The document presents an overview of Silicon Valley Bank's focus on venture debt amidst a changing investment landscape, highlighting reduced venture capital availability and shifting interests towards software sectors. It illustrates the role of venture debt in extending the financial runway of startups and mentions the decreasing interest in cleantech and life sciences. Furthermore, it analyzes current market trends, including mergers and acquisitions, and emphasizes the demand from smaller venture funds and strategic investments from major corporations.

1. Shai Goldman
Silicon Valley Bank
sgoldman@svb.com
Twitter: @shaig
Presentation available at slideshare.net
Nov 30, 2010
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2.  Silicon Valley Bank
 Venture Debt
 Macro Overview
 Less VC $
 Super Angel / Micro VC $
 Corporate VC $
 Less interest in cleantech, life science, semi
 More interest in software
 More M&A and Less IPO
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3.  HQ in Bay Area, California – Est. 1983
 Technology, Venture Capital, Wine
 US, UK, Israel, China, India
 10,000 technology companies are clients
 50%+ of VCs backed startups are clients
 Commercial Bank (Lending, Investments, Valuations, FX)
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4.  Venture Debt does not replace Venture Capital
 Augments Series A round
 Typically used for extending run way
 Series A round -> 18 months
 + Venture Debt -> 24 months
 Hit additional milestones
 Higher valuation on Series B
 Ex: $5M Series A x 20% = $1M Venture Debt
 Pricing (equity/warrants + interest)
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5. 1052
5000
1500
2800
1300
2534
0
1000
2000
3000
4000
5000
6000
1995 2000 2001 2007 2008 2010
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6. 350
94
57
57
86
6 12
40
0
50
100
150
200
250
300
350
400
2000 2004 2005 2006 2007 2008 2009 2010
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7. $7
$100
$35
$22 $22?
$0
$20
$40
$60
$80
$100
$120
1995 2000 2007 2010 2011
VC investments ($US Billion)
Per PWC MoneyTree Report
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8.  10 year returns = negative (below 0%)*
 VCs target a 3X return on fund, 15%+ annual return
 Less interest by their investors i.e. Limited Partners (LPs)
 SWF (Sovereign Wealth Funds) are showing increased
interest
 Exits have decreased, median acquisition is $55M
*http://thomsonreuters.com/content/press_room/financial/2010_08_10_US_
PE_performance_positive
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9.  Smaller funds < $100M
 A few General Partners
 $1.5M rounds ($15K to $1M /investment)
 LPs are showing interest in these new funds
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10.  Innovation is not from within
 Find and invest in innovation
 Cash available
 Intel, Google, Cisco, Best Buy, Disney, GM, Nike,
Telefonica, Applied Materials, etc
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11.  Cleantech (down)
◦ Very capital intensive, over funded in 2006/2007
 Life Science (down)
◦ Capital intensive, long investment period, regulatory
issues
 Semi (down)
◦ Capital intensive, only a couple of acquires
 Software (up)
◦ Delivery: SaaS/Web, Mobile
◦ Clients: Enterprise, Consumer
◦ Billing: Subscription, Freemium
◦ Capital Efficient
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12.  Mobile: iOS (Apple), Android (Google), RIM? MS?
 Infrastructure: HP, Cisco, VMware, IBM, MS
 Enterprise: SAP, Oracle, Salesforce, MS
 Consumer: Apple, Google, Facebook, Twitter,
Amazon, Disney, Netflix
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13.  $500K to $1.5M
 SW (mobile, consumer, enterprise, infrastructure)
 2+ Founders Full Time
 Initial Product Complete
 Revenue/Customers
 US (Bay Area, NYC, Boston, LA, Seattle, Austin)
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14.  M&A
◦ $55M Median Acquisition
◦ Active Acquires: Apple, Facebook, Google, HP, Dell,
IBM, Oracle, Cisco, Amazon, etc
 $1B+ M&A (IPO?) opportunities
◦ Facebook ($34B - $50B),
◦ Groupon ($2.5B - $6B Google? rumor)
◦ Zynga
◦ LinkedIn
◦ Twitter
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