Venture View: 2010

NVCA Predictions Survey Results

Venture View: 2010 VC Predictions Survey
Results

• Fourth Annual Predictions Survey of the NVCA

• Conducted in Nov. 30 – Dec. 8, 2009
• More than 325 responses from VCs across the US
• For more information
– Contact: Emily Mendell (emendell@nvca.org)
– Contact: Channa Brooks (channa@tenorcom.com)
In 2010, venture capital investment
will:

11% 7%
9%

44%
29%

Increase substantially >$25 BN Increase slightly $21-25 BN Decrease slightly $1

Decrease substantailly <$15 BN Remain unchanged from 2009
In 2010, our firm will invest in:

33%
49%

18%

More portfolio companies Fewer portfolio companies

The same number of portfolio companies
The percentage of deals outside our
current geographic footprint in 2010
will:

20%

72%

Increase Decrease Remain the Same

Investment in 2010 in the following
sectors will:

54%
Clean Tech 20%
26%

46%
Internet 39%
15%

33%
Media/Entertain. 37%
30%

32%
Software 43%
25%

0% 20% 40% 60%

 Investment in 2010 in the
following sectors will:

30%
Wireless 34%
37%

30%
Biotech 36%
34%

29%
Med Devices 38%
33%

5%
Semiconductors 31%
64%

0% 10% 20% 30% 40% 50% 60% 70%

Investment in 2010 in the
following regions will:

70%
China 17%
12%

58%
India 26%
16%

20%
Israel 53%
27%

15%
Europe 40%
45%

0% 20% 40% 60% 80%

Investment in 2010 in the
following stages will:

55%
Growth Equity 30%
15%

53%
Late 28%
19%

49%
Expansion 32%
20%

45%
Early 25%
30%

45%
Seed 25%
31%

0% 20% 40% 60%

In 2010 the number of venture-backed
IPOs will be:

45% 43.3% Mean: 26.32

Min: 5 Max: 120
40% Median: 25

35%
30% 26.1%
25% 20.4%
20%
15% 10.2
10%
5%
0%
0-19 20-29 30-50 >50
In 2010 the venture-backed
acquisitions market will improve.

In 2010 the # of venture- In 2010 the value of venture-

backed acquisitions will: backed acquisitions will:

8%
1% 25%

11% 64%

91%

Increase Decrease Same Increase Decrease Same

In 2010 firms resources are expected to
remain largely unchanged.

In 2010 the # of venture In 2010 the # of admin

investors in our firm will: professionals in our firm will:

22% 12%

17%

15%
63%
71%

Increase Decrease Same Increase Decrease Same

In 2010, venture funds raised on
average will be:

10%
3%

87%

Smaller Larger Same size

In 2010, the US venture industry will
see foreign limited partners in:

25%

27%

More Funds Fewer Funds Same Number of Funds

In the next five years, the number of
firms in the venture industry will:

4% 6%

90%

Shrink Expand Remain the same

In the next five years the venture
capital industry will shrink by:

1% 0%
21% 20%

58%

< 15% 16-30% 31-50% 51-70% >70%

 What will you do differently in
2010?
“We will find new mistakes to make
“It's the global economy, stupid. Focus on 2010 will be Brazil's Skype that we have not made before; but all
investments in the USA targeting customers moment.” - Simon Olson, in all things look pretty strong and the
in the ROW (rest of the world).” – Trevor Loy, Partner, Draper Fisher team is optimistic.” - Bob More,
General Partner, Flywheel Ventures Jurvetson, FIR Capital Brazil General Partner, Frazier Healthcare
Ventures
“The IPO market for VC backed companies will finally reopen in the US and several IPOs will reach $1
billion market capitalizations or more.” - Pascal Levensohn, Founder and Managing Partner,
Levensohn Venture Partners
“In 2010 we are going to “Take more companies public.” – Richard
Carpe Per Diem - Sieze the Kramlich, General Partner/Co-Founder, NEA
We will look for valuations to
come into equilibrium and do day to make money for our
LPs.” - Venky Ganesan, “Corporate venturing Relentlessly & w/
more transactions at that time.”
Managing Director, Globespan & job creation funds.” seemingly undue
– Jim Hale, Founding Partner, FTV
Capital Partners - Thomas O. Gephart, precision reverse
Capital
“500K to 1M as early as possible in great teams = early stage Managing Partner, engineer the early exit
investing.” - Steve Fredrick, General Partner, Grotech Ventures Ventana Capital to drive w/ great focus
what founders do now
“For 2010, we plan to broaden our “We will do more investment under better to grow their cos.” -
geographic focus to include investments in environment for new deals.” - Masatoshi Ueno, Becca Braun, President,
Europe.” - John Huntz, Executive Director, CEO/Technology, Yasuda Enterprise Development JumpStart Ventures
Arcapita Ventures America
Since Sep08 we have focused on firms that can “We willInc.
raise our next fund and continue to invest in
reach breakeven on this round. In 2010 our consumer-facing Internet companies like Twitter and
willingness to take finance risk will likely return.” - Zynga.” - Norman Fogelsong, General Partner,
Bronson Lingamfelter, Associate, Rose Tech Institutional Venture Partners
Ventures
 What will you do differently in
2010?
“We will fund growth more aggressively As start-up capital efficiency continues to improve, we will do more
in 2010 as we come out of the earlier stage deals.” – John Backus, Managing Partner, New Atlantic
recession.” – Don Rainey, General Ventures
Partner, Grotech Ventures “With our new $1.2Bn NVP XI fund, we plan
“2010 will likely mark the renewal of Corporate Venture Capital to continue our expansion along 3 vectors: 1.
as corporations will rediscover the value of tapping external Stages (early & late)2. Regions and 3.
innovation.” - Bernard Slede, Portfolio Manager, HP Corporate Sectors.” - Sergio Monsalve, Principal, NVP
Venture Capital
“More reserve capacity per deal and less deals per fund;
“Hopefully nothing. We're rockin' here at also build broader syndicate up front at initial
Catamount.” - Jed Smith, Managing Director, investment.” - George Arida, Managing Director, Venture
Catamount Ventures Investors LLC
“Work harder, maintain
“Expect to see us be more aggressive high standards, and see “We will increase our investment pace
seeding new opportunities.” - Michael more companies.” - because we believe this a great time to
Greeley, General Partner, Flybridge C.W. Newhall, General invest - innovation and strong companies
Capital Partners Partner, Co-Founder, abound!” - Jeanne M Sullivan, General
NEA Partner, StarVest Partners L.P.
ctually spend meaningful time with investment bankers, again.” - Gerry Langeler, Managing Director, OVP Venture Partn
“Move to accelerate the “Embrace more
development of investment “The makeup of seed syndicates will evolve in 2010, as universities into our seed
candidates and portfolio more traditional venture capitalists seek earlier access
stage model.” - Rudy
companies.” - Greg Knudson,to capital-efficient deals.” - Christine Herron, Principal, Garza, Managing Partner,
Director, Rocket Ventures First Round Capital
G51 Capital
Historical Data for the Venture
Industry
 Venture Capital Fundraising 1997-2009

120.0

100.0

80.0

60.0

40.0

20.0

0.0
1997 Reuters/NVCA
Source: Thomson 1998 1999 2000 2001 2002 2003 2004 2005 2006 200
BN Raised 18.1 30.6 58.2 106.6 38.0 3.8 10.6 19.2 28.9 31.9 36
 Venture Capital Investment 1997-2009

$120
$101

$100
$ Billions Invested

$80

$52
$60
$39
$40 $31 $28
$26
$20 $21 $19 $22 $23
$14
$20

$0

2004

2006

2007

2008
1997

1998

1999

2000

2001

2002

2003

2005
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,
Data: Thomson Reuters
Venture Capital Exits 1997-2009

700 M&A
IPO
600
500
Number of Issues

400
300
200
100
0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Thomson Reuters/National Venture Capital Association
M&A 164 209 240 317 353 319 285 348 350 375 378
IPO 136 77 260 264 41 24 29 93 56 57 86