2Q 2013Venture Capital Rundown

Presentation Slide Deck

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Source:PitchBook

Since hitting an all-time high in 2Q 2012, VC investment in U.S.-based companies has decelerated for three consecutive quarters.

Source:PitchBook

VC Deal-Making Declined for a Third Straight Quarter, Hitting the Lowest Level in More Than 2

YearsU.S. VC Deal Flow by Quarter

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2009 2010 2011 2012 2013

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0

200

400

600

800

1,000

1,200

$5.1 $5.4 $5.6 $5.2 $6.0 $6.7 $5.7 $5.9 $9.2 $8.6 $9.0 $7.8 $7.5 $8.7 $7.0 $6.4 $6.3

669 617 664722 734

809755

792

964 966937

874

1,0131,075

919807

753

Capital Invested ($B) # of Deals Closed

Source:PitchBook

Early Stage Deals Have Shrunk as a Proportion of Overall VC Activity in Recent Years

VC Deal Flow (count) by Stage

1Q 2013

4Q 2012

3Q 2012

2Q 2012

1Q 2012

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Angel & Seed Early Stage

Source:PitchBook

Angel & Seed Rounds

Source:PitchBook

Angel & Seed Financings Have Held Relatively Steady, Helping Increase Their Share of VC Deal

Flow to 29%Angel & Seed Deal Flow by Quarter

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2009 2010 2011 2012 2013

$0

$50

$100

$150

$200

$250

$300

0

50

100

150

200

250

300

$63 $35 $51 $61 $71 $78 $74 $106 $161 $158 $161 $178 $184 $230 $266 $235 $196

8151 61 69

11292

111 109

185160 160

173

243264

235

204

219

Capital Invested ($M) # of Deals Closed

Source:PitchBook

Software Remains the Most Active Sector, But Angel & Seed Investors Have Been Exploring

Other SectorsAngel & Seed Deals (count) by Sector

1Q 2013

4Q 2012

3Q 2012

2Q 2012

1Q 2012

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Software

Commercial Services

Media

Retail

B2C Services

Other

Source:PitchBook

The Median Round Amount was Just 14% of the Median Pre-Money Valuation, the Lowest Since 1Q

2009Angel & Seed Median Pre-Money Valuation and Round Amount

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2011 2012 2013

$0

$1

$2

$3

$4

$5

$6

$3.53

$4.78

$4.01

$4.70

$3.93

$4.63 $4.57 $4.37

$5.38

$0.64 $0.75 $0.77 $0.80 $0.64 $0.75 $0.86 $1.00$0.75

Median Pre-Money Valuation ($M)

Source:PitchBook

Virtually All of the Recent Increase in Angel & Seed Rounds Can be Attributed to a Rise in Seed

FinancingsDeal Count of Angel vs. Seed Rounds

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2010 2011 2012 2013

0

50

100

150

200

250

Angel Rounds Seed Rounds

Source:PitchBook

Early Stage Rounds

Source:PitchBook

Early Stage Deals Hit a Four-Year Low with $2.0 Billion Invested Through 295 Financings in 1Q

2013Early Stage Deal Flow by Quarter

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2009 2010 2011 2012 2013

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

0

100

200

300

400

500

600

$1.8 $2.4 $2.1 $2.4 $2.5 $2.1 $2.6 $2.1 $2.9 $2.7 $3.4 $3.1 $2.5 $3.0 $2.4 $2.2 $2.0

318 307 329375

360393 371

391

473442444 438

481 497

411344

295

Capital Invested ($B)

Source:PitchBook

Software Continues to be the Mainstay of Early Stage Investing

Early Stage Deals (count) by Sector

1Q 2013

4Q 2012

3Q 2012

2Q 2012

1Q 2012

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Software

Commercial Services

Pharma & Biotech

HC Devices & Supplies

Media

Other

Source:PitchBook

The Median Pre-Money Valuation has Shifted Fairly Significantly From Quarter-to-Quarter

Early Stage Median Pre-Money Valuation and Round Amount

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2011 2012 2013

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$8.4

$11.0

$13.8

$11.7$10.8

$13.1 $12.2

$15.6$14.5

$3.3 $3.3$4.1

$3.3 $3.0 $3.4 $3.5$4.2 $4.0

Median Pre-Money Valuation ($M)

Source:PitchBook

The Median Time Between Angel & Seed Funding and the First Early Stage Round Jumped 4 Months

in 1Q 2013Median Time Between Angel & Seed and Early Stage Rounds

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2011 2012 2013

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

0.98

0.910.94

1.031.06

1.00 1.01

0.89

1.22

Year

s

Source:PitchBook

Late Stage Rounds

Source:PitchBook

Late Stage Financings Have Been in Decline, But the Downturn is Not as Severe as in Early Stage

DealsLate Stage Deal Flow by Quarter

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2009 2010 2011 2012 2013

$0

$1

$2

$3

$4

$5

$6

$7

0

50

100

150

200

250

300

350

400

$3.3 $3.0 $3.5 $2.7 $3.4 $4.5 $3.0 $3.7 $6.2 $5.7 $5.4 $4.5 $4.9 $5.5 $4.3 $3.9 $4.1

270 259 274 278 262

324

273292

306

364333

263289

314273 259

239

Capital Invested ($B)

Source:PitchBook

Other Leading Sectors Besides Software Continue to Grow in Importance

Late Stage Deals (count) by Sector

1Q 2013

4Q 2012

3Q 2012

2Q 2012

1Q 2012

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Software

HC Devices & Supplies

Commercial Services

Pharma & Biotech

Media

Other

Source:PitchBook

The Median Pre-Money Valuation Rose Significantly in the Last Year While the Median

Round Amount was FlatLate Stage Median Pre-Money Valuation and Round Amount

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2011 2012 2013

$0

$10

$20

$30

$40

$50

$60

$70

$80

$39.3

$57.9

$40.6

$50.8 $49.7 $46.3

$64.5

$52.1

$67.8

$8.8 $9.4 $10.0 $8.9 $10.0 $10.1 $10.6 $10.0 $10.0

Median Pre-Money Valuation ($M)

Source:PitchBook

Commercial Services has More Than Doubled Its Share of Late Stage Deal-Making in the Last Year

Commercial Services as % of Late Stage Deals

1Q 2012 1Q 20130%

2%

4%

6%

8%

10%

12%

14%

6.2%

11.7%

4.0%

10.4%

Deal Flow % Capital Invested %

Source:PitchBook

First Financings

Source:PitchBook

After Hitting a Zenith in 1Q 2012, the Number of First Financings Has Been in Free Fall

First Financings from Top Sectors

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2010 2011 2012 2013

0

50

100

150

200

250

300

350

400

450

254 227

250 261

380

312 329 324

427 395

324 288

261 OtherPharma & BiotechCommercial ServicesMediaSoftwareSeries6

Source:PitchBook

The Median Pre-Money Valuation for First Financings Has Swung Widely from Quarter-to-

QuarterFirst Financing Median Pre-Money Valuation and Round

Amount

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2010 2011 2012 2013

$0

$1

$2

$3

$4

$5

$6

$7

$8

$6.4

$5.6

$4.5$5.1

$6.0 $5.7 $5.4$6.1

$5.4$5.4

$7.5

$5.9$6.8

$1.7$1.2 $1.3 $1.5 $1.3 $1.3 $1.3 $1.3 $1.0 $1.1 $1.2 $1.2 $1.0

Median Pre-Money Valuation ($M)

Source:PitchBook

VC Deal Flow Details

Source:PitchBook

All of the Most Active Regions for VC Investing Saw a Slowdown in 1Q 2013

VC Deals (count) by Region

19%

1%4%

13%

7%5%3%

48%

17%

2%

4%

12%

7%

6%4%

49%

Mid-Atlantic

Midwest

Mountain

New England

Great Lakes

South

Southeast

West Coast

4Q 2012

1Q 2013

Source:PitchBook

Despite the Slowdown in Overall Deal-Making, VC Investing in Many of the Most Active Sectors Held

SteadyVC Deals (count) by Sector

41%

11%8%6%

7%

26%43%

11%8%

7%

5%

26%Software

Commercial Services

Media

HC Devices & Supplies

Pharma and Biotech

Other

4Q 2012

1Q 2013

Source:PitchBook

The Median Pre-Money Valuation is Substantially Higher in Software and Media Than Most Other

SectorsMedian Pre-Money Valuations ($M) by Sector from 1Q 2012 to

1Q 2013

All Sectors Software Media Commercial Services

$0

$10

$20

$30

$40

$50

$60

$70

$80

$4.5 $4.6 $4.2 $4.5

$13.2 $14.0 $11.8 $12.9

$52.2

$68.8 $68.2

$30.2

Angel & Seed Early Stage Late Stage

Source:PitchBook

VC Exits

Source:PitchBook

Exit Flow Sank 25% and Capital Exited Cratered 84% in

1Q 2013 to the Lowest Levels Seen Since 2009VC Exits by Quarter

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2008 2009 2010 2011 2012 2013

$0

$5

$10

$15

$20

$25

020406080100120140160180

$2.3$14.0$2.5 $2.7 $1.4 $3.4 $2.2 $6.2 $6.5 $3.4 $5.8 $7.3 $6.0 $6.7 $6.0 $7.9 $4.9$21.6$8.4$10.5$1.7

90 7993

73 86 7992

114124118

142

162151

116

141115 133138 136

124

93

Capital Exited ($B) # of Exits

Source:PitchBook

Virtually All of the Decline in Exits in 1Q 2013 Can be Attributed to Weakness in Corporate

AcquisitionsVC Exits (count) by Exit Type

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2011 2012 2013

0%10%20%30%40%50%60%70%80%90%

100%

Acquisition IPO Buyout

Source:PitchBook

VC Fundraising

Source:PitchBook

VC Fundraising Continues to be a Slog, With Just 13

U.S-Based Funds Closing on $3.3 Billion in 1Q 2013

VC Fundraising by Quarter

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2008 2009 2010 2011 2012 2013

$0

$2

$4

$6

$8

$10

$12

$14

$16

0

10

20

30

40

50

60

70

80

$14.1 $6.8 $5.0 $2.1 $5.2 $1.3 $3.5 $2.6 $8.7 $2.0 $3.0 $3.7 $5.3 $5.5 $1.6 $6.3 $7.6 $3.8 $6.3 $1.8 $3.3

73

24

2116

35

10

20

9

29

1621 18

14 14 1316

2821

28

12 13

Capital Raised ($B)

Source:PitchBook

The 4 Largest Vehicles Attracted 60% of the Capital Raised in 1Q 2013

VC Fundraising (count) by Fund Size

2008 2009 2010 2011 2012 20130%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$1B+

$500M-$1B

$250M-$500M

$100M-$250M

$50M-$100M

Under $50M

**as of 3/31/2013

Source:PitchBook

Most Active Angel & Seed Investors in 1Q 2013

By Count of Closed U.S. Deals

Y Combinator 19 First Round Capital 4500 Startups 18 Greylock Partners 4Andreessen Horowitz 9 Lightbank 4MuckerLab 8 Resolute.vc 4SV Angel 8 Atlas Venture 3Connecticut Innovations 6 Capital Innovators 3Fortify Ventures 6 Cowboy Ventures 3TechStars 6 Felicis Ventures 3Acceleprise 5 ff Venture Capital 3Blueprint Health 5 Founders Fund 3CrunchFund 5 Harrison Metal Capital 3Google Ventures 5 Launchpad LA 3Great Oaks Venture Capital 5 Quotidian Ventures 3Portland Seed Fund 5 Trinity Ventures 3

Source:PitchBook

Most Active Early Stage Investors in 1Q 2013

By Count of Closed U.S. Deals

Bessemer Venture Partners 9 Lightspeed Venture Partners 5First Round Capital 8 True Ventures 5Kleiner Perkins Caufield & Byers 8 Baseline Ventures 4New Enterprise Associates 8 Charles River Ventures 4500 Startups 7 CrunchFund 4Andreessen Horowitz 7 Draper Associates 4Google Ventures 7 Draper Fisher Jurvetson 4Greylock Partners 7 Founder Collective 4Intel Capital 6 Harrison Metal Capital 4Siemer Ventures 6 Norwest Venture Partners 4SV Angel 6 RRE Ventures 4Highland Capital Partners 5 Sequoia Capital 4Lerer Ventures 5 Third Rock Ventures 4

Source:PitchBook

Most Active Late Stage Investors in 1Q 2013

By Count of Closed U.S. Deals

Intel Capital 8 FirstMark Capital 4InterWest Partners 6 Flybridge Capital Partners 4Kleiner Perkins Caufield & Byers 6 Google Ventures 4Norwest Venture Partners 6 Greylock Partners 4Sequoia Capital 6 Khosla Ventures 4Menlo Ventures 5 Mayfield Fund 4New Enterprise Associates 5 Shasta Ventures 4Qualcomm Ventures 5 True Ventures 4Accel Partners 4 US Venture Partners 4Advanced Technology Ventures 4 VantagePoint Capital Partners 4Baird Venture Partners 4 Versant Ventures 4Delphi Ventures 4 Vulcan Capital 4Draper Fisher Jurvetson 4

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