NATIONAL VENTURE CAPITAL ASSOCIATION

YEARBOOK 2010

PREPARED BY

INCLUDING STATISTICS FROM THE
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters

March 2010 Dear Reader: As the nation and world works through the many economic and fiscal challenges of our time, the US venture capital industry and the entrepreneurial sector are being looked to for job creation, economic development, better healthcare, cleaner technology, and other answers to today’s opportunities. The statistics gathered and tracked by Thomson Reuters for ThomsonONE.com (formerly VentureXpert) and this Yearbook are essential to enabling analysis of venture capital by policy think tanks and economists and for use by government officials and other decision makers. For example, recent analysis of Thomson Reuters data by IHS Global Insight shows that while venture capital investment represents 0.2% of US GDP the revenue of , companies created by the industry represented 21% of GDP in 2008. For every venture capital dollar invested in 1970-2001, there was $9.88 in US revenue during 2008 in those companies and for every $24,564 of venture capital invested in 1970-2001, there was one ongoing job at the end of the year 2008. On behalf of the National Venture Capital Association board of directors and staff, we are pleased to present you with the latest statistics that describe the activity of the venture capital industry in the United States. These statistics reflect yet another all-time high level of survey participation by venture capital practitioners. This support has allowed us to accurately report industry activity. Your comments are always welcome at research@nvca.org. NVCA believes that it is more important than ever to effectively tell the story of venture capital, differentiate it from other forms of alternative assets, and explain what’s needed to continue creating great, leading-edge companies. We believe that a strong venture capital industry is essential to America’s future and improving our quality of life. Very truly yours, John Jaggers Sevin Rosen Funds NVCA Director & Chairman of the NVCA Research Committee Mark G. Heesen NVCA President John S. Taylor NVCA VP Research

NVCA BOARD OF DIRECTORS 2009-2010
Executive Committee
Terry McGuire Chairman Polaris Venture Partners E. Rogers Novak Treasurer Novak Biddle Venture Partners Paul Maeder At-Large Highland Capital Partners Kate Mitchell Chairman-elect Scale Venture Partners Ira Ehrenpreis At-Large Technology Partners

Research Committee
John Jaggers Research Chairman Sevin Rosen Funds Diana Frazier FLAG Capital Management, LLC Mike Elliott Noro-Moseley Partners

Stephen Holmes InterWest Partners

Board Members At-Large
Keith Crandell ARCH Venture Partners James Fleming Columbia Capital Josh Green Mohr, Davidow Ventures Deepak Kamra Canaan Partners Jack Lasersohn The Vertical Group Trevor Loy Flywheel Ventures Jason Mendelson Foundry Group David Prend RockPort Capital Partners Ray Rothrock Venrock Associates Barbara Dalton Pfizer, Inc. Michael Greeley Flybridge Capital Partners Jim Hale, III FTV Capital Robert Kibble Mission Ventures Pascal Levensohn Levensohn Venture Partners James Marver Vantage Point Partners Sherrill Neff Quaker BioVentures Jonathan Root U.S. Venture Partners

2

Thomson Reuters

Thomson Reuters 3 . but is not guaranteed.National Venture Capital Association Yearbook 2010 For the National Venture Capital Association Prepared by Thomson Reuters Copyright © 2010 Thomson Reuters The information presented in this report has been gathered with the utmost care from sources believed to be reliable. Thomson Reuters disclaims any liability including incidental or consequential damages arising from errors or omissions in this report.

nvca. NY 10036 Telephone: 646-223-4431 Fax: 646-223-4470 www.S. Publisher Jim Beecher Vice President of Research John S. Myers Vice President of Federal Policy & Political Advocacy Jennifer Connell Dowling Vice President of Membership & Member Firm Liaison Janice Mawson Director of Federal Policy & Political Advocacy Emily A.org President Mark G. VCJ) Greg Winterton (646-223-6787) ThomsonONE. Deals and Private Equity Operations Shariq Kajiji Editor-in-Charge. Deals Group David Toll Vice President of Strategic Affairs & Public Outreach Emily Mendell Global Private Equity Operations Manager Alex Tan Contributor & Press Management Matthew Toole Product Manager Lori Ann Silva Team Manager Paul Pantalla Research Editor Eamon Beltran Operations Manager Private Equity—North America James Thisdelle Senior Art Director David Cooke Sales Manager – Publications (Buyouts. Private Equity Products Elizabeth Benson U.National Venture Capital Association 2010 Yearbook National Venture Capital Association 1655 Fort Myer Drive. 18th Floor New York. Suite 850 Arlington. Baker Director of Marketing Jeanne Lazarus Metzger Director of Federal Life Science Policy Kelly Slone Public Policy Manager Sumi Singh Accounting Manager Beverley Badley Membership Coordinator & Database Administrator Terry Samm Manager of Administration and Meetings Allyson Chappell Administrative Assistant Gwendolyn Taylor Research Lab Mavis Moulterd Vice President. Heesen Thomson Reuters 3 Times Square.com Vice President. Taylor Senior Vice President Molly M.thomsonreuters.com Sales: Bill Moore (646-223-7285) 4 Thomson Reuters . Virginia 22209-3114 Telephone: 703-524-2549 Telephone: 703-524-3940 www.

. . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Methodology . . . . . . . . . 15 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Methodology . . . . . . . . . . . . . . . . . . 15 Capital Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Appendix F: Stage Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . 75 Appendix E: Industry Sector VEIC Ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Appendix H: Portfolio Company Valuation Guidelines. . . 23 Exits: IPOs and Acquisitions . . . . . . 11 Portfolio Company Post-Money Valuations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Appendix I: International Convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 Thomson Reuters 5 . . . 43 Appendix B: MoneyTree Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 49 Appendix A: Glossary . . . . . . . . . . . . . . . . . 9 Capital Commitments . 77 Appendix C: MoneyTree Geographical Regions . . . 12 Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Table of Contents What is Venture Capital? . . . . . . . . . . . . . . . . . . . 9 Introduction . . . . . . . . . . . . . . . . . 73 Appendix D: Industry Codes (VEICs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Appendix G: Data Sources and Resources . 19 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Portfolio Company Valuations . . . 10 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Appendix J: Non-US Private Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Inc.or twoperson company has ever gone public! Along the way. have superb scalability.588 52.632 # Change 89. and be truly innovative.713 34.015 3.350 173.S.287 1.693 2. Inc. with the shares allocated among the investors and management team based on an agreed “valuation.000 86. a business concept needs to address world markets. the concept.085 13. These days.What is Venture Capital? Venture capital has enabled the United States to support its entrepreneurial talent and appetite by turning ideas and basic science into products and services that are the envy of the world. Follow-on investment provides additional funding as the company grows. the value-added potential for the firm. Few entrepreneurs approaching venture capital firms for money are aware that they essentially are asking for 1/6 of a person! Yet that active engagement is critical to the success of the fledgling company.550 15. A busy venture capital professional’s most precious asset is time.895 50. usually only 10 or so get a serious look.300 40. Venture capital partners become actively engaged with a company. mature organizations.784 7 . venture industry provides the capital to create some of the most innovative and successful companies. there is little actual value. But venture capital is more than money.840 38. are also equity investment.621 Venture capital is quite unique as an institutional investor asset class.100 16. talent must be recruited and the company scaled up. Venture capital funds build companies from the simplest form – perhaps just the entrepreneur and an idea expressed as a business plan – to freestanding.000 176.” typically occurring every year or two. daily interaction with the management team is common. This limits the number of startups in which any one fund can invest. Google JetBlue As of IPO 1.and two-person For every 100 business plans that come to a venture capital firm for funding. eBay of IPO 650 2. be made successful in a reasonable timeframe.” But.805 11. Apple Inc.900 15. With a startup. More Than Money Deal Flows — Where The Buys Are The U. Many one.011 Current 91. and only one ends up being funded. Venture capital is a long-term investment.521 1. These “rounds.479 73. it is an equity investment in a company whose stock is essentially illiquid and worthless until a company matures five to eight years down the road. The venture capital firm looks at the management team. Thomson Reuters 7 . Current data is FY 2007 Year End Data companies have received funding but no one. the marketplace. unless a company is acquired or goes public. fit to the fund’s objectives.153 460 1.350 138 Current 331. that threaten established products and services in a corporation.500 # Change 330. and the capital needed to build a successful business. This money funds new ideas that could not be financed with traditional bank financing. Venture Capital Backed Companies Known for Innovative Technology and Products Employment at IPO and Now Company Microsoft Intel Corporation Medtronic. Source: IHS Global Insight. When an investment is made in a company. and that typically require five to eight years to be launched.362 Risk Capital for Business Venture capital firms are professional. institutional managers of risk capital that enables and supports the most innovative and promising companies.021 4.000 75.847 85. Ask any venture capitalist who has had an ultrasuccessful investment and he or she will tell you that the company that broke through the gravity evolved from the original business plan concept with the careful input of an experienced hand.000 35. A concept that promises a 10 or 20 percent improvement on something that already exists is not likely to get a close look. typically taking a board seat. Venture Capital Backed Companies Known for Innovative Business Models Employment at IPO and Now Company As The Home Depot Starbucks Corporation Staples Whole Foods Market.

these companies on average are 10% of their mature size at the time they go public. and fair and open capital markets. individuals. pen- Much of venture capital’s success has come from the entrepreneurial spirit pervasive in the American culture. only one in six ever goes public and one in three is acquired. protection of intellectual property. Beyond the IPO sion funds. services infrastructure that supports developing companies. a venture capital firm will create a Limited Partnership with the investors as LPs and the firm itself as the General Partner. When a company is successful and has a strong public stock offering. say $100 million. an initial funding of a company will cause the venture fund to reserve three or four times that first investment for follow-on financing. A new fund is established when the venture capital firm obtains necessary commitments from its investors. Although the investor has high hopes for any company getting funded. The venture capital fund and its investors split the capital gains per a pre-agreed formula. Economic success occurs when the stock price increases above the purchase price. Typically. Over the next three to eight or so years. The entrepreneur benefits from appreciated stock and stock options. Each “fund. venture capital itself is unique. the IPO process provides needed growth capital for a growing company. Far from being a destination. Many talented teams have come to the venture capital process when their projects were turned down by their companies. efficient capital markets. 8 Thomson Reuters .Many technologies currently under development by venture capital firms are truly disruptive technologies that do not lend themselves to being embraced by larger companies whose current products could be cannibalized by this. That is.” or portfolio. many larger organizations tend to reduce spending on research and development and product development when things get tight. or is acquired. the venture firm works with the founding entrepreneur to grow the company. It is not driven by quick returns or transaction fees. and corporations have benefited far beyond the risk-adjusted returns of the public markets. motivated entrepreneurs. tolerance for failure. most have quietly failed While the legal and economic structures used to create a venture capital fund are similar to those used by other alternative investment asset classes. The rank and file employees throughout the organization historically also do well with their stock options. is a separate partnership. with the increased emphasis on public company quarterly results. and a skilled workforce. Typically. The nascent deployment of venture capital in other countries is gated by a country’s or region’s cultural fit. It is dependent upon a good flow of science. access to good science. The money is taken from investors as the investments are made. The Exit Funnel Outcomes of the 11. financial recognition of success. intellectual property protection. Many college endowments. Economic Alignment of all Stakeholders — An American Success Story What’s Ahead Venture capital is rare among asset classes in that success is truly shared. The payoff comes after the company is acquired or goes public. A 2009 analysis by IHS Global Insight shows that more than 90% of the jobs at today’s venture backed public companies were created after it went public. Also.686 Companies First Funded 1991 to 2000 Went/Going Public 14% Still Private or Unknown* 35% Acquired 33% Common Structure — Unique Results Known Failed 18% *Of these. Many of the most exciting venture capital backed companies left the venture portfolios after they went public. the stock price of the company reflects its success. and the willingness of big business to purchase from small companies. charities.

0 5. this resizing is a function of the technology bubble bursting several years earlier. Exits and fundraising remain challenging. IPO activity remained at a mere trickle and the acquisition exit marketplace declined both in quantity and quality.188 No. of VC Funds in Existence 741 1.0 5. little has improved. And while the quality of new business opportunities.396 1. known as deal flow.7 15.611 6. which has been endorsed by the NVCA as the official industry activity database. of VC Firms in Existence 389 753 794 No.4 billion at yearend 2009 compared with $203. With 2009 fundraising 1/7 the Thomson Reuters 9 . stresses remain.9 Avg VC Fund Size to Date ($M) 36.0 Venture Capital Under Management Summary Statistics Industry Resources 1989 1999 2009 No. the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters and analyzed through the ThomsonONE.9 Avg VC Fund Size Raised This Year ($M) 46. remains very high quality and the best opportunities are getting funded. Reports from across the industry are that excellent teams are coming to venture firms with very strong business plans.6 179. While the global economic issues that surfaced in 2008 accelerated the decline and definitely added stresses to the industry.1 Largest VC Fund Raised to Date ($M) 1. That part of the venture capital ecosystem is working well. A healthy venture capital ecosystem requires its metrics to be in balance. The lack of distributions to the institutional investors who provide the capital to the industry has left these professional money managers with little capital to recycle back to the industry.0 Venture capital under management in the United States by the end of 2009 decreased 11.000. the industry continued the downsizing that became very visible in mid-2008. With many firms that raised money during the bubble unable to raise additional funds at this time.4 145.175. of VC Funds Raising Money This Year 105 454 127 VC Capital Raised This Year ($B) 4.Executive Summary During 2009.0 193. All indications are that some additional contractions are ahead.828 No.7 122. Even several weeks into 2010. these fund managers leave the industry.4 Avg VC Capital Under Mgt per Firm ($M) 73.4 VC Capital Under Management ($B) 28. and more than 35% from its reported peak in 2006.9% from the 2008 level. the capital under management decline is specifically the result of the large amount of capital raised during 2001 and earlier being replaced by smaller new funds in recent years.7 105. But the industry is very much open for business.com (formerly VentureXpert) database of Thomson Reuters. Introduction The National Venture Capital Association 2010 Yearbook provides a summary of all of venture capital activity in the United States.579 7. of Professionals 3.7 billion a year earlier.4 225. The industry managed $179. as this overview is being written. The statistics for this publication were assembled primarily from Figure 1. Subscribers to that system can perform considerable further analysis on the underlying data. As with contractions in other industry metrics.3 72. of First Time VC Funds Raised 17 90 21 No. This ranges from investments into portfolio companies to capital managed by general partners to fundraising from limited partners to valuations of companies receiving venture capital investments to exits of the investments by either IPOs or mergers and acquisitions. As portfolios are wound down. a further decline is likely. While fundraising and investment entered a new size band.6 121. This decrease is not unexpected and is the result of anticipated fallout from the technology bubble burst around the millennium.000. 2009 remained a difficult year for many firms to raise money.9 55.

Headcount similarly declined from 8. down from peaks of 1. At the end of 2009.0 Capital Commitments to U. the industry has returned to a more traditional size band.188 funds.National Venture Capital Association Figure 2. Venture Funds ($ Billions) 1980 to 2009 120 100 80 ($Billions) 60 40 20 0 amount raised in 2000. Venture Funds ($ Billions) 1980 to 2009 300 250 200 ($Billions) 150 100 50 0 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 Year Figure 3.S. This reflects a very difficult fundraising environment Thomson Reuters .1 billion in 2007. 794 firms managed 1.023 firms in 2005 and 1.4 billion from a post-bubble record level $36.883 managed funds in 2001.828 at the end of 2009.892 at the end of 2007 to 6. 10 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 0 20 1 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 Year Commitments New commitments to venture capital funds in the United States again decreased in 2009 to $15.0 Capital Under Management U.S.

605 750 447 2. Fundraising in 2009 was down 57% from the peak $36. of Companies 411 155 162 728 Initial Investments No. A look behind the charts shows that this total was dominated by a small group of firms. There are still a record number of companies in portfolios in the later stage of development that in most other environments would have already gone public or otherwise been acquired.3 6.0 2009 Investments By Company Stage Startup/Seed 9% Later Stage 34% Early Stage 26% Expansion 31% from 2008.2010 NVCA Yearbook Figure 4.3 17.S. After years of taking on 1.1 3. The top seven firms raised 46% of the total. most of which are the same firms that led fundraising a decade or two ago. The contention for venture capitalist attention (and dollars) between existing later stage portfolio companies and newly-arriving business plans continues. of Companies 1. Investment Year In 2009.4 155 0.1 billion in 2007.372 618 382 2.9 billion to $17.9 162 1.0 Investments to Portfolio Companies ($ Billions) 1980 to 2009 120 100 80 ($Billion) 60 40 20 0 19 8 19 0 8 19 1 8 19 2 8 19 3 19 84 8 19 5 8 19 6 8 19 7 8 19 8 89 19 9 19 0 9 19 1 9 19 2 9 19 3 9 19 4 9 19 5 9 19 6 9 19 7 9 19 8 9 20 9 2000 2001 2002 2003 2004 2005 0 20 6 2007 0 20 8 09 in part created by recent economic stress. Money raised by the three largest firms in 2009 represented 31% of the total. A sub-$20-billion industry is welcomed by many long-time practitioners as a return to a manageable size.802 Investment Amt ($Bil) 8. While numerically fewer. most of the decrease reflects the contraction of the U. Total venture investment decreased from $27. of Investment Deals Amt ($Bil) 411 1. venture capital industry that began after the technology bubble burst in 2000. of Deals 1.000++ companies each year. However. No.0 2009 Investments By Industry Class Industry Group Information Technology Medical/Health/Life Science Non-High Technology Total No.3 Thomson Reuters 11 .372 All Investments No. 127 funds raised $15. total venture investment decreased 37% in dollars and 30% in number of deals Figure 5.5 billion raised in 2008.7 billion. down 46% from the $28. In 2009.0 728 3.7 Figure 6. each one represents a fresh commitment by venture capital funds to the future.4 billion. the industry in 2009 funded 728 first-time companies.

701. the year 2009 was not much better. there were just 12 venture-backed IPOs raising $1.690.032.2 3% 3% 556. The number of venture-backed companies acquired during 2009 (270) declined from 2008 (349).National Venture Capital Association Figure 7.6 3% 2% 468. respectively.5 5% 4% 644.7 As bad as 2008 was for venture-backed companies exiting through initial public offerings or acquisitions.0 2% 1% 295. Similarly. The IPO levels remained near zero against a backdrop of an ever increasing number of portfolio companies maturing into the later stages and thus awaiting an exit. with 38% of the known acquisitions occurring at a price less than the total venture investment in that company.372 Pct of Investment Pct of Total ($ Millions) Total 40% 8. However. which itself declined from 2007 (379). Biotechnology valuations are lower but Industrial/Energy. it varies by sector. the sector receiving the second highest amount of money.6 4% 4% 574.8 50% 11% 2. Figure 8. the $1. The 12 venture-backed companies that went public in 2009 were double the six IPOs in 2008. there were only 23 companies in registration. going back at least to 1980.9 million. At year end 2009. significantly increased.6 billion raised through IPOs in 2009 is the second worst year (only to 2008) since 1990. While the valuation of the 2009 IPOs reached almost $15 billion. did increase overall at the average and at the median from the reference period 2005-2008.1 billion.2 3% 5% 407. 12 Thomson Reuters . the overall pace remained a mere trickle. Software. While there were a few strong acquisitions raising the average purchase price to $152. In 2009. These two years are the second-worst and worst years.0 2% 2% 302.1 2% 23% 2.0 Venture Capital Investments in 2009 By Industry Sector Telecommunications 3% Software 18% Biotechnology 20% Semiconductors 4% Retail/Distribution 1% Networking & Equipment 4% Business Products & Services 1% Computers & Peripherals 2% Consumer Products & Services 2% Electronics/Instrumentation 2% Financial Services 2% Healthcare Services 1% Industrial/Energy 13% Medical Devices & Equipment 14% Media & Entertainment 7% IT Services 6% Portfolio Company Post-Money Valuations Exits Round valuations in 2009.853. the MoneyTree sector containing much of the clean technology investment. where reported.6 11% 6% 855.0 2009 Investments By State Number of State Companies California 958 Massachusetts 250 New York 150 Texas 94 Washington 89 New Jersey 62 Colorado 56 Pennsylvania 111 Georgia 38 Florida 27 All Others 537 Total 2.1 15% 17. also showed meaningfully higher valuations. the overall quality of deals deteriorated.6 billion and 270 acquisitions with disclosed deals totaling $14.

0 59.00 50 5.3 N/A N/A N/A 8.0 N/A N/A N/A N/A N/A N/A 31.7 88.0 73.3 3.0 Upper Lower Quartile Median Quartile 60.6 9.0 Valuations Per Company Industry 2009 Financings ($ Millions) Company Industry Biotechnology Business Products and Services Computers and Peripherals Consumer Products and Services Electronics/Instrumentation Financial Services Healthcare Services Industrial/Energy IT Services Media and Entertainment Medical Devices and Equipment Networking and Equipment Other Retailing/Distribution Semiconductors Software Telecommunications Total Avg Val 49.0 1.2 406.00 100 10.5 24.00 Thomson Reuters 13 .4 40.6 Max 249.0 77.0 Min 4.7 20.5 26.5 43.1 80.9 N/A N/A N/A 21.0 21.2 N/A N/A 23.3 13.1 18.7 N/A N/A N/A 550.7 182.5 8.0 5.0 N/A 8.3 7.00 0 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Year 0. IPO and acquisition activity were both far below what is necessary to sustain the industry long term.5 17.0 1.1 N/A N/A 5.8 26.3 N/A N/A N/A N/A N/A N/A N/A N/A N/A 307.0 66.4 30.0 16.3 80.7 94.0 436.0 1.9 103.000. Figure 9.3 54.0 N/A N/A N/A 189.9 1.5 30.0 N/A 23.00 250 25.2010 NVCA Yearbook In 2009.8 44.0 229.5 6.00 150 15.2 109.00 200 20.0 21.3 Figure 10.4 N/A N/A 46.9 29.000.0 20.0 56.2 3.9 274.2 12.0 N/A 18.0 403.2 719.9 11.1 54.2 48.1 17.1 12.0 11.0 Venture-Backed IPOs 300 No of IPOs Offer Amount ($B) 30.0 165.7 18.

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and headcount declines are the result of firms which raised money at the time of the bubble being unable to follow those funds with new funds in recent years. Headcount similarly declined from 8. we are primarily counting the number of firms with limited partnerships and are excluding other types of investment vehicles.7 billion a year earlier. larger activity level contraction beginning in 2001. fund. In addition to contractions in other industry metrics. there may well be fewer firms actually making new investments. As portfolios are wound down. For this publication. this is actually stating that there are 794 firms that have raised a venture capital partnership in the last eight years. funds. the capital under management decline is specifically the result of the large amount of capital raised 2001 and earlier being replaced by smaller new funds in recent years. the industry has returned to a more traditional size band.01 Capital Under Management U. Under this methodology. In reality. This decrease is not unexpected and is the result of anticipated fallout from the technology bubble burst around the millennium.Industry Resources Venture capital under management in the United States by the end of 2009 decreased 11. down from peaks of 1. The overall drop in capital under management is reflected in the anticipated decrease in active firms. While the economic crisis which began in mid-2008 made it tough for venture firms to raise money and the exit markets to stage a comeback. The industry managed $179. these declines are part of a longer. and headcount. From Figure 1.892 at the end 2007 to 6.883 managed funds in 2001. these fund managers leave the industry. and more than 35% from its reported peak in 2006. At the end of 2009. With 2009 fundraising 1/7 the amount raised in 2000. To clarify. METHODOLOGY The number of firms in existence will vary on a rolling eight-year basis as firms raise new funds or do not raise funds for more than eight years. we estimate that there are currently 794 firms with limited partnerships “in existence”. Venture Funds ($ Billions) 1980 to 2009 300 250 200 ($ Billion) 150 100 50 0 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 Year Thomson Reuters 15 .S. Many of the firm.9% from 2008 levels.023 firms in 2005 and 1.188 funds. 794 firms managed 1.828 at the end of 2009.4 billion at the end of 2009 compared with $203. All indications are that some additional contractions are ahead.

400 that description.500 276.500 24.011 437 9. If a firm raised both buyout and venture capital funds.903 22. of the 794 firms in existence at the end of 2009.08 shows the reality of fund life.900 203.954 1.100 6.520 5.400 145.03 Distribution of Firms By Capital Managed 2009 160 140 120 95 100 80 60 40 20 0 88 57 129 119 117 144 there’s not one singular definition.644 4.677 28.357 2. However.500 253.175 24.465 1.219 516 304 2.665 3. we have tried to clarify the industry definition of capital under management as the cumulative total of committed capital less liquidated funds or those funds that have completed their life cycle.933 213.900 21. the firms counted for capital under management include firms with fixed life partnerships and venture capital funds raised.585 3.865 223.236 2. Current capital under management is calculated by taking the capital under management calculation from the previous year.600 224.400 29.100 222.107 3.177 24.721 1. ‘Financial institutions’ refers to firms that are affiliates and/or subsidiaries of investment banks and non-investment bank finan- 16 Thomson Reuters . it may appear that the statistics for total industry resources may be underestimated.136 2.243 2. financial institutions.600 28.200 29. Thomson Reuters classifies venture capital firms using four distinct types: private independent firms.668 1.333 11.835 120. capital under management reported by firms can differ from firm to firm as Figure 1.266 2.800 11.624 22.911 4. Venture capital under management can be a complex statistic to estimate.233 238. roughly 58% of them (460) managed $100 million or less.062 185. For this analysis.236 11. For this analysis only.172 17.594 16.278 4. 45 Capital Under Management ($ Millions) This chart shows capital committed to US venture firms in active funds.565 2.400 2.457 1.297 11.257 1.600 17.400 14.500 28. only the venture funds would be counted in the calculation of venture capital under management.767 2.169 12.308 21.279 5.324 14. While much of the capital is managed by larger firms.900 25.807 13.317 2.700 179. others may include committed capital plus capital gains.809 3.989 14.600 34.942 1. and still other firms define it as committed capital after subtracting liquidations. this must be balanced with the fact capital under management by captive and evergreen funds is difficult to compare equitably to typical limited partnerships with fixed lives. Indeed.700 254.994 51.767 1. venture capital firms have a stated 10-year fixed life span.369 21.831 185.061 1.713 18.482 14.105 4.027 3.393 210. Figure 1. and subtracting the capital raised eight years prior.535 230.989 21.378 4. corporations.172 1.631 3.530 666 807 861 850 819 732 667 598 355 228 353 457 540 897 75.160 1.613 2. ‘Private independent’ firms are made up of independent private and public firms including both institutionally and non-institutionally funded firms and family groups.000 27.810 39.221 14. except for life science funds which are often established as 12-year funds.798 12.160 2.991 751 416 4. and other entities.655 18.882 1.356 23.500 262.125 13.400 48.233 6.700 92.732 210.018 25. For example.516 24.100 2.267 2.600 252.453 163.500 40.700 63. some firms include only cumulative committed capital.929 13. add in the current year’s funds’ commitments. Thomson Reuters calculates capital under management as the cumulative amount committed to funds on a rolling eight-year basis.526 4. To complicate matters. it is difficult to compare these totals to European private equity firms which include capital gains as part of their capital under management measurements.084 1.369 1.320 10. just 45 firms managed active funds totaling more than $1 billion. For purposes of the analysis in this publication.800 252.National Venture Capital Association Figure 1.100 7.766 8.100 25.121 2.016 808 4.200 269. By comparison.869 3.782 33.02 Total Capital Under Management By Firm Type 1980 to 2009 ($ Millions) 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Private Independent Financial Institutions Corporations Other Total 2.333 2. Typically.838 1.927 22.960 3.219 736 487 6.

2 24.06 Top 5 States By Capital Under Management 2009 Fund Vintage Year 2007 2008 2009 No.1 89.2 147.8 116.9 269.8 Firms That Raised Funds in the Last 8 Vintage Years 91 127 162 208 259 296 331 359 374 389 390 370 361 374 387 429 469 548 626 753 882 943 938 965 1001 1023 1022 1016 885 794 Capital Managed ($B) 4.3 million and the average firm is made up of 8.2 57.1 54.6 78.4 31. Capital under management by those funds at the end of 2009 is $179. 794 firms as calculated using our eight-year methodology managed 1. each fund typically a separate limited partnership.8 13.188 individual funds.7 250.6 151 Avg Firm Size ($M) 45.7 302.04 Fund and Firm Analysis Fund Vintage Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Total Cumulative Funds 186 251 322 435 550 638 717 817 898 992 1051 1090 1166 1260 1365 1523 1670 1895 2139 2486 2904 3143 3217 3320 3490 3673 3854 4070 4266 4331 Total Cumulative Firms 117 155 193 237 288 320 354 388 409 438 455 463 484 516 547 613 673 773 859 994 1137 1220 1236 1288 1354 1425 1497 1587 1648 1670 Total Cumulative Capital ($B) 5.9 33.5 68.9 21.6 269.6 principals.2 186.8 20.4 16.5 276.4 270.1 45.3 36.5 32.6 17.8 billion.892 7.242.331 funds had been raised.1 29.5 8. Those funds totaled $481.5 253.8 7.2 63. The average firm size is $225.3 311.5 473.1 94.1 7.7 63.828 Avg Mgt Per Principal ($M) 28.9 104.9 149.6 161.6 34.9 267.3 38.9 441.4 254.7 261.6 Estimated Industry Principals 8.7 27.1 48 48.2 73 74.7 254.829.8 42.5 40.2 29.4 481. cial entities including commercial banks and insurance companies.1 70.831.1 144.4 16.1 80 100 131.5 *Total includes above 5 states only Thomson Reuters 17 .1 79.2 103.7 179.2 26.8 47.8 11.4 Avg Fund Size ($M) 32 32. Principals Per Firm 8.828 principals (people who go to board meetings) in the industry.1 321.1 68.1 144.6 53.681.8 41 44.2 225.5 28.9 230.4 74.8 252.4 billion.9 9.8 8.6 28. The ‘Corporations’ classification includes venture capital subsidiaries and affiliates of industrial corporations.2 35.2 262.290.497 6.4 60. A principal on average manages $26.6 342.1 6. The capital under management data referred to in this section consist primarily of venture capital firms investing through limited partnerships with fixed commitment levels and fixed Figure 1.7 8. At the end of 2009.2 269.3 134.610.7 31.6 193.3 160.4 145.5 84.670 firms had been founded and 4.7 92.05 Principals Information lives and does not include infinite lived “evergreen funds” or true captive corporate industrial investment groups without fixed commitment levels.9 263. Figure 1.1 136.3 39. 1.1 151.4 29 27.6 224.6 35. there were 6.3 141. State CA MA NY MD CT Total* ($ Millions) 79.8 58.5 262.2010 NVCA Yearbook Figure 1.8 56.2 369.8 35.1 31.5 65 67.1 25.8 38.4 48.1 9.4 14. The term ‘evergreen funds’ refers to funds that have a continuous infusion of capital from a parent organization as opposed to the fixed life and commitment level of a closed-end venture capital fund.6 252.1 27.5 407.3 The correct interpretation of this chart is that at year end 2009.9 49.3 129.9 million.9 203.5 24.9 Existing Funds 128 188 248 355 458 539 601 677 712 741 729 655 616 622 648 706 772 903 1088 1396 1738 1883 1852 1797 1820 1778 1715 1584 1362 1188 The correct interpretation of this chart is that since the beginning of the industry to the end of 2009.

587 5.467 4.156 17 51 67 73 79 79 86 107 93 57 42 35 32 55 137 192 200 299 342 684 761 909 835 791 866 920 190 213 343 365 434 330 458 562 515 496 376 459 406 26 29 30 34 55 88 91 127 115 111 112 109 148 4 4 9 9 19 20 15 16 16 16 11 10 26 833 877 924 861 902 979 846 260 261 277 308 433 475 3 47 51 53 59 139 226 230 242 195 194 247 244 83 109 110 112 120 126 123 125 38 13 13 12 9 70 111 126 126 133 174 195 199 134 112 99 153 226 2 4 30 103 129 193 186 220 263 280 274 202 295 3 3 20 563 590 621 602 613 665 661 653 108 138 0 0 0 127 133 133 129 137 139 138 140 6 6 15 16 16 16 16 16 16 0 0 0 0 0 7 3 6 6 7 7 7 7 7 5 2 11 23 31 127 181 184 180 97 96 93 104 104 79 80 82 165 23 32 60 45 56 57 79 98 89 81 98 101 110 15 16 57 41 44 44 74 76 76 76 34 45 44 15 27 42 72 101 137 135 172 260 246 234 208 181 1 2 2 15 16 16 36 37 37 36 37 22 23 1 1 1 1 1 21 26 26 26 26 28 29 100 0 0 0 0 0 0 0 0 0 0 0 0 0 37 41 42 50 52 105 103 65 65 62 63 55 55 24 1 1 1 29 29 28 38 38 37 37 39 9 7 7 35 39 41 40 39 48 42 42 14 9 52 0 1 1 24 25 25 50 51 52 51 51 28 28 1 18 130 170 178 205 244 248 250 231 118 74 75 1 2 2 2 2 2 2 16 16 15 15 16 16 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9 9 9 9 9 0 0 0 0 0 0 0 0 13 13 13 14 14 0 0 0 0 0 0 1 1 1 1 1 11 11 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7.832 2.518 1.244 1.700 254.497 4.294 1.188 972 130 1.245 2.562 3.374 7.106 522 1.248 42 256 27 109 1 18 84 89 3 59 138 13 4 215 0 0 8 2 3 0 0 4 93 13 15 0 1 1 0 0 23 1 0 0 0 0 0 0 0 3 0 0 0 0 0 0 0 0 0 4.657 83 528 61 86 1 30 133 96 1 51 146 14 4 834 0 0 8 2 3 0 16 1 131 14 16 0 1 1 0 38 25 1 0 0 1 0 0 0 0 3 0 0 0 0 0 0 0 0 0 6.999 30.200 29.360 11.853 1.082 2.060 6.627 44.600 34.765 3.218 7.303 3.975 5.400 1999 49.893 41.876 6.888 461 1.477 2.809 1.390 1.069 1.733 76 263 267 316 411 388 429 404 389 200 245 230 180 85 216 548 618 719 755 748 748 965 891 555 540 752 1 1 3 36 38 38 46 48 48 48 46 12 1.681 44.007 1.877 1.288 1.177 4.100 25.641 1.235 1.964 5.687 3.276 562 542 1.456 18.496 4.148 4.636 3.445 860 829 507 510 510 552 744 780 796 524 689 741 1.662 1.614 9.900 203.121 1.399 5.980 1.676 1.097 4.284 3.696 43.955 5.509 3.643 1.724 9.335 3.966 1.606 1.798 2. These later periods are referred to as “out years.414 1.155 8.499 6.168 1.500 24.329 99.767 5.600 252.608 3.090 5.959 45.955 4.834 8.000 27.831 34.230 1.492 4.385 1.600 28.400 14.403 2.078 990 1.674 9.891 5.546 3.751 6.679 1.247 2.277 4.333 4.507 3.058 4.544 112.175 1.400 Figure 1.015 402 716 1.671 1.896 4.091 39 894 368 129 31 448 239 27 322 303 120 6 7 49 168 111 45 154 23 89 0 5 10 100 47 77 29 0 2 0 0 25 9 37 105 0 0 0 0 0 0 40.579 5.140 2.300 723 1.102 4.830 980 1.345 4. most of the strong exits have occurred.842 8.404 5.136 2.534 3.712 105.830 8.793 94.195 2. in fact.462 111 331 409 500 539 768 771 848 891 825 861 947 1.468 7.470 1.314 1.797 8.676 4.718 2.146 11.” By this point in time.326 42.732 1.770 3.600 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 79.443 1.509 2.671 3.244 607 754 881 1.700 1998 26.424 3.023 870 1.176 6.106 5.810 3.483 5.215 9.022 38 101 140 435 510 539 558 646 681 708 687 485 651 167 336 436 475 497 798 985 947 956 918 1.266 4.072 102.267 1. the companies that are going to outright fail have done so.744 5.246 3.284 1.098 3.804 1.027 1.231 3.712 147 628 752 579 94 687 252 51 447 521 147 5 7 275 137 175 9 120 0 87 0 16 23 114 66 30 13 10 2 0 0 25 9 66 138 0 0 0 0 0 0 63.263 13. and the portfolio consists of a few portfolio company holdings which are difficult to sell at a favorable price.234 4.175 91.671 6.723 4.172 3.374 2.250 46.500 253.816 300 1.063 122 33 7 445 110 207 38 12 0 207 0 16 66 116 67 40 13 73 12 0 0 26 40 52 140 24 0 0 0 72 0 145.637 3.600 4.066 4.263 5.159 43.057 5.585 1.273 1.057 4.206 1.610 8.268 1.444 6.559 88.551 2.567 1.650 1.314 6.200 269.843 1.411 8.668 4.309 34.764 3.434 1.419 2.831 2.049 1.400 6.059 6.380 3.417 2.738 2.309 2.400 1996 14.500 1995 11.975 4.143 1.097 4.963 8.700 179.856 2.154 4.669 48.299 1.700 1997 19.800 11. 18 Thomson Reuters .329 34.731 2.800 252.939 4.716 11.073 29.830 4.472 21.094 3.231 10.509 1.802 4.400 29.500 262.701 3.217 9.090 8.240 64 525 437 262 31 375 165 27 303 456 124 6 7 90 167 193 10 151 0 86 0 5 32 121 19 30 29 10 2 0 0 25 9 46 136 0 0 0 0 0 0 48.259 5.754 1.746 21.08 Life of IT Funds in Years Life of IT Funds In Years <= 10 11-12 13-14 15-16 17-18 >=19 % of Funds 7% 20% 27% 22% 14% 10% Source: Adams Street Partners.871 91.409 4.606 11.315 2.289 1.764 8.720 79.900 21.198 1.163 1.244 688 416 1.489 1.426 42.239 268 476 449 561 575 533 637 1.290 2.173 3.162 1.824 3.437 45.932 4.489 1.468 5.747 3.498 2.630 4.354 760 1.294 4.248 8.467 5.National Venture Capital Association Figure 1.473 14.651 16.810 2.040 844 673 573 541 215 241 209 198 296 276 335 545 459 406 108 108 107 107 125 178 177 169 254 256 7 7 0 14 14 18 218 220 225 227 478 730 726 709 746 585 513 436 421 200 184 183 89 89 100 85 255 257 197 199 665 664 652 686 597 605 617 604 119 130 37 48 89 124 125 143 116 117 139 119 12 12 12 34 35 70 75 77 78 87 0 24 24 24 24 24 97 98 100 77 203 291 218 219 215 217 278 162 165 74 14 14 14 14 14 14 85 86 73 74 16 60 60 55 65 54 60 68 69 39 140 140 139 140 117 118 111 112 37 37 140 140 116 68 56 56 57 57 31 31 66 65 84 65 66 19 30 30 31 31 100 100 113 83 85 86 76 79 23 28 79 80 93 80 81 86 86 87 21 20 168 167 167 167 162 163 101 102 19 19 11 11 11 9 16 16 16 8 14 14 15 41 41 41 41 41 41 55 40 14 0 0 0 0 0 0 0 0 13 13 25 53 53 28 28 28 29 30 30 1 39 68 68 68 69 69 29 31 31 1 52 51 51 28 19 0 0 0 0 0 176 165 165 71 38 38 38 39 0 0 23 23 23 23 23 24 24 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 118 118 117 117 118 119 119 120 0 0 71 71 71 71 71 72 72 0 0 0 21 21 21 21 21 21 21 21 0 0 224.389 676 1.191 14.161 55 120 258 252 404 430 418 448 631 562 473 1.629 1.278 1.393 4.561 1.935 3.630 8.317 2.073 43.516 4.875 5.639 1.014 768 96 767 558 53 762 749 111 24 7 367 140 192 38 12 0 90 0 17 67 117 67 40 13 74 2 0 0 26 40 53 141 0 0 0 0 0 0 92.009 9.500 276.847 4.569 11.538 10.380 12.100 1981 1.297 1.877 1. dissolved.572 1.011 1.955 5.500 28.381 42. based on 2006 analysis of funds then dissolved.324 8.403 13.076 7.475 1.224 4.134 1.199 2.600 17.413 7.178 5.429 11.800 1.762 1.07 Capital Under Management By State 1980 to 2009 ($ Millions) State CA MA NY MD CT WA NJ DC PA IL TX VA MN CO NC UT OH GA MI FL TN MO AL KY LA WI IN AZ NM RI ME ID IA OK DE NH OR SC SD HI VT ND MS PR KS NE NV MT AK WY AR WV Total 1980 1. This chart tracks the year in which a 10-year fund is.891 1.332 11.808 7.572 1.068 1.960 2.971 2.100 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 2.730 7.761 1.999 3.333 1.406 3.741 1.197 30.512 5.

Thomson Reuters 19 . Please note that the state of fund domicile matters less than has been true historically.S. In 2009. Much of the money is managed by large. it has been very difficult for any firm not perceived as having top quartile potential to raise money. including venture capital. (2) surveys of the industry routinely conducted by Thomson Reuters. An important note: the fund commitments presented in this publication do not include those corporate captive venture capital funds that are funded by a corporate parent as well as evergreen funds since they do not typically raise capital from outside investors. pension plans. down 46% from the $28. the terms “capital commitments. The top two fundraising states remained California and Massachusetts. This reflects a very difficult fundraising environment in part created by recent economic stress. also known as fundraising. top performing firms have a better chance of outperforming other asset classes on a risk-adjusted basis. There are several reasons for fundraising difficulty: (1) the denominator effect where institutional investors found themselves over allocated to the asset class as their overall portfolio valuations fell. A look behind the charts shows that this total was dominated by a small group of firms. There are three sources of data for capital commitments: (1) SEC filings that are regularly monitored by our research staff. Looking at annual commitment totals. national funds that tend to be domiciled in any of several states with a broad geographic investing footprint. For example. In this chapter.Capital Commitments New commitments to venture capital funds in the United States again decreased in 2009 to $15. However. Rounding out the top five states are Maryland. and subsequently raises the remaining $125 million in 2009. Over the past few years. a venture capital firm announces a $200 million fund in late 2007. nothing would be reflected in 2007. most of which are the same firms that led fundraising a decade or two ago. New York. For purposes of these statistics.4 billion. This slowdown dominated the last half of 2008 and accelerated further in 2009. firms able to raise capital. and New Jersey. money managers) saw the public portion of their portfolios fall and found themselves over-allocated to alternative asset classes. The 2009 environment took that to a new level.1 billion in 2007. most of the decrease reflects the contraction of the U.5 billion raised in 2008. As the economy worsened toward the end of 2008. Assuming it started investing and made its first capital call in 2009. and (3) with strong returns difficult in the current environment. The top seven firms raised 46% of the total. The data in this chapter is by calendar year and incrementally measures how much capital a fund raised during the calendar year. capital commitments. 127 funds raised $15.1 billion in 2007. Capital commitments are stated on either a calendar year basis when committed or a vintage year basis once the fund starts investing depending on the analysis required. with only the most promising. many institutional investors (e. and in many cases. are firm capital commitments to private equity limited partnerships by outside investors.S. funds domiciled in the top five states accounted for 91% of the capital raised compared with the top five 2008 states raising 82% of the total. raises $75 million in 2008. For example.” “fundraising. venture capital industry that began after the technology bubble burst in 2000. Overall. Fundraising in 2009 was down 57% from the peak $36. Money raised by the three largest firms in 2009 represented 31% of the total.g. venture firm raising the most money in 2009 is domiciled in the midAtlantic but does most of its investing elsewhere. For most firms. the fundraising environment in 2009 was difficult.4 billion from their post-bubble record level $36. and (3) industry press and press releases from venture firms. $75 million would be counted in 2008. Methodology As defined by Thomson Reuters. the entire fund would then be considered to be a 2009 vintage year fund. the U. venture firms had raised considerable funds in 2007 and the first part of 2008.. established. endowments. and $125 million would be counted in 2009. (2) few distributions back to investors from exits in recent years thus impairing the traditional “recycling” of capital from mature fund exits to newly-emerging funds.” and “fund closes” are used interchangeably.

970.6 No.5 126.057.7 5.761.3 41.662.316.416.958.319.5 5. Funds 52 75 87 144 116 120 103 114 104 105 87 42 81 90 141 172 168 247 295 454 663 326 208 164 218 242 242 250 224 127 Buyouts and Mezzanine Capital 183.400.6 3.0 11.9 149.3 9.917.774.417.131.964.966.326.268.5 3.1 5.025.9 17.3 1.1 20.482. Funds 4 4 13 15 22 22 31 44 50 78 62 27 57 81 99 103 100 130 161 156 160 123 92 105 141 182 183 212 190 109 Private Equity Capital 2.123.672.765.262.889.9 89.9 213.886.777.7 26.024.392.3 205.965.277.002.3 16.339.849.3 21.001.9 41.788.112.3 51.0 3.7 53.299.01 Capital Commitments To U.National Venture Capital Association Figure 2.8 7.5 36.376.2 108.7 16.2 29.598.2 15.3 3.7 15.037.374.6 10.918.034.1 8.7 52.4 9.859.0 36.681.4 11.351.1 7.790.6 1.966.8 611.8 2.8 5.5 1.6 38.3 19.6 7.0 19.435.861.0 43.5 181.843.981.6 181. Venture Funds ($ Billions) 1980 to 2009 120 100 80 ($ Billion) 60 40 20 0 Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 Year Figure 2.3 2.090.832.962.6 11.2 58.02 Capital Commitments To Private Equity Funds 1980-2009 Venture Capital $Mil 2.2 241.4 12.0 104.005.3 4.9 55.1 6.343.967.6 109.3 29.8 137.962.612.520. Funds 56 79 100 159 138 142 134 158 154 183 149 69 138 171 240 275 268 377 456 610 823 449 300 269 359 424 425 462 414 236 Thomson Reuters .4 28.466.547.1 1.460.705.5 76.678.7 31.4 16.086.145.229.7 31.053.209.9 36.5 185.521.7 71.6 28.5 62.4 4.0 92.1 42.1 27.1 20.613.8 3.2 11.1 No.937.5 30.446.426.486.S.3 3.065.902.240.0 2.118.306.7 No.7 4.6 60.318.4 3.936.5 8.450.544.931.

635 2.338 1.437 1.271 1.229 1991 546 242 50 509 75 94 0 167 150 0 0 0 0 35 16 0 58 0 0 40 0 5 0 0 0 0 0 0 0 0 0 0 0 0 0 15 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2.165 934 1.338 609 1.423 1.788 4.070 5.076 1.613 5.753 8.487 1.473 17 276 26 50 295 2.038 30 0 5 321 266 267 50 40 250 326 585 131 256 924 1.414 513 140 94 84 69 662 330 102 5 276 558 82 14 0 0 11 0 70 112 52 8 75 4 110 0 0 0 0 12 65 286 0 0 80 29 131 1 0 0 5 0 103 40 10 36 17 6 0 0 3 0 8 0 0 0 0 0 0 0 0 25 0 0 0 0 30 0 0 0 0 0 0 0 11 9 0 0 0 77 16 3 0 0 0 21 42 41 0 19 15 27 0 0 0 0 6 4 13 2 0 0 0 135 8 2 0 5 70 0 15 0 0 6 0 31 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 41 0 0 0 0 0 0 0 22 0 10 0 0 0 0 0 0 0 26 0 0 0 0 0 69 0 0 0 0 0 20 25 0 0 0 0 104.964 3.597 1.150 272 1.290 334 86 488 451 352 2.026 1.017 67 2.882 0 2 133 786 152 209 78 101 13 0 38 0 40 220 0 0 24 1 0 0 0 0 64 14 1 0 5 7 46 20 0 0 0 75 0 0 65 98 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 11 31.958 1995 3.981 3.216 80 16 11 7 19 60 273 8 11 51 33 101 262 82 22 101 16 84 126 224 29 34 40 24 987 26 9 56 1 313 2.381 9.766 2.521 38.344 119 38 238 72 428 4.771 5.903 1990 618 675 213 490 244 57 0 45 310 0 0 0 0 0 162 2 143 0 14 155 1 0 0 0 30 0 0 0 53 0 5 0 0 0 0 0 0 0 0 0 0 5 10 0 0 0 0 0 0 0 0 3.293 239 1.844 28.460 654 363 2.602 5.156 7.278 1993 1.967 2.904 60 165 2.2010 NVCA Yearbook Figure 2.310 182 388 0 13 116 11 105 164 0 283 0 0 6 64 37 32 0 86 40 169 0 0 0 20 0 0 0 0 0 59 0 0 0 7 0 0 0 0 0 25 0 0 0 0 8.002 570 466 1.966 36.612 19.501 MA 223 115 438 548 357 598 557 1.131 2008 2009 15.03 Venture Capital Fund Commitments 1980 to 2009 ($ Millions) State 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 CA 380 363 731 859 948 998 770 1.692 6.183 2.913 775 1.860 1996 3.242 NJ 41 23 13 96 216 254 61 120 0 125 IL 1.469 1.286 1.073 478 702 432 81 1.324 5 11 109 33 78 527 65 388 12 41 0 349 180 0 253 366 16 88 0 45 0 0 0 20 0 0 50 0 0 0 0 42 0 0 0 0 0 0 0 0 0 0 19.647 4.223 938 83 1 995 281 65 0 14 0 2 0 2.808 4.895 431 183 1.100 278 833 16.025 1.407 1.051 0 470 110 247 0 30 300 0 0 40 0 0 946 0 382 56 0 0 0 48 0 0 67 0 11 0 0 0 49 0 0 0 0 0 2 0 0 0 0 0 0 0 0 0 0 63 0 0 0 5.655 1.574 1.377 2.144 4.967 1994 1.917 9.340 4.226 663 481 1.656 9.775 1998 1999 7.584 2.354 407 220 177 1.966 118 575 2.435 4.223 1.139 186 76 794 653 21 26 0 0 10 0 861 19 0 0 55 104 0 0 0 18 20 34 614 120 72 291 16 106 1.868 1.325 2.631 3.662 2000 2001 2002 2003 2004 2005 41.962 235 465 558 1.203 13.712 2.981 15.038 55.327 1.245 2.911 1.942 58 659 0 17 51 375 45 0 25 80 22 14 13 20 0 10 0 0 0 0 0 0 0 0 0 127 0 29 0 0 0 0 0 0 0 0 0 0 0 25 0 0 0 0 0 28 0 0 0 0 0 7 0 0 30.868 48 500 236 364 1.849 1997 5.169 170 417 695 200 278 0 110 272 0 3 0 0 133 66 0 137 0 56 0 0 40 0 114 4 0 14 0 64 0 0 0 0 0 0 0 0 10 0 0 14 0 0 0 0 0 0 0 0 0 0 3.025 164 886 122 68 96 106 83 129 69 522 46 25 32 325 22 83 20 1.743 2.328 3.003 1992 1.848 456 295 820 174 425 0 26 151 0 0 36 20 326 0 34 0 164 204 0 216 0 0 24 24 6 11 116 0 10 0 0 0 22 0 0 0 0 0 0 25 0 36 65 0 0 0 0 11.182 2.705 3.603 13.728 22.413 240 485 746 3.627 1.664 172 3.967 16.331 2.375 Thomson Reuters 21 .172 19 0 15 19 12 0 8 103 5 492 5 5 5 211 4 194 4 10 3 0 0 0 0 45 0 15 0 28 0 6 0 0 0 0 0 0 0 0 0 0 0 20 0 0 0 0 0 12 0 0 0 0 0 0 0 13 0 0 0 0 0 0 0 0 0 0 0 3 0 28.122 315 0 392 566 2.186 625 19 0 13 49 62 100 170 213 11 109 398 275 555 603 363 284 43 0 103 518 5 7 400 185 590 1.158 3.274 447 2.000 65 48 211 74 57 47 325 158 26 DC 0 0 0 0 0 39 0 0 5 0 PA 0 9 0 57 69 54 73 55 12 118 CT 70 309 44 333 130 316 156 236 288 66 AL 0 0 0 0 0 150 0 0 0 0 MI 0 0 0 0 0 5 0 7 33 0 TN 0 0 0 0 30 20 24 73 0 34 UT 0 0 0 0 6 0 11 1 0 0 FL 60 3 87 39 171 10 0 36 11 29 MN 2 0 3 168 0 266 110 51 418 20 VA 0 0 34 0 2 0 4 10 13 15 TX 12 57 0 240 118 87 61 231 41 162 IA 0 20 0 25 0 11 0 60 0 0 GA 0 0 0 52 0 0 0 15 65 0 NM 0 0 2 31 17 36 28 0 2 0 NC 0 0 0 0 0 7 7 32 23 38 WA 9 37 17 113 0 25 126 37 60 0 OR 0 0 0 20 0 0 0 30 0 0 CO 0 0 40 29 112 32 71 32 70 80 OH 0 16 30 0 34 3 0 87 75 0 WI 0 0 0 58 0 0 0 0 0 0 LA 0 0 0 0 0 0 0 0 0 0 OK 0 0 0 0 0 0 32 0 0 10 MO 0 0 0 0 15 644 0 33 0 0 SD 0 0 0 0 0 0 0 0 0 0 IN 0 0 12 10 2 0 10 0 27 16 HI 0 0 0 0 2 0 0 0 0 0 KS 0 0 0 0 0 0 0 0 0 0 RI 0 0 5 0 0 17 0 0 25 0 MS 0 0 0 0 0 0 0 0 0 0 NH 0 7 4 34 0 49 0 0 40 0 ME 1 0 0 0 0 0 0 22 948 0 AZ 0 0 0 0 19 0 0 0 37 0 ID 0 0 0 0 0 0 0 0 0 0 WV 0 0 0 0 0 0 0 0 0 0 KY 0 17 0 0 0 0 0 0 0 0 SC 0 1 0 2 0 0 0 0 0 13 PR 0 0 0 0 0 0 0 0 0 0 NV 0 0 0 0 0 0 0 0 0 0 ND 0 0 0 0 0 0 0 0 0 0 NE 0 0 0 0 0 0 0 0 0 0 DE 0 0 8 0 0 0 0 0 0 0 UN 0 0 0 0 0 0 0 0 0 0 WY 0 0 0 0 0 0 0 0 0 0 AR 0 0 0 0 0 0 0 0 0 0 VT 0 0 0 0 0 0 0 0 0 0 Total 2.083 3.657 1.544 15.400 11.043 424 302 1.154 363 230 280 114 260 0 0 84 0 106 19 7 194 5 74 2 10 179 32 19 10 0 18 0 11 0 0 3 25 0 12 20 0 0 0 0 15 14 0 50 0 111 31 0 0 0 0 9.820 0 5 181 30 0 0 174 226 409 640 10 0 433 1.041 652 392 561 197 344 994 1.557 9.963 2006 2007 10.005 788 335 MD 0 45 0 0 219 4 182 24 2 74 NY 228 402 193 1.

National Venture Capital Association

Figure 2.04 Top 5 States By Venture Capital Committed 2009

State
California Massachusetts Maryland New York New Jersey Sub-Total Remaining States Total

No. of Funds
45 17 4 15 1 82 45 127

Committed ($Mil)
5,630.70 3,274.40 2,765.70 1,868.30 500.00 14,039.10 1,335.50 15,374.60

Figure 2.05 Private Equity Annual Commitment ($ Billions) 1980 to 2009
220.00 200.00 180.00 160.00 140.00
($ Billion)

Venture Capital Buyouts and Mezzanine Capital

120.00 100.00 80.00 60.00 40.00 20.00 198 0 198 1 198 2 198 3 198 198 4 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 199 199 3 4 199 5 199 6 199 7 199 8 199 9 20 00 20 01 20 02 20 0 20 3 04 20 05 20 06 20 07 20 08 20 09

Year

22

Thomson Reuters

Investments
In 2009, total venture investment decreased 37% in dollars and 30% in number of deals from 2008. Total venture investment decreased from $27.9 billion to $17.7 billion. While the timing of this most recent drop in industry size followed global economic concerns in mid-2008, the downward resizing of the industry is a result of the technology bubble bursting in 2000. Many of the venture firms which raised funds at the peak have since deployed their available capital and are unable to raise new funds. A sub-$20-billion industry is welcomed by many long time practitioners as a return to a manageable size. After years of taking on 1,000++ companies each year, the industry in 2009 funded 728 first time companies. While numerically fewer, each one represents a fresh commitment by venture capital funds to the future. The contention for venture capitalist attention (and dollars) between existing later stage portfolio companies and newly-arriving business plans continues. There are still a record number of companies in portfolios in the later stage of development which in most other environments would have already gone public or otherwise been acquired. While the actual number of later stage deals declined in 2009, the proportion is still historically high. Not all of these later stage companies received further funding in 2009. Many of those companies which did not get 2009 funding have had to cut back growth plans awaiting better times. With IPOs occurring at a mere trickle and M&A markets slow, there is no place for these companies to go. The life sciences share of the venture capital investment scene continued to grow. In 2009, 20% of total dollars went to biotechnology companies, 14% went to medical devices and equipment and 1% went to healthcare services. Clean technology is the industry’s most visible emerging sector with $2.2 billion invested in 2009 — just over 12% of the total dollars and more than four times the amount of four years earlier. California companies received just over 50% of the total investment dollars although individual centers of sector strength and strong deal flow drove investment to 46 states and DC. Investment by corporate venture capital groups declined to 7% of total US investment in 2009. Approximately 13% of all rounds involve at least one corporate venture group down from 19% a year earlier. Several factors were in play which put upward pressure on the amount of venture capital invested: (1) there are a record number of later stage companies which need continued funding in light of poor exit opportunities; (2) the emerging sectors such as biotechnology, medical devices, and clean technology tend to be more capital intensive than typical information technology companies;(3) venture firms report an increasing number of high-quality opportunities and teams in the marketplace; and (4) increased government R&D funding will undoubtedly make certain sectors more investible in the future. On the other hand, those factors suppressing investment levels in the near term are (1) the need for capital efficiency at the portfolio companies – lengthening the runway and reducing the burn rate; (2) possible difficulty in additional fundraising from institutional investors over the next several quarters because of stretched allocations to this asset class; and (3) a lack of exits means lack of distributions which means a lack of capital which can be recycled for future investment.

Methodology

As calculated by Thomson Reuters, venture capital investment data are derived from several sources. Primarily, survey information is obtained from the quarterly survey which drives the MoneyTree Report™ from PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. This is the official industry

database of venture capital investment. Secondly, Thomson Reuters obtains data from SEC filings that are regularly monitored by our research staff. Finally, publicly available sources such as press releases and trade publications are used.

For detailed information on which transactions qualify as MoneyTree deals and are therefore counted in this chapter, please refer to Appendix B.

Thomson Reuters

23

National Venture Capital Association
Figure 3.1 Venture Capital Investments ($ Billions) 1980 to 2009

120 100 80 60 40 20 0
0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 00 01 02 03 04 05 06 07 08 09 198 198 198 198 198 198 198 198 198 198 199 199 199 199 199 199 199 199 199 199 20 20 20 20 20 20 20 20 20 20

Year

Figure 3.2 Venture Capital Investments in 2009 By Industry Group

Industry Group Information Technology Medical/Health/Life Science Non-High Technology Total

All Investments No. of Companies 1,372 618 382 2,372

No. of Deals 1,605 750 447 2,802

Investment No. of Amt ($Bil) Companies 8.3 411 6.1 155 3.3 162 17.7 728

Initial Investments No. of Investment Deals Amt ($Bil) 411 1.4 155 0.9 162 1.0 728 3.3

24

Thomson Reuters

0 0.4 Venture Capital Investments in 2009 By Industry Sector Telecommunications Telecommunication 3% s Biotechnology 20% Business Products and Services 1% Computers and Peripherals 2% Consumer Products and Services 2% Electronics/Instrumentation Electronics/Instrumentation 2% 2% Financial Services 2% Healthcare Services 1% Software 18% Semiconductors Semiconductor 4% s Retail/Distribution Retailing/Distributio 1% n Networking and Equipment Networking and Equipment 4% 4% Medical Devices and Equipment 14% Media and Entertainment 7% IT Services 6% Industrial/Energy Industrial/Energy 13% 13% Figure 3.138 303 174 111 109 1.3 Venture Capital Investments Top 5 States in 2009 State California Massachusetts New York Texas Washington Total* No.9 2.835 Amt Invested ($Bil) 8.2010 NVCA Yearbook Figure 3.6 0.0 *Total includes top 5 states only Figure 3.6 13.5 Venture Capital Investments in 2009 By Stage Startup/Seed 9% Later Stage 34% Early Stage 26% Expansion 31% Thomson Reuters 25 .9 0. of Deals 1. of Cos 958 250 150 94 89 1.541 No.

6 Amount of Capital Invested By State in 2009 ($ Millions) 574 574 WA WA 101 101 OR OR 15 15 MT MT 15 15 ID ID WY WY 7 7 ND ND 1 SD NE 8854 CA 15 NV NV 15 NE 38 NH 263 263 MN MN 23 WI 14 VT 23 WI 131 MI 159 IN 108 OH 11 KY 48 TN AR AR 0 MS 0 8 ME 2033 MA 39 RI 158 CT 557 NJ 855 NY 407 PA 18 18DE DE 277 277 MD MD 47 DC 84 84 IA IA 8 8 KS KS 5 OK 24 24 MO MO 178 178 UT UT 468 468 CO CO 195 IL 219 VA 290 NC 8 SC 111 111 AZ AZ 7 7 NM NM 645 AK AK TX 645 TX 11 LA MS 43 43 AL AL 302 302 GA GA 295 FL 77 HI HI PR GU 0 VI Figure 3.7 Number of Companies Invested in By State in 2009 89 WA 13 OR 1 1 MT MT 5 ID 2 2 ND ND 2 SD NE 12 12 NH NH 33 33 MN MN 9 WI WI 9 55 VT VT 25 MI 12 IN 5 KY 13 TN AR AR 5 ME 150 NY 250 250 MA MA WY WY NE 15 15 KS KS 4 OK 6 IA 12 12 MO MO 39 IL 958 CA 3 NV 31 31 UT UT 56 56 CO CO 44 44 OH OH 111 PA 62 NJ 1 WV 39 VA 31 NC MD 57 57 MD DE 5 5 DE 13 RI 29 CT 12 AZ 12 12 NM NM AK 94 94 TX TX 11 LA 2 2 MS MS 8 8 AL AL 38 38 GA GA 4 SC 8 DC 27 FL 2 2 HI HI PR GU VI 26 Thomson Reuters .National Venture Capital Association Figure 3.

13 19.01 1.87 1.20 220.98 7.29 468.08 89.79 32.14 314.486.122.168 1998 1.00 2.29 78.191.78 1.277.86 1.62 14.39 147.52 4.37 84.35 132.08b Venture Capital Investments in 1980 to 2009 By Region (Number of Deals) Region Silicon Valley New England NY Metro Midwest LA/Orange County Southeast Northwest DC/Metroplex Texas San Diego Philadelphia Metro Colorado SouthWest North Central South Central Upstate NY Sacramento/N.38 10.090.817.84 707.01 1.170 2003 870 443 195 168 146 240 109 180 173 123 88 73 52 73 18 24 11 1 6 2.55 133.23 186.52 164.45 45.739.160.44 224.19 2.56 416.83 572.75 122.53 192.44 755.47 66.36 42.29 829.45 512.32 512.65 228.00 468.00 0.17 36.58 1.47 223.07 197.92 2.025.16 70.11 7.930.777.26 36.29 1.00 3.43 75.70 58.20 0.01 235.38 12.50 17.98 131.55 175.93 7.00 0.97 21.03 362.05 1.03 719.101 577 432 272 246 396 189 257 335 157 128 109 88 121 31 29 25 15 10 4.181.09 35.24 114.82 1.653.30 517.20 39.186.00 0.49 132.006.84 146.087.94 1.66 23.03 20.77 227.83 1.98 225.839 1996 758 329 150 181 134 215 104 114 132 105 89 81 51 71 20 9 10 9 8 2.96 1.13 101.00 2.56 8.52 740.93 58.40 71.93 1.00 12.37 85.45 1.25 415.69 194.88 67.39 930.04 1985 710.10 0.278.009.00 15.40 1.03 1981 300.23 1.19 79.79 454.63 14.31 1.74 799.45 740.82 66.75 0.82 4.673.473 1989 1990 1991 378 387 330 216 211 168 116 87 80 128 101 91 110 96 91 107 122 105 63 48 42 49 59 54 86 83 69 56 47 41 35 42 41 50 47 34 30 21 25 38 43 39 8 5 3 12 6 4 6 10 9 2 0 0 0 0 3 1.32 485.52 545.08 5.09 42.06 1.11 96.272.31 41.76 24.71 194.75 1.72 7.50 83.839.787.84 240.41 0.108.587.40 59.74 0.613.220.76 27.11 47.17 758.248.919 2001 1.73 360.32 0.14 7.73 950.00 3.95 21.54 41.85 5.25 81.058.154 880 805 498 515 648 331 498 468 232 225 220 146 148 51 34 35 17 14 7.41 1.75 29.509.90 12.65 636.24 12.42 180.76 3.21 61.85 1.69 37.82 145.90 6.03 3.15 50.88 173.88 107.45 4.27 27.01 291.81 2.92 83.86 0.58 339.75 132.67 53.46 48.60 0.29 48.00 523.09 1.54 199.13 21.56 405.90 22.59 2.75 27.43 67.50 66.24 132.25 20.08 138.422.47 161.432.96 22.362 1.67 Figure 3.86 623.29 103.46 1994 1.417 1985 1986 1987 318 323 330 235 209 248 89 100 117 97 111 128 99 105 118 93 117 130 46 46 56 46 42 61 108 90 103 42 31 49 38 35 50 43 56 59 19 29 41 36 47 53 11 11 12 17 10 9 11 17 11 13 0 1 1 0 0 1.38 124.90 1.07 154.35 1984 1.485.08 Venture Capital Investments in 1980 to 2009 By Region ($ Millions) Region Silicon Valley New England NY Metro Southeast LA/Orange County San Diego Midwest Northwest Texas DC/Metroplex Colorado Philadelphia Metro North Central SouthWest South Central Upstate NY Sacramento/N.97 798.57 86.50 5.45 2.33 1.09 644.42 354.12 349.16 2.96 1.46 1.00 0.244.53 22.204.25 985.76 1.502.42 19.255 498 271 257 223 241 221 213 178 167 131 100 96 86 30 34 18 0 8 4.87 432.95 15.34 128.73 545.50 984.86 105.338.45 3.48 487.42 19.05 150.52 35.076.36 67.482.29 0.44 91.126.08 2.62 353.117.690.804.02 0.55 341.513.27 12.122.65 1.09 772.245.49 268.33 34.140.93 1989 865.90 5.48 11.89 59.37 1.84 1.89 99.431.416.93 1987 819.17 138.21 1.561.03 1.01 31.09 149.36 24.845.818.24 245.631.89 1993 830.28 62.12 518.34 0.38 95.88 69.31 10.817.57 157.25 29.59 367.062.57 20.01 771.54 318.076.96 132.88 58.08 133.25 5.00 0.06 466.250.03 1.963.45 147.964.174.81 30.00 3.00 0.415 1.48 976.90 10.29 2.86 461.43 265.833.57 1.60 4.715.43 79.61 377.261.51 571.746.19 20.13 202.67 1.57 144.731.203 442 286 209 221 230 177 212 191 128 109 99 85 66 25 37 9 0 14 3.802 Thomson Reuters 27 .78 3.51 90.64 11.946.07 189.79 100.32 88.78 202.993 2004 952 428 217 163 152 238 150 182 172 130 99 69 56 70 29 28 7 3 5 3.42 490.2010 NVCA Yearbook Figure 3.530.566.84 1.76 216.120.205 2006 1.971.220.32 13.81 174.14 266.39 28.63 242.10 1.70 837.90 111.073.58 0.90 1.12 9.79 453.95 456.72 109.Cal Unknown AK/HI/PR Total 1980 109.64 419.037 463 260 240 213 301 133 158 192 115 135 124 85 109 27 31 16 17 5 3.841.899.32 704.94 147.524.79 98.229 1992 414 160 69 85 94 105 47 45 65 46 63 51 34 40 7 9 13 1 3 1.19 127.63 0.12 50.039.78 35.58 46.00 2.36 237.294.36 1.81 87.62 565.21 487.37 15.88 1.14 720.93 11.07 17.759.92 942.30 0.23 2.49 408.38 547.336.205.990.12 22.05 10.352.96 39.00 102.02 626.66 106.04 226.40 2.77 204.00 2.582.00 26.03 216.94 392.19 753.555.00 41.15 443.76 203.03 46.003.017.122.233 474 319 285 243 213 210 206 152 132 149 105 81 81 42 32 19 0 8 3.01 28.32 1.056.57 1.160 1994 331 142 78 83 57 106 48 45 64 58 44 49 26 38 10 5 9 2 2 1.17 9.15 5.00 5.542.08 36.94 125.23 453.59 5.10 488.052.149.72 192.570 1997 863 381 228 226 159 294 131 134 170 97 138 95 70 117 25 20 7 7 6 3.057.72 90.50 0.661 1999 1.34 227.97 6.84 55.09 56.65 618.425.90 406.65 244.69 837.71 15.65 5.78 10.437.31 94.379 1.42 381.42 293.03 1990 837.04 83.08 106.90 928.351 1993 308 144 69 86 61 107 42 35 66 47 49 47 29 41 7 10 7 4 1 1.76 30.944.90 31.68 22.08 0.35 202.78 0.07 1.94 1.24 650.81 4.03 15.91 117.382.148.47 6.21 60.136.35 18.96 6.82 1.02 19.62 69.63 2.79 6.09 1.37 24.89 1992 1.31 104.310.73 3.Cal Unknown AK/HI/PR Total 1980 92 58 27 29 42 24 10 13 36 6 14 11 17 21 8 4 2 0 0 414 1981 156 124 63 46 80 37 25 16 49 16 20 35 19 21 15 8 3 0 1 734 1982 267 150 78 68 89 58 35 27 66 14 18 33 20 34 9 7 6 19 1 999 1983 341 214 106 86 127 65 58 53 77 34 27 40 18 52 11 13 10 2 0 1.571.13 410.154.01 1982 512.09 357.73 1.47 17.15 5.627.66 1.00 7.96 2.74 34.49 273.87 20.36 418.27 1.96 145.44 1.19 17.07 20.21 2.269.11 186.32 341.50 86.11 13.10 0.59 943.593.86 37.49 293.001.77 38.373.743 2007 1.58 1.04 1.133.91 528.00 423.00 0.57 53.65 588.49 131.90 1.05 31.93 29.91 304.423.76 683.552.864.09 1.75 54.49 38.07 1.28 173.197 1995 494 232 125 129 89 164 79 74 98 70 78 59 37 71 15 8 10 3 4 1.51 911.35 2.94 421.42 474.946.66 3.83 67.43 101.19 1.45 110.76 158.332.36 14.53 70.72 3.084.89 791.518 2002 806 452 225 240 158 274 138 201 177 117 97 88 65 74 24 24 7 0 3 3.19 78.57 97.22 3.31 2.502.04 162.360.34 45.06 224.35 59.98 4.90 1.90 102.94 260.38 148.62 207.68 44.62 27.87 23.66 903.75 8.16 403.73 51.56 38.45 74.35 385.23 26.55 429.79 3.692 654 476 312 343 450 261 264 302 144 136 159 113 115 30 31 17 5 5 5.605.75 14.36 0.71 14.497.00 1.96 17.40 666.69 14.14 358.984 2009 866 348 246 221 157 138 133 119 111 107 89 72 69 58 37 13 8 8 2 2.48 159.05 137.071.804.07 363.036.63 765.50 1986 917.85 17.239.06 12.08 207.05 2.51 7.00 0.78 216.87 434.16 11.67 16.186.18 1.72 2.370.036.76 7.53 21.57 106.25 18.88 21.710.90 57.43 19.12 59.14 1983 981.00 0.46 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1.74 418.02 3.91 1988 945.38 4.93 683.229.05 423.00 3.88 5.61 193.19 89.38 1.76 1.05 13.64 136.576 1988 340 228 103 102 106 109 64 57 102 54 43 59 24 52 7 10 11 2 0 1.00 3.478.334 1984 389 242 81 102 113 79 45 39 84 37 28 53 25 63 7 16 14 0 0 1.18 131.55 7.65 326.00 2.027 2008 1.26 250.64 3.11 8.413.351.343.31 1.29 225.84 9.72 3.86 76.53 163.51 178.98 68.07 16.31 134.835.33 127.00 0.14 713.58 2.17 129.48 845.83 314.02 42.509 2000 2.71 10.34 115.32 52.96 1.930.51 218.297.54 30.97 2.473.150 2005 985 430 190 166 186 198 162 207 174 138 89 79 77 66 9 31 10 2 6 3.099.40 41.34 4.36 310.28 635.75 27.038.00 0.96 65.09 7.08 136.14 622.10 2.38 47.74 1.38 1.55 129.941.120.90 64.27 32.163.204.883.21 1.234.91 11.18 477.50 86.33 985.173.59 93.17 1.490 1.878.41 688.221.10 1991 719.989.

6 5.4 10.5 1986 732.114.2 5.75 1.09c-1 Quarterly Venture Capital Investments 1980 to 2009 By Stage ($ Millions) Stage Startup/Seed Early Stage Expansion Later Stage Total 1980 1981 1980-1Q 1980-2Q 1980-3Q 1980-4Q 1980 Total 1981-1Q 1981-2Q 1981-3Q 1981-4Q 1981 Total 46.3 812.557.251.23 395.89 690.35 282.99 107.011 1.781.5 2.33 91.82 36.764.610 493 3.1 1.20 1989-2Q 166.41 363.817.5 69.631.9 1987 616.08 165.89 72.52 1984-2Q 186.186.67 880.03 139.60 51.21 181.95 48.57 39.6 717.099.292 2.431.85 908.1 11.91 683.2 1.49 296.270.35 1984-1Q 170.02 170.370.78 133.02 640.975.0 1.78 2.71 823.93 449.946.20 581.1 373.524.4 1.3 7.55 363.50 631.98 1.570 1997 536 886 1.0 57.719 2.415 1991 184 271 528 246 1.141.22 293.229.38 1.0 1.96 208.141.070.85 110.111 997 3.376 1.237.07 112.043.840.91 322.73 31.44 180.50 81.82 846.20 694.624.99 877.069 1.05 313.6 601.401 546 4.5 892.480.81 98.334 1984 387 388 512 130 1.173.36 616.7 336.8 3.6 908.15 77.00 543.32 710.14 274.76 680.0 1982 333.3 1.837.57 383.0 177.246.839 1996 504 753 1.070 1.24 94.362 1986 382 325 494 178 1.16 92.684.2 523.193.93 1989-1Q 140.95 201.133.04 435.43 428.9 3.850 3.6 1.0 344.41 453.264.81 109.95 105.8 588.521.46 376.471.651.6 1.7 5.0 9.82 71.4 448.09 1988-2Q 144.351.50 1.33 280.53 102.2 1.35 140.14 99.5 690.2 3.542.295.9 2.6 280.3 9.0 5.086.36 67.08 26.21 123.61 67.07 4.37 22.09c-2 Quarterly Venture Capital Investments 1980 to 2009 By Stage ($ Millions) Stage Startup/Seed Early Stage Expansion Later Stage Total 1985-1Q 147.97 601.48 1985-2Q 141.3 9.8 3.205.31 69.1 7.186.6 27.45 344.75 707.50 313.89 170.9 1993 599.1 11.5 21.170 2003 209 812 1.6 449.276.52 109.28 712.1 8.44 126.10 506.18 635.7 667.35 104.2 601.4 2.530.154.30 91.591.20 1989-4Q 1989 Total 133.864.86 543.0 1990 384.91 1988-1Q 154.45 1988-4Q 1988 Total 112.93 1987-1Q 142.019 294 2.4 665.01 93.173.697 675 7.109.11 440.5 30.351 1993 284 179 505 192 1.661 1999 808 1.587.01 333.270.498.16 128.63 110.78 148.60 100.56 30.77 170.478.52 3.79 859.0 521.211.2 994.20 291.93 708.7 555.93 164.074.77 66.06 124.07 268.44 1985-4Q 1985 Total 129.10 373.44 1987 1987-3Q 144.576 410 3.03 28 Thomson Reuters .14 23.1 1991 223.490 1990 259 368 586 202 1.64 62.60 166.473 1989 352 328 644 166 1.6 38.625.174.0 511.932.7 3.77 703.1 1.1 1.1 10.45 363.168 1998 664 1.79 346.10 1.95 1986-4Q 1986 Total 181.2 1.99 2.919 2001 279 1.3 3.229 1992 249 282 601 219 1.1 91.777.379 1987 386 391 589 210 1.77 58.76 37.8 398.54 161.8 7.72 272.88 142.8 3.51 509.761.03 2.2 2.27 158.2 4.5 1994 727.197 4.521.23 21.777.84 351.64 732.991.436.8 1.70 1983-4Q 1983 Total 153.00 289.984 2009 309 889 804 800 2.27 225.6 4.71 398.145.3 2.224 1.605.68 448.68 280.0 10.7 2.6 3.205 2006 379 972 1.191.49 172.016 3.611.18 76.006.3 1.07 265.9 1.8 100.47 2.883.88 1988 1988-3Q 229.40 285.174.4 3.60 95.576 1988 365 350 595 163 1.9 440.243 801 3.425.326.4 3.883.5 21.77 160.904.18 228.631.89 30.85 790.84 139.3 1.29 60.0 21.13 406.26 665.17 739.63 60.8 376.68 616.64 177.690.54 636.058.26 302.28 693.338.531.08 1.87 246.114.85 1.58 82.8 8.09b Venture Capital Investments 1980 to 2009 By Stage (Number of Deals) Stage 1980 1981 Startup/Seed 113 226 Early Stage 149 214 Expansion 125 243 Later Stage 27 51 Total 414 734 1982 267 315 310 107 999 1983 360 415 458 101 1.2 324.5 207.7 Figure 3.18 74.98 588.6 9.509 2000 697 2.67 172.8 5.471.04 Figure 3.09 95.2 11.08 178.88 153.0 22.51 45.76 2.58 45.0 1985 509.912.941.174.36 1987-2Q 200.205.5 1.062.7 14.29 301.6 320.864.1 456.36 1984 1984-3Q 162.8 12.09 79.6 708.04 523.50 1986-1Q 180.399.6 1.0 19.154.3 5.502.136.45 740.47 126.4 19.4 548.399.6 2.40 1984-4Q 1984 Total 117.17 48.2 2.15 151.12 1985 1985-3Q 91.596.51 31.68 26.28 391.523.14 677.713.53 717.85 74.3 506.4 1.1 1983 543.5 23.56 211.8 8.7 3.276 1.National Venture Capital Association Figure 3.4 28.83 11.9 703.61 78.09 81.370.8 359.455.2 1.96 49.3 5.65 747.50 143.7 51.05 80.5 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1.592.88 207.64 20.47 349.058.9 1989 543.58 163.671.150 2005 249 848 1.993 2004 220 886 1.670.40 186.94 1989 1989-3Q 102.69 3.3 721.740.453 529 5.29 1986-2Q 268.197 1995 429 508 696 206 1.11 104.36 304.543.67 134.70 1.0 9.45 298.5 3.0 1981 322.947.2 123.160 1994 329 251 424 193 1.83 146.0 2.64 687.417 1985 360 310 526 166 1.98 102.97 87.027 2008 494 1.510.362.14 471.01 1982 1982-1Q 1982-2Q 1982-3Q 1982-4Q 1982 Total 1983-1Q 1983-2Q 112.35 145.4 1.473.58 151.566.0 26.9 1988 640.50 797.52 1987-4Q 1987 Total 129.33 82.6 339.0 5.9 8.759.5 16.47 53.817.70 1.23 711.09 144.7 3.9 1.3 1.6 363.4 3.84 50.09 Venture Capital Investments 1980 to 2009 By Stage ($ Millions) Stage Startup/Seed Early Stage Expansion Later Stage Total 1980 153.502.70 91.743 2007 484 1.98 97.8 17.358.412 334 3.802 Figure 3.21 359.70 1986 1986-3Q 102.96 143.63 133.374 598 2.59 3.9 1992 534.62 273.1 11.73 144.34 164.36 277.27 707.58 183.99 706.197 3.518 2002 179 888 1.52 793.3 1984 636.66 1983 1983-3Q 136.03 305.

311.528.978.34 225.145.365.104.73 1995-2Q 397.26 137.77 2.89 1992-1Q 62.13 1.101.21 2.86 585.277.210.671.811.599.54 1.147.285.771.41 7.011.50 744.44 2.27 585.57 2003-2Q 91.02 135.314.81 348.56 336.109.859.091.27 314.80 2008-4Q 2008 Total 306.50 3.764.49 2.33 349.55 2000 2000-3Q 847.271.79 9.390.530.483.86 828.81 2005 2005-3Q 151.26 676.276.47 1.83 2.027.25 21.09 835.326.84 2001-4Q 2001 Total 126.478.296.946.32 1997-4Q 1997 Total 300.97 96.77 1.102.77 2.19 15.57 1.418.810.425.21 1.00 7.01 5.26 937.472.100.235.322.63 401.577.08 2007-2Q 347.133.75 277.35 1.589.61 338.56 1.50 575.96 2.73 127.447.975.741.708.31 1997-2Q 303.77 1995-4Q 1995 Total 314.37 339.018.08 7.083.23 1.896.488.062.625.04 2.01 1.017.03 2.38 2008-2Q 463.40 2004-4Q 2004 Total 135.24 601.255.455.01 2.74 857.487.921.82 1.075.71 7.59 6.73 1.774.24 1.93 1.99 4.95 11.10 3.228.65 93.54 2007-1Q 250.18 5.02 1.82 2.731.691.854.134.31 669.185.30 5.781.71 3.37 2001-2Q 233.91 1.53 2.087.328.032.511.22 9.02 9.70 307.40 186.46 Figure 3.88 2.385.61 3.78 1.42 761.15 9.83 131.095.606.39 1.677.46 456.79 165.837.17 166.010.583.15 2.465.42 3.32 1991-2Q 79.98 92.79 Figure 3.87 5.274.54 797.96 551.276.774.225.84 20.269.86 455.18 2006-4Q 2006 Total 292.50 3.72 620.70 27.193.58 2007-4Q 2007 Total 477.27 754.28 81.302.77 1998 1998-3Q 436.44 667.10 12.10 7.31 75.89 1993-1Q 144.86 5.436.715.25 2003 2003-3Q 90.431.912.22 1991-4Q 1991 Total 52.84 3.070.605.48 5.22 153.363.631.53 1994-2Q 204.15 778.611.362.02 1.48 128.036.66 1999-2Q 795.250.270.046.46 1994-1Q 183.721.175.12 14.06 5.84 2.430.96 1.14 461.498.09c-3 Quarterly Venture Capital Investments 1980 to 2009 By Stage ($ Millions) Stage Startup/Seed Early Stage Expansion Later Stage Total 1990-1Q 80.28 8.27 3.46 1.986.62 2008-1Q 420.52 2009-2Q 516.61 3.309.369.20 712.31 6.85 2009-1Q 202.82 509.23 692.376.21 6.09 7.60 1.41 4.10 1.96 320.39 677.864.479.72 3.61 3.09c-6 Quarterly Venture Capital Investments 1980 to 2009 By Stage ($ Millions) Stage Startup/Seed Early Stage Expansion Later Stage Total 2005-1Q 116.40 749.346.35 2.23 708.09 169.39 5.73 4.85 521.52 2.090.56 7.42 1998-1Q 361.36 1990 1990-3Q 103.46 30.72 19.647.57 2.35 483.53 2004-1Q 91.26 255.63 16.38 1.370.22 1.510.31 495.66 768.331.24 1.50 930.67 3.09 482.95 2.185.019.12 1.491.866.83 534.98 1.59 5.17 304.59 1.13 3.97 2002-1Q 67.53 339.578.42 172.45 2001 2001-3Q 113.299.13 2.87 197.50 2007 2007-3Q 349.48 339.29 1.91 2009 2009-3Q 475.351.75 1998-4Q 1998 Total 462.612.19 304.85 555.13 15.69 7.73 1.251.17 2.67 Thomson Reuters 29 .73 1.96 2008 2008-3Q 434.51 1.37 762.10 1991-1Q 44.69 1.63 81.27 6.47 427.31 2.38 556.20 1993 1993-3Q 164.80 679.80 2.17 92.840.61 4.45 3.41 2.27 8.74 548.72 485.366.27 1.193.761.20 1.237.77 2.033.44 21.27 11.00 702.14 7.40 1.84 445.32 811.18 2.46 467.14 5.041.020.374.312.043.34 1.300.41 2002 2002-3Q 80.07 2.874.259.01 4.208.06 882.874.846.893.19 6.39 838.107.743.95 6.219.96 383.22 1.602.542.09 1.73 4.54 1.70 812.309.41 249.61 989.095.52 22.012.684.364.63 1.563.08 1990-4Q 1990 Total 83.83 5.331.687.740.87 1.67 9.58 2006 2006-3Q 333.38 200.64 1.18 4.58 27.17 534.57 1.80 2.99 4.30 10.24 3.28 1993-4Q 1993 Total 161.99 1.66 176.84 322.85 818.117.73 1999-1Q 504.30 2.84 2000-4Q 2000 Total 466.67 1999 1999-3Q 936.26 160.40 5.32 2004-2Q 119.03 7.41 862.92 120.03 2.566.902.09c-5 Quarterly Venture Capital Investments 1980 to 2009 By Stage ($ Millions) Stage Startup/Seed Early Stage Expansion Later Stage Total 2000-1Q 775.89 1.41 981.39 1997 1997-3Q 313.668.506.134.864.099.362.13 251.67 79.35 6.406.425.76 2.972.89 10.73 1.356.133.136.991.68 6.335.02 141.86 994.49 3.174.90 10.56 2.001.29 4.943.22 2.76 172.591.10 2.14 3.64 1.98 4.61 96.307.07 54.25 2.605.822.743.00 2006-1Q 231.57 1.670.72 88.09 1995 1995-3Q 215.078.387.819.14 2.16 323.97 2002-2Q 91.559.218.68 5.20 2.43 2005-4Q 2005 Total 148.75 1993-2Q 128.88 1.09 2.18 433.87 788.35 4.37 22.234.77 26.596.535.26 6.614.066.270.37 874.00 8.96 Figure 3.44 12.673.760.692.62 86.678.23 472.523.21 1.84 1.28 1996-2Q 420.713.43 2.58 2.39 209.70 1.75 11.960.10 2003-4Q 2003 Total 83.25 3.794.88 3.17 390.54 21.82 10.906.849.85 1999-4Q 1999 Total 1.85 3.507.775.03 384.543.90 5.009.89 4.46 1.924.23 3.50 13.005.946.62 1.08 1.38 10.28 5.050.91 2.40 1992 1992-2Q 1992-3Q 1992-4Q 1992 Total 208.98 2004 2004-3Q 110.25 892.11 1996 1996-3Q 203.74 17.574.286.57 1.05 1996-1Q 306.862.70 1.96 193.70 7.932.22 339.557.63 2.22 1.82 2006-2Q 371.02 3.52 230.37 2.94 908.470.65 92.212.759.99 12.75 1.70 3.21 2.17 1.50 894.20 2002-4Q 2002 Total 80.27 62.261.61 19.899.13 8.40 4.92 2.53 1.89 192.55 1.46 7.68 5.887.65 599.71 223.02 1.43 6.95 1.33 2.191.948.30 409.33 8.74 2.32 3.651.52 5.025.45 28.971.086.592.888.89 1.11 832.370.86 25.282.61 51.76 5.063.609.530.247.79 6.51 23.49 1998-2Q 391.81 1.941.26 2.524.75 57.175.78 1991 1991-3Q 46.68 2.40 528.22 3.169.99 5.12 100.60 511.164.59 2.81 7.74 1.02 149.58 1.71 1.587.86 2.473.40 14.02 2003-1Q 70.671.46 1.54 1996-4Q 1996 Total 306.987.75 1997-1Q 378.00 2.19 1.51 11.05 2000-2Q 916.263.03 2.49 3.75 5.30 38.30 1.45 11.646.18 592.904.171.64 4.690.680.05 125.95 26.358.048.82 299.61 2.10 2.09c-4 Quarterly Venture Capital Investments 1980 to 2009 By Stage ($ Millions) Stage Startup/Seed Early Stage Expansion Later Stage Total 1995-1Q 265.49 2.778.2010 NVCA Yearbook Figure 3.650.353.372.22 176.10 5.15 324.544.53 913.23 158.55 138.338.56 2001-1Q 248.264.79 1990-2Q 117.19 255.02 641.812.62 1.577.63 721.13 1.358.61 3.074.93 5.246.131.43 704.489.13 4.98 1.82 1994 1994-3Q 148.624.08 3.80 4.351.295.179.059.233.43 967.30 973.336.025.32 1.79 727.963.38 2005-2Q 491.51 1994-4Q 1994 Total 190.67 205.21 5.49 2009-4Q 2009 Total 402.006.78 959.23 3.10 1.507.

719 Expansion 189 178 162 167 696 229 241 233 316 1.09d-3 Quarterly Venture Capital Investments 1980 to 2009 By Stage (Number of Deals) Stage Startup/Seed Early Stage Expansion Later Stage Total 1990 1991 1992 1993 1994 1990-1Q 1990-2Q 1990-3Q 1990-4Q 1990 Total 1991-1Q 1991-2Q 1991-3Q 1991-4Q 1991 Total 1992-1Q 1992-2Q 1992-3Q 1992-4Q 1992 Total 1993-1Q 1993-2Q 1993-3Q 1993-4Q 1993 Total 1994-1Q 1994-2Q 1994-3Q 1994-4Q 1994 Total 60 70 58 71 259 51 48 42 43 184 49 68 48 84 249 69 68 66 81 284 89 68 81 91 329 87 95 74 112 368 79 70 58 64 271 74 87 51 70 282 41 48 39 51 179 64 61 49 77 251 148 146 140 152 586 129 128 123 148 528 154 160 101 186 601 144 119 117 125 505 104 108 98 114 424 47 51 40 64 202 48 65 53 80 246 68 40 41 70 219 64 46 41 41 192 46 63 37 47 193 342 362 312 399 1415 307 311 276 335 1229 345 355 241 410 1351 318 281 263 298 1160 303 300 265 329 1197 Figure 3.09d-4 Quarterly Venture Capital Investments 1980 to 2009 By Stage (Number of Deals) 1995 1996 1997 1998 1999 Stage 1995-1Q 1995-2Q 1995-3Q 1995-4Q1995 Total 1996-1Q 1996-2Q 1996-3Q 1996-4Q1996 Total 1997-1Q 1997-2Q 1997-3Q 1997-4Q1997 Total 1998-1Q 1998-2Q 1998-3Q 1998-4Q1998 Total 1999-1Q 1999-2Q 1999-3Q 1999-4Q1999 Total Startup/Seed 124 95 95 115 429 132 139 98 135 504 161 117 119 139 536 148 160 162 194 664 165 212 245 186 808 Early Stage 129 135 112 132 508 149 205 178 221 753 204 209 219 254 886 236 220 248 307 1.839 575 655 584 756 2.168 849 901 912 999 3.509 30 Thomson Reuters .421 1.019 308 366 326 412 1.867 5.576 380 564 602 907 2.National Venture Capital Association Figure 3.09d-2 Quarterly Venture Capital Investments 1980 to 2009 By Stage (Number of Deals) Stage Startup/Seed Early Stage Expansion Later Stage Total 1985 1986 1987 1988 1989 1985-1Q 1985-2Q 1985-3Q 1985-4Q 1985 Total 1986-1Q 1986-2Q 1986-3Q 1986-4Q 1986 Total 1987-1Q 1987-2Q 1987-3Q 1987-4Q 1987 Total 1988-1Q 1988-2Q 1988-3Q 1988-4Q 1988 Total 1989-1Q 1989-2Q 1989-3Q 1989-4Q 1989 Total 111 89 61 99 360 133 107 62 80 382 115 102 86 83 386 118 78 88 81 365 106 97 77 72 352 88 82 61 79 310 109 69 70 77 325 124 83 97 87 391 96 91 87 76 350 99 63 82 84 328 142 120 114 150 526 168 133 93 100 494 173 131 152 133 589 152 177 127 139 595 213 156 118 157 644 60 40 36 30 166 56 49 29 44 178 61 58 45 46 210 48 40 40 35 163 44 29 38 55 166 401 331 272 358 1362 466 358 254 301 1379 473 374 380 349 1576 414 386 342 331 1473 462 345 315 368 1490 Figure 3.011 242 379 446 652 1.412 368 412 406 390 1.661 911 1.310 1.453 Later Stage 55 46 53 52 206 65 70 75 84 294 88 74 80 92 334 97 109 96 108 410 124 155 128 122 529 Total 497 454 422 466 1.09d-1 Quarterly Venture Capital Investments 1980 to 2009 By Stage (Number of Deals) Stage Startup/Seed Early Stage Expansion Later Stage Total 1980 1981 1982 1983 1984 1980-1Q 1980-2Q 1980-3Q 1980-4Q 1980 Total 1981-1Q 1981-2Q 1981-3Q 1981-4Q 1981 Total 1982-1Q 1982-2Q 1982-3Q 1982-4Q 1982 Total 1983-1Q 1983-2Q 1983-3Q 1983-4Q 1983 Total 1984-1Q 1984-2Q 1984-3Q 1984-4Q 1984 Total 42 12 27 32 113 62 48 58 58 226 93 48 57 69 267 88 95 98 79 360 122 84 92 89 387 57 21 28 43 149 98 45 34 37 214 154 55 43 63 315 156 78 93 88 415 139 94 72 83 388 49 25 26 25 125 94 49 55 45 243 126 57 58 69 310 157 92 107 102 458 173 115 115 109 512 7 7 6 7 27 15 11 10 15 51 36 21 24 26 107 25 27 25 24 101 44 26 24 36 130 155 65 87 107 414 269 153 157 155 734 409 181 182 227 999 426 292 323 293 1334 478 319 303 317 1417 Figure 3.570 761 766 744 897 3.

5 249.0 88.2 515.170 717 745 732 799 2.4 371.4 73.6 234.363.3 3.802 Figure 3.8 1.0 338.5 1.9 21.2 256.007 991 893 806 3.1 1996 1.1 2.219.348.3 112.1 441.7 541.4 394.197 1.9 1992 545.1 161.5 698.7 1.09d-5 Quarterly Venture Capital Investments 1980 to 2009 By Stage (Number of Deals) 2000 2001 2002 2003 2004 2000-1Q 2000-2Q 2000-3Q 2000-4Q2000 Total 2001-1Q 2001-2Q 2001-3Q 2001-4Q2001 Total 2002-1Q 2002-2Q 2002-3Q 2002-4Q2002 Total 2003-1Q 2003-2Q 2003-3Q 2003-4Q2003 Total 2004-1Q 2004-2Q 2004-3Q 2004-4Q2004 Total Stage Startup/Seed 194 193 172 138 697 81 72 67 59 279 48 53 40 38 179 55 59 43 52 209 44 71 42 63 220 Early Stage 766 779 687 618 2.224 1.7 Business Products and Services 5.8 122.6 363.0 1982 77.0 28.2 144.931 1.7 240.2 124.8 153.2 365.817.0 440.802 Thomson Reuters 31 .0 21.898.5 7.364.7 1.513.9 490.4 485.839 2.4 664.5 100.3 32.7 224.2 593.5 1.5 12.078 4.1 23.645.1 540.0 3.6 397.017 1.8 1.8 3.6 6.2 2.0 2.287.5 1.5 173.347.400 2.7 2.1 8.338.0 107.0 102.9 1.058.2 158.1 1983 128.4 78.4 39.1 124.759.0 558.507.3 38.518 856 870 705 739 3.077.3 28.9 252.4 1.9 334.1 2.5 438.4 Retailing/Distribution 27.2 2.3 1.229 1.728.570 3.144.063 993 911 3.011 1.3 578.9 579.6 1.5 194.5 130.3 26.3 1.3 3.5 66.8 11.697 636 672 546 547 2.531.376 284 317 324 351 1.2 1.661 5.7 443.2 96.9 282.2 171.1 31.0 574.8 1.6 1.4 31.6 2.4 11.410.8 115.6 1.0 71.070 251 284 262 272 1.490 1.224 174 196 197 237 804 203 262 275 257 997 272 283 232 229 1.4 563.053.5 26.159.5 27.4 295.3 191.9 133.033.7 607.4 1.2 347.027 1.330.2 114.4 84.8 436.1 2.9 1989 305.524.09d-6 Quarterly Venture Capital Investments 1980 to 2009 By Stage (Number of Deals) Stage Startup/Seed Early Stage Expansion Later Stage Total 2005 2006 2007 2008 2009 2005-1Q 2005-2Q 2005-3Q 2005-4Q 2005 Total 2006-1Q 2006-2Q 2006-3Q 2006-4Q 2006 Total 2007-1Q 2007-2Q 2007-3Q 2007-4Q 2007 Total 2008-1Q 2008-2Q 2008-3Q 2008-4Q 2008 Total 2009-1Q 2009-2Q 2009-3Q 2009-4Q 2009 Total 48 66 67 68 249 76 93 113 97 379 83 134 128 139 484 129 123 144 98 494 57 75 88 89 309 210 214 220 204 848 204 242 228 298 972 243 310 245 272 1.6 423.3 3.631.833.4 10.3 405.2 270.743 874 1.366.5 3.5 43.504.993 3.5 2.2 253.5 127.253 988 932 938 897 946 966 949 628 19 46 58 67 52 73 97 130 145 128 139 134 157 132 137 168 231 249 280 270 353 341 321 352 392 397 471 494 503 411 35 48 64 99 110 130 111 164 147 180 189 154 188 148 128 180 213 267 282 281 286 248 237 245 275 281 352 405 384 309 26 41 53 56 34 52 62 82 68 67 56 48 74 75 92 139 177 211 262 688 933 358 160 132 137 188 314 374 408 251 95 158 163 148 151 128 131 155 134 140 145 121 124 93 94 129 151 209 186 189 240 193 128 138 146 147 215 304 352 231 3 8 23 27 29 24 24 31 22 27 30 30 19 17 31 58 119 160 202 451 685 323 174 146 146 158 204 250 273 202 10 35 52 66 96 87 76 90 77 75 55 64 63 69 71 139 209 269 329 519 855 491 276 221 223 251 327 299 249 140 20 43 47 72 97 85 71 87 90 78 73 48 56 42 37 59 68 110 112 138 255 210 169 214 256 231 250 220 196 119 12 36 27 65 65 79 73 73 68 73 75 64 85 63 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252 1.0 167.163.542.1 47.8 83.3 57.8 65.6 612.8 20.6 13.3 174.417 1.8 364.722.7 8.173.5 1.1 191.8 63.205 3.111 1.064 1.6 2.4 Consumer Products and Services 19.4 495.7 15.9 1.3 464.2 140.7 803.7 380.0 205.3 2.2 885.3 53.7 370.6 184.8 52.493.0 70.172.1 5.5 2.062.9 4.1 1991 251.7 Software 37.1 Telecommunications 7.1 294.197 299 325 308 265 1.1 576.8 610.367.3 316.1 140.9 0.690.5 117.8 45.0 19.4 193.4 771.9 319.6 112.2 65.3 4.5 219.150 Figure 3.3 280.408.276 338 331 279 276 1.0 34.3 41.5 844.7 647.3 172.1 150.2 187.9 80.6 7.9 319.8 320.8 1.4 130.135 2.7 185.6 1.487.4 192.3 426.8 3.088.3 1.5 3.2 2.0 Other 0.150 3.4 216.783.2 1.3 483.168 3.4 51.5 7.4 Medical Devices and Equipment 23.5 1995 736.3 Total 523.2 603.136.984 2.3 39.1 221.170 2.610.7 0.8 117.8 77.245.9 397.020.016.142.2 96.062.205 881 977 921 964 3.671.1 201.1 520.8 906.2 342.2 693.7 66.8 735.9 80.961.767.8 2009 3.5 2.292 247 249 194 198 888 195 216 189 212 812 208 237 214 227 886 Expansion 1.1 230.9 99.1 56.459.082.8 279.197.478.5 1994 546.3 194.5 537.243 Later Stage 168 143 179 185 675 135 143 131 137 546 143 108 122 120 493 120 147 149 182 598 187 198 176 240 801 Total 2.7 57.7 Figure 3.511.362 1.111 329 359 348 340 1.6 155.6 1.4 307.1 104.9 4.6 2001 3.2 878.5 152.9 1993 455.8 259.7 28.051.4 121.072.4 2.3 6.1 206.371.157.5 499.180.133.7 5.508.4 30.027 3.0 19.6 2.7 1.518 3.7 81.1 206.8 Healthcare Services 17.3 888.743 4.6 455.6 217.9 50.7 238.1 271.383.10 Venture Capital Investments 1980 to 2009 By Industry ($ Millions) Industry 1980 1981 Biotechnology 46.2 5.324.8 38.014 995 4.8 2000 3.2 185.3 60.115.984 631 681 690 800 2.799.566.9 1987 256.7 628.0 297.9 2.9 Semiconductors 20.6 0.0 5.5 112.6 13.006.2 4.6 43.5 33.0 2005 4.560.7 8.555.941.0 2002 3.7 16.2 314.2 56.544.3 59.1 144.069.7 142.6 1.9 79.2 1.294.351 1.9 209.864.432.6 128.3 358.057.3 444.5 235.088.7 62.8 312.4 476.3 3.5 121.6 158.2 15.1 1.0 541.0 223.3 Networking and Equipment 27.117.6 2.719.0 155.5 1.202.6 4.0 261.4 1998 1999 1.5 7.0 434.3 587.4 5.2 31.5 Industrial/Energy 139.0 759.230.510.5 181.6 42.8 4.8 757.8 2.502.8 367.628.7 29.493.3 7.197 213 211 184 192 800 736 838 801 830 3.379 1.0 1.7 2.016 264 303 314 316 1.10b Venture Capital Investments 1980 to 2009 By Industry (Number of Deals) Industry Software Biotechnology Medical Devices and Equipment Media and Entertainment Industrial/Energy IT Services Telecommunications Semiconductors Networking and Equipment Business Products and Services Consumer Products and Services Electronics/Instrumentation Computers and Peripherals Financial Services Healthcare Services Retailing/Distribution Other Total 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 39 90 163 299 328 322 319 299 275 294 301 282 296 238 248 418 670 802 961 1.285 1.099.2 385.7 54.5 129.709.4 909.6 612.6 63.9 448.0 211.509 7.6 1.7 174.3 225.3 1984 99.5 10.8 1.382.9 471.729.6 1.343.069 187 199 221 282 889 275 296 239 301 1.5 2.6 713.3 926.5 409.226.919 4.1 4.3 138.2 102.5 2.902.2010 NVCA Yearbook Figure 3.2 231.498.4 120.5 229.0 1.0 64.6 64.4 176.920.473.141.1 Financial Services 12.7 358.0 305.8 1.8 1.777.2 81.3 191.9 689.4 174.154.5 286.4 1.0 59.9 22.317.7 4.947.3 222.0 67.9 0.1 3.755.771.7 3.6 242.8 42.422.987.6 304.659.8 5.3 4.946.5 15.845.335.3 25.1 22.9 364.0 86.4 182.4 2.1 1.4 278.6 433.7 616.1 611.5 1.605.1 86.5 556.3 1.6 1.467.560.0 129.5 662.374 292 359 269 323 1.3 2.6 684.251.611.7 51.8 28.4 18.7 565.003.410.6 290.1 4.1 1.548.4 14.7 10.3 150.0 1990 280.2 410.8 398.827.0 2006 4.5 743.9 164.6 155.9 154.5 77.0 Media and Entertainment 17.8 448.0 336.3 14.1 507.6 704.883.3 21.141.6 77.6 IT Services 3.1 501.6 36.466.3 168.2 771.7 11.746.5 1986 213.8 57.0 208.9 52.5 683.5 690.0 655.8 1.4 239.8 2.0 47.5 243.1 91.1 872.2 3.2 3.6 2.106 1.6 123.042.8 35.2 2.0 318.8 918.0 42.3 0.6 370.962.8 1.401 418 460 349 383 1.045.637.919 1.0 590.6 4.506.0 1.7 152.7 2.103.0 3.351.6 93.6 2008 4.9 159.5 2.3 150.8 161.0 350.2 126.7 110.568.370.151.6 213.0 1.3 107.6 182.1 102.160 1.9 726.610 347 323 351 353 1.4 31.6 125.3 94.473 1.5 53.3 415.5 377.021.0 2003 3.415 1.334 1.205.6 45.9 2.747 7.2 384.0 760.981.993 731 865 701 853 3.6 1.3 Computers and Peripherals 88.4 2.216.661.2 3.1 2.0 1985 109.931.576 1.6 425.5 2007 5.342.4 21.1 115.5 929.1 224.2 401.6 57.1 63.9 10.

0 0.527.9 417.1 8.5 67.5 45.4 3.3 3.4 14.0 10.1 0.4 381.7 44.3 20.6 265.3 2.0 6.3 622.0 1.0 70.8 0.5 218.9 2.9 291.4 11.5 90.1 1.2 2.3 72.7 119.7 611.4 40.9 4.2 715.9 156.4 2.3 30.0 0.0 29.6 54.101.3 18.8 1.0 0.3 2.6 10.2 11.2 68.4 14.4 12.7 103.0 44.1 2.5 0.7 26.0 0.8 10.2 4.8 203.6 797.6 19.0 5.7 127.9 47.1 508.0 5.0 6.0 12.7 15.0 0.0 99.7 20.6 0.2 129.6 841.3 7.0 0.1 86.0 0.9 15.2 31.9 3.7 157.0 0.0 56.5 46.4 5.0 221.7 32 Thomson Reuters .4 5.0 50.7 0.1 15.0 1.3 73.0 27.8 173.0 0.1 42.0 1.136.8 88.4 142.3 613.8 40.9 379.2 39.0 0.9 14.2 4.0 0.0 23.3 6.7 781.6 14.7 14.002.0 0.0 0.6 197.5 56.2 13.101.9 77.0 81.7 4.3 21.8 4.6 2.0 0.7 11.6 300.3 209.0 55.6 117.5 27.5 990.6 5.3 928.4 1.3 3.7 1.0 1.8 20.0 0.0 0.6 5.6 56.5 0.4 8.4 23.6 57.8 94.0 67.1 332.4 0.7 69.6 21.3 132.3 539.7 15.502.6 111.0 38.8 817.2 198.7 705.5 0.531.3 489.0 0.5 2004 9.9 452.1 455.0 0.2 86.4 51.6 1.6 37.9 83.0 0.1 0.8 2.1 910.8 0.4 131.6 8.7 459.0 1.2 1.0 18.3 795.0 11.0 0.0 0.7 0.5 4.4 23.8 7.8 53.0 0.8 48.7 212.8 15.1 27.3 14.4 9.7 403.3 94.9 1.2 30.323.670.5 0.5 1.7 8.0 0.0 261.5 32.7 70.8 1.0 9.0 0.613.2 1.0 0.1 294.3 0.4 4.8 23.4 302.1 19.6 1.7 170.6 20.8 92.8 2009 8.6 375.2 2.7 0.8 2.9 145.4 19.7 12.0 3.5 0.0 17.5 14.296.3 0.1 195.5 25.3 538.6 369.0 0.8 73.0 140.5 0.5 0.8 87.7 67.4 66.4 87.5 14.8 29.3 307.3 56.8 0.9 27.7 352.7 162.6 1.7 206.3 519.9 32.8 23.4 70.2 12.1 4.2 8.1 1.4 113.0 6.0 0.1 40.6 1.1 22.8 26.0 0.0 72.9 7.6 23.9 33.9 2.0 1.0 0.0 1.3 9.8 770.491.0 4.3 104.4 0.9 386.3 2.0 0.0 0.11 Venture Capital Investments By State 1980 to 2009 ($ Millions) State CA MA NY TX WA NJ CO PA GA FL NC MD MN VA IL UT IN CT MI AZ OH OR IA TN DC AL RI NH MO WI DE NV ID MT VT UN LA KY ME SC KS HI ND NM OK WV SD MS AK AR NE PR WY Total 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 168.0 0.5 1.0 0.5 440.0 112.0 0.9 412.9 0.4 160.4 208.6 233.8 4.3 64.8 1.0 50.1 13.0 0.0 5.0 0.0 3.1 1.5 42.0 0.8 0.0 80.4 1.2 360.818.5 334.0 0.8 33.6 3.3 2.1 0.0 1.9 9.5 225.9 17.5 31.3 4.5 2.7 0.0 5.8 25.8 707.9 27.4 2.4 351.8 57.0 7.338.1 626.6 88.2 13.0 2.944.0 4.8 34.9 25.5 13.1 1.9 17.032.4 0.3 0.9 5.1 136.6 837.7 132.7 15.4 0.2 8.1 698.1 39.2 14.5 1.070.1 281.6 244.8 140.4 0.9 32.4 67.1 2.5 9.5 26.0 0.9 64.9 16.660.6 48.8 1.2 56.2 3.0 2.0 0.2 664.8 23.2 959.9 35.7 14.0 10.1 235.3 29.9 18.0 0.1 2.6 71.0 32.4 19.9 5.5 0.3 1.2 22.093.0 0.1 571.0 15.5 34.3 136.6 12.0 0.1 721.8 3.2 399.4 4.465.0 0.4 52.0 0.7 0.0 0.0 0.0 64.6 367.0 302.8 25.7 0.6 63.447.7 9.0 0.0 0.0 2.0 0.0 50.0 2005 10.2 12.3 21.8 4.7 11.6 352.0 0.3 411.8 19.5 26.7 6.845.5 0.099.0 0.7 13.8 1.0 2.9 3.0 55.9 1.4 381.874.6 12.0 1.0 136.3 58.9 0.1 2.9 14.128.6 17.0 17.1 19.4 101.9 9.1 6.2 56.716.9 107.3 251.3 123.0 5.7 11.1 205.8 19.1 56.9 607.0 188.8 168.1 45.7 36.2 3.7 300.9 46.0 0.0 0.6 18.4 225.3 512.0 0.0 30.0 0.7 3.1 1.5 82.6 4.9 43.8 31.0 20.0 0.4 9.4 3.0 12.1 90.0 0.3 93.1 4.4 5.0 0.4 150.4 0.107.4 551.1 12.0 13.8 25.0 62.3 3.4 15.3 4.7 478.5 843.0 0.2 640.8 30.3 1.9 125.9 15.4 11.8 30.8 8.7 34.5 21.9 24.9 202.9 4.5 33.1 12.0 0.1 0.6 224.1 68.9 3.7 12.8 134.272.9 12.5 1.9 53.8 34.9 186.0 3.237.0 611.4 150.3 130.134.0 0.7 3.4 0.4 27.727.2 0.133.0 0.0 0.9 0.0 295.4 905.5 1.1 16.1 0.5 6.8 3.9 66.6 25.0 0.1 35.7 116.3 32.242.0 46.8 4.817.4 105.6 3.1 23.0 23.1 6.2 407.5 0.8 1.1 79.7 236.5 1.5 295.8 0.1 31.2 27.7 5.0 0.1 722.5 4.1 1.0 0.9 269.0 0.0 2.3 99.0 0.3 31.8 27.4 110.5 0.1 7.7 17.4 0.0 0.8 9.5 61.0 0.1 58.8 151.0 0.0 0.8 0.7 2.817.7 152.2 134.8 29.0 0.6 8.0 0.2 94.5 7.4 35.0 0.0 2.2 48.2 131.0 0.7 41.2 48.5 0.0 6.8 8.0 0.7 47.0 0.3 780.6 0.4 194.8 6.8 4.1 253.6 463.8 0.0 0.9 1.1 9.6 80.7 106.0 19.9 3.883.5 34.7 95.226.4 0.2 1.0 7.732.8 7.0 0.392.0 5.7 5.759.6 15.0 187.6 9.0 45.5 2007 14.0 0.0 0.0 0.8 195.2 2.5 3.0 0.0 0.4 9.0 0.6 159.1 875.9 2.4 2.117.8 85.0 0.0 0.5 2.7 15.566.5 57.0 14.5 662.2 0.2 30.0 37.174.0 550.2 0.4 477.0 15.7 42.3 3.3 21.839.7 822.2 397.2 453.0 3.8 111.9 2.1 6.4 12.5 85.605.0 1.5 14.5 18.2 24.7 948.5 17.3 216.5 1.7 32.9 255.9 243.9 54.0 4.3 65.2 39.7 6.2 4.5 3.0 0.1 34.4 37.6 8.8 24.5 6.5 0.2 1.3 2.2 0.0 0.5 0.5 70.0 2.7 41.0 34.6 110.9 313.9 1.0 0.0 523.7 0.7 66.8 0.0 0.8 14.7 432.1 47.1 70.2 29.0 0.0 86.0 0.9 14.5 7.7 27.3 110.5 26.5 22.0 0.1 32.6 4.3 20.0 0.7 8.7 1.9 2.2 15.7 0.1 8.7 6.212.9 7.0 22.1 469.9 2.8 46.7 43.5 9.0 0.1 34.7 122.9 17.8 7.0 6.6 0.473.3 1.2 99.3 15.3 251.853.261.0 12.948.1 400.033.5 0.0 4.0 0.3 0.348.0 13.4 11.5 3.0 6.0 0.0 37.6 22.5 413.3 16.2 0.3 87.0 901.864.4 15.6 131.7 173.1 38.1 358.2 755.0 52.138.0 0.6 343.1 126.946.8 37.6 2.8 115.2 0.4 4.7 896.6 424.370.6 21.3 1.2 218.4 83.4 0.9 15.1 289.9 30.1 0.1 955.9 384.8 360.7 6.866.2 68.0 47.5 0.5 0.8 1.7 12.1 0.3 2.0 69.9 201.0 0.5 2.9 20.1 10.4 4.0 2.2 38.4 1.5 4.0 7.8 23.3 147.220.1 61.3 180.0 9.1 36.0 8.2 0.4 2.9 53.0 21.7 54.6 559.9 74.9 3.2 1.0 0.0 0.5 7.1 455.6 6.8 11.7 69.0 10.3 11.5 7.1 81.5 0.9 3.5 1.0 16.0 3.2 57.8 45.8 42.0 140.0 0.7 3.0 1.6 38.0 210.0 0.0 3.5 18.5 42.0 39.9 3.3 156.7 52.479.9 44.5 0.6 3.0 0.0 0.4 35.4 58.0 0.0 0.0 33.6 6.1 115.9 28.0 8.8 4.5 0.0 0.9 84.173.1 62.3 31.2 707.3 124.9 1.0 8.0 25.0 0.5 53.8 30.6 9.2 1.4 4.930.4 105.2 46.7 42.0 0.0 0.3 1.0 1.6 1.3 134.7 36.4 0.5 13.4 1.7 1.0 70.1 318.0 293.7 219.8 6.9 0.0 3.5 18.7 186.0 0.3 306.2 32.7 569.9 9.3 0.0 273.3 212.4 408.0 0.0 3.0 0.5 159.4 116.8 4.2 91.5 132.8 221.2 62.3 202.6 5.0 0.6 65.7 31.5 2.4 12.7 0.4 5.5 1.5 65.3 0.6 85.3 0.4 10.458.684.351.0 0.4 4.3 0.4 1.2 29.128.148.9 384.0 0.6 40.7 4.8 108.3 84.2 10.4 52.4 1.5 0.0 0.0 19.6 468.7 412.9 55.5 217.2 374.4 18.0 12.4 42.0 0.2 0.6 0.9 57.5 19.5 886.0 11.8 63.1 315.0 435.2 558.8 35.3 476.3 44.0 80.0 0.4 66.2 1.0 12.0 826.8 7.8 5.0 46.9 266.0 4.9 97.0 0.8 2.3 0.9 15.5 81.9 11.3 0.0 0.5 29.1 37.1 13.6 108.0 7.3 53.0 6.3 29.0 0.1 1.6 21.1 377.8 1.8 79.8 45.0 133.6 166.9 4.1 27.8 0.0 0.7 22.0 227.1 73.8 900.4 18.0 0.0 0.037.2 26.7 27.5 4.2 463.3 3.3 0.0 0.7 51.9 0.1 31.5 5.0 0.1 43.9 54.0 16.1 8.4 7.1 7.0 0.3 15.2 66.2 28.0 10.0 0.2 0.2 1.2 537.3 7.3 17.3 2.4 110.0 0.591.215.1 0.3 3.923.5 25.586.9 66.0 5.4 0.0 2.0 2.7 0.6 7.5 13.5 438.0 0.9 1.6 41.0 0.3 82.0 0.6 125.2 73.2 0.9 78.3 37.7 0.9 0.8 52.0 0.8 27.3 2.0 180.690.3 693.4 19.8 26.6 588.0 0.6 14.4 1.2 1.1 91.685.6 3.6 469.8 4.1 25.8 157.1 2.2 3.7 231.0 75.6 574.1 0.1 8.1 135.0 0.0 157.941.7 63.9 0.437.0 0.9 33.0 4.1 139.9 227.3 73.0 2.4 155.4 0.180.5 10.1 17.5 0.6 42.0 2006 12.163.1 215.1 2.5 4.1 0.4 97.205.0 6.0 1.0 109.822.6 89.7 4.947.0 0.0 5.3 44.3 133.3 0.4 0.8 263.6 1.5 26.4 30.4 7.9 2.1 522.5 1.6 2.0 0.1 46.4 17.8 61.4 1.058.9 32.2 21.491.7 3.4 608.0 1.6 29.9 181.8 39.2 110.3 104.0 0.9 18.339.7 25.2 556.2 86.0 17.777.3 85.478.8 4.9 80.9 1.0 2.9 58.7 21.0 0.1 68.4 522.5 1.8 0.1 10.8 1.1 155.1 420.0 0.4 945.7 39.6 1.0 0.1 12.9 16.111.9 242.7 56.0 0.6 30.1 1.4 581.6 107.1 388.1 16.9 0.7 24.7 24.7 70.2 201.8 8.4 3.7 143.2 135.2 635.0 481.0 1.0 0.0 292.3 11.5 8.7 164.0 0.0 0.6 24.0 0.8 16.8 9.7 1.4 16.3 4.0 56.0 0.0 0.4 360.2 0.0 0.9 7.7 0.0 30.0 38.8 106.2 20.2 76.0 16.2 57.1 18.4 0.8 68.005.5 7.2 6.7 9.3 0.0 0.0 0.0 37.4 3.4 219.154.3 293.3 10.0 0.8 1.0 0.7 259.5 30.8 763.7 32.0 0.7 6.1 79.631.2 161.0 0.0 23.0 1.058.647.8 0.0 2003 8.0 0.1 165.3 25.4 60.0 44.0 13.1 89.6 2.4 177.9 23.8 3.1 51.977.373.0 18.7 42.2 0.0 1.6 2.0 86.7 286.8 322.5 3.204.318.0 1.2 1.8 266.6 227.8 1.1 3.3 21.5 1.5 15.2 12.2 30.8 403.0 0.0 0.967.6 7.5 4.5 21.5 84.9 3.8 3.9 450.8 2.524.5 0.8 357.0 20.0 0.0 0.4 799.7 17.3 84.9 1.4 49.0 0.0 0.9 13.8 5.8 254.341.6 25.4 10.7 324.2 95.0 0.0 0.2 51.7 0.4 32.5 74.3 55.0 0.2 5.6 2.9 5.4 27.6 0.6 0.6 59.0 0.6 354.7 23.0 0.3 43.5 294.8 140.0 41.1 2.821.National Venture Capital Association Figure 3.0 0.542.9 0.0 0.0 435.354.0 0.2 1.5 1.0 43.768.0 0.8 291.1 5.398.7 1.0 380.2 184.6 1.7 1.3 9.4 2.7 0.2 0.8 50.9 1.6 2008 14.9 0.6 216.8 14.0 17.9 1.4 3.9 6.6 45.1 263.0 1.5 12.1 23.062.8 273.1 27.252.0 0.4 158.5 10.4 11.7 102.1 5.4 7.0 0.0 0.0 0.7 58.1 666.3 25.0 0.126.4 2.8 150.0 0.7 0.7 4.0 0.0 0.5 3.9 125.0 0.8 100.0 0.2 25.4 2.802.7 31.2 8.2 128.112.6 345.2 0.6 50.8 101.0 3.0 327.0 0.6 177.0 1.5 644.4 639.0 0.4 213.479.0 0.2 78.8 311.5 0.0 0.9 7.0 1.3 0.5 0.5 1.0 38.0 390.5 6.6 38.2 381.2 418.0 3.4 3.3 94.2 27.8 1.5 3.3 357.3 35.0 1.8 3.2 39.0 25.2 8.2 9.0 1.6 277.6 1.0 0.5 26.5 1.8 11.0 165.9 1.7 48.0 4.7 102.4 432.7 1.2 7.6 31.0 10.7 2.9 0.4 1.2 3.4 29.1 212.4 32.9 0.8 2.4 497.9 225.5 216.2 89.2 1.8 619.5 31.8 1.6 1.0 66.0 0.9 7.8 18.1 377.0 0.4 175.9 492.215.5 26.1 23.3 124.0 0.0 0.1 0.5 58.5 64.6 1.1 76.4 8.6 855.7 12.0 2.8 37.3 32.8 5.6 13.3 600.7 12.5 29.5 8.1 25.1 0.4 62.312.2 30.2 138.0 3.8 12.5 11.0 74.0 6.8 18.7 14.4 8.0 2.4 325.0 3.7 31.3 8.0 241.

150 384 120 102 173 83 92 73 87 30 60 58 82 34 23 59 77 17 63 12 21 16 8 10 1 5 24 19 33 8 9 6 0 0 1 5 3 2 5 2 4 8 1 5 4 2 0 5 0 3 3 1 0 2.415 1991 1992 1993 1994 1995 1996 471 567 423 455 664 1.138 303 174 124 111 109 73 72 67 50 44 43 43 39 36 34 34 33 31 18 18 16 16 16 15 14 14 13 13 11 9 8 8 8 5 5 5 5 5 4 4 3 3 2 2 2 1 1 0 0 0 0 0 2.168 1998 1.627 422 248 190 152 163 90 105 104 58 80 69 86 35 35 49 53 45 37 23 37 21 16 10 14 19 23 22 26 18 8 15 7 0 7 7 11 3 7 5 12 6 1 6 0 3 2 1 0 0 3 2 1 3.530 512 282 145 335 141 153 109 93 44 140 127 138 71 44 84 90 22 111 10 43 35 6 11 11 4 32 17 34 20 15 24 5 14 2 3 4 5 3 7 5 5 1 5 3 1 2 2 0 3 10 5 0 4.661 1999 2.509 2000 2.382 395 188 144 193 111 76 124 55 64 97 69 99 74 33 80 83 32 62 3 19 38 8 5 11 4 26 19 26 16 15 3 7 15 0 3 16 11 2 11 16 10 0 3 2 1 0 1 0 2 5 2 0 3.919 2001 1.936 773 602 257 468 255 185 220 177 77 220 197 274 116 62 110 156 55 184 22 69 66 27 9 15 8 46 49 58 22 28 45 4 17 4 4 14 15 4 9 11 10 1 3 3 1 3 2 1 5 10 10 0 7.008 134 135 127 123 197 289 22 32 33 35 65 85 35 60 46 38 65 83 69 65 66 64 98 133 27 33 28 35 61 74 47 41 34 39 55 62 34 51 47 49 59 81 28 23 15 21 33 47 22 21 21 22 37 53 34 34 37 41 47 53 36 33 25 34 42 56 23 19 18 21 40 63 30 30 22 31 43 46 6 10 6 0 7 15 30 27 26 21 51 51 17 18 20 22 35 60 8 5 12 3 13 21 20 28 24 18 48 54 1 5 2 2 3 9 12 12 12 12 17 29 13 20 21 23 27 29 8 1 8 7 7 8 4 2 3 0 3 1 1 1 4 2 8 4 2 0 2 1 2 5 23 10 8 10 19 24 9 9 12 7 15 21 17 11 10 4 10 16 6 9 8 8 7 9 1 4 9 4 10 8 3 3 2 3 1 4 3 4 2 5 10 6 0 1 4 2 2 7 3 2 1 3 4 4 0 1 2 1 1 1 2 2 2 3 10 7 4 1 2 0 2 5 3 1 0 3 4 1 1 0 0 5 2 7 9 7 7 6 5 13 4 4 0 2 1 2 0 0 0 0 0 0 0 0 0 0 0 3 1 4 2 5 0 3 0 0 0 1 2 0 3 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 1 1 2 0 0 0 5 3 1 5 3 2 1 2 4 5 0 1 0 0 0 0 1.570 1997 1.205 2006 1.351 1.518 2002 1.984 2009 1.170 2003 1.126 334 152 133 170 85 77 95 49 53 83 79 81 65 30 90 83 29 69 6 42 30 12 4 12 3 26 16 17 19 16 2 4 7 4 2 15 2 1 5 14 7 0 4 3 1 0 2 0 2 3 2 2 3.993 2004 1.2010 NVCA Yearbook Figure 3.576 1988 511 195 46 53 102 23 42 59 28 22 38 31 24 43 6 29 11 12 23 4 35 12 6 6 2 6 29 8 7 15 4 4 3 2 4 0 4 4 3 1 3 0 0 0 1 0 5 1 0 0 5 0 1 1.150 2005 1.334 1984 553 215 43 29 84 17 39 53 15 19 25 33 19 34 5 48 12 26 20 2 27 15 7 10 2 4 10 4 5 11 8 4 2 0 0 1 0 4 1 3 2 1 0 0 2 1 0 1 0 0 1 0 0 1.490 1990 540 167 29 42 83 27 46 47 28 22 31 34 26 37 3 30 24 13 30 3 21 14 12 7 0 3 22 10 18 11 7 5 2 0 1 0 0 6 3 2 5 1 0 0 3 0 0 0 0 0 0 0 0 1.802 Thomson Reuters 33 .088 385 153 100 177 110 96 88 95 50 79 79 91 38 28 58 85 30 60 7 26 25 11 14 8 6 28 28 40 10 13 7 1 0 2 2 3 4 5 4 6 6 2 2 3 0 0 8 0 5 3 1 0 3.561 401 221 138 191 141 94 99 111 43 84 57 89 30 41 40 64 19 57 7 32 28 15 7 3 9 14 13 19 20 7 9 2 0 5 3 10 4 7 8 3 7 1 11 1 0 0 3 0 7 3 3 1 3.229 1.743 2007 1.241 385 151 105 172 116 92 69 90 35 79 57 81 34 30 52 54 15 62 14 31 12 10 8 3 8 27 9 22 10 6 8 3 3 1 2 4 3 4 11 5 6 3 4 5 1 0 3 0 1 1 1 1 3.027 2008 1.663 451 203 161 178 172 97 100 96 64 75 71 95 38 33 59 68 23 60 16 41 29 15 4 7 25 21 17 22 20 5 18 3 0 6 6 7 7 5 6 10 9 2 4 2 1 1 4 0 1 1 4 1 4.839 2.417 1985 470 214 47 34 108 20 44 43 20 25 31 27 21 32 1 23 15 19 21 1 24 15 8 6 6 3 17 5 3 11 7 4 1 13 1 1 2 9 0 4 1 0 0 1 1 0 1 1 0 0 1 0 0 1.198 585 348 146 302 205 114 159 100 51 162 128 147 89 42 85 106 43 116 8 51 56 11 10 10 6 45 23 31 18 10 17 3 3 2 3 16 11 1 7 9 9 1 3 2 1 2 0 0 5 7 2 0 5.11b Number of Venture Capital Deals by State 1980 to 2009 State CA MA NY PA TX WA NJ CO MD OH GA IL VA CT UT MN NC MI FL KS OR AZ IN RI LA NM TN MO NH WI AL DC IA UN DE ID KY ME VT OK SC NV SD HI MS ND MT WV AK AR NE PR WY Total 1980 1981 1982 142 255 376 50 110 136 17 37 47 11 17 19 36 49 66 8 13 18 18 28 28 11 35 33 6 7 12 7 15 12 8 14 11 13 13 18 5 7 9 7 19 24 5 4 6 18 16 31 4 4 12 2 10 19 9 11 24 0 1 1 2 10 14 7 13 12 0 0 3 0 4 3 4 9 5 5 2 1 1 3 4 1 0 5 3 4 5 1 3 1 2 2 7 2 2 4 2 1 2 0 0 19 0 0 0 0 0 2 1 1 2 2 0 0 0 3 0 3 5 3 0 0 0 0 0 1 0 0 0 0 1 0 0 3 0 0 0 0 0 1 0 0 0 2 0 0 1 1 0 0 0 1 0 0 0 0 0 1 1 414 734 999 1983 512 189 66 20 77 32 40 40 22 10 16 28 23 34 1 42 15 28 21 2 23 14 8 7 3 1 12 4 7 7 1 6 2 2 0 3 1 3 1 6 0 2 0 0 0 0 0 2 0 0 1 0 0 1.362 1986 476 183 46 44 90 20 44 56 17 20 43 27 19 32 12 29 21 22 20 2 24 11 15 4 2 4 23 5 9 15 9 5 3 0 1 0 4 6 3 5 0 2 0 0 1 0 2 1 0 2 0 0 0 1.160 1.197 1.379 1987 508 216 52 55 103 25 51 59 24 26 44 31 28 39 13 33 16 22 28 6 29 20 15 7 2 6 27 12 10 17 11 7 2 1 1 1 7 5 3 4 4 2 0 0 0 1 1 2 0 0 0 0 0 1.319 377 135 99 174 127 78 79 104 38 63 54 86 33 27 44 49 19 55 4 26 26 10 13 3 15 25 10 24 16 3 12 3 2 5 3 3 3 5 0 1 9 0 5 2 0 2 5 0 2 3 1 4 3.473 1989 550 179 48 38 86 35 52 50 19 18 29 62 29 43 5 29 16 16 20 4 28 23 6 7 0 1 27 11 11 6 7 1 2 2 3 0 5 6 2 4 7 1 0 0 1 0 0 0 0 0 1 0 0 1.

4 4.186 1.412 2.082.1 10.543 2.5 2.820 2.169 1.0 526.223 837 765 926 1.1 4.631.542.876.414 6.7 9.370.2 2.0 21.5 1.300.972.133.777.15 Venture Capital Investments First vs. of Cos receiving financing can be less than the sum of the prior two columns because a given company can receive initial and follow-on financing in the same year 34 Thomson Reuters .448 1.000 1.981 4.4 Total 523.000 Series2 Follow-on 100.4 19.8 23.5 73.605.440 3.205.4 573.536.505.166.249.220.293 1.690.7 1.635 2.0 1.016 913 959 1. of Cos Receiving Financing* 379 661 876 1.0 2.9 21.000 20.1 845.531.5 30.062.000 Figure 3.1 31.6 38.203.175.307 2.478.5 4.819 1.5 7.12 Venture Capital Investments First vs.3 1. of Cos Receiving Initial Deals Financing 271 482 514 643 567 449 491 562 502 438 342 259 388 342 417 884 1.000 6.4 7.677 2.13 Venture Capital Investments First vs. of Cos Receiving Follow-On Financing 127 218 404 587 705 756 734 826 766 809 761 690 690 626 607 753 1.000 Number of Companies First Series1 First ($ Millions) 4.0 19.1 2.331 1.2 17.000 0 1 ’80 ’8 ’82 ’83 ’84 ’85 ’86 ’87 ’88 ’89 ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 Year Year Figure 3.209 1.5 13.0 22.864.483 2.288.913.771.566.5 16.099.173.000 0 1 ’80 ’8 ’82 ’83 ’84 ’85 ’86 ’87 ’88 ’89 ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 60.449.6 928.887.3 6.502.946.524.8 2.173.14 Venture Capital Investments Number of Companies Receiving 7.0 2.252.4 2.7 1.9 3.194.8 100.126.7 15.121.9 3.028.219 728 No.268.947.1 2.0 824.321.9 3.731 3.230 1.102.035 908 1.3 3.162.8 4.7 469.343 3.058.059 2.720.374.2 3.9 3.9 6.National Venture Capital Association Figure 3.4 1.168 2.3 Follow-on 220.4 1.721 No.5 2.744 1.096.6 27.1 3.1 1.5 2.992.316.434.336 3.218. Follows-on Rounds Total Dollars Invested ($ Millions) Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 First 302.2 886.800 2.950 1.5 36.000 5.7 14.646.759.372 Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 * No.8 6.649 2.7 7.399 3.4 979.221 1.4 1.2 15.486.7 51.165 1.000 40.000 3.817.154.0 795.1 2.7 5.059.1 1.883.7 6.3 3.268 1.2 20.8 17. Follows-on Rounds Total Number of Companies No.000 Follow-on 80.473.677.3 588.039.074 2.0 26.333 1.5 21.115 3.4 901.7 14.9 3.138 1.592.612.037.484.0 1.728.136.3 27.804 2.197 1.777.132 1.5 718.338.033 1.5 3. Follows-on Rounds Total Dollars Invested ($ Millions) 120.538 2.7 Figure 3.038.848.1 17.941.000 2.3 2.366 1.4 2.351.829 1.

724.6 16.1 3.8 73.452.1 356.4 2.3 71.8 2.6 16.1 92.1 62.4 169.677.6 4.1 231.4 54.0 506.8 12.2 16.302.8 2.7 2007 1.2 90.7 60.6 1.2 2.0 0.354.5 347.0 333.364.4 979.4 187.4 232.0 178.2 11.9 895.0 254.3 254.2 1989 245.7 2008 1.3 5.2 653.9 24.1 215.720.9 152.7 33.5 220.9 1.3 6.3 526.2 6.3 8.5 158.0 155.9 63.8 247.4 4.1 207.5 212.0 138.9 906.0 0.6 571.3 275.728.4 38.6 8.1 11.2 106.8 100.0 261.9 Total 302.8 353.5 339.6 109.0 67.4 228.7 51.8 79.4 30.3 27.4 1.0 81.9 952.489.138.2 321.521.0 1990 175.8 44.7 72.2 45.1 845.0 25.1 21.720.18 First Sequence by Industry ($ Millions) Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Software 26.4 901.2 42.5 0.7 133.873.5 46.9 22.2 98.2 1.1 132.5 126.0 155.4 83.4 58.1 323.3 26.8 111.121.5 2.126.039.0 2.7 228.4 151.2 4.7 297.126.5 92.9 1998 1999 2000 930.4 52.4 2.4 7.184.3 404.2 15.7 70.9 25.8 96.8 1.321.0 130.0 427.8 4.0 Early Stage 56.9 131.0 795.2 202.5 1.7 377.0 71.506.6 71.1 4.4 117.0 161.2 65.8 1996 657.677.7 790.3 101.7 65.9 81.3 70.4 15.7 54.476.3 264.3 2.290.7 32.8 154.3 61.5 91.1 1997 762.3 210.8 272.7 1.3 313.0 106.4 1.2 13.1 862.3 28.4 4.2 81.8 395.8 1.8 848.0 95.2 122.299.4 48.1 153.2 12.4 Industrial/Energy 104.4 17.249.8 51.6 33.4 2001 573.0 145.8 63.7 69.7 913.943.2 345.2 15.2 39.2 28.3 109.6 160.8 8.3 Telecommunications 3.316.891.331 1.8 973.0 7.8 93.6 42.096.5 61.9 49.7 13.8 232.8 158.5 Other 0.0 250.6 56.1 150.0 401.7 110.287.9 528.059.1 91.4 110.7 89.0 500.2 1995 701.2 81.8 127.3 43.8 322.3 3.230 1.9 95.2 225.4 118.7 495.982.2 662.2 62.0 270.3 40.1 1986 414.7 419.717.305.8 Networking and Equipment 4.6 253.8 153.300.0 206.3 28.6 510.1 Retailing/Distribution 27.1 1.9 203.6 9.9 101.4 250.1 950.1 66.623.698.6 843.7 52.239.5 46.3 62.4 8.0 5.7 5.5 39.059.4 326.8 31.7 292.9 360.4 48.1 221.1 2.7 7.525.6 275.6 733.9 550.7 1.6 35.3 25.7 43.2 276.9 233.5 214.0 526.0 0.6 62.121.300.7 32.0 91.0 825.8 207.2 1.2010 NVCA Yearbook Figure 3.9 127.9 417.1 844.7 125.8 10.159.157.5 54.1 2009 839.8 13.3 Figure 3.366 1.1 4.6 278.2 21.5 62.6 41.6 880.5 2.6 0.8 243.0 287.7 0.5 419.8 13.0 27.6 1.5 2.0 443.1 1.7 391.5 44.5 29.612.726.9 483.5 718.5 90.2 876.8 43.7 385.5 78.6 6.8 275.6 39.4 81.9 1.6 Business Products and Services 3.6 Total 302.3 2.1 IT Services 3.8 41.5 2002 251.7 363.321.120.1 4.7 Semiconductors 18.3 41.5 143.8 47.4 1.4 23.8 70.045.4 22.031.691.513.700.6 19.5 19.9 44.6 55.3 82.0 372.8 6.5 138.3 24.9 57.0 37.8 2.7 Healthcare Services 5.3 190.4 1993 331.033 1.5 76.9 13.3 6.6 82.1 878.4 133.6 206.2 726.162.4 1992 202.3 22.1 4.0 11.6 Computers and Peripherals 38.2 7.3 1.0 824.4 179.2 133.3 32.299.7 324.2 Biotechnology 13.6 19.3 76.2 222.4 3.3 Thomson Reuters 35 .3 14.8 20.9 535.7 16.9 168.1 70.505.4 6.2 4.4 25.4 573.4 217.8 24.2 1.2 103.16 First Sequence by Stage of Development ($ Millions) Stage 1980 1981 1982 1983 1984 Startup/Seed 133.4 1.0 64.319.0 1.1 1.1 56.5 12.7 8.1 56.8 55.8 260.4 999.5 232.9 96.524.8 735.3 3. of Deals) Stage 1980 1981 1982 1983 1984 1985 Startup/Seed 101 202 210 290 279 221 Early Stage 95 141 182 219 161 99 Expansion 59 109 96 106 112 106 Later Stage 16 30 26 28 15 23 Total 271 482 514 643 567 449 1986 242 115 106 28 491 1987 227 192 117 26 562 1988 208 167 106 21 502 1989 203 99 111 25 438 1990 119 118 90 15 342 1991 85 75 83 16 259 1992 117 127 121 23 388 1993 143 69 104 26 342 1994 186 108 105 18 417 1995 1996 1997 1998 1999 2000 2001 253 313 346 453 649 577 219 282 409 474 497 1116 1922 692 291 358 423 414 636 811 281 58 58 50 48 39 56 31 884 1.7 145.7 1988 347.1 162.7 502.0 117.7 58.2 1.8 43.2 600.0 200.7 526.0 0.7 268.3 278.9 117.4 901.3 204.862.2 7.4 294.1 36.1 15.316.5 133.7 400.7 11.029.0 795.107.2 192.2 3.5 556.3 9.2 32.612.2 124.4 1.5 161.3 1.7 Consumer Products and Services 7.3 588.1 249.4 288.8 4.6 141.6 109.5 42.0 27.6 192.9 113.3 266.7 215.162.4 2004 358.125.5 102.6 210.3 105.6 35.6 273.2 339.3 2003 278.4 376.4 17.3 1.646.0 19.6 2.412 2.9 206.5 83.3 0.2 40.0 632.7 310.7 52.5 979.8 Later Stage 56.733.2 299.5 1.4 25.728.8 55.1 28.2 886.1 7.738.5 1.1 Financial Services 6.7 4.7 93.440 3.0 270.9 28.6 148.138 1.0 0.7 585.4 42.9 44.5 9.6 54.7 22.3 107.8 748.8 205.1 94.664.7 37.223 2002 129 469 205 34 837 2003 160 427 145 33 765 2004 2005 2006 2007 2008 167 200 313 394 355 527 530 559 564 514 182 245 267 283 216 50 58 91 90 134 926 1.6 142.5 1.0 0.0 824.697.505.5 392.8 26.5 1985 296.6 121.9 160.2 3.5 327.0 513.571.449.3 61.2 52.8 701.1 369.2 1.3 27.9 1.4 158.3 74.123.7 2.8 9.9 37.388.9 613.7 2005 786.0 32.1 38.8 399.1 30.5 549.6 59.5 6.4 88.3 28.646.2 298.0 34.5 661.2 15.6 32.4 176.2 5.3 51.0 1991 91.1 88.4 1.2 10.7 10.3 514.9 210.3 739.5 911.4 52.9 82.3 262.7 127.6 101.848.5 13.0 16.7 6.5 8.1 28.039.6 109.9 383.5 1.1 437.8 0.137.6 175.4 1.848.8 53.3 868.6 194.4 886.0 1.7 57.679.293 1.1 707.1 1.2 571.098.6 2.9 5.9 149.5 243.4 141.2 18.3 368.3 4.777.0 181.3 60.6 54.8 100.4 1987 342.0 328.9 76.7 247.8 386.5 4.1 22.2 247.8 358.0 59.4 178.8 144.2 90.3 344.533.9 Medical Devices and Equipment 14.2 43.8 92.195.1 45.8 207.2 845.8 2.2 51.4 1994 480.5 892.3 Media and Entertainment 7.6 994.4 332.8 61.4 Electronics/Instrumentation 18.2 31.7 464.1 13.9 141.769.2 398.219 2009 188 342 127 71 728 Figure 3.0 663.1 14.0 29.7 59.0 106.7 307.5 988.0 330.8 176.0 31.449.3 737.6 254.3 783.9 41.9 655.7 22.6 42.2 174.3 718.8 53.5 39.5 4.9 278.6 143.9 0.2 154.6 12.5 23.3 110.7 39.4 20.249.5 25.1 Expansion 56.1 10.8 204.2 45.8 2006 1.9 117.3 130.0 39.2 96.4 573.0 1.1 297.9 13.3 271.3 63.8 2.0 40.3 39.1 682.5 52.17 First Sequence by Stage of Development (No.9 6.096.5 83.4 586.6 82.8 115.9 264.3 588.777.1 48.9 871.366.1 9.1 44.0 286.4 228.9 120.9 52.2 2.4 1.9 99.1 83.5 157.3 319.

293 1.219 2009 159 85 80 71 71 64 32 32 26 21 17 15 14 12 11 11 7 728 36 Thomson Reuters .National Venture Capital Association Figure 3.331 1.366 1.138 1. of Deals) Industry Software Media and Entertainment Biotechnology Industrial/Energy IT Services Medical Devices and Equipment Business Products and Services Telecommunications Consumer Products and Services Other Financial Services Computers and Peripherals Networking and Equipment Healthcare Services Electronics/Instrumentation Semiconductors Retailing/Distribution Total 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 24 60 81 161 129 74 72 80 85 66 81 58 67 51 97 215 318 320 324 588 861 304 19 34 37 30 15 28 32 45 31 33 22 10 28 24 29 71 75 105 117 372 386 75 13 31 33 23 20 28 32 54 46 32 26 20 52 45 40 53 69 87 102 80 123 109 70 112 80 68 71 62 58 72 71 73 49 28 31 32 39 81 77 99 88 96 121 79 2 8 18 12 12 11 8 5 8 11 6 5 4 6 19 26 65 65 88 226 325 77 18 29 28 48 51 40 51 60 54 59 37 30 43 42 37 55 84 105 94 85 70 56 6 11 21 15 12 13 23 20 12 9 10 9 10 13 10 30 41 48 75 147 219 49 6 23 27 26 41 27 24 23 22 22 7 12 20 27 22 69 90 94 134 233 389 131 12 15 32 22 19 28 29 32 18 22 25 16 22 17 30 57 50 72 68 134 99 28 3 4 8 4 3 1 1 0 1 0 1 2 0 1 1 6 2 5 4 10 9 9 9 11 10 16 5 18 22 24 21 12 7 11 13 18 13 29 39 40 62 100 179 44 37 67 74 81 66 28 31 31 34 27 18 11 27 17 17 43 37 43 31 34 53 25 5 16 11 37 21 18 21 20 24 22 16 14 22 14 17 29 49 52 82 102 211 96 2 2 13 25 24 9 31 19 11 8 7 10 16 12 18 42 59 52 39 55 58 18 21 29 20 24 32 27 18 24 17 17 10 8 10 5 9 23 19 18 17 17 27 25 18 26 10 34 40 24 13 15 21 12 11 8 11 5 10 23 29 54 44 48 118 79 6 4 11 17 6 13 25 38 26 13 9 7 12 13 9 32 35 34 43 113 118 19 271 482 514 643 567 449 491 562 502 438 342 259 388 342 417 884 1.440 3.223 2002 260 40 106 62 29 66 28 47 23 2 27 12 37 21 16 51 10 837 2003 227 40 90 48 33 73 28 43 18 0 17 23 20 17 19 64 5 765 2004 2005 2006 2007 2008 247 262 266 271 259 53 89 156 176 175 111 116 143 129 132 56 64 105 147 146 45 62 76 99 116 75 83 126 124 99 34 37 44 57 48 53 76 108 82 45 29 41 43 51 54 3 3 2 5 4 33 29 30 39 29 21 21 13 26 19 33 26 17 25 10 15 24 19 17 11 22 32 27 30 30 79 45 43 36 29 17 23 12 17 13 926 1.033 1.412 2.230 1.19 First Sequence by Industry (No.

4 675.3 236.967.0 24.5 39.342 1.Cal South Central Upstate NY Unknown TOTAL ($ Millions) 3.547 2.967.741.1 10.7 236.0 785.0 9.7 10.5 49.602 1.646.2 273.3 99.3 13.185 24.20 Internet-Related Investments By Year 1994-2009 Figure 3.0 351.878.5 196.4 10.822.5 229.8 6.042.011.619 1.9 10.2010 NVCA Yearbook Figure 3.8 9.022 4.7 11.7 282.612.3 8.533.456 3.723.6 State California New York Massachusetts Texas Washington TOTAL* ($ Millions) 3.9 * Total includes above 5 states only Figure 3.514 1.4 3.6 11.5 5.0 1.417 1.153.21 Top Five States by Internet-Related Investments in 2009 Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 TOTAL No.397.301.8 649.888.0 6.752. of Cos 169 401 743 998 1.0 1.128.9 124.7 246.6 33.6 6.708.647 ($ Millions) 707.1 610.9 76.7 384.984.188 1.252 1.5 320.7 Thomson Reuters 37 .22 2009 Internet-Related Investments By Regions in 2009 Stage Region Silicon Valley NY Metro New England LA/Orange County Midwest Southeast Northwest DC/Metroplex Texas SouthWest Colorado San Diego Philadelphia Metro North Central Sacramento/N.192 1.6 5.798.

0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.2 2.0 0.0 0.0 4.0 0.0 0.0 0.0 94.0 0.0 0.0 0.0 0.0 25.0 0.1 6.0 0.0 0.0 25.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.3 56.3 2.0 0.0 0.5 0.0 0.0 0.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 12.5 0.0 41.6 0.0 0.0 0.0 48.6 0.0 86.0 0.0 2.0 0.0 0.0 0.0 0.7 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.0 0.5 0.0 0.4 0.0 0.0 0.4 78.0 0.0 0.0 27.0 0.0 0.2 158.0 3.0 0.0 0.0 0.0 0.0 102.0 0.0 0.0 0.0 15.0 0.0 0.0 0.0 0.0 0.0 0.2 0.9 2.0 0.0 0.0 0.0 0.0 0.0 34.0 0.0 0.2 0.0 0.0 0.9 0.0 0.0 0.6 14.0 0.0 0.0 45.0 0.3 0.0 0.2 131.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 9.0 1.0 0.0 0.0 16.0 0.0 2.0 0.9 13.0 0.0 0.0 0.0 381.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.1 8.0 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 295.0 0.0 0.0 0.0 0.1 11.0 1.0 55.0 0.0 0.6 0.0 0.0 0.7 25.0 3.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.032.5 0.4 0.1 0.0 0.0 0.0 6.0 5.0 0.0 2.0 0.0 10.0 0.0 0.0 0.0 0.2 33.8 0.8 0.1 32.0 0.0 0.0 0.0 0.7 9.0 0.0 0.0 0.7 HI 0.5 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 28.0 4.0 0.9 28.0 0.0 0.0 0.0 1.0 3.0 0.9 0.0 6.1 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 11.8 0.0 0.0 0.0 2.0 0.1 0.7 0.3 0.4 0.0 0.3 0.1 0.0 0.0 0.0 0.0 0.1 42.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 5.0 0.4 0.0 3.0 0.5 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 52.0 0.0 14.0 0.0 0.6 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.0 0.4 237.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 0.2 0.0 0.0 15.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 0.9 0.0 0.0 0.0 0.0 16.5 0.0 0.0 0.0 0.0 11.0 27.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 21.0 0.0 0.0 59.4 0.0 0.0 12.2 84.0 0.0 0.4 0.7 0.0 0.0 0.3 0.3 3.0 0.0 24.0 0.0 0.0 0.0 0.0 0.0 0.0 7.0 0.0 0.3 65.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.8 0.0 0.5 0.0 7.0 0.0 0.0 0.0 27.0 15.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.3 0.0 0.2 0.6 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 IND 0.0 0.4 0.0 17.0 0.0 0.0 0.0 14.6 0.6 0.0 0.5 9.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0 0.0 2.0 0.0 0.0 0.7 135.6 4.0 0.2 46.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 17.0 0.3 0.2 9.0 0.4 5.9 0.0 0.0 0.0 10.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.0 2.0 0.0 0.0 134.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.0 0.0 0.2 460.0 0.0 0.6 45.0 0.0 4.0 0.0 24.0 0.3 0.0 0.0 0.0 6.0 0.2 0.1 0.0 1.0 0.2 18.7 35.0 0.1 0.23 Sources and Targets of Invested Capital Investments 2009 SOURCE STATE AB AL AZ BC CA CO CT DC DE FF FL GA HI IA ID IL IN KS KY LA MA MB MD ME MI MN MO NC ND NH NJ NM NV NW NY OH OK ON OR PA QL QU RI SC SD ST TN TX UN UT VA VC VT WA WI WY Total Target State IA ID 0.0 0.9 0.0 6.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 110.6 6.0 0.0 5.0 0.0 0.0 0.0 0.0 0.0 8.9 1.0 0.0 0.0 0.0 0.0 0.0 0.9 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 41.0 1.2 23.0 7.0 0.0 0.0 0.0 0.0 4.0 0.0 10.8 0.0 0.0 0.0 0.6 10.0 0.0 0.0 0.0 0.0 10.0 0.0 0.0 0.0 0.0 0.0 1.3 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.2 0.2 0.0 0.0 0.0 9.0 0.5 18.0 0.0 43.0 0.6 0.0 0.0 0.0 0.0 0.8 0.272.1 0.0 1.0 0.5 0.0 0.3 15.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 12.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.0 0.0 0.0 0.0 0.3 695.0 0.0 0.0 53.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.4 2.0 0.0 2.8 13.0 0.0 0.0 0.0 0.0 0.0 0.0 8.0 37.0 0.0 0.0 0.4 1.0 0.0 0.0 0.0 25.0 0.5 0.0 0.0 0.9 0.1 IL 0.0 0.0 23.0 0.9 4.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.0 0.0 0.5 0.0 0.0 0.3 0.0 0.6 0.6 0.0 0.2 4.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.National Venture Capital Association Figure 3.5 0.0 0.0 2.0 0.4 0.1 12.0 2.0 0.0 1.6 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.2 0.0 0.2 2.0 0.0 0.0 0.0 0.0 0.4 1.0 0.0 0.3 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 37.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 7.4 4.0 0.0 0.0 0.0 0.2 0.0 5.0 14.0 0.0 0.0 0.0 0.0 0.0 0.8 6.0 38 Thomson Reuters .0 0.0 0.2 0.4 2.0 0.0 0.0 0.0 0.0 0.6 8.0 4.0 0.0 0.0 0.0 0.0 0.5 30.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.6 MD ME MI MN MO MS 0.0 0.0 27.0 0.0 0.0 13.0 0.0 0.0 0.7 0.1 0.2 0.6 5.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.9 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 73.0 0.0 0.0 24.0 0.0 0.0 8.0 22.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 263.8 0.0 0.0 0.0 79.0 0.0 4.0 195.0 0.0 0.0 0.1 0.0 40.0 0.0 0.5 0.0 0.0 0.0 30.1 0.5 0.0 277.0 0.0 689.0 0.0 0.0 0.0 0.0 0.7 295.0 0.0 0.0 0.0 0.0 29.0 196.0 0.0 0.2 22.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 6.0 0.1 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.3 2.9 38.0 0.0 0.0 0.0 0.0 0.3 33.0 0.0 0.0 8.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 438.0 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.1 0.0 4.0 0.0 0.2 0.0 1.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.862.7 0.6 0.0 0.0 0.9 0.8 14.0 10.4 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 7.4 0.0 0.0 0.0 0.0 0.0 AZ CA CO CT DC DE FL GA 0.0 0.0 0.0 3.0 0.0 0.8 11.0 2.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 83.0 0.5 0.0 0.9 0.0 0.0 197.0 0.0 0.0 0.0 0.0 0.4 1.3 0.0 0.0 0.0 0.4 0.0 0.0 0.5 0.9 146.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 3.0 0.0 53.0 0.5 0.9 0.0 0.0 1.0 0.0 0.0 159.0 0.9 0.7 3.0 0.8 1.1 2.0 11.3 0.0 0.0 0.0 0.5 555.0 0.5 0.0 0.0 0.0 0.8 0.0 0.0 2.0 0.3 0.0 0.7 1.0 1.3 23.0 0.0 0.9 11.0 0.1 14.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 AK AL 0.0 11.0 0.0 0.9 0.0 0.0 0.0 0.0 0.0 0.7 0.0 0.0 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0 7.0 0.0 0.0 0.0 0.0 0.8 18.0 0.0 14.0 3.0 0.0 0.0 0.0 0.0 44.0 0.2 2.5 2.0 0.0 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.8 7.0 0.0 0.7 0.9 40.9 0.4 4.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 29.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 0.2 AR 0.0 0.0 0.0 0.0 0.0 0.0 0.4 MA 1.0 0.0 0.7 42.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 12.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.8 0.0 0.0 0.0 3.0 0.0 5.0 0.7 0.0 4.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.0 0.8 3.0 0.0 57.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 22.0 0.0 0.6 0.0 0.0 36.0 0.0 0.0 0.0 0.0 0.0 0.6 468.0 46.0 0.0 0.0 185.0 0.4 0.0 0.0 0.0 0.0 0.0 6.0 0.0 0.0 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 9.0 2.3 8.0 0.0 0.0 0.0 0.0 2.0 0.3 0.0 0.4 KS KY LA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 1.0 0.0 0.0 17.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.2 0.6 52.264.0 0.6 6.0 1.0 0.0 0.0 0.0 0.0 15.0 0.8 3.0 0.0 0.0 0.0 0.

0 1.0 1.0 0.00 0.0 0.0 17.0 0.0 4.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 LA 0.0 0.0 0.00 0.0 0.9 1.0 0.0 0.0 0.0 0.0 27.0 0.0 0.0 0.8 0.2 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 40.3 54.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 0.0 0.1 10.0 0.0 0.0 6.0 0.0 0.0 0.00 0.0 22.0 0.0 0.0 0.5 0.0 0.2 0.0 0.0 0.0 1.0 0.6 0.23 (continued) Sources and Targets of Invested Capital Investments 2009 SOURCE STATE MT NC ND AB 0.0 0.0 0.0 27.0 0.0 0.0 0.5 0.0 8.0 0.4 161.0 0.0 0.0 0.0 0.0 0.0 0.0 6.0 0.0 0.0 0.0 17.6 5.0 0.0 0.0 0.8 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0 0.5 4.8 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 17.0 0.0 0.6 23.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 VT 0.0 0.7 0.0 MD 0.0 0.0 6.1 0.0 0.0 0.0 0.0 0.0 4.0 0.9 0.0 16.0 0.0 0.0 0.0 0.0 0.0 0.0 NY 12.0 158.00 0.0 0.0 0.0 4.0 0.0 0.00 0.0 0.0 0.0 0.0 8.1 0.0 AZ 0.0 0.5 1.0 0.0 0.0 10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 23.2 13.8 0.0 0.0 0.0 0.0 VA 0.0 0.8 0.0 0.0 5.00 0.0 0.0 9.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 WA 0.2 0.0 0.0 0.0 1.3 0.00 0.0 0.0 0.0 0.6 0.0 0.0 IL 0.0 644.0 0.4 0.5 0.0 2.8 0.6 0.0 0.0 0.0 0 0.0 0.00 0.0 0.4 0.0 0.0 10.0 0.1 0.4 175.0 0.3 71.0 0.1 0.0 0.0 0.0 0.0 0.0 0.1 50.9 97.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 0.0 ND 0.0 0.0 0.5 0.7 0.0 0.0 0.3 0.0 0.0 28.6 0.0 0.0 0.0 0.1 2.0 0.4 0.0 0.0 0.0 5.0 SC 0.0 0.7 17.5 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.8 7.2 2.0 13.0 0.00 0.0 0.1 41.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 WA 0.0 0.0 0.5 10.0 0.0 0.6 44.0 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.0 OK 0.0 1.0 0.0 5.0 0.0 0.0 RI 0.905.0 0.5 0.0 0.0 0.7 0.0 0.0 0.0 0.0 57.0 14.0 0.0 0.0 0.0 0.0 47.0 0.0 0.0 0.00 0.7 Thomson Reuters 39 .0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 UT 0.0 0.0 13.3 0.1 18.0 0.0 0.0 0.7 0.0 0.0 0.0 0.00 0.3 0.0 0.0 0.00 0.1 0.8 Target State OK OR PA PR RI SC SD TN TX UN UT 0.3 3.0 0.0 0.0 DE 0.0 0.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.7 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 9.0 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.9 0.0 0.0 0.0 0.1 0.9 271.0 0.8 17.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 289.0 0.0 0.1 2.9 112.0 0.0 0.0 NV 0.0 0.0 0.0 1.0 0.0 MN 0.0 0.0 0.0 0.0 7.0 0.0 0.0 0.0 0.0 0.0 KS 0.0 0.6 0.0 0.0 0.0 0.9 0.0 4.0 0.0 0.0 0.0 0.0 10.0 0.8 0.0 0.8 37.0 0.8 7.0 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.4 5.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 42.0 0.6 3.0 2.1 0.0 0.8 776.0 0.0 0.0 0.4 17.0 0.0 0.0 0.4 2.0 0.0 0.00 0.0 0.0 0.5 0.0 0.0 0.0 0.0 2.2 0.0 WV 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 5.00 0.0 NH 0.0 0.0 0.0 0.8 0.0 0.0 0.00 0.4 0.00 0.0 0.0 0.00 0.7 15.0 0.0 NW 0.0 3.0 0.0 0.0 5.0 0.0 0.0 0.0 7.0 0.0 6.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 DC 0.0 8.0 1.0 0.0 4.0 0.00 0.0 0.0 0.00 0.3 3.0 0.7 556.0 0.0 0.0 0.4 0.083.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.2 1.0 2.7 0.3 112.5 1.0 0.0 3.0 0.0 GA 0.0 0.0 0.0 0.4 0.0 25.0 44.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 69.0 111.0 0.0 0.0 2.0 0.0 0.0 0.0 2.1 8.0 VC 0.7 26.0 0.0 0.9 0.0 0.0 0.1 VA 0.0 6.0 0.0 0.0 0.0 0.0 0.2 59.8 1.0 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.6 NM 0.0 0.0 0.0 93.0 2.0 0.0 0.0 0.0 5.1 4.2 0.0 0.0 1.4 407.0 0.0 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.0 0.7 42.00 0.8 0.00 0.7 3.0 0.0 0.0 0.7 0.2 0.0 0.0 0.0 7.0 OH 0.0 0.0 0.0 ME 0.0 0.0 0.0 0.8 2.0 5.0 0.0 1.0 0.0 0.0 0.0 0.2 0.0 0.5 293.7 0.0 25.0 0.0 0.0 19.0 0.0 0.0 0.0 0.0 5.0 0.0 MI 0.0 0.0 0.2 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.1 0.0 0.5 OH 0.690.0 0.0 0.0 0.0 0.0 4.1 87.0 ON 0.0 0.0 0.0 0.7 0.0 0.0 0.0 30.8 0.0 TX 0.0 0.0 0.0 0.4 170.0 0.0 38.0 0.0 0.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0 0.0 0.0 UN 0.0 0.0 0.0 0.4 0.00 0.0 0.0 0.0 0.0 0.0 0.1 69.0 0.0 0.0 0.0 1.0 0.0 48.0 0.0 0.0 0.3 0.0 0.0 0.0 0.9 0.0 0.3 0.00 0.3 0.0 0.0 0.0 0.0 3.0 0.0 0.4 18.5 0.0 0.0 0.0 0.0 8.0 0.0 0.0 0.0 0.0 0.6 6.0 0.0 0.0 0.0 0.0 0.0 10.0 0.0 0.0 0.0 0.00 0.0 0.0 0.8 33.0 HI 0.0 0.0 1.0 0.0 0.0 3.7 1.0 0.0 0.0 0.0 0.2 0.6 0.4 0.7 199.0 0.0 0.0 0.0 0.3 0.0 0.2 0.5 0.0 0.00 0.0 0.0 0.0 0.8 2.0 0.8 0.0 0.0 2.0 0.0 0.0 0.1 0.9 0.0 0.0 0.0 VT 0.0 0.5 0.0 0.0 2.1 47.0 0.0 0.0 0.0 9.0 0.0 0.1 72.0 0.2 MO 0.0 0.8 0.0 4.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 2.1 0.0 0.00 0.0 17.0 0.0 0.0 0.00 0.0 0.4 59.0 0.0 0.0 OR 0.4 NY 0.0 0.7 0.0 0.0 0.3 0.0 0.0 WI 0.2 WI 0.0 0.5 10.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 WY 0.0 64.0 0.0 0.0 0.0 0.0 0.0 0.4 0.1 1.0 0.0 2.3 0.0 FF 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 IN 0.8 0.2 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 CA 0.0 0.0 0.3 0.0 0.0 0.4 0.0 0.0 2.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 4.0 0.0 0.0 PA 0.8 48.00 0.6 0.0 0.0 0.8 0.0 0.0 0.8 0.0 0.1 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 2.0 0.0 0.0 2.0 TN 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 2.7 0.0 0.00 0.0 0.0 0.7 0.8 0.0 0.0 MB 0.0 0.0 0.0 0.0 0.0 0.0 4.0 0.00 0.0 40.0 0.5 0.0 0.0 0.3 0.0 0.8 0.0 0.00 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.0 0.0 CO 0.7 17.0 0.4 0.0 0.8 VI 0.3 1.0 ID 0.4 50.0 0.0 0.0 0.0 0.2 177.0 0.0 0.0 18.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 5.5 59.0 0.0 0.0 0.0 0.4 23.2 8.00 0.0 0.0 0.0 0.0 0.0 QL 0.9 0.0 4.0 0.0 0.0 0.0 0.0 17.0 0.0 0.0 0.0 0.0 0.0 24.00 0.0 26.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.00 0.0 0.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.0 ST 0.0 0.0 0.0 28.0 0.0 0.0 6.0 0.0 0.0 0.0 0.0 30.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 1.0 0.0 0.0 0.0 0.0 3.0 0.0 0.5 0.0 1.0 6.0 0.7 0.9 57.0 0.0 2.0 0.0 0.0 0.0 0.6 13.00 0.0 0.0 QU 0.0 0.0 0.0 0.0 AL 0.0 0.0 0.0 0.0 0.0 0.0 0.6 7.0 0.0 0.628.0 0.0 14.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 1.0 0.0 0.0 0.7 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.5 99.0 0.0 0.0 0.0 0.6 NE NH NJ NM NV 0.0 0.2 0.0 0.0 0.6 1.0 855.0 0.3 91.0 0.8 0.0 0.0 0.0 37.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 39.0 3.0 0.0 BC 0.0 0.0 0.0 0.0 0.0 0.0 4.0 0.5 98.5 0.2 0.0 0.2 0.0 0.0 0.0 0.0 0.0 11.0 0.2 0.0 0.1 0.6 6.0 0.0 0.0 0.4 174.0 0.0 0.00 0.0 0.7 0.0 0.0 0.0 0.0 0.0 574.0 0.0 0.0 1.3 0.0 16.0 6.1 0.0 1.5 0.0 0.0 25.0 0.8 110.582.0 0.0 0.0 0.0 0.0 30.0 14.0 0.00 0.0 0.0 0.0 3.0 WY 0.0 4.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 218.2 0.0 0.0 0.00 0.0 0.0 0.00 0.2010 NVCA Yearbook Figure 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 FL 0.8 2.4 0.0 0.0 MA 2.0 0.0 0.0 0.0 0.0 0.0 177.0 0.0 0.8 24.0 0.6 3.0 0.00 0.0 0.0 0.0 0.0 0.0 2.0 7.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0 SD 0.0 29.0 IA 0.3 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 31.0 0.0 3.0 0.0 0.0 0.0 0.0 76.0 1.0 1.0 0.0 0.0 0.0 119.0 0.3 0.0 0.0 0.0 30.0 0.0 177.0 0.0 13.0 0.3 7.0 6.0 0.0 0.0 9.0 0.0 0.0 128.5 0.0 0.3 0.0 0.0 0.0 0.0 0.1 476.0 0.0 0.0 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.0 0.0 0.4 161.0 0.0 0.0 0.0 0.0 0.0 0.7 0.1 242.0 0.0 0.0 TOT 6.0 0.6 0.1 0.0 0.0 2.0 0.0 0.0 0.0 0.0 1.0 0.8 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.7 44.0 0.0 0.0 0.0 0.0 2.0 0.0 0.8 0.7 0.0 11.0 0.4 354.0 0.0 0.0 0.039.0 0.0 0.0 0.0 0.0 2.0 0.0 0.2 8.0 0.7 1.00 0.9 192.0 0.5 49.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.00 0.0 NJ 0.0 0.0 NC 0.00 0.0 0.0 0.1 6.0 Total 14.0 0.4 0.0 0.0 11.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.3 9.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 35.0 0.00 0.4 3.0 0.0 0.0 0.9 0.0 0.9 7.0 0.0 272.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.00 0.7 12.0 0.6 0.9 0.00 0.0 1.0 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.4 31.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 CT 0.0 0.

506.3 771.330.4 80.6 22.6 1.1 146.2 227.9 106.418.4 17.2 31.6 136.4 672.7 370.270.7 40.2 2.29 Top Five States By Portion Received From In-State Firms 2009 Company Location District of Columbia Tennessee California Massachusetts North Carolina *Minimum $20 million invested Pct.5 1.9 111.4 290.0 87.1 32.1 1.7 56.5 143.1 146.8 1.426.459.5 6.9 303.967.967.0 558.6 136.0 Total 3.28 Top Five States By Percentage Invested Within State in 2009 Figure 3.0 253.7 Figure 3.27 2009 Internet-Related vs Non Internet-Related Investments By Industry Sector (Number of Companies) Industry Software Media and Entertainment IT Services Telecommunications Networking and Equipment Consumer Products and Services Business Products and Services Computers and Peripherals Financial Services Retailing/Distribution Semiconductors Medical Devices and Equipment Healthcare Services Biotechnology Industrial/Energy Electronics/Instrumentation Other Total Internet Related Non-Internet Related 442 103 211 12 170 6 99 19 62 8 46 24 38 32 26 25 22 23 17 6 14 81 13 247 9 23 7 323 6 187 3 47 NA 21 1.6 6.6 NA 6.National Venture Capital Association Figure 3.020.0 172.1 447.8 628.1 189.0 87.426.1 447.372 Fund Domicile California Tennessee Utah North Carolina Ohio Pct.2 1.9 2.5 102.5 136.2 713. Invested Within State 72% 68% 62% 53% 46% *Minimum $20 million invested Figure 3.5 60.7 Non-Internet Related 689.690.967. Invested From State 66% 63% 48% 34% 32% 40 Thomson Reuters .6 31.4 290.140.26 2009 Internet-Related vs Non Internet-Related Investments By Industry Sector ($ Millions) Industry Software Media and Entertainment IT Services Networking and Equipment Telecommunications Consumer Products and Services Computers and Peripherals Business Products and Services Semiconductors Financial Services Retailing/Distribution Medical Devices and Equipment Industrial/Energy Biotechnology Healthcare Services Electronics/Instrumentation Other Total Internet Related 2.1 47.7 Figure 3.667.4 10.4 672.507.6 22.9 79.5 1.723.8 338.4 2.840.9 2.115.1 189.5 60.172.1 2.1 47.020.185 1.3 3.5 36.5 143.6 364.140.077.25 2009 Internet-Related Investments By Industry Sector Company Stage Startup/Seed Early Stage Expansion Later Stage TOTAL ($ Millions) 167.7 148.4 305.24 2009 Internet-Related Investments By Stage Figure 3.5 1.292.187 Total 545 223 176 118 70 70 70 51 45 23 95 260 32 330 193 50 21 2.5 136.1 1.2 2.3 3.5 1.7 Industry Group Software Media and Entertainment IT Services Networking and Equipment Telecommunications Consumer Products and Services Computers and Peripherals Business Products and Services Semiconductors Financial Services Retailing/Distribution Medical Devices and Equipment Industrial/Energy Biotechnology Healthcare Services Electronics/Instrumentation TOTAL ($ Millions) 2.

2 8% 761 1.3 5.116.2 10.597.284 16.9 5.5 4.583.31 Number of States California Venture Firms Invested Into By Year Location of Venture Firm California Massachusetts New York Pennsylvania Connecticut Maryland Illinois North Carolina Minnesota New Jersey Washington No.30 Number of States Invested Into in 2009 By State of Venture Firm Figure 3.34 California Investments as a Percentage of Overall Investments 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1994 1999 2004 2009 Other SoCal NoCal Thomson Reuters 41 .942.1 3.0 59 375.1 9% 578 1.170.2 5.4 Figure 3.3 37 216.709.7 36 146.8 7% 333 1.4 147 2.0 9% 511 7.7 46 147.4 47 123.1 3.9 6% 136 735.0 290 2.9 39 606.5 7% 373 Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Average Investment Per Deal ($ Millions) 2.622.5 10. of Clean Millions) Technology Deals 76.33 Clean technology Investments By Year Clean Technology Investments ($ No.6 5.9 9% 798 2.546.1 86 502. of CorpInvestments Investments Backed Deals ($ Millions) 434.5 63 434.2010 NVCA Yearbook Figure 3.6 12.9 10.102 4.2 247 4.9 14.1 68 261.314.2 3.701.3 16% 2.961.32 Corporate Investments By Year % of Overall Deals With at Least One Corp VC 7% 9% 11% 14% 23% 27% 22% 18% 15% 18% 17% 18% 20% 19% 13% Figure 3. of States Invested In 33 32 28 21 19 18 17 16 15 14 14 Year 1989 1999 2009 No.312.4 209 Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Corp-Backed % of Overall No.6 15% 1.6 13% 997 1.194.2 7% 450 1.1 8% 657 2.017.6 48 346.4 92 1. of States Invested In 28 40 33 Figure 3.844.0 5.8 7% 558 2.9 7% 554 1.218.1 7% 235 959.

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5 12.0 233.1 10.0 1.0 30. the sector receiving the second highest amount of money.4 350.2 46.3 352.0 11.2 10.4 Max 493.0 455.9 40. Later stage companies needed cash infusions at a time when they would have otherwise gone public or been acquired.1 0.3 83.3 N/A 2.8 5. where reported.000.5 57.1 17.1 0.9 74.3 18.9 14. The overall drop in the public markets for technology company stocks of more than 30% affected valuations of companies at both ends of the maturity spectrum. Continued depressed public markets did not allow much step up in valuation.5 18.Portfolio Company Valuations Round valuations in 2009. Figure 4.5 51.6 80.4 18.4 1.4 66.8 40.04) from the reference period (Figure 4.7 33.05) and subsequent financings separately (Figures 4.0 31. it is worth looking at a company’s first financings (Figures 4. For the mere 12 venture-backed companies that went public in 2009.5 144.06).02 and 4.8 N/A N/A 7.1 Thomson Reuters 43 . Early stage fundings had to be structured to provide for additional rounds and investors later on. even higher than the prior record in 2007.08).0 33. significantly increased.3 2.9 20.1 142.2 84.9 35.9 9.4 5.01 Valuations By Company Industry 1995-2008 ($ Millions) Company Industry Biotechnology Business Products and Services Computers and Peripherals Consumer Products and Services Electronics/Instrumentation Financial Services Healthcare Services Industrial/Energy IT Services Media and Entertainment Medical Devices and Equipment Networking and Equipment Other Retailing/Distribution Semiconductors Software Telecommunications Total Avg Val 66.200. The 2009 crop of IPOs had the highest median valuation.3 Lower Median Quartile 52. However a closer look at those two charts shows differing trends by sector.5 82.3 2. also showed meaningfully higher valuations.1 1.6 83.6 8.8 29.6 200. and (B) early investment in companies just getting going.0 7.0 384.0 8.3 137.8 566. and highest average valuation ($1.0 38.0 28.200.0 14.2 0.01) which is the prior four years.0 Upper Quartile 102.4 1.0 0.3 26.9 12.9 12.2 N/A 14.0 13.4 90.03 and 4.9 28.0 28.5 5.0 36.0 2.7 141.3 million.0 53.9 Min 0.7 55.6 5.0 1. Software.0 4.1 0.3 0.9 82. Note that the average valuation statistic was driven by one very large IPO which made up more than half the total valuation.6 25.6 5.8 11.2 3. did increase overall at the average and at the median (Figure 4.0 N/A 28.8 0.0 18.0 30.6 20.0 6.0 0. Biotechnology valuations are lower but Industrial/Energy. $428.9 36.0 340.0 64. With the activity focused on the two ends of the spectrum.2 billion) ever.5 95.8 2. the MoneyTree sector containing much of the clean technology investment.3 N/A 11. the valuations were good (Figure 4. Remember that venture investment in 2009 was characterized as a mix of (A) later stage companies receiving large rounds anticipating an acquisition (M&A) or initial public offering (IPO).0 122.

3 10.7 21.0 28.0 10.3 10.0 2.1 8.0 5.5 5.2 5.0 26.1 0.5 6.1 Figure 4.3 79.9 0.6 71.1 19.6 Min 0.6 N/A N/A 82.8 18.0 1.8 50.1 10.1 1.6 101.8 14.0 2.5 14.4 174.8 156.3 23.8 23.3 2.3 2.6 144.0 12.3 3.5 3.0 122.0 6.0 Upper Quartile 107.6 94.4 16.5 5.0 150.2 384.0 340.3 5.4 9.0 Upper Lower Quartile Median Quartile 19.5 11.4 42.200.0 64.4 1.4 11.8 5.0 7.3 57.8 2.5 45.5 27.6 150.5 46.3 0.0 200.4 18.3 2.7 3.4 3.0 18.9 5.5 6.5 5.8 19.0 61.1 N/A N/A 6.1 8.5 90.6 22.2 N/A N/A 13.4 57.0 1.6 200.9 11.3 7.9 20.0 15.7 23.2 8.7 15.2 62.0 40.0 0.0 0.4 350.7 70.1 44 Thomson Reuters .0 10.3 N/A N/A 1.9 8.0 9.6 19.4 24.4 Max 493.4 63.9 14.0 59.9 86.6 9.6 87.4 N/A N/A 28.0 35.5 95.8 2.2 69.0 44.0 7.0 3.7 29.0 28.9 10.0 233.8 0.0 4.0 N/A N/A 566.0 455.2 26.5 76.200.1 Min 0.8 20.8 57.1 10.6 N/A N/A N/A N/A 54.000.03 Valuations By Company Industry 1995-2008 Financings ($ Millions) Additional Round Financings Company Industry Biotechnology Business Products and Services Computers and Peripherals Consumer Products and Services Electronics/Instrumentation Financial Services Healthcare Services Industrial/Energy IT Services Media and Entertainment Medical Devices and Equipment Networking and Equipment Other Retailing/Distribution Semiconductors Software Telecommunications Total Avg Val 79.2 10.0 2.3 19.National Venture Capital Association Figure 4.7 79.1 41.7 67.02 Valuations By Company Industry 1995-2008 Financings ($ Millions) First Round Financings Company Industry Biotechnology Business Products and Services Computers and Peripherals Consumer Products and Services Electronics/Instrumentation Financial Services Healthcare Services Industrial/Energy IT Services Media and Entertainment Medical Devices and Equipment Networking and Equipment Other Retailing/Distribution Semiconductors Software Telecommunications Total Avg Val 18.2 4.2 11.0 6.9 N/A N/A N/A N/A N/A N/A 16.9 9.7 99.3 37.0 10.4 4.0 102.0 11.0 16.4 3.8 3.5 26.5 Max 115.4 20.0 384.3 352.2 12.8 20.9 15.1 13.0 165.5 0.1 14.3 Lower Median Quartile 70.3 69.0 N/A N/A 82.0 12.4 73.6 20.0 0.0 110.5 0.0 0.9 52.3 61.2 3.4 7.2 14.1 0.0 34.8 5.7 23.0 15.0 31.1 0.5 10.3 137.5 49.0 90.

0 40.1 12.0 56.9 1.9 274.3 80.4 40.1 N/A N/A 5.04 Valuations By Company Industry 2009 Financings ($ Millions) Company Industry Biotechnology Business Products and Services Computers and Peripherals Consumer Products and Services Electronics/Instrumentation Financial Services Healthcare Services Industrial/Energy IT Services Media and Entertainment Medical Devices and Equipment Networking and Equipment Other Retailing/Distribution Semiconductors Software Telecommunications Total Avg Val 49.0 N/A N/A N/A N/A 21.0 NA NA NA NA NA NA 3.000.0 406.05 Valuations By Company Industry 2009 Financings ($ Millions) First Round Financings Company Industry Biotechnology Business Products and Services Computers and Peripherals Consumer Products and Services Electronics/Instrumentation Financial Services Healthcare Services Industrial/Energy IT Services Media and Entertainment Medical Devices and Equipment Networking and Equipment Other Retailing/Distribution Semiconductors Software Telecommunications Total Avg Val NA NA NA NA NA NA NA NA NA 112.5 8.1 12.0 1.9 103.5 30.0 N/A 8.7 54.6 Max 249.2010 NVCA Yearbook Figure 4.3 Min NA NA NA NA NA NA NA NA NA 9.2 48.4 N/A N/A 46.9 13.0 436.2 3.0 59.9 11.5 17.0 Upper Quartile 60.0 1.1 17.0 N/A 18.1 18.0 Min 4.5 NA NA NA NA NA NA 93.7 17.7 94.1 26.6 9.2 N/A N/A N/A 307.8 Lower Median Quartile NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA 17.0 21.0 26.3 N/A N/A N/A N/A N/A N/A 109.0 11.7 16.2 719.3 3.2 77.7 9.5 6.8 44.0 1.3 N/A N/A N/A 8.0 20.4 73.8 24.0 NA NA NA NA NA NA 64.5 30.5 80.7 N/A N/A N/A 550.3 54.0 Upper Quartile NA NA NA NA NA NA NA NA NA 117.0 165.2 N/A N/A 23.0 66.3 13.5 Lower Median Quartile 29.0 N/A N/A 31.2 3.0 N/A N/A N/A 189.0 5.0 NA NA NA NA NA NA 406.3 Figure 4.000.0 Thomson Reuters 45 .0 NA NA NA NA NA NA NA NA NA NA NA NA 14.0 N/A 23.6 22.0 229.7 18.9 N/A N/A 20.0 43.2 88.9 Max NA NA NA NA NA NA NA NA NA 406.0 403.3 7.5 8.9 N/A 21.0 11.7 182.

07 2009 Venture-Backed IPOs Valuations as of IPO Company Industry Biotechnology Business Products and Services Computers and Peripherals Consumer Products and Services Electronics/Instrumentation Financial Services Healthcare Services Industrial/Energy IT Services Media and Entertainment Medical Devices and Equipment Networking and Equipment Other Retailing/Distribution Semiconductors Software Telecommunications Total Avg Val 640.0 229.9 773.4 59.0 212.0 32.9 284.5 22.9 11.1 Figure 4.417.2 NA NA 27.0 NA 1.0 NA NA NA NA 26.4 NA NA 46.5 141.0 8.9 313.7 Max 249.6 NA 750.2 NA 403.3 54.2 24.1 833.0 436.1 20.0 11.3 7.0 NA NA 34.0 33.8 77.7 436.5 NA NA 136.0 NA NA NA NA NA NA 347.7 30.8 58.2 5.0 182.1 31.National Venture Capital Association Figure 4.2 719.0 50.9 44.0 NA NA NA NA NA NA 550.8 212. 46 Thomson Reuters .1 853.06 Valuations By Company Industry 2009 Financings ($ Millions) Additional Round Financings Company Industry Biotechnology Business Products and Services Computers and Peripherals Consumer Products and Services Electronics/Instrumentation Financial Services Healthcare Services Industrial/Energy IT Services Media and Entertainment Medical Devices and Equipment Networking and Equipment Other Retailing/Distribution Semiconductors Software Telecommunications Total Avg Val 53.3 19.2 19.2 NA NA NA NA NA NA NA NA NA NA NA NA NA NA 571.1 NA NA 13.2 380.5 NA NA NA NA NA NA 226.0 4.8 83.0 NA NA NA NA NA 1.417.0 18.7 131.8 46.9 73.9 *Categories containing less than 3 companies will not be displayed but their valuation amounts will be included in bottom line totals.8 NA 55.0 Min 4.3 27.0 1.1 NA NA NA NA NA NA 13.0 66.7 Lower Median Quartile 30.9 NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA 804.6 Upper Lower Max Quartile Median Quartile Min 1.3 583.0 Upper Quartile 73.000.000.6 251.9 290.1 NA 605.0 NA NA NA NA NA NA NA NA NA NA NA NA 186.

240.8 343.7 1.5 406.3 570.8 110.2 23.083.0 346.9 7.0 Min 12.8 41.8 2.442.8 212.2010 NVCA Yearbook Figure 4.6 182.9 Thomson Reuters 47 .2 622.4 11.4 182.262.139.4 9.1 248.0 171.2 527.2 9.647.1 2.911.7 573.9 1.963.3 171.2 205.4 12.9 1.0 504.8 197.5 1.5 47.1 70.3 322.6 255.0 271.965.9 21.3 66.6 208.0 57.8 1.1 1.2 71.1 380.8 110.8 134.7 156.9 359.827.5 935.9 152.9 140.0 88.5 11.719.7 389.443.7 257.569.2 290.7 223.8 222.08 Venture-Backed IPOs Valuations as of IPO ($ Millions) By Year of IPO Year of IPO 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Avg Val 161.7 656.2 227.6 4.1 387.0 428.053.3 221.6 269.1 63.2 106.0 108.220.5 201.1 160.3 310.5 390.3 141.7 255.7 538.6 8.0 18.3 439.2 499.2 161.7 Upper Lower Max Quartile Median Quartile 1.3 36.1 361.7 441.9 50.6 23.4 284.5 521.7 821.

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6 billion and 270 acquisitions with disclosed deals totaling $14.00 200 20. the reader is reminded that 2009 results are based on this very small sample of 12 IPOs. At year end 2009. This research is compiled three ways: first. To put this in context. going back at least to 1980. through industry surveys. the term “venture-backed” has different meanings depending on context. The number of venture-backed companies acquired during 2009 (270) declined from 2008 (349). of IPOs 49 . it is a far cry from current levels. There are Figure 5.6 billion raised through IPOs in 2009 is the second worst year (only to 2008) since 1990. we have been successful in identifying virtually all companies that have gone public that have had venture backing.00 0 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Year 0. double the six IPOs in 2008. While the valuation of the 2009 IPOs reached almost $15 billion. That would suggest an annual IPO count of around 140. While times may have changed and the anticipated percent is lower. the overall quality of deals deteriorated. However. which is tracked through the new issues online database of Thomson Reuters. These two years are the second-worst and worst years. While we have provided the traditional analytical charts and summaries in this chapter. with 38% of the known acquisitions occurring at a price less than the total venture investment in that company. through cross-referencing venturebacked companies with IPOs in registration or that have begun trading. there were only 23 companies in registration. IPO and acquisition activity were both far below what is necessary to sustain the industry long term. Methodology Initial and secondary public offerings of companies that are venture-backed are followed and analyzed by Thomson Reuters.Exits: IPOs and Acquisitions As bad as 2008 was for venture-backed companies exiting through initial public offerings or acquisitions. While there were a few strong acquisitions raising the average purchase price to $152. Similarly. In 2009. which itself declined from 2007 (379). In recent years.9 million. the $1. approximately 14% of the venturebacked companies first funded in the 1990s eventually went public.00 150 15. By using this research process. the overall pace remained a mere trickle.00 50 5. In 2009.000 companies annually are funded for the first time. more than 1. there were just 12 venture-backed IPOs raising $1. Only 12 venture-backed companies went public in 2009.01 Venture-Backed IPOs 300 No of IPOs Offer Amount ($B) 30. The number of acquisitions actually declined in 2009 to the lowest post-bubble level.00 100 10. respectively.00 Thomson Reuters Offer ($Billion) No.00 250 25. The IPO levels remained near zero against a backdrop of an ever increasing number of portfolio companies maturing into the later stages and thus awaiting an exit.1 billion. the year 2009 was not much better. third. through daily prospectus research. second.

National Venture Capital Association three decreasingly stringent classifications that Thomson Reuters uses in classifying public companies as venture-backed. Thus.789 56 91 5 14 17 3. The most rigorous is that a venture capitalist must be a shareholder at the time of the public offering and the investment must have been made by a non-buyout venture capital fund.204 6.242 255 390 8 84 120 53.03 Venture-Backed IPOs 1980 to 2009 Value and Age Characteristics Offer Amount ($Mil) 664 1.727 343 497 4 73 97 133.023 11.140 86 136 7 24 39 31.126 108 160 6 41 48 17.147 11.668 8.440 35 87 4 13 21 14.678 256 656 7 65 79 16.274 67 85 6 25 32 20.823 25.404 77 169 6 22 32 23.762 7.618 3.646 258 441 10 97 137 14.005 1.117 10.529 52 106 5 15 21 9.257 228 285 8 69 121 61.490 2.826 3.663 35 76 4 12 20 18.318 846 1.787 44 98 5 9 12 4.194 68 110 7 23 28 18.02 Number of Venture-Backed IPOs vs.577 55 96 7 20 23 5.399 110 207 5 30 35 22.672 31 57 5 12 17 6. All IPOs Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 # of All IPOs 476 350 83 76 67 187 167 167 159 24 39 # of VentureBacked IPOs 269 265 41 22 29 94 57 57 86 6 12 Figure 5.378 4.770 1.931 2.558 202 290 6 76 90 22. The second most strict category still provides that the investment be made in a venture round of financing.556 346 623 9 71 78 2. but allows that the investment could have been exit- Figure 5.950 223 361 8 66 70 8.886 26 51 7 8 16 2.073 110 155 7 32 42 56.317 70 112 8 33 41 31.782 20.109 2.889 428 1241 10 Mean Age @ IPO (yrs) 11 10 7 8 8 9 9 9 6 8 9 9 9 9 11 9 8 8 7 5 7 12 15 9 8 8 10 9 10 10 Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Num of IPOs 59 97 39 196 83 75 152 125 54 65 70 153 195 219 166 205 272 138 78 269 265 41 22 29 94 57 57 86 6 12 50 Thomson Reuters .279 2.068 577 3. an investment that was exited prior to going public or a company financed by a buyout firm would not be counted as venture-backed in this sense.683 4.391 57 68 5 15 21 5.004 322 439 6 71 96 7.253 182 221 5 63 77 133. This is the criterion used in publishing venture-backed IPOs in the Venture Capital Journal.642 Med Offer Mean Offer Post Offer Med Post Mean Post Median Age Amt ($Mil) Amt ($Mil) Value ($Mil) Value ($Mil) Value ($Mil) @ IPO (yrs) 9 12 3.517 28 62 9 8 11 4.326 470 1.396 4.485 5.223 1.482 4.639 249 504 5 71 85 18.

it usually refers to companies covered by the second category.643 269 48 504 78 2.218 594 125 844 327 756 108 67 0 367 21 257 1.223 1.827 3.085 335 331 440 414 185 39 157 3. The term ‘private-equity backed’ will refer to the third category of company.782 1999 4.482 4.023 2004 2005 2006 2.642 Figure 5.337 4.396 4.762 7.242 2.669 352 798 62 28 139 699 755 197 324 464 0 0 0 0 11.337 333 130 Media and Entertainment 0 49 7 41 12 78 778 196 61 15 40 243 258 666 466 160 485 457 116 Retailing/Distribution 0 7 0 120 41 223 236 94 106 34 33 366 257 729 101 67 551 175 309 Financial Services 25 0 0 39 0 208 207 56 9 85 0 166 281 197 323 442 1.215 325 694 Electronics/Instrumentation 31 54 45 165 14 6 33 16 0 64 45 66 78 272 201 216 140 77 72 Biotechnology 35 143 44 397 45 17 318 173 24 65 63 920 769 485 161 527 856 536 147 Consumer Products and Services 3 62 26 198 93 12 102 119 8 174 5 445 401 376 338 285 191 155 515 Networking and Equipment 24 76 61 108 34 30 135 113 37 52 71 299 241 356 400 285 567 316 319 Computers and Peripherals 209 208 234 820 179 177 261 237 108 165 125 68 277 298 199 398 371 200 53 IT Services 0 21 43 66 25 13 21 32 12 0 0 169 848 66 64 284 457 85 262 Semiconductors 87 34 0 278 79 14 41 98 74 79 25 178 132 340 203 669 6 204 0 Medical Devices and Equipment 45 51 40 274 37 74 80 152 20 108 124 490 817 333 476 878 1.378 4.436 782 855 250 103 77 138 0 427 84 7 0 90 122 191 2.591 122 0 332 759 610 300 53 192 535 72 52 1.040 358 719 0 0 0 1.490 2.823 2000 2001 2002 2003 4.492 450 91 Healthcare Services 26 24 0 160 67 83 30 13 0 59 61 359 730 124 240 297 276 185 247 Industrial/Energy 90 148 8 324 199 251 240 418 242 155 399 350 1.521 505 1.315 202 453 108 344 636 1.2010 NVCA Yearbook ed at some point prior to the IPO.204 6. The third and most comprehensive definition of venture-backed includes companies invested in by either venture capital or buyout funds and the investor may or may not have exited prior to the IPO.050 505 576 1.05 Venture-Backed IPOs by MoneyTree™ Industry Total Number of Companies Industry 1980 1981 1982 Software 4 10 6 Biotechnology 1 5 4 Telecommunications 2 4 2 Networking and Equipment 2 4 2 Consumer Products and Services 1 7 3 Electronics/Instrumentation 5 8 3 Medical Devices and Equipment 6 6 6 Industrial/Energy 11 21 3 Media and Entertainment 0 6 2 Computers and Peripherals 12 15 6 Healthcare Services 2 2 0 Semiconductors 8 5 0 Retailing/Distribution 0 1 0 Financial Services 3 0 1 IT Services 0 2 1 Business Products and Services 2 1 0 Other 0 0 0 Totals 59 97 39 1983 25 24 6 6 11 10 21 16 4 30 10 8 7 4 5 9 0 196 1984 9 4 6 4 6 4 5 12 1 10 6 5 6 0 3 2 0 83 1985 3 5 8 2 2 1 5 14 6 12 4 2 7 2 1 1 0 75 1986 1987 1988 1989 1990 1991 22 12 7 9 9 14 16 13 2 8 4 32 8 8 2 2 6 3 4 6 3 3 2 8 7 5 1 5 1 12 7 4 0 1 2 3 11 10 4 8 11 22 13 29 15 10 15 14 15 4 2 1 3 4 16 10 6 4 7 3 3 1 0 2 4 12 4 4 5 5 1 8 10 5 4 2 3 4 7 6 1 4 0 3 2 3 1 1 0 6 6 5 1 0 2 5 1 0 0 0 0 0 152 125 54 65 70 153 1992 18 29 8 12 11 6 35 21 8 14 8 3 7 8 3 3 1 195 1993 27 24 15 10 12 12 20 25 15 12 4 16 14 5 3 5 0 219 1994 20 13 11 14 5 8 20 22 10 8 7 9 3 10 3 3 0 166 1995 55 17 10 10 9 8 23 15 5 8 6 18 2 8 7 3 1 205 1996 59 31 18 10 7 8 44 22 10 11 6 1 11 14 12 8 0 272 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 27 19 69 55 5 4 4 8 6 6 22 6 6 49 4 4 7 25 14 17 9 7 39 41 1 0 2 8 4 3 6 7 26 16 1 0 0 2 0 4 6 7 7 4 4 1 3 3 1 1 2 1 1 4 1 1 0 0 0 0 14 3 1 15 8 3 1 15 8 10 10 3 1 10 6 1 0 2 1 3 8 3 35 16 0 3 1 10 4 6 7 3 5 7 0 1 0 1 1 0 6 5 7 3 6 1 1 1 1 0 6 0 5 14 2 0 3 6 8 2 5 6 16 5 0 0 1 1 1 1 4 1 8 2 3 2 4 7 3 2 3 5 27 16 0 1 0 2 1 2 2 2 16 8 0 0 2 3 4 0 1 0 0 0 0 0 0 0 0 0 138 78 269 265 41 22 29 94 57 57 2007 2008 2009 12 1 4 21 0 3 9 0 2 5 0 1 2 0 1 0 0 1 11 2 0 4 0 0 2 0 0 1 1 0 1 2 0 8 0 0 3 0 0 0 0 0 4 0 0 3 0 0 0 0 0 86 6 12 Thomson Reuters 51 . When the term venturebacked is used in this particular chapter.772 1.04 Venture-Backed IPOs by MoneyTree™ Industry Total Offering Size ($ Millions) Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Software 68 164 43 487 137 47 270 222 130 128 135 386 517 800 391 1.704 237 1.730 150 0 152 274 41 500 0 4.241 113 580 184 496 0 828 0 10.068 577 3.006 1. Figure 5.123 36 328 453 2.711 0 90 0 1.293 787 775 1.272 245 7 Business Products and Services 10 2 0 191 10 8 51 17 2 0 62 95 61 116 67 78 429 109 90 Other 0 0 0 0 0 0 54 0 0 0 0 0 10 0 0 7 0 141 0 Total 664 1.668 8.618 3.837 834 731 Telecommunications 11 28 27 104 34 39 73 361 15 41 207 162 234 737 264 599 1.117 2007 1.326 2008 2009 62 456 0 386 0 380 0 198 0 142 0 80 188 0 0 0 0 0 57 0 164 0 0 0 0 0 0 0 0 0 0 0 0 0 470 1.279 2.317 522 158 0 1.109 2.019 365 155 289 4.933 1.361 135 0 0 606 0 55 0 1.147 11.318 846 1.152 0 20.499 0 207 65 275 0 0 65 104 490 201 322 683 0 0 97 0 0 0 0 25.583 0 1.682 4.931 2.888 1.485 5.022 1.

2 90. Therefore.0 79.5 N/A 89.0 157.9 222683.9 Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Figure 5.2 371.1 39639.0 72.0 77.4 214.06 Average and Median Age in Months of Companies at IPO 2000 to 2009 Industry Telecommunications Computer Hardware and Services Computer Software Business/Financial Semiconductors and Electronics Biotechnology Healthcare Related Retailing and Media Industrial/Energy 2000 2001 Mean Median Mean Median 55.0 100.8 145.8 200.0 18.0 176.1 171.0 58.5 114.5 64.3 82.6 81.1 29460.2 174.0 84.0 109.8 398.0 49968.3 19034.7 53.0 45.5 217. buyouts.0 0.8 55.0 57. and other private equity financed companies.2 43507.4 54.3 103.0 94.5 121.5 103.6 595.0 106.0 56.3 63.6 6027.0 89.National Venture Capital Association Figure 5.5 4.1 3788.1 196.0 87.1 90.0 125.0 N/A N/A N/A N/A Figure 5.4 48.5 122.0 67.7 79.0 110.6 49.0 N/A Mean 102.5 108.5 111.1 80.4 149.3 17324.0 83.2 78.5 54.1 152.3 1656.3 109. 52 Thomson Reuters .0 122.0 223.0 132.0 643.0 110.7 854.7 N/A 2003 Median 102.4 86.0 87.0 124.0 120.0 2002 Median N/A 243.0 82.3 109.0 68.0 361.0 N/A 103.0 0.6 71.0 2008 2009 Mean Median Mean Median 127.9 4293.0 N/A 104.0 60.5 271.0 4.5 330.7 157.0 N/A 99.0 136.0 141.3 7521.0 180.6 9970.0 129.3 24031.5 164.8 86.2 73.5 N/A 145.4 9487.0 71.2 106.5 91.0 67.0 112.8 128.0 0.0 0.1 87.7 2007 Median 97.5 68.5 67.0 217.0 424.9 51730.0 94.3 82.4 115.3 7586.0 100.0 100.5 132.4 220. Note: Private Equity includes venture capital.4 65. not the total number of transactions.3 131.5 N/A 2004 2005 Mean Median Mean Median 85.5 N/A N/A 137.8 1579.4 3405.5 50.0 Mean 101.3 16106.5 96.0 N/A N/A N/A 127.1 74.3 23.0 120.1 76855.5 0.0 106.0 106.0 315.4 71.0 104.0 110.0 176.0 98.9 143.0 63.0 0.5 40.0 158.0 2006 Median 65.1 869.0 0.0 47.8 85.2 118.2 392.2 91.0 175.0 108.4 119.07 are included here.0 25386.6 1038.2 83.08 Private Equity-Backed Merger & Acquisitions by Year Number Total 1 1 1 3 5 8 17 21 31 37 28 33 91 118 136 160 193 268 325 349 375 407 360 327 389 449 513 568 502 333 Number Known 0 1 0 0 2 3 4 8 16 20 12 13 60 73 88 108 146 200 233 256 249 203 187 146 213 222 227 244 168 122 ($ Millions) Price Average 0.4 361.5 14605.0 95. mezzanine.5 111.9 195.3 105.5 321.5 98.2 40.8 7410.9 16770.0 98.3 42019.1 8531.5 9. transactions from Figure 5.6 94.0 55.5 481.6 106.0 107.0 0.0 95.7 68165.5 80.0 64.0 N/A N/A N/A 123.6 126.9 73.3 134.8 14068.5 131.0 109.2 90. not the total number of transactions.0 0.6 40.0 N/A 164.0 99.0 Mean N/A 243.7 16043.9 121780.1 68.1 37023.5 100.0 73.0 112.7 253.8 271.0 116.07 Venture-Backed Merger & Acquisitions by Year Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Number Total 1 0 1 2 4 6 11 13 16 18 20 17 75 71 100 97 118 163 212 240 316 355 320 285 349 349 376 379 349 270 Number Known 0 0 0 0 1 3 1 4 6 5 9 4 46 42 63 60 77 115 133 165 206 164 154 120 188 163 164 168 119 92 ($ Millions) Price Average 0.2 109.1 120.8 74.0 96.7 49.0 0.1 113.0 N/A N/A N/A 96.5 94.4 75.7 66.7 82.4 214.5 39.4 13775.0 Mean 87.5 126.1 99.0 0.6 91541.8 67.7 118.7 111.0 90.0 123.0 Average acquisition price is calculated by dividing total known acquisition proceeds by the number of transactions where the proceeds are known.0 0.0 81.6 113.8 73.0 29383.0 113.4 106. Average acquisition price is calculated by dividing total known acquisition proceeds by the number of transactions where the proceeds are known.1 62.8 116.5 77.6 65122.5 80.0 105.1 2544.5 325.0 145.1 254.9 96.0 489.3 67.3 102.7 2071.

2010 NVCA Yearbook Figure 5.10 Venture-Backed Acquisitions by MoneyTree™ Industry Number of Companies 1980 to 2009 Industry Software Media and Entertainment Telecommunications Medical Devices and Equipment Biotechnology Semiconductors Networking and Equipment IT Services Industrial/Energy Business Products and Services Financial Services Healthcare Services Computers and Peripherals Electronics/Instrumentation Retailing/Distribution Consumer Products and Services Other Total 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 0 0 0 0 2 0 3 1 3 2 5 2 12 14 30 26 22 45 63 57 99 88 117 103 118 124 137 125 128 99 0 0 0 0 0 0 0 1 0 0 0 1 1 5 2 4 9 14 10 20 32 48 19 13 30 26 26 41 31 26 0 0 0 0 0 0 1 1 0 2 1 1 2 4 5 4 7 12 16 20 29 34 37 30 24 26 29 29 22 21 0 0 0 0 0 1 1 2 2 2 2 0 12 4 8 9 7 14 9 11 7 15 11 8 23 25 21 23 14 20 0 0 0 0 0 0 1 0 1 1 1 2 6 3 5 9 11 10 12 13 14 17 11 15 22 25 30 24 20 19 0 0 0 0 0 1 0 0 0 1 1 3 1 2 3 5 1 1 9 8 16 12 13 12 14 11 15 17 24 18 0 0 0 0 0 0 0 1 0 0 0 0 2 8 10 8 13 5 9 20 21 14 15 18 24 21 25 15 24 18 0 0 0 0 0 0 1 0 2 1 0 0 1 0 0 4 6 6 11 15 17 28 33 26 27 22 19 28 21 13 0 0 0 1 2 1 1 2 2 3 3 3 8 6 12 8 6 13 19 19 11 13 10 7 9 12 10 19 18 12 0 0 0 0 0 0 0 1 1 0 1 1 1 3 1 0 3 3 7 10 14 21 17 14 14 14 19 28 13 9 0 0 0 0 0 0 0 0 0 0 0 0 6 3 3 4 5 5 7 11 8 17 11 9 11 7 13 10 6 5 0 0 0 0 0 0 1 1 1 2 1 1 5 0 9 9 4 5 14 6 10 8 12 4 6 14 9 5 4 4 0 0 1 0 0 2 1 2 1 2 4 1 10 10 6 4 10 10 12 9 7 5 1 9 9 9 8 4 5 3 1 0 0 0 0 0 0 1 2 2 0 1 4 3 2 1 4 7 4 2 4 9 3 3 5 3 5 2 5 1 0 0 0 0 0 1 0 0 0 0 1 0 2 3 2 1 2 5 3 8 14 11 6 8 5 2 6 5 4 1 0 0 0 1 0 0 1 0 1 0 0 1 2 3 2 1 8 8 7 11 11 14 4 6 7 7 4 3 9 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 1 0 0 1 1 0 1 1 0 1 0 1 2 4 6 11 13 16 18 20 17 75 71 100 97 118 163 212 240 316 355 320 285 349 349 376 379 349 270 Thomson Reuters 53 .09 Venture-Backed Acquisitions by MoneyTree™ Industry Total Transaction Values 1980 to 2009 ($ Million) Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 Medical Devices and Equipment 0 0 0 0 0 101 0 6 4 250 0 0 Biotechnology 0 0 0 0 0 0 0 0 0 0 0 68 Software 0 0 0 0 0 0 0 5 40 0 104 83 Telecommunications 0 0 0 0 0 0 0 0 0 0 0 0 Retailing/Distribution 0 0 0 0 0 0 0 0 0 0 0 0 Media and Entertainment 0 0 0 0 0 0 0 0 0 0 0 0 Networking and Equipment 0 0 0 0 0 0 0 0 0 0 0 0 Industrial/Energy 0 0 0 0 5 99 0 0 11 0 20 40 Semiconductors 0 0 0 0 0 71 0 0 0 15 0 0 Computers and Peripherals 0 0 0 0 0 0 0 0 0 47 79 0 IT Services 0 0 0 0 0 0 0 0 0 0 0 0 Business Products and Services 0 0 0 0 0 0 0 387 0 0 12 0 Healthcare Services 0 0 0 0 0 0 0 0 199 60 0 0 Financial Services 0 0 0 0 0 0 0 0 0 0 0 0 Electronics/Instrumentation 0 0 0 0 0 0 0 0 0 0 0 0 Other 0 0 0 0 0 0 0 0 0 0 0 0 Consumer Products and Services 0 0 0 0 0 0 87 0 227 0 0 10 Total 0 0 0 0 5 271 87 398 481 372 214 200 1992 436 61 274 4 35 0 0 180 0 16 0 0 94 1407 36 0 1 2545 1993 43 25 141 299 80 119 347 231 38 161 0 0 0 161 13 0 0 1656 1994 295 39 521 790 90 29 354 771 67 84 0 0 178 109 49 0 29 3406 1995 221 97 500 334 29 45 794 79 327 69 19 0 475 734 42 0 23 3788 1996 313 388 1022 419 2 2107 1033 1115 0 889 485 185 130 67 14 0 362 8531 1997 602 426 2104 1097 161 1387 213 244 8 394 80 207 94 34 115 0 245 7411 1998 157 172 2930 948 74 343 1206 350 468 674 706 368 166 463 60 0 404 9488 1999 498 780 10309 2249 955 10407 10518 1061 1269 388 676 1639 325 431 47 0 466 42019 2000 2001 398 611 1206 430 15755 3063 9474 1518 1086 8 2517 669 18902 5525 2066 1240 5353 1439 1374 357 2077 533 2218 245 286 262 701 489 4162 209 0 0 592 171 68166 16770 2002 565 115 1944 1257 3 324 751 113 563 59 603 142 855 211 20 0 61 7587 2003 525 604 2043 326 757 285 789 59 415 64 1011 154 84 99 20 0 285 7521 2004 1145 709 4305 1748 12 2260 526 613 740 756 1681 279 706 10 116 0 439 16044 2005 1156 2637 4754 1182 0 1370 1468 499 214 270 1729 252 789 530 72 0 403 17325 2006 1533 1779 4301 1420 305 4470 603 426 945 311 490 351 817 938 3 0 343 19035 2007 1989 6045 5201 1501 2285 1812 713 1719 1029 610 2395 2478 362 1040 83 195 0 29460 2008 584 1647 3691 1872 10 1428 609 514 787 49 707 463 27 988 117 0 284 13775 2009 3645 2331 1808 1337 930 921 844 660 523 400 373 294 0 0 0 0 0 14068 Figure 5.

transactions from Figure 5. mezzanine. transactions from Figure 5. Therefore.10 are included here. 54 Thomson Reuters .12 Private Equity-Backed Acquisitions by MoneyTree™ Industry Number of Companies 1980 to 2009 Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Software 0 0 0 0 2 0 3 3 4 5 7 5 14 20 33 30 31 54 75 74 106 91 117 108 121 128 146 142 142 105 Media and Entertainment 0 0 0 0 0 0 1 1 0 1 0 1 1 6 5 6 16 20 22 29 38 52 21 15 30 30 36 55 35 33 Industrial/Energy 0 0 0 2 3 2 3 3 6 4 4 8 11 18 18 23 17 35 39 35 21 24 23 20 20 52 60 73 74 29 Medical Devices and Equipment 0 0 0 0 0 2 1 3 2 5 3 0 14 8 12 13 15 23 17 21 11 18 13 10 24 31 25 30 17 26 Biotechnology 0 0 0 0 0 0 2 0 1 4 1 2 7 6 8 15 14 13 19 22 16 18 13 16 23 28 31 25 22 24 Telecommunications 0 0 0 0 0 0 1 1 1 2 1 1 4 4 10 8 10 15 19 25 34 35 41 32 27 26 32 36 28 23 Semiconductors 0 1 0 0 0 1 0 0 0 1 2 4 1 2 3 5 1 2 12 10 17 13 13 12 14 12 16 19 27 19 Networking and Equipment 0 0 0 0 0 0 0 2 0 2 0 0 2 10 11 11 16 7 12 27 21 14 16 19 24 25 27 18 25 19 IT Services 0 0 0 0 0 0 1 0 3 1 1 0 1 0 0 5 6 8 14 19 22 31 35 29 28 23 23 36 21 17 Financial Services 0 0 0 0 0 0 0 1 0 0 0 0 8 11 8 13 18 28 22 21 12 24 13 11 13 12 15 13 11 9 Business Products and Services 0 0 0 0 0 0 0 1 3 0 2 2 1 3 1 3 4 7 10 13 15 23 17 15 17 20 32 42 25 9 Consumer Products and Services 0 0 0 1 0 0 2 2 3 2 0 2 6 9 3 5 13 19 22 13 16 21 12 9 15 20 21 30 27 9 Healthcare Services 0 0 0 0 0 0 1 1 1 2 1 1 5 1 11 11 8 9 15 9 10 11 13 4 8 17 19 19 12 5 Computers and Peripherals 0 0 1 0 0 2 2 2 3 4 4 1 10 11 9 7 12 10 13 15 9 5 1 10 9 10 8 4 7 3 Retailing/Distribution 0 0 0 0 0 1 0 0 1 2 1 5 2 6 2 3 5 9 8 13 18 13 8 13 7 7 13 14 10 2 Electronics/Instrumentation 1 0 0 0 0 0 0 1 3 2 1 1 4 3 2 2 7 9 6 3 7 13 4 3 6 4 7 8 12 1 Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 1 0 1 3 4 2 4 7 0 Total 1 1 1 3 5 8 17 21 31 37 28 33 91 118 136 160 193 268 325 349 375 407 360 327 389 449 513 568 502 333 Note: Private Equity includes venture capital. buyouts. and other private equity financed companies.National Venture Capital Association Figure 5. Figure 5. Therefore. mezzanine.09 are included here. and other private equity financed companies. buyouts.11 Private Equity-Backed Acquisitions by MoneyTree™ Industry Total Transaction Values 1980 to 2009 ($ Million) Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Telecommunications 0 0 0 0 0 0 0 0 262 0 0 0 81 299 1376 Biotechnology 0 0 0 0 0 0 0 0 0 809 0 68 228 1057 351 Medical Devices and Equipment 0 0 0 0 0 101 0 6 4 344 167 0 1311 368 358 Software 0 0 0 0 0 0 0 24 56 443 104 135 696 580 911 Industrial/Energy 0 0 0 0 644 99 63 25 302 75 20 130 282 953 2012 Media and Entertainment 0 0 0 0 0 0 0 0 0 32 0 0 0 143 122 Networking and Equipment 0 0 0 0 0 0 0 0 0 15 0 0 0 675 1529 Consumer Products and Services 0 0 0 0 0 0 132 95 227 0 0 10 90 549 29 Retailing/Distribution 0 0 0 0 0 0 0 0 0 212 0 619 35 357 90 Healthcare Services 0 0 0 0 0 0 0 0 199 60 0 0 94 103 1053 Semiconductors 0 218 0 0 0 71 0 0 0 15 100 70 0 38 67 Financial Services 0 0 0 0 0 0 0 317 0 0 0 0 1424 732 1733 Computers and Peripherals 0 0 0 0 0 0 19 0 242 67 79 0 16 161 289 IT Services 0 0 0 0 0 0 0 0 7 0 0 0 0 0 0 Business Products and Services 0 0 0 0 0 0 0 387 200 0 12 7 0 0 0 Electronics/Instrumentation 0 0 0 0 0 0 0 0 81 0 115 0 36 13 49 Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 0 218 0 0 644 271 215 854 1580 2071 596 1039 4293 6028 9970 1995 2299 794 614 1287 2625 405 1482 573 472 951 327 2759 264 19 1192 43 0 16106 1996 3155 999 1199 5958 2438 3650 6842 1305 1371 1559 0 6561 951 485 370 181 0 37024 1997 3399 583 4980 6479 8075 3809 1355 2129 7810 5247 289 18410 394 357 1383 426 0 65123 1998 3884 1918 2235 4574 3403 12959 4278 2506 5616 789 792 44588 730 1075 1999 197 0 91541 1999 65791 4755 3208 39945 7844 23978 44539 549 3877 610 4705 16882 1554 2164 2200 81 0 222683 2000 16753 2101 481 22068 3022 6733 18902 1375 2636 286 5353 1505 2569 31248 2258 4491 0 121780 2001 7670 540 993 3258 2978 738 5525 748 2408 602 1564 3565 357 866 245 7582 0 39640 2002 7116 2540 1011 1944 3822 1112 751 1540 178 1020 563 1538 59 670 142 27 0 24032 2003 326 660 548 4175 1634 285 877 1432 1636 84 415 253 64 1809 196 20 190 14605 2004 2165 812 1295 4631 6014 2260 526 1101 703 706 740 10 756 1848 1269 221 330 25386 2005 1182 4855 3063 5027 10523 5250 2346 4378 0 1717 214 1005 270 2079 486 72 1039 43507 2006 2622 1779 2202 5337 16750 9239 819 1559 910 2398 1188 938 311 1031 2338 3 545 49968 2007 4936 6083 4231 6176 8957 7902 947 17394 4745 1801 1029 1370 610 2633 3458 3689 890 76855 2008 2222 1764 716 4852 8404 1650 782 770 973 718 787 1813 769 707 1663 472 324 29383 2009 29567 6848 3919 2570 1622 1281 1219 1072 955 570 550 490 400 373 294 0 0 51730 Note: Private Equity includes venture capital.

An acquisition where deal price is less than the total venture investment (“<TVI”) clearly did not result in a good return. Each deal is classified as a ratio of company acquisition (exit) price to total venture investment from all rounds. Four times the investment to 10 times the investment can be a good outcome. in Registration vs. Number of Venture-Backed IPOs Year 2003 2004 2005 2006 2007 2008 2009 *As of Year-End # of Cos in Registration* 31 57 16 36 31 20 23 # of IPOs 29 94 57 57 86 6 12 Thomson Reuters 55 . This chart compares the number of deals in each category.2010 NVCA Yearbook Figure 5. An acquisition for more than 10 times venture investment is usually a nice outcome.13 Venture-Backed Merger & Acquisitions by Year Year 2003 2004 2005 2006 2007 2008 2009 Relationship Between Transaction Values vs. Cumulative Total Venture Investment < TVI 1x-4x TVI 4x-10x TVI >10x TVI 41% 37% 15% 7% 34% 32% 22% 11% 28% 39% 21% 12% 26% 37% 21% 16% 22% 32% 25% 21% 25% 31% 25% 18% 38% 20% 27% 15% This chart is prepared by analyzing all deals where total venture investment and acquisition price are confirmed.14 Venture-Backed IPOs Cos. Figure 5.

National Venture Capital Association This page intentionally left blank. 56 Thomson Reuters .

real estate.000 with a spouse.000 individually or $300. Manager returns and benchmark returns are measured net of the risk-free rate. “D” and so on.Appendix A: Glossary “A” round – a financing event whereby angel groups and / or venture capitalists become involved in a fast growth company that was previously financed by founders and their friends and families. The current criteria for a natural person are: $1 million net worth or annual income exceeding $200. hedge funds. The most commonly used adjustment provides partial protection and is called Weighted Average. thereby reducing or Anti-dilution – a contract clause that protects an investor from a substantial reduction in percentage ownership in a company due to the issuance by the Thomson Reuters 57 . investors and experts who have a fiduciary responsibility for the well being and proper guidance of a corporation. general partners and executive officers of the issuer are considered to be accredited investors. such as LIBOR plus 400 basis points (or. which may or may not result in changes for venture investors. company of additional shares to other entities. manager returns are adjusted for the risk of the manager’s portfolio relative to the risk of the benchmark index. typically composed of managers. Alpha is a proxy for manager skill. Beta – a measure of volatility of a public stock relative to an index or a composite of all stocks in a market or geographical region. Alpha – a term derived from statistics and finance theory that is used to describe the return produced by a fund manager in excess of the return of a benchmark index. college endowments and other relatively large institutional investors typically allocate a certain percentage of their investments to alternative assets with an objective to diversify their portfolios. Book – see Private placement memorandum. For example. Accredited investor – a person or legal entity. Beta product – a product that is being tested by potential customers prior to being formally launched into the marketplace. Typically. A beta of more than one indicates the stock has higher volatility than the index (or composite) and a beta of one indicates volatility equivalent to the index (or composite). Pension plans. but excludes publicly traded securities.5% if the index value changes by 1%. that meets certain net worth and income qualifications and is considered to be sufficiently sophisticated to make investment decisions in private offerings. The Securities and Exchange Commission has proposed revisions to the accredited investor qualifying rules. 50 basis points equals one half of one percent. For example. and oil and gas. such as a company or trust fund. Board of directors – a group of individuals. as the experts say. Usually angels invest less than $1 million per startup. “B” round – a financing event whereby investors such as venture capitalists and organized angel groups are sufficiently interested in a company to provide additional funds after the “A” round of financing. the S&P500 index is used in calculating the beta of a stock. Bootstrapping – the actions of a startup to minimize expenses and build cash flow. “beeps”). Alternative asset class – a class of investments that includes venture capital. In addition. Banks quote variable loan rates in terms of an index plus a margin and the margin is often described in basis points.5 will change by 1. Angel – a wealthy individual that invests in companies in relatively early stages of development. Regulation D of the Securities Act of 1933 exempts accredited investors from protection of the Securities Act. Basis point (“bp”) – one one-hundredth (1/100) of a percentage unit. leverage buyouts. the price of a stock with a beta of 1. The board is elected by the shareholders. Subsequent rounds are called “C”. Directors. The mechanism for making an adjustment that maintains the same percentage ownership is called a Full Ratchet.

the bridge lender has the right to convert the note to preferred stock at a price that is a 20% to 25% discount from the price of the preferred stock in the next financing round. Investor A’s preferred stock is repriced to a weighted average of investor A’s price and investor B’s price. Burn rate – the rate at which a startup with little or no revenue uses available cash to cover expenses.National Venture Capital Association eliminating the need for outside investors. warrants. pany by an outside investor (in a leveraged buyout) or a management team (in a management buyout). and subordinated debt. warrants and options) in the denominator of the formula for determining the new weighted average price. Buy-sell agreement – a contract that sets forth the conditions under which a shareholder must first offer his or her shares for sale to the other shareholders before being allowed to sell to entities outside the company. preferred stock. while many venture capital funds have become so large that investments in this size range are difficult. 58 Thomson Reuters . Capital Asset Pricing Model (CAPM) – a method of estimating the cost of equity capital of a company.the difficulty faced by some entrepreneurs in trying to raise between $2 million and $5 million. options. In venture capital. marketing. A broadbased anti-dilution method uses all common stock outstanding on a fully diluted basis (including all convertible securities. Also. Capital call – when a private equity fund manager (usually a “general partner” in a partnership) requests that an investor in the fund (a “limited partner”) provide additional capital. which are taxed at a lower rate than ordinary income. solution. See Mezzanine and Wipeout bridge. operations. Usually expressed on a monthly or weekly basis. family and angel investors are typically good sources for financing rounds of less than $2 million. such as common stock. For most venture capital funds fewer than 10 of every 100 business plans received eventually receive funding. competition. the purchase of a controlling interest of a com- Capitalization table – a table showing the owners of a company’s shares and their ownership percentages as well as the debt holders. A C corporation is a stand-alone legal entity so it offers some protection to its owners. Typically. Bp – see Basis point. A business plan typically includes the following sections: executive summary. technology. Capital gains – a tax classification of investment earnings resulting from the purchase and sale of assets. Business Development Company (BDC) – a publicly traded company that invests in private companies and is required by law to provide meaningful support and assistance to its portfolio companies. market need.A weighted average anti-dilution method adjusts downward the price per share of the preferred stock of investor A due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. managers and investors from liability resulting from its actions. a company’s investors and founders have earnings classified as long term capital gains (held for a year or longer). Broad-based weighted average anti-dilution . It also lists the forms of ownership. Usually a limited partner will agree to a maximum investment amount and the general partner will make a series of capital calls over time to the limited partner as opportunities arise to finance startups and buyouts. C Corporation – an ownership structure that allows any number of individuals or companies to own shares. management. The cost of equity capital is equal to the return of a risk-free investment plus a premium that reflects the risk of the company’s equity. Business plan – a document that describes a new concept for a business opportunity. a bridge is usually a short term note (6 to 12 months) that converts to preferred stock. Bridge financing – temporary funding that will eventually be replaced by permanent capital from equity investors or debt lenders. exit strategy. See Narrow-based weighted average anti-dilution . Buyout – a sector of the private equity industry. Friends. and financials (including cash flow projections). senior debt. Typically. Capital gap .

Common stock – a type of security representing ownership rights in a company. preferred stock has certain rights that common stock doesn’t have. See Capital call. a telecommunications equipment manufacturer whose market value is 2 times revenues can be used to estimate the value of a similar and relatively new company with a new product in the same industry. Convertible preferred is the most common tool for private equity funds to invest in companies. Collateral – hard assets of the borrower.2010 NVCA Yearbook Capital stock – a description of stock that applies when there is only one class of shares. In the event of a liquida- Commitment – an obligation. Conversion – the right of an investor or lender to force a company to replace the investor’s preferred shares or the lender’s debt with common shares at a preset conversion ratio. typically the maximum amount that a limited partner agrees to invest in a fund. although some successful firms receive 25%-30%. company founders. Typically. The general partner will typically receive a 20% carried interest. The clawback gives limited partners the right to reclaim a portion of disbursements to a general partner for profitable investments based on significant losses from later investments in a portfolio. Convertible preferred stock – a type of stock that gives an owner the right to convert to common shares of stock. bondholders and preferred stockholders take precedence over common stockholders. the claims of secured and unsecured creditors. See Preferred stock. For example. Also known as “carry” or “promote. a fund must return the capital given to it by limited partners plus any preferential rate of return before the general partner can share in the profits of the fund. Closing – the conclusion of a financing round whereby all necessary legal documents are signed and capital has been transferred. Comparable – a publicly traded company with similar characteristics to a private company that is being valued. See Participating preferred stock. convertible preferred stock automatically converts to common stock if the company makes an initial public offering (IPO). Typically. Carried interest — the share in the capital gains of a venture capital fund which is allocated to the General Partner. Co-sale right – a contractual right of an investor to sell some of the investor’s stock along with the founder’s or majority shareholder’s stock if either the founder or majority shareholder elects to sell stock to a third-party. Usually. This class is known as “common stock”.” Clawback – a clause in the agreement between the general partner and the limited partners of a private equity fund. usually involving a leveraged buyout transaction. Control – the authority of an individual or entity that owns more than 50% of equity in a company or owns the largest block of shares compared to other shareholders.” Co-investment –the direct investment by a limited partner alongside a general partner in a portfolio company. Convertible debt – a loan which allows the lender to exchange the debt for common shares in a company at a preset conversion ratio. management and employees own common stock while investors own preferred stock. such as decisionmaking management control. Club deal – the act of investing by two or more entities in the same target company. for which a lender has a legal interest until a loan obligation is fully paid off. such as real estate or equipment. a promised return on investment (dividend). Capped participating preferred stock – preferred stock whose participating feature is limited so that an investor cannot receive more than a specified amount. tion of the company. Usually. Thomson Reuters 59 . Also known as a “convertible note. A conversion feature was first used in railroad bonds in the 1800’s. See Liquidity discount. Consolidation – see Rollup. or senior priority in receiving proceeds from a sale or liquidation of the company. Also known as Tag-along right.

Coverage ratio – describes a company’s ability to pay debt from cash flow or profits. Defined benefit plan managers can invest in private equity funds. Defined benefit plan – a company retirement plan in which the benefits are typically based on an employee’s salary and number of years worked. company management may agree to a negative covenant.A transaction in which the buyer purchases shares of an operating company from an existing seller. Dilution – the reduction in the ownership percentage of current investors. Fixed benefits are paid after the employee retires. and compensation agreements. client contracts. The employer may also contribute to the employee’s plan. Cost of revenue – the expenses generated by the core operations of a company. Typical measures are EBITDA/Interest. Deal flow – a measure of the number of potential investments that a fund reviews in any given period. This information may include detailed financial statements. Distressed debt – the bonds of a company that is either in or approaching bankruptcy. The benefits depend solely on the amount of money made from investing the employee’s contributions. For example. Defined contribution plan capital cannot be invested in private equity funds. the employee bears the investment risk. Defined contribution plan – a company retirement plan in which the employee elects to contribute some portion of his or her salary into a retirement plan. Disbursement – an investment by a fund in a company. Demand rights give an investor the right to force a startup to register its shares with the SEC and prepare for a public sale of stock (IPO). the transacted interest is a primary issue purchase directly into an operating company. Buyers are often funds that specialize in such investments. whereby it promises not to incur additional debt. property leases. Current ratio – the ratio of current assets to current liabilities. Some private equity funds specialize in purchasing such debt at deep discounts with the expectation of exerting 60 Thomson Reuters . Discount rate – the interest rate used to determine the present value of a series of future cash flows. Direct secondary transaction . intellectual property. (EBITDA minus Capital Expenditures)/Interest. founders and employees caused by the issuance of new shares to new investors. The employer bears the investment risk and is committed to pro- Discounted cash flow (DCF) – a valuation methodology whereby the present value of all future cash flows expected from a company is calculated.National Venture Capital Association Cost of capital – see Weighted average cost of capital. Covenant – a legal promise to do or not do a certain thing. and EBIT/Interest. Data room – a specific location where potential buyers / investors can review confidential information about a target company. The penalties for violation of a covenant may vary from repairing the mistake to losing control of the company. Cram down round – a financing event upon which new investors with substantial capital are able to demand and receive contractual terms that effectively cause the issuance of sufficient new shares by the startup company to significantly reduce (“dilute”) the ownership percentage of previous investors. Cumulative dividends – the owner of preferred stock with cumulative dividends has the right to receive accrued (previously unpaid) dividends in full before dividends are paid to any other classes of stock. viding the benefits to the employee. in a financing arrangement. Dilution protection – see Anti-dilution and Full ratchet. With this type of plan. Demand rights – a type of registration right. Sellers are often venture capitalists selling their ownership stake in a portfolio company. such as a 401(k) or 403(b). While the transaction is a secondary sale of shares.

usually based on financial performance metrics such as revenue or net income. by an entrepreneur to a potential investor about an investment opportunity. Typically. the options are to merge. Earnings before interest. of private and public companies’ value as a multiple of EBIT. One possible valuation methodology is based on a comparison Exit strategy – the plan for generating profits for owners and investors of a company. Typically. depreciation and amortization (EBITDA) – a measurement of the cash flow of a company. preferred shares or unit interests. Due diligence – the investigatory process performed by investors to assess the viability of a potential investment and the accuracy of the information provided by the target company. a company in early stage will have a core management team and a proven concept or product. minus excess cash. Dividends – payments made by a company to the owners of certain securities. such as the sale of the company. Drag-along rights – the contractual right of an investor in a company to force all other investors to agree to a specific action. if any shares remain. be acquired or make an initial public offering (IPO). Employee Stock Ownership Program (ESOP) – a plan established by a company to reserve shares for employees. Distribution – the transfer of cash or securities to a limited partner resulting from the sale. but no positive cash flow. Enterprise Value (EV) – the sum of the market values of the common stock and long term debt of a company. then. An alternative is to recapitalize (releverage the company and then pay dividends to shareholders). Equity – the ownership structure of a company represented by common shares. ESOP – see Employee Stock Ownership Program.2010 NVCA Yearbook influence in the restructuring of the company and then selling the debt once the company has meaningfully recovered. and so on until all the shares are committed. Earnings before interest and taxes (EBIT) – a measurement of the operating profit of a company. Dutch auction – a method of conducting an IPO whereby newly issued shares of stock are committed to the highest bidder. Earn out – an arrangement in which sellers of a business receive additional future payments. Early stage – the state of a company after the seed (formation) stage but before middle stage (generating revenues). Elevator pitch – a concise presentation. Typically. by approval of the board of directors. lasting only a few minutes (an elevator ride). One possible valuation methodology is based on a comparison of private and public companies’ value as a multiple of EBITDA. Entrepreneur – an individual who starts his or her own business. taxes. to owners of preferred stock. Entrepreneurship – the application of innovative leadership to limited resources in order to create exceptional value. Evergreen fund – a fund that reinvests its profits in order to ensure the availability of capital for future investments. Equity = Assets – Liabilities. to the next highest bidder. Drawdown schedule – an estimate of the gradual transfer of committed investment funds from the limited partners of a private equity fund to the general partners. liquidation or IPO of one or more portfolio companies in which a general partner chose to invest. Thomson Reuters 61 . Down round – a round of financing whereby the valuation of the company is lower than the value determined by investors in an earlier round. Note that the price per share paid by all buyers is the price commitment of the buyer of the last share. dividends are paid quarterly.

but before any interest payments on debt are made. directors. Free cash flow to equity (FCFE) – the cash flow available after operating expenses.National Venture Capital Association Expansion stage – the stage of a company characterized by a complete management team and a substantial increase in revenues. Going-private transaction – when a public compa- 62 Thomson Reuters . with the venture firm as the GP and limited partners (LPs) being the institutional and high net worth investors that provide most of the capital in the partnership. First refusal – the right of a privately owned company to purchase any shares that employees would like to sell. Free cash flow to the firm (FCFF) – the operating cash flow available after operating expenses. The GP earns a management fee and a percentage of gains (see Carried interest). the discount rate used is the cost of equity. taxes. a GP for hire refers to the professional investor who may be hired by a purchasing firm to manage the new fund created from the orphaned assets purchased. This has received much recent attention as the Financial Accounting Standards Board (FASB) has issued definitive guidance (FAS 157) on this long standing principle. Fair value – a financial reporting principle for valuing assets and liabilities. In past cases. In a discounted cash flow model to determine the enterprise value of a firm using FCFF. portfolio companies in venture capital fund portfolios. for example. Founders stock – nominally priced common stock issued to founders. Typically. Gatekeepers – intermediaries which endowments. Fully diluted basis – a methodology for calculating any per share ratios whereby the denominator is the total number of shares issued by the company on the assumption that all warrants and options are exercised and preferred stock. net principal repayments. GP – see General partner. the GP has often expanded its role to fundraise for and run new funds aside from the initial fund. pension funds and other institutional investors use as advisors regarding private equity investments. and consultants. reinvestment needs and changes in working capital.In a spin-out or a synthetic secondary. Fairness opinion – a letter issued by an investment bank that charges a fee to assess the fairness of a negotiated price for a merger or acquisition. General partner (GP) – a class of partner in a partnership. individual investors and relatively small institutional investors participate in a fund-of-funds to minimize their portfolio management efforts. company management and employees who own a fixed amount of common shares suffer significant dilution. reinvestment needs and changes in working capital. In a discounted cash flow model to determine the value of the equity of a firm using FCFE. Friends and family financing – capital provided by the friends and family of founders of an early stage company. FAS 157 – an an accounting standard developed by the Financial Accounting Standards Board (FASB) regarding the application of a fair value principle. Usually as a result of the implementation of a ratchet. interest payments on debt. The general partner retains liability for the actions of the partnership. Founders should be careful not to create an ownership structure that may hinder the participation of professional investors once the company begins to achieve success. venture capital and buyout funds have been structured as limited partnerships. Investor A’s preferred stock is repriced to match the price of investor B’s preferred stock. preferred stock dividends. GP for hire . the discount rate used is the weighted average cost of capital (WACC). Historically. taxes. employees. Fund-of-funds – a fund created to invest in private equity funds. Full ratchet – an anti-dilution protection mechanism whereby the price per share of the preferred stock of investor A is adjusted downward due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. See Narrow-based weighted average anti-dilution and Broad-based weighted average anti-dilution. officers.

New public offerings must be registered with the Securities and Exchange Commission. In-kind distribution – a distribution to limited partners of a private equity fund that is in the form of publicly trades shares rather than cash.e. allowing it to become a corporation. Entrepreneurs often develop business plans with hockey stick charts to impress potential investors. This usually occurs after a financing round whereby one or more investors receive a relatively large percentage of the company. Moody’s Ba2 or below). High yield debt – debt issued via public offering or public placement (Rule 144A) that is rated below investment grade by S&P or Moody’s. The lower rating is indicative of higher risk of default. and become owned by management. cash or some other financial or operational measure that increases dramatically at some point in the future. take short positions in securities. An inside round raises liability issues since the valuation of the company has no third party veri- Initial public offering (IPO) – the first offering of stock by a company to the public. or use a variety of derivative instruments in order to achieve a return that is relatively less correlated to the performance of typical indices (such as the S&P 500) than traditional long-only funds. and therefore the debt carries a higher coupon or yield than investment grade debt. Hedge fund managers are typically compensated based on assets under management as well as fund performance. Also known as “middle stage. Holding period – amount of time an investment remains in a portfolio. and select private investors. Inside round – a round of financing in which the investors are the same investors as the previous round. Also referred to as Junk bonds or Subinvestment grade debt. Incubator – a company or facility designed to host startup companies. Incorporation – the process by which a business receives a state charter. managers and employees would suffer the financial and emotional consequences of dilution. Many corporations choose Delaware because its laws are business-friendly and up to date. Hot money – capital from investors that have no tolerance for lack of results by the investment manager and move quickly to withdraw at the first sign of trouble.” Grossing up – an adjustment of an option pool for management and employees of a company which increases the number of shares available over time. Without a grossing up. Thomson Reuters 63 . Hedge fund – an investment fund that has the ability to use leverage. customers. Indenture – the terms and conditions between a bond issuer and bond buyers. delist from all stock exchanges. Hurdle rate – a minimum rate of return required before an investor will make an investment. Hockey stick – the general shape and form of a chart showing revenue. Hart-Scott-Rodino Act – a law requiring entities that acquire certain amounts of stock or assets of a company to inform the Federal Trade Commission and the Department of Justice and to observe a waiting period before completing the transaction. employees. Growth stage – the state of a company when it has received one or more rounds of financing and is generating revenue from its product or service. Incubators help startups grow while controlling costs by offering networks of contacts and shared backoffice resources. thereby potentially affecting the overall performance of the company.2010 NVCA Yearbook ny chooses to pay off all public investors. Golden handcuffs – financial incentives that discourage founders and / or important employees from leaving a company before a predetermined date or important milestone. See Qualified IPO. This means that the debt is rated below the top four rating categories (i. An IPO is one of the methods that a startup that has achieved significant success can use to raise additional capital for further growth. Hot issue – stock in an initial public offering that is in high demand. S&P BB+.

64 Thomson Reuters . thereby determining the valuation of the company. but as investments produce results the cash flow or returns trend upward. build operations and increase revenues.I. Interest coverage ratio – earnings before interest and taxes (EBIT) divided by interest expense.B. This is often done when the company is performing well financially and the debt markets are expanding. Institutional investor – professional entities that invest capital on behalf of companies or individuals. The risk is that the increase in assets and revenues does not generate sufficient net income and cash flow to pay the interest costs of the debt. Typically. Internal rate of return (IRR) – the interest rate at which a certain amount of capital today would have to be invested in order to grow to a specific value at a specific time in the future. Also known as a “Term Sheet”. Lead investor – the venture capital investor that makes the largest investment in a financing round and manages the documentation and closing of that round. insurance companies and university endowments. cash flow or returns are negative due to investments. J curve – a concept that during the first few years of a private equity fund. a company is attempting to achieve results faster than if it only used its cash available from pre-leverage operations.O. By signing this document. Leveraged buyout (LBO) – the purchase of a company or a business unit of a company by an outside investor using mostly borrowed capital. liquidity event such as an IPO or buyout. Later stage – the state of a company that has proven its concept. LBO – see Leveraged buyout. losses. Letter of intent – a document confirming the intent of an investor to participate in a round of financing for a company. and is approaching cash flow break even or positive net income. less risky ventures is lower than in earlier stage ventures. Typical leverage ratios include Total Debt / EBITDA. Leverage ratios – measurements of a company’s debt as a multiple of cash flow. This is a key ratio used by lenders to assess the ability of a company to produce sufficient cash to pay its debt obligation. L. Examples are: pension plans. the subject company agrees to begin the legal and due diligence process prior to the closing of the transaction. The lead investor sets the price per share of the financing round. and trademarks. Investment thesis / Investment philosophy – the fundamental ideas which determine the types of investments that an investment fund will choose in order to achieve its financial goals.National Venture Capital Association fication in the form of an outside investor. Total Debt / (EBITDA minus Capital Expenditures).R. a later stage company is about 6 to 12 months away from a Leveraged recapitalization – the reorganization of a company’s capital structure resulting in more debt added to the balance sheet. A graph of cash flow or returns versus time would then resemble the letter “J”. the terms of the inside round may be considered self-dealing if they are onerous to any set of shareholders or if the investors give themselves additional preferential rights. achieved significant revenues compared to its competition. IPO – see Initial public offering. The rate of return for venture capitalists that invest in later stage. and Seniore Debt / EBITDA. writings and images that are intangible but often protected by law via patents. Leverage – the use of debt to acquire assets. In addition. Private equity funds can recapitalize a portfolio company and then direct the company to issue a one-time dividend to equity investors. Intellectual property (IP) – knowledge. and expenses. By using debt. – see The London Interbank Offered Rate. IRR – see Internal rate of return. Issuer – the company that chooses to distribute a portion of its stock to the public. copyrights. techniques.

London Interbank Offered Rate (L. For example.O. while the limited partners receive income. 2% is typical. For example. mezzanine debt has lower priority than senior debt but usually has a higher interest rate and often includes warrants. Management fee – a fee charged to the limited partners in a fund by the general partner. The general partner is liable for the actions of the partnership while the limited partners are generally protected from legal actions and any losses beyond their original investment. use or sell an invention under certain circumstances and for compensation. Limited partner (LP) – an investor in a limited partnership.75% to 3% of capital under management. rather its owners pay taxes on their proportion of the LLC profits at their individual tax rates. Mezzanine – a layer of financing that has intermediate priority (seniority) in the capital structure of a company. Often an MBO is conducted in partnership with a buyout fund. Liquidity event – a transaction whereby owners of a significant portion of the shares of a private company sell their shares in exchange for cash or shares in another. By avoiding large sales of its stock. three months. bondholders and preferred stockholders take precedence over common stockholders. Management rights – the rights often required by a venture capitalist as part of the agreement to invest in a company. management and employees often agree not to sell their shares for a specific time period after an IPO. LIBOR is a relatively volatile rate and is typically quoted in maturities of one month. Liquidity discount – a decrease in the value of a private company compared to the value of a similar but publicly traded company. MBO – see Management buyout. Since an investor in a private company cannot readily sell his or her investment. In a liquidation. The general partner manages the investments and is liable for the actions of the partnership while the limited partners are generally protected from legal actions and any losses beyond their original investment. Liquidation preference – the contractual right of an investor to priority in receiving the proceeds from the liquidation of a company. depending on the type and size of fund. In venture Thomson Reuters 65 .R. the claims of secured and unsecured creditors. An LLC itself does not pay taxes. a venture capital investor with a “2x liquidation preference” has the right to receive two times its original investment upon liquidation. usually 6 to 12 months. Lock-up agreement – investors. attend board meetings and review information about the company’s financial situation. Management fees in a private equity fund usually range from 0.B. The general partner collects a management fee and earns a percentage of capital gains (see Carried interest). For example. The venture capitalist has the right to consult with management on key operational issues. capital gains and tax benefits.2010 NVCA Yearbook License – a contract in which a patent owner grants to a company the right to make. the company has time to build interest among potential buyers of its shares. The limited partner receives income.I. Liquidation – the sale of a company. Management buyout (MBO) – a leveraged buyout controlled by the members of the management team of a company or a division.) – the average rate charged by large banks in London for loans to each other. usually larger company. six months and one year. This may occur in the context of an acquisition by a larger company or in the context of selling off all assets prior to cessation of operations (Chapter 7 bankruptcy). Limited partnership – a legal entity composed of a general partner and various limited partners. capital gains and tax benefits. the shares in the private company must be valued less than a comparable public company. Market capitalization – the value of a publicly traded company as determined by multiplying the number of shares outstanding by the current price per share. an IPO is a liquidity event. For venture capital funds. Limited liability company (LLC) – an ownership structure designed to limit the founders’ losses to the amount of their investment.

A weighted average anti-dilution method adjusts downward the price per share of the preferred stock of investor A due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. Narrow-based weighted average anti-dilution – a type of anti-dilution mechanism. Operating cash flow – the cash flow produced from the operation of a business.National Venture Capital Association capital. Non-cumulative dividends – dividends that are payable to owners of preferred stock at a specific point in time only if there is sufficient cash flow available after all company expenses have been paid. No-shop clause – a section of an agreement to purchase a company whereby the seller agrees not to market the company to other potential buyers for a specific time period. If cash flow is insufficient. which in essence ends any preferential rights of an investor. the owners of the preferred stock will not receive the dividends owed for that time period and will have to wait until the board of directors declares another set of dividends. NDA – see Non-disclosure agreement. stock or other assets. Multiples – a valuation methodology that compares public and private companies in terms of a ratio of value to an operations figure such as revenue or net income. Before the startup issues its IPO. Option pool – a group of options set aside for long term. clients. then it is reasonable to assume that a startup computer hardware company that is growing fast has the potential to achieve a valuation of 2 times its revenues. Non-interference – an agreement often signed by employees and management whereby they agree not to interfere with the company’s relationships with employees. Offering memorandum – a legal document that provides details of an investment to potential investors. See Bridge financing. A narrow-based anti-dilution uses only common stock outstanding in the denominator of the formula for determining the new weighted average price. within a certain time period after termination of employment. Non-disclosure agreement (NDA) – an agreement issued by entrepreneurs to protect the privacy of their ideas when disclosing those ideas to third parties. a venture capitalist may agree to have registration rights that are pari passu with the other investors in a financing round. See Private placement memorandum. convertible preferred stock. The most onerous version of “pay to play” is automatic conversion to common shares. suppliers and sub-contractors Participating dividends – the right of holders of certain preferred stock to receive dividends and participate in additional distributions of cash. OID – see Original issue discount. not from investing activities (such as selling assets) or financing activities (such as issuing debt). Non-solicitation – an agreement often signed by employees and management whereby they agree not to solicit other employees of the company regarding job opportunities. warrants and options. Outstanding shares – the total amount of common shares of a company. such as the right to influence key management decisions. a mezzanine round is generally the round of financing that is designed to help a company have enough resources to reach an IPO. it will likely be valued at less than 2 times revenue because of the lack of liquidity of its shares. if several publicly traded computer hardware companies are valued at approximately 2 times revenues. For example. See Liquidity discount. Calculated as net operating income (NOI) plus depreciation. not including treasury stock. Pari passu – a legal term referring to the equal treatment of two or more parties in an agreement. Pay to play – a clause in a financing agreement whereby any investor that does not participate in a future round agrees to suffer significant dilution compared to other investors. 66 Thomson Reuters . phased compensation to management and employees. For example. Investor A’s preferred stock is repriced to a weighed average of investor A’s price and investor B’s price.

a private equity fund will issue a PPM when it is raising capital from institution- Private placement – the sale of a security directly to a limited number of institutional and qualified individual investors. Preemptive rights – the rights of shareholders to maintain their percentage ownership of a company Private investment in public equity (PIPEs) – investments by a private equity fund in a publicly traded company. Portfolio company – a company that has received an investment from a private equity fund. usually defined as being made up of venture capital funds and buyout funds. oil and gas. Private equity – equity investments in non-public companies. an ad hoc group of individuals and firms involved in the private equity industry for the purpose of establishing valuation and reporting guidelines. Primary shares – shares sold by a corporation (not by individual shareholders).2010 NVCA Yearbook Participating preferred stock – a unit of ownership composed of preferred stock and common stock. Post-money valuation – the valuation of a company including the capital provided by the current round of financing. and other such partnerships are sometimes included in the definition. by buying shares sold by the company in future financing rounds. PPM – see Private placement memorandum. a private placement avoids registration with the Securities and Exchange Commission. For example. Sometimes a private equity fund will hire a placement agent so the fund partners can focus on making and managing investments in companies rather than on raising capital. usually at a discount and in the form of preferred stock. The preferred stock entitles the owner to receive a predetermined sum of cash (usually the original investment plus accrued dividends) if the company is sold or has an IPO. Real estate. a venture capitalist may invest $5 million in a company valued at $2 million pre-money. Placement agent – a company that specializes in finding institutional investors that are willing and able to invest in a private equity fund. Preferred return – a minimum return per annum that must be generated for limited partners of a private equity fund before the general partner can begin receiving a percentage of profits from investments. Private equity investors usually purchase preferred stock when they make investments in companies. These special rights may include dividends. PIK refers to payment in kind. The common stock represents additional continued ownership in the company. PIK dividend – a dividend paid to the holder of a stock. usually with respect to dividends and proceeds from a sale or dissolution of a company. Pre-money valuation – the valuation of a company prior to the current round of financing. As a result. Preferred stock – a type of stock that has certain rights that common stock does not have. a venture capitalist may invest $5 million in a company valued at $2 million “premoney” (before the investment was made). participation. anti-dilution protection and veto provisions. PEIGG – acronym for Private Equity Industry Guidelines Group. For example. Preference – seniority. liquidity preference. Thomson Reuters 67 . If structured correctly. Piggyback rights – rights of an investor to have his or her shares included in a registration of a startup’s shares in preparation for an IPO. the startup will have a “post-money” valuation of $7 million. among others. in the form of additional stock rather than cash. the startup will have a post-money valuation of $7 million. Private placement memorandum (PPM) – a document explaining the details of an investment to potential investors. PIPEs – see Private investment in public equity. Participating preferred stock has been characterized as “having your cake and eating it too”. usually preferred stock. For example. As a result.

There is an exception that 35 non-accredited investors can participate. ny’s capital structure. a startup may issue a PPM when it needs growth capital.National Venture Capital Association al investors. Private securities – securities that are not registered with the Securities and Exchange Commission and do not trade on any exchanges. calculated as a percentage of the original investment. Institutional investors often prefer to invest in private equity funds that demonstrate consistent results over time. The realization ratio is used as a measure of the distributions from investment results of a private equity partnership compared to the capital under management. The name refers to the disclosure warning printed in red letters on the cover of each preliminary prospectus advising potential investors of the risks involved. Also. Recapitalization – the reorganization of a compa- Ratchet – a mechanism to prevent dilution. discretion. net profit after taxes divided by average total assets. the investor has the right to take back his/her investment and may even negotiate a right to receive an additional sum in excess of the original investment. Also. Return on investment (ROI) – the proceeds from an investment. Usually upon a qualified IPO preferred stock is forced to convert to common stock. Redemption rights – the right of an investor to force the startup company to buy back the shares issued as a result of the investment. private equity investors are measured by the results of their investments during a particular period of time. Prudent man rule – a fundamental principle for professional money management which serves as a basis for the Prudent Investor Act. For example. Quartile – one fourth of the data points in a data set.” In the 1970s a favorable interpretation of this rule enabled pension fund managers to invest in venture capital for the first time. Realization ratio – the ratio of cumulative distributions to paid-in capital. usually at a discount. An antidilution clause in a contract protects an investor from a reduction in percentage ownership in a company due to the future issuance by the company of additional shares to other entities. intelligence and regard for the safety of capital as well as income. Red herring – a preliminary prospectus filed with the Securities and Exchange Commission and containing the details of an IPO offering. Right of first refusal – a contractual right to participate in a transaction. The price per share is negotiated between the buyer and the seller (the “issuer”). Regulation D – an SEC regulation that governs private placements. Private placements are investment offerings for institutional and accredited individual investors but not for the general public. This amount is usually specified to be sufficiently large to guarantee that the IPO shares will trade in a major exchange (NASDAQ or New York Stock Exchange). Often. Restricted shares – shares that cannot be traded in the public markets. Registration – the process whereby shares of a company are registered with the Securities and Exchange Commission under the Securities Act of 1933 in preparation for a sale of the shares to the public. Rights offering – an offering of stock to current shareholders that entitles them to purchase the new issue. Qualified IPO – a public offering of securities valued at or above a total amount specified in a financing agreement. 68 Thomson Reuters . The principle is based on a statement by Judge Samuel Putnum in 1830: “Those with the responsibility to invest money for others should act with prudence. Also known as “Offering Memorandum”. Rights of co-sale with founders – a clause in venture capital investment agreements that allows the VC fund to sell shares at the same time that the founders of a startup chose to sell. placing in the upper quartile of the investment results for all funds. In effect. during a specific time period. a venture capitalist may participate in a first round of investment in a startup and request a right of first refusal in any following rounds of investment.

Rollup – the purchase of relatively smaller companies in a sector by a rapidly growing company in the same sector. Also. Scale-up – the process of a company growing quickly while maintaining operational and financial controls in place. Series A preferred stock – preferred stock issued by a fast growth company in exchange for capital from investors in the “A” round of financing. Secondary shares – shares sold by a shareholder (not by the corporation). the movie theater industry underwent significant consolidation in the 1960’s and 1970’s. SBIC – see Small Business Investment Company. Seniority – higher priority. Rule 144 – a rule of the Securities and Exchange Commission that specifies the conditions under which the holder of shares acquired in a private transaction may sell those shares in the public markets. The Sharpe Ratio is calculated by subtracting the risk-free rate from the return on a specific investment for a time period (usually one year) and then dividing the resulting figure by the standard deviation of the historical (annu- Thomson Reuters 69 . a company will often make a road show to generate interest among institutional investors prior to its IPO. a schedule for phased increases in management fees for general partners in a limited partnership as the fund increases its investment activities over time. friends and family to the founders of a startup in seed stage. Seed capital – investment provided by angels. Royalties – payments made to patent or copyright owners in exchange for the use of their intellectual property. Sometimes limited partners chose to sell their interest in a partnership. For example. Securities and Exchange Commission (SEC) – the regulatory body that enforces federal securities laws such as the Securities Act of 1933 and the Securities Exchange Act of 1934. typically to raise cash or because they cannot meet their obligation to invest more capital according to the takedown schedule. Round – a financing event usually involving several private equity investors. Senior debt – a loan that has a higher priority in case of a liquidation of the asset or company. In practice. Certain investment companies specialize in buying these partnership interests at a discount. ties toward the end of its term. The strategy is to create economies of scale. Secondary market – a market for the sale of limited partnership interests in private equity funds. Seed stage – the state of a company when it has just been incorporated and its founders are developing their product or service. Scale-down – a schedule for phased decreases in management fees for general partners in a limited partnership as the fund reduces its investment activi- Sharpe Ratio – a method of calculating the riskadjusted return of an investment. An S corporation does not pay taxes. Road show – presentations made in several cities to potential investors and other interested parties. For example.2010 NVCA Yearbook Risk-free rate – a term used in finance theory to describe the return from investing in a riskless security. this is often taken to be the return on US Treasury Bills. rather its owners pay taxes on their proportion of the corporation’s profits at their individual tax rates. S corporation – an ownership structure that limits its number of owners to 100. Venture capitalists look for scalability in the startups they select to finance. ROI – see Return on investment. Scalability – a characteristic of a new business concept that entails the growth of sales and revenues with a much slower growth of organizational complexity and expenses. This preferred stock is usually convertible to common shares upon the IPO or sale of the company.

usually up to ten years in leveraged buyout structures.A popular method of completing a direct secondary transaction in which the buyer becomes a limited partner (LP) in a special purpose vehicle (SPV) or similar entity which has been set up out of the underlying investments in order to create a limited partnership interest. By signing this document. a syndicate can refer to a group of investment banks that agree to participate in the sale of stock to the public as part of an IPO. a round may be disbursed in two or three tranches. Subordinated debt – a loan that has a lower priority than a senior loan in case of a liquidation of the asset or company. Success rate – the proportion of venture funded companies that are considered successful. Strategic investor – a relatively large corporation that agrees to invest in a young or a smaller company in order to have access to its proprietary technology. Alternatively. Term sheet – a document confirming the intent of an investor to participate in a round of financing for a company. product or service. Under water option – an option is said to be under water if the current fair market value of a stock is less than the option exercise price. receive the same benefits as a majority investor. The higher the Sharpe Ratio. Synthetic secondary . profits and reputation.National Venture Capital Association al) returns for that investment. An underwriter usually chooses to work with a syndicate of investment banks in order to maximize the distribution of the securities. Also known as “junior debt”. Venture capital – a segment of the private equity industry which focuses on investing in new companies with high growth potential and accompanying high risk. Tag-along right – the right of a minority investor to Turnaround – a process resulting in a substantial increase in a company’s revenues. A study of companies funded by VCs during the 1990s indicated that 14% of the companies went public and another 11%were acquired. 70 Thomson Reuters . Tender offer – an offer to public shareholders of a company to purchase their shares. Syndicate – a group of investors that agree to participate in a round of funding for a company. Sweat equity – ownership of shares in a company resulting primarily from work rather than investment of capital. the better. a takedown is used by a general partner of a private equity fund to plan the transfer of capital from the limited partners. When venture capital firms finance a company. The term arose because of the synthetic nature of the direct purchase through the LP secondary transaction. the subject company agrees to begin the legal and due diligence process prior to the closing of the transaction. Usually applies to a sale of securities by investors. Each tranche may have different rights or risk characteristics. Stock purchase options are commonly used as long term incentive compensation for employees and management of fast growth companies. Also known as Co-sale right. Typically. Term loan – a bank loan for a specific period of time. Tranche – a portion of a set of securities. Stock option – a right to purchase or sell a share of stock at a specific price within a specific period of time. Also known as “Letter of Intent”. Small Business Investment Company (SBIC) – a company licensed by the Small Business Administration to receive government capital in the form of debt or equity in order to use in private equity investing. Takedown – a schedule of the transfer of capital in phases in order to complete a commitment of funds. each of which is paid when the company attains one or more milestones. Underwriter – an investment bank that chooses to be responsible for the process of selling new securities to the public.

issuance of a new class of stock. an investor would suffer from a reduction of his or her percentage ownership. a venture capitalist has to make a difficult decision as to whether to liquidate a zombie or continue to invest funds in the hopes that the zombie will become a winner. Zombie – a company that has received capital from investors but has only generated sufficient revenues and cash flow to maintain its operations without significant growth. Usually as a result of a washout round.” Typically.tuck. Without anti-dilution protection. Weighted average anti-dilution – an anti-dilution protection mechanism whereby the conversion rate of preferred stock is adjusted in order to reduce an investor’s loss due to an increase in the number of shares in a company. Thomson Reuters 71 . Usually. Thomson Reuters and National Venture Capital Association are grateful to the Center for its support. merger or liquidation. These definitions were graciously provided by the Center for Private Equity and Entrepreneurship at the Tuck School of Business at Dartmouth. company management and employees who own a fixed amount of common shares suffer significant dilution. the new investor gains majority ownership and control of the company. usually valid for several years or indefinitely.dartmouth. warrants are issued concurrently with preferred stocks or bonds in order to increase the appeal of the stocks or bonds to potential investors.html. A warrant is a long term option. representing the fact that venture capitalists must achieve significant returns on investment in order to compensate for the risks they take in funding unproven companies. Warrant – a security which gives the holder the right to purchase shares in a company at a pre-determined price. Write-down – a decrease in the reported value of an asset or a company. debt. but not as badly as in the case of a full ratchet. These matters may include payment of dividends.edu/pecenter/resources/glossary. Sometimes referred to as “walking dead. Weighted average cost of capital (WACC) – the average of the cost of equity and the after-tax cost of Washout round – a financing round whereby previous investors. Voting rights – the rights of holders of preferred and common stock in a company to vote on certain acts affecting the company. Vintage – the year that a private equity fund stops accepting new investors and begins to make investments on behalf of those investors. Venture funds are generally benchmarked to funds of the same vintage year. Write-off – a decrease in the reported value of an asset or a company to zero. Please refer to the Center’s website for additional definitions and information at http://mba. the founders and management suffer significant dilution. Typically.2010 NVCA Yearbook Venture capital method – a pricing valuation method whereby an estimate of the future value of a company is discounted by a certain interest rate and adjusted for future anticipated dilution in order to determine the current value. Usually as a result of the implementation of a weighted average antidilution. Write-up – an increase in the reported value of an asset or a company. This average is determined using weight factors based on the ratio of equity to debt plus equity and the ratio of debt to debt plus equity. Vesting – a schedule by which employees gain ownership over time of a previously agreed upon amount of retirement funding or stock options. discount rates for the venture capital method are considerably higher than public stock return rates. Used by permission.

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All data is subject to verification with the venture capital firms and/or the investee companies. Drawdowns on commitments are Thomson Reuters 73 . Investee companies must be domiciled in one of the 50 US states or DC even if substantial portions of their activities are outside the United States. Qualifying transactions include cash investments by these entities either directly or by participation in various forms of private placement. not buyout or services in kind). General Definition The report includes the investment activity of professional venture capital firms with or without a US office. Angel. Only professional independent venture capital firms.g. The report excludes debt. corporations. recapitalizations. all subsequent equity financing rounds are included regardless of whether the round involved a venture capital firm as long as all other investment criteria are met (e.Appendix B: MoneyTree Report Criteria The MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters REPORT CRITERIA recognized at the time the company receives the money rather than recorded as a lump sum amount at the time the term sheet is executed.g. Where there are other participants such as angels. not buyout or services in kind). and governments in a qualified and verified financing round the entire amount of the round is included.S. and other forms of private equity that do not involve cash such as services-in-kind and venture leasing. investments for which the proceeds are primarily intended for acquisition such as roll-ups. buyouts. Angel. Convertible debt and bridge loans are recognized only when converted to equity. Specific Methodology The focus of the report is on cash received by the company. incubator and similar investments that are part of a qualifying venture capital round or follow a qualifying venture capital round are included to the extent that such investments can be fully verified as meeting all other criteria (e. venture arms of corporations. cash-for-equity. Therefore. investment banks and similar entities whose primary activity is financial investing. and may have been newlycreated or spunout of existing companies. cash-for-equity. IPOs. Once a company has received a qualifying venture capital financing round. Data is primarily obtained from a quarterly survey of venture capital practitioners.g. secondary purchases. Information is augmented by other research techniques including other public and private sources. incubator and similar investments are considered pre-venture financing if the company has received no prior qualifying venture capital investment and are not included in the MoneyTree results. Direct investment by corporations (not through a venture capital arm) is excluded unless (a) the investment is clearly demonstrated to be primarily a financial investment rather than outsourced R&D or market development. not buyout or services in kind). investments in public companies such as PIPES (private investments in public entities). tranches not term sheets are the determining factor. Summary Description The MoneyTree™ Report measures cash-for-equity investments by the professional venture capital community in private emerging companies in the U. All recipient companies are private. or (c) it follows a qualifying venture round in a company and meets all other criteria (e. institutions. SBICs. change of ownership. cash for equity. (b) it is co-investment in an otherwise qualifying round.

none of the parties can warrant the ultimate validity of the data obtained in this manner. Disclaimer PricewaterhouseCoopers. and recognized corporate venture capital groups are included in venture capital industry rankings. Therefore. Results are updated periodically. the National Venture Capital Association. However. and Thomson Reuters have taken responsible steps to ensure that the information contained in the MoneyTree Report has been obtained from reliable sources. 74 Thomson Reuters .National Venture Capital Association institutional venture capital groups. all data is subject to change at any time.

Iowa. Indiana. Arizona. and Puerto Rico Colorado: The state of Colorado DC/Metroplex: Washington. Arkansas. New Mexico.. D. Ventura. Oregon.C. Mississippi. and parts of Connecticut (excluding Fairfield county) New York Metro: Metropolitan NY area. Oklahoma. bay area and coastline Philadelphia Metro: Eastern Pennsylvania. Idaho. Georgia. Montana. West Virginia. and Fairfield County. and Maryland LA/Orange County: Los Angeles. and Wyoming Sacramento/Northern California: Northeastern California San Diego: San Diego area Silicon Valley: Northern California. Tennessee.e. South Dakota. except San Diego) Midwest: Illinois. and Riverside Counties (i. Virginia. and Nebraska Northwest: Washington. North Dakota. Missouri. southern New Jersey. Kentucky. Michigan. Ohio. Orange. and Louisiana Southwest: Utah. New Hampshire. Vermont. Rhode Island. Hawaii. and Delaware South Central: Kansas. northern New Jersey. and western Pennsylvania New England: Maine. South Carolina.. Florida. except Metropolitan New York City area Thomson Reuters 75 . Massachusetts.Appendix C: MoneyTree Geographical Definitions The Geographical Regions identified in the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters and used in the 2010 NVCA Yearbook are as follows: Alaska/Hawaii/Puerto Rico: Alaska. Connecticut North Central: Minnesota. and North Carolina Upstate New York: Northern New York state. and Nevada Texas: The state of Texas Southeast: Alabama. southern California. Wisconsin.

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Appendix D: Industry Codes (VEIC)
VEIC
1000 1100 1110 1120 1125 1130 1135 1199 1200 1210 1215 1220 1230 1299 1300 1310 1320 1325 1330 1399 1400 1500 1510 1515 1520 1521 1522 1523 1524 1525

INDUSTRY DESCRIPTION
COMMUNICATIONS AND MEDIA Commercial Communications Radio & TV Broadcasting Stations CATV & Pay TV Systems Cable Service Providers Radio & TV Broadcasting & Other Related Equipment Services to Commercial Communications Other Commercial Communications Telecommunications Long Distance Telephone Services Local Exchange Carriers (LEC) Telephone Interconnect & Other Equipment Telephone answering and/or management systems,PBXs Other Telephone Related Wireless Communications Mobile Communications, Pagers & Cellular Radio Wireless Communications Services Messaging Services Wireless Communications Components Other Wireless Communications Facsimile Transmission Data Communications Local Area Networks (incl. voice/data PBX systems) Wide Area Networks Data Communications Components Communications Processors/Network Management Protocol Converters & Emulators Modems and Multiplexers Other Data Communication Components Switches/Hubs/Routers/Gateways/ ATM

VEIC
1530 1549 1550 1551 1552 1553 1559 1560 1561 1562 1563 1569 1600 1610 1620 1630 1640 1699 1700 1710 1720 1800 1810 1825 1899 2000 2100 2110 2111 2112 2119

INDUSTRY DESCRIPTION
Network test, monitor and support equipment Other Data Communications Internet Communications and Infrastructure NEC Internet Access Services and Service Providers Internet Multimedia Services Internet Backbone Infrastructure Other Internet Communications NEC E-Commerce Technology Internet Security and Transaction Services Ecommerce Services Ecommerce Enabling Software Other Ecommerce Satellite Microwave Communications Satellite Services/Carriers/Operators Satellite Ground (and other) Equipment Microwave Service Facilities Microwave & Satellite Components Other Satellite & Microwave Media and Entertainment Entertainment Publishing Other Communications Related Defense Communications Other Communications Services NEC Other Communications Products (not yet classified) COMPUTER RELATED Computers and Hardware Mainframes & Scientific Computers Mainframes Supercomputers and Scientific Computers Other Mainframes and Scientific Computers

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National Venture Capital Association
VEIC
2120 2121 2122 2123 2124 2125 2126 2130 2140 2141 2142 2143 2144 2149 2200 2210 2220 2230 2234 2236 2238 2239 2250 2255 2260 2280 2290 2295 2299 2300 2311 2312 2313 2315 2316 2317 2318 2319 2320

INDUSTRY DESCRIPTION
Mini & Personal/Desktop Computers Fail Safe Computers Mini Computers Personal Computers (micro/personal) Other Mini and Personal Computers Portable Computers (notebooks/ laptops) Handheld Computing (PDA) Optical computing Servers and Workstations Servers Web Servers Workstations Thin Client Hardware Other Servers and Workstations Computer Graphics and Digital Imaging CAD/CAM, CAE,EDA Systems Graphic Systems Scanning Hardware OCR (Optical Character Recognition) OBR (Optical Bar Recognition) MICR (Magnetic Ink Character Recognition) Other Scanning Related Graphics Printers/Plotters Graphics/Enhanced Video Cards Other Graphics Peripherals Other Multimedia NEC Digital Imaging Hardware and Equipment Digital Imaging Services Other Computer Graphics Integrated Turnkey Systems and Solutions Business and Office Consumer Retailing Transportation Finance/Insurance/Real Estate Agriculture Recreation/Entertainment Manufacturing/Industrial/ Construction Medical/Health

VEIC
2321 2322 2323 2324 2325 2399 2500 2510 2511 2512 2513 2519 2520 2521 2522 2523 2524 2529 2530 2531 2532 2533 2539 2540 2541 2542 2543 2546 2549 2550 2551 2552 2553 2559 2560 2561 2562 2563 2564 2569 2590 2600 2630

INDUSTRY DESCRIPTION
Computer related Communications Products/Services Education Reference Scientific Other Intergrated Systems and Solutions Peripherals Terminals Intelligent Terminals Portable Terminals Graphics Terminals Other Terminals Printers Laser Printers Color Printers Inkjet Printers Dot Matrix Printers Other Printers Data I/O Devices Mouse Input Devices TouchPad Input Devices Pen based computing Other Data I/O Devices Disk Related Memory Devices Floppy Disks & Drives Winchester Hard Disks and Drives Optical Disks & Drives,CD-ROM DVD Disk Drive Components Other Disk Related Tape Related Devices Magnetic Tapes Tape Heads & Drives Continuous Tape Backup Systems Other Tape Related Devices Other Memory Devices (excl. semiconductors) PC or PMCIA cards Memory Cards Sound Cards Communications Cards Other Peripheral Cards Other Peripherals (not yet classified) Computer Services Time Sharing Firms

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2010 NVCA Yearbook
VEIC
2640 2650 2655 2660 2665 2670 2675 2691 2699 2700 2710 2711 2712 2713 2716 2719 2720 2721 2722 2723 2724 2729 2730 2731 2732 2733 2734 2735 2736 2737 2738 2739 2740 2741 2743 2744

INDUSTRY DESCRIPTION
Computer Leasing & Rentals Computer Training Services Backup and Disaster Recover Data Processing,Analysis & Input Services Computer Repair Services Computerized Billing & Accounting Services Computer Security Services Data communications systems management Other Computer Services Computer Software Systems Software Database & File Management Operating Systems & Utilities Program Development Tools/CASE/Languages Graphics and Digital Imaging Software Other Systems Software Communications/Networking Software Security/Firewalls,Encryption software Email Software Groupware Multimedia software Other Communications/Networking Software Applications Software Business and Office Software Home Use Software Educational Software Manufacturing/Industrial Software Medical/Health Software Banks/Financial Institutions Software Retailing Software Integrated Software ERP/Inventory Software Recreational/Game Software Scientific Software Agricultural Software Transportation Software

VEIC
2748 2749 2750 2751 2752 2753 2754 2755 2760 2761 2762 2763 2765 2766 2768 2769 2780 2781 2782 2783 2784 2785 2798 2799 2800 2810 2811 2812 2813 2814 2815 2816 2817 2818 2819

INDUSTRY DESCRIPTION
Other Industry specific Software Other Applications Software Artificial Intelligence Related Software Expert Systems Natural Language Computer-Aided Instruction Artificial Intel. Programming Aids Other Artificial Intelligence Related Software Services Programming Services/Systems Engineering Software Consulting Services Software Distribution/Clearinghouse Internet/Web Design and programming services Internet Graphics Services Other Internet Software Services Other Software Services Internet Systems Software Site Development and Administration Software Internet Search Software and Engines WebServer Software Web Languages (Java/ActiveX/HTML/XML) Web Authoring/Development Software Other Internet Systems Software Other Software Related Internet and Online Related E-Commerce—Selling products Online or Internet Business and Office Products Consumer Products Retailing Products Publishing Products Transportation Products Finance/Insurance/Real Estate products Agricultural Products Recreation/Entertainment/Music/ Movies Manufacturing/Industrial/ Construction

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Info/Content VEIC 2860 2861 2862 2863 2864 2865 2866 2869 2870 2871 2873 2879 2900 2910 2911 2990 3000 3100 3110 3111 3112 3114 3115 3119 3120 3130 3132 3135 3139 3140 3160 3170 3200 3300 3310 3400 3410 3420 INDUSTRY DESCRIPTION Medical/Health Info/Content Computer Related Info/Content Communications Info/Content Education Info/Content Reference Info/Content Scientific Info/Content Legal Info/Content Other Aggregation/Portal/Exchange Sites Internet Services Internet Marketing Services Data Warehousing Services Other Internet and Online Services NEC Other Computer Related Voice Synthesis Voice Recognition Other Computer Related (not yet classified) OTHER ELECTRONICS RELATED Electronic Components Semiconductors Customized Semiconductors Standard Semiconductors Flash Memory Optoelectronics semiconductors (incl laser diodes) Other Semiconductors Microprocessors Controllers and Sensors Controllers Sensors Other Controllers/Sensors Circuit Boards Display Panels Other Electronics Related (including keyboards) Batteries Power Supplies Uninterruptible Power Supply (UPS) Electronics Related Equipment Semiconductor Fabrication Equip.National Venture Capital Association VEIC 2820 2821 2822 2823 2824 2825 2826 2829 2830 2831 2832 2833 2834 2835 2836 2837 2838 2839 2840 2841 2842 2843 2844 2845 2846 2848 2849 2850 2851 2852 2853 2854 2855 2856 2857 2858 2859 INDUSTRY DESCRIPTION Medical/Health Computer Related Communications Products Education Products Reference Products Scientific Products Legal Products Other Ecommerce Selling Products Ecommerce—Selling Services Online/Internet Business and Office Services Consumer Services Retailing Services Publishing Services Transportation Services Finance/Insurance/Real Estate Services Agricultural Services Recreation/Entertainment/Music/ Movies Manufacturing/Industrial/ Construction Medical/Health Services Computer Related services Communications Products/Services Education Services Reference Scientific Legal Recreation/Entertainment Services Other Ecommerce Selling Services Web Aggregration/Portal Sites/Exchanges Business and Office Info/content Consumer Info/Content Retailing Info/Content Publishing Info/Content Transportation Info/Content Finance/Real Estate/Insurance Info/Content Agriculture Info/Content Recreation/Entertainment/Music/ Movies Manufac/Industrial/Constr. & Wafer Products Component Testing Equipment 80 Thomson Reuters .

vaccines) Other Therapeutic Proteins (incl. excimers) Other Laser Related Fiber Optics Fiber Optic Cables Fiber Optic Couplers and Connectors Fiber Optic Communication Systems (see 1510) Other Fiber Optics Analytical & Scientific Instrumentation Chromatographs & Related Laboratory Equipment Other Measuring Devices Other Analytical & Scientific Instrumentation Other Electronics Related Military Electronics (excluding communications) Copiers Calculators Security/Alarm/Sensors Other Electronics Related (incl. alarm systems) Optoelectronics Photo diodes Optoelectronics fabrication equipment Lenses with Optoelectronics applications Advanced photographic processes (incl lithographs) Other Optoelectrinics Related Other Electronc Semiconductor BIOTECHNOLOGY AND PHARMACOLOGY Human Biotechnology Medical Diagnostic Biotechnology Products In Vitro Monoclonal Antibody Diagnostics VEIC 4112 4113 4119 4120 4121 4122 4123 4129 4130 4200 4210 4220 4230 4240 4250 4290 4300 4310 4311 4312 4319 4320 4321 4322 4329 4330 4340 4390 4400 4410 INDUSTRY DESCRIPTION In Vivo Monoclonal Antibody Diagnostics/Imaging DNA/RNA Probes Other Medical Diagnostic Biotechnology Therapeutic Biotechnology Products Therapeutic Monoclonal Antibodies Immune Response Effectors (interferons.2010 NVCA Yearbook VEIC 3499 3500 3510 3599 3600 3610 3620 3630 3699 3700 3710 3720 3799 3800 3810 3820 3830 3835 3899 3900 3910 3920 3930 3940 3989 3990 4000 4100 4110 4111 INDUSTRY DESCRIPTION Other Electronics Related Equipment Laser Related Laser Components (incl. Microorganisms to raise plant yield Other Plant Related Biotechnology Biotech Related Animal Health & Nutrition Products Genetically Engineered Animals Other Animal Related Biotechnology Industrial Biotechnology Biochemical Products Biotech Related Fine Chemicals (NOT Pharmaceuts. beamsplitters.) Biotech Related Commodity Chemicals Other Biochemical Products Biotech Processes for Food Industrial Applications Biotech Related Food Enzymes and Cultures Biotech Related Food Diagnostics Other Biotech Process for Food/Industrial Products Biotech Processes for Pollution/Toxic Waste Contrl Biotech Processes for Enhanced Oil Recovery/Mining Other Industrial Biotechnology Biosensors Biosensors for Medical Diagnostic Applications Thomson Reuters 81 . Eng. hormones & TPA) Other Therapeutic Biotechnology Genetic Engineering Agricultural/Animal Biotechnology Genetically Engineered Plants Genetic.

Instrumentation Other Oil & Gas (NEC) Alternative Energy Solar Energy Photovoltaic Solar Other Solar Wind Energy Geothermal Energy 82 Thomson Reuters . Oil & Gas Drilling & Extraction Equipment Oil & Gas Drilling Instrumentation Oil & Gas Exploration Equip. lenses) Other Medical/Health (NEC) Medical Health Services Hospitals/Clinics/Primary Care Long Term Care/Home Care/Elder Care Dependent Care (child care/assisted living Managed care (including PPO/PPM) Other Healthcare Facilities Emergency Services/Ambulance Hospital & Other Institutional Management Other Medical/Health Services Pharmaceuticals Pharmaceutical Research Pharmaceutical Production Pharmaceutical Services Pharmaceutical Equipment Pharmaceuticals/Fine Chemicals (non-biotech) Other Pharmaceutical NEC ENERGY RELATED Oil & Gas Exploration and Production Oil & Gas Exploration Services Oil & Gas Drilling & Support Services Oil & Gas Drilling.National Venture Capital Association VEIC 4420 4490 4500 4510 4520 4525 4599 4600 4610 4699 4900 5000 5100 5110 5120 5121 5122 5123 5124 5125 5130 5140 5200 5210 5220 5221 5230 5240 5299 5300 5310 5340 INDUSTRY DESCRIPTION Biosensors for Industrial Applications Other Biosensors Biotech Related Research & Production Equipment Biotech Related Analytical Instruments & Apparatus Biotech Related Production Equipment Biotech laser and optronic applications Other Biotech Research & Production Equipment Biotech Related Research & Other Services Pure & Contract Biotechnology Research Other Biotechnology Services Other Biotechnology Related MEDICAL/HEALTH RELATED Medical Diagnostics Diagnostic Services Medical Imaging X-Rays CAT Scanning Ultra Sound Imaging Nuclear Imaging Other Medical Imaging Diagnostic Test Products & Equipment Other Medical Diagnostics Medical Therapeutics Therapeutic Services Surgical Instrumentation & Equipment Surgical lasers (including laser delivery fibers) Pacemakers & Artificial Organs Drug Delivery & Other Equipment Other Therapeutic (including defibrillators) Medical Health Related Products Disposable Medical Products Handicap Aids VEIC 5350 5380 5399 5400 5410 5412 5414 5420 5429 5430 5440 5499 5500 5510 5520 5530 5540 5550 5599 6000 6100 6200 6300 6400 6410 6420 6430 6499 6500 6510 6511 6512 6520 6530 INDUSTRY DESCRIPTION Medical Monitoring Equipment Health related optics (including glasses.Exploration & Extraction Equip.

2010 NVCA Yearbook VEIC 6540 6599 6600 6700 6710 6720 6799 6800 6900 7000 7100 7110 7120 7125 7130 7140 7150 7155 7160 7170 7199 7200 7210 7220 7230 7240 7245 7246 7247 7248 7250 7299 7300 7310 INDUSTRY DESCRIPTION Energy Co-Generation Other Alternative Energy (incl.magazines.Production and Instruments Other Leisure/Recreational Products and Services Retailing Related Drug Stores Clothing and Shoe Stores Discount Stores Computer Stores Retail Publishing (books.Radio. jewelry) Health & Beauty Aids Home Furnishing & Housewares Housewares Furnishings & Furniture Garden and Horticultural Products Other Home Furnishings (NEC) Mobile Homes Other Consumer Products Consumer Services Fast Food Restaurants Other Restaurants Hotels and Resorts Auto Repair Shops Education & Educational Products and Materials Travel Agencies and Services Other Consumer Services Other Consumer Related (not yet classified) INDUSTRIAL PRODUCTS Chemicals & Materials Plastic Fabricators Homogeneous Injections/Extrusions Non-Homogeneous Injections/Extrusions Fiber-Reinforced (Plastic) Composites Other Fabricated Plastics Processes for Working with Plastics Other Plasti Fabricators Coatings & Adhesives Manufacturers Optical coatings Other Coatings & Adhesives Membranes & Membrane-Based Products Thomson Reuters 83 . nuclear energy) Enhanced Oil Recovery/Heavy Oil/Shale Coal Related Coal Mining Coal Related Equipment Other Coal Related Energy Conservation Related Other Energy Related CONSUMER RELATED Entertainment and Leisure Movies.Shoes & Accessories (incl.Stereo Equipment & Consumer Electronics Music.Hobby Equipment & Athletic Clothes Sports Facilities (Gyms and Clubs) Sports TVs. newspapers) Office Supply Stores Music/Electronics Specialty Department and retail stores Franchises(NEC) Other Retailing Related Food and Beverages Wine & Liquors VEIC 7320 7330 7340 7350 7399 7400 7410 7420 7430 7431 7432 7433 7434 7450 7499 7500 7510 7520 7530 7540 7550 7560 7599 7999 8000 8100 8110 8111 8112 8113 8114 8115 8119 8120 8121 8129 8130 INDUSTRY DESCRIPTION Health Food Soft Drinks & Bottling Plants Food Supplements/Vitamins General Food Products Other Food and Beverages Consumer Products Clothing.Records.Movie Products & Theater Operations Amusement & Recreational Facilities Casino and Gambling Toys & Electronic Games Sporting Goods.

silicon wafers) III/V Semiconductor Mater.Ball Bearings. 0ther 84 Thomson Reuters .National Venture Capital Association VEIC 8140 8141 8142 8143 8144 8145 8146 8147 8148 8149 8150 8151 8152 8160 8161 8162 8170 8189 8199 8200 8210 8220 8221 8230 8240 8250 8260 8299 8300 8310 8320 8330 INDUSTRY DESCRIPTION Specialty/Performance Materials Semiconductor Materials (eg.Cranes & Conveyors Pumps. clad) Ceramics Lubricants & Functional Fluids Other Specialty Materials Specialty materials for laser generation Superconducting materials Other Special Performance Materials Commodity Chemicals & Polymers Industrial Chemicals Polymer (Plastics) Materials Specialty/Performance Chemicals Electronic Chemicals Other Industrial Chemicals Agricultural Chemicals Other Commidity Chemicals and Polymers Other Chemicals & Materials (not yet classified) Industrial Automation Energy Management Industrial Measurement & Sensing Equipment Laser related measuring & sensing equipment Process Control Equipment & Systems Robotics Machine Vision Software & Systems Numeric & Computerized Control of Machine Tools Other Industrial Automation (NEC) Industrial Equipment and Machinery Machine Tools. Other Metalworking Equipment Hoists. Hardware VEIC 8340 8350 8360 8370 8399 8500 8510 8520 8530 8599 8600 8700 9000 9100 9110 9120 9125 9130 9140 9150 9160 9180 9199 9200 9210 9220 9230 9235 9240 9250 9254 9255 9299 INDUSTRY DESCRIPTION Mining Machinery Industrial Trucks and Tractors Other Industrial Process Machinery Power Transmission Equipment (generators & motors) Other Industrial Equipment & Machinery Environmental Related Air Filters & Air Purification & Monitoring Equip. Compressors. Indus. (eg.Buses and Cars Mail and Package Shipment Motor Vehicles. coatings. Chemical and Solid Material Recycling Water Treatment Equipment & Waste Disposal Systems Other Environmental Related Other Industrial Products (not yet classified) Industrial Services OTHER SERVICES AND MANUFACTURING Transportation Airlines and Aviation Related Trucking Railway related Leasing of Railcars.Transporation Equipment & Parts Airfield and Other Transportation Services Advanced Aircraft/Aerospace Other Transportation Financial Services Insurance Related Real Estate Banking Non Bank Credit Securities & Commodities Brokers and Services Investment Groups Venture Capital and Private Equity Investors Financial Transactions Services Financial Services. gallium arsenide) Specialty Metals (incl. alloys.

Animal Husbandry.Fishing.2010 NVCA Yearbook VEIC 9300 9310 9320 9330 9340 9350 9360 9399 9400 9410 9415 9420 9430 9440 9450 9460 9470 9499 9500 9510 9520 9530 9540 INDUSTRY DESCRIPTION Services Engineering Services Advertising and Public Relations Leasing (not elsewhere classified) Distributors.Importers and Wholesalers Consulting Services Media Related Services Other Services NEC Product Manufacturing Business Products and Supplies Office Automation Equipment Office Furniture & Other Professional Furnishings Textiles (Synthetic & Natural) Hardware.etc.Chem.Forestry. & Solid Waste Treatment Plants Gas Transmission & Distribution Other Utilities & Related Firms Other Products and Services Conglomerates Socially Responsible Environment Responsible Women-Owned Minority-Owned Holding Companies Other Products and Services Thomson Reuters 85 .Sewage.Plumbing Supplies Publishing Packaging Products & Systems Printing & Binding Other Manufacturing (not elsewhere classified) Agriculture.Fishing Mining and Minerals (non-energy related) Construction & Building Products Construction Manufacture of Building Products Manufacture of Pre-Fabricated Buildings & Systems Distribution of Building Products & Systems Construction Services Other Construction & Building Products Related Utilities and Related Firms Electric Companies Water.Forestry. Agriculture related Forestry related Fishing related Animal husbandry VEIC 9599 9600 9700 9710 9720 9730 9740 9750 9799 9800 9810 9820 9830 9899 9900 9910 9912 9914 9915 9918 9920 9999 INDUSTRY DESCRIPTION Other Agriculture.

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8200. 6400. 3170 Consumer Products and Services 2812. 7540. 9820. 7432. 9310. 6520. 2200. 3830. 5540. 4319. 7434. 9000. 3420. 8700. 5499 Computer Software 1563. 2321. 9320. 9520. 6599. 2559. 2560. 2210. 6420. 9899 Thomson Reuters 87 . 2319. 8120. Telecommunications and Other. Medical Devices and Equipment. 8399. 9500. 5440. 9255. 8150. 9400. 2700. 9740. 4320. 2120. 9210. 2542. 4130. 5429. 2230. 8112.Appendix E: Industry Sector VEIC Ranges Industry analysis is based upon the following industry sectors: Biotechnology. 8221. 2143. 5550. 2562. 3500. 6900. 7320. 5599 Computers and Peripherals 2000. 2121. 2126. Healthcare Services. 2731. 3499. 2550. 8100. 8140. 2564. 4113. 2734. 8320. 2300. 2799. 4230. 2733. 2280. 2752. 4240. 5510. 2831. 4322. 4129. 9100. 2836. 9599. 2520. 6540. 5410. 2911. 4599. 2723. 3799. 7420. 5500. 2785. 2730. 9120. 8129. Computer Software. 2141. 5430. 8189. 4111. 7431. 4300. 4123. Business Products and Services. 2782. 2122. 7999 Business Products and Services 2811. 8149. 2260. 2740. 3899 Financial Services 2816. 2781. 3720. 8599. 6600. 2529. 2824. 9460. 9420. 2837. 2739. 6100. 9240. 7430. 9399 Electronics/Instrumentation 3000. 4610. 8148. 9200. 6710. 4400. 2552. 2315. 6500. 2738. 6799. 7399. 2111. 4122. 3810. 2741. 2844. 6800. 2540. 8111. 2311. 2119. 7550. 2721. 8600. 2521. 2724. Consumer Products and Services. 2561. 9410. 2749. 2990. 4220. 5412. 2530. 2236. 2313. Retailing/Distribution. 2123. 9299 Healthcare Services 2820. 4510. 5530. 9180. 9250. 7433. 2753. 2110. 3700. 8151. 6510. 6700. 7000. 9160. 6410. 6300. 9499. 2900. 7310. 9750. 2524. 4290. 8300. 4410. 4250. 9430. 2713. 2112. 7400. 2722. 4600. 9235. 2523. 8220. 4525. 9340. 8143. 2750. 7330. 9220. 7450. 8530. 9700. 9150. 2299. 9440. 2543. 7510. 2533. 2323. 9300. 8310. 2840. 5414. These sectors are based on the 17 industry classifications of the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. 6530. 8144. 4390. 5520. 2500. 8162. 4490. 2220. 9810. 2539. 8370. 7410. 2551. 2751. 8161. 2754. 2239. 2238. 6430. 2712. 2531. 2316. 7599. 8260. 8199. Biotechnology 4000. 4329. 3100. 2399. 2755. 8145. 2780. 8210. 2729. 3160. 8230. 7500. 4119. 9470. 9140. 4200. 8147. 2743. 7340. 8340. 2295. 2318. 8000. 9799. 3599. 2144. 2549. 9350. 8114. Financial Services. 9230. 9110. 2149. 5420. 6000. 8330. 9600. 2839. 9830. 8520. 8115. 4420. 9125. 8240. 2510. Semiconductors. 2832. 7499. 2519. 9710. 2125. 8500. Industrial/Energy. 4120. 7520. 4100. 4210. 2511. 9254. 8360. 7530. 7300. 2250. 4112. 3800. Media and Entertainment. 4500. 2719. 8152. 2532. 4311. 2234. 9800. 2513. 2142. 8170. 2783. 3200. 2324. 9360. 2710. 9330. 8510. 4310. 2512. 2744. 4699. 3400. 8119. 2569. 8350. 4520. 8250 Industrial/Energy 2819. 2784. 2312. 6499. 4330. 6512. 4312. 3820. 4321. 2255. 3835. 8160. 6720. Electronics/Instrumentation. 6200. 9199. 2140. 8146. 9540. 3510. 2320. 4900. 2541. 8121. 2553. 2590. 2732. 2910. 3310. 5400. 2124. 2563. IT Services. 4121. 9130. 9730. 2711. 2130. 8113. 8110. 9510. 8299. 2322. 9720. 2317. 9530. 3300. 7560. 2546. 2720. 2798. 6511. 3710. 4110. 4340. 9415. 2737. 8130. 2748. 2100. 2736. 2290. 2735. 2325. 2522. 2716. Computers and Peripherals. Networking and Equipment.

1810. 3115. 3989. 2853. 1523. 2873. 2675. 9918. 3114. 2650. 3600. 5300. 2818. 7155. 2655. 2851. 5123. 7210. 9920. 7245. 1800. 2859. 2863. 2691. 9914. 2861. 2670. 1125. 7250. 2763. 1120. 2760. 5299. 9910. 7199. 2829. 3699 Telecommunications 1000. 2823. 9450 Medical Devices and Equipment 5000. 3940. 5125. 1640. 5120. 5340. 2814. 2821. 5220. 2830. 2843. 2857. 2817. 1620. 2862. 1399. 5100. 2815. 5124. 1220. 7248. 2835. 2640. 2813. 2762. 2630. 2765. 3900. 1520. 2849. 3111. 7246. 2860. 2850. 1200. 7150. 7100. 1551. 3910. 2834. 5240. 2800. 7220. 5221. 2852. 7247. 2699. 9915. 1500. 1699. 2846. 3139. 3112. 1525. 1552. 2870. 3132. 1510. 7120. 1320. 5350. 1630. 1310. 1515. 1299. 1210. 2660. 3620. 3920. 7230. 1700. 2841. 1325. 8142 Retailing/Distribution 2810. 3119. 1524. 2854. 2869. 9999 88 Thomson Reuters . 2768. 2833. 1710. 3135. 2848. 1330. 5380. 1199. 2871. 2826. 2825. 5200. 1521. 2864. 1215. 3610. 7299. 1561. 7350 Networking and Equipment 1400. 3140. 2842 Other 9900. 7125. 1825. 2600. 1899. 1610. 1559. 5399 Semiconductors 3110. 2865. 7130. 1230. 3930. 1530. 9912. 5140. 8141. 2761. 2866. 1100.National Venture Capital Association IT Services 1560. 2766. 2769. 2856. 5130. 1600. 7110. 1130. 7140. 5210. 1300. 1522. 2858. 5310. 3630. 1562. 5110. 1553. 2855. 2879 Media and Entertainment 1110. 7160. 7170. 1720. 5121. 1569. 1135. 7200. 2838. 2845. 1550. 2665. 7240. 3410. 3990. 3130. 1549. 3120. 5122. 2822. 5230.

from either a public or private company. but are more likely to be than in previous stages of development. This involves product development and market research as well as building a management team and developing a business plan. these companies may or may not be profitable. at any stage of development. This also includes companies considering IPO. LATER STAGE Capital in this stage is provided for companies that have reached a fairly stable growth rate. Management/leveraged buyouts usually involve revitalizing an operation. with entrepreneurial management acquiring a significant equity interest. Other financial characteristics of these companies include positive cash flow. EARLY STAGE FINANCING This stage provides financing to companies completing development where products are mostly in testing or pilot production. ACQUISITION FOR EXPANSION Funds provided to a company to finance its acquisition of other companies or assets. working capital. developed a business plan. ACQUISITION FINANCING An acquisition of 49% stake or less. that is. marketing. product may have just been made commercially available. Thomson Venture Economics includes these deals in standard venture capital disbursement data when calculating venture capital disbursements where the funding is by a venture capital firm.Appendix F: Stage Definitions SEED STAGE FINANCING This stage is a relatively small amount of capital provided to an inventor or entrepreneur to prove a concept. More institutional investors are more likely to be included along with initial investors from previous rounds. Thomson Reuters 89 . MANAGEMENT/LEVERAGED BUYOUT These funds enable an operating management group to acquire a product line or business. This is a pre-marketing stage. and are ready or have already started conducting business. In some cases. The venture capitalist’s role in this stage evolves from a supportive role to a more strategic role. Again. assembled the key management. Firm acquires minority shares of a company. Usually such firms will have made market studies. or development of an improved product. EXPANSION STAGE FINANCING This stage involves working capital for the initial expansion of a company that is producing and shipping and has growing accounts receivables and inventories. It may or may not be showing a profit. A consolidator of companies in specific industries. if the initial steps are successful. Some of the uses of capital may include further plant expansion. Often these companies are closely held or family owned. Companies may be in the process of organizing or they may already be in business for three years or less. not growing as fast as the rates attained in the expansion stages.

Secondary buyouts are distinguished when the initial firm investor is different from the current investing firm.National Venture Capital Association RECAP/ TURNAROUND Financing provided to a company at a time of operational or financial difficulty with the intention of improving the company’s performance. A buyout deal on top of a buyout deal. SECONDARY BUYOUT 90 Thomson Reuters .

the designated PwC/NVCA MoneyTree Report allows Thomson Reuters unparalleled access to primary sources of information from general partners.330 financing rounds. the information available is more up-to-date than what can be presented in this report. crosschecked with other data sources. As of February 2010.com. the foremost information provider for private equity professionals worldwide. and articles from the peHUB and the Venture Capital Journal. users are encouraged to always use the most current numbers even regarding historical activity so as to maintain accuracy and comparability. PricewaterhouseCoopers. and 159. PricewaterhouseCoopers. www.070 private equity funds. MoneyTree™ Data The online database of Thomson Reuters is ThomsonONE. With the availability of the online data access. This publication is produced on an annual basis primarily using year-end data. Thomson Reuters. Primarily for this reason. Readers should note that timely industry information on details concerning venture capital investment is available from other sources such as PricewaterhouseCoopers at www. events.840 executives. and Thomson One Banker)is endorsed by the NVCA as the official United States venture capital activity database. the online research database of Thomson Reuters.com/products_services/financial/financial_products/deal_making/private_equity/ Many of the tables and charts presented in this report can be produced by using ThomsonONE. and updated as new information comes in. the private equity news releases of Thomson Reuters will often restate statistics from prior news releases.Appendix G: Data Sources and Resources For this publication. Sources of Data of advantages of using ThomsonONE.org. and the National Venture Capital Association joined forces in December 2001 to produce what was then known as the PricewaterhouseCoopers/Thomson Venture Economics/National Venture Capital Association MoneyTree™ Survey. Conducted on a quarterly basis.pwcmoneytree. research reports. we have worked with many venture firms to ensure that that their current and past data is correct. the main source for data was ThomsonONE. PricewaterhouseCoopers and other such entities around the world.nvca. By establishing working relationships with private equity and venture capital firms. On a daily basis.com Private Equity database. The private equity portion of Thomson Reuters offers an incomparable range of products from directories to conferences. the ‘Industry Stats’ section of the NVCA website.com includes blogs. two of the industry’s most widely-read publications. institutional investors. However.com (which recently replaced VentureXpert™. Deals Insight and Reuters News along with other statistical data.380 private equity firms. On a quarterly basis.com (VentureXpert). on a timely basis. Thomson Reuters has been able to gather. because the online database is continuously updated. ThomsonONE. 273. By using data gathered through the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. Thomson Reuters. the database included over 78. portfolio company information. and the ‘News & Ideas’ segment of the private equity section of Thomson Reuters found at http://thomsonreuters. ThomsonONE.com.520 portfolio companies. newsletters.com is that the reader can customize a report to better fit the needs of what they are seeking. the underlying databases can be accessed online to provide the most up-to-date and comprehensive global private equity statistics and profile information available. complete and accurate information. 31. and industry associations such as the NVCA. fund raising. Other information contained in this database is gathered through a variety of public and proprietary sources including. One Timeliness of Data Collectively. ThomsonONE.com. and the NVCA have the utmost commitment to provide an accurate historical record of venture capital activity. Verification and Updating of Data Thomson Reuters 91 .com contains investment. 14. journals. and the ThomsonONE. In addition. the database is constantly analyzed for consistency.

which contains investment. users can access the analytics portion of the database.com Both the breadth and depth of ThomsonONE. there are also advantages of using the database for a general partner as well. IPO analytic. a particularly valuable tool for large institutional investors investing in various funds. and limited partners. portfolio company. valuation.National Venture Capital Association Reporting Functionality of ThomsonONE. fund raising. Although this is not an inclusive list. A description of the features provided include portfolio highlights that show changes in portfolio activity between reporting periods. fund performance. Over 100 different types of reports can be produced detailing firm. and IPOs broken out into state and nation profiles.15 look like for just biotech? • How much money was raised by each fund stage in 2009? • What was a particular venture-backed IPO’s one year return at the end of 2009? • As of December 2009. merger analytic. These changes can include the number of funds invested in. investments. committed capital. the user can find the answers to the following questions: • Which venture firms actively co-invest with a firm I am considering co-investing with? • Which venture firms are most active in funding online financial services companies in the Ohio Valley? • What does Yearbook Figure 3. In addition.com Users can access information in terms of profiles on private equity companies. fund. the amount of capital called. IPO profiles and fund performance analysis. was the 10-year return to small buyout funds larger than that of large buyout funds? • Who are the most active acquirers of ecommerce security companies? • How much money was committed to mezzanine funds from 1997 to 2009? • How much money was invested in the venture capital industry from 1987 to 2009? • What is the performance at quarter end for private equity funds that were formed from 1998 to 2009? • In 2009. ture-backed IPOs and mergers and acquisitions • Aid in recruiting talented executives from other venture-backed companies • Quickly spot venture-backed companies in competition with your own portfolio companies • Create industry analyses to benchmark both performance and portfolio investments • Find other venture capitalists likely to support follow-on rounds • Provide clarity to investment decisions by comparing them to current market conditions • Compile valuation reports for comparable portfolio companies • Identify prospective investors and their investment histories • Benchmark valuations among recent transactions and obtain valuation comparables • Analyze investment trends by industry • Utilize returns information to limited partners using appropriate benchmarks • Tailor your pitch to investor focus size and limited partner type Another database is available to users: LPXpert. how much money was invested at each development stage in Research Triangle Pharmaceutical companies? In addition. and percent overlap of investments. and fund statistic information along with venture capital information such as aggregate fund raising. executive.com can perhaps best be shown in that it. executives. utilizing the database by general partners can be helpful to them for among the following reasons: • Plan your companies’ exits with data on both ven- Reporting Functionality of LPXpert The extent to how comprehensive LPXpert is can be shown by providing the following examples of the types of queries that could be researched using this product: • What other funds have co-invested alongside the funds I have invested in? • What are the other funds managed by the firms I have invested with. but that I am not currently invested in? Comprehensiveness of Data of LPXpert 92 Thomson Reuters . funds. Comprehensiveness of ThomsonONE. IPOs. among other types of information. firms. an online portfolio monitoring system that allows institutional investors to analyze their portfolio activity in both a cost-effective and timely manner.

how has the amount of dollars invested changed between reporting periods? ucts_services/financial/financial_products/deal_making/private_equity/private_equity_venture_capital or by phone at 1-800-782-5555. which can include a free trial and discounts on an annual subscription.com.com or LPXpert.com/prod- Thomson Reuters 93 . and Other Services For more information on ThomsonONE. please visit http://thomsonreuters. For information on NVCA membership. For information on services PricewaterhouseCoopers provides for venture capital firms as well as emerging companies.2010 NVCA Yearbook • How have my funds performed over the last 10 years ending December 31. what is the industry distribution by percentage? • Of the funds I have invested in. please visit their website at www.com.pwcmoneytree. 2009? • Of the amount that I have invested in my portfolio of funds. please contact Janice Mawson at the NVCA. LPXpert. You may contact her online through the link on the member benefits section of the NVCA website or at 703-524-2549. Accessing ThomsonONE.

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GAAP generally requires the use of investment company accounting which mandates that a fair value to be assigned to the individual portfolio companies.org/home. understanding progress in the portfolio requires some estimate of the success of the investee companies by the venture capital or private equity firm.html > Valuations). www. ERISA-regulation. The institutional investors providing capital to a fund typically become limited partners (LPs). very little money is paid out in the first four or five years. The venture firm becomes a general partner (GP) in the limited partnership.cfainstitute. Much more attention is being paid to the other category: portfolio company valuation guidelines. most recently revised in March 2007.Appendix H: Portfolio Company Valuation Guidelines In the United States. while every portfolio company receives funding with high expectations. The first is portfolio performance presentation formats. While many investors and fund managers agree that financial measurements mean little for the first three or so years of a fund.. e. GAAP requires fair value measurement for portfolio positions. This document and accompanying guidance can be currently found at http://www. In most of the limited partnership agreements defining GP-LP relationship. The chronology and sections below refer to this category. are the most commonly referred to in the US. longer in the life sciences arena. Therefore. During that period the venture capital fund reports progress to the limited partners. especially for pre-revenue or even pre-EBITDA companies. In many cases.peigg. most GPs must issue financial statements using fair value. the life of a typical venture fund is at least 10 years. However.g. this means quarterly portfolio updates and a complete audited annual financial statement. The agreed valuation procedures for individual portfolio companies become the basis for progress assessment as the fund matures and ultimately distributes cash to the investors. it can take several years to determine if a particular company is a likely winner. Also. Neither NVCA nor Thomson Reuters has determined how widespread the adoption of those standards is or will likely be. Guidelines fall into two categories. Suffice it to say for now that portfolio valuation guidelines developed by the Private Equity Industry Guidelines Group (PEIGG. after that the fund wants to communicate progress to the investors. a venture capital fund is usually organized as a limited partnership. An unrelated European consortium has created “international” guidelines which they intend to conform to IASB rules. calculations. This was developed by the CFA Institute. Therefore.org/centre/codes/gips/. So while portfolio company valuations are more of an art than a science. An example of the former is the Private Equity Provisions of the Global Investment Performance Standards (GIPS). the GPs are required to provide financial reports quarterly (unaudited) and annually (audited) prepared according to United States Generally Accepted Accounting Principles (“GAAP”). and disclosure. Thomson Reuters 95 . For a typical venture fund. This is consistent with the LPs need for fair values of their investments as well as 3rd party or regulatory requirements. the NVCA has not endorsed or otherwise commented on these standards. most limited partner agreements (LPAs) establishing a venture capital fund require the venture firm to provide quarterly and annual financial statements using Generally Accepted Accounting Principles (GAAP). This is where specific valuation rules and processes become important. While many of the specifications and terminology line up with current practice in the United States. That version has received little attention in the US. Why Valuation Guidelines Matter What ultimately matters to the investors and private equity practitioners is the cash which has been distributed to the investors during the life of the fund compared with the original money put in.

NVCA position was widely consistent with input provided by members of the NVCA CFO Task Force. GPs prepare for their first audits since the effective date of AICPA’s SAS 101 rule. bless. especially in the venture capital side of private equity. PEIGG issues guidance on controversial paragraph 30 which was the most discussed and debated provision in the guidelines. The second development is international venture associations creating localized guidelines based heavily on these guidelines.privateequityvaluation. 96 Thomson Reuters . of which portfolio company valuation guidelines was the first one. This becomes PEIGG guidelines version 2. September 2006 – Financial Accounting Standards March 2004 – NVCA board issued statement of support. members at large. 30 non-US private equity and venture capital associations endorsed this document. in fact. and the NVCA Board of Directors.com. true. which now refers to the September 2004 version of the PEIGG guidelines. The most recent edition is October 2006. adopt. publish. Subsequently. fund-of-fund managers and others formed the Private Equity Industry Guidelines Groups (PEIGG). April 2006 – Guidelines issued by a consortium of three Europe-based venture capital associations (AFIC. Informal feedback from US venture capital professionals reviewing this document was that the document was more formulaic than PEIGG’s counterpart and only partially compliant with US GAAP as defined at that time. The overall constitution of this group is not hugely different from the 1989-1990 group. PEIGG also hails the NVCA support. Go to http://www. and fund-of-fund managers formed a group to develop a set of portfolio company valuation guidelines. 2003 – A self-appointed group of private equity practitioners. 1989-1990 – A group of investors. Despite no endorsement by the NVCA these guidelines became accepted practice by much of the US industry. December 2003 – After an extensive input phase and review by various industry groups and service providers. PEIGG agrees to minor wording changes in two paragraphs. It was not clear to what extent this increased scrutiny would affect valuation expectation and practices. These guidelines were referred to by many as being issued by the NVCA but in fact they were not. language the NVCA board used in its March 2004 statement of support.National Venture Capital Association The Evolution of Valuation Guidelines: 1989 to 2009 March/April 2004 – The Institutional Limited Partners Association (ILPA) hails NVCA support as welcome support – especially as it relates to the GP and LPs mutually agreeing to the valuation process. and in part inspired by. These two wording changes were consistent with. the NVCA did not endorse. EVCA) are released. The PEIGG group announced that it was contemplating taking on four initiatives. The authors cite compliance with IASB rules. July 2004 – After consulting quietly with various industry groups. private equity fund managers. but not endorsement as some pundits had hoped. there had been multiple iterations of the European and British guidelines. The NVCA also decided to make the PEIGG document widely available to its members. Throughout the process PEIGG had been actively soliciting feedback and input from a number of industry groups including the NVCA. The text of that statement is below. or otherwise opine on the guidelines. December 2004 – As most fund accounting year’s end. BVCA. March 2005 – NVCA board issues an updated statement. These guidelines have gotten little traction in the US and expected to be updated in 2009. This section reviews the various efforts to create comprehensive portfolio company valuation guidelines for US private equity. The text of NVCA’s statement is printed below. by 2005. These were created in Europe and other international regions. the first version of the PEIGG guidelines were issued. September 2004 – Based on input from ILPA and others. fund managers. Essentially that rule says that if a reporting entity claims to be reporting “fair value” – which is required by GAAP – then the auditors must document and test that this is. Decade of the 1990s – Two noteworthy developments occurred in the 1990s. In fact. Contrary to a very persistent rumor. October 2004 – ILPA endorses the PEIGG guidelines.

htm. and other investments in private companies) has grown and matured.S. and the need to determine the allocation of distributions of fund realizations.com. some auditors began requiring selective compliance in advance of the 2008 effective date. Only a few of its 145 pages relate directly to typical venture capital and private equity funds.sec. August 2008 – SEC proposes a roadmap toward While the NVCA has not specifically endorsed the PEIGG portfolio company valuation guidelines (see statement in next section below).The decreases in public market valuations accelerate. The interest Thomson Reuters 97 . by its very nature private equity is an asset class in which judgment plays a significant role. but supportable. Details at www. March 2008 – the International Private Equity Valuation & Venture Capital Valuation (IPEV) Board reconstitutes and re-launches itself. authoritative GAAP became contained in a single Codification and the prior nomenclature went away. private equity industry (defined as venture. views on valuation. expanded to include 5 practitioners from the United States. March 2007 – PEIGG issues a revised portfolio company valuation guidelines document to reflect the Fair Value Measurement standard (FAS 157). Details are at http://www. FAS157 is now Topic 820 Fair Value Measurements and Disclosure. mezzanine. pre-revenue companies tricky. global accounting standards and publishes for public comment the concept of adoption of International Financial Reporting Standards.S. it believes that the guidelines document should be readily accessible to its members for reference and use. stems from a number of sources. Private Equity Valuation Guidelines (“Guidelines”) is to provide managers a framework for valuing investments in portfolio companies at fair value and to provide greater consistency within the private equity industry with regard to valuations. such as an investor’s desire to measure interim performance. Because FASB maintains that this is a clarification and further definition of fair value which was already required for portfolio accounting.” Familiar standards will no longer exist. 2.privateequityvaluation. The objective of the Updated U. The initial focus of the group is on convergence of US PEIGG and IPEV valuation guidelines. Be sure to refer to www. Accordingly. investors in the same company may have different. (Text below) July 2009 – Effective July 1.org for the latest version and guidance on the document. buyout. AICPA guidance and EITFs under single “Topics.peigg. September 2008 – At this point. This makes valuation of even on-track. investor’s need for fair value data to report investments in their own financial statements. its participants have become increasingly interested in the appropriate reporting of fund values. However. Historically there were few The PEIGG Guidelines OVERVIEW Introduction 1. a manager’s need to report and measure valuations in accordance with fund agreements. Existing US GAAP was recast in 90 topics which include all related FASB pronouncements. For example. September 2007 – NVCA board reaffirms its prior position on the PEIGG guidelines to refer to the most recent version. This changed what appeared a couple of months earlier to be a generally painless implementation of FAS 157 to a fluid environment with no precedent and little guidance. As the U. December 2008 .gov/news/press/2008/2008-184. The NVCA issues a one page information letter to its members to shed light on applying FAS 157 in a valuation microburst/whirlpool. The guidelines as updated in March 2007 to reflect FAS 157 are printed below. The NVCA thanks the members of PEIGG for their efforts and for their permission to reprint the guidelines here. This has led to increased scrutiny of portfolio company values and the need for greater consistency of valuation methodologies employed by managers of private equity funds. visible signs of a valuation whirlpool are hard to miss.2010 NVCA Yearbook Board (FASB) issues its long-awaited and long-anticipated fair value measurement standard as FAS 157.

or lacking a principal market. 157). 157.Audits of Investment Companies. For example. 4. Securities of private companies. the estimate of fair value should incorporate all reasonably available information about the business and utilize assumptions that market participants would normally use in their estimates of value.National Venture Capital Association authoritative guidelines compliant with U. when a manager’s past experience indicates that liquidation preferences will likely be renegotiated or may not be fully enforced at the time of liquidation.. will not have quoted market prices available. To the extent the Guidelines are adopted by a manager and a Valuation Policy Committee and in one or more respects the Guidelines are inconsistent with the fund agreement. transparent and prudent basis. The objective is to estimate the exchange price at which hypothetical willing marketplace participants would agree to transact in the principal market. in consultation with the Valuation Policy Committee (as discussed below) may develop and document appropriate definitions of these subjective terms. private companies at times engage in arm’s-length transactions for issuances of their equity or debt securities. The Guidelines seek to have all investments in portfolio companies reported at fair value on a consistent. substance takes precedence over form. Included in these Guidelines are terms that are subjective in nature.32). The Guidelines are not intended to be all encompassing. The estimate of fair value should seek to best replicate the amount at which the investment could be sold in a current transaction between willing parties. Private Equity Valuation Guidelines are intended to assist managers in their estimation of fair value and are intended to be consistent with GAAP (FASB Statement No. the manager. and could therefore be used as an estimate of the theoretical exit price. they are to be a guide to assist managers and investors in agreeing to a valuation framework while allowing a manager to exercise its best judgment in applying the Guidelines. 3. defined in accordance with GAAP is “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” (FASB Statement No. by definition. paragraph 5). fair value is the estimated “exit price” in that market. 7. Fair value as Fair Value Concept 10. When quoted market prices or arm’s-length transaction prices as described above are not available. 157. the manager is strongly encouraged to use the expected results rather than the form of the agreement. and could have different meanings in various factual situations. Rather.S.S. No matter which market is deemed most appropriate. Fair Value Measurements.. the most advantageous market. However. nor are they intended to eliminate all subjectivity. Valuations should be updated on each measurement date. managers are expected to use their judgment. limited partners) incorporating feedback from a wide number of industry participants. Of course. general partners) and investors (i. In September. The Updated U. generally accepted accounting principles (GAAP) that required specific procedures for estimating fair value of investments in portfolio companies held by private equity investors.e. 6. generally on a quarterly basis. valuations used for annual and quarterly performance reporting should be used in private placement 98 Thomson Reuters .03) and requires investments to be reported at fair value (paragraph 1. In utilizing judgment.e. 5. The AICPA Guide’s definition of Investment Companies includes Private Equity Investors (paragraph 1. The value of these transactions could serve as an observable market price similar to a quoted market price if the transaction is both recent and between willing parties for the same securities as those for which the fair value determination is being made (deemed a level 2 input by FASB Statement No. the fund agreement would govern (absent a specific amendment thereto). the Financial Accounting Standards Board released Statement of Financial Accounting Standards No. The Guidelines are not intended in any way to modify the provisions of the fund agreement relating to the subject matter hereof. 2006. such as materiality. 8. In determining the fair value of individual investments using these Guidelines. While it is outside the scope of these Guidelines to force specific definitions upon its users. These Guidelines were created jointly by managers (i. 9. 157) and the AICPA Audit and Accounting Guide .

The manager will then need to determine General Guidelines 16.2010 NVCA Yearbook memorandums and other marketing materials. 12. 17. 11. Managers of funds should. These Guidelines encourage managers to use the “market approach” in most situations (see FASB Statement No. some of which are discussed in paragraphs 41 and 42. Historically. However. there are other valuation methodologies. II. should establish the written valuation parameters to be consistently followed by the fund’s manager using these Guidelines. 18. either alone or in combination. these Guidelines provide a consistent and transparent methodology for determining fair value. However. a fund’s advisory committee. the Private Equity Industry used cost or the value of the latest round of financing as an approximation of fair value. or a portion of. Such an approach is incompatible with the concept of fair value described above. On each valuation date managers need to take into account available information from market participants. formulate or approve the valuations. often without taking into account other facts and circumstances. in consultation with the Valuation Policy Committee. a manager may conclude. Valuation Policy Committee how the total enterprise value is distributed among the various securities of the company. These other methodologies or techniques may be 15. The Valuation Policy Committee could be all of. PRIVATE COMPANY VALUATION METHODOLOGIES 13. without undue cost and effort. practices. As a result. As further outlined below. Since value is often realized through a liquidity event of the entire company. The fund manager. contact other sophisticated investors to discuss the valuations of common investments and the factors considered in their valuations. To value an investment. managers are not required to use other investors’ valuations since the estimate of fair value is the responsibility of the managers. that the best indication of fair value is provided by cost or the value of the latest round of financing. the methodologies discussed in this section involve estimating the value of the company as a whole as an initial step for valuing the company’s privately issued securities. These Guidelines acknowledge the perception that bias exists or has the potential to exist in a nonindependent (versus independent) valuation performed by a fund’s manager. (Neither these Guidelines nor GAAP require managers to obtain independent valuations). managers should place the most weight on valuation methodologies that are clearly objective and timely. For Private Equity. procedures and methodologies as well as valuing their investments in portfolio companies The Valuation Policy Committee should not set. Private equity fund managers are solely responsible for establishing and documenting valuation policy. At each valuation date a manager must make a determination of fair value for each investment. as the primary technique to estimate the fair value of equity securities in private companies. The agreed upon valuation policy and deviations from that policy should be communicated to the Valuation Policy Committee and the limited partners by the manager. after considering the facts and circumstances as outlined below. the value of the company as a whole at the reporting date will often provide the best evidence of the value of the investment in that company. As a result. the relevant marketplace and the global economy along with specific facts and circumstances in determining the fair value of their investments. it is recommended that the manager of each private equity fund establish a Valuation Policy Committee consisting of a subset of the fund’s investor representatives. transparent and prudent basis. except as required by the fund agreement. if such a committee exists. the market approach usually is the most appropriate. Managers are to fairly value the investments in their portfolio companies on a consistent. 157 allows managers to utilize three valuation techniques. FASB Statement No. In addition to the market approach technique discussed above. The Valuation Policy Committee should periodically discuss the level of the manager’s adherence to the fund’s valuation policy parameters. paragraph 18a) utilizing Comparable Company Transactions or Performance Multiple inputs. Thomson Reuters 99 . 157. 14.

and industryspecific benchmarking (described in FASB Statement No. b) Market. but it is not necessarily the only factor. If a private financing will be completed with a high degree of certainty in the near future. After some period of time. where. The value of the last round of financing is a factor in determining fair value. typically the value of prior investments was not increased in a subsequent higher priced financing round unless a new investor ‘validated’ the new pricing. 19. regardless of the manager’s participation. escrows. b) The transaction occurs under duress. it should continue to be used until a new methodology will provide a better approximation of the investment’s current fair value. once used. privileges and preferences of preferred securities are discussed in paragraph 47. Determination of valuation adjustments should typically be based upon actual positive and negative events. developing proprietary technology. a manager should consider their best estimate of the upcoming new financing if it can be objectively determined that the prospective financing is at fair value. a) The current performance of the company is significantly above or below the expectations at the time of the original investment. including valuing interest bearing securities.National Venture Capital Association appropriate in certain circumstances. 24. to establish the value of a previous investment. liquidation preferences. valuing net assets. Examples of changes in circumstances which indicate a change in fair value may include. PIK dividends. The manager must evaluate whether such a premium is representative of what the most likely buyers of the company would also pay upon exit. whether the price paid by the strategic investor is deemed to be the exit price (fair value) expected from market participants. but are not limited to. and the pricing of the transaction has been substantially agreed. achieving technology breakthroughs. cost or the latest round of financing becomes less reliable as an approximation of fair value. 21. economic or company specific conditions 100 Thomson Reuters . Potential indicators of this situation will include evaluation of the company’s success or failure in attaining certain milestones. c) The transaction price includes transaction costs (transaction costs are expensed under GAAP). This approach may be different from historic practice. progressing through clinical trials or significantly exceeding or failing to meet budgets. warrants. 26. 20. Occasionally a round of financing includes a significant investment from a strategic investor paying a premium due to benefits accruing uniquely to itself. not upon expected accomplishments and performance. Managers should reconsider a company’s fair value in connection with each material equity financing. Cost / Latest Round of Financing 25. the manager must assess whether fair value has changed even though there has not been a new round of financing.157 as the income and cost approaches). It is expected that there would not be frequent changes in valuation methodology. While entry prices and exit prices are different conceptually. The transaction price may not represent fair value upon purchase when: a) The transaction is between related parties. d) The market in which the initial transaction takes place is different than the principal or most advantageous market in which the exit transaction would take place. A subsequent equity financing that includes substantially the same group of investors as the prior financing is an appropriate factor to consider in valuing prior investments unless it can be demonstrated that the financing no longer represents fair value. for the Private Equity Industry these Guidelines presume the manager at the time of the initial investment has considered near term company performance in determining investment valuation. 23. 27. convertible securities. Therefore. Other valuation matters. cost (the transaction price) may be fair value (the exit price) upon purchase. and therefore. the following: Deviations from Cost / Latest Round of Financing 22. Therefore. Regardless of the valuation methodology used. and include discounting cash flows. and other rights.

that have significant manager involvement face a daunting task to create value for investors. in the absence of market-based financing events. c) Substantial decreases in the value of quoted. These Guidelines acknowledge that until a company achieves marketplace acceptance for its product or service. Thomson Reuters 101 . However. Diligence. Because of the difficultly in building sustainable. and in particular when considering the valuation write-up of early-stage companies. Comparable Company Transactions 33.. However. Managers may consider historic cost or the price paid at the most recent round of financing in making their fair value determination. All such changes and the factors upon which the changes are made should be reviewed with the Valuation Policy Committee. increases in value should only be made where the manager can support the increase using the methodologies discussed in these guidelines or using other techniques common to the marketplace.g. significant ownership dilution caused by recapitalization of the company. changes in the legal or regulatory environment in which the company operates. public debt). the manager will be required to exercise prudent judgment and carefully consider the broad indicators of potential changes to fair value (such as market conditions. As a result. 32. a bankruptcy filing. Potential indicators of this situation will include evaluation of broad changes in the economic climate. both decreases and increases in investment fair value should be recognized when warranted. long-term value in a private equity backed business.2010 NVCA Yearbook have significantly improved or deteriorated since the time of the original investment. but should not use cost or the most recent financing price as the sole determinate of fair value. Thus. Recommended methodologies are discussed below. This methodology involves deriving the value of a company through examination of third-party investments in comparable equity securities of the company. prudence and caution should be applied when valuing private companies. 30. 157). or significant fluctuations in share prices of quoted companies operating in the same or a related industry. Even private companies 31. Usually. The result of such consideration will provide indications whether the carrying value of the investment should be increased or decreased to represent fair value. These comparisons should be appropriately adjusted for any control premiums. 28. may not easily lend itself to an analytical process. if any. synergistic benefits or other excess benefits or detriments that accrue to the owner when determining a proper comparable valuation. However. These Guidelines recognize that building longterm value in a private equity backed business is not an easy task. When valuation adjustments are necessary. it is unlikely that truly comparable companies with determinable fair values will be readily identifiable. increased or decreased risk factors faced by the company. and other factors as discussed above). defaults on any obligations of the company. remembering that fair value is defined as the exit price on the measurement date in a hypothetical transaction. it is natural that decreases in value may be more easily identified and justified than increases in value. many positive events need to happen in order for portfolio companies to succeed. Estimating the extent of a change in fair value. changes in the company’s cost structure. or liquidity concerns that are expected to be more than short term in nature are circumstances which may indicate a potential impairment in value. the more consideration should be given to reviewing changed circumstances and potentially determining fair value utilizing other inputs. The longer that fair value has been estimated using cost or the price paid at the most recent round of financing. more senior securities of the company (e. managers must recognize that there should be no bias toward either increasing or decreasing carrying value to record fair value. managers often become aware that certain of their investments are likely to fail given their insight into the company. relevant stock market indices. the methodology used should be based on relevant comparable data wherever possible (“relevant comparable data” as used in these Guidelines is intended to be consistent with the input hierarchy discussed in paragraphs 22-31 of FASB Statement No. changes in the financing markets. 29. examination of transactions in equity securities of comparable companies and direct comparisons to similar companies.

To the extent comparable transactions cannot be ascertained and fair value cannot be reasonably assessed and reliably measured using comparable transactions. The multiple to be used. 38. There may be significant changes in the financial. The valuation determined using this methodology is calculated by applying the most appropriate and reasonable multiple derived from reference to market based conditions of quoted companies or recent private transactions. The manager should be confident that reasonable. relevant and sustainable performance metrics are utilized. Performance Multiple sustainable performance. Discounts applied to private securities may be higher than those applied to restricted public securities. Managers should share with the Valuation Policy Committee the factual data and their assumptions that support the sustainable performance used in the valuation determination. discounted cash flow (DCF) methodologies should only be used in limited situations using a discount rate commensurate with the risks involved. To the extent fair value cannot be reasonably assessed and reliably measured using performance multiples. should be one of the following: a) Current average comparable public company multiple for similar companies in the industry. Managers should share with the Valuation Policy Committee the factual data that generates the multiples used in the valuation process.National Venture Capital Association 34. a discount to a private company’s equity value may be appropriate. among other factors). 36. the following Performance Multiple methodology should be used. economic or legal climate in which the company operates which harm or enhance the prospects of the company. are as follows: a) Because of the need to use significant estimates and forward-looking information. 42. The performance multiple methodology applies a relevant multiple to the performance of the company being valued in order to derive the value of the company. This approach is most applicable to companies that have achieved positive and sustainable operating performance. which may necessitate the adjustment for one-time and non-recurring items. c) The original acquisition multiple when no other similar public or private multiples can be ascertained. 35. which may be appropriate in certain circumstances. Other Valuation Methodologies 41. and 39. b) Current average multiples for recent private transactions of similar companies in the industry. The multiples used should be those that are used regularly and routinely to value companies in the industry in which the subject company is operating. the following methodologies may be considered. 40. These situations would involve instances where the methodologies previously discussed in these Guidelines prove incapable of addressing the specific circumstances. should only be used in estimating fair value where appropriate. which may need to be adjusted for differences in terms of growth prospects and risk attributes (depending on the size of the comparison sample. which are customarily and routinely used in specific industries such as price per subscriber or other industry norms. A few other valuation methodologies. The most appropriate and reasonable multiple as determined above will be applied to the relevant operating performance metrics of the company to estimate fair value. which are discussed in paragraph 46. regulatory. the manager should exercise prudent judgment in 102 Thomson Reuters . c) Industry-specific benchmarks. 37. The manager needs to consider these changes in evaluating a company’s b) Net asset valuation methodologies should be used for valuing investments in businesses whose value is derived primarily from the underlying value of their tangible assets rather than their performance. but these changes may not yet have affected performance. if applicable. If the multiples used are derived from public company comparables. In those circumstances where there are indications that a change in carrying value is appropriate based on paragraph 27. but the methodologies described in paragraphs 32-41 are not applicable.

46. When determining a discount to actively traded restricted securities. d) Warrants should be carried at their fair value. the manager is strongly encouraged to use the expected results in Thomson Reuters 103 . 44. e) The rights associated with preferred stock are generally divided into two broad categories—economic rights and control rights. Once the enterprise value of the company is determined in accordance with these Guidelines. where transactions do not occur with sufficient frequency and volume to provide ongoing pricing data. Actively traded public equity and public debt securities are required to be valued at the closing price or bid price. factors that should be taken into consideration include the company’s trading characteristics (the extent to which the market for the security is active). an adjustment to the last transacted price may be appropriate or other valuation techniques may be utilized based on all relevant factors. the last transacted price may not provide the best indication of fair value. Examples of restrictions that may warrant a discount include rule 144 holding periods and underwriter’s lock-ups. Restricted IV. the amount of the discount should also decrease. When a manager’s past experience indicates that liquidation preferences will be renegotiated or will not be fully enforced at the time of liquidation. VALUATION OF PUBLICLY TRADED SECURITIES Unrestricted 43. As the remaining length of the restriction decreases. Inactive b) PIK dividends should be accrued in accordance with the terms of the underlying security. the investor’s ability to sell its position when the restriction expires. III. The adjustment of the discount will vary depending on the duration of the restriction. except as discussed below. A quoted price is not readily available for securities which trade in inactive markets. Active markets are defined as a market in which transactions occur with sufficient frequency (daily) and sufficient volume to provide pricing information on an ongoing basis. In such situations. A discount from values of actively traded securities should be taken for holdings of securities when there is a formal restriction that limits sale of the securities. c) Valuations of securities denominated in currencies other than the base currency of the fund should be adjusted for changes in the spot prices of the currency. OTHER MATTERS 47. Such securities should be valued consistent with the Guidelines set forth above. Therefore. regardless of the size of the position held. 157). and the term of the restriction. In addition. Discount (blockage) factors for unrestricted securities that trade in an active market are prohibited by GAAP (FASB Statement No. Limitations on sale based on rule 144’s volume tests or based on a closed trading window for board members do not qualify as formal restrictions related to the security itself. There are a wide variety of securities and capital structures used in the private equity industry. Some examples and valuation guidance for securities and structures which have not been specifically addressed by these Guidelines include: 45. when making their fair value determination managers should recognize that liquidation preferences are often granted to investors as an inducement to invest in a company. a) The carrying value of private interest bearing securities should be based on the underlying company’s ability to service and repay debt. fair value should be determined by allocating value to shares of preferred and common stock based on their relative economic and control rights. A valuation discount may be necessary depending on the health of the company and the realizability of the underlying securities. Therefore discounts are not allowed by GAAP in these situations. Discounts for restricted equity securities from their market price typically range from 0% to 30%.2010 NVCA Yearbook considering assumptions that marketplace participants would utilize in their estimate of fair value.

transparent and prudent basis. using its best estimate. If the security is not currently convertible. • Focus the private equity industry on the need to determine fair value for each of their investments in a manner that is consistent with these Guidelines. they are to be a guide to assist managers and investors in agreeing to a valuation framework while allowing a manager to exercise its best judgment in applying the Guidelines. The concepts outlined in these Guidelines are intended to be consistent with Level 1. ultimately expects to receive from the buyer in light of the escrow’s various conditions. Rather. 51. • Encourage managers to approach valuation from a consistent. 50. FASB’s Statement No. private equity funds. As the private equity industry has matured in the United States. it is also understood that a manager may be GAAP compliant without utilizing these Guidelines. If managers adopt these Guidelines it is expected that their determination of fair value will be GAAP compliant. 53. It is recommended that managers and investors work jointly to develop a timetable to implement these guidelines. The Guidelines are not intended to be all encompassing. If the value of the underlying security is less than the conversion price. nor are they intended to eliminate all subjectivity. It is recommended that managers and investors collaborate to share experiences and best practices across relationships.National Venture Capital Association determining the valuation of a security which has a liquidation preference. The FASB valuation hierarchy has not been restated in these Guidelines. The Private Equity Industry Guidelines Group acknowledges that the application of these guidelines may result in a departure from past valuation practices. h) Because of the inefficiencies of the secondary market. This collaboration will narrow the range of specific definitions of subjective terms and will enhance the consistent application of these Guidelines. and investors in. These Guidelines are consistent with US Generally Accepted Accounting Principles. CONCLUSION 49. the carrying value of the convertible security should be based on the underlying company’s ability to service and repay the security. 2 and 3 inputs as defined. These Guidelines are designed to provide a framework for addressing the majority of the private equity industry’s valuation questions on a consistent. the use of an appropriate discount in valuing the underlying security should be considered. transparent and prudent basis. It is expected that over time the broad use of these Guidelines will become industry practice 48. The key goals of these Guidelines are as follows: f) Currently convertible securities should be valued at the excess of the value of the underlying security over the conversion price as if the security was converted when the conversion feature is “in the money” (appropriately discounted if restricted). 2 and 3 inputs (Statement No. The input level is a required GAAP disclosure and provides users of financial statements with additional clarity in how a manager made their determination of fair value. 104 Thomson Reuters . 157 paragraphs 2131). there is a need for greater consistency of valuation standards/methodologies by both managers of. V. • Provide greater transparency into valuation results through the use of the Valuation Policy Committee as described in the Guidelines. 157 Fair Value Measurements utilizes a hierarchy described as Level 1. purchase and sale transactions of partnership interests in and of themselves may not be appropriate in determining the value of portfolio company valuations or positions in funds. 52. However. g) If deemed determinable beyond a reasonable doubt (virtually certain) escrows from the sale of a portfolio company should be valued at an amount that the manager.

if any. relevant comparable transactions. rules of thumb or safe harbors for establishing Fair Value. to Generally Accepted Accounting Principles and fair value measurement standards. but much more judgment is required when we are in a period of economic discontinuity. performance compared to plan. The NVCA encourages diligence. a GP could ask: “Given my portfolio company’s current cash position. These methodologies should be agreed to by the firm’s investors (LPs). the NVCA suggests its members include a review of the Private Equity Industry Guidelines Group (PEIGG) December 2003 “Private Equity Valuations Guidelines” document. IPO markets appear closed. 2007. When evaluating current valuation procedures or developing new approaches. For example. what is the lowest price that I would Thomson Reuters 105 . NVCA Member Alert – Fair Value Considerations for Venture Capitalists December 2008 The following alert was sent to the NVCA membership to highlight certain issues and considerations to be explored in the application of FAS 157. including a financing round’s specific terms and conditions. an independent group which sought and reflected input from the NVCA and other industry stakeholders. the NVCA board statement of support is below: investors as they attempt to value privately-held investments at December 31. Fund managers must continue to exercise their sound judgment in estimating the Fair Value of each portfolio company after considering the relevant facts. The valuation process does not change. probability of meeting forecasts.. There are no easy outs. best considerations for Fair Value determination include the following: • The Fair Value of an investment portfolio is the sum of the Fair Value determined for each portfolio company using a “bottoms up” approach. or cannot sell. the projected environment for its product or technology. their private investments in this market. cash burn rate. even though “exit markets” may have few buyers. GPs must use their judgment in estimating the current Fair Values of their investments. follow and communicate clearly the specific procedures and methodologies used for valuing their portfolios. the fair value measurement standard. “We are operating in a severely distressed investment environment that has deteriorated rapidly in the past few months. 2008? The short answer is: despite the current very challenging economic environment. What does this mean for venture capital • Valuations should reflect specific factors in a buy/sell context. such as valuation changes to early-stage companies in the absence of market-based financing events.2010 NVCA Yearbook NVCA Position on Portfolio Company Valuation Guidelines (March 2007 Version) The NVCA Board of Directors reaffirmed its support for the latest iteration (March 2007) of the PEIGG Guidelines on September 18. US GAAP requires Fair Value reporting for virtually all VC firms because they are “investment companies. prudence.peigg. The NVCA thanks David Larsen of Duff and Phelps and several members of the NVCA CFO Task Force for their role in drafting this document: As always. as reissued in March 2007 (found at www.” The NVCA recommends that its members create. and caution when implementing the specific elements of any guideline. Fund managers need to establish Fair Values even though they may not currently need to sell.” US GAAP continues to define Fair Value as: “the price that would be received to sell an asset…in an orderly transaction between market participants at the measurement date. when required. recognizing that the ultimate responsibility for valuations remains with the general partner. Applying a “top-down” overall percentage adjustment to the aggregate portfolio’s value is not compliant with US GAAP. While the NVCA has not specifically endorsed the PEIGG or other valuation guidelines. Such judgment should take into account all relevant information. including current market conditions. and conform. Virtually all LP agreements require GPs to use US GAAP for financial reporting.org). and there are few. We commend the fine efforts of PEIGG. as a board member. etc.

The fact that the macro market is distressed probably adversely impacts the value of most companies. In summary. determining Fair Value continues to require the exercise of judgment based on objective evidence. Paragraph 7]. If you need more details about Fair Value. • Each valuation should reflect a company’s degree of progress from the prior reporting date to the current one.peigg.org. or you can download the 158-page SFAS 157 at www. • The Fair Value at December 31 in many cases will likely be different from the value at September 30. but should assume “exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary…” SFAS 157.National Venture Capital Association sell the company’s stock today in an orderly sale with a willing buyer?” [Footnote: A fund manager should not assume a “fire sale” of the stock.” • The valuations set by the most recent financing round – perhaps even one in the third quarter of 2008 – may be stale and inappropriate for determining Fair Value. • To determine a portfolio company’s Fair Value. you might consider the 18-page PEIGG Valuation Guidelines at www.org. given the deterioration of the macro economic environment. especially given current market conditions.fasb. 106 Thomson Reuters . GPs should apply their judgment in a consistent manner and evaluate the same data they use for monitoring a company’s performance and progress. This negative impact may be compounded by disappointing company performance or mitigated by tangible and sustainable company progress. such as calibrating the original investment decision with the current performance of the company and the current economic environment. There is no magic formula or weighting of factors.

should the international rules become the new U. and international accounting standards. While seemingly distant from the U. A key concern for the U. comparability.Appendix I: International Convergence A GP’s Primer on Global Accounting Standards Convergence A recent flurry of media coverage has focused on the possible upcoming convergence of U. a separate set of rules emerged from the International Accounting Standards Board (“IASB”) which was Europe-centric. venture fund statements to their investors would become unusable. The other set would be to provide meaningful portfolio information to investors and other stakeholders. We would expect this dialogue to center on transparency. venture capital industry are matters specifically affecting fund reporting. As a first step towards understanding and engaging in constructive dialogue in both of these areas. the United States has been developing generalized accounting principles referred to as Generally Accepted Accounting Principles (“GAAP”). and other priorities at the SEC. for example. More relevant to the U. GAAP. In February 2010. rules. neither) is the best system overall for the U.S.S.S. the details need to be worked through. One set would be used to create audit GAAP financial statements. Why Has The Convergence Issue Come to the Surface at This Time? In 2009. and expert opinion on what all of this means to our industry.S. so if current GAAP provisions were not continued.” pronounced “IFF-ers”). This recognition of the importance of Investment Company Accounting is significant. with a new administration. Reports are that international venture capital and private equity firms currently subject to international rules are simply ignoring those provisions or additionally providing side schedules prepared in accordance with U. international rules become GAAP.S. although it not clear who the audience for those statements would be. Much of this coverage discusses which accounting system casts which public companies in the most favorable light. GPs would likely have to keep an additional set of books. relevance. the Boards are reported to have chosen to generally follow criteria set out in current GAAP Topic 946. These rules became known as the International Financial Reporting Standards (“IFRS. FASB develops and updates GAAP and the SEC has adopted these accounting rules for public company reporting and other situations over which the SEC has jurisdiction. rather than a new more restrictive test for qualification that would have excluded some venture capital funds. venture capital industry is being able to continue investment company (IC) accounting. Over recent years. In recent years. and ongoing costs in addition to any conversion costs. The keeper/arbiter/decider of GAAP is the Financial Accounting Standards Board (“FASB”). specifically the financial statements provided by GPs to LPs under international rules. reliability. it is important that all business constituencies weigh in on which system (current U. if the existing For years. GAAP vs. business community going forward.S. Furthermore. which might be significant. on a parallel track. Sources report the Boards jointly agreed to permit an investment company exception to consolidation rules — a change from the existing IAS 27. analysis.S.S. new SEC leadership. International vs. If investment company accounting is removed from GAAP. As with any general agreement. There are no provisions in the international rules for IC reporting. venture capital industry. the direction and timetable for convergence became less clear. reports from a FASB-IASB meeting on convergence suggest a major initial victory for venture capital financial reporting. the large number of multinational corporations complained that they had to Thomson Reuters 107 . the NVCA CFO Task Force has appointed a subgroup to begin gathering facts.

GP-to-LP Reporting One area already identified as a possible problem area is GP to LP reporting. Annual audits of these reports are GAAP-based. However. This all contemplates a well-thought-out and informed decision in two years. But unlike UNIX. U. public companies to convert from U. Please check the www. which has grown to roughly a twofoot stack of written rules. Until this point.000 feet. however we should logically expect alignment of private and public company rules. while the IASB produces plain vanilla IFRS standards. Since most fund agreements require GAAP financials.National Venture Capital Association endure keeping two sets of books and this prompted the concept of convergence. 2011 is also the year that major U. Nothing in the SEC proposal or the FASB-IASB memorandum says that the U. IFRS – Never Generalize Even viewed from 30. The updated FASB-IASB memorandum of understanding is at http://www. Japan.S. This would mean an end to fair value reporting as we have known it. essentially unusable to the LPs in determining the value of their own portfolio holdings.S. At about the same time. each country/jurisdiction has been able to create its own version of IFRS. Most of the SEC and FASB efforts to date have focused on public company reporting. much of Washington’s attention was focused on rescuing troubled assets and economic stimulus. the financial statements for a number of the portfolio companies would have to be consolidated into the operating financials of the venture capital fund itself. Under GAAP. GAAP vs. you need the implementation guide that combines with the original document to create its own two-foot stack. U.org website for updates. venture capital firms have been using U. What is not clear at this time is what the current global economic turmoil will do to the priority of this project or its timetable. The convergence time table may be delayed. there is no one flavor of IFRS in use. the U. if investment company accounting is eliminated from GAAP.” Our early analysis of IFRS shows special investment company rules for portfolios of publicly-traded companies. but no such provisions for portfolios of private companies.nvca. venture capital industry provides fairvalue portfolio reports under the special rules of “investment company reporting. Again.pdf. much of the surface comparisons are not useful. trading partners Canada. Second.S.S. This would create a mish-mash report. In early September 2008. we received a report from a member firm with international intermediaries for overseas investment where the local auditors raised the question of whether those financial statements need to be IFRS-compliant.S. The SEC “roadmap” provides for a three-year run-up to an SEC “go-no go” decision in 2011. It is worth pointing out that the SEC roadmap refers to public company reporting.S. because venture-backed companies plan to be public companies or a component of a public company.fasb. Korea. GAAP to IFRS. to implement IFRS. So an apples-toapples comparison of “IFRS-compliant” financials from different jurisdictions can be difficult. the SEC and the FASB announced steps to pave the way for U. However. most venture-backed private companies would want to use public company accounting from the start. sometimes the differences among the localized IFRS versions are large. it is true that IRFS itself is a very thin document com- 108 Thomson Reuters . venture firms might have to maintain two sets of books. A potential further complication could arise if DOL ERISA fair value rules remain in place for the plan sponsors while accounting rules abandon the current fair value reporting requirements. the FASB and the IASB met to review and re-orient their convergence plan to be consistent with the SEC’s proposed schedule. Even with two sets of rules. The initial reading is that. GAAP accounting standards exclusively.org/intl/MOU_0911-08. will conclusively “converge” by switching over to IFRS.S. Much like the original UNIX kernel. under IFRS. In 2009. in early November. We are very early on in verifying and creating awareness of the lack of private portfolio provisions. Virtually all LP agreements (or accompanying documents) require GPs to provide GAAP-compliant financial reports to LPs. and India have indicated plans to adopt IFRS.S. it is difficult to generalize on how the two systems compare. First. pared to GAAP.

The initial. Thomson Reuters 109 .S. Many international GPs continue to produce financial statements in accordance with U. the press release issued with those guidelines.2010 NVCA Yearbook How International GPs Now Handle LP Reporting dialogue has begun on convergence. John Taylor.S. Private Equity Industry Guidelines Group (“PEIGG”) and IPEV fair value guidelines. Check that site for updates. GAAP-type fair value schedule. and international LPs. IPEV was expanded to include five practitioners from the United States who are familiar with the venture industry. and somewhat limited.org.S. john.S.S.taylor@nvca. it is not clear how quickly any accounting standard convergence activities will move. review by the NVCA CFO Task Force subgroup is that they simply are not doing so. please contact NVCA Vice President of Research. Those reporting under IFRS are incurring the additional effort and expense of also providing a separate U. With the international and domestic attention on other economic matters. Going Forward Recent Events A full chronology of events is posted under Valuation Guidelines on the NVCA website www. A logical question arising from the above paragraph is how venture capital firms operating in IFRS jurisdictions are currently reporting to LPs. etc.privateequityvaluation. For more information. At the time this update is written in February 2010. This document is updated from the chronology in Appendix H of the NVCA 2010 Yearbook prepared by Thomson Reuters.nvca.S. and implement conversion to IFRS by 2014. including those subject to U. Details. Even as the U. GAAP for both their U.com. In March 2008. FAQs. The initial focus of the group is on convergence of U. and the September 2009 International Private Equity and Venture Capital Valuation Guidelines. industry works toward compliance with the FASB’s Statement 157 (now officially called “Topic 820”) on fair value measurement starting with 2008 financials. the International Private Equity & Venture Capital Valuation (IPEV) board reconstituted and relaunched itself. ERISA fair value reporting rules.org. FASB plans to address the consolidation standard by Q4 2010. are online at www. resolve major convergence issues by mid-2011.

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the reader can use this appendix to analyze trends in private equity outside of the United States. a 76% decrease from the previous year. private equity outside of the United States provides equity capital for entities not publicly traded and consists of buyouts and venture capital.4%. Commitments As mentioned previously. as well. an 80% decrease from 2008. an increase from 4% in the previous year. data herein is not as comprehensive as the United States data presented elsewhere in this publication. For example. private equity investors have continued to broaden their investment criteria to include overseas ventures so as to increase portfolio diversification and search for higher returns. This appendix highlights various aspects of private equity activity outside of the United States and provides valuable information for comparison to the United States private equity environment. but also include capital gains and the amount raised by both captive funds and funds of funds. Despite this.com. outside of the United States. It should be noted that these totals reflect not only the amount raised by independent funds. this appendix provides a brief overview of non-US private equity. Appendix J is produced for readers to analyze non-US private equity data. institutional buyouts (outside investors buying a business from existing shareholders). which typically garners the largest percentage of investment dollars due the large trans- Thomson Reuters 111 . **Special Note: The methodology used to generate the data within this appendix differs slightly from the methodology used in previous years. this appendix is not directly comparable to domestic data found in this Yearbook due to differences in definitions between the regions and variations in the currencies of each region. During 2009 commitments totaled $36. it is per- Private equity commitment levels. significantly decreased in 2009 from the record levels set in 2008.9 billion invested in the previous year. most data is now replicable on ThomsonONE. However. of committed funds. a slight decrease from 2008 when balanced stage financing accounted for 11% of commitments. Like in the United States. On the other hand. based on historical analysis of investments by stage. while balanced stage financing accounted for 3. trends reported in the past remain intact. 2009 represents the slowest year for private equity fundraising commitments outside of the United States since 2004. Additionally. non-US venture capital is considered a subset of private equity. Introduction haps most comparable to analyze aggregate private equity in the two regions as opposed to any classifications contained within. or expansion stages. a 21% decrease from the $57. 53%.3 billion. start-up. Buyout stage financing. Additionally. All data is reported in US dollars.0 billion in 2009. and management buy-ins (management from outside the company investing with private equity investors). As such. For ease of analysis and to avoid differences in definitions between venture capital and buyouts inside and outside of the United States.Appendix J: Non-US Private Equity As interest in globalization increases with each year. Investments Private equity investing outside of the United States reached $46. All data is provided by Thomson Reuters. Early stage financing accounted for 11% of commitments. The category of buyouts includes management buyouts (management from inside the company investing with private equity investors). The United States places more emphasis on the early stages of development than do other regions. venture capital describes the process of financing companies at the seed. However. causing data to vary slightly from previous Yearbook issues. Buyouts funds accounted for a vast majority of the funds. leveraged buyouts (the target taking on a high level of debt secured by assets). readers should note the differences in methodology and definitions of private equity between United States and other regions before analyzing the data.

private equity investments in China reached $4. led activity in 2009. Leading all activity outside of the United States. By number of deals. 112 Thomson Reuters . venture capital investments accounted for 65% of total deal activity outside of the United States. a 27% increase from 2008 levels.1 billion. investments in the United Kingdom totaled $8. accounting for 48% of total investments. a 2% decrease from 2008 and investments in India totaled $2. In the emerging markets.8 billion during 2009.8 billion a 35% decrease from a year ago.National Venture Capital Association action size associated with these deals.

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