moneytree analyst call q408
DESCRIPTION
TRANSCRIPT
1
The MoneyTree™ Report
Overview of Venture Capital InvestmentsFourth Quarter and Year End 2008
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report
based on data from Thomson Reuters
2
Host of the Analyst CallMaryanne Coughlin Director, Technology Sector Analyst PricewaterhouseCoopers
Maryanne Coughlin is a director at PricewaterhouseCoopers, serving as sector analyst for the Firm's US technology and venture capital industry practices. In this role, she advises partners and client teams on marketplace trends and their impact on technology sector firms.
Prior to joining PwC in 2007, Maryanne was director of global services model and forecast management at IDC, a technology research firm. While at IDC, Maryanne launched and managed two new research services,presented at the firm's flagship US vendor conferences, and authored one of the firm's most popular research documents. Before joining IDC, Maryanne held positions in client services, marketing, interactive communications and editorial at marchFIRST (formerly USWeb/CKS),Tenet Healthcare, and the US Naval Institute. While at USWeb/CKSMaryanne led the engagement to design and create an award-winning online insurance marketplace. While at Tenet, Coughlin authored the Fortune 500 company's Internet business plan, established the company's brand on the Internet, and served on the Tenet Marketing Council. Earlier in her career, Maryanne worked for international startup Americom International Corp., assisting an entrepreneur in raising funding to build and operate a hotel and business center as a joint venture with Radisson Hotels International and Intourist in Moscow, Russia.
Maryanne holds a Master's degree from the University of Virginia and a bachelor's degree from Loyola College in Maryland. She completed the Stanford Professional Publishing Course at Stanford University.
3
National Fourth Quarter and Year End Results$ Invested and # Deals by QuarterInvestments by Stage of Development Investments by Industry/SectorFirst-time Financing
PricewaterhouseCoopers Commentary on Results
NVCA Commentary on Results
Levensohn Venture Partners
Frazier Healthcare Ventures
MoneyTree Report Q&A
Overview
4
Thomson Reuters
Matthew TooleResearch Director, Private EquityThomson Reuters
Matthew Toole is the director of research for Thomson Reuters’ Investment Banking content, which includes mergers & acquisitions, venture capital, private equity and capital markets.
Prior to this appointment, Matthew managed Thomson Financial’s capital markets content strategy and development including debt and equity research and banking contributor relations. Matthew started his career as a research analyst in the fixed income group at Thomson Financial Securities Data.
Matthew received his Bachelor of Science in Biology from Providence College.
5
Investments Decline 8% Over 2007US Venture Capital Investments: 2001-2008
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Reuters
0
5
10
15
20
25
30
35
40
45
2001 2002 2003 2004 2005 2006 2007 2008
Tota
l Am
ount
Inve
sted
($bi
l)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Num
ber o
f Dea
ls
Q1 Q2 Q3 Q4 Number of Deals
$40.6
$21.9 $22.5 $23.2
$26.7
$30.9
$19.7
$28.3
6
Bulk of the $$ Going to Expansion & Later Stage DealsUS Venture Capital Investments: 2001-2008
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Reuters
9.44.2 3.9 4.5 4.7 5.3 6.8 6.8
23.0
12.410.1 9.2 8.7
11.511.7 10.6
8.2
5.55.8 8.8 9.8
9.912.5
10.8
0
5
10
15
20
25
30
35
40
45
2001 2002 2003 2004 2005 2006 2007 2008
Tota
l Am
ount
Inve
sted
($bi
l)
Seed/Early Stage Expansion Later Stage
7
First Sequence Financing accounts for 22% of 2008 venture capital investments
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Reuters
21.7%
24.2%23.1%
24.8%
21.6%20.0%20.0%
18.3%
0
1
2
3
4
5
6
7
8
2001 2002 2003 2004 2005 2006 2007 2008
Tota
l Am
ount
Inve
sted
($bi
l)
0%
5%
10%
15%
20%
25%
30%
% o
f Inv
estm
ent D
olla
rs
Total Amount Invested ($bil) % of Investment Dollars
8
IT
$4,500.4
$3,459.9
$195.0
Biotechnology Medical Devices &Equipment
Healthcare Services
$4,918.8
$2,039.0$1,832.0 $1,687.9 $1,650.9
$644.8 $573.3
Software Media &Entertainment
IT Services Telecom Semiconductors Networking &Equipment
Electronics &Instrumentation
$13.3 billion
$9.5 billion
IT Investments ($M)
Life Sciences Investments ($M)
Software and Biotech Have Investor’s InterestUS Venture Capital Investments By Industry – 2008
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Reuters
LS
9
PricewaterhouseCoopers
Tracy T. LefteroffGlobal Managing PartnerPrivate Equity & Venture Capital and Life Sciences Industry Services
As Global Managing Partner of Private Equity and Venture Capital as well as Life Sciences Industry Services, Mr. Lefteroff is in charge of services provided to the venture capital community, venture-funded technology companies and publicly-held, privately-owned and venture-funded life sciences companies worldwide. Mr. Lefteroff has been key to the development of strategic collaborative agreements with many of the major international pharmaceutical companies and has recently assisted in several high profile industry mergers. He also co-authored the Firm’s Practice Standards and Aids for the Life Sciences Industry.
Mr. Lefteroff currently serves on the Board of Directors of the Stanford Venture Laboratory and the California Healthcare Institute. He has served as Treasurer of the Washington State Biotechnology Association, Chairman of the MIT Enterprise Forum of the Northwest and as a Committee Member of the Washington Society of CPA’s High Technology Committee. He is also a member of the American Institute of Certified Public Accountants and the California, Washington and Idaho Societies of CPA’s. Mr. Lefteroff has been with PricewaterhouseCoopers for approximately 16 years, including three years in the Seattle, Washington office, where he was extensively involved with the Firm’s venture capital and life sciences clients. Today he resides in the San Jose, California office.
10
$411
$1,391
$1,327
$1,022 $1,005
$496
$1,289$1,300$1,345
$947$1,016
$1,021
$814
$550
$432
Sof tw are Biotechnology Industrial/Energy Medical Devices and Equipment Media and Entertainment
Q4 2007Q3 2008
Q4 2008
Investment Activity – Q4 2008 Top IndustriesQ4 2007, Q3 2008, Q4 2008
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Reuters
Total Amount Invested ($M)
11
$1,974
$5,028
$1,956
$4,594
$2,924
$1,641
$5,239
$3,248
$5,462
$4,069
$4,651
$4,919
$4,500
$3,460
$2,039
Sof tw are Industrial/Energy Biotechnology Medical Devices and Equipment Media and Entertainment
20062007
2008
Investment Activity – Full-Year 2008 Top Industries2006, 2007, 2008
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Reuters
Total Amount Invested ($M)
12
$4,267$3,916
$4,594
$5,239
$1,936$2,222
$2,924
$4,069
$3,460
$4,500
2004 2005 2006 2007 2008
Medical Devices and Equipment Biotechnology
Life Sciences Investments2004 – 2008
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Reuters
Total Amount Invested ($M)
13
$444 $550
$1,440
$2,666
$4,115
2004 2005 2006 2007 20080
50
100
150
200
250
300
$ Invested # of deals
Internet-Specific & Clean Tech Investments2004 – 2008
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Reuters
Clean Tech Investments ($M)
$4,900$5,015$4,291
$3,300$2,904
2004 2005 2006 2007 20080
200
400
600
800
1,000
$ Invested # of deals
Internet-Specific Investments ($M)
14
National Venture Capital Association
John S. TaylorVice President of ResearchNational Venture Capital Association
John S. Taylor is Vice President of Research at the National Venture Capital Association (NVCA) which is based in the Washington, DC area. He is responsible for developing and overseeing association data and research efforts. The key element in this effort is the creation of a research consortium which was announced in 1998 involving the NVCA, Thomson Venture Economics, and the Ewing Marion Kauffman Foundation. In December 2001, PricewaterhouseCoopers joined the team and the tri-branded MoneyTree™ survey became the definitive source for venture capital investment information. This team was created to ensure accurate, impartial, durable, and practical data on the venture capital and private equity industries. He joined the NVCA in 1996.
Mr. Taylor is frequently quoted by major newspapers and magazines on the subject of venture capital and private equity and has recently provided live commentary on CNBC, CNNfn, Bloomberg radio, and NPR Morning Edition.
Mr. Taylor’s career began with the company now known as Accenture where he was a senior consultant advising small business clients. He has since held senior product manager and IT positions in both large and small organizations. At a national computer services provider, he helped develop a new generation of minicomputer and microcomputer products for the residential real estate industry.
He has served as a board member of both for-profit businesses and non-profit organizations. In 1998, he was awarded the Maryland Governors Citation for outstanding volunteer service. He recently joined the Advisory Board of the Center for Private Equity and Entrepreneurship at the Amos Tuck School.
He received an MBA degree from the Amos Tuck School at Dartmouth College, and a BS degree in chemistry from Dickinson College.
15
Number of Deals by StageUS Venture Capital Investments: 2001-2008
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Reuters
15451022 976 1076 1061 1295 1486 1453
2388
15821352 1209 1093
1366 1259 1178
545
488594 808 1001
10141207 1177
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2001 2002 2003 2004 2005 2006 2007 2008
Num
ber o
f Dea
ls
Seed/Early Stage Expansion Later Stage
16
Number of Deals by StageUS Venture Capital Investments: Quarterly 2006-2008
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Reuters
72 84 109 90 82 120 120 128 115 108 131 86
197 231226 286 229
306 242 259 245 279249 240
330 360338 338
289306
320 344 326 322 273 257
273 280 234 227268 308 311 320 302 334 306 235
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q106 Q206 Q306 Q406 Q105 Q205 3Q05 4Q05 1Q08 2Q08 3Q08 4Q08
Per
cent
age
of D
eals
Seed Early Stage Expansion Later Stage
17
Number of First-Time vs. Follow-On DealsUS Venture Capital Investments: 2001-2008
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Reuters
1213836 753 921 1019 1201 1299 1171
3264
2255 21672172 2136
24742653 2637
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2001 2002 2003 2004 2005 2006 2007 2008
Num
ber o
f Dea
ls
First-Time Follow-On
18
Levensohn Venture Partners Pascal LevensohnManaging Partner and FounderLevensohn Venture PartnersPascal Levensohn has been a finance professional for twenty six years and a venture capitalist since 1996, when he founded Levensohn Venture Partners ("LVP") in San Francisco. He invests in early stage software, semiconductor, and communications companies.
A frequent speaker on corporate governance issues, Pascal has published numerous articles on venture capital trends since 1999. In May 2006, Pascal established and now chairs the Working Group on Director Accountability and Board Effectiveness, a 33 member VC industry group that promotes director education and best governance practices. The group’s first effort, “A Simple Guide to the Basic Responsibilities of Venture–Backed Company Directors”, was released in January 2007. Pascal co-authored the first governance white paper in the VC industry in November 2003, "After the Term Sheet: How Venture Boards Influence the Success or Failure of Technology Companies". A second white paper, “Rites of Passage: Managing CEO Transition in Venture-Backed Technology Companies”, was published in January 2006. Pascal's VC governance work is now part of the curriculum at several universities, including the Harvard Business School and Stanford's Graduate School of Engineering (Department of Management Science & Engineering).
Pascal was elected to the board of the National Venture Capital Association in April 2007, where he serves on the education committee. He currently serves as the Chairman of the San Francisco Jewish Community Federation’s Business Leadership Council and as co-chair of the Steering Committee of the Aspen Institute’s Socrates Society a leadership development program with which he has been involved since 1997.
Pascal received a BA in Government from Harvard University and is a graduate of the Lawrenceville School. He is a member of the Council on Foreign Relations and the Pacific Council on International Policy
19
Frazier Healthcare Ventures Robert MoreGeneral PartnerFrazier Healthcare Ventures
Mr. More joined Frazier Healthcare Ventures in 2008 as a General Partner and is a member of the firm’s biopharma and medical device investment teams. Prior to Frazier Healthcare, Mr. More was a Partner with Domain Associates, having joined the firm in 1996 as a Kauffman Fellow and becoming a Partner in 2000. From 1997-1998, Mr. More served as the Chief Operating Officer of Small Molecule Therapeutics, a Domain portfolio company subsequently purchased by Morphochem AG. And from 1992 to 1995, Mr. More was with Pharmacia Biotech in sales. Prior to joining Pharmacia, Mr. More held a research position at Somatogen, a company developing a recombinant blood substitute that was subsequently bought by Baxter. While attending business school, Mr. More worked with MedVest, an early-stage venture group in Washington, D.C.
Mr. More managed successful investments in and served on the boards of ESP Pharma (acquired by Protein Design Labs, Inc.), Proxima Therapeutics (acquired by Cytyc Corporation), Onux Medical (acquired by C.R. Bard), NovaCardia (acquired by Merck), Esprit Pharma (acquired by Allergan) and IntraLase (acquired by Advanced Medical Optics, Inc.).
Mr. More serves as an advisory board member for Montagu Newhall Associates, Okapi Ventures, The Medical Industry Group of the NVCA and The Sulpizio Family Cardiovascular Center. He is also a past founding board member of the Kauffman Fellows Program.
Mr. More received his MBA from the Darden School of Business Administration at the University of Virginia and a BA from Middlebury College.
20
MoneyTree™ ReportQ&A