List of Venture Capital Companies in California - PowerPoint

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					                                                   Venture Capital Today



                                                            Robert W. Conn
                                                           Managing Director
                                                   Enterprise Partner Venture Capital
                                                              La Jolla, CA
                                                             March 13, 2006


                   Seminar Talk for the Department of Computer Science and Engineering, University of California, San
                                                          Diego (UCSD)




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                                            About Enterprise Partners VC




    Enterprise Partners was founded in 1985 and is the largest venture capital firm headquartered in Southern California with over
    $1.1 billion in capital under management. The firm focuses on seed, early stage and promising later stage companies developing
    technologies and market solutions in both IT and the life sciences. The firm is currently investing its sixth fund whose size is
    $353M.

    Our partners are entrepreneurs themselves, having formed, run and sold multiple companies across a spectrum of industries.
    Along with a professional staff bringing financial, legal, product development, marketing and operations support to the firm, the
    partners at Enterprise draw on their experience and partner with our portfolio companies to achieve success.




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                                  The Purpose of Venture Capital




          • To Provide High-Risk Capital to Enable Innovations and
            Inventions, Often from Universities and Research Institutes, to
            Move from Concept to Commerce

          • To Help Create Large Economic Value for Founders,
            Management, Employees and Investors

          • To Build New Companies, Create Jobs, and Help Ensure
            Economic Growth and Long Term Economic Prosperity




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                         The U.S. Venture Capital System Has Been and
                     Is an “Unfair U.S. Advantage” – How did that Happen?


            •   The Enabling Event: The1979 Dept. of Labor Clarification of the
                “Prudent Man” Rule Catalyzed Modern Venture Capital.
                 –   The Ruling meant the Labor Department would not view the allocation of a small
                     portion of Managed Pension Funds in higher risk “Venture Capital” as “Imprudent” –
                     even if a number of firms in a VC fund failed.

                 –   The Ruling Enabled “Risk Capital” as an Asset Class – It Opened the Door to Pension
                     Funds, University Endowments, and others for VC Firms - and Led to the Modern
                     Venture Capital Asset Class

            •   Two Other Key Milestone Events:
                 –   The Steiger Amendment in 1978 - which Reduced the Capital Gains Tax from 49% to
                     25%. This provided a strong financial incentive for Individuals to Start Companies

                 –   The Bayh-Dole Act of 1980 - which granted Sole ownership of discoveries made under
                     Federal Government financial support (e.g., Grant for Research at Universities) to the
                     Universities, Non-Profits and Small Businesses where they were made.
                       • The Act permitted exclusive licensing by a university to enable the development
                         and transfer of an invention to the marketplace for the public good
                       • The Act Provided a Strong incentive for universities to form research collaborations
                         with industry
                       • It was understood that this would be a stimulant for the U.S. economy.



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                             Venture Capital Has Been a Key “Fuel” for the U.S. Economic Engine, Enabling the Translation of Discovery and Innovation
                                                         into Products and Services, Jobs, and Successful New Businesses.


        „In 1979, there were 25 VC firms that raised about $500M for venture capital investment. In 2005, there were about
        125 VC firms that raised and invested about $20B.
        „Venture-Backed Companies are a Major Economic Stimulant and Contribute Importantly to U.S. Economic
        Competitiveness


                                                               US VC Funds Raised 1980-2005

                          120,000                                                                                          700

                          100,000                                                                                          600
         USD (Millions)




                                                                                                                           500
                           80,000
                                                                                                                           400          USD Raised
                           60,000
                                                                                                                           300          No. of Funds
                           40,000
                                                                                                                           200
                           20,000                                                                                          100

                                0                                                                                          0




                                                                                                     3)
                                80
                                81
                                82
                                83
                                84
                                85
                                                    86
                                                    87
                                                    88
                                                    89
                                                    90
                                                    91
                                                    92
                                                                            93
                                                                            94
                                                                            95
                                                                            96
                                                                            97
                                                                            98
                                                                                                    99
                                                                                                    00
                                                                                                    01
                                                                                                    02
                                                                                                    03
                                                                                                05 04
                                                                                                  (Q
                                                                            Year

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                Venture Capital Backed Companies Do Make a Real Difference in U.S. Jobs and Economic Vitality
                                                     and Leadership

                The Top Dozen High-Tech Companies by Market Value (Dec. 2005)

                 Company                              Market Cap ($B)                   Year Founded
                 Microsoft                                    269                            1975
                 Intel                                        141                            1968
                 IBM                                          133                            1888
                 Cisco                                        108                            1984
                 Google                                       97                             1998
                 HP                                           81                             1939
                 Dell                                         76                             1984
                 Qualcomm                                     75                             1985
                 Oracle                                       66                             1977
                 eBay                                         53                             1995
                 TI                                           50                             1930
                 Yahoo                                        50                             1994

    Pre 1980
    Post 1980

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               Metrics in Addition to Market Cap of the Economic Impact Of Venture-Backed Companies




         •   Jobs: 18% of Workers in the U.S. are at Companies that were Original
             Financed by Venture Capital

         •   Payroll: 24% of Payroll in the U.S. is From Companies that were
             Originally Financed by Venture Capital

         •   Implication – The Economic Impact of VC-Backed Companies is Large,
             and the Jobs Pay Well




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                  Venture Capital Today ‟ Recovered from the Bubble Years and Raising and Investing $20 Billion Per Year



                                                          6,316

                                                               $94.7
                                           4,590



                                                                                    3,268
                                              $49.5
                               2,547
                      2,211                                                                         2,387    2,155    2,249   2,239
                                                                              $36.2
           1,912

                                                                                              $22.0                   $21.7   $22.1
                                  $17.9                                                                     $19.3
                       $13.1
           $9.2


           1996         1997       1998        1999             2000            2001              2002      2003      2004    2005
                                   Amount Invested ($B)                                             Number of Deals

                                                   Source: Ernst & Young / Dow Jones VentureOne


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                                                       - Venture Capital Today is Still Adventurous -
                                                  U.S. Seed/First Round Investment over the Past 10 Years



                                                                   2,950


                                                                     $28.8
                                                         2,084


                                                           $15.8
                                         1,081
                                                                               1,088
                             941
             841
                                                                               $7.8                         726    749
                                                                                          674     623
                                            $6.3
                             $4.2                                                      $4.1                 $4.6
             $3.2                                                                                $3.6              $3.5



             1996            1997            1998           1999      2000     2001    2002      2003       2004   2005
                                            Amount Invested ($B)                         Number of Deals


          Source: Ernst & Young / Dow Jones VentureOne


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                                                           Median Deal Size is About $7 Million Across
                                                                   All Rounds of Investments




                                                                    $10



                                                                                 $7.5
                                                                                                            $7.0   $6.9
    ($ Millions)
                                                      $6.5                                $6.3       $6.3


                                     $4.6

                     $3.6
     $3.1




     1996           1997             1998             1999          2000         2001     2002       2003   2004   2005

            Source: Ernst & Young / Dow Jones VentureOne


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                   Southern California Is a Vibrant Place for Venture Deals As Shown By 2005 Venture
                                                    Capital Financings


     $2.1 Billion Invested – 10% of U.S. Total                                                                  204 Deals

                  Software 15%                                                                                                     Biopharmaceuticals
                                                     Biopharmaceuticals                                                                  16%
                                                           23%
                                                                                Software 25%
 Semis 15%
                                                                                                                                                 Comm 8%

                                                                                                                                                      Cons/Bus
                                                                    Comm 11%                                                                         Products 1%
 Retailers                                                                                                                                            Cons/Bus
   1%                                                                           Semis 11%                                                            Services 8%
   Other 2%                                                    Cons/Bus
                                                             Products 1%                                                                     Electronics 3%
     Med IS 2%                                                                         Retail 2%                                          Energy 1%
                                                        Cons/Bus
                  Med                                  Services 7%                          Other 4%                                      Health
                                                  Electronics 2%                                       Med IS                    Info
                 Devices      Info                                                                               Med Devices   Services   Services
                                       Health                                                           2%
                  13%       Services                                                                                12%                     3%
                                       Services Energy 1%                                                                        4%
                              3%         4%
                                                            Source: Ernst & Young / Dow Jones VentureOne


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                               San Diego Also Has a Vibrant Local Venture Capital Infrastructure


    „   San Diego is Fifth in the U.S. in Terms of Deals and The Dollar Value of Venture Financings, and 2nd in
        California after Silicon Valley.

    „   San Diego VC Financings Are About $1 Billion Per Year

    „   San Diego has More Than 20 Venture Capital Firms Headquartered in the Region and Many Major
        Service Providers -
    „   San Diego’s Three Largest Venture Capital Firms Are:
        -Enterprise Partners Venture Capital ‟ Founded in 1985.                 Capital Under Management: $1.1
        Billion
        -Forward Ventures ‟ Founded in 1993.
                Capital Under Management: $460 Million
        -Mission Ventures ‟ Founded in 1997.
                Funds Under Management: $460 Million



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                                                    San Diego Venture Financings in 2005
                                          By Dollars Invested, 60% of Deals were Life Sciences and 40% IT ‟
                                            The Ratio is 50-50 When Measured By Number of Deals Done


                $898 Million Invested                                                                  85 Deals

       Software 16%                                 Biopharmaceuticals                                                                  Biopharmaceuticals
                                                          51%                                                                                 35%
                                                                                   Software
                                                                                     26%

   Semis 13%



  Other 3%
                                                                              Semis 10%
   Med IS 2%
                                                                                                                                             Comm 2%
  Med Devices 7%
                                                                                       Other 5%                                        Cons/Bus
               Healthcare                                                                                                             Services 7%
               Services2%               Comm 2%                                                            Med Devices
                                                                                        Med IS 2%             11%        Healthcare
                            Cons/Bus                                                                                     Services2%
                             Services
                               4%
                                                            Source: Ernst & Young / Dow Jones VentureOne


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     Trends in the Information Technology (IT) Market and Some
        Observations for Startup Companies and Venture Capital

        IT includes Essentially all High Tech that’s not Bio-based – Media,
       Networking, Communications, Software, Consumer Electronics, Telecom
                             Semiconductors, Computing




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                                 We’ve Entered the Era of the Digital Consumer




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                       Venture Capital Today and IT Startups


           ‟ There’s Always a New Wave Coming - The IT Trail - -
               „ From the Mainframe of the ’60’s to the Minis of the ’70’s to PCs in the ’80’s, and the
                  Internet and Wireless/Mobility in the ’90’s, there continues to be an On-Going Revolution
                  in the Markets and Products
           ‟ Globalization and the Rise of the Innovation Culture around the World is an Opportunity, Not a
             Threat
           ‟ “Moore’s Law”, and All it Enables for Semiconductor Performance, Continues ‟ with Great
             Impact on Computing, Communications, Networking and Storage
           ‟ Can we Build Major Value from Startup to Finish in a Capital Efficient Way? That today
             probably means less than $30M invested prior to Exit. Globalization has helped here.




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                                  The Key Points for Startup Companies and Entrepreneurs


„      Address a Major Need ‟ In Most Areas, the Needs and Pain-Points are Known. So
     ‟     Provide a Distinctive and Protectable Solution
     ‟     Address a Major Market ‟ Large Markets Enable Large Exits!
     ‟     Identify the Customers and Insure the Solution is a “Must Have”, as Opposed to “Nice to Have”.
     ‟     Understand the Competitive Landscape ‟ Incumbents, Other Startups
     ‟     Build a Strong Team and Execution Plan, taking account of Capabilities and Markets Globally
     ‟     Have Strong, Early Financial Support - to Execute on the Product Development and Go-to-Market
           Plan




         Venture Capital Firms Will Do Their Diligence to Confirm the Value Proposition, and Work with
               Entrepreneurs and Their Companies In Building a Strong Team and Execution Plan

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                                 Summary: Venture Capital Today is Alive and Well



 „ California Remains the Country’s Center of Gravity for Venture Capital and Start-Up Companies

 „ Southern California and San Diego are Vibrant Regions for Start Up Companies and Talent in Both IT and
   Biotech/Life Sciences

 „ An Academic with an Entrepreneurial Bent Can Create a Company and Be Successful ‟ There are Many
   Examples




 To Provide A Sense of Markets and Companies That We at Enterprise Partners Have Found To Have Compelling
     Stories, the Next Slide Lists Recent EPVC Investments Over the Past 12 Months, and the Following Slide is a
     List of My Investments Since Joining Enterprise Partners in July of 2002.




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                                       Recent Enterprise Partners Investments


 3Leaf Networks - 3Leaf Networks is developing the infrastructure for virtual servers in the enterprise data
      center. Santa Clara, CA www.3leafnetworks.com Partner: Bob Conn
 Anaborex - Anaborex is an early stage biotechnology company developing drugs for the treatment of the wasting
      syndrome many cancer patients experience towards the late stages of their disease. San Diego, CA
      www.anaborex.com Partner: Drew Senyei
 Celladon - Celladon is an exciting new biotechnology company focused on developing treatments for
      cardiovascular diseases. Celladon’s drug products have shown beneficial results in preclinical studies in
      reversing the morbidity and mortality of Congenital Heart Failure. San Diego, CA
      www.celladon.net Partner: Drew Senyei
 DeviceScape Software - DeviceScape provides a software platform that enables the development of a broad range
      of wireless devices that connect easily, coordinate seamlessly and can be managed. Brisbane, CA
      www.devicescape.com Partner: Bill Stensrud
 Expresso Fitness - Expresso Fitness provides networked and interactive software and cardio equipment for the
      multi-billion dollar fitness industry. Sunnyvale, CA www.expressofitness.com Partner: Bill Stensrud
 Identrust - Identrust™ is a global identity solutions provider that is bank-built and government regulated.
      San Francisco, CA www.identrust.com Partner: Carl Eibl
 Muze - Muze is the leading source of entertainment product information for music, books, films, and games.
      Muze content provides customers with detailed information about entertainment products. New York, NY
      www.muze.com Partner: Bill Stensrud
 Tarari - Tarari designs and produces content processors that accelerate and offload compute-intensive, complex
      algorithm used in XML/web services, network security and digital media environments. San Diego, CA
      www.tarari.com Partner: Bob Conn
 vMix.com - vMix is a free, global, video sharing online community for personal video sharing and brings
      together three communities: creators, viewers and advertisers in a marketplace of content. San Diego, CA
      www.vmix.com Partner: Carl Eibl
 WideRay Corp - WideRay enables the deployment of "proximity services", targeted, on-demand, on-location
      delivery of content, transactions, software, and services directly to end-user mobile devices.
      San Francisco, CA www.wideray.com Partner: Bill Stensrud

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                                                Investments Led By Bob Conn Since Joining EPVC in July of 2002


 „        Pathscale, Inc. ‟ Jan. 2003. Pathscale provides chip and software solutions to Accelerate Commodity-Based Cluster Computing. Acquired by Qlogic in Feb.
          2006
 „        TwinStar Systems, Inc. ‟ Dec. 2003. Metrology system for advanced semiconductor whole-wafer and in-line inspection. Shutdown in June, 2004.
 „        NEXX Systems Inc. ‟ April, 2004 ‟ NEXX develops and sells Back-End Equipment to Firms Packaging and Assembling Semiconductor Chips and Displays.
          Revenues of $20M in 2005 and Growing.
 „        Pivotal Systems Inc. ‟ April, 2004. Pivotal develops in-situ, closed-loop control solutions for etch and deposition semiconductor processes equipment. Exceeded
          $1M in Revenue in 2005 and growing.
 „        NetSift (from UCSD ‟ final EP Investment led by another EP partner) ‟ June, 2004. NetSift develops deep packet network processing technology for security.
          Acquired by Cisco in June, 2005.
 „        Nuelight Inc. ‟ October, 2004. Nuelight develops analog and mixed signal chip solutions for OLED Displays used in Handsets, Monitors and HDTV.
 „        3Leaf Networks - April, 2005. 3Leaf is developing the infrastructure required to support both the scale-up and scale-out of Commodity Virtual Servers for major
          compute-intensive industry needs .
 „        Quorum Systems ‟ Joined Board Nov. 2005. Quorum is a fabless semiconductor company that develops highly integrated, multi-mode radio frequency (RF)
          transceivers in a single-chip CMOS solution for cell phones and converged handsets (GSM or CDMA plus Wi-Fi and Bluetooth).
 „        Ascendent Systems ‟ Joined Board Nov. 2005. Ascendent makes software to connect cell phones to a corporate PBX, enabling office-phone functions to be
          extended to Mobile Users with one phone number. Acquired by RIM, March, 2006
 „        Tarari, Inc. ‟ January, 2006. Tarari develops and delivers software-enabled ASIC and board-level solutions for advanced content inspection and acceleration
          applications that improves network and application performance. Exceeded $3M in Revenue in 2005 and growing.
 ------------
 „        Two Seed Investments ‟Scoperta - Oct. 2005 (from UCSD) (Materials for consumer and industrial products) ‟and Novowave ‟ Dec. 2005 (Digital Home
          Networking for Consumer Products.)




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