Shaking the MoneyTree

Transcription

1 Hosted by: Shaking the MoneyTree pwc

2 Agenda Please join PricewaterhouseCoopers, Cooley Godward Kronish LLP and a distinguished panel as they provide insight into Venture Investments, including PwC's Shaking the MoneyTree Report. MoneyTree Thursday, September 3, 2009 Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, California :00-7:00 p.m. Registration and Networking 7:00-8:15 p.m. Presentation and Panel Discussion Moderator Steve Bengston, PricewaterhouseCoopers LLP Event Panelists Tim Carey, PricewaterhouseCoopers LLP Emmett Cunningham, Clarus Ventures Rich Ferrari, De Novo Ventures Allan May, Emergent Medical Parnters Rich Redelfs, Foundation Capital PricewaterhouseCoopers/National Venture Capital Association MoneyTree TM Report based on data from Thomson Reuters. PricewaterhouseCoopers 1

3 Event Panelists PricewaterhouseCoopers 2

4 Steve Bengston Director PricewaterhouseCoopers LLP Steve is Director of Emerging Company Services (ECS) at PricewaterhouseCoopers. ECS acts as mentor capitalists for young, high potential companies and assists them with a variety of services, including, Review- ing Executive Summaries/Investor Presentations, Referrals, Raising Money, Partnerships and Finding People. Before joining PwC, Steve had 20 years of experience in a variety of marketing, business development and general management roles at several high tech companies in the Bay Area. Most recently, he was Pres/ CEO of ynot.com, a leading international emarketing and greeting card company. Previously, he was VP Marketing & Business Development at Worldview Systems, an Internet travel pioneer. At Worldview, Steve helped launch and market Travelocity with Sabre Interactive. Steve has a BA in Economics and MBA from Stanford University. He works closely or sits on the Advisory Board at Churchill Club, SVASE, SDForum, Life Science Angels, Entrepreneurs Foundation, and the Stanford/MIT Venture Lab, has taught classes on start ups at UC Berkeley, Santa Clara Law School, Hastings Law School, and Stanford, and is active in a variety of other organizations in the Bay Area targeting entrepreneurs and investors. He also hosts the PricewaterhouseCoopers Startup radio show at He is a frequent moderator/panelist at both university and industry sponsored events. PricewaterhouseCoopers 3

5 Tim Carey Partner PricewaterhouseCoopers LLP Tim Carey joined PricewaterhouseCoopers' Detroit office in 1992 and was admitted to the partnership in He has spent the past 7 years as a Partner in the San Jose office specializing in the semiconductor industry. Tim also spent two years in our Manchester, England office and has extensive experience working in both Europe and Asia. Tim is the US Leader of the firm's CleanTech practice and has worked with numerous companies in the renewable energy and transportation sectors within CleanTech. He is the firm's liaison to VC CleanTech funds and is responsible for PwC's thought leadership efforts within the sector. Tim has extensive SEC experience having served as the lead Engagement Partner on five IPO's and numerous debt and equity offerings. In addition, he has significant experience with M&A transactions ranging from acquisitions, spin-offs and divestitures to complex joint ventures, strategic investments and alliances. In addition to client work, Tim speaks regularly to outside groups on a variety of topics including corporate governance, revenue recognition, accounting for stockbased compensation and initial public offerings. He is also currently on the board of the Silicon Valley Chapter of the National Association of Corporate Directors. Tim received a Bachelor s degree in Financial Administration from Michigan State University in 1987 and an MBA with Distinction from the University of Michigan in He is a certified public accountant and a member of the American Institute of Certified Public Accountants as well as the Michigan and California Associations of Certified Public Accountants. Tim is also a Board Member of the Silicon Valley Chapter of the National Association of Corporate Directors and is affiliated with the American Institute of Certified Public Accountants, California Society of Certified Public Accountant and Michigan Association of Certified Public Accountants. PricewaterhouseCoopers 4

6 Emmett Cunningham, Jr., MD, PhD, MPH Partner Clarus Ventures Dr. Cunningham joined Clarus Ventures with more than 20 years experience in the biomedical and biopharmaceutical sectors. Prior to Clarus, Dr. Cunningham was the Senior Vice President, Medical Strategy at Eyetech Pharmaceuticals, Inc. (NASDAQ:EYET), where he helped build and lead the team that developed and commercialized Macugen, a first-in-class product for the treatment of age-related macular degeneration. Prior to Eyetech, Dr. Cunningham was at Pfizer, Inc, where he was responsible for the clinical development of early phase central nervous system compounds and the in-licensing of early and late-stage therapeutic candidates in ophthalmology. Dr. Cunningham is an internationally recognized specialist in infectious and inflammatory eye disease with over 200 publications. He is an Adjunct Clinical Professor of Ophthalmology at Stanford University, was Clinical Professor and Director of the Uveitis service at NYU from 2002 to 2005, and was Director of both the Uveitis Service and the Kimura Ocular Immunology Laboratory at the University of California at San Francisco (UCSF) from 1995 to Dr. Cunningham received an MD and MPH in epidemiology and statistics from Johns Hopkins University, a PhD in neuroscience from the University of California at San Diego (UCSD) for work done at The Salk Institute, and completed both a residency in ophthalmology and fellowship training in Corneal Disease and Uveitis at UCSF. Dr. Cunningham is a member of the Board of Directors for SARcode Inc., a member of the Scientific Advisory Boards of ESBAtech AG and Comentis Inc., and a Board observer for Ferrokin Biosciences, Pearl Therapeutics Inc., Taligen Therapeutics Inc., and Zogenix, Inc. PricewaterhouseCoopers 5

7 Rich Ferrari Managing Director De Novo Ventures Rich has been a successful CEO of several medical technology companies, both prior to and after cofounding De Novo in Following De Novo s investment in CryoVascular Systems, Rich became CEO, growing the initial 5 person start up team to a company of 20 employees. He was instrumental in developing the clinical and product strategies and hiring the executive team. In 2002, Rich led Paracor Medical, another De Novo portfolio company. He grew the company from 4 to 22 employees, refined the product strategy, raised its Series B financing and hired his replacement CEO. Prior to co-founding De Novo Ventures, he was the co-founder and CEO of CardioThoracic Systems ( CTSI ), a company he led to an initial public offering in only 7 months in CTSI, the market leader in disposable instruments and systems for performing minimally invasive beating heart bypass surgery, was ultimately acquired by Guidant Corporation in November Before that, Rich was the CEO of Cardiovascular Imaging Systems ( CVIS ). As CEO, he orchestrated a successful IPO and ultimately sold the company to Boston Scientific Corporation in In addition, Rich founded Saratoga Ventures in 1996, a venture capital partnership that has provided seed financing to startup medical technology companies, including Atrionix, Oratec, Enteric Medical, Trivascular, and Endotex. At Saratoga, Rich was Chairman of Oratec, which was sold in 2001 to Smith & Nephew PLC. Mr. Ferrari also co-founded The Medical Technology Group, which spun out Integrated Vascular Systems, an early stage femoral artery closure company which was sold to Abbott and Angiosense, a needlefree, jet injection, local drug delivery company. Early in his career, Rich held the position of Executive Vice President and General Manager of ADAC Laboratories. Rich holds a BS degree from Ashland University and an MBA from the University of South Florida. Rich sits on the boards of BenVenue, CardioMind, MyoScience, Ovalis, Paracor Medical, Pulmonx, Simpirica, Spinal Kinetics and Spinal Modulation. His prior board involvement includes TriVascular. PricewaterhouseCoopers 6

8 Allan May Managing Director Emergent Medical Partners Allan has been a founder, board member and/or CEO of a number of early stage companies in medical device and biotechnology including Athenagen (an LSA company), MAST Immunosystems, Intella Interventional Systems, Quanam Medical, ImmuneTech, NuGEN Technologies, AngstroVision, IntegriGen, Imetrx, and Vascular Architects. Previously, Mr. May was Senior Vice President of Diasonics, Inc., a NYSE-listed medical imaging company manufacturing and distributing MRI, ultrasound, fluoroscopic and therapeutic devices, and President and COO of Fortune Systems Corporation, a NASDAQ-traded developer of microprocessor based file servers utilizing the Unix operating system. He also has extensive experience in negotiating and consummating mergers and acquisitions, having been involved in over 100 transactions. He co-founded Life Science Angels ( LSA ) in 2005 and currently serves as its Chairman. LSA is the largest angel organization in the United States comprised solely of life science industry veterans and investing solely in medical device and life science early stage companies. PricewaterhouseCoopers 7

9 Rich Redelfs General Partner Foundation Capital Rich joined Foundation Capital in 2004 after more than 20 years in networking and communications, amassing a combination of start-up entrepreneurial as well as large company intrapreneurial experience. Most recently, he was president and CEO of Atheros Communications, which he helped build into the leading provider of Wi-Fi wireless semiconductors; it was subsequently named "Silicon Valley's Fastest Growing Private Company" by the Silicon Valley/San Jose Business Journal and PricewaterhouseCoopers for the period. In 2003 Rich received Frost & Sullivan's prestigious "Wireless LAN CEO of the Year" award. Rich currently serves on the boards of Dust Networks, Mobius Microsystems, Prematics, ACCO Semiconductor and Ventiva, and was previously on the boards of Azimuth Systems and Atheros Communications. He has an MBA from Harvard Business School and a BSIE from Purdue. PricewaterhouseCoopers 8

10 Companies PricewaterhouseCoopers 9

11 PricewaterhouseCoopers Ten Almaden Boulevard Suite 1600 San Jose, CA Phone: PricewaterhouseCoopers (PwC) is well placed to help you meet the challenges and opportunities of the US marketplace. We offer the perspective of a global organization combined with detailed knowledge of local, state and US national issues. Formed in 1998 from a merger between Price Waterhouse and Coopers & Lybrand, PwC has a history in client services that dates back to the nineteenth century. Each accounting practice originated in London during the mid-1800s. Today, PwC serves 29 industries. Our industry-focused professionals in the fields of assurance, tax, human resources, transactions, performance improvement and crisis management help to resolve complex client and stakeholder issues worldwide. We also bring our experience and talents to help educational institutions, the federal government, non-profits, and international relief agencies address their unique business issues. PricewaterhouseCoopers 10

12 Clarus Ventures 801 Gateway Boulevard Suite 410 South San Francisco, CA Phone: (650) Clarus Ventures is a life sciences venture capital firm founded by a team of accomplished investment professionals with extensive and complementary industry backgrounds which have enabled them to establish a long history of success in creating value. Their deep relationships with world thought leaders and decision makers allow this team to identify unique investment opportunities and shepherd them to maturity. Clarus augments its core expertise of investing in biopharmaceuticals and medical technology companies with the deep and diverse expertise of the team in research and development, commercialization, business development and operations management at the global level. Clarus has $1.2 billion of assets under management across two lifesciences dedicated funds. Clarus is headquartered in Cambridge, MA, and has an office in South San Francisco, CA. PricewaterhouseCoopers 11

13 De Novo Ventures 400 Hamilton Avenue Suite 300 Palo Alto, CA Phone: (650) De Novo Ventures was formed in 2000 by seasoned investors and experienced medical device entrepreneurs who sought to share the lessons learned from a history of successful investing and building successful companies. They believed that their unique combination of skills and perspectives could help entrepreneurs to build companies which would have significant clinical impact and generate superior returns. Seven years later, this belief continues to hold true, demonstrated by our investment success in selected medical device and biotechnology companies. With $650 million under management, De Novo has made more than 40 investments in medical devices and biotechnology across three funds. We invest in all stages of enterprise development and growth from early stage to late stage. Our unique background of leading companies as entrepreneurs and operating executives from start to exit enables us to advise entrepreneurs and management teams over the full life cycle of the company. Eight exits have occurred in DNV I -- four IPOs: Favrille (NASDAQ: FVRL), Fox Hollow Technologies (NASDAQ: EVVV), Renovis (NASDAQ: RNVS), and SenoRx (NASDAQ: SENO) and four acquisitions: CryoVascular Systems (Boston Scientific), TriVascular (Boston Scientific), LuMend (Johnson and Johnson) and Microvention (Terumo). DNV II has had one exit to date Hansen Medical (NASDAQ: HNSN). PricewaterhouseCoopers 12

14 Emergent Medical Partners 3282 Alpine Road Portola Valley, CA Phone: (650) Emergent Medical Partners is a life sciences investment firm that focuses on medical device and healthcare companies. We have over 50 years of experience creating and investing in medical devices and healthcare companies. Our focus is on early stage companies and our expertise encompasses all areas of medicine, including cardiovascular and general surgery, orthopedic surgery, cardiology, radiology, oncology, obesity, gynecology, oncology, and sleep disorders. Often, an engineer and a physician come to us with an idea or a prototype, and we work with them to help bring about a clinical solution. We are able to find managers, engineers, and clinicians to fill any gaps in these teams. This assistance is in addition to the possible investment in the company by Emergent Medical Ventures. Most of the exits of the companies associated with our managing directors have been by acquisition. Emergent Medical Partner s network is unparalleled in Silicon Valley, as we have access to the CEO s of large and small companies throughout the United States, relationships with local hospitals to facilitate implementation of clinical trials, and relationships with the major universities in the Bay Area. Combined, these abilities help entrepreneurs while helping our investors realize superior returns. PricewaterhouseCoopers 13

15 Foundation Capital 250 Middlefield Road Menlo Park, CA Phone: (650) Foundation Capital was founded in 1995 by Bill Elmore, Kathryn Gould, and Jim Anderson with a single purpose: to build great companies. These are companies that rise upward on the strongest of all foundations the power of an idea. And as such, they are organizations that make a difference, not only in the lives of their constituents, but in the impact they have on their markets. We should know: every partner at Foundation Capital has been an entrepreneur before coming here. We have served as CEOs, as executive managers, and as technologists with a compelling idea that ultimately resulted in real-world experience directing a company to success. We continue to run Foundation Capital with this entrepreneurial spirit, because our true expertise is the understanding, the perspective, and the enthusiasm we bring to helping promising companies in their formative stages. We are, quite simply, a venture capital firm where the venture matters more than the capital. Where purpose, and hard work, count. Where people, and beliefs, matter. PricewaterhouseCoopers 14

16 Silicon Valley Bank 3005 Tasman Drive Santa Clara, CA Phone: (408) A SVB Financial Group provides diversified financial services to emerging, growth and established technology companies and the life science, venture capital and premium wine markets. Through its focus on specialized markets and extensive knowledge of the people and business issues driving them, SVB Financial Group provides a level of service and partnership that measurably impacts its clients' success. Headquartered in Santa Clara, Calif., the company offers its clients commercial, investment, merchant and private banking, as well as value-added services using its knowledge and networks. Founded in 1983, SVB Financial Group serves nearly 11,000 clients around the world through 27 domestic offices, and international subsidiaries in the U.K., Israel, India and China, and an extensive network of relationships with venture capitalists in Asia, Australia, Europe, India, and Israel. With solid understanding of the true risks and rewards faced by companies in dynamic markets, the company is widely recognized for its ability to develop innovative approaches to meet the unique financial needs of its clients. SVB Financial Group began serving the technology and life science markets at a time when they were not wellunderstood by the financial services industry and when many of the leading companies in these industries were just getting started. At that time, many of these companies had yet to show profits and were not considered creditworthy by local community or regional banks. Over the last two decades, SVB Financial Group has become one of the most respected names in the financial services industry. The company has created innovative solutions for some of the world's most successful technology and life sciences companies. These companies face unique challenges and require special services, such as finding the right venture capitalist or angel investor, securing capital to support rapid growth, or driving overseas expansion. SVB Financial Group offers products and services specifically tailored to meet our clients' needs at every stage of corporate growth. PricewaterhouseCoopers 15

17 Presentation PricewaterhouseCoopers 16

18 Q2 Update: September 2009 Shaking the MoneyTree Steve Bengston PricewaterhouseCoopers/ National Venture Capital Association MoneyTree Report

19 About The Report PricewaterhouseCoopers and the National Venture Capital Association produce the MoneyTree Report Core measure of equity investments in venture-backed companies in the United States Companies have received at least one round of financing involving a professional VC firm or equivalent Captures: tranches, note term sheets, foreign VCs, qualified private placement Excludes: debt, bridge loans, recaps, roll-ups, IPOs, PIPEs, leasing, etc. MoneyTree Report in its 14th year Results online at Slide 2

20 MoneyTree Total Investments: Q ($ in billions) $14.0 $12.0 $12.5 $10.0 $10.9 Q1 $8.0 $6.0 $4.0 $2.0 $8.1 $7.8 $6.6 $5.9 $4.4 $4.4 $4.2 $4.8 $4.7 $5.5 $5.2 $6.1 $4.9 $5.8 $5.0 $6.3 $5.8 $5.8 $6.3 $7.1 $6.6 $6.3 $7.4 $7.4 $7.8 $8.0 $7.7 $7.6 $7.2 $5.7 $3.2 $3.7 Q2 Q3 Q4 $ # of Deals Q1 Q2 Q Q4 982 Q1 841 Q2 850 Q3 692 Q4 722 Q1 704 Q2 742 Q3 719 Q4 787 Q1 716 Q2 852 Q3 694 Q4 842 Q1 732 Q2 829 Q3 791 Q4 815 Q1 880 Q2 962 Q3 911 Q4 952 Q1 867 Q2 Q3 Q4 Q1 Q Q3 980 Q4 884 Q1 603 Q2 612 Q3 Q4 Slide 3

21 MoneyTree Total Investments: 1980 YTD 2009 ($ in billions) Annual Venture Capital Investments 1980 to YTD 2009 $120 $0.5 $1.1 $1.5 $2.8 $2.9 $2.7 $2.9 $3.2 $3.2 $3.2 $2.6 $2.1 $3.4 $3.5 $4.0 $7.6 $10.8 $14.4 $20.2 $52.0 $39.3 $21.3 $19.3 $22.1 $22.9 $26.3 $30.6 $28.1 $6.9 $101.8 $100 $80 $60 $40 $20 $ Slide 4

22 NIIHA U KA U AI O AHU MOLOKAI LANAI KAHOOLA WE MA UI HA W AII Investments by Region: Sacramento/N. CA $7.3 M 4 Deals 0% of US total Silicon Valley $1,176.7 M 174 Deals 32% of US total LA/Orange County $159.0 M 30 Deals 4% of US total San Diego $172.2 M 22 Deals 5% of US total AK/HI/PR $0 M 0 Deals 0% of US total Northwest $126.7 M 35 Deals 3% of US total Colorado $211.1 M 16 Deals 6% of US total Southwest $157.9 M 18 Deals 4% of US total North Central $100.7 M 15 Deals 3% of US total Texas $74.1 M 23 Deals 2% of US total South Central $5.8 M 7 Deals 0% of US total Midwest $201.2 M 52 Deals 5% of US total Southeast $282.3 M 34 Deals 8% of US total Upstate NY $2.6 M 2 Deals 0% of US total DC/Metroplex $89.8 M 26 Deals 2% of US total New England $466.9 M 76 Deals 13% of US total NY Metro $276.2 M 54 Deals 8% of US total Philadelphia Metro $161.9 M 22 Deals 4% of US total Unknown region totals are not included in the map Total Investments - $3,674.4 million in 612 deals Slide 5

23 Investments by Region: ($ in millions) Silicon Valley $1,176.7 New England Southeast $282.3 $466.9 Region # of Deals % Change $ from Q1 09 NY Metro $276.2 Silicon Valley 174-8% Colorado $211.1 New England 76 15% Midwest San Diego Philadelphia Metro $201.2 $172.2 $161.9 Southeast NY Metro Colorado Midwest % -18% 158% 53% LA/Orange County SouthWest Northwest $159.0 $157.9 $126.7 San Diego Philadelphia Metro LA/Orange County SouthWest % 418% -24% 280% North Central DC/Metroplex Texas Sacramento/N.Cal South Central $7.3 $5.8 $100.7 $89.8 $74.1 Northwest North Central DC/Metroplex Texas Sacramento/N.Cal South Central Upstate NY % 66% 13% -58% 4% -44% 57% Upstate NY AK/HI/PR $2.6 AK/HI/PR Total % 15% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 Total: $3,674.4 million in 612 deals Unknown region totals are not included in the chart Slide 6

24 Investments by Region Quarterly Percent of Total U.S. Investments (% of Total Dollars) Top U.S. Regions Q2 08 Q % 40% 40.34% 38.74% 35.93% 39.98% 32.03% 30% 20% 10% 10.93% 11.92% 13.58% 12.70% 12.71% 4.30% 3.44% 4.86% 3.56% 7.68% 5.30% 7.36% 6.92% 10.54% 7.52% 2.47% 2.91% 2.87% 2.56% 5.75% 0% Silicon Valley New England Southeast NY Metro Colorado Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Slide 7

25 Silicon Valley Market Share of US VC $: '95 '97 '99 '01 '03 '05 '07 Q1'09 SV % Slide 8

26 All Deals ($M): Silicon Valley Slide 9 Q1 '95 Q3 '95 Q1 '96 Q3 '96 Q1 '97 Q3 '97 Q1 '98 Q3 '98 Q1 '99 Q3 '99 Q1 '00 Q3 '00 Q1 '01 Q3 '01 Q1 '02 Q3 '02 Q1 '03 Q3 '03 Q1 '04 Q3 '04 Q1 '05 Q3 '05 Q1 '06 Q3 '06 Q1'07 Q3'07 Q1'08 Q3'08 Q1'09 $M Deals

27 All Deals (#): Silicon Valley Slide 10 Q1 '95 Q3 '95 Q1 '96 Q3 '96 Q1 '97 Q3 '97 Q1 '98 Q3 '98 Q1 '99 Q3 '99 Q1 '00 Q3 '00 Q1 '01 Q3 '01 Q1 '02 Q3 '02 Q1 '03 Q3 '03 Q1 '04 Q3 '04 Q1 '05 Q3 '05 Q1 '06 Q3 '06 Q1'07 Q3'07 Q1'08 Q3'08 Q1'09 # Deals

28 Series A Deals ($M): Silicon Valley Slide 11 Q1 '95 Q3 '95 Q1 '96 Q3 '96 Q1 '97 Q3 '97 Q1 '98 Q3 '98 Q1 '99 Q3 '99 Q1 '00 Q3 '00 Q1 '01 Q3 '01 Q1 '02 Q3 '02 Q1 '03 Q3 '03 Q1 '04 Q3 '04 Q1 '05 Q3 '05 Q1 '06 Q3 '06 Q1'07 Q3'07 Q1'08 Q3'08 Q1'09 $M Deals

29 Series A Deals (#): Silicon Valley Slide 12 Q1 '95 Q3 '95 Q1 '96 Q3 '96 Q1 '97 Q3 '97 Q1 '98 Q3 '98 Q1 '99 Q3 '99 Q1 '00 Q3 '00 Q1 '01 Q3 '01 Q1 '02 Q3 '02 Q1 '03 Q3 '03 Q1 '04 Q3 '04 Q1 '05 Q3 '05 Q1 '06 Q3 '06 Q1'07 Q3'07 Q1'08 Q3'08 Q1'09 # Deals

30 Silicon Valley Inv. By Round: Q $ M 50 0 A B C D E F G H I J K L M N O P Slide 13

31 Silicon Valley Inv. By Round: $ M 50 0 A B C D E F G H I J K L M N O Slide 14

32 Investments by Industry: ($ in millions) Biotechnology $888.1 Software $644.1 Medical Devices and Equipment $628.4 IT Services Industrial/Energy Networking and Equipment Semiconductors Computers and Peripherals Media and Entertainment Telecommunications Electronics/Instrumentation Business Products and Services Consumer Products and Services $180.3 $170.2 $131.5 $115.8 $94.9 $84.6 $49.5 $43.5 $295.1 $286.5 Industry Biotechnology Software Medical Devices and Equipment IT Services Industrial/Energy Networking and Equipment Semiconductors Computers and Peripherals Media and Entertainment Telecommunications Electronics/Instrumentation Business Products and Services Consumer Products and Services # of Deals % Change $ from Q % 0.98% 38.80% 28.22% % % -5.15% % % % % % % Healthcare Services Retailing/Distribution $22.8 $17.7 Healthcare Services Retailing/Distribution Financial Services % % % Financial Services Other $15.7 $5.7 Other TOTAL % 15.14% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Total: $3,674.4 million in 612 deals Visit for Industry definitions Slide 15

33 Investments by Industry Quarterly Percent of Total U.S. Investments (% of Total Dollars) 30% Top 5 Industries Q2 08 to Q % 24.17% 20% 15% 10% 5% 14.05% 17.21% 18.44% 18.07% 16.29% 18.82% 18.75% 19.99% 17.53% 12.11% 12.89% 10.34% 14.19% 17.10% 7.89% 6.00% 4.71% 7.21% 8.03% 15.51% 17.65% 16.49% 10.03% 7.80% 0% Biotechnology Software Medical Devices and Equipment IT Services Industrial/Energy Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Slide 16

34 Life Science Investments Percent of Total U.S. Investments Life Science Sectors Q2 08 to Q2 09 (% of Total Dollars) 45% 40% 35% 30% 25% 20% 15% 10% 14.05% 17.20% 18.44% 18.07% 24.17% 12.11% 12.89% 10.34% 14.19% 17.10% 26.17% 30.10% 28.79% 32.26% 41.27% 5% 0% Biotechnology Medical Devices and Equipment Life Sciences Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Slide 17

35 Life Science $ Invested as % Total: YTD '01 '03 '05 '07 '09 YTD LS % Tot Slide 18

36 MoneyTree Cleantech Investments: Q ($ in millions) $1,200 $1,000 $800 $600 $400 $200 $41.9 $136.5 $75.7 $186.3 $157.9 $128.0 $116.4 $120.6 $287.7 $402.3 $522.9 $245.5 $460.4 $586.5 $892.5 $716.6 $1,089.8 $910.8 $1,045.4 $977.3 $238.3 $274.4 Q1 Q2 Q3 Q4 $ # of Deals Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Slide 19

37 Cleantech Investments by Sub-sector Top cleantech sub-sectors Q ($ in millions) $500 $400 $430.0 $420.1 $446.9 $460.0 $300 $271.2 $200 $100 $0 $81.1 Solar Energy 50.6 $162.3 $129.9 $87.8 $ Alternative Fuels (includes biofuels) $39.0 $26.4 $43.7 $96.8 $ Energy Storage (includes vehicular battery technology) $43.8 $10.7 $71.5 $15.6 $ Transportation (includes electric vehicles) $95.1 $141.8 $125.6 $43.9 $ Pollution and Recycling (includes water technology) $26.1 $13.2 $69.3 $7.0 $ Wind and Geothermal Energy Q Q Q Q Q Slide 20

38 Investments by Cleantech Sub-Sector Percent of Total Cleantech Investments (% of Total Cleantech Dollars) Top cleantech sub-sectors Q % 40% 39% 46% 43% 47% 34% 30% 25% 20% 10% 0% Solar Energy 18% 18% 12% 9% 14% 18% Alternative Fuels (includes biofuels) 4% 3% 4% 10% 6% 11% Energy Storage (includes vehicular battery technology) 4% 1% 7% 2% 8% 1% Transportation (includes electric vehicles) 9% 16% 12% 4% 13% 0% Pollution and Recycling (includes water technology) 2% 1% 7% 1% 2% 0% Wind and Geothermal Energy Q Q Q Q Q Slide 21

39 Cleantech investments by Region: Second Quarter 2009 ($ in millions) Silicon Valley $112.1 LA/Orange County $30.0 Northwest $28.6 Colorado Southeast NY Metro $20.7 $20.1 $26.6 Region Silicon Valley LA/Orange County Northwest # of Deals % Change $ from Q % 8% 64% North Central DC/Metroplex $13.9 $10.1 Colorado Southeast NY Metro % NA 3674% New England Philadelphia Metro South Central Sacramento/N.Cal Midwest $6.5 $4.0 $1.4 $0.2 $0.2 North Central DC/Metroplex New England Philadelphia Metro South Central Sacramento/N.Cal Midwest SouthWest Total % 13791% -79% 433% NA NA -98% -99% 15% SouthWest $0.1 $0 $15 $30 $45 $60 $75 $90 $105 Visit for Region definitions Total: $274.4 million in 42 deals Slide 22

40 Cleantech investments by Region: 1H 2008 vs 1H 2009 (% of total Cleantech investment) Silicon Valley LA/Orange County Northwest Colorado New England Southeast NY Metro North Central San Diego Midwest Texas SouthWest DC/Metroplex Philadelphia Metro 4% 4% 4% 4% 0% 3% 3% 3% 3% 2% 2% 2% 1% 2% 2% 1% 3% 8% 9% 6% 9% 7% 8% 7% 11% 12% 39% 41% 1H H % 10% 20% 30% 40% 50% Visit for Region definitions Slide 23

41 Investments by Stage of Development: ($ in millions) Later Stage $1,155.2 Expansion $1,028.8 Early Stage $1,015.9 Stage of Development # of Deals % Change in $ Amount from Q Later Stage % Expansion Stage % Early Stage % Startup/Seed $474.6 Startup/Seed Total % 15.14% $0 $500 $1,000 $1,500 $2,000 Total: $ million in 612 deals Slide 24

42 Investments by Sequence of Financing: ($ in millions) 5th and Beyond $1,149.8 Second $750.6 First $678.2 Financing # of Deals % Change in $ Amount from Q th and Beyond % Second % Third $553.5 First % Third % Fourth $542.2 Fourth Total % 15.14% $0 $500 $1,000 $1,500 Total: $3,674.4 million in 612 deals Slide 25

43 First Sequence Financing Number of Deals 500 First Sequence Deals Q1 Q2 Q3 Q4 Slide 26

44 First Sequence Financing Investment Amount $4 ($ in billions) First Sequence Investments $2.0 $1.3 $1.2 $1.3 $1.2 $1.0 $0.8 $0.8 $1.0 $1.1 $1.1 $1.0 $1.3 $1.2 $1.3 $1.4 $1.5 $1.4 $1.4 $1.4 $1.7 $1.6 $1.4 $1.6 $1.8 $2.0 $2.1 $1.7 $1.7 $1.6 $1.2 $0.6 $0.7 $2.8 $3 $2 $1 $ Q1 Q2 Q3 Q4 Slide 27

45 First Sequence Financing Percent of Total U.S. Investments 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 34.9% 34.9% 34.6% 32.1% 32.6% 33.8% 32.7% 32.0% 31.3% 29.5% 30.4% 31.0% 31.4% 30.4% 30.3% 27.9% 28.7% 26.5% 25.9% 25.1% 25.6% 27.7%27.2% 29.2% 34.4% 32.8% 24.9% 23.8% 24.7% 22.0% 22.1% 22.4% 23.0% 26.9% 21.6% 28.4% 25.3% 26.1% 25.1% 24.3%24.4% 23.9% 23.8% 22.4% 22.9% 21.6% 22.3% 19.5% 20.5% 22.1% 23.9% 20.2% 20.5% 20.3%20.0%20.9% 19.5%18.5% 18.2%18.0% 10% 5% 0% Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q % of Total Dollars % of Total Deals Slide 28

46 Stage of Development Quarterly Percent of Total First Sequence Dollars (% of first sequence dollars) 60% Stage Development Q to 50% 40% 30% 20% 17.62% 18.42% 19.59% 20.16% 42.90% 40.02% 35.94% 42.09% 38.37% 30.22% 27.85% 26.42% 21.90% 23.39% 22.36% 14.52% 19.22% 16.42% 18.09% 10% 4.52% 0% Startup/Seed Early Stage Expansion Later Stage Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Slide 29

47 Stage of Development Quarterly Percent of Total First Sequence Deals (% of first sequence deals) 60% Stage Development Q to 50% 40% 30% 20% 10% 26.43% 31.47% 26.38% 25.50% 22.70% 45.95% 41.26% 44.49% 43.62% 48.94% 17.12% 14.69% 17.32% 16.11% 20.57% 10.51% 12.59% 11.81% 14.77% 7.80% 0% Startup/Seed Early Stage Expansion Later Stage Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Slide 30

48 First Sequence Deals in Startup & Early Stage Companies 90% % 63.6% 63.3% 66.9% 72.4% 74.2% 2, % 71.6% 76.7% 74.9% 70.4% 71.0% 72.2% 70.8% 70.3% 80% 70% 60% % 40% ,765 30% % 10% 0 0% Seq 1 Deals in Startup/Early Stage % of Total Seq 1 Deals YTD Slide 31

49 Median Deal Size vs. Mean Deal Size Quarterly Total U.S. Investments $10 $8.6 $8 $6 $6.0 $6.5 $6.6 $7.0 $7.3 $7.2 $7.1 $6.9 $6.9 $7.6 $7.4 $7.4 $7.1 $7.2 $7.2 $6.7 $7.0 $7.8 $7.5 $7.6 $7.1 $7.3 $6.4 $5.3 $6.0 $4 $3.4 $3.8 $3.6 $4.0 $4.5 $4.2 $4.5 $4.5 $4.2 $4.3 $3.9 $4.5 $4.2 $4.0 $4.0 $3.5 $4.1 $4.2 $3.8 $4.0 $4.0 $3.5 $3.5 $2.5 $3.0 $2.2 $2 $0 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Median Deal Size Mean Deal Size Slide 32

50 Top 10 Deals : Q ($ Millions) Solyndra Silicon Valley Cleantech $219 Pocket Communications San Antonio Telco 100 Silver Spring Networks Silicon Valley Cleantech 75 Biolex Therapeutics North Carolina Biotech 60 i/o Data Centers Phoenix IT Services 56 Boston Power Boston Cleantech 55 Pacira Pharma New Jersey Biotech 55 Bayhill Therapeutics Silicon Valley Biotech 54 Kosmos Energy Dallas Cleantech 54 Calisolar Silicon Valley Cleantech 52 Slide 33

51 Top 10 Deals : Q ($ Millions) Anacor Pharmaceuticals Silicon Valley Biotech $ 50 Ardian Silicon Valley Med Device 47 SFJ Pharma Silicon Valley Biotech 45 Pathway Medical Seattle Med Device 40 BioVex Boston Biotech 40 Green Bullions Miami Industrial/Energy 40 Kosmos Energy Dallas Cleantech 39 Obopay Silicon Valley Financial Services 35 Twitter Silicon Valley Software 35 Quadriserv NY Software 34 Slide 34

52 Top 10 Deals : ($ Millions) Clovis Oncology Boulder Biotech $146 Workday Silicon Valley Software 75 ExactTarget Indianapolis IT Services 70 Hyperion Therapeutics Silicon Valley Biotech 60 PhotoThera Carlsbad Med Device 50 Phoenix Services Unionville, PA Cleantech 50 Fusion-io Salt Lake City Comp & Peripherals 48 Cempra Pharma Chapel Hill, NC Biotech 46 Revolution Money Saint Petersburg Software 42 LifeLock Tempe IT Services 40 Slide 35

53 Most Active Venture Investors Venture Capital Firm Canaan Partners Innovation Works, Inc. Kleiner Perkins Caufield & Byers New Enterprise Associates Polaris Venture Partners Duff Ackerman & Goodrich LLC First Round Capital U.S. Venture Partners Draper Fisher Jurvetson Alta Partners ARCH Venture Partners Highland Capital Partners LLC Novak Biddle Venture Partners, L.P. Venrock Associates OVP Venture Partners Redpoint Ventures Location Westport, Connecticut Pittsburgh, Pennslyvania Menlo Park, California Baltimore, Maryland Waltham, Massachusetts San Fransisco, California West Conshokocken, Pennslyvania Menlo Park, California Menlo Park, California San Fransisco, California Chicago, Illinois Lexington, Massachusetts Bethesda, Maryland Palo Alto, California Kirkland, Washington Menlo Park, California Total Deals Slide 36

54 Q Venture Capital Performance US Venture Capital Index Returns for the Periods ending 3/31/2009, 12/21/2008 and 3/31/2008 For the period ending 1 st Qtr. 1 Year 3 Years 5 Years 10 Years 15 Years 20 Years March 31, December 31, March 31, Other indices at March 31, 2009 DIJA SDAQ Composite S&P Source: Cambridge Associates LLC Note: Because the US Venture Capital index is cap weighted, the largest vintage years mainly drive the index s performance. Slide 37

55 Analysis of Venture-Backed IPO and M&A Activity Date Number of IPOs* Total Venture- Backed Offering Size ($M) Average Venture- Backed Offering Size ($M) Number of Venture-backed M&A deals Average M&A deal size** , , , , Q Q Q Q Q Q Source: Thomson Reuters and National Venture Capital Association * Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges, regardless of domicile **Only accounts for deals with disclosed values Slide 38

56 Venture Backed Exits: #M&A vs #IPO M&A IPO '02 '04 '06 '08 Slide 39

57 Venture Capital Fundraising Year Quarter Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 First Time Funds Source: Thomson Reuters & National Venture Capital Association 3 8 Follow-On Funds Total Number of Funds VC Raised ($M) 19, , , , , , , , , , , , , ,701.9 Data current as of July 13, 2009 Slide 40

58 Summary: Good News Full Year 2008 $28 B, 5 th biggest ever Worldwide Cleantech Investments (Innovas Solutions) - US 21%, China 14%, Japan & India 6%, Advertising $ to Internet/Mobile just begun (7%) - Worldwide Ad Spending $600B - 21% media time Internet/Mobile Big Trends still exist -Cleantech -Cloud Computing -Virtualization -Demographic/Geographic shifts -Analytics: Extracting signal from noise -Advertising to Internet/Mobile Cisco acquiring again Actona Airespace Arroyo Video Solutions Dynamicsoft FineGround Networks IronPort Systems Linksys Meetinghouse Navini Networks NetSolve Orative P-Cube Perfigo Post path Pure Digital Pure Networks Protego Networks Reactivity Scientific Atlanta Securent Sheer Networks SignalWorks Tidal Software Topspin $ 82m 450m 92M 55m 70m 830m 500m 44m 330m 128m 31m 200m 74m 215m 590M 120m 65m 135m 6900m 100m 97M 14m 105m 250M Slide 41

59 Summary: Not So Good News IPO mkt weak - 6 vc backed IPO s in US in 08, lowest since 1977, raised $0.5B vs $10.3B in 07-5 vc backed IPO s 1st half : 1776 IPO s, 56% all exits : 392 IPO s, 13% all exits $3.0B invested in Q1 09 lowest since Q1 97, 62% drop vs Q1 08, 44% drop vs Q4 08 M&A weak - Q1 09: 56 deals, down 47% vs Q1 08, lowest # in decade - Q2 09: 67 deals for $2.8 B, down 60% vs Q2 08, 80% vs Q Median M&A about $22M in Q1 09 & Q2 09, $16M in ave. Q2 deal - $4 Trillion mkt cap lost on US exchanges in last 12 months, e.g. - Citigroup: $130B gone, AIG: $150B, Fannie Mae/Freddie Mac: $105B ($1B left) US Homeowners lost $6 Trillion equity last 3 years - 12 Million homes worth less than mortgage Employment down 2 million jobs in 08, US unemployment at 26 year high - Silicon Valley unemployment 11.8% June 09 vs. 6% June 08 US household net worth shrank to $50 trillion in 09 vs $62 trillion in 07 US government recently borrowed 10% of budget, 45% of budget in 09 Slide 42

60 Summary/Predictions VC Market: Men Behaving Badly VC s stop funding many portfolio companies, major triage More layoffs/cost cutting, unemployment up New Deals must be perfect All Deals Series A, lots of down rounds Fewer Deals per fund, higher reserves VC syndicate quality more important, lots inside rounds (57% Q1) VC s fear capital calls produce LP defaults VC Fundraising problematic: $6.3B in 1 st half 09, 62% drop vs 08 More Government regulation Slide 43

61 Globalization Marches On China VC$ : 4.2B 08, 2.5B 07, 1.3B 04 China VC$ raised $7.3B 08 India VC$: $3.0B 08, 0.6B 04 Japan VC$: $1.9B 08, 1.5B 04 Israel VC$: $1.4B 08, $1.2B in 07 & 06 % Int l: 70% PC, 86% Internet, 92% Mobile China surpass US for most Internet users in 08, 67% under 29 Asia 43% of Internet users by 2013 China as new IMF for US - Balanced budget, devalued currency, higher interest rates, relaxed - Regulation, tax cuts Australian commentator: Need Communists to save Capitalism China 2 nd largest economy by 2025 India population surpass China by 2020 Slide 44

62 Steve Bengston PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP (a Delaware limited liability partnership) or, as the context requires, other member firms of PricewaterhouseCoopers International Ltd., each of which is a separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers LLP. SJ_07_0080