The MoneyTree™ Report
Overview of Venture Capital Investments Fourth Quarter and Year End 2008
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters
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Host of the Analyst Call
Maryanne Coughlin Director, Technology Sector Analyst PricewaterhouseCoopers
Maryanne Coughlin is a director at PricewaterhouseCoopers, serving as sector analyst for the Firm's US technology and venture capital industry practices. In this role, she advises partners and client teams on marketplace trends and their impact on technology sector firms. Prior to joining PwC in 2007, Maryanne was director of global services model and forecast management at IDC, a technology research firm. While at IDC, Maryanne launched and managed two new research services, presented at the firm's flagship US vendor conferences, and authored one of the firm's most popular research documents. Before joining IDC, Maryanne held positions in client services, marketing, interactive communications and editorial at marchFIRST (formerly USWeb/CKS), Tenet Healthcare, and the US Naval Institute. While at USWeb/CKS Maryanne led the engagement to design and create an award-winning online insurance marketplace. While at Tenet, Coughlin authored the Fortune 500 company's Internet business plan, established the company's brand on the Internet, and served on the Tenet Marketing Council. Earlier in her career, Maryanne worked for international startup Americom International Corp., assisting an entrepreneur in raising funding to build and operate a hotel and business center as a joint venture with Radisson Hotels International and Intourist in Moscow, Russia. Maryanne holds a Master's degree from the University of Virginia and a bachelor's degree from Loyola College in Maryland. She completed the Stanford Professional Publishing Course at Stanford University.
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Overview
National Fourth Quarter and Year End Results
$ Invested and # Deals by Quarter Investments by Stage of Development Investments by Industry/Sector First-time Financing
PricewaterhouseCoopers Commentary on Results NVCA Commentary on Results Levensohn Venture Partners Frazier Healthcare Ventures MoneyTree Report Q&A
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Thomson Reuters
Matthew Toole Research Director, Private Equity Thomson Reuters
Matthew Toole is the director of research for Thomson Reuters’ Investment Banking content, which includes mergers & acquisitions, venture capital, private equity and capital markets. Prior to this appointment, Matthew managed Thomson Financial’s capital markets content strategy and development including debt and equity research and banking contributor relations. Matthew started his career as a research analyst in the fixed income group at Thomson Financial Securities Data. Matthew received his Bachelor of Science in Biology from Providence College.
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Investments Decline 8% Over 2007 US Venture Capital Investments: 2001-2008
45
$40.6
5,000 4,500 4,000
$30.9 $28.3
40 35
Total Amount Invested ($bil)
30 25 20 15 10 5 0 2001 2002 Q1 2003 Q2 2004 Q3 2005 Q4
$21.9 $19.7 $22.5 $23.2
3,500 3,000 2,500 2,000 1,500 1,000 500 0
Number of Deals
5
$26.7
2006
2007
2008
Number of Deals
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report Based on data from Thomson Reuters
Bulk of the $$ Going to Expansion & Later Stage Deals US Venture Capital Investments: 2001-2008
45 40 35
Total Amount Invested ($bil)
8.2
30 25 20 15 10 5 0 2001 2002 2003 2004 2005 Expansion 2006 Later Stage
6
12.5 23.0 5.5 5.8 8.8 9.8 11.7 9.9 10.8
12.4 9.4 4.2
11.5 10.1 9.2 8.7
10.6
3.9
4.5
4.7
5.3
6.8
6.8
2007
2008
Seed/Early Stage
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report Based on data from Thomson Reuters
First Sequence Financing accounts for 22% of 2008 venture capital investments
8 7 6
Total Amount Invested ($bil) 20.0% 20.0% 21.6% 18.3% 24.8% 23.1% 21.7% 24.2%
30% 25% 20% 15% 10% 5% 0% 2001 2002 2003 2004 2005 2006 2007 2008
% of Investment Dollars
7
5 4 3 2 1 0
Total Amount Invested ($bil)
% of Investment Dollars
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report Based on data from Thomson Reuters
Software and Biotech Have Investor’s Interest US Venture Capital Investments By Industry – 2008
IT Investments ($M)
$4,918.8
IT
$13.3 billion
$2,039.0
$1,832.0
$1,687.9
$1,650.9 $644.8 $573.3
Software
Media & Entertainment
IT Services
Telecom
Semiconductors Networking & Electronics & Equipment Instrumentation
Life Sciences Investments ($M)
$4,500.4 $3,459.9
LS
$9.5 billion
$195.0 Biotechnology Medical Devices & Equipment Healthcare Services
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report Based on data from Thomson Reuters
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PricewaterhouseCoopers
Tracy T. Lefteroff Global Managing Partner Private Equity & Venture Capital and Life Sciences Industry Services
As Global Managing Partner of Private Equity and Venture Capital as well as Life Sciences Industry Services, Mr. Lefteroff is in charge of services provided to the venture capital community, venture-funded technology companies and publicly-held, privatelyowned and venture-funded life sciences companies worldwide. Mr. Lefteroff has been key to the development of strategic collaborative agreements with many of the major international pharmaceutical companies and has recently assisted in several high profile industry mergers. He also co-authored the Firm’s Practice Standards and Aids for the Life Sciences Industry. Mr. Lefteroff currently serves on the Board of Directors of the Stanford Venture Laboratory and the California Healthcare Institute. He has served as Treasurer of the Washington State Biotechnology Association, Chairman of the MIT Enterprise Forum of the Northwest and as a Committee Member of the Washington Society of CPA’s High Technology Committee. He is also a member of the American Institute of Certified Public Accountants and the California, Washington and Idaho Societies of CPA’s. Mr. Lefteroff has been with PricewaterhouseCoopers for approximately 16 years, including three years in the Seattle, Washington office, where he was extensively involved with the Firm’s venture capital and life sciences clients. Today he resides in the San Jose, California office.
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Investment Activity – Q4 2008 Top Industries Q4 2007, Q3 2008, Q4 2008
Total Amount Invested ($M)
$1,391 $1,345 $1,327 $1,300 $1,289
Q4 2007 Q3 2008 Q4 2008
$1,021 $1,016
$1,022
$1,005 $947 $814
$550 $496 $411 $432
Sof tw are
Biotechnology
Industrial/Energy
Medical Devices and Equipment
Media and Entertainment
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report Based on data from Thomson Reuters
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Investment Activity – Full-Year 2008 Top Industries 2006, 2007, 2008
Total Amount Invested ($M)
$5,462 $5,028 $4,919 $4,651 $4,594 $4,500 $4,069 $3,460 $3,248 $2,924 $5,239
2006 2007 2008
$1,956 $1,641
$1,974 $2,039
Sof tw are
Industrial/Energy
Biotechnology
Medical Devices and Equipment
Media and Entertainment
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report Based on data from Thomson Reuters
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Life Sciences Investments 2004 – 2008
Total Amount Invested ($M)
$5,239 $4,594 $4,267 $3,916 $4,069 $3,460 $2,924 $2,222 $1,936 $4,500
2004
2005
2006
2007
2008
Medical Devices and Equipment
Biotechnology
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report Based on data from Thomson Reuters
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Internet-Specific & Clean Tech Investments 2004 – 2008
Internet-Specific Investments ($M)
$5,015 $4,291 $2,904 $3,300
$4,900
1,000 800 600 400 200 0
2004
2005
2006
2007
2008
$ Invested
Clean Tech Investments ($M)
# of deals
300 250 200 150 $1,440 100 50 0 2006 2007 2008
$4,115 $2,666
$444
$550
2004
2005
$ Invested
# of deals
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report Based on data from Thomson Reuters
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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 tribranded 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. 14
Number of Deals by Stage US Venture Capital Investments: 2001-2008
5000 4500
545
4000 3500
Number of Deals
1207 1014 2388 488 594 808 1001 1259
1177
3000 2500 2000 1500 1000
1545
1582
1366 1352 1209 1093
1178
500 0 2001
1022
976
1076
1061
1295
1486
1453
2002
2003
2004
2005 Expansion
2006 Later Stage
2007
2008
Seed/Early Stage
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report Based on data from Thomson Reuters
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Number of Deals by Stage US Venture Capital Investments: Quarterly 2006-2008
100% 90%
273 280 234 227 268 308 320 302 235
311
80% 70%
Percentage of Deals
334
306
60%
338
338 289
306
50% 40% 30%
330
360
320
344
326
322
273
257
226
286
306 229
20% 10%
197
231
242
259
245
279
249
240
72
84
109
90
82
120
120
128
115
108
131
86
0% Q106 Q206 Q306 Q406 Q105 Q205 3Q05 4Q05 1Q08 2Q08 3Q08 4Q08 Seed Early Stage Expansion Later Stage
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PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report Based on data from Thomson Reuters
Number of First-Time vs. Follow-On Deals US Venture Capital Investments: 2001-2008
5000 4500 4000 3500
Number of Deals
3000 2500 2000 1500 1000 500 0
3264 2474 2255 2167 2172 2136 2653 2637
1213
836
753
921
1019
1201
1299
1171
2001
2002
2003
2004 First-Time
2005 Follow-On
2006
2007
2008
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report Based on data from Thomson Reuters
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Levensohn Venture Partners
Pascal Levensohn Managing Partner and Founder Levensohn Venture Partners
Pascal Levensohn has been a finance professional for twenty six years and a venture capitalist since 1996, when he founded Levensohn Venture Partners ("LVP") in San Francisco. He invests in early stage software, semiconductor, and communications companies. A frequent speaker on corporate governance issues, Pascal has published numerous articles on venture capital trends since 1999. In May 2006, Pascal established and now chairs the Working Group on Director Accountability and Board Effectiveness, a 33 member VC industry group that promotes director education and best governance practices. The group’s first effort, “A Simple Guide to the Basic Responsibilities of Venture–Backed Company Directors”, was released in January 2007. Pascal coauthored the first governance white paper in the VC industry in November 2003, "After the Term Sheet: How Venture Boards Influence the Success or Failure of Technology Companies". A second white paper, “Rites of Passage: Managing CEO Transition in Venture-Backed Technology Companies”, was published in January 2006. Pascal's VC governance work is now part of the curriculum at several universities, including the Harvard Business School and Stanford's Graduate School of Engineering (Department of Management Science & Engineering). Pascal was elected to the board of the National Venture Capital Association in April 2007, where he serves on the education committee. He currently serves as the Chairman of the San Francisco Jewish Community Federation’s Business Leadership Council and as co-chair of the Steering Committee of the Aspen Institute’s Socrates Society a leadership development program with which he has been involved since 1997. Pascal received a BA in Government from Harvard University and is a graduate of the Lawrenceville School. He is a member of the Council on Foreign Relations and the Pacific Council on International Policy
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Frazier Healthcare Ventures
Robert More General Partner Frazier Healthcare Ventures
Mr. More joined Frazier Healthcare Ventures in 2008 as a General Partner and is a member of the firm’s biopharma and medical device investment teams. Prior to Frazier Healthcare, Mr. More was a Partner with Domain Associates, having joined the firm in 1996 as a Kauffman Fellow and becoming a Partner in 2000. From 19971998, Mr. More served as the Chief Operating Officer of Small Molecule Therapeutics, a Domain portfolio company subsequently purchased by Morphochem AG. And from 1992 to 1995, Mr. More was with Pharmacia Biotech in sales. Prior to joining Pharmacia, Mr. More held a research position at Somatogen, a company developing a recombinant blood substitute that was subsequently bought by Baxter. While attending business school, Mr. More worked with MedVest, an early-stage venture group in Washington, D.C. Mr. More managed successful investments in and served on the boards of ESP Pharma (acquired by Protein Design Labs, Inc.), Proxima Therapeutics (acquired by Cytyc Corporation), Onux Medical (acquired by C.R. Bard), NovaCardia (acquired by Merck), Esprit Pharma (acquired by Allergan) and IntraLase (acquired by Advanced Medical Optics, Inc.). Mr. More serves as an advisory board member for Montagu Newhall Associates, Okapi Ventures, The Medical Industry Group of the NVCA and The Sulpizio Family Cardiovascular Center. He is also a past founding board member of the Kauffman Fellows Program. Mr. More received his MBA from the Darden School of Business Administration at the University of Virginia and a BA from Middlebury College.
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MoneyTree™ Report Q&A
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