Quarterly Venture Capital Report - Q2 2011 - CB Insights

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					                                                                                       Venture Capital Activity Report | Q2 2011




TABLE OF CONTENTS
QUARTER SUMMARY                                               2

QUARTERLY TRENDS                                              3

SECTOR REVIEW                                                 11
1      INTERNET                                               11

2      HEALTHCARE                                             18

3      GREEN / CLEAN TECH                                     25

GEOGRAPHIC REVIEW
1      CALIFORNIA                                             32

2      MASSACHUSETTS                                          38

3      NEW YORK                                               43

4      WASHINGTON                                             49

5      TEXAS                                                  54



DEFINITIONS & DATA INTEGRITY                                  59




    © 2010, CB Insights. All rights reserved. For more information about CB Insights, please email info@cbinsights.com.

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 2                                                                      Venture Capital Activity Report | Q2 2011


Q2 2011 – This Quarter in Venture Capital
Quarter sees dealflow and funding levels dial it up even more over Q1 2011.
Compared to Q2 2010, deals climbed 25% and funding climbed 29%.
Q2 2011 registered $7.6B of venture capital funding invested in 768 deals representing a nine-quarter high on both
dimensions. And this performance follows Q1 2011 which saw deals and funding at pre-recessionary levels. We know
that all you bubble prognosticators are probably licking your lips reading this. But before you make these predictions, take
a look at the quarter in a bit more detail as the quarter’s stats are not good news for everyone as we detail below.

At a higher level, if the final two quarters of the year maintain similar funding levels, we are on track for $29-$30 billion
invested by VCs in 2011. Of course, some of the punditry have suggested that the VC asset class’ “right size” is around
$25 billion so it will be interesting to see if the momentum of Q1 and Q2 continues or if we’re in for a second half swoon.

As always, we recommend you also review our definitions and methodology on p. 59 to see what is included vs. what is
not as there tends to be a fair amount of misinformation out there about venture data.

Seed VC Investments Grow…                                        VC to Big 3 Grows
 Q2 2011 saw the percentage of seed VC deals climb to             The trifecta of California, Mass and NY took over 60% of
 12% - a five quarter high. The seed VC phenomena                 deals and more than 75% of funding.
 showed strength across all sectors with internet,
 healthcare and clean tech all seeing the share of Seed          I Wish They All Could be California Deals
 VC deals growing to a five quarter high.                          California extended its dominance registering a five
                                                                   quarter high for deals. On a YoY basis, deals in the state
…But Overall, Early Stage VC Drops                                 were up 27% and dollars were up 19%. Bucking the
 Although Seed VC showed cross-sector strength, Q2                 national trend, the state also saw an uptick in early stage
 2011 did see the overall portion of VC deals to early             activity. California’s venture deals were primarily
 stage companies (primarily Series A deals) dip to a five          centered on internet companies followed by healthcare.
 quarter low. We’ll be tracking this phenomena going               The 2 sectors combined for 58% of the state’s deals and
 forward because if it continues, it’s possible companies          56% of the funding.
 who’ve raised their Seed rounds might be orphaned.
                                                                 Massachusetts Flexes Its Muscle
Clean Tech Loses Some Gas                                         Massachusetts saw over $1B of funding and saw a five
  After Q1 2011 which saw green investment and deals              quarter high on both deals and dollars. Like Cali, Mass
  rebound from prior period doldrums, Q2 2011 saw green           bucked the early stage downward trend and actually saw
  venture investment and deals return to what might be            increased early stage activity. Internet and healthcare
  their new normal which is a lot lower. On a YoY basis,          investment represented ½ of deals and ¾ of funding.
  deals were up 18% but funding was down 25%. On a
  sequential basis, deals were down 24% and funding was          New York Funding Keeps Rising
  down almost 60%. Green software showed the most                 NY hit a 5 quarter funding high growing 52% YoY while
  signs of life within otherwise lifeless clean tech.             deals grew 27%. Seed deals hit a five quarter high while
                                                                  Series A dipped. The internet and mobile sectors
Healthcare VC Shows Signs of Life                                 dominated taking 85% of deals and 90% of funding.
 Medical devices continued to lead venture deals in
 healthcare with the overall sector seeing deals up 7%           Texas Climbs on Deals and Dollars
 and funding climbing by 16% on a YoY basis. California            Texas grew deals and dollars 12% and 40% yoy,
 and Massachusetts continued their dominance of                    respectively, and saw a 5 quarter high on deals. The
 healthcare venture investment seeing 56% of all deals             state’s VC haul was led by internet deals but overall,
 and 75% of venture funding.                                       Texas VC is one of the most diverse in terms of sectors..

Venture Investment to Internet Sector Climbs Higher              Sleeping in Seattle
 VC deals and dollars to internet companies hit a five             Deal count in Washington grew 10% vs. Q4 2010 but
 quarter high. Deals were up 28% YoY and funding grew              funding remained at the low levels seen in prior quarter.
 69% vs. Q2’10. A couple of mega-deals to the group                The state maintained a fair level of diversity in terms of
 buying and ecommerce industries drove funding levels.             industries.
 California represented almost 1 of every 2 internet deals
 while New York retained the #2 spot followed by
 Massachusetts.

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 3                                              Venture Capital Activity Report | Q2 2011


$7.6B over 768 Deals – Another Eight Quarter High
While Q1 to Q2’11 growth wasn’t as eye-popping as the growth seen last quarter,
Q2’11 marked the 3rd consecutive quarter of more deals and funding.




www.cbinsights.com
 4                                               Venture Capital Activity Report | Q2 2011


Cali Grabs Highest Deal Share in 5 Quarters
Call, Mass and NY own 60+% share of deals with Cali raising it share of deals a five
quarter high. New York’s share of deals dips.




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 5                                              Venture Capital Activity Report | Q2 2011


The Big Three Increase Dominance of Funding
California, Massachusetts and New York combine to take nearly 75% of overall U.S.
venture capital funding in Q2 2011 – the highest concentration in five quarters.




www.cbinsights.com
6                                                          Venture Capital Activity Report | Q2 2011


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 7                                                 Venture Capital Activity Report | Q2 2011


June Closes Q2’11 with Biggest Funding Month of Year
Q2 starts slowly with a relatively weak April, but finishes strong as June sees $3.0
billion of investment – the strongest month for VC so far in 2011.




www.cbinsights.com
 8                                              Venture Capital Activity Report | Q2 2011


Seed Grows its Deal Share, but Overall Early Stage Dips
The seed venture trend continues as it consumes 12% of overall deal share in Q2 – up
2% over Q1. However, overall early stage contracts, losing ground to late stage.




www.cbinsights.com
 9                                                Venture Capital Activity Report | Q2 2011


Software Recovers, Mobile Loses a Bit of Ground
Non-internet software deal share recovers to its “normal” level of 8%, while Mobile
cedes a bit of ground. Healthcare and Internet show pop in investment dollars.




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10                                              Venture Capital Activity Report | Q2 2011


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11                             Venture Capital Activity Report | Q2 2011




     Q2 2011 Venture Capital

     INTERNET




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12                                               Venture Capital Activity Report | Q2 2011


Internet Venture Capital Investments Keeps on Rising
Investment in web companies continues its upward trend, exhibiting a five-quarter high




                                                                                             Internet
in terms of both deals and dollars. Will investment eclipse $3 billion later in 2011?




www.cbinsights.com
13                                               Venture Capital Activity Report | Q2 2011


DC Registers Largest Deal of the Quarter with LivingSocial
California continues its reign with NY and Mass rounding out the top three in terms of




                                                                                             Internet
deal share. However, mega-deal pushes Washington DC to 2nd spot for Q2.




                                                                 Quarter Highlights

                                                                 298 deals | $2,742M

                                                                 Top Five Deals
                                                                  LivingSocial
                                                                  CSN Stores
                                                                  Gilt Groupe
                                                                  Kabam
                                                                  Flipboard, YapStone


                                                                 Top Cities
                                                                  San Francisco, CA
                                                                   54 deals | $442M
                                                                  Washington DC
                                                                   1 deals | $400M
                                                                  New York, NY
                                                                   42 deals | $386M
                                                                  Boston, MA
                                                                   9 deals | $208M
                                                                  Palo Alto, CA
                                                                   17 deals | $172M
                                                                  Redwood City, CA
                                                                   5 deals | $117M
                                                                  Chicago, IL
                                                                   6 deals | $80M
                                                                  Mountain View, CA
                                                                   11 deals | $67M
                                                                  Los Angeles, CA
                                                                   8 deals | $64M
                                                                  Seattle, WA
                                                                   8 deals | $52M




www.cbinsights.com
14                                                Venture Capital Activity Report | Q2 2011


Cali Grows Share in Top Spot for Web Deals, NY Still #2
California grows its share of Internet deal to highest level in 5 quarters, while New York




                                                                                              Internet
and Massachusetts hold steady. DC looms large on back of single big deal.




www.cbinsights.com
15                                            Venture Capital Activity Report | Q2 2011


Seed Internet Deals Up, While Overall Early Stage Down
Seed deals in web companies show continued growth while Series A experiences a




                                                                                          Internet
hiccup in Q2. Overall early stage sees five-quarter low in terms of deal share.




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16                                            Venture Capital Activity Report | Q2 2011


Internet Investment Diversity Continues
While deal distribution remains diverse, eCommerce funding to Group Buying and




                                                                                          Internet
Apparel (LivingSocial, Gilt Groupe) drives Q2 funding distribution.




www.cbinsights.com
17                                               Venture Capital Activity Report | Q2 2011


Later Stage Internet Deals See Dwindling Medians
For the second straight quarter, later stage Internet deals (Series C+) generally see




                                                                                             Internet
smaller medians. Early stage medians remain fairly steady.




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18                             Venture Capital Activity Report | Q2 2011




     Q2 2011 Venture Capital

     HEALTHCARE




www.cbinsights.com
19                                              Venture Capital Activity Report | Q2 2011


Healthcare Venture Funding Sees 5-Quarter High
While Healthcare deal flow continues its downward trend since Q3 2010, the sector’s




                                                                                            Healthcare
investment dollars see a 5-quarter peak with nearly $1.9B of venture investment.




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20                                             Venture Capital Activity Report | Q2 2011


Nothing to See Here - Cali and Mass Dominate Healthcare




                                                                                            Healthcare
Once again, California and Massachusetts combine for 56% of deal share, while their
collective venture investment share grows to over 75% of healthcare funding.




                                                               Quarter Highlights

                                                               147 deals | $1,894M

                                                               Top Five Deals
                                                                Cameron Health
                                                                Tesaro
                                                                Radius
                                                                Merrimack Pharmaceuticals
                                                                Ultragenyx Pharmaceutical



                                                               Top Cities
                                                                Cambridge, MA
                                                                 11 deals | $305M
                                                                Lexington, MA
                                                                 3 deals | $124M
                                                                San Diego, CA
                                                                 8 deals | $110M
                                                                San Clemente, CA
                                                                 1 deals | $107M
                                                                Mountain View, CA
                                                                 5 deals | $93M
                                                                Santa Clara, CA
                                                                 2 deals | $64M
                                                                Waltham, MA
                                                                 4 deals | $64M
                                                                Redwood City, CA
                                                                 5 deals | $64M
                                                                Boston, MA
                                                                 8 deals | $61M
                                                                South San Francisco, CA
                                                                 2 deals | $49M




www.cbinsights.com
21                                            Venture Capital Activity Report | Q2 2011


Mass. Grows Investment Share, Reaching 5-Quarter High




                                                                                          Healthcare
Venture investment share sees a shakeup with Mass taking 31% on the heels of
numerous pharma mega-deals. Venture deal distribution is rather unphased vs. Q1.




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22                                             Venture Capital Activity Report | Q2 2011


Early Stage Healthcare Ticks Up in Q2 2011




                                                                                           Healthcare
Early stage Healthcare investment bounces back from a 5-quarter low in Q1’11.




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23                                             Venture Capital Activity Report | Q2 2011


Medical Devices, Drug Development and Pharma Rule Q2




                                                                                           Healthcare
Medical devices continue supremacy of investment within the Healthcare sector,
followed by relatively strong quarters from Drug Development and Pharmaceuticals.




www.cbinsights.com
24                                              Venture Capital Activity Report | Q2 2011


Healthcare Medians Down Across the Board in Q2




                                                                                            Healthcare
Q2 sees numerous Healthcare mega-deals which pull aggregate investment higher,
but these are offset by smaller deals across the board. Ultimately, medians are driven
down for all stages of Healthcare investment in Q2.




www.cbinsights.com
25                             Venture Capital Activity Report | Q2 2011




     Q2 2011 Venture Capital

     GREEN & CLEAN TECH




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26                                                 Venture Capital Activity Report | Q2 2011


Green Tech Returns to Earth, Down Sharply from Q1
After an incredible surge in Q1, Green Tech returns to more familiar territory in Q2 with
$781M invested over 65 deals – numbers consistent with late 2010.




                                                                                               Green




www.cbinsights.com
27                                               Venture Capital Activity Report | Q2 2011


California #1 Again in Green Tech, but New Entrants Emerge
Cali remains atop the Green Tech leader boards in terms of both deals and dollars.




                                                                                             Green
However, Georgia, and to a lesser extent, Texas emerge as serious players in Q2.




                                                                 Quarter Highlights

                                                                 65 deals | $781M

                                                                 Top Five Deals
                                                                  Fisker Automotive
                                                                  Suniva
                                                                  KiOR
                                                                  Solopower
                                                                  Proterra


                                                                 Top Cities
                                                                  Irvine, CA
                                                                    1 deals | $100M
                                                                  Norcross, GA
                                                                    1 deals | $94M
                                                                  Newton, MA
                                                                    2 deals | $62M
                                                                  Pasadena, TX
                                                                    1 deals | $55M
                                                                  San Jose, CA
                                                                    1 deals | $44M
                                                                  Berkeley, CA
                                                                    2 deals | $34M
                                                                  Austin, TX
                                                                    2 deals | $33M
                                                                  Golden, CO
                                                                    1 deals | $30M
                                                                  San Mateo, CA
                                                                    1 deals | $25M
                                                                  Goleta, CA
                                                                    1 deals | $25M




www.cbinsights.com
28                                            Venture Capital Activity Report | Q2 2011


Cali Loses Investment Share to Georgia and Texas
Green Tech mega-deals in George and Texas erode California’s dominance of overall




                                                                                          Green
investment funding share. Texas is #2 in terms of deal share, edging out Mass.




www.cbinsights.com
29                                             Venture Capital Activity Report | Q2 2011


Green Tech Seed Experiences Banner Quarter in Q2
Share of seed deals more than doubles in Q2, taking 15% of overall deal share.




                                                                                           Green
However, overall later stage investments took more deals and dollars in Q2.




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30                                             Venture Capital Activity Report | Q2 2011


Renewables Dominate but Software Shows Strength
Green/Environmental Software is the big mover in Q2, nearly quadrupling deal share




                                                                                           Green
since Q1. Renewables reclaims ground after brief deal share swoon in Q1.




www.cbinsights.com
31                                             Venture Capital Activity Report | Q2 2011


Median Deal Sizes Tick Down Across Almost All Rounds
Early stage medians see uptick, but other rounds all see medians decrease in Q2.




                                                                                           Green




www.cbinsights.com
32                             Venture Capital Activity Report | Q2 2011




     Q2 2011 Venture Capital

     CALIFORNIA




www.cbinsights.com
33                                                         Venture Capital Activity Report | Q2 2011


What Smart Investors, Bankers and
Wealth Managers Use to Get Ahead…
With CB Insights you can access deep private company info that was once exclusively
available behind prohibitively expensive paywalls.


CB Insights is accessible for free by visiting http://www.cbinsights.com


 Conduct Comparable Company and
 Transaction Anlaysis                                          Coverage Universe
                 Over 82,000 high value private
                                                               •   Venture Capital – 1999 to present
                 company profiles across industries and
                                                               •   Angel Investment
                 sectors. Medical devices to
                                                               •   Private Equity
                 mobile. Industrial to internet.
                                                               •   Federal SBIR Grants – 3 years
                                                               •   State Grant Programs
 Generate Better Investment Ideas                              •   Incubators – Over 300
                 Angel investment to venture capital to        •   Middle Market Private Companies
                 private equity to government funding to
                 under the radar mid-market private            Sector Coverage
                 companies.
                                                               •   Green/clean tech
                                                               •   Internet
 Keep Track of Your Coverage Universe                          •   Mobile & Telecom
                                                               •   Software
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                 interest to your CBI Watchlist and get        •   Computer Hardware & Services
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                 automatically.                                •   Industrial
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                 relationships with companies and              •   Environmental Services &
                 investors over time.                              Equipment
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 Analyze Companies and Investors Real-time                     •   Media
                                                               •   Metals & Mining
                 Downloadable reports and analytics
                                                               •   Retail
                 which allow you to manipulate data
                                                               •   Risk & Security
                 when and how you want to.



www.cbinsights.com
34                                               Venture Capital Activity Report | Q2 2011


California Sees 5-Quarter High in Terms of Venture Deals
Cali’s deal volume sees substantial uptick from Q1, reaching 5-quarter high. Venture




                                                                                             California
funding also remains strong, although down a bit from the previous quarter.




www.cbinsights.com
35                                             Venture Capital Activity Report | Q2 2011


Internet Tops Again in Cali, Followed by Healthcare




                                                                                           California
Internet and Healthcare combine for 58% and 56% of deal and investment share,
respectively, in California. The rest of the field remains diverse.




                                                               Quarter Highlights

                                                               336 deals | $3,656M

                                                               Top Sector
                                                                 # of Deals – Internet
                                                                 $ of Funding – Internet

                                                               Top Deals
                                                                Cameron Health
                                                                Square
                                                                Fisker Automotive
                                                                Kabam



                                                               Top Cities
                                                               San Francisco
                                                                 86 deals | $797M
                                                               Palo Alto
                                                                 29 deals | $381M
                                                               Mountain View
                                                                 26 deals | $284M
                                                               Santa Clara
                                                                 11 deals | $200M
                                                               Redwood City
                                                                 11 deals | $181M
                                                               San Diego
                                                                 14 deals | $154M
                                                               Sunnyvale
                                                                 13 deals | $154M
                                                               Irvine
                                                                 5 deals | $152M
                                                               San Jose
                                                                 14 deals | $140M
                                                               San Clemente
                                                                 1 deals | $107M




www.cbinsights.com
36                                               Venture Capital Activity Report | Q2 2011


Energy Funding Share Falls to 5-Quarter Low in Cali
After a strong showing in Q1, Energy funding dwindles to just 5% of overall investment




                                                                                             California
in California. Healthcare’s share of deals sees a 5-quarter low as well.




www.cbinsights.com
37                                                Venture Capital Activity Report | Q2 2011


Cali’s Early Stage Investment Alive and Well in Q2
Bucking the overall trend in Q2, early stage investment maintained its strength in




                                                                                              California
California in Q2 2011.




www.cbinsights.com
38                             Venture Capital Activity Report | Q2 2011




     Q2 2011 Venture Capital

     MASSACHUSETTS




www.cbinsights.com
39                                             Venture Capital Activity Report | Q2 2011




                                                                                           Massachusetts
On the Comeback Trail – Mass Reaches 5-Quarter High
Massachusetts exceeds $1B in venture investment in Q1 marking a 5-quarter high for
both deals and dollars. Deal volume trends up for the third straight quarter.




www.cbinsights.com
40                                               Venture Capital Activity Report | Q2 2011




                                                                                               Massachusetts
Healthcare & Internet Dominate Massachusetts in Q2
Healthcare and Internet combine for over half of deal volume and over three-quarter of
investment dollars. Software sits atop a crowded field vying for 3rd place.




                                                                 Quarter Highlights

                                                                 89 deals | $1,143M

                                                                 Top Sector
                                                                   # of Deals – Healthcare
                                                                   $ of Funding - Healthcare

                                                                 Top Five Deals
                                                                  CSN Stores
                                                                  Tesaro
                                                                  Radius
                                                                  Merrimack Pharmaceuticals
                                                                  Blueprint Medicines

                                                                 Top Cities
                                                                  Cambridge
                                                                   27 deals | $372M
                                                                  Boston
                                                                   23 deals | $315M
                                                                  Lexington
                                                                   3 deals | $124M
                                                                  Waltham
                                                                   9 deals | $85M
                                                                  Newton
                                                                   3 deals | $63M
                                                                  Billerica
                                                                   1 deals | $26M
                                                                  Burlington
                                                                   1 deals | $24M
                                                                  Watertown
                                                                   2 deals | $23M
                                                                  Westford
                                                                   1 deals | $16M
                                                                  Chelmsford
                                                                   1 deals | $16M




www.cbinsights.com
41                                               Venture Capital Activity Report | Q2 2011




                                                                                             Massachusetts
Internet & Healthcare Both See Huge Funding Pop in Q2
Mass is no stranger to Healthcare and Internet, but those sectors surged in Q2 on the
backs of numerous Pharma and eCommerce mega-deals.




www.cbinsights.com
42                                                Venture Capital Activity Report | Q2 2011




                                                                                              Massachusetts
Early Stage Deal Share Grows Share Slightly in Q2
Like Cali (and unlike the national trend), Mass grew in terms of early stage deal volume
Q2. Overall, funding to later stage deals increased.




www.cbinsights.com
43                             Venture Capital Activity Report | Q2 2011




     Q2 2011 Venture Capital

     NEW YORK




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44                                              Venture Capital Activity Report | Q2 2011


New York Venture Investment Sees 5-Quarter High




                                                                                            New York
New York experiences another strong quarter of investment, reaching a five-quarter
funding high. However, deal volume falls to lowest levels since Q3 2010.




www.cbinsights.com
45                                              Venture Capital Activity Report | Q2 2011


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connect with us via any of the following.




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46                                               Venture Capital Activity Report | Q2 2011


New York Likes It Some Internet and Mobile




                                                                                             New York
Internet consumes nearly three-quarters of venture investment in NY, while Mobile is a
clear #2. Those 2 sectors take 90% of VC funding in NY in the quarter.




                                                                 Quarter Highlights

                                                                 61 deals | $539M

                                                                 Top Sector
                                                                   # of Deals – Internet
                                                                   $ of Funding - Internet

                                                                 Top Five Deals
                                                                  Gilt Groupe
                                                                  Foursquare
                                                                  Ideeli
                                                                  Animoto
                                                                  Ioxus

                                                                 Top Cities
                                                                  New York
                                                                    56 deals | $509M
                                                                  Oneonta
                                                                    1 deals | $21M
                                                                  White Plains
                                                                    1 deals | $7M
                                                                  Malta
                                                                    1 deals | $2M
                                                                  Ithaca
                                                                    1 deals | $1M




www.cbinsights.com
47                                               Venture Capital Activity Report | Q2 2011


Internet Grows Share, Mobile Registers Huge Quarter




                                                                                             New York
Mobile sees a five-quarter high in terms of both investment and deal share in NY, while
Internet increases its dominance of the Empire State.




www.cbinsights.com
48                                               Venture Capital Activity Report | Q2 2011


More Seeds for New York in Q2, but Fewer Series A




                                                                                             New York
One out of every four deals in New York was a Seed deal in Q2, but overall early stage
dropped to a five-quarter low due to fewer Series A deals.




www.cbinsights.com
49                             Venture Capital Activity Report | Q2 2011




     Q2 2011 Venture Capital

     WASHINGTON




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50                                                Venture Capital Activity Report | Q2 2011


Washington Remains Range-Bound (in a Lower Range)




                                                                                              Washington
Washington sees slight uptick in venture investment, but deal volume remains
relatively flat. Overall, funding is down 37% since the same quarter last year.




www.cbinsights.com
51                                              Venture Capital Activity Report | Q2 2011


Internet Still on Top in Washington, but Field is Crowded




                                                                                            Washington
Internet consumes 28% of Washington’s deal flow, but the field remains diverse with
Healthcare, Mobile and Software equally represented in Q2.




                                                                Quarter Highlights

                                                                29 deals | $132M

                                                                Top Sector
                                                                  # of Deals – Internet
                                                                  $ of Funding - Internet

                                                                Top Five Deals
                                                                 Lockerz
                                                                 ExtraHop Networks
                                                                 Avalara
                                                                 Glympse
                                                                 Billing Revolution

                                                                Top Cities
                                                                 Seattle
                                                                  21 deals | $97M
                                                                 Bainbridge Island
                                                                  1 deals | $10M
                                                                 Redmond
                                                                  1 deals | $8M
                                                                 Bellevue
                                                                  4 deals | $7M
                                                                 Spokane
                                                                  1 deals | $6M
                                                                 Clyde Hill
                                                                  1 deals | $5M




www.cbinsights.com
52                                               Venture Capital Activity Report | Q2 2011


Healthcare Registers Strong Comeback in Q2




                                                                                             Washington
Healthcare reemerges in Q2 after nearly disappearing last quarter. Internet cedes
deal and investment share to Healthcare, Mobile and Software.




www.cbinsights.com
53                                                 Venture Capital Activity Report | Q2 2011


Seed is Strong in Wash, but Overall Early Stage Falls in Q2




                                                                                               Washington
Consistent with other states, seed registered a relatively strong quarter in terms of
deals, but early stage was dragged down by a weak Series A showing.




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54                             Venture Capital Activity Report | Q2 2011




     Q2 2011 Venture Capital

     TEXAS




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55                                               Venture Capital Activity Report | Q2 2011


Texas Venture Funding Remains Steady in Q2




                                                                                             Texas
Texas maintains venture investment levels consistent with recent quarters while
experiencing a five-quarter high in terms of deal volume.




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56                                                 Venture Capital Activity Report | Q2 2011


Texas Exhibits Diversity in Terms of Deal Share in Q2




                                                                                                    Texas
Internet is the leader in terms of deal volume in Q2, but overall the state remains a hub
of diversity for venture investment. Mobile & Energy lead share of investment dollars.




                                                                   Quarter Highlights

                                                                   37 deals | $298M

                                                                   Top Sector
                                                                     # of Deals – Internet
                                                                     $ of Funding – Bus. Prods. &
                                                                     Svcs.

                                                                   Top Five Deals
                                                                    KiOR
                                                                    Mavenir Systems
                                                                    Spiceworks
                                                                    SolarBridge Technologies
                                                                    Illumitex

                                                                   Top Cities
                                                                    Austin
                                                                      18 deals | $140M
                                                                    Pasadena
                                                                      1 deals | $55M
                                                                    Richardson
                                                                      1 deals | $40M
                                                                    Houston
                                                                      7 deals | $36M
                                                                    Dallas
                                                                      3 deals | $9M
                                                                    Frisco
                                                                      1 deals | $5M
                                                                    San Antonio
                                                                      1 deals | $5M
                                                                    Addison
                                                                      1 deals | $4M
                                                                    Richardson
                                                                      1 deals | $3M
                                                                    Georgetown
                                                                      1 deals | $1M




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57                                                Venture Capital Activity Report | Q2 2011


Internet Leads Deals, Energy Leads Investment in Texas




                                                                                              Texas
Texas maintains its industry diversity in Q2, with Internet, Mobile, Energy, Healthcare
and Software all showing strength in terms of deals.




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58                                               Venture Capital Activity Report | Q2 2011

Early Stage Investment Continues to Shrink in Texas




                                                                                             Texas
Seed VC shows signs of life in Q2, but Series A is down for a second straight quarter,
bringing overall share of early stage to a five-quarter low in Texas.




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59                                                                     Venture Capital Activity Report | Q2 2011


Definitions – Ensuring Data Integrity
What’s Included in our Quarterly Venture Capital Numbers? What is not?

Given the importance of venture capital in spurring innovation and entrepreneurship, measuring venture capital activity
accurately is important. We encourage you to review the methodology and definitions employed by us to better
understand the numbers presented in this report. If you have any questions about our definitions or methodological
principles, we encourage you to reach out to us directly.


 What is included?                                              What is excluded?

• Equity financings into emerging companies.                    • Angel investment. These are not included in
  Funding must come from venture capital firms including          numbers unless an investment round included Angels
  corporate venture groups.                                       investing alongside a venture capital firm or corporate
• Fundings of only private companies. Public                      venture group.
  companies of any kind on any exchange (including Pink         • No contingent funding. If a company receives a
  Sheets) are excluded from our numbers even if they              commitment for $20M subject to hitting certain
  received investment by a venture firm(s)                        milestones but first gets $8M, only the $8M is included
• Companies must be headquartered in the USA. Our                 in our data.
  geographic data is based on the city and state where the      • No business development/R&D arrangements
  company receiving investment is headquartered. If a             whether transferable into equity now, later or
  company has a satellite office/presence in multiple cities      never. If a company signs a $300M R&D partnership
  or was founded in a particular city but has moved its HQ,       with a larger corporation, this is not equity financing
  our results reflect only this HQ address.                       nor is it from venture capital firms. As a result, it is not
• Only include the investment made in the quarter for             included.
  tranched investments. If a company does a second              • Buyouts, Consolidations and Recapitalizations.
  closing of its Series B round for $5M and previously had        All three of these of transaction types are commonly
  closed $2M in a prior quarter, only the $5M is reflected        employed by private equity firms and are tracked by
  in our results.                                                 CB Insights. However, they are excluded for the
• Round #s reflect what has closed – not what is                  purposes of this report. Private equity investments into
  intended. If a company indicates the closing of $5M out         companies which may have received venture capital
  of a desired raise of $15M, our numbers reflect only the        investment prior are also not included.
  amount which has closed.                                      • Private placements. These investments also known
• Only verifiable fundings are included. Fundings are             as PIPEs (Private Investment in Public Equities) even
  verified via (1) various federal & state regulatory filings     if made by a venture capital firm(s) are not included.
  (2) direct confirmation with firm or investor or (3) press    • Debt/loans of any kind. Venture debt or any kind of
  release.                                                        debt/loan issued to emerging, startup companies even
• Funding close date matters. Fundings are provided               if included as an additional part of an equity financing
  based on funding close date and not on announcement             is not included. If a company receives $3M with $2M
  date.                                                           from venture investors and $1M in debt, only the $2M
                                                                  is included in these statistics.
                                                                • Government funding. Grants, loans, equity
                                                                  financings by the federal government, state agencies
                                                                  or public-private partnerships to emerging, startup
                                                                  companies are not included. Strictly venture or
                                                                  corporate venture outfits.
                                                                • Incubator investments. Investments of money as
                                                                  equity or debt and/or services by incubators are not
                                                                  included.
                                                                • Strategic corporate investments. Corporations
                                                                  making strategic investments in companies but not as
                                                                  part of a specific organized venture group are not
                                                                  included.



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60                                                         Venture Capital Activity Report | Q2 2011


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61                                              Venture Capital Activity Report | Q2 2011


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DOCUMENT INFO
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posted:7/14/2011
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pages:61
Description: Quarterly venture capital in Q2 2011 totaled $7.6B over 768 deals. Clean tech faltered as did early stage activity across sectors. . The big 3 states of California, Massachusetts and New York took a greater share of venture capital dollars and deals.