heesen san diego venture group - 2012-01-24

San Diego Venture GroupVC Outlook 2012January 24, 2012

Mark G. HeesenNVCA President

The Number of US VC Firms Has Peaked ... Thankfully

At Year End

# Active Firms

Capital Managed

1970 28 $1B 1980 87 $4B 1990 96 $28B

2000 1,022 $220B 2010

462 $177B

Source: 2011 NVCA Yearbook, prepared by Thomson Reuters, figure 1.04

VC Fundraising Has Slowed Down – New commitments continue below company investment

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

$B 10 12 18 31 58 107 38 4 11 19 31 32 31 26 16 14 18

0

20

40

60

80

100

120

Source: Thomson Reuters/NVCA

Does not include Corporate Venture groups.

The Vast Bulk of the Capital Goes to Existing Managers Raising a Follow-On Fund

2005 2006 2007 2008 2009 2010 2011$B First 2.4 1.4 2.9 2.2 0.9 1.6 1.9$B Follow On 27.9 30.5 27.7 23.2 15.5 12.2 16.9

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5

10

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20

25

30

35

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ime

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-On

Source: Thomson Reuters/National Venture Capital Association

Investment Marches On -The industry is in a new size band but it is very much

open for business!

$0

$10

$20

$30

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$70

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$90

$10019

88

1989

1990

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1992

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1994

1995

1996

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2000

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2011

$ B

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VC Investment Peaked in 2000; Industry is Smaller Now

Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters

$99b

$31b

$28b

Despite economic turbulence and uncertainty, VCs funded Over 1100 in 2011; 1000-1300 is typical

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500

1,000

1,500

2,000

2,500

3,000

3,500

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011# Cos 1,428 2,459 3,388 1,236 840 768 950 1,067 1,259 1,361 1,281 795 1,047 1,159

Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters

First Fundings of Life Sciences Companies is Way Down…

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

# LS FF 153 192 202 166 192 167 173 165 185 206 268 259 242 157 188 153

0

50

100

150

200

250

300

Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters

SoCal under a Microscope…

Note that data “cuts” can be done from the historical trend data section of www.pwcmoneytree.com or from the

National Aggregate Spreadsheet which can be downloaded from that site.

10

So. California Investing Generally Tracked National Trends …

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

$M Inv 1,171 1,081 1,298 1,707 4,539 8,591 3,583 2,158 1,783 2,441 2,588 3,112 3,704 3,136 1,921 2,493 2,805

# Deals 165 240 264 333 505 751 402 275 268 274 313 354 394 375 277 341 315

0

100

200

300

400

500

600

700

800

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$1,000

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illion

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Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters

… and first time funding are rebounding nicely

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50

100

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350

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011# 1st Fundings 102 127 228 323 110 63 65 82 119 122 131 126 61 84 95

Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters

SoCal’s 37% focus on life sciences is higher than national; clean tech makes up the bulk of Ind/Energy

Bio22%

Ind/Energy22%

Med Dev15%

SW12%

Media/Ent5%

Consumer5%

IT Services5% Semi

2% Other12%

$ Invested 2009 through 2011

Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters

The Exit Scene - the importance of acquisitions has become clear

over the past several years

but the IPO market remains the key!

IPO Levels Far Below What is Needed

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

$Offer B 12.01 5.00 3.54 18.75 22.96 3.41 2.07 2.01 10.48 4.48 4.48 10.33 0.47 1.64 7.02 9.88

Count 281 142 78 271 263 41 22 29 94 57 57 86 6 12 75 52

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50

100

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250

300

0.00

5.00

10.00

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Source: Thomson Reuters/National Venture Capital Association

Median Age at IPO is Off Its Peak – but Still Historically High

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Med Age - Yrs 5.78 6.54 4.74 4.29 5.26 7.15 7.93 7.70 6.86 6.20 8.02 8.78 9.59 10.30 9.18 8.30

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Med Age - Yrs

Source: Thomson Reuters/National Venture Capital Association, As of 5/27/2011

What’s in the Venture-Backed IPO Pipeline?IPOs During Period and Registration Counts at

Period End; Are we seeing a comeback?

2003 2004 2005 2006 2007 2008 2009 2010 2011

IPOs Done 29 94 57 57 86 6 12 75 52

In Reg on last day 31 57 16 36 60 28 29 42 60

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Source: Thomson Reuters/National Venture Capital Association

As of 11/4/2011, there were 65 port cos in registration with 3 IPOs QTD including Groupon.

Volume of M&A Exits has Increased to Record Levels

Source: Thomson Reuters/National Venture Capital Association

Venture Exit Counts- IPOs and M&A by Year

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

#M&A 100 97 116 164 209 240 317 353 319 284 349 350 378 382 348 273 436 429

#IPO 166 202 270 136 77 260 264 41 24 29 94 57 57 86 6 12 75 52

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#M&A

#IPO

Source: Thomson Reuters/National Venture Capital Association

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