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% 9%

7%

44% 29%

Increase substantially >$25 BN Decrease substantailly <$15 BN

Increase slightly $21-25 BN Remain unchanged from 2009

Decrease slightly $1

In 2010, our firm will invest in:

33%

49%

18%
More portfolio companies The same number of portfolio companies Fewer portfolio companies

The percentage of deals outside our current geographic footprint in 2010 will:

20%

8

72%

Increase

Decrease

Remain the Same

Investment in 2010 in the following sectors will:
Clean Tech 20% 54% 26% 46%

Internet

15%

39%

Media/Entertain.

33% 37% 30% 32% 25% 0% 20% 40%

Software

43%

60%

Investment in 2010 in the following sectors will:
Wireless 30% 34% 37% 30%

Biotech

36% 34%

Med Devices

29%

38% 33%

Semiconductors

5%

31%

64% 50% 60% 70%

0%

10%

20%

30%

40%

Investment in 2010 in the following regions will:
70%

China

17% 12% 58%

India

16% 20%

26%

Israel

27% 15%

53%

Europe

40% 45% 40% 60% 80%

0%

20%

Investment in 2010 in the following stages will:
Growth Equity 30% 55%

15%

Late

19%

28% 49%

53%

Expansion

20% 25%

32%

Early

45% 30% 45% 31% 40% 60%

Seed 0% 20%

25%

In 2010 the number of venture-backed IPOs will be:
45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 26.1% 20.4% 43.3%
Mean: 26.32 Min: 5 Max: 120 Median: 25

10.2

0-19

20-29

30-50

>50

In 2010 the venture-backed acquisitions market will improve.
In 2010 the # of venturebacked acquisitions will:
8% 1%
25%

In 2010 the value of venturebacked acquisitions will:

11%

64%

91%

Increase

Decrease

Same

Increase

Decrease

Same

In 2010 firms resources are expected to remain largely unchanged.
In 2010 the # of venture investors in our firm will:
In 2010 the # of admin professionals in our firm will:

22%

12% 17%

63%

15%
71%

Increase

Decrease

Same

Increase

Decrease

Same

In 2010, venture funds raised on average will be:

3%

10%

87%
Smaller Larger Same size

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

25%

4

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 2010 will be Brazil's Skype that we have not made before; but all moment.” - Simon Olson, in all things look pretty strong and the Partner, Draper Fisher team is optimistic.” - Bob More, 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 “Take more companies public.” – Richard “In 2010 we are going to Kramlich, General Partner/Co-Founder, NEA Carpe Per Diem - Sieze the We will look for valuations to day to make money for our come into equilibrium and do “Corporate venturing LPs.” - Venky Ganesan, Relentlessly & w/ more transactions at that time.” & job creation funds.” Managing Director, Globespan seemingly undue – Jim Hale, Founding Partner, FTV - Thomas O. Gephart, Capital Partners precision reverse Capital Managing Partner, “500K to 1M as early as possible in great teams = early stage engineer the early exit Ventana Capital investing.” - Steve Fredrick, General Partner, Grotech Ventures 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 Inc. our next fund and continue to invest in “We will raise Since Sep08 we have focused on firms that can consumer-facing Internet companies like Twitter and reach breakeven on this round. In 2010 our Zynga.” - Norman Fogelsong, General Partner, willingness to take finance risk will likely return.” Institutional Venture Partners Bronson Lingamfelter, Associate, Rose Tech Ventures “It's the global economy, stupid. Focus on investments in the USA targeting customers in the ROW (rest of the world).” – Trevor Loy, General Partner, Flywheel 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 to continue our expansion along 3 vectors: 1. “2010 will likely mark the renewal of Corporate Venture Capital Stages (early & late)2. Regions and 3. as corporations will rediscover the value of tapping external Sectors.” - Sergio Monsalve, Principal, NVP innovation.” - Bernard Slede, Portfolio Manager, HP Corporate 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 “We will increase our investment pace “Expect to see us be more aggressive high standards, and see because we believe this a great time to more companies.” seeding new opportunities.” - Michael invest - innovation and strong companies C.W. Newhall, General Greeley, General Partner, Flybridge abound!” - Jeanne M Sullivan, General Partner, Co-Founder, Capital Partners Partner, StarVest Partners L.P. NEA “Move to accelerate the development of investment “The makeup of seed syndicates will evolve in 2010, as more traditional venture capitalists seek earlier access candidates and portfolio companies.” - Greg Knudson,to capital-efficient deals.” - Christine Herron, Principal, First Round Capital Director, Rocket Ventures

ctually spend meaningful time with investment bankers, again.” - Gerry Langeler, Managing Director, OVP Venture Partn “Embrace more universities into our seed stage model.” - Rudy Garza, Managing Partner, 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 1998 1999 Source: Thomson Reuters/NVCA 18.1 30.6 58.2

2000 106.6

2001 38.0

2002 3.8

2003 10.6

2004 19.2

2005 28.9

2006 31.9

200

BN Raised

36

Venture Capital Investment 1997-2009
$120
$101

$100 $ Billions Invested $80 $60 $40
$14 $20 $21 $19 $22 $52 $39 $23 $26 $31 $28

$20
2004 2006 2007 2008 1997 1998 1999 2000 2001 2002 2003 2005

$0

Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

Venture Capital Exits 1997-2009
700 600
Number of Issues

M&A IPO

500 400 300 200 100 0
M&A IPO 1997 164 136 1998 209 77 1999 240 260 2000 317 264 2001 353 41 2002 319 24 2003 285 29 2004 348 93 2005 350 56 2006 375 57 2007 378 86
Source: Thomson Reuters/National Venture Capital Association

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