The MoneyTree Report Overview of Venture Capital Investments Third Quarter 2009 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report based on data from Thomson Reuters 1
Host of the Analyst Call Emily Mendell Vice President of Strategic Affairs National Venture Capital Association With two decades of broad-based experience in the financial services and technology markets, Emily Mendell is responsible for the positioning, communications, media relations and public affairs for the National Venture Capital Association (NVCA). Emily began her work with the NVCA in 2000 as a managing principal of The Weiser Group, a strategic financial communications firm based in New York. At The Weiser Group, she specialized in designing and implementing public relations and marketing strategies, and developing editorial materials pieces for clients. Her industry expertise includes accounting, financial services, private equity, transaction processing, and electronic commerce. Prior to joining The Weiser Group, Emily served as Director of Strategic Marketing and Communications for Integrion Financial Network, a consortium of 18 banks, IBM and Visa. While at Integrion, Emily was responsible for all corporate communications, including the organization s internal and external positioning. Emily previously held management positions at CoreStates Financial Corp including Vice President of Strategic Business Development within the transaction processing division. Emily is a cum laude graduate of The Wharton School, University of Pennsylvania, where she earned a Bachelor of Science degree in Economics with a concentration in Finance and Management. 2
Overview National Third Quarter Results $ Invested and # Deals by Quarter Investments by Stage of Development First-time Financing Investments by Industry/Sector PricewaterhouseCoopers Commentary on Results NVCA Commentary on Results Crosslink Capital Polaris Venture Partners MoneyTree Report Q&A 3
Thomson Reuters Elizabeth Benson Head of Private Equity and Desktop Products Thomson Reuters 4
Venture Capital Investments Rise in Q3 09 Venture Capital Investments Total Amount Invested ($B) 1,200 $6.6 $6.4 $7.4 $7.3 $7.8 $8.0 $7.7 $7.4 $7.2 $5.7 $3.3 $4.1 $4.8 1,000 800 600 400 # Deals 200 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 0 Average Deal Size ($M) $7.2 $6.6 $8.5 $6.9 $7.7 $7.5 $7.5 $7.0 $7.2 $6.3 $5.4 $6.3 $7.5 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 5 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters
Balanced Distribution of Dollars Across Investment Stages in Q3 09 Venture Capital Investments Total Amount Invested ($B) $8 $7 $6 $5 $4 $3 $2 $1 $0 $2.9 $3.2 $2.6 $2.9 $3.1 $3.1 $2.9 $2.3 $2.1 $2.1 $2.9 $2.5 $3.0 $2.3 $3.0 $1.6 $3.0 $3.3 $1.2 $2.5 $2.5 $2.0 $1.4 $1.3 $1.6 $1.0 $1.4 $1.8 $1.5 $1.9 $2.1 $1.6 $1.7 $1.9 $1.8 $1.6 $0.9 $1.7 $1.6 Q3' 06 Q4 '06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Seed/Early Stage Expansion Later Stage Last Four Quarters 32% 35% 33% 6 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters
13% of dollars in Q3 09 going toward First Sequence Financing Total Amount Invested in First-time Financings ($B) 400 $1.6 $1.5 $1.7 $1.8 $1.9 $2.1 $1.8 $1.6 $1.5 350 300 250 $1.2 $0.7 $0.8 $0.6 200 150 100 # Deals 50 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 0 7 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters
Biotech and Industrial/Energy Have Investor s Interest US Venture Capital Investments By Industry Q3 09 IT Investments ($M) $622.4 IT $2.1 billion $446.4 $283.5 $248.8 $148.6 $139.7 $123.3 $82.0 Software Media & Entertainment IT Services Networking & Equipment Semiconductors Electronics & Instrumentation Telecom Computers & Peripherals Life Sciences Investments ($M) $905.1 LS $1.5 billion $616.6 $10.4 Biotechnology Medical Devices & Equipment Healthcare Services 8 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters
PricewaterhouseCoopers Tracy T. Lefteroff Global Managing Partner Venture Capital and Life Sciences Industries Services As Global Managing Partner of Private Equity and Venture Capital as well as Life Sciences Industry Services, Mr. Lefteroff is in charge of services provided to the venture capital community, venture-funded technology companies and publicly-held, privatelyowned and venture-funded life sciences companies worldwide. Mr. Lefteroff has been key to the development of strategic collaborative agreements with many of the major international pharmaceutical companies and has recently assisted in several high profile industry mergers. He also co-authored the Firm s Practice Standards and Aids for the Life Sciences Industry. Mr. Lefteroff currently serves on the Board of Directors of BIO the Biotechnology Industry Organization, the Stanford Venture Laboratory and the California Healthcare Institute. He has served as Treasurer of the Washington State Biotechnology Association, Chairman of the MIT Enterprise Forum of the Northwest and as a Committee Member of the Washington Society of CPA s High Technology Committee. He is also a member of the American Institute of Certified Public Accountants and the California, Washington and Idaho Societies of CPA s. Mr. Lefteroff has been with PricewaterhouseCoopers for approximately 20 years, including three years in the Seattle, Washington office, where he was extensively involved with the Firm s venture capital and life sciences clients. Today he resides in the San Jose, California office. 9
Investment Activity Q3 2009 Top Industries Q3 2008, Q2 2009, Q3 2009 Total Amount Invested ($M) $1,210 $1,264 $1,340 $947 $905 $864 $891 $680 $622 $655 $617 $456 $373 $446 $121 Biotechnology Industrial/Energy Software Medical Devices and Equipment Media and Entertainment Q3 2008 Q2 2009 Q3 2009 10 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters
Life Sciences Investments Q3 2006 Q3 2009 Total Amount Invested ($M) $1,521 $1,327 $1,305 $1,157 $1,158 $1,169 $781 $709 $884 $1,145 $982 $767 $1,051 $982 $1,210 $1,090 $983 $947 $902 $891 $646 $655 $562 $475 $617 $905 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Medical Devices and Equipment Biotechnology 11 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters
Internet-Specific & Clean Tech Investments Q3 2006 Q3 2009 Internet-Specific Investments ($M) $1,614 $1,464 $1,296 $1,338 $1,178 $1,248 $1,131 $1,145 $1,076 $819 $843 $610 $594 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1' 08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 300 250 200 150 100 50 0 $ Invested # of deals Clean Tech Investments ($M) $1,180 $1,044 $913 $987 $891 $898 $532 $721 $620 $444 $475 $245 $238 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 80 70 60 50 40 30 20 10 0 $ Invested # of deals 12 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters
National Venture Capital Association John S. Taylor Vice President of Research National 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. 13
Number of Deals by Stage Q3 2006 Q3 2009 231 229 264 304 314 317 300 331 309 262 349 341 285 315 352 325 336 328 280 279 208 210 168 176 192 185 341 394 325 442 372 407 379 408 405 363 232 255 284 Q3' 06 Q4 '06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Seed/Early Stage Expansion Later Stage 14 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters
Number of First-Time vs. Follow-On Deals Q3 2006 Q3 2009 599 665 610 692 681 715 684 732 707 646 463 502 482 322 299 264 369 330 361 331 335 287 258 153 155 155 Q3 '06 Q4 '06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2' 08 Q3' 08 Q4 '08 Q1' 09 Q2' 09 Q3' 09 First-Time Follow-On 15 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report Based on data from Thomson Reuters
Crosslink Capital Jim Feuille General Partner Crosslink Capital Focus: Jim focuses on investments in Digital Media & Internet Services and Software & Business Services. Experience: Prior to joining Crosslink in 2002, Jim brought 20 years of technology investment banking and management experience to the firm. Jim s prior positions included Global Head of Technology Investment Banking at UBS, where he built a powerful global technology investment banking practice from scratch, Chief Operating Officer at Volpe Brown Whelan & Company, where he ran all aspects of the firm s investment banking and brokerage operations, and led the firm to record growth in revenue and market share prior to its acquisition by Prudential, and Head of Technology Investment Banking at Robertson Stephens, where he built the technology investment banking team into a leadership position in the industry. Education: BA, Chemistry, Dartmouth College JD, MBA, Stanford University 16
Polaris Venture Partners Amir Nashat General Partner Polaris Venture Partners Amir Nashat is a general partner in our Boston office. Amir joined Polaris in April 2002 and focuses on investments in the life sciences. Prior to joining Polaris, Amir completed his PhD as a Hertz Fellow in Chemical Engineering at the Massachusetts Institute of Technology with a minor in Biology under the guidance of Dr. Robert Langer. During his time at MIT, Amir completed an internship in the London office of Goldman, Sachs & Company. Boards: Amir currently represents Polaris as a Director of Athenix Corporation, atyr Pharmaceuticals, Avila Therapeutics, Bind Biosciences, Fate Therapeutics, Living Proof, Pervasis Therapeutics, Promedior Pharmaceuticals, Selecta Biosciences, and Sun Catalytix. Amir played an instrumental role in the inception of Living Proof, and Pervasis, serving as the founding President of both companies. Additionally, Amir has served as a Director of Adnexus Therapeutics (acquired by Bristol Myers Squibb) and Hydra Biosciences, and as an Observer of GI Dynamics and Advion. Amir currently serves on the Board of the New England Venture Capital Association, on the Advisory Board of the Simmons School of Management Entrepreneurship Initiative, and is part of the Deshpande Center for Technological Innovation at MIT. Education: Prior to obtaining his PhD at MIT, Amir earned both his MS and BS in Materials Science and Mechanical Engineering at the University of California, Berkeley. 17
MoneyTree Report Q&A 18