Shaking the MoneyTree™
2009 Results
OCTANe
Q3
PricewaterhouseCoopers
CA Medical Device & Investor Forum November 10, 2009
Randy Churchill Director, Emerging Company Services randy.churchill@us.pwc.com 213-217-3819
Q3 2009 Slide 1
About The Report
• MoneyTree™ Report in its 15th year • PricewaterhouseCoopers and the National Venture Capital Association produce the MoneyTree Report™ based on data from Thomson Reuters • ‘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 (not term sheets), foreign VCs, qualified private placements • Excludes: debt, bridge loans, recaps, roll-ups, IPOs, PIPEs, leases, etc. • Results online at pwcmoneytree.com, nvca.org, and venturexpert.com
PricewaterhouseCoopers
Q3 2009 Slide 2
MoneyTree Total Investments
Q1 2001 – Q3 2009
($ in billions)
$14.0
$12.3 $10.8
$12.0
$10.0
$7.9
$7.8
$7.7
$8.0
$8.0
$6.3 $7.2 $7.4 $7.3
$7.7 $7.4
$5.2 $6.1
$6.3
$5.8
$5.8
$5.8
$6.4
$6.0
$6.5 $5.9
$6.6
$7.2
$5.7
$5.5
$4.1 $4.8
$4.7
$4.9
$5.1
Q1
$3.3 $4.1 $4.8
$4.4
$4.3
$4.0
Q2 Q3 Q4
$2.0
$0.0 2001
2001 # of Deals Q1 Q2 Q3 Q4 Q1 1283 1215 1004 984
2002
2002 Q2 Q3 Q4 722 Q1 705 843 855 694
2003
2003 Q2 743 Q3 721 Q4 791 Q1 720
2004
2004 Q2 855 Q3 696 Q4 846
2005
2005 Q1 736 Q2 834 Q3 798 Q4 825
2006
2006 Q1 882 Q2 976 Q3 921 Q4 964
2007
2007 Q1 Q2 Q3
2008
2008 Q4 Q1 Q2 Q3
2009
2009 Q4 904 Q1 616 Q2 657 Q3 637 Q4
874 1061 1011 1076 1015 1067 994
PricewaterhouseCoopers
Q3 2009 Slide 3
Investments by Region: Q3 2009
Northwest $241.6 M 30 Deals
Sacramento/N. CA $2.0 M 2 Deals 0% of US total Silicon Valley $2,234.0 M 210 Deals 46% of US total Los Angeles $172.3 M 25 Deals 4% of US total Orange County $66.9M 8 Deals 1% of US total 5% of US total
Upstate NY $8.0 M 1 Deals
0% of US total
New England $558.8 M 86 Deals
12% of US total
North Central $101 .0 M 13 Deals
2% of US total
NY Metro $251.3 M 50 Deals
5% of US total
Colorado $50.3 M
13 Deals 1% of US total
Midwest $161.3 M 40 Deals
3% of US total
Philadelphia Metro $94.4 M 25 Deals
2% of US total
Southwest $48.2 M 14 Deals San Diego $236.3 M 32 Deals
5% of US total 1% of US total
South Central $4.6 M 11 Deals
0% of US total
Texas $197.9 M 23 Deals
4% of US total
KAU AI
Southeast $212.8 M 33 Deals
4% of US total
DC/Metroplex $167.0 M 21 Deals
3% of US total
AK/HI/PR $0 M 0 Deals
0% of US total
NIIHA U O AHU
MOLOKAI MA UI
LANAI
KAHOOLA
WE
HA W AII
Q3 2009 Total Investments - $4,808.8 million in 637 deals
Q3 2009 Slide 4
PricewaterhouseCoopers
Investments by Region
Q3 2009
($ in millions)
Silicon Valley New England Southern California NY Metro Northwest Southeast Texas DC/Metroplex Midwest North Central Philadelphia Metro Colorado Southwest Upstate NY South Central Sacramento/N.Cal
$251.3 $241.6 $212.8 $197.9 $167.0 $161.3 $101.0 $94.4 $50.3 $48.2 $8.0 $4.6 $2.0 $558.8 $475.5 $2,234.0
Region Silicon Valley New England Southern California NY Metro Northwest Southeast Texas DC/Metroplex Midwest North Central Philadelphia Metro Colorado Southwest Upstate NY South Central Sacramento/N.Cal Total
# of Deals 210 86 65 50 30 33 23 21 40 13 25 13 14 1 11 2 637
% Change $ from previous Q 63% 15% 10% -11% 83% -37% 170% 25% -23% -3% -42% -76% -69% 208% -20% -80% 17%
$0
$500
$1,000
$1,500
$2,000
$2,500
Q3 2009 Total Investments - $4,808.8 million in 637 deals
PricewaterhouseCoopers Q3 2009 Slide 5
Investments by Industry
Q3 2009
($ in millions)
Biotechnolgy Industrial/Energy Software Medical Devices and Equipment Media and Entertainment IT Servicew Netorking and Equipment Semiconductors Electronics/Instrumentation Consumer Products ans Services Telecommunications Financial Services Computers and Peripherals Retailing/Distribution Business Products and Services Healthcare Services Other $0
$10.4 $5.2 $45.5 $41.3 $88.4 $82.0 $148.6 $139.7 $137.4 $123.3 $283.5 $248.8 $446.4 $622.4 $864.2 $905.1
Industry
$616.6
# of Deals 104 52 128 71 60 48 25 21 18 23 32 8 13 5 20 7 2 637
% Change $ from previous Q -4% 89% -9% -6% 269% -11% 18% -14% 55% 149% -17% 486% -40% 101% -17% -57% -63% 17%
Biotechnology Industrial/Energy Software Medical Devices and Equipment Media and Entertainment IT Services Networking and Equipment Semiconductors Electronics and Instrumentation Consumer Products and Services Telecommunications Financial Services Computers and Peripherals Retailing/Distribution Business Products and Services Healthcare Servicew Other Total
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Q3 2009 Total Investments - $4,808.8 million in 637 deals
Visit pwcmoneytree.com for Industry definitions
PricewaterhouseCoopers Q3 2009 Slide 6
Investments by Industry
Quarterly Percent of Total U.S. Investments
(% of Total Dollars)
30%
Top Five Industries Q3 ’08 to Q3 ‘09
23%
25%
19%
19%
18%
17%
17%
18%
18%
17%
20%
19%
19%
20%
13%
10%
11%
12%
10%
13%
15%
14%
16%
10%
7%
0% Biotechnology Industrial/Energy Software Medical Devices and Equipment Media and Entertainment
Q3 '08
Q4 '08
Q1 '09
Q2 '09
Q3 '09
3%
5%
5%
7%
PricewaterhouseCoopers
Q3 2009 Slide 7
9%
Life Science Investments
Percent of Total U.S. Investments
(% of Total Dollars)
Life Science Sectors – Q3 ’08 to Q3 ‘09
50% 45% 40%
34% 39% 29% 23% 19% 17% 19% 19% 14% 16% 12%
35% 30% 25% 20% 15% 10% 5% 0% Biotechnology Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Medical Devices and Equipment
29%
10%
13%
Life Sciences
32%
PricewaterhouseCoopers
Q3 2009 Slide 8
U.S. Medical Device Investments by Sub-Sector: YTD 2009
($ in millions) Surgical Instrumentation & Equipment Pacemakers & Artificial Organs Other Therapeutic (including defibrillators) Drug Delivery & Other Equipment Diagnostic Test Products & Equipment Surgical lasers (including laser delivery fibers) Other Medical Imaging Health related optics (including glasses, lenses) Medical Monitoring Equipment Other Medical/Health (NEC) Disposable Medical Products Diagnostic Services Nuclear Imaging Other Medical Diagnostics Ultra Sound Imaging Handicap Aids $0 $48.6 $36.2 $35.7 $31.2 $15.3 $7.0 $6.3 $5.4 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 $550 $110.8 $99.7 $99.4 $94.7 $181.3 $176.3
Surgical Instrumentation & Equipment Pacemakers & Artificial Organs Other Therapeutic (including defibrillators) Drug Delivery & Other Equipment Diagnostic Test Products & Equipment Surgical lasers (including laser delivery fibers) Other Medical Imaging Health related optics (including glasses, lenses) Medical Monitoring Equipment Other Medical/Health (NEC) Disposable Medical Products Diagnostic Services Nuclear Imaging Other Medical Diagnostics Ultra Sound Imaging Handicap Aids Total
$442.9 $355.7
Sub-Sector # of Deals 56 28 22 19 23 6 5 8 12 11 5 5 3 2 2 6 213
YTD 2009 Medical Devices Total: $1,746.5 million in 213 deals
PricewaterhouseCoopers
Q3 2009 Slide 9
Medical Device Investments by Stage of Development: YTD 2009
($ in millions)
Later Stage
$673.0
Expansion
$285.8
Stage of Development
# of Deals 62 46 65 40 213
Early Stage
$492.4
Later Stage Expansion Stage Early Stage Startup/Seed
Startup/Seed
$295.3
Total
$0
$100
$200
$300
$400
$500
$600
$700
$800
YTD 2009 Medical Devices Total: $1,746.5 million in 213 deals
PricewaterhouseCoopers
Q3 2009 Slide 10
Medical Device Investments by Sequence of Financing: YTD 2009
($ in millions)
5th and Beyond
$753.1
Third
$316.5
Financing
# of Deals 66 40 49 41 17 213
Second
$308.0
5th and Beyond Third Second
First
$197.6
First Fourth
Fourth
$171.3
Total
$0
$100
$200
$300
$400
$500
$600
$700
$800
YTD 2009 Medical Devices Total: $1,746.5 million in 213 deals
PricewaterhouseCoopers
Q3 2009 Slide 11
U.S. Medical Device Investments by Region: YTD 2009
($ in millions) Silicon Valley Southern California New England Northwest North Central NY Metro Southeast Midwest Philadelphia Metro DC/Metroplex Colorado SouthWest Texas South Central
$0
$619.5 $285.8 $183.7 $126.0 Region $123.1 Silicon Valley $98.9 $77.6 $67.7 $62.4 $35.6 $28.4 $23.1 $14.5 $0.3
$50 $100 $150 $200 $250 $300 $350 $400 $450 $500 $550 $600 $650 $700
# of Deals 56 32 24 8 15 9 14 23 10 4 4 6 7 1 213
Southern California New England Northwest North Central NY Metro Southeast Midwest Philadelphia Metro DC/Metroplex Colorado SouthWest Texas South Central Total
YTD 2009 Medical Device Total: $1,746.5 million in 213 deals
PricewaterhouseCoopers
Q3 2009 Slide 12
Los Angeles Medical Device Investments by Sub-sector: YTD 2009
($ in millions)
Surgical Instrumentation & Equipment
$22.0
Other Medical Imaging
$14.0
Sub-Sector
# of Deals 1 1 2 1 5
Drug Delivery & Other Equipment
$13.3
Surgical Instrumentation & Equipment Other Medical Imaging Drug Delivery & Other Equipment
Diagnostic Test Products & Equipment
$0.6
Diagnostic Test Products & Equipment Total
$0
$5
$10
$15
$20
$25
YTD 2009 Los Angeles Sub-sector Total: $49.9 million in 5 deals
PricewaterhouseCoopers
Q3 2009 Slide 13
Orange County Medical Device Investments by Sub-sector: YTD 2009
($ in millions) Health related optics (including glasses, lenses) $40.1
Surgical lasers (including laser delivery fibers)
$22.4
Pacemakers & Artificial Organs
$15.8
Sub-Sector Health related optics (including glasses, lenses) Surgical lasers (including laser delivery fibers)
# of Deals 2 1 4 1 2 1 1 1 13
Nuclear Imaging
$10.3
Surgical Instrumentation & Equipment
$8.1
Pacemakers & Artificial Organs Nuclear Imaging Surgical Instrumentation & Equipment
Other Therapeutic (including defibrillators)
$2.5
Other Therapeutic (including defibrillators) Other Medical Imaging
Other Medical Imaging
$2.3
Handicap Aids Total
Handicap Aids
$0.2
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
YTD 2009 Orange County Sub-sector Total: $101.6 million in 13 deals
PricewaterhouseCoopers
Q3 2009 Slide 14
San Diego Medical Device Investments by Sub-sector: YTD 2009
($ in millions) Surgical lasers (including laser delivery fibers) $50.2
Health related optics (including glasses, lenses)
$38.9
Disposable Medical Products
$21.7
Sub-Sector Surgical lasers (including laser delivery fibers) Health related optics (including glasses, lenses)
# of Deals 2 2 2 1 2 1 2 2 14
Drug Delivery & Other Equipment
$13.5
Nuclear Imaging
$5.0
Disposable Medical Products Drug Delivery & Other Equipment Nuclear Imaging
Medical Monitoring Equipment
$2.4
Medical Monitoring Equipment Surgical Instrumentation & Equipment
Surgical Instrumentation & Equipment
$1.6
Diagnostic Test Products & Equipment Total
Diagnostic Test Products & Equipment
$1.0
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
$55
YTD 2009 San Diego Sub-sector Total: $134.3 million in 14 deals
PricewaterhouseCoopers
Q3 2009 Slide 15
YTD 2009 – SoCal’s Largest Medical Device Investments
Amount invested (US Mil) $50.0 $25.9 $22.4 $22.0 $21.5 $20.1 $20.0 $14.0 $13.6 $13.5 $13.0
Company PhotoThera, Inc. Ophthonix, Inc. LenSx Lasers, Inc. ValenTx, Inc. Tandem Diabetes Care, Inc. WaveTec Vision Systems, Inc. Visiogen, Inc. Gamma Medica-Ideas, Inc. Undisclosed BeneChill, Inc. SynergEyes, Inc.
Location Carlsbad, CA Vista, CA Aliso Viejo, CA Carpinteria, CA San Diego, CA Aliso Viejo, CA Irvine, CA Northridge, CA Laguna Hills, CA San Diego, CA Carlsbad, CA
PricewaterhouseCoopers
Thomson Reuters
Q3 2009 Slide 16
YTD 2009 – Most Active Venture Investors in Medical Devices
Company De Novo Ventures Versant Ventures Foundation Medical Partners Delphi Ventures Kleiner Perkins Caufield & Byers SV Life Sciences Advisers Affinity Capital Management New Enterprise Associates Three Arch Partners Accuitive Medical Ventures HLM Venture Partners InterWest Partners Morgenthaler Ventures Oxford Bioscience Partners Split Rock Partners LLC U.S. Venture Partners Location Palo Alto, California Menlo Park, California Rowayton, Connecticut Menlo Park, California Menlo Park, California Boston, Massachusetts Minneapolis, Minnesota Baltimore, Maryland Portola Valley, California Duluth, Georgia Boston, Massachusetts Menlo Park, California Menlo Park, California Boston, Massachusetts Minneapolis, Minnesota Menlo Park, California Number of Deals 12 12 9 8 8 8 7 7 7 6 6 6 6 6 6 6
Q3 2009 Slide 17
PricewaterhouseCoopers
Venture-backed IPO and M&A Activity
Date Number of IPOs1 Total Venture-Backed Offering Size ($M) Average Venture-Backed Offering Size ($M) Number of Venturebacked M&A deals Average M&A deal size2
2004 2005 2006 2007 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2008 2009 Q1 2009 Q2 2009 Q3
94 57 57 86 5 0 1 0 6 0 5 3
11,378.0 4,485.0 5,117.1 10,326.3 282.7 0.0 187.5 0.0 470.2 0.0 720.7 572.1
121.0 78.7 89.8 120.1 56.6 0.0 187.5 0.0 78.4 0.0 144.1 190.7
346 350 369 372 108 84 88 62 342 63 64 62
85.3 187.0 105.0 170.9 127.2 126.7 96.3 140.4 120.5 47.0 197.7 57.5
Source: Thomson Reuters/National Venture Capital Association
1
Includes all companies with at least one U.S. VC investor that trades on U.S. exchanges, regardless of domicile. accounts for deals with disclosed values.
2 Only
PricewaterhouseCoopers
Q3 2009 Slide 18
Venture Capital Fundraising
Year First Time Funds Follow-On Funds Total Number of Funds VC Raised ($M)
2004 2005 2006 2007 2008
Quarter
64 68 57 62 51 15 27 10 23 14 12 3 8 4
154 174 185 189 173 62 59 62 59 49 37 47 19 13
218 242 242 251 224 77 86 74 82 63 49 50 27 17
19,154.4 28,962.7 31,925.0 36,064.9 28,604.6 8,595.8 12,322.5 7,228.4 9,284.5 8,497.0 3,594.7 4,810.9 1,965.5 1557.8
Q3 ’07 Q4 ’07 Q1 ’08 Q2 ’08 Q3 ’08 Q4 ’08 Q1 ’09 Q2 ’09 Q3 ‘09
Source: Thomson Reuters/National Venture Capital Association Data current as of October 12, 2009
PricewaterhouseCoopers
Q3 2009 Slide 19
Venture Capital Performance
US Venture Capital Index Returns – Q2 2009
For the period ending
June 30, 2009 March 31, 2009 June 30, 2008
Qtr.
0.2 -2.9 0.4
1 Year
-17.1 -17.5 4.7
3 Years
1.3 1.3 13.3
5 Years
5.7 5.8 11.5
10 Years
14.3 26.2 33.9
15 Years
36.3 34.2 33.4
20 Years
22.7 22.5 21.9
Other indices at June 30, 2009
DIJA NASDAQ Composite S&P 500 12.0 20.1 15.9 -23.0 -20.0 -26.2 -6.3 -5.5 -8.2 -1.7 -2.2 -2.2 -0.4 -3.74 -2.22 8.1 6.6 6.9 9.0 7.5 7.8
Source: Cambridge Associates LLC Note: Because the US Venture Capital index is cap weighted, the largest vintage years mainly drive the index’s performance.
PricewaterhouseCoopers
Q3 2009 Slide 20
Q3 2009 In Review
•U.S. •Overall VC investing increased, but off significantly YTD •Slightly improved liquidity opportunities (IPO and M&A) •Dwindling LP investment •SoCal •Ranked third behind NE and SV •Life Sciences remained strong •Med Devices – SoCal #2 behind SV
PricewaterhouseCoopers
Q3 2009 Slide 21
Shaking the MoneyTree™
Q3 2009 Results
www.pwcmoneytree.com
© 2009 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.
PricewaterhouseCoopers
Q3 2009 Slide 22