second bounce of the ball - what's going on in tech?
TRANSCRIPT
Industrial Revolution 2.0 3.0 4.0& The Next Bounce of the Ball
YC NgPartner @ Potential VC
Agenda
What’s going on in the tech market - a VC perspective
What industries are being disrupted?
How does it affect Deloitte?
YC Ng Partner @ Potential.vc
Previously: Barclays, Debt Syndicate Startup stuff: Scarlett of Soho (acquired) Investor/Advisor @ hackajob, Inkpact, CaseHub, Papier, Mindmate, leaf.fm, Rentecarlo Mentor @ Techstars, Ignite, Entrepreneur First, Accelerate Cambridge
In God we trust, all others must bring data.
With more money (and new non-VC entrants), venture financings have been on the rise - 2015 was an enormous year
0
25
50
75
100
0
2,500
5,000
7,500
10,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
# OF ROUNDS CLOSED CAPITAL INVESTED ($BN)
Source: Pitchbook 2015 Annual US Venture Industry Report; Upfront VC
Pre-recession levels of LP contributions to the VC industry - 2016 seems likely to keep growing
US FINANCING ACTIVITY
0
15
30
45
60
0
75
150
225
300
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: DowJones Venture Source; Upfront VC
The opportunity cost to “play” has fallen
# OF VC/GROWTH FUNDS RAISED BY SIZE (M) (2013 - Q42014)
0
25
50
75
100
$1 - $50 $101 - $150 $201 - $250 $301 - $350 $401 - $450 $501+
2013 FUNDS RAISED 2014 FUNDS RAISED
Source: CBInsights
Source: Source: Pitchbook 2015 Annual US Venture Industry Report; Upfront VC
Dollars into later-stage deals have been largely driven by non-traditional VCs (up 50% in the last 3 yrs)
NON-VC PARTICIPATION IN $20M-PLUS ROUNDS
0%
15%
30%
45%
60%
2012 2013 2014 2015
55%47%47%
37%
Source: Pitchbook 2015 Annual US Venture Industry Report; Upfront VC
Corporate VC is the new “cool thing”
QUARTERLY CORPORATE VC PARTICIPATION Q3’12 - Q4’14
0
25
50
75
100
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14
969392
83
73
666668
6064
Source: CBInsights
Private & public market disconnect
0
6.5
13
19.5
26
BOX DROPBOX
VALUATION AS A MULTIPLE OF PROJECTED 2014 SALES
Source: CBInsights
A very visible re-calibration of valuations of pre-IPO mutual fund cohort at places like Fidelity
FIDELITY’S HOLDINGS: % PRICE CHANGES SINCE PURCHASE
BLUE BOTTLE
MONGODB SERIES F
TABOOLA SERIES E
TURN INC.
ZENEFITS SERIES C
DATAMINR SERIES D
DROPBOX SERIES C
SNAPCHAT SERIES F
-70% -52.5% -35% -17.5% 0%
-15%
-29%
-35%
-44%
-45%
-47%
-54%
-61%
% CHANGE
Source: Upfront VC
More than 90% of respondents in the Upfront VC Survey expected valuations to go down in 2016 with a full 1/3 of investors expecting significant price corrections
INCREASE
ABOUT THE SAME
MARGINALLY DOWN
SIGNIFICANTLY DOWN
0% 17.5% 35% 52.5% 70%
30%
61%
8%
1%
5%
61%
28%
6%
Q4'15 1H'16 (EST)Source: Upfront VC
More than 90% of respondents in the Upfront VC Survey expected valuations to go down in 2016 with a full 1/3 of investors expecting significant price corrections
INCREASE
ABOUT THE SAME
MARGINALLY DOWN
SIGNIFICANTLY DOWN
0% 17.5% 35% 52.5% 70%
30%
61%
8%
1%
5%
61%
28%
6%
Q4'15 1H'16 (EST)Source: Upfront VC
But a full 82% of LPs are likely to maintain their existing investment pace
HOW WOULD YOU DESCRIBE YOUR LIKELY INVESTMENT PACE IN VENTURE
OVER THE NEXT 3 YEARS?
10%
82%
8%
WE'RE LIKELY TO INCREASE OUR INVESTMENT PACEWE'RE LIKELY TO KEEP THE SAME INVESTMENT PACEWE'RE LIKELY TO SLOW DOWN OUR INVESTMENT PACE
Source: Upfront VC
Areas being disrupted
How does this affect
Changing loyalties
Defensive Strategy• Helping the current FTSE companies respond to
threats & disruption
Proactive Strategy• Identifying and helping the next-generation of FTSE
companies
What role should you play?
3.5%“Unicorns” as a % of Nasdaq total market cap
