National Venture Capital Association2009 Venture Capital Predictions
Survey Results
December 17, 2008
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NVCA 2009 Venture CapitalPredictions Survey
n Third Annual Predictions Surveyn Conducted in Nov. 24 – Dec. 12, 2008n More than 400 responsesn Quotes and press release available:
n Contact: Emily Mendell ([email protected])n Contact: Laura Cruz ([email protected])
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Ninety two percent of VCs predict ventureinvestment to slow in 2009
61%
31%
3% 4% 1%0%
20%
40%
60%
80%
<$27 BN $27-29 BN $30 BN $32-35 BN > $35 BN
What range will venture capital investmentlevels be in 2009?
Range of Investment $
Perc
ent o
f Res
pond
ents
Est.
2008
Inve
stm
ent
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In 2009, 53 percent of VCs predict theywill invest in the same or morecompanies.
In 2009, our firm will invest in:
34%
19%
47%
Same # of companies More companies Fewer companies
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Clean technology and life sciences werepredicted as having the highest potentialfor stability/growth.
38%
42%
32%
28%
38%
33%
20%
14%
24%
25%
48%
58%
0% 20% 40% 60% 80%
Internet
Medical Devices
Biotech
Clean Tech
IncreaseUnchangedDecrease
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Semiconductors and Media were predictedby most VCs to see a slow down ininvestment.
79%
71%
60%
59%
18%
18%
26%
30%
3%
11%
14%
11%
0% 20% 40% 60% 80% 100%
Semiconductors
Media
Wireless
Software
IncreaseUnchangedDecrease
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Most VCs predict a slowdown ofinternational investing in 2009.
74%
56%
56%
51%
20%
34%
22%
21%
6%
10%
22%
28%
0% 20% 40% 60% 80%
Europe
Israel
India
China
IncreaseUnchangedDecrease
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VCs predict a decrease in seed and earlystage investment in 2009.
60%
64%
48%
35%
18%
21%
22%
20%
22%
15%
30%
45%
0% 20% 40% 60% 80%
Seed
Early
Expansion
Late
IncreaseUnchangedDecrease
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Most venture capitalists do not predictIPO relief until 2010 or beyond.
The venture backed IPO market will re-open in:
9%
18%
72%
0%1%
Q1 2009 Q2 2009 Q3 2009 Q4 2009 2010 or beyond
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Acquisition volume may increase butvalues are predicted to decline.
In 2009 venture backedacquisition volume will:
34%
43%
23%
Increase Decrease Same
In 2009 venture backed acquisitionvalues will:
4%
87%
9%
Increase Decrease Same
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2009 will be a difficult year forentrepreneurs.
It will be harder for newcompanies to get funded.
96%
4%
Agree Disagree
It will be harder to sustain exisitingportfolio companies.
93%
7%
Agree Disagree
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The reallocation of institutional funds willresult in fewer venture capital firms goingforward.
Institutional investors willreduce commitments to VC.
85%
15%
Agree Disagree
More VC firms will not be able toraise money.
96%
4%
Agree Disagree
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Despite market challenges, venturecapitalists remain bullish on returns –especially in the long term.
VC returns will decline in theshort term (3-5 years)
92%
8%
Agree Disagree
VC returns will decline in the longterm (5 - 10 years)
83%
17%
Agree Disagree
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Most venture capitalists believe theeconomy will remain the same or worsenin 2009.
How will the U.S. economy fare in 2009?
25.0%
19.0%
56.0%
Improve Worsen Unchanged
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Few VCs predict the Dow Jones to riseabove 10,000 in 2009.
At what level will the DJIA be onDecember 31, 2009?
31.3%
14.0%
13.6%
41.1%
< 8000 8000-9000 9000-10000 >10,000
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Historical Venture Capital Statistics
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Venture Capital Fundraising1998 – 2008 (thru Q3)
Source: NVCA and Thomson Reuters
0.0
20.0
40.0
60.0
80.0
100.0
120.0
$B Gross 29.7 55.8 104.4 39.0 3.8 10.6 19.1 28.0 31.4 35.5 25.4
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Q3
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Venture Capital Investment1998 – Q3 2008
Source: The MoneyTree Report by PricewaterhouseCoopers/National Venture Capital Association; Data: Thomson Reuters
$21.1
$54.0
$105.0
$40.6
$22.0$19.8 $22.5 $23.1 $26.7 $30.8$22.6
$0
$20
$40
$60
$80
$100
$120
$ B
illio
ns In
vest
ed
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Q3
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Venture Exit Counts-IPOs and M&A by Year 1993 – 2008 (Q3)
Source: NVCA and Thomson Reuters
0
100
200
300
400
500
600
700
Year
Num
ber o
f Iss
ues
M&A 74 100 97 116 164 209 240 317 353 316 293 339 351 369 359 199IPO 220 166 202 270 136 77 260 264 41 24 29 93 57 57 86 6
93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08Q3
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