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on December 21, 2010

Venture View 2011 Venture Capital Predictions Survey
December 2010

Venture View 2011
5th annual venture capital predictions survey Conducted November 29 ± December 12 2010 Surveyed venture capitalists and ventureventurebacked CEOs across the United States More than 500 responses

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

2

Venture Investments

In 2011, total U.S. venture investment will:
60% 51% 50% 40% 30% 20% 10% 0% VCs Increase Decrease CEOs Remain Same 24% 24% 14% 28% 58%

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

4

VCs: How will U.S. VC investment dollars fare by industry in 2011?
Consumer Internet Software (Cloud) Health are IT Mobile Tele om Software (SaaS) 0
11 7 2

1

2

0

1

77

2

11

0

9

1

20 Same

0

0 e rease

0 In rease

100

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

5

VCs: How will U.S. VC investment dollars fare by industry in 2011?
Energy Med Devices Biopharma Fin Serv Hardware 0%
22% 40% 38%

35%

30%

35%

34%

33%

33%

34%

38%

28%

34%

55%

10%

20% Same

40%

60%

80%

100%

Decrease

Increase
6

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

VCs: In w ic industries to you expect to see investment ³frot ´ in 2011

Consumer Internet Software (Cloud) Mo ile elecom Clean ec Software (SaaS) ea t I Biotec Financia Services Med Devices ardware

6 % 4 % 2 % 28% 1 % 1 % 6% 4% 3% 2%

0%

10%

20%

30%

40%

50%

60%

0%

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

7

VCs: o you plan to invest in any of t e following global regions in 2011?
60% 50% 40% 30% 20% 10% 0% VCs
None Canada China Latin America Western Europe Eastern Europe India Africa

53%

26% 1 % 18% 13% 11% % 2%

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

8

VCs: H w will U.S. VC inves ment dolla s fa e investment by c mpany stage in 2011?
Seed 25% 26% 4 %

Ea ly

2 %

25%

46%

Expansion

35%

16%

4 %

La e 0%

35% 20% Same

14%

51% 60% 80% 100%

40%

Dec ease

Inc ease
9

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

VCs: H

diffic lt ill it be fo c mpanies to aise the following ounds?
63% 16% 21%

Seed

Se ies A

68% 65%

20%

12%

Se ies B Se ies C and Beyond 0% Ve y/Some

2 % 23% 80%

6%

42% 20% at Diffic lt 40% Ne t al

35% 60% Ve y/Some

100%

at Easy
10

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

VCs: In 2011 the number of investments I will make into new vs. follow on companies will:
44% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Increase Decrease Same 12% 43%

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

11

VCs: For early stage investors: How will you invest with angels in 2011?
50% 40% 30% 30% 20% 10% 0% More Less Same Not at all 5% 18% 4 %

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

12

How will term sheets be structured in 2011?
s s

1 % 2%

1 %

22%

2%

1%

More f More f

or ble to entre reneurs or ble to or ble s

More f More f

or ble to entre reneurs or ble to or ble s

qu lly f

qu lly f

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

13

How will company valuations fare in 2011?
VCs CEOs

1 %

% 0% 1 %

%

%

Increase

ecrease

Same

Increase

ecrease

Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

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Venture Exits

VCs: How will entu e backed IPO olume fa e in 2011?
O e all 28% 5% 6 %

Tec IPOs

24%

5%

2%

Life Sciences

45%

1 %

36%

Clean Tec 0%

31% 20% Same 40%

25% 60%

34% 80% 100%

Dec ease

Inc ease
16

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

VCs: How will entu e backed IPO quality fa e in 2011?
O e all 3 % 6% 55%

Tec IPOs

3 %

%

52%

Life Sciences

51%

12%

3 %

Clean Tec 0%

53%

16% 40% 60%

31% 80% 100%

20% Same

Dec ease

Inc ease
17

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

VCs: How will entu e backed acquisition olume fa e in 2011?
O e all 15% 3% 82%

Tec IPOs

14% 2%

84%

Life Sciences

35%

6%

59%

Clean Tec 0%

43% 20% Same 40%

21% 60%

36% 80% 100%

Dec ease

Inc ease
18

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

VCs: How will entu e backed acquisition quality fa e in 2011?
O e all 45% 4% 51%

Tec IPOs

44%

5%

51%

Life Sciences

52%

8%

40%

Clean Tec 0%

55%

19% 40% 60%

26% 80% 100%

20% Same

Dec ease

Inc ease
19

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

VCs: How will alte nati e entu e-backed exits efa e in 2011?

Sales to PE

31%

14%

55%

Seconda y Ma ket

33%

14%

53%

P i ate to P i ate

44%

8%

48%

0%

20% Same

40%

60%

80%

100%

Dec ease

Inc ease
20

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

C

s: How will venture-backed IP venturefare in 2011?

volume

32%

58% 10%

Increase

Decrease

Same
21

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

C

s: How will venture-backed IP venturefare in 2011?

quality

44%

44%

12%

Increase

Decrease

Same
22

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

C

s: How will venture-backed acquisition venturevolume fare in 2011?

15% 4%

81%

Increase

Decrease

Same
23

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

C

s: How will venture-backed acquisition venturequality fare in 2011?

40%

52%

8%

Increase

Decrease

Same
24

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

VCs: From which exits do you think the best returns will come?
1% 3% 2% 29%

65%

Ac uisitions Sales to PE

IPOs Pri ate to Pri ate

Secondary Sales

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

25

VCs: How will funding rounds address founder¶s liquidity?

40%

38%

22%

More partial liquidity

Less partial liquidity

Same partial liquidity
26

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

C s: o you anticipate your company engaging in any of the following in 2011
0 0 0 0 20 10 0
one c uisition y P c uisition y Pu lic Co IP c uisition y Pri ate Co Secon ary mar et sale

2

7 2

9

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

27

Venture Fundraising

VCs: How will US venture capital fundraising fare in 2011?

30%

38%

32%

Increase

Decrease

Same
29

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

VCs: In 2011, US VC funds will see foreign limited partners in:

25% 48%

2 %

More funds

Fewer funds

Same funds
30

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

VCs: How will limited partner agreements be structured in 2011?

21% 3%

6%

More fa orable to LPs E ual fa or to LPs and VCs

More fa orable to VCs

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

31

The Economy

How will the U.S. economy fare in 2011?
VCs CEOs

33%

30%

%

63%

6%

64%

Impro e

ecline

Same

Impro e

ecline

Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

33

C

s: How will corporate technology spending fare in 2011?

29%

5%

66%

Increase

Decrease

Same
34

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

How will these start-up ecosystems fare in start2011?
Silicon Valley
50% 40% 30% 20% 10% 0% VCs Impro e Decline CEOs Same
35

4 %

43%

44%

40%

16% 10%

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

How will these start-up ecosystems fare in start2011?
ew n lan
0 0 0 20 10 0 s Impro e ecline ame
36

9 9 2

1

19

Os

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

How will these start-up ecosystems fare in start2011?
New York
50% 40% 30% 20% 12% 10% 0% VCs Impro e Decline CEOs Same
37

45%

43%

43%

43%

15%

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

VCs: ame a U.S. region other than Silicon Valley, ew ngland or that is poised for growth in 2011.
25% 21% 20% 16% 15% 10% 5% 0% VCs
So Cal Southwest one Rocky Mountain Southeast orthwest Mid Atlantic Midwest Texas

14%

12%

11% 11% 8% 6% 2%

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

38

C s: ame a U.S. region other than Silicon that is poised for Valley, ew ngland or growth in 2011.
16% 14% 12% 10% 8% 6% 4% 2% 0% 15% 15% 14% 11% 11% 10% 10% 10%

2% C
Southwest So Cal Mid Atlantic

s
Southeast orthwest Texas

Midwest Rocky Mountain one

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

39

This or That

TH T? THIS ho will fare better in 2011?
China or India
0% 60% 50% 40% 30% 20% 10% 0% VCs China India
41

64%

59% 41%

36%

CE s

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

TH T? THIS ho will fare better in 2011?
Infotech or Cleantech or Biotech
0% 60% 50% 40% 30% 20% 10% 0% VCs Info Tech Clean Tech CE s Biotech
42

69%

39% 32% 19% 12% 29%

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

TH T? THIS ho will fare better in 2011?
Small VC firms or Large VC firms
0% 0% 60% 50% 40% 30% 20% 10% 0% VCs Small VC Firms CE s Large VC Firms
43

48% 30%

52%

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

TH T? THIS ho will fare better in 2011?
Entrepreneurs or VCs
0% 60% 50% 40% 30% 20% 10% 0% VCs Entrepreneurs VCs
44

62%

56% 38% 44%

CE s

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

TH T? THIS ho will fare better in 2011?
ngels or VC or PE
50% 50% 40% 30% 20% 10% 0% VCs ngels VC PE
45

38% 30% 20% 33% 29%

CE s

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

TH T? THIS ho will fare better in 2011?
Silicon Valley or Silicon lley
9% 80% 60% 40% 21% 20% 0% VCs Silicon Valley Silicon CE s lley
46

68%

32%

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

Company Operations

C

s: oes your company plan to raise additional funding in 2011?

36%

64%

Yes

No
48

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

C

s: Compared to 2010, how difficult will it be for companies to raise VC in 2011?
1%

11%

1 %

35% 36%

Very difficult Somewhat easy

Somewhat difficult Very easy

Neutral

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

49

C

s: hat is your prediction for your company¶s headcount in 2011?

15% 3%

82%

Increase

Decrease

Same
50

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

C

s: In terms of global activity in 2011, my company will
60%

60% 50% 40% 28% 30% 20% 10% 0% Increase revenues overseas Maintain revenue levels overseas Decrease revenues overseas No business overseas 0% 12%

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

51

C s: How do you predict your total compensation package will fare in 2011?

4 %

50%

3%

Increase

Decrease

Same
52

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

C

s: o you plan to cash out a portion of your equity in 2011?

10%

90%

Yes

No
53

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

In 2011, I will use social media:
s

s

2 4

41

1

1

ore

ess

ame

ot at all

ore

ess

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

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11

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For more information: Emily Mendell, NVCA, emendell@nvca.org, 610-565-3904 Tiffany Richardson, Dow Jones, tiffany.richardson@dowjones.com, 609-627-2101

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource

55