cspa money tree presentation 8-27-2014

Shaking the MoneyTree™

Q2 2014 Update

www.pwc.com

PricewaterhouseCoopers/National Venture Capital Association MoneyTreeTM Report, based on data from Thomson Reuters

PwC

PricewaterhouseCoopers/National Venture Capital Association MoneyTreeTM report, based on data from Thomson Reuters

Kathleen Borie 650-743-7979 [email protected]

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PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, based on data from Thomson Reuters

PwC

About the report

• PricewaterhouseCoopers and the National Venture Capital Association produce the MoneyTree Report™, based on data from Thomson Reuters

• ‘Core’ measure of equity investments in venture-backed companies in the United States

• Companies have received at least one round of financing, involving a professional VC firm or equivalent

• Captures: tranches, not term sheets, foreign VCs, qualified private placement

• Excludes: debt, bridge loans, recaps, roll-ups, IPOs, PIPEs, leasing, etc.

• MoneyTree™ Report in its 19th year

• Results online at www.pwcmoneytree.com and www.nvca.org

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Investment Trends

PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters

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$3.9

$5.1

$6.5 $6.3 $6.1

$9.7

$5.1

$7.1

$8.2

$7.4 $7.2

$13.0

$5.4 $5.5

$7.6

$6.7

$8.0

$5.9 $5.7

$7.5 $7.0

$8.5

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

2009 2010 2011 2012 2013 2014Q1 Q2 Q3 Q4

MoneyTree total investments: Q1 2009 – Q2 2014

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($ in billions)

2009 2010 2011 2012 2013 2014

# of Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Deals 680 765 767 944 826 1,023 891 911 907 1,088 1,022 1,000 886 987 948 1,067 923 1,000 1,057 1,126 985 1,114


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$8.0 $11.4

$15.1 $21.6

$54.9

$105.1

$40.9

$22.2 $19.6 $22.8 $23.5

$27.6 $32.0 $30.2

$20.3 $23.4

$29.8 $27.4 $29.7 $22.7

$0

$20

$40

$60

$80

$100

$120

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Q2

YTD

($ in billions)

MoneyTree total investments Annual venture capital investments 1995 – Q2 2014 YTD

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# of deals

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q2

YTD

1,897 2,637 3,232 3,745 5,603 8,040 4,591 3,208 3,027 3,231 3,298 3,884 4,229 4,182 3,156 3,651 4,017 3,888 4,106 2,099


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Investments by region – Quarterly percent of total US investments

Top 5 US regions : Q2 2013 – Q2 2014

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41%

12% 10%

6%

3%

46%

11% 9%

6% 5%

39%

11% 13%

5% 4%

51%

10% 10%

5% 4%

55%

10% 9%

4% 4%

0%

10%

20%

30%

40%

50%

60%

Silicon Valley New England NY Metro LA/Orange County Midwest

(% of total dollars)

Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14

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Investments by industry – Quarterly percent of total US investments

8

32%

20%

9% 9%

5%

45%

12%

8% 5% 5%

35%

16% 14%

7% 7%

42%

11%

8% 8% 5%

47%

14%

8% 6% 6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Software Biotechnology Media andEntertainment

IT Services Industrial/Energy

Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14

(% of Total Dollars)

Top 5 Industries : Q1 2013 – Q2 2014


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Internet-specific investments ($B)

Internet-specific & Software investments

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Q1 2010 – Q2 2014

$0.9 $1.1 $1.1 $1.2

$1.4

$2.3

$1.7 $1.7 $1.6

$2.0

$1.6 $1.5 $1.3

$1.8

$1.5

$2.4 $2.3

$2.7

0

50

100

150

200

250

300

350

Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14

$ Invested

# of deals


Software investments ($B)

$1.0 $1.4 $1.3 $1.5 $1.5

$1.9 $2.3

$1.9 $1.8

$2.5 $2.0

$2.3 $2.4 $2.3

$3.6 $2.9

$4.1

$6.1

0

50

100

150

200

250

300

350

400

450

500

Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14

$ Invested

# of deals

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Life sciences investments – Percent of total US investments Life sciences sector : Q2 2013 – Q2 2014

10

20%

7%

28%

12%

7%

19%

16%

5%

22%

11%

6%

17%

14%

5%

19%

0%

5%

10%

15%

20%

25%

30%

Biotechnology Medical Devices and Equipment Life Sciences

(% of total dollars)

Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14


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$2,546

$125

$2,885

$3,913

Seed Stage Early Stage

Expansion Stage Later Stage

Investments by stage of development: Q2 2014

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Q2 2014 Total Investments - $12,969 million in 1,114 deals

Stage of Development # of

Deals

% Change in $ from Q1 2014

Seed Stage 55 46%

Early Stage 522 17%

Expansion Stage

308 53%

Later Stage 229 25%

Total 1,114 34%

($) in millions


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$1,859

$11,109

First Sequence Follow-on

Investments by sequence of financing: Q2 2014

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Financing # of Deals % Change in $ from Q1 2014

First Sequence 351 48%

Follow-on 763 31%

Total 1,114 34%

($) in millions


Q1 2014 Total Investments - $9,469 million in 951 deals

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First sequence financing Investment amount: Q1 2009 – Q2 2014

First sequence investments

13

$0.7

$1.0

$1.2

$0.9 $0.9

$1.3

$0.8

$1.1

$1.6

$1.1 $1.2

$1.9

$0.8

$1.3 $1.3

$1.1

$1.3

$1.2

$0.9

$1.3 $1.2

$1.5

-

$0

$0

$1

$1

$1

$1

$1

$2

$2

$2

2009 2010 2011 2012 2013 2014

($ in billions) Q1 Q2 Q3 Q4


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First sequence financing Number of deals: Q1 2009 – Q2 2014

First sequence deals

14

167

235

304

261

289 293

196

293

364

330 342 351

187

274

350

321

374

281 288

333

370 362

-

100

200

300

400

500

2009 2010 2011 2012 2013 2014

Q1 Q2 Q3 Q4


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Quarterly percent of total first sequence dollars – Stage of development Q2 2013 – Q2 2014

15

15%

70%

8% 7%

12%

63%

18%

7%

20%

53%

14% 13%

8%

71%

11% 10% 7%

50%

26%

17%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Seed Stage Early Stage Expansion Stage Later Stage

(% of first sequence dollars)

Q2 '13

Q3 '13

Q4 '13

Q1 '14

Q2 '14


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Quarterly percent of total first sequence deals – Stage of development Q2 2013 – Q2 2014

16

12%

72%

10% 6%

13%

73%

10%

5%

15%

66%

13%

5%

13%

70%

11% 6%

11%

63%

15% 11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Seed Stage Early Stage Expansion Stage Later Stage

(% of first sequence deals)

Q2 '13

Q3 '13

Q4 '13

Q1 '14

Q2 '14


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Median deal size vs. mean deal size – Quarterly total US investments: Q1 2009 – Q2 2014

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$3.0 $2.5

$3.1

$2.4

$2.9 $3.0 $2.7

$2.8 $2.5

$3.0 $3.0

$2.5 $3.0 $3.0

$2.3 $2.2 $2.3 $2.5 $2.6 $2.7

$3.3 $3.5

$5.7

$6.6 $7.1

$6.3 $6.2

$7.0

$6.2 $6.2 $7.2

$7.6 $7.4 $7.5

$7.1 $7.5

$7.0 $6.5 $6.6

$7.2 $7.5

$7.5

$9.9

$11.6

-

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

Median Deal Size Mean Deal Size

($ in millions)


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Top 10 Deals Silicon Valley: Q2 2014($ Millions)

Uber SF Software $ 1200

Lyft SF Software 250

Pure Storage Mt View Comp/Peripherals 225

Pinterest SF Media/Entertainment 160

SunRun SF Industrial/Energy 150

Proteus Digital Health Redwood City Biotech 119

Anaplan SF Software 100

New Relic SF Software 100

Attensity Group Palo Alto Software 90

Tanium Berkeley Software 90

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Q2 2014 – Most active US venture investors

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VC Firm Location Number of Deals New Enterprise Associates, Inc. Menlo Park, California 32

Andreessen Horowitz LLC Menlo Park, California 32

First Round Capital Philadelphia, Pennsylvania 27

Kleiner Perkins Caufield & Byers LLC Menlo Park, California 25

SV Angel II Q LP San Francisco, California 23

True Ventures Palo Alto, California 22

Sequoia Capital Menlo Park, California 20

Canaan Partners Menlo Park, California 19

Polaris Partners Waltham, Massachusetts 17

Accel Partners & Co Inc Palo Alto, California 16

Atlas Venture Advisors Inc Cambridge, Massachusetts 16

Khosla Ventures LLC Menlo Park, California 14

Google Ventures Mountain View, California 14

DreamIt Ventures Bryn Mawr, Pennsylvania 14

Greylock Partners Menlo Park, California 14

Redpoint Ventures Menlo Park, California 14

Innovation Works Inc Pittsburgh, Pennsylvania 14

Lerer Ventures New York, New York 14

Foundry Group LLC Boulder, Colorado 12

Venrock, Inc. Palo Alto, California 12

InterWest Partners LLC Menlo Park, California 12

General Catalyst Partners LLC Cambridge, Massachusetts 12

Tech Coast Angels Los Angeles, California 11

Foundation Capital Menlo Park, California 11

Draper Fisher Jurvetson International Inc Menlo Park, California 11

Bessemer Venture Partners, L.P. Larchmont, New York 11

500 Startups, L.P. Mountain View, California 10

Connecticut Innovations Inc Rocky Hill, Connecticut 10

OrbiMed Advisors LLC New York, New York 10

Lightspeed Venture Partners X LP Menlo Park, California 10

Battery Ventures LP Boston, Massachusetts 10

Norwest Venture Partners Palo Alto, California 10

Versant Ventures, Inc. Menlo Park, California 10


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IPO and M&A Activity

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January 2011 PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters

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Analysis of venture-backed IPO and M&A activity

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Source: Thomson Reuters and National Venture Capital Association *Only accounts for deals with disclosed values **Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges, regardless of domicile

Date Total M&A Deals

Average M&A deal size ($M)*

Number of IPOs**

Total Offer Amount ($M)

Average IPO Offer

Amount ($M)

2009 360 113.4 13 1,979.8 152.3

2010 545 118.0 66 7,409.5 112.3

Q1 2011 139 117.0 14 1,526.9 109.1

Q2 2011 94 167.6 20 5,635.1 281.8

Q3 2011 142 161.3 5 475.9 95.2

Q4 2011 123 131.3 11 2,803.2 254.8

2011 498 142.6 50 10,441.1 208.8

Q1 2012 114 131.1 19 1,682.8 88.6

Q2 2012 124 185.4 12 17,227.9 1,435.7

Q3 2012 124 228.6 10 1,140.7 114.1

Q4 2012 127 126.0 8 1,408.4 176.1

2012 489 171.9 49 21,459.9 438.0

Q1 2013 86 92.7 8 716.9 89.6

Q2 2013 96 218.6 22 2,249.9 102.3

Q3 2013 115 161.9 27 2,781.4 103.0

Q4 2013 94 190.4 24 5,320.1 221.7

2013 391 176.2 81 11,068.2 136.6

Q1 2014 111 251.7 37 3,400.1 91.9

Q2 2014 97 98.6 28 4,926.4 175.9

2014 208 350.3 65 8,330.9 267.9


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Fundraising

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February 2011 PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters

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Venture capital fundraising

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Source: Thomson Reuters & National Venture Capital Association Data current as of July 15, 2014

Year First Time Funds

Follow-On Funds Total Number of Funds

VC Raised ($M)

2010 53 122 175 13,272.0

2011 61 128 189 19,022.7

2012 75 141 216 19,798.2

2013 57 140 197 17,086.3

2014 Q2 YTD 44 90 134 16,471.1

Quarter

Q1 ‘13 10 37 48 4,387.5

Q2 ‘13 19 36 55 3,328.6

Q3 ‘13 18 46 64 4,430.7

Q4 ‘13 17 37 54 4,939.5

Q1 ‘14 27 36 63 9,076.2

Q2 ‘14 20 58 78 7,394.9


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Top Funds Raised: Q2 2014 ($M)

Norwest $1200 M

JP Morgan Chase 968

Bain 715

GGV Capital 622

Raine Group 502

Sofinnova 500

Meritech Capital 500

DFJ 470

Oak 456

Spark 375

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Summary

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February 2011 PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters

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Summary: Good News

• VC investing continues at a strong post-recession pace

- Increased participation by non traditional investors - Focus on larger, later stage deals - Strong investing activity in software/internet sector

• Big Trends still exist

- Cloud /SaaS - Mobile - Big Data/Analytics - Sharing economy - Advertising $ to Internet/Mobile - Enterprise - Education - Healthcare IT - Software Defined Data Centers/Storage/Networking

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Summary: Good News (con’t)

• California is the place to be VC $: 1/2 CA

• Exit markets for VC backed companies remain strong by historical standards

• IPO activity has shown some recent volatility, but pipeline remains robust

• M&A activity has decreased, as corporations chose to invest in companies rather than acquire them. The top 10 public tech firms have $350B in cash on their balance sheets which should bode well for future M&A transactions

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Summary: Not So Good News

• Economy – mixed trends, continued market volatility

- Global GDP deceleration - US economy improved though indicators were mixed

• Life Science VC $ at risk until FDA fixed: Morgenthaler/ ATV merger, Scale, Highland, Prospect, CMEA, Mohr Davidow. Cleantech investing will also continue to be under pressure until Federal policies are clarified

• Funding gap still exists - $22.7B invested in YTD 2014 versus $16.5 raised

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Summary/Predictions VC Market

• The VC industry has been in a state of consolidation over the past 5 years as many LPs abandoned the sector due to disappointing returns (median 10 year VC returns were 4.2% in ’10 compared to 14.3 % in 2009)

• VC fund performance making gains across most time horizons (median 10-year VC returns were 10.0% as of Q1 2014) due to the improved exit market. This trend is expected to continue in 2014

• Barbell structure evolving - larger funds which are stage and industry agnostic on one end; and smaller, early stage, industry or region specific funds on the other

• Gap “haves” and “have-nots” is growing: Top 5 funds attracted 43% of Q2 funds

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cspa money tree presentation 8-27-2014

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