• Embed Doc
  • Copy Link
  • Readcast
  • Collections
  • CommentGo Back
Download
 
From survival to growth
Global venture capital insights and trends report 2009
 
Foreword
Nearly all aspects of the global economy are feeling the impacts of the economic downturn. The Venture Capital(VC) industry, for one, faces a number of dif
fi
cult challenges: falling demand for portfolio company products andservices; a dearth of exit opportunities through Initial Public Offerings (IPOs) and acquisitions; and the need fortough decisions about the prospects of some portfolio companies.But while the challenges are signi
fi
cant, a number of factors suggest that the industry will soon move from thechallenges of survival to opportunities for growth. First, the venture industry is applying many of the lessonslearned in the aftermath of the technology bubble of 2000. VC
fi
rms have reacted quickly to assess their portfoliosin light of the downturn and to set aside reserve capital to support companies with the potential to succeed in thelong term. Portfolio companies’ strategies are being adjusted to the new economic realities with cost management,an intense focus on the customer value proposition and overall operational excellence.Most important, venture-backed companies are identifying and pursuing the opportunities inherent in a downturn —“Never waste a good crisis” has become the new industry catchphrase. These opportunities include the abilityto access cheaper resources, attract the best talent more easily and overtake or acquire struggling competitors.Forging innovation partnerships with large corporations that increasingly view innovation as a primary source ofcompetitive advantage is another opportunity to be seized. Honing a business model and innovation strategy thatwork in a downturn can pay impressive dividends on the upswing.Indeed, many of today’s market-leading companies were founded or received their
fi
rst round of venture
fi
nancingin recessionary periods — Hewlett-Packard, Apple and Cisco, Starbucks, Intuit, Skype and Shanda, to name just afew. While it is hard to predict which venture-backed companies will emerge as market leaders this time, it is safeto say that some will develop and bring to market great new innovations and become the billion-dollar enterprisesof tomorrow.As you will read in our interviews with leading VC investors around the globe, the work of funding great newcompanies continues despite the dif
fi
cult economy. Investors point to cleantech, cloud computing, Softwareas a Service (SaaS), genomics and consumer applications as a few of the areas in which they expect to seedisruptive innovation.Given the importance of innovation to the world economy, VC funding should not be taken for granted, especiallyin some of the most trying economic conditions since the Great Depression. That is why we make a number ofpolicy recommendations for the support of the VC ecosystem: incentives for innovation and entrepreneurshipin government stimulus packages; cross-border cooperation to improve the
fl
ow of talented individuals; and amultinational task force to develop a plan to increase the number of IPOs by venture-backed companies.
From survival to growth
, our seventh annual report on venture capital, examines the state of VC today and providesinsights into such topics as strategies for seizing opportunities in the current downturn, managing working capitaland concerns for technology companies. Throughout the report, leading company executives and VC investors fromaround the globe share their own perspectives on the impacts of the downturn and strategies for success. We aregrateful for their contributions.We hope that you will
fi
nd this report a source of valuable insight and look forward to working together with you onthe global challenges and opportunities that lie ahead.
 
Table of contents
1
From crisis to opportunit
•
y
by Gil Forer, Ernst & Young, and Dr. Martin Haemmig, CeTIM .........................................................2
Fireside chat on venture capital and growth companie
•
s
Interview with Scott Carter, Sequoia Capital, and Paul Deninger, Jefferies ...................................10
Lessons learned from building a company in turbulent time
•
s
Interview with Matthew Szulik, Red Hat .....................................................................................14
Innovation
fi
nds
fi
nance despite market turbulenc
•
e
by John de Yonge, Ernst & Young ..............................................................................................18
Perspective from Europ
•
e
Interview with Bruce Golden, Accel Partners ..............................................................................20
Current topics for t
•
echnology companies
Ernst & Young Global Technology Center ...................................................................................23
Perspective from Chin
•
a
Interview with Bo Shao and David Zhang, Matrix Partners ..........................................................26
Perspective from
•
the United States
Interview with Deepak Kamra, Canaan Partners .........................................................................28
How to manage cas
•
h
by Steve Payne and Al Sardo, Ernst & Young ..............................................................................30
Perspective from Israe
•
l
Interview with Chemi Peres, Pitango Venture Capital ..................................................................32
Perspective from the United State
•
s
Interview with Noubar Afeyan, Flagship Ventures .......................................................................34
Perspective on corporate innovation and collaboratio
•
n
Interview with Steve Meller, Procter & Gamble ...........................................................................36
Perspective of a c
•
orporate investor
Interview with Nino Marakovic, SAP Ventures ............................................................................38
Perspective on b
•
iotech
Interview with Alex Barkas, Prospect Venture Partners ...............................................................40
Perspective on
•
US cleantech policy
Interview with Timothy Urban, Washington Council, Ernst & Young .............................................42
Perspective from the United State
•
s
Interview with Jeffrey Glass, Bain Capital Ventures ....................................................................46
Contacts
•
Ernst & Young Global Venture Capital Advisory Group ................................................................49
of 00

Leave a Comment

You must be to leave a comment.
Submit
Characters: ...
You must be to leave a comment.
Submit
Characters: ...