The State of Venture Investing - sdvg.org€¦ · The State of Venture Investing January 24, 2013...

The State of Venture Investing

January 24, 2013

Josh Green

Mohr Davidow Ventures

The Number of US VC Firms Has Peaked .. Thankfully

At Year End

# Active Firms

Capital Managed

1970 28 $1B 1980 87 $4B 1990 100 $28B

2000 1,035 $224B 2011 526 $197B

Source: 2012 NVCA Yearbook, prepared by Thomson Reuters, figure 1.04

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

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012$B 12 18 31 58 107 38 4 11 19 31 32 31 26 16 14 19 21

0

20

40

60

80

100

120

Source: Thomson Reuters/NVCA

Does not include Corporate Venture groups.

$0

$20

$40

$60

$80

$100

$12019

88

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

$ B

illio

n In

vest

ed

VC Investment Peaked in 2000; Industry is Smaller Now; $27B in 2012

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

$105b

$32b

$27b

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

2005 2006 2007 2008 2009 2010 2011 2012$B 1st,Only 3.8 2.4 3.0 2.2 1.1 1.6 1.8 1.6$B Follow On 28.4 30.2 27.8 23.4 15.1 12.1 17.0 18.9

0.05.0

10.015.020.025.030.035.0

$B R

aise

d by

Firs

t-Ti

me

Man

ager

s vs

. Fo

llow

-On

Source: Thomson Reuters/National Venture Capital Association. Note: sole funds are included in first funds

Venture Capitalists Continue To Invest in Promising Companies –

1,000-1,300 Considered Healthy; Life Sci particularly slow now

-

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 2012# Cos 1436 2471 3394 1235 851 774 970 1082 1278 1418 1313 831 1087 1312 1163


The Number of 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 2012# LS FF 152 192 203 167 192 170 177 169 188 207 274 271 257 171 188 181 135

0

50

100

150

200

250

300

Note: For this chart, biotech, pharmaceuticals, med devices, and therapeutics are included. HC services is not.


Clean Technology has grown dramatically; was > 15% of all US VC investment; softer now

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012$B CT 105.22 40.976 22.141 19.677 23.235 23.605 27.588 31.883 29.921 20.381 23.315 29.463 26.525% of AllVC 0.6% 1.0% 1.6% 1.2% 1.9% 2.7% 6.5% 6.6% 14.3% 12.4% 17.6% 15.5% 12.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

0

20

40

60

80

100

120


IPO Levels Overall Below What is Needed; 2012 Numbers Driven by Facebook & friends ($16.0B)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012$Offer B 5.8 4.2 24.0 27.4 4.1 2.3 2.0 10.3 5.1 7.1 12.4 0.8 2.0 7.6 10.7 21.5Count 141 79 280 238 37 24 26 83 59 68 92 7 13 68 51 49

0

50

100

150

200

250

300

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Num

ber o

f IPO

s

Offe

r $B

Source: Thomson Reuters/National Venture Capital Association

M&A Exits for Venture-Backed Companies are Improving – But There is a Long Way to Go!


1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $B 7.9 8.3 39.6 81.8 25.6 12.5 9.2 30.0 20.0 25.4 30.7 16.2 12.3 17.7 24.1 21.5

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0

$ B

illio

n

Disclosed Acquisition Price Paid $B

Venture Exit Counts- IPOs and M&A by Year

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012#M&A 97 116 143 189 227 380 384 363 323 402 443 485 488 416 351 521 488 437#IPO 202 270 141 79 280 238 37 24 26 83 59 68 92 7 13 68 51 49

0100200300400500600700

Num

ber o

f Iss

ues

#M&A#IPO


12

Venture investment in San Diego was up in 2012 – over 4% of national …

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012$M Inv 485 516 669 1,429 2,302 1,579 997 826 1,198 1,205 1,224 1,851 1,210 949 897 927 1,117% of National 4.3% 3.4% 3.1% 2.6% 2.2% 3.9% 4.5% 4.2% 5.2% 5.1% 4.4% 5.8% 4.0% 4.7% 3.8% 3.1% 4.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

$0

$500

$1,000

$1,500

$2,000

$2,500

$ M

illi

on

s In

to S

an D

ieg

o P

ort

Co

s


Who’s Investing in San Diego Companies? 25% comes from SiValley, 15% from NYC

Si Valley25%

Unk/Misc18%NY Metro

15%

Foreign12%

MidWest8%

NewEng7%

Philly5%

San Diego4%

Other6%

2012 Investment in San Diego Companies


70% of 2012 Investment Dollars Went to Biotech & Clean Tech

Bio54%

Ind/Energy17%

Software14%

Med Dev10%

IT Svcs2%

Consumer1% Networks

1%

Media/Entert1%

Other0%

San Diego 2012 Investment


San Diego First Fundings Have Been Soft Recently – Time to Refill the Pipeline!

-

10

20

30

40

50

60

70

80

90

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012# Cos 40 65 85 41 30 32 32 41 34 42 38 26 25 23 16


www.nvca.org

nvcaccess.nvca.org

Public Policy and The Venture Industry The road ahead…

The Washington Environment

•  Emboldened White House •  Acrimonious environment: red/blue, right/left, tax

brackets •  Fiscal matters are paramount •  Congressional turnover •  Overwhelmed regulators e.g. SEC •  Tax reform could be a free for all

Recent Battles

•  J.O.B.S. Act of 2012 •  FDA reform •  Clean technology science funding/supportive

policies (ARPA-E support) •  Internet regulation

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