred stock. Typically, the bridge lender has the right to convert the note to preferred stock at a price that is a 20% to 25% discount from the price of the preferred stock in the next financing round. See Mezzanine and Wipeout bridge. Broad-based weighted average anti-dilution – A weighted average anti-dilution method adjusts downward the price per share of the preferred stock of investor A due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. Investor A’s preferred stock is repriced to a weighted average of investor A’s price and investor B’s price. A broadbased anti-dilution method uses all common stock outstanding on a fully diluted basis (including all convertible securities, warrants and options) in the denominator of the formula for determining the new weighted average price. See Narrow-based weighted average anti-dilution. Burn rate – the rate at which a startup with little or no revenue uses available cash to cover expenses. Usually expressed on a monthly or weekly basis. Business Development Company (BDC) – a publicly traded company that invests in private companies and is required by law to provide meaningful support and assistance to its portfolio companies. Business plan – a document that describes a new concept for a business opportunity. A business plan typically includes the following sections: executive summary, market need, solution, technology, competition, marketing, management, operations, exit strategy, and financials (including cash flow projections). For most venture capital funds fewer than 10 of every 100 business plans received eventually receive funding. 62 Buy-sell agreement – a contract that sets forth the conditions under which a shareholder must first offer his or her shares for sale to the other shareholders before being allowed to sell to entities outside the company. C Corporation – an ownership structure that allows any number of individuals or companies to own shares. A C corporation is a stand-alone legal entity so it offers some protection to its owners, managers and investors from liability resulting from its actions. Capital Asset Pricing Model (CAPM) – a method of estimating the cost of equity capital of a company. The cost of equity capital is equal to the return of a risk-free investment plus a premium that reflects the risk of the company’s equity. Capital call – when a private equity fund manager (usually a “general partner” in a partnership) requests that an investor in the fund (a “limited partner”) provide additional capital. Usually a limited partner will agree to a maximum investment amount and the general partner will make a series of capital calls over time to the limited partner as opportunities arise to finance startups and buyouts. Capital gap – the difficulty faced by some entrepreneurs in trying to raise between $2 million and $5 million. Friends, family and angel investors are typically good sources for financing rounds of less than $2 million, while many venture capital funds have become so large that investments in this size range are difficult. Capitalization table – a table showing the owners of a company’s shares and their ownership percentages as well as the debt holders. It also lists the forms of ownership, such as common stock, preferred stock, warrants, options, senior debt, and subordinated debt. Capital gains – a tax classification of investment earnings resulting from the purchase and sale of assets. Typically, a company’s investors and founders have earnings classified as long term capital gains Thomson Reuters
2013 NVCA Yearbook (held for a year or longer), which are taxed at a lower rate than ordinary income. Capital stock – a description of stock that applies when there is only one class of shares. This class is known as “common stock”. Capital Under Management – A frequently-used metric for sizing total funds managed by a venture capital or buyout firm. In practice, there are several ways of calculating this. In the US, this is the total committed capital for all funds managed by a firm on which it collects management fees. This calculation ignores whether portions of the committed capital have not yet been called and whether portions of the fund have been liquidated and distributed. It typically does not include aging funds in their “out years” on which fees are not being collected. For purposes of this book in calculating capital managed in figure 1.04, because direct data is not available, the last eight vintage years of capital commitments is considered a proxy for the industry’s total capital under management. Capped participating preferred stock – preferred stock whose participating feature is limited so that an investor cannot receive more than a specified amount. See Participating preferred stock. Carried interest – the share in the capital gains of a venture capital fund which is allocated to the General Partner. Typically, a fund must return the capital given to it by limited partners plus any preferential rate of return before the general partner can share in the profits of the fund. The general partner will typically receive a 20% carried interest, although some successful firms receive 25%-30%. Also known as “carry” or “promote.” Club deal – the act of investing by two or more entities in the same target company, usually involving a leveraged buyout transaction. Co-investment – the direct investment by a limited partner alongside a general partner in a portfolio company. Collateral – hard assets of the borrower, such as real estate or equipment, for which a lender has a legal interest until a loan obligation is fully paid off. Commitment – an obligation, typically the maximum amount that a limited partner agrees to invest in a fund. See Capital call. Common stock – a type of security representing ownership rights in a company. Usually, company founders, management and employees own common stock while investors own preferred stock. In the event of a liquidation of the company, the claims of secured and unsecured creditors, bondholders and preferred stockholders take precedence over common stockholders. See Preferred stock. Comparable – a private or public company with similar characteristics to a private or public company that is being valued. For example, a telecommunications equipment manufacturer whose market value is 2 times revenues can be used to estimate the value of a similar and relatively new company with a new product in the same industry. See Liquidity discount. Control – the authority of an individual or entity that owns more than 50% of equity in a company or owns the largest block of shares compared to other shareholders. Consolidation – see Rollup. Clawback – a clause in the agreement between the general partner and the limited partners of a private equity fund. The clawback gives limited partners the right to reclaim a portion of disbursements to a general partner for profitable investments based on significant losses from later investments in a portfolio. Closing – the conclusion of a financing round whereby all necessary legal documents are signed and capital has been transferred. Thomson Reuters Conversion – the right of an investor or lender to force a company to replace the investor’s preferred shares or the lender’s debt with common shares at a preset conversion ratio. A conversion feature was first used in railroad bonds in the 1800’s. Convertible debt – a loan which allows the lender to exchange the debt for common shares in a company at a preset conversion ratio. Also known as a “convertible note.” 63
National Venture Capital Association Convertible preferred stock – a type of stock that gives an owner the right to convert to common shares of stock. Usually, preferred stock has certain rights that common stock doesn’t have, such as decisionmaking management control, a promised return on investment (dividend), or senior priority in receiving proceeds from a sale or liquidation of the company. Typically, convertible preferred stock automatically converts to common stock if the company makes an initial public offering (IPO). Convertible preferred is the most common tool for private equity funds to invest in companies. Current ratio – the ratio of current assets to current liabilities. Co-sale right – a contractual right of an investor to sell some of the investor’s stock along with the founder’s or majority shareholder’s stock if either the founder or majority shareholder elects to sell stock to a third-party. Also known as Tag-along right. Defined benefit plan – a company retirement plan in which the benefits are typically based on an employee’s salary and number of years worked. Fixed benefits are paid after the employee retires. The employer bears the investment risk and is committed to providing the benefits to the employee. Defined benefit plan managers can invest in private equity funds. Cost of capital – see Weighted average cost of capital. Cost of revenue – the expenses generated by the core operations of a company. Covenant – a legal promise to do or not do a certain thing. For example, in a financing arrangement, company management may agree to a negative covenant, whereby it promises not to incur additional debt. The penalties for violation of a covenant may vary from repairing the mistake to losing control of the company. Coverage ratio – describes a company’s ability to pay debt from cash flow or profits. Typical measures are EBITDA/Interest, (EBITDA minus Capital Expenditures)/Interest, and EBIT/Interest. Cram down round – a financing event upon which new investors with substantial capital are able to demand and receive contractual terms that effectively cause the issuance of sufficient new shares by the startup company to significantly reduce (“dilute”) the ownership percentage of previous investors. Cumulative dividends – the owner of preferred stock with cumulative dividends has the right to receive accrued (previously unpaid) dividends in full before dividends are paid to any other classes of stock. 64 Data room – a specific location where potential buyers / investors can review confidential information about a target company. This information may include detailed financial statements, client contracts, intellectual property, property leases, and compensation agreements. Deal flow – a measure of the number of potential investments that a fund reviews in any given period. Defined contribution plan – a company retirement plan in which the employee elects to contribute some portion of his or her salary into a retirement plan, such as a 401(k) or 403(b). The employer may also contribute to the employee’s plan. With this type of plan, the employee bears the investment risk. The benefits depend solely on the amount of money made from investing the employee’s contributions. Defined contribution plan capital cannot be invested in private equity funds. Demand rights – a type of registration right. Demand rights give an investor the right to force a startup to register its shares with the SEC and prepare for a public sale of stock (IPO). Dilution – the reduction in the ownership percentage of current investors, founders and employees caused by the issuance of new shares to new investors. Dilution protection – see Anti-dilution and Full ratchet. Direct secondary transaction – A transaction in which the buyer purchases shares of an operating company from an existing seller. While the transaction is a secondary sale of shares, the transacted interest is a primary issue purchase directly into an operating company. Sellers are often venture capital- Thomson Reuters
2013 NVCA Yearbook ists selling their ownership stake in a portfolio company. Buyers are often funds that specialize in such investments. Disbursement – an investment by a fund in a company. Discount rate – the interest rate used to determine the present value of a series of future cash flows. Discounted cash flow (DCF) – a valuation methodology whereby the present value of all future cash flows expected from a company is calculated. Distressed debt – the bonds of a company that is either in or approaching bankruptcy. Some private equity funds specialize in purchasing such debt at deep discounts with the expectation of exerting influence in the restructuring of the company and then selling the debt once the company has meaningfully recovered. Distribution – the transfer of cash or securities to a limited partner resulting from the sale, liquidation or IPO of one or more portfolio companies in which a general partner chose to invest. Dividends – payments made by a company to the owners of certain securities. Typically, dividends are paid quarterly, by approval of the board of directors, to owners of preferred stock. Down round – a round of financing whereby the valuation of the company is lower than the value determined by investors in an earlier round. Drag-along rights – the contractual right of an investor in a company to force all other investors to agree to a specific action, such as the sale of the company. Drawdown schedule – an estimate of the gradual transfer of committed investment funds from the limited partners of a private equity fund to the general partners. Due diligence – the investigatory process performed by investors to assess the viability of a potential investment and the accuracy of the information provided by the target company. Thomson Reuters Dutch auction – a method of conducting an IPO where-by newly issued shares of stock are committed to the highest bidder, then, if any shares remain, to the next highest bidder, and so on until all the shares are committed. Note that the price per share paid by all buyers is the price commitment of the buyer of the last share. Early stage – the state of a company after the seed (formation) stage but before middle stage (generating revenues). Typically, a company in early stage will have a core management team and a proven concept or product, but no positive cash flow. Earnings before interest and taxes (EBIT) – a measurement of the operating profit of a company. One possible valuation methodology is based on a comparison of private and public companies’ value as a multiple of EBIT. Earnings before interest, taxes, depreciation and amortization (EBITDA) – a measurement of the cash flow of a company. One possible valuation methodology is based on a comparison of private and public companies’ value as a multiple of EBITDA. Earn out – an arrangement in which sellers of a business receive additional future payments, usually based on financial performance metrics such as revenue or net income. Elevator pitch – a concise presentation, lasting only a few minutes (an elevator ride), by an entrepreneur to a potential investor about an investment opportunity. Employee Stock Ownership Program (ESOP) – a plan established by a company to reserve shares for employees. Entrepreneur – an individual who starts his or her own business. Entrepreneurship – the application of innovative leadership to limited resources in order to create exceptional value. Enterprise Value (EV) – the sum of the market values of the common stock and long term debt of a company, minus excess cash. 65
National Venture Capital Association Equity – the ownership structure of a company represented by common shares, preferred shares or unit interests. Equity = Assets – Liabilities. ESOP – see Employee Stock Ownership Program. Evergreen fund – a fund that reinvests its profits in order to ensure the availability of capital for future investments. Exit strategy – the plan for generating profits for owners and investors of a company. Typically, the options are to merge, be acquired or make an initial public offering (IPO). An alternative is to recapitalize (releverage the company and then pay dividends to shareholders). Expansion stage – the stage of a company characterized by a complete management team and a substantial increase in revenues. Fair value – a financial reporting principle for valuing assets and liabilities, for example, portfolio companies in venture capital fund portfolios. This has received much recent attention as the Financial Accounting Standards Board (FASB) has issued definitive guidance (FAS 157) on this long standing principle. Fairness opinion – a letter issued by an investment bank that charges a fee to assess the fairness of a negotiated price for a merger or acquisition. FAS 157 – an an accounting standard developed by the Financial Accounting Standards Board (FASB) regarding the application of a fair value principle. First refusal – the right of a privately owned company to purchase any shares that employees would like to sell. Founders stock – nominally priced common stock issued to founders, officers, employees, directors, and consultants. Free cash flow to equity (FCFE) – the cash flow available after operating expenses, interest payments on debt, taxes, net principal repayments, preferred stock dividends, reinvestment needs and changes in working capital. In a discounted cash flow model to determine the value of the equity of a firm using 66 FCFE, the discount rate used is the cost of equity. Free cash flow to the firm (FCFF) – the operating cash flow available after operating expenses, taxes, reinvestment needs and changes in working capital, but before any interest payments on debt are made. In a discounted cash flow model to determine the enterprise value of a firm using FCFF, the discount rate used is the weighted average cost of capital (WACC). Friends and family financing – capital provided by the friends and family of founders of an early stage company. Founders should be careful not to create an ownership structure that may hinder the participation of professional investors once the company begins to achieve success. Full ratchet – an anti-dilution protection mechanism whereby the price per share of the preferred stock of investor A is adjusted downward due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. Investor A’s preferred stock is repriced to match the price of investor B’s preferred stock. Usually as a result of the implementation of a ratchet, company management and employees who own a fixed amount of common shares suffer significant dilution. See Narrow-based weighted average anti-dilution and Broad-based weighted average anti-dilution. Fully diluted basis – a methodology for calculating any per share ratios whereby the denominator is the total number of shares issued by the company on the assumption that all warrants and options are exercised and preferred stock. Fund-of-funds – a fund created to invest in private equity funds. Typically, individual investors and relatively small institutional investors participate in a fund-offunds to minimize their portfolio management efforts. Gatekeepers – intermediaries which endowments, pension funds and other institutional investors use as advisors regarding private equity investments. General partner (GP) – a class of partner in a partnership. The general partner retains liability for the actions of the partnership. Historically, venture capital and buyout funds have been structured as limited Thomson Reuters
2013 NVCA Yearbook partnerships, with the venture firm as the GP and limited partners (LPs) being the institutional and high net worth investors that provide most of the capital in the partnership. The GP earns a management fee and a percentage of gains (see Carried interest). use a variety of derivative instruments in order to achieve a return that is relatively less correlated to the performance of typical indices (such as the S&P 500) than traditional long-only funds. Hedge fund managers are typically compensated based on assets under management as well as fund performance. GP – see General partner. GP for hire – In a spin-out or a synthetic secondary, a GP for hire refers to the professional investor who may be hired by a purchasing firm to manage the new fund created from the orphaned assets purchased. In past cases, the GP has often expanded its role to fundraise for and run new funds aside from the initial fund. Going-private transaction – when a public company chooses to pay off all public investors, delist from all stock exchanges, and become owned by management, employees, and select private investors. Golden handcuffs – financial incentives that discourage founders and / or important employees from leaving a company before a predetermined date or important milestone. Grossing up – an adjustment of an option pool for management and employees of a company which increases the number of shares available over time. This usually occurs after a financing round whereby one or more investors receive a relatively large percentage of the company. Without a grossing up, managers and employees would suffer the financial and emotional consequences of dilution, thereby potentially affecting the overall performance of the company. Growth stage – the state of a company when it has received one or more rounds of financing and is generating revenue from its product or service. Also known as “middle stage.” High yield debt – debt issued via public offering or public placement (Rule 144A) that is rated below investment grade by S&P or Moody’s. This means that the debt is rated below the top four rating categories (i.e. S&P BB+, Moody’s Ba2 or below). The lower rating is indicative of higher risk of default, and therefore the debt carries a higher coupon or yield than investment grade debt. Also referred to as Junk bonds or Sub-investment grade debt. Hockey stick – the general shape and form of a chart showing revenue, customers, cash or some other financial or operational measure that increases dramatically at some point in the future. Entrepreneurs often develop business plans with hockey stick charts to impress potential investors. Holding period – amount of time an investment remains in a portfolio. Hot issue – stock in an initial public offering that is in high demand. Hot money – capital from investors that have no tolerance for lack of results by the investment manager and move quickly to withdraw at the first sign of trouble. Hurdle rate – a minimum rate of return required before an investor will make an investment. Incorporation – the process by which a business receives a state charter, allowing it to become a corporation. Many corporations choose Delaware because its laws are business-friendly and up to date. Hart-Scott-Rodino Act – a law requiring entities that acquire certain amounts of stock or assets of a company to inform the Federal Trade Commission and the Department of Justice and to observe a waiting period before completing the transaction. Incubator – a company or facility designed to host startup companies. Incubators help startups grow while controlling costs by offering networks of contacts and shared backoffice resources. Hedge fund – an investment fund that has the ability to use leverage, take short positions in securities, or Indenture – the terms and conditions between a bond issuer and bond buyers. Thomson Reuters 67
National Venture Capital Association Initial public offering (IPO) – the first offering of stock by a company to the public. New public offerings must be registered with the Securities and Exchange Commission. An IPO is one of the methods that a startup that has achieved significant success can use to raise additional capital for further growth. See Qualified IPO. In-kind distribution – a distribution to limited partners of a private equity fund that is in the form of publicly trades shares rather than cash. Inside round – a round of financing in which the investors are the same investors as the previous round. An inside round raises liability issues since the valuation of the company has no third party verification in the form of an outside investor. In addition, the terms of the inside round may be considered self-dealing if they are onerous to any set of shareholders or if the investors give themselves additional preferential rights. Institutional investor – professional entities that invest capital on behalf of companies or individuals. Examples are: pension plans, insurance companies and university endowments. Intellectual property (IP) – knowledge, techniques, writings and images that are intangible but often protected by law via patents, copyrights, and trademarks. Interest coverage ratio – earnings before interest and taxes (EBIT) divided by interest expense. This is a key ratio used by lenders to assess the ability of a company to produce sufficient cash to pay its debt obligation. Internal rate of return (IRR) – the interest rate at which a certain amount of capital today would have to be invested in order to grow to a specific value at a specific time in the future. Investment thesis / Investment philosophy – the fundamental ideas which determine the types of investments that an investment fund will choose in order to achieve its financial goals. IPEV – Stands for International Private Equity Valuation guidelines group. This group is made up of representatives of the international and US venture 68 capital industry and has published guidelines for applying US GAAP and international IFRS valuation rules. See www.privateequityvaluation.com IPO – see Initial public offering. IRR – see Internal rate of return. Issuer – the company that chooses to distribute a portion of its stock to the public. J curve – a concept that during the first few years of a private equity fund, cash flow or returns are negative due to investments, losses, and expenses, but as investments produce results the cash flow or returns trend upward. A graph of cash flow or returns versus time would then resemble the letter “J”. Later stage – the state of a company that has proven its concept, achieved significant revenues compared to its competition, and is approaching cash flow break even or positive net income. Typically, a later stage company is about 6 to 12 months away from a liquidity event such as an IPO or buyout. The rate of return for venture capitalists that invest in later stage, less risky ventures is lower than in earlier stage ventures. LBO – see Leveraged buyout. Lead investor – the venture capital investor that makes the largest investment in a financing round and manages the documentation and closing of that round. The lead investor sets the price per share of the financing round, thereby determining the valuation of the company. Letter of intent – a document confirming the intent of an investor to participate in a round of financing for a company. By signing this document, the subject company agrees to begin the legal and due diligence process prior to the closing of the transaction. Also known as a “Term Sheet”. Leverage – the use of debt to acquire assets, build operations and increase revenues. By using debt, a company is attempting to achieve results faster than if it only used its cash available from pre-leverage operations. The risk is that the increase in assets and revenues does not generate sufficient net income and cash flow to pay the interest costs of the debt. Thomson Reuters
2013 NVCA Yearbook Leveraged buyout (LBO) – the purchase of a company or a business unit of a company by an outside investor using mostly borrowed capital. Leveraged recapitalization – the reorganization of a company’s capital structure resulting in more debt added to the balance sheet. Private equity funds can recapitalize a portfolio company and then direct the company to issue a one-time dividend to equity investors. This is often done when the company is performing well financially and the debt markets are expanding. Leverage ratios – measurements of a company’s debt as a multiple of cash flow. Typical leverage ratios include Total Debt / EBITDA, Total Debt / (EBITDA minus Capital Expenditures), and Seniore Debt / EBITDA. L.I.B.O.R. – see The London Interbank Offered Rate. License – a contract in which a patent owner grants to a company the right to make, use or sell an invention under certain circumstances and for compensation. Limited liability company (LLC) – an ownership structure designed to limit the founders’ losses to the amount of their investment. An LLC itself does not pay taxes, rather its owners pay taxes on their proportion of the LLC profits at their individual tax rates. Limited partnership – a legal entity composed of a general partner and various limited partners. The general partner manages the investments and is liable for the actions of the partnership while the limited partners are generally protected from legal actions and any losses beyond their original investment. The general partner collects a management fee and earns a percentage of capital gains (see Carried interest), while the limited partners receive income, capital gains and tax benefits. Limited partner (LP) – an investor in a limited partnership. The general partner is liable for the actions of the partnership while the limited partners are generally protected from legal actions and any losses beyond their original investment. The limited partner receives income, capital gains and tax benefits. Thomson Reuters Liquidation – the sale of a company. This may occur in the context of an acquisition by a larger company or in the context of selling off all assets prior to cessation of operations (Chapter 7 bankruptcy). In a liquidation, the claims of secured and unsecured creditors, bondholders and preferred stockholders take precedence over common stockholders. Liquidation preference – the contractual right of an investor to priority in receiving the proceeds from the liquidation of a company. For example, a venture capital investor with a “2x liquidation preference” has the right to receive two times its original investment upon liquidation. Liquidity discount – a decrease in the value of a private company compared to the value of a similar but publicly traded company. Since an investor in a private company cannot readily sell his or her investment, the shares in the private company must be valued less than a comparable public company. Liquidity event – a transaction whereby owners of a significant portion of the shares of a private company sell their shares in exchange for cash or shares in another, usually larger company. For example, an IPO is a liquidity event. Lock-up agreement – investors, management and employees often agree not to sell their shares for a specific time period after an IPO, usually 6 to 12 months. By avoiding large sales of its stock, the company has time to build interest among potential buyers of its shares. London Interbank Offered Rate (L.I.B.O.R.) – the average rate charged by large banks in London for loans to each other. LIBOR is a relatively volatile rate and is typically quoted in maturities of one month, three months, six months and one year. Management buyout (MBO) – a leveraged buyout controlled by the members of the management team of a company or a division. Often an MBO is conducted in partnership with a buyout fund. Management fee – a fee charged to the limited partners in a fund by the general partner. Management fees in a private equity fund usually range from 0.75% to 3% of capital under management, depend- 69
National Venture Capital Association ing on the type and size of fund. For venture capital funds, 2% is typical. Management rights – the rights often required by a venture capitalist as part of the agreement to invest in a company. The venture capitalist has the right to consult with management on key operational issues, attend board meetings and review information about the company’s financial situation. Market capitalization – the value of a publicly traded company as determined by multiplying the number of shares outstanding by the current price per share. MBO – see Management buyout. Mezzanine – a layer of financing that has intermediate priority (seniority) in the capital structure of a company. For example, mezzanine debt has lower priority than senior debt but usually has a higher interest rate and often includes warrants. In venture capital, a mezzanine round is generally the round of financing that is designed to help a company have enough resources to reach an IPO. See Bridge financing. MoneyTree™ Report – Officially known as The MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters. This report provides much of the data in this report. It is used for investment statistics in United States based companies. Specific definition information is available in several of the appendices of this Yearbook. Multiples – a valuation methodology that compares public and private companies in terms of a ratio of value to an operations figure such as revenue or net income. For example, if several publicly traded computer hardware companies are valued at approximately 2 times revenues, then it is reasonable to assume that a startup computer hardware company that is growing fast has the potential to achieve a valuation of 2 times its revenues. Before the startup issues its IPO, it will likely be valued at less than 2 times revenue because of the lack of liquidity of its shares. See Liquidity discount. type of anti-dilution mechanism. A weighted average anti-dilution method adjusts downward the price per share of the preferred stock of investor A due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. Investor A’s preferred stock is repriced to a weighed average of investor A’s price and investor B’s price. A narrow-based anti-dilution uses only common stock outstanding in the denominator of the formula for determining the new weighted average price. NDA – see Non-disclosure agreement. No-shop clause – a section of an agreement to purchase a company whereby the seller agrees not to market the company to other potential buyers for a specific time period. Non-cumulative dividends – dividends that are payable to owners of preferred stock at a specific point in time only if there is sufficient cash flow available after all company expenses have been paid. If cash flow is insufficient, the owners of the preferred stock will not receive the dividends owed for that time period and will have to wait until the board of directors declares another set of dividends. Non-interference – an agreement often signed by employees and management whereby they agree not to interfere with the company’s relationships with employees, clients, suppliers and sub-contractors within a certain time period after termination of employment. Non-solicitation – an agreement often signed by employees and management whereby they agree not to solicit other employees of the company regarding job opportunities. Non-disclosure agreement (NDA) – an agreement issued by entrepreneurs to protect the privacy of their ideas when disclosing those ideas to third parties. Offering memorandum – a legal document that provides details of an investment to potential investors. See Private placement memorandum. OID – see Original issue discount. Narrow-based weighted average anti-dilution – a 70 Thomson Reuters
2013 NVCA Yearbook Operating cash flow – the cash flow produced from the operation of a business, not from investing activities (such as selling assets) or financing activities (such as issuing debt). Calculated as net operating income (NOI) plus depreciation. Option pool – a group of options set aside for long term, phased compensation to management and employees. Piggyback rights – rights of an investor to have his or her shares included in a registration of a startup’s shares in preparation for an IPO. PIK dividend – a dividend paid to the holder of a stock, usually preferred stock, in the form of additional stock rather than cash. PIK refers to payment in kind. PIPEs – see Private investment in public equity. Outstanding shares – the total amount of common shares of a company, not including treasury stock, convertible preferred stock, warrants and options. Pay to play – a clause in a financing agreement whereby any investor that does not participate in a future round agrees to suffer significant dilution compared to other investors. The most onerous version of “pay to play” is automatic conversion to common shares, which in essence ends any preferential rights of an investor, such as the right to influence key management decisions. Pari passu – a legal term referring to the equal treatment of two or more parties in an agreement. For example, a venture capitalist may agree to have registration rights that are pari passu with the other investors in a financing round. Participating dividends – the right of holders of certain preferred stock to receive dividends and participate in additional distributions of cash, stock or other assets. Participating preferred stock – a unit of ownership composed of preferred stock and common stock. The preferred stock entitles the owner to receive a predetermined sum of cash (usually the original investment plus accrued dividends) if the company is sold or has an IPO. The common stock represents additional continued ownership in the company. Participating preferred stock has been characterized as “having your cake and eating it too”. PEIGG – acronym for Private Equity Industry Guidelines Group, an ad hoc group of individuals and firms involved in the private equity industry for the purpose of establishing valuation and reporting guidelines. Thomson Reuters Placement agent – a company that specializes in finding institutional investors that are willing and able to invest in a private equity fund. Sometimes a private equity fund will hire a placement agent so the fund partners can focus on making and managing investments in companies rather than on raising capital. Portfolio company – a company that has received an investment from a private equity fund. Post-money valuation – the valuation of a company including the capital provided by the current round of financing. For example, a venture capitalist may invest $5 million in a company valued at $2 million “pre-money” (before the investment was made). As a result, the startup will have a post-money valuation of $7 million. PPM – see Private placement memorandum. Preemptive rights – the rights of shareholders to maintain their percentage ownership of a company by buying shares sold by the company in future financing rounds. Preference – seniority, usually with respect to dividends and proceeds from a sale or dissolution of a company. Preferred return – a minimum return per annum that must be generated for limited partners of a private equity fund before the general partner can begin receiving a percentage of profits from investments. Preferred stock – a type of stock that has certain rights that common stock does not have. These special rights may include dividends, participation, liquidity preference, anti-dilution protection and veto 71
National Venture Capital Association provisions, among others. Private equity investors usually purchase preferred stock when they make investments in companies. Pre-money valuation – the valuation of a company prior to the current round of financing. For example, a venture capitalist may invest $5 million in a company valued at $2 million pre-money. As a result, the startup will have a “post-money” valuation of $7 million. Primary shares – shares sold by a corporation (not by individual shareholders). Private Equity Growth Capital Council (PEGCC) – an advocacy, communications and research organization for the buyout industry in the United States. Private equity – equity investments in non-public companies, usually defined as being made up of venture capital funds and buyout funds. Real estate, oil and gas, and other such partnerships are sometimes included in the definition. Private investment in public equity (PIPEs) – investments by a private equity fund in a publicly traded company, usually at a discount and in the form of preferred stock. Private placement – the sale of a security directly to a limited number of institutional and qualified individual investors. If structured correctly, a private placement avoids registration with the Securities and Exchange Commission. Private placement memorandum (PPM) – a document explaining the details of an investment to potential investors. For example, a private equity fund will issue a PPM when it is raising capital from institutional investors. Also, a startup may issue a PPM when it needs growth capital. Also known as “Offering Memorandum”. Private securities – securities that are not registered with the Securities and Exchange Commission and do not trade on any exchanges. The price per share is negotiated between the buyer and the seller (the “issuer”). Prudent man rule – a fundamental principle for 72 professional money management which serves as a basis for the Prudent Investor Act. The principle is based on a statement by Judge Samuel Putnum in 1830: “Those with the responsibility to invest money for others should act with prudence, discretion, intelligence and regard for the safety of capital as well as income.” In the 1970s a favorable interpretation of this rule enabled pension fund managers to invest in venture capital for the first time. Qualified IPO – a public offering of securities valued at or above a total amount specified in a financing agreement. This amount is usually specified to be sufficiently large to guarantee that the IPO shares will trade in a major exchange (NASDAQ or New York Stock Exchange). Usually upon a qualified IPO preferred stock is forced to convert to common stock. Quartile – one fourth of the data points in a data set. Often, private equity investors are measured by the results of their investments during a particular period of time. Institutional investors often prefer to invest in private equity funds that demonstrate consistent results over time, placing in the upper quartile of the investment results for all funds. Ratchet – a mechanism to prevent dilution. An antidilution clause in a contract protects an investor from a reduction in percentage ownership in a company due to the future issuance by the company of additional shares to other entities. Realization ratio – the ratio of cumulative distributions to paid-in capital. The realization ratio is used as a measure of the distributions from investment results of a private equity partnership compared to the capital under management. Recapitalization – the reorganization of a company’s capital structure. Red herring – a preliminary prospectus filed with the Securities and Exchange Commission and containing the details of an IPO offering. The name refers to the disclosure warning printed in red letters on the cover of each preliminary prospectus advising potential investors of the risks involved. Redemption rights – the right of an investor to force the startup company to buy back the shares issued as Thomson Reuters
2013 NVCA Yearbook a result of the investment. In effect, the investor has the right to take back his/her investment and may even negotiate a right to receive an additional sum in excess of the original investment. Registration – the process whereby shares of a company are registered with the Securities and Exchange Commission under the Securities Act of 1933 in preparation for a sale of the shares to the public. Regulation D – an SEC regulation that governs private placements. Private placements are investment offerings for institutional and accredited individual investors but not for the general public. There is an exception that 35 non-accredited investors can participate. Restricted shares – shares that cannot be traded in the public markets. Return on investment (ROI) – the proceeds from an investment, during a specific time period, calculated as a percentage of the original investment. Also, net profit after taxes divided by average total assets. Rights offering – an offering of stock to current shareholders that entitles them to purchase the new issue, usually at a discount. ROI – see Return on investment. Rollup – the purchase of relatively smaller companies in a sector by a rapidly growing company in the same sector. The strategy is to create economies of scale. For example, the movie theater industry underwent significant consolidation in the 1960’s and 1970’s. Round – a financing event usually involving several private equity investors. Royalties – payments made to patent or copyright owners in exchange for the use of their intellectual property. Rule 144 – a rule of the Securities and Exchange Commission that specifies the conditions under which the holder of shares acquired in a private transaction may sell those shares in the public markets. S corporation – an ownership structure that limits its number of owners to 100. An S corporation does not pay taxes, rather its owners pay taxes on their proportion of the corporation’s profits at their individual tax rates. SBIC – see Small Business Investment Company. Rights of co-sale with founders – a clause in venture capital investment agreements that allows the VC fund to sell shares at the same time that the founders of a startup chose to sell. Right of first refusal – a contractual right to participate in a transaction. For example, a venture capitalist may participate in a first round of investment in a startup and request a right of first refusal in any following rounds of investment. Risk-free rate – a term used in finance theory to describe the return from investing in a riskless security. In practice, this is often taken to be the return on US Treasury Bills. Road show – presentations made in several cities to potential investors and other interested parties. For example, a company will often make a road show to generate interest among institutional investors prior to its IPO. Thomson Reuters Scalability – a characteristic of a new business concept that entails the growth of sales and revenues with a much slower growth of organizational complexity and expenses. Venture capitalists look for scalability in the startups they select to finance. Scale-down – a schedule for phased decreases in management fees for general partners in a limited partnership as the fund reduces its investment activities toward the end of its term. Scale-up – the process of a company growing quickly while maintaining operational and financial controls in place. Also, a schedule for phased increases in management fees for general partners in a limited partnership as the fund increases its investment activities over time. Secondary market – a market for the sale of limited partnership interests in private equity funds. Sometimes limited partners chose to sell their 73
National Venture Capital Association interest in a partnership, typically to raise cash or because they cannot meet their obligation to invest more capital according to the takedown schedule. Certain investment companies specialize in buying these partnership interests at a discount. form of debt or equity in order to use in private equity investing. Secondary shares – shares sold by a shareholder (not by the corporation). Stock option – a right to purchase or sell a share of stock at a specific price within a specific period of time. Stock purchase options are commonly used as long term incentive compensation for employees and management of fast growth companies. Securities and Exchange Commission (SEC) – the regulatory body that enforces federal securities laws such as the Securities Act of 1933 and the Securities Exchange Act of 1934. Strategic investor – a relatively large corporation that agrees to invest in a young or a smaller company in order to have access to its proprietary technology, product or service. Seed capital – investment provided by angels, friends and family to the founders of a startup in seed stage. Subordinated debt – a loan that has a lower priority than a senior loan in case of a liquidation of the asset or company. Also known as “junior debt”. Seed stage – the state of a company when it has just been incorporated and its founders are developing their product or service. Success rate – the proportion of venture funded companies that are considered successful. A study of companies funded by VCs during the 1990s indicated that 14% of the companies went public and another 11%were acquired. Senior debt – a loan that has a higher priority in case of a liquidation of the asset or company. Seniority – higher priority. Series A preferred stock – preferred stock issued by a fast growth company in exchange for capital from investors in the “A” round of financing. This preferred stock is usually convertible to common shares upon the IPO or sale of the company. Shareholder agreement – a contract that sets out, for example, the basis on which the company will be operated and the shareholders’ rights and obligations. It provides protection to minority shareholders. Sharpe Ratio – a method of calculating the riskadjusted return of an investment. The Sharpe Ratio is calculated by subtracting the risk-free rate from the return on a specific investment for a time period (usually one year) and then dividing the resulting figure by the standard deviation of the historical (annual) returns for that investment. The higher the Sharpe Ratio, the better. Small Business Investment Company (SBIC) – a company licensed by the Small Business Administration to receive government capital in the 74 Sweat equity – ownership of shares in a company resulting primarily from work rather than investment of capital. Syndicate – a group of investors that agree to participate in a round of funding for a company. Alternatively, a syndicate can refer to a group of investment banks that agree to participate in the sale of stock to the public as part of an IPO. Synthetic secondary – A popular method of completing a direct secondary transaction in which the buyer becomes a limited partner (LP) in a special purpose vehicle (SPV) or similar entity which has been set up out of the underlying investments in order to create a limited partnership interest. The term arose because of the synthetic nature of the direct purchase through the LP secondary transaction. Tag-along right – the right of a minority investor to receive the same benefits as a majority investor. Usually applies to a sale of securities by investors. Also known as Co-sale right. Takedown – a schedule of the transfer of capital in phases in order to complete a commitment of funds. Thomson Reuters
2013 NVCA Yearbook Typically, a takedown is used by a general partner of a private equity fund to plan the transfer of capital from the limited partners. Tender offer – an offer to public shareholders of a company to purchase their shares. Term loan – a bank loan for a specific period of time, usually up to ten years in leveraged buyout structures. Term sheet – a document confirming the intent of an investor to participate in a round of financing for a company. By signing this document, the subject company agrees to begin the legal and due diligence process prior to the closing of the transaction. Also known as “Letter of Intent”. Tranche – a portion of a set of securities. Each tranche may have different rights or risk characteristics. When venture capital firms finance a company, a round may be disbursed in two or three tranches, each of which is paid when the company attains one or more milestones. Turnaround – a process resulting in a substantial increase in a company’s revenues, profits and reputation. Under water option – an option is said to be under water if the current fair market value of a stock is less than the option exercise price. Underwriter – an investment bank that chooses to be responsible for the process of selling new securities to the public. An underwriter usually chooses to work with a syndicate of investment banks in order to maximize the distribution of the securities. Venture capital – a segment of the private equity industry which focuses on investing in new companies with high growth potential and accompanying high risk. Venture capital method – a pricing valuation method whereby an estimate of the future value of a company is discounted by a certain interest rate and adjusted for future anticipated dilution in order to determine the current value. Usually, discount rates for the venture capital method are considerably high- Thomson Reuters er than public stock return rates, representing the fact that venture capitalists must achieve significant returns on investment in order to compensate for the risks they take in funding unproven companies. Vesting – a schedule by which employees gain ownership over time of a previously agreed upon amount of retirement funding or stock options. Vintage – the year that a private equity fund stops accepting new investors and begins to make investments on behalf of those investors. Venture funds are generally benchmarked to funds of the same vintage year. Voting rights – the rights of holders of preferred and common stock in a company to vote on certain acts affecting the company. These matters may include payment of dividends, issuance of a new class of stock, merger or liquidation. Warrant – a security which gives the holder the right to purchase shares in a company at a pre-determined price. A warrant is a long term option, usually valid for several years or indefinitely. Typically, warrants are issued concurrently with preferred stocks or bonds in order to increase the appeal of the stocks or bonds to potential investors. Washout round – a financing round whereby previous investors, the founders and management suffer significant dilution. Usually as a result of a washout round, the new investor gains majority ownership and control of the company. Weighted average cost of capital (WACC) – the average of the cost of equity and the after-tax cost of debt. This average is determined using weight factors based on the ratio of equity to debt plus equity and the ratio of debt to debt plus equity. Weighted average anti-dilution – an anti-dilution protection mechanism whereby the conversion rate of preferred stock is adjusted in order to reduce an investor’s loss due to an increase in the number of shares in a company. Without anti-dilution protection, an investor would suffer from a reduction of his or her percentage ownership. Usually as a result of the implementation of a weighted average anti-dilution, company management and employees who own a fixed 75
National Venture Capital Association amount of common shares suffer significant dilution, but not as badly as in the case of a full ratchet. Write-down – a decrease in the reported value of an asset or a company. Write-off – a decrease in the reported value of an asset or a company to zero. Write-up – an increase in the reported value of an asset or a company. Zombie – a company that has received capital from investors but has only generated sufficient revenues and cash flow to maintain its operations without significant growth. Sometimes referred to as “walking dead.” Typically, a venture capitalist has to make a difficult decision as to whether to liquidate a zombie or continue to invest funds in the hopes that the zombie will become a winner. These definitions were graciously provided by the Center for Private Equity and Entrepreneurship at the Tuck School of Business at Dartmouth. Please refer to the Center’s website for additional definitions and information at http://mba.tuck.dartmouth.edu/pecenter/resources/glossary.html. Used by permission. Thomson Reuters and National Venture Capital Association are grateful to the Center for its support. 76 Thomson Reuters
Appendix B: MoneyTree Report Criteria PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters The MoneyTree Report is a quarterly study of venture capital investment activity in the United States. As a collaboration between PricewaterhouseCoopers and the National Venture Capital Association, based upon data from Thomson Reuters, it is the only industry-endorsed research of its kind. The MoneyTree Report is the definitive source of information on emerging companies that receive financing and the venture capital firms that provide it. The study is a staple of the financial community, entrepreneurs, government policymakers and the business press worldwide. Report Criteria The MoneyTree™ Report records cash for equity investments as the cash is actually received by the company (also called a tranche) as opposed to when financing is committed (often referred to as a “term sheet”) to a company. Accordingly, the amount reported in a given quarter may be less than the total round amount committed to the company at the time when the round of financing closed. The type of financing as it is used in the MoneyTree™ Report refers to the number of tranches a company has received. The number designation (1, 2, 3, etc.) does not refer to the round of financing. Rounds are usually designated alphabetically, e.g. Series A, Series B, and so on. The MoneyTree™ Report does not track rounds. Summary Description The MoneyTree™ Report measures cash-for-equity investments by the professional venture capital community in private emerging companies in the U.S. It is based on data provided by Thomson Reuters. General Definition The report includes the investment activity of profes- Thomson Reuters sional venture capital firms with or without a US office, SBICs, venture arms of corporations, institutions, investment banks and similar entities whose primary activity is financial investing. Where there are other participants such as angels, corporations, and governments in a qualified and verified financing round the entire amount of the round is included. Qualifying transactions include cash investments by these entities either directly or by participation in various forms of private placement. All recipient companies are private, and may have been newly-created or spun-out of existing companies. The report excludes debt, buyouts, recapitalizations, secondary purchases, IPOs, investments in public companies such as PIPES (private investments in public entities), investments for which the proceeds are primarily intended for acquisition such as rollups, change of ownership, and other forms of private equity that do not involve cash such as services-inkind and venture leasing. Investee companies must be domiciled in one of the 50 US states or DC even if substantial portions of their activities are outside the United States. Specific Methodology The focus of the report is on cash received by the company. Therefore, tranches not term sheets are the determining factor. Drawdowns on commitments are recognized at the time the company receives the money rather than recorded as a lump sum amount at the time the term sheet is executed. Convertible debt and bridge loans are recognized only when converted to equity. Once a company has received a qualifying venture capital financing round, all subsequent equity financing rounds are included regardless of whether the round involved a venture capital firm as long as all other investment criteria are met (e.g. cash-for-equity, not buyout or services in kind). Angel, incubator and similar investments are consid- 77
National Venture Capital Association ered pre-venture financing if the company has received no prior qualifying venture capital investment and are not included in the MoneyTree™ results. Angel, incubator and similar investments that are part of a qualifying venture capital round or follow a qualifying venture capital round are included to the extent that such investments can be fully verified as meeting all other criteria (e.g. cash for equity, not buyout or services in kind). Direct investment by corporations (not through a corporate venture capital arm) is excluded unless (a) the investment is clearly demonstrated to be primarily a financial investment rather than outsourced R&D or market development, (b) it is a co-investment in an otherwise qualifying round, or (c) it follows a qualifying venture round in a company and meets all other criteria (e.g. cash-for-equity, not buyout or services in kind). Data is primarily obtained from a quarterly survey of venture capital practitioners conducted by Thomson 78 Reuters. Information is augmented by other research techniques including other public and private sources. All data is subject to verification with the venture capital firms and/or the investee companies. Only professional independent venture capital firms, institutional venture capital groups, and recognized corporate venture capital groups are included in venture capital industry rankings. Disclaimer PricewaterhouseCoopers and the National Venture Capital Association have taken responsible steps to ensure that the information contained in the MoneyTree™ Report has been obtained from reliable sources. However, neither of the parties nor Thomson Reuters can warrant the ultimate validity of the data obtained in this manner. Results are updated periodically. Therefore, all data is subject to change at any time. Thomson Reuters
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Appendix C: MoneyTree Geographical Definitions The Geographical Regions identified in the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters and used in this NVCA Yearbook are as follows: Alaska/Hawaii/Puerto Rico: Alaska, Hawaii, and Puerto Rico Northwest: Washington, Oregon, Idaho, Montana, and Wyoming Colorado: The state of Colorado Philadelphia Metro: Eastern Pennsylvania, southern New Jersey, and Delaware DC/Metroplex: Washington, D.C., Virginia, West Virginia, and Maryland LA/Orange County: Los Angeles, Ventura, Orange, and Riverside Counties (i.e., southern California, except San Diego) Midwest: Illinois, Missouri, Indiana, Kentucky, Ohio, Michigan, and western Pennsylvania New England: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and parts of Connecticut (excluding Fairfield county) New York Metro: Metropolitan NY area, northern New Jersey, and Fairfield County, Connecticut North Central: Minnesota, Iowa, Wisconsin, North Dakota, South Dakota, and Nebraska Thomson Reuters Sacramento/Northern California: Northeastern California San Diego: San Diego area Silicon Valley: Northern California, bay area and coastline South Central: Kansas, Oklahoma, Arkansas, and Louisiana Southeast: Alabama, Florida, Georgia, Mississippi, Tennessee, South Carolina, and North Carolina Southwest: Utah, Arizona, New Mexico, and Nevada Texas: The state of Texas Upstate New York: Northern New York state, except Metropolitan New York City area 81
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Appendix D: Industry Codes (VEIC) Company VE Primary Industry Class 1000 Communications and Media 1100 Commercial Communications 1110 Radio & TV Broadcasting Stations 1120 CATV & Pay TV Systems 1125 Cable Service Providers 1130 Radio & TV Broadcasting & Other Related Equipment 1135 Services to Commercial Communications 1199 Other Commercial Communications 1700 Media and Entertainment 1710 Entertainment 1720 Publishing 1800 Other Communications Related 1200 Telecommunications 1210 Long Distance Telephone Services 1215 Local Exchange Carriers (LEC) 1220 Telephone Interconnect & Other Equipment 1230 Telephone answering and/or management systems, PBXs 1299 Other Telephone Related 1300 Wireless Communications 1310 Mobile Communications, Pagers & Cellular Radio 1320 Wireless Communications Services 1325 Messaging Services 1330 Wireless Communications Components 1399 Other Wireless Communications 1400 Facsimile Transmission 1500 Data Comm. 1500 Data Communications 1510 Local Area Networks (incl. voice/data PBX systems) 1515 Wide Area Networks 1520 Data Communications Components 1521 Communications Processors/Network Management 1522 Protocol Converters & Emulators 1523 Modems and Multiplexers 1524 Other Data Communication Components 1525 Switches/Hubs/Routers/Gateways/ATM 1530 Network test, monitor and support equipment 1549 Other Data Communications 1600 Satellite Comm 1600 Satellite Microwave Communications 1610 Satellite Services/Carriers/Operators 1620 Satellite Ground (and other) Equipment 1630 Microwave Service Facilities 1640 Microwave & Satellite Components 1699 Other Satellite & Microwave 1800 Comm. Other Thomson Reuters 1100 Commer. Comm. 1400 Facsimile Trans 2100 Computer Hardware Company VE Primary Industry Sub-Group 3 1300 Wireless Communications 1000 Communications Company VE Primary Industry Sub-Group 2 1200 Telephone Rel. 1000 Information Technology Company VE Primary Industry Sub-Group 1 1810 Defense Communications 1825 Other Communications Services NEC 1899 Other Communications Products (not yet classified) 2100 Computers Hardware 2100 Computers and Hardware 2110 Mainframes & Scientific Computers 2111 Mainframes 2112 Supercomputers and Scientific Computers 2119 Other Mainframes and Scientific 83
National Venture Capital Association Company VE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 2120 Mini & Personal/Desktop Computers 2121 Fail Safe Computers 2122 Mini Computers 2123 Personal Computers (micro/personal) 2124 Other Mini and Personal Computers 2125 Portable Computers (notebooks/laptops) 2126 Handheld Computing (PDA) 2130 Optical computing 2140 Servers and Workstations 2141 Servers 2143 Workstations 2144 Thin Client Hardware 2149 Other Servers and Workstations 2200 Digital Imaging and 2300 Turnkey Integrated Systems 2300 Integrated Turnkey Systems and Solutions and Solutions 2311 Business and Office 2312 Consumer 2313 Retailing 2315 Transportation 2316 Finance/Insurance/Real Estate 2317 Agriculture 2318 Recreation/Entertainment 2319 Manufacturing/Industrial/Construction 2320 Medical/Health 2321 Computer related 2322 Communications Products/Servcies 2323 Education 2324 Reference 2325 Scientific 2399 Other Intergrated Systems and Solutions 2500 Computer Peripherals 84 2200 Computer Graphics and Digital Imaging Computer Graphics 2210 CAD/CAM, CAE,EDA Systems 2220 Graphic Systems 2230 Scanning Hardware 2234 OCR (Optical Character Recognition) 2236 OBR (Optical Bar Recognition) 2238 MICR (Magnetic Ink Character Recognition) 2239 Other Scanning Related 2250 Graphics Printers/Plotters 2255 Graphics/Enhanced Video Cards 2260 Other Graphics Peripherals 2280 Other Multimedia NEC 2290 Digital Imaging Hardware and Equipment 2295 Digital Imaging Services 2299 Other Computer Graphics 2500 Peripherals 2510 Terminals 2511 Intelligent Terminals 2512 Portable Terminals 2513 Graphics Terminals 2519 Other Terminals 2520 Printers 2521 Laser Printers 2522 Color Printers 2523 Inkjet Printers 2524 Dot Matrix Printers 2529 Other Printers 2530 Data I/O Devices 2531 Mouse Input Devices 2532 TouchPad Input Devices 2533 Pen based computing Thomson Reuters
2013 NVCA Yearbook Company VE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 2539 Other Data I/O Devices 2540 Disk Related Memory Devices 2541 Floppy Disks & Drives 2542 Winchester Hard Disks and Drives 2543 Optical Disks & Drives,CD-ROM DVD 2546 Disk Drive Components 2549 Other Disk Related 2550 Tape Related Devices 2551 Magnetic Tapes 2552 Tape Heads & Drives 2553 Continuous Tape Backup Systems 2559 Other Tape Related Devices 2560 Other Memory Devices (excl. semiconductors) 2561 PC or PMCIA cards 2562 Memory Cards 2563 Sound Cards 2564 Communications Cards 2569 Other Peripheral Cards 2590 Other Peripherals (not yet classified) 2700 Computer Software 2600 Computer Services 2630 Time Sharing Firms 2640 Computer Leasing & Rentals 2650 Computer Training Services 2655 Backup and Disaster Recover 2660 Data Processing,Analysis & Input Services 2665 Computer Repair Services 2670 Computerized Billing & Accounting Services 2675 Computer Security Services 2691 Data communications systems management 2699 Other Computer Services 2700 Computer Software Thomson Reuters 2600 Computer Services 2700 Computer Software 2710 Systems Software 2711 Database & File Management 2712 Operating Systems & Utilities 2713 Program Development Tools/CASE/Languages 2716 Graphics and Digital Imaging Software 2719 Other Systems Software 2720 Communications/Networking Software 2721 Security/Firewalls,Encryption software 2722 Email Software 2723 Groupware 2724 Multimedia software 2729 Other Communications/Networking Software 2730 Applications Software 2731 Business and Office Software 2732 Home Use Software 2733 Educational Software 2734 Manufacturing/Industrial Software 2735 Medical/Health Software 2736 Banks/Financial Institutions Software 2737 Retailing Software 2738 Integrated Software 2739 ERP/Inventory Software 2740 Recreational/Game Software 2741 Scientific Software 2743 Agricultural Software 2744 Transportation Software 2748 Other Industry specific Software 2749 Other Applications Software 2750 Artificial Intelligence Related Software 85
National Venture Capital Association Company VE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 2751 Expert Systems 2752 Natural Language 2753 Computer-Aided Instruction 2754 Artificial Intel. Programming Aids 2755 Other Artificial Intelligence Related 2799 Other Software Related 2710 Computer Programming 1550 Internet Communications and Infrastructure NEC 1551 Internet Access Services and Service Providers 1552 Internet Multimedia Services 1553 Internet Backbone Infrastructure 1559 Other Internet Communications NEC 1560 E-Commerce Technology 1561 Internet Security and Transaction Services 1562 Ecommerce Services 1569 Other Ecommerce 2100 Computers Hardware 2142 Web Servers 2780 Internet Software 1563 Ecommerce Enabling Software 2780 Internet Systems Software 2781 Site Development and Administration Software 2782 Internet Search Software and Engines 2783 WebServer Software 2784 Web Languages (Java/ActiveX/HTML/XML) 2785 Web Authoring/Development Software 2798 Other Internet Systems Software 2785 Internet Programming 2765 Internet/Web Design and programming services 2766 Internet Graphics Services 2768 Other Internet Software Services 2800 Internet Ecommerce 86 1550 Internet Communications 1560 E-Commerce Technology 2800 Internet Specific 2760 Software Services 2761 Programming Services/Systems Engineering 2762 Software Consulting Services 2763 Software Distribution/Clearinghouse 2769 Other Software Services 2800 Internet and Online Related 2810 E-Commerce—Selling products Online or Internet 2811 Business and Office Products 2812 Consumer Products 2813 Retailing Products 2814 Publishing Products 2815 Transportation Products 2816 Finance/Insurance/Real Estate products 2817 Agricultural Products 2818 Recreation/Entertainment/Music/Movies 2819 Manufacturing/Industrial/Construction 2820 Medical/Health 2821 Computer Related 2822 Communications Products 2823 Education Products 2824 Reference Products 2825 Scientific Products 2826 Legal Products 2829 Other Ecommerce Selling Products 2830 Eccommerce—Selling Services Online/Internet 2831 Business and Office Services 2832 Consumer Services 2833 Retailing Services Thomson Reuters
2013 NVCA Yearbook Company VE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 2834 Publishing Services 2835 Transportation Services 2836 Finance/Insurance/Real Estate Services 2837 Agricultural Services 2838 Recreation/Entertainment/Music/Movies 2839 Manufacturing/Industrial/Construction 2840 Medical/Health Services 2841 Computer Related services 2842 Communications Products/Services 2843 Education Services 2844 Reference 2845 Scientific 2846 Legal 2848 Recreation/Entertainment Services 2849 Other Ecommerce Selling Services 2810 Internet Content 2820 Internet Services 2900 Computer Other 2850 Web Aggregration/Portal Sites/Exchanges 2851 Business and Office Info/content 2852 Consumer Info/Content 2853 Retailing Info/Content 2854 Publishing Info/Content 2855 Transportation Info/Content 2856 Finance/Real Estate/Insurance Info/Content 2857 Agriculture Info/Content 2858 Recreation/Entertainment/Music/Movies 2859 Manufac/Industrial/Constr. Info/Content 2860 Medical/Health Info/Content 2861 Computer Related Info/Content 2862 Communications Info/Content 2863 Education Info/Content 2864 Reference Info/Content 2865 Scientific Info/Content 2866 Legal Info/Content 2869 Other Aggregation/Portal/Exchange Sites 2870 Internet Services 2871 Internet Marketing Services 2873 Data Warehousing Services 2879 Other Internet and Online Services NEC 2900 Computer Other 2000 Computer Related 2900 Other Computer Related 2910 Voice Synthesis 2911 Voice Recognition 2990 Other Computer Related (not yet classified) 3000 Semiconductor/Electr 3100 Semiconductors/Other Electronics 3100 Electronic Components 3110 Semiconductors 3111 Customized Semiconductors 3112 Standard Semiconductors 3114 Flash Memory 3115 Optoelectronics semiconductors (incl laser diodes) 3119 Other Semiconductors 3120 Microprocessors 3130 Controllers and Sensors 3132 Controllers 3135 Sensors 3139 Other Controllers/Sensors 3140 Circuit Boards 3160 Display Panels 3200 Batteries 3300 Power Supplies 3300 Power Supplies 3310 Uninterruptible Power Supply (UPS) 3400 Electronics Equipment Thomson Reuters 3200 Batteries 3400 Electronics Related Equipment 87
National Venture Capital Association Company VE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 3410 Semiconductor Fabrication Equip. & Wafer Products 3420 Component Testing Equipment 3499 Other Electronics Related Equipment 3500 Laser Related 3600 Fiber Optics 3700 Analytical & Scientific Instrumentation 3710 Chromatographs & Related Laboratory Equipment 3720 Other Measuring Devices 3799 Other Analytical & Scientific Instrumentation 3800 Electronics, Other 3000 Other Electronics Related 3170 Other Electronics Related (including keyboards) 3800 Other Electronics Related 3810 Military Electronics (excluding communications) 3820 Copiers 3830 Calculators 3835 Security/Alarm/Sensors 3899 Other Electronics Related (incl. alarm systems) 3900 Optoelectronics 3900 Optoelectronics 3910 Photo diodes 3920 Optoelectronics fabrication equipment 3930 Lenses with Optoelectronics applications 3940 Advanced photographic processes (incl lithographs) 3989 Other Optoelectrinics Related 3990 Other Electronc Semiconductor 4100 Biotech-Human 4100 Human Biotechnology 4110 Medical Diagnostic Biotechnology Products 4111 In Vitro Monoclonal Antibody Diagnostics 4112 In Vivo Monoclonal Antibody Diagnostics/ Imaging 4113 DNA/RNA Probes 4119 Other Medical Diagnostic Biotechnology 4120 Therapeutic Biotechnology Products 4121 Therapeutic Monoclonal Antibodies 4122 Immune Response Effectors (interferons, vaccines) 4123 Other Therapeutic Proteins (incl. hormones & TPA) 4129 Other Therapeutic Biotechnology 4130 Genetic Engineering 4200 Biotech-Animal 88 3600 Fiber Optics 3610 Fiber Optic Cables 3620 Fiber Optic Couplers and Connectors 3630 Fiber Optic Communication Systems (see 1510) 3699 Other Fiber Optics 3700 Scientific Instrumentation 4000 Medical/Health/Life Science 4000 Biotechnology 3500 Laser Related 3510 Laser Components (incl. beamsplitters, excimers) 3599 Other Laser Related 4200 Agricultural/Animal Biotechnology 4210 Genetically Engineered Plants 4220 Genetic. Eng. Microorganisms to raise plant yield 4230 Other Plant Related Biotechnology 4240 Biotech Related Animal Health & Nutrition Products 4250 Genetically Engineered Animals Thomson Reuters
2013 NVCA Yearbook Company VE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 4290 Other Animal Related Biotechnology 4300 Biotech-Industrial 4400 Biosensors 4500 Biotech Related Research & Production Equipment 4510 Biotech Related Analytical Instruments & Apparatus 4520 Biotech Related Production Equipment 4525 Biotech laser and optronic applications 4599 Other Biotech Research & Production Equipment 4600 Biotech Research 4600 Biotech Related Research & Other Services 4610 Pure & Contract Biotechnology Research 4699 Other Biotechnology Services 4700 Biotech Other 4000 Biotechnology and Pharmacology 4900 Other Biotechnology Related 5100 Medical Diagnostics 5100 Medical Diagnostics 5110 Diagnostic Services 5120 Medical Imaging 5121 X-Rays 5122 CAT Scanning 5123 Ultra Sound Imaging 5124 Nuclear Imaging 5125 Other Medical Imaging 5130 Diagnostic Test Products & Equipment 5140 Other Medical Diagnostics 5200 Medical Therapeutics 5200 Medical Therapeutics 5210 Therapeutic Services 5220 Surgical Instrumentation & Equipment 5221 Surgical lasers (including laser delivery fibers) 5230 Pacemakers & Artificial Organs 5240 Drug Delivery & Other Equipment 5299 Other Therapeutic (including defibrillators) 5300 Med/Health Products Thomson Reuters 4400 Biosensors 4410 Biosensors for Medical Diagnostic Applications 4420 Biosensors for Industrial Applications 4490 Other Biosensors 4500 Biotech Equipment 5000 Medical/Health 4300 Industrial Biotechnology 4310 Biochemical Products 4311 Biotech Related Fine Chemicals (NOT Pharmaceuts.) 4312 Biotech Related Commodity Chemicals 4319 Other Biochemical Products 4320 Biotech Processes for Food Industrial 1 Applications 4321 Biotech Related Food Enzymes and Cultures 4322 Biotech Related Food Diagnostics 4329 Other Biotech Process for Food/Industrial Products 4330 Biotech Processes for Pollution/Toxic Waste Control 4340 Biotech Processes for Enhanced Oil Recovery/Mining 4390 Other Industrial Biotechnology 5000 Medical/Health Related 5300 Medical Health Related Products 5310 Disposable Medical Products 5340 Handicap Aids 5350 Medical Monitoring Equipment 5380 Health related optics (including glasses, lenses) 5399 Other Medical/Health (NEC) 89
National Venture Capital Association Company VE Primary Industry Class 5400 Medical Health Services 5410 Hospitals/Clinics/Primary Care 5412 Long Term Care/Home Care/Elder Care 5414 Dependent Care (child care/assisted living 5420 Managed care (including PPO/PPM) 5429 Other Healthcare Facilities 5430 Emergency Services/Ambulance 5440 Hospital & Other Institutional Management 5499 Other Medical/Health Services 5500 Pharmaceuticals 5510 Pharmaceutical Research 5520 Pharmaceutical Production 5530 Pharmaceutical Services 5540 Pharmaceutical Equipment 5550 Pharmaceuticals/Fine Chemicals (nonbiotech) 5599 Other Pharmaceutical NEC 7100 Entertainment and Leisure 7100 Entertainment and Leisure 7110 Movies,Movie Products & Theater Operations 7120 Amusement & Recreational Facilities 7125 Casino and Gambling 7130 Toys & Electronic Games 7140 Sporting Goods,Hobby Equipment & Athletic Clothes 7150 Sports Facilities (Gyms and Clubs) 7155 Sports 7160 TVs, Radio, Stereo Equipment & Consumer Electronics 7170 Music,Records,Production and Instruments 7199 Other Leisure/Recreational Products and Services 7200 Retailing Related 7200 Retailing Related 7210 Drug Stores 7220 Clothing and Shoe Stores 7230 Discount Stores 7240 Computer Stores 7245 Retail Publishing (books, magazines, newspapers) 7246 Office Supply Stores 7247 Music/Electronics 7248 Specialty Department and retail stores 7250 Franchises(NEC) 7299 Other Retailing Related 7300 Food and Beverage 7300 Food and Beverages 7310 Wine & Liquors 7320 Health Food 7330 Soft Drinks & Bottling Plants 7340 Food Supplements/Vitamins 7350 General Food Products 7399 Other Food and Beverages 7400 Consumer Products 7400 Consumer Products 7410 Clothing,Shoes & Accessories (incl. jewelry) 7420 Health & Beauty Aids 7430 Home Furnishing & Housewares 7431 Housewares 7432 Furnishings & Furniture 7433 Garden and Horticultural Products 7434 Other Home Furnishings (NEC) 7450 Mobile Homes 7499 Other Consumer Products 7500 Consumer Services 90 Company VE Primary Industry Sub-Group 3 5500 Pharmaceutical 7000 Consumer Related Company VE Primary Industry Sub-Group 2 5400 Med/Health Services 6000 Non-High Technology Company VE Primary Industry Sub-Group 1 7500 Consumer Services 7510 Fast Food Restaurants Thomson Reuters
2013 NVCA Yearbook Company VE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 7520 Other Restaurants 7530 Hotels and Resorts 7540 Auto Repair Shops 7550 Education & Educational Products and Materials 7560 Travel Agencies and Services 7599 Other Consumer Services 7600 Consumer, Other 8141 Semiconductor Materials (eg. silicon wafers) 8142 III/V Semiconductor Mater. (eg. gallium arsenide) 6100 Oil & Gas Exploration and Production 6200 Oil & Gas Exploration Services 6300 Oil & Gas Drilling & Support Services 6400 Oil & Gas Drilling,Exploration & Extraction Equip. 6410 Oil & Gas Drilling & Extraction Equipment 6420 Oil & Gas Drilling Instrumentation 6430 Oil & Gas Exploration Equip. Instrumentation 6499 Other Oil & Gas (NEC) 6500 Energy, Alternative 6500 Alternative Energy 6510 Solar Energy 6511 Photovoltaic Solar 6512 Other Solar 6520 Wind Energy 6530 Geothermal Energy 6540 Energy Co-Generation 6599 Other Alternative Energy (incl. nuclear energy) 6600 Energy, Enhanced Recovery 6600 Enhanced Oil Recovery/Heavy Oil/Shale 6700 Energy, Coal 6700 Coal Related 6710 Coal Mining 6720 Coal Related Equipment 6799 Other Coal Related 6800 Energy, Conservation 6800 Energy Conservation Related 6900 Energy, Other 6000 Energy Related 6900 Other Energy Related 8100 Chemicals and Materials Thomson Reuters 3100 Semiconductors/Other Electronics 6100 Oil & Gas Exploration 8000 Industrial/Energy 7000 Consumer Related 7999 Other Consumer Related (not yet classified) 8100 Chemicals & Materials 8110 Plastic Fabricators 8111 Homogeneous Injections/Extrusions 8112 Non-Homogeneous Injections/Extrusions 8113 Fiber-Reinforced (Plastic) Composites 8114 Other Fabricated Plastics 8115 Processes for Working with Plastics 8119 Other Plasti Fabricators 8120 Coatings & Adhesives Manufacturers 8121 Optical coatings 8129 Other Coatings & Adhesives 8130 Membranes & Membrane-Based Products 8140 Specialty/Performance Materials 8143 Specialty Metals (incl. coatings, alloys, clad) 8144 Ceramics 8145 Lubricants & Functional Fluids 8146 Other Specialty Materials 8147 Specialty materials for laser generation 8148 Superconducting materials 8149 Other Special Performance Materials 8150 Commodity Chemicals & Polymers 91
National Venture Capital Association Company VE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 3 8151 Industrial Chemicals 8152 Polymer (Plastics) Materials 8160 Specialty/Performance Chemicals 8161 Electronic Chemicals 8162 Other Industrial Chemicals 8170 Agricultural Chemicals 8189 Other Commidity Chemicals and Polymers 8199 Other Chemicals & Materials (not yet classified) 8200 Industrial Automation 8200 Industrial Automation 8210 Energy Management 8220 Industrial Measurement & Sensing Equipment 8221 Laser related measuring & sensing equipment 8230 Process Control Equipment & Systems 8240 Robotics 8250 Machine Vision Software & Systems 8260 Numeric & Computerized Control of Machine Tools 8299 Other Industrial Automation (NEC) 8300 Industrial Equipment 8300 Industrial Equipment and Machinery 8310 Machine Tools, Other Metalworking Equipment 8320 Hoists, Cranes & Conveyors 8330 Pumps, Ball Bearings, Compressors, Indus. Hardware 8340 Mining Machinery 8350 Industrial Trucks and Tractors 8360 Other Industrial Process Machinery 8370 Power Transmission Equipment (generators & motors) 8399 Other Industrial Equipment & Machinery 8500 Pollution and Recycling 8500 Environmental Related 8510 Air Filters & Air Purification & Monitoring Equip. 8520 Chemical and Solid Material Recycling 8530 Water Treatment Equipment & Waste Disposal Systems 8599 Other Environmental Related 8600 Industrial Products, Other 8700 Industrial Services 9100 Transportation Company VE Primary Industry Sub-Group 2 8000 Industrial Products 8600 Other Industrial Products (not yet classified) 8700 Industrial Services 9100 Transportation 9100 Transportation 9110 Airlines and Aviation Related 9120 Trucking 9125 Railway related 9130 Leasing of Railcars,Buses and Cars 9140 Mail and Package Shipment 9150 Motor Vehicles,Transporation Equipment & Parts 9160 Airfield and Other Transportation Services 9180 Advanced Aircraft/Aerospace 9199 Other Transportation 9200 Financial Services 92 9200 Financial Services 9200 Financial Services 9210 Insurance Related 9220 Real Estate 9230 Banking 9235 Non Bank Credit 9240 Securities & Commodities Brokers and Services 9250 Investment Groups 9254 Venture Capital and Private Equity Investors 9255 Financial Transactions Services Thomson Reuters
2013 NVCA Yearbook Company VE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 9299 Financial Services, 0ther 9300 Business Serv. 9300 Services 9310 Engineering Services 9320 Advertising and Public Relations 9330 Leasing (not elsewhere classified) 9340 Distributors,Importers and Wholesalers 9350 Consulting Services 9360 Media Related Services 9399 Other Services NEC 9400 Manufact. 9400 Manufacturing 9400 Product Manufacturing 9410 Business Products and Supplies 9415 Office Automation Equipment 9420 Office Furniture & Other Professional Furnishings 9430 Textiles (Synthetic & Natural) 9440 Hardware,Plumbing Supplies 9450 Publishing 9460 Packaging Products & Systems 9470 Printing & Binding 9499 Other Manufacturing (not elsewhere classified) 9500 Agr/Forestr/Fish 9500 Agricultural, Forestry 9500 Agriculture, Forestry, Fishing, Animal Husbandry,etc. 9510 Agriculture related 9520 Forestry related 9530 Fishing related 9540 Animal husbandry 9599 Other Agriculture,Forestry,Fishing 9600 Mining and Minerals (non-energy related) 9700 Construction 9700 Construction 9700 Construction & Building Products 9710 Construction 9720 Manufacture of Building Products 9730 Manufacture of Pre-Fabricated Buildings & Systems 9740 Distribution of Building Products & Systems 9750 Construction Services 9799 Other Construction & Building Products Related 9800 Utilities 9800 Utilities 9800 Utilities and Related Firms 9810 Electric Companies 9820 Water,Sewage,Chem. & Solid Waste Treatment Plants 9830 Gas Transmission & Distribution 9899 Other Utilities & Related Firms 9900 Other Thomson Reuters 9300 Business Services 9900 Other 9000 Other Services and Manufacturing 9900 Other Products and Services 9910 Conglomerates 9912 Socially Responsible 9914 Environment Responsible 9915 Women-Owned 9918 Minority-Owned 9920 Holding Companies 9999 Other Products and Services 93
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Appendix E: Industry Sector VEIC Ranges Industry analysis is based upon the following industry sectors: Biotechnology, Business Products and Services,Computers and Peripherals, Consumer Products and Services, Computer Software, Electronics/Instrumentation, Financial Services, Healthcare Services, Industrial/Energy, IT Services, Media and Entertainment, Medical Devices and Equipment, Networking and Equipment, Retailing/Distribution, Semiconductors, Telecommunications and Other. These sectors are based on the 17 industry classifications of the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. Biotechnology 4000, 4100, 4110, 4111, 4112, 4113, 4119, 4120, 4121, 4122, 4123, 4129, 4130, 4200, 4210, 4220, 4230, 4240, 4250, 4290, 4300, 4310, 4311, 4312, 4319, 4320, 4321, 4322, 4329, 4330, 4340, 4390, 4400, 4410, 4420, 4490, 4500, 4510, 4520, 4525, 4599, 4600, 4610, 4699, 4900, 5500, 5510, 5520, 5530, 5540, 5550, 5599 Business Products and Services 2811, 2824, 2831, 2844, 9300, 9310, 9320, 9330, 9340, 9350, 9360, 9399 Computers and Peripherals 2000, 2100, 2110, 2111, 2112, 2119, 2120, 2121, 2122, 2123, 2124, 2125, 2126, 2130, 2140, 2141, 2142, 2143, 2144, 2149, 2220, 2230, 2234, 2236, 2238, 2239, 2250, 2255, 2260, 2280, 2290, 2295, 2299, 2500, 2510, 2511, 2512, 2513, 2519, 2520, 2521, 2522, 2523, 2524, 2529, 2530, 2531, 2532, 2533, 2539, 2540, 2541, 2542, 2543, 2546, 2549, 2550, 2551, 2552, 2553, 2559, 2560, 2561, 2562, 2563, 2564, 2569, 2590, 3170 Consumer Products and Services 2812, 2832, 7000, 7300, 7310, 7320, 7330, 7340, 7399, 7400, 7410, 7420, 7430, 7431, 7432, 7433, 7434, 7450, 7499, 7500, 7510, 7520, 7530, 7540, 7550, 7560, 7599, 7999 Computer Software 1563, 2200, 2210, 2300, 2311, 2312, 2313, 2315, 2316, 2317, 2318, 2319, 2320, 2321, 2322, 2323, 2324, 2325, 2399, 2700, 2710, 2711, 2712, 2713, 2716, 2719, 2720, 2721, 2722, 2723, 2724, 2729, 2730, 2731, 2732, 2733, 2734, 2735, 2736, 2737, 2738, 2739, 2740, 2741, 2743, 2744, 2748, 2749, 2750, 2751, 2752, 2753, 2754, 2755, 2780, 2781, 2782, 2783, 2784, 2785, 2798, 2799, 2900, 2910, 2911, 2990, 8250 Electronics/Instrumentation 3000, 3100, 3160, 3200, 3300, 3310, 3400, 3420, 3499, 3500, 3510, 3599, 3700, 3710, 3720, 3799, 3800, 3810, 3820, 3830, 3835, 3899 Financial Services 2816, 2836, 9200, 9210, 9220, 9230, 9235, 9240, 9250, 9254, 9255, 9299 Healthcare Services 2820, 2840, 5400, 5410, 5412, 5414, 5420, 5429, 5430, 5440, 5499 Thomson Reuters 95
National Venture Capital Association Industrial/Energy 2819, 2837, 2839, 6000, 6100, 6200, 6300, 6400, 6410, 6420, 6430, 6499, 6500, 6510, 6511, 6512, 6520, 6530, 6540, 6599, 6600, 6700, 6710, 6720, 6799, 6800, 6900, 8000, 8100, 8110, 8111, 8112, 8113, 8114, 8115, 8119, 8120, 8121, 8129, 8130, 8140, 8143, 8144, 8145, 8146, 8147, 8148, 8149, 8150, 8151, 8152, 8160, 8161, 8162, 8170, 8189, 8199, 8200, 8210, 8220, 8221, 8230, 8240, 8260, 8299, 8300, 8310, 8320, 8330, 8340, 8350, 8360, 8370, 8399, 8500, 8510, 8520, 8530, 8599, 8600, 8700, 9000, 9100, 9110, 9120, 9125, 9130, 9140, 9150, 9160, 9180, 9199, 9400, 9410, 9415, 9420, 9430, 9440, 9460, 9470, 9499, 9500, 9510, 9520, 9530, 9540, 9599, 9600, 9700, 9710, 9720, 9730, 9740, 9750, 9799, 9800, 9810, 9820, 9830, 9899 IT Services 1560, 1561, 1562, 1569, 2600, 2630, 2640, 2650, 2655, 2660, 2665, 2670, 2675, 2691, 2699, 2760, 2761, 2762, 2763, 2765, 2766, 2768, 2769, 2800, 2870, 2871, 2873, 2879 Media and Entertainment 1110, 1120, 1125, 1130, 1135, 1199, 1700, 1720, 2814, 2818, 2834, 2838, 2843, 2848, 2850, 2851, 2852, 2853, 2854, 2855, 2856, 2857, 2858, 2859, 2860, 2861, 2862, 2863, 2864, 2865, 2866, 2869, 7100, 7110, 7120, 7125, 7130, 7140, 7150, 7155, 7160, 7170, 7199, 9450 Medical Devices and Equipment 5000, 5100, 5110, 5120, 5121, 5122, 5123, 5124, 5125, 5130, 5140, 5200, 5210, 5220, 5221, 5230, 5240, 5299, 5300, 5310, 5340, 5350, 5380, 5399 Networking and Equipment 1400, 1500, 1510, 1515, 1520, 1521, 1522, 1523, 1524, 1525, 1530, 1549, 3600, 3610, 3620, 3630, 3699 Retailing/Distribution 2810, 2813, 2815, 2817, 2821, 2823, 2825, 2826, 2829, 2830, 2833, 2835, 2841, 2845, 2846, 2849, 7200, 7210, 7220, 7230, 7240, 7245, 7246, 7247, 7248, 7250, 7299, 7350 Semiconductors 3110, 3111, 3112, 3114, 3115, 3119, 3120, 3130, 3132, 3135, 3139, 3140, 3410, 3900, 3910, 3920, 3930, 3940, 3989, 3990, 8141, 8142 Telecommunications 1000, 1100, 1200, 1210, 1215, 1220, 1230, 1299, 1300, 1310, 1320, 1325, 1330, 1399, 1550, 1551, 1552, 1553, 1559, 1600, 1610, 1620, 1630, 1640, 1699, 1710, 1800, 1810, 1825, 1899, 2822, 2842 Other 9900, 9910, 9912, 9914, 9915, 9918, 9920, 9999 96 Thomson Reuters
Appendix F: Stage Definitions SEED STAGE FINANCING This stage is a relatively small amount of capital provided to an inventor or entrepreneur to prove a concept. This involves product development and market research as well as building a management team and developing a business plan, if the initial steps are successful. This is a pre-marketing stage. EARLY STAGE FINANCING This stage provides financing to companies completing development where products are mostly in testing or pilot production. In some cases, product may have just been made commercially available. Companies may be in the process of organizing or they may already be in business for three years or less. Usually such firms will have made market studies, assembled the key management, developed a business plan, and are ready or have already started conducting business. EXPANSION STAGE FINANCING This stage involves working capital for the initial expansion of a company that is producing and shipping and has growing accounts receivables and inventories. It may or may not be showing a profit. Some of the uses of capital may include further plant expansion, marketing, working capital, or development of an improved product. More institutional investors are more likely to be included along with initial investors from previous rounds. The venture capitalist’s role in this stage evolves from a supportive role to a more strategic role. LATER STAGE Capital in this stage is provided for companies that have reached a fairly stable growth rate; that is, not growing as fast as the rates attained in the expansion stages. Again, these companies may or may not be profitable, but are more likely to be than in previous stages of development. Other financial characteristics of these companies include positive cash flow. This also includes companies considering IPO. ACQUISITION FINANCING An acquisition of 49% stake or less. Firm acquires minority shares of a company. Thomson Reuters includes these deals in standard venture capital disbursement data when calculating venture capital disbursements where the funding is by a venture capital firm. ACQUISITION FOR EXPANSION Funds provided to a company to finance its acquisition of other companies or assets. A consolidator of companies in specific industries. MANAGEMENT/LEVERAGED BUYOUT These funds enable an operating management group to acquire a product line or business, at any stage of development, from either a public or private company. Often these companies are closely held or family owned. Management/leveraged buyouts usually involve revitalizing an operation, with entrepreneurial management acquiring a significant equity interest. Thomson Reuters 97
National Venture Capital Association RECAP/TURNAROUND Financing provided to a company at a time of operational or financial difficulty with the intention of improving the company’s performance. SECONDARY BUYOUT A buyout deal on top of a buyout deal. Secondary buyouts are distinguished when the initial firm investor is different from the current investing firm. 98 Thomson Reuters
Appendix G: Data Sources and Resources For this publication, the main source for data was ThomsonONE.com, the online research database of Thomson Reuters. ThomsonONE.com (which replaced VentureXpert™, and Thomson One Banker) is endorsed by the NVCA as the official United States venture capital activity database. By using data gathered through the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters, ThomsonONE.com contains investment, fund raising, portfolio company information, and Reuters News along with other statistical data. Over 1.1 million global private companies can be analyzed within ThomsonONE.com, including historical revenue figures on over 450,000 companies and detailed financials on over 160,000 companies with up to a five year history. Through a partnership with VC Experts.com, Inc. the historical breadth and depth of the Thomson Reuters venture capital content is integrated with private company valuation and deal terms. ThomsonONE.com includes blogs, events, and articles from the peHUB and the Venture Capital Journal, two of the industry’s most widely-read publications. Other information contained in this database is gathered through a variety of public and proprietary source. This publication is produced on an annual basis primarily using year-end data. However, the underlying databases can be accessed online to provide the most up-to-date and comprehensive global private equity statistics and profile information available. Data Sources and Resources MoneyTree™ Data plete and accurate information. PricewaterhouseCoopers, Thomson Reuters, and the National Venture Capital Association joined forces in December 2001 to produce what was then known as the PricewaterhouseCoopers/Thomson Venture Economics/National Venture Capital Association MoneyTree™ Survey. Conducted on a quarterly basis, the designated PwC/NVCA MoneyTree Report allows Thomson Reuters unparalleled access to primary sources of information from general partners. Timeliness of Data Sources of Data The online database of Thomson Reuters is ThomsonONE.com (VentureXpert), the foremost information provider for private equity professionals worldwide. The private equity portion of Thomson Reuters offers an incomparable range of products from directories to conferences, journals, newsletters, research reports, and the ThomsonONE.com Private Equity database. As of March 2013, the database included over 107,000 portfolio companies, over 18,000 private equity firms, nearly 41,000 private equity funds, and over 235,000 financing rounds. By establishing working relationships with private equity and venture capital firms, institutional investors, and industry associations such as the NVCA, PricewaterhouseCoopers and other such entities around the world, Thomson Reuters has been able to gather, on a timely basis, com- Thomson Reuters Many of the tables and charts presented in this report can be produced by using ThomsonONE.com. One of advantages of using ThomsonONE.com is that the reader can customize a report to better fit the needs of what they are seeking. In addition, because the online database is continuously updated, the information available is more up-to-date than what can be presented in this report. Readers should note that timely industry information on details concerning venture capital investment is available from other sources such as PricewaterhouseCoopers at www.pwcmoneytree.com, the ‘Industry Stats’ section of the NVCA website, www.nvca.org, and the Private Equity section of Thomson Reuters’ Deals Intelligence found at http://dmi.thomsonreuters.com/PrivateEquity Verification and Updating of Data Collectively, PricewaterhouseCoopers, Thomson Reuters, and the NVCA have the utmost commitment to provide an accurate historical record of venture capital activity. On a daily basis, the database is constantly analyzed for consistency, crosschecked with other data sources, and updated as new information comes in. On a quarterly basis, we have worked with many venture firms to ensure that that their current and past data is correct. Primarily for this reason, the 99
National Venture Capital Association private equity news releases of Thomson Reuters will often restate statistics from prior news releases. With the availability of the online data access, users are encouraged to always use the most current numbers even regarding historical activity so as to maintain accuracy and comparability. Reporting Functionality of ThomsonONE.com Users can access information in terms of profiles on private equity companies, funds, firms, executives, IPOs, and limited partners. In addition, users can access the analytics portion of the database, which contains investment, valuation, PE backed exits, fund performance, and fund raising information along with venture capital information such as aggregate fund raising, and investments. Thomson Reuters On Demand is a service offering that caters to Financial & Risk clients. With access to virtually all F&R content sets, users of the service offering can order reports and analysis as needed. Comprehensiveness of ThomsonONE.com Both the breadth and depth of ThomsonONE.com can perhaps best be shown in that it, among other types of information, the user can find the answers to the following questions: • Which venture firms actively co-invest with a firm I am considering co-investing with? • Which venture firms are most active in funding online financial services companies in the Ohio Valley? • What does Yearbook Figure 3.15 look like for just biotech? • How much money was raised by each fund stage in 2012? • What was a particular venture-backed IPO’s one year return at the end of 2012? • As of December 2012, was the 10-year return to small buyout funds larger than that of large buyout funds? • Who are the most active acquirers of ecommerce security companies? • How much money was committed to mezzanine funds from 1997 to 2012? • How much money was invested in the venture capital industry from 1987 to 2012? • What is the performance at quarter end for private equity funds that were formed from 1998 to 2012? 100 • In 2012, how much money was invested at each development stage in Research Triangle Pharmaceutical companies? In addition, there are also advantages of using the database for a general partner as well. Although this is not an inclusive list, utilizing the database by general partners can be helpful to them for among the following reasons: • Plan your companies’ exits with data on both venture-backed IPOs and mergers and acquisitions • Aid in recruiting talented executives from other venture-backed companies • Quickly spot venture-backed companies in competition with your own portfolio companies • Create industry analyses to benchmark both performance and portfolio investments • Find other venture capitalists likely to support follow- on rounds • Provide clarity to investment decisions by comparing them to current market conditions • Compile valuation reports for comparable portfolio companies • Identify prospective investors and their investment histories • Benchmark valuations among recent transactions and obtain valuation comparables • Analyze investment trends by industry • Utilize returns information to limited partners using appropriate benchmarks • Tailor your pitch to investor focus size and limited partner type Accessing ThomsonONE.com and Other Services For more information on ThomsonONE.com, please visit http://thomsonreuters.com/products_services/financial/financial_products/deal_making/private_equity/private_equity_venture_capital/ or by phone at 1-800-782-5555. For information on NVCA membership, which can include a free trial and discounts on an annual subscription, please contact Janice Mawson at the NVCA. You may contact her online through the link on the member benefits section of the NVCA website or at 703-524-2549. For information on services PricewaterhouseCoopers provides for venture capital firms as well as emerging companies, please visit their website at www.pwcmoneytree.com. Thomson Reuters
Appendix H: International Convergence During 2012, the discussions and work focused on moving toward one high quality set of standards for financial reporting have begun to provide a picture of the future. While that picture is more gray scale than vivid color, the following facts and expectations highlight the current state of play at this point in time: • The SEC issued a report in 2012, without a recommendation, on whether to adopt international accounting rules, or a modification thereof, as the accepted accounting practice in the United States. It appears increasingly unlikely that the SEC will move 100% into the International Financial Reporting Standards (IFRS) camp; • FASB’s parent, the Financial Accounting Foundation, created a new Private Company Council (PCC) to advise on private company accounting. Their work is just beginning; • The AICPA is considering whether the PCC will provide an appropriate framework for private companies or if the AICPA should continue with efforts to develop an alternative non-GAAP basis of accounting for private companies; • The International Accounting Standards Board (IASB) modified IFRS consolidation rules to effectively create Investment Company accounting substantially similar to that used under U.S. GAAP; and • While Fair Value accounting rules are now virtually identical under U.S. GAAP and IFRS, auditors are raising questions related to "unit of account" and valuing minority positions that could impact how venture capital and private equity funds estimate Fair Value. The Dialogue and SEC Decision: Should international rules become accepted as U.S. GAAP? For years, the United States has been developing generalized accounting principles referred to as Generally Accepted Accounting Principles (“GAAP”). The keeper/arbiter/decider of GAAP is the Financial Accounting Standards Board (“FASB”). The FASB develops and updates GAAP and the SEC has adopted these accounting rules for public company reporting and other situations over which the SEC has jurisdiction. In recent years, on a parallel track, a separate set of rules emerged from the International Accounting Standards Board (“IASB”), which was Europe-centric. These rules became known as the International Financial Reporting Standards (“IFRS,” pronounced “EYE-fers”). IFRS has now been adopted by most developed and many developing countries around the world, with the exception of the United States. Over recent years, a large number of multinational corporations complained that they had to endure keeping two sets of books and this prompted the con- Thomson Reuters cept of convergence. In early September 2008, the SEC and the FASB announced steps to pave the way for United States public companies to convert from U.S. GAAP to IFRS. The SEC “roadmap” provided for a three-year run-up to an SEC “go-no go” decision in 2011, but the decision was deferred. At about the same time, the FASB and the IASB met to review and re-orient their convergence plan to be consistent with the SEC’s proposed schedule. The 2008-2009 world financial crisis deferred and deprioritized much of the work in this area. The SEC’s 2012 staff report on adopting IFRS did not make a recommendation, but raised questions about consistent application, transparency, reliability, relevance, comparability, and ongoing costs in addition to any conversion costs, which might be significant. More relevant to the United States venture capital industry are matters specifically affecting fund reporting, the financial statements provided by GPs to LPs under the eventual rules. Because of the recent change in IFRS consolidation rules, United States venture capital firms would conceptually not be impacted by a change to IFRS. 101
National Venture Capital Association How United States GAAP and International IFRS Compare – Never Generalize Even viewed from 30,000 feet, it is difficult to generalize on how the two systems compare. First, while the IASB produces plain vanilla IFRS standards, there is no one flavor of IFRS in use. Much like the original UNIX kernel, each country/jurisdiction has been able to create its own version of IFRS. But unlike UNIX, sometimes the differences among the localized IFRS versions are large. So apples-to apples comparison of “IFRS-compliant” financials from different jurisdictions can be difficult. Second, it is true that IRFS itself is a very thin document compared to GAAP, which has grown to roughly a two-foot stack of written rules. However, to implement IFRS, you need the implementation guide that combines with the original document to create its own two-foot stack. Again, much of the surface comparisons are not useful. Until now, United States venture capital firms have been using U.S. GAAP accounting standards exclusively. While seemingly distant from the United States venture capital industry, it is important that all business constituencies weigh in on which system (current U.S. GAAP vs. International vs. neither) is the best system overall for the United States business community going forward. GP-to LP Reporting – Can Meaningful Statements Continue? or IFRS, in almost all cases, must report their LP fund positions on a Fair Value basis. LPs are increasingly awakening to the specific conditions outlined in a change to U.S. GAAP from 2009, which codified an LP’s ability to use Net Asset Value (NAV) as an LP’s estimate of the Fair Value of their fund interest. These conditions include that the LP must satisfy themselves that the GP reported NAV is based on the Fair Value of underlying investments, that NAV is “in-phase” (no time lag, unless deemed insignificant), and that the LP interest is in a fund as defined by ASC Topic 946. If these three conditions are not met, or if the LP chooses not to use NAV, then Fair Value would be determined using other techniques. The point here for GPs is that LPs need robustly determined Fair Value on a timely basis, generally at least quarterly. How the Same Words have Different Meanings The 2012 change in IFRS consolidation rules for Investment Entities and the 2011 adoption of a common definition of Fair Value for U.S. GAAP and IFRS should have created a framework where financial reporting to investors would be identical for funds using IFRS and funds using U.S. GAAP. If it were only that easy! While we enter 2013 with a consistent framework under U.S. GAAP and IFRS where venture capital and private equity funds report all investments at Fair Value; and while we now have an identical definition of Fair Value (the amount a market participant would pay in an orderly transaction), schisms are developing. A key priority for the United States venture capital industry is being able to continue producing quarterly financial statements using investment company (IC) accounting. Virtually all LP agreements (or accompanying documents) require GPs to provide GAAP-compliant financial reports to LPs. Annual audits include testing to ensure GAAP compliance. Under GAAP, the United States venture capital industry now provides Fair Value portfolio reports under the special rules of “investment company reporting.” In 2012, IFRS was modified to effectively create a financial reporting framework substantially similar to U.S. GAAP. Because of nuances in the way IFRS is drafted, IFRS auditors are questioning whether Fair Value should be determined based on the “investment” or on a “single share” basis. While the reasons for such a question are beyond the scope of this document, the question and potential results could mean that IFRS and U.S. GAAP, though identical in principle, would result in different Fair Value estimates (as an aside, this is an example of one situation that concerns the SEC in moving the United States towards IFRS). GP’s should not lose sight of the fact their LP’s who prepare financial statements using either U.S. GAAP At the same time, many auditors of U.S. GAAP, as a reaction to their regulators the PCAOB, and because 102 Thomson Reuters
2013 NVCA Yearbook of pressure from the SEC, which now regulates private equity funds, are questioning whether or not the sale or exit of an enterprise can be assumed when determining the Fair Value of minority positions. Some auditors have gone so far as to indicate that they may require the use of option pricing models for determining the Fair Value of all minority positions. Going Forward With questions regarding whether or not IFRS should be interpreted as requiring all Fair Value estimates to be on a single share basis, and with U.S. auditors appearing to feel some pressure to use mathematical models to document their audit conclusions, both GPs and LPs in the venture capital and private equity industry could be faced with financial reporting that is either very costly and/or is not representative of how deals are done in the industry. Thomson Reuters In December 2012, the International Private Equity & Venture Capital Valuation (IPEV) Board updated its Valuation Guidelines. The updated valuation guidelines address both the “unit of account” and mathematical model questions. In addition, IPEV released Investor Reporting Guidelines in October 2012. While each fund manager must decide both what information to report and how to estimate Fair Value, the IPEV Valuation Guidelines and the IPEV Investor Reporting Guidelines provide balanced, and industry created, assistance in dealing with reporting and valuation questions. NVCA and Thomson Reuters acknowledge and appreciate the assistance of David Larsen of Duff and Phelps in updating and refocusing the material in this Appendix. 103
National Venture Capital Association This page is intentionally left blank. 104 Thomson Reuters
Appendix I: US Accounting Rulemaking and Valuation Guidelines In the United States, a venture capital fund is usually organized as a limited partnership. The institutional investors providing capital to a fund typically become the limited partners (LPs). The venture firm itself becomes a general partner (GP) in the limited partnership. In most of the limited partnership agreements defining the GP-LP relationship, the GPs are required to provide financial reports quarterly (unaudited) and annually (audited) prepared according to United States Generally Accepted Accounting Principles (“GAAP”). GAAP calls for the use of investment company accounting, which mandates that a Fair Value be assigned to the individual investments (portfolio companies). This is consistent with the LP’s need for Fair Value of their investments, as well as third-party or regulatory requirements, e.g., ERISA-regulation. In recent years, the GP-to-LP financial statements have been subject to numerous rule “clarifications, convergence with non-U.S. account” ing, expanded disclosures, and more formal presentations. Industry groups (PEIGG a decade ago and IPEV today) have released guidelines that, if adopted, can reduce questions from LPs and provide a basis to respond to questions posed by auditors. Guidelines fall into two categories. The first is portfolio performance presentation formats, calculations, and disclosure. Examples of such Guidelines are the Private Equity Provisions of the Global Investment Performance Standards (GIPS), developed by the CFA Institute and the IPEV Investor Reporting Guidelines. While many of the specifications and terminology line up with current practice in the United States, the NVCA has not endorsed or otherwise commented on these Guidelines. Neither NVCA nor Thomson Reuters has determined how widespread the adoption of those guidelines is or will likely be. These documents and accompanying guidance can be currently found at http://www.cfainstitute.org/centre/codes/gips/ and www.privateequityvaluation.com. The second important category of guidelines is focused on valuation. Why Valuation Guidelines Matter What ultimately matters to investors and private equity practitioners is the cash that has been distributed to the investors during the life of the fund compared with the original money put in. However, the specified life of a typical venture fund is at least 10 years and often longer in the life sciences arena. During that period, the venture capital fund reports progress to the limited partners. In many cases, this means quarterly portfolio updates and a complete annual audited financial statement. For a typical ven- Thomson Reuters ture fund, very little money is paid out in the first four or five years. Also, while every portfolio company receives funding with high expectations, it can take several years to determine if a particular company is a likely winner. Therefore, understanding progress in the portfolio requires some estimate of the success of the investee companies by the venture capital or private equity firm. While many investors and fund managers agree that financial measurements mean little for the first three or so years of a fund, investors are required to report the Fair Value of their fund positions on a quarterly or annual basis. This is where specific valuation rules and processes become important. The agreed valuation procedures for individual portfolio companies become the basis for progress assessment as the fund matures and ultimately distributes cash to the investors. Thus, while portfolio company valuations are more of an art than a science, especially for pre-revenue or even pre-EBITDA companies, most limited partner agreements (LPAs) establishing a venture capital fund require the venture firm to provide quarterly and annual financial statements using Generally Accepted Accounting Principles (GAAP). GAAP requires Fair Value measurement for portfolio positions. Therefore, most GPs must issue financial statements using Fair Value. Most important, if industry-created valuation guidelines are not used, those outside the industry, such as 105
National Venture Capital Association self-appointed group of private equity practitioners, fund managers, LPs and others, issued U.S. Private Equity Valuation Guidelines. The Guidelines were issued after extensive input and review soliciting feedback and input from a number of industry groups that included NVCA. auditors or regulators could impose their view on the industry. A non-industry view could adversely impact the LPs desire and ability to invest if interim values are not representative of the way the industry sees value, and costs for determining valuation could increase. • 2005 – In part as a reaction to the PEIGG Guidelines, three Europe-based venture capital associations (AFIC, BVCA, EVCA) created the International Private Equity and Venture Capital (IPEV) Valuation Board. • The Evolution of Reporting and Valuation Guidelines April 2006 – IPEV released its Valuation Guidelines. September 2006 – Financial Accounting Standards Board (FASB) issued its long-awaited and long anticipated Fair Value measurement standard as FAS 157. Only a few of its 145 pages relate directly to typical venture capital and private equity funds. Because the FASB maintains that this is a clarification and further definition of Fair Value that was already required for portfolio accounting, some auditors began requiring selective compliance in advance of the 2008 effective date. To understand the pressure on valuation and reporting in today’s environment, a historical background review is instructive. • • • • 106 1940 – United States Investment Company legislation (“the 40 Act”) required investment companies to report the Fair Value of investments. While the application of accounting standards has evolved over the past 70+ years, the underlying basis of reporting has always been Fair Value. 1989-90 – A group of investors, private equity fund managers, and fund-of-fund managers formed a group to develop a set of portfolio company valuation guidelines for financial reporting. Contrary to a very persistent rumor, the NVCA did not endorse, adopt, bless, publish, or otherwise opine on the guidelines. Using the principle of conservatism, these non-endorsed guidelines used cost or the value of the last round of financing to approximate Fair Value. Decade of the 1990s – Two noteworthy developments occurred in the 1990s. Despite no endorsement by the NVCA, these guidelines became accepted practice by much of the United States industry, especially in the venture capital side of private equity. These guidelines were referred to by many as being issued by the NVCA but in fact they were not. The second development is that international venture associations created localized guidelines based heavily on these guidelines. These were created in Europe and other international regions. In fact, by 2005, there had been multiple iterations of the European and British guidelines, again generally focused on cost or the value of the last round of financing. December 2003/September 2004 – The Private Equity Industry Guidelines Group (PEIGG), a • • March 2007 – PEIGG issued a revised portfolio company valuation guidelines document to reflect the Fair Value Measurement standard (FAS 157). • September 2007 – NVCA board reaffirmed its prior position on the PEIGG guidelines to refer to the most recent version. • March 2008 – the IPEV Board reconstituted and re-launched itself and adds five practitioners from the United States. The initial focus of the group was on convergence of U.S. PEIGG and IPEV valuation guidelines. Details at www.privateequityvaluation.com. • July 2009 – Effective July 1, authoritative GAAP became contained in a single codification and the prior nomenclature went away. Existing U.S. GAAP was recast into 90 topics, which include all related FASB pronouncements, AICPA guidance and EITFs under single “Topics.” Familiar standards would no longer exist. For example, FAS 157 became Topic 820 Fair Value Measurements and Disclosure. Investment Thomson Reuters
2013 NVCA Yearbook Company accounting became ASC Topic 946. • May 2011 – FASB amended ASC Topic 820 and the IASB issues IFRS 13, resulting in nearly identical Fair Value guidance. • October 2012 – IPEV released Investor Reporting Guidelines • December 2012 – IPEV updated its Valuation Guidelines to harmonize with ASC Topic 820 and IFRS 13. NVCA Position on Portfolio Company Valuation Guidelines The NVCA Board of Directors has not specifically endorsed valuation guidelines, but has historically affirmed its support for pragmatic industry-supported valuation efforts. NVCA Member Alert –Fair Value Considerations for Venture Capitalists–December 2008 In 2008, as a response to the economic crisis at the time, the NVCA issued a membership alert. Much of that alert remains relevant today. The following alert was sent to the NVCA membership to highlight certain issues and considerations to be explored in the application of FAS 157, the Fair Value measurement standard. The NVCA thanks David Larsen of Duff and Phelps and several members of the NVCA CFO Task Force for their role in drafting this document: “We are operating in a severely distressed investment environment that has deteriorated rapidly in the past few months. What does this mean for venture capital investors as they attempt to value privately-held investments at December 31, 2008? The short answer is: despite the current very challenging economic environment, fund managers must continue to exercise their sound judgment in estimating the Fair Value of each portfolio company after considering the relevant facts, including current market conditions. The valuation process does not change, but much more judgment is required when we are in a period of economic discontinuity. Virtually all LP agreements require GPs to use U.S. GAAP for financial reporting. Thomson Reuters U.S. GAAP requires Fair Value reporting for virtually all VC firms because they are “investment companies.” U.S. GAAP continues to define Fair Value as: “the price that would be received to sell an asset … in an orderly transaction between market participants at the measurement date.” Fund managers need to establish Fair Values even though they may not currently need to sell, or cannot sell, their private investments in this market. GPs must use their judgment in estimating the current Fair Values of their investments, even though “exit markets” may have few buyers, IPO markets appear closed, and there are few, if any, relevant comparable transactions. Such judgment should take into account all relevant information, including a financing round’s specific terms and conditions. There are no easy outs, rules of thumb or safe harbors for establishing Fair Value. As always, best considerations for Fair Value determination include the following: • • • • The Fair Value of an investment portfolio is the sum of the Fair Value determined for each portfolio company using a “bottoms up” approach. Applying a “top-down” overall percentage adjustment to the aggregate portfolio’s value is not compliant with U.S. GAAP. Valuations should reflect specific factors in a buy/sell context. For example, a GP could ask: “Given my portfolio company’s current cash position, cash burn rate, performance compared to plan, probability of meeting forecasts, the projected environment for its product or technology, etc., as a board member, what is the lowest price that I would sell the company’s stock today in an orderly sale with a willing buyer?” [Footnote: A fund manager should not assume a “fire sale” of the stock, but should assume “exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary …” from SFAS 157, Paragraph 7]. The valuations set by the most recent financing round – perhaps even one in the third quarter of 2008 – may be stale and inappropriate for determining Fair Value, especially given current market conditions. The Fair Value at December 31 in many cases will likely be different from the value at September 30, given the deterioration of the macroeconomic environment. 107
National Venture Capital Association • Each valuation should reflect a company’s degree of progress from the prior reporting date to the current one. • To determine a portfolio company’s Fair Value, GPs should apply their judgment in a consistent manner and evaluate the same data they use for monitoring a company’s performance and progress. There is no magic formula or weighting of factors. In summary, determining Fair Value continues to require the exercise of judgment based on objective evidence, such as calibrating the original investment decision with the current performance of the company and the current economic environment. The fact that the macro market is distressed probably adversely impacts the value of most companies. This negative impact may be compounded by disappointing company performance or mitigated by tangible and sustainable company progress. If you need more details about Fair Value, you might consider the IPEV Valuation Guidelines at www.privateequityvaluation.com.” 2013 Headwinds As noted above, new pressure is emerging that could impact how venture capital and private equity managers estimate Fair Value. Key factors include: 1. LPs are awakening to the fact that they need to obtain more information from the GP about how the GP estimates Fair Value so the LP can use NAV to estimate the Fair Value of their LP interest. a. LPs are revisiting their internal valuation policies. b. LPs are asking more detailed valuation questions of the GP. 2. The IASB has created “investment company accounting” by requiring venture capital and private equity funds to report all investments at Fair Value rather than consolidating control positions. 3. Auditors of IFRS have raised questions concerning the level of aggregation (unit of account) that should be used to value venture capital and private equity investments. a. Some auditors believe that unit of account 108 b. c. d. is a single share of an investee company. Single share valuations would likely result in reporting understated Fair Values. Reporting understated Fair Values would exacerbate the “J” curve, and could cause some LPs to reduce investments in the industry because of lower interim returns. IFRS could deviate from U.S. GAAP even though the Fair Value principles are identical. 4. Auditors of U.S. GAAP have raised questions concerning how to estimate the Fair Value of non-control positions. a. Is it appropriate to assume that the entire enterprise is being sold when estimating Fair Value? b. For non-control positions, is it appropriate or required to use option pricing models and theory to estimate Fair Value? The IASB is expected to address the Unit of Account question during early 2013. The AICPA has formed a task force to provide guidance on investments of venture capital and private equity funds. Part of the reason the AICPA has formed a task force is because the IPEV guidelines have not been as formally accepted or acknowledged in the U.S. as they have been in Europe. Further, some parties believe that the AICPA task force conclusions may be relatively auditor-friendly, rather than being GP/LP/Auditor/Service Provider balanced, as the IPEV guidelines are generally considered to be. All of this raises the question: could GPs reduce LP questions and increase LP valuation comfort by stating that they comply with the IPEV Valuation Guidelines? Further, if the IPEV Valuation Guidelines were more widely adopted by the VC community, would the industry be able to push back on an AICPA effort that could increase GP valuation costs? Over the next year, greater clarity should emerge. NVCA and Thomson Reuters acknowledge and appreciate the assistance of David Larsen of Duff and Phelps in updating and refocusing the material in this Appendix. Thomson Reuters
Appendix J: Non-US Private Equity As interest in globalization increases with each year, private equity investors have continued to broaden their investment criteria to include overseas ventures so as to increase portfolio diversification and search for higher returns. As such, Appendix J is produced for readers to analyze non-US private equity data. All data is reported in US dollars. Introduction This appendix highlights various aspects of private equity activity outside of the United States and provides valuable information for comparison to the United States private equity environment. However, this appendix is not directly comparable to domestic data found in this Yearbook due to differences in definitions between the regions and variations in the currencies of each region. Additionally, this appendix provides a brief overview of non-US private equity; data herein is not as comprehensive as the United States data presented elsewhere in this publication. Despite this, the reader can use this appendix to analyze trends in private equity outside of the United States. All data is provided by Thomson Reuters. As mentioned previously, readers should note the differences in methodology and definitions of private equity between United States and other regions before analyzing the data. For example, private equity outside of the United States provides equity capital for entities not publicly traded and consists of buyouts and venture capital. The category of buyouts includes management buyouts (management from inside the company investing with private equity investors), leveraged buyouts (the target taking on a high level of debt secured by assets), institutional buyouts (outside investors buying a business from existing shareholders), and management buy-ins (management from outside the company investing with private equity investors). On the other hand, venture capital describes the process of financing companies at the seed, start-up, or expansion stages. The United States places more emphasis on the early stages of development than do other regions, based on historical analysis of investments by stage. Like in the United States, non-US venture capital is considered a subset of private equity. For ease of analysis and to avoid differences in definitions between venture capital and buyouts inside and outside of the United States, it is perhaps most comparable to analyze aggregate private equity in the two regions as opposed to any classifications contained within. Thomson Reuters **Special Note: The methodology used to generate the data within this appendix differs slightly from the methodology used in previous years, causing data to vary slightly from previous Yearbook issues. However, trends reported in the past remain intact. Additionally, most data is now replicable on ThomsonONE.com. Commitments Private equity commitment levels, outside of the United States, totaled $110.3 billion in 2012. European-based funds raised the bulk, raising $59.6 billion, equal to 54% of this amount. Meanwhile, Asian funds had $42.6 billion in fundraising commitments which is 39% of the total. Funds in the Other Regions raised the remaining $8.1 billion or 7% of the total. In the stage level, Buyout commitments outside the United States accounted for $37.9 billion or 34% of the total. Surprisingly taking the second largest part of the commitments was funds of funds which raised $24.1 billion or 22% of the total. Venture Capital funds represented 14% ($15.6 billion). Private Real Estate funds raised $13.2 billion or 12% of the share. Other Private Equity/Special Situation funds, Generalist, and Mezzanine funds raised $9.7 billion, $7.7 billion, and $1.9 billion, respectively. It should be noted that these totals reflect not only the amount raised by independent funds, but also include capital gains and the amount raised by captive funds. Investments Overall, private equity investing outside of the United States reached $73.1 billion. Buyout stage financing led investment activity, accounting for 69% of total dollars. The Venture Capital investments followed with 17% of the total. By number of deals, Venture Capital investments led with 55% and the Buyouts investments followed with 36% of the total deal activity outside of the United States. The United 109
National Venture Capital Association Kingdom received the biggest share of private equity outside the United States in 2012 with $13 billion worth of investments or 18% of the total value. Canada followed with $10.5 billion. China comes in at third with $8.4 billion or 12% of the total. Private equity commitments and investments saw a decrease outside of the United States in 2012. Commitments saw a slight decrease of 5% from $115 billion in 2011. Private equity investments dropped 32% from $109 billion of the previous year. Figure J1 Private Equity Commitments Outside of the United States in 2012 # Firms # Funds Amount Raised in Range (USD Mil) 196 124 89 409 Fund World Location 213 138 73 424 42,564.6 59,629.0 8,143.8 110,337.4 Asia Europe Other Regions TOTAL Figure J2 Private Equity Commitments Outside of the United States By Fund Stage in 2012 Fund Stage # Firms Buyouts Venture Capital Generalist Mezzanine Stage Fund of Funds Other Private Equity/Special Situations Real Estate TOTAL # Funds 67 216 30 11 28 11 46 409 68 221 32 11 32 11 49 424 Amount Raised in Range (USD Mil) 37,990.9 15,612.9 7,741.1 1,892.6 24,131.4 9,728.4 13,240.1 110,337.4 Figure J3 Private Equity Investing Outside of the United States By Location in 2012 Company Nation United Kingdom Canada China France Germany Hong Kong Other Nations TOTAL # Deals 703 935 459 619 379 21 2,326 5,442 # Companies 643 824 439 595 354 18 2,203 5,076 Sum of Equity Invested (USD Mil) 13,094.9 10,483.1 8,427.0 4,748.0 4,472.2 4,018.1 27,832.5 73,075.8 Figure J4 Private Equity Investing Outside of the United States By Stage in 2012 Company Stage Buyout/Acquisition Venture Capital Other TOTAL 110 # Deals 1,961 3,010 471 5,442 # Companies 1,843 2,846 433 5,076 Sum of Equity Invested (USD Mil) 50,573.2 12,534.5 9,968.1 73,075.8 Thomson Reuters

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NVCA Yearbook 2013: US National Venture Capital Association's Yearbook 2013

  • 1.
    NATIONAL VENTURE CAPITAL ASSOCIATION YEARBOOK 2013 NATIONAL VENTURECAPITAL ASSOCIATION YEARBOOK 2013 PREPARED BY 3 Times Square 18th Floor New York, NY 10036 www.thomsonreuters.com 1655 Fort Myer Drive Suite 850 Arlington, VA 22209 www.nvca.org INCLUDING STATISTICS FROM THE PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters
  • 2.
    March 2013 Dear Reader: Theseare interesting times characterized by economic and political uncertainty - and little forward motion. And yet in the entrepreneurial section of the economy, the opportunities to create great companies remain unabated. There is wide agreement among policy makers on the importance of entrepreneurial companies to economic growth and well-being. Venture capital is a major driver of that entrepreneurial economy. The nation continues to look to this sector for job creation, economic development, better healthcare, cleaner technology, and a faster, better, and more secure internet. The NVCA Yearbook 2013, prepared by Thomson Reuters, is the 16th iteration of a series launched in early 1998 by NVCA and what is now Thomson Reuters. Since then we have joined forces with PricewaterhouseCoopers to provide the best possible information on venture capital deals across all 50 states. This investment information is tracked and reported by the PricewaterhouseCoopers/NVCA MoneyTreeTM Report based on data from Thomson Reuters. On behalf of the National Venture Capital Association board of directors and staff, we are pleased to present you with the latest statistics that describe the activity of the venture capital industry in the United States. These statistics reflect strong survey participation by venture capital practitioners. This support has allowed us to bring appropriate transparency to a part of the economy that most people are aware of but few really understand. Your comments are always welcome at research@nvca.org. NVCA believes that it is more important than ever to effectively tell the story of venture capital, differentiate it from other forms of alternative assets, and explain what’s needed to continue creating great, leading-edge companies. We believe that a strong venture capital industry is essential to America’s future and our quality of life. NVCA is proud to be funding innovation and empowering entrepreneurs! Very truly yours Diana Frazier FLAG Capital Management NVCA Director & Chair, NVCA Research Committee Mark G. Heesen NVCA President John S. Taylor NVCA Head of Research
  • 3.
    NVCA BOARD OFDIRECTORS 2012-2013 Executive Committee Ray Rothrock Chair Venrock Associates Josh Green Chair-Elect Mohr, Davidow Ventures Michael Greeley Treasurer FlyBridge Capital Partners Jonathan Leff At-Large & Research Committee Deerfield Management Jason Mendelson At-Large Foundry Group Scott Sandell At-Large New Enterprise Associates Research Committee Diana Frazier Chair, Research Committee FLAG Capital Management, LLC Mike Elliott Noro-Moseley Partners Adam Grosser Silver Lake Kraftwerk Board Members At-Large Jonathan Callaghan True Ventures Maria Cirino .406 Ventures David Douglass Delphi Ventures Bruce Evans Summit Partners Claudia Fan Munce IBM Venture Capital Group Norm Fogelsong Institutional Venture Partners Venky Ganesan Menlo Ventures Robert Goodman Bessemer Venture Partners Mark Gorenberg Hummer Winblad Venture Partners Jason Green Emergence Capital Partners Ross Jaffe, MD Versant Ventures Ray Leach Jumpstart, Inc. Sherrill Neff Quaker BioVentures Robert Nelsen ARCH Venture Partners David Lincoln Element Partners James Marver VantagePoint Capital Partners Anne Rockhold Accel Partners 2 Thomson Reuters
  • 4.
    2013 National Venture CapitalAssociation Yearbook For the National Venture Capital Association Prepared by Thomson Reuters Copyright © 2013 Thomson Reuters The information presented in this report has been gathered with the utmost care from sources believed to be reliable, but is not guaranteed. Thomson Reuters disclaims any liability including incidental or consequential damages arising from errors or omissions in this report. Thomson Reuters 3
  • 5.
    National Venture CapitalAssociation 2013 Yearbook National Venture Capital Association Thomson Reuters 1655 Fort Myer Drive, Suite 850 Arlington, Virginia 22209-3114 Telephone: 703-524-2549 Telephone: 703-524-3940 www.nvca.org 3 Times Square, 18th Floor New York, NY 10036 Telephone: 646-223-4431 Fax: 646-223-4470 www.thomsonreuters.com President Mark G. Heesen Head of Research John S. Taylor Senior Vice President Molly M. Myers Senior Vice President of Federal Policy & Political Advocacy Jennifer Connell Dowling Vice President of Communications Emily Mendell Vice President of Membership & Member Firm Liaison Janice Mawson Vice President of Federal Policy & Political Advocacy Emily A. Baker Chief Marketing Officer Jeanne Lazarus Metzger Vice President of Federal Life Science Policy Kelly Slone Membership and Database Manager Terry Samm Manager of Administration and Meetings Allyson Chappell Accounting Manager Beverley Badley Administrative Assistant Gwendolyn Taylor Global Head of Deals & Private Equity Stephen N. Case II Vice President, Deals and Private Equity Operations Shariq Kajiji Global Business Manager – Private Equity Jim Beecher Editor-in-Charge David Toll Global Private Equity Operations Manager Anna Aquino-Chavez Press Management Matthew Toole Product Manager Lori Ann Silva Content Specialist Paul Pantalla Data Specialist Francis Base Research Editor Eamon Beltran Senior Art Director David Cooke Sales Manager – Publications (Buyouts, VCJ, peHUB) Greg Winterton (646-223-6787) ThomsonONE.com Sales: Dave Sharma (646-223-4048) Research Lab Mavis Moulterd, Thea Shepherd 4 Thomson Reuters
  • 6.
    Table of Contents Whatis Venture Capital? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 11 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Exits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 15 Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 17 Capital Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Investments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Appendix A: Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Appendix B: MoneyTree Report Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Appendix C: MoneyTree Geographical Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Appendix D: Industry Codes (VEICs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Appendix E: Industry Sector VEIC Ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Appendix F: Stage Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Appendix G: Data Sources and Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Appendix H: International Convergence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Appendix I: US Accounting Rulemaking and Valuation Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105 Appendix J: Non-US Private Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Thomson Reuters 5
  • 7.
    National Venture CapitalAssociation This page is intentionally left blank. 6 Thomson Reuters
  • 8.
    What is VentureCapital? Venture capital has enabled the United States to support its entrepreneurial talent and appetite by turning ideas and basic science into products and services that are the envy of the world. Venture capital funds build companies from the simplest form – perhaps just the entrepreneur and an idea expressed as a business plan – to freestanding, mature organizations. Risk Capital for Business Venture capital firms are professional, institutional managers of risk capital that enables and supports the most innovative and promising companies. This money funds new ideas that could not be financed with traditional bank financing, that threaten established products and services in a corporation, and that typically require five to eight years to be launched. Venture capital is quite unique as an institutional investor asset class. When an investment is made in a company, it is an equity investment in a company whose stock is essentially illiquid and worthless until a company matures five to eight years down the road. Follow-on investment provides additional funding as the company grows. These “rounds,” typically occurring every year or two, are also equity investment, with the shares allocated among the investors and management team based on an agreed “valuation.” But, unless a company is acquired or goes public, there is little actual value. Venture capital is a long-term investment. More Than Money The U.S. venture industry provides the capital to create some of the most innovative and successful companies. But venture capital is more than money. Venture capital partners become actively engaged with a company, typically taking a board seat. With a startup, daily interaction with the management team is common. This limits the number of startups in which any one fund can invest. Few entrepreneurs approaching venture capital firms for money are aware that they essentially are asking for 1/6 of a person! Yet that active engagement is critical to the success of the fledgling company. Many one- and two-person Thomson Reuters Venture Capital Backed Companies Known for Innovative Business Models Employment at IPO and Now As Company The Home Depot Starbucks Corporation Staples Whole Foods Market, Inc. eBay of IPO 650 2,521 1,693 2,350 138 Current 331,000 160,000 89,019 69,500 31,500 # Change 330,350 157 ,479 87 ,326 67 ,150 31,362 Venture Capital Backed Companies Known for Innovative Technology and Products Employment at IPO and Now Company Microsoft Intel Corporation Medtronic, Inc. Apple Inc. Google JetBlue As of IPO 1,153 460 1,287 1,015 3,021 4,011 Current 94,000 100,100 45,000 76,100 53,861 12,070 # Change 92,847 99,640 43,713 75,085 50,840 8,059 Source: Global Insight; Updated from ThomsonOne 2/2013 companies have received funding but no one- or twoperson company has ever gone public! Along the way, talent must be recruited and the company scaled up. Ask any venture capitalist who has had an ultra-successful investment and he or she will tell you that the company that broke through the gravity evolved from the original business plan concept with the careful input of an experienced hand. Deal Flows — Where The Buys Are For every 100 business plans that come to a venture capital firm for funding, usually only 10 or so get a serious look, and only one ends up being funded. The venture capital firm looks at the management team, the concept, the marketplace, fit to the fund’s objectives, the value-added potential for the firm, and the capital needed to build a successful business. A busy venture capital professional’s most precious asset is time. These days, a business concept needs to address world markets, have superb scalability, be made successful in a reasonable timeframe, and be truly innovative. A concept that promises a 10 or 20 percent improvement on something that already exists is not likely to get a close look. 7
  • 9.
    National Venture CapitalAssociation Many technologies currently under development by venture capital firms are truly disruptive technologies that do not lend themselves to being embraced by larger companies whose current products could be cannibalized by this. Also, with the increased emphasis on public company quarterly results, many larger organizations tend to reduce spending on research and development and product development when things get tight. Many talented teams have come to the venture capital process when their projects were turned down by their companies. The Exit Funnel Outcomes of the 11,686 Companies First Funded 1991 to 2000 Went/Going Public 14% Still Private or Unknown* 35% Acquired 33% Common Structure — Unique Results While the legal and economic structures used to create a venture capital fund are similar to those used by other alternative investment asset classes, venture capital itself is unique. Typically, a venture capital firm will create a Limited Partnership with the investors as LPs and the firm itself as the General Partner. Each “fund,” or portfolio, is a separate partnership. A new fund is established when the venture capital firm obtains necessary commitments from its investors, say $100 million. The money is taken from investors as the investments are made. Typically, an initial funding of a company will cause the venture fund to reserve three or four times that first investment for follow-on financing. Over the next three to eight or so years, the venture firm works with the founding entrepreneur to grow the company. The payoff comes after the company is acquired or goes public. Although the investor has high hopes for any company getting funded, only one in six ever goes public and one in three is acquired. Economic Alignment of all Stakeholders — An American Success Story Venture capital is rare among asset classes in that success is truly shared. It is not driven by quick returns or transaction fees. Economic success occurs when the stock price increases above the purchase price. When a company is successful and has a strong public stock offering, or is acquired, the stock price of the company reflects its success. The entrepreneur benefits from appreciated stock and stock options. The rank and file employees throughout the organization historically also do well with their stock options. The venture capital fund and its investors split the capital gains per a 8 Known Failed 18% *Of these, most have quietly failed pre-agreed formula. Many college endowments, pension funds, charities, individuals, and corporations have benefited far beyond the risk-adjusted returns of the public markets. Beyond the IPO Many of the most exciting venture capital backed companies left the venture portfolios after they went public. Far from being a destination, the IPO process provides needed growth capital for a growing company. A 2009 analysis by IHS Global Insight shows that more than 90% of the jobs at today’s venture backed public companies were created after it went public. That is, these companies on average are 10% of their mature size at the time they go public. What’s Ahead Much of venture capital’s success has come from the entrepreneurial spirit pervasive in the American culture, financial recognition of success, access to good science, and fair and open capital markets. It is dependent upon a good flow of science, motivated entrepreneurs, protection of intellectual property, and a skilled workforce. The nascent deployment of venture capital in other countries is gated by a country’s or region’s cultural fit, tolerance for failure, services infrastructure that supports developing companies, intellectual property protection, efficient capital markets, and the willingness of big business to purchase from small companies. Thomson Reuters
  • 10.
    Executive Summary During 2012,many of the metrics describing the venture capital industry in the United States were similar to those of the prior two years. The decline in the number of firms and capital managed was expected but not as large as some were anticipating. Venture investment focused on companies in the seed and early stages, with many later-stage companies continuing to await a helpful IPO environment. Investment in early-stage life science companies continues to soften. Fundraising remained very challenging for the majority of venture firms, largely because of a dearth of healthy exits that would distribute yet-unrealized returns to current fund investors. The number of initial public offerings in 2012 fell slightly from 2011 levels, but the proceeds and IPO valuation tally were both up significantly, largely as a result of one huge IPO and a handful of large ones. A healthy venture capital ecosystem requires its metrics to be in balance. And while the quality of new business opportunities, known as deal flow, remains very high and the best opportunities are getting funded, stresses remain. Introduction The National Venture Capital Association 2013 Yearbook provides a summary of venture capital activity in the United States. This ranges from investments into portfolio companies to capital managed by general partners to fundraising from limited partners to exits of the investments by either IPOs or mergers and acquisitions. The statistics for this publication were assembled primarily from the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters and analyzed through Figure 1.0 Venture Capital Under Management Summary Statistics No. of VC Firms in Existence No. of VC Funds in Existence No. of Principals No. of First Time VC Funds Raised No. of VC Funds Raising Money This Year VC Capital Raised This Year ($B) VC Capital Under Management ($B) Avg VC Capital Under Mgt per Firm ($M) Avg VC Fund Size to Date ($M) Avg VC Fund Size Raised This Year ($M) Largest VC Fund Raised to Date ($M) Thomson Reuters 1992 2002 2012 358 1,089 841 616 2,119 1,269 4,996 14,541 5,887 13 25 43 78 176 162 4.9 15.7 20.1 28.7 272.1 199.2 80.2 249.9 236.9 39.1 94.4 110.6 62.8 89.2 124.1 1,775.0 6,300.0 6,300.0 the ThomsonONE.com (formerly VentureXpert) database of Thomson Reuters, which has been endorsed by the NVCA as the official industry activity database. Subscribers to ThomsonONE can recreate most of the charts in this publication and report individual deal detail and more granular statistics than provided herein. Industry Resources The activity level of the U.S. venture capital industry is roughly half of what it was at the 2000-era peak. For example, in 2000, 1053 firms each invested $5 million or more during the year. In 2012, the count was less than half that at 522. Venture capital under management in the United States by the end of 2012 decreased to $199.2 billion as calculated using the methodology described below. However, looking behind the numbers, we know that the industry continues to contract from the circa 2000 bubble high of $261.2 billion The slight downtick in number of firms and capital managed in 2012 perhaps understates a consolidating trend. The average venture capital firm shrunk to 7.0 principals per firm from 7.4 in 2011. The corresponding drop in headcount to under 6,000 principals is almost one-third lower than 2007 levels. This 9
  • 11.
    10 2 01 0 201 1 201 2 2 00 1 200 2 200 3 200 4 200 5 200 6 200 7 2 00 8 200 9 199 8 199 9 200 0 199 6 199 7 199 4 199 5 198 9 199 0 199 1 199 2 199 3 198 8 198 7 198 6 198 5 ($ Billions) 198 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 1993 199 4 199 5 199 6 1997 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 ($ Billions) National Venture Capital Association Figure 2.0 Capital Under Management U.S. Venture Funds ($ Billions) 1985 to 2012 350 300 250 200 150 100 50 0 Year Figure 3.0 Capital Commitments to U.S. Venture Funds ($ Billions) 1985 to 2012 120 100 80 60 40 20 0 Year Thomson Reuters
  • 12.
    2013 NVCA Yearbook Figure4.0 Investments in Portfolio Companies ($ Billions) 1985 to 2012 120 100 ($ Billions) 80 60 40 200 1 200 2 200 3 2 00 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 199 7 199 8 199 9 200 0 199 4 199 5 199 6 198 7 198 8 198 9 199 0 199 1 199 2 199 3 0 198 5 198 6 20 Year Figure 5.0 Venture Capital Investments in 2012 By Industry Group All Investments Industry Group Information Technology Medical/Health/Life Science Non-High Technology Total # Companies 2,130 649 364 3,143 # Deals 2,480 818 425 3,723 meant that there was an increase in the average amount of capital managed by each principal. It is possible going forward, that the number of principals per firm will increase as the number of firms decreases. This is because the bulk of the money being raised today is being raised by larger, specialty, and boutique firms. Commitments New commitments to venture capital funds in the United States increased for the second year in a row, which follows four years of declines. In 2012, commitments totaling $20.1 billion were made to 183 funds. This is roughly two-thirds of the annual levels Thomson Reuters Initial Investments Investment Amt ($Bil) 16.5 6.8 3.4 26.7 # Companies 870 148 156 1,174 # Deals 870 148 156 1,174 Investment Amt ($Bil) 3.0 0.7 0.4 4.1 seen in 2005-2007 and approximately one-fifth of the annual amount raised at the bubble peak. When you look behind the 2012 capital commitments at the specific funds being raised, the 10 largest funds represent 48% of the capital raised, with 173 funds raising the other 52%. This is the sixth consecutive year in which more money was invested by the industry than raised in new commitments. That has been the case in 11 of the past 13 years. While this is not a true apples-toapples comparison, it does explain the industry’s strong interest in raising additional funds in 2013 and beyond. The narrow success of recent IPO and 11
  • 13.
    National Venture CapitalAssociation Figure 6.0 Venture Capital Investments in 2012 Stage by Dollars Invested Seed 3% Later Stage 32% Early Stage 30% Expansion 35% Figure 7.0 Venture Capital Investments in 2012 Industry Sector by Dollars Invested Telecommunications 2% Other 0.2% Biotechnology 15% Business Products and Services 0.4% Computers and Peripherals 2% Consumer Products and Services 5% Electronics/ Instrumentation 1% Financial Services 1% Healthcare Services 1% Software 31% Semiconductors 3% Retailing/ Distribution 2% Networking and Equipment 1% Medical Devices and Equipment 9% 12 Industrial/Energy 10% IT Services 7% Media and Entertainment 7% Thomson Reuters
  • 14.
    2013 NVCA Yearbook acquisitionmarkets has not enabled most firms to pay out sufficient distributions to their investors to begin raising another fund. For the vast majority of firms, raising additional capital right now is very difficult. Investments Measuring industry activity with the total dollars invested in a given year shows that the industry has remained generally in the $20 billion to $30 billion range since 2002. In 2012, $26.7 billion was invested in 3,143 companies. This is less than 2011 totals and greater than 2010 totals. The number of first-time fundings likewise was less than 2011 and greater than 2010. Further parsing the data shows an increasing portion of the investment dollars going to California companies. Software was the leading sector in 2012, receiving 31% of the total dollars. The second largest sector was Biotechnology which fell to roughly half that amount at 15.4% of total investment The continued interest in Clean Technology investing brought the Figure 8.0 2012 Investments By State State California Massachusetts New York Washington Texas Illinois Colorado Pennsylvania New Jersey Virginia All Others Total Number of Companies 1,280 326 287 101 134 76 85 154 49 62 589 3,143 Pct of Total 41% 10% 9% 3% 4% 2% 3% 5% 2% 2% 19% Investment ($ Millions) 14,128.8 3,067.9 1,856.7 931.5 930.5 570.4 564.2 517.8 429.3 372.3 3,282.8 26,652.4 Pct of Total 53% 12% 7% 3% 3% 2% 2% 2% 2% 1% 12% Figure 9.0 Venture-Backed IPOs Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Num of IPOs 48 104 86 43 42 47 120 150 175 140 184 256 141 79 280 238 37 24 26 82 59 68 92 7 13 68 51 49 Thomson Reuters Offer Amount ($Mil) 763 2,414 2,125 769 873 1,108 3,726 5,431 6,141 4,004 7,859 12,666 5,831 4,221 24,005 27,443 4,130 2,333 2,024 10,032 5,113 7,127 12,365 765 1,980 7,609 10,690 21,451 Med Offer Amt ($Mil) 13 14 17 15 16 20 27 24 24 24 36 35 33 43 70 83 80 89 71 70 68 85 97 83 123 93 106 89 Mean Offer Post Offer Med Post Mean Post Median Age Amt ($Mil) Value ($Mil) Value ($Mil) Value ($Mil) @ IPO (yrs) 16 1,991 32 47 3 23 166,260 53 1889 4 25 10,790 46 150 4 18 20,523 51 555 3 21 5,479 51 166 4 24 5,886 60 178 4 31 14,151 78 168 5 36 15,759 68 147 5 35 14,430 75 129 5 29 9,854 67 91 5 43 17,046 103 136 4 49 40,360 111 191 3 41 17,784 99 146 3 53 9,649 149 214 3 86 86,669 294 425 3 115 63,610 336 464 3 112 15,545 304 576 4 97 8,322 266 347 3 78 7,412 252 285 5 122 50,268 254 613 6 87 39,702 202 673 5 105 71,467 293 1067 5 134 68,282 361 742 6 109 3,645 278 521 7 152 9,192 548 707 6 112 111,386 431 1662 5 210 94,987 606 1862 6 438 122,264 371 2495 7 Mean Age @ IPO (yrs) 4 4 4 4 4 4 5 5 6 5 5 4 6 3 3 4 4 5 6 6 5 6 6 7 7 6 7 8 13
  • 15.
    National Venture CapitalAssociation Industrial/Energy sector to 10.5% of the total. Medical Devices rounded out the top four sectors at 9.4%. The life sciences share of the venture capital investment dollars decreased in 2012 to its lowest level since 2002. In 2012, 15.4% of the money went into Biotechnology, 9.4% into Medical Devices, and 1.2% into Healthcare Services, totaling 26.0%. This is down from the 33.1% combined share in 2009. As has been the case for several years, attention has been focused on the two ends of the spectrum. Looking at deal counts, 2012 actually saw the highest percentage of seed- and early-stage deals since at least 1985 (51.8% of total deals). This certainly would challenge the suggestion that the industry’s attention is single-focused on later-stage companies. That said, the 22.4% of deals going to later-stage companies is also toward the top end of the historical range. There remains a record number of companies in portfolios in the later stage of development that in most other positions in the business cycle would have already gone public or otherwise been acquired. With the rule of thumb that a healthy venture capital industry invests in 1,000-1,300 new companies each year, the 1,174 first fundings in 2012 is very much in that range. Not surprisingly, 81% of those first round investments were made at the seed- and early-stage levels. The year 2012 provided an interesting contrast in geographic dispersion. While 53% of all the investment dollars went to California-based portfolio companies, a record for MoneyTree™, companies in 48 states and DC received financing, also a MoneyTree™ record high. Figure 10.0 Venture-Backed M&A Exits Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 14 Number Total 6 8 10 17 20 19 16 69 59 82 92 107 143 189 227 379 384 363 323 402 443 485 488 416 350 521 488 449 Number Known 3 1 4 9 10 7 4 43 36 56 58 76 99 113 154 245 175 165 134 199 198 207 200 134 108 149 169 121 ($ Millions) Price Average 300.2 100.1 63.4 9.1 667.2 111.2 920.7 115.1 746.9 74.7 120.3 10.0 190.5 15.9 2,119.1 81.5 1,332.9 58.0 3,207.1 123.4 3,801.8 111.8 8,230.8 265.5 7,743.6 176.0 8,002.0 105.3 38,688.0 530.0 79,996.4 597.0 25,115.6 120.2 11,913.2 60.2 8,240.8 43.6 28,846.1 142.1 19,600.2 80.0 24,288.5 87.4 30,745.5 106.8 16,236.9 57.6 12,364.9 51.1 17,700.3 47.6 24,093.2 75.5 21,516.2 65.6 Thomson Reuters
  • 16.
    2013 NVCA Yearbook Exits ingor seeking to go public were not able to do so. Once successful portfolio companies mature, venture funds generally exit their positions in those companies by taking them public through an initial public offering (IPO) or by selling them to presumably larger organizations (acquisition, or trade sale). This then lets the venture fund distribute the proceeds to investors, raise a new fund for future investment, and invest in the next generation of companies. This chapter considers each type of exit separately. On the market valuation placed on these IPOs at the offer price, 2012 was a very good year. The 49 IPOs had a valuation of $122.3 billion. This is the highest amount since 1986. What is quite striking (Fig 5.03), is the huge gap between median and mean (average) valuation of almost seven times! This suggests a huge outlier effect created by the very large IPOs that succeeded. IPOs in 2012 were a mixed bag at best. On the one hand, the number of venture-backed companies going public actually fell from 2011 from 51 to 49. But the dollars raised in those initial public offerings more than doubled from $10.7 billion to $21.5 billion. But looking behind the numbers, we see that Facebook itself raised $16.0 billion of that $21.5 billion, with a few other high-profile IPOs looming large in the remainder. This meant that many companies attempt- Thomson Reuters In 2012, the acquisition market weakened. There was a slight decrease in the number of acquisitions, or trade sales, of venture-backed companies. We tracked 449 acquisitions, of which we had disclosed deal amounts for 121 of them. The sum of the disclosed values was also down at $21.5 billion. Just over onefifth of them were acquired at 10 times or greater than the cumulative venture capital investment in those companies. We tracked four acquisitions at more than $1 billion. 15
  • 17.
    National Venture CapitalAssociation This page is intentionally left blank. 16 Thomson Reuters
  • 18.
    Industry Resources The activitylevel of the U.S. venture capital industry is roughly half of what it was at the 2000-era peak. For example, in 2000, 1053 firms each invested $5 million or more during the year. In 2012, the count was less than half that at 522. Venture capital under management in the United States by the end of 2012 decreased to $199.2 billion as calculated using the methodology described below. However, looking behind the numbers, we know that the industry continues to contract from the circa 2000 bubble high of $261.2 billion The slight downtick in firms and capital managed in 2012 perhaps understates a consolidating trend. The average venture capital firm shrunk to 7.0 principals per firm from 7.4 in 2011. The corresponding drop in headcount to under 6,000 principals is almost one-third lower than 2007 levels. This meant that there was an increase in the average amount of capital managed by each principal. It is possible going forward, that the number of principals per firm will increase as the number of firms decreases. This is because the bulk of the money being raised today is being raised by larger, specialty, and boutique firms. For our purposes here, we define a principal to be someone who goes to portfolio company board meetings. That is, deal partners would be included and firm CFOs would not be included. Geographic location of the largest venture firms is quite concentrated. California domiciled firms manage 47.1% of the industry’s capital although these firms may be actively investing in other states and countries. This concentration has been consistent for several years and may increase going forward, given the movement of some east coast funds westward. Taken together, the top five states (California, Massachusetts, New York, Connecticut, and Illinois) hold 81.4% of total venture capital in this country. METHODOLOGY Historically we have calculated industry size using a “rolling eight years of fundraising” proxy for capital managed, number of funds, number of firms, etc. The number of firms in existence will vary on a rolling eight-year basis as firms raise new funds or do not raise funds for more than eight years. Currently, we know the industry is consolidating, but the eight- year model now includes fund vintage years 2005-2012. However, through 2012, the rolling eight year methodology belies this contraction because the very slow fundraising years of 2002-2004 were rolling out of the calculation. Under this methodology, we estimate that there are currently 841 firms with limited partnerships “in existence.” To clarify, this is actually stating that there are 841 firms that have raised a venture capital fund in the last eight years. In reality, fewer firms are actually making new investments in 2012. added a column to the table to report the number of independent and corporate venture groups actually investing $5 million or more in a given year. These 522 firms are less than half the level of 2000. We expect this statistic to fall further going forward. For this publication, we are primarily counting the number of firms with limited partnerships and are excluding other types of investment vehicles. From that description, it may appear that the statistics for total industry resources may be underestimated. However, this must be balanced with the fact that capital under management by captive and evergreen funds is difficult to compare equitably to typical limited partnerships with fixed lives. For this analysis only, the firms counted for capital under management include firms with fixed-life partnerships and venture capital funds they raised. If a firm raised both buyout and venture capital funds, only the venture funds would be counted in the calculation of venture capital under management. To better report the actual number of active firms, we Thomson Reuters 17
  • 19.
    National Venture CapitalAssociation Venture capital under management can be a complex statistic to estimate. Indeed, capital under management reported by firms can differ from firm to firm as there’s not one singular definition. For example, some firms include only cumulative committed capital, others may include committed capital plus capital gains, and still other firms define it as committed capital after subtracting liquidations. To complicate matters, it is difficult to compare these totals to European private equity firms, which include capital gains as part of their capital under management measurements. have completed their life cycle. Typically, venture capital firms have a stated 10-year fixed life span, except for life science funds, which are often established as 12-year funds. Figure 1.08 shows the reality of fund life. Thomson Reuters calculates capital under management as the cumulative amount committed to funds on a rolling eight-year basis. Current capital under management is calculated by taking the capital under management calculation from the previous year, adding in the current year’s funds’ commitments, and subtracting the capital raised eight years prior. For purposes of the analysis in this publication, we have tried to clarify the industry definition of capital under management as the cumulative total of committed capital less liquidated funds or those funds that For this analysis, Thomson Reuters classifies venture capital firms using four distinct types: private independent firms, financial institutions, corporations, and other entities. ‘Private independent’ firms are Figure 1.01 Capital Under Management U.S. Venture Funds ($ Billions) 1985 to 2012 350 300 ($ Billions) 250 200 150 100 50 198 5 198 6 198 7 198 8 198 9 199 0 199 1 1992 1993 199 4 199 5 199 6 1997 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 0 Year 18 Thomson Reuters
  • 20.
    2013 NVCA Yearbook madeup of independent private and public firms including both institutionally and non-institutionally funded firms and family groups. ‘Financial institutions’ refers to firms that are affiliates and/or subsidiaries of investment banks and non-investment bank financial entities, including commercial banks and insurance companies. The ‘corporations’ classification includes venture capital subsidiaries and affiliates of industrial corporations. In 2013, we will modify the methodology to reflect virtually all direct corporate investment because many of the corporate venture investors do not operate out of a separate fund or group. The capital under management statistics reported in this section consist primarily of venture capital firms investing through limited partnerships with fixed commitment levels and fixed lives and do not include non-vintage “evergreen funds” or true captive corporate industrial investment groups without fixed commitment levels. The term ‘evergreen funds’ refers to funds that have a continuous infusion of capital from a parent organization, as opposed to the fixed life and commitment level of a closed-end venture capital fund. Figure 1.02 Total Capital Under Management By Firm Type 1985 to 2012 ($ Millions) 1985 1986 1987 1988 P vate Independent 11,636 14,574 17,299 18,607 Pri Financial Institutions 3,368 3,508 3,442 3,178 Corporations 1,739 1,709 2,062 2,148 Other 857 909 897 867 Total 1989 1990 22,112 2,714 2,095 779 22,632 2,802 2,142 725 1991 1992 1993 1994 1995 1996 1997 1998 21,805 22,557 25,199 28,528 33,417 2,392 2,220 2,484 2,924 3,758 2,086 2,211 1,526 1,573 1,345 618 313 191 275 380 40,235 5,123 2,032 409 51,877 7,209 2,348 665 76,398 10,382 3,245 3 875 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 120,221 15,466 6,797 1,116 187,475 23,454 11,604 1,467 221,105 24,975 12,787 2,134 221,634 225,208 233,976 242,466 24,453 23,558 22,277 21,634 12,766 12,717 12,245 12,044 2,347 2,317 2,302 2,055 255,714 238,766 18,991 14,384 11,964 8,828 2,031 1,822 194,698 6,263 4,171 1,469 171,713 4,865 2,979 843 175,980 5,266 3,458 3,997 2011 2012 183,482 180,936 9,541 9,670 4,483 4,497 3,995 4,098 17,600 20,700 23,700 24,800 27,700 28,300 26,900 27,300 29,400 33,300 38,900 47,800 62,100 90,900 143,600 224,000 261,000 261,200 263,800 270,800 278,200 288,700 263,800 206,600 180,400 188,700 201,500 199,200 Figure 1.03 Distribution of Firms By Capital Managed 2012 155 160 139 125 140 112 111 120 91 100 80 60 47 60 40 20 10 00 + 50 010 00 25 050 0 10 025 0 -10 0 50 25 -5 0 10 -2 5 010 0 Capital Under Management ($ Millions) This chart shows capital committed to U.S. venture firms in active funds. While much of the capital is managed by larger firms, of the 841 firms at the end of 2012, roughly 60% of them (504) managed $100 million or less. By comparison, just 47 firms managed active funds totaling more than $1 billion. Thomson Reuters 19
  • 21.
    National Venture CapitalAssociation Figure 1.04 Fund and Firm Analysis Fund Vintage Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Cumulative Funds 631 707 810 887 979 1,037 1,075 1,147 1,244 1,342 1,497 1,647 1,859 2,096 2,433 2,849 3,092 3,174 3,282 3,447 3,622 3,805 4,019 4,205 4,313 4,439 4,599 4,716 Total Cumulative Firms 323 353 388 406 435 451 458 478 509 542 607 668 760 839 966 1,109 1,191 1,208 1,260 1,328 1,398 1,474 1,558 1,621 1,664 1,725 1,787 1,828 Total Cumulative Capital ($B) 20 23.4 27.4 30.8 35.8 38.3 40.5 44.1 49.4 56.7 66.2 78.6 97.9 129.2 184.1 268.2 310.4 318 330 349.4 376.2 417.9 447.9 474.8 490.7 506.7 531.5 548.6 Existing Funds 532 590 670 700 727 716 639 601 613 635 687 760 880 1,059 1,358 1,702 1,848 1,832 1,785 1,800 1,763 1,709 1,586 1,356 1,221 1,265 1,317 1,269 Firms That Raised Funds in the Last 8 Vintage Years 294 324 353 365 380 383 360 352 370 385 424 469 541 613 733 864 920 918 948 984 1009 1019 1010 879 818 844 868 841 Capital Managed ($B) 17.6 20.7 23.7 24.8 27.7 28.3 26.9 27.3 29.4 33.3 38.9 47.8 62.1 90.9 143.6 224 261 261.2 263.8 270.8 278.2 288.7 263.8 206.6 180.4 188.7 201.5 199.2 Avg Fund Size ($M) 33.1 35.1 35.4 35.4 38.1 39.5 42.1 45.4 48.0 52.4 56.6 62.9 70.6 85.8 105.7 131.6 141.2 142.6 147.8 150.4 157.8 168.9 166.3 152.4 147.7 149.2 153.0 157.0 Avg Firm Size ($M) 59.9 63.9 67.1 67.9 72.9 73.9 74.7 77.6 79.5 86.5 91.7 101.9 114.8 148.3 195.9 259.3 283.7 284.5 278.3 275.2 275.7 283.3 261.2 235 220.5 223.6 232.1 236.9 Firms Actively Investing 92 113 112 118 115 100 80 104 93 110 185 249 342 408 713 1053 759 534 505 575 558 570 627 603 462 509 545 522 The correct interpretation of this chart is that since the beginning of the industry to the end of 2012, 1,828 firms had been founded and 4,716 funds had been raised. Those funds totaled $548.6 billion. At the end of 2012, 841 firms as calculated using our eight-year methodology managed 1,269 individual funds, with each fund typically being a separate limited partnership. Capital under management, again calculated using a rolling eight years of fundraising, by those firms at the end of 2012 was $199.2 billion. However, only 522 independent and corporate venture groups invested at least $5 million in MoneyTree™ deals in 2012. Figure 1.05 Principals Information Year 2007 2008 2009 2010 2011 2012 No. Principals Per Firm 8.7 8.5 8.6 8.0 7.4 7.0 Estimated Industry Principals 8,665 7,293 6,760 6,328 6,231 5,887 Figure 1.06 Top 5 States By Capital Under Management 2012 Avg Mgt Per Principal ($M) 30.0 28.3 26.4 25.7 28.6 33.8 State CA MA NY CT IL Total* ($ Millions) 93,814.8 34,482.3 21,378.0 8,051.2 4,369.0 162,095.4 *Total includes above 5 states states only *Total includes above 5 only The correct interpretation of this chart is that at year end 2012, there were 5,887 principals (people who go to board meetings) in the industry. A principal on average manages $33.8 million and the average firm is made up of 7.0 principals, down from 7.4 principals a year earlier. 20 Thomson Reuters
  • 22.
    2013 NVCA Yearbook Figure1.07 Capital Under Management By State 1985 to 2012 ($ Millions) N O W S N M P W R N W A M U A T State 1985 1986 1987 1988 1989 CA 4,875 5,836 6,493 6,727 7,987 MA 2,331 2,646 3,533 3,886 4,292 NY 3,382 4,421 4,369 4,158 5,589 CT 1,285 1,432 1,917 1,979 1,821 IL 470 490 720 848 804 PA 444 518 548 562 731 DC 3 4 4 3 4 TX 454 488 722 720 792 NJ 610 707 746 734 730 MD 93 97 123 116 158 WA 313 406 384 422 395 VA 72 78 78 84 104 MN 198 294 338 672 743 NC 34 54 87 89 124 CO 361 428 396 513 613 MO 557 581 614 591 599 UT 9 19 19 15 15 MI 111 119 125 122 123 FL 124 131 172 192 194 TN 102 127 191 183 215 GA 88 94 175 257 261 DE 39 40 40 38 47 OH 852 889 969 831 254 AL 125 131 131 127 134 IN 45 55 56 77 96 AZ 40 43 43 73 74 LA 7 7 7 7 7 KY 15 16 16 16 0 WI 181 99 98 95 104 NM 71 100 135 132 168 ID 0 0 0 0 0 ME 1 1 20 25 26 OK 1 29 29 28 37 SD 0 0 0 0 0 HI 2 2 2 2 2 IA 49 51 104 101 80 OR 168 176 203 239 242 VT 0 0 0 0 0 NH 24 25 25 49 50 ND 0 0 0 0 0 KS 0 0 0 0 0 SC 1 1 1 1 15 NE 0 0 0 1 1 MS 0 0 0 0 0 PR 0 0 0 0 0 WY 0 0 0 0 0 RI 15 16 16 36 36 NV 0 0 0 0 0 WV 0 0 0 0 0 AR 2 2 2 2 2 MT 0 1 1 1 1 UN 46 48 48 46 31 AK 0 0 0 0 0 Total 17,600 20,700 23,700 24,800 27,700 Thomson Reuters 1990 7,620 4,414 5,810 1,984 818 772 4 835 950 163 383 91 882 113 572 655 16 38 132 259 275 41 257 136 88 75 5 0 104 255 0 26 38 0 2 82 246 0 51 0 13 15 1 0 9 0 37 0 0 2 1 31 0 28,300 1991 7,732 4,070 5,460 1,840 783 774 4 773 880 98 198 56 810 109 554 653 15 14 110 276 262 41 273 136 80 75 2 0 78 243 0 26 37 0 2 61 228 0 50 0 13 15 1 0 9 0 36 0 0 2 1 21 0 26,900 1992 7,728 4,944 5,314 1,937 886 770 1 805 546 115 241 42 764 110 528 642 10 14 97 270 262 14 303 137 96 34 11 0 78 230 0 28 37 0 0 62 116 0 50 0 13 15 1 0 9 0 36 0 0 0 1 0 0 27,300 1993 8,562 5,136 5,911 2,268 1,148 570 20 936 512 374 227 35 842 108 617 107 10 13 151 200 434 41 427 6 99 44 22 0 81 205 0 29 38 0 0 54 74 0 27 0 14 15 11 0 9 0 22 0 0 0 1 0 0 29,400 1994 9,315 5,645 6,977 2,430 1,220 739 20 1,143 695 784 178 32 896 146 566 137 25 10 223 292 432 51 470 6 109 43 31 7 163 179 0 98 9 0 0 55 74 0 27 0 14 15 11 0 9 0 22 0 0 0 0 0 0 33,300 1995 11,524 6,881 8,268 2,282 1,361 822 123 1,145 958 914 299 48 877 128 475 119 31 41 321 306 434 100 447 6 111 44 49 21 168 154 0 89 10 0 2 5 77 0 47 0 37 29 105 11 9 0 23 0 0 0 0 0 0 38,900 1996 14,797 7,339 9,952 2,397 1,312 1,324 1,670 1,225 1,480 1,514 460 73 511 298 549 124 31 41 303 453 359 121 375 6 192 10 89 21 195 151 0 86 32 10 2 5 30 0 19 0 37 52 136 11 9 0 0 0 0 0 0 0 0 47,800 1997 19,349 10,436 10,286 3,677 1,989 1,743 2,325 1,681 1,557 2,004 677 251 616 618 863 147 94 66 378 463 762 114 689 5 176 9 275 21 180 120 0 88 23 10 2 16 30 0 66 0 56 37 138 11 49 0 2 0 0 0 0 0 0 62,100 1998 26,799 15,737 19,646 4,684 2,245 2,100 2,450 2,994 2,171 2,642 1,078 506 713 804 1,162 111 96 76 688 743 1,074 116 764 24 191 38 366 21 204 12 0 89 67 85 2 17 40 0 67 0 43 37 141 11 40 0 2 0 0 0 0 0 0 90,900 2000 83,652 38,137 38,221 8,913 4,393 3 6,233 3,847 6,871 3,628 3 5,112 2,799 2,520 2,235 1,007 1,365 4,775 307 268 587 1,782 1,235 2,308 113 1,847 107 662 101 476 21 1 245 12 014 202 140 178 1 11 16 100 016 65 00 42 36 175 11 39 0 117 22 223 021 1 19 00 00 00 224,00 2001 102,032 47,762 39,225 11,878 4,805 6,338 4,122 7,994 4,311 5,378 3,684 2,636 2,187 1,36 1,446 5,288 449 475 591 1,749 1,280 2,158 80 1,872 107 662 104 651 21 245 12 1 14 290 139 177 11 60 100 1 43 65 00 42 37 164 39 68 1 117 226 23 221 19 00 00 00 261,300 2002 102,065 49,004 37,658 11,710 5,258 6,231 4,686 7,922 4,226 5,159 3,687 2,649 2,363 1,577 5,432 417 448 589 1,682 1,161 2,151 69 1,873 107 650 145 648 14 152 12 14 218 139 177 11 60 112 43 84 00 42 71 164 39 68 117 226 32 21 19 00 00 00 261,200 2003 105,008 48,678 37,086 11,682 5,616 6,523 4,584 7,799 4,440 5,043 3,566 2,819 2,357 1,776 5,412 407 559 631 1,591 1,150 2,075 28 1,853 155 683 180 631 14 152 33 14 219 139 177 9 55 83 43 65 00 19 58 71 28 68 117 35 32 21 19 00 00 00 263,800 2004 110,920 49,187 36,655 13,333 5,690 6,100 3,373 8,259 4,083 4,811 4,630 2,868 2,361 1,618 5,229 504 589 859 1,577 1,043 2,109 15 1,986 173 593 180 663 14 133 35 14 214 117 175 16 65 85 43 65 00 19 35 38 28 68 117 35 33 21 19 00 00 00 270,800 2005 116,533 50,675 36,182 13,525 5,168 6,506 3,582 8,448 4,073 4,762 4,591 3,338 2,441 1,447 4,882 1,232 546 912 1,802 1,089 1,835 15 1,805 225 595 199 502 18 105 69 14 215 117 175 16 53 85 43 19 00 0 41 38 28 29 118 33 33 21 19 00 00 00 278,200 2006 125,205 55,598 29,295 14,879 5,289 7,033 4,640 8,203 5,159 4,743 4,597 3,367 2,593 1,657 4,663 1,293 651 946 1,525 840 1,697 15 1,721 224 608 171 430 216 205 74 84 276 111 103 16 60 76 43 30 00 0 41 38 29 29 118 33 33 21 19 00 00 00 288,700 2007 2008 2009 2010 113,611 97,099 85,072 88,085 52,312 38,586 32,397 32,001 25,621 14,104 13,156 18,116 13,251 12,165 8,498 9,263 4,235 3,590 3,278 3,060 7,063 4,564 4,399 4,408 5,046 4,835 4,631 4,043 6,550 5,431 4,203 4,061 5,021 4,137 3,916 3,959 4,432 2,936 3,005 2,912 5,173 4,627 3,720 3,684 3,013 1,802 2,225 2,267 2,472 1,640 1,657 1,317 1,542 1,190 1,216 1,696 3,010 1,604 974 1,137 1,384 1,318 1,182 1,187 1,251 1,328 1,136 1,199 685 919 976 1,051 1,283 558 801 864 669 576 565 775 1,686 558 530 533 251 256 394 396 1,329 714 565 521 216 357 361 362 617 136 342 343 173 130 118 263 353 336 196 263 218 223 225 226 213 141 143 170 77 79 80 114 85 72 73 73 160 164 73 73 121 47 47 47 113 32 32 48 7 14 14 43 67 69 39 39 78 34 40 29 57 41 14 19 30 31 31 11 00 013 1 13 14 0 0 0 8 41 42 41 5 38 0 0 2 30 30 1 1 30 31 1 1 119 0 0 0 33 34 10 10 9 10 10 0 21 0 0 0 0 0 0 0 00 00 00 00 00 00 00 00 00 00 00 00 263,800 206,600 180,400 188,700 2011 93,952 31,836 22,380 10,076 4,564 4,123 4,510 4,164 3,554 2,891 3,693 2,073 1,763 1,614 1,144 1,188 1,314 1,244 819 802 646 445 570 387 308 260 279 212 194 84 73 69 47 48 43 39 29 19 11 14 8 5 2 1 1 0 0 0 0 0 00 00 00 201,500 2012 93,815 34,482 21,378 8,051 4,369 4,183 4,165 3,838 3,355 3,010 2,749 1,999 1,862 1,633 1,399 1,315 1,296 1,022 818 763 605 544 439 369 335 309 214 212 199 82 73 69 48 40 36 29 27 19 16 14 8 5 3 1 1 0 0 0 0 0 00 00 00 199,200 21 0 0 0
  • 23.
    National Venture CapitalAssociation Figure 1.08 Life of IT Funds in Years Life of IT Funds In Years <= 10 11-12 13-14 15-16 17-18 >=19 % of Funds 7% 20% 27% 22% 14% 10% Source: Adams Street Partners, based on 2010 analysis of dissolved funds. This chart tracks the year in which a 10-year fund is, in fact, dissolved. These later periods are referred to as “out years.” Historically, after the 10th year, only a few companies remain in the portfolios that typically do not have huge upside potential. But the slow pace of exits in recent years has resulted in a number of good, mature companies remaining in portfolios well past the nominal 10-year mark. Life science funds tend to have lives two years longer than typical technology funds. In preparing this chart, partial years are rounded to the nearest whole year. So 10.4 years would round to 10 years, and 10.5 years would round up to 11 years. The median life span of a fund in this analysis is 14.17 years. 22 Thomson Reuters
  • 24.
    Capital Commitments New commitmentsto venture capital funds in the United States increased for the second year in a row, which follows four years of declines. In 2012, commitments totaling $20.1 billion were made to 183 funds. This is roughly two-thirds of the annual levels seen in 2005-2007 and approximately one-fifth of the annual amount raised at the bubble peak. When you look behind the 2012 capital commitments at the specific funds being raised, the 10 largest funds represent 48% of the capital raised, with 173 funds raising the other 52%. This is the sixth consecutive year in which more money was invested by the industry than raised in new commitments. That has been the case in 11 of the past 13 years. While this is not a true apples-to-apples comparison, it does explain the industry’s strong interest in raising additional funds in 2013 and beyond. The narrow success of recent IPO and acquisition markets has not enabled most firms to pay out sufficient distributions to their investors to begin raising another fund. For the vast majority of firms, raising additional capital right now is very difficult. For the seventh year in a row, the top fundraising states were California and Massachusetts. This year, Connecticut replaces New York in the third position. California, with its venture firms raising $13.7 billion, holds the top spot for the tenth year in a row. Firms domiciled in the top five fundraising states in 2012 gathered 88% of the dollars, compared with 91% in 2011, 88% in 2010 and 82% in 2009. Please note that the state of fund domicile matters less than has been true historically. Much of the money is managed by large, national funds that tend to be domiciled in any of several states with a broad geographic investing footprint. Readers should not interpret capital available to entrepreneurs in a given state as being limited to the capital raised in that state. Venture capital fundraising typically makes up 20-25% of private equity fundraising. But in 2012, it represented 16% of total, down from 22% in 2011. Methodology figure 1.04). The data in this chapter is by calendar year and incrementally measures how much in new commitments funds raised during the calendar year. As defined by Thomson Reuters, capital commitments, also known as fundraising, are firm capital commitments to private equity/venture capital limited partnerships by outside investors. For purposes of these statistics, the terms “capital commitments,” “fundraising,” and “fund closes” are used interchangeably. There are three data sources for tracking capital commitments: (1) SEC filings that are regularly monitored by our research staff, (2) surveys of the industry routinely conducted by Thomson Reuters, and (3) verified industry press and press releases from venture firms. Consider, for example, a venture capital firm that announces a $200 million fund in late 2010, raises $75 million in 2011, and subsequently raises the remaining $125 million in 2012. In this chapter, nothing would be reflected in 2010, $75 million would be counted in 2011, and $125 million would be counted in 2012. Assuming it started investing and made its first capital call in 2012, the entire fund would then be considered to be a 2012 vintage year fund. Capital commitments are stated on either (1) a calendar-year basis when committed (for example, throughout this chapter) or (2) a vintage-year basis which is designated once the fund starts investing (for example, Note that fund commitments presented in this publication do not include those corporate captive venture capital funds that are funded by a corporate parent, which do not typically raise capital from outside investors. Thomson Reuters 23
  • 25.
    National Venture CapitalAssociation Figure 2.01 Capital Commitments To U.S. Venture Funds ($ Billions) 1985 to 2012 120 100 ($ Billions) 80 60 40 20 2 01 0 201 1 201 2 2 00 1 200 2 200 3 2 00 4 200 5 200 6 200 7 2 00 8 200 9 199 8 199 9 200 0 199 6 199 7 199 4 199 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 199 3 198 5 0 Year Figure 2.02 Capital Commitments To Private Equity Funds 1985-2012 Venture Capital Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 24 Sum ($Mil) 3,727.9 3,584.5 4,379.1 4,209.7 4,918.8 3,222.7 1,900.3 5,223.1 4,489.2 7,636.7 9,387.3 11,550.0 17,741.9 30,641.7 53,597.8 101,417.9 38,923.4 11,867.3 10,586.7 18,137.1 30,627.3 31,371.7 29,378.1 25,577.2 16,194.4 13,519.8 19,296.2 20,065.9 % of Total PE 56% 42% 21% 28% 29% 27% 31% 33% 21% 27% 26% 26% 29% 33% 50% 56% 43% 25% 23% 23% 22% 17% 11% 12% 25% 21% 22% 16% Buyouts and Mezzanine Capital No. Funds 116 101 116 104 106 86 40 80 93 136 161 168 242 290 430 634 324 202 161 212 234 236 235 215 162 175 188 183 Sum ($Mil) 2,971.8 5,043.7 16,234.6 10,946.4 12,068.5 8,831.5 4,242.1 10,752.5 16,961.7 20,457.0 27,040.7 32,981.4 42,803.0 62,023.7 53,720.7 80,614.8 52,523.0 35,076.8 35,913.4 59,878.5 108,249.8 152,566.2 243,264.2 180,923.9 49,871.5 51,674.8 70,103.5 106,249.9 No. Funds 21 32 47 54 78 64 27 58 81 100 108 104 136 173 166 171 137 124 121 158 205 216 264 231 148 173 207 217 Total Private Equity Sum ($Mil) 6,699.7 8,628.2 20,613.6 15,156.1 16,987.3 12,054.3 6,142.4 15,975.6 21,451.0 28,093.7 36,428.0 44,531.3 60,544.9 92,665.4 107,318.5 182,032.7 91,446.4 46,944.0 46,500.1 78,015.6 138,877.1 183,937.9 272,642.3 206,501.1 66,065.9 65,194.6 89,399.6 126,315.7 No. Funds 137 133 163 158 184 150 67 138 174 236 269 272 378 463 596 805 461 326 282 370 439 452 499 446 310 348 395 400 Thomson Reuters
  • 26.
    2013 NVCA Yearbook Figure2.03 Venture Capital Fund Commitments 1985 to 2012 ($ Millions) State CA C MA CT NY NC WA CO TN T FL PA UT MO MN IL NJ AZ VA WI IN OH TX MI MD AL GA NH NE N DE D ND OK O AR A DC D HI H IID IIA KS K KY K LLA ME M MS M NV N NM N OR O PR P RI R SC S SD S VT V WV W WY W Total T 1985 1986 1987 1,250 969 1,159 534 356 973 282 156 420 202 1,460 547 7 7 31 25 126 37 32 71 32 20 23 73 10 0 36 54 73 55 0 11 1 644 0 33 14 110 51 51 47 325 254 61 120 0 0 0 0 4 10 0 0 0 0 10 0 3 0 87 37 33 231 5 0 7 4 7 24 150 0 0 0 0 15 49 0 0 0 0 0 39 0 0 0 0 0 0 32 0 0 0 0 0 0 0 0 0 0 0 0 0 11 0 60 0 0 0 0 0 0 0 0 0 0 0 22 0 0 0 0 0 0 36 28 0 0 0 30 0 0 0 17 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3,728 3,584 4,379 1988 936 582 352 279 23 60 70 0 11 12 0 0 418 158 0 37 13 0 27 75 41 33 0 0 65 40 0 5 0 0 0 0 0 0 0 0 0 0 948 0 0 2 0 0 25 0 0 0 0 0 4,210 Thomson Reuters 1989 1,519 339 66 2,260 38 0 80 34 29 118 0 0 20 26 125 0 15 0 16 0 161 0 49 0 0 0 0 0 0 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 13 0 0 0 0 4,919 1990 831 675 290 490 1 0 0 0 0 45 0 53 162 57 243 0 2 0 5 30 143 0 14 0 14 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 155 0 10 0 5 0 0 0 0 3,223 1991 549 180 150 474 0 5 0 0 35 167 0 0 16 94 75 0 0 0 0 0 50 0 50 0 0 15 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 40 0 0 0 0 0 0 0 0 1,900 1992 1,311 1,051 300 494 0 48 0 40 0 30 0 0 946 247 110 0 17 0 49 67 381 0 0 0 0 0 0 0 0 0 0 0 0 0 56 0 0 11 2 0 0 0 0 0 0 0 0 0 0 0 5,161 1993 1,333 368 473 940 0 40 114 0 59 110 0 64 66 278 177 10 5 0 0 4 137 3 225 0 56 0 0 0 0 0 0 0 0 0 0 0 14 14 0 0 0 0 0 0 0 0 0 0 0 0 4,489 1994 1,764 1,158 388 1,860 63 37 0 116 105 182 27 0 164 183 401 0 0 40 20 86 283 14 479 0 0 0 0 0 0 0 0 25 0 0 0 0 7 169 59 0 0 6 0 0 0 0 0 0 0 0 7,637 1995 3,107 1,955 260 2,364 10 129 19 84 106 114 0 11 7 230 213 0 7 0 0 10 179 0 67 0 74 20 111 130 0 0 0 31 3 0 5 0 15 18 0 12 50 2 32 0 0 14 0 0 0 0 9,387 1996 3,724 1,871 425 1,516 184 239 216 149 0 264 0 6 36 295 606 0 20 31 116 0 326 26 439 0 34 0 36 820 0 24 0 65 0 0 0 0 0 24 22 0 25 0 0 0 0 0 11 0 0 0 11,550 1997 5,463 2,602 1,324 3,609 349 180 253 109 78 784 17 45 208 575 118 0 165 30 0 358 394 11 145 5 41 50 0 668 0 0 0 0 0 0 11 20 42 88 0 0 0 0 0 0 0 0 0 0 0 0 17,742 1998 8,456 5,176 1,068 9,346 174 409 433 266 250 177 50 25 217 466 1,002 0 226 0 13 58 1,330 0 768 30 181 0 0 392 0 45 0 0 0 0 2 0 0 51 0 0 0 0 10 0 0 0 22 0 0 0 30,642 1999 21,891 7,659 2,843 8,945 180 640 1,942 267 326 1,241 62 80 107 1,304 570 29 884 17 20 659 1,803 321 840 0 30 0 0 360 0 0 0 28 10 0 5 0 0 373 127 0 25 0 0 0 0 0 14 0 0 0 53,598 2000 43,485 16,692 2,313 15,400 613 1,175 2,414 262 955 2,751 126 65 1,827 964 1,041 60 2,212 66 103 662 3,615 241 1,990 137 918 0 41 778 0 110 20 0 0 15 21 0 0 70 0 30 0 0 65 0 0 0 131 20 6 26 101,418 2001 13,452 9,783 4 4,164 2,986 105 888 513 82 26 537 232 286 17 1,10 1,103 6 652 21 1 119 14 0 330 2,232 8 340 16 19 0 0 622 0 0 0 0 0 27 26 0 1 135 27 76 0 0 0 0 3 31 2 25 0 1 25 4 0 38,923 2002 154 1,397 24 7,704 55 43 118 22 8 54 0 0 276 478 392 43 37 0 10 102 106 0 381 11 0 1 11 0 315 0 0 0 22 3 0 0 0 8 8 16 0 10 0 14 0 0 3 35 0 0 1 13 0 11,867 2003 4,830 1,597 165 1,233 237 1 94 101 56 388 34 0 26 657 561 41 196 0 36 5 76 65 105 49 0 9 0 0 0 0 0 0 0 0 0 0 2 0 3 0 0 1 18 0 0 0 2 0 0 0 0 10,587 2004 8,645 1,485 1,926 2,149 17 955 84 16 1 451 40 80 50 432 197 0 72 11 17 210 589 63 162 19 55 0 0 299 0 0 0 10 8 0 10 0 0 73 0 0 0 4 2 0 0 0 5 0 0 0 18,137 2005 12,869 9,151 1,143 1,736 108 281 69 84 313 688 24 829 295 80 204 19 419 0 6 558 570 122 433 70 104 0 0 393 0 1 12 0 0 0 0 0 0 5 4 0 0 0 34 0 0 0 6 0 0 0 0 30,627 2006 13,621 4,366 3,136 2,512 401 563 132 62 10 794 170 40 473 422 1,812 0 555 78 24 152 314 23 472 19 103 5 0 896 0 38 0 0 0 0 43 0 65 12 46 1 0 5 0 0 0 0 3 0 0 0 31,372 2007 12,016 5,122 904 4,310 185 1,376 358 100 109 746 213 210 275 545 235 0 582 102 1 81 316 49 783 0 203 7 0 315 0 11 0 0 0 75 0 1 10 98 0 19 0 0 7 2 1 0 0 0 11 0 0 29,378 2008 14,053 2,486 766 1,826 103 492 221 134 25 963 569 54 325 258 53 20 105 15 29 83 1,038 256 369 118 19 0 0 1,123 1 13 0 0 0 6 0 0 20 12 0 0 0 0 0 5 0 0 0 14 3 0 0 25,577 2009 8,635 3,574 158 1,652 5 5 3 89 32 233 33 0 22 216 504 0 14 9 1 4 78 84 484 101 31 0 0 204 0 0 0 0 0 0 15 0 0 0 0 0 0 0 6 0 0 0 0 0 0 0 16,194 2010 6,337 2,779 1,035 1,259 456 0 262 42 75 205 16 72 0 238 112 0 121 27 28 30 83 177 68 2 31 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 35 12 0 0 0 16 0 0 0 13,520 2011 2012 9,790 13,665 2,503 1,410 149 1,388 4,096 758 130 472 0 399 6 280 161 278 2 268 126 183 160 159 0 155 0 150 215 120 100 63 222 54 36 45 0 40 0 39 79 32 210 31 192 20 544 19 58 19 26 13 0 5 0 1 475 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8 0 0 0 0 0 6 0 0 0 0 0 1 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 19,296 20,066 25
  • 27.
    National Venture CapitalAssociation Figure 2.04 Top 5 States By Venture Capital Committed 2012 No. of Funds State California Massachusetts Connecticut New York North Carolina Sub-Total Remaining States Total 64 17 4 21 5 111 72 183 Committed ($Mil) 13,665.3 1,409.7 1,388.0 757.7 472.0 17,692.7 2,373.1 20,065.9 280 260 240 220 200 180 160 140 120 100 80 60 40 20 - Venture Capital Buyout and Mezzannine Capital 198 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 199 3 199 4 199 5 199 6 199 7 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 ($ Billions) Figure 2.05 Private Equity Annual Commitment ($ Billions) 1985 to 2012 Year 26 Thomson Reuters
  • 28.
    Investments Measuring industry activitywith the total dollars invested in a given year shows that the industry has remained generally in the $20 billion to $30 billion range since 2002. In 2012, $26.7 billion was invested in 3,143 companies. This is less than 2011 totals and greater than 2010 totals. The number of first-time fundings likewise was less than 2011 and greater than 2010. Further parsing the data shows an increasing portion of the investment dollars going to California companies. Sectors Software was the leading sector in 2012, receiving 31% of the total dollars. The second largest sector was Biotechnology which fell to roughly half that amount at 15.4% of total investment The continued interest in Clean Technology investing brought the Industrial/Energy sector to 10.5% of the total. Medical Devices rounded out the top four sectors at 9.4%. The life sciences share of the venture capital investment dollars decreased in 2012 to its lowest level since 2002. In 2012, 15.4% of the money went into Biotechnology, 9.4% into Medical Devices, and 1.2% into Healthcare Services, totaling 26.0%. This is down from the 33.1% combined share in 2009. This recent downward life sciences trend is very visible when just looking at first fundings. In 2012, only 149 life science (the three sectors combined) companies received first funding. This is 12.7% of the total. As recently as 2006, the 294 first fundings of life science companies made up 23.0% of total first fundings. Among first fundings, Software led the way with 441 companies getting their initial venture capital rounds. This is more than one-third of the total number of first fundings. The nearest sector to Software was Media and Entertainment with 174 first fundings. Stages and First-Time Fundings Seed stage companies received 3% of total dollars in 2012, with early stage, expansion, and later stage companies roughly splitting the remaining share. More than one-third of the capital went to expansionstage companies. But it is worth looking more closely at those statistics. Thomson Reuters As has been the case for several years, attention has been focused on the two ends of the spectrum. Looking at deal counts, 2012 actually saw the highest percentage of seed- and early-stage deals since at least 1985 (51.8% of total deals). This certainly would challenge the suggestion that the industry’s attention is single-focused on later-stage companies. That said, the 22.4% of deals going to later-stage companies is also toward the top end of the historical range. There remains a record number of companies in portfolios in the later stage of development that in most other positions in the business cycle would have already gone public or otherwise been acquired. With the rule of thumb that a healthy venture capital industry invests in 1,000-1,300 new companies each year, the 1,174 first fundings in 2012 is very much in that range. Not surprisingly, 81% of those first round investments were made at the seed and early stage. Geographical Spread Across the United States The year 2012 provided an interesting contrast in geographic dispersion. While 53% of all the investment dollars went to California-based portfolio companies, a record for MoneyTree™, companies in 48 states and DC received financing, also a MoneyTree™ record high. That said, the five largest states (California, Massachusetts, New York, Washington and Texas) received 78% of all the dollars invested nationally. This compares to 2011, when California companies received a then-record 51.2% of the dollars. That year, companies in a record 47 states and DC received venture capital funding. Together, the top five states (California, Massachusetts, New York, Texas, and Illinois) received 77% of the total dollars. 27
  • 29.
    National Venture CapitalAssociation California-domiciled venture capital firms made investments in 39 states in 2012. Approximately 49% of all the money invested in California came from California-domiciled firms. Conversely, Californiabased firms concentrated 71% of their investment power within the state. Corporate Venture Group Involvement The number and reach of corporate venture capital groups increased in 2012. These groups provided 8.2% of the venture capital invested by all venture groups. They were involved in 15.2% of the deals the highest level in four years. Going forward, all signs suggest that these groups are becoming more involved alongside traditional venture firms in deals, as well as initiating corporate venture group syndicates to do deals in lieu of, or in advance of, investment rounds by traditional venture firms. 28 Methodology As calculated by Thomson Reuters, venture capital investment data are derived from several sources. Primarily, survey information is obtained from the quarterly survey that drives the MoneyTree Report™ from PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. This is the official industry database of venture capital investment. Secondly, Thomson Reuters obtains data from SEC filings that are regularly monitored by our research staff. Finally, publicly available sources such as press releases and trade publications are used. For detailed information on which transactions qualify as MoneyTree deals and are therefore counted in this chapter, please refer to Appendix B. Thomson Reuters
  • 30.
    2013 NVCA Yearbook Figure3.01 Venture Capital Investments ($ Billions) 1985 to 2012 120 ($ Billions) 100 80 60 40 20 198 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 199 3 199 4 199 5 199 6 199 7 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 0 Year Figure 3.02 Venture Capital Investments in 2012 By Industry Group All Investments Industry Group Information Technology Medical/Health/Life Science Non-High Technology Total # Companies 2,130 649 364 3,143 # Deals 2,480 818 425 3,723 Initial Investments Investment Amt ($Bil) 16.5 6.8 3.4 26.7 # Companies 870 148 156 1,174 # Deals 870 148 156 1,174 Investment Amt ($Bil) 3.0 0.7 0.4 4.1 Figure 3.03 Venture Capital Investments Top 5 States in 2012 State California Massachusetts New York Washington Texas Total* # Companies 1,280 326 287 101 134 2,128 # Deals 1,532 414 331 117 159 2,553 Amt Invested ($Bil) 14.1 3.1 1.9 0.9 0.9 20.9 *Total includes top 5 states only Thomson Reuters 29
  • 31.
    National Venture CapitalAssociation Figure 3.04 Venture Capital Investments in 2012 Industry Sector by Dollars Invested Telecommunications 2% Other 0.2% Biotechnology 15% Business Products and Services 0.4% Computers and Peripherals 2% Consumer Products and Services 5% Electronics/ Instrumentation 1% Financial Services 1% Healthcare Services 1% Software 31% Semiconductors 3% Retailing/ Distribution 2% Networking and Equipment 1% Medical Devices and Equipment 9% Industrial/Energy 10% IT Services 7% Media and Entertainment 7% Figure 3.05 Venture Capital Investments in 2012 Stage By Dollars Invested Seed 3% Later Stage 32% Early Stage 30% Expansion 35% 30 Thomson Reuters
  • 32.
    2013 NVCA Yearbook Figure3.06 Amount of Capital Invested By State in 2012 ($ Millions) 61 NH 932 574 WA WA 6 15 MT MT 124 101 OR OR 15 15 ID ID 7 NV 15 NV 14,129 CA 2 7 ND ND 0 SD WY WY 95 WI 23 5 84 IA IA 304 178 UT UT 111 212 AZ AZ 468 564 CO CO 46 8 KS KS 35 7 NM NM 286 OH 84 IN 429 NJ 11 LA 931 TX TX 18 9 DE DE 169 NC 87 TN 10 0 MS MS 85 RI 158 CT 15 VW 372 VA 23 KY 5 AR 3,068 MA 518 PA AR 645 AK AK 570 IL 21 24 MO MO 34 OK 1,857 NY 232 MI WI 11 NE NE 13 ME 4 VT 243 263 MN MN 302 265 GA GA 23 43 AL AL 277 280 MD MD 6 DC 39 SC 203 FL GU 17 HI HI PR VI Figure 3.07 Number of Companies Invested in By State in 2012 8 12 NH NH 101 WA 3 1 MT MT 24 OR 4 ID 1 2 ND ND 1 SD WY WY 12 WI WI 1 IA 5 NE 1,280 CA 37 31 UT UT 13 AZ 85 56 CO CO 9 15 KS KS 7 OK 12 12 NM NM 134 94 TX TX AK 8 12 MO 76 IL 41 MI 5 KY 3 2 MS MS 6 8 AL AL 44 38 GA GA 12 RI 38 CT 49 NJ 2 WV 62 VA 5 6 DE DE 57 50 MD 25 DC MD 5 SC 31 FL 3 2 HI HI MA 154 PA 33 NC 30 TN 1 AR AR 4 LA 51 44 OH OH 14 IN MO 250 326 MA 287 NY 9 NE 4 NV 5 ME 45 VT VT 26 33 MN MN GU 1 PR VI Thomson Reuters 31
  • 33.
    National Venture CapitalAssociation Figure 3.08 Venture Capital Investments in 1985 to 2012 By Region ($ Millions) Region Silicon Valley NewEngland NYMetro LA/Orange County Midwest SanDiego Northwest Texas Southeast DC/Metroplex Colorado SouthWest Philadelphia Metro North Central South Central Upstate NY Unknown Sacramento/N.Cal AK/HI/PR Total 1985 758.8 435.4 221.2 196.5 157.5 99.6 142.2 249.0 166.4 99.1 77.0 40.1 52.6 37.0 13.7 14.2 16.0 2,776.4 1986 1,016.3 436.6 211.0 186.9 139.9 95.4 142.9 228.4 234.2 61.1 113.8 82.5 63.3 44.5 11.4 10.7 45.5 3,124.5 1987 849.9 525.1 273.9 276.9 198.4 107.8 153.3 211.0 271.0 111.8 111.4 57.5 79.2 73.6 19.8 10.2 0.5 32.0 3,363.6 1988 985.9 496.9 308.0 222.5 132.3 149.8 141.2 240.7 266.5 129.9 107.8 59.7 71.8 41.6 11.7 5.3 0.8 33.6 3,406.0 1989 916.5 404.7 360.4 242.1 183.2 145.5 118.0 228.3 224.4 139.5 157.8 50.7 65.3 51.2 14.5 7.3 6.1 4.2 3,319.6 1990 1991 914.1 780.5 425.0 287.0 190.1 181.5 174.7 119.4 155.9 181.4 113.3 115.7 88.2 59.9 141.0 161.4 145.9 109.4 96.9 51.3 93.7 54.2 30.3 49.0 105.9 34.7 92.2 44.9 11.6 4.2 11.1 3.4 13.0 0.2 19.5 15.7 - 0.3 2,822.4 2,254.0 1992 1993 1,119.5 903.2 417.0 358.4 239.0 222.3 179.4 176.4 165.2 276.9 111.2 133.0 252.1 118.4 149.6 240.7 346.6 405.8 65.8 384.1 129.7 135.0 98.4 49.7 168.9 108.3 89.1 109.6 6.5 8.6 9.1 5.7 30.8 0.8 8.5 19.1 0.0 1.0 3,586.3 3,656.8 1994 1,074.4 440.4 283.3 198.4 432.6 220.5 165.7 311.8 362.3 137.8 197.4 38.0 137.6 87.4 15.2 0.7 0.1 20.0 22.0 4,157.6 1995 1,807.8 796.6 509.7 1,004.1 470.3 276.8 379.7 479.2 876.6 420.2 325.1 113.1 220.9 223.8 45.2 35.5 0.3 20.0 7.8 8,012.6 1996 1997 3,417.7 4,632.3 1,159.4 1,606.7 743.2 1,289.4 702.9 875.2 743.3 919.6 485.2 516.0 557.6 564.4 553.4 908.7 1,165.0 1,366.1 586.3 515.1 321.2 405.0 184.6 303.1 349.9 534.2 208.5 341.6 81.1 67.4 22.7 90.3 2.2 4.4 28.6 21.4 28.7 14.0 11,341.5 14,974.9 1998 5,878.3 2,353.4 1,817.6 1,250.6 1,653.5 669.1 820.3 1,205.6 1,794.8 1,148.5 838.9 411.2 703.9 429.6 196.7 195.4 39.1 86.8 5.5 21,489.9 1999 17,801.6 5,641.6 4,532.3 3,596.9 2,729.2 1,429.5 2,877.6 3,162.7 4,831.0 2,395.1 1,845.8 843.1 1,732.6 770.0 360.1 212.4 2.4 119.1 17.4 54,900.3 2000 33,452.0 12,019.9 10,300.4 6,808.1 5,776.7 2,302.3 3,603.4 6,262.9 7,976.1 5,785.3 4,091.9 1,387.5 2,591.5 1,426.7 446.9 293.9 50.4 375.3 248.6 105,200.0 2001 12,599.3 5,431.2 3,512.8 2,285.8 2,182.4 1,579.1 1,426.8 3,104.3 2,684.7 2,103.1 1,244.4 515.1 1,073.3 669.4 110.4 159.1 14.3 203.0 69.8 40,968.3 2002 7,242.9 2,992.3 1,569.4 1,286.8 976.9 996.2 746.4 1,187.6 1,772.7 1,095.6 588.0 393.8 607.8 431.5 69.3 104.5 65.4 4.9 22,132.3 2003 6,755.6 2,990.4 1,422.0 1,069.4 913.6 825.8 643.5 1,221.0 1,117.9 794.6 644.8 220.5 555.1 268.5 65.5 122.7 32.2 17.9 19,681.1 2004 7,999.3 3,345.5 1,648.2 1,319.8 712.5 1,197.8 993.3 1,215.1 1,439.2 1,086.6 363.2 393.6 768.4 464.1 130.1 104.8 38.4 15.1 23,235.1 2005 8,116.3 2,967.1 1,998.5 1,506.1 918.0 1,203.9 1,011.3 1,189.4 1,101.3 1,220.4 653.4 524.8 597.8 367.0 96.1 60.1 37.7 43.3 23,612.5 2006 9,816.8 3,310.8 2,185.5 1,902.7 1,010.1 1,223.6 1,318.2 1,519.7 1,228.2 1,361.6 688.8 526.6 845.5 382.1 64.3 156.2 29.4 47.1 27,617.2 2007 2008 11,554.7 11,436.4 3,964.5 3,788.3 1,902.8 2,148.7 1,906.3 2,041.1 1,167.9 1,364.6 1,844.4 1,209.4 1,636.2 1,134.7 1,496.9 1,122.6 1,812.4 1,389.3 1,443.5 1,145.8 686.3 872.3 577.7 490.1 953.6 861.9 535.7 644.6 152.8 91.3 136.5 92.3 - 82.0 71.3 20.9 21.3 31,871.5 29,925.9 2009 8,220.5 2,577.6 1,737.3 1,060.1 952.8 949.0 678.7 665.5 1,045.0 678.4 623.2 277.5 433.7 400.3 25.0 26.9 0.5 18.8 7.4 20,378.3 2 01 0 9,302.8 2,604.3 1,886.2 1,704.5 1,340.0 896.9 774.9 1,070.9 1,109.4 967.2 447.9 263.8 444.7 343.3 77.7 44.8 22.5 14.0 23,315.7 2 011 11,656.8 3,318.1 2,859.8 2,080.4 1,769.2 926.6 796.6 1,580.2 1,210.2 987.2 615.7 543.1 458.9 392.5 106.2 106.7 88.3 0.6 29,497.2 2 01 2 10,907.4 3,237.4 2,334.6 2,067.2 1,386.7 1,116.7 1,076.0 930.5 796.2 727.4 564.2 558.4 399.0 355.8 95.7 48.7 29.5 20.1 0.7 26,652.4 2 01 1 1,248 448 415 311 233 211 162 167 167 119 113 107 84 70 21 58 8 3 1 3,946 2 01 2 1,160 452 396 300 264 171 163 159 154 118 101 100 77 50 24 22 5 4 3 3,723 Figure 3.08b Venture Capital Investments in 1985 to 2012 By Region (Number of Deals) Region Silicon Valley New England NY Metro Midwest LA/Orange County Southeast DC/Metroplex Texas Northwest Philadelphia Metro San Diego Colorado SouthWest North Central Upstate NY South Central Sacramento/N.Cal AK/HI/PR Unknown Total 32 1985 323 235 89 98 90 91 45 106 47 38 43 43 20 37 17 11 11 1 1,345 1986 340 214 100 116 101 117 45 93 49 35 35 58 30 50 10 10 18 1,421 1987 343 257 131 133 114 134 65 106 62 54 54 62 42 54 10 12 12 1 1,646 1988 362 231 108 101 106 115 59 105 70 44 56 63 26 52 10 6 10 2 1,526 1989 394 222 121 127 112 113 51 91 64 41 56 53 32 39 12 7 6 3 1,544 1990 398 217 90 103 97 130 62 85 48 48 47 49 22 44 6 5 10 1 1,462 1991 337 170 89 99 89 112 54 70 41 43 43 35 30 40 4 4 9 3 1 1,273 1992 421 159 81 93 97 108 48 70 50 65 46 53 34 39 9 5 9 3 2 1,392 1993 316 149 80 85 63 117 41 71 49 47 49 48 30 38 10 6 8 1 4 1,212 1994 336 146 85 83 55 112 47 69 50 46 61 53 29 37 5 9 10 2 2 1,237 1995 509 232 135 132 92 181 72 101 84 78 77 58 37 70 8 15 7 4 2 1,894 1996 771 333 158 192 134 226 113 135 112 91 109 83 55 69 9 22 9 9 7 2,637 1997 867 383 240 239 166 294 135 172 134 142 100 98 71 116 21 25 7 6 7 3,223 1998 1,043 469 274 250 217 308 162 197 132 138 123 127 88 106 31 27 17 5 14 3,728 1999 1,685 663 491 311 356 454 272 318 264 145 161 162 116 114 31 30 19 5 3 5,600 2000 2,159 904 818 515 518 665 510 484 329 231 236 222 146 151 36 50 36 15 16 8,041 2001 1,103 597 448 276 251 391 261 341 192 142 156 115 89 125 29 28 27 10 8 4,589 2002 817 457 232 243 164 270 199 173 140 102 114 91 68 75 24 24 7 3 3,203 2003 874 446 193 174 149 247 183 173 108 88 125 74 55 71 22 21 11 8 3,022 2 004 958 427 227 178 150 246 187 177 148 105 132 72 58 77 29 31 9 6 3,217 2005 1,006 440 192 181 178 198 222 181 160 97 143 93 84 67 28 11 11 8 3,300 2 006 1,236 458 294 230 219 238 220 201 184 116 128 110 93 73 39 26 8 14 3,887 2007 1,305 521 296 272 234 246 220 188 216 138 169 114 106 95 33 31 18 10 1 4,213 2 008 1,290 510 342 304 243 227 208 161 205 153 134 116 84 88 31 40 20 9 4,165 2 0 09 990 387 287 252 170 159 139 123 129 97 115 94 71 68 13 32 9 3 1 3,139 2 01 0 1,092 411 393 272 227 216 152 165 161 124 134 86 59 58 21 42 8 4 1 3,626 Thomson Reuters
  • 34.
    2013 NVCA Yearbook Figure3.09 Venture Capital Investments 1985 to 2012 By Stage ($ Millions) Stage S SSeed Early Stage Expansion LaterStage Total 1985 526.2 517.8 1,245.7 486.8 2,776.4 1986 759.7 620.3 1,198.8 545.7 3,124.5 1987 623.4 750.5 1,495.1 494.6 3,363.6 1988 670.5 714.6 1,563.2 457.7 3,406.0 1989 558.4 737.6 1,595.8 427.8 3,319.6 1990 397.1 684.4 1,269.2 471.7 2,822.4 1991 241.8 548.7 1,100.2 363.3 2,254.0 1992 556.5 566.8 1,778.7 684.3 3,586.3 1993 629.6 575.8 1,866.0 585.4 3,656.8 1994 781.2 839.7 1,539.1 985.7 4,145.7 1995 1,272.9 1,733.4 3,564.2 1,442.2 8,012.6 1996 1,271.7 2,640.5 5,540.4 1,888.9 11,341.5 1997 1,374.2 3,420.5 7,588.6 2,591.6 14,974.9 1998 1,766.2 5,460.1 10,367.0 3,905.5 21,498.9 1999 3,666.2 11,360.2 29,406.8 10,467.0 54,900.3 2000 3,156.1 25,335.4 59,121.5 17,587.0 105,200.0 2001 800.7 8,606.3 22,911.7 8,649.6 40,968.3 2002 340.2 3,935.3 12,135.5 5,721.1 22,132.0 2003 365.7 3,608.5 9,805.5 5,901.4 19,681.1 2004 951.6 4,045.9 9,046.2 9,191.5 23,235.1 2005 1,006.3 4,056.3 8,607.9 9,942.0 23,612.5 2006 1,293.6 4,727.4 11,154.8 10,441.5 27,617.2 2007 2008 1,819.6 1,917.3 6,081.5 5,731.0 11,091.8 10,857.4 12,882.2 11,420.1 31,875.1 29,925.9 2009 1,870.7 4,906.9 6,824.2 6,776.5 20,378.3 2010 1,661.3 5,867.0 8,702.0 7,085.4 23,315.7 2011 2011 1,052.6 8,794.4 9,830.5 9,819.7 29,497.2 2012 2012 726.4 7,876.3 9,376.4 8,673.3 26,652.4 2004 234 899 1,201 883 3,217 2005 264 859 1,116 1,061 3,300 2006 396 1,001 1,380 1,110 3,887 2007 524 1,129 1,277 1,283 4,213 2008 537 1,137 1,242 1,249 4,165 2009 375 973 888 903 3,139 2010 409 1,271 1,074 872 3,626 2011 445 1,562 1,021 918 3,946 2012 280 1,647 962 834 3,723 1988-1Q 164.7 144.0 314.5 135.3 758.5 1988-2Q 150.0 216.6 497.1 105.0 968.6 1988 1988-3Q 1988-4Q 1988 Total 240.6 115.2 670.5 184.7 169.4 714.6 320.2 431.4 1,563.2 151.4 66.0 457.7 896.9 781.9 3,406.0 Figure 3.09b Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) Stage 1985 Seed 357 Early Stage 290 Expansion 525 Later Stage 173 Total 1,345 1986 388 333 504 196 1,421 1987 387 412 616 231 1,646 1988 371 359 614 182 1,526 1989 355 338 664 187 1,544 1990 258 370 603 231 1,462 1991 193 278 544 258 1,273 1992 252 291 606 243 1,392 1993 290 184 515 223 1,212 1994 332 256 429 220 1,237 1995 431 519 706 238 1,894 1996 504 754 1,045 334 2,637 1997 542 896 1,402 383 3,223 1998 670 1,019 1,572 467 3,728 1999 811 1,735 2,445 609 5,600 2000 703 2,855 3,703 780 8,041 2001 279 1,299 2,392 619 4,589 2002 181 875 1,585 562 3,203 2003 216 799 1,355 652 3,022 Figure 3.09c-1 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) 1985 Stage 1985-1Q 1985-2Q 1985-3Q 1985-4Q 1985 Total Seed 153.0 146.5 93.7 133.0 526.2 Early Stage 96.3 185.3 106.3 129.9 517.8 Expansion 219.5 319.6 312.8 393.7 1,245.7 Later Stage 154.4 89.4 164.4 78.5 486.8 Total 623.1 740.8 677.2 735.1 2,776.4 1986-1Q 185.6 129.6 270.0 125.3 710.5 1986 1986-2Q 1986-3Q 270.0 114.7 135.3 176.6 381.4 252.6 93.2 180.4 879.9 724.4 1986-4Q 1986 Total 189.4 759.7 178.7 620.3 294.8 1,198.8 146.7 545.7 809.6 3,124.5 1987-1Q 145.7 170.7 423.3 100.1 839.7 1987-2Q 199.4 183.9 354.2 164.9 902.4 1987 1987-3Q 142.0 205.1 402.5 118.9 868.5 1987-4Q 1987 Total 136.3 623.4 190.8 750.5 315.1 1,495.1 110.7 494.6 752.9 3,363.6 Figure 3.09c-2 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) 1989 Stage 1989-1Q 1989-2Q 1989-3Q 1989-4Q 1989 Total Seed 138.1 174.6 115.4 130.3 558.4 Early Stage 255.9 127.7 163.1 190.9 737.6 Expansion 399.6 434.1 305.5 456.6 1,595.8 Later Stage 95.5 97.7 78.3 156.4 427.8 Total 889.1 834.1 662.2 934.2 3,319.6 Thomson Reuters 1990-1Q 81.9 139.7 307.2 123.1 651.9 1990 1990-2Q 1990-3Q 116.7 114.8 199.1 133.1 356.1 208.0 105.5 126.3 777.4 582.2 1990-4Q 1990 Total 83.8 397.1 212.5 684.4 397.9 1,269.2 116.7 471.7 810.9 2,822.4 1991-1Q 45.8 137.9 249.5 89.5 522.8 1991-2Q 84.6 130.3 276.2 115.8 606.9 1991 1991-3Q 53.4 140.4 262.9 57.9 514.5 1991-4Q 1991 Total 58.0 241.8 140.0 548.7 311.7 1,100.2 100.1 363.3 609.9 2,254.0 1992-1Q 67.6 123.0 496.3 203.2 890.2 1992-2Q 210.2 187.6 434.8 175.3 1,007.9 1992 1992-3Q 71.8 102.7 352.2 107.0 633.8 1992-4Q 1992 Total 206.8 556.5 153.4 566.8 495.4 1,778.7 198.8 684.3 1,054.5 3,586.3 33
  • 35.
    National Venture CapitalAssociation Figure 3.09c-3 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) 1993 Stage 1993-1Q 1993-2Q 1993-3Q Seed 139.7 144.1 164.3 Early Stage 164.3 136.8 106.6 Expansion 355.0 412.3 461.3 Later Stage 189.2 111.2 116.8 848.3 804.4 849.0 Total 1993-4Q 1993 Total 181.5 629.6 168.0 575.8 637.3 1,866.0 168.3 585.4 1,155.2 3,656.8 1994 1994-1Q 1994-2Q 1994-3Q 1994-4Q 1994 Total 190.0 225.8 160.2 205.1 781.2 177.6 196.4 157.8 307.9 839.7 325.3 390.5 344.2 479.1 1,539.1 186.6 190.5 262.0 346.6 985.7 879.5 1,003.3 924.2 1,338.7 4,145.7 1995 1995-2Q 1995-3Q 1995-4Q 396.6 229.9 329.8 393.6 366.8 564.1 1,328.2 800.4 815.7 428.0 308.7 361.1 2,546.4 1,705.8 2,070.6 1995-1Q 316.6 408.8 620.0 344.5 1,689.9 1996 1995 Total 1996-1Q 1996-2Q 1996-3Q 1,272.9 322.7 431.9 200.6 1,733.4 597.8 714.0 574.6 3,564.2 1,151.9 1,509.9 1,277.0 1,442.2 346.4 460.3 545.4 8,012.6 2,418.8 3,116.1 2,597.6 1996-4Q 316.5 754.1 1,601.6 536.8 3,208.9 1996 Total 1,271.7 2,640.5 5,540.4 1,888.9 11,341.5 Figure 3.09c-4 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) Stage Seed Early Stage Expansion Later Stage Total 1997-1Q 400.6 769.5 1,358.4 594.7 3,123.3 1997-2Q 330.8 846.8 1,958.5 531.6 3,667.8 1997 1997-3Q 323.3 760.1 1,970.6 669.3 3,723.3 1997-4Q 1997 Total 319.5 1,374.2 1,044.1 3,420.5 2,301.0 7,588.6 795.9 2,591.6 4,460.5 14,974.9 1998-1Q 402.6 1,164.7 1,753.9 854.6 4,175.7 1998-2Q 426.4 1,014.5 3,359.1 973.6 5,773.5 1998 1998-3Q 459.9 1,290.4 2,716.0 949.5 5,415.7 1998-4Q 1998 Total 477.3 1,766.2 1,990.6 5,460.1 2,538.0 10,367.0 1,127.9 3,905.5 6,133.9 21,498.9 1999-1Q 591.5 1,215.0 3,210.3 1,605.2 6,622.0 1999-2Q 840.4 1,993.7 5,498.5 2,999.2 11,331.8 1999 1999-3Q 989.7 2,661.8 7,348.1 2,597.5 13,597.1 1999-4Q 1,244.5 5,489.7 13,350.0 3,265.1 23,349.3 1999 Total 3,666.2 11,360.2 29,406.8 10,467.0 54,900.3 2000-1Q 807.0 7,138.2 16,113.3 4,382.9 28,441.3 2000-2Q 984.1 6,937.9 15,761.4 4,343.2 28,026.6 2000 2000-3Q 878.3 5,912.3 15,263.6 4,572.9 26,627.0 2000-4Q 486.8 5,347.0 11,983.2 4,288.1 22,105.1 2000 Total 3,156.1 25,335.4 59,121.5 17,587.0 105,200.0 Figure 3.09c-5 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) Stage Seed Early Stage Expansion Later Stage Total 2001-1Q 256.6 3,459.5 6,939.3 2,447.6 13,103.0 2001-2Q 265.3 2,102.1 6,622.1 2,513.1 11,502.5 2001 2001-3Q 128.5 1,712.2 4,563.8 1,802.4 8,206.9 2001-4Q 150.3 1,332.5 4,786.5 1,886.5 8,155.9 2001 Total 800.7 8,606.3 22,911.7 8,649.6 40,968.3 2002-1Q 76.4 1,182.2 3,804.8 1,927.7 6,991.1 2002-2Q 93.5 1,134.1 3,544.3 1,339.6 6,111.4 2002 2002-3Q 84.2 827.7 2,462.6 1,094.4 4,468.8 2002-4Q 2002 Total 86.1 340.2 791.4 3,935.3 2,323.8 12,135.5 1,359.4 5,721.1 4,560.7 22,132.0 2003-1Q 84.5 690.0 2,468.7 1,159.6 4,402.8 2003-2Q 95.2 1,015.7 2,513.9 1,368.7 4,993.4 2003 2003-3Q 100.3 806.8 2,202.5 1,520.5 4,630.1 2003 Total 365.7 3,608.5 9,805.5 5,901.4 19,681.1 2004-1Q 104.8 904.9 2,063.3 2,312.6 5,385.6 2004-2Q 124.3 1,030.3 2,680.0 2,481.9 6,316.6 2004 2004-3Q 168.0 1,028.6 2,043.1 1,856.6 5,096.3 2004-4Q 2004 Total 554.5 951.6 1,082.0 4,045.9 2,259.7 9,046.2 2,540.4 9,191.5 6,436.6 23,235.1 2007-4Q 556.0 1,780.0 2,986.9 3,093.8 8,416.7 2007 Total 1,819.6 6,081.5 11,091.8 12,882.2 31,875.1 2008-1Q 459.3 1,376.9 3,427.7 2,813.0 8,076.8 2008-2Q 535.3 1,524.3 2,697.9 3,272.5 8,030.0 2008 2008-3Q 557.9 1,372.6 2,556.8 3,137.7 7,625.0 2008-4Q 2008 Total 364.9 1,917.3 1,457.2 5,731.0 2,175.0 10,857.4 2,197.1 11,420.1 6,194.1 29,925.9 2011-4Q 192.4 2,458.5 2,608.9 2,135.5 7,395.3 2011 Total 1,052.6 8,794.4 9,830.5 9,819.7 29,497.2 2012-1Q 157.9 1,933.7 1,789.2 2,355.8 6,236.6 2012-2Q 230.6 2,190.2 2,715.7 2,187.7 7,324.2 2012 2012-3Q 181.0 1,824.0 2,614.1 1,983.2 6,602.3 2012-4Q 2012 Total 156.9 726.4 1,928.3 7,876.3 2,257.5 9,376.4 2,146.6 8,673.3 6,489.4 26,652.4 2003-4Q 85.8 1,096.0 2,620.3 1,852.6 5,654.7 Figure 3.09c-6 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) 2005 Stage 2005-1Q 2005-2Q 2005-3Q 2005-4Q 2005 Total 2006-1Q Seed 148.5 530.5 165.0 162.2 1,006.3 246.7 Early Stage 867.8 1,001.6 1,192.0 994.8 4,056.3 930.1 Expansion 2,132.9 2,367.4 1,759.6 2,348.1 8,607.9 2,604.7 Later Stage 2,082.1 2,551.8 2,972.5 2,335.5 9,942.0 2,847.4 Total 5,231.3 6,451.3 6,089.1 5,840.7 23,612.5 6,629.0 2006-2Q 374.0 1,018.4 3,211.1 2,793.3 7,396.8 2006 2006-3Q 366.6 1,112.3 2,881.2 2,529.5 6,889.6 2006-4Q 306.2 1,666.6 2,457.7 2,271.4 6,701.9 2006 Total 1,293.6 4,727.4 11,154.8 10,441.5 27,617.2 2007-1Q 319.3 1,337.9 2,646.9 3,108.6 7,412.6 2007-2Q 489.2 1,700.5 2,353.2 3,289.9 7,832.8 2007 2007-3Q 455.0 1,263.1 3,104.8 3,389.9 8,213.0 Figure 3.09c-7 Quarterly Venture Capital Investments 1985 to 2012 By Stage ($ Millions) 2009 Stage 2009-1Q 2009-2Q 2009-3Q 2009-4Q 2009 Total Seed 319.7 672.4 511.0 367.6 1,870.7 Early Stage 767.3 1,179.6 1,213.6 1,746.5 4,906.9 Expansion 1,223.8 1,770.3 1,824.4 2,005.7 6,824.2 Later Stage 1,531.5 1,606.8 1,844.7 1,793.6 6,776.5 Total 3,842.2 5,229.1 5,393.7 5,913.3 20,378.3 34 2010-1Q 407.9 1,147.8 1,788.9 1,723.4 5,067.9 2010-2Q 687.8 1,740.3 2,796.5 1,925.7 7,150.2 2010 2010-3Q 332.5 1,410.4 1,685.3 1,999.1 5,427.4 2010-4Q 2010 Total 233.1 1,661.3 1,568.5 5,867.0 2,431.3 8,702.0 1,437.1 7,085.4 5,670.2 23,315.7 2011-1Q 225.2 1,830.3 2,257.4 2,220.8 6,533.7 2011-2Q 413.4 2,272.4 2,418.9 3,037.1 8,141.7 2011 2011-3Q 221.7 2,233.2 2,545.3 2,426.3 7,426.5 Thomson Reuters
  • 36.
    2013 NVCA Yearbook Figure3.09d-1 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) Stage Seed Early Stage Expansion Later Stage Total 1985 1986 1987 1988 1985-1Q 1985-2Q 1985-3Q 1985-4Q 1985 Total 1986-1Q 1986-2Q 1986-3Q 1986-4Q 1986 Total 1987-1Q 1987-2Q 1987-3Q 1987-4Q 1987 Total 1988-1Q 1988-2Q 1988-3Q 1988-4Q 1988 Total 110 88 61 98 357 134 107 65 82 388 116 101 85 85 387 120 79 88 84 371 88 69 60 73 290 111 70 72 80 333 131 83 103 95 412 99 94 87 79 359 138 122 114 151 525 166 136 96 106 504 182 139 158 137 616 158 182 133 141 614 65 40 37 31 173 60 55 31 50 196 64 64 51 52 231 54 48 42 38 182 401 319 272 353 1,345 471 368 264 318 1,421 493 387 397 369 1,646 431 403 350 342 1,526 Figure 3.09d-2 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) 1989 1990 1991 1992 Stage 1989-1Q 1989-2Q 1989-3Q 1989-4Q 1989 Total 1990-1Q 1990-2Q 1990-3Q 1990-4Q 1990 Total 1991-1Q 1991-2Q 1991-3Q 1991-4Q 1991 Total 1992-1Q 1992-2Q 1992-3Q 1992-4Q 1992 Total Seed 106 100 77 72 355 60 69 59 70 258 51 49 42 51 193 49 68 49 86 252 Early Stage 101 65 84 88 338 87 97 73 113 370 79 69 60 70 278 73 86 52 80 291 Expansion 215 160 127 162 664 148 153 145 157 603 137 127 126 154 544 156 160 104 186 606 Later Stage 52 33 38 64 187 55 57 48 71 231 49 69 54 86 258 74 47 44 78 243 Total 474 358 326 386 1,544 350 376 325 411 1,462 316 314 282 361 1,273 352 361 249 430 1,392 Figure 3.09d-3 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) 1993 1994 1995 1996 Stage 1993-1Q 1993-2Q 1993-3Q 1993-4Q 1993 Total 1994-1Q 1994-2Q 1994-3Q 1994-4Q 1994 Total 1995-1Q 1995-2Q 1995-3Q 1995-4Q 1995 Total 1996-1Q 1996-2Q 1996-3Q 1996-4Q 1996 Total Seed 69 68 66 87 290 91 67 83 91 332 125 95 95 116 431 130 140 97 137 504 Early Stage 41 49 38 56 184 64 61 54 77 256 130 136 116 137 519 148 206 175 225 754 Expansion 145 121 116 133 515 105 111 98 115 429 187 179 164 176 706 235 247 245 318 1,045 Later Stage 67 53 52 51 223 50 69 43 58 220 61 55 58 64 238 71 82 85 96 334 Total 322 291 272 327 1,212 310 308 278 341 1,237 503 465 433 493 1,894 584 675 602 776 2,637 Figure 3.09d-4 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) Stage Seed Early Stage Expansion Later Stage Total 1997 1998 1999 2000 1997-1Q 1997-2Q 1997-3Q 1997-4Q 1997 Total 1998-1Q 1998-2Q 1998-3Q 1998-4Q 1998 Total 1999-1Q 1999-2Q 1999-3Q 1999-4Q 1999 Total 2000-1Q 2000-2Q 2000-3Q 2000-4Q 2000 Total 163 120 120 139 542 152 162 164 192 670 166 211 249 185 811 196 197 172 138 703 662 1,735 763 793 680 619 2,855 201 208 228 259 896 242 221 243 313 1,019 245 380 448 900 2,445 1,009 981 899 814 3,703 310 361 320 411 1,402 366 407 405 394 1,572 383 567 595 174 150 145 609 192 172 207 209 780 100 87 90 106 383 108 121 114 124 467 140 774 776 758 915 3,223 868 911 926 1,023 3,728 934 1,332 1,442 1,892 5,600 2,160 2,143 1,958 1,780 8,041 Figure 3.09d-5 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) 2001 2002 2003 2004 Stage 2001-1Q 2001-2Q 2001-3Q 2001-4Q 2001 Total 2002-1Q 2002-2Q 2002-3Q 2002-4Q 2002 Total 2003-1Q 2003-2Q 2003-3Q 2003-4Q 2003 Total 2004-1Q 2004-2Q 2004-3Q 2004-4Q 2004 Total Seed 80 73 68 58 279 47 53 40 41 181 57 60 44 55 216 46 75 45 68 234 213 799 207 238 222 232 899 Early Stage 436 338 271 254 1,299 247 242 193 193 875 188 215 183 353 1,355 281 349 261 310 1,201 Expansion 650 670 543 529 2,392 410 447 348 380 1,585 346 320 336 192 652 205 216 194 268 883 Later Stage 155 156 148 160 619 160 136 128 138 562 132 160 168 731 813 3,022 739 878 722 878 3,217 Total 1,321 1,237 1,030 1,001 4,589 864 878 709 752 3,203 723 755 Thomson Reuters 35
  • 37.
    National Venture CapitalAssociation Figure 3.09d-6 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) 2005 2006 2007 2008 Stage 2005-1Q 2005-2Q 2005-3Q 2005-4Q 2005 Total 2006-1Q 2006-2Q 2006-3Q 2006-4Q 2006 Total 2007-1Q 2007-2Q 2007-3Q 2007-4Q 2007 Total 2008-1Q 2008-2Q 2008-3Q 2008-4Q 2008 Total Seed 52 68 68 76 264 82 93 121 100 396 90 139 136 159 524 135 134 156 112 537 Early Stage 212 219 214 214 859 205 241 236 319 1,001 257 326 257 289 1,129 265 301 284 287 1,137 275 295 242 304 1,116 328 360 345 347 1,380 277 322 319 359 1,277 344 331 282 285 1,242 Expansion Later Stage 223 280 286 272 1,061 290 314 253 253 1,110 282 326 336 339 1,283 310 338 323 278 1,249 Total 762 862 810 866 3,300 905 1,008 955 1,019 3,887 906 1,113 1,048 1,146 4,213 1,054 1,104 1,045 962 4,165 Figure 3.09d-7 Quarterly Venture Capital Investments 1985 to 2012 By Stage (Number of Deals) 2009 2010 2011 2012 Stage 2009-1Q 2009-2Q 2009-3Q 2009-4Q 2009 Total 2010-1Q 2010-2Q 2010-3Q 2010-4Q 2010 Total 2011-1Q 2011-2Q 2011-3Q 2011-4Q 2011 Total 2012-1Q 2012-2Q 2012-3Q 2012-4Q 2012 Total Seed 70 87 99 119 375 93 119 99 98 409 94 128 114 109 445 61 78 73 68 280 Early Stage 195 213 244 321 973 268 361 308 334 1,271 344 392 401 425 1,562 350 433 411 453 1,647 Expansion 183 217 219 269 888 252 300 244 278 1,074 225 275 277 244 1,021 221 250 244 247 962 Later Stage 229 244 199 231 903 205 239 230 198 872 234 279 212 193 918 229 197 192 216 834 Total 677 761 761 940 3,139 818 1,019 881 908 3,626 897 1,074 1,004 971 3,946 861 958 920 984 3,723 Figure 3.10 Venture Capital Investments 1985 to 2012 By Industry ($ Millions) Industry SSoftware Biotechnology Industrial/Energy Medical Devices and Equipment IT Services Media and Entertainment Consumer Products and Services Semiconductors Telecommunications Retailing/Distribution Computers and Peripherals Networking and Equipment Healthcare Services Financial Services Electronics/Instrumentation Business Products and Services Other Total 1985 1986 1987 1988 1989 1990 1991 1992 1993 612 577 519 482 457 519 463 614 459 136 223 290 369 334 314 287 581 479 201 208 290 222 345 242 183 285 278 181 182 259 340 347 325 235 514 393 26 38 51 39 36 38 41 29 54 101 118 155 166 151 93 69 132 278 69 135 176 153 86 159 126 123 159 253 293 255 294 165 190 90 156 93 178 174 148 161 124 128 117 200 251 32 114 296 232 217 89 48 97 103 449 473 392 370 311 245 174 205 164 224 164 143 137 197 174 140 250 516 81 125 140 97 155 92 72 191 202 81 96 62 209 233 63 25 120 102 120 121 122 77 110 58 74 51 50 29 81 64 53 52 94 77 39 70 3 3 0 6 0 33 0 6 2,776 3,125 3,364 3,406 3,320 2,822 2,254 3,586 3,657 1994 1995 1996 1997 1998 1999 2000 2001 2002 671 1,186 2,350 3,462 4,721 10,690 25,251 10,820 5,509 585 832 1,186 1,368 1,551 2,101 4,270 3,480 3,312 294 527 498 704 1,260 1,464 2,627 1,250 826 439 668 618 1,026 1,256 1,577 2,403 2,046 1,863 119 175 442 640 1,093 4,323 8,890 2,475 978 275 944 1,154 1,056 1,873 7,408 10,598 2,370 784 176 534 510 742 680 2,718 3,220 702 256 157 214 340 597 631 1,380 3,806 2,474 1,654 463 937 1,323 1,562 3,024 8,032 16,468 5,179 2,168 103 303 269 326 769 2,810 3,209 368 139 178 316 363 394 383 939 1,628 693 457 250 372 631 962 1,446 4,658 11,730 5,791 2,671 202 460 734 939 959 1,495 1,386 543 380 123 181 323 385 843 2,215 4,131 1,238 331 65 151 211 307 202 274 797 400 309 40 176 369 434 706 2,590 4,726 1,085 478 6 37 21 71 102 225 60 55 17 4,146 8,013 11,341 14,975 21,499 54,900 105,200 40,968 22,132 2003 4,855 3,745 774 1,613 747 662 157 1,767 1,674 64 360 1,739 229 413 209 673 19,681 2004 5,483 4,388 847 1,905 748 1,410 334 2,166 1,854 217 538 1,559 389 530 395 460 14 23,235 2005 5,144 3,930 1,138 2,209 1,057 1,200 363 1,855 2,150 249 535 1,695 364 903 412 408 23,612 2006 5,449 4,816 1,996 2,778 1,482 1,888 424 2,307 2,414 189 388 1,252 416 528 703 586 27,617 2007 6,124 5,713 3,082 3,759 1,930 2,166 454 2,041 2,191 340 550 1,443 307 580 557 621 18 31,875 2008 6,069 4,970 4,631 3,603 2,108 1,796 418 1,595 1,514 222 470 756 159 464 646 475 30 29,926 2009 4,205 3,972 2,564 2,605 1,228 1,371 489 773 636 156 345 753 171 404 393 260 56 20,378 2010 5,116 3,903 3,465 2,341 1,661 1,572 571 1,046 792 165 408 678 272 408 422 491 4 23,316 2011 7,516 4,825 3,595 2,883 2,264 2,258 1,399 1,345 631 454 494 357 394 394 437 215 37 29,497 2012 8,293 4,115 2,792 2,511 1,993 1,976 1,208 926 582 498 453 316 309 284 244 97 53 26,652 Figure 3.10b Venture Capital Investments 1985 to 2012 By Industry (Number of Deals) Industry SSoftware Biotechnology Media and Entertainment Medical Devices and Equipment IT Services Industrial/Energy Consumer Products and Services Semiconductors Telecommunications Retailing/Distribution Electronics/Instrumentation Computers and Peripherals Financial Services Healthcare Services Networking and Equipment Business Products and Services Other Total 36 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 321 323 307 280 296 302 287 296 243 253 435 686 73 98 138 153 138 145 138 164 136 140 176 236 56 68 92 75 71 58 54 79 82 97 138 191 128 117 166 151 185 191 161 188 148 128 179 212 23 25 33 24 27 31 30 22 19 33 62 127 122 138 162 140 144 157 125 132 102 101 128 155 43 51 72 59 52 67 48 51 54 66 114 132 84 72 92 91 80 78 51 60 45 38 64 74 86 77 94 80 81 63 67 64 73 73 141 211 18 32 71 81 73 46 38 34 35 28 54 70 77 68 70 57 60 50 47 38 27 37 49 47 157 148 131 138 135 104 78 84 65 66 93 95 22 28 36 43 44 25 24 24 31 31 47 61 33 56 56 46 55 41 38 46 52 45 73 139 80 76 73 69 71 74 65 83 65 77 82 123 20 42 51 38 32 28 20 25 32 22 50 69 2 2 2 1 2 2 2 3 2 9 9 1,345 1,421 1,646 1,526 1,544 1,462 1,273 1,392 1,212 1,237 1,894 2,637 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 820 980 1,411 2,165 1,298 1,005 965 949 955 1,027 1,073 1,098 815 1,035 1,178 1,277 242 274 260 355 337 326 357 400 405 483 526 530 458 493 466 463 219 266 701 944 372 167 127 140 209 329 399 400 266 345 441 395 272 294 288 295 257 234 248 280 286 358 399 402 345 349 370 319 162 207 456 687 324 170 147 151 172 236 281 286 221 303 362 315 213 186 205 254 204 131 142 158 154 225 306 365 255 307 311 243 162 163 287 285 119 72 47 67 78 79 110 103 86 114 137 162 116 120 148 256 209 169 214 258 218 266 224 206 132 137 136 108 268 340 529 858 481 275 214 232 236 309 279 230 131 120 124 95 91 121 230 282 83 49 31 38 40 40 41 42 38 33 68 59 54 56 53 76 59 63 55 72 84 96 93 94 63 67 58 51 115 91 104 133 81 59 57 61 65 60 70 61 54 56 61 48 91 115 190 334 137 76 64 68 63 90 85 68 54 74 60 45 152 155 159 165 105 70 70 64 64 51 57 51 40 45 47 43 140 211 279 481 335 232 186 193 186 137 146 106 101 63 49 38 94 139 279 459 177 102 97 83 83 99 113 119 72 75 61 35 12 10 21 12 11 3 1 3 2 2 11 4 8 10 17 27 3,223 3,728 5,600 8,041 4,589 3,203 3,022 3,217 3,300 3,887 4,213 4,165 3,139 3,626 3,946 3,723 Thomson Reuters
  • 38.
    2013 NVCA Yearbook Figure3.11 Venture Capital Investments By State 1985 to 2012 ($ Millions) State 1985 1986 CCA 1,070.9 1,344.1 MA 396.3 379.5 NY 114.5 71.2 WA 55.4 66.1 TX 249.0 228.4 IL 43.7 30.7 CO 77.0 113.8 PA 48.3 43.3 NJ 75.3 116.9 VA 32.3 23.5 UT 6.0 32.8 OH 34.7 55.7 MD 46.8 20.8 GA 55.8 111.4 MN 24.4 29.9 MI 34.8 21.3 AZ 15.2 38.1 FL 31.1 34.5 NC 17.3 17.4 CT 71.6 76.9 OR 84.9 75.0 WI 11.4 13.6 TN 43.5 53.5 RI 12.6 9.9 IN 13.3 16.7 DC 18.9 14.8 NH 5.3 14.8 KS 2.3 2.2 SC 0.9 NM 18.9 9.2 OK 1.5 4.7 AL 15.5 17.3 KY 2.4 2.3 MO 8.8 4.3 ID 0.3 WV 1.1 2.0 ME 19.0 11.6 ME 0.5 LA 9.9 3.3 MS 2.2 0.0 DE 0.3 NV - 2.4 MT 1.6 1.7 AR 1.2 IA 0.7 0.9 VT 6.6 ND - HI PR AK SD UN WY - 0.1 Total 2,776.4 3,124.5 1987 1,266.7 446.8 100.5 98.3 211.0 38.5 111.4 78.0 132.3 76.4 8.3 44.8 30.5 66.6 35.4 59.1 38.6 70.8 20.9 101.3 51.7 16.4 76.1 6.6 17.7 4.7 15.1 3.9 15.3 6.6 14.1 21.3 7.4 11.1 0.1 15.3 1.9 4.5 4.1 3.3 7.8 8.0 14.0 0.5 3,363.6 1988 1,391.8 387.8 112.1 73.3 240.7 42.7 107.8 68.4 99.1 66.6 11.9 53.4 46.1 97.2 26.0 15.7 43.9 82.5 15.7 167.7 66.7 12.8 42.7 14.2 6.4 17.2 27.7 4.6 18.1 3.9 5.3 9.6 2.8 1.6 0.0 8.7 1.5 1.9 0.6 1.4 1.1 1.3 4.5 0.8 3,406.0 1989 1,308.3 296.8 158.7 74.8 228.3 93.4 157.8 56.2 156.6 51.8 4.4 32.7 87.7 53.7 37.6 21.8 37.8 44.3 26.1 89.6 43.2 11.7 73.8 30.9 10.1 0.0 29.5 5.1 23.7 3.0 9.3 2.0 5.8 9.4 17.2 0.9 4.8 5.5 2.0 7.4 6.1 3,319.6 Thomson Reuters 1990 1991 1992 1993 1994 1995 1996 1997 1,221.6 1,031.3 1,418.6 1,231.6 1,513.3 3,108.7 4,634.4 6,044.9 351.5 240.0 366.3 310.9 385.9 697.2 1,053.9 1,438.6 48.8 45.0 143.8 103.9 69.9 303.3 293.3 786.2 55.2 29.2 191.5 85.4 138.6 325.9 466.9 434.2 141.0 161.4 149.6 240.7 311.8 479.2 553.4 908.7 72.0 96.6 73.9 89.5 168.9 198.9 361.1 419.4 93.7 54.2 129.7 135.0 197.4 325.1 321.2 405.0 108.8 35.2 154.0 104.7 148.9 128.0 299.4 540.9 66.5 68.7 106.1 101.2 198.2 241.6 441.8 490.9 46.7 14.0 30.9 39.5 77.6 279.4 440.1 297.9 1.0 9.1 24.4 7.3 1.2 23.2 57.5 90.7 27.9 19.6 27.1 34.3 67.3 68.7 164.5 181.9 47.6 36.4 30.1 343.5 55.9 140.0 139.5 188.3 20.9 47.1 192.7 143.4 93.5 155.8 247.1 371.9 78.7 38.7 64.1 37.1 55.4 192.3 149.9 256.8 26.4 5.7 14.9 58.7 8.6 65.7 79.4 106.2 27.5 33.3 64.9 41.9 35.7 83.4 95.5 170.2 34.6 22.5 71.9 127.7 102.8 270.9 398.9 436.5 36.9 12.1 48.8 22.2 63.6 210.7 179.9 271.8 134.5 86.5 57.8 33.3 82.5 141.3 146.0 264.9 33.0 29.7 55.6 32.8 27.0 38.6 90.5 126.9 10.9 5.5 23.3 32.5 8.5 9.1 26.0 62.9 38.8 21.1 7.0 44.3 40.6 157.7 178.2 106.6 2.7 0.4 5.1 10.5 - 3.5 20.3 11.5 10.5 8.3 0.0 16.6 56.3 15.2 20.8 29.7 2.5 0.8 4.8 1.1 4.3 0.8 6.7 5.2 16.2 29.2 6.8 31.7 7.9 30.5 42.9 53.3 8.9 0.4 1.7 4.8 1.5 8.7 35.7 9.2 7.6 4.0 1.2 11.4 21.8 53.1 100.2 61.0 1.8 4.4 - 0.5 - 3.6 12.9 32.5 2.6 1.5 - 11.0 6.1 31.8 27.8 2.3 0.3 10.6 55.1 25.0 28.5 50.2 109.9 - 8.5 3.9 15.4 11.9 21.6 31.1 35.0 7.5 34.9 25.2 55.1 70.5 98.5 56.1 72.6 5.0 0.2 0.1 15.2 0.1 1.2 0.1 - 0.0 23.8 5.1 4.3 0.5 3.0 - 1.5 1.5 3.7 - 38.0 3.5 0.5 10.4 3.7 - 2.3 3.8 3.8 2.7 25.5 13.7 26.5 4.9 2.4 14.5 1.7 15.0 10.6 8.4 2.3 3.8 9.9 3.0 12.5 4.4 4.7 1.1 0.1 2.2 9.1 - 1.2 2.9 18.7 9.7 - 1.0 - 1.0 5.0 4.0 2.5 0.7 1.6 2.0 19.8 12.1 22.1 17.1 7.2 1.3 3.8 - 5.3 13.0 1.8 4.5 - 0.2 9.8 1.1 - 20.5 1.5 - 0.3 0.0 1.0 22.0 7.8 8.2 12.5 - - 13.0 0.2 30.8 0.8 0.1 0.3 2.2 4.4 2.0 2,822.4 2,254.0 3,586.3 3,656.8 4,145.7 8,012.6 11,341.5 14,974.9 1998 7,884.8 2,002.1 1,402.4 736.5 1,205.6 435.9 838.9 644.9 501.2 749.7 116.2 319.1 349.9 504.5 340.0 122.4 226.1 625.3 326.9 345.2 53.5 51.3 107.3 26.0 44.0 46.9 167.8 10.4 168.0 7.7 115.4 58.3 37.5 611.7 30.3 2.0 59.7 29.1 41.0 4.5 61.2 29.9 8.8 4.2 0.5 4.2 1.3 39.1 21,498.9 1999 22,947.1 5,085.3 5,085 3,428.6 2,343.7 3,162.7 1,243.7 1,845.8 1,763.5 907.8 907 1,238.9 418.4 508.0 616.5 1,164.1 1, 616.5 253.5 365.5 1,697.4 853.6 889.2 501.0 88.5 581.0 35.4 46.7 539.7 233.8 30.2 218.2 12.1 70.0 65.9 65 81.9 309.1 16.5 44.9 57.3 234.0 250.7 2 16.8 16 47.1 16.3 25.9 3.9 3.0 3. 12.8 12 4.6 4. 0.7 2.4 54,900.3 2000 42,937.7 10,576.4 6,715.8 2,767.8 6,262.9 2,382.3 4,091.9 2,911.7 3,162.9 3,325.2 666.9 1,013.6 1,947.3 2,270.7 981.1 356.4 668.6 2,700.1 1,829.8 1,550.8 810.4 259.7 458.3 92.6 273.3 508.3 767.9 264.8 415.2 21.1 44.5 278.5 201.8 655.8 8.5 4.5 140.2 163.1 103.3 23.5 134.7 30.9 16.7 34.3 16.4 46.4 46 6.1 203.0 42.1 3.5 0.3 50.4 105,200.0 2001 16,667.2 4,953.4 1,948.7 1,150.7 3,104.3 998.6 1,244.4 1,084.2 1,544.4 1,004.2 220.1 247.1 935.6 847.9 475.0 154.9 247.5 937.3 585.6 608.2 248.6 92.6 193.3 118.7 56.5 161.8 257.9 40.3 10.1 14.2 13.8 80.3 88.9 267.4 2.7 1.4 3.9 90.1 46.0 30.0 14.6 33.3 24.8 10.4 9.1 11.6 1.0 37.8 32.0 1.6 14.3 40,968.3 2002 9,591.2 2,639.3 767.0 570.7 1,187.6 313.6 588.0 497.8 972.0 429.0 135.7 266.0 627.1 574.9 343.3 109.4 212.4 401.7 557.2 191.9 165.1 51.2 122.5 95.9 40.1 23.5 225.7 8.9 45.3 13.9 33.0 66.1 13.8 81.0 10.6 15.9 16.9 16.9 17.7 5.0 19.4 31.8 9.7 2.0 1.2 4.4 0.5 18.1 22,132.0 2003 8,683.1 2,721.3 669.8 450.8 1,221.0 379.9 644.8 537.6 839.8 397.3 111.8 193.9 328.6 281.5 208.2 95.2 81.9 326.1 379.4 223.6 140.5 37.6 82.6 62.8 24.5 56.1 167.1 27.0 11.8 3.6 35.1 35.7 5.4 79.5 52.2 12.6 2.7 4.6 2.3 0.9 0.4 23.2 1.2 0.5 14.5 17.8 0.1 3.5 19,681.1 2004 10,555.3 3,093.7 786.2 847.0 1,215.1 236.6 363.2 658.8 968.1 291.1 249.8 89.9 709.5 500.5 388.3 134.3 72.2 427.6 327.3 251.6 142.4 66.0 96.2 58.0 67.8 80.2 127.6 48.7 13.6 24.0 68.1 69.2 48.2 26.0 2.5 5.8 26.0 0.2 9.6 4.9 2.1 47.6 3.7 5.3 4.5 2.0 13.7 1.5 2.2 1.5 23,235.1 2005 10,864.0 2,733.8 1,094.7 837.6 1,189.4 320.2 653.4 523.5 925.4 536.7 248.8 136.5 645.0 264.4 274.0 93.3 134.7 346.0 341.6 209.6 132.2 67.8 101.5 72.8 123.7 28.1 97.2 7.2 2.7 76.4 80.8 35.2 32.0 127.7 10.0 10.5 5.1 13.1 3.0 10.0 11.1 64.9 27.4 5.1 12.1 34.8 14.6 28.8 4.1 23,612.5 2006 12,972.4 3,062.6 1,458.1 1,147.2 1,519.7 437.6 688.8 948.7 740.2 461.9 198.1 91.2 848.6 414.1 300.5 131.3 276.7 323.8 410.5 289.0 146.8 72.6 35.2 77.2 32.8 46.2 84.1 31.5 8.3 32.1 14.9 19.9 28.2 57.8 17.8 4.9 39.9 7.5 11.4 16.2 5.3 19.6 6.5 1.5 24.1 32.8 14.3 6.5 27,617.2 2007 15,387.4 3,759.3 1,316.5 1,358.9 1,496.9 459.6 686.3 1,010.7 608.6 644.9 184.7 226.4 727.3 438.0 413.1 109.7 238.2 599.3 522.1 271.0 254.4 90.2 126.7 4.5 70.6 60.5 154.1 123.4 86.9 131.1 8.1 34.4 54.1 47.6 18.7 10.8 7.8 2.9 15.1 5.0 7.3 23.7 4.0 6.2 25.3 17.6 0.2 4.9 16.0 4.0 0.2 31,875.1 2008 14,758.1 3,423.2 1,513.4 942.7 1,122.6 480.0 872.3 808.5 757.7 559.6 199.2 275.8 520.9 418.5 481.0 214.5 228.5 327.5 488.9 236.1 152.2 71.6 84.3 16.1 93.7 35.4 194.8 59.5 21.2 49.8 17.3 48.8 22.8 92.5 22.8 30.0 5.4 27.8 14.5 79.0 12.6 15.6 58.2 42.2 5.5 7.5 13.8 0.5 1.5 29,925.9 2009 10,248.4 2,381.7 1,068.8 582.2 665.5 257.6 623.2 433.6 666.1 240.9 162.7 122.7 386.5 313.6 284.8 178.5 94.0 347.6 254.9 190.2 67.4 25.9 75.0 30.0 232.1 49.2 52.1 7.5 7.1 5.5 4.5 45.4 17.3 17.4 14.6 3.0 11.4 13.0 1.3 20.6 15.4 14.5 84.1 47.1 4.7 7.4 0.8 0.5 20,378.3 2010 11,926.7 2,448.9 1,400.0 621.8 1,070.9 647.6 447.9 517.9 466.0 409.3 139.0 175.2 446.7 337.0 142.1 151.7 78.4 239.4 423.1 133.2 133.4 135.0 67.8 59.3 80.0 107.5 56.9 41.7 41.6 12.4 13.0 0.6 16.7 97.0 7.8 3.8 4.3 11.5 18.0 32.2 33.9 1.9 5.0 51.5 33.1 3.2 9.5 4.5 10.0 23,315.7 2011 14,752.2 3,132.5 2,429.0 551.4 1,580.2 768.7 615.7 509.6 485.9 617.7 239.5 432.5 314.0 383.4 283.1 84.8 229.1 350.2 304.9 156.7 236.8 72.9 107.4 42.2 177.9 53.4 56.3 57.2 59.7 64.9 27.1 3.5 12.5 134.4 5.1 2.1 38.6 21.9 1.0 26.2 9.5 3.2 28.4 24.8 4.0 0.6 4.1 29,497.2 2012 14,128.8 3,067.9 1,856.7 931.5 930.5 570.4 564.2 517.8 429.3 372.3 304.3 285.7 279.6 264.8 242.6 232.3 211.7 202.9 169.0 157.6 123.8 95.2 87.2 85.1 84.1 61.0 60.7 46.2 39.5 35.2 34.0 23.1 23.1 21.2 15.2 14.6 12.8 10.6 10.5 9.8 9.5 7.1 5.6 5.0 5.0 4.4 2.4 0.6 0.1 26,652.4 37
  • 39.
    National Venture CapitalAssociation Figure 3.11b Number of Venture Capital Deals by State 1985 to 2012 State CCA MA NY PA TX WA CO IL VA OH GA MD NJ CT MI UT FL NC TN MN OR DC IN AZ NM RI WI KS MO NH DE OK AL KY ME MT ME SC ID LA MS NV VT HI WV AR IA ND PR SD AK UN WY Total 38 1985 467 215 45 34 106 20 43 26 22 26 31 18 45 33 20 3 21 14 16 23 24 4 8 15 2 6 12 1 5 3 1 4 7 2 8 2 1 1 1 6 1 1 1 1 1,345 1986 494 187 46 45 93 21 58 27 22 21 44 17 43 33 24 14 20 20 22 31 24 5 15 11 3 4 16 2 7 9 1 5 10 4 6 3 2 1 2 3 1 1 3 1 1,421 1987 523 224 63 59 106 29 62 31 31 26 45 24 54 41 25 15 29 15 28 34 30 8 15 20 5 7 17 6 13 11 1 4 12 7 5 2 5 1 2 2 3 2 2 1 1 1,646 1988 534 195 48 54 105 30 63 31 26 21 41 28 42 46 12 7 24 11 31 29 34 4 6 13 6 6 15 3 8 10 4 1 4 4 4 6 5 3 2 1 3 1 3 2 1,526 1989 568 182 49 41 91 37 53 61 30 18 31 19 55 48 16 6 22 18 27 30 27 2 6 24 1 7 6 3 11 13 3 4 7 5 6 1 7 1 1 2 2 3 1,544 1990 552 172 31 44 85 26 49 34 27 21 33 29 44 41 15 4 32 28 22 32 22 5 12 14 3 7 10 3 11 18 5 2 7 6 5 3 1 3 1 2 1 1,462 1991 478 136 24 37 70 26 35 44 24 20 36 27 48 36 9 9 19 20 24 31 12 3 8 15 2 4 6 1 9 17 4 1 2 2 4 3 10 2 1 4 3 3 3 1 1,273 1992 573 135 38 61 70 37 53 40 20 21 37 25 44 33 6 8 25 20 11 26 12 3 1 22 2 9 3 9 10 3 4 2 1 7 1 1 4 4 1 1 4 2 1 2 1,392 1993 436 131 37 44 71 32 48 25 20 20 42 18 38 26 12 7 26 22 8 24 15 2 7 21 2 3 8 2 13 10 1 10 2 2 5 7 2 4 2 1 1 1 4 1,212 1994 462 127 38 39 69 36 53 35 21 20 46 22 40 35 3 1 19 20 12 20 13 4 7 25 1 9 2 8 4 3 5 4 3 3 6 1 2 5 2 3 4 1 2 2 1,237 1995 685 197 73 64 101 66 58 44 39 36 49 32 56 43 12 6 61 36 21 50 17 1 8 27 2 3 8 4 19 10 4 2 9 9 2 1 5 1 7 2 5 2 9 2 4 2 1,894 1996 1,023 289 89 85 135 83 83 56 59 57 54 49 68 45 21 16 57 60 29 47 28 5 9 30 5 2 11 11 26 17 4 7 8 7 5 5 15 1 4 3 4 3 3 6 6 7 2,637 1997 1,140 334 156 139 172 89 98 88 82 54 79 49 85 65 28 31 74 80 25 89 41 2 13 29 4 4 19 6 18 17 4 5 17 15 2 3 15 2 12 4 7 3 4 2 2 4 1 2 7 2 3,223 1998 1999 2000 2001 2002 2003 2001 2002 2003 1,400 2,221 2,949 1,537 1,102 1,159 398 592 790 520 387 384 520 38 196 353 611 294 156 120 149 153 261 155 108 106 197 318 484 341 173 173 34 111 208 256 146 110 80 14 127 162 222 115 91 74 74 119 203 128 81 59 99 154 285 145 92 86 66 53 82 45 51 32 98 161 224 138 81 65 58 100 178 92 92 86 83 118 188 157 96 85 15 73 96 123 78 41 38 29 44 55 22 27 18 35 43 58 44 29 24 44 29 70 117 190 113 64 66 11 82 104 154 88 80 76 88 80 76 24 47 50 30 25 24 77 84 107 87 58 57 18 52 67 42 28 23 4 18 45 22 7 6 9 11 28 77 12 12 8 38 57 70 35 27 19 4 6 8 4 6 5 5 11 11 11 14 10 16 19 27 20 11 8 3 8 22 10 8 13 23 29 54 18 29 19 18 24 31 60 39 41 34 39 3 5 1 2 1 12 8 9 5 4 3 14 10 30 15 13 10 16 16 14 5 3 3 14 11 15 9 6 3 2 3 2 5 7 11 10 3 2 17 10 11 4 4 3 3 2 3 2 2 5 9 9 14 10 7 2 3 5 6 3 3 3 11 10 10 6 6 7 3 1 4 3 4 3 3 3 3 5 2 7 1 2 2 8 5 3 5 5 3 5 3 7 2 4 5 1 1 1 1 1 1 2 2 2 11 5 1 1 1 1 2 2 1 1 14 3 16 8 3,728 5,600 8,041 4,589 3,203 3,022 2004 2005 2006 2007 2004 2005 2006 2007 1,249 1,338 1,591 1,727 382 391 412 472 159 132 233 218 114 108 150 178 177 181 201 188 114 123 144 167 72 93 110 114 62 61 67 73 79 91 95 102 37 38 46 67 79 64 91 75 97 115 112 99 94 81 92 101 38 34 30 36 17 21 24 23 31 32 43 37 66 54 60 60 56 47 59 69 27 25 13 23 52 43 45 61 31 28 33 39 8 11 9 14 10 13 14 17 12 28 34 34 8 16 9 27 8 12 7 3 14 18 21 23 13 5 10 16 9 11 14 18 22 21 19 25 1 5 4 5 12 1 8 6 8 5 9 8 6 3 10 9 4 3 7 8 2 1 1 2 3 4 4 5 1 2 10 2 3 5 7 4 3 2 7 5 2 4 1 7 8 7 8 3 4 8 7 5 6 11 6 3 5 4 5 2 2 6 2 4 3 2 3 1 1 1 2 3 4 4 1 3 1 4 1 2 3,217 3,300 3,887 4,213 2008 2008 1,687 456 261 194 161 163 116 76 89 68 80 103 96 42 45 38 45 55 27 51 33 14 14 22 18 6 20 25 25 28 9 5 10 8 4 2 4 10 6 10 6 8 7 2 8 4 2 1 1 4,165 2009 2010 2009 2010 1,284 1,461 342 375 205 296 135 160 123 165 109 120 94 86 54 73 50 58 60 61 46 70 79 74 78 72 42 62 36 31 34 27 37 46 39 58 17 30 39 30 15 33 8 16 15 17 20 16 13 11 15 11 14 21 17 36 12 15 14 10 6 9 4 2 11 2 9 15 4 7 1 3 4 5 10 4 4 11 3 4 4 5 8 7 3 3 3 4 1 9 2 3 1 1 3 1 1 1 3,139 3,626 2011 2011 1,602 395 345 151 167 125 107 99 76 73 60 73 64 56 36 49 57 49 38 48 37 11 14 22 10 14 15 46 22 13 10 4 2 9 5 2 1 4 3 8 1 3 8 3 2 3 1 2 1 3,946 2012 2012 1,532 414 331 179 159 117 100 83 80 60 54 54 54 52 47 44 35 35 32 29 27 26 17 15 14 14 13 10 9 8 7 7 6 6 6 6 5 5 4 4 4 4 4 3 3 1 1 1 1 1 3,723 Thomson Reuters
  • 40.
    2013 NVCA Yearbook Figure3.12 Venture Capital Investments First vs. Follows-on Rounds Total Dollars Invested ($ Millions) Figure 3.14 Venture Capital Investments Number of Companies Receiving 7,000 120,000 6,000 100,000 First 80,000 60,000 40,000 5,000 First Series1 4,000 3,000 2,000 Year Year Figure 3.13 Venture Capital Investments First vs. Follows-on Rounds Total Dollars Invested ($ Millions) Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 First 724.1 898.0 1,009.1 1,101.1 906.1 835.9 552.0 1,284.4 1,273.7 1,652.6 3,976.7 4,196.6 4,838.4 7,174.7 16,362.8 28,632.2 7,347.9 4,321.1 3,703.9 5,444.5 5,955.0 6,329.9 7,719.7 6,556.6 3,622.0 4,287.4 5,437.8 4,177.4 Thomson Reuters Follow-on 2,052.2 2,226.5 2,354.5 2,304.8 2,413.5 1,986.4 1,702.0 2,301.9 2,383.1 2,493.1 4,035.9 7,144.8 10,136.5 14,324.2 38,537.5 76,567.8 33,620.4 17,810.9 15,977.2 17,790.6 17,657.5 21,287.4 24,155.4 23,369.3 16,756.3 19,028.3 24,059.4 22,475.0 '10 '11 '12 0 '07 '08 '09 0 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 1,000 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 20,000 '01 '02 '03 '04 '05 '06 ($ Millions) (Number of Companies) Follow-on Follow-on Series2 Total 2,776.4 3,124.5 3,363.6 3,406.0 3,319.6 2,822.4 2,254.0 3,586.3 3,656.8 4,145.7 8,012.6 11,341.5 14,974.9 21,498.9 54,900.3 105,200.0 40,968.3 22,132.0 19,681.1 23,235.1 23,612.5 27,617.2 31,875.1 29,925.9 20,378.3 23,315.7 29,497.2 26,652.4 Figure 3.15 Venture Capital Investments First vs. Follows-on Rounds Total Number of Companies Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 No. of Cos Receiving Initial Deals Financing 433 506 580 513 450 351 267 392 356 430 901 1,146 1,304 1,431 2,470 3,394 1,236 851 775 971 1,081 1,281 1,416 1,307 830 1,088 1,317 1,174 No. of Cos Receiving Follow-On Financing 756 759 865 800 839 787 717 717 651 628 775 1,171 1,473 1,830 2,442 3,691 2,782 1,972 1,834 1,842 1,853 2,128 2,248 2,343 1,896 2,040 2,158 2,117 No. of Cos Receiving Financing* 1,153 1,226 1,387 1,264 1,239 1,071 942 1,046 950 993 1,571 2,118 2,575 3,030 4,477 6,425 3,855 2,712 2,508 2,707 2,806 3,233 3,493 3,474 2,638 3,006 3,308 3,143 * No. of Cos receiving financing can be less than the sum of the prior two columns because a given company can receive initial and follow-on financing in the same year 39
  • 41.
    National Venture CapitalAssociation Figure 3.16 First Sequence by Stage of Development ($ Millions) 1985 to 2012 Stage SSeed Early Stage Expansion LaterStage Total 1985 306.3 112.0 266.8 39.1 724.1 1986 437.6 185.1 211.7 63.6 898.0 1987 353.4 319.2 274.1 62.4 1,009.1 1988 378.1 291.8 324.3 106.9 1,101.1 1989 257.4 215.3 320.0 113.4 906.1 1990 178.2 292.2 278.9 86.7 835.9 1991 102.7 214.6 157.6 77.1 552.0 1992 213.4 255.4 572.5 243.1 1,284.4 1993 356.5 261.1 488.1 168.0 1,273.7 1994 528.1 390.8 493.1 240.5 1,652.6 1995 742.6 898.3 1,644.4 691.5 3,976.7 1996 636.9 1,356.4 1,742.4 460.9 4,196.6 1997 804.9 1,691.8 1,866.5 475.2 4,838.4 1998 1999 1,003.4 2,798.2 2,700.2 6,292.2 2,835.0 5,960.4 636.1 1,311.9 7,174.7 16,362.8 2000 2,520.6 16,472.4 8,715.9 923.3 28,632.2 2001 632.1 4,424.6 1,925.8 365.4 7,347.9 2002 267.1 2,330.5 1,339.1 384.4 4,321.1 2003 304.1 2,135.0 950.4 314.5 3,703.9 2004 828.4 2,610.2 1,294.3 711.6 5,444.5 2005 813.8 2,655.3 1,563.0 922.9 5,955.0 2006 1,078.6 2,553.2 1,908.1 790.0 6,329.9 2007 1,413.8 2,921.1 2,479.8 905.0 7,719.7 2008 1,376.7 2,406.6 1,703.8 1,069.5 6,556.6 2009 1,013.8 1,342.7 790.2 475.3 3,622.0 2010 897.6 1,753.4 913.9 722.5 4,287.4 2011 811.4 2,602.0 1,038.8 985.5 5,437.8 2012 477.2 2,130.5 923.8 645.8 4,177.4 Figure 3.17 First Sequence by Stage of Development (No. of Deals) 1985 to 2012 Stage 1985 1986 1987 Seed 220 247 230 Early Stage 81 118 199 Expansion 108 106 119 Later Stage 24 35 32 Total 433 506 580 1988 211 169 107 26 513 1989 1990 1991 1992 1993 1994 206 119 88 119 145 189 102 121 79 131 71 112 113 88 80 115 106 107 29 23 20 27 34 22 450 351 267 392 356 430 1995 256 281 294 70 901 1996 310 401 360 75 1,146 1997 347 470 419 68 1,304 1998 459 495 412 65 1,431 1999 661 1118 629 62 2,470 2000 584 1919 800 91 3,394 2001 220 693 280 43 1,236 2002 131 465 202 53 851 2003 166 421 142 46 775 2004 2005 2006 2007 2008 178 211 322 425 383 535 543 574 588 551 183 251 273 299 229 75 76 112 104 144 971 1,081 1,281 1,416 1,307 2 009 225 388 142 75 830 2 01 0 281 542 166 99 1,088 2 01 1 355 673 173 116 1,317 2 01 2 198 758 138 80 1,174 2009 791.2 249.8 616.8 326.2 573.1 304.2 125.0 89.4 42.0 54.5 43.1 3.6 22.5 60.0 118.7 50.7 151.2 3,622.0 2010 943.1 442.1 613.9 380.9 440.7 243.5 116.8 173.3 105.6 153.5 65.7 2.0 81.6 66.4 153.0 145.3 159.9 4,287.4 2011 1,603.1 591.8 922.5 468.9 576.2 212.4 353.2 82.3 102.1 98.4 50.0 15.5 79.0 100.8 63.1 59.8 58.7 5,437.8 2012 1,717.8 459.0 441.8 303.0 247.0 233.3 202.0 141.3 79.7 70.6 70.0 52.7 46.8 37.5 27.4 24.4 23.0 4,177.4 Figure 3.18 First Sequence by Industry ($ Millions) 1985 to 2012 Industry SSoftware Media andEntertainment Biotechnology ITServices Industrial/Energy MedicalDevicesandEquipment ConsumerProductsandServices Telecommunications Semiconductors HealthcareServices Electronics/Instrumentation Other Retailing/Distribution ComputersandPeripherals BusinessProductsandServices NetworkingandEquipment Financial Services Total 40 1985 92.3 69.8 34.5 20.8 93.6 41.7 46.8 64.5 46.3 16.5 43.3 0.5 19.7 38.5 12.3 21.9 61.1 724.1 1986 118.6 43.5 54.3 9.6 81.3 75.0 63.9 45.0 22.4 66.1 27.6 2.0 57.0 69.0 48.7 34.1 79.8 898.0 1987 94.6 100.3 66.0 5.5 114.5 85.8 57.9 38.6 38.6 56.4 32.1 137.8 87.0 26.6 23.5 43.9 1,009.1 1988 130.1 114.1 66.9 12.8 123.8 84.8 77.0 33.4 56.7 17.1 25.7 6.0 63.3 70.5 11.3 41.8 165.9 1,101.1 1989 94.3 80.4 53.1 20.6 222.5 74.7 31.1 44.2 14.5 48.8 12.7 22.4 46.3 13.3 55.9 71.4 906.1 1990 167.9 63.7 26.1 18.3 107.2 60.0 77.6 53.6 36.3 31.5 14.7 0.0 13.2 52.4 37.7 40.4 35.3 835.9 1991 106.8 13.9 16.1 10.3 68.4 45.9 53.8 10.8 10.2 31.7 15.1 32.7 25.1 19.1 63.7 19.9 8.3 552.0 1992 149.8 81.3 164.1 8.9 148.9 126.1 76.9 93.5 51.7 66.6 14.2 0.0 52.7 59.9 28.1 61.0 100.6 1,284.4 1993 123.0 195.6 123.9 36.0 147.7 117.2 74.8 64.6 5.1 92.5 16.0 28.4 35.1 61.9 73.0 78.9 1,273.7 1994 296.0 115.3 161.1 93.0 154.4 124.9 113.2 192.8 40.9 109.5 8.6 0.2 60.5 48.5 33.6 37.7 62.4 1,652.6 1995 542.1 775.1 159.3 44.9 434.1 188.4 318.1 365.2 69.5 300.4 67.1 12.0 217.7 148.1 125.2 95.5 114.0 3,976.7 1996 918.7 363.8 206.5 220.8 274.5 210.8 209.5 417.5 130.5 273.9 90.3 0.5 131.0 120.0 243.0 128.0 257.2 4,196.6 1997 1,053.2 392.7 346.2 236.1 361.6 259.8 195.1 387.1 166.2 342.5 123.8 16.1 114.2 110.2 255.3 224.3 254.1 4,838.4 1998 1,372.8 688.4 384.0 377.1 782.4 275.2 246.3 955.6 165.4 239.2 47.5 26.8 355.3 122.1 367.0 325.9 443.6 7,174.7 1999 2,852.6 2,458.4 423.0 1,549.1 744.1 308.1 838.8 1,968.5 290.0 368.5 81.4 92.3 667.1 273.5 990.7 1,604.5 852.0 16,362.8 2000 6,177.6 2,874.8 798.9 2,621.8 1,094.8 335.1 954.3 4,756.8 1,145.2 430.5 153.1 37.0 872.8 348.0 1,921.7 2,624.8 1,484.8 28,632.2 2001 1,636.2 344.6 817.5 291.6 474.8 277.7 131.6 808.4 517.0 84.4 103.3 36.6 59.1 259.8 277.1 896.7 331.4 7,347.9 2002 1,263.6 208.5 698.8 133.1 436.1 250.5 44.9 189.5 344.6 155.1 82.3 17.0 34.7 17.2 120.3 248.5 76.3 4,321.1 2003 900.3 219.2 423.7 163.3 265.4 309.7 78.0 179.5 382.7 70.5 45.8 12.4 83.5 342.6 132.8 94.4 3,703.9 2004 1,232.0 731.5 724.5 198.8 308.9 325.2 126.7 284.2 419.6 94.3 98.8 13.6 118.3 91.1 235.9 193.4 247.6 5,444.5 2005 1,174.1 566.2 615.5 335.0 531.4 409.6 233.2 343.8 269.5 140.7 136.0 135.9 84.4 162.7 173.6 643.3 5,955.0 2006 1,344.7 637.8 1,088.5 347.0 718.7 565.2 126.3 395.9 269.5 118.1 134.9 39.9 55.7 189.3 129.6 168.6 6,329.9 2007 1,483.5 648.3 1,063.8 483.0 1,261.3 786.8 205.9 421.2 200.3 70.2 121.2 15.8 84.5 109.4 262.2 169.7 332.6 7,719.7 2008 1,161.3 504.0 950.2 631.8 1,243.3 691.1 200.4 318.8 162.7 32.0 60.7 55.1 156.3 98.5 50.7 239.8 6,556.6 Thomson Reuters
  • 42.
    2013 NVCA Yearbook Figure3.19 First Sequence by Industry (No. of Deals) 1985 to 2012 Industry 1985 1986 1987 1988 1989 1990 SSoftware 72 75 83 87 68 83 Media and Entertainment 29 34 46 33 33 23 IT Services 12 8 6 9 11 7 Consumer Products and Services 26 30 33 18 23 26 Biotechnology 28 32 57 47 36 26 Industrial/Energy 57 59 73 71 73 51 Medical Devices and Equipment 39 53 61 57 62 37 Telecommunications 26 25 25 21 24 10 Other 1 1 1 2 Retailing/Distribution 13 24 39 26 13 9 Financial Services 14 20 24 22 12 7 Healthcare Services 9 32 19 11 9 7 Business Products and Services 12 26 22 13 9 8 Electronics/Instrumentation 27 18 24 18 15 8 Semiconductors 24 13 16 21 13 14 Computers and Peripherals 27 34 33 35 28 17 Networking and Equipment 17 22 19 23 21 16 Total 433 506 580 513 450 351 Thomson Reuters 1991 61 11 5 18 21 29 28 13 2 6 10 12 9 10 7 11 14 267 1992 66 27 5 21 53 33 44 18 2 12 13 17 10 10 11 27 23 392 1993 51 27 8 19 46 35 41 27 1 13 17 13 17 6 6 15 14 356 1994 98 31 20 28 42 40 36 23 1 9 12 20 11 11 11 20 17 430 1995 223 70 28 57 54 80 55 68 5 36 32 42 31 21 25 42 32 901 1996 324 76 66 53 69 79 84 89 1 36 38 59 39 21 29 36 47 1,146 1997 327 108 63 71 84 98 108 93 6 33 44 53 48 19 54 43 52 1,304 1998 333 114 90 68 107 84 96 140 5 46 63 37 74 18 44 31 81 1,431 1999 591 376 230 140 80 102 87 231 10 115 102 52 148 16 50 35 105 2,470 2000 880 391 327 100 122 123 69 395 9 121 172 58 224 27 116 52 208 3,394 2001 313 73 73 29 110 83 61 128 8 19 41 20 52 25 77 28 96 1,236 2002 268 43 27 24 115 62 62 44 2 9 29 20 26 18 52 11 39 851 2003 228 38 34 20 92 52 76 37 1 5 19 17 29 19 66 21 21 775 2004 250 57 51 31 109 69 79 57 3 20 34 16 38 23 80 18 36 971 2005 289 102 63 43 119 70 88 70 2 23 31 24 39 32 42 19 25 1,081 2006 300 156 91 42 148 115 127 95 10 34 19 41 22 48 12 21 1,281 2007 326 179 100 57 147 150 124 77 9 13 47 19 55 26 38 25 24 1,416 2008 308 165 120 52 148 154 109 49 3 17 31 10 49 29 33 20 10 1,307 2009 218 90 79 31 95 82 76 26 6 11 18 13 27 17 13 17 11 830 2010 319 148 99 41 119 91 70 37 9 17 37 21 29 15 15 14 7 1,088 2011 433 215 137 57 114 87 67 47 12 25 21 12 32 11 21 15 11 1,317 2012 441 174 109 79 73 68 63 37 25 22 17 13 12 12 12 10 7 1,174 41
  • 43.
    National Venture CapitalAssociation Figure 3.20 Internet-Related Investments By Year 1995-2012 Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 TOTAL # Companies 427 761 1,027 1,494 3,068 4,611 2,389 1,468 1,249 1,270 1,369 1,678 1,791 1,844 1,428 1,703 2,082 2,050 13,982 ($ Millions) 1,931.0 4,215.3 6,339.7 11,911.9 42,567.5 80,656.8 26,433.4 11,358.8 9,324.1 10,897.8 11,153.3 13,136.8 14,880.7 13,332.5 9,299.5 11,047.0 15,851.2 15,676.0 310,013.3 Figure 3.21 Top Five States By Internet-Related Investments in 2012 State California New York Massachusetts Washington Texas TOTAL* ($ Millions) 8,783.7 1,665.3 1,288.3 671.4 470.2 12,878.8 *Total includes above 5 states only Figure 3.22 2012 Internet-Related Investments By Regions Stage Region Silicon Valley NY Metro New England LA/Orange County Northwest Midwest DC/Metroplex Texas SouthWest Southeast San Diego Colorado Philadelphia Metro North Central South Central Upstate NY Sacramento/N.Cal Alaska/Hawaii/Puerto Rico TOTAL 42 ($ Millions) 7,558.5 1,776.0 1,338.4 950.0 769.1 652.5 493.4 470.2 433.3 409.6 268.2 233.8 147.0 109.8 40.1 18.9 7.1 0.1 15,676.0 Thomson Reuters
  • 44.
    2013 NVCA Yearbook Figure3.23 Sources and Targets of Invested Capital Investments 2012 SOURCE STATE AL AR AZ CA CO CT DC DE FF FL GA HI IA ID IL IN KS KY LA MA MD ME MI MN MO MT NC ND NE NH NJ NM NV NY OH OK OR PA PR RI SC SD TN TX UN UT VA VT WA WI Total AK 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 AL 7.3 0.0 0.0 8.9 0.0 0.0 0.0 0.0 1.1 0.0 2.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.2 0.0 0.0 0.0 0.0 0.0 23.2 AR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.1 0.0 0.0 0.0 0.0 0.0 5.0 AZ CA CO CT DC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.6 0.0 0.0 0.0 11.0 6,966.5 87.2 24.6 20.7 0.0 56.4 83.5 0.0 0.0 4.6 281.7 21.7 26.6 0.0 0.0 18.3 1.4 0.0 2.2 0.0 0.0 0.0 0.0 0.0 20.5 1,191.8 80.1 27.5 0.0 0.0 29.2 0.0 0.0 0.0 0.0 18.4 6.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 5.8 0.0 0.0 50.0 257.2 18.3 0.0 0.0 0.0 10.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.2 0.0 0.0 0.0 0.0 2.9 1.0 6.3 1218.6 24.7 8.0 0.0 46.0 49.4 13.8 0.4 7.3 0.0 0.0 0.0 0.0 0.0 0.0 142.3 0.9 0.0 0.0 2.5 50.6 0.0 0.0 0.0 0.0 55.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 34.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 144.0 0.4 1.9 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.1 0.0 0.0 0.0 32.2 1029.8 31.6 17.9 3.2 0.0 6.8 0.0 2.4 0.0 0.0 2.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.8 104.5 0.9 2.5 7.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.4 0.8 0.0 0.0 2.5 8.1 0.0 0.0 0.0 16.9 51.7 2.5 0.0 0.0 14.0 2227.9 166.8 41.7 17.8 0.5 21.1 0.0 0.0 0.0 0.0 46.1 4.1 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 93.6 10.0 0.0 0.1 0.0 5.5 2.2 0.0 0.0 211.8 14,129.0 564.1 157.6 61.0 DE 0.0 0.0 0.0 7.9 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.1 0.2 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 9.5 FL 2.1 0.0 0.0 48.5 0.0 2.4 0.0 0.0 21.6 6.3 1.8 0.0 0.0 0.0 7.5 0.0 0.0 0.0 1.3 7.2 6.3 0.0 0.0 8.2 2.4 0.0 5.7 0.0 0.0 0.0 0.0 0.0 0.0 31.3 2.3 0.0 0.0 19.6 0.0 0.0 0.0 0.0 0.0 0.0 28.5 0.0 0.0 0.0 0.0 0.0 203.0 GA 4.2 0.0 0.0 101.3 0.0 7.7 4.8 0.0 6.6 3.4 28.1 0.0 0.0 0.0 5.6 0.0 0.0 0.0 0.2 5.0 5.7 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 2.0 0.0 0.0 17.3 0.0 0.0 0.0 3.9 0.0 0.0 0.0 0.0 2.1 18.1 45.1 0.0 1.8 0.0 0.0 0.0 264.9 HI 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.6 Target State IA ID 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 12.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 15.2 IL 0.0 0.0 0.0 134.9 14.7 2.6 5.1 0.0 146.9 0.0 0.0 0.0 0.0 0.0 84.5 0.0 0.0 0.0 1.3 40.2 2.5 0.0 20.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19.6 5.9 0.0 0.0 6.9 0.0 0.0 0.0 0.0 10.0 0.3 65.8 1.7 7.5 0.0 0.0 0.2 570.6 IND 0.0 0.0 0.0 4.3 0.0 0.0 0.0 0.0 0.0 3.5 0.0 0.0 0.0 0.0 0.1 17.0 0.0 0.0 0.0 0.0 0.0 0.0 3.0 0.0 0.0 0.0 10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.2 0.0 0.0 25.0 0.0 0.0 0.0 0.0 0.0 0.0 15.0 0.0 0.0 0.0 0.0 0.0 84.1 KS K 0.0 0.0 0.0 8.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 3.5 0.0 0.0 0.0 2.0 0.3 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.0 8.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 22.2 0.0 0.1 0.0 0.0 0.0 46.3 KY 0.0 0.0 0.0 2.5 0.0 0.2 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 23.0 LA MA 0.0 0.0 0.0 0.0 0.0 21.3 2.3 718.7 0.0 9.8 0.0 58.0 0.0 6.8 0.0 0.0 0.0 308.6 0.0 6.0 0.0 6.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 25.2 0.0 8.9 0.0 0.0 0.0 0.4 0.3 1.0 4.6 903.0 0.0 10.5 0.0 11.0 0.1 0.1 0.0 11.3 0.0 9.5 0.0 0.0 0.0 2.6 0.0 0.0 0.0 0.0 0.0 3.9 0.0 47.2 0.0 0.0 0.0 2.7 2.3 210.1 0.0 9.0 0.0 0.0 0.0 0.0 0.0 25.6 0.0 0.0 0.0 17.0 0.0 0.0 0.0 1.5 0.0 3.0 0.0 13.4 1.0 565.5 0.0 12.0 0.0 10.4 0.0 0.0 0.0 25.3 0.0 2.7 10.6 3,068.0 MD 0.5 0.0 0.0 122.4 7.8 5.1 0.4 0.0 19.4 0.0 1.3 0.0 0.0 0.0 4.3 0.3 0.0 3.1 0.0 16.0 13.4 0.0 0.0 0.0 0.0 0.0 9.8 0.0 0.0 0.0 3.1 0.0 0.0 22.1 0.0 0.0 0.0 3.8 0.0 0.0 0.0 0.0 0.0 0.0 33.5 1.1 9.6 0.0 2.4 0.0 279.4 ME 0.0 0.0 0.0 3.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.2 0.0 0.0 0.0 0.0 0.0 12.8 MI 0.0 0.0 0.0 28.9 0.0 52.4 0.0 0.0 26.2 0.0 0.0 0.0 0.0 0.0 13.8 0.0 0.0 1.9 0.0 8.3 0.0 0.0 34.4 0.0 0.0 0.0 3.7 0.0 0.0 0.0 0.0 0.0 0.0 10.8 4.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 41.9 0.0 0.0 0.0 1.4 4.2 232.2 MN 0.0 0.0 0.0 81.5 0.0 6.0 0.4 0.0 52.0 0.0 2.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.0 7.5 0.0 0.0 7.6 50.0 0.0 0.0 0.0 0.0 0.0 0.0 6.5 0.0 0.0 4.7 0.0 0.0 0.0 0.3 0.0 0.0 0.0 5.2 1.8 0.0 16.3 0.0 0.0 0.0 0.0 0.0 242.4 MO 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8.7 4.8 0.0 0.0 0.0 0.0 0.0 21.3 MS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 1.6 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.4 1.4 3.4 0.0 0.0 0.0 0.0 0.0 9.8 Source State includes U.S. states. FF = other foreign UN = undisclosed or unknown. Thomson Reuters 43
  • 45.
    National Venture CapitalAssociation Target State Figure 3.23 (continued) Sources and Targets of Invested Capital Investments 2012 SOURCE STATE AL AR AZ CA CO CT DC DE FF FL GA HI IA ID IL IN KS KY LA MA MD ME MI MN MO MT NC ND NE NH NJ NM NV NY OH OK OR PA PR RI SC SD TN TX UN UT VA VT V WA WI Total MT 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.2 0.0 0.0 0.0 0.0 0.0 5.6 NC 2.4 0.0 0.0 27.3 0.0 5.9 1.2 0.0 34.3 0.8 0.9 0.0 0.0 0.0 7.0 0.8 0.0 0.0 0.0 6.8 2.2 0.0 0.0 0.0 2.9 0.0 42.6 0.0 0.0 0.0 0.0 0.0 0.0 16.9 1.2 0.0 0.0 4.8 0.0 0.0 0.0 0.0 0.0 0.5 9.0 0.0 1.7 0.0 0.0 0.0 169.2 ND 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.4 0.0 0.0 0.0 0.0 0.0 2.4 NE 0.0 0.0 0.0 7.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 10.7 NH 0.0 0.0 0.0 18.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 12.2 0.0 4.4 0.0 0.0 0.0 0.0 0.6 0.0 0.0 1.1 5.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19.1 0.0 0.0 0.0 0.0 0.0 60.6 NJ 0.0 0.0 0.2 62.9 0.0 20.4 0.7 0.0 70.4 0.0 0.0 0.0 0.0 0.0 15.6 0.7 0.0 0.0 0.0 23.3 0.3 0.0 4.4 0.5 0.0 0.0 8.4 0.0 0.0 0.0 27.5 0.0 0.0 39.0 0.0 0.0 0.0 14.1 0.0 0.0 0.0 0.0 0.0 0.3 120.8 0.0 0.0 0.0 19.8 0.0 429.3 NM 0.0 0.0 0.0 3.4 0.1 1.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.0 0.0 0.8 3.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.6 13.6 3.3 0.0 0.0 0.0 0.0 35.1 Target State NV NY OH OK ORE PA PR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.8 422.7 76.1 0.0 46.5 128.7 0.0 0.0 8.4 0.0 0.0 6.6 3.8 0.0 0.0 42.8 27.2 0.0 0.0 10.4 0.0 0.0 5.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.7 0.0 1.0 136.1 17.6 0.0 10.2 35.0 0.0 0.0 0.0 1.9 0.0 5.8 5.2 0.0 0.0 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8.4 2.2 0.0 0.0 5.5 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 3.8 0.0 0.0 0.8 0.0 0.0 2.8 0.0 0.0 0.0 0.6 0.0 0.0 256.9 15.4 13.7 2.3 54.9 0.0 0.0 26.5 1.4 0.0 0.0 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 1.8 0.0 4.6 3.2 0.0 0.0 0.0 1.7 0.0 4.6 3.0 0.0 0.0 1.1 0.9 0.0 2.7 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.0 0.0 0.0 0.0 3.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 16.5 6.5 0.0 0.0 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.0 0.0 440.5 17.8 0.0 4.6 15.9 0.0 0.0 15.3 40.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.7 0.5 0.0 0.0 86.3 9.9 0.0 0.0 95.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.7 0.0 0.0 0.2 0.0 0.0 0.0 7.5 1.0 0.0 0.0 0.1 1.3 333.7 38.2 18.5 20.8 136.3 0.0 0.0 11.3 0.0 0.0 5.1 0.0 0.0 0.0 14.0 0.0 0.0 0.0 5.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 17.4 7.0 0.0 6.4 0.0 0.0 0.0 0.0 4.3 0.0 0.0 0.0 0.0 7.1 1,856.8 285.8 34.0 123.8 518.0 0.1 RI 0.0 0.0 0.0 19.8 0.0 2.8 0.0 0.0 8.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19.3 0.0 0.0 0.0 0.0 0.0 0.0 6.3 0.0 0.0 0.0 0.0 0.0 0.0 2.8 0.0 0.0 0.0 10.5 0.0 5.2 0.0 0.0 0.0 0.0 5.9 0.0 0.0 0.0 3.5 0.0 84.9 SC 1.0 0.0 0.0 11.3 0.0 0.0 0.0 0.0 6.6 0.0 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.8 0.0 0.0 3.3 0.0 0.0 0.0 2.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.6 0.0 0.0 0.0 0.0 0.0 39.6 SD 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TN 0.0 0.0 0.0 16.3 0.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.0 8.5 0.0 0.0 0.1 0.0 1.8 0.0 0.0 0.0 5.0 0.0 0.0 6.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 23.6 0.0 18.3 0.0 0.6 0.0 0.0 0.0 87.1 TX 1.0 0.0 0.0 151.8 11.3 6.0 1.3 0.0 67.9 14.5 0.0 0.0 0.0 0.0 14.2 0.0 0.0 0.0 2.0 102.1 2.5 1.1 0.0 0.0 1.2 0.0 1.5 0.0 0.0 0.0 0.7 0.0 0.0 183.2 0.0 5.0 0.0 17.4 0.0 0.0 0.0 0.0 5.6 150.5 182.7 0.0 0.8 0.0 6.1 0.0 930.4 UN 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 UT 0.0 0.0 1.9 172.5 0.0 0.2 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.9 2.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.0 0.0 0.0 34.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 10.5 45.8 12.5 0.0 0.0 0.0 304.5 VA 4.1 0.0 0.0 24.2 6.7 0.0 27.8 0.0 12.4 0.0 0.0 0.0 0.0 0.0 38.0 0.0 0.0 0.0 0.0 18.5 13.4 0.0 0.0 0.0 0.0 0.0 0.9 0.0 0.0 0.0 0.2 0.0 0.0 7.5 0.0 0.0 0.0 8.4 0.0 0.0 0.0 0.0 0.0 1.1 59.7 0.0 149.4 0.0 0.0 0.0 372.3 VI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 VT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.9 0.0 0.0 0.5 0.0 0.0 4.4 WA 0.0 0.0 0.2 235.5 37.9 21.1 0.8 0.0 57.6 3.0 0.0 0.0 0.0 0.0 32.5 0.0 0.0 0.0 0.0 53.7 1.5 0.0 7.7 2.3 0.0 0.0 0.0 0.0 0.0 0.0 13.7 0.0 0.0 59.9 0.0 0.0 1.1 27.9 0.0 0.0 0.0 0.0 0.0 30.2 156.4 0.8 13.3 0.0 174.1 0.5 931.7 WI 0.0 0.0 0.0 29.6 0.0 0.0 0.0 0.0 0.5 3.8 0.0 0.0 0.0 0.0 22.3 0.0 0.0 1.3 0.0 0.0 0.0 0.0 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8.8 0.0 0.0 0.0 0.0 0.0 0.0 17.4 0.0 0.0 0.0 0.0 9.8 95.3 WV 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 10.7 0.0 3.6 0.0 0.0 0.0 14.6 WY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOT 23 0 27 9,844 247 607 77 3 2,363 83 80 0 0 8 621 41 0 15 35 2,875 206 18 236 142 86 0 147 0 3 6 287 8 3 2,268 99 8 5 490 0 22 0 9 60 307 4,512 102 281 1 367 30 26,653 Source State includes U.S. states. FF = other foreign. UN = undisclosed or unknown. 44 Thomson Reuters
  • 46.
    2013 NVCA Yearbook Figure3.24 2012 Internet-Related Investments By Stage Company Stage Seed Early Stage Expansion Later Stage TOTAL ($ Millions) 243.0 4,297.2 7,089.7 4,046.1 15,676.0 Figure 3.25 2012 Internet-Related Investments By Industry Sector Industry Group Software IT Services Media and Entertainment Consumer Products and Services Telecommunications Retailing/Distribution Computers and Peripherals Semiconductors Networking and Equipment Financial Services Medical Devices and Equipment Healthcare Services Business Products and Services Industrial/Energy Biotechnology Electronics/Instrumentation TOTAL ($ Millions) 7,956.7 1,976.7 1,894.8 1,093.0 574.4 486.7 355.2 353.0 315.0 211.7 146.8 140.1 74.1 48.9 29.5 19.4 15,676.0 Figure 3.26 2012 Internet-Related vs Non Internet-Related Investments By Industry Sector ($ Millions) Industry Software IT Services Media and Entertainment Consumer Products and Services Telecommunications Retailing/Distribution Computers and Peripherals Semiconductors Networking and Equipment Financial Services Medical Devices and Equipment Healthcare Services Business Products and Services Industrial/Energy Biotechnology Electronics/Instrumentation Other Total Thomson Reuters Internet Related 7,956.7 1,976.7 1,894.8 1,093.0 574.4 486.7 355.2 353.0 315.0 211.7 146.8 140.1 74.1 48.9 29.5 19.4 0.0 15,676.0 Non-Internet Related 336.8 16.6 81.4 115.1 7.6 11.6 97.8 573.4 0.9 72.1 2,364.7 169.4 23.3 2,743.5 4,085.2 224.4 52.7 10,976.4 Total 8,293.5 1,993.3 1,976.2 1,208.1 581.9 498.2 453.0 926.4 315.9 283.8 2,511.5 309.5 97.5 2,792.4 4,114.8 243.8 52.7 26,652.4 45
  • 47.
    National Venture CapitalAssociation Figure 3.27 2012 Internet-Related vs Non Internet-Related Investments By Industry Sector (Number of Companies) Industry Software Media and Entertainment IT Services Consumer Products and Services Telecommunications Retailing/Distribution Networking and Equipment Financial Services Computers and Peripherals Semiconductors Business Products and Services Industrial/Energy Medical Devices and Equipment Healthcare Services Biotechnology Electronics/Instrumentation Other Total Internet Related 1,038 323 281 114 83 46 32 24 23 19 17 14 14 11 6 5 0 2,050 Figure 3.28 Top Five States By Percentage Invested Within State in 2012 Fund Domicile California Virginia Texas Washington Utah Pct. Invested Within State 71% 53% 49% 47% 45% *Minimum $20 million invested Figure 3.30 Number of States Invested Into in 2012 By State of Venture Firm Location of Venture Firm California Massachusetts New York Pennsylvania Connecticut Illinois Maryland Texas New Jersey Virginia North Carolina Michigan 46 No. of States Invested In 39 33 32 26 23 20 19 19 18 17 17 17 Non-Internet Related 58 11 5 28 4 3 2 16 10 66 16 182 243 29 353 41 26 1,093 Total 1,096 334 286 142 87 49 34 40 33 85 33 196 257 40 359 46 26 3,143 Figure 3.29 Top Five States By Portion Received From In-State Firms 2012 Pct. Invested From State 49% 40% 37% 31% 29% Company Location California Virginia Missouri Alabama Massachusetts *Minimum $20 million invested Figure 3.31 Number of States California Venture Firms Invested Into By Year Year 1992 2002 2012 No. of States Invested In 30 34 39 Thomson Reuters
  • 48.
    2013 NVCA Yearbook Figure3.32 Corporate Investments By Year Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 # All Venture # Deals with CVC Capital Deals Involvement 1,894 145 2,637 224 3,223 346 3,728 501 5,600 1190 8,041 1963 4,589 964 3,203 546 3,022 434 3,217 533 3,300 544 3,887 789 4,213 793 4,165 878 3,139 394 3,626 452 3,946 557 3,723 565 Calculated Percentage of Deals $M Average with Corporate VC Amount of All VC $M Average Amount Involvement Deals of CVC Participation 7.7% $4.23 $3.01 8.5% $4.30 $3.03 10.7% $4.65 $2.73 13.4% $5.77 $3.44 21.3% $9.80 $6.25 24.4% $13.08 $7.64 21.0% $8.93 $4.76 17.0% $6.91 $3.49 14.4% $6.51 $2.94 16.6% $7.22 $2.88 16.5% $7.16 $2.81 20.3% $7.11 $3.22 18.8% $7.57 $3.23 21.1% $7.19 $3.04 12.6% $6.49 $3.35 12.5% $6.43 $4.15 14.1% $7.48 $3.97 15.2% $7.16 $3.86 Total VC Investment $M 8,013 11,341 14,975 21,499 54,900 105,200 40,968 22,132 19,681 23,235 23,612 27,617 31,875 29,926 20,378 23,316 29,497 26,652 Calculated Total CVC Percentage of Dollars Investment $M Coming from CVCs 436 5.4% 679 6.0% 946 6.3% 1,722 8.0% 7,436 13.5% 15,003 14.3% 4,588 11.2% 1,907 8.6% 1,277 6.5% 1,535 6.6% 1,527 6.5% 2,542 9.2% 2,558 8.0% 2,670 8.9% 1,319 6.5% 1,877 8.0% 2,211 7.5% 2,178 8.2% Figure 3.34 California Investments as a Percentage of Overall Investments Figure 3.33 Clean technology Investments By Year 100% Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Clean Technology Investments ($ Millions) 77.0 163.0 180.4 183.9 310.4 629.1 404.2 346.8 229.0 431.1 630.9 1,800.8 3,116.2 4,271.3 2,523.7 4,085.3 4,549.3 3,303.1 Thomson Reuters # Clean Technology Deals 35 47 52 42 56 53 63 50 58 82 98 153 267 313 248 317 349 267 Average Investment Per Deal ($ Millions) 2.2 3.5 3.5 4.4 5.5 11.9 6.4 6.9 3.9 5.3 6.4 11.8 11.7 13.6 10.2 12.9 13.0 12.4 90% 80% 70% 59.6% 56.7% 51.7% 47.0% SoCal 60% NoCal 50% 40% Other 12.0% 11.8% 9.3% 10.3% 33.0% 36.0% 41.0% 31.1% 1997 2002 2007 2012 30% 20% 10% 0% 47
  • 49.
    National Venture CapitalAssociation This page is intentionally left blank. 48 Thomson Reuters
  • 50.
    Exits: IPOs andAcquisitions Once successful portfolio companies mature, venture funds generally exit their positions in those companies by taking them public through an initial public offering (IPO) or by selling them to presumably larger organizations (acquisition, or trade sale). This then lets the venture fund distribute the proceeds to investors, raise a new fund for future investment, and invest in the next generation of companies. This chapter considers each type of exit separately. IPOs in 2012 were a mixed bag at best. On the one hand, the number of venture-backed companies going public actually fell from 2011 from 51 to 49. But the dollars raised in those initial public offerings more than doubled from $10.7 billion to $21.5 billion. But looking behind the numbers, we see that Facebook itself raised $16.0 billion of that $21.5 billion, with a few other high-profile IPOs looming large in the remainder. This meant that many companies attempting or seeking to go public were not able to do so. The 49 venture-backed IPOs in 2012 are a far cry from the 280 IPOs in 1999. While no one is suggesting that the industry would be well-served by returning to the heady days of the bubble, we know that only 49 IPOs means many companies that would have gone public in more traditional times were frustrated in their efforts/attempts to go public. The venture industry typically invests in 1,000-1,400 new companies each year. In the 1990s, 14% of all first fundings went public. Even if just 10% go public these days, that would suggest an annual run rate of 100 to 140 companies — a far cry from 49. On the market valuation placed on these IPOs at the offer price, 2012 was a very good year. The 49 IPOs had a valuation of $122.3 billion. This is the highest amount since 1986. What is quite striking (Fig 5.03), is the huge gap between median and mean (average) valuation of almost seven times! This suggests a huge outlier effect created by the several large IPOs. In 2012, the provision in the JOBS act took effect which enabled companies to file the documents necessary to go public confidentially. It appears that the majority of companies are electing this option, so it is difficult to report on the IPO pipeline at year end 2012. Nine venture-backed companies went public with an IPO valuation of $1 billion or greater. The bulk of the IPO valuations were in the $100 million to $500 million range. The length of time it takes for a company to go public remains at historically high levels. Those few that were able Figure 4.01 Venture-Backed IPOs 30.00 No of IPOs Offer Amount ($B) 250 25.00 20.00 150 15.00 100 No. of IPOs 200 10.00 Offer ($ Billion) 300 5.00 50 0.00 0 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 Year Thomson Reuters 49
  • 51.
    National Venture CapitalAssociation to go public had a median age of seven years. Many companies awaiting their turn to go public are older than that, so as IPO markets reopen, we could see this statistic increase. In 2012, the acquisition market weakened. There was a slight decrease in the number of acquisitions, or trade sales, of venture-backed companies. We tracked 449 acquisitions, of which we had disclosed deal amounts for 121 of them. The sum of the disclosed values was also down at $21.5 billion. Just over one-fifth of them were acquired at 10 times or greater than the cumulative venture capital investment in those companies. We tracked four acquisitions at more than $1 billion. Methodology This chapter focuses on company exits by venture funds through IPO and through acquisition (trade sale, M&A). Some additional charts are provided on private equity backed acquisitions because of the venture industry’s interest in that data. With Thomson Reuters’ expansion of global deals coverage in 2012, the criteria used to report these exits were redefined and refined during 2012. These are explained below. In this chapter and throughout this Yearbook, we use the classic nomenclature for describing the two main types of private equity: Private Equity = Venture Capital + Buyout/Mezzanine Therefore charts describing Private Equity in this chapter and throughout this Yearbook include both buyout/mezzanine activity and venture capital activity. The Thomson Reuters venture capital (private equity) backed exits coverage includes full history for the U.S. and Canada as well as Global Exits from 2005 to the present. Multiple exits per company are now tracked, including IPOs (although secondary offerings are not tracked, since first IPO is considered the exit), Secondary Sales (sponsor to sponsor), Trade Sales (VC (PE) Firm to Non-PE Firm), Buybacks, Reverse Takeovers and Writeoffs. All values are sourced from the industry leading Thomson Reuters Deals database with hyperlinks to the Tearsheets to view the underlying details of the transactions. The PE Backed Exits component in ThomsonONE.com can be used to further analyze all of the VC and PE Exits content herein. Specifically, venture capital IPO exits reported in this chapter are those done on United States stock exchanges/markets with at least one United States domiciled venture fund investor. Specifically, venture capital (private equity) acquisi- Figure 4.02 Number of Venture-Backed IPOs vs. All IPOs Year # of All IPOs # of VentureBacked IPOs 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 347 81 76 67 188 168 167 162 24 39 104 99 113 238 37 24 26 82 59 68 92 7 13 68 51 49 Note: IPO counts reflect IPOs on U.S. stock exchanges and markets. Venture-backed IPOs are those with at least one U.S.-domiciled venture fund investor. 50 Thomson Reuters
  • 52.
    2013 NVCA Yearbook tionexits reported in this chapter are secondary sales and trade sales that completed where the company was domiciled in the United States and had at least one United States domiciled venture capital (private equity) investor. Figure 4.03 Venture-Backed IPOs 1985 to 2012 Value and Time to Exit Characteristics Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Num of IPOs 48 104 86 43 42 47 120 150 175 140 184 256 141 79 280 238 37 24 26 82 59 68 92 7 13 68 51 49 Offer Amount ($Mil) 763 2,414 2,125 769 873 1,108 3,726 5,431 6,141 4,004 7,859 12,666 5,831 4,221 24,005 27,443 4,130 2,333 2,024 10,032 5,113 7,127 12,365 765 1,980 7,609 10,690 21,451 Thomson Reuters Med Offer Amt ($Mil) 13 14 17 15 16 20 27 24 24 24 36 35 33 43 70 83 80 89 71 70 68 85 97 83 123 93 106 89 Mean Offer Post Offer Med Post Mean Post Median Time Mean Time Amt ($Mil) Value ($Mil) Value ($Mil) Value ($Mil) to Exit (yrs) to Exit (yrs) 16 1,991 32 47 2.8 3.9 23 166,260 53 1,889 3.9 4.2 25 10,790 46 150 3.7 3.9 18 20,523 51 555 3.2 3.7 21 5,479 51 166 3.9 4.2 24 5,886 60 178 3.6 4.2 31 14,151 78 168 4.7 5.0 36 15,759 68 147 4.5 5.0 35 14,430 75 129 5.4 5.8 29 9,854 67 91 4.7 5.3 43 17,046 103 136 3.8 4.8 49 40,360 111 191 3.2 4.1 41 17,784 99 146 3.0 6.4 53 9,649 149 214 2.5 3.1 86 86,669 294 425 2.9 3.1 115 63,610 336 464 3.1 3.7 112 15,545 304 576 4.0 4.4 97 8,322 266 347 3.3 5.0 78 7,412 252 285 5.4 5.6 122 50,268 254 613 5.5 6.1 87 39,702 202 673 5.2 5.3 105 71,467 293 1,067 5.4 5.6 134 68,282 361 742 6.0 6.0 109 3,645 278 521 7.4 7.3 152 9,192 548 707 5.9 6.9 112 111,386 431 1,662 5.0 5.9 210 94,987 606 1,862 6.3 7.0 438 122,264 371 2,495 7.2 7.8 51
  • 53.
    National Venture CapitalAssociation Figure 4.04 Venture-Backed IPOs by MoneyTree™ Industry Total Offering Size ($ Millions) Industry M and Entertainment Media Software Biotechnology IT Services Networking and Equipment Telecommunications Consumer Products and Services Industrial/Energy Financial Services Business Products and Services Semiconductors Medical Devices and Equipment Computers and Peripherals Electronics/Instrumentation Healthcare Services O Other R Retailing/Distribution TTotal 1985 51 52 38 15 25 27 7 29 0 58 15 61 135 7 89 0 154 763 1986 599 270 349 4 105 89 177 58 91 33 47 89 306 60 15 54 67 2,414 1987 22 206 217 32 136 421 7 177 46 0 368 147 267 17 14 0 48 2,125 1988 3 161 26 0 42 79 8 75 10 2 79 22 116 0 0 0 146 769 1989 17 135 51 0 43 30 91 127 47 0 62 71 150 0 14 0 35 873 1990 1991 10 103 192 476 66 964 0 163 82 346 141 22 5 186 242 346 0 21 44 66 29 210 90 241 74 118 48 0 69 435 0 0 18 29 1,108 3,726 1992 253 409 848 48 284 212 240 325 1,248 70 86 601 295 91 144 12 265 5,431 1993 710 846 473 41 233 766 156 670 51 193 311 266 203 372 132 0 718 6,141 1994 562 447 296 68 457 277 58 450 237 70 164 388 122 155 180 0 71 4,004 1995 1996 207 659 2,366 1,869 437 1,250 308 396 313 749 492 1,498 335 177 495 1,064 273 1,597 35 496 696 0 995 1,666 339 357 296 261 162 269 0 0 111 358 7,859 12,666 1997 505 912 590 151 416 379 160 778 209 185 319 444 75 111 235 203 159 5,831 1998 199 953 197 239 235 881 541 138 45 58 37 98 59 76 123 0 344 4,221 1999 2000 2,995 1,243 5,243 4,924 587 4,211 2,146 2,030 3,050 4,339 4,720 5,304 602 295 207 1,107 521 50 1,068 594 221 1,052 0 634 215 617 135 251 458 156 101 177 1,736 459 24,005 27,443 2001 2002 2003 2004 0 353 75 1,422 405 259 330 2,466 353 342 442 1,616 0 0 0 49 275 0 0 69 173 0 175 594 120 39 82 280 747 0 0 638 771 231 353 1,447 0 248 62 0 133 0 381 522 673 456 0 806 0 63 0 0 46 0 0 0 306 83 59 124 100 0 0 0 26 259 65 0 4,130 2,333 2,024 10,032 2005 376 570 897 140 0 651 3 299 706 507 472 380 8 0 77 0 28 5,113 2006 2007 2008 864 209 0 768 1,471 344 957 1,318 6 207 836 0 479 313 0 731 1,591 0 542 154 0 1,114 1,007 0 551 1,178 0 0 1,202 0 136 975 0 633 1,407 134 0 124 188 0 0 0 0 130 94 0 0 0 144 452 0 7,127 12,365 765 2009 0 604 153 0 0 402 163 88 0 0 0 0 0 438 132 0 0 1,980 2010 2011 2012 731 2,210 16,236 1,178 3,310 2,022 1,070 997 854 379 353 636 267 0 316 197 805 305 727 847 262 1,040 984 247 558 0 176 190 322 152 534 255 130 299 145 115 0 367 0 124 95 0 138 0 0 0 0 0 178 0 0 7,609 10,690 21,451 Figure 4.05 Venture-Backed IPOs by MoneyTree™ Industry Total Number of Companies Industry BBiotechnology Software IIT Services M and Entertainment Media CConsumer Products and Services IIndustrial/Energy N Networking and Equipment TTelecommunications FFinancial Services SSemiconductors BBusiness Products and Services M Medical Devices and Equipment CComputers and Peripherals EElectronics/Instrumentation HHealthcare Services OOther RRetailing/Distribution TTotal 52 1985 5 3 1 4 1 3 1 6 0 1 1 3 9 1 4 0 5 48 1986 1987 1988 1989 1990 16 14 2 6 4 15 10 8 8 9 1 3 0 0 0 10 2 1 1 2 5 1 1 3 1 5 13 6 4 6 2 5 2 2 2 6 6 2 1 4 3 3 1 3 0 4 5 5 3 1 2 0 1 0 1 10 8 4 5 8 14 9 5 4 3 6 3 0 0 2 1 1 0 1 3 1 0 0 0 0 3 3 5 1 1 104 86 43 42 47 1991 31 14 5 3 6 10 8 1 1 9 3 12 3 0 13 0 1 120 1992 27 13 1 7 7 9 11 7 6 4 3 27 11 4 6 1 6 150 1993 21 26 1 10 4 19 6 14 2 13 6 15 9 13 4 0 12 175 1994 14 19 3 9 2 15 13 10 8 9 3 17 6 5 4 0 3 140 1995 16 56 5 4 9 11 10 8 5 16 1 20 8 9 3 0 3 184 1996 33 54 9 12 7 18 10 18 10 0 6 44 11 10 5 0 9 256 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 22 7 9 47 4 4 7 26 15 17 21 1 2 12 11 12 26 21 75 58 5 5 4 9 6 7 13 2 5 10 9 9 4 5 29 16 0 0 0 1 1 2 6 0 0 4 3 6 7 3 34 11 0 4 1 6 4 6 2 0 0 5 8 4 6 7 9 3 3 11 22 33 11 44 11 00 11 55 22 33 17 3 3 7 4 00 00 33 33 77 55 00 11 66 33 33 6 5 26 17 2 0 0 1 0 4 3 0 0 3 0 3 7 9 37 33 1 0 2 6 6 3 9 0 2 3 5 3 4 2 7 1 2 22 44 77 22 44 33 00 00 55 00 22 8 1 4 10 2 0 3 6 6 2 10 0 0 6 3 2 3 1 15 8 0 11 11 00 44 00 44 00 00 11 22 11 13 2 0 11 7 4 0 13 8 11 11 2 0 4 2 1 3 3 4 6 0 11 00 00 11 00 11 11 00 00 22 00 3 1 2 3 1 00 00 00 00 00 00 00 11 11 11 00 7 3 7 2 4 11 11 11 11 00 11 11 11 11 00 00 1 0 2 1 1 00 00 00 00 00 00 00 00 00 00 00 4 6 17 4 1 11 11 00 11 11 22 00 00 22 00 00 141 79 280 238 37 24 26 82 59 68 92 7 13 68 51 49 Thomson Reuters
  • 54.
    2013 NVCA Yearbook Figure4.06 Average and Median Years Between First Funding and the IPO by Industry 2000 to 2012 Industry Biotechnology Business Products and Services Computers and Peripherals CConsumer Products and Services Electronics/Instrumentation FFinancial Services Healthcare Services IIndustrial/Energy IT Services Media and Entertainment Medical Devices and Equipment Networking and Equipment Other RRetailing/Distribution SSemiconductors Software Telecommunications 2000 Mean Median 4.5 4.6 2.0 1.7 4.3 2.8 1.4 1.5 3.4 2.7 1.0 1.0 3.3 3.3 3.4 3.2 1.9 1.8 4.3 3.2 5.1 3.9 3.3 3.0 1.3 1.3 1.9 1.8 5.5 3.7 3.5 3.3 3.6 3.1 Thomson Reuters 2001 Mean Median 4.5 4.6 N/A N/A N/A N/A 3.7 4.6 6.3 6.3 12.9 12.9 5.2 5.2 1.1 0.4 N/A N/A N/A N/A 4.8 4.5 4.2 4.2 2.6 2.6 4.3 4.3 2.9 2.9 4.2 4.6 1.4 1.4 2002 Mean Median 8.4 6.7 2.7 2.7 15.7 15.7 4.6 4.6 N/A N/A 1.9 1.9 7.1 7.1 N/A N/A N/A N/A 4.4 3.5 3.7 3.2 N/A N/A N/A 3.4 3.4 3.4 N/A N/A 3.3 3.0 N/A N/A 2003 Mean Median 6.0 5.1 5.7 5.7 N/A N/A 4.3 4.3 N/A N/A 5.0 4.7 5.7 5.7 N/A N/A N/A N/A 5.7 5.7 N/A N/A N/A N/A N/A N/A 4.0 4.0 5.3 4.1 6.1 5.6 6.5 6.5 2004 Mean Median 5.6 5.1 N/A N/A N/A N/A 5.5 5.2 N/A N/A 5.5 5.3 8.9 8.9 7.7 3.4 5.3 5.3 6.1 5.4 8.1 7.3 6.1 6.1 N/A N/A N/A N/A 6.5 6.4 5.3 5.7 5.3 5.1 2005 2006 Mean Median Mean Median 5.6 5.5 5.4 5.1 4.3 4.4 N/A N/A 0.8 0.8 N/A N/A 5.5 5.5 4.9 4.9 N/A N/A N/A N/A N/A N/A 3.0 3.0 4.7 4.8 3.9 3.9 N/A N/A 8.2 7.0 2.1 0.6 3.8 3.8 6.0 6.0 4.6 4.4 8.4 8.2 6.6 7.1 6.9 5.3 N/A N/A 7.70 6.6 N/A N/A N/A N/A N/A N/A 6.1 6.1 1.5 1.5 4.3 5.0 6.7 6.7 5.4 5.6 6.5 6.0 5.0 4.1 4.2 3.9 2007 Mean Median 5.0 5.0 6.1 5.2 6.7 6.7 17.8 17.8 N/A N/A N/A N/A 3.1 3.4 9.9 9.9 1.0 0.9 6.1 6.5 6.4 6.4 6.7 6.6 6.3 6.7 N/A N/A N/A N/A 3.1 3.1 7.9 7.2 6.5 5.9 6.8 7.2 2008 Mean Median 7.0 7.0 N/A N/A 8.7 8.7 N/A N/A N/A N/A N/A N/A N/A N/A 10.2 10.2 N/A N/A N/A N/A N/A N/A 6.0 6.0 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 6.7 6.7 N/A N/A 2009 Mean Median 10.4 10.4 N/A N/A N/A N/A 5.3 5.3 7.78 7.8 N/A N/A 2.0 2.0 1.4 1.4 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 6.4 7.3 10.4 10.4 2010 Mean Median 5.8 4.9 0.6 0.6 N/A N/A 5.1 4.3 3.7 3.7 7.0 8.9 2.6 2.6 3.1 3.1 6.2 6.4 8.7 10.1 5.2 5.2 7.4 7.4 N/A N/A N/A N/A 2.2 2.2 4.9 4.4 7.5 6.3 8.7 9.1 2011 Mean Median 6.6 5.5 4.2 4.2 7.3 7.3 1.9 3.8 12.5 12.5 N/A N/A N/A N/A 7.0 7.2 9.9 11.8 6.7 6.2 5.5 5.5 N/A N/A N/A N/A N/A N/A N/A N/A 7.6 7.6 7.1 5.2 8.0 9.8 2012 Mean Median 5.9 6.0 5.7 5.7 N/A N/A 7.2 8.3 N/A N/A 9.3 9.3 N/A N/A 5.2 5.4 10.1 7.9 6.3 6.4 4.9 4.9 10.1 9.9 N/A N/A N/A N/A N/A N/A 13.1 13.1 8.5 7.6 9.4 8.8 53
  • 55.
    National Venture CapitalAssociation Figure 4.07 Venture-Backed Merger & Acquisitions by Year Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Number Total 6 8 10 17 20 19 16 69 59 82 92 107 143 189 227 379 384 363 323 402 443 485 488 416 350 521 488 449 Number Known 3 1 4 9 10 7 4 43 36 56 58 76 99 113 154 245 175 165 134 199 198 207 200 134 108 149 169 121 ($ Millions) Price Average 300.2 100.1 63.4 9.1 667.2 111.2 920.7 115.1 746.9 74.7 120.3 10.0 190.5 15.9 2,119.1 81.5 1,332.9 58.0 3,207.1 123.4 3,801.8 111.8 8,230.8 265.5 7,743.6 176.0 8,002.0 105.3 38,688.0 530.0 79,996.4 597.0 25,115.6 120.2 11,913.2 60.2 8,240.8 43.6 28,846.1 142.1 19,600.2 80.0 24,288.5 87.4 30,745.5 106.8 16,236.9 57.6 12,364.9 51.1 17,700.3 47.6 24,093.2 75.5 21,516.2 65.6 Average acquisition price is calculated by dividing total known acquisition proceeds by the number of transactions where the proceeds are known, not the total number of transactions 54 Figure 4.08 Private Equity-Backed Merger & Acquisitions by Year Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Number Number Total Known 7 3 12 3 14 6 33 19 28 16 29 12 29 11 92 59 100 61 108 70 144 90 158 117 220 150 277 183 307 204 475 304 462 219 444 221 428 201 559 290 680 311 774 333 878 361 669 227 493 162 845 285 836 294 916 288 ($ Millions) Price Average 300.2 100.1 178.9 59.6 1,072.2 178.7 3,839.2 202.1 1,829.8 114.4 929.7 77.5 774.5 70.4 3,450.8 58.5 4,355.0 71.4 7,812.4 111.6 10,452.5 116.1 19,582.9 167.4 31,635.1 210.9 35,142.5 192.0 62,637.2 307.0 134,860.0 443.6 64,040.5 292.4 35,654.9 161.3 25,760.9 128.2 55,117.1 190.1 66,871.1 215.0 111,154.3 333.8 149,705.1 414.7 63,442.3 279.5 55,101.1 340.1 97,165.3 340.9 88,599.3 301.4 125,435.7 435.5 Average acquisition price is calculated by dividing total known acquisition proceeds by the number of transactions where the proceeds are known, not the total number of transactions. Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity financed companies. Therefore, transactions from Figure 5.07 are included here. Thomson Reuters
  • 56.
    2013 NVCA Yearbook Figure4.09 Venture-Backed Acquisitions by MoneyTree™ Industry Total Transaction Values 1985 to 2011 ($ Million) Industry 1985 1986 1987 1988 1989 1990 Software 0 0 25 0 0 22 Biotechnology 0 0 0 0 0 0 0 0 0 0 0 0 M Media and Entertainment 0 0 0 0 0 0 I IT Services Telecommunications 0 0 0 0 0 0 Medical Devices and Equipment 201 0 3 0 317 0 Industrial/Energy 99 63 0 238 59 20 Semiconductors 0 0 0 0 0 0 Computers and Peripherals 0 0 0 149 61 79 Healthcare Services 0 0 0 199 60 0 Business Products and Services 0 0 640 0 0 0 Consumer Products and Services 0 0 0 0 0 0 Financial Services 0 0 0 140 0 0 Networking and Equipment 0 0 0 18 250 0 Electronics/Instrumentation 0 0 0 81 0 0 0 0 0 0 0 0 O Other 0 0 0 95 0 0 R Retailing/Distribution 300 63 667 921 747 120 T Total S 1991 83 68 30 0 0 0 0 0 0 0 0 10 0 0 0 0 0 190 1992 264 33 0 0 4 234 203 0 16 88 0 1 1,204 0 36 0 35 2,119 1993 1994 1995 116 455 617 25 8 89 119 29 38 0 0 15 298 790 328 43 295 110 122 764 53 0 59 84 110 58 140 0 178 475 0 0 0 0 26 23 91 144 734 317 352 1,024 13 49 42 0 0 0 80 0 29 1,333 3,207 3,802 1996 1,228 388 2,160 315 381 298 1,127 54 827 130 109 46 67 1,090 12 0 0 8,231 1997 2,122 265 2,106 80 1,133 507 193 11 373 180 181 237 34 178 105 0 39 7,744 1998 1999 2,888 5,621 5 141 846 343 10,996 523 699 521 2,218 130 298 381 962 627 1,903 422 721 64 0 47 397 388 385 459 1,299 981 11,521 60 133 0 00 28 689 8,002 38,688 2000 23,475 1,206 3,227 2,384 7,528 433 1,396 7,210 4,610 286 1,637 2,611 1,355 18,359 3,456 0 824 79,996 2001 3,689 679 6,315 491 2,630 932 858 2,099 357 177 157 519 617 5,403 189 0 4 25,116 2002 1,886 115 999 612 1,125 414 182 2,703 51 818 870 343 557 818 71 3350 0 11,913 2003 2,098 259 209 1,002 301 580 1,006 359 47 37 151 418 98 813 6 0 857 8,241 2004 4,972 688 3,355 1,999 1,678 1,168 2,128 688 680 6,227 3,024 444 250 1,311 116 0 118 28,846 2005 4,870 2,478 2,980 1,066 1,310 1,268 1,003 575 248 624 132 582 890 1,290 72 212 0 19,600 2006 7,704 2,104 2,771 795 2,287 1,704 1,425 1,029 492 968 409 486 985 628 38 0 463 24,289 2007 6,923 6,050 3,039 2,482 1,785 1,818 1,812 964 6 542 2,124 245 1,896 549 87 246 180 30,746 2008 5,575 1,266 2,251 745 1,789 499 832 664 49 27 570 284 988 609 80 0 10 16,237 2009 1,745 843 892 203 2,205 2,569 886 628 500 5 314 0 0 643 0 0 930 12,365 2010 3,739 3,720 1,088 1,415 826 1,571 1,276 1,040 348 755 181 141 812 678 0 95 14 17,700 2011 6,756 3,948 1,013 2,084 451 3,809 1,674 743 557 601 315 1,143 466 24 510 0 0 24,093 2012 5,199 2,727 2,312 2,072 1,979 1,639 1,141 1,035 764 756 697 615 435 146 0 0 0 21,516 2007 2008 2009 157 147 119 38 27 22 50 36 33 20 22 16 32 24 19 26 13 26 43 30 29 35 14 13 19 24 22 15 25 23 11 11 7 11 12 7 12 10 5 3 7 4 5 7 4 9 5 1 2 22 00 488 416 350 2010 169 45 65 24 38 21 46 14 26 23 7 14 12 6 5 5 1 521 2011 2012 171 152 47 50 64 43 20 31 34 30 37 29 23 29 13 15 15 15 18 13 8 11 15 9 9 8 7 6 4 4 1 4 2 0 488 449 Figure 4.10 Venture-Backed Acquisitions by MoneyTree™ Industry Number of Companies 1985 to 2012 Industry 1985 1986 1987 1988 1989 1990 1991 SSoftware 0 3 2 0 1 6 1 IT Services 0 1 0 1 1 1 0 Media and Entertainment 0 0 0 0 0 0 1 Industrial/Energy 1 2 2 3 3 3 2 Biotechnology 0 0 0 0 1 1 1 Medical Devices and Equipment 2 0 1 2 4 2 0 Telecommunications 0 1 0 0 1 0 1 Business Products and Services 0 0 1 1 0 0 1 Semiconductors 0 0 0 0 0 1 2 Networking and Equipment 0 0 1 2 1 0 0 Consumer Products and Services 0 0 0 0 0 0 1 Healthcare Services 0 1 0 1 2 0 1 Financial Services 0 0 0 1 0 0 0 CComputers and Peripherals 1 0 2 2 4 4 2 EElectronics/Instrumentation 0 0 1 3 2 0 1 R Retailing/Distribution 2 0 0 1 0 1 2 O Other 0 0 0 0 0 0 0 TTotal 6 8 10 17 20 19 16 Thomson Reuters 1992 1993 1994 1995 1996 11 15 24 29 21 0 0 0 2 5 1 4 2 3 7 8 3 9 5 8 4 2 3 10 9 13 4 8 7 6 2 4 5 3 6 1 0 1 0 3 1 1 3 3 2 2 7 8 8 13 2 3 1 1 5 4 1 8 9 4 5 2 4 4 5 9 8 4 5 9 4 2 1 1 4 2 3 1 1 0 0 0 0 1 0 69 59 82 92 107 1997 1998 1999 2000 43 62 59 119 7 11 16 22 11 10 20 40 9 18 11 13 9 11 12 16 13 11 10 9 12 12 18 31 2 4 4 15 2 8 9 21 4 8 22 24 6 7 10 16 3 9 2 9 4 5 13 13 8 7 11 13 6 4 3 4 4 2 7 14 0 0 0 0 143 189 227 379 2001 94 31 51 12 21 19 32 29 14 15 14 5 19 6 7 15 0 384 2002 128 38 27 12 9 12 40 13 14 20 7 13 13 2 7 7 1 363 2003 2004 2005 2006 120 133 162 175 1 25 33 22 30 15 33 31 26 9 12 21 17 15 24 30 32 10 23 27 25 37 25 34 42 15 20 22 26 11 17 17 20 23 30 22 28 11 10 11 10 3 7 12 13 9 14 12 16 8 8 8 10 1 4 5 3 5 7 7 8 10 1 1 1 11 0 323 402 443 485 55
  • 57.
    National Venture CapitalAssociation Figure 4.11 Private Equity-Backed Acquisitions by MoneyTree™ Industry Total Transaction Values 1985 to 2012 ($ Million) Industry IIndustrial/Energy M and Entertainment Media Biotechnology Software TTelecommunications Healthcare Services Financial Services Consumer Products and Services Retailing/Distribution Business Products and Services Medical Devices and Equipment Other IT Services Electronics/Instrumentation Networking and Equipment SSemiconductors Computers and Peripherals Total 1985 99 0 0 0 0 0 0 0 0 0 201 0 0 0 0 0 0 300 1986 63 0 0 0 0 0 0 116 0 0 0 0 0 0 0 0 0 179 1987 1988 25 1,490 0 0 0 0 25 16 0 0 0 199 0 140 0 1,444 0 295 640 0 383 0 0 0 0 7 0 81 0 18 0 0 0 149 1,072 3,839 1989 311 32 766 0 0 60 0 33 0 0 317 0 0 0 250 0 61 1,830 1990 20 220 0 22 0 0 0 45 0 263 167 0 0 115 0 0 79 930 1991 1992 1993 102 792 1,881 30 0 213 68 33 25 83 686 128 0 79 298 0 94 0 0 1,204 461 10 30 634 475 96 94 7 12 0 0 373 182 0 0 0 0 0 0 0 36 13 0 0 317 0 0 0 0 16 110 775 3,451 4,355 1994 922 350 80 455 1,042 178 695 1,729 90 0 1,731 0 0 49 352 59 81 7,812 1995 2,490 398 422 629 698 598 2,283 699 472 200 244 0 15 42 1,024 97 140 10,452 1996 2,120 3,428 407 1,228 2,399 1,494 2,728 1,078 452 419 1,000 0 485 375 1,090 54 827 19,583 1997 4,610 3,195 396 2,252 1,187 3,702 2,745 1,360 8,384 207 1,298 0 1,620 107 178 11 384 31,635 1998 1999 4,738 2,841 11,274 19,833 622 879 3,041 10,115 1,331 2,426 317 112 1,520 1,605 1,645 575 3,738 3,265 1,331 694 2,075 1,324 229 0 523 2,834 162 312 1,337 12,000 640 3,066 620 758 35,143 62,637 2000 2,973 42,607 2,102 25,732 11,257 668 1,383 3,612 1,660 2,532 516 0 3,138 3,456 21,167 7,324 4,732 134,860 2001 3,193 6,332 679 3,795 32,034 617 1,116 1,628 2,227 513 1,188 176 533 1,226 6,033 2,224 528 64,041 2002 4,073 4,439 2,540 2,121 7,332 1,237 3,038 2,711 175 1,356 940 350 674 381 818 3,248 223 35,655 2003 7,317 1,612 927 3,983 451 37 292 3,656 3,174 253 1,243 190 1,282 6 934 359 47 25,761 2004 12,455 6,958 1,738 5,574 2,232 7,403 474 5,264 1,042 4,077 2,078 143 2,124 422 1,406 731 995 55,117 2005 21,258 5,379 2,978 5,478 5,731 3,440 2,957 5,981 978 1,238 2,304 1,676 2,192 948 2,348 1,251 735 66,871 2006 2007 24,179 23,751 26,770 8,738 2,104 7,127 9,493 20,762 12,623 4,451 3,643 4,054 985 3,349 10,238 23,880 1,700 30,996 11,642 5,825 2,845 6,073 630 411 929 4,838 72 3,210 1,536 946 1,272 1,266 492 29 111,154 149,705 2008 12,510 3,024 1,443 7,517 2,162 780 3,792 2,242 924 6,504 6,131 8,203 5,509 431 782 719 769 63,442 2009 1,850 1,678 4,857 2,262 31,482 581 3,463 1,451 945 561 3,422 0 203 0 1,218 628 500 55,101 2010 25,115 2,248 7,052 15,688 3,795 8,210 2,271 7,257 6,509 959 7,477 2,865 3,696 1,333 678 1,665 348 97,165 2011 2012 25,706 31,281 4,022 15,097 4,499 13,182 14,348 12,969 3,516 9,295 4,942 8,034 9,887 7,077 2,285 4,297 554 4,259 2,540 3,890 5,660 3,756 871 3,521 2,172 2,685 2,407 2,275 3,838 1,814 743 1,152 609 851 88,599 125,436 Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity financed companies. Therefore, transactions from Figure 5.09 are included here. Figure 4.12 Private Equity-Backed Acquisitions by MoneyTree™ Industry Number of Companies 1985 to 2012 Industry IIndustrial/Energy Software Media and Entertainment IT Services Business Products and Services Medical Devices and Equipment Consumer Products and Services Biotechnology Healthcare Services Telecommunications Financial Services Retailing/Distribution Networking and Equipment Semiconductors Computers and Peripherals Electronics/Instrumentation Other TTotal 1985 1986 1987 1988 1989 1990 1991 1992 1993 2 3 3 9 5 4 9 17 20 0 3 2 1 1 6 2 13 17 0 1 0 0 2 1 1 1 6 0 1 0 3 1 1 0 1 0 0 0 1 3 0 2 2 2 2 2 0 2 2 4 3 0 15 5 0 2 1 3 2 1 2 6 10 0 0 0 0 3 1 1 4 3 0 1 0 1 2 0 1 5 1 0 1 1 0 1 1 1 4 4 0 0 0 1 0 0 0 5 8 2 0 0 3 0 3 5 3 5 0 0 1 2 1 0 0 2 7 0 0 0 0 0 1 2 1 1 1 0 2 2 4 4 2 9 9 0 0 1 3 2 1 1 4 2 0 0 0 0 0 0 0 0 0 7 12 14 33 28 29 29 92 100 1994 1995 1996 12 25 20 26 30 21 8 5 12 0 3 6 1 3 5 9 11 9 4 5 13 6 13 10 9 10 7 8 4 8 6 10 12 2 3 2 8 10 13 3 4 2 5 6 9 1 1 9 0 1 0 108 144 158 1997 1998 1999 2000 35 39 33 37 44 66 67 127 17 19 29 54 12 12 22 25 7 9 7 23 17 17 14 13 13 19 14 23 10 16 14 18 5 12 4 11 14 14 20 38 12 11 17 16 11 8 13 19 4 11 24 26 2 10 11 26 9 8 13 15 8 5 5 4 0 1 0 0 220 277 307 475 2001 35 98 58 32 34 20 25 22 8 35 26 18 16 15 7 12 1 462 2002 2003 33 46 133 127 31 27 41 27 20 18 14 15 22 25 12 17 16 4 45 43 19 13 9 14 20 25 16 11 3 9 9 4 1 3 444 428 2004 65 143 43 36 29 27 39 28 14 29 19 14 31 19 9 10 4 559 2005 126 170 43 26 33 35 33 36 25 37 19 21 28 19 13 1 6 10 1 680 2006 114 197 54 42 44 33 52 33 31 53 21 23 32 21 11 9 4 774 2007 2008 148 114 183 163 86 50 49 30 65 33 40 20 62 39 36 28 30 22 52 36 23 19 29 17 21 30 22 29 5 9 19 16 8 14 878 669 2009 58 131 47 24 19 41 25 26 10 35 14 6 25 22 5 4 1 493 2010 121 200 79 56 30 43 42 48 33 57 27 29 25 29 7 11 8 845 2011 2012 133 209 206 188 84 76 51 62 39 54 55 50 42 44 42 40 38 38 29 38 27 28 14 27 25 18 19 16 9 12 15 9 8 7 836 916 Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity financed companies. Therefore, transactions from Figure 5.10 are included here. 56 Thomson Reuters
  • 58.
    2013 NVCA Yearbook Figure4.13 M&A Transaction Values vs. Amount Invested Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Relationship Between Transaction Values vs. Cumulative Total Venture Investment < TVI 1x-4x TVI 4x-10x TVI >10x TVI 14% 26% 22% 38% 8% 29% 29% 34% 13% 40% 16% 31% 15% 23% 31% 31% 15% 15% 25% 45% 9% 22% 23% 46% 41% 19% 23% 17% 51% 26% 13% 10% 46% 39% 10% 5% 38% 33% 19% 10% 30% 38% 17% 15% 30% 37% 18% 15% 24% 33% 24% 19% 30% 30% 24% 16% 47% 24% 20% 9% 32% 33% 21% 14% 20% 29% 30% 21% 20% 27% 32% 21% This chart is prepared by analyzing all deals where total venture investment and acquisition price are confirmed. Each deal is classified as a ratio of company acquisition (exit) price to total venture investment from all rounds. This chart compares the number of deals in each category. An acquisition where deal price is less than the total venture investment (“<TVI”) clearly did not result in a good return. Four times the investment to 10 times the investment can be a good outcome. An acquisition for more than 10 times venture investment is usually a nice outcome. Figure 4.14 Venture-Backed IPOs Cos. in Registration vs. Number of Venture-Backed IPOs Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 # of Venture Backed IPOs 29 94 57 57 86 6 12 75 53 49 # of Moneytree Cos. in Registration 31 57 16 36 31 20 23 31 60 27* * Beginning in 2012, companies could elect confidential registration. Those, of course, cannot be counted in the number in registration. As of this writing, it appears that half or more of companies seeking to go public are electing confidential registration. Thomson Reuters 57
  • 59.
    National Venture CapitalAssociation Figure 4.15 Post-Offer Value Ranges Venture-Backed IPO Post Offer Value Ranges by Number of Companies Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 >$1B 1 4 1 1 16 12 5 4 4 7 15 2 3 20 17 9 $500M-$1B 4 10 3 3 31 25 5 7 2 10 7 11 16 4 6 13 9 $100M-$500M 58 107 55 29 147 96 12 15 22 64 35 45 57 4 6 40 19 29 <$100M 62 89 63 11 10 4 5 2 2 4 13 4 4 1 2 2 2 * Count only includes IPOs with disclosed post-offer values Figure 4.16 M&A Deal Value Ranges Venture-Backed M&A Deal Value Ranges by Number of Companies Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 >$1B 1 2 15 3 1 5 1 2 1 2 1 4 $500M-$1B 1 2 1 12 23 3 3 2 5 3 3 12 4 6 6 10 6 $100M-$500M 10 17 21 27 57 101 44 26 28 44 55 60 71 36 31 50 60 48 <$100M 47 56 77 86 83 106 125 136 104 145 140 142 117 92 72 93 98 64 * Count only includes transactions with disclosed values 58 Thomson Reuters
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    2013 NVCA Yearbook Figure4.17 Venture-Backed US Company IPOs By Year By Country Country Argentina Bermuda Bahamas Canada China France Hong Kong India Israel Netherlands Norway Russia South Korea Taiwan US 2005 # Exits 1 5 2 2 1 48 2006 2007 2008 Offer Amt Offer Amt Offer Amt ($ Mil) # Exits ($ Mil) # Exits ($ Mil) 1 332.8 1 137.5 91.1 1 57.5 621.1 5 624.7 12 2,482.5 67.5 1 78.0 1 26.3 1 43.8 1 380.5 190.8 1 144.1 70.4 4,072.5 58 5,718.4 77 9,466.5 # Exits 7 2009 2010 Offer Amt Offer Amt Offer Amt ($ Mil) # Exits ($ Mil) # Exits ($ Mil) --------2 220.0 20 2,738.5 11 103.3 1 11 80.5 8 ------------765.0 11 1,759.8 46 4,686.8 2011 2012 Total Offer Amt Offer Amt Offer Amt # Exits ($ Mil) # Exits ($ Mil) # Exits ($ Mil) ----11 332.8 3 11 621.3 6 1 621.3 ----11 137.5 1 11 54.0 5 3 202.6 8 1,739.7 2 165.7 54 8,592.1 11 77.0 7 1 77.0 1 103.3 1 80.5 ----44 171.8 1 11 304.6 3 1 304.6 ----11 43.8 4 11 1,434.8 1,43 2 1,815.3 ----33 334.9 3 ----11 70.4 7 38 6,458.1 47 21,285.4 332 54,212.6 Figure 4.18 Ratio of IPO Pre-Money Valuation To Amount Invested Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Post Offer Value ($ Billion) 17.0 40.4 17.8 9.6 86.7 63.6 15.5 8.3 7.4 50.3 39.7 71.5 68.3 3.6 9.2 111.4 95.0 122.3 Offer Amt ($ Billion) 7.9 12.7 5.8 4.2 24.0 27.4 4.1 2.3 2.0 10.0 5.1 7.1 12.4 0.8 2.0 7.6 10.7 21.5 IPO Pre Money Valuation 9.2 27.7 12.0 5.4 62.7 36.2 11.4 6.0 5.4 40.2 34.6 64.3 55.9 2.9 7.2 103.8 84.3 100.8 Total Venture Inv ($ Billion) 2.2 3.7 2.7 2.4 11.0 13.0 2.6 1.7 2.4 6.7 3.1 4.3 6.7 0.4 0.6 5.9 6.6 6.7 Ratio 4.2 7.5 4.4 2.3 5.7 2.8 4.4 3.5 2.2 6.0 11.2 15.0 8.3 8.0 12.0 17.6 12.8 15.0 Note: To be included in this chart, non-U.S. based companies must be trading on a U.S. exchange/market and have at least 1 U.S. venture fund investor. Thomson Reuters 59
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    National Venture CapitalAssociation Figure 4.19 Venture-Backed IPOs Valuations As Of IPO Year of IPO 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 60 Avg Val ($ Mil) 136.4 191.3 145.8 214.4 424.8 464.3 575.7 346.7 285.1 613.0 672.9 1,066.7 742.2 520.7 707.1 1,662.5 1,862.5 2,495.2 Max ($ Mil) 1,068.5 4,548.9 1,106.3 1,116.2 2,970.2 2,767.7 3,464.1 822.4 821.9 23,053.7 22,422.9 39,248.4 14,035.4 1,443.1 1,622.0 23,725.8 16,795.6 81,247.2 Upper Quartile ($ Mil) 144.8 183.1 60.3 226.1 480.5 539.7 723.7 541.0 359.2 391.0 396.8 534.9 762.8 1,011.5 1,089.0 1,414.1 1,514.7 727.2 Median ($ Mil) 103.3 111.1 98.8 148.8 294.4 335.8 303.5 266.2 251.9 254.1 201.9 293.2 360.8 278.5 547.9 430.5 606.3 371.0 Lower Quartile ($ Mil) 60.9 64.2 59.8 101.4 193.0 213.9 141.0 165.7 170.4 151.7 133.0 179.5 268.6 184.4 306.9 223.0 327.1 243.6 Min ($ Mil) 10.4 9.5 6.6 12.5 16.9 18.0 46.6 36.8 41.9 21.6 4.6 70.9 50.0 75.8 212.9 23.4 94.8 75.2 Thomson Reuters
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    Appendix A: Glossary “A”round – a financing event whereby angel groups and / or venture capitalists become involved in a fast growth company that was previously financed by founders and their friends and families. Accredited investor – a person or legal entity, such as a company or trust fund, that meets certain net worth and income qualifications and is considered to be sufficiently sophisticated to make investment decisions in private offerings. Regulation D of the Securities Act of 1933 exempts accredited investors from protection of the Securities Act. The Securities and Exchange Commission has proposed revisions to the accredited investor qualifying rules, which may or may not result in changes for venture investors. The current criteria for a natural person are: $1 million net worth or annual income exceeding $200,000 individually or $300,000 with a spouse. Directors, general partners and executive officers of the issuer are considered to be accredited investors. Alternative asset class – a class of investments that includes venture capital, leverage buyouts, hedge funds, real estate, and oil and gas, but excludes publicly traded securities. Pension plans, college endowments and other relatively large institutional investors typically allocate a certain percentage of their investments to alternative assets with an objective to diversify their portfolios. Alpha – a term derived from statistics and finance theory that is used to describe the return produced by a fund manager in excess of the return of a benchmark index. Manager returns and benchmark returns are measured net of the risk-free rate. In addition, manager returns are adjusted for the risk of the manager’s portfolio relative to the risk of the benchmark index. Alpha is a proxy for manager skill. Angel – a wealthy individual that invests in companies in relatively early stages of development. Usually angels invest less than $1 million per startup. Anti-dilution – a contract clause that protects an investor from a substantial reduction in percentage Thomson Reuters ownership in a company due to the issuance by the company of additional shares to other entities. The mechanism for making an adjustment that maintains the same percentage ownership is called a Full Ratchet. The most commonly used adjustment provides partial protection and is called Weighted Average. “B” round – a financing event whereby investors such as venture capitalists and organized angel groups are sufficiently interested in a company to provide additional funds after the “A” round of financing. Subsequent rounds are called “C”, “D” and so on. Basis point (“bp”) – one one-hundredth (1/100) of a percentage unit. For example, 50 basis points equals one half of one percent. Banks quote variable loan rates in terms of an index plus a margin and the margin is often described in basis points, such as LIBOR plus 400 basis points (or, as the experts say, “beeps”). Beta – a measure of volatility of a public stock relative to an index or a composite of all stocks in a market or geographical region. A beta of more than one indicates the stock has higher volatility than the index (or composite) and a beta of one indicates volatility equivalent to the index (or composite). For example, the price of a stock with a beta of 1.5 will change by 1.5% if the index value changes by 1%. Typically, the S&P500 index is used in calculating the beta of a stock. Beta product – a product that is being tested by potential customers prior to being formally launched into the marketplace. Board of directors – a group of individuals, typically composed of managers, investors and experts who have a fiduciary responsibility for the well being and proper guidance of a corporation. The board is elected by the shareholders. Book – see Private placement memorandum. 61
  • 63.
    National Venture CapitalAssociation Bootstrapping – the actions of a startup to minimize expenses and build cash flow, thereby reducing or eliminating the need for outside investors. Buyout – a sector of the private equity industry. Also, the purchase of a controlling interest of a company by an outside investor (in a leveraged buyout) or a management team (in a management buyout). Bp – see Basis point. Bridge financing – temporary funding that will eventually be replaced by permanent capital from equity investors or debt lenders. In venture capital, a bridge is usually a short term note (6 to 12 months) that converts to preferred stock. Typically, the bridge lender has the right to convert the note to preferred stock at a price that is a 20% to 25% discount from the price of the preferred stock in the next financing round. See Mezzanine and Wipeout bridge. Broad-based weighted average anti-dilution – A weighted average anti-dilution method adjusts downward the price per share of the preferred stock of investor A due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. Investor A’s preferred stock is repriced to a weighted average of investor A’s price and investor B’s price. A broadbased anti-dilution method uses all common stock outstanding on a fully diluted basis (including all convertible securities, warrants and options) in the denominator of the formula for determining the new weighted average price. See Narrow-based weighted average anti-dilution. Burn rate – the rate at which a startup with little or no revenue uses available cash to cover expenses. Usually expressed on a monthly or weekly basis. Business Development Company (BDC) – a publicly traded company that invests in private companies and is required by law to provide meaningful support and assistance to its portfolio companies. Business plan – a document that describes a new concept for a business opportunity. A business plan typically includes the following sections: executive summary, market need, solution, technology, competition, marketing, management, operations, exit strategy, and financials (including cash flow projections). For most venture capital funds fewer than 10 of every 100 business plans received eventually receive funding. 62 Buy-sell agreement – a contract that sets forth the conditions under which a shareholder must first offer his or her shares for sale to the other shareholders before being allowed to sell to entities outside the company. C Corporation – an ownership structure that allows any number of individuals or companies to own shares. A C corporation is a stand-alone legal entity so it offers some protection to its owners, managers and investors from liability resulting from its actions. Capital Asset Pricing Model (CAPM) – a method of estimating the cost of equity capital of a company. The cost of equity capital is equal to the return of a risk-free investment plus a premium that reflects the risk of the company’s equity. Capital call – when a private equity fund manager (usually a “general partner” in a partnership) requests that an investor in the fund (a “limited partner”) provide additional capital. Usually a limited partner will agree to a maximum investment amount and the general partner will make a series of capital calls over time to the limited partner as opportunities arise to finance startups and buyouts. Capital gap – the difficulty faced by some entrepreneurs in trying to raise between $2 million and $5 million. Friends, family and angel investors are typically good sources for financing rounds of less than $2 million, while many venture capital funds have become so large that investments in this size range are difficult. Capitalization table – a table showing the owners of a company’s shares and their ownership percentages as well as the debt holders. It also lists the forms of ownership, such as common stock, preferred stock, warrants, options, senior debt, and subordinated debt. Capital gains – a tax classification of investment earnings resulting from the purchase and sale of assets. Typically, a company’s investors and founders have earnings classified as long term capital gains Thomson Reuters
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    2013 NVCA Yearbook (heldfor a year or longer), which are taxed at a lower rate than ordinary income. Capital stock – a description of stock that applies when there is only one class of shares. This class is known as “common stock”. Capital Under Management – A frequently-used metric for sizing total funds managed by a venture capital or buyout firm. In practice, there are several ways of calculating this. In the US, this is the total committed capital for all funds managed by a firm on which it collects management fees. This calculation ignores whether portions of the committed capital have not yet been called and whether portions of the fund have been liquidated and distributed. It typically does not include aging funds in their “out years” on which fees are not being collected. For purposes of this book in calculating capital managed in figure 1.04, because direct data is not available, the last eight vintage years of capital commitments is considered a proxy for the industry’s total capital under management. Capped participating preferred stock – preferred stock whose participating feature is limited so that an investor cannot receive more than a specified amount. See Participating preferred stock. Carried interest – the share in the capital gains of a venture capital fund which is allocated to the General Partner. Typically, a fund must return the capital given to it by limited partners plus any preferential rate of return before the general partner can share in the profits of the fund. The general partner will typically receive a 20% carried interest, although some successful firms receive 25%-30%. Also known as “carry” or “promote.” Club deal – the act of investing by two or more entities in the same target company, usually involving a leveraged buyout transaction. Co-investment – the direct investment by a limited partner alongside a general partner in a portfolio company. Collateral – hard assets of the borrower, such as real estate or equipment, for which a lender has a legal interest until a loan obligation is fully paid off. Commitment – an obligation, typically the maximum amount that a limited partner agrees to invest in a fund. See Capital call. Common stock – a type of security representing ownership rights in a company. Usually, company founders, management and employees own common stock while investors own preferred stock. In the event of a liquidation of the company, the claims of secured and unsecured creditors, bondholders and preferred stockholders take precedence over common stockholders. See Preferred stock. Comparable – a private or public company with similar characteristics to a private or public company that is being valued. For example, a telecommunications equipment manufacturer whose market value is 2 times revenues can be used to estimate the value of a similar and relatively new company with a new product in the same industry. See Liquidity discount. Control – the authority of an individual or entity that owns more than 50% of equity in a company or owns the largest block of shares compared to other shareholders. Consolidation – see Rollup. Clawback – a clause in the agreement between the general partner and the limited partners of a private equity fund. The clawback gives limited partners the right to reclaim a portion of disbursements to a general partner for profitable investments based on significant losses from later investments in a portfolio. Closing – the conclusion of a financing round whereby all necessary legal documents are signed and capital has been transferred. Thomson Reuters Conversion – the right of an investor or lender to force a company to replace the investor’s preferred shares or the lender’s debt with common shares at a preset conversion ratio. A conversion feature was first used in railroad bonds in the 1800’s. Convertible debt – a loan which allows the lender to exchange the debt for common shares in a company at a preset conversion ratio. Also known as a “convertible note.” 63
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    National Venture CapitalAssociation Convertible preferred stock – a type of stock that gives an owner the right to convert to common shares of stock. Usually, preferred stock has certain rights that common stock doesn’t have, such as decisionmaking management control, a promised return on investment (dividend), or senior priority in receiving proceeds from a sale or liquidation of the company. Typically, convertible preferred stock automatically converts to common stock if the company makes an initial public offering (IPO). Convertible preferred is the most common tool for private equity funds to invest in companies. Current ratio – the ratio of current assets to current liabilities. Co-sale right – a contractual right of an investor to sell some of the investor’s stock along with the founder’s or majority shareholder’s stock if either the founder or majority shareholder elects to sell stock to a third-party. Also known as Tag-along right. Defined benefit plan – a company retirement plan in which the benefits are typically based on an employee’s salary and number of years worked. Fixed benefits are paid after the employee retires. The employer bears the investment risk and is committed to providing the benefits to the employee. Defined benefit plan managers can invest in private equity funds. Cost of capital – see Weighted average cost of capital. Cost of revenue – the expenses generated by the core operations of a company. Covenant – a legal promise to do or not do a certain thing. For example, in a financing arrangement, company management may agree to a negative covenant, whereby it promises not to incur additional debt. The penalties for violation of a covenant may vary from repairing the mistake to losing control of the company. Coverage ratio – describes a company’s ability to pay debt from cash flow or profits. Typical measures are EBITDA/Interest, (EBITDA minus Capital Expenditures)/Interest, and EBIT/Interest. Cram down round – a financing event upon which new investors with substantial capital are able to demand and receive contractual terms that effectively cause the issuance of sufficient new shares by the startup company to significantly reduce (“dilute”) the ownership percentage of previous investors. Cumulative dividends – the owner of preferred stock with cumulative dividends has the right to receive accrued (previously unpaid) dividends in full before dividends are paid to any other classes of stock. 64 Data room – a specific location where potential buyers / investors can review confidential information about a target company. This information may include detailed financial statements, client contracts, intellectual property, property leases, and compensation agreements. Deal flow – a measure of the number of potential investments that a fund reviews in any given period. Defined contribution plan – a company retirement plan in which the employee elects to contribute some portion of his or her salary into a retirement plan, such as a 401(k) or 403(b). The employer may also contribute to the employee’s plan. With this type of plan, the employee bears the investment risk. The benefits depend solely on the amount of money made from investing the employee’s contributions. Defined contribution plan capital cannot be invested in private equity funds. Demand rights – a type of registration right. Demand rights give an investor the right to force a startup to register its shares with the SEC and prepare for a public sale of stock (IPO). Dilution – the reduction in the ownership percentage of current investors, founders and employees caused by the issuance of new shares to new investors. Dilution protection – see Anti-dilution and Full ratchet. Direct secondary transaction – A transaction in which the buyer purchases shares of an operating company from an existing seller. While the transaction is a secondary sale of shares, the transacted interest is a primary issue purchase directly into an operating company. Sellers are often venture capital- Thomson Reuters
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    2013 NVCA Yearbook istsselling their ownership stake in a portfolio company. Buyers are often funds that specialize in such investments. Disbursement – an investment by a fund in a company. Discount rate – the interest rate used to determine the present value of a series of future cash flows. Discounted cash flow (DCF) – a valuation methodology whereby the present value of all future cash flows expected from a company is calculated. Distressed debt – the bonds of a company that is either in or approaching bankruptcy. Some private equity funds specialize in purchasing such debt at deep discounts with the expectation of exerting influence in the restructuring of the company and then selling the debt once the company has meaningfully recovered. Distribution – the transfer of cash or securities to a limited partner resulting from the sale, liquidation or IPO of one or more portfolio companies in which a general partner chose to invest. Dividends – payments made by a company to the owners of certain securities. Typically, dividends are paid quarterly, by approval of the board of directors, to owners of preferred stock. Down round – a round of financing whereby the valuation of the company is lower than the value determined by investors in an earlier round. Drag-along rights – the contractual right of an investor in a company to force all other investors to agree to a specific action, such as the sale of the company. Drawdown schedule – an estimate of the gradual transfer of committed investment funds from the limited partners of a private equity fund to the general partners. Due diligence – the investigatory process performed by investors to assess the viability of a potential investment and the accuracy of the information provided by the target company. Thomson Reuters Dutch auction – a method of conducting an IPO where-by newly issued shares of stock are committed to the highest bidder, then, if any shares remain, to the next highest bidder, and so on until all the shares are committed. Note that the price per share paid by all buyers is the price commitment of the buyer of the last share. Early stage – the state of a company after the seed (formation) stage but before middle stage (generating revenues). Typically, a company in early stage will have a core management team and a proven concept or product, but no positive cash flow. Earnings before interest and taxes (EBIT) – a measurement of the operating profit of a company. One possible valuation methodology is based on a comparison of private and public companies’ value as a multiple of EBIT. Earnings before interest, taxes, depreciation and amortization (EBITDA) – a measurement of the cash flow of a company. One possible valuation methodology is based on a comparison of private and public companies’ value as a multiple of EBITDA. Earn out – an arrangement in which sellers of a business receive additional future payments, usually based on financial performance metrics such as revenue or net income. Elevator pitch – a concise presentation, lasting only a few minutes (an elevator ride), by an entrepreneur to a potential investor about an investment opportunity. Employee Stock Ownership Program (ESOP) – a plan established by a company to reserve shares for employees. Entrepreneur – an individual who starts his or her own business. Entrepreneurship – the application of innovative leadership to limited resources in order to create exceptional value. Enterprise Value (EV) – the sum of the market values of the common stock and long term debt of a company, minus excess cash. 65
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    National Venture CapitalAssociation Equity – the ownership structure of a company represented by common shares, preferred shares or unit interests. Equity = Assets – Liabilities. ESOP – see Employee Stock Ownership Program. Evergreen fund – a fund that reinvests its profits in order to ensure the availability of capital for future investments. Exit strategy – the plan for generating profits for owners and investors of a company. Typically, the options are to merge, be acquired or make an initial public offering (IPO). An alternative is to recapitalize (releverage the company and then pay dividends to shareholders). Expansion stage – the stage of a company characterized by a complete management team and a substantial increase in revenues. Fair value – a financial reporting principle for valuing assets and liabilities, for example, portfolio companies in venture capital fund portfolios. This has received much recent attention as the Financial Accounting Standards Board (FASB) has issued definitive guidance (FAS 157) on this long standing principle. Fairness opinion – a letter issued by an investment bank that charges a fee to assess the fairness of a negotiated price for a merger or acquisition. FAS 157 – an an accounting standard developed by the Financial Accounting Standards Board (FASB) regarding the application of a fair value principle. First refusal – the right of a privately owned company to purchase any shares that employees would like to sell. Founders stock – nominally priced common stock issued to founders, officers, employees, directors, and consultants. Free cash flow to equity (FCFE) – the cash flow available after operating expenses, interest payments on debt, taxes, net principal repayments, preferred stock dividends, reinvestment needs and changes in working capital. In a discounted cash flow model to determine the value of the equity of a firm using 66 FCFE, the discount rate used is the cost of equity. Free cash flow to the firm (FCFF) – the operating cash flow available after operating expenses, taxes, reinvestment needs and changes in working capital, but before any interest payments on debt are made. In a discounted cash flow model to determine the enterprise value of a firm using FCFF, the discount rate used is the weighted average cost of capital (WACC). Friends and family financing – capital provided by the friends and family of founders of an early stage company. Founders should be careful not to create an ownership structure that may hinder the participation of professional investors once the company begins to achieve success. Full ratchet – an anti-dilution protection mechanism whereby the price per share of the preferred stock of investor A is adjusted downward due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. Investor A’s preferred stock is repriced to match the price of investor B’s preferred stock. Usually as a result of the implementation of a ratchet, company management and employees who own a fixed amount of common shares suffer significant dilution. See Narrow-based weighted average anti-dilution and Broad-based weighted average anti-dilution. Fully diluted basis – a methodology for calculating any per share ratios whereby the denominator is the total number of shares issued by the company on the assumption that all warrants and options are exercised and preferred stock. Fund-of-funds – a fund created to invest in private equity funds. Typically, individual investors and relatively small institutional investors participate in a fund-offunds to minimize their portfolio management efforts. Gatekeepers – intermediaries which endowments, pension funds and other institutional investors use as advisors regarding private equity investments. General partner (GP) – a class of partner in a partnership. The general partner retains liability for the actions of the partnership. Historically, venture capital and buyout funds have been structured as limited Thomson Reuters
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    2013 NVCA Yearbook partnerships,with the venture firm as the GP and limited partners (LPs) being the institutional and high net worth investors that provide most of the capital in the partnership. The GP earns a management fee and a percentage of gains (see Carried interest). use a variety of derivative instruments in order to achieve a return that is relatively less correlated to the performance of typical indices (such as the S&P 500) than traditional long-only funds. Hedge fund managers are typically compensated based on assets under management as well as fund performance. GP – see General partner. GP for hire – In a spin-out or a synthetic secondary, a GP for hire refers to the professional investor who may be hired by a purchasing firm to manage the new fund created from the orphaned assets purchased. In past cases, the GP has often expanded its role to fundraise for and run new funds aside from the initial fund. Going-private transaction – when a public company chooses to pay off all public investors, delist from all stock exchanges, and become owned by management, employees, and select private investors. Golden handcuffs – financial incentives that discourage founders and / or important employees from leaving a company before a predetermined date or important milestone. Grossing up – an adjustment of an option pool for management and employees of a company which increases the number of shares available over time. This usually occurs after a financing round whereby one or more investors receive a relatively large percentage of the company. Without a grossing up, managers and employees would suffer the financial and emotional consequences of dilution, thereby potentially affecting the overall performance of the company. Growth stage – the state of a company when it has received one or more rounds of financing and is generating revenue from its product or service. Also known as “middle stage.” High yield debt – debt issued via public offering or public placement (Rule 144A) that is rated below investment grade by S&P or Moody’s. This means that the debt is rated below the top four rating categories (i.e. S&P BB+, Moody’s Ba2 or below). The lower rating is indicative of higher risk of default, and therefore the debt carries a higher coupon or yield than investment grade debt. Also referred to as Junk bonds or Sub-investment grade debt. Hockey stick – the general shape and form of a chart showing revenue, customers, cash or some other financial or operational measure that increases dramatically at some point in the future. Entrepreneurs often develop business plans with hockey stick charts to impress potential investors. Holding period – amount of time an investment remains in a portfolio. Hot issue – stock in an initial public offering that is in high demand. Hot money – capital from investors that have no tolerance for lack of results by the investment manager and move quickly to withdraw at the first sign of trouble. Hurdle rate – a minimum rate of return required before an investor will make an investment. Incorporation – the process by which a business receives a state charter, allowing it to become a corporation. Many corporations choose Delaware because its laws are business-friendly and up to date. Hart-Scott-Rodino Act – a law requiring entities that acquire certain amounts of stock or assets of a company to inform the Federal Trade Commission and the Department of Justice and to observe a waiting period before completing the transaction. Incubator – a company or facility designed to host startup companies. Incubators help startups grow while controlling costs by offering networks of contacts and shared backoffice resources. Hedge fund – an investment fund that has the ability to use leverage, take short positions in securities, or Indenture – the terms and conditions between a bond issuer and bond buyers. Thomson Reuters 67
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    National Venture CapitalAssociation Initial public offering (IPO) – the first offering of stock by a company to the public. New public offerings must be registered with the Securities and Exchange Commission. An IPO is one of the methods that a startup that has achieved significant success can use to raise additional capital for further growth. See Qualified IPO. In-kind distribution – a distribution to limited partners of a private equity fund that is in the form of publicly trades shares rather than cash. Inside round – a round of financing in which the investors are the same investors as the previous round. An inside round raises liability issues since the valuation of the company has no third party verification in the form of an outside investor. In addition, the terms of the inside round may be considered self-dealing if they are onerous to any set of shareholders or if the investors give themselves additional preferential rights. Institutional investor – professional entities that invest capital on behalf of companies or individuals. Examples are: pension plans, insurance companies and university endowments. Intellectual property (IP) – knowledge, techniques, writings and images that are intangible but often protected by law via patents, copyrights, and trademarks. Interest coverage ratio – earnings before interest and taxes (EBIT) divided by interest expense. This is a key ratio used by lenders to assess the ability of a company to produce sufficient cash to pay its debt obligation. Internal rate of return (IRR) – the interest rate at which a certain amount of capital today would have to be invested in order to grow to a specific value at a specific time in the future. Investment thesis / Investment philosophy – the fundamental ideas which determine the types of investments that an investment fund will choose in order to achieve its financial goals. IPEV – Stands for International Private Equity Valuation guidelines group. This group is made up of representatives of the international and US venture 68 capital industry and has published guidelines for applying US GAAP and international IFRS valuation rules. See www.privateequityvaluation.com IPO – see Initial public offering. IRR – see Internal rate of return. Issuer – the company that chooses to distribute a portion of its stock to the public. J curve – a concept that during the first few years of a private equity fund, cash flow or returns are negative due to investments, losses, and expenses, but as investments produce results the cash flow or returns trend upward. A graph of cash flow or returns versus time would then resemble the letter “J”. Later stage – the state of a company that has proven its concept, achieved significant revenues compared to its competition, and is approaching cash flow break even or positive net income. Typically, a later stage company is about 6 to 12 months away from a liquidity event such as an IPO or buyout. The rate of return for venture capitalists that invest in later stage, less risky ventures is lower than in earlier stage ventures. LBO – see Leveraged buyout. Lead investor – the venture capital investor that makes the largest investment in a financing round and manages the documentation and closing of that round. The lead investor sets the price per share of the financing round, thereby determining the valuation of the company. Letter of intent – a document confirming the intent of an investor to participate in a round of financing for a company. By signing this document, the subject company agrees to begin the legal and due diligence process prior to the closing of the transaction. Also known as a “Term Sheet”. Leverage – the use of debt to acquire assets, build operations and increase revenues. By using debt, a company is attempting to achieve results faster than if it only used its cash available from pre-leverage operations. The risk is that the increase in assets and revenues does not generate sufficient net income and cash flow to pay the interest costs of the debt. Thomson Reuters
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    2013 NVCA Yearbook Leveragedbuyout (LBO) – the purchase of a company or a business unit of a company by an outside investor using mostly borrowed capital. Leveraged recapitalization – the reorganization of a company’s capital structure resulting in more debt added to the balance sheet. Private equity funds can recapitalize a portfolio company and then direct the company to issue a one-time dividend to equity investors. This is often done when the company is performing well financially and the debt markets are expanding. Leverage ratios – measurements of a company’s debt as a multiple of cash flow. Typical leverage ratios include Total Debt / EBITDA, Total Debt / (EBITDA minus Capital Expenditures), and Seniore Debt / EBITDA. L.I.B.O.R. – see The London Interbank Offered Rate. License – a contract in which a patent owner grants to a company the right to make, use or sell an invention under certain circumstances and for compensation. Limited liability company (LLC) – an ownership structure designed to limit the founders’ losses to the amount of their investment. An LLC itself does not pay taxes, rather its owners pay taxes on their proportion of the LLC profits at their individual tax rates. Limited partnership – a legal entity composed of a general partner and various limited partners. The general partner manages the investments and is liable for the actions of the partnership while the limited partners are generally protected from legal actions and any losses beyond their original investment. The general partner collects a management fee and earns a percentage of capital gains (see Carried interest), while the limited partners receive income, capital gains and tax benefits. Limited partner (LP) – an investor in a limited partnership. The general partner is liable for the actions of the partnership while the limited partners are generally protected from legal actions and any losses beyond their original investment. The limited partner receives income, capital gains and tax benefits. Thomson Reuters Liquidation – the sale of a company. This may occur in the context of an acquisition by a larger company or in the context of selling off all assets prior to cessation of operations (Chapter 7 bankruptcy). In a liquidation, the claims of secured and unsecured creditors, bondholders and preferred stockholders take precedence over common stockholders. Liquidation preference – the contractual right of an investor to priority in receiving the proceeds from the liquidation of a company. For example, a venture capital investor with a “2x liquidation preference” has the right to receive two times its original investment upon liquidation. Liquidity discount – a decrease in the value of a private company compared to the value of a similar but publicly traded company. Since an investor in a private company cannot readily sell his or her investment, the shares in the private company must be valued less than a comparable public company. Liquidity event – a transaction whereby owners of a significant portion of the shares of a private company sell their shares in exchange for cash or shares in another, usually larger company. For example, an IPO is a liquidity event. Lock-up agreement – investors, management and employees often agree not to sell their shares for a specific time period after an IPO, usually 6 to 12 months. By avoiding large sales of its stock, the company has time to build interest among potential buyers of its shares. London Interbank Offered Rate (L.I.B.O.R.) – the average rate charged by large banks in London for loans to each other. LIBOR is a relatively volatile rate and is typically quoted in maturities of one month, three months, six months and one year. Management buyout (MBO) – a leveraged buyout controlled by the members of the management team of a company or a division. Often an MBO is conducted in partnership with a buyout fund. Management fee – a fee charged to the limited partners in a fund by the general partner. Management fees in a private equity fund usually range from 0.75% to 3% of capital under management, depend- 69
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    National Venture CapitalAssociation ing on the type and size of fund. For venture capital funds, 2% is typical. Management rights – the rights often required by a venture capitalist as part of the agreement to invest in a company. The venture capitalist has the right to consult with management on key operational issues, attend board meetings and review information about the company’s financial situation. Market capitalization – the value of a publicly traded company as determined by multiplying the number of shares outstanding by the current price per share. MBO – see Management buyout. Mezzanine – a layer of financing that has intermediate priority (seniority) in the capital structure of a company. For example, mezzanine debt has lower priority than senior debt but usually has a higher interest rate and often includes warrants. In venture capital, a mezzanine round is generally the round of financing that is designed to help a company have enough resources to reach an IPO. See Bridge financing. MoneyTree™ Report – Officially known as The MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters. This report provides much of the data in this report. It is used for investment statistics in United States based companies. Specific definition information is available in several of the appendices of this Yearbook. Multiples – a valuation methodology that compares public and private companies in terms of a ratio of value to an operations figure such as revenue or net income. For example, if several publicly traded computer hardware companies are valued at approximately 2 times revenues, then it is reasonable to assume that a startup computer hardware company that is growing fast has the potential to achieve a valuation of 2 times its revenues. Before the startup issues its IPO, it will likely be valued at less than 2 times revenue because of the lack of liquidity of its shares. See Liquidity discount. type of anti-dilution mechanism. A weighted average anti-dilution method adjusts downward the price per share of the preferred stock of investor A due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. Investor A’s preferred stock is repriced to a weighed average of investor A’s price and investor B’s price. A narrow-based anti-dilution uses only common stock outstanding in the denominator of the formula for determining the new weighted average price. NDA – see Non-disclosure agreement. No-shop clause – a section of an agreement to purchase a company whereby the seller agrees not to market the company to other potential buyers for a specific time period. Non-cumulative dividends – dividends that are payable to owners of preferred stock at a specific point in time only if there is sufficient cash flow available after all company expenses have been paid. If cash flow is insufficient, the owners of the preferred stock will not receive the dividends owed for that time period and will have to wait until the board of directors declares another set of dividends. Non-interference – an agreement often signed by employees and management whereby they agree not to interfere with the company’s relationships with employees, clients, suppliers and sub-contractors within a certain time period after termination of employment. Non-solicitation – an agreement often signed by employees and management whereby they agree not to solicit other employees of the company regarding job opportunities. Non-disclosure agreement (NDA) – an agreement issued by entrepreneurs to protect the privacy of their ideas when disclosing those ideas to third parties. Offering memorandum – a legal document that provides details of an investment to potential investors. See Private placement memorandum. OID – see Original issue discount. Narrow-based weighted average anti-dilution – a 70 Thomson Reuters
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    2013 NVCA Yearbook Operatingcash flow – the cash flow produced from the operation of a business, not from investing activities (such as selling assets) or financing activities (such as issuing debt). Calculated as net operating income (NOI) plus depreciation. Option pool – a group of options set aside for long term, phased compensation to management and employees. Piggyback rights – rights of an investor to have his or her shares included in a registration of a startup’s shares in preparation for an IPO. PIK dividend – a dividend paid to the holder of a stock, usually preferred stock, in the form of additional stock rather than cash. PIK refers to payment in kind. PIPEs – see Private investment in public equity. Outstanding shares – the total amount of common shares of a company, not including treasury stock, convertible preferred stock, warrants and options. Pay to play – a clause in a financing agreement whereby any investor that does not participate in a future round agrees to suffer significant dilution compared to other investors. The most onerous version of “pay to play” is automatic conversion to common shares, which in essence ends any preferential rights of an investor, such as the right to influence key management decisions. Pari passu – a legal term referring to the equal treatment of two or more parties in an agreement. For example, a venture capitalist may agree to have registration rights that are pari passu with the other investors in a financing round. Participating dividends – the right of holders of certain preferred stock to receive dividends and participate in additional distributions of cash, stock or other assets. Participating preferred stock – a unit of ownership composed of preferred stock and common stock. The preferred stock entitles the owner to receive a predetermined sum of cash (usually the original investment plus accrued dividends) if the company is sold or has an IPO. The common stock represents additional continued ownership in the company. Participating preferred stock has been characterized as “having your cake and eating it too”. PEIGG – acronym for Private Equity Industry Guidelines Group, an ad hoc group of individuals and firms involved in the private equity industry for the purpose of establishing valuation and reporting guidelines. Thomson Reuters Placement agent – a company that specializes in finding institutional investors that are willing and able to invest in a private equity fund. Sometimes a private equity fund will hire a placement agent so the fund partners can focus on making and managing investments in companies rather than on raising capital. Portfolio company – a company that has received an investment from a private equity fund. Post-money valuation – the valuation of a company including the capital provided by the current round of financing. For example, a venture capitalist may invest $5 million in a company valued at $2 million “pre-money” (before the investment was made). As a result, the startup will have a post-money valuation of $7 million. PPM – see Private placement memorandum. Preemptive rights – the rights of shareholders to maintain their percentage ownership of a company by buying shares sold by the company in future financing rounds. Preference – seniority, usually with respect to dividends and proceeds from a sale or dissolution of a company. Preferred return – a minimum return per annum that must be generated for limited partners of a private equity fund before the general partner can begin receiving a percentage of profits from investments. Preferred stock – a type of stock that has certain rights that common stock does not have. These special rights may include dividends, participation, liquidity preference, anti-dilution protection and veto 71
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    National Venture CapitalAssociation provisions, among others. Private equity investors usually purchase preferred stock when they make investments in companies. Pre-money valuation – the valuation of a company prior to the current round of financing. For example, a venture capitalist may invest $5 million in a company valued at $2 million pre-money. As a result, the startup will have a “post-money” valuation of $7 million. Primary shares – shares sold by a corporation (not by individual shareholders). Private Equity Growth Capital Council (PEGCC) – an advocacy, communications and research organization for the buyout industry in the United States. Private equity – equity investments in non-public companies, usually defined as being made up of venture capital funds and buyout funds. Real estate, oil and gas, and other such partnerships are sometimes included in the definition. Private investment in public equity (PIPEs) – investments by a private equity fund in a publicly traded company, usually at a discount and in the form of preferred stock. Private placement – the sale of a security directly to a limited number of institutional and qualified individual investors. If structured correctly, a private placement avoids registration with the Securities and Exchange Commission. Private placement memorandum (PPM) – a document explaining the details of an investment to potential investors. For example, a private equity fund will issue a PPM when it is raising capital from institutional investors. Also, a startup may issue a PPM when it needs growth capital. Also known as “Offering Memorandum”. Private securities – securities that are not registered with the Securities and Exchange Commission and do not trade on any exchanges. The price per share is negotiated between the buyer and the seller (the “issuer”). Prudent man rule – a fundamental principle for 72 professional money management which serves as a basis for the Prudent Investor Act. The principle is based on a statement by Judge Samuel Putnum in 1830: “Those with the responsibility to invest money for others should act with prudence, discretion, intelligence and regard for the safety of capital as well as income.” In the 1970s a favorable interpretation of this rule enabled pension fund managers to invest in venture capital for the first time. Qualified IPO – a public offering of securities valued at or above a total amount specified in a financing agreement. This amount is usually specified to be sufficiently large to guarantee that the IPO shares will trade in a major exchange (NASDAQ or New York Stock Exchange). Usually upon a qualified IPO preferred stock is forced to convert to common stock. Quartile – one fourth of the data points in a data set. Often, private equity investors are measured by the results of their investments during a particular period of time. Institutional investors often prefer to invest in private equity funds that demonstrate consistent results over time, placing in the upper quartile of the investment results for all funds. Ratchet – a mechanism to prevent dilution. An antidilution clause in a contract protects an investor from a reduction in percentage ownership in a company due to the future issuance by the company of additional shares to other entities. Realization ratio – the ratio of cumulative distributions to paid-in capital. The realization ratio is used as a measure of the distributions from investment results of a private equity partnership compared to the capital under management. Recapitalization – the reorganization of a company’s capital structure. Red herring – a preliminary prospectus filed with the Securities and Exchange Commission and containing the details of an IPO offering. The name refers to the disclosure warning printed in red letters on the cover of each preliminary prospectus advising potential investors of the risks involved. Redemption rights – the right of an investor to force the startup company to buy back the shares issued as Thomson Reuters
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    2013 NVCA Yearbook aresult of the investment. In effect, the investor has the right to take back his/her investment and may even negotiate a right to receive an additional sum in excess of the original investment. Registration – the process whereby shares of a company are registered with the Securities and Exchange Commission under the Securities Act of 1933 in preparation for a sale of the shares to the public. Regulation D – an SEC regulation that governs private placements. Private placements are investment offerings for institutional and accredited individual investors but not for the general public. There is an exception that 35 non-accredited investors can participate. Restricted shares – shares that cannot be traded in the public markets. Return on investment (ROI) – the proceeds from an investment, during a specific time period, calculated as a percentage of the original investment. Also, net profit after taxes divided by average total assets. Rights offering – an offering of stock to current shareholders that entitles them to purchase the new issue, usually at a discount. ROI – see Return on investment. Rollup – the purchase of relatively smaller companies in a sector by a rapidly growing company in the same sector. The strategy is to create economies of scale. For example, the movie theater industry underwent significant consolidation in the 1960’s and 1970’s. Round – a financing event usually involving several private equity investors. Royalties – payments made to patent or copyright owners in exchange for the use of their intellectual property. Rule 144 – a rule of the Securities and Exchange Commission that specifies the conditions under which the holder of shares acquired in a private transaction may sell those shares in the public markets. S corporation – an ownership structure that limits its number of owners to 100. An S corporation does not pay taxes, rather its owners pay taxes on their proportion of the corporation’s profits at their individual tax rates. SBIC – see Small Business Investment Company. Rights of co-sale with founders – a clause in venture capital investment agreements that allows the VC fund to sell shares at the same time that the founders of a startup chose to sell. Right of first refusal – a contractual right to participate in a transaction. For example, a venture capitalist may participate in a first round of investment in a startup and request a right of first refusal in any following rounds of investment. Risk-free rate – a term used in finance theory to describe the return from investing in a riskless security. In practice, this is often taken to be the return on US Treasury Bills. Road show – presentations made in several cities to potential investors and other interested parties. For example, a company will often make a road show to generate interest among institutional investors prior to its IPO. Thomson Reuters Scalability – a characteristic of a new business concept that entails the growth of sales and revenues with a much slower growth of organizational complexity and expenses. Venture capitalists look for scalability in the startups they select to finance. Scale-down – a schedule for phased decreases in management fees for general partners in a limited partnership as the fund reduces its investment activities toward the end of its term. Scale-up – the process of a company growing quickly while maintaining operational and financial controls in place. Also, a schedule for phased increases in management fees for general partners in a limited partnership as the fund increases its investment activities over time. Secondary market – a market for the sale of limited partnership interests in private equity funds. Sometimes limited partners chose to sell their 73
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    National Venture CapitalAssociation interest in a partnership, typically to raise cash or because they cannot meet their obligation to invest more capital according to the takedown schedule. Certain investment companies specialize in buying these partnership interests at a discount. form of debt or equity in order to use in private equity investing. Secondary shares – shares sold by a shareholder (not by the corporation). Stock option – a right to purchase or sell a share of stock at a specific price within a specific period of time. Stock purchase options are commonly used as long term incentive compensation for employees and management of fast growth companies. Securities and Exchange Commission (SEC) – the regulatory body that enforces federal securities laws such as the Securities Act of 1933 and the Securities Exchange Act of 1934. Strategic investor – a relatively large corporation that agrees to invest in a young or a smaller company in order to have access to its proprietary technology, product or service. Seed capital – investment provided by angels, friends and family to the founders of a startup in seed stage. Subordinated debt – a loan that has a lower priority than a senior loan in case of a liquidation of the asset or company. Also known as “junior debt”. Seed stage – the state of a company when it has just been incorporated and its founders are developing their product or service. Success rate – the proportion of venture funded companies that are considered successful. A study of companies funded by VCs during the 1990s indicated that 14% of the companies went public and another 11%were acquired. Senior debt – a loan that has a higher priority in case of a liquidation of the asset or company. Seniority – higher priority. Series A preferred stock – preferred stock issued by a fast growth company in exchange for capital from investors in the “A” round of financing. This preferred stock is usually convertible to common shares upon the IPO or sale of the company. Shareholder agreement – a contract that sets out, for example, the basis on which the company will be operated and the shareholders’ rights and obligations. It provides protection to minority shareholders. Sharpe Ratio – a method of calculating the riskadjusted return of an investment. The Sharpe Ratio is calculated by subtracting the risk-free rate from the return on a specific investment for a time period (usually one year) and then dividing the resulting figure by the standard deviation of the historical (annual) returns for that investment. The higher the Sharpe Ratio, the better. Small Business Investment Company (SBIC) – a company licensed by the Small Business Administration to receive government capital in the 74 Sweat equity – ownership of shares in a company resulting primarily from work rather than investment of capital. Syndicate – a group of investors that agree to participate in a round of funding for a company. Alternatively, a syndicate can refer to a group of investment banks that agree to participate in the sale of stock to the public as part of an IPO. Synthetic secondary – A popular method of completing a direct secondary transaction in which the buyer becomes a limited partner (LP) in a special purpose vehicle (SPV) or similar entity which has been set up out of the underlying investments in order to create a limited partnership interest. The term arose because of the synthetic nature of the direct purchase through the LP secondary transaction. Tag-along right – the right of a minority investor to receive the same benefits as a majority investor. Usually applies to a sale of securities by investors. Also known as Co-sale right. Takedown – a schedule of the transfer of capital in phases in order to complete a commitment of funds. Thomson Reuters
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    2013 NVCA Yearbook Typically,a takedown is used by a general partner of a private equity fund to plan the transfer of capital from the limited partners. Tender offer – an offer to public shareholders of a company to purchase their shares. Term loan – a bank loan for a specific period of time, usually up to ten years in leveraged buyout structures. Term sheet – a document confirming the intent of an investor to participate in a round of financing for a company. By signing this document, the subject company agrees to begin the legal and due diligence process prior to the closing of the transaction. Also known as “Letter of Intent”. Tranche – a portion of a set of securities. Each tranche may have different rights or risk characteristics. When venture capital firms finance a company, a round may be disbursed in two or three tranches, each of which is paid when the company attains one or more milestones. Turnaround – a process resulting in a substantial increase in a company’s revenues, profits and reputation. Under water option – an option is said to be under water if the current fair market value of a stock is less than the option exercise price. Underwriter – an investment bank that chooses to be responsible for the process of selling new securities to the public. An underwriter usually chooses to work with a syndicate of investment banks in order to maximize the distribution of the securities. Venture capital – a segment of the private equity industry which focuses on investing in new companies with high growth potential and accompanying high risk. Venture capital method – a pricing valuation method whereby an estimate of the future value of a company is discounted by a certain interest rate and adjusted for future anticipated dilution in order to determine the current value. Usually, discount rates for the venture capital method are considerably high- Thomson Reuters er than public stock return rates, representing the fact that venture capitalists must achieve significant returns on investment in order to compensate for the risks they take in funding unproven companies. Vesting – a schedule by which employees gain ownership over time of a previously agreed upon amount of retirement funding or stock options. Vintage – the year that a private equity fund stops accepting new investors and begins to make investments on behalf of those investors. Venture funds are generally benchmarked to funds of the same vintage year. Voting rights – the rights of holders of preferred and common stock in a company to vote on certain acts affecting the company. These matters may include payment of dividends, issuance of a new class of stock, merger or liquidation. Warrant – a security which gives the holder the right to purchase shares in a company at a pre-determined price. A warrant is a long term option, usually valid for several years or indefinitely. Typically, warrants are issued concurrently with preferred stocks or bonds in order to increase the appeal of the stocks or bonds to potential investors. Washout round – a financing round whereby previous investors, the founders and management suffer significant dilution. Usually as a result of a washout round, the new investor gains majority ownership and control of the company. Weighted average cost of capital (WACC) – the average of the cost of equity and the after-tax cost of debt. This average is determined using weight factors based on the ratio of equity to debt plus equity and the ratio of debt to debt plus equity. Weighted average anti-dilution – an anti-dilution protection mechanism whereby the conversion rate of preferred stock is adjusted in order to reduce an investor’s loss due to an increase in the number of shares in a company. Without anti-dilution protection, an investor would suffer from a reduction of his or her percentage ownership. Usually as a result of the implementation of a weighted average anti-dilution, company management and employees who own a fixed 75
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    National Venture CapitalAssociation amount of common shares suffer significant dilution, but not as badly as in the case of a full ratchet. Write-down – a decrease in the reported value of an asset or a company. Write-off – a decrease in the reported value of an asset or a company to zero. Write-up – an increase in the reported value of an asset or a company. Zombie – a company that has received capital from investors but has only generated sufficient revenues and cash flow to maintain its operations without significant growth. Sometimes referred to as “walking dead.” Typically, a venture capitalist has to make a difficult decision as to whether to liquidate a zombie or continue to invest funds in the hopes that the zombie will become a winner. These definitions were graciously provided by the Center for Private Equity and Entrepreneurship at the Tuck School of Business at Dartmouth. Please refer to the Center’s website for additional definitions and information at http://mba.tuck.dartmouth.edu/pecenter/resources/glossary.html. Used by permission. Thomson Reuters and National Venture Capital Association are grateful to the Center for its support. 76 Thomson Reuters
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    Appendix B: MoneyTreeReport Criteria PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters The MoneyTree Report is a quarterly study of venture capital investment activity in the United States. As a collaboration between PricewaterhouseCoopers and the National Venture Capital Association, based upon data from Thomson Reuters, it is the only industry-endorsed research of its kind. The MoneyTree Report is the definitive source of information on emerging companies that receive financing and the venture capital firms that provide it. The study is a staple of the financial community, entrepreneurs, government policymakers and the business press worldwide. Report Criteria The MoneyTree™ Report records cash for equity investments as the cash is actually received by the company (also called a tranche) as opposed to when financing is committed (often referred to as a “term sheet”) to a company. Accordingly, the amount reported in a given quarter may be less than the total round amount committed to the company at the time when the round of financing closed. The type of financing as it is used in the MoneyTree™ Report refers to the number of tranches a company has received. The number designation (1, 2, 3, etc.) does not refer to the round of financing. Rounds are usually designated alphabetically, e.g. Series A, Series B, and so on. The MoneyTree™ Report does not track rounds. Summary Description The MoneyTree™ Report measures cash-for-equity investments by the professional venture capital community in private emerging companies in the U.S. It is based on data provided by Thomson Reuters. General Definition The report includes the investment activity of profes- Thomson Reuters sional venture capital firms with or without a US office, SBICs, venture arms of corporations, institutions, investment banks and similar entities whose primary activity is financial investing. Where there are other participants such as angels, corporations, and governments in a qualified and verified financing round the entire amount of the round is included. Qualifying transactions include cash investments by these entities either directly or by participation in various forms of private placement. All recipient companies are private, and may have been newly-created or spun-out of existing companies. The report excludes debt, buyouts, recapitalizations, secondary purchases, IPOs, investments in public companies such as PIPES (private investments in public entities), investments for which the proceeds are primarily intended for acquisition such as rollups, change of ownership, and other forms of private equity that do not involve cash such as services-inkind and venture leasing. Investee companies must be domiciled in one of the 50 US states or DC even if substantial portions of their activities are outside the United States. Specific Methodology The focus of the report is on cash received by the company. Therefore, tranches not term sheets are the determining factor. Drawdowns on commitments are recognized at the time the company receives the money rather than recorded as a lump sum amount at the time the term sheet is executed. Convertible debt and bridge loans are recognized only when converted to equity. Once a company has received a qualifying venture capital financing round, all subsequent equity financing rounds are included regardless of whether the round involved a venture capital firm as long as all other investment criteria are met (e.g. cash-for-equity, not buyout or services in kind). Angel, incubator and similar investments are consid- 77
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    National Venture CapitalAssociation ered pre-venture financing if the company has received no prior qualifying venture capital investment and are not included in the MoneyTree™ results. Angel, incubator and similar investments that are part of a qualifying venture capital round or follow a qualifying venture capital round are included to the extent that such investments can be fully verified as meeting all other criteria (e.g. cash for equity, not buyout or services in kind). Direct investment by corporations (not through a corporate venture capital arm) is excluded unless (a) the investment is clearly demonstrated to be primarily a financial investment rather than outsourced R&D or market development, (b) it is a co-investment in an otherwise qualifying round, or (c) it follows a qualifying venture round in a company and meets all other criteria (e.g. cash-for-equity, not buyout or services in kind). Data is primarily obtained from a quarterly survey of venture capital practitioners conducted by Thomson 78 Reuters. Information is augmented by other research techniques including other public and private sources. All data is subject to verification with the venture capital firms and/or the investee companies. Only professional independent venture capital firms, institutional venture capital groups, and recognized corporate venture capital groups are included in venture capital industry rankings. Disclaimer PricewaterhouseCoopers and the National Venture Capital Association have taken responsible steps to ensure that the information contained in the MoneyTree™ Report has been obtained from reliable sources. However, neither of the parties nor Thomson Reuters can warrant the ultimate validity of the data obtained in this manner. Results are updated periodically. Therefore, all data is subject to change at any time. Thomson Reuters
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    Appendix C: MoneyTreeGeographical Definitions The Geographical Regions identified in the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters and used in this NVCA Yearbook are as follows: Alaska/Hawaii/Puerto Rico: Alaska, Hawaii, and Puerto Rico Northwest: Washington, Oregon, Idaho, Montana, and Wyoming Colorado: The state of Colorado Philadelphia Metro: Eastern Pennsylvania, southern New Jersey, and Delaware DC/Metroplex: Washington, D.C., Virginia, West Virginia, and Maryland LA/Orange County: Los Angeles, Ventura, Orange, and Riverside Counties (i.e., southern California, except San Diego) Midwest: Illinois, Missouri, Indiana, Kentucky, Ohio, Michigan, and western Pennsylvania New England: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and parts of Connecticut (excluding Fairfield county) New York Metro: Metropolitan NY area, northern New Jersey, and Fairfield County, Connecticut North Central: Minnesota, Iowa, Wisconsin, North Dakota, South Dakota, and Nebraska Thomson Reuters Sacramento/Northern California: Northeastern California San Diego: San Diego area Silicon Valley: Northern California, bay area and coastline South Central: Kansas, Oklahoma, Arkansas, and Louisiana Southeast: Alabama, Florida, Georgia, Mississippi, Tennessee, South Carolina, and North Carolina Southwest: Utah, Arizona, New Mexico, and Nevada Texas: The state of Texas Upstate New York: Northern New York state, except Metropolitan New York City area 81
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  • 84.
    Appendix D: IndustryCodes (VEIC) Company VE Primary Industry Class 1000 Communications and Media 1100 Commercial Communications 1110 Radio & TV Broadcasting Stations 1120 CATV & Pay TV Systems 1125 Cable Service Providers 1130 Radio & TV Broadcasting & Other Related Equipment 1135 Services to Commercial Communications 1199 Other Commercial Communications 1700 Media and Entertainment 1710 Entertainment 1720 Publishing 1800 Other Communications Related 1200 Telecommunications 1210 Long Distance Telephone Services 1215 Local Exchange Carriers (LEC) 1220 Telephone Interconnect & Other Equipment 1230 Telephone answering and/or management systems, PBXs 1299 Other Telephone Related 1300 Wireless Communications 1310 Mobile Communications, Pagers & Cellular Radio 1320 Wireless Communications Services 1325 Messaging Services 1330 Wireless Communications Components 1399 Other Wireless Communications 1400 Facsimile Transmission 1500 Data Comm. 1500 Data Communications 1510 Local Area Networks (incl. voice/data PBX systems) 1515 Wide Area Networks 1520 Data Communications Components 1521 Communications Processors/Network Management 1522 Protocol Converters & Emulators 1523 Modems and Multiplexers 1524 Other Data Communication Components 1525 Switches/Hubs/Routers/Gateways/ATM 1530 Network test, monitor and support equipment 1549 Other Data Communications 1600 Satellite Comm 1600 Satellite Microwave Communications 1610 Satellite Services/Carriers/Operators 1620 Satellite Ground (and other) Equipment 1630 Microwave Service Facilities 1640 Microwave & Satellite Components 1699 Other Satellite & Microwave 1800 Comm. Other Thomson Reuters 1100 Commer. Comm. 1400 Facsimile Trans 2100 Computer Hardware Company VE Primary Industry Sub-Group 3 1300 Wireless Communications 1000 Communications Company VE Primary Industry Sub-Group 2 1200 Telephone Rel. 1000 Information Technology Company VE Primary Industry Sub-Group 1 1810 Defense Communications 1825 Other Communications Services NEC 1899 Other Communications Products (not yet classified) 2100 Computers Hardware 2100 Computers and Hardware 2110 Mainframes & Scientific Computers 2111 Mainframes 2112 Supercomputers and Scientific Computers 2119 Other Mainframes and Scientific 83
  • 85.
    National Venture CapitalAssociation Company VE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 2120 Mini & Personal/Desktop Computers 2121 Fail Safe Computers 2122 Mini Computers 2123 Personal Computers (micro/personal) 2124 Other Mini and Personal Computers 2125 Portable Computers (notebooks/laptops) 2126 Handheld Computing (PDA) 2130 Optical computing 2140 Servers and Workstations 2141 Servers 2143 Workstations 2144 Thin Client Hardware 2149 Other Servers and Workstations 2200 Digital Imaging and 2300 Turnkey Integrated Systems 2300 Integrated Turnkey Systems and Solutions and Solutions 2311 Business and Office 2312 Consumer 2313 Retailing 2315 Transportation 2316 Finance/Insurance/Real Estate 2317 Agriculture 2318 Recreation/Entertainment 2319 Manufacturing/Industrial/Construction 2320 Medical/Health 2321 Computer related 2322 Communications Products/Servcies 2323 Education 2324 Reference 2325 Scientific 2399 Other Intergrated Systems and Solutions 2500 Computer Peripherals 84 2200 Computer Graphics and Digital Imaging Computer Graphics 2210 CAD/CAM, CAE,EDA Systems 2220 Graphic Systems 2230 Scanning Hardware 2234 OCR (Optical Character Recognition) 2236 OBR (Optical Bar Recognition) 2238 MICR (Magnetic Ink Character Recognition) 2239 Other Scanning Related 2250 Graphics Printers/Plotters 2255 Graphics/Enhanced Video Cards 2260 Other Graphics Peripherals 2280 Other Multimedia NEC 2290 Digital Imaging Hardware and Equipment 2295 Digital Imaging Services 2299 Other Computer Graphics 2500 Peripherals 2510 Terminals 2511 Intelligent Terminals 2512 Portable Terminals 2513 Graphics Terminals 2519 Other Terminals 2520 Printers 2521 Laser Printers 2522 Color Printers 2523 Inkjet Printers 2524 Dot Matrix Printers 2529 Other Printers 2530 Data I/O Devices 2531 Mouse Input Devices 2532 TouchPad Input Devices 2533 Pen based computing Thomson Reuters
  • 86.
    2013 NVCA Yearbook CompanyVE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 2539 Other Data I/O Devices 2540 Disk Related Memory Devices 2541 Floppy Disks & Drives 2542 Winchester Hard Disks and Drives 2543 Optical Disks & Drives,CD-ROM DVD 2546 Disk Drive Components 2549 Other Disk Related 2550 Tape Related Devices 2551 Magnetic Tapes 2552 Tape Heads & Drives 2553 Continuous Tape Backup Systems 2559 Other Tape Related Devices 2560 Other Memory Devices (excl. semiconductors) 2561 PC or PMCIA cards 2562 Memory Cards 2563 Sound Cards 2564 Communications Cards 2569 Other Peripheral Cards 2590 Other Peripherals (not yet classified) 2700 Computer Software 2600 Computer Services 2630 Time Sharing Firms 2640 Computer Leasing & Rentals 2650 Computer Training Services 2655 Backup and Disaster Recover 2660 Data Processing,Analysis & Input Services 2665 Computer Repair Services 2670 Computerized Billing & Accounting Services 2675 Computer Security Services 2691 Data communications systems management 2699 Other Computer Services 2700 Computer Software Thomson Reuters 2600 Computer Services 2700 Computer Software 2710 Systems Software 2711 Database & File Management 2712 Operating Systems & Utilities 2713 Program Development Tools/CASE/Languages 2716 Graphics and Digital Imaging Software 2719 Other Systems Software 2720 Communications/Networking Software 2721 Security/Firewalls,Encryption software 2722 Email Software 2723 Groupware 2724 Multimedia software 2729 Other Communications/Networking Software 2730 Applications Software 2731 Business and Office Software 2732 Home Use Software 2733 Educational Software 2734 Manufacturing/Industrial Software 2735 Medical/Health Software 2736 Banks/Financial Institutions Software 2737 Retailing Software 2738 Integrated Software 2739 ERP/Inventory Software 2740 Recreational/Game Software 2741 Scientific Software 2743 Agricultural Software 2744 Transportation Software 2748 Other Industry specific Software 2749 Other Applications Software 2750 Artificial Intelligence Related Software 85
  • 87.
    National Venture CapitalAssociation Company VE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 2751 Expert Systems 2752 Natural Language 2753 Computer-Aided Instruction 2754 Artificial Intel. Programming Aids 2755 Other Artificial Intelligence Related 2799 Other Software Related 2710 Computer Programming 1550 Internet Communications and Infrastructure NEC 1551 Internet Access Services and Service Providers 1552 Internet Multimedia Services 1553 Internet Backbone Infrastructure 1559 Other Internet Communications NEC 1560 E-Commerce Technology 1561 Internet Security and Transaction Services 1562 Ecommerce Services 1569 Other Ecommerce 2100 Computers Hardware 2142 Web Servers 2780 Internet Software 1563 Ecommerce Enabling Software 2780 Internet Systems Software 2781 Site Development and Administration Software 2782 Internet Search Software and Engines 2783 WebServer Software 2784 Web Languages (Java/ActiveX/HTML/XML) 2785 Web Authoring/Development Software 2798 Other Internet Systems Software 2785 Internet Programming 2765 Internet/Web Design and programming services 2766 Internet Graphics Services 2768 Other Internet Software Services 2800 Internet Ecommerce 86 1550 Internet Communications 1560 E-Commerce Technology 2800 Internet Specific 2760 Software Services 2761 Programming Services/Systems Engineering 2762 Software Consulting Services 2763 Software Distribution/Clearinghouse 2769 Other Software Services 2800 Internet and Online Related 2810 E-Commerce—Selling products Online or Internet 2811 Business and Office Products 2812 Consumer Products 2813 Retailing Products 2814 Publishing Products 2815 Transportation Products 2816 Finance/Insurance/Real Estate products 2817 Agricultural Products 2818 Recreation/Entertainment/Music/Movies 2819 Manufacturing/Industrial/Construction 2820 Medical/Health 2821 Computer Related 2822 Communications Products 2823 Education Products 2824 Reference Products 2825 Scientific Products 2826 Legal Products 2829 Other Ecommerce Selling Products 2830 Eccommerce—Selling Services Online/Internet 2831 Business and Office Services 2832 Consumer Services 2833 Retailing Services Thomson Reuters
  • 88.
    2013 NVCA Yearbook CompanyVE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 2834 Publishing Services 2835 Transportation Services 2836 Finance/Insurance/Real Estate Services 2837 Agricultural Services 2838 Recreation/Entertainment/Music/Movies 2839 Manufacturing/Industrial/Construction 2840 Medical/Health Services 2841 Computer Related services 2842 Communications Products/Services 2843 Education Services 2844 Reference 2845 Scientific 2846 Legal 2848 Recreation/Entertainment Services 2849 Other Ecommerce Selling Services 2810 Internet Content 2820 Internet Services 2900 Computer Other 2850 Web Aggregration/Portal Sites/Exchanges 2851 Business and Office Info/content 2852 Consumer Info/Content 2853 Retailing Info/Content 2854 Publishing Info/Content 2855 Transportation Info/Content 2856 Finance/Real Estate/Insurance Info/Content 2857 Agriculture Info/Content 2858 Recreation/Entertainment/Music/Movies 2859 Manufac/Industrial/Constr. Info/Content 2860 Medical/Health Info/Content 2861 Computer Related Info/Content 2862 Communications Info/Content 2863 Education Info/Content 2864 Reference Info/Content 2865 Scientific Info/Content 2866 Legal Info/Content 2869 Other Aggregation/Portal/Exchange Sites 2870 Internet Services 2871 Internet Marketing Services 2873 Data Warehousing Services 2879 Other Internet and Online Services NEC 2900 Computer Other 2000 Computer Related 2900 Other Computer Related 2910 Voice Synthesis 2911 Voice Recognition 2990 Other Computer Related (not yet classified) 3000 Semiconductor/Electr 3100 Semiconductors/Other Electronics 3100 Electronic Components 3110 Semiconductors 3111 Customized Semiconductors 3112 Standard Semiconductors 3114 Flash Memory 3115 Optoelectronics semiconductors (incl laser diodes) 3119 Other Semiconductors 3120 Microprocessors 3130 Controllers and Sensors 3132 Controllers 3135 Sensors 3139 Other Controllers/Sensors 3140 Circuit Boards 3160 Display Panels 3200 Batteries 3300 Power Supplies 3300 Power Supplies 3310 Uninterruptible Power Supply (UPS) 3400 Electronics Equipment Thomson Reuters 3200 Batteries 3400 Electronics Related Equipment 87
  • 89.
    National Venture CapitalAssociation Company VE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 3410 Semiconductor Fabrication Equip. & Wafer Products 3420 Component Testing Equipment 3499 Other Electronics Related Equipment 3500 Laser Related 3600 Fiber Optics 3700 Analytical & Scientific Instrumentation 3710 Chromatographs & Related Laboratory Equipment 3720 Other Measuring Devices 3799 Other Analytical & Scientific Instrumentation 3800 Electronics, Other 3000 Other Electronics Related 3170 Other Electronics Related (including keyboards) 3800 Other Electronics Related 3810 Military Electronics (excluding communications) 3820 Copiers 3830 Calculators 3835 Security/Alarm/Sensors 3899 Other Electronics Related (incl. alarm systems) 3900 Optoelectronics 3900 Optoelectronics 3910 Photo diodes 3920 Optoelectronics fabrication equipment 3930 Lenses with Optoelectronics applications 3940 Advanced photographic processes (incl lithographs) 3989 Other Optoelectrinics Related 3990 Other Electronc Semiconductor 4100 Biotech-Human 4100 Human Biotechnology 4110 Medical Diagnostic Biotechnology Products 4111 In Vitro Monoclonal Antibody Diagnostics 4112 In Vivo Monoclonal Antibody Diagnostics/ Imaging 4113 DNA/RNA Probes 4119 Other Medical Diagnostic Biotechnology 4120 Therapeutic Biotechnology Products 4121 Therapeutic Monoclonal Antibodies 4122 Immune Response Effectors (interferons, vaccines) 4123 Other Therapeutic Proteins (incl. hormones & TPA) 4129 Other Therapeutic Biotechnology 4130 Genetic Engineering 4200 Biotech-Animal 88 3600 Fiber Optics 3610 Fiber Optic Cables 3620 Fiber Optic Couplers and Connectors 3630 Fiber Optic Communication Systems (see 1510) 3699 Other Fiber Optics 3700 Scientific Instrumentation 4000 Medical/Health/Life Science 4000 Biotechnology 3500 Laser Related 3510 Laser Components (incl. beamsplitters, excimers) 3599 Other Laser Related 4200 Agricultural/Animal Biotechnology 4210 Genetically Engineered Plants 4220 Genetic. Eng. Microorganisms to raise plant yield 4230 Other Plant Related Biotechnology 4240 Biotech Related Animal Health & Nutrition Products 4250 Genetically Engineered Animals Thomson Reuters
  • 90.
    2013 NVCA Yearbook CompanyVE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 4290 Other Animal Related Biotechnology 4300 Biotech-Industrial 4400 Biosensors 4500 Biotech Related Research & Production Equipment 4510 Biotech Related Analytical Instruments & Apparatus 4520 Biotech Related Production Equipment 4525 Biotech laser and optronic applications 4599 Other Biotech Research & Production Equipment 4600 Biotech Research 4600 Biotech Related Research & Other Services 4610 Pure & Contract Biotechnology Research 4699 Other Biotechnology Services 4700 Biotech Other 4000 Biotechnology and Pharmacology 4900 Other Biotechnology Related 5100 Medical Diagnostics 5100 Medical Diagnostics 5110 Diagnostic Services 5120 Medical Imaging 5121 X-Rays 5122 CAT Scanning 5123 Ultra Sound Imaging 5124 Nuclear Imaging 5125 Other Medical Imaging 5130 Diagnostic Test Products & Equipment 5140 Other Medical Diagnostics 5200 Medical Therapeutics 5200 Medical Therapeutics 5210 Therapeutic Services 5220 Surgical Instrumentation & Equipment 5221 Surgical lasers (including laser delivery fibers) 5230 Pacemakers & Artificial Organs 5240 Drug Delivery & Other Equipment 5299 Other Therapeutic (including defibrillators) 5300 Med/Health Products Thomson Reuters 4400 Biosensors 4410 Biosensors for Medical Diagnostic Applications 4420 Biosensors for Industrial Applications 4490 Other Biosensors 4500 Biotech Equipment 5000 Medical/Health 4300 Industrial Biotechnology 4310 Biochemical Products 4311 Biotech Related Fine Chemicals (NOT Pharmaceuts.) 4312 Biotech Related Commodity Chemicals 4319 Other Biochemical Products 4320 Biotech Processes for Food Industrial 1 Applications 4321 Biotech Related Food Enzymes and Cultures 4322 Biotech Related Food Diagnostics 4329 Other Biotech Process for Food/Industrial Products 4330 Biotech Processes for Pollution/Toxic Waste Control 4340 Biotech Processes for Enhanced Oil Recovery/Mining 4390 Other Industrial Biotechnology 5000 Medical/Health Related 5300 Medical Health Related Products 5310 Disposable Medical Products 5340 Handicap Aids 5350 Medical Monitoring Equipment 5380 Health related optics (including glasses, lenses) 5399 Other Medical/Health (NEC) 89
  • 91.
    National Venture CapitalAssociation Company VE Primary Industry Class 5400 Medical Health Services 5410 Hospitals/Clinics/Primary Care 5412 Long Term Care/Home Care/Elder Care 5414 Dependent Care (child care/assisted living 5420 Managed care (including PPO/PPM) 5429 Other Healthcare Facilities 5430 Emergency Services/Ambulance 5440 Hospital & Other Institutional Management 5499 Other Medical/Health Services 5500 Pharmaceuticals 5510 Pharmaceutical Research 5520 Pharmaceutical Production 5530 Pharmaceutical Services 5540 Pharmaceutical Equipment 5550 Pharmaceuticals/Fine Chemicals (nonbiotech) 5599 Other Pharmaceutical NEC 7100 Entertainment and Leisure 7100 Entertainment and Leisure 7110 Movies,Movie Products & Theater Operations 7120 Amusement & Recreational Facilities 7125 Casino and Gambling 7130 Toys & Electronic Games 7140 Sporting Goods,Hobby Equipment & Athletic Clothes 7150 Sports Facilities (Gyms and Clubs) 7155 Sports 7160 TVs, Radio, Stereo Equipment & Consumer Electronics 7170 Music,Records,Production and Instruments 7199 Other Leisure/Recreational Products and Services 7200 Retailing Related 7200 Retailing Related 7210 Drug Stores 7220 Clothing and Shoe Stores 7230 Discount Stores 7240 Computer Stores 7245 Retail Publishing (books, magazines, newspapers) 7246 Office Supply Stores 7247 Music/Electronics 7248 Specialty Department and retail stores 7250 Franchises(NEC) 7299 Other Retailing Related 7300 Food and Beverage 7300 Food and Beverages 7310 Wine & Liquors 7320 Health Food 7330 Soft Drinks & Bottling Plants 7340 Food Supplements/Vitamins 7350 General Food Products 7399 Other Food and Beverages 7400 Consumer Products 7400 Consumer Products 7410 Clothing,Shoes & Accessories (incl. jewelry) 7420 Health & Beauty Aids 7430 Home Furnishing & Housewares 7431 Housewares 7432 Furnishings & Furniture 7433 Garden and Horticultural Products 7434 Other Home Furnishings (NEC) 7450 Mobile Homes 7499 Other Consumer Products 7500 Consumer Services 90 Company VE Primary Industry Sub-Group 3 5500 Pharmaceutical 7000 Consumer Related Company VE Primary Industry Sub-Group 2 5400 Med/Health Services 6000 Non-High Technology Company VE Primary Industry Sub-Group 1 7500 Consumer Services 7510 Fast Food Restaurants Thomson Reuters
  • 92.
    2013 NVCA Yearbook CompanyVE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 7520 Other Restaurants 7530 Hotels and Resorts 7540 Auto Repair Shops 7550 Education & Educational Products and Materials 7560 Travel Agencies and Services 7599 Other Consumer Services 7600 Consumer, Other 8141 Semiconductor Materials (eg. silicon wafers) 8142 III/V Semiconductor Mater. (eg. gallium arsenide) 6100 Oil & Gas Exploration and Production 6200 Oil & Gas Exploration Services 6300 Oil & Gas Drilling & Support Services 6400 Oil & Gas Drilling,Exploration & Extraction Equip. 6410 Oil & Gas Drilling & Extraction Equipment 6420 Oil & Gas Drilling Instrumentation 6430 Oil & Gas Exploration Equip. Instrumentation 6499 Other Oil & Gas (NEC) 6500 Energy, Alternative 6500 Alternative Energy 6510 Solar Energy 6511 Photovoltaic Solar 6512 Other Solar 6520 Wind Energy 6530 Geothermal Energy 6540 Energy Co-Generation 6599 Other Alternative Energy (incl. nuclear energy) 6600 Energy, Enhanced Recovery 6600 Enhanced Oil Recovery/Heavy Oil/Shale 6700 Energy, Coal 6700 Coal Related 6710 Coal Mining 6720 Coal Related Equipment 6799 Other Coal Related 6800 Energy, Conservation 6800 Energy Conservation Related 6900 Energy, Other 6000 Energy Related 6900 Other Energy Related 8100 Chemicals and Materials Thomson Reuters 3100 Semiconductors/Other Electronics 6100 Oil & Gas Exploration 8000 Industrial/Energy 7000 Consumer Related 7999 Other Consumer Related (not yet classified) 8100 Chemicals & Materials 8110 Plastic Fabricators 8111 Homogeneous Injections/Extrusions 8112 Non-Homogeneous Injections/Extrusions 8113 Fiber-Reinforced (Plastic) Composites 8114 Other Fabricated Plastics 8115 Processes for Working with Plastics 8119 Other Plasti Fabricators 8120 Coatings & Adhesives Manufacturers 8121 Optical coatings 8129 Other Coatings & Adhesives 8130 Membranes & Membrane-Based Products 8140 Specialty/Performance Materials 8143 Specialty Metals (incl. coatings, alloys, clad) 8144 Ceramics 8145 Lubricants & Functional Fluids 8146 Other Specialty Materials 8147 Specialty materials for laser generation 8148 Superconducting materials 8149 Other Special Performance Materials 8150 Commodity Chemicals & Polymers 91
  • 93.
    National Venture CapitalAssociation Company VE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 3 8151 Industrial Chemicals 8152 Polymer (Plastics) Materials 8160 Specialty/Performance Chemicals 8161 Electronic Chemicals 8162 Other Industrial Chemicals 8170 Agricultural Chemicals 8189 Other Commidity Chemicals and Polymers 8199 Other Chemicals & Materials (not yet classified) 8200 Industrial Automation 8200 Industrial Automation 8210 Energy Management 8220 Industrial Measurement & Sensing Equipment 8221 Laser related measuring & sensing equipment 8230 Process Control Equipment & Systems 8240 Robotics 8250 Machine Vision Software & Systems 8260 Numeric & Computerized Control of Machine Tools 8299 Other Industrial Automation (NEC) 8300 Industrial Equipment 8300 Industrial Equipment and Machinery 8310 Machine Tools, Other Metalworking Equipment 8320 Hoists, Cranes & Conveyors 8330 Pumps, Ball Bearings, Compressors, Indus. Hardware 8340 Mining Machinery 8350 Industrial Trucks and Tractors 8360 Other Industrial Process Machinery 8370 Power Transmission Equipment (generators & motors) 8399 Other Industrial Equipment & Machinery 8500 Pollution and Recycling 8500 Environmental Related 8510 Air Filters & Air Purification & Monitoring Equip. 8520 Chemical and Solid Material Recycling 8530 Water Treatment Equipment & Waste Disposal Systems 8599 Other Environmental Related 8600 Industrial Products, Other 8700 Industrial Services 9100 Transportation Company VE Primary Industry Sub-Group 2 8000 Industrial Products 8600 Other Industrial Products (not yet classified) 8700 Industrial Services 9100 Transportation 9100 Transportation 9110 Airlines and Aviation Related 9120 Trucking 9125 Railway related 9130 Leasing of Railcars,Buses and Cars 9140 Mail and Package Shipment 9150 Motor Vehicles,Transporation Equipment & Parts 9160 Airfield and Other Transportation Services 9180 Advanced Aircraft/Aerospace 9199 Other Transportation 9200 Financial Services 92 9200 Financial Services 9200 Financial Services 9210 Insurance Related 9220 Real Estate 9230 Banking 9235 Non Bank Credit 9240 Securities & Commodities Brokers and Services 9250 Investment Groups 9254 Venture Capital and Private Equity Investors 9255 Financial Transactions Services Thomson Reuters
  • 94.
    2013 NVCA Yearbook CompanyVE Primary Industry Class Company VE Primary Industry Sub-Group 1 Company VE Primary Industry Sub-Group 2 Company VE Primary Industry Sub-Group 3 9299 Financial Services, 0ther 9300 Business Serv. 9300 Services 9310 Engineering Services 9320 Advertising and Public Relations 9330 Leasing (not elsewhere classified) 9340 Distributors,Importers and Wholesalers 9350 Consulting Services 9360 Media Related Services 9399 Other Services NEC 9400 Manufact. 9400 Manufacturing 9400 Product Manufacturing 9410 Business Products and Supplies 9415 Office Automation Equipment 9420 Office Furniture & Other Professional Furnishings 9430 Textiles (Synthetic & Natural) 9440 Hardware,Plumbing Supplies 9450 Publishing 9460 Packaging Products & Systems 9470 Printing & Binding 9499 Other Manufacturing (not elsewhere classified) 9500 Agr/Forestr/Fish 9500 Agricultural, Forestry 9500 Agriculture, Forestry, Fishing, Animal Husbandry,etc. 9510 Agriculture related 9520 Forestry related 9530 Fishing related 9540 Animal husbandry 9599 Other Agriculture,Forestry,Fishing 9600 Mining and Minerals (non-energy related) 9700 Construction 9700 Construction 9700 Construction & Building Products 9710 Construction 9720 Manufacture of Building Products 9730 Manufacture of Pre-Fabricated Buildings & Systems 9740 Distribution of Building Products & Systems 9750 Construction Services 9799 Other Construction & Building Products Related 9800 Utilities 9800 Utilities 9800 Utilities and Related Firms 9810 Electric Companies 9820 Water,Sewage,Chem. & Solid Waste Treatment Plants 9830 Gas Transmission & Distribution 9899 Other Utilities & Related Firms 9900 Other Thomson Reuters 9300 Business Services 9900 Other 9000 Other Services and Manufacturing 9900 Other Products and Services 9910 Conglomerates 9912 Socially Responsible 9914 Environment Responsible 9915 Women-Owned 9918 Minority-Owned 9920 Holding Companies 9999 Other Products and Services 93
  • 95.
    National Venture CapitalAssociation This page is intentionally left blank. 94 Thomson Reuters
  • 96.
    Appendix E: IndustrySector VEIC Ranges Industry analysis is based upon the following industry sectors: Biotechnology, Business Products and Services,Computers and Peripherals, Consumer Products and Services, Computer Software, Electronics/Instrumentation, Financial Services, Healthcare Services, Industrial/Energy, IT Services, Media and Entertainment, Medical Devices and Equipment, Networking and Equipment, Retailing/Distribution, Semiconductors, Telecommunications and Other. These sectors are based on the 17 industry classifications of the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. Biotechnology 4000, 4100, 4110, 4111, 4112, 4113, 4119, 4120, 4121, 4122, 4123, 4129, 4130, 4200, 4210, 4220, 4230, 4240, 4250, 4290, 4300, 4310, 4311, 4312, 4319, 4320, 4321, 4322, 4329, 4330, 4340, 4390, 4400, 4410, 4420, 4490, 4500, 4510, 4520, 4525, 4599, 4600, 4610, 4699, 4900, 5500, 5510, 5520, 5530, 5540, 5550, 5599 Business Products and Services 2811, 2824, 2831, 2844, 9300, 9310, 9320, 9330, 9340, 9350, 9360, 9399 Computers and Peripherals 2000, 2100, 2110, 2111, 2112, 2119, 2120, 2121, 2122, 2123, 2124, 2125, 2126, 2130, 2140, 2141, 2142, 2143, 2144, 2149, 2220, 2230, 2234, 2236, 2238, 2239, 2250, 2255, 2260, 2280, 2290, 2295, 2299, 2500, 2510, 2511, 2512, 2513, 2519, 2520, 2521, 2522, 2523, 2524, 2529, 2530, 2531, 2532, 2533, 2539, 2540, 2541, 2542, 2543, 2546, 2549, 2550, 2551, 2552, 2553, 2559, 2560, 2561, 2562, 2563, 2564, 2569, 2590, 3170 Consumer Products and Services 2812, 2832, 7000, 7300, 7310, 7320, 7330, 7340, 7399, 7400, 7410, 7420, 7430, 7431, 7432, 7433, 7434, 7450, 7499, 7500, 7510, 7520, 7530, 7540, 7550, 7560, 7599, 7999 Computer Software 1563, 2200, 2210, 2300, 2311, 2312, 2313, 2315, 2316, 2317, 2318, 2319, 2320, 2321, 2322, 2323, 2324, 2325, 2399, 2700, 2710, 2711, 2712, 2713, 2716, 2719, 2720, 2721, 2722, 2723, 2724, 2729, 2730, 2731, 2732, 2733, 2734, 2735, 2736, 2737, 2738, 2739, 2740, 2741, 2743, 2744, 2748, 2749, 2750, 2751, 2752, 2753, 2754, 2755, 2780, 2781, 2782, 2783, 2784, 2785, 2798, 2799, 2900, 2910, 2911, 2990, 8250 Electronics/Instrumentation 3000, 3100, 3160, 3200, 3300, 3310, 3400, 3420, 3499, 3500, 3510, 3599, 3700, 3710, 3720, 3799, 3800, 3810, 3820, 3830, 3835, 3899 Financial Services 2816, 2836, 9200, 9210, 9220, 9230, 9235, 9240, 9250, 9254, 9255, 9299 Healthcare Services 2820, 2840, 5400, 5410, 5412, 5414, 5420, 5429, 5430, 5440, 5499 Thomson Reuters 95
  • 97.
    National Venture CapitalAssociation Industrial/Energy 2819, 2837, 2839, 6000, 6100, 6200, 6300, 6400, 6410, 6420, 6430, 6499, 6500, 6510, 6511, 6512, 6520, 6530, 6540, 6599, 6600, 6700, 6710, 6720, 6799, 6800, 6900, 8000, 8100, 8110, 8111, 8112, 8113, 8114, 8115, 8119, 8120, 8121, 8129, 8130, 8140, 8143, 8144, 8145, 8146, 8147, 8148, 8149, 8150, 8151, 8152, 8160, 8161, 8162, 8170, 8189, 8199, 8200, 8210, 8220, 8221, 8230, 8240, 8260, 8299, 8300, 8310, 8320, 8330, 8340, 8350, 8360, 8370, 8399, 8500, 8510, 8520, 8530, 8599, 8600, 8700, 9000, 9100, 9110, 9120, 9125, 9130, 9140, 9150, 9160, 9180, 9199, 9400, 9410, 9415, 9420, 9430, 9440, 9460, 9470, 9499, 9500, 9510, 9520, 9530, 9540, 9599, 9600, 9700, 9710, 9720, 9730, 9740, 9750, 9799, 9800, 9810, 9820, 9830, 9899 IT Services 1560, 1561, 1562, 1569, 2600, 2630, 2640, 2650, 2655, 2660, 2665, 2670, 2675, 2691, 2699, 2760, 2761, 2762, 2763, 2765, 2766, 2768, 2769, 2800, 2870, 2871, 2873, 2879 Media and Entertainment 1110, 1120, 1125, 1130, 1135, 1199, 1700, 1720, 2814, 2818, 2834, 2838, 2843, 2848, 2850, 2851, 2852, 2853, 2854, 2855, 2856, 2857, 2858, 2859, 2860, 2861, 2862, 2863, 2864, 2865, 2866, 2869, 7100, 7110, 7120, 7125, 7130, 7140, 7150, 7155, 7160, 7170, 7199, 9450 Medical Devices and Equipment 5000, 5100, 5110, 5120, 5121, 5122, 5123, 5124, 5125, 5130, 5140, 5200, 5210, 5220, 5221, 5230, 5240, 5299, 5300, 5310, 5340, 5350, 5380, 5399 Networking and Equipment 1400, 1500, 1510, 1515, 1520, 1521, 1522, 1523, 1524, 1525, 1530, 1549, 3600, 3610, 3620, 3630, 3699 Retailing/Distribution 2810, 2813, 2815, 2817, 2821, 2823, 2825, 2826, 2829, 2830, 2833, 2835, 2841, 2845, 2846, 2849, 7200, 7210, 7220, 7230, 7240, 7245, 7246, 7247, 7248, 7250, 7299, 7350 Semiconductors 3110, 3111, 3112, 3114, 3115, 3119, 3120, 3130, 3132, 3135, 3139, 3140, 3410, 3900, 3910, 3920, 3930, 3940, 3989, 3990, 8141, 8142 Telecommunications 1000, 1100, 1200, 1210, 1215, 1220, 1230, 1299, 1300, 1310, 1320, 1325, 1330, 1399, 1550, 1551, 1552, 1553, 1559, 1600, 1610, 1620, 1630, 1640, 1699, 1710, 1800, 1810, 1825, 1899, 2822, 2842 Other 9900, 9910, 9912, 9914, 9915, 9918, 9920, 9999 96 Thomson Reuters
  • 98.
    Appendix F: StageDefinitions SEED STAGE FINANCING This stage is a relatively small amount of capital provided to an inventor or entrepreneur to prove a concept. This involves product development and market research as well as building a management team and developing a business plan, if the initial steps are successful. This is a pre-marketing stage. EARLY STAGE FINANCING This stage provides financing to companies completing development where products are mostly in testing or pilot production. In some cases, product may have just been made commercially available. Companies may be in the process of organizing or they may already be in business for three years or less. Usually such firms will have made market studies, assembled the key management, developed a business plan, and are ready or have already started conducting business. EXPANSION STAGE FINANCING This stage involves working capital for the initial expansion of a company that is producing and shipping and has growing accounts receivables and inventories. It may or may not be showing a profit. Some of the uses of capital may include further plant expansion, marketing, working capital, or development of an improved product. More institutional investors are more likely to be included along with initial investors from previous rounds. The venture capitalist’s role in this stage evolves from a supportive role to a more strategic role. LATER STAGE Capital in this stage is provided for companies that have reached a fairly stable growth rate; that is, not growing as fast as the rates attained in the expansion stages. Again, these companies may or may not be profitable, but are more likely to be than in previous stages of development. Other financial characteristics of these companies include positive cash flow. This also includes companies considering IPO. ACQUISITION FINANCING An acquisition of 49% stake or less. Firm acquires minority shares of a company. Thomson Reuters includes these deals in standard venture capital disbursement data when calculating venture capital disbursements where the funding is by a venture capital firm. ACQUISITION FOR EXPANSION Funds provided to a company to finance its acquisition of other companies or assets. A consolidator of companies in specific industries. MANAGEMENT/LEVERAGED BUYOUT These funds enable an operating management group to acquire a product line or business, at any stage of development, from either a public or private company. Often these companies are closely held or family owned. Management/leveraged buyouts usually involve revitalizing an operation, with entrepreneurial management acquiring a significant equity interest. Thomson Reuters 97
  • 99.
    National Venture CapitalAssociation RECAP/TURNAROUND Financing provided to a company at a time of operational or financial difficulty with the intention of improving the company’s performance. SECONDARY BUYOUT A buyout deal on top of a buyout deal. Secondary buyouts are distinguished when the initial firm investor is different from the current investing firm. 98 Thomson Reuters
  • 100.
    Appendix G: DataSources and Resources For this publication, the main source for data was ThomsonONE.com, the online research database of Thomson Reuters. ThomsonONE.com (which replaced VentureXpert™, and Thomson One Banker) is endorsed by the NVCA as the official United States venture capital activity database. By using data gathered through the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters, ThomsonONE.com contains investment, fund raising, portfolio company information, and Reuters News along with other statistical data. Over 1.1 million global private companies can be analyzed within ThomsonONE.com, including historical revenue figures on over 450,000 companies and detailed financials on over 160,000 companies with up to a five year history. Through a partnership with VC Experts.com, Inc. the historical breadth and depth of the Thomson Reuters venture capital content is integrated with private company valuation and deal terms. ThomsonONE.com includes blogs, events, and articles from the peHUB and the Venture Capital Journal, two of the industry’s most widely-read publications. Other information contained in this database is gathered through a variety of public and proprietary source. This publication is produced on an annual basis primarily using year-end data. However, the underlying databases can be accessed online to provide the most up-to-date and comprehensive global private equity statistics and profile information available. Data Sources and Resources MoneyTree™ Data plete and accurate information. PricewaterhouseCoopers, Thomson Reuters, and the National Venture Capital Association joined forces in December 2001 to produce what was then known as the PricewaterhouseCoopers/Thomson Venture Economics/National Venture Capital Association MoneyTree™ Survey. Conducted on a quarterly basis, the designated PwC/NVCA MoneyTree Report allows Thomson Reuters unparalleled access to primary sources of information from general partners. Timeliness of Data Sources of Data The online database of Thomson Reuters is ThomsonONE.com (VentureXpert), the foremost information provider for private equity professionals worldwide. The private equity portion of Thomson Reuters offers an incomparable range of products from directories to conferences, journals, newsletters, research reports, and the ThomsonONE.com Private Equity database. As of March 2013, the database included over 107,000 portfolio companies, over 18,000 private equity firms, nearly 41,000 private equity funds, and over 235,000 financing rounds. By establishing working relationships with private equity and venture capital firms, institutional investors, and industry associations such as the NVCA, PricewaterhouseCoopers and other such entities around the world, Thomson Reuters has been able to gather, on a timely basis, com- Thomson Reuters Many of the tables and charts presented in this report can be produced by using ThomsonONE.com. One of advantages of using ThomsonONE.com is that the reader can customize a report to better fit the needs of what they are seeking. In addition, because the online database is continuously updated, the information available is more up-to-date than what can be presented in this report. Readers should note that timely industry information on details concerning venture capital investment is available from other sources such as PricewaterhouseCoopers at www.pwcmoneytree.com, the ‘Industry Stats’ section of the NVCA website, www.nvca.org, and the Private Equity section of Thomson Reuters’ Deals Intelligence found at http://dmi.thomsonreuters.com/PrivateEquity Verification and Updating of Data Collectively, PricewaterhouseCoopers, Thomson Reuters, and the NVCA have the utmost commitment to provide an accurate historical record of venture capital activity. On a daily basis, the database is constantly analyzed for consistency, crosschecked with other data sources, and updated as new information comes in. On a quarterly basis, we have worked with many venture firms to ensure that that their current and past data is correct. Primarily for this reason, the 99
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    National Venture CapitalAssociation private equity news releases of Thomson Reuters will often restate statistics from prior news releases. With the availability of the online data access, users are encouraged to always use the most current numbers even regarding historical activity so as to maintain accuracy and comparability. Reporting Functionality of ThomsonONE.com Users can access information in terms of profiles on private equity companies, funds, firms, executives, IPOs, and limited partners. In addition, users can access the analytics portion of the database, which contains investment, valuation, PE backed exits, fund performance, and fund raising information along with venture capital information such as aggregate fund raising, and investments. Thomson Reuters On Demand is a service offering that caters to Financial & Risk clients. With access to virtually all F&R content sets, users of the service offering can order reports and analysis as needed. Comprehensiveness of ThomsonONE.com Both the breadth and depth of ThomsonONE.com can perhaps best be shown in that it, among other types of information, the user can find the answers to the following questions: • Which venture firms actively co-invest with a firm I am considering co-investing with? • Which venture firms are most active in funding online financial services companies in the Ohio Valley? • What does Yearbook Figure 3.15 look like for just biotech? • How much money was raised by each fund stage in 2012? • What was a particular venture-backed IPO’s one year return at the end of 2012? • As of December 2012, was the 10-year return to small buyout funds larger than that of large buyout funds? • Who are the most active acquirers of ecommerce security companies? • How much money was committed to mezzanine funds from 1997 to 2012? • How much money was invested in the venture capital industry from 1987 to 2012? • What is the performance at quarter end for private equity funds that were formed from 1998 to 2012? 100 • In 2012, how much money was invested at each development stage in Research Triangle Pharmaceutical companies? In addition, there are also advantages of using the database for a general partner as well. Although this is not an inclusive list, utilizing the database by general partners can be helpful to them for among the following reasons: • Plan your companies’ exits with data on both venture-backed IPOs and mergers and acquisitions • Aid in recruiting talented executives from other venture-backed companies • Quickly spot venture-backed companies in competition with your own portfolio companies • Create industry analyses to benchmark both performance and portfolio investments • Find other venture capitalists likely to support follow- on rounds • Provide clarity to investment decisions by comparing them to current market conditions • Compile valuation reports for comparable portfolio companies • Identify prospective investors and their investment histories • Benchmark valuations among recent transactions and obtain valuation comparables • Analyze investment trends by industry • Utilize returns information to limited partners using appropriate benchmarks • Tailor your pitch to investor focus size and limited partner type Accessing ThomsonONE.com and Other Services For more information on ThomsonONE.com, please visit http://thomsonreuters.com/products_services/financial/financial_products/deal_making/private_equity/private_equity_venture_capital/ or by phone at 1-800-782-5555. For information on NVCA membership, which can include a free trial and discounts on an annual subscription, please contact Janice Mawson at the NVCA. You may contact her online through the link on the member benefits section of the NVCA website or at 703-524-2549. For information on services PricewaterhouseCoopers provides for venture capital firms as well as emerging companies, please visit their website at www.pwcmoneytree.com. Thomson Reuters
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    Appendix H: InternationalConvergence During 2012, the discussions and work focused on moving toward one high quality set of standards for financial reporting have begun to provide a picture of the future. While that picture is more gray scale than vivid color, the following facts and expectations highlight the current state of play at this point in time: • The SEC issued a report in 2012, without a recommendation, on whether to adopt international accounting rules, or a modification thereof, as the accepted accounting practice in the United States. It appears increasingly unlikely that the SEC will move 100% into the International Financial Reporting Standards (IFRS) camp; • FASB’s parent, the Financial Accounting Foundation, created a new Private Company Council (PCC) to advise on private company accounting. Their work is just beginning; • The AICPA is considering whether the PCC will provide an appropriate framework for private companies or if the AICPA should continue with efforts to develop an alternative non-GAAP basis of accounting for private companies; • The International Accounting Standards Board (IASB) modified IFRS consolidation rules to effectively create Investment Company accounting substantially similar to that used under U.S. GAAP; and • While Fair Value accounting rules are now virtually identical under U.S. GAAP and IFRS, auditors are raising questions related to "unit of account" and valuing minority positions that could impact how venture capital and private equity funds estimate Fair Value. The Dialogue and SEC Decision: Should international rules become accepted as U.S. GAAP? For years, the United States has been developing generalized accounting principles referred to as Generally Accepted Accounting Principles (“GAAP”). The keeper/arbiter/decider of GAAP is the Financial Accounting Standards Board (“FASB”). The FASB develops and updates GAAP and the SEC has adopted these accounting rules for public company reporting and other situations over which the SEC has jurisdiction. In recent years, on a parallel track, a separate set of rules emerged from the International Accounting Standards Board (“IASB”), which was Europe-centric. These rules became known as the International Financial Reporting Standards (“IFRS,” pronounced “EYE-fers”). IFRS has now been adopted by most developed and many developing countries around the world, with the exception of the United States. Over recent years, a large number of multinational corporations complained that they had to endure keeping two sets of books and this prompted the con- Thomson Reuters cept of convergence. In early September 2008, the SEC and the FASB announced steps to pave the way for United States public companies to convert from U.S. GAAP to IFRS. The SEC “roadmap” provided for a three-year run-up to an SEC “go-no go” decision in 2011, but the decision was deferred. At about the same time, the FASB and the IASB met to review and re-orient their convergence plan to be consistent with the SEC’s proposed schedule. The 2008-2009 world financial crisis deferred and deprioritized much of the work in this area. The SEC’s 2012 staff report on adopting IFRS did not make a recommendation, but raised questions about consistent application, transparency, reliability, relevance, comparability, and ongoing costs in addition to any conversion costs, which might be significant. More relevant to the United States venture capital industry are matters specifically affecting fund reporting, the financial statements provided by GPs to LPs under the eventual rules. Because of the recent change in IFRS consolidation rules, United States venture capital firms would conceptually not be impacted by a change to IFRS. 101
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    National Venture CapitalAssociation How United States GAAP and International IFRS Compare – Never Generalize Even viewed from 30,000 feet, it is difficult to generalize on how the two systems compare. First, while the IASB produces plain vanilla IFRS standards, there is no one flavor of IFRS in use. Much like the original UNIX kernel, each country/jurisdiction has been able to create its own version of IFRS. But unlike UNIX, sometimes the differences among the localized IFRS versions are large. So apples-to apples comparison of “IFRS-compliant” financials from different jurisdictions can be difficult. Second, it is true that IRFS itself is a very thin document compared to GAAP, which has grown to roughly a two-foot stack of written rules. However, to implement IFRS, you need the implementation guide that combines with the original document to create its own two-foot stack. Again, much of the surface comparisons are not useful. Until now, United States venture capital firms have been using U.S. GAAP accounting standards exclusively. While seemingly distant from the United States venture capital industry, it is important that all business constituencies weigh in on which system (current U.S. GAAP vs. International vs. neither) is the best system overall for the United States business community going forward. GP-to LP Reporting – Can Meaningful Statements Continue? or IFRS, in almost all cases, must report their LP fund positions on a Fair Value basis. LPs are increasingly awakening to the specific conditions outlined in a change to U.S. GAAP from 2009, which codified an LP’s ability to use Net Asset Value (NAV) as an LP’s estimate of the Fair Value of their fund interest. These conditions include that the LP must satisfy themselves that the GP reported NAV is based on the Fair Value of underlying investments, that NAV is “in-phase” (no time lag, unless deemed insignificant), and that the LP interest is in a fund as defined by ASC Topic 946. If these three conditions are not met, or if the LP chooses not to use NAV, then Fair Value would be determined using other techniques. The point here for GPs is that LPs need robustly determined Fair Value on a timely basis, generally at least quarterly. How the Same Words have Different Meanings The 2012 change in IFRS consolidation rules for Investment Entities and the 2011 adoption of a common definition of Fair Value for U.S. GAAP and IFRS should have created a framework where financial reporting to investors would be identical for funds using IFRS and funds using U.S. GAAP. If it were only that easy! While we enter 2013 with a consistent framework under U.S. GAAP and IFRS where venture capital and private equity funds report all investments at Fair Value; and while we now have an identical definition of Fair Value (the amount a market participant would pay in an orderly transaction), schisms are developing. A key priority for the United States venture capital industry is being able to continue producing quarterly financial statements using investment company (IC) accounting. Virtually all LP agreements (or accompanying documents) require GPs to provide GAAP-compliant financial reports to LPs. Annual audits include testing to ensure GAAP compliance. Under GAAP, the United States venture capital industry now provides Fair Value portfolio reports under the special rules of “investment company reporting.” In 2012, IFRS was modified to effectively create a financial reporting framework substantially similar to U.S. GAAP. Because of nuances in the way IFRS is drafted, IFRS auditors are questioning whether Fair Value should be determined based on the “investment” or on a “single share” basis. While the reasons for such a question are beyond the scope of this document, the question and potential results could mean that IFRS and U.S. GAAP, though identical in principle, would result in different Fair Value estimates (as an aside, this is an example of one situation that concerns the SEC in moving the United States towards IFRS). GP’s should not lose sight of the fact their LP’s who prepare financial statements using either U.S. GAAP At the same time, many auditors of U.S. GAAP, as a reaction to their regulators the PCAOB, and because 102 Thomson Reuters
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    2013 NVCA Yearbook ofpressure from the SEC, which now regulates private equity funds, are questioning whether or not the sale or exit of an enterprise can be assumed when determining the Fair Value of minority positions. Some auditors have gone so far as to indicate that they may require the use of option pricing models for determining the Fair Value of all minority positions. Going Forward With questions regarding whether or not IFRS should be interpreted as requiring all Fair Value estimates to be on a single share basis, and with U.S. auditors appearing to feel some pressure to use mathematical models to document their audit conclusions, both GPs and LPs in the venture capital and private equity industry could be faced with financial reporting that is either very costly and/or is not representative of how deals are done in the industry. Thomson Reuters In December 2012, the International Private Equity & Venture Capital Valuation (IPEV) Board updated its Valuation Guidelines. The updated valuation guidelines address both the “unit of account” and mathematical model questions. In addition, IPEV released Investor Reporting Guidelines in October 2012. While each fund manager must decide both what information to report and how to estimate Fair Value, the IPEV Valuation Guidelines and the IPEV Investor Reporting Guidelines provide balanced, and industry created, assistance in dealing with reporting and valuation questions. NVCA and Thomson Reuters acknowledge and appreciate the assistance of David Larsen of Duff and Phelps in updating and refocusing the material in this Appendix. 103
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    Appendix I: USAccounting Rulemaking and Valuation Guidelines In the United States, a venture capital fund is usually organized as a limited partnership. The institutional investors providing capital to a fund typically become the limited partners (LPs). The venture firm itself becomes a general partner (GP) in the limited partnership. In most of the limited partnership agreements defining the GP-LP relationship, the GPs are required to provide financial reports quarterly (unaudited) and annually (audited) prepared according to United States Generally Accepted Accounting Principles (“GAAP”). GAAP calls for the use of investment company accounting, which mandates that a Fair Value be assigned to the individual investments (portfolio companies). This is consistent with the LP’s need for Fair Value of their investments, as well as third-party or regulatory requirements, e.g., ERISA-regulation. In recent years, the GP-to-LP financial statements have been subject to numerous rule “clarifications, convergence with non-U.S. account” ing, expanded disclosures, and more formal presentations. Industry groups (PEIGG a decade ago and IPEV today) have released guidelines that, if adopted, can reduce questions from LPs and provide a basis to respond to questions posed by auditors. Guidelines fall into two categories. The first is portfolio performance presentation formats, calculations, and disclosure. Examples of such Guidelines are the Private Equity Provisions of the Global Investment Performance Standards (GIPS), developed by the CFA Institute and the IPEV Investor Reporting Guidelines. While many of the specifications and terminology line up with current practice in the United States, the NVCA has not endorsed or otherwise commented on these Guidelines. Neither NVCA nor Thomson Reuters has determined how widespread the adoption of those guidelines is or will likely be. These documents and accompanying guidance can be currently found at http://www.cfainstitute.org/centre/codes/gips/ and www.privateequityvaluation.com. The second important category of guidelines is focused on valuation. Why Valuation Guidelines Matter What ultimately matters to investors and private equity practitioners is the cash that has been distributed to the investors during the life of the fund compared with the original money put in. However, the specified life of a typical venture fund is at least 10 years and often longer in the life sciences arena. During that period, the venture capital fund reports progress to the limited partners. In many cases, this means quarterly portfolio updates and a complete annual audited financial statement. For a typical ven- Thomson Reuters ture fund, very little money is paid out in the first four or five years. Also, while every portfolio company receives funding with high expectations, it can take several years to determine if a particular company is a likely winner. Therefore, understanding progress in the portfolio requires some estimate of the success of the investee companies by the venture capital or private equity firm. While many investors and fund managers agree that financial measurements mean little for the first three or so years of a fund, investors are required to report the Fair Value of their fund positions on a quarterly or annual basis. This is where specific valuation rules and processes become important. The agreed valuation procedures for individual portfolio companies become the basis for progress assessment as the fund matures and ultimately distributes cash to the investors. Thus, while portfolio company valuations are more of an art than a science, especially for pre-revenue or even pre-EBITDA companies, most limited partner agreements (LPAs) establishing a venture capital fund require the venture firm to provide quarterly and annual financial statements using Generally Accepted Accounting Principles (GAAP). GAAP requires Fair Value measurement for portfolio positions. Therefore, most GPs must issue financial statements using Fair Value. Most important, if industry-created valuation guidelines are not used, those outside the industry, such as 105
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    National Venture CapitalAssociation self-appointed group of private equity practitioners, fund managers, LPs and others, issued U.S. Private Equity Valuation Guidelines. The Guidelines were issued after extensive input and review soliciting feedback and input from a number of industry groups that included NVCA. auditors or regulators could impose their view on the industry. A non-industry view could adversely impact the LPs desire and ability to invest if interim values are not representative of the way the industry sees value, and costs for determining valuation could increase. • 2005 – In part as a reaction to the PEIGG Guidelines, three Europe-based venture capital associations (AFIC, BVCA, EVCA) created the International Private Equity and Venture Capital (IPEV) Valuation Board. • The Evolution of Reporting and Valuation Guidelines April 2006 – IPEV released its Valuation Guidelines. September 2006 – Financial Accounting Standards Board (FASB) issued its long-awaited and long anticipated Fair Value measurement standard as FAS 157. Only a few of its 145 pages relate directly to typical venture capital and private equity funds. Because the FASB maintains that this is a clarification and further definition of Fair Value that was already required for portfolio accounting, some auditors began requiring selective compliance in advance of the 2008 effective date. To understand the pressure on valuation and reporting in today’s environment, a historical background review is instructive. • • • • 106 1940 – United States Investment Company legislation (“the 40 Act”) required investment companies to report the Fair Value of investments. While the application of accounting standards has evolved over the past 70+ years, the underlying basis of reporting has always been Fair Value. 1989-90 – A group of investors, private equity fund managers, and fund-of-fund managers formed a group to develop a set of portfolio company valuation guidelines for financial reporting. Contrary to a very persistent rumor, the NVCA did not endorse, adopt, bless, publish, or otherwise opine on the guidelines. Using the principle of conservatism, these non-endorsed guidelines used cost or the value of the last round of financing to approximate Fair Value. Decade of the 1990s – Two noteworthy developments occurred in the 1990s. Despite no endorsement by the NVCA, these guidelines became accepted practice by much of the United States industry, especially in the venture capital side of private equity. These guidelines were referred to by many as being issued by the NVCA but in fact they were not. The second development is that international venture associations created localized guidelines based heavily on these guidelines. These were created in Europe and other international regions. In fact, by 2005, there had been multiple iterations of the European and British guidelines, again generally focused on cost or the value of the last round of financing. December 2003/September 2004 – The Private Equity Industry Guidelines Group (PEIGG), a • • March 2007 – PEIGG issued a revised portfolio company valuation guidelines document to reflect the Fair Value Measurement standard (FAS 157). • September 2007 – NVCA board reaffirmed its prior position on the PEIGG guidelines to refer to the most recent version. • March 2008 – the IPEV Board reconstituted and re-launched itself and adds five practitioners from the United States. The initial focus of the group was on convergence of U.S. PEIGG and IPEV valuation guidelines. Details at www.privateequityvaluation.com. • July 2009 – Effective July 1, authoritative GAAP became contained in a single codification and the prior nomenclature went away. Existing U.S. GAAP was recast into 90 topics, which include all related FASB pronouncements, AICPA guidance and EITFs under single “Topics.” Familiar standards would no longer exist. For example, FAS 157 became Topic 820 Fair Value Measurements and Disclosure. Investment Thomson Reuters
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    2013 NVCA Yearbook Companyaccounting became ASC Topic 946. • May 2011 – FASB amended ASC Topic 820 and the IASB issues IFRS 13, resulting in nearly identical Fair Value guidance. • October 2012 – IPEV released Investor Reporting Guidelines • December 2012 – IPEV updated its Valuation Guidelines to harmonize with ASC Topic 820 and IFRS 13. NVCA Position on Portfolio Company Valuation Guidelines The NVCA Board of Directors has not specifically endorsed valuation guidelines, but has historically affirmed its support for pragmatic industry-supported valuation efforts. NVCA Member Alert –Fair Value Considerations for Venture Capitalists–December 2008 In 2008, as a response to the economic crisis at the time, the NVCA issued a membership alert. Much of that alert remains relevant today. The following alert was sent to the NVCA membership to highlight certain issues and considerations to be explored in the application of FAS 157, the Fair Value measurement standard. The NVCA thanks David Larsen of Duff and Phelps and several members of the NVCA CFO Task Force for their role in drafting this document: “We are operating in a severely distressed investment environment that has deteriorated rapidly in the past few months. What does this mean for venture capital investors as they attempt to value privately-held investments at December 31, 2008? The short answer is: despite the current very challenging economic environment, fund managers must continue to exercise their sound judgment in estimating the Fair Value of each portfolio company after considering the relevant facts, including current market conditions. The valuation process does not change, but much more judgment is required when we are in a period of economic discontinuity. Virtually all LP agreements require GPs to use U.S. GAAP for financial reporting. Thomson Reuters U.S. GAAP requires Fair Value reporting for virtually all VC firms because they are “investment companies.” U.S. GAAP continues to define Fair Value as: “the price that would be received to sell an asset … in an orderly transaction between market participants at the measurement date.” Fund managers need to establish Fair Values even though they may not currently need to sell, or cannot sell, their private investments in this market. GPs must use their judgment in estimating the current Fair Values of their investments, even though “exit markets” may have few buyers, IPO markets appear closed, and there are few, if any, relevant comparable transactions. Such judgment should take into account all relevant information, including a financing round’s specific terms and conditions. There are no easy outs, rules of thumb or safe harbors for establishing Fair Value. As always, best considerations for Fair Value determination include the following: • • • • The Fair Value of an investment portfolio is the sum of the Fair Value determined for each portfolio company using a “bottoms up” approach. Applying a “top-down” overall percentage adjustment to the aggregate portfolio’s value is not compliant with U.S. GAAP. Valuations should reflect specific factors in a buy/sell context. For example, a GP could ask: “Given my portfolio company’s current cash position, cash burn rate, performance compared to plan, probability of meeting forecasts, the projected environment for its product or technology, etc., as a board member, what is the lowest price that I would sell the company’s stock today in an orderly sale with a willing buyer?” [Footnote: A fund manager should not assume a “fire sale” of the stock, but should assume “exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary …” from SFAS 157, Paragraph 7]. The valuations set by the most recent financing round – perhaps even one in the third quarter of 2008 – may be stale and inappropriate for determining Fair Value, especially given current market conditions. The Fair Value at December 31 in many cases will likely be different from the value at September 30, given the deterioration of the macroeconomic environment. 107
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    National Venture CapitalAssociation • Each valuation should reflect a company’s degree of progress from the prior reporting date to the current one. • To determine a portfolio company’s Fair Value, GPs should apply their judgment in a consistent manner and evaluate the same data they use for monitoring a company’s performance and progress. There is no magic formula or weighting of factors. In summary, determining Fair Value continues to require the exercise of judgment based on objective evidence, such as calibrating the original investment decision with the current performance of the company and the current economic environment. The fact that the macro market is distressed probably adversely impacts the value of most companies. This negative impact may be compounded by disappointing company performance or mitigated by tangible and sustainable company progress. If you need more details about Fair Value, you might consider the IPEV Valuation Guidelines at www.privateequityvaluation.com.” 2013 Headwinds As noted above, new pressure is emerging that could impact how venture capital and private equity managers estimate Fair Value. Key factors include: 1. LPs are awakening to the fact that they need to obtain more information from the GP about how the GP estimates Fair Value so the LP can use NAV to estimate the Fair Value of their LP interest. a. LPs are revisiting their internal valuation policies. b. LPs are asking more detailed valuation questions of the GP. 2. The IASB has created “investment company accounting” by requiring venture capital and private equity funds to report all investments at Fair Value rather than consolidating control positions. 3. Auditors of IFRS have raised questions concerning the level of aggregation (unit of account) that should be used to value venture capital and private equity investments. a. Some auditors believe that unit of account 108 b. c. d. is a single share of an investee company. Single share valuations would likely result in reporting understated Fair Values. Reporting understated Fair Values would exacerbate the “J” curve, and could cause some LPs to reduce investments in the industry because of lower interim returns. IFRS could deviate from U.S. GAAP even though the Fair Value principles are identical. 4. Auditors of U.S. GAAP have raised questions concerning how to estimate the Fair Value of non-control positions. a. Is it appropriate to assume that the entire enterprise is being sold when estimating Fair Value? b. For non-control positions, is it appropriate or required to use option pricing models and theory to estimate Fair Value? The IASB is expected to address the Unit of Account question during early 2013. The AICPA has formed a task force to provide guidance on investments of venture capital and private equity funds. Part of the reason the AICPA has formed a task force is because the IPEV guidelines have not been as formally accepted or acknowledged in the U.S. as they have been in Europe. Further, some parties believe that the AICPA task force conclusions may be relatively auditor-friendly, rather than being GP/LP/Auditor/Service Provider balanced, as the IPEV guidelines are generally considered to be. All of this raises the question: could GPs reduce LP questions and increase LP valuation comfort by stating that they comply with the IPEV Valuation Guidelines? Further, if the IPEV Valuation Guidelines were more widely adopted by the VC community, would the industry be able to push back on an AICPA effort that could increase GP valuation costs? Over the next year, greater clarity should emerge. NVCA and Thomson Reuters acknowledge and appreciate the assistance of David Larsen of Duff and Phelps in updating and refocusing the material in this Appendix. Thomson Reuters
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    Appendix J: Non-USPrivate Equity As interest in globalization increases with each year, private equity investors have continued to broaden their investment criteria to include overseas ventures so as to increase portfolio diversification and search for higher returns. As such, Appendix J is produced for readers to analyze non-US private equity data. All data is reported in US dollars. Introduction This appendix highlights various aspects of private equity activity outside of the United States and provides valuable information for comparison to the United States private equity environment. However, this appendix is not directly comparable to domestic data found in this Yearbook due to differences in definitions between the regions and variations in the currencies of each region. Additionally, this appendix provides a brief overview of non-US private equity; data herein is not as comprehensive as the United States data presented elsewhere in this publication. Despite this, the reader can use this appendix to analyze trends in private equity outside of the United States. All data is provided by Thomson Reuters. As mentioned previously, readers should note the differences in methodology and definitions of private equity between United States and other regions before analyzing the data. For example, private equity outside of the United States provides equity capital for entities not publicly traded and consists of buyouts and venture capital. The category of buyouts includes management buyouts (management from inside the company investing with private equity investors), leveraged buyouts (the target taking on a high level of debt secured by assets), institutional buyouts (outside investors buying a business from existing shareholders), and management buy-ins (management from outside the company investing with private equity investors). On the other hand, venture capital describes the process of financing companies at the seed, start-up, or expansion stages. The United States places more emphasis on the early stages of development than do other regions, based on historical analysis of investments by stage. Like in the United States, non-US venture capital is considered a subset of private equity. For ease of analysis and to avoid differences in definitions between venture capital and buyouts inside and outside of the United States, it is perhaps most comparable to analyze aggregate private equity in the two regions as opposed to any classifications contained within. Thomson Reuters **Special Note: The methodology used to generate the data within this appendix differs slightly from the methodology used in previous years, causing data to vary slightly from previous Yearbook issues. However, trends reported in the past remain intact. Additionally, most data is now replicable on ThomsonONE.com. Commitments Private equity commitment levels, outside of the United States, totaled $110.3 billion in 2012. European-based funds raised the bulk, raising $59.6 billion, equal to 54% of this amount. Meanwhile, Asian funds had $42.6 billion in fundraising commitments which is 39% of the total. Funds in the Other Regions raised the remaining $8.1 billion or 7% of the total. In the stage level, Buyout commitments outside the United States accounted for $37.9 billion or 34% of the total. Surprisingly taking the second largest part of the commitments was funds of funds which raised $24.1 billion or 22% of the total. Venture Capital funds represented 14% ($15.6 billion). Private Real Estate funds raised $13.2 billion or 12% of the share. Other Private Equity/Special Situation funds, Generalist, and Mezzanine funds raised $9.7 billion, $7.7 billion, and $1.9 billion, respectively. It should be noted that these totals reflect not only the amount raised by independent funds, but also include capital gains and the amount raised by captive funds. Investments Overall, private equity investing outside of the United States reached $73.1 billion. Buyout stage financing led investment activity, accounting for 69% of total dollars. The Venture Capital investments followed with 17% of the total. By number of deals, Venture Capital investments led with 55% and the Buyouts investments followed with 36% of the total deal activity outside of the United States. The United 109
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    National Venture CapitalAssociation Kingdom received the biggest share of private equity outside the United States in 2012 with $13 billion worth of investments or 18% of the total value. Canada followed with $10.5 billion. China comes in at third with $8.4 billion or 12% of the total. Private equity commitments and investments saw a decrease outside of the United States in 2012. Commitments saw a slight decrease of 5% from $115 billion in 2011. Private equity investments dropped 32% from $109 billion of the previous year. Figure J1 Private Equity Commitments Outside of the United States in 2012 # Firms # Funds Amount Raised in Range (USD Mil) 196 124 89 409 Fund World Location 213 138 73 424 42,564.6 59,629.0 8,143.8 110,337.4 Asia Europe Other Regions TOTAL Figure J2 Private Equity Commitments Outside of the United States By Fund Stage in 2012 Fund Stage # Firms Buyouts Venture Capital Generalist Mezzanine Stage Fund of Funds Other Private Equity/Special Situations Real Estate TOTAL # Funds 67 216 30 11 28 11 46 409 68 221 32 11 32 11 49 424 Amount Raised in Range (USD Mil) 37,990.9 15,612.9 7,741.1 1,892.6 24,131.4 9,728.4 13,240.1 110,337.4 Figure J3 Private Equity Investing Outside of the United States By Location in 2012 Company Nation United Kingdom Canada China France Germany Hong Kong Other Nations TOTAL # Deals 703 935 459 619 379 21 2,326 5,442 # Companies 643 824 439 595 354 18 2,203 5,076 Sum of Equity Invested (USD Mil) 13,094.9 10,483.1 8,427.0 4,748.0 4,472.2 4,018.1 27,832.5 73,075.8 Figure J4 Private Equity Investing Outside of the United States By Stage in 2012 Company Stage Buyout/Acquisition Venture Capital Other TOTAL 110 # Deals 1,961 3,010 471 5,442 # Companies 1,843 2,846 433 5,076 Sum of Equity Invested (USD Mil) 50,573.2 12,534.5 9,968.1 73,075.8 Thomson Reuters