[PreMoney SF 2016] Anand Sanwal > CB Insights on Tech, VC and Emerging Trends

www.cbinsights.com @cbinsights
1
PREMONEY
CB Insights on tech, vc and emerging trends

WHAT CB INSIGHTS DOES
WE TELL YOU WHERE
TECHNOLOGY IS GOING
CB Insights organizes massive amounts of
information so that our clients can predict,
communicate and discuss technology trends.
http://www.cbinsights.com

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ABOUT ME
WHO AM I?
• CEO and Co-founder of CB Insights
• Ran American Express’ $50M Chairman’s
Innovation Fund
• Worked in venture capital and M&A
• Author of “Optimizing Corporate Portfolio
Management” (Wiley 2007)
• Graduate of Wharton (Finance and
Accounting) and the University of
Pennsylvania (Chemical Engineering)
Email | asanwal@cbinsights.com
Twitter | @asanwal

A FEW OF OUR HAPPY CUSTOMERS
The most publicly reference-able customers of anyone in the industry
See what other customers have to say at http://www.cbinsights.com/customer-love
“Designed by a VC insider who truly knows the space and
understands end-user needs.”
“We're using CB Insights at Salesforce Ventures to analyze
industry trends that are relevant to our strategy. It's helped improve
our efficiency.”
Matt Garratt
Sr. Director, Corporate
Development
Salesforce Ventures
“CB Insights provides our team with a holistic and thematic
approach that really captures market activity….we've found
CBI to have the best access for the most accurate market
view.”
“We have been looking for a tool that could give us the ability
to track, research and identify investment opportunities. CB
Insights provides this simply and in a simple, easy to use
interface. The depth of information that we get is exactly
what we need. Great product.”
Jonathan Tudor
Ventures Director
Castrol
innoVentures
“CB Insights perfectly illustrates what I expect today from such
online services to stay tuned to our fast-changing Tech Landscape.
Accurate and up-to-date data mash-ups, intuitive UIs, smart data
visualization capabilities and direct API access… all packaged
together with straightforward pricing.”
Simon Mencarelli
Senior Manager, Strategic
Planning
Dassault Systems
“CB Insights' intuitive user interface, analytical capabilities,
and detailed investment information create a very powerful
tool for our team's research needs.”
Nate D’Anna
Corporate Development
Cisco
Greg Bae
Investments & Biz
Dev
Comcast Ventures
Jack Leeney
Portfolio
Manager
Telefonica
Ventures
LOVED BY CUSTOMERS
USED BY THE SMARTEST TEAMS ACROSS EVERY
INDUSTRY

@cbinsights
@asanwal

Image source: Affirm Agency

GLOBAL AND US FINANCING TRENDS

$25.5B DEPLOYED ACROSS 1829 DEALS TO VC-BACKED
COMPANIES IN THE FIRST QUARTER OF 2016
2015 was a record year in both deals and dollars invested in VC-backed companies, though we saw a marked
pullback in financings towards year-end. 2016 has seen a less exuberant start; at the current run rate, deal
activity is roughly on pace to match 2013 while investment dollars would fall between the 2014 and 2015
figures.

Q1’16 SEES CONTINUED DECLINE FROM Q4’15 AS BOTH
DEAL TALLY AND FUNDING DOLLARS DROP
The negative sentiment that caused a sharp correction in Q4’15 has continued to persist into the new year.
Global funding fell a further 8% vs. the previous quarter as mega-round activity continued to cool. Deal count
was a bit more stable but nevertheless fell 4% as opposed to recovering from the drastic drop-off in Q4’15.

SEED-STAGE DEAL SHARE FALLS TO 5-QUARTER LOW
WHILE SERIES A RISES
Deal share to seed-stage investments abruptly dropped in Q1’16, down from 32% of the total in Q4’15 to just
28%. Series A deals continued to take a strong proportion of deals with the 26% in Q1’16 representing a 5-
quarter high for A rounds.

MEDIAN EARLY-STAGE DEAL SIZE TICKS UPWARD TO 5-
QUARTER HIGH
Median early-stage (Seed - Series A) deal size among all VC-backed companies hit $2.7M in Q1’16, up 17%
from the previous quarter. This reflects the active ecosystem of micro-VCs, multi-stage funds and strategic
investors actively pursuing early-stage deals.

GLOBAL MEDIAN LATE-STAGE DEAL SIZES CONTINUE TO
FALL
The continued decline of mega-rounds led to a further drop in global median late-stage (Series D or later) deal
sizes. Q1’16’s median late-stage deal size plunged 30% from the previous quarter to just $22M, nearing the
pre-euphoria figures of Q1’15.

U.S. SAW $14.8B ACROSS 1035 DEALS IN Q1’16
US-based VC-backed companies raised a record $72.4B in equity financing in 2015, although deal count
dropped by 8% from 2014. Negative sentiment has continued to the start of the new year, with deal activity
barely on pace to reach 2011’s figures at the Q1’16 run-rate.

QUARTERLY FINANCING TRENDS TO US-BASED COMPANIES

LESS UNICORN CHATTER

SERIES A AND SERIES B TRENDS

$11.2B INVESTED INTO US-BASED SERIES A AND B
COMPANIES IN 2015
In 2015, funding to US-based tech companies slightly increased over 2014 while deal activity slowed. 2015 had
3 mega-rounds to US-based Series B companies including Gitthub ($250M), Oscar Health ($145M), and
Symphony Communication Services Holdings ($100M).

QUARTERLY TREND REVEALS FINANCING DROPOFF TO
SERIES A AND B STAGE COMPANIES
The quarterly trend reveals a third consecutive quarterly drop in investment to Series A and B-stage companies.
This represents the lowest quarterly total for deals and dollars since Q1’15.

MEDIAN ROUND SIZE OF SERIES A AND B STAGE
COMPANIES IN THE U.S.
The median round size of both Series A and Series B investment has steadily increased over the past 5 years.
From 2011 to 2015, the median round size for Series A companies increased from $3.3M to $6M, representing
an 82% increase, while Series B companies went from $7M to $12.5M, a 79% increase over the period.

HOW LONG DOES IT TAKE COMPANIES RAISE FOLLOW-ON
FINANCING?
Overall, its taking less time for companies to raise financing. The amount of time that seed stage companies
wait before they raise a Series A has steadily declined, and the same is true for Series A companies that have
raised a Series B round.

SERIES A AND SERIES B INVESTOR
TRENDS

MOST ACTIVE SERIES A INVESTORS IN THE U.S.
Rank Investors
1 SV Angel
2 Google Ventures
3 Andreessen Horowitz
4 Lerer Hippeau Ventures
5 First Round Capital
6 True Ventures
7 Accel Partners
8 New Enterprise Associates
8 KhoslaVentures
10 500 Startups
11 Greycroft Partners
12 General Catalyst Partners
13 SequoiaCapital
14 Greylock Partners
15 Kleiner PerkinsCaufield & Byers
16 FelicisVentures
17 Floodgate
18 Foundry Group
Most Active SeriesA InvestorsIn The U.S.
From 2011 through Q1’16, SV Angel ranks as the most active investor participating in Series A rounds to US-
based companies. GV, aka Google Ventures, and a16z round out the second and third spot, as seen below.
1
2
3
4
5

MOST ACTIVE SERIES B INVESTORS IN THE U.S.
1
2
3
4
4
Rank Investors
2 Intel Capital
3 Bessemer Venture Partners
4 KhoslaVentures
6 Accel Partners
6 SequoiaCapital
8 Greylock Partners
10 Battery Ventures
11 Redpoint Ventures
12 Lightspeed Venture Partners
12 Index Ventures
16 Salesforce Ventures
17 Bain Capital Ventures
Most Active Series B Investors In The U.S.
From 2011 through Q1’16, NEA ranks as the most active investor participating in Series B rounds to US-based
companies. Intel Capital, one of the most active CVCs ranks second and Bessemer Venture Partners ranks
third.

MOST ACTIVE SERIES A INVESTORS IN CALIFORNIA
1
2
3
4
5
Rank Investors
2 SV Angel
3 Google Ventures
4 True Ventures
5 KhoslaVentures
6 Accel Partners
7 SequoiaCapital
8 Greylock Partners
9 500 Startups
9 DataCollective
15 FelicisVentures
16 Redpoint Ventures
16 Social Capital
16 Benchmark Capital
Most Active Series A Investors In California
Andreessen Horowitz ranks as the most active investor participating in Series A rounds to California-based
companies. SV Angel and GV round out the top 3, while True Ventures and Khosla Ventures rank at the 4th and
5th spot.

MOST ACTIVE SERIES B INVESTORS IN CALIFORNIA
1
1
3
4
5
Rank Investors
3 KhoslaVentures
4 Intel Capital
5 Greylock Partners
5 SequoiaCapital
7 Accel Partners
8 Redpoint Ventures
9 Index Ventures
10 Bessemer Venture Partners
10 Battery Ventures
14 SV Angel
14 DCM Ventures
14 FelicisVentures
14 Trinity Ventures
18 Formation 8
18 Northgate Capital
18 Institutional Venture Partners
Most Active Series B Investors In California
Andreessen Horowitz ties NEA as the most active investor participating in Series B rounds to California-based
companies. Both funds have billions in assets under management, and have the flexibility to invest across
stages and sectors.

MOST ACTIVE SERIES A INVESTORS IN NEW YORK
1
2
2
4
Rank Investors
1 Lerer Hippeau Ventures
2 RREVentures
2 BoxGroup
5 Softbank Capital
5 SVAngel
8 Spark Capital
8 Thrive Capital
10 IA Ventures
10 Contour Venture Partners
12 Founder Collective
12 ff Venture Capital
14 Slow Ventures
14 General Catalyst Partners
14 Social Starts
17 Great Oaks Venture Capital
17 Tribeca Venture Partners
17 Betaworks
Most Active Series A Investors In New York
Lerer Hippeau Ventures ranks as the most active investor participating in Series A rounds to NY-based
companies. RRE Ventures and BoxGroup tie at the number 2 spot while FirstMark Capital and Greycroft
Partners round out the top 5 spots.

MOST ACTIVE SERIES B INVESTORS IN NEW YORK
1
2
2
2
2
Rank Investors
2 RREVentures
2 Union Square Ventures
2 Softbank Capital
2 Gotham Ventures
6 Intel Capital
6 New York Angels
9 Social Starts
9 QED Investors
9 IA Ventures
Most Active Series B Investors In New York
First Round Capital ranks as the most active investor participating in Series B rounds to NY-based companies.
RRE Ventures, USV, Softbank Capital, and Gotham Ventures are all tied at the number two spot.

THE UNITED STATE OF VENTURE CAPITAL – THE MOST
ACTIVE TECH VC IN EACH STATE

FLASH SALES: THAT WAS OBVIOUS

PAST STARS HAVE LOST THEIR SHINE

MOOCS (MASSIVE OPEN ONLINE COURSES) SEE DECLINING
INTEREST. ED TECH OVERALL IS WEAK.

SPRINKLE SOME “AI” IN THERE

INVESTORS CANNOT GET ENOUGH ARTIFICIAL
INTELLIGENCE
The new “big data”

THE BOT BUBBLE?

AI APPLICATIONS IN HEALTHCARE ALSO VERY HOT

ECOMMERCE IS HAVING A BAD YEAR

SUBSCRIPTION ECOMMERCE SEES FUNDING DECLINE

BUT SUBSCRIPTION SPACE CONTINUES TO GET MEDIA
CHATTER

PROGRAMMATIC COMMERCE
Purchases will be made with data insights (often of the recurring variety). Hardware (IoT) and software (AI)
opportunities. The age old “know when I’m out of milk” and order it issue that smart fridges were supposed to
solve.

ON-DEMAND
This was small handful of companies (Uber, Airbnb) which drove up funding totals and a lot of investors jumped
in driven by FOMO.

LOTS OF HEAT AROUND AUTONOMOUS VEHICLES (AND IT’S
NOT ALL ABOUT GOOGLE)

DIGITAL HEALTH IS HOT
The digital health industry reached a new investment high in 2015. The past year saw nearly $5.8B invested, a
small increase from the breakout year in 2014 (which itself saw more than double the funding over 2013).
However, there was a more significant jump in deals, which saw a 20.6% year-over-year increase and broke the
800-mark for the first time (nearly hitting 900). We need to see exits.

REMEMBER QUANTIFIED SELF

CLINICAL WEARABLES HOTTER THAN GENERAL PURPOSE
FITNESS WEARABLES

FIN TECH IS HOT

BLOCKCHAIN INCREASES IN INTEREST WHILE BITCOIN
SLIPS

WITHIN BLOCKCHAIN, LOTS OF POTENTIAL APPLICATIONS

CYBERSECURITY ALSO HOT (BUT OVERFUNDED)
In dollar terms, investment has grown from $1.1B to $3.8B, which is 235% growth over 5 years. The all-time
high funding total in 2015 was bolstered by large rounds to well-funded companies including Tenable Network
Security‘s $250M Series B and Tanium‘s $120M Series G. The challenge here is that this space is probably
overfunded by lots of ”me too” companies and lemming investors who piled in.

GETTING ‘REAL’
Real estate tech spans categories like property and leasing management software and listing and search
services, among several others. The industry saw a record in deals and dollars in 2015.

“ASSET INTENSIVE”
From oil & gas analytics to mining software to construction tech software (not the fin tech type), a few booming
areas. Smart money like Sequoia, Greylock, Bain are all making bets here.

IoT REMAINS OF INTEREST ESPECIALLY INDUSTRIAL IoT

INDUSTRIAL IoT
Yes - the Internet of Things still has legs. Industrial applications for supply chains, factory floors and oil fields
are gaining steam.

IN GOOD NEWS, BIZ FUNDAMENTALS ARE HOT AGAIN

Email | asanwal@cbinsights.com
Twitter | @asanwal
WHAT CB INSIGHTS DOES
WE TELL YOU WHERE
TECHNOLOGY IS GOING
CB Insights organizes massive amounts of information
so that our clients can discover, predict, and
communicate coming technology trends.

[PreMoney SF 2016] Anand Sanwal > CB Insights on Tech, VC and Emerging Trends

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