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National Venture Capital Association

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This document is the 2014 National Venture Capital Association Yearbook. It provides an introduction and overview of key venture capital industry metrics and trends in 2014 such as total capital commitments, investments, and exits. It also outlines the methodology used to collect venture capital industry data and provides several appendices with additional details.

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NATIONALVENTURECAPITALASSOCIATION2014 NATIONALVENTURE CAPITAL ASSOCIATION YEARBOOK 2014 INCLUDING STATISTICS FROM THE PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters
2014 National Venture Capital Association Yearbook | 1 NVCA THOMSON REUTERS March 2014 Dear Colleague: We are delighted to present to you the NVCA 2014 Yearbook, prepared by Thomson Reuters. This is the 17th edition in a series launched in early 1998. Since then, much has changed in the industry. One thing that has not changed, however, is our commitment to bring accurate and responsible transparency to this powerful economic force called venture capital. You will find in this publication new and updated charts that track investment activity in the United States. Reflecting our dynamic environment, for the first time we provide a chapter on Growth Equity – an asset subclass that did not exist in its present form when we printed the first edition of this publication. More changes are already in the works. For example, in recognition of the strong and broad emergence of corporate venture capital groups and direct corporate investment over the past few quarters, we will soon be changing our methodology to be more inclusive of solo (i.e., without a traditional venture investor in the round) and early corporate investment into companies. Further, we will also include corporate direct investment from the corporation itself, not just from a separate or captive entity. Stay tuned. The industry’s goal remains the same: to create fast-growing and sustainable companies, introduce new technologies, and improve medical care and patient well-being, while providing an attractive return to those who trust the industry with their capital. Whether by traditional venture capital, corporate venture capital, growth equity, or a number of new and energized investment vehicles, we are here to report that the beat goes on. As always, your feedback and suggestions are welcome. Please feel free to contact us at research@nvca. org or through any NVCA director or staff member. Very truly yours, Diana Frazier Bobby Franklin John S. Taylor FLAG Capital Management NVCA President and CEO NVCA Head of Research NVCA Director and Chair, Research Committee
2 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA NVCA BOARD OF DIRECTORS 2013-2014 EXECUTIVE COMMITTEE Josh Green Scott Sandell Mohr, Davidow Ventures New Enterprise Associates Chair Chair-Elect Anne Rockhold Jonathan Callaghan Accel Partners True Ventures Treasurer Executive Committee At-Large Bruce Evans Jonathan Leff Summit Partneer Deerfield Management Executive Committee At-Large Executive Committee At-Large, Research Committee AT-LARGE Diana Frazier Mark Leschly FLAG Capital Rho Ventures Research Chair Research Committee John Backus Maria Cirino New Atlantic Ventures .406 Ventures David Douglass Claudia Fan Munce Delphi Ventures IBM Venture Capital Group Norm Fogelsong Venky Ganesan Institutional Venture Partners Menlo Ventures Robert Goodman Mark Gorenberg Bessemer Venture Partners Zetta Venture Partners Jason Green Adam Grosser Emergence Capital Partners Silver Lake Kraftwerk James Healy Ross Jaffe Sofinnova Ventures Versant Ventures Scott Kupor Ray Leach Andreessen Horowitz Jumpstart, Inc David Lincoln Robert Nelsen Element Partners ARCH Venture Partners Art Pappas Sue Siegel Pappas Ventures GE Ventures
2014 National Venture Capital Association Yearbook | 3 NVCA THOMSON REUTERS 2014 National Venture Capital Association Yearbook For the National Venture Capital Association Prepared by Thomson Reuters Copyright 2014 Thomson Reuters The information presented in this report has been gathered with the utmost care from sources believed to be reliable, but is not guaranteed. Thomson Reuters disclaims any liability including incidental or consequential damages arising from errors or omissions in this report.
4 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA National Venture Capital Association 1655 Fort Myer Drive, Suite 850 Arlington, Virginia 22209-3114 Telephone: 703-524-2549 Telephone: 703-524-3940 www.nvca.org President and CEO Bobby Franklin President Emeritus Mark G. Heesen Head of Research John S. Taylor Senior Vice President of Federal Policy and Political Advocacy Jennifer Connell Dowling Vice President of Federal Life Science Policy Kelly Slone Vice President of Federal Policy and Political Advocacy Emily Baker Vice President of Communications Ben Veghte Vice President of Membership and Member Firm Liaison Janice Mawson Vice President of Administration Roberta Catucci Director of Business Development Hannah Veith Manager of Administration and Meetings Allyson Chappell Accounting Manager Beverley Badley Research Lab Mavis Moulterd (Emeritus), Annie Black, Liberty Benjamin Lab Assistants Thea Shepherd, Lexi Oscar, Gracie Baker Thomson Reuters 3 Times Square, 18th Floor New York, NY 10036 Telephone: 646-223-4431 Fax: 646-223-4470 www.thomsonreuters.com Global Head of Deals & Private Equity Stephen N. Case II Head of Deals and Private Equity Operations Katarzyna Namiesnik Global Business Manager – Private Equity Jim Beecher Editor-in-Charge David Toll Global Private Equity Operations Manager Anna Aquino-Chavez Press Management Matthew Toole Senior Content Specialist Michael D. Smith Content Specialist Paul Pantalla Data Specialist Francis S. Tan Senior Art Director David Cooke Sales Manager – Publications (Buyouts, VCJ, peHUB) Greg Winterton (646-223-6787) ThomsonONE.com Sales: 1-877-365-1455 National Venture Capital Association 2014 Yearbook
2014 National Venture Capital Association Yearbook | 5 NVCA THOMSON REUTERS TABLE OF CONTENTS What is Venture Capital? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 11 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Exits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 14 Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 17 Capital Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Investments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 Growth Equity Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 Appendix A: Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Appendix B: MoneyTree Report Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105 Appendix C: MoneyTree Geographical Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Appendix D: Industry Codes (VEICs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Appendix E: Industry Sector VEIC Ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 Appendix F: Stage Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .115 Appendix G: Data Sources and Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Appendix H: International Convergence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .119 Appendix I: US Accounting Rulemaking and Valuation Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .121 Appendix J: Non-US Private Equity . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . . . . . 125
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2014 National Venture Capital Association Yearbook | 7 NVCA THOMSON REUTERS WHAT IS VENTURE CAPITAL? Venture capital has enabled the United States to support its entrepreneur- ial talent and appetite by turning ideas and basic science into products and services that are the envy of the world. Venture capital funds build companies from the simplest form – perhaps just the entrepreneur and an idea expressed as a businessplan – to freestanding, mature organizations. Risk Capital for Business Venture capital firms are professional, institutional managers of risk capi- tal that enables and supports the most innovative and promising compa- nies. This money funds new ideas that could not be financed with tradi- tional bank financing, that threaten established products and services in a corporation, and that typically require five to eight years to be launched. Venture capital is quite unique as an institutional investor asset class. When an investment is made in a company, it is an equity investment in a company whose stock is essentially illiquid and worthless until a company matures five to eight years down the road. Follow-on investment provides additional funding as the company grows. These “rounds,” typically oc- curring every year or two, are also equity investment, with the shares al- located among the investors and management team based on an agreed “valuation.” But, unless a company is acquired or goes public, there is little actual value.Venture capital is a long-term investment. More Than Money The U.S. venture industry provides the capital to create some of the most innovative and successful companies. But venture capital is more than money. Venture capital partners become actively engaged with a com- pany, typically taking a board seat. With a startup, daily interaction with the management team is common. This limits the number of startups in which any one fund can invest. Few entrepreneurs approaching venture capital firms for money are aware that they essentially are asking for 1/6 of a person! Yet that active engagement is critical to the success of the fledgling company. Many one- and two-person companies have received funding but no one- or twoperson company has ever gone public!Along the way, talent must be recruited and the company scaled up. Ask any venture capitalist who has had an ultra-successful investment and he or she will tell you that the company that broke through the gravity evolved from the original business plan concept with the careful input of an expe- rienced hand. Deal Flows — Where The Buys Are For every 100 business plans that come to a venture capital firm for fund- ing, usually only 10 or so get a serious look, and only one ends up being funded. Theventure capital firm looks at the management team, the con- cept, the marketplace, fit to the fund’s objectives, the value-added po- tential for the firm, and the capital needed to build a successful business. A busy venture capital professional’s most precious asset is time. These days, a business concept needs to address world markets, have superb scalability, be made successful in a reasonable timeframe, and be truly innovative. A concept that promises a 10 or 20 percent improvement on something that already exists is not likely to get a close look. Many technologies currently under development by venture capital firms are truly disruptive technologies that do not lend themselves to being em- braced by larger companies whose current products could be cannibalized by this. Also, with the increased emphasis on public company quarterly results, many larger organizations tend to reduce spending on research and development and product development when things get tight. Many tal- ented teams have come to the venture capital process when their projects were turned down by their companies. Common Structure — Unique Results While the legal and economic structures used to create a venture capi- tal fund are similar to those used by other alternative investment asset classes, venture capital itself is unique. Typically, a venture capital firm will create a Limited Partnership with the investors as LPs and the firm itself as the General Partner. Each “fund,” or portfolio, is a separate part- nership. A new fund is established when the venture capital firm obtains necessary commitments from its investors, say $100 million. The money is taken from investors as the investments are made. Typically, an initial funding of a company will cause the venture fund to reserve three or four times that first investment for follow-on financing. Over the next three to eight or so years, the venture firm works with the founding entrepreneur to grow the company. The payoff comes after the company is acquired or goes public. Although the investor has high hopes for any company get- ting funded, only one in six ever goes public and one in three is acquired. Venture Capital Backed Companies Known for Innovative Business Models Employment at IPO and Now Company As of IPO Current # Change The Home Depot 650 331,000 330,350 Starbucks Corporation 2,521 160,000 157,479 Staples 1,693 89,019 87,326 Whole Foods Market, Inc. 2,350 69,500 67,150 eBay 138 31,500 31,362 Venture Capital Backed Companies Known for Innovative Technology Products Employment at IPO and Now Company As of IPO Current # Change Microsoft 1,153 94,000 92,847 Intel Corporation 460 100,100 99,640 Medtronic, Inc. 1,287 45,000 43,713 Apple Inc. 1,015 76,100 75,085 Google 3,021 53,861 50,840 JetBlue 4,011 12,070 8,059 Source: Global Insight; Updated fromThomsonOne 2/2013
8 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Economic Alignment of all Stakeholders — An American Success Story Venture capital is rare among asset classes in that success is truly shared. It is not driven by quick returns or transaction fees. Economic success occurs when the stock price increases above the purchase price. When a company is successful and has a strong public stock offering, or is ac- quired, the stock price of the company reflects its success. The entrepre- neur benefits from appreciated stock and stock options. The rank and file employees throughout the organization historically also do well with their stock options. The venture capital fund and its investors split the capi- tal gains per a pre-agreed formula. Many college endowments, pension funds, charities, individuals, and corporations have benefited far beyond the risk-adjusted returns of the public markets. What’s Ahead Much of venture capital’s success has come from the entrepreneurial spirit pervasive in theAmerican culture, financial recognition of success, access to good science, and fair and open capital markets. It is dependent upon a good flow of science, motivated entrepreneurs, protection of intellec- tual property, and a skilled workforce. The nascent deployment of ven- ture capital in other countries is gated by a country’s or region’s cultural fit, tolerance for failure, services infrastructure that supports developing companies, intellectual property protection, efficient capital markets, and the willingness of big business to purchase from small companies.
2014 National Venture Capital Association Yearbook | 9 NVCA THOMSON REUTERS EXECUTIVE SUMMARY During 2013, many of the metrics describing the venture capital indus- try in the United States were similar to those of the prior three years, with the exception of a pickup in the breadth of the IPO markets. The decline in capital managed continued as expected, but not as much as some were anticipating. A record proportion of venture deals focused on companies in the seed and early stages, while a number of companies long in the portfolios finally went public, led by Biotechnology companies in the first half of 2013. Investment in early-stage life science companies continued to fall during the year, although a fourth-quarter increase in first fundings of Biotechnology companies was encouraging. Fundraising remained very challenging for the majority of venture firms. This is largely because of a dearth of healthy exits through 2012 that would have distributed yet-unrealized returns to current fund inves- tors. Aside from the Facebook IPO in 2012 ($16.0B of the $21.5B raised in 2012), 2013 was a much-improved year with 81 venture-backed IPOs. Remarkably, over half of them were Biotechnology companies. Early signs for 2014 suggest that IPO momentum carried forward into at least the first part of the year. A healthy venture capital ecosystem requires its metrics to be in bal- ance. And while the quality of new business opportunities, known as deal flow, remains very high and the best opportunities are getting funded, stresses remain. Introduction The National Venture Capital Association 2014 Yearbook provides a summary of venture capital activity in the United States. This ranges from investments into portfolio companies to capital managed by general partners to fundraising from limited partners to valuations of companies receiving venture capital investments to exits of the investments by ei- ther IPOs or mergers and acquisitions. The statistics for this publication were assembled primarily from the MoneyTree™ Report by Pricewater- houseCoopers and the National Venture Capital Association, based on data from Thomson Reuters and analyzed through the Thomson ONE. com (formerly VentureXpert) database of Thomson Reuters, which has been endorsed by the NVCA as the official industry activity database. Subscribers to Thomson ONE can recreate most of the charts in this pub- lication and report individual deal detail and more granular statistics than those provided herein. Industry Resources The activity level of the US venture capital industry is roughly half of what it was at the 2000-era peak. For example, in 2000, 1,050 firms each invested $5 million or more during the year. In 2013, the count was roughly half that at 548. Venture capital under management in the United States by the end of 2013 decreased to $192.9 billion. However, looking behind the numbers, we know that the industry continues to contract from the circa 2004 high of $288.9 billion. The peak capital under management that year was a statistical anomaly caused when funds raised at the height of the 2000 tech bubble were joined by new capital raised post bubble. The slight downtick in firms and capital managed (Fig. 1.04) in 2013 understates a consolidating industry. The average venture capital firm shrunk to 6.7 principals per firm from 8.7 just six years earlier. The corre- sponding drop in headcount to under 6,000 principals is almost one-third lower than 2007 levels. This meant that there was a general increase in the average amount of capital managed by each principal. It is possible going forward that the number of principals per firm will increase as the number of firms decreases. This is because the bulk of the capital being commit- ted today is being raised by larger, specialty, and boutique firms. For our purposes here, we define a principal to be someone who goes to portfolio company board meetings. That is, deal partners would be included and firm CFOs would not be included. Contrary to some popular misconceptions, only 43 firms managed more than $1 billion. By comparison, 277 firms managed less than $25 million. Commitments The year 2013 continued to be a very challenging fundraising year for most venture capital firms in the United States. This was due to a lack of recent distributions caused by the tight exit markets, lackluster returns by many venture funds over the past decade compared with the prior decade, and a challenge for the largest alternative asset investors to place money in many of the smaller funds in this asset class because of scale. Only $16.8 billion was raised by 187 funds. This was considerably less than the $19.6 billion raised in 2012 or the $19.0 billion raised in 2011. The amount of new commitments each year by venture capital funds continued to be less than the amount they invested in companies. Investments Measuring industry activity by the total dollars invested in a given year shows that the industry has remained generally in the $20 billion to $30 billion range since 2002. In 2013, $29.5 billion was invested in 3,382 companies through 4,041 deals. The number of deals was 4% higher than 2012 counts, but was essentially the same as 2011. The number of first- time fundings increased in 2013 to 1,334 companies from the previous 1,275, but it remains near the top of the healthy range of 1,000 to 1,400 Figure 1.0 Venture Capital Under Management Summary Statistics 1993 2003 2013 No. of VC Firms in Existence 370 951 874 No. of VC Funds in Existence 613 1,788 1,331 No. of Professionals 5,217 14,777 5,891 No. of First Time VC Funds Raised 25 34 53 No. of VC Funds Raising Money This Year 93 160 187 VC Capital Raised This Year ($B) 4.5 9.1 16.8 VC Capital Under Management ($B) 29.3 263.9 192.9 Avg VC Capital Under Mgt per Firm ($M) 79.2 277.5 220.7 Avg VC Fund Size to Date ($M) 40.2 94.4 110.3 Avg VC Fund Size Raised This Year ($M) 48.3 102.9 89.7 Largest VC Fund Raised to Date ($M) 1,775.0 6,300.0 6,300.0
10 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA first-time fundings in a year. Further parsing the data shows 50% of the in- vestment dollars going to California companies, down from 53% in 2012 but consistent with the previous three years. The year 2013 saw a record 56% of the financing rounds going to seed and early stage companies, compared with a more typical one-third of deals. A carefully watched sta- tistic is the investment in the life sciences. It is possible that the downward plummet in first-time life sciences investment is starting to reverse, led by Biotechnology, but it is still too early to be sure. Corporate Venture investment continues to gain considerable strength and presence in the overall industry. Software was the leading sector in 2013, receiving 37.3% of the total dollars. The second largest sector was Biotechnology, which was less than half that amount at 15.4% of total investment. Among first fundings, Soft- ware led the way with 591 companies getting their initial venture capital rounds. This is more than 46% of the first fundings. Again in 2013, the second most active first-funding sector is Media and Entertainment at 170 first fundings. California-domiciled venture capital firms made investments in 38 states in 2013. Approximately 48% of all the money invested in Califor- nia came from California-domiciled firms. Conversely, California-based firms concentrated 68% of their investment dollars within the state. The number and reach of corporate venture capital groups increased in 2013, along with the visibility of this group. These groups provided an estimated 10.5% of the venture capital invested by all venture groups. They were involved in 16.9% of the deals – the highest level in five years. Going forward, all signs suggest that these groups are becoming more involved alongside traditional venture firms in deals, as well as initiating corporate venture group syndicates to do deals in lieu of, or in advance of, investment rounds by traditional venture firms. Exits Once successful portfolio companies mature, venture funds generally exit their positions in those companies by taking them public through an initial public offering (IPO) or by selling them to presumably larger orga- nizations (acquisition, “M&A”, or trade sale). This then lets the venture fund distribute the proceeds to investors, raise a new fund for future in- vestment, and invest in the next generation of companies. We consider each type of exit separately. During 2013, 81 venture-backed companies went public in the United States, marking the strongest full-year total for the number of new ven- ture-backed listings since 2007. Remarkably, more than half of them were Biotechnology IPOs, many of those being modestly sized. While the total dollars raised in 2012 was higher at $21.5 billion, it is important to re- member that $16.0 billion of that came from the Facebook IPO alone. The remaining $5.5 billion was raised by the remaining 48 IPOs in 2012. It was a very different story in 2013. $11.1 billion was raised by 81 com- panies. The increase in mean and median time to exit reflects the fact that many of these IPOs were mature companies, and many of them were in the life sciences space, which had been awaiting an IPO opportunity for months, and in some cases, years. NVCA is encouraged by the increase in smaller IPOs and biotech IPOs in light of its 2012 legislative successes with the JOBS Act and creating a pathway for FDA Reform. The M&A space continued to soften in 2013, with the total number of deals falling from 473 in the prior year to 376. Total proceeds fell by 27%. Note that only 94 of the 376 acquisitions had reported deal values. Histori- cally, deals with unreported sales prices are fairly diminutive, and in many cases, fire sales. However, an increasing number of deal term sheets spec- ify a non-disclosure restriction on all parties. So going forward, all but the largest and most visible acquisitions may be hard to measure. Observers have wondered why, given the huge amounts of cash on the balance sheets of technology and Biotechnology giants, more acquisitions are not occur- ring. We did see a flurry of acquisitions in early 2014, perhaps signaling an increase in that kind of activity. Growth Equity This edition of the NVCAYearbook, prepared by Thomson Reuters, for the first time profiles US growth equity investment in its own chapter. The NVCA believes growth equity investing is an important segment of the overall venture capital industry. Venture capitalists help create and grow companies; growth equity investors are strongly focused on the growth component of that mission and help companies scale through fat part of their hiring curves. The NVCA also believes that growth equity invest- ing is a critical component of the emerging growth company financing continuum and has become, in many respects, the private alternative to the public markets for both emerging growth companies and their earlier stage venture capital backers. Growth equity really emerged as an asset class in 2000 and continues strong today. In 2013, we identified 342 growth equity deals in the United States. This compares with 406 in 2012, but is very much in line with the past several years. A disclosed $12.3 billion in equity investment was reported for 2013. This does not count the approximately 105 deals for which no dollar equity amounts were disclosed.
2014 National Venture Capital Association Yearbook | 11 NVCA THOMSON REUTERS 0 50 100 150 200 250 300 350 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Figure 2.0 Capital Under Management U.S. Venture Funds ($ Billions) 1985 to 2013 0 20 40 60 80 100 120 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Figure 3.0 Capital Commitments To U.S. Venture Funds ($ Billions) 1985 to 2013
12 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 5.0 Venture Capital Investments in 2013 By Industry Group Industry Group # Companies # Deals Investment Amt ($Bil) # Companies # Deals Investment Amt ($Bil) Information Technology 2,360 2,784 20 1009 1009 3.5 Medical/Health/Life Science 649 816 6.9 167 167 1.2 Non-High Technology 373 440 2.7 157 157 0.4 Total 3,382 4,041 29.6 1,334 1,334 5.1 Initial InvestmentsAll Investments 0 20 40 60 80 100 120 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Figure 4.0 Venture Capital Investments ($ Billions) 1985 to 2013
2014 National Venture Capital Association Yearbook | 13 NVCA THOMSON REUTERS Seed 3% Early Stage 34% Expansion 33% Later Stage 30% Figure 6.0 Venture Capital Investments in 2013 By Stage Biotechnology 15% Business Products and Services 0.4% Computers and Peripherals 2% Consumer Products and Services 4% Electronics/Instrumentation 1% Financial Services 2% Healthcare Services 1% Industrial/Energy 5% IT Services 7% Media and Entertainment 10% Medical Devices and Equipment 7% Networking and Equipment 2% Retailing/Distribution 1% Semiconductors 2% Software 37% Telecommunications 2% Other 0.2% Figure 7.0 Venture Capital Investments in 2013 By Industry Sector
14 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 8.0 2013 Investments By State State Number of Companies Pct of Total Investment ($ Millions) Pct of Total California 1,280 40% 14,769.7 50% Massachusetts 326 10% 3,079.3 10% New York 287 9% 2,870.4 10% Texas 101 3% 1,315.5 4% Washington 134 4% 913.2 3% Maryland 76 2% 664.5 2% Virginia 85 3% 593.8 2% Pennsylvania 154 5% 446.5 2% Illinois 49 2% 434.9 1% Colorado 62 2% 428.8 1% All Others 676 21% 4,028.6 14% Total 3,230 29,545.2 Figure 9.0 Venture-Backed IPOs Year Num of IPOs Offer Amount ($Mil) Med Offer Amt ($Mil) Mean Offer Amt ($Mil) Post Offer Value ($Mil) Med Post Value ($Mil) Mean Post Value ($Mil) Median Age At IPO (Years) Mean Age At IPO (Years) 1985 48 763 13 16 2,020 37 48 3.0 4.0 1986 105 2,417 13 23 166,032 52 1866 4.0 4.0 1987 86 2,125 17 25 10,972 46 155 4.0 4.0 1988 43 769 15 18 21,117 51 571 3.0 4.0 1989 42 873 16 21 4,443 50 131 4.0 4.0 1990 47 1,108 20 24 5,886 60 178 4.0 4.0 1991 120 3,726 27 31 17,611 81 202 5.0 5.0 1992 150 5,443 24 36 15,955 68 146 5.0 5.0 1993 175 6,154 25 35 14,808 75 130 5.0 6.0 1994 138 3,952 24 29 10,344 68 94 5.0 5.0 1995 184 7,859 36 43 19,300 104 152 4.0 5.0 1996 256 12,716 35 50 51,511 112 240 3.0 4.0 1997 141 5,829 33 41 19,101 99 148 3.0 6.0 1998 78 4,125 43 53 24,655 164 324 3.0 3.0 1999 280 23,975 69 86 147,341 304 532 3.0 3.0 2000 238 27,443 83 115 108,783 325 494 3.0 4.0 2001 37 4,130 80 112 19,233 327 534 4.0 4.0 2002 24 2,333 89 97 8,322 266 347 3.0 5.0 2003 26 2,024 71 78 7,412 252 285 5.0 6.0 2004 82 10,032 70 122 50,268 254 613 6.0 6.0 2005 59 5,113 68 87 39,702 202 673 5.0 5.0 2006 67 7,065 86 105 71,124 283 1078 5.0 6.0 2007 91 12,339 98 136 68,203 365 749 6.0 6.0 2008 7 765 83 109 3,645 278 521 7.0 7.0 2009 13 1,980 123 152 9,192 548 707 6.0 7.0 2010 70 7,774 93 111 114,981 428 1643 5.0 6.0 2011 51 10,690 106 210 94,657 606 1856 6.0 7.0 2012 49 21,460 89 438 122,168 371 2493 7.0 8.0 2013 81 11,068 91 137 62,700 354 784 7.0 8.0 *Age at IPO is defined as time elapsed from first funding round until IPO date.
2014 National Venture Capital Association Yearbook | 15 NVCA THOMSON REUTERS Figure 10.0 Venture-Backed Mergers & Acquisitions by Year Year Number Total Number Known Price Average 1985 7 3 300.2 100.1 1986 8 1 63.4 63.4 1987 11 4 667.2 166.8 1988 17 9 920.7 102.3 1989 21 10 746.9 74.7 1990 19 7 120.3 17.2 1991 16 4 190.5 47.6 1992 69 43 2119.1 49.3 1993 59 36 1332.9 37.0 1994 84 57 3208.4 56.3 1995 92 58 3801.8 65.5 1996 108 76 8230.8 108.3 1997 145 100 7798.0 78.0 1998 189 113 8002.0 70.8 1999 228 155 38710.6 249.7 2000 379 245 79996.4 326.5 2001 384 175 25115.6 143.5 2002 365 166 11913.2 71.8 2003 323 134 8240.8 61.5 2004 402 199 28846.1 145.0 2005 446 201 19717.3 98.1 2006 484 208 24291.0 116.8 2007 488 201 30745.5 153.0 2008 417 134 16236.9 121.2 2009 351 109 12364.9 113.4 2010 523 150 17707.3 118.0 2011 490 169 24093.2 142.6 2012 473 132 22694.2 171.9 2013 376 94 16586.5 176.5 ($ Millions)
16 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 11.0 Growth Equity Investments ($ Billions) 2000 to 2013* 0 5 10 15 20 25 30 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Totals include only disclosed amounts. Many growth equity deal amounts are not reported.
2014 National Venture Capital Association Yearbook | 17 NVCA THOMSON REUTERS INDUSTRY RESOURCES The activity level of the US venture capital industry is roughly half of what it was at the 2000-era peak. For example, in 2000, 1,050 firms each invested $5 million or more during the year. In 2013, the count was roughly half that at 548. Venture capital under management in the United States by the end of 2013 decreased to $192.9 billion as calculated using the methodology described below. However, looking behind the numbers, we know that the industry continues to contract from the circa 2006 high of $288.9 billion. The peak capital under management that year was a statistical anomaly caused by funds raised at the height of the 2000 tech bubble were joined by new capital raised post bubble. The slight downtick in firms and capital managed (Fig. 1.04) in 2013 perhaps understates a consolidating industry. The average venture capital firm shrunk to 6.7 principals per firm from 8.7 just six years earlier. The corresponding drop in headcount to under 6,000 principals is almost one-third lower than 2007 levels. This meant that there was a general increase in the average amount of capital managed by each principal. It is possible going forward that the number of principals per firm will increase as the number of firms decreases. This is because the bulk of the capital being committed today is being raised by larger, specialty, and boutique firms. For our purposes here, we define a principal to be someone who goes to portfolio company board meetings. That is, deal partners would be included and firm CFOs would not be included. Geographic location of the largest venture firms is quite concentrated. 49% of the industry’s California-domiciled firms manage capital, although these firms may be actively investing in other states and countries. This concentration has been consistent for several years and may increase going forward, given the movement of some East Coast funds westward. Taken together, the top five states (California, Massachusetts, New York, Connecticut, and Illinois) hold 81.1% of total venture capital in this country, essentially the same as a year ago. Contrary to some popular misconceptions, only 43 firms managed more than $1 billion. By comparison, 277 firms managed less than $25 million. Methodology Historically, we have calculated industry size using a “rolling eight years of fundraising” proxy for capital managed, number of funds, num- ber of firms, etc. The number of firms in existence will vary on a rolling eight-year basis as firms raise new funds or do not raise funds for more than eight years. Currently, we know the industry is consolidating, but the eight-year model now includes fund vintage years 2006-2013.  Under this methodology, we estimate that there are currently 874 firms with limited partnerships “in existence.” To clarify, this is actually stating that there are 874 firms that have raised a venture capital fund in the last eight years. In reality, only 548 of them invested at least $5 million in companies in 2013, and 136 of them invested more than $5 million in first rounds for a company. For this publication, we are primarily counting the number of firms with limited partnerships and are excluding other types of investment vehicles. From that description, it may appear that the statistics for total industry resources may be underestimated. However, this must be balanced with the fact that capital under management by captive and evergreen funds is difficult to compare equitably to typical limited partnerships with fixed lives. For this analysis only, the firms counted for capital under manage- ment include firms with fixed-life partnerships and venture capital funds they raised. If a firm raised both buyout and venture capital funds, only the venture funds would be counted in the calculation of venture capital under management. Venture capital under management can be a complex statistic to esti- mate. Indeed, capital under management reported by firms can differ from firm to firm as there’s not one singular definition. For example, some firms include only cumulative committed capital, others may include commit- ted capital plus capital gains, and still other firms define it as committed capital after subtracting liquidations. To complicate matters, it is difficult to compare these totals to European private equity firms, which include capital gains as part of their capital under management measurements. For purposes of the analysis in this publication, we have tried to clarify the industry definition of capital under management as the cumulative to- tal of committed capital less liquidated funds or those funds that have completed their life cycle. Typically, venture capital firms have a stated 10-year fixed life span, except for life science funds, which are often established as 12-year funds. Figure 1.09 shows the reality of fund life. Thomson Reuters calculates capital under management as the cumulative amount committed to funds on a rolling eight-year basis. Current capital under management is calculated by taking the capital under management calculation from the previous year, adding in the current year’s funds’ commitments, and subtracting the capital raised eight years prior. For this analysis, Thomson Reuters classifies venture capital firms us- ing four distinct types: private independent firms, financial institutions, corporations, and other entities. ‘Private independent’ firms are made up of independent private and public firms including both institutionally and non-institutionally funded firms and family groups. ‘Financial institu- tions’ refers to firms that are affiliates and/or subsidiaries of investment banks and non-investment bank financial entities, including commercial banks and insurance companies. The ‘corporations’classification includes venture capital subsidiaries and affiliates of industrial corporations. In 2013, we will modify the methodology to reflect virtually all direct cor- porate investment because many of the corporate venture investors do not operate out of a separate fund or group. The capital under management statistics reported in this section consist primarily of venture capital firms investing through limited partnerships with fixed commitment levels and fixed lives and do not include non-vintage “evergreen funds” or true cap- tive corporate industrial investment groups without fixed commitment levels. The term ‘evergreen funds’ refers to funds that have a continuous infusion of capital from a parent organization, as opposed to the fixed life and commitment level of a closed-end venture capital fund.
18 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 1.01 Capital Under Management U.S. Venture Funds ($ Billions) 1985 to 2013 0 50 100 150 200 250 300 350 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year
2014 National Venture Capital Association Yearbook | 19 NVCA THOMSON REUTERS Figure 1.03 Distribution of Firms By Capital Managed 2013 Figure 1.02 Total Capital Under Management By Firm Type 1985 to 2013 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Private Independent 11,766 14,721 17,459 18,850 22,369 22,722 21,893 22,643 25,162 28,490 33,308 40,201 51,940 76,560 119,121 Financial Institutions 3,388 3,520 3,447 3,190 2,719 2,793 2,384 2,214 2,431 2,873 3,688 5,070 7,061 10,238 15,291 Corporations 1,582 1,545 1,895 1,989 1,931 1,963 1,907 2,032 1,517 1,564 1,526 2,219 2,531 3,425 8,169 Other 864 914 900 871 781 722 616 312 190 273 378 410 667 877 1,119 Total 17,600 20,700 23,700 24,900 27,800 28,200 26,800 27,200 29,300 33,200 38,900 47,900 62,200 91,100 143,700 Figure 1.02 (Continued) Total Capital Under Management By Firm Type 1985 to 2013 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Private Independent 187,356 221,327 222,028 224,828 233,595 241,637 255,315 239,643 194,573 171,016 174,722 186,032 186,676 179,202 Financial Institutions 22,980 24,459 23,945 23,015 21,659 21,110 18,325 13,914 6,034 4,708 5,620 7,734 7,970 6,615 Corporations 12,995 14,153 14,126 13,886 13,627 13,467 13,297 8,990 4,294 3,125 3,688 4,860 4,892 6,401 Other 1,469 2,061 2,201 2,170 2,219 1,986 1,963 1,754 1,399 851 670 674 662 682 Total 224,800 262,000 262,300 263,900 271,100 278,200 288,900 264,300 206,300 179,700 184,700 199,300 200,200 192,900 0 50 100 150 200 0-10 10-25 25-50 50-100 100-250 250-500 500-1000 1000+ 164 113 114 107 132 82 53 43 This chart shows capital committed to US venture firms in active funds. While much of the capital is managed by larger firms, of the 808 firms included in this calculation at the end of 2013, roughly 62% of them (498) managed $100 million or less. By comparison, just 43 firms managed active funds totaling more than $1 billion.
20 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 1.04 Fund and Firm Analysis 2013 Fund Vintage Year Total Cumulative Funds Total Cumulative Firms Total Cumulative Capital ($B) Existing Funds Firms That Raised Funds in the Last 8 Vintage Years Capital Managed ($B) Avg Fund Size ($M) Avg Firm Size ($M) 1985 631 323 20 532 294 17.6 33.1 59.9 1986 707 353 23.4 590 324 20.7 35.1 63.9 1987 810 388 27.4 670 353 23.7 35.4 67.1 1988 888 406 30.9 701 365 24.9 35.5 68.2 1989 980 435 35.9 728 380 27.8 38.2 73.2 1990 1037 451 38.2 716 383 28.2 39.4 73.6 1991 1075 458 40.4 639 360 26.8 41.9 74.4 1992 1147 478 44.1 601 352 27.2 45.3 77.3 1993 1244 509 49.3 613 370 29.3 47.8 79.2 1994 1342 542 56.7 635 385 33.2 52.3 86.2 1995 1498 608 66.2 688 425 38.9 56.5 91.5 1996 1648 670 78.8 760 471 47.9 63.0 101.7 1997 1862 764 98.1 882 545 62.2 70.5 114.1 1998 2099 843 129.3 1062 616 91.1 85.8 147.9 1999 2435 969 184.1 1360 736 143.7 105.7 195.2 2000 2851 1111 268.9 1704 866 224.8 131.9 259.6 2001 3096 1194 311.3 1852 923 262 141.5 283.9 2002 3178 1211 319 1836 921 262.3 142.9 284.8 2003 3286 1264 330.1 1788 951 263.9 147.6 277.5 2004 3451 1332 349.9 1803 985 271.1 150.4 275.2 2005 3626 1402 376.3 1764 1009 278.2 157.7 275.7 2006 3815 1481 418.2 1716 1022 288.9 168.4 282.7 2007 4034 1567 448.4 1599 1016 264.3 165.3 260.1 2008 4221 1631 475.2 1370 886 206.3 150.6 232.8 2009 4327 1672 491 1231 823 179.7 146.0 218.3 2010 4456 1736 503.7 1278 853 184.7 144.5 216.5 2011 4621 1801 529.4 1335 881 199.3 149.3 226.2 2012 4785 1868 550 1334 883 200.2 150.1 226.7 2013 4957 1938 569.2 1331 874 192.9 144.9 220.7 The correct interpretation of this chart is that since the beginning of the industry to the end of 2013, 1,938 firms had been founded and 4,957 funds had been raised. Those funds totaled $569.2 billion. At the end of 2013, 874 firms as calculated using our eight-year methodol- ogy managed 1,331 individual funds, with each fund typically being a separate limited partnership. Capital under management, again calculated using a rolling eight years of fundraising, by those firms at the end of 2013 was $192.9 billion.
2014 National Venture Capital Association Yearbook | 21 NVCA THOMSON REUTERS Figure 1.05 Number of Active Investors 1985 to 2013 Year # of Active Investors # of Active First Round Investors # of Active Life Science Investors 1985 92 11 1 1986 115 24 12 1987 112 29 13 1988 119 32 26 1989 116 22 23 1990 101 25 18 1991 81 14 15 1992 104 34 31 1993 92 35 29 1994 110 46 33 1995 184 95 53 1996 251 122 63 1997 344 138 83 1998 411 169 87 1999 717 321 106 2000 1,050 546 148 2001 760 220 155 2002 534 137 147 2003 509 136 165 2004 579 202 201 2005 562 183 193 2006 572 192 197 2007 630 238 236 2008 602 212 219 2009 463 105 173 2010 508 136 177 2011 549 159 195 2012 534 139 175 2013 548 136 179 Firms included in each count must have invested $5 million in that year in that category. Life Sciences investor count includes investment in companies in the two MoneyTree Categories: Biotechnology/Pharma and Medical Devices/ Equipment. Figure 1.06 Principals Information Year No. Principals Per Firm Estimated Industry Principals Avg Mgt Per Principal ($M) 2007 8.7 8665 30.0 2008 8.5 7293 28.3 2009 8.6 6760 26.4 2010 8.0 6328 25.7 2011 7.4 6231 28.6 2012 7.0 5887 33.8 2013 6.7 5891 32.8 Figure 1.07 Top 5 States By Capital Under Management 2013 State ($ Millions) CA 94,076.6 MA 32,636.6 NY 19,480.4 CT 5,815.1 IL 4,517.3 Total* 156,526.1 *Total includes above 5 states only The correct interpretation of this chart is that since the beginning of the in- dustry to the end of 2013, 1,938 firms had been founded and 4,957 funds had been raised. Those funds totaled $569.2 billion. At the end of 2013, 874 firms as calculated using our eight-year methodology managed 1,331 individual funds, with each fund typically being a separate limited partnership. Capital under management, again calculated using a rolling eight years of fundrais- ing, by those firms at the end of 2013 was $192.9 billion.
22 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 1.08 Capital Under Management By State 1985-2013 State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 CA 5,024 5,974 6,815 7,051 8,318 8,192 8,257 8,258 9,062 9,978 12,015 15,379 20,289 27,452 51,226 MA 2,252 2,580 3,409 3,775 4,179 4,057 3,761 4,636 4,830 5,179 6,553 6,980 9,859 15,397 22,905 NY 3,382 4,428 4,370 4,160 5,598 5,805 5,455 5,308 5,904 6,968 8,246 9,995 10,311 19,676 26,659 CT 1,297 1,444 1,807 1,876 1,714 1,713 1,570 1,665 1,927 2,088 2,064 2,194 3,323 4,492 6,787 IL 474 493 725 907 863 876 840 944 1,202 1,275 1,419 1,263 1,939 2,191 3,693 TX 458 493 727 726 798 840 777 809 935 1,143 1,145 1,233 1,688 3,001 4,797 PA 281 347 376 396 564 601 604 598 569 738 822 1,332 1,750 2,105 3,090 NJ 616 713 752 740 736 954 885 549 511 695 958 1,489 1,563 2,177 2,715 DC 36 38 38 40 41 42 42 40 25 24 146 1,698 2,382 2,504 2,661 WA 316 409 387 425 398 385 199 243 227 178 299 463 680 1,081 1,796 MD 91 95 121 117 159 164 98 115 374 784 914 1,523 2,012 2,649 3,513 CO 365 431 399 518 618 575 557 531 616 565 475 552 867 1,165 3,337 VA 73 79 79 85 105 92 56 42 35 32 48 73 252 508 1,238 NC 34 55 87 90 125 114 110 111 108 146 123 294 620 806 1,009 MN 200 297 340 677 749 886 815 768 841 896 877 514 618 715 1,093 UT 9 19 20 15 15 16 16 10 10 25 31 31 94 96 131 MI 112 120 126 123 124 38 14 14 13 10 41 41 66 77 439 GA 89 95 176 260 263 276 264 263 433 432 434 361 765 1,077 1,164 TN 103 128 192 185 216 260 278 271 199 291 306 455 465 745 1,059 DE 39 41 40 39 47 41 41 14 41 51 100 122 115 117 116 MO 562 586 619 596 603 658 656 645 107 137 119 125 148 111 217 OH 860 897 976 838 256 259 275 305 427 469 447 377 692 766 1,247 FL 125 131 173 193 196 133 110 98 151 223 321 304 380 690 1,072 IN 45 56 56 78 97 88 80 97 99 109 111 194 176 192 207 WI 183 100 99 96 104 104 79 79 81 163 168 196 180 204 174 AL 126 132 132 128 135 137 137 138 6 6 6 6 5 24 33 AZ 41 44 44 73 75 76 75 34 44 43 44 10 10 38 38 LA 7 7 7 7 7 5 2 11 22 31 49 90 277 367 444 KY 15 16 16 16 0 0 0 0 0 7 21 21 21 21 21 ME 1 1 20 25 26 26 26 28 29 98 89 87 88 89 207 ID 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ND 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 OK 1 29 29 28 37 38 37 37 38 9 10 32 23 67 66 OR 170 177 205 241 244 247 229 117 73 74 77 30 30 40 40 NM 71 100 136 133 170 257 244 232 205 179 154 152 121 12 12 SD 0 0 0 0 0 0 0 0 0 0 0 10 10 85 84 HI 2 2 2 2 2 2 2 0 0 0 2 2 2 2 11 KS 0 0 0 0 0 13 13 13 14 14 37 37 57 43 43 IA 50 52 105 102 81 82 62 62 54 55 5 5 16 17 16 VT 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2014 National Venture Capital Association Yearbook | 23 NVCA THOMSON REUTERS Figure 1.08 (Continued) Capital Under Management By State 1985-2013 State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 NH 24 25 25 50 50 51 50 51 27 27 47 19 66 67 66 NE 0 0 0 1 1 1 1 1 11 11 105 137 139 141 140 MT 0 1 1 1 1 1 1 1 1 0 0 0 0 0 0 MS 0 0 0 0 0 0 0 0 0 0 11 11 11 12 11 PR 0 0 0 0 0 9 9 9 9 9 9 9 49 40 40 WY 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 SC 1 1 1 1 15 15 15 15 15 15 29 52 37 37 37 RI 15 16 16 36 37 37 36 36 22 22 23 0 2 2 2 NV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 24 WV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 AR 2 2 2 2 2 2 2 0 0 0 0 0 0 0 19 UNK 46 48 48 47 31 31 21 0 0 0 0 0 0 0 0 AK 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 17,600 20,700 23,700 24,900 27,800 28,200 26,800 27,200 29,300 33,200 38,900 47,900 62,200 91,100 143,700 Figure 1.08b Capital Under Management By State 1985-2013 State 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 CA 85,153 105,283 105,172 107,896 113,719 119,881 128,655 117,244 100,374 87,469 90,424 96,923 99,386 94,077 MA 37,341 45,970 47,440 47,019 47,553 48,784 53,712 50,417 37,146 30,861 30,528 30,209 32,914 32,637 NY 38,938 39,981 38,421 37,176 36,710 36,242 29,115 25,441 13,205 12,198 13,599 18,628 17,653 19,480 CT 8,260 10,623 10,462 10,431 12,066 11,984 13,336 11,699 10,426 7,428 8,201 8,940 6,928 5,815 IL 4,308 4,747 5,202 5,559 5,685 5,163 5,286 4,239 3,620 3,282 3,065 4,595 4,451 4,517 TX 6,881 8,001 7,932 7,806 8,259 8,486 8,242 6,589 5,467 4,193 4,057 4,735 4,455 4,215 PA 6,241 6,344 6,241 6,532 6,439 6,509 7,037 7,143 4,642 4,482 4,495 4,250 4,220 3,623 NJ 3,633 4,315 4,231 4,444 4,083 4,074 5,160 5,022 4,135 3,917 3,965 3,691 3,503 3,447 DC 3,899 4,172 4,739 4,616 3,401 3,582 4,641 5,047 4,833 4,632 4,049 4,527 4,193 3,369 WA 2,803 3,687 3,691 3,568 4,629 4,590 4,597 5,174 4,625 3,721 3,691 3,708 2,943 3,303 MD 5,119 5,383 5,165 5,047 4,811 4,762 4,744 4,433 2,934 3,005 2,927 3,134 3,282 2,854 CO 4,781 5,293 5,438 5,416 5,229 4,882 4,664 3,011 1,603 974 1,139 1,148 1,187 1,635 VA 2,524 2,638 2,652 2,822 2,868 3,338 3,367 3,014 1,801 2,226 2,271 2,081 2,056 1,583 NC 1,367 1,448 1,599 1,803 1,644 1,468 1,678 1,564 1,211 1,238 1,730 1,631 1,726 1,558 MN 2,238 2,189 2,366 2,359 2,361 2,441 2,593 2,473 1,639 1,657 1,319 1,323 1,426 1,531 UT 268 475 449 560 589 546 651 1,259 1,335 1,144 1,209 1,245 1,422 1,429 MI 588 591 590 631 859 912 946 685 919 976 1,065 1,263 1,045 1,203 GA 2,311 2,160 2,154 2,077 2,109 1,835 1,940 1,931 808 783 787 921 882 1,122 TN 1,237 1,281 1,162 1,174 1,043 1,089 887 716 624 614 840 857 845 795 DE 114 80 69 28 15 15 15 251 256 404 504 653 755 756 MO 307 450 418 407 504 1,232 1,293 1,385 1,317 1,182 1,189 1,192 1,324 561 OH 1,850 1,874 1,876 1,855 1,986 1,806 1,722 1,329 713 565 522 573 456 529 FL 1,785 1,751 1,684 1,592 1,577 1,802 1,525 1,284 557 801 875 832 834 529
24 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 1.08b (Continued) Capital Under Management By State 1985-2013 State 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 IN 663 662 651 684 593 595 608 617 136 342 343 309 344 345 WI 246 245 152 152 133 105 207 254 182 185 212 237 309 339 AL 107 107 107 155 173 225 227 219 359 363 366 391 376 317 AZ 101 104 145 180 180 199 171 173 130 118 263 261 311 295 LA 476 651 648 631 663 502 431 353 336 196 265 282 217 249 KY 21 21 14 14 14 21 219 221 226 228 230 216 223 216 ME 202 290 218 219 214 215 310 194 198 108 109 109 110 110 ID 14 14 14 14 14 14 84 86 73 74 74 74 75 75 ND 0 0 0 0 0 0 0 0 13 13 14 14 14 58 OK 140 140 139 139 117 117 111 121 47 47 48 48 48 50 OR 100 100 112 83 85 85 76 78 34 40 29 29 38 46 NM 12 12 12 33 35 69 74 77 79 80 114 84 83 42 SD 178 178 177 177 175 175 103 113 32 32 48 48 40 40 HI 11 11 11 9 16 16 16 7 14 14 43 44 36 36 KS 42 42 42 19 19 0 0 0 0 0 0 14 14 34 IA 16 60 60 55 65 53 60 67 69 39 39 39 29 29 VT 16 43 43 43 43 43 43 57 41 14 19 19 19 29 NH 65 65 65 46 47 0 11 11 11 11 11 11 16 16 NE 175 165 164 71 38 38 38 38 0 0 2 2 3 3 MT 0 0 0 0 0 0 2 2 2 2 2 2 2 2 MS 11 39 39 28 28 28 29 30 30 1 1 1 1 1 PR 39 68 68 68 68 29 29 30 31 1 1 1 1 1 WY 118 117 117 117 117 118 118 119 0 0 0 0 0 0 SC 36 37 51 38 15 20 20 20 21 20 5 6 6 0 RI 2 26 26 35 35 33 33 33 34 10 10 0 0 0 NV 23 23 33 33 33 33 33 9 10 10 0 0 0 0 WV 21 21 21 21 21 21 21 21 0 0 0 0 0 0 AR 19 19 19 19 19 19 19 0 0 0 0 0 0 0 UNK 0 0 0 0 0 0 0 0 0 0 0 0 0 0 AK 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 224,800 262,000 262,300 263,900 271,100 278,200 288,900 264,300 206,300 179,700 184,700 199,300 200,200 192,900 Figure 1.09 Life of IT Funds in Years Life of IT Funds In Years % of Funds <= 10 7% 11-12 20% 13-14 27% 15-16 22% 17-18 14% >=19 10% This chart tracks the year in which a 10-year fund is, in fact, dissolved. These later periods are referred to as “out years.” Historically, after the 10th year, only a few companies that typically do not have huge upside potential remain in the portfolios. But the slow pace of exits in recent years has resulted in a number of good, mature companies remaining in portfolios well past the nominal 10-year mark. Life science funds tend to have lives two years longer than typical technology funds. In preparing this chart, partial years are rounded to the nearest whole year. So 10.4 years would round to 10 years, and 10.5 years would round up to 11 years. The median life span of a fund in this analysis is 14.17 years. Source: Adams Street Partners, based on 2010 analysis of dissolved funds.
2014 National Venture Capital Association Yearbook | 25 NVCA THOMSON REUTERS CAPITAL COMMITMENTS Methodology The Thomson Reuters/National Venture Capital Association sample in- cludes US-based venture capital funds. Classifications are based on the headquarters location of the fund, not the location of the venture capital firm. The sample excludes fund of funds. Effective November 1, 2010, Thomson Reuters venture capital fund data has been updated in order to provide more consistent and relevant categories for searching and reporting. As a result of these changes, there may be shifts in fundraising statistics from legacy editions of this publica- tion due to reclassification of funds based on analysis of actual activity by primary market, nation, and/or fund stages. As defined by Thomson Reuters, capital commitments, also known as fundraising, are firm capital commitments to private equity/venture capi- tal limited partnerships by outside investors. For purposes of these statis- tics, the terms “capital commitments,” “fundraising,” and “fund closes” are used interchangeably. There are three data sources for tracking capital commitments: (1) SEC filings that are regularly monitored by our research staff, (2) surveys of the industry routinely conducted by Thomson Re- uters, and (3) verified industry press and press releases from venture firms. Capital commitments are stated on either (1) a calendar-year basis when committed (for example, throughout this chapter) or (2) a vintage-year basis, which is designated once the fund starts investing (for example, figure 1.04). The data in this chapter is by calendar year and incrementally measures how much in new commitments funds raised during the calen- dar year. Consider, for example, a venture capital firm that announces it will begin raising a $200-million fund in late 2011, raises $75 million in 2012, and subsequently raises the remaining $125 million in 2013. In this chapter, nothing would be reflected in 2011, $75 million would be counted in 2012, and $125 million would be counted in 2013. Assuming it started investing and made its first capital call in 2013, the entire fund would then be considered to be a vintage year 2013 fund. In Figure 1.04, for example, this hypothetical fund would show in the totals for 2013. Note that fund commitments presented in this publication do not in- clude those corporate captive venture capital funds that are funded by a corporate parent, which do not typically raise capital from outside inves- tors. The year 2013 continued to be a very challenging fundraising year for most venture capital firms in the United States. This is due to a lack of recent distributions caused by the tight exit markets, lackluster returns by many venture funds over the past decade compared with the prior decade, and a challenge for the largest alternative asset investors to place money in many of the smaller funds in this asset class because of scale. Only $16.8 billion was raised by 187 funds. This is considerably less than the $19.6 billion raised in 2012 or the $19.0 billion raised in 2011. The amount of new commit- ments each year by venture capital funds continues to be less than the amount they invested in companies. The top fundraising state in 2013 was Massachusetts at $5.5 billion, which edged typical leader California at $5.3 billion. New York was third largest at about half that amount. Much further behind, Washington state and Virginia rounded out the top five. Combined, Massachusetts and California funds raised 64% of the total. Adding in New York, the top three states raised more than three-quarters (77%) of the total amount. The Thomson Reuters taxonomy considers venture capital and buyout/mezzanine to be the two components of Private Equity. Figures 2.02 and 2.05 show venture capital’s decreasing share of the private equity dollars. Venture capital raised 24% of the asset class allocations in 2009 compared with 11% in 2013.
26 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA 0 20 40 60 80 100 120 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Figure 2.01 Capital Commitments To U.S. Venture Funds ($ Billions) 1985 to 2013
2014 National Venture Capital Association Yearbook | 27 NVCA THOMSON REUTERS Figure 2.02 Capital Commitments To Private Equity Funds 1985-2013 Year Sum ($Mil) % of Total PE No. Funds Sum ($Mil) No. Funds Sum ($Mil) No. Funds 1985 3,759.9 56% 118 2,971.8 21 6,731.7 139 1986 3,584.5 42% 101 5,043.7 32 8,628.2 133 1987 4,379.1 21% 116 16,234.6 47 20,613.6 163 1988 4,209.7 28% 104 10,946.4 54 15,156.1 158 1989 4,918.8 29% 106 12,068.5 78 16,987.3 184 1990 3,077.5 26% 85 8,831.5 64 11,909.0 149 1991 1,900.3 31% 40 4,242.1 27 6,142.4 67 1992 5,223.1 33% 80 10,752.5 58 15,975.6 138 1993 4,489.2 21% 93 16,961.7 81 21,451.0 174 1994 7,636.7 27% 136 20,157.0 99 27,793.7 235 1995 9,387.3 26% 161 27,040.7 108 36,428.0 269 1996 11,550.0 26% 168 32,789.4 104 44,339.3 272 1997 17,741.9 30% 242 42,165.3 134 59,907.2 376 1998 30,641.7 33% 290 61,636.4 172 92,278.1 462 1999 53,420.2 51% 428 51,363.2 164 104,783.4 592 2000 101,417.9 56% 634 79,164.8 170 180,582.7 804 2001 38,923.4 43% 324 51,388.3 137 90,311.7 461 2002 10,388.1 23% 203 35,123.3 124 45,511.4 327 2003 9,144.7 20% 160 35,946.4 123 45,091.1 283 2004 17,656.3 23% 211 59,837.4 158 77,493.7 369 2005 30,071.9 22% 233 107,746.6 206 137,818.6 439 2006 31,107.6 17% 236 152,899.7 219 184,007.3 455 2007 29,401.0 11% 235 234,460.4 266 263,861.4 501 2008 25,052.7 12% 214 176,340.7 232 201,393.5 446 2009 16,122.0 24% 159 50,145.9 149 66,267.9 308 2010 13,243.3 20% 173 51,901.5 177 65,144.8 350 2011 18,962.3 21% 186 70,344.2 210 89,306.5 396 2012 19,554.6 15% 208 108,076.4 226 127,631.0 434 2013 16,765.7 11% 187 130,256.2 214 147,021.9 401 Venture Capital Buyouts and Mezzanine Capital Total Private Equity
28 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 2.03 Venture Capital Fund Commitments 1985-2013 ($ Millions) State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 MA 201.88 1,460.41 546.89 279.00 2,260.07 489.77 473.90 493.63 940.19 1,860.48 2,364.08 1,516.09 3,757.76 9,346.10 9,065.81 15,399.96 3,092.69 7,754.42 1,233.34 2,148.71 CA 1,249.69 972.35 1,268.36 966.91 1,523.51 1,010.69 549.12 1,331.19 1,388.50 1,829.06 3,106.99 3,724.04 5,717.43 8,525.24 21,928.12 44,218.83 14,166.13 2,767.31 5,634.15 8,731.29 NY 534.28 356.09 973.09 813.49 338.52 529.47 180.08 1,051.12 367.79 1,158.41 1,954.71 1,875.06 2,601.56 5,200.95 7,586.57 16,691.77 9,721.17 2,598.46 1,596.98 1,797.30 WA 37.41 33.48 231.25 40.69 161.45 142.81 55.43 381.89 137.00 282.50 193.64 326.00 393.97 1,406.64 1,802.52 3,687.77 2,232.20 185.50 75.63 893.91 VA 299.07 155.86 310.63 357.37 61.50 129.50 150.00 300.30 419.25 388.28 260.20 424.93 1,165.98 1,067.56 2,842.58 1,813.40 3,464.30 46.73 165.00 1,756.45 TN 253.67 61.34 119.67 0.35 125.00 243.46 75.00 110.00 176.58 401.30 213.13 605.75 117.61 1,001.84 569.79 1,040.86 651.68 392.11 560.62 196.70 CO 4.20 7.47 24.18 0.00 49.25 13.61 50.00 0.00 224.90 479.20 66.50 439.00 145.00 768.15 839.70 1,989.92 340.45 380.50 105.00 161.52 TX 89.43 47.02 324.62 157.79 26.20 57.20 94.40 247.17 277.82 182.81 229.68 295.21 575.13 466.35 1,298.59 964.19 1,103.18 477.86 701.08 432.30 PA 31.50 70.55 32.23 69.90 79.71 0.40 0.00 0.00 114.22 0.00 19.35 216.40 252.88 432.62 1,942.08 2,414.30 512.63 117.96 93.92 83.89 OH 25.00 126.13 37.40 59.51 0.00 0.00 5.00 48.00 39.90 36.87 128.50 239.32 179.99 408.79 640.30 1,174.61 888.01 83.03 1.20 955.27 MI 38.74 0.00 0.00 4.80 0.00 0.00 0.00 0.00 0.00 0.00 130.00 820.00 667.60 391.50 359.60 778.29 622.18 314.80 0.00 324.48 MN 20.00 23.45 72.50 0.00 34.07 0.00 0.00 40.00 0.00 115.90 83.77 149.00 109.07 266.36 254.81 261.55 36.93 22.40 93.25 0.00 IL 0.00 3.50 10.00 12.80 15.00 2.00 0.00 17.00 5.00 0.00 7.00 20.00 165.40 255.99 884.03 2,211.92 119.15 37.48 196.27 71.95 NC 9.70 0.00 36.00 10.70 29.30 0.00 35.00 0.00 133.28 105.00 106.00 0.00 77.70 250.00 325.88 954.75 25.75 7.95 56.00 1.00 UT 13.60 109.75 51.20 417.50 20.00 161.80 16.20 946.30 65.85 164.05 46.80 35.50 207.97 216.70 106.57 1,826.52 16.50 275.50 26.00 49.80 GA 0.00 0.00 15.10 65.00 0.00 14.00 0.00 0.00 56.00 0.00 74.19 34.30 40.85 181.00 30.00 917.90 19.00 0.00 0.00 55.00 MO 54.05 73.06 54.65 12.10 117.98 44.52 166.60 30.10 109.70 181.65 113.60 264.00 783.90 177.00 1,240.76 2,751.47 536.61 85.66 387.97 450.73 WI 6.50 7.00 31.48 22.80 38.12 0.60 0.00 0.00 0.00 63.45 10.10 183.50 349.00 173.68 180.41 613.41 119.64 74.90 275.86 17.31 ND 2.56 0.00 86.98 75.00 0.00 30.38 0.00 67.00 4.43 85.97 10.00 0.00 364.95 58.00 658.58 662.03 329.95 101.70 4.88 209.72 DC 0.00 0.00 0.00 0.00 0.00 0.00 0.00 10.60 14.20 169.00 18.26 23.95 87.95 51.00 373.35 69.50 26.50 52.00 0.00 72.98 LA 0.00 10.50 0.80 0.00 0.00 0.00 0.00 0.00 0.00 27.00 0.00 0.00 17.00 50.00 61.50 126.00 231.65 0.00 34.30 40.30 KS 0.00 31.82 0.00 0.00 10.30 0.00 0.00 0.00 0.00 0.00 0.00 24.29 0.00 45.30 0.00 110.10 0.00 0.00 0.00 0.00 MS 150.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.00 30.00 0.00 137.00 16.35 11.00 49.00 18.70 OR 643.50 0.00 33.26 0.00 0.00 53.13 0.00 0.00 63.60 0.00 11.30 6.00 45.40 25.03 79.63 64.77 286.20 0.00 0.00 80.30 VT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 11.00 0.00 22.00 14.00 131.00 1.00 0.00 0.00 5.00 IN 0.00 10.00 0.00 27.30 16.30 4.70 0.00 49.00 0.00 20.00 0.00 116.11 0.00 12.80 20.00 103.30 0.00 10.00 35.56 17.00 FL 0.00 0.00 30.00 0.00 0.00 0.00 0.00 0.00 0.00 32.00 32.00 0.00 0.00 10.00 0.00 65.00 0.00 14.00 0.00 2.20 CT 10.73 0.00 60.05 0.00 0.00 0.00 0.00 56.00 0.00 0.00 5.00 0.00 10.50 1.78 5.00 21.00 26.00 0.00 0.00 10.00 NJ 5.00 0.00 6.70 32.50 0.00 0.00 0.00 0.00 3.00 13.50 0.00 26.00 11.30 0.30 320.80 241.00 8.00 0.00 64.84 63.33 MD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 OK 16.60 0.00 0.00 24.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 25.00 0.00 0.00 0.00 AL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.60 0.00 0.00 0.00 9.50 0.00 0.00 2.53 0.00 7.86 SD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 IA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 12.00 0.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00 0.00 RI 49.42 0.00 0.00 40.00 0.00 0.00 15.00 0.00 0.00 0.00 20.00 0.00 50.00 0.00 0.00 0.00 0.00 11.20 8.80 0.00 HI 0.00 0.00 22.04 947.60 0.00 0.00 0.00 2.00 0.00 58.80 0.00 21.65 0.00 0.00 126.89 0.00 76.45 15.60 2.95 0.00 MT 0.00 0.00 0.00 37.00 0.00 0.00 0.00 0.00 10.10 0.00 0.00 0.00 0.00 0.00 29.40 60.00 20.70 42.61 40.80 0.00 NH 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.50 4.00 12.75 2.00 0.00 ME 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 19.65 25.00 0.00 0.00 0.00 AZ 0.00 0.00 0.00 0.00 12.50 4.50 0.00 0.00 0.00 0.00 14.00 0.00 0.00 0.00 0.00 0.00 0.00 15.00 0.00 0.00 WV 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15.00 27.00 0.00 0.00 0.00 SC 0.00 0.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 31.20 0.00 0.00 0.00 ID 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 50.00 25.00 0.00 0.00 25.00 0.00 0.00 10.00 0.00 0.00 PR 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 NV 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 111.01 36.00 0.00 0.00 0.00 40.60 0.00 0.00 0.00 0.00 NE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 25.00 31.00 64.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 10.00 DE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 62.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 UN 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 26.00 0.00 0.00 0.00 0.00 WY 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 0.00 AR 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 40.00 0.00 31.00 30.15 0.00 16.60 82.00 14.00 0.00 0.00 10.68 NM 36.15 27.70 0.00 2.06 0.00 155.00 40.00 0.00 0.00 6.10 1.90 0.00 0.00 0.00 0.00 0.00 0.00 0.00 17.76 20.35 KY 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 14.00 7.40 15.00 0.00 42.00 0.00 0.00 0.00 135.00 8.00 2.14 0.00 Total 3,782.66 3,587.47 4,379.07 4,476.68 4,918.80 3,097.52 1,905.73 5,243.80 4,565.30 7,733.72 9,442.31 11,553.58 17,993.04 30,842.67 53,638.36 101,740.87 38,952.18 15,928.95 11,465.28 18,696.01
2014 National Venture Capital Association Yearbook | 29 NVCA THOMSON REUTERS Figure 2.03 (Continued) Venture Capital Fund Commitments 1985-2013 ($ Millions) State 2005 2006 2007 2008 2009 2010 2011 2012 2013 MA 1,735.74 2,252.82 4,409.92 1,949.58 1,652.22 1,259.41 4,096.04 659.75 5,474.78 CA 13,319.31 13,635.99 12,533.51 13,972.15 8,635.34 6,337.42 9,678.38 14,708.16 5,315.87 NY 9,150.90 4,365.57 5,121.96 2,516.05 3,573.19 2,664.92 2,339.74 1,414.73 2,200.41 WA 629.84 379.48 263.77 1,037.91 26.79 82.72 209.64 51.34 561.77 VA 143.06 2,910.97 286.64 227.29 157.73 938.22 11.00 23.15 446.06 TN 204.27 1,812.38 235.17 52.79 503.67 112.40 100.27 64.78 310.39 CO 432.75 472.23 782.73 368.88 484.14 67.60 543.52 28.93 275.10 TX 80.46 421.96 544.90 258.01 215.60 237.65 215.05 131.67 274.35 PA 68.76 132.45 358.26 220.75 3.50 262.09 6.13 280.36 259.59 OH 280.57 562.85 1,376.20 492.38 5.28 0.00 0.00 398.81 240.19 MI 392.62 896.30 314.60 1,122.94 204.06 0.00 475.00 0.40 236.24 MN 83.75 61.83 99.50 133.96 88.79 56.95 160.93 277.79 222.01 IL 418.62 555.42 582.42 105.28 14.42 121.37 35.63 44.70 187.62 NC 313.00 11.20 109.26 25.20 32.25 74.55 1.57 268.00 154.98 UT 295.00 473.24 275.00 325.10 21.80 0.00 0.00 150.00 136.85 GA 103.50 361.70 203.00 18.73 18.75 30.00 25.55 17.15 126.45 MO 688.16 794.40 825.81 962.73 233.18 205.17 126.81 281.89 101.38 WI 108.01 401.37 185.28 102.93 5.37 457.40 109.58 479.98 67.50 ND 558.16 152.22 81.45 83.38 1.88 30.27 82.40 29.44 45.27 DC 4.00 12.00 0.00 0.00 0.00 0.00 0.00 0.00 44.80 LA 23.98 169.59 213.15 576.50 34.26 16.45 160.42 159.33 40.00 KS 12.00 37.96 10.50 0.00 0.00 0.00 0.00 0.14 25.86 MS 69.65 19.10 0.00 117.93 101.35 1.53 58.10 19.90 14.23 OR 828.70 39.65 210.30 53.94 0.00 72.00 0.00 155.00 12.02 VT 0.00 3.28 0.00 14.48 0.00 16.00 0.00 0.00 10.00 IN 6.00 24.49 1.16 28.80 1.00 28.05 0.00 38.95 8.00 FL 0.00 0.00 2.03 5.00 5.90 12.25 2.03 6.98 2.00 CT 0.00 42.91 0.00 0.00 15.35 0.00 0.00 0.00 0.00 NJ 122.44 23.00 49.00 255.56 84.00 176.51 193.98 20.11 0.00 MD 0.00 0.25 10.04 19.97 0.00 0.00 7.85 0.00 0.00 OK 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 AL 0.00 0.00 0.00 6.39 0.00 0.00 0.00 0.00 0.00 SD 0.00 1.75 0.00 0.00 0.00 0.00 0.00 0.00 0.00 IA 0.00 1.35 0.00 0.00 0.00 0.00 0.00 0.00 0.00 RI 0.00 5.00 6.66 0.00 0.00 0.00 0.00 4.50 0.00 HI 0.00 45.55 19.45 0.00 0.00 0.00 5.50 4.64 0.00 MT 19.00 0.00 0.00 20.00 0.00 0.00 222.18 57.16 0.00 NH 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 ME 0.00 0.00 11.00 3.00 0.00 0.00 0.00 0.00 0.00 AZ 5.60 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 WV 0.00 0.00 75.75 0.00 0.00 0.00 0.00 0.00 0.00 SC 0.00 0.00 1.00 0.00 0.00 0.00 0.00 0.00 0.00 ID 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 PR 0.00 0.00 0.00 13.20 0.00 0.48 0.00 0.18 0.00 NV 0.00 0.00 0.00 0.00 0.00 2.00 0.00 1.00 0.00 NE 0.00 0.00 0.00 0.00 0.00 100.00 100.00 0.00 0.00 DE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 UN 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 WY 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 AR 0.00 80.68 102.33 15.09 9.20 27.32 0.15 40.00 0.00 NM 25.65 5.20 1.27 0.00 0.00 35.00 1.14 0.00 0.00 KY 7.95 65.00 98.00 12.00 0.00 0.00 0.00 7.00 0.00 Total 30,131.45 31,231.10 29,400.99 25,117.84 16,128.99 13,425.72 18,968.57 19,825.91 16,793.70
30 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 2.04 Top 5 States By Venture Capital Committed 2013 State No of Funds Committed ($Mil) Massachusetts 24 5,474.8 California 58 5,315.9 New York 25 2,200.5 Washington 5 561.8 Virginia 5 446.1 Subtotal 117 13,999.1 Remaining States 70 2,766.8 Total 187 16,765.9 - 20 40 60 80 100 120 140 160 180 200 220 240 260 280 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Venture Capital Buyouts and Mezzanine Figure 2.5 Private Equity Annual Commitment ($ Billions) 1985 to 2013
2014 National Venture Capital Association Yearbook | 31 NVCA THOMSON REUTERS Measuring industry activity by the total dollars invested in a given year shows that the industry has remained generally in the $20 billion to $30 billion range since 2002. In 2013, $29.5 billion was invested in 3,382 companies through 4,041 deals. The number of deals is 4% higher than 2012 counts, but is essentially the same as 2011. The number of first-time fundings increased in 2013 to 1,334 companies from the previous 1,275, but it remains near the top of the healthy range of 1,000 to 1,400 first-time fundings in a year. Further parsing the data shows 50% of the investment dollars going to California companies, down from 53% in 2012 but consistent with the previous three years. The year 2013 saw a record 56% of the financing rounds going to seed and early stage companies, compared with a more typical one-third of deals. A carefully watched statistic is the investment in the life sci- ences. It is possible that the downward plummet in first-time life sciences investment is starting to reverse, led by Biotechnology, but it is still too early to be sure. Corporate Venture investment continues to gain considerable strength and presence in the overall industry. INVESTMENTS Sectors Software was the leading sector in 2013, receiving 37.3% of the total dollars. The second largest sector was Biotechnology, which was less than half that amount at 15.4% of total investment. Media and Entertainment, where much of the social networking is categorized, received 9.9% and Medical Devices and Equipment received 7.2%. The life sciences share of the venture capital investment dollars de- creased in 2013 to its lowest level since 2001 at 23.6% of the total dollars. (For purposes of this paragraph, life sciences is made up of all three life science categories. Some industry observers choose to exclude the health- care services sector from the life sciences totals.) This is down from the recent peak of 32.7% in 2009. (The all-time peak was 36.3% in 1992.) This recent downward life sciences trend is very visible when just looking at first fundings. In 2013, only 155 life sciences (defined in this paragraph as Biotech/pharma and Medical Devices/therapeutics, but not healthcare services) received first fundings, up just slightly form 148 in 2012. While the uptick driven by Biotechnology first fundings may be an early indicator of a rebound, these last two years are the lowest counts since 1996. The possible recovery in Biotechnology investing may have been driven in part by the success of recent efforts at FDA reform and the strong number of Biotechnology company IPOs in 2013 (count = 42). Among first fundings, Software led the way with 591 companies get- ting their initial venture capital rounds. This is more than 46% of the first fundings. Again in 2013, the second most active first-funding sector is Media and Entertainment at 170 first fundings. Stages and First-Time Fundings Investment activity in the industry seems to be bifurcated by the large number of later stage companies hoping to join fairly strong public mar- kets at year end 2013 and the very large number of new companies being funded by the industry. While many of the larger portfolio companies, IPOs, and big acquisitions have gotten the headlines and visibility, 2013 actually saw the highest percentage of seed- and early-stage deals ever at 55.7% of all deals. This surpasses the prior record of 52.6% in 2012. This certainly would challenge the suggestion that the industry’s attention is single-focused on later-stage companies. Despite the flurry of IPO activity in 2013 and acquisitions announced for early 2014, there remains a record number of companies in portfolios in the later stage of development that in most other positions in the business cycle would have already gone public or otherwise been acquired. With the rule of thumb that a healthy venture capital industry invests in 1,000-1,300 new companies each year, the 1,334 first fundings in 2013 is very much in that range. Not surprisingly, 83% of those first round invest- ments were made at the seed and early stage. Geographical Spread Across the United States The year 2013 provided an interesting contrast in geographic disper- sion. The slight majority of investment dollars went to California compa- nies at 50.01%. This is down from the record 53.2% in 2012. Interestingly, companies in 48 states and DC received financing, which ties the 2012 record high. Ranked by total dollars invested, the top five states (Califor- nia, Massachusetts, New York, Washington and Texas) received 78% of all the dollars invested nationally. This compares to 2011, when California companies received a then- record 51.2% of the dollars. That year, companies in a record 47 states and DC received venture capital funding. Together, the top five states (Cali- fornia, Massachusetts, New York, Texas, and Washington State) received 77% of the total dollars. California-domiciled venture capital firms made investments in 38 states in 2013. Approximately 48% of all the money invested in Califor- nia came from California-domiciled firms. Conversely, California-based firms concentrated 68% of their investment dollars within the state. Corporate Venture Group Involvement The number and reach of corporate venture capital groups increased in 2013, along with the visibility of this group. These groups provided an estimated 10.5% of the venture capital invested by all venture groups. They were involved in 16.9% of the deals – the highest level in five years. Going forward, all signs suggest that these groups are becoming more involved alongside traditional venture firms in deals, as well as initiating corporate venture group syndicates to do deals in lieu of, or in advance of, investment rounds by traditional venture firms. Methodology As calculated by Thomson Reuters, venture capital investment data are derived from several sources. Primarily, survey information is obtained from the quarterly survey that drives the MoneyTree Report™ from Price- waterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. This is the official industry database of venture capital investment. Secondly, Thomson Reuters obtains data from SEC filings that are regularly monitored by our research staff. Finally, publicly available sources such as press releases and trade publications are used. For detailed information on which transactions qualify as MoneyTree deals and are therefore counted in this chapter, please refer to Appendix B.
32 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA 0 20 40 60 80 100 120 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Figure 3.01 Venture Capital Investments ($ Billions) 1985 to 2013 Figure 3.03 Venture Capital Investments Top 5 States in 2013 State # Companies # Deals Invested ($Bil) California 1,362 1,616 14.8 Massachusetts 307 364 3.1 New York 344 403 2.9 Texas 134 154 1.3 Washington 107 126 0.9 Total* 2,254 2,663 23.0 *Total includes top 5 states only Figure 3.02 Venture Capital Investments in 2013 By Industry Group Industry Group # Companies # Deals Investment Amt ($Bil) # Companies # Deals Investment Amt ($Bil) Information Technology 2,360 2,784 20 1,009 1,009 3.5 Medical/Health/Life Science 649 816 6.9 167 167 1.2 Non-High Technology 373 441 2.7 158 158 0.4 Total 3,382 4,041 29.6 1,334 1,334 5.1 Initial InvestmentsAll Investments
2014 National Venture Capital Association Yearbook | 33 NVCA THOMSON REUTERS Biotechnology 15% Business Products and Services 0.4% Computers and Peripherals 2% Consumer Products and Services 4% Electronics/Instrumentation 1% Financial Services 2% Healthcare Services 1% Industrial/Energy 5% IT Services 7% Media and Entertainment 10% Medical Devices and Equipment 7% Networking and Equipment 2% Retailing/Distribution 1% Semiconductors 2% Software 37% Telecommunications 2% Other 0.2% Figure 3.04 Venture Capital Investments in 2013 By Industry Sector (Dollars Invested) Seed 3% Early Stage 34% Expansion 33% Later Stage 30% Figure 3.05 Venture Capital Investments in 2013 By Stage (Dollars Invested)
34 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA USA AK AR NE WY PR VI GU 5 AL 113 AZ CA 429 CO 182 CT 286 DC 71 DE 421 FL 412 GA 2 HI 23 IA 7 ID IL 25 IN33 KS 11 KY 15 LA 3,079 MA 664 MD 27 ME 108 MI 270 MN 77 MO 1 MS MT 260 NC 24 ND 74 NH 322 NJ 26 NM 7 NV 2,870 NY 319 OH 8 OK 138 OR 447 PA 82 RI 86 SC 12 SD 109 TN 1,316 TX 315 UT 594 VA 21 VT 913 WA 36 WI 1 WV 14,770 10 86 435 0 Figure 3.06 Amount of Capital Invested By State in 2013 ($ Millions) USA AK AR NE WY PR VI GU 4 AL 19 AZ CA 62 CO 43 CT 27 DC 5 DE 37 FL 35 GA 2 HI 2 IA 2 ID 74 IL 11 IN6 KS 6 KY 6 LA 307 MA 63 MD 4 ME 58 MI 32 MN 32 MO 2 MS 1 MT 40 NC 1 ND 13 NH 38 NJ 13 NM 3 NV 344 NY 68 OH 8 OK 30 OR 196 PA 11 RI 12 SC 1 SD 35 TN 134 TX 30 UT 58 VA 8 VT 107 WA 18 WI 1 WV 1,362 9 3 Figure 3.07 Number of Companies Invested in By State in 2013
2014 National Venture Capital Association Yearbook | 35 NVCA THOMSON REUTERS Figure 3.08 Venture Capital Investments in 1985-2013 By Region ($ Millions) Region 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Silicon Valley 758.8 1,016.0 849.9 985.9 918.1 914.1 780.5 1,121.1 903.7 1,073.8 1,807.8 3,417.7 4,632.3 5,881.4 17,797.4 New England 435.4 436.6 524.3 496.9 404.7 424.9 287.0 417.0 358.4 440.4 796.6 1,159.4 1,611.8 2,353.4 5,622.0 NY Metro 221.2 215.2 273.9 308.0 360.4 190.1 181.5 239.0 221.3 275.8 509.7 743.2 1,289.4 1,817.3 4,611.8 LA/Orange County 196.5 186.9 276.9 222.5 242.1 174.7 119.4 179.4 176.4 189.1 1,004.1 702.9 875.2 1,230.6 3,593.7 DC/Metroplex 99.1 61.5 111.8 129.9 139.5 96.9 51.3 65.8 384.1 137.8 420.2 586.3 515.1 1,148.5 2,395.1 Texas 248.6 228.4 211.0 240.7 229.2 141.0 161.4 150.5 241.9 313.8 479.2 553.4 908.7 1,205.6 3,163.1 Southeast 166.4 237.6 269.5 272.1 235.4 145.9 109.1 346.9 408.2 362.3 878.6 1,166.0 1,396.7 1,794.8 4,831.0 Midwest 160.5 139.9 198.4 132.3 183.2 166.7 181.4 165.2 276.9 432.6 470.4 736.2 913.5 1,644.5 2,631.1 Northwest 142.2 142.9 153.3 141.2 118.0 88.2 59.9 252.1 118.4 164.7 379.7 557.6 564.4 820.3 2,874.6 San Diego 99.6 95.4 107.8 149.8 145.5 113.3 115.7 128.2 133.0 221.0 276.8 485.2 516.0 669.4 1,437.0 SouthWest 40.1 82.5 57.5 59.7 50.7 30.3 49.0 98.4 49.7 38.0 113.1 184.6 303.1 411.2 843.1 Colorado 77.0 113.8 111.4 107.8 157.8 93.7 54.2 129.7 135.0 197.4 325.1 321.2 405.0 838.9 1,832.9 Philadelphia Metro 52.6 63.3 79.2 71.8 65.3 105.9 40.6 168.9 111.4 138.1 220.9 356.2 534.2 703.9 1,732.6 North Central 37.0 44.5 73.6 41.4 51.2 92.2 44.9 77.1 109.6 87.4 223.8 208.5 341.6 429.6 770.0 South Central 13.7 11.4 19.8 11.7 14.5 11.6 4.2 6.5 8.6 15.2 45.2 81.1 67.4 196.7 360.1 Upstate NY 14.2 10.7 10.2 5.3 7.3 11.1 3.4 9.1 5.7 0.7 35.5 22.7 90.3 195.4 212.4 Sacramento/N.Cal 16.0 45.5 32.0 33.6 4.2 19.5 15.7 8.5 19.1 20.0 20.0 28.6 21.4 86.8 119.1 Unknown - - 0.5 0.8 6.1 13.0 0.2 30.8 0.8 0.1 0.3 2.2 4.4 39.1 2.4 AK/HI/PR - - - - - - 0.3 0.0 1.0 22.0 7.8 28.7 14.0 5.5 17.4 Total 2,779.0 3,132.3 3,361.3 3,411.3 3,333.0 2,833.1 2,259.7 3,594.2 3,663.2 4,130.1 8,014.8 11,341.6 5,004.6 21,473.0 54,846.7
36 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.08 (Continued) Venture Capital Investments in 1985-2013 By Region ($ Millions) Region 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Silicon Valley 33,430.9 12,618.7 7,249.2 6,766.5 8,021.2 8,133.6 9,806.9 11,610.0 11,551.3 8,263.4 9,436.2 12,037.2 11,237.6 12,225.7 New England 12,000.6 5,397.2 2,999.3 2,990.4 3,359.7 2,969.9 3,319.2 4,004.1 3,754.8 2,603.7 2,577.9 3,344.5 3,391.6 3,307.7 NY Metro 10,275.4 3,497.1 1,548.7 1,385.0 1,635.7 1,972.7 2,172.1 1,936.2 2,169.7 1,748.9 1,872.8 2,862.5 2,366.9 3,194.7 LA/Orange County 6,782.0 2,264.7 1,286.8 1,069.4 1,319.8 1,506.1 1,898.7 1,925.3 2,041.4 1,080.9 1,687.8 2,076.7 2,092.5 1,748.2 DC/Metroplex 5,795.2 2,103.1 1,095.6 797.4 1,086.6 1,208.3 1,356.3 1,423.7 1,167.9 684.3 973.9 1,014.0 756.8 1,545.9 Texas 6,270.8 3,137.3 1,191.6 1,221.0 1,212.3 1,170.7 1,518.2 1,493.8 1,127.7 678.2 1,079.4 1,622.4 948.9 1,315.5 Southeast 7,967.1 2,684.7 1,768.7 1,115.0 1,418.1 1,094.2 1,206.3 1,841.0 1,352.0 1,032.0 1,101.2 1,193.4 801.1 1,293.9 Midwest 5,776.7 2,184.5 976.9 913.6 712.5 916.5 1,009.7 1,159.2 1,369.5 952.3 1,368.2 1,554.1 1,436.8 1,107.3 Northwest 3,627.9 1,426.8 766.7 643.5 1,001.2 1,003.9 1,288.0 1,612.5 1,075.6 673.9 728.9 785.4 998.5 1,056.7 San Diego 2,297.6 1,579.1 997.4 825.8 1,197.8 1,203.9 1,231.0 1,846.4 1,209.4 939.5 881.2 928.0 1,191.6 767.7 SouthWest 1,387.5 515.1 393.8 220.5 393.6 524.8 526.6 589.0 545.7 291.2 275.9 571.5 600.4 455.4 Colorado 4,091.9 1,244.4 588.0 609.9 363.2 622.9 703.3 686.3 872.3 458.9 445.9 619.7 589.0 428.8 Philadelphia Metro 2,591.5 1,073.3 636.6 555.1 734.6 592.6 795.9 890.5 803.0 389.4 452.2 456.7 415.3 420.0 North Central 1,397.3 669.6 433.7 268.5 464.0 367.0 385.6 532.7 632.6 410.5 336.7 380.9 359.9 375.3 South Central 446.9 110.4 69.3 65.5 130.1 96.1 64.3 152.8 91.3 25.3 75.2 102.1 96.0 141.1 Upstate NY 293.9 159.1 104.5 122.7 104.8 60.1 156.1 136.5 92.3 26.9 44.8 112.7 48.6 112.5 Sacramento/N.Cal 372.3 203.0 65.4 32.2 38.4 37.7 29.4 82.0 71.3 18.8 16.5 67.8 20.0 25.2 Unknown 50.4 14.3 - - - - - - - 0.5 - - - 21.1 AK/HI/PR 248.6 69.8 4.9 17.9 15.1 43.3 47.1 20.9 21.3 7.4 14.0 0.6 0.7 2.5 Total 105,104.6 40,952.1 22,177.1 19,620.0 23,208.8 23,524.5 27,514.5 31,942.9 29,948.9 20,286.2 23,368.6 29,730.0 27,352.3 9,545.2
2014 National Venture Capital Association Yearbook | 37 NVCA THOMSON REUTERS Figure 3.09 Venture Capital Investments in 1985-2013 By Region (Number of Deals) Region 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Silicon Valley 323 339 343 362 395 398 337 422 315 335 509 771 869 1,045 1,687 2,159 1,106 819 879 NY Metro 89 101 131 108 121 90 89 81 79 84 136 158 240 273 491 816 446 231 192 New England 235 214 257 231 222 217 170 159 149 146 232 333 384 469 662 905 595 458 446 Midwest 100 116 133 101 127 103 99 93 85 83 132 190 237 249 309 515 276 243 174 LA/Orange County 90 101 114 106 112 97 89 97 63 54 92 134 166 216 355 516 250 164 149 Southeast 91 118 134 115 115 131 111 108 117 112 182 226 294 308 454 664 391 268 247 DC/Metroplex 45 46 65 59 51 62 54 48 41 47 72 113 135 162 272 509 261 198 183 Northwest 47 49 62 70 64 48 41 50 49 50 84 112 134 132 263 331 192 141 108 Texas 106 93 106 105 91 85 70 70 72 68 101 135 172 197 318 485 343 174 174 Philadelphia Metro 38 35 54 44 41 48 43 65 47 45 78 91 142 138 145 231 142 103 88 San Diego 43 35 54 56 56 47 43 47 49 61 77 109 100 124 162 235 156 114 125 Colorado 43 58 62 63 53 49 35 53 48 53 58 83 98 127 161 222 115 91 71 SouthWest 20 30 42 25 32 22 30 34 30 29 37 55 71 88 116 146 89 68 55 North Central 38 50 54 51 39 44 40 39 38 37 70 69 116 107 114 151 126 76 71 Upstate NY 17 10 10 10 12 6 4 9 10 5 8 9 21 31 31 36 29 24 22 South Central 11 10 12 6 7 5 4 5 6 9 15 22 25 27 30 50 28 24 21 Unknown - - 1 2 3 1 1 2 4 2 2 7 7 14 3 16 8 - - Sacramento/N.Cal 11 18 12 10 6 10 9 9 8 10 7 9 7 17 19 36 27 7 11 AK/HI/PR 1 - - - - - 3 3 1 2 4 9 6 5 5 15 10 3 8 Total 1,348 1,423 1,646 1,524 1,547 1,463 1,272 1,394 1,211 1,232 1,896 2,635 3,224 3,729 5,597 8,038 4,590 3,206 3,024 Figure 3.09 (Continued) Venture Capital Investments in 1985-2013 By Region (Number of Deals) Region 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Silicon Valley 970 1,006 1,235 1,311 1,300 997 1,108 1,269 1,225 1,257 NY Metro 226 191 295 299 343 285 387 424 411 446 New England 430 441 458 524 508 388 414 457 466 418 Midwest 178 181 228 271 304 250 277 316 311 416 LA/Orange County 151 177 219 236 245 177 228 233 268 253 Southeast 244 198 235 247 230 158 215 209 172 211 DC/Metroplex 187 221 218 221 210 138 154 167 166 171 Northwest 148 159 182 217 201 128 156 165 154 165 Texas 176 181 201 188 162 126 168 172 163 154 Philadelphia Metro 104 96 116 135 150 97 127 123 126 135 San Diego 132 143 130 169 134 114 135 114 106 98 Colorado 72 91 112 114 116 91 84 109 105 81 SouthWest 58 84 92 107 86 71 60 85 84 79 North Central 77 66 73 94 87 69 59 70 53 73 Upstate NY 29 28 40 33 31 13 21 22 23 36 South Central 31 11 26 31 41 33 42 59 23 29 Unknown - - - 1 - 1 1 1 - 10 Sacramento/N.Cal 9 11 8 18 20 9 7 6 5 6 AK/HI/PR 6 8 14 10 9 3 4 3 4 3 Total 3,228 3,293 3,882 4,226 4,177 3,148 3,647 4,004 3,865 4,041
38 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.10 Venture Capital Investments in 1985-2013 By Stage Stage 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Seed 528.9 759.7 623.4 670.2 559.3 396.6 241.8 557.7 629.6 781.2 1,273.0 1,275.0 1,366.6 1,769.3 3,617.8 3,150.4 803.5 Early Stage 506.8 624.0 748.8 714.6 737.9 684.8 548.4 577.9 574.9 839.7 1,733.1 2,636.8 3,455.1 5,460.1 11,480.6 25,292.6 8,591.3 Expansion 1,243.9 1,198.2 1,490.6 1,568.8 1,600.3 1,265.6 1,099.6 1,770.1 1,867.0 1,506.9 3,561.7 5,503.0 7,564.1 10,322.5 29,254.7 59,047.2 22,898.7 Later Stage 499.4 550.4 498.5 457.7 435.5 486.0 369.8 688.5 591.7 1,002.4 1,447.0 1,926.9 2,618.8 3,921.0 10,493.6 17,614.5 8,658.6 Total 2,779.0 3,132.3 3,361.3 3,411.3 3,333.0 2,833.1 ,259.7 3,594.2 3,663.2 4,130.1 8,014.8 11,341.6 15,004.6 21,473.0 54,846.7 105,104.6 40,952.1 Figure 3.10 (Continued) Venture Capital Investments in 1985-2013 By Stage Stage 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Seed 340.7 364.9 916.9 995.6 1,291.6 1,837.0 1,923.1 1,735.2 1,676.3 1,079.4 836.4 966.4 Early Stage 3,979.7 3,582.2 4,040.8 4,057.9 4,770.4 6,087.3 5,888.9 4,940.6 5,913.8 8,926.9 8,315.1 9,896.0 Expansion 12,122.6 9,764.9 9,053.6 8,521.7 11,123.5 1,065.7 10,725.1 6,841.2 8,706.9 9,829.3 9,446.6 9,814.2 Later Stage 5,734.1 5,908.0 9,197.5 9,949.3 0,329.0 2,952.9 11,411.9 6,769.2 7,071.6 9,894.4 8,754.2 8,868.7 Total 22,177.1 19,620.0 23,208.8 23,524.5 7,514.5 1,942.9 29,948.9 20,286.2 23,368.6 9,730.0 27,352.3 29,545.2 Figure 3.11 Venture Capital Investments in 1985-2013 By Stage (Number of Deals) Stage 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Seed 358 388 387 370 355 258 193 252 290 332 431 503 542 672 811 705 281 Early Stage 290 333 411 358 338 371 277 292 181 255 519 751 897 1,019 1,735 2,852 1,298 Expansion 523 502 614 614 665 600 541 603 513 422 705 1,043 1,399 1,569 2,438 3,698 2,391 Later Stage 177 200 234 182 189 234 261 247 227 223 241 338 386 469 613 783 620 Total 1,348 1,423 1,646 1,524 1,547 1,463 1,272 1,394 1,211 1,232 1,896 2,635 3,224 3,729 5,597 8,038 4,590 Figure 3.11 (Continued) Venture Capital Investments in 1985-2013 By Stage (Number of Deals) Stage 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Seed 182 217 235 264 398 528 536 374 410 446 296 221 Early Stage 879 800 903 855 1,002 1,137 1,152 979 1,287 1,603 1,738 2,031 Expansion 1,580 1,352 1,203 1,113 1,381 1,269 1,240 894 1,077 1,026 987 991 Later Stage 565 655 887 1,061 1,101 1,292 1,249 901 873 929 844 798 Total 3,206 3,024 3,228 3,293 3,882 4,226 4,177 3,148 3,647 4,004 3,865 4,041
2014 National Venture Capital Association Yearbook | 39 NVCA THOMSON REUTERS Figure 3.12a Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 1985 1986 1987 Stage 1985-1Q 1985-2Q 1985-3Q 1985-4Q 1985 Total 1986-1Q 1986-2Q 1986-3Q 1986-4Q 1986 Total 1987-1Q 1987-2Q 1987-3Q 1987-4Q 1987 Total Seed 153.0 149.3 93.7 133.0 528.9 185.6 270.0 114.7 189.4 759.7 145.7 199.4 142.0 136.3 623.4 Early Stage 95.9 185.3 95.2 130.4 506.8 129.6 139.5 176.6 178.2 624.0 170.7 183.9 204.2 190.0 748.8 Expansion 219.2 319.2 312.8 392.7 1,243.9 270.2 381.4 252.3 294.3 1,198.2 421.8 352.2 402.5 314.1 1,490.6 Later Stage 154.6 89.8 175.5 79.5 499.4 125.6 96.7 180.4 147.7 550.4 100.1 167.0 119.8 111.7 498.5 Total 622.6 743.6 677.2 735.6 2,779.0 711.0 887.5 724.1 809.6 3,132.3 838.2 902.4 868.5 752.2 3,361.3 Figure 3.12b Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 1988 1989 1990 Stage 1988-1Q 1988-2Q 1988-3Q 1988-4Q 1988 Total 1989-1Q 1989-2Q 1989-3Q 1989-4Q 1989 Total 1990-1Q 1990-2Q 1990-3Q 1990-4Q 1990 Total Seed 164.5 150.0 240.6 115.2 670.2 138.1 174.6 116.3 130.3 559.3 81.9 116.7 114.3 83.8 396.6 Early Stage 144.0 216.6 184.7 169.4 714.6 255.9 128.0 163.1 190.9 737.9 139.7 199.1 133.1 212.9 684.8 Expansion 314.5 494.6 320.2 439.5 1,568.8 399.6 426.5 305.5 468.8 1,600.3 307.2 352.6 208.0 397.9 1,265.6 Later Stage 135.3 105.0 151.4 66.0 457.7 95.5 105.3 78.3 156.4 435.5 123.1 119.9 126.3 116.7 486.0 Total 758.3 966.1 896.9 790.0 3,411.3 889.1 834.4 663.1 946.4 3,333.0 651.9 788.2 581.6 811.3 2,833.1 Figure 3.12c Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 1991 1992 1993 Stage 1991-1Q 1991-2Q 1991-3Q 1991-4Q 1991 Total 1992-1Q 1992-2Q 1992-3Q 1992-4Q 1992 Total 1993-1Q 1993-2Q 1993-3Q 1993-4Q 1993 Total Seed 45.8 84.6 53.4 58.0 241.8 67.6 210.4 71.8 207.8 557.7 139.7 144.1 164.3 181.5 629.6 Early Stage 137.7 130.3 140.4 140.0 548.4 134.0 187.6 102.7 153.6 577.9 164.0 136.1 106.6 168.2 574.9 Expansion 249.5 276.2 257.0 317.0 1,099.6 496.0 434.8 343.9 495.4 1,770.1 357.1 412.3 461.3 636.3 1,867.0 Later Stage 89.5 115.8 63.7 100.8 369.8 211.2 163.2 115.3 198.8 688.5 189.5 111.6 116.8 173.8 591.7 Total 522.5 606.9 514.5 615.7 2,259.7 908.8 996.1 633.8 1,055.5 3,594.2 850.3 804.1 849.0 1,159.8 3,663.2 Figure 3.12d Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 1994 1995 1996 Stage 1994-1Q 1994-2Q 1994-3Q 1994-4Q 1994 Total 1995-1Q 1995-2Q 1995-3Q 1995-4Q 1995 Total 1996-1Q 1996-2Q 1996-3Q 1996-4Q 1996 Total Seed 190.0 225.8 160.2 205.1 781.2 316.8 396.6 229.9 329.8 1,273.0 330.0 427.9 200.6 316.5 1,275.0 Early Stage 177.6 196.4 157.8 307.9 839.7 408.8 393.6 366.8 563.8 1,733.1 596.2 712.9 573.6 754.1 2,636.8 Expansion 310.5 388.5 327.7 480.1 1,506.9 620.0 1,325.7 800.4 815.7 3,561.7 1,151.9 1,506.8 1,277.0 1,567.3 5,503.0 Later Stage 201.3 192.5 262.0 346.6 1,002.4 344.5 430.5 308.7 363.4 1,447.0 348.0 461.3 546.5 571.1 1,926.9 Total 879.4 1,003.3 907.8 1,339.7 4,130.1 1,690.0 2,546.4 1,705.8 2,072.6 8,014.8 2,426.1 3,109.0 2,597.6 3,208.9 11,341.6
40 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.12e Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 1997 1998 1999 Stage 1997-1Q 1997-2Q 1997-3Q 1997-4Q 1997 Total 1998-1Q 1998-2Q 1998-3Q 1998-4Q 1998 Total 1999-1Q 1999-2Q 1999-3Q 1999-4Q 1999 Total Seed 392.9 330.8 323.4 319.5 1,366.6 405.4 426.4 459.9 477.6 1,769.3 591.5 799.7 990.1 1,236.5 3,617.8 Early Stage 773.5 846.8 760.1 1,074.7 3,455.1 1,164.7 1,014.5 1,290.4 1,990.6 5,460.1 1,302.0 2,026.8 2,661.8 5,489.9 11,480.6 Expansion 1,354.4 1,938.5 1,970.1 2,301.0 7,564.1 1,753.9 3,350.1 2,690.5 2,528.0 10,322.5 3,108.3 5,487.4 7,325.5 13,333.5 29,254.7 Later Stage 601.4 551.6 669.8 795.9 2,618.8 854.6 973.6 955.0 1,137.9 3,921.0 1,620.2 3,004.2 2,620.1 3,249.1 10,493.6 Total 3,122.3 3,667.8 3,723.4 4,491.2 15,004.6 4,178.5 5,764.5 5,395.7 6,134.2 21,473.0 6,622.0 11,318.1 13,597.5 23,309.1 54,846.7 Figure 3.12f Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2000 2001 2002 Stage 2000-1Q 2000-2Q 2000-3Q 2000-4Q 2000 Total 2001-1Q 2001-2Q 2001-3Q 2001-4Q 2001 Total 2002-1Q 2002-2Q 2002-3Q 2002-4Q 2002 Total Seed 808.6 984.1 870.9 486.8 3,150.4 256.6 265.6 128.5 152.7 803.5 76.4 94.0 84.2 86.1 340.7 Early Stage 7,137.5 6,937.9 5,903.8 5,313.5 25,292.6 3,447.7 2,104.5 1,720.2 1,318.9 8,591.3 1,209.5 1,138.0 827.7 804.5 3,979.7 Expansion 16,100.4 15,726.9 15,253.6 11,966.2 59,047.2 6,905.3 6,622.1 4,588.8 4,782.5 22,898.7 3,804.8 3,535.3 2,461.7 2,320.8 12,122.6 Later Stage 4,382.9 4,357.2 4,582.9 4,291.6 17,614.5 2,459.6 2,515.1 1,793.4 1,890.5 8,658.6 1,932.6 1,345.6 1,096.5 1,359.4 5,734.1 Total 28,429.3 28,006.1 26,611.1 22,058.1 105,104.6 13,069.2 11,507.4 8,230.9 8,144.7 40,952.1 7,023.4 6,112.9 4,470.0 4,570.8 22,177.1 Figure 3.12g Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2003 2004 2005 Stage 2003-1Q 2003-2Q 2003-3Q 2003-4Q 2003 Total 2004-1Q 2004-2Q 2004-3Q 2004-4Q 2004 Total 2005-1Q 2005-2Q 2005-3Q 2005-4Q 2005 Total Seed 83.3 95.3 100.3 86.0 364.9 104.8 124.3 118.1 569.7 916.9 139.3 529.0 165.0 162.2 995.6 Early Stage 676.2 1,011.5 806.8 1,087.7 3,582.2 904.9 1,030.3 1,028.5 1,077.0 4,040.8 907.8 992.9 1,186.2 971.0 4,057.9 Expansion 2,468.1 2,508.0 2,165.5 2,623.3 9,764.9 2,069.3 2,680.0 2,042.6 2,261.7 9,053.6 2,092.9 2,336.1 1,759.6 2,333.2 8,521.7 Later Stage 1,160.2 1,374.6 1,520.5 1,852.6 5,908.0 2,312.6 2,481.9 1,856.6 2,546.4 9,197.5 2,082.1 2,579.1 2,952.5 2,335.5 9,949.3 Total 4,387.8 4,989.4 4,593.1 5,649.7 19,620.0 5,391.6 6,316.6 5,045.8 6,454.8 23,208.8 5,222.1 6,437.1 6,063.2 5,802.0 23,524.5 Figure 3.12h Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2006 2007 2008 Stage 2006-1Q 2006-2Q 2006-3Q 2006-4Q 2006 Total 2007-1Q 2007-2Q 2007-3Q 2007-4Q 2007 Total 2008-1Q 2008-2Q 2008-3Q 2008-4Q 2008 Total Seed 249.2 367.6 372.1 302.7 1,291.6 315.8 500.0 462.4 558.7 1,837.0 459.3 528.3 557.7 377.9 1,923.1 Early Stage 930.6 1,022.2 1,143.1 1,674.5 4,770.4 1,341.1 1,706.4 1,259.8 1,780.0 6,087.3 1,401.6 1,571.4 1,382.2 1,533.6 5,888.9 Expansion 2,594.2 3,218.2 2,863.1 2,448.0 11,123.5 2,641.8 2,335.6 3,102.0 2,986.4 11,065.7 3,421.3 2,657.7 2,549.7 2,096.4 10,725.1 Later Stage 2,832.4 2,778.3 2,473.8 2,244.5 10,329.0 3,151.4 3,297.7 3,378.0 3,125.8 12,952.9 2,827.0 3,275.0 3,126.9 2,183.1 11,411.9 Total 6,606.5 7,386.3 6,852.0 6,669.7 27,514.5 7,450.1 7,839.8 8,202.2 8,450.9 31,942.9 8,109.1 8,032.4 7,616.5 6,191.0 29,948.9
2014 National Venture Capital Association Yearbook | 41 NVCA THOMSON REUTERS Figure 3.12i Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2009 2010 2011 Stage 2009-1Q 2009-2Q 2009-3Q 2009-4Q 2009 Total 2010-1Q 2010-2Q 2010-3Q 2010-4Q 2010 Total 2011-1Q 2011-2Q 2011-3Q 2011-4Q 2011 Total Seed 319.7 536.0 511.0 368.5 1,735.2 416.7 689.0 338.7 231.9 1,676.3 219.6 424.4 227.4 208.1 1,079.4 Early Stage 768.2 1,178.5 1,240.7 1,753.2 4,940.6 1,149.7 1,732.4 1,457.3 1,574.5 5,913.8 1,861.1 2,307.7 2,244.0 2,514.1 8,926.9 Expansion 1,233.0 1,779.0 1,829.0 2,000.2 6,841.2 1,820.2 2,788.6 1,670.2 2,428.0 8,706.9 2,210.7 2,457.8 2,579.8 2,580.9 9,829.3 Later Stage 1,527.1 1,600.6 1,844.7 1,796.7 6,769.2 1,702.2 1,915.0 1,985.5 1,468.8 7,071.6 2,236.0 3,007.4 2,506.0 2,145.1 9,894.4 Total 3,848.0 5,094.2 5,425.5 5,918.6 20,286.2 5,088.8 7,125.0 5,451.7 5,703.2 23,368.6 6,527.4 8,197.3 7,557.2 7,448.2 29,730.0 Figure 3.12j Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2012 2013 Stage 2012-1Q 2012-2Q 2012-3Q 2012-4Q 2012 Total 2013-1Q 2013-2Q 2013-3Q 2013-4Q 2013 Total Seed 187.4 282.5 179.3 187.2 836.4 208.7 227.9 192.2 337.5 966.4 Early Stage 1,956.2 2,184.2 1,932.5 2,242.2 8,315.1 1,551.5 2,536.9 2,862.0 2,945.6 9,896.0 Expansion 1,810.0 2,763.6 2,580.5 2,292.5 9,446.6 2,057.7 2,215.5 2,537.0 3,004.0 9,814.2 Later Stage 2,356.5 2,170.9 1,985.2 2,241.6 8,754.2 2,190.4 2,125.8 2,333.2 2,219.3 8,868.7 Total 6,310.1 7,401.1 6,677.5 6,963.5 27,352.3 6,008.3 7,106.1 7,924.4 8,506.4 29,545.2
42 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.13a Quarterly Venture Capital Investments 1985-2013 By Stage (Number of Deals) 1985 1986 1987 Stage 1985-1Q 1985-2Q 1985-3Q 1985-4Q 1985 Total 1986-1Q 1986-2Q 1986-3Q 1986-4Q 1986 Total 1987-1Q 1987-2Q 1987-3Q 1987-4Q 1987 Total Seed 110 89 61 98 358 134 107 65 82 388 116 101 85 85 387 Early Stage 88 69 59 74 290 111 71 72 79 333 131 83 102 95 411 Expansion 138 121 114 150 523 166 136 95 105 502 182 138 158 136 614 Later Stage 66 41 38 32 177 61 56 31 52 200 64 65 52 53 234 Total 402 320 272 354 1,348 472 370 263 318 1,423 493 387 397 369 1,646 Figure 3.13b Quarterly Venture Capital Investments 1985-2013 By Stage (Number of Deals) 1988 1989 1990 Stage 1988-1Q 1988-2Q 1988-3Q 1988-4Q 1988 Total 1989-1Q 1989-2Q 1989-3Q 1989-4Q 1989 Total 1990-1Q 1990-2Q 1990-3Q 1990-4Q 1990 Total Seed 119 79 88 84 370 106 100 77 72 355 60 69 59 70 258 Early Stage 99 94 87 78 358 101 65 84 88 338 88 97 73 113 371 Expansion 158 181 133 142 614 216 158 127 164 665 148 151 144 157 600 Later Stage 54 48 42 38 182 52 35 38 64 189 55 59 49 71 234 Total 430 402 350 342 1,524 475 358 326 388 1,547 351 376 325 411 1,463 Figure 3.13c Quarterly Venture Capital Investments 1985-2013 By Stage (Number of Deals) 1991 1992 1993 Stage 1991-1Q 1991-2Q 1991-3Q 1991-4Q 1991 Total 1992-1Q 1992-2Q 1992-3Q 1992-4Q 1992 Total 1993-1Q 1993-2Q 1993-3Q 1993-4Q 1993 Total Seed 51 49 42 51 193 49 68 49 86 252 69 68 66 87 290 Early Stage 78 69 60 70 277 73 86 52 81 292 40 48 38 55 181 Expansion 137 127 124 153 541 155 160 103 185 603 144 121 116 132 513 Later Stage 49 69 56 87 261 77 46 45 79 247 68 54 52 53 227 Total 315 314 282 361 1,272 354 360 249 431 1,394 321 291 272 327 1,211 Figure 3.13d Quarterly Venture Capital Investments 1985-2013 By Stage (Number of Deals) 1994 1995 1996 Stage 1994-1Q 1994-2Q 1994-3Q 1994-4Q 1994 Total 1995-1Q 1995-2Q 1995-3Q 1995-4Q 1995 Total 1996-1Q 1996-2Q 1996-3Q 1996-4Q 1996 Total Seed 91 67 83 91 332 125 95 95 116 431 130 139 97 137 503 Early Stage 64 61 53 77 255 130 137 116 136 519 147 205 174 225 751 Expansion 101 110 96 115 422 187 178 164 176 705 235 246 245 317 1,043 Later Stage 53 69 43 58 223 61 56 58 66 241 72 83 86 97 338 Total 309 307 275 341 1,232 503 466 433 494 1,896 584 673 602 776 2,635
2014 National Venture Capital Association Yearbook | 43 NVCA THOMSON REUTERS Figure 3.12e Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 1997 1998 1999 Stage 1997-1Q 1997-2Q 1997-3Q 1997-4Q 1997 Total 1998-1Q 1998-2Q 1998-3Q 1998-4Q 1998 Total 1999-1Q 1999-2Q 1999-3Q 1999-4Q 1999 Total Seed 392.9 330.8 323.4 319.5 1,366.6 405.4 426.4 459.9 477.6 1,769.3 591.5 799.7 990.1 1,236.5 3,617.8 Early Stage 773.5 846.8 760.1 1,074.7 3,455.1 1,164.7 1,014.5 1,290.4 1,990.6 5,460.1 1,302.0 2,026.8 2,661.8 5,489.9 11,480.6 Expansion 1,354.4 1,938.5 1,970.1 2,301.0 7,564.1 1,753.9 3,350.1 2,690.5 2,528.0 10,322.5 3,108.3 5,487.4 7,325.5 13,333.5 29,254.7 Later Stage 601.4 551.6 669.8 795.9 2,618.8 854.6 973.6 955.0 1,137.9 3,921.0 1,620.2 3,004.2 2,620.1 3,249.1 10,493.6 Total 3,122.3 3,667.8 3,723.4 4,491.2 15,004.6 4,178.5 5,764.5 5,395.7 6,134.2 21,473.0 6,622.0 11,318.1 13,597.5 23,309.1 54,846.7 Figure 3.12f Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2000 2001 2002 Stage 2000-1Q 2000-2Q 2000-3Q 2000-4Q 2000 Total 2001-1Q 2001-2Q 2001-3Q 2001-4Q 2001 Total 2002-1Q 2002-2Q 2002-3Q 2002-4Q 2002 Total Seed 808.6 984.1 870.9 486.8 3,150.4 256.6 265.6 128.5 152.7 803.5 76.4 94.0 84.2 86.1 340.7 Early Stage 7,137.5 6,937.9 5,903.8 5,313.5 25,292.6 3,447.7 2,104.5 1,720.2 1,318.9 8,591.3 1,209.5 1,138.0 827.7 804.5 3,979.7 Expansion 16,100.4 15,726.9 15,253.6 11,966.2 59,047.2 6,905.3 6,622.1 4,588.8 4,782.5 22,898.7 3,804.8 3,535.3 2,461.7 2,320.8 12,122.6 Later Stage 4,382.9 4,357.2 4,582.9 4,291.6 17,614.5 2,459.6 2,515.1 1,793.4 1,890.5 8,658.6 1,932.6 1,345.6 1,096.5 1,359.4 5,734.1 Total 28,429.3 28,006.1 26,611.1 22,058.1 105,104.6 13,069.2 11,507.4 8,230.9 8,144.7 40,952.1 7,023.4 6,112.9 4,470.0 4,570.8 22,177.1 Figure 3.12g Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2003 2004 2005 Stage 2003-1Q 2003-2Q 2003-3Q 2003-4Q 2003 Total 2004-1Q 2004-2Q 2004-3Q 2004-4Q 2004 Total 2005-1Q 2005-2Q 2005-3Q 2005-4Q 2005 Total Seed 83.3 95.3 100.3 86.0 364.9 104.8 124.3 118.1 569.7 916.9 139.3 529.0 165.0 162.2 995.6 Early Stage 676.2 1,011.5 806.8 1,087.7 3,582.2 904.9 1,030.3 1,028.5 1,077.0 4,040.8 907.8 992.9 1,186.2 971.0 4,057.9 Expansion 2,468.1 2,508.0 2,165.5 2,623.3 9,764.9 2,069.3 2,680.0 2,042.6 2,261.7 9,053.6 2,092.9 2,336.1 1,759.6 2,333.2 8,521.7 Later Stage 1,160.2 1,374.6 1,520.5 1,852.6 5,908.0 2,312.6 2,481.9 1,856.6 2,546.4 9,197.5 2,082.1 2,579.1 2,952.5 2,335.5 9,949.3 Total 4,387.8 4,989.4 4,593.1 5,649.7 19,620.0 5,391.6 6,316.6 5,045.8 6,454.8 23,208.8 5,222.1 6,437.1 6,063.2 5,802.0 23,524.5 Figure 3.12h Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2006 2007 2008 Stage 2006-1Q 2006-2Q 2006-3Q 2006-4Q 2006 Total 2007-1Q 2007-2Q 2007-3Q 2007-4Q 2007 Total 2008-1Q 2008-2Q 2008-3Q 2008-4Q 2008 Total Seed 249.2 367.6 372.1 302.7 1,291.6 315.8 500.0 462.4 558.7 1,837.0 459.3 528.3 557.7 377.9 1,923.1 Early Stage 930.6 1,022.2 1,143.1 1,674.5 4,770.4 1,341.1 1,706.4 1,259.8 1,780.0 6,087.3 1,401.6 1,571.4 1,382.2 1,533.6 5,888.9 Expansion 2,594.2 3,218.2 2,863.1 2,448.0 11,123.5 2,641.8 2,335.6 3,102.0 2,986.4 11,065.7 3,421.3 2,657.7 2,549.7 2,096.4 10,725.1 Later Stage 2,832.4 2,778.3 2,473.8 2,244.5 10,329.0 3,151.4 3,297.7 3,378.0 3,125.8 12,952.9 2,827.0 3,275.0 3,126.9 2,183.1 11,411.9 Total 6,606.5 7,386.3 6,852.0 6,669.7 27,514.5 7,450.1 7,839.8 8,202.2 8,450.9 31,942.9 8,109.1 8,032.4 7,616.5 6,191.0 29,948.9
44 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.13i Quarterly Venture Capital Investments 1985-2013 By Stage (Number of Deals) 2009 2010 2011 Stage 2009-1Q 2009-2Q 2009-3Q 2009-4Q 2009 Total 2010-1Q 2010-2Q 2010-3Q 2010-4Q 2010 Total 2011-1Q 2011-2Q 2011-3Q 2011-4Q 2011 Total Seed 70 87 99 118 374 93 120 100 97 410 93 129 114 110 446 Early Stage 195 212 249 323 979 271 361 318 337 1,287 353 398 408 444 1,603 Expansion 186 220 219 269 894 253 305 242 277 1,077 223 277 282 244 1,026 Later Stage 229 242 199 231 901 207 237 228 201 873 237 281 214 197 929 Total 680 761 766 941 3,148 824 1,023 888 912 3,647 906 1,085 1,018 995 4,004 Figure 3.13j Quarterly Venture Capital Investments 1985-2013 By Stage (Number of Deals) 2012 2013 Stage 2012-1Q 2012-2Q 2012-3Q 2012-4Q 2012 Total 2013-1Q 2013-2Q 2013-3Q 2013-4Q 2013 Total Seed 65 88 72 71 296 53 47 53 68 221 Early Stage 359 445 428 506 1,738 420 512 564 535 2,031 Expansion 225 255 252 255 987 236 231 244 280 991 Later Stage 233 195 194 222 844 203 195 187 213 798 Total 882 983 946 1,054 3,865 912 985 1,048 1,096 4,041
2014 National Venture Capital Association Yearbook | 45 NVCA THOMSON REUTERS Figure 3.14 Venture Capital Investments 1985-2013 By Industry ($ Millions) Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Biotechnology 136 223 290 369 336 316 292 599 483 578 832 1,192 1,368 1,554 2,104 4,293 Business Products and Services 29 81 64 53 52 94 77 39 70 30 188 291 437 715 2,561 4,661 Computers and Peripherals 450 473 392 370 312 245 174 205 164 178 316 358 394 383 958 1,636 Consumer Products and Services 69 135 176 153 86 169 126 123 162 176 522 507 742 692 2,715 3,221 Electronics/Instrumentation 119 118 120 72 104 57 72 51 50 63 151 200 307 198 272 779 Financial Services 81 92 62 209 233 63 25 120 102 124 181 319 383 843 2,128 4,131 Healthcare Services 81 129 138 97 155 92 72 191 204 202 460 734 939 959 1,495 1,396 Industrial/Energy 201 208 290 222 345 243 183 272 281 296 527 495 695 1,257 1,427 2,637 IT Services 21 45 51 52 47 38 38 29 54 119 175 534 641 1,076 4,319 8,863 Media and Entertainment 101 119 155 166 151 93 69 132 278 275 944 1,154 1,080 1,865 7,394 0,613 Medical Devices and Equipment 184 182 258 340 347 322 235 515 388 438 668 619 1,027 1,251 1,581 2,404 Networking and Equipment 225 164 143 137 197 174 140 250 516 250 372 628 962 1,436 4,604 1,557 Other 3 3 0 6 - 0 33 0 6 6 38 21 67 90 214 60 Retailing/Distribution 32 121 296 232 217 89 48 97 103 103 303 269 326 749 2,842 3,206 Semiconductors 255 296 257 299 171 191 92 156 93 159 214 346 597 631 1,378 3,802 Software 618 570 519 477 458 519 466 614 460 671 1,188 2,352 3,485 4,769 10,899 25,482 Telecommunications 177 174 148 159 124 128 117 201 250 463 937 1,321 1,556 3,006 7,957 16,364 Unknown - - - - - - - - - - - - - - - - Total 2,779 3,132 3,361 3,411 3,333 2,833 ,260 3,594 3,663 4,130 8,015 11,342 15,005 21,473 54,847 105,105 Figure 3.14 (Continued) Venture Capital Investments 1985-2013 By Industry ($ Millions) Industry 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 3,503 3,331 3,675 4,402 3,987 4,876 5,843 5,138 3,909 3,970 4,777 4,191 4,562 Business Products and Services 1,076 475 673 466 372 593 596 466 252 437 194 130 218 Computers and Peripherals 709 457 362 530 551 394 569 419 341 375 490 436 517 Consumer Products and Services 702 256 157 331 385 420 441 400 492 661 1,432 1,335 1,245 Electronics/Instrumentation 366 300 194 375 397 669 542 605 379 390 423 250 324 Financial Services 1,204 331 413 532 907 524 574 481 381 391 317 276 536 Healthcare Services 556 380 234 382 379 380 344 165 141 250 299 333 286 Industrial/Energy 1,248 823 734 843 1,131 1,941 3,046 4,537 2,564 3,421 3,753 2,904 1,507 IT Services 2,520 1,017 731 771 999 1,510 1,924 2,106 1,257 1,699 2,627 1,893 1,993 Media and Entertainment 2,368 788 669 1,374 1,203 1,863 2,200 1,877 1,650 1,576 2,307 2,134 2,936 Medical Devices and Equipment 2,085 1,894 1,660 1,919 2,170 2,777 3,694 3,648 2,586 2,363 2,935 2,549 2,130 Networking and Equipment 5,714 2,627 1,726 1,537 1,661 1,222 1,388 776 697 564 370 317 670 Other 55 17 - 14 0 - 3 5 28 8 13 48 99 Retailing/Distribution 368 139 64 217 249 189 340 199 133 149 380 370 240 Semiconductors 2,473 1,655 1,761 2,157 1,851 2,307 2,058 1,586 808 1,110 1,350 894 597 Software 10,864 5,525 4,945 5,520 5,251 5,495 6,219 6,008 4,085 5,257 7,472 8,573 11,020 Telecommunications 5,142 2,163 1,620 1,841 2,032 2,355 2,162 1,533 582 746 590 718 644 Unknown - - - - - - - - - - - - 21 Total 40,952 22,177 19,620 23,209 23,524 27,515 31,943 29,949 20,286 23,369 29,730 27,352 29,545
46 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.15 Venture Capital Investments 1985-2013 By Industry (Number of Deals) Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 73 98 138 153 139 146 140 167 136 139 176 235 244 275 264 Business Products and Services 20 42 51 38 32 28 20 25 32 21 53 70 95 138 277 Computers and Peripherals 158 148 131 138 136 104 78 84 65 66 93 94 115 92 106 Consumer Products and Services 43 51 72 59 52 67 48 51 54 66 110 131 162 164 286 Electronics/Instrumentation 74 66 68 55 58 49 46 38 27 36 49 43 52 54 51 Financial Services 22 27 36 43 44 25 24 24 31 31 47 60 89 115 189 Healthcare Services 33 57 56 46 55 41 38 46 53 45 73 139 152 155 159 Industrial/Energy 122 138 162 138 144 158 124 131 102 101 128 155 211 185 202 IT Services 22 26 33 26 28 32 29 22 19 33 62 128 160 207 457 Media and Entertainment 56 68 92 75 71 58 54 79 82 97 138 191 217 263 701 Medical Devices and Equipment 129 117 166 151 184 189 159 187 147 128 179 213 273 297 290 Networking and Equipment 81 76 73 70 71 74 65 83 62 74 82 123 140 211 274 Other 2 2 2 1 2 2 2 3 2 10 9 10 9 20 Retailing/Distribution 19 34 71 81 73 46 38 34 35 27 54 70 91 120 231 Semiconductors 87 74 94 93 82 79 52 60 45 39 64 76 118 119 148 Software 322 322 307 279 297 302 288 296 243 252 436 688 829 988 1,420 Telecommunications 85 77 94 78 81 63 67 65 75 75 142 210 266 337 522 Total 1,348 1,423 1,646 1,524 1,547 1,463 1,272 1,394 1,211 1,232 1,896 2,635 3,224 3,729 5,597 Figure 3.15 Venture Capital Investments 1985-2013 By Industry (Number of Deals) Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 358 342 331 358 404 413 487 539 544 463 504 468 478 474 Business Products and Services 454 176 101 97 83 78 95 111 116 68 76 59 39 66 Computers and Peripherals 133 82 59 57 60 66 62 72 59 52 52 59 43 34 Consumer Products and Services 286 119 72 47 66 77 79 110 103 88 116 139 170 171 Electronics/Instrumentation 73 55 62 53 69 82 93 90 93 61 68 59 51 42 Financial Services 334 136 76 64 70 65 88 87 68 50 73 57 53 62 Healthcare Services 166 106 70 71 63 66 52 57 50 38 46 45 43 42 Industrial/Energy 254 201 128 136 157 152 224 306 358 262 303 320 257 240 IT Services 686 327 174 149 155 174 240 284 282 218 296 366 297 344 Media and Entertainment 950 372 168 129 142 210 330 402 411 279 346 436 410 455 Medical Devices and Equipment 296 259 236 250 284 279 356 395 400 343 345 372 322 311 Networking and Equipment 478 329 227 184 190 183 130 137 106 95 56 48 32 25 Other 12 11 3 1 6 3 2 10 4 6 11 10 13 22 Retailing/Distribution 282 84 49 31 38 40 40 41 39 35 32 64 57 49 Semiconductors 256 209 170 215 257 219 265 228 210 136 146 136 113 92 Software 2,168 1,303 1,006 969 952 952 1,031 1,078 1,115 831 1,066 1,256 1,391 1,547 Telecommunications 852 479 274 213 232 234 308 279 219 123 111 110 96 65 Total 8,038 4,590 3,206 3,024 3,228 3,293 3,882 4,226 4,177 3,148 3,647 4,004 3,865 4,041
2014 National Venture Capital Association Yearbook | 47 NVCA THOMSON REUTERS Figure 3.16 Venture Capital Investments 1985-2013 By State ($ Millions) State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 California 1,070.9 1,343.8 1,266.7 1,391.8 1,309.8 1,221.6 1,031.3 1,437.2 1,232.1 1,503.8 3,108.7 4,634.4 6,044.9 7,868.2 22,947.2 42,882.9 Massachusetts 396.3 379.5 446.0 387.8 296.8 350.9 240.0 366.3 310.9 385.9 697.2 1,053.9 1,438.6 2,002.1 5,065.7 10,557.1 New York 114.5 75.4 100.5 112.1 158.7 48.8 45.0 143.8 103.9 69.9 303.3 293.3 786.2 1,402.1 3,508.1 6,690.8 Texas 248.6 228.4 211.0 240.7 229.2 141.0 161.4 150.5 241.9 313.8 479.2 553.4 908.7 1,205.6 3,163.1 6,270.8 Washington 55.4 66.1 98.3 73.3 74.8 55.2 29.2 191.5 85.4 137.6 325.9 466.9 434.2 736.5 2,340.7 2,792.3 Maryland 46.8 20.8 30.5 46.1 87.7 47.6 36.4 30.1 343.5 55.9 140.0 139.5 188.3 349.9 616.5 1,961.5 Virginia 32.3 23.5 76.4 66.6 51.8 46.7 14.0 30.9 39.5 77.6 279.4 440.1 297.9 749.7 1,238.9 3,320.9 Pennsylvania 48.8 43.3 78.0 68.4 56.2 119.6 41.1 154.0 107.9 149.4 128.0 305.6 540.9 644.9 1,763.5 2,911.7 Illinois 43.5 30.7 38.5 42.7 93.4 72.0 96.6 73.9 89.5 168.9 199.0 358.0 414.3 426.9 1,232.7 2,382.3 Colorado 77.0 113.8 111.4 107.8 157.8 93.7 54.2 129.7 135.0 197.4 325.1 321.2 405.0 838.9 1,832.9 4,091.9 Florida 31.1 34.5 70.8 80.0 44.3 34.6 22.5 71.9 127.7 102.8 270.9 398.9 467.1 625.3 1,697.4 2,691.1 Georgia 55.8 111.4 66.6 105.3 64.7 20.9 46.8 192.7 143.4 93.5 157.8 247.1 371.9 504.5 1,164.1 2,270.7 New Jersey 75.3 116.9 132.3 99.1 156.6 66.5 68.7 106.1 100.2 190.7 241.6 441.8 490.9 501.2 907.8 3,162.9 Ohio 34.7 55.7 44.8 53.4 32.7 27.9 19.6 27.1 34.3 67.3 68.7 160.5 180.9 319.1 421.0 1,013.6 Utah 6.0 32.8 8.3 11.9 4.4 1.0 9.1 24.4 7.3 1.2 23.2 57.5 90.7 116.2 418.4 666.9 D. of Columbia 18.9 15.2 4.7 17.2 0.0 2.5 0.8 4.8 1.1 4.3 0.8 6.7 5.2 46.9 539.7 508.3 Minnesota 24.4 29.9 35.4 25.8 37.6 78.7 38.7 52.0 37.1 55.4 192.3 149.9 256.8 340.0 616.5 951.7 North Carolina 17.3 20.9 21.0 15.7 26.1 36.9 12.1 48.8 22.2 63.6 210.7 180.9 271.8 326.9 853.6 1,821.8 Connecticut 71.6 76.9 101.3 167.7 89.6 134.9 86.5 57.8 33.3 82.5 141.3 146.0 270.0 345.2 889.2 1,550.8 Oregon 84.9 75.0 51.7 66.7 43.2 33.0 29.7 55.6 32.8 27.0 38.6 90.5 126.9 53.5 501.0 810.4 Arizona 15.2 38.1 38.6 43.9 37.8 27.5 33.3 64.9 41.9 35.7 83.4 95.5 170.2 226.1 365.5 668.6 Tennessee 43.5 53.5 74.5 42.7 73.8 38.8 21.1 7.2 46.7 40.6 157.7 178.2 106.6 107.3 581.0 466.3 Michigan 34.8 21.3 59.1 15.7 21.8 26.4 5.7 14.9 58.7 8.6 65.7 79.4 106.2 122.4 253.5 356.4 South Carolina 0.9 - 15.3 18.1 23.7 7.6 4.0 1.2 11.4 21.8 53.1 100.2 61.0 168.0 218.2 415.2 Arkansas - 1.2 - - - - - 1.0 - - 5.0 - 4.0 29.9 25.9 34.3 Rhode Island 12.6 9.9 6.6 14.2 30.9 2.7 0.4 5.1 10.5 - 3.5 20.3 11.5 26.0 35.4 92.6 Missouri 8.8 4.3 11.1 1.6 9.4 7.5 34.9 25.2 55.1 70.5 98.5 56.1 72.6 611.7 309.1 655.8 New Hampshire 5.3 14.8 15.1 27.7 29.5 16.2 29.2 6.8 31.7 7.9 30.5 42.9 53.3 167.8 233.8 767.9 Delaware 0.3 - 4.5 1.4 4.8 2.3 3.8 9.9 3.0 12.5 4.4 4.7 1.1 - 16.8 134.7 Wisconsin 11.4 13.6 16.4 12.8 11.7 10.9 5.5 23.3 32.5 8.5 9.1 26.0 62.9 51.3 88.5 259.7 Kansas 2.3 2.2 3.9 4.6 5.1 8.9 0.4 1.7 4.8 1.5 8.7 35.7 9.2 10.4 30.2 264.8 Maine 19.0 11.6 15.3 8.7 17.2 5.1 4.3 0.5 3.0 - 1.5 1.5 3.7 59.7 44.9 140.2 New Mexico 18.9 9.2 6.6 3.9 3.0 1.8 4.4 - 0.5 - 3.6 12.9 32.5 7.7 12.1 21.1 Indiana 16.0 16.7 17.7 6.4 10.1 10.5 8.3 0.0 16.6 56.3 15.2 20.8 29.7 44.0 46.7 273.3 North Dakota - - 14.0 - - - - - - 0.2 9.8 - 1.1 0.5 3.0 6.1 Iowa 0.7 0.9 7.8 1.3 2.0 2.5 0.7 1.6 2.0 19.8 12.1 22.1 17.1 8.8 3.9 16.4 Vermont - 6.6 8.0 4.5 7.4 7.2 1.3 3.8 - 5.3 13.0 1.8 4.5 4.2 - 46.4 Louisiana 9.9 3.3 1.9 1.9 - - 2.3 3.8 3.8 2.7 25.5 13.7 26.5 41.0 234.0 103.3 South Dakota - - - - - - - - - - - - - - 0.7 0.3 Nebraska 0.5 - - 1.5 - - - 0.1 38.0 3.5 0.5 10.4 3.7 29.1 57.3 163.1
48 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.16 (Continued) Venture Capital Investments 1985-2013 By State ($ Millions) State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Kentucky 2.4 2.3 7.4 2.8 5.8 - 8.5 3.9 15.4 11.9 21.6 31.1 35.0 37.5 81.9 201.8 Nevada - 2.4 4.1 - 5.5 0.1 2.2 9.1 - 1.2 2.9 18.7 9.7 61.2 47.1 30.9 Oklahoma 1.5 4.7 14.1 5.3 9.3 2.6 1.5 - - 11.0 6.1 31.8 27.8 115.4 70.0 44.5 Idaho 0.3 - - - - - - 5.0 0.2 0.1 15.2 0.1 1.2 30.3 16.5 8.5 Alabama 15.5 17.3 21.3 9.6 2.0 2.3 0.3 10.6 55.1 25.0 28.5 50.2 109.9 58.3 65.9 278.5 Hawaii - - - - - - - - - - - 20.5 1.5 4.2 12.8 203.0 Mississippi 2.2 0.0 - 0.6 0.9 4.9 2.4 14.5 1.7 15.0 - 10.6 8.4 4.5 250.7 23.5 West Virginia 1.1 2.0 0.1 0.0 - 0.1 - - 0.0 - - - 23.8 2.0 - 4.5 Montana 1.6 1.7 3.3 1.1 - - 1.0 - - - - - - - 16.3 16.7 Alaska - - - - - - - - - - - - - - - 3.5 Puerto Rico - - - - - - 0.3 0.0 1.0 22.0 7.8 8.2 12.5 1.3 4.6 42.1 Unknown - - 0.5 0.8 6.1 13.0 0.2 30.8 0.8 0.1 0.3 2.2 4.4 39.1 2.4 50.4 Wyoming - 0.1 - - - - - - - - - - 2.0 - - - Total 2,779.0 3,132.3 3,361.3 3,411.3 3,333.0 2,833.1 2,259.7 3,594.2 3,663.2 4,130.1 8,014.8 11,341.6 15,004.6 21,473.0 54,846.7 105,104.6 Figure 3.16b Venture Capital Investments 1985-2013 By State ($ Millions) State 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 California 16,665.4 9,598.7 8,693.9 10,577.2 10,881.4 12,965.9 15,463.7 14,873.4 10,302.7 12,021.7 15,109.7 14,541.6 14,769.7 Massachusetts 4,919.4 2,646.3 2,721.3 3,107.9 2,736.6 3,032.0 3,798.9 3,328.7 2,407.8 2,422.6 3,152.7 3,222.1 3,079.3 New York 1,935.1 746.3 669.8 773.7 1,068.9 1,444.6 1,350.0 1,538.6 1,080.4 1,391.8 2,474.8 1,899.3 2,870.4 Texas 3,137.3 1,191.6 1,221.0 1,212.3 1,170.7 1,518.2 1,493.8 1,127.7 678.2 1,079.4 1,622.4 948.9 1,315.5 Washington 1,150.7 591.0 450.8 854.9 830.3 1,116.9 1,335.2 883.5 565.2 575.8 539.2 853.1 913.2 Maryland 935.6 627.1 331.4 709.5 637.8 844.2 728.9 578.0 424.0 484.2 438.4 407.8 664.5 Virginia 1,004.2 429.0 397.3 291.1 534.8 460.9 626.4 534.6 209.4 376.7 520.1 273.6 593.8 Pennsylvania 1,084.2 526.5 537.6 624.9 518.3 898.7 977.3 787.0 433.6 525.4 515.6 524.4 446.5 Illinois 998.6 313.6 379.9 236.6 315.7 437.2 451.4 477.0 257.1 654.3 799.5 594.4 434.9 Colorado 1,244.4 588.0 609.9 363.2 622.9 703.3 686.3 872.3 458.9 445.9 619.7 589.0 428.8 Florida 937.3 401.7 323.2 422.6 329.2 282.0 599.3 265.2 337.7 234.2 335.5 203.9 421.0 Georgia 847.9 574.9 281.5 500.5 264.4 414.1 431.6 420.9 310.6 334.0 381.3 262.8 411.8 New Jersey 1,542.3 972.0 802.8 968.1 925.4 740.7 578.9 716.0 621.8 460.8 439.6 421.4 322.3 Ohio 249.2 266.0 193.9 89.9 136.5 91.2 228.1 273.6 122.7 199.4 188.1 304.5 319.2 Utah 220.1 135.7 111.8 249.8 248.8 198.1 196.0 254.8 176.3 150.5 249.3 318.4 315.0 D. of Columbia 161.8 23.5 56.1 80.2 25.1 46.2 57.7 25.3 49.1 109.3 53.4 60.8 286.5 Minnesota 475.2 345.5 208.2 388.2 274.0 304.5 413.1 485.0 284.8 145.1 291.4 254.1 270.0 North Carolina 585.6 554.2 379.4 311.1 346.9 422.5 555.4 511.6 254.9 421.6 303.6 180.9 259.6 Connecticut 608.2 191.9 223.6 251.6 209.6 289.0 271.0 236.1 190.2 133.2 157.8 152.6 181.7 Oregon 248.6 165.1 140.5 142.4 132.2 146.8 254.4 152.2 79.6 133.4 237.8 124.6 138.5 Arizona 247.5 212.4 81.9 72.2 134.7 276.7 238.2 228.5 94.0 84.2 230.4 237.4 113.3
2014 National Venture Capital Association Yearbook | 49 NVCA THOMSON REUTERS Figure 3.16b Venture Capital Investments 1985-2013 By State ($ Millions) State 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Tennessee 193.3 122.5 82.6 96.2 101.5 43.2 126.7 84.3 75.0 69.3 108.6 81.3 109.3 Michigan 154.9 109.4 95.2 134.3 93.3 131.3 104.7 214.5 178.5 148.9 83.1 238.9 108.2 South Carolina 10.1 45.3 11.8 13.6 2.7 8.3 86.9 21.2 7.1 41.6 59.7 39.5 85.7 Arkansas 10.4 9.7 1.2 3.7 5.1 6.5 6.2 - - 5.0 - 5.0 85.5 Rhode Island 118.7 95.9 62.8 58.0 72.8 77.2 4.5 16.1 30.0 59.3 42.2 85.1 81.7 Missouri 267.4 81.0 79.5 26.0 127.7 57.8 47.6 92.5 17.4 97.0 134.4 21.5 76.7 New Hampshire 257.9 225.7 167.1 127.6 97.2 123.1 154.1 255.8 52.1 56.9 62.5 60.7 74.4 Delaware 14.6 19.4 0.4 2.1 11.1 5.3 7.3 79.0 20.6 32.2 26.2 9.6 70.8 Wisconsin 92.6 51.2 37.6 66.0 67.8 72.0 87.2 71.6 36.1 134.9 52.9 95.3 35.9 Kansas 40.3 8.9 27.0 48.7 7.2 31.5 123.4 59.5 7.5 39.1 53.8 47.6 32.9 Maine 3.9 16.9 2.7 26.0 5.1 39.9 7.8 5.4 11.4 4.3 38.6 12.8 26.8 New Mexico 14.2 13.9 3.6 24.0 76.4 32.1 131.1 49.8 5.5 12.4 64.9 36.3 25.9 Indiana 56.5 40.1 24.5 67.8 123.7 32.8 70.6 93.7 232.1 80.0 177.9 84.2 25.4 North Dakota 1.0 - 14.5 2.0 - - 0.2 5.5 4.7 3.2 4.0 2.4 24.1 Iowa 9.1 2.0 - 5.3 12.1 1.5 25.3 58.2 84.1 51.5 28.4 5.0 22.5 Vermont 11.6 1.2 0.5 4.5 34.8 24.1 17.6 42.2 47.1 33.1 24.8 4.4 21.4 Louisiana 46.0 17.7 2.3 9.6 3.0 11.4 15.1 14.6 13.3 18.1 21.2 9.4 14.8 South Dakota 1.6 18.1 3.5 2.2 - - 4.0 0.5 0.8 - 4.1 - 11.9 Nebraska 90.1 16.9 4.6 0.2 13.1 7.5 2.9 11.8 - 2.0 - 3.1 11.0 Kentucky 88.9 13.8 5.4 48.2 35.0 28.2 56.9 32.8 17.3 16.7 12.5 23.5 10.8 Nevada 33.3 31.8 23.2 47.6 64.9 19.6 23.7 12.6 15.4 28.8 27.0 8.3 9.6 Oklahoma 13.8 33.0 35.1 68.1 80.8 14.9 8.1 17.3 4.5 13.0 27.1 34.0 8.0 Idaho 2.7 10.6 52.2 2.5 10.0 17.8 18.7 22.8 14.6 7.8 5.1 15.2 6.5 Alabama 80.3 65.1 35.7 69.2 39.7 19.9 36.1 48.8 45.4 0.6 3.5 23.1 5.2 Hawaii 37.8 4.4 17.8 13.7 14.6 32.8 4.9 7.5 7.4 9.5 0.6 0.6 2.5 Mississippi 30.0 5.0 0.9 4.9 10.0 16.2 5.0 - 1.3 - 1.0 9.8 1.2 West Virginia 1.4 15.9 12.6 5.8 10.5 4.9 10.8 30.0 3.0 3.8 2.1 14.6 1.2 Montana 24.8 - - - 27.4 - 4.0 15.6 14.5 1.9 3.2 5.6 0.0 Alaska - - - - - - - - - - - - - Puerto Rico 32.0 0.5 0.1 1.5 28.8 14.3 16.0 13.8 - 4.5 - 0.1 - Unknown 14.3 - - - - - - - 0.5 - - - - Wyoming - - - 1.5 4.1 6.5 0.2 1.5 - 10.0 - - - Total 40,952.1 22,177.1 19,620.0 23,208.8 23,524.5 27,514.5 31,942.9 29,948.9 20,286.2 23,368.6 29,730.0 27,352.3 29,545.2
50 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.17 Venture Capital Investments 1985-2013 By State (Number of Deals) State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 California 467 493 523 534 569 552 478 575 435 460 685 1,023 1,142 1,402 2,223 2,946 1,539 1,104 1,164 1,262 New York 45 47 63 48 49 31 24 38 37 38 74 89 156 195 353 609 293 155 120 158 Massachusetts 215 187 224 195 182 172 136 135 131 127 197 289 334 398 591 791 518 388 384 385 Pennsylvania 35 45 59 54 41 44 37 61 44 38 64 85 139 149 153 261 155 109 106 113 Texas 106 93 106 105 91 85 70 70 72 68 101 135 172 197 318 485 343 174 174 176 Washington 20 21 29 30 37 26 26 37 32 36 66 83 89 111 207 258 146 111 80 114 Illinois 26 27 31 31 61 34 44 40 25 35 44 55 87 73 118 203 128 81 59 62 Ohio 26 21 26 21 18 21 20 21 20 20 36 56 53 66 52 82 45 51 32 37 Colorado 43 58 62 63 53 49 35 53 48 53 58 83 98 127 161 222 115 91 71 72 Michigan 20 24 25 12 16 15 9 6 12 3 12 21 28 29 44 55 22 27 18 17 Maryland 18 17 24 28 19 29 27 25 18 22 32 49 49 58 100 178 92 91 86 98 Virginia 22 22 31 26 30 27 24 20 20 21 39 59 82 99 154 284 145 92 86 78 Connecticut 33 33 41 46 48 41 36 33 26 35 43 45 66 73 96 123 78 41 37 38 North Carolina 14 21 15 11 18 28 20 20 22 20 36 60 80 82 104 153 88 79 76 56 Tennessee 16 22 28 31 27 22 24 11 8 12 21 29 25 24 47 51 30 25 24 27 Florida 21 20 29 23 22 32 19 25 26 19 61 57 74 70 117 189 113 64 66 64 New Jersey 45 43 54 42 55 44 48 44 37 39 56 68 85 83 118 188 156 96 85 94 Georgia 31 44 45 42 33 34 35 37 42 46 50 54 79 98 161 224 138 81 65 79 Minnesota 23 31 34 28 30 32 31 25 24 20 50 47 89 77 84 107 88 59 57 52 Missouri 5 7 13 8 11 11 9 9 13 8 19 26 18 23 29 54 18 29 19 9 Oregon 24 24 30 34 27 22 12 12 15 13 17 28 41 18 52 67 42 28 23 31 Utah 3 14 15 7 6 4 9 8 7 1 6 16 31 35 43 58 44 29 24 31 D. of Columbia 4 6 8 4 2 5 3 3 2 4 1 5 2 4 18 45 22 7 6 8 Arizona 15 11 20 13 24 14 15 22 21 25 27 30 29 38 57 70 35 27 19 12 Wisconsin 13 16 17 15 6 10 6 9 8 9 8 11 19 16 19 27 20 11 8 14 New Hampshire 3 9 11 10 13 18 17 10 10 4 10 17 17 24 31 60 39 41 34 22 New Mexico 2 3 5 5 1 3 2 - 2 1 2 5 4 4 6 8 4 6 5 8 Indiana 9 15 15 6 6 12 8 1 7 7 8 9 13 9 11 28 7 12 8 10 South Carolina 1 - 5 3 7 5 10 7 7 6 5 15 15 17 10 11 4 4 3 5 Rhode Island 6 4 7 6 7 7 4 2 3 - 3 2 4 5 11 11 11 14 10 8 Kansas 1 2 6 3 3 3 1 3 2 2 4 11 6 3 8 22 10 8 13 13 Vermont - 3 3 3 2 3 3 1 - 3 5 3 3 3 1 4 3 4 3 3 Nebraska 1 - - 5 1 - - 1 5 3 1 5 3 6 7 11 10 3 2 2 Oklahoma 4 5 4 1 4 2 1 - - 5 2 7 5 12 8 9 5 4 3 12 Louisiana 6 2 2 2 - - 2 1 4 2 7 4 12 9 9 14 10 7 2 4 Kentucky 2 4 7 4 5 - 2 2 2 3 9 7 15 16 16 14 5 3 3 6 Alabama 7 10 12 4 7 7 2 4 10 4 9 8 17 14 10 30 15 12 10 8 Delaware 1 1 1 4 3 5 4 3 1 3 4 4 4 - 3 5 1 2 1 1 Nevada - 2 2 - 1 1 4 4 - 2 2 4 7 11 10 10 6 6 7 7 Arkansas - 1 - - - - - 1 - - 2 - 2 3 5 5 3 5 3 2
2014 National Venture Capital Association Yearbook | 51 NVCA THOMSON REUTERS Figure 3.17b Venture Capital Investments 1985-2013 By State (Number of Deals) State 2005 2006 2007 2008 2009 2010 2011 2012 2013 California 1,337 1,592 1,735 1,699 1,297 1,478 1,622 1,604 1,616 New York 131 235 221 265 203 292 355 343 403 Massachusetts 392 409 475 452 343 378 402 426 364 Pennsylvania 107 149 176 193 136 163 156 190 233 Texas 181 201 188 162 126 168 172 163 154 Washington 122 142 168 159 107 116 122 114 126 Illinois 60 65 70 74 52 76 103 83 93 Ohio 38 46 69 68 60 64 74 61 86 Colorado 91 112 114 116 91 84 109 105 81 Michigan 21 24 22 45 36 31 35 49 72 Maryland 115 111 100 108 80 76 76 57 71 Virginia 91 94 103 88 49 58 77 79 67 Connecticut 34 30 36 41 42 62 57 50 52 North Carolina 48 58 70 58 39 57 47 34 50 Tennessee 25 14 23 27 17 31 41 33 50 Florida 52 57 60 43 35 45 55 35 47 New Jersey 81 93 100 92 77 70 63 58 43 Georgia 64 91 73 82 47 70 59 55 41 Minnesota 42 46 61 52 39 31 49 32 39 Missouri 11 14 18 25 12 15 22 12 38 Oregon 28 33 39 33 16 32 38 30 38 Utah 32 42 38 40 34 27 48 44 34 D. of Columbia 10 9 13 12 7 16 12 27 33 Figure 3.17 (Continued) Venture Capital Investments 1985-2013 By State (Number of Deals) State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Maine 8 6 5 4 6 6 4 1 2 - 2 5 2 14 11 15 9 6 3 4 Hawaii 1 - - - - - - - - - - 3 4 3 3 3 5 2 7 5 Mississippi 1 1 - 1 1 3 1 4 2 5 - 3 4 3 5 6 3 3 3 5 North Dakota - - 1 - - - - - - 1 2 - 1 1 1 1 1 - 2 1 Idaho 1 - 1 - - - - 1 2 1 1 1 2 3 2 3 2 2 5 2 Iowa 1 3 2 3 2 2 3 4 1 4 9 6 4 7 2 4 5 1 1 4 Montana 2 3 2 6 - - 3 - - - - - - - 2 3 2 - - - South Dakota - - - - - - - - - - - - - - 1 1 2 2 1 4 West Virginia 1 1 2 1 - 1 - - 1 - - - 2 1 - 2 2 8 5 3 Alaska - - - - - - - 1 - - - - - - - 1 - - - - Puerto Rico - - - - - - 3 2 1 2 4 6 2 2 2 11 5 1 1 1 Unknown - - 1 2 3 1 1 2 4 2 2 7 7 14 3 16 8 - - - Wyoming - 1 - - - - - - - - - - 2 - - - - - - 1 Total 1,348 1,423 1,646 1,524 1,547 1,463 1,272 1,394 1,211 1,232 1,896 2,635 3,224 3,729 5,597 8,038 4,590 3,206 3,024 3,228
52 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.17b Venture Capital Investments 1985-2013 By State (Number of Deals) State 2005 2006 2007 2008 2009 2010 2011 2012 2013 Arizona 28 34 34 22 20 18 23 19 25 Wisconsin 18 20 22 20 15 23 14 14 19 New Hampshire 21 22 25 30 14 10 15 8 17 New Mexico 16 9 27 18 13 11 10 16 17 Indiana 13 14 17 14 15 16 14 17 15 South Carolina 1 2 10 10 5 10 4 5 15 Rhode Island 12 7 3 6 15 11 14 15 13 Kansas 5 10 16 25 17 35 47 12 10 Vermont 4 8 7 8 8 7 8 5 10 Nebraska 3 4 4 2 - 2 1 4 9 Oklahoma 1 8 6 5 4 2 4 7 8 Louisiana 3 2 7 11 12 4 8 3 7 Kentucky 4 10 10 10 9 15 9 7 6 Alabama 6 9 10 10 11 2 2 6 5 Delaware 5 4 5 9 6 9 10 7 5 Nevada 8 7 8 6 4 4 4 5 5 Arkansas 2 6 2 - - 1 - 1 4 Maine 3 7 8 4 4 7 5 6 4 Hawaii 6 11 6 7 3 3 3 3 3 Mississippi 2 4 1 - 4 - 1 4 3 North Dakota - - 1 4 3 1 1 1 3 Idaho 3 5 7 6 4 4 3 4 2 Iowa 3 2 3 8 9 2 3 1 2 Montana 2 1 1 2 1 3 2 6 1 South Dakota - 1 3 1 3 - 2 1 1 West Virginia 5 4 5 2 3 4 2 3 1 Alaska - - - - - - - - - Puerto Rico 2 3 4 2 - 1 - 1 - Unknown - - - - 1 1 1 - - Wyoming 4 1 2 1 - 1 - - - Total 3,293 3,882 4,226 4,177 3,148 3,647 4,004 3,865 4,041
2014 National Venture Capital Association Yearbook | 53 NVCA THOMSON REUTERS 0 20,000 40,000 60,000 80,000 100,000 120,000 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 13 ($Millions) Year Follow-on First Figure 3.18 Venture Capital Investments First vs. Follow-on Deals Total Dollars Invested ($ Millions)
54 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.19 Venture Capital Investments First vs. Follow-on Year First Follow-on Total 1985 727.3 2,051.7 2,779.0 1986 905.3 2,226.9 3,132.3 1987 1,008.4 2,352.9 3,361.3 1988 1,098.4 2,312.9 3,411.3 1989 907.4 2,425.6 3,333.0 1990 847.2 1,985.9 2,833.1 1991 551.7 1,707.9 2,259.7 1992 1,302.5 2,291.7 3,594.2 1993 1,274.8 2,388.4 3,663.2 1994 1,644.6 2,485.5 4,130.1 1995 3,976.7 4,038.0 8,014.8 1996 4,198.9 7,142.7 11,341.6 1997 4,869.1 10,135.5 15,004.6 1998 7,154.7 14,318.3 21,473.0 1999 16,333.3 38,513.4 54,846.7 2000 28,542.8 76,561.8 105,104.6 2001 7,300.7 33,651.4 40,952.1 2002 4,343.6 17,833.5 22,177.1 2003 3,692.1 15,927.9 19,620.0 2004 5,402.7 17,806.1 23,208.8 2005 5,885.4 17,639.1 23,524.5 2006 6,266.8 21,247.7 27,514.5 2007 7,721.4 24,221.5 31,942.9 2008 6,515.5 23,433.3 29,948.9 2009 3,506.0 16,780.2 20,286.2 2010 4,294.3 19,074.3 23,368.6 2011 5,498.2 24,231.8 29,730.0 2012 4,440.6 22,911.7 27,352.3 2013 5,104.7 24,440.5 29,545.2
2014 National Venture Capital Association Yearbook | 55 NVCA THOMSON REUTERS 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 (NumberofCompanies) Year Series2 Series1 Follow-on First Figure 3.20 Venture Capital Investments Number of Companies Receiving
56 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.21 Venture Capital Investments First vs Follow-on Year No. of Cos Receiving Initial Deals Financing No. of Cos Receiving Follow-On Financing No. of Cos Receiving Financing* 1985 435 757 1,156 1986 507 760 1,228 1987 580 865 1,387 1988 510 801 1,262 1989 450 841 1,241 1990 351 788 1,072 1991 266 717 941 1992 394 716 1,047 1993 354 652 949 1994 428 626 989 1995 902 776 1,573 1996 1,145 1,170 2,116 1997 1,305 1,473 2,575 1998 1,430 1,831 3,030 1999 2,468 2,440 4,474 2000 3,391 3,692 6,423 2001 1,233 2,785 3,854 2002 847 1,977 2,713 2003 777 1,834 2,511 2004 975 1,847 2,715 2005 1,075 1,852 2,800 2006 1,277 2,128 3,229 2007 1,419 2,255 3,502 2008 1,309 2,348 3,479 2009 830 1,903 2,645 2010 1,091 2,052 3,022 2011 1,346 2,178 3,356 2012 1,275 2,148 3,269 2013 1,334 2,221 3,383 * No. of Cos receiving financing can be less than the sum of the first two columns because any given company can receive initial and follow-on financing in the same year
2014 National Venture Capital Association Yearbook | 57 NVCA THOMSON REUTERS Figure 3.22 First Sequence by Stage of Development ($ Millions) Stage 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Seed 309.0 437.6 353.4 377.9 258.3 178.2 102.7 214.3 356.5 528.1 742.6 639.1 798.3 1,003.4 2,790.6 Early Stage 101.4 88.8 318.5 291.8 215.7 292.6 214.3 266.5 260.1 390.8 898.0 1,356.4 1,722.4 2,700.2 6,367.9 Expansion 65.8 211.4 272.0 321.8 312.4 277.3 153.3 572.5 490.2 471.0 1,641.9 1,742.4 1,866.5 2,815.0 5,840.2 Later Stage 51.1 67.5 64.4 106.9 121.0 99.1 81.4 249.1 168.0 254.8 694.2 460.9 481.9 636.1 1,334.5 Total 727.3 905.3 1,008.4 1,098.4 907.4 847.2 551.7 1,302.5 1,274.8 1,644.6 3,976.7 4,198.9 4,869.1 7,154.7 16,333.3 Figure 3.22 (Continued) First Sequence by Stage of Development ($ Millions) Stage 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Seed 2,522.9 632.4 266.8 302.9 793.6 803.0 1,081.6 1,410.7 1,368.5 878.3 899.2 823.9 558.4 750.2 Early Stage 16,420.1 4,411.0 2,359.3 2,121.4 2,605.1 2,616.9 2,522.1 2,917.8 2,381.0 1,346.1 1,748.5 2,645.7 2,244.3 2,920.4 Expansion 8,673.1 1,891.8 1,333.1 953.4 1,292.3 1,572.6 1,923.0 2,477.3 1,698.1 786.3 946.6 1,047.6 945.7 789.1 Later Stage 926.8 365.4 384.4 314.5 711.6 892.9 740.1 915.5 1,068.0 495.3 700.0 981.0 692.2 644.9 Total 28,542.8 7,300.7 4,343.6 3,692.1 5,402.7 5,885.4 6,266.8 7,721.4 6,515.5 3,506.0 4,294.3 5,498.2 4,440.6 5,104.7 Figure 3.23 First Sequence by Stage of Development (Number of Deals) Stage 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Seed 221 247 230 210 206 119 88 119 145 189 256 309 347 459 661 Early Stage 81 118 199 168 102 122 78 132 70 111 281 401 470 495 1116 Expansion 107 105 118 106 111 86 79 115 105 104 293 360 419 411 626 Later Stage 26 37 33 26 31 24 21 28 34 24 72 75 69 65 65 Total 435 507 580 510 450 351 266 394 354 428 902 1,145 1,305 1,430 2,468 Figure 3.23 (Continued) First Sequence by Stage of Development (Number of Deals) Stage 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Seed 587 221 130 165 178 210 324 426 381 224 281 356 213 177 Early Stage 1913 691 465 424 539 539 570 592 557 387 548 701 827 930 Expansion 799 279 199 142 183 252 275 295 228 142 169 177 149 150 Later Stage 92 42 53 46 75 74 108 106 143 77 93 112 86 77 Total 3,391 1,233 847 777 975 1,075 1,277 1,419 1,309 830 1,091 1,346 1,275 1,334
58 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.24 First Sequence by Industry ($ Millions) Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Software 97.8 110.6 94.6 130.1 94.3 167.9 106.8 149.8 123.0 296.0 542.1 923.8 1,060.5 1,375.8 2,980.7 Biotechnology 34.5 54.3 66.0 66.9 54.8 26.1 16.1 181.1 123.0 161.1 159.3 212.8 346.3 383.7 417.9 Media and Entertainment 69.8 43.2 100.3 114.1 80.4 63.7 13.9 81.3 195.6 115.3 775.1 364.3 419.3 686.4 2,466.9 IT Services 15.3 16.6 5.5 12.8 20.6 18.3 10.3 8.9 36.0 93.0 44.9 312.9 231.3 377.1 1,545.9 Medical Devices and Equipment 44.4 75.0 85.0 84.8 74.3 59.6 45.9 127.2 117.2 123.9 188.4 212.6 260.1 263.0 310.4 Healthcare Services 16.5 70.2 56.4 17.1 48.8 31.5 31.7 66.6 92.5 109.5 300.4 273.9 342.5 239.2 368.5 Consumer Products and Services 46.8 63.9 57.9 77.0 31.1 88.4 53.8 76.9 74.8 113.2 306.6 206.5 195.1 257.8 835.8 Financial Services 61.1 75.6 43.9 165.9 71.4 35.3 8.3 100.6 78.9 62.9 114.0 253.2 253.2 443.6 765.0 Industrial/Energy 93.6 81.3 114.5 123.5 222.5 108.0 68.2 148.9 150.2 156.4 434.1 274.5 352.3 782.4 708.2 Other 0.5 2.0 - 6.0 - 0.0 32.7 0.0 - 0.2 13.0 0.5 15.3 26.8 92.3 Computers and Peripherals 39.0 69.0 87.0 70.5 46.3 52.4 19.1 59.9 35.1 48.5 148.1 115.2 110.2 122.5 273.5 Business Products and Services 12.3 49.7 26.6 11.3 13.3 37.7 63.7 28.1 61.9 24.3 135.7 159.3 267.6 367.0 963.1 Telecommunications 64.2 45.0 38.6 30.9 44.2 53.6 10.8 93.5 64.2 192.8 365.2 416.4 387.1 955.6 1,960.1 Retailing/Distribution 19.7 64.6 137.8 63.3 22.4 13.2 25.1 52.7 28.4 60.5 217.7 131.0 114.2 335.3 698.7 Electronics/Instrumentation 42.1 27.6 31.9 25.7 12.7 14.7 15.1 14.2 16.0 6.6 67.1 85.7 123.8 47.5 79.2 Unknown - - - - - - - - - - - - - - - Semiconductors 47.5 22.4 38.9 56.7 14.5 36.3 10.2 51.7 5.1 42.9 69.5 130.5 166.2 165.0 292.2 Networking and Equipment 22.2 34.1 23.5 41.8 55.9 40.4 19.9 61.0 73.0 37.7 95.5 125.7 224.3 325.9 1,574.8 Total 727.3 905.3 1,008.4 1,098.4 907.4 847.2 551.7 1,302.5 1,274.8 1,644.6 3,976.7 4,198.9 4,869.1 7,154.7 16,333.3 Figure 3.24 First Sequence by Industry ($ Millions) Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Software 6,120.9 1,649.4 1,270.5 936.3 1,236.5 1,170.4 1,320.9 1,492.4 1,184.3 817.8 1,006.2 1,687.9 1,883.0 2,279.1 Biotechnology 807.9 804.2 698.8 423.7 724.5 622.6 1,098.4 1,070.4 955.7 472.8 613.6 891.3 465.7 818.0 Media and Entertainment 2,848.6 344.6 208.5 223.3 680.5 525.5 649.4 652.7 495.6 247.8 378.1 568.1 518.4 433.9 IT Services 2,616.3 310.4 129.0 143.2 198.8 338.6 342.4 517.1 632.7 298.7 444.2 494.2 277.7 371.1 Medical Devices and Equipment 339.5 281.8 279.3 309.7 333.4 389.4 548.6 776.2 682.9 321.7 245.9 244.4 223.2 207.3 Healthcare Services 428.0 84.4 155.1 70.5 87.5 144.7 78.7 76.2 28.7 59.5 148.7 91.2 112.3 181.1 Consumer Products and Services 954.3 131.6 44.9 78.0 123.7 225.7 130.5 205.9 193.4 125.0 193.2 351.6 199.8 177.3 Financial Services 1,484.8 297.5 76.3 94.4 249.2 646.1 164.9 326.1 245.9 132.0 149.9 50.5 29.0 142.0 Industrial/Energy 1,106.8 472.8 433.0 251.0 308.9 525.3 698.0 1,262.0 1,218.3 584.9 443.9 597.0 264.4 127.9 Other 37.0 36.6 17.0 - 13.6 0.1 - 2.7 - 3.5 2.0 12.4 25.2 85.9 Computers and Peripherals 346.8 259.8 17.2 85.0 91.1 84.4 55.7 101.4 129.4 62.2 50.9 99.3 27.4 67.9 Business Products and Services 1,907.7 277.1 117.3 342.6 235.8 152.0 208.3 239.6 97.5 122.8 81.9 49.7 40.2 66.7 Telecommunications 4,755.3 796.6 189.5 180.6 285.9 342.0 410.0 423.4 304.1 84.2 158.2 71.1 136.4 55.3 Retailing/Distribution 869.8 59.1 34.7 12.4 118.3 135.9 39.9 84.5 34.6 21.5 56.1 79.0 43.0 25.0 Electronics/Instrumentation 144.1 103.3 82.3 45.4 98.8 130.1 134.9 114.2 65.7 37.9 66.2 30.0 70.6 23.8 Unknown - - - - - - - - - - - - - 19.7 Semiconductors 1,145.2 514.9 344.7 375.4 417.6 281.5 260.5 212.9 196.0 69.0 110.0 99.6 91.0 19.6 Networking and Equipment 2,629.8 876.5 245.4 120.5 198.4 171.2 125.6 163.7 50.7 44.6 145.3 80.8 33.2 3.0 Total 28,542.8 7,300.7 4,343.6 3,692.1 5,402.7 5,885.4 6,266.8 7,721.4 6,515.5 3,506.0 4,294.3 5,498.2 4,440.6 5,104.7
2014 National Venture Capital Association Yearbook | 59 NVCA THOMSON REUTERS Figure 3.25 First Sequence by Industry (Number of Deals) Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Software 73 73 83 87 68 83 61 66 51 97 223 327 330 335 596 Media and Entertainment 29 33 46 33 33 23 11 27 27 31 70 76 107 113 379 IT Services 11 9 6 9 11 7 5 5 8 20 28 67 62 90 230 Biotechnology 28 32 57 47 37 26 21 54 45 42 54 69 85 106 81 Consumer Products and Services 26 30 33 18 23 26 18 21 19 28 55 52 71 69 139 Industrial/Energy 57 59 73 69 73 52 28 33 35 40 80 79 96 84 100 Medical Devices and Equipment 40 53 61 57 61 36 28 45 41 36 55 85 109 96 87 Business Products and Services 12 27 22 13 9 8 9 10 17 10 32 39 50 74 146 Financial Services 14 19 24 22 12 7 10 13 17 12 32 37 43 63 101 Healthcare Services 9 33 19 11 9 7 12 17 13 20 42 59 53 37 52 Retailing/Distribution 13 26 39 26 13 9 6 12 13 9 36 36 33 45 116 Telecommunications 25 25 25 20 24 10 13 18 27 23 69 88 93 139 228 Electronics/Instrumentation 26 18 23 18 15 8 10 10 6 10 21 19 19 17 15 Semiconductors 25 13 17 21 13 14 7 11 6 12 25 29 54 43 51 Other 1 1 - 1 - 2 2 2 1 1 6 1 5 5 10 Computers and Peripherals 28 34 33 35 28 17 11 27 15 20 42 35 43 32 35 Networking and Equipment 18 22 19 23 21 16 14 23 13 17 32 47 52 82 102 Total 435 507 580 510 450 351 266 394 354 428 902 1,145 1,305 1,430 2,468 Figure 3.25 (Continued) First Sequence by Industry (Number of Deals) Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Software 877 315 269 232 249 285 300 329 319 228 338 469 517 591 Media and Entertainment 393 73 43 39 57 101 157 181 165 89 146 210 192 170 IT Services 327 75 26 32 51 67 90 99 117 73 99 140 98 124 Biotechnology 123 109 115 91 110 121 149 149 149 93 117 113 87 100 Consumer Products and Services 100 29 24 20 30 41 43 58 52 32 41 58 81 79 Industrial/Energy 124 81 59 52 70 69 115 149 156 84 90 91 75 57 Medical Devices and Equipment 70 63 63 77 80 84 126 123 108 79 70 71 61 55 Business Products and Services 223 52 25 29 37 36 40 55 47 26 29 29 16 34 Financial Services 172 40 29 19 36 32 32 47 30 17 34 21 18 22 Healthcare Services 58 20 20 17 15 25 18 17 9 13 20 11 14 18 Retailing/Distribution 121 19 9 5 20 23 10 13 15 11 15 25 23 18 Telecommunications 393 128 44 39 58 70 96 75 44 24 32 44 38 17 Electronics/Instrumentation 26 25 18 18 22 32 22 26 30 16 16 10 13 11 Semiconductors 116 76 53 65 79 43 47 41 35 15 15 21 15 11 Other 9 8 2 1 6 3 - 9 3 5 9 8 12 18 Computers and Peripherals 51 28 11 21 18 19 13 25 19 16 13 14 9 7 Networking and Equipment 208 92 37 20 37 24 19 23 11 9 7 11 6 2 Total 3,391 1,233 847 777 975 1,075 1,277 1,419 1,309 830 1,091 1,346 1,275 1,334
60 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.26 Internet-Related Investments By Year Year # Companies ($ Millions) 1995 433 1,946.0 1996 763 4,236.4 1997 1,030 6,375.9 1998 1,492 11,875.9 1999 3,069 42,540.5 2000 4,615 80,915.1 2001 2,391 26,620.0 2002 1,473 11,394.5 2003 1,255 9,343.2 2004 1,278 10,991.5 2005 1,367 11,002.1 2006 1,680 13,007.0 2007 1,805 14,959.7 2008 1,860 13,444.9 2009 1,450 9,434.3 2010 1,725 11,061.2 2011 2,136 15,949.3 2012 2,170 16,067.8 2013 2,281 19,009.3 Total 15,177 330,174.5 Figure 3.27 Top 5 States by Internet-Related Investments State ($ Millions) California 10,056.9 New York 2,320.1 Massachusetts 1,253.5 Texas 882.1 Washington 624.6 Total* 15,137.2 *Total includes above 5 states only
2014 National Venture Capital Association Yearbook | 61 NVCA THOMSON REUTERS Figure 3.28 Internet-Related Investments by Region in 2013 Stage Region ($ Millions) Silicon Valley 8,735.3 NY Metro 2,406.6 New England 1,358.8 LA/Orange County 1,132.9 DC/Metroplex 911.2 Texas 882.1 Southeast 873.3 Northwest 742.3 Midwest 655.1 SouthWest 329.8 Colorado 259.2 Philadelphia Metro 211.5 North Central 166.9 San Diego 164.8 South Central 127.0 Upstate NY 28.6 Sacramento/N.Cal 23.9 Total 19,009.3
62 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.29 Sources and Targets of Invested Capital Investments 2013 ($ Millions) SOURCE STATE AK AL AR AZ CA CO CT DC DE FL GA HI IA ID IL IND KS KY LA MA MD ME MI AL 0.0 1.3 0.0 0.0 0.7 0.0 0.0 1.7 0.0 0.0 2.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 AR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 AZ 0.0 0.0 0.0 5.1 1.9 0.0 0.0 0.0 0.0 5.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 CA 0.0 0.0 0.0 17.0 6,882.1 86.6 9.4 98.7 7.8 112.5 65.8 1.8 14.0 0.0 77.9 9.6 5.3 1.5 3.0 669.2 52.1 1.2 13.5 CO 0.0 0.0 0.0 4.7 65.0 115.0 0.0 10.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 4.3 9.0 0.0 0.0 CT 0.0 0.0 83.2 0.5 173.1 5.9 24.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.1 0.0 0.0 3.0 0.0 82.6 125.4 0.0 0.0 DC 0.0 0.0 0.0 0.0 16.3 2.2 0.0 27.0 0.0 12.0 6.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.3 11.6 0.0 0.0 DE 0.0 0.0 0.0 0.0 7.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 FF 0.0 0.0 0.0 11.2 1,386.5 87.8 7.2 3.1 0.6 45.0 2.7 0.4 0.0 0.0 20.2 0.0 9.1 0.0 0.0 229.3 12.7 0.0 0.1 FL 0.0 0.0 0.0 0.0 26.8 0.0 0.0 0.0 0.0 24.8 4.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 5.4 0.0 0.0 0.0 GA 0.0 1.6 0.0 0.0 14.2 1.1 0.0 0.0 0.0 2.0 43.3 0.0 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ID 0.0 0.0 0.0 0.1 0.0 3.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IL 0.0 0.0 0.0 0.0 102.7 19.3 0.0 0.0 0.0 21.0 0.0 0.0 0.0 0.0 147.0 0.0 0.0 0.0 0.0 35.7 60.8 0.0 3.7 IN 0.0 0.0 0.0 0.0 13.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.7 3.5 0.8 0.0 0.0 7.2 0.0 0.0 0.0 KS 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.2 0.0 0.0 0.0 KY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.0 1.5 0.0 0.0 0.0 LA 0.0 0.0 0.0 0.0 8.5 0.0 2.7 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.4 0.1 0.0 0.0 0.0 MA 0.0 0.0 0.0 3.8 938.4 21.7 42.3 0.3 30.0 21.8 4.8 0.0 0.8 5.0 36.9 0.1 0.8 2.3 6.0 976.1 2.2 19.5 1.9 MD 0.0 0.0 0.0 1.4 84.9 13.0 0.0 14.9 0.0 5.0 0.0 0.0 0.0 0.0 14.4 0.0 0.0 0.0 1.2 32.5 54.3 0.0 0.0 ME 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.4 0.0 1.1 0.0 MI 0.0 0.0 0.0 0.0 33.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.1 0.0 0.0 0.0 0.0 8.2 0.0 0.0 38.7 MN 0.0 0.0 0.0 0.0 55.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.0 0.0 3.6 0.0 0.0 0.0 MO 0.0 0.0 0.0 0.0 22.9 1.1 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 5.6 0.0 0.0 2.1 9.8 0.0 1.1 MT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NC 0.0 0.0 0.0 0.0 26.8 0.0 0.0 0.0 0.0 2.1 5.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20.3 1.9 0.0 0.3 ND 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NE 0.0 0.0 0.0 0.0 0.0 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 NH 0.0 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.8 0.0 1.0 0.0 NJ 0.0 0.0 0.0 9.1 139.9 2.5 4.8 6.7 2.3 1.2 2.0 0.0 0.0 0.0 11.8 0.0 0.0 0.0 0.0 43.5 0.0 0.0 0.0 NM 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.9 0.0 0.0 0.0 NV 0.0 0.0 0.0 0.0 4.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 NY 0.0 1.0 0.0 17.6 1150.1 14.8 14.3 5.5 9.5 65.5 168.7 0.0 1.7 0.0 7.5 4.7 4.5 0.0 0.9 183.5 22.7 3.5 1.8 OH 0.0 0.0 0.0 0.0 7.8 0.1 0.0 0.0 0.0 8.3 0.0 0.0 0.0 0.0 14.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 OK 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 OR 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.0 PA 0.0 0.0 0.0 2.3 153.2 0.1 3.3 14.0 30.0 18.4 8.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 64.0 9.8 0.0 1.3 RI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 SC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 SD 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.0 Target State
2014 National Venture Capital Association Yearbook | 63 NVCA THOMSON REUTERS Figure 3.29 (Continued) Sources and Targets of Invested Capital Investments 2013 ($ Millions) SOURCE STATE AK AL AR AZ CA CO CT DC DE FL GA HI IA ID IL IND KS KY LA MA MD ME MI TN 0.0 0.0 0.3 0.0 3.4 0.0 0.0 0.0 0.0 0.0 4.6 0.0 0.0 0.0 2.5 0.0 0.0 0.0 0.0 6.2 0.0 0.0 0.0 TX 0.0 0.0 1.1 0.0 238.4 1.6 0.0 0.0 0.0 46.6 0.0 0.0 0.0 0.0 4.2 0.0 0.0 0.0 0.0 1.1 0.0 0.0 1.9 UN 0.0 1.3 0.1 35.3 2,698.2 37.8 53.9 86.6 8.0 27.2 88.2 0.4 6.0 1.5 50.7 7.6 5.2 3.1 2.6 631.0 225.5 0.5 22.1 UT 0.0 0.0 0.0 5.0 28.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 VA 0.0 0.0 0.0 0.0 30.8 11.8 0.0 6.0 0.0 2.1 6.7 0.0 0.0 0.0 2.1 0.0 0.0 0.0 0.0 18.0 63.8 0.0 1.6 VT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 WA 0.0 0.0 0.0 0.0 141.8 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 10.2 0.8 0.0 3.5 WI 0.0 0.0 0.0 0.0 12.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.8 0.0 0.0 0.0 0.0 0.8 0.0 0.0 6.4 WV 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total 0.0 5.2 86.6 113.3 14,471.5 431.3 162.6 274.6 88.4 421.0 413.4 2.5 22.5 6.5 427.5 25.4 32.9 10.8 14.8 3,062.1 662.8 26.8 99.9 Target State Figure 3.29b Sources and Targets of Invested Capital Investments 2013 ($ Millions) SOURCE STATE MN MO MS MT NC ND NE NH NJ NM NV NY OH OK ORE PA PR RI SC SD TN TX UN AL 0.0 0.0 0.0 0.0 1.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.1 0.0 0.0 0.0 0.0 AR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.5 0.0 AZ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 CA 67.7 0.2 0.0 0.0 36.9 0.0 10.0 12.3 75.5 3.4 0.4 757.7 86.2 0.0 43.6 79.7 0.0 27.0 15.3 0.0 3.8 384.7 0.0 CO 2.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 5.6 0.0 0.0 3.3 0.0 0.0 0.5 0.0 0.0 0.0 2.6 0.0 CT 0.0 10.0 0.0 0.0 5.3 0.0 0.0 0.0 4.6 0.0 0.0 32.9 0.0 0.0 0.0 2.5 0.0 0.0 0.0 6.0 0.0 4.2 0.0 DC 11.0 0.0 0.0 0.0 5.3 0.0 0.0 0.0 0.0 0.0 0.0 5.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 DE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 FF 12.7 1.5 0.0 0.0 57.0 2.3 0.0 0.2 19.0 1.7 0.0 257.5 21.5 0.0 3.9 34.8 0.0 18.9 8.6 0.0 0.0 69.8 0.0 FL 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 3.7 3.5 0.0 0.0 5.9 0.0 0.0 0.0 0.0 0.4 9.5 0.0 GA 5.2 0.0 0.0 0.0 0.9 0.0 0.0 0.6 0.0 0.0 0.0 4.7 0.0 0.0 0.0 0.0 0.0 0.0 3.7 0.0 5.8 0.7 0.0 IA 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ID 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IL 5.7 11.6 0.0 0.0 0.7 0.0 0.0 1.5 0.0 0.0 0.0 2.7 12.9 0.0 0.0 2.1 0.0 0.0 0.0 0.0 18.1 22.6 0.0 IN 2.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.0 0.0 1.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 LA 0.0 0.2 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.7 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 6.7 0.0 MA 54.9 0.0 0.0 0.0 6.9 0.0 0.0 32.5 9.8 0.9 0.0 248.9 30.5 0.0 2.1 43.5 0.0 18.8 10.0 0.0 6.5 47.9 0.0 MD 0.0 0.0 0.0 0.0 11.3 0.0 0.0 0.0 6.0 0.0 8.0 37.1 0.0 0.0 0.0 9.5 0.0 0.0 0.0 0.0 0.0 0.2 0.0 ME 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 MI 12.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.1 0.0 2.0 0.6 0.0 0.4 1.0 0.0 0.0 4.3 0.0 0.0 1.1 0.0 MN 17.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.5 0.0 0.0 0.0 0.8 0.0 6.0 0.0 0.0 0.0 0.0 0.0 5.4 0.0 0.0 MO 0.0 7.3 0.0 0.0 1.3 0.0 0.0 0.0 0.0 2.1 0.0 0.4 2.8 0.0 0.0 0.0 0.0 0.0 4.6 0.0 4.0 4.3 0.0 MT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Target State
64 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.29b Sources and Targets of Invested Capital Investments 2013 ($ Millions) SOURCE STATE MN MO MS MT NC ND NE NH NJ NM NV NY OH OK ORE PA PR RI SC SD TN TX UN NC 0.0 0.0 0.0 0.0 53.4 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 3.0 0.0 0.0 4.0 0.0 0.9 20.5 0.0 ND 5.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NE 0.0 0.2 0.0 0.0 0.0 0.0 3.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NH 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NJ 10.2 1.8 0.0 0.0 0.0 11.2 0.0 5.0 35.8 0.0 0.0 26.1 0.0 0.0 0.0 8.9 0.0 0.0 0.0 0.0 0.0 1.9 0.0 NM 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NV 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 2.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NY 0.0 0.2 0.0 0.0 16.4 0.0 0.1 7.0 83.8 0.0 0.0 519.0 21.9 0.0 2.0 28.8 0.0 5.0 8.6 6.0 0.0 199.3 0.0 OH 2.7 0.0 0.0 0.0 2.3 0.0 0.0 0.0 0.0 0.2 0.1 8.8 56.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 OK 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 0.0 4.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.2 0.0 OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 PA 3.0 5.2 0.0 0.0 0.1 0.0 0.0 6.0 13.9 0.0 0.0 81.8 1.6 0.0 2.3 82.6 0.0 3.7 0.0 0.0 0.0 9.6 0.0 RI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.6 0.0 0.0 0.0 0.0 0.0 SC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 SD 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TN 0.0 0.0 0.1 0.0 10.1 0.0 0.0 0.0 0.0 0.0 0.0 4.1 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 30.4 20.0 0.0 TX 0.0 6.6 0.0 0.0 0.0 0.0 0.0 0.0 5.0 1.6 0.0 2.7 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.3 275.6 0.0 UN 48.0 20.4 0.8 0.0 45.8 10.6 5.9 4.1 87.3 1.8 1.0 639.1 43.0 3.1 52.2 133.4 0.0 5.0 24.6 0.0 30.9 174.4 0.0 UT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.7 0.0 14.9 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 VA 5.0 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.0 0.0 0.0 12.3 0.0 0.0 0.0 3.1 0.0 0.0 0.0 0.0 2.8 0.2 0.0 VT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 WA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.3 0.0 0.0 8.6 13.5 0.0 11.1 0.0 0.0 0.0 0.0 0.0 0.0 9.0 0.0 WI 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 WV 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total 267.0 65.0 1.2 0.0 255.6 24.1 21.0 74.4 351.3 25.9 9.6 2,686.3 301.8 8.0 130.3 441.1 0.0 81.7 85.7 11.9 109.3 1,272.4 0.0 Target State
2014 National Venture Capital Association Yearbook | 65 NVCA THOMSON REUTERS Figure 3.29c Sources and Targets of Invested Capital Investments 2013 ($ Millions) SOURCE STATE UT VA VI VT WA WI WV WY TOT AL 0.0 4.7 0.0 0.0 0.0 0.0 0.0 0.0 14.2 AR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.5 AZ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 13.0 CA 96.7 50.0 0.0 0.0 176.6 6.1 0.0 0.0 10,062.8 CO 0.0 20.0 0.0 0.0 19.2 0.0 0.0 0.0 263.7 CT 0.1 0.0 0.0 0.0 21.2 0.0 0.0 0.0 591.1 DC 0.0 59.9 0.0 0.0 0.0 0.0 0.0 0.0 164.9 DE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.8 FF 3.7 57.5 0.0 0.9 30.1 0.2 0.0 0.0 2,417.5 FL 0.0 0.0 0.0 0.0 5.7 0.0 0.0 0.0 90.4 GA 0.0 8.0 0.0 1.3 0.0 0.0 0.0 0.0 93.5 IA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 ID 1.5 0.0 0.0 0.0 0.1 0.0 0.0 0.0 4.8 IL 0.0 3.3 0.0 0.0 37.9 2.1 0.0 0.0 511.4 IN 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 32.7 KS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.4 KY 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 3.8 LA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 25.1 MA 16.0 44.5 0.0 5.2 44.4 0.0 0.0 0.0 2,738.1 MD 1.0 11.1 0.0 0.0 25.0 0.0 0.0 0.0 331.0 ME 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.5 MI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 119.0 MN 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 97.4 MO 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 69.5 MT 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.1 Target State
66 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.29c Sources and Targets of Invested Capital Investments 2013 ($ Millions) SOURCE STATE UT VA VI VT WA WI WV WY TOT NC 2.2 0.1 0.0 0.0 3.3 0.0 0.0 0.0 146.0 ND 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 5.3 NE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.7 NH 0.0 0.0 0.0 0.0 2.5 0.0 0.0 0.0 15.6 NJ 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.0 329.8 NM 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 12.0 NV 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 7.8 NY 34.1 37.5 0.0 0.0 43.3 4.3 0.0 0.0 2694.8 OH 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 103.3 OK 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.1 OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 9.3 PA 0.0 90.0 0.0 0.0 34.9 0.0 0.2 0.0 639.3 RI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.1 SC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 SD 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.7 TN 7.2 0.0 0.0 0.0 0.5 0.0 0.0 0.0 90.2 TX 1.0 4.7 0.0 0.0 2.8 0.0 0.0 0.0 595.2 UN 66.1 146.8 0.0 10.0 286.4 15.7 1.0 0.0 5,850.1 UT 60.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 111.3 VA 0.0 53.0 0.0 0.0 17.3 0.0 0.0 0.0 237.5 VT 0.0 0.0 0.0 3.6 0.0 0.0 0.0 0.0 3.6 WA 6.5 0.0 0.0 0.0 113.7 0.0 0.0 0.0 329.8 WI 13.1 0.0 0.0 0.0 3.3 6.2 0.0 0.0 53.8 WV 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 Total 313.8 591.0 0.0 21.0 874.1 35.9 1.2 0.0 28,922.8 Figure 3.30 2013 Internet-Related Investments By Stage Company Stage ($ Millions) Seed 348.75 Early Stage 6,036.86 Expansion 7,559.33 Later Stage 5,064.38 TOTAL 19,009.32
2014 National Venture Capital Association Yearbook | 67 NVCA THOMSON REUTERS Figure 3.31 2013 Internet-Related Investments By Industry Sector Industry Group ($ Millions) Software 10,821.33 Media and Entertainment 2,771.45 IT Services 1,966.98 Consumer Products and Services 1,074.01 Networking and Equipment 669.55 Telecommunications 572.39 Financial Services 324.00 Retailing/Distribution 228.44 Computers and Peripherals 222.24 Semiconductors 132.53 Healthcare Services 107.14 Business Products and Services 53.76 Industrial/Energy 22.52 Biotechnology 16.23 Medical Devices and Equipment 15.65 Other 5.61 Electronics/Instrumentation 5.50 Total 19,009.32 Figure 3.32 2013 Internet-Related vs. Non Internet-Related By Industry Sector ($ Million) Industry Internet Related Non-Internet Related Total Biotechnology 16.2 4,545.7 4,561.9 Business Products and Services 53.8 164.2 218.0 Computers and Peripherals 222.2 295.0 517.2 Consumer Products and Services 1,074.0 171.5 1,245.5 Electronics/Instrumentation 5.5 318.8 324.3 Financial Services 324.0 212.4 536.4 Healthcare Services 107.1 179.0 286.1 Industrial/Energy 22.5 1,484.0 1,506.5 IT Services 1,967.0 25.9 1,992.9 Media and Entertainment 2,771.4 164.1 2,935.5 Medical Devices and Equipment 15.6 2,114.5 2,130.2 Networking and Equipment 669.6 - 669.6 Other 5.6 93.0 98.6 Retailing/Distribution 228.4 12.0 240.4 Semiconductors 132.5 464.9 597.4 Software 10,821.3 198.7 11,020.0 Telecommunications 572.4 71.2 643.6 Total 19,009.3 10,514.8 29,524.1
68 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.33 2013 Internet-Related vs. Non Internet-Related By Industry Sector (Number of Companies) Industry Internet Related Non-Internet Related Total Biotechnology 4 367 371 Business Products and Services 17 41 58 Computers and Peripherals 18 11 29 Consumer Products and Services 114 35 149 Electronics/Instrumentation 2 31 33 Financial Services 26 25 51 Healthcare Services 13 24 37 Industrial/Energy 7 191 198 IT Services 292 5 297 Media and Entertainment 368 15 383 Medical Devices and Equipment 6 244 250 Networking and Equipment 22 22 Other 1 10 11 Retailing/Distribution 38 2 40 Semiconductors 13 60 73 Software 1,291 25 1,316 Telecommunications 49 6 55 Total 2,281 1,092 3,373 Figure 3.34 Top 5 States By Pecentage Invested Within State in 2013 Fund Domicile Pct. Invested Within State California 68% Ohio 55% Utah 55% Texas 46% Georgia 46% *Minimum $20 million invested Figure 3.35 Top 5 States By Portion Received From In-State Firms 2013 Fund Domicile Pct. Invested Within State California 48% New Mexico 40% Michigan 39% Illinois 34% Massachusetts 32% *Minimum $20 million invested
2014 National Venture Capital Association Yearbook | 69 NVCA THOMSON REUTERS Figure 3.36 Number of States Invested Into in 2013 By State of Venture Firm Location of Venture Firm No. of States Invested In California 38 Massachusetts 36 New York 36 Pennsylvania 27 Illinois 19 Connecticut 18 Maryland 18 New Jersey 18 Virginia 18 Texas 17 Georgia 16 Missouri 16 Figure 3.37 Number of States California Venture Firms Into By Year Year No. of States Invested In 1993 32 2003 34 2013 38 Figure 3.38 Corporate Investments By Year Year # All Venture Capital Deals # Deals with CVC Involvement Calculated Percentage of Deals with Corporate VC Involvement $M Average Amount of All VC Deals $M Average Amount of CVC Participation Total VC Investment $M Total CVC Investment $M Calculated Percentage of Dollars Coming from CVCs 1995 1,896 140 7.4% 4.23 3.08 8,015 431 5.4% 1996 2,635 234 8.9% 4.30 3.37 11,342 787 6.9% 1997 3,224 324 10.0% 4.65 2.85 15,005 922 6.1% 1998 3,729 495 13.3% 5.76 3.63 21,473 1,795 8.4% 1999 5,597 1230 22.0% 9.80 6.43 54,847 7,908 14.4% 2000 8,038 1950 24.3% 13.08 7.63 105,105 14,877 14.2% 2001 4,590 964 21.0% 8.92 4.81 40,952 4,639 11.3% 2002 3,206 551 17.2% 6.92 3.33 22,177 1,837 8.3% 2003 3,024 439 14.5% 6.49 2.91 19,620 1,279 6.5% 2004 3,228 545 16.9% 7.19 2.76 23,209 1,505 6.5% 2005 3,293 565 17.2% 7.14 2.68 23,524 1,514 6.4% 2006 3,882 817 21.0% 7.09 3.16 27,515 2,581 9.4% 2007 4,226 846 20.0% 7.56 3.21 31,943 2,714 8.5% 2008 4,177 896 21.5% 7.17 2.99 29,949 2,679 8.9% 2009 3,148 405 12.9% 6.44 3.28 20,286 1,327 6.5% 2010 3,647 487 13.4% 6.41 3.86 23,369 1,879 8.0% 2011 4,004 590 14.7% 7.43 3.80 29,730 2,243 7.5% 2012 3,865 611 15.8% 7.08 3.69 27,352 2,256 8.2% 2013 4,041 683 16.9% 7.31 4.55 29,545 3,105 10.5%
70 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.39 Clean Technology Investments By Year Year Clean Technology Investments ($ Millions) # Clean Technology Deals Average Investment Per Deal ($ Millions) 1995 64.6 34 1.9 1996 141.5 44 3.2 1997 180.4 51 3.5 1998 170.2 40 4.3 1999 262.1 53 4.9 2000 592.7 49 12.1 2001 335.4 57 5.9 2002 350.3 49 7.1 2003 237.5 58 4.1 2004 417.5 78 5.4 2005 614.7 97 6.3 2006 1,772.8 152 11.7 2007 3,036.0 261 11.6 2008 4,225.7 306 13.8 2009 2,244.6 234 9.6 2010 3,944.8 305 12.9 2011 4,392.0 333 13.2 2012 3,081.0 246 12.5 2013 1,468.0 184 8.0 27.8% 9.7% 39.0% 41.5% 8.8% 55.7% 11.0% 8.5% 63.4% 34.7% 50.0% 50.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1998 2003 2008 2013 Other SoCal NoCal Figure 3.40 California Investments as a Percentage of Overall Investment (Dollars Invested)
2014 National Venture Capital Association Yearbook | 71 NVCA THOMSON REUTERS EXITS IPOs and Acquisitions 0.00 5.00 10.00 15.00 20.00 25.00 30.00 0 50 100 150 200 250 300 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 13 Offer($Billion) No.ofIPOs Year No of IPOs Offer Amount ($B) Figure 4.01 Venture-Backed IPOs Once successful portfolio companies mature, venture funds generally exit their positions in those companies by taking them public through an initial public offering (IPO) or by selling them to presumably larger organizations (acquisition, “M&A”, or trade sale). This then lets the venture fund dis- tribute the proceeds to investors, raise a new fund for future investment, and invest in the next generation of companies. This chapter considers each type of exit separately. During 2013, 81 venture-backed companies went public in the United States, marking the strongest full year total for the number of new venture-backed listings since 2007. Remarkably, more than half of them were biotechnology IPOs, many of those being modestly sized. While the total dollars raised in 2012 was higher at $21.5 billion, it is important to remember that $16.0 billion of that came from the Facebook IPO alone. The remaining $5.5 billion was raised by the remaining 48 IPOs in 2012. It was a very different story in 2013. $11.1 billion was raised by 81 companies. The increase in mean and median time to exit reflects the fact that many of these IPOs were mature companies, and many of them were in the life sciences space, which had been awaiting an IPO opportunity for months, and in some cases, years. NVCA is encouraged by the increase in smaller IPOs and biotech IPOs in light of its 2012 legislative successes with the JOBS Act and creating a pathway for FDA Reform. The M&A space continued to soften in 2013, with the total number of deals falling from 473 in the prior year to 376. Total proceeds fell by 27%. Note that only 94 of the 376 acquisitions had reported deal values. Historically, deals with unreported sales prices are fairly diminutive, and in many cases, fire sales. However, an increasing number of deal term sheets specify a non-disclosure restriction on all parties. So going forward, all but the largest and most visible acquisitions may be hard to measure. Observers have wondered why, given the huge amounts of cash on the balance sheets of technol- ogy and biotechnology giants, more acquisitions are not occurring. We did see a flurry of acquisitions in early 2014, perhaps signaling an increase in that kind of activity. Methodology This chapter focuses on company exits by venture funds through IPOs and through acquisitions (trade sale, M&A). Some additional charts are provided on private equity-backed acquisitions because of the venture in- dustry’s interest in that data. With Thomson’s expansion of global deals coverage beginning in 2012, the criteria used to report these exits were redefined and refined. These are explained below. In this chapter and throughout this Yearbook, we use the classic nomen- clature for describing the two main types of private equity: Private Equity = Venture Capital + Buyout/Mezzanine Therefore, charts describing Private Equity in this chapter and through- out this Yearbook include both buyout/mezzanine activity and venture capital activity. The Thomson Reuters venture capital (private equity) exits coverage
72 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.02 Number of Venture-Backed IPOs vs. All IPOs Year # of All IPOs # of Venture- Backed IPOs 2000 353 238 2001 84 37 2002 75 24 2003 70 26 2004 189 82 2005 171 59 2006 168 67 2007 164 91 2008 25 7 2009 39 13 2010 103 70 2011 98 51 2012 113 49 2013 169 81 Note: IPO counts reflect IPOs on US stock exchanges and markets. Venture-backed IPOs are those with at least one US-domiciled venture fund investor. includes full history for the US and Canada as well as Global Exits from 2005 to the present. Multiple exits per company are now tracked, includ- ing IPOs (although secondary offerings are not tracked, since the first IPO is considered the exit), Secondary Sales (sponsor to sponsor), Trade Sales (VC (PE) Firm to Non-PE Firm), Buybacks, Reverse Takeovers and Writeoffs. All values are sourced from the industry-leading Thomson Reuters Deals database with hyperlinks to the Tearsheets to view the un- derlying details of the transactions. The private equity-backed exits com- ponent in ThomsonONE.com can be used to further analyze all of the VC and PE Exits content herein. Specifically, venture capital IPO exits reported in this chapter are those done on United States stock exchanges/markets with at least one United States domiciled venture fund investor. Specifically, venture capital (private equity) acquisition exits reported in this chapter are completed secondary sales and trade sales where the company was domiciled in the United States and had at least one United States domiciled venture capital (private equity) investor.
2014 National Venture Capital Association Yearbook | 73 NVCA THOMSON REUTERS Fig. 4.03 Venture-Backed IPOs 1985 to 2013 Value and Age Characteristics Year Num of IPOs Offer Amount ($Mil) Med Offer Amt ($Mil) Mean Offer Amt ($Mil) Post Offer Value ($Mil) Med Post Value ($Mil) Mean Post Value ($Mil) Median Time to Exit (yrs) Mean Time to Exit (yrs) 1985 48 763 13 16 2,020 37 48 2.8 3.9 1986 105 2,417 13 23 166,032 52 1866 3.9 4.2 1987 86 2,125 17 25 10,972 46 155 3.7 3.9 1988 43 769 15 18 21,117 51 571 3.2 3.7 1989 42 873 16 21 4,443 50 131 3.9 4.2 1990 47 1,108 20 24 5,886 60 178 3.6 4.2 1991 120 3,726 27 31 17,611 81 202 4.7 5.0 1992 150 5,443 24 36 15,955 68 146 4.5 5.0 1993 175 6,154 25 35 14,808 75 130 5.4 5.7 1994 138 3,952 24 29 10,344 68 94 4.7 5.3 1995 184 7,859 36 43 19,300 104 152 3.8 4.8 1996 256 12,716 35 50 51,511 112 240 3.2 4.1 1997 141 5,829 33 41 19,101 99 148 3.0 6.4 1998 78 4,125 43 53 24,655 164 324 2.5 3.1 1999 280 23,975 69 86 147,341 304 532 2.9 3.1 2000 238 27,443 83 115 108,783 325 494 3.1 3.7 2001 37 4,130 80 112 19,233 327 534 4.0 4.4 2002 24 2,333 89 97 8,322 266 347 3.3 5.0 2003 26 2,024 71 78 7,412 252 285 5.4 5.6 2004 82 10,032 70 122 50,268 254 613 5.5 6.1 2005 59 5,113 68 87 39,702 202 673 5.2 5.3 2006 67 7,065 86 105 71,124 283 1078 5.3 5.6 2007 91 12,339 98 136 68,203 365 749 6.0 6.0 2008 7 765 83 109 3,645 278 521 7.4 7.3 2009 13 1,980 123 152 9,192 548 707 5.9 6.9 2010 70 7,774 93 111 114,981 428 1643 5.0 5.9 2011 51 10,690 106 210 94,657 606 1856 6.3 7.0 2012 49 21,460 89 438 122,168 371 2493 7.2 7.8 2013 81 11,068 91 137 62,700 354 784 7.4 8.1
74 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.04 Venture-Backed IPOs by MoneyTree Industry Total Offering Size ($ Million) Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 38 349 217 26 51 66 964 860 486 257 437 1,250 575 197 562 Business Products and Services 58 33 0 2 0 44 66 70 193 70 35 496 185 58 1,137 Computers and Peripherals 135 306 267 116 150 74 118 295 203 122 339 357 75 59 215 Consumer Products and Services 7 177 7 8 91 5 186 240 169 58 335 177 160 541 602 Electronics/Instrumentation 7 60 17 0 0 48 0 91 372 155 296 224 111 76 135 Financial Services 0 91 39 10 47 0 21 1,248 51 237 273 1,597 209 45 521 Healthcare Services 89 15 22 0 14 69 435 144 132 180 162 269 235 123 458 Industrial/Energy 29 58 177 75 127 242 346 325 670 437 495 1,064 794 138 207 IT Services 15 4 32 27 0 0 163 48 41 68 308 396 151 239 2,141 Media and Entertainment 51 599 22 3 17 10 103 253 710 562 207 727 505 199 2,872 Medical Devices and Equipment 61 89 147 22 71 90 241 601 254 388 995 1,666 444 90 0 Networking and Equipment 25 105 136 42 43 82 346 284 233 457 313 749 416 235 2,912 Other 0 54 0 0 0 0 0 12 0 0 0 0 203 0 46 Retailing/Distribution 154 67 48 146 35 18 29 265 718 71 111 358 159 344 1,736 Semiconductors 15 47 368 79 62 29 210 86 311 164 696 36 319 37 221 Software 52 270 206 134 135 192 476 409 846 447 2,366 1,851 912 870 5,618 Telecommunications 27 92 421 79 30 141 22 212 766 277 492 1,498 377 877 4,592 Total 763 2,417 2,125 769 873 1,108 3,726 5,443 6,154 3,952 7,859 12,716 5,829 4,125 23,975 Fig. 4.04 (Continued) Venture-Backed IPOs by MoneyTree Industry Total Offering Size ($ Million) Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 4,211 353 342 442 1,616 897 895 1,292 6 153 1,155 997 854 3,507 Business Products and Services 594 0 248 62 0 507 0 1,202 0 0 190 322 152 0 Computers and Peripherals 617 0 63 0 0 8 0 124 188 0 0 367 0 193 Consumer Products and Services 295 120 39 82 280 3 542 154 0 163 727 847 262 631 Electronics/Instrumentation 251 46 0 0 0 0 0 0 0 438 0 95 0 0 Financial Services 50 771 231 353 1,447 706 551 1,178 0 0 558 0 185 253 Healthcare Services 156 306 83 59 124 77 0 130 94 132 138 0 0 0 Industrial/Energy 1,107 747 0 0 638 299 1,114 1,007 0 88 955 984 247 0 IT Services 2,030 0 0 0 49 140 207 836 0 0 379 163 636 576 Media and Entertainment 1,243 0 353 75 1,434 376 864 209 0 0 830 3,210 16,236 2,839 Medical Devices and Equipment 634 673 456 0 806 380 633 1,407 134 0 299 145 115 283 Networking and Equipment 4,339 275 0 0 69 0 479 313 0 0 267 0 316 301 Other 177 100 0 0 0 0 0 0 0 0 0 0 0 0 Retailing/Distribution 459 26 259 65 0 28 144 452 0 0 178 0 0 0 Semiconductors 1,052 133 0 381 522 472 136 975 0 0 534 255 130 274 Software 4,924 405 259 330 2,506 570 768 1,471 344 604 1,368 2,500 2,022 2,022 Telecommunications 5,304 173 0 175 542 651 731 1,591 0 402 197 805 305 187 Total 27,443 4,130 2,333 2,024 10,032 5,113 7,065 12,339 765 1,980 7,774 10,690 21,460 11,068
2014 National Venture Capital Association Yearbook | 75 NVCA THOMSON REUTERS Fig. 4.05 Venture-Backed IPOs by MoneyTree Industry Total Number of Companies Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 5 16 14 2 6 4 31 27 22 13 16 33 21 7 9 Business Products and Services 1 2 0 1 0 1 3 3 6 3 1 6 3 1 16 Computers and Peripherals 9 14 9 5 4 3 3 11 9 6 8 11 3 3 4 Consumer Products and Services 1 5 1 1 3 1 6 7 4 2 9 7 6 7 9 Electronics/Instrumentation 1 6 3 0 0 2 0 4 13 5 9 9 3 1 2 Financial Services 0 3 2 1 3 0 1 6 2 8 5 10 4 2 7 Healthcare Services 4 1 2 0 1 3 13 6 4 4 3 5 7 3 7 Industrial/Energy 3 5 13 6 4 6 10 9 19 14 11 18 18 3 3 IT Services 1 1 3 1 0 0 5 1 1 3 5 9 4 5 28 Media and Entertainment 4 10 2 1 1 2 3 7 10 9 4 13 7 3 32 Medical Devices and Equipment 3 10 8 4 5 8 12 27 14 17 20 44 13 2 0 Networking and Equipment 1 2 5 2 2 2 8 11 6 13 10 10 6 5 25 Other 0 1 0 0 0 0 0 1 0 0 0 0 1 0 1 Retailing/Distribution 5 3 3 5 1 1 1 6 12 3 3 9 4 6 17 Semiconductors 1 4 5 5 3 1 9 4 13 9 16 1 8 1 4 Software 3 15 10 7 8 9 14 13 26 19 56 53 26 20 80 Telecommunications 6 7 6 2 1 4 1 7 14 10 8 18 7 9 36 Total 48 105 86 43 42 47 120 150 175 138 184 256 141 78 280 Fig. 4.05 Venture-Backed IPOs by MoneyTree Industry Total Number of Companies Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 47 4 4 7 26 15 16 20 1 2 13 11 12 42 Business Products and Services 8 0 1 1 0 4 0 4 0 0 1 2 1 0 Computers and Peripherals 6 0 1 0 0 1 0 1 1 0 0 2 0 1 Consumer Products and Services 3 3 1 2 3 1 4 1 0 1 5 2 3 3 Electronics/Instrumentation 3 1 0 0 0 0 0 0 0 1 0 1 0 0 Financial Services 1 2 2 4 7 2 4 3 0 0 5 0 2 1 Healthcare Services 2 4 1 1 1 1 0 1 1 1 1 0 0 0 Industrial/Energy 7 4 0 0 3 3 7 5 0 1 5 3 3 0 IT Services 16 0 0 0 1 1 2 6 0 0 4 2 6 4 Media and Entertainment 11 4 1 7 4 6 2 0 0 6 9 4 6 Medical Devices and Equipment 11 7 4 0 13 8 11 11 2 0 4 2 1 4 Networking and Equipment 17 2 0 0 1 0 4 3 0 0 3 0 3 3 Other 1 1 0 0 0 0 0 0 0 0 0 0 0 0 Retailing/Distribution 4 1 1 1 0 1 1 2 0 0 2 0 0 0 Semiconductors 10 2 0 3 6 6 2 10 0 0 6 3 2 3 Software 58 5 5 4 10 6 7 13 2 5 12 9 9 13 Telecommunications 33 1 0 2 4 6 3 9 0 2 3 5 3 1 Total 238 37 24 26 82 59 67 91 7 13 70 51 49 81
76 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.06 Average and Median Age in Years by MoneyTree Industry Companies at IPO 2000-2013 2000 2001 2002 2003 2004 2005 2006 Industry Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Biotechnology 4.5 4.3 4.5 4.6 8.4 6.7 6.0 5.1 5.6 5.1 5.6 5.5 5.3 5.0 Business Products and Services 2.0 1.7 N/A N/A 2.7 2.7 5.7 5.7 N/A N/A 4.3 4.4 N/A N/A Computers and Peripherals 4.3 2.8 N/A N/A 15.7 15.7 N/A N/A N/A N/A 0.8 0.8 N/A N/A Consumer Products and Services 1.4 1.5 3.7 4.6 4.6 4.6 4.3 4.3 5.5 5.2 5.5 5.5 4.9 4.9 Electronics/Instrumentation 3.4 2.7 6.3 6.3 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Financial Services 1.0 1.0 12.9 12.9 1.9 1.9 5.0 4.7 5.5 5.3 3.0 3.0 4.7 4.8 Healthcare Services 3.3 3.3 5.2 5.2 7.1 7.1 5.7 5.7 8.9 8.9 3.9 3.9 N/A N/A Industrial/Energy 3.4 3.2 1.1 0.4 N/A N/A N/A N/A 7.7 3.4 8.2 7.0 2.1 0.6 IT Services 1.9 1.8 N/A N/A N/A N/A N/A N/A 5.3 5.3 3.8 3.8 6.0 6.0 Media and Entertainment 4.3 3.2 N/A N/A 4.4 3.5 5.7 5.7 6.0 5.8 4.6 4.4 8.4 8.2 Medical Devices and Equipment 5.1 4.8 4.8 4.5 3.7 3.2 N/A N/A 8.1 7.3 6.6 7.1 6.9 5.3 Networking and Equipment 3.3 3.0 4.2 4.2 N/A N/A N/A N/A 6.1 6.1 N/A N/A 7.0 6.6 Other 1.3 1.3 2.6 2.6 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Retailing/Distribution 1.9 1.8 4.3 4.3 3.4 3.4 4.0 4.0 N/A N/A 6.1 6.1 1.5 1.5 Semiconductors 5.5 3.7 2.9 2.9 N/A N/A 5.3 4.1 6.5 6.4 4.3 5.0 6.7 6.7 Software 3.4 3.3 4.2 4.6 3.3 3.0 6.1 5.6 5.3 5.5 5.4 5.6 6.5 6.0 Telecommunications 3.6 3.1 1.4 1.4 N/A N/A 6.5 6.5 5.3 5.0 5.0 4.1 4.2 3.9 Fig. 4.06 (Continued) Average and Median Age in Years by MoneyTree Industry Companies at IPO 2000-2013 2007 2008 2009 2010 2011 2012 2013 Industry Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Biotechnology 5.1 5.1 7.0 7.0 10.4 10.4 5.7 4.8 6.6 5.5 5.9 6.0 8.2 7.5 Business Products and Services 6.1 5.2 N/A N/A N/A N/A 0.6 0.6 4.2 4.2 5.7 5.7 N/A N/A Computers and Peripherals 6.7 6.7 8.7 8.7 N/A N/A N/A N/A 7.3 7.3 N/A N/A 5.0 5.0 Consumer Products and Services 17.8 17.8 N/A N/A 5.3 5.3 5.1 4.3 3.8 3.8 7.2 8.3 6.4 3.9 Electronics/Instrumentation N/A N/A N/A N/A 7.8 7.8 N/A N/A 12.5 12.5 N/A N/A N/A N/A Financial Services 3.1 3.4 N/A N/A N/A N/A 7.0 8.9 N/A N/A 9.3 9.3 6.7 6.7 Healthcare Services 9.9 9.9 10.2 10.2 2.0 2.0 2.6 2.6 N/A N/A N/A N/A N/A N/A Industrial/Energy 1.0 0.9 N/A N/A 1.4 1.4 2.8 3.1 7.0 7.2 5.2 5.4 N/A N/A IT Services 6.1 6.5 N/A N/A N/A N/A 7.6 8.6 8.9 8.9 10.1 7.9 9.9 9.1 Media and Entertainment 6.4 6.4 N/A N/A N/A N/A 7.9 7.4 6.4 6.1 6.3 6.4 7.9 7.6 Medical Devices and Equipment 6.7 6.6 6.0 6.0 N/A N/A 5.2 5.2 5.5 5.5 4.9 4.9 7.5 7.7 Networking and Equipment 6.3 6.7 N/A N/A N/A N/A 7.4 7.4 N/A N/A 10.1 9.9 5.7 6.2 Other N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Retailing/Distribution 3.1 3.1 N/A N/A N/A N/A 2.2 2.2 N/A N/A N/A N/A N/A N/A Semiconductors 7.9 7.2 N/A N/A N/A N/A 4.9 4.4 7.6 7.6 13.1 13.1 8.8 9.5 Software 6.5 5.9 6.7 6.7 6.4 7.3 7.1 6.1 8.0 9.0 8.5 7.6 8.0 6.8 Telecommunications 6.8 7.2 N/A N/A 10.4 10.4 8.7 9.1 8.0 9.8 9.4 8.8 16.9 16.9
2014 National Venture Capital Association Yearbook | 77 NVCA THOMSON REUTERS Fig. 4.07 Venture-Backed Merger & Acquisitions by Years Year Number Total Number Known ($ Millions) Price Average Mean Time To Exit (Years) Median Time To Exit To Exit (Years) 1985 7 3 300.2 100.1 7.0 4.8 1986 8 1 63.4 63.4 3.4 3.5 1987 11 4 667.2 166.8 4.9 3.5 1988 17 9 920.7 102.3 4.7 4.1 1989 21 10 746.9 74.7 4.3 3.6 1990 19 7 120.3 17.2 5.8 5.5 1991 16 4 190.5 47.6 6.0 5.0 1992 69 43 2119.1 49.3 4.7 4.0 1993 59 36 1332.9 37.0 5.3 4.7 1994 84 57 3208.4 56.3 5.8 5.3 1995 92 58 3801.8 65.5 4.6 4.1 1996 108 76 8230.8 108.3 5.2 4.1 1997 145 100 7798.0 78.0 4.5 3.1 1998 189 113 8002.0 70.8 4.5 2.8 1999 228 155 38710.6 249.7 3.6 2.8 2000 379 245 79996.4 326.5 3.2 2.7 2001 384 175 25115.6 143.5 3.0 2.2 2002 365 166 11913.2 71.8 3.5 2.9 2003 323 134 8240.8 61.5 4.3 3.6 2004 402 199 28846.1 145.0 5.0 4.6 2005 446 201 19717.3 98.1 5.4 5.2 2006 484 208 24291.0 116.8 5.7 5.7 2007 488 201 30745.5 153.0 5.8 6.3 2008 417 134 16236.9 121.2 5.8 5.6 2009 351 109 12364.9 113.4 5.7 5.5 2010 523 150 17707.3 118.0 5.8 5.0 2011 490 169 24093.2 142.6 5.8 5.0 2012 473 132 22694.2 171.9 6.2 5.6 2013 376 94 16586.5 176.5 5.9 5.0 Fig. 4.08 Private Equity-Backed Merger & Acquisitions by Years Year Number Total Number Known ($ Millions) Price Average Mean Time To Exit (Years) Median Time To Exit To Exit (Years) 1985 8 3 300.2 100.1 7.2 5.3 1986 13 4 246.4 61.6 3.6 4.0 1987 17 8 1422.2 177.8 4.1 3.3 1988 35 21 4139.2 197.1 3.8 3.4 1989 30 17 2594.8 152.6 4.4 3.6 1990 29 12 929.7 77.5 6.1 5.3 1991 29 11 774.5 70.4 5.2 4.7 1992 92 59 3652.8 61.9 4.7 4.0 1993 101 61 4355.5 71.4 5.1 4.7 1994 110 71 7848.2 110.5 5.6 5.0 1995 144 90 11057.4 122.9 5.1 4.8 1996 160 117 19587.9 167.4 4.8 3.9 1997 221 150 31562.5 210.4 5.0 3.8 1998 276 182 35578.7 195.5 4.5 3.0 1999 307 204 62827.4 308.0 3.8 3.0 2000 475 304 136325.6 448.4 3.5 2.8 2001 462 219 64564.5 294.8 3.4 2.4 2002 443 221 36264.2 164.1 3.8 3.0 2003 428 201 26264.8 130.7 4.5 3.8 2004 560 290 56179.7 193.7 5.2 4.6 2005 685 316 68468.5 216.7 5.4 5.2 2006 777 337 112915.0 335.1 5.6 5.5 2007 879 362 183217.8 506.1 5.6 5.2 2008 672 226 64078.8 283.5 5.3 4.6 2009 495 163 57883.9 355.1 5.5 4.9 2010 849 288 101808.3 353.5 5.7 4.7 2011 846 297 95368.7 321.1 5.8 5.0 2012 968 302 134158.0 444.2 5.9 5.3 2013 802 203 91618.3 451.3 5.9 5.4 Average acquisition price is calculated by dividing total known acquisition proceeds by the number of transactions where the proceeds are known, not the total number of transactions. Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity financed companies. Therefore, data from fig. 4.07 is included here. Average acquisition price is calculated by dividing total known acquisition proceeds by the number of transactions where the proceeds are known, not the total number of transactions.
78 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.09 Fig. 4.09 Venture-Backed Acquisitions by MoneyTree Industry Total Transaction Values 1985 to 2013 Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 0 0 0 0 0 0 68 33 25 9 89 388 265 141 846 Business Products and Services 0 0 640 0 0 0 0 0 0 0 0 109 181 47 397 Computers and Peripherals 0 0 0 149 61 79 0 16 110 58 140 827 373 422 721 Consumer Products and Services 0 0 0 0 0 0 10 1 0 26 23 46 237 388 503 Electronics/Instrumentation 0 0 0 81 0 0 0 36 13 49 42 12 105 60 133 Financial Services 0 0 0 140 0 0 0 1,204 91 144 734 67 34 459 1,299 Healthcare Services 0 0 0 199 60 0 0 88 0 178 475 130 180 64 0 Industrial/Energy 99 63 0 238 59 20 0 203 122 764 53 1,127 193 381 962 IT Services 0 0 0 0 0 0 0 0 0 0 15 315 80 523 699 Media and Entertainment 0 0 0 0 0 0 30 0 119 29 38 2,160 2,106 343 10,878 Medical Devices and Equipment 201 0 3 0 317 0 0 234 43 295 110 298 507 130 298 Networking and Equipment 0 0 0 18 250 0 0 0 317 352 1,024 1,090 178 981 11,521 Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Retailing/Distribution 0 0 0 95 0 0 0 35 80 0 29 0 39 28 689 Semiconductors 0 0 0 0 0 0 0 0 0 59 84 54 11 627 1,903 Software 0 0 25 0 0 22 83 264 116 455 617 1,228 2,176 2,888 5,621 Telecommunications 0 0 0 0 0 0 0 4 298 790 328 381 1,133 521 2,241 Total 300 63 667 921 747 120 190 2,119 1,333 3,208 3,802 8,231 7,798 8,002 38,711 Fig. 4.09 (Continued) Fig. 4.09 Venture-Backed Acquisitions by MoneyTree Industry Total Transaction Values 1985 to 2013 Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 1,206 679 115 259 688 2,462 2,104 6,050 1,266 843 3,720 3,948 2,967 3,075 Business Products and Services 1,637 157 870 151 3,024 132 409 2,124 570 314 181 315 697 0 Computers and Peripherals 4,610 357 51 47 680 248 492 6 49 500 348 557 764 945 Consumer Products and Services 2,611 519 343 418 444 582 486 245 284 0 141 1,143 615 0 Electronics/Instrumentation 3,456 167 71 6 116 72 38 87 80 0 0 510 0 115 Financial Services 1,355 617 557 98 250 890 985 1,896 988 0 812 466 435 0 Healthcare Services 286 177 818 37 6,227 624 968 542 27 5 755 601 756 250 Industrial/Energy 1,396 858 182 1,006 2,128 1,117 1,425 1,799 832 886 1,276 1,674 1,141 455 IT Services 2,384 491 612 1,002 1,999 1,066 795 2,482 745 203 1,415 2,084 2,077 898 Media and Entertainment 3,227 6,315 999 324 3,355 2,980 2,599 3,039 2,251 892 1,051 1,013 2,430 1,382 Medical Devices and Equipment 433 932 414 465 1,168 1,268 1,704 1,832 499 2,569 1,571 3,809 1,779 1,528 Networking and Equipment 18,359 5,425 818 813 1,311 1,290 628 549 609 643 678 24 146 430 Other 0 0 350 0 0 212 0 246 0 0 95 0 0 0 Retailing/Distribution 824 4 0 857 118 0 463 180 10 930 14 0 0 30 Semiconductors 7,210 2,099 2,703 359 688 575 1,029 964 664 628 1,047 743 1,284 1,601 Software 23,475 3,689 1,886 2,098 4,972 4,886 7,879 6,923 5,575 1,745 3,775 6,756 5,623 5,328 Telecommunications 7,528 2,630 1,125 301 1,678 1,313 2,287 1,785 1,789 2,205 826 451 1,980 550 Total 79,996 25,116 11,913 8,241 28,846 19,717 24,291 30,746 16,237 12,365 17,707 24,093 22,694 16,587
2014 National Venture Capital Association Yearbook | 79 NVCA THOMSON REUTERS Fig. 4.10 Venture-Backed Acquisitions by MoneyTree Industry Number of Companies 1985 to 2013 Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 0 0 0 0 1 1 1 4 2 4 10 10 9 11 12 Business Products and Services 0 0 1 1 0 0 1 1 0 1 0 3 2 4 4 Computers and Peripherals 1 0 2 2 4 4 2 9 8 4 5 9 8 7 11 Consumer Products and Services 0 0 0 0 0 0 1 2 3 1 1 5 7 7 11 Electronics/Instrumentation 0 0 1 3 2 0 1 4 2 1 1 4 6 4 3 Financial Services 0 0 0 0 0 0 0 5 2 4 4 5 4 5 13 Healthcare Services 0 1 0 1 2 0 1 4 1 8 9 4 3 9 2 Industrial/Energy 1 2 2 3 3 3 2 8 3 10 5 8 9 18 11 IT Services 0 1 0 1 1 1 0 0 0 0 2 5 7 11 16 Media and Entertainment 0 0 0 0 0 0 1 1 4 2 3 7 11 10 19 Medical Devices and Equipment 2 0 1 2 5 2 0 13 4 8 7 6 13 11 10 Networking and Equipment 0 0 1 2 1 0 0 2 7 8 8 13 4 8 22 Other 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 Retailing/Distribution 2 0 0 1 0 1 2 2 3 1 1 0 4 2 7 Semiconductors 0 0 0 0 0 1 2 1 1 3 3 2 2 8 9 Software 1 3 3 0 1 6 1 11 15 24 29 21 44 62 59 Telecommunications 0 1 0 0 1 0 1 2 4 5 3 6 12 12 19 Total 7 8 11 17 21 19 16 69 59 84 92 108 145 189 228 Fig. 4.10 (Continued) Venture-Backed Acquisitions by MoneyTree Industry Number of Companies 1985 to 2013 Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 16 21 9 15 24 29 32 32 24 19 38 34 33 22 Business Products and Services 15 29 14 15 20 22 24 35 14 13 14 13 15 5 Computers and Peripherals 13 6 2 8 8 8 10 3 7 4 6 7 6 7 Consumer Products and Services 16 14 7 11 10 11 10 11 11 7 7 8 11 7 Electronics/Instrumentation 4 6 7 4 5 3 5 5 7 4 5 4 5 6 Financial Services 13 19 13 9 14 12 16 12 10 5 12 9 9 8 Healthcare Services 9 5 13 3 7 12 12 11 12 7 14 15 9 5 Industrial/Energy 13 12 12 9 12 22 18 19 22 16 24 20 29 14 IT Services 23 31 38 25 33 22 30 38 27 22 46 48 51 26 Media and Entertainment 40 51 27 16 33 31 26 49 36 33 63 65 46 46 Medical Devices and Equipment 9 19 12 9 23 27 25 27 13 26 21 37 32 25 Networking and Equipment 24 16 20 23 30 22 28 15 25 23 23 18 12 7 Other 0 0 1 1 1 1 0 2 2 0 1 2 0 1 Retailing/Distribution 14 15 7 7 7 8 9 9 5 1 5 1 4 5 Semiconductors 21 14 14 11 17 17 20 19 24 22 27 15 18 14 Software 118 94 129 120 133 163 177 157 148 120 171 171 162 162 Telecommunications 31 32 40 37 25 36 42 44 30 29 46 23 31 16 Total 379 384 365 323 402 446 484 488 417 351 523 490 473 376
80 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.11 Private Equity-Backed Acquisitions by MoneyTree Industry Total Transaction Values 1985 to 2013 Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 0 0 0 0 766 0 68 33 25 93 448 412 472 498 904 Business Products and Services 0 0 640 0 263 7 12 0 0 750 419 220 1331 694 Computers and Peripherals 0 0 0 149 61 79 0 16 110 81 140 827 387 620 758 Consumer Products and Services 0 116 0 1444 798 45 10 30 634 1729 706 1078 1360 1676 827 Electronics/Instrumentation 0 0 0 81 0 115 0 36 13 49 42 375 107 162 312 Financial Services 0 0 0 340 0 0 0 1204 461 695 2305 2728 2745 1520 1605 Healthcare Services 0 0 0 199 60 0 0 94 0 178 598 1494 3702 317 112 Industrial/Energy 99 63 275 1490 311 20 102 792 1881 922 2490 2120 4610 4783 2841 IT Services 0 0 0 7 0 0 0 0 0 0 15 485 1620 533 2820 Media and Entertainment 0 0 100 100 32 220 30 0 213 351 398 3428 3195 11433 19721 Medical Devices and Equipment 201 68 383 0 317 167 0 575 182 1731 244 1000 1378 2075 1341 Networking and Equipment 0 0 0 18 250 0 0 0 317 354 1024 1090 178 1497 12000 Other 0 0 0 0 0 0 0 0 0 0 0 0 0 229 0 Retailing/Distribution 0 0 0 295 0 0 475 96 94 90 472 452 8034 3738 3265 Semiconductors 0 0 0 0 0 0 0 0 0 67 97 54 11 640 3066 Software 0 0 25 16 0 22 83 686 128 467 629 1228 2357 3196 10115 Telecommunications 0 0 0 0 0 0 0 79 299 1042 698 2399 1187 1331 2449 Total 300 246 1422 4139 2595 930 775 3653 4356 7848 11057 19588 31563 35579 62827 Fig. 4.11 (Continued) Private Equity-Backed Acquisitions by MoneyTree Industry Total Transaction Values 1985 to 2013 Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 2102 801 2584 986 1805 3047 2384 7904 1830 6963 9043 6488 15784 7207 Business Products and Services 2532 520 1381 254 4077 1982 11642 4709 6517 567 2262 2540 3711 6515 Computers and Peripherals 4732 528 229 47 995 739 492 29 769 500 348 754 851 1473 Consumer Products and Services 3666 1628 2711 3656 5264 6074 10591 22156 2252 1451 7257 2413 4720 1137 Electronics/Instrumentation 3456 1204 381 6 447 1698 77 2997 392 0 1333 2517 2275 1240 Financial Services 1383 1116 3435 292 564 2957 1406 3349 3796 3463 2271 9887 7102 7267 Healthcare Services 668 617 1223 37 7417 3440 3646 4214 780 581 8210 4950 8403 1010 Industrial/Energy 2973 3360 4073 7492 12455 20938 24190 56947 12165 1998 25034 26358 31086 17253 IT Services 3138 533 674 1312 2135 2192 935 5362 5604 373 3717 2172 3960 4426 Media and Entertainment 42607 6332 4460 1733 7223 5397 26597 8756 3066 1708 2446 3816 15613 3213 Medical Devices and Equipment 556 1196 954 1168 2395 2364 3121 6691 6285 3610 8212 6201 8215 13093 Networking and Equipment 22320 6226 854 942 1420 2373 1561 991 782 1281 678 3838 590 2613 Other 0 176 350 200 143 1676 630 426 8358 0 2865 871 3521 635 Retailing/Distribution 1660 2227 175 3174 1042 978 1700 31001 924 945 6524 3108 4266 7021 Semiconductors 7493 2224 3248 422 805 1276 1272 1591 850 628 1789 890 1408 1799 Software 25737 3796 2134 4087 5761 5603 10034 21470 7546 2327 15871 14993 13333 9841 Telecommunications 11303 32082 7399 458 2232 5736 12634 4624 2162 31490 3948 3574 9320 5874 Total 136326 64565 36264 26265 56180 68468 112915 183218 64079 57884 101808 95369 134158 91618
2014 National Venture Capital Association Yearbook | 81 NVCA THOMSON REUTERS Fig. 4.12 Private Equity-Backed Acquisitions by MoneyTree Industry Number of Companies 1985 to 2013 Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 0 0 0 0 3 1 1 4 3 7 13 11 10 15 14 Business Products and Services 0 0 1 3 0 2 2 2 3 1 3 5 7 9 7 Computers and Peripherals 1 0 2 2 4 4 2 9 9 5 6 9 9 8 13 Consumer Products and Services 0 2 1 3 3 1 2 6 10 4 5 13 14 19 15 Electronics/Instrumentation 0 0 1 3 2 1 1 4 2 1 1 9 8 5 5 Financial Services 0 0 0 2 0 0 1 5 8 6 10 12 12 11 17 Healthcare Services 0 1 0 1 2 0 1 5 1 9 10 8 5 12 4 Industrial/Energy 2 3 4 9 5 4 8 17 20 13 25 20 35 39 33 IT Services 0 1 0 3 1 1 0 1 0 0 3 6 12 12 21 Media and Entertainment 0 1 1 1 2 1 1 1 6 8 5 12 17 19 28 Medical Devices and Equipment 2 1 2 2 5 3 0 15 5 9 11 9 17 17 14 Networking and Equipment 0 0 1 2 1 0 0 2 7 8 10 13 4 11 24 Other 0 0 0 0 0 0 0 0 0 0 1 0 0 1 0 Retailing/Distribution 2 0 0 3 0 3 5 3 5 2 3 2 10 8 13 Semiconductors 0 0 0 0 0 1 2 1 1 3 4 2 2 10 11 Software 1 3 3 1 1 6 2 13 17 26 30 21 45 66 67 Telecommunications 0 1 1 0 1 1 1 4 4 8 4 8 14 14 21 Total 8 13 17 35 30 29 29 92 101 110 144 160 221 276 307 Fig. 4.12 (Continued) Private Equity-Backed Acquisitions by MoneyTree Industry Number of Companies 1985 to 2013 Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 18 22 11 17 28 34 33 36 28 26 48 42 46 31 Business Products and Services 23 34 21 18 29 34 42 65 33 19 32 39 54 43 Computers and Peripherals 15 7 3 9 9 13 11 5 9 6 7 10 12 12 Consumer Products and Services 23 25 22 25 39 33 55 62 40 25 43 43 49 57 Electronics/Instrumentation 4 11 9 4 10 7 9 18 14 4 11 15 10 14 Financial Services 16 26 19 13 19 19 22 23 19 14 27 28 29 35 Healthcare Services 11 8 15 4 14 25 30 30 22 10 33 38 40 30 Industrial/Energy 37 35 33 45 66 128 113 148 115 57 122 137 219 154 IT Services 26 32 41 27 36 26 42 49 30 24 56 52 65 39 Media and Entertainment 54 58 31 28 43 43 54 84 50 48 76 84 82 68 Medical Devices and Equipment 13 20 14 14 27 35 32 41 20 40 42 55 51 39 Networking and Equipment 26 17 20 25 31 28 32 21 30 25 25 25 16 14 Other 0 1 1 3 4 10 4 8 14 1 8 8 7 7 Retailing/Distribution 19 18 9 15 14 21 24 28 17 7 29 16 29 24 Semiconductors 26 15 16 11 19 19 21 23 30 22 30 19 20 16 Software 126 98 133 127 143 171 200 184 165 132 203 206 200 196 Telecommunications 38 35 45 43 29 39 53 54 36 35 57 29 39 23 Total 475 462 443 428 560 685 777 879 672 495 849 846 968 802 *Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity-financed companies. Therefore, transactions from Figure 4.10 are included here.
82 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.13 Venture-Backed M&A Transaction Values vs. Amount Invested Year < TVI 1x-4x TVI 4x-10x TVI >10x TVI 1995 14% 26% 22% 38% 1996 8% 27% 30% 34% 1997 10% 41% 15% 34% 1998 15% 22% 31% 32% 1999 14% 15% 26% 45% 2000 8% 23% 22% 46% 2001 41% 19% 23% 17% 2002 50% 26% 13% 11% 2003 45% 38% 11% 5% 2004 36% 33% 20% 11% 2005 30% 37% 19% 14% 2006 29% 37% 18% 16% 2007 22% 30% 24% 23% 2008 28% 29% 25% 18% 2009 44% 21% 25% 10% 2010 31% 31% 22% 16% 2011 15% 27% 34% 24% 2012 18% 25% 29% 28% 2013 18% 37% 29% 16% Fig. 4.14 Venture-Backed IPOs Cos In Registration vs. Number of Venture-Backed IPOs Year # of Venture Backed IPOs # of Moneytree Cos. in Registration 2003 26 31 2004 82 57 2005 59 16 2006 67 36 2007 91 31 2008 7 20 2009 13 23 2010 70 31 2011 51 60 2012 49 27 2013 81 22 Fig. 4.15 Post-Offer Value Ranges by Number of Companies Year $10B or Greater >$1B $500M-$1B $100M-$500M <$100M 1995 - 2 4 59 62 1996 - 5 11 110 89 1997 - 1 4 58 66 1998 - 6 3 50 17 1999 1 28 46 181 22 2000 - 27 37 138 18 2001 - 5 7 18 6 2002 - - 7 15 2 2003 - - 2 22 2 2004 1 4 10 64 4 2005 1 4 7 35 13 2006 1 7 11 44 4 2007 1 15 16 57 3 2008 - 2 - 4 1 2009 - 3 4 6 - 2010 2 21 6 41 2 2011 2 17 13 19 2 2012 2 9 9 29 2 2013 1 13 12 50 5 * Count only includes IPOs with disclosed post-offer values This chart is prepared by analyzing all deals where total venture investment and ac- quisition price are confirmed. Each deal is classified as a ratio of company acquisi- tion (exit) price to total venture investment from all rounds. This chart compares the number of deals in each category. An acquisition where deal price is less than the total venture investment (“<TVI”) clearly did not result in a good return. Four times the investment to 10 times the investment can be a good outcome. An acquisition for more than 10 times venture investment is usually a nice outcome. *Beginning in 2012, companies could elect confidential registration. Those, of course, cannot be counted in the number in registration. As of this writing, it appears that half or more of companies seeking to go public are electing confidential registration.
2014 National Venture Capital Association Yearbook | 83 NVCA THOMSON REUTERS Fig. 4.16 Deal Value Ranges by Number of Companies Year >$1B $500M-$1B $100M-$500M <$100M 1995 - 1 10 47 1996 1 2 17 56 1997 - 1 22 77 1998 - - 27 86 1999 2 12 58 84 2000 15 23 101 106 2001 3 4 43 125 2002 1 3 28 134 2003 - 2 29 103 2004 5 6 45 143 2005 1 3 58 139 2006 2 3 62 141 2007 1 15 74 112 2008 2 4 42 87 2009 - 8 34 68 2010 - 11 49 90 2011 1 12 63 93 2012 5 10 53 64 2013 3 8 45 39 * Count only includes transactions with disclosed values Fig. 4.17 Venture-Backed US Company IPOs by Year by Country Country # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) Argentina - - - - 1 332.8 - - - - - - - - - - - - 1 332.8 Bahamas - - 1 137.5 - - - - - - - - - - - - - - 1 137.5 Bermuda - - - - - - - - - - - - 1 621.3 - - - - 1 621.3 Canada 1 91.1 - - 1 57.5 - - - - - - - - - - - - 2 148.6 China 5 621.1 5 624.7 12 2,482.5 - - 2 220.0 21 2,838.3 8 1,739.7 2 165.7 4 556.3 59 9,248.2 France - - - - - - - - - - - - 1 77.0 - - 1 288.1 2 365.1 Hong Kong - - - - - - - - - - 1 103.3 - - - - - - 1 103.3 India - - - - - - - - - - 1 80.5 - - - - - - 1 80.5 Israel 2 67.5 1 78.0 - - - - - - - - - - - - 2 208.2 5 353.7 Netherlands - - - - - - - - - - - - 1 304.6 - - 1 89.7 2 394.3 Norway - - 1 43.8 - - - - - - - - - - - - - - 1 43.8 Russia - - 1 380.5 - - - - - - - - 1 1,434.8 - - - - 2 1,815.3 South Korea 2 190.8 1 144.1 - - - - - - - - - - - - - - 3 334.9 Taiwan 1 70.4 - - - - - - - - - - - - - - - - 1 70.4 United Kingdom - - - - - - - - - - - - - - - - 1 74.0 1 74.0 United States 48 4,072.5 57 5,655.9 77 9,466.5 7 765.026 11 1,759.8 47 4,752.3 39 6,512.1 47 21,294.2 72 9,852.0 405 64,130.4 *To be included in this chart, non-US based companies must be trading on a U.S. exchange/market and have at least 1 U.S. venture fund investor. 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total
84 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.18 Ratio of IPO Pre-Money Valuation to Amount Invested Year Post Offer Value ($ Billion) Offer Amt ($ Billion) IPO Pre Money Valuation Total Venture Inv. ($ Billion) Ratio 1995 19.3 7.9 11.4 2.2 5.2 1996 51.5 12.7 38.8 3.7 10.5 1997 19.1 5.8 13.3 2.7 4.9 1998 24.7 4.1 20.5 2.4 8.6 1999 147.3 24.0 123.4 11.0 11.2 2000 108.8 27.4 81.3 13.0 6.3 2001 19.2 4.1 15.1 2.6 5.8 2002 8.3 2.3 6.0 1.7 3.5 2003 7.4 2.0 5.4 2.4 2.2 2004 50.3 10.0 40.2 6.7 6.0 2005 39.7 5.1 34.6 3.1 11.2 2006 71.1 7.1 64.1 4.3 14.9 2007 68.2 12.3 55.9 6.7 8.3 2008 3.6 0.8 2.9 0.4 8.0 2009 9.2 2.0 7.2 0.6 12.0 2010 115.0 7.8 107.2 5.9 18.2 2011 94.7 10.7 84.0 6.6 12.7 2012 122.2 21.5 100.7 6.7 15.0 2013 62.7 11.1 51.6 9.4 5.5 Fig. 4.19 2013 Venture-Backed IPOs Valuations as of IPOs Year of IPO Avg Val ($ Mil) Max ($ Mil) Upper Quartile ($ Mil) Median ($ Mil) Lower Quartile ($ Mil) Min ($ Mil) 1995 152.0 2,128.6 144.8 104.2 61.4 10.4 1996 239.6 9,989.8 183.4 111.6 65.2 9.5 1997 148.1 1,106.3 161.1 99.3 57.2 6.6 1998 324.4 4,623.9 288.0 163.9 106.9 7.1 1999 531.9 10,203.2 537.0 303.7 186.7 5.9 2000 494.5 4,227.7 550.7 325.4 185.0 1.7 2001 534.2 3,464.1 617.7 326.6 158.6 46.6 2002 346.7 822.4 537.8 266.2 175.6 36.8 2003 285.1 821.9 353.2 251.9 171.2 41.9 2004 613.0 23,053.7 389.2 254.1 152.3 21.6 2005 672.9 22,422.9 392.2 201.9 136.6 4.6 2006 1,077.6 39,248.4 529.2 283.2 179.9 70.9 2007 749.5 14,035.4 762.8 364.7 274.1 50.0 2008 520.7 1,443.1 713.2 278.5 210.7 75.8 2009 707.1 1,622.0 852.5 547.9 313.0 212.9 2010 1,642.6 23,725.8 1,419.9 428.1 222.7 23.4 2011 1,856.0 16,465.6 1,496.6 606.3 336.2 94.8 2012 2,493.2 81,247.2 704.0 371.0 247.3 75.2 2013 783.8 14,435.1 587.8 354.1 212.7 42.9 Note: To be included in this chart, non-US based companies must be trading on a US exchange/market and have at least one US venture fund investor.
2014 National Venture Capital Association Yearbook | 85 NVCA THOMSON REUTERS GROWTH EQUITY INVESTMENTS This edition of the NVCA Yearbook, prepared by Thomson Reuters, for the first time profiles US growth equity investment in its own chapter. The NVCA believes growth equity investing is an important segment of the overall venture capital industry. Venture capitalists help create and grow companies; growth equity investors are strongly focused on the growth component of that mission and help companies scale through fat part of their hiring curves. The NVCA also believes that growth equity investing is a critical component of the emerging growth company financing continuum and has become, in many respects, the private alternative to the public markets for both emerging growth companies and their earlier stage venture capital backers. Growth equity really emerged as an asset class in 2000 and continues strong today. In 2013, we identified 342 growth equity deals in the United States. This compares with 406 in 2012, but is very much in line with the past several years. A disclosed $12.3 billion in equity investment was reported for 2013. This does not count the approximately 105 deals for which no dollar equity amounts were disclosed. An analysis of the charts in this chapter helps profile the growth equity activity. Approximately 38% of disclosed equity dollars went to Califor- nia companies. This compares with 50% of traditional venture capital dol- lars going to California companies. As with traditional venture capital, the sector receiving the most dol- lars through the most deals is Software. By count, 148 of the 342 deals, or 43%, were into software companies. By contrast, no other MoneyTree sector garnered more than 10% of the total number of deals. The definition of a growth equity company: • Company’s revenues are growing rapidly • Company is cash flow positive, profitable or approaching profit- ability • Company is often founder-owned and/or managed • Investor is agnostic about taking a controlling position and usually purchases minority ownership position • Industry investment mix is similar to that of earlier stage venture capital investors • Capital is used for company needs or shareholder liquidity • Additional financing rounds are not usually expected until exit • Investments are unlevered or use light leverage at purchase • Investment returns are primarily a function of growth, not leverage Methodology The growth equity asset class really emerged after the 2000 tech bubble. Therefore, our statistics begin in 2000. These growth equity transactions for the most part were already captured in the Thomson One database. But they were, and still are, reported under the respective venture capital or buyout categories. For purposes of this chapter, they are aggregated and reported as if they were a standalone dataset. While still nascent in its application, our 2014 Yearbook methodology for tagging growth equity transactions from the full venture capital/buy- out database bears some explanation. We expect these criteria to mature over time as we gain more experience defining the asset class. For now: • Date: 1/1/2000 and later • Equity dollar amount invested: Zero (not disclosed) or more than$15 million • Geographic location of company: United States ª Deal stage: expansion, later stage, acquisition for expansion, ac- quisition, LBO, mezzanine, MBO, recap or turnaround, secondary buyout, secondary purchase • Firms investing: Must include at least one firm from a list of 65 known, active growth equity investors It should also be noted that the dollar value of many of these growth equity transactions are not disclosed, so therefore the dollar amounts re- ported in the charts will understate the amount of equity investment made by growth equity firms. For this chapter, we have excluded equity invest- ment reported from $1 to $14.99 million, because growth equity deals tend to be larger in size. Also, unlike traditional venture capital portfolio companies that enter the portfolios with smaller and earlier stage rounds and exit with an IPO, acquisition, or failure, growth equity-backed companies enter those port- folios with more maturity, and, presumably, with a shorter track to liquid- ity.
86 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 5.01 Growth Equity Investments ($ Billions) 2000 to 2013* 0 5 10 15 20 25 30 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Software 34% Computers and Peripherals 21% Media and Entertainment 10% Industrial/Energy 8% Consumer Products and Services 6% IT Services 5% Financial Services 3% Medical Devices and Equipment 2% Biotechnology 2% Telecommunications 2% Healthcare Services 1% Semiconductors 1% Retailing/Distribution 1% Business Products and Services 1% 1% Electronics/Instrumentation 1% Networking and Equipment Figure 5.02 Growth Equity Investments By Industry Sector
2014 National Venture Capital Association Yearbook | 87 NVCA THOMSON REUTERS Fig. 5.03 Growth Equity Investments By Company State* State # Companies # Deals Amt. Invested ($Bil) California 153 141 4,677.6 Texas 27 25 3,368.8 New York 35 33 1,060.6 Massachusetts 21 20 650.4 Georgia 11 10 300.3 Total* 247 229 10,057.8 *Total includes top 5 states only Figure 5.04 Growth Equity Investments 2000-2013 By Industry ($ Millions)* Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 797.01 361 551 743 781 959 829 1,098 819 298 398 409 489 240 Business Products and Services 612.08 222 444 75 154 139 158 368 2,451 94 83 41 - 137 Computers and Peripherals 778.08 136 196 88 187 122 83 97 55 - 73 118 261 2,549 Consumer Products and Services 839.55 186 221 176 739 61 1,224 448 93 228 442 987 924 747 Electronics/ Instrumentation 197.00 83 30 96 96 110 164 251 212 164 115 123 129 72 Financial Services 1,304.76 224 66 296 672 914 464 316 482 249 1,904 94 198 410 Healthcare Services 221.88 48 99 175 270 145 149 274 129 383 194 287 161 Industrial/Energy 728.69 53 312 121 325 2,519 622 1,304 1,239 996 1,147 1,856 1,162 927 IT Services 2,678.90 595 323 71 178 3,700 528 785 814 670 457 1,151 685 666 Media and Entertainment 2,007.22 607 215 458 589 297 487 1,020 713 1,061 1,127 1,848 794 1,277 Medical Devices and Equipment 395.22 571 482 240 447 485 531 1,050 875 469 963 1,217 284 290 Networking and Equipment 4,240.43 2,500 1,226 570 532 654 414 590 268 176 441 199 696 100 Other - - 46 - 130 266 - 350 306 - 52 - - - Retailing/Distribution 860.80 79 193 - 55 103 - 207 107 44 30 392 154 143 Semiconductors 944.95 622 407 461 478 528 3,049 665 357 89 365 504 289 161 Software 6,409.81 2,298 825 1,011 2,079 1,471 2,526 1,358 3,034 1,058 1,316 3,645 3,695 4,229 Telecommunications 5,727.49 1,471 1,008 619 781 1,375 1,268 913 430 531 285 185 325 220 Total 28,743.86 10,055.40 6,643.83 5,200.68 8,490.98 13,848.92 12,493.56 11,094.65 12,384.40 6,127.02 9,579.65 12,961.99 10,370.76 12,329.17
88 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 5.05 Growth Equity Investments 2000-2013 By Industry (Number of Deals)* Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 22 11 16 22 32 30 25 37 32 12 17 13 18 14 Business Products and Services 20 9 3 2 6 9 11 14 13 9 10 7 9 13 Computers and Peripherals 12 4 6 3 8 5 4 6 2 3 7 7 9 Consumer Products and Services 27 6 7 5 10 11 13 23 10 10 14 24 27 16 Electronics/ Instrumentation 6 1 1 3 4 4 6 10 7 5 6 5 6 3 Financial Services 16 6 4 8 12 14 12 16 19 16 14 13 9 12 Healthcare Services 6 2 5 7 10 3 6 7 6 1 11 10 13 4 Industrial/Energy 16 2 6 5 13 15 19 43 38 22 39 37 25 18 IT Services 76 24 15 6 12 17 27 54 43 33 33 53 35 33 Media and Entertainment 65 15 4 13 17 12 23 32 35 27 30 35 41 31 Medical Devices and Equipment 15 19 19 13 18 23 21 38 34 14 29 20 14 13 Networking and Equipment 80 63 32 25 21 23 16 21 14 8 20 11 8 3 Other - - 1 - 4 5 4 11 4 1 1 - - - Retailing/Distribution 23 4 2 1 2 8 2 6 6 1 6 7 5 9 Semiconductors 27 21 17 16 23 27 27 28 16 5 14 19 10 8 Software 203 86 42 32 62 58 64 83 87 57 91 117 168 148 Telecommunications 99 44 25 22 32 17 28 25 20 14 15 10 11 8 Total 713 317 205 183 286 281 308 454 386 235 353 388 406 342
2014 National Venture Capital Association Yearbook | 89 NVCA THOMSON REUTERS Figure 5.06 Growth Equity Investments 2000-2013 By MoneyTree Region ($ Millions)* State 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Silicon Valley 11,021 2,966 1,852 1,347 1,988 2,121 2,060 2,849 3,385 2,675 3,396 5,207 4,151 4,062 Texas 1,968 1,072 594 522 1,246 1,048 3,121 738 521 101 432 1,974 332 3,369 NY Metro 2,342 808 320 270 920 3,415 1,404 1,233 815 455 750 1,274 679 1,112 New England 3,976 1,811 556 742 890 576 846 1,329 950 285 1,882 585 709 828 Southeast 1,773 426 674 571 478 481 2,127 464 1,293 828 644 365 581 656 LA/Orange County 1,421 417 284 323 630 658 1,036 1,076 651 200 659 1,398 1,149 496 DC/Metroplex 1,239 786 307 278 375 463 229 341 436 98 278 515 435 377 Midwest 1,163 428 862 210 375 253 320 645 272 362 588 849 555 377 SouthWest 197 89 153 30 480 128 217 727 212 55 60 181 345 255 Northwest 993 320 113 159 300 254 276 427 134 243 420 105 394 219 North Central 310 96 20 113 153 160 109 123 2,409 70 56 - 68 181 San Diego 404 229 137 119 182 277 441 286 241 233 106 198 98 120 Philadelphia Metro 453 212 416 287 261 3,674 139 345 234 218 229 94 143 109 South Central 42 36 - - - 45 - - - 150 17 35 173 83 Colorado 1,232 331 138 230 126 245 139 446 831 154 38 105 560 70 Upstate NY - - 190 - 85 - 30 47 - - 24 63 - 16 AK/HI/PR 190 - - - - - - - - - - - - - Sacramento/N.Cal 19 30 27 - - 50 - 19 - - - 16 - - Total 28,743 10,055 6,644 5,201 8,491 13,849 12,494 11,095 12,384 6,126 9,580 12,963 10,371 12,329
90 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 5.07 Growth Equity Investments 2000-2013 By MoneyTree Region (Number of Deals)* State 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Silicon Valley 274 98 69 53 85 82 83 121 141 70 136 144 143 125 NY Metro 44 23 10 12 16 30 32 49 36 25 36 49 41 41 Southeast 38 15 21 17 18 20 25 29 30 19 22 19 22 28 Texas 46 33 16 18 24 15 23 33 24 16 25 29 21 27 LA/Orange County 38 12 13 8 15 21 26 39 24 11 26 27 26 25 New England 108 57 22 32 40 28 32 53 32 21 19 30 33 25 Midwest 29 11 9 8 13 9 19 33 17 17 21 27 37 17 DC/Metroplex 38 22 11 6 19 15 13 21 21 12 18 17 22 11 SouthWest 6 3 5 2 12 7 8 10 9 6 5 2 13 10 Colorado 16 6 4 4 4 6 5 14 9 7 9 6 10 7 North Central 12 4 3 5 6 8 4 7 9 5 8 2 6 7 Northwest 30 11 6 5 16 11 11 12 10 9 11 12 14 7 Philadelphia Metro 16 9 6 7 9 13 12 13 14 8 7 12 9 5 San Diego 13 9 6 6 7 13 10 12 8 8 6 7 4 3 South Central 3 2 - - - 1 3 2 1 1 3 2 3 3 Upstate NY - - 2 - 2 1 1 2 - - 1 2 - 1 AK/HI/PR 1 1 - - - - - 2 1 - - - - - Sacramento/N.Cal 1 1 2 - - 1 1 2 - - - 1 2 - Total 713 317.0 205.0 183.0 286.0 281.0 308.0 454.0 386.0 235.0 353.0 388.0 406.0 342.0 *Data used for the Growth Equity charts is based on the following criteria: The investment dollar totals include investments in US-based companies that are relevant to Growth Equity (Expansion, Later Stage, Acq. for Expansion, Acquisition, LBO, Mezzanine, MBO, Recap or Turnaround, Second- ary Buyout, Secondary Purchase), with a total equity investment amount of $15 million and up, and participation from at least one firm classified as a Growth Equity investor. Participating firms include the following: 3i, 3i Group PLC, ABS Capital Partners, Inc., Accel Partners Co Inc, Adams Street Partners LLC, Andreessen Horowitz LLC, Apax Partners LLP, Austin Ventures LP, Bain Capital Venture Partners LLC, Battery Ventures LP, Bessemer Venture Partners LP, Bregal Capital LLP, Carrick Capital Management Company LLC, Catalyst Investors LLC, Catterton Partners Corp, Chicago Growth Partners, Columbia Capital, Columbia Capital Group, Inc., Edison Ventures, Francisco Partners LP, Frazier Healthcare, FTV Capital, General Atlantic LLC, General Catalyst Partners LLC, GGV Capital, Great Hill Equity Partners LLC, Highland Capital Partners LLC, Insight Venture Partners LLC, Institutional Venture Partners, JMI Equity, Kennet Venture Partners Ltd, Kleiner Perkins Caufield Byers LLC, Level Equity, LLR Partners Inc, M/C Partners, Mainsail Partners LP, Meritech Capital Partners, New Enterprise Associates, Inc., Newspring Capital, Noro-Moseley Partners, North Bridge Venture Partners L P, Norwest Venture Partners, Oak Investment Partners, Pine Brook Road Partners LLC, Polaris Partners, Redpoint Ventures, Rho Capital Partners Inc, Sequoia Capital, Serent Capital LLC, Silver Lake Partners LP, Spectrum Equity, Stripes Group LLC, Summit Partners LP, Susquehanna Growth Equity LLC, Symmetric Capital, TA Associates Management, L.P., Trident Capital, Updata Partners, Volition Capital LLC, Weston Presidio Capital, WestView Capital Partners, Duff Ackerman Goodrich LLC, Draper Fisher Jurvetson International Inc, Draper Fisher Jur- vetson Gotham Venture Partners, Draper Fisher Jurvetson New England (AKA DFJ/NE), Technology Crossover Ventures, Revolution Ventures LLC, Element Partners, Riveria Investment Group. Company and deal counts include ‘Growth Equity’ transactions with disclosed and undisclosed equity investment totals.
2014 National Venture Capital Association Yearbook | 91 NVCA THOMSON REUTERS APPENDIX A Glossary “A” round – a financing event whereby angel groups and / or venture capitalists become involved in a fast growth company that was previously financed by founders and their friends and families. Accredited investor – a person or legal entity, such as a company or trust fund, that meets certain net worth and income qualifications and is considered to be sufficiently sophisticated to make investment decisions in private offerings. Regulation D of the Securities Act of 1933 exempts accredited investors from protection of the Securities Act. The Securities and Exchange Commission has proposed revisions to the accredited investor qualifying rules, which may or may not result in changes for venture investors. The current criteria for a natural person are: $1 million net worth or annual income exceeding $200,000 individually or $300,000 with a spouse. Directors, general partners and executive officers of the issuer are considered to be accredited investors. Alternative asset class – a class of investments that includes venture capital, leverage buyouts, hedge funds, real estate, and oil and gas, but excludes publicly traded securities. Pension plans, college endowments and other relatively large institutional investors typically allocate a certain percentage of their investments to alternative assets with an objective to diversify their portfolios. Alpha – a term derived from statistics and finance theory that is used to describe the return produced by a fund manager in excess of the return of a benchmark index. Manager returns and benchmark returns are measured net of the risk-free rate. In addition, manager returns are adjusted for the risk of the manager’s portfolio relative to the risk of the benchmark index. Alpha is a proxy for manager skill. Angel – a wealthy individual that invests in companies in relatively early stages of development. Usually angels invest less than $1 million per startup. Anti-dilution – a contract clause that protects an investor from a substantial reduction in percentage ownership in a company due to the issuance by the company of additional shares to other entities. The mechanism for making an adjustment that maintains the same percentage ownership is called a Full Ratchet. The most commonly used adjustment provides partial protection and is called Weighted Average. “B” round – a financing event whereby investors such as venture capitalists and organized angel groups are sufficiently interested in a company to provide additional funds after the “A” round of financing. Subsequent rounds are called “C”, “D” and so on. Basis point (“bp”) – one one-hundredth (1/100) of a percentage unit. For example, 50 basis points equals one half of one percent. Banks quote variable loan rates in terms of an index plus a margin and the margin is often described in basis points, such as LIBOR plus 400 basis points (or, as the experts say, “beeps”). Beta – a measure of volatility of a public stock relative to an index or a composite of all stocks in a market or geographical region. A beta of more than one indicates the stock has higher volatility than the index (or composite) and a beta of one indicates volatility equivalent to the index (or composite). For example, the price of a stock with a beta of 1.5 will change by 1.5% if the index value changes by 1%. Typically, the SP500 index is used in calculating the beta of a stock. Beta product – a product that is being tested by potential customers prior to being formally launched into the marketplace. Board of directors – a group of individuals, typically composed of managers, investors and experts who have a fiduciary responsibility for the well being and proper guidance of a corporation. The board is elected by the shareholders. Book – see Private placement memorandum. Bootstrapping – the actions of a startup to minimize expenses and build cash flow, thereby reducing or eliminating the need for outside investors. Bp – see Basis point. Bridge financing – temporary funding that will eventually be replaced by permanent capital from equity investors or debt lenders. In venture capital, a bridge is usually a short term note (6 to 12 months) that converts to preferred stock. Typically, the bridge lender has the right to convert the note to preferred stock at a price that is a 20% to 25% discount from the price of the preferred stock in the next financing round. See Mezzanine and Wipeout bridge. Broad-based weighted average anti-dilution – A weighted average anti-dilution method adjusts downward the price per share of the preferred stock of investor A due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. Investor A’s preferred stock is
92 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA repriced to a weighted average of investor A’s price and investor B’s price. A broad-based anti-dilution method uses all common stock outstanding on a fully diluted basis (including all convertible securities, warrants and options) in the denominator of the formula for determining the new weighted average price. See Narrow-based weighted average anti-dilution. Burn rate – the rate at which a startup with little or no revenue uses available cash to cover expenses. Usually expressed on a monthly or weekly basis. Business Development Company (BDC) – a publicly traded company that invests in private companies and is required by law to provide meaningful support and assistance to its portfolio companies. Business plan – a document that describes a new concept for a business opportunity. A business plan typically includes the following sections: executive summary, market need, solution, technology, competition, marketing, management, operations, exit strategy, and financials (including cash flow projections). For most venture capital funds fewer than 10 of every 100 business plans received eventually receive funding. Buyout – a sector of the private equity industry. Also, the purchase of a controlling interest of a company by an outside investor (in a leveraged buyout) or a management team (in a management buyout). Buy-sell agreement – a contract that sets forth the conditions under which a shareholder must first offer his or her shares for sale to the other shareholders before being allowed to sell to entities outside the company. C Corporation – an ownership structure that allows any number of individuals or companies to own shares. A C corporation is a stand-alone legal entity so it offers some protection to its owners, managers and investors from liability resulting from its actions. Capital Asset Pricing Model (CAPM) – a method of estimating the cost of equity capital of a company. The cost of equity capital is equal to the return of a risk-free investment plus a premium that reflects the risk of the company’s equity. Capital call – when a private equity fund manager (usually a “general partner” in a partnership) requests that an investor in the fund (a “limited partner”) provide additional capital. Usually a limited partner will agree to a maximum investment amount and the general partner will make a series of capital calls over time to the limited partner as opportunities arise to finance startups and buyouts. Capital gap – the difficulty faced by some entrepreneurs in trying to raise between $2 million and $5 million. Friends, family and angel investors are typically good sources for financing rounds of less than $2 million, while many venture capital funds have become so large that investments in this size range are difficult. Capitalization table – a table showing the owners of a company’s shares and their ownership percentages as well as the debt holders. It also lists the forms of ownership, such as common stock, preferred stock, warrants, options, senior debt, and subordinated debt. Capital gains – a tax classification of investment earnings resulting from the purchase and sale of assets. Typically, a company’s investors and founders have earnings classified as long term capital gains (held for a year or longer), which are taxed at a lower rate than ordinary income. Capital stock – a description of stock that applies when there is only one class of shares. This class is known as “common stock”. Capital Under Management – A frequently-used metric for sizing total funds managed by a venture capital or buyout firm. In practice, there are several ways of calculating this. In the US, this is the total committed capital for all funds managed by a firm on which it collects management fees. This calculation ignores whether portions of the committed capital have not yet been called and whether portions of the fund have been liquidated and distributed. It typically does not include aging funds in their “out years” on which fees are not being collected. For purposes of this book in calculating capital managed in figure 1.04, because direct data is not available, the last eight vintage years of capital commitments is considered a proxy for the industry’s total capital under management. Capped participating preferred stock – preferred stock whose participating feature is limited so that an investor cannot receive more than a specified amount. See Participating preferred stock. Carried interest – the share in the capital gains of a venture capital fund which is allocated to the General Partner. Typically, a fund must return the capital given to it by limited partners plus any preferential rate of return before the general partner can share in the profits of the fund. The general partner will typically receive a 20% carried interest, although some successful firms receive 25%-30%. Also known as “carry” or “promote.” Clawback – a clause in the agreement between the general partner and the limited partners of a private equity fund. The clawback gives limited partners the right to reclaim a portion of disbursements to a general partner for profitable investments based on significant losses from later investments in a portfolio.
2014 National Venture Capital Association Yearbook | 93 NVCA THOMSON REUTERS Closing – the conclusion of a financing round whereby all necessary legal documents are signed and capital has been transferred. Club deal – the act of investing by two or more entities in the same target company, usually involving a leveraged buyout transaction. Co-investment–thedirectinvestmentbyalimitedpartneralongside a general partner in a portfolio company. Collateral – hard assets of the borrower, such as real estate or equipment, for which a lender has a legal interest until a loan obligation is fully paid off. Commitment – an obligation, typically the maximum amount that a limited partner agrees to invest in a fund. See Capital call. Common stock – a type of security representing ownership rights in a company. Usually, company founders, management and employees own common stock while investors own preferred stock. In the event of a liquidation of the company, the claims of secured and unsecured creditors, bondholders and preferred stockholders take precedence over common stockholders. See Preferred stock. Comparable – a private or public company with similar characteristics to a private or public company that is being valued. For example, a telecommunications equipment manufacturer whose market value is 2 times revenues can be used to estimate the value of a similar and relatively new company with a new product in the same industry. See Liquidity discount. Control – the authority of an individual or entity that owns more than 50% of equity in a company or owns the largest block of shares compared to other shareholders. Consolidation – see Rollup. Conversion – the right of an investor or lender to force a company to replace the investor’s preferred shares or the lender’s debt with common shares at a preset conversion ratio. A conversion feature was first used in railroad bonds in the 1800’s. Convertible debt – a loan which allows the lender to exchange the debt for common shares in a company at a preset conversion ratio. Also known as a “convertible note.” Convertible preferred stock – a type of stock that gives an owner the right to convert to common shares of stock. Usually, preferred stock has certain rights that common stock doesn’t have, such as decision-making management control, a promised return on investment (dividend), or senior priority in receiving proceeds from a sale or liquidation of the company. Typically, convertible preferred stock automatically converts to common stock if the company makes an initial public offering (IPO). Convertible preferred is the most common tool for private equity funds to invest in companies. Co-sale right – a contractual right of an investor to sell some of the investor’s stock along with the founder’s or majority shareholder’s stock if either the founder or majority shareholder elects to sell stock to a third-party. Also known as Tag-along right. Cost of capital – see Weighted average cost of capital. Cost of revenue – the expenses generated by the core operations of a company. Covenant – a legal promise to do or not do a certain thing. For example, in a financing arrangement, company management may agree to a negative covenant, whereby it promises not to incur additional debt. The penalties for violation of a covenant may vary from repairing the mistake to losing control of the company. Coverage ratio – describes a company’s ability to pay debt from cash flow or profits. Typical measures are EBITDA/Interest, (EBITDA minus Capital Expenditures)/Interest, and EBIT/Interest. Cram down round – a financing event upon which new investors with substantial capital are able to demand and receive contractual terms that effectively cause the issuance of sufficient new shares by the startup company to significantly reduce (“dilute”) the ownership percentage of previous investors. Cumulative dividends – the owner of preferred stock with cumulative dividends has the right to receive accrued (previously unpaid) dividends in full before dividends are paid to any other classes of stock. Current ratio – the ratio of current assets to current liabilities. Data room – a specific location where potential buyers / investors can review confidential information about a target company. This information may include detailed financial statements, client contracts, intellectual property, property leases, and compensation agreements. Deal flow – a measure of the number of potential investments that a fund reviews in any given period. Defined benefit plan – a company retirement plan in which the benefits are typically based on an employee’s salary and number of years worked. Fixed benefits are paid after the employee retires. The employer bears the investment risk and is committed to providing
94 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA the benefits to the employee. Defined benefit plan managers can invest in private equity funds. Defined contribution plan – a company retirement plan in which the employee elects to contribute some portion of his or her salary into a retirement plan, such as a 401(k) or 403(b). The employer may also contribute to the employee’s plan. With this type of plan, the employee bears the investment risk. The benefits depend solely on the amount of money made from investing the employee’s contributions. Demand rights – a type of registration right. Demand rights give an investor the right to force a startup to register its shares with the SEC and prepare for a public sale of stock (IPO). Dilution – the reduction in the ownership percentage of current investors, founders and employees caused by the issuance of new shares to new investors. Dilution protection – see Anti-dilution and Full ratchet. Direct secondary transaction – A transaction in which the buyer purchases shares of an operating company from an existing seller. While the transaction is a secondary sale of shares, the transacted interest is a primary issue purchase directly into an operating company. Sellers are often venture capitalists selling their ownership stake in a portfolio company. Buyers are often funds that specialize in such investments. Disbursement – an investment by a fund in a company. Discount rate – the interest rate used to determine the present value of a series of future cash flows. Discounted cash flow (DCF) – a valuation methodology whereby the present value of all future cash flows expected from a company is calculated. Distressed debt – the bonds of a company that is either in or approaching bankruptcy. Some private equity funds specialize in purchasing such debt at deep discounts with the expectation of exerting influence in the restructuring of the company and then selling the debt once the company has meaningfully recovered. Distribution – the transfer of cash or securities to a limited partner resulting from the sale, liquidation or IPO of one or more portfolio companies in which a general partner chose to invest. Dividends – payments made by a company to the owners of certain securities. Typically, dividends are paid quarterly, by approval of the board of directors, to owners of preferred stock. Down round – a round of financing whereby the valuation of the company is lower than the value determined by investors in an earlier round. Drag-along rights – the contractual right of an investor in a company to force all other investors to agree to a specific action, such as the sale of the company. Drawdown schedule – an estimate of the gradual transfer of committed investment funds from the limited partners of a private equity fund to the general partners. Due diligence – the investigatory process performed by investors to assess the viability of a potential investment and the accuracy of the information provided by the target company. Dutch auction – a method of conducting an IPO where-by newly issued shares of stock are committed to the highest bidder, then, if any shares remain, to the next highest bidder, and so on until all the shares are committed. Note that the price per share paid by all buyers is the price commitment of the buyer of the last share. Early stage – the state of a company after the seed (formation) stage but before middle stage (generating revenues). Typically, a company in early stage will have a core management team and a proven concept or product, but no positive cash flow. Earnings before interest and taxes (EBIT) – a measurement of the operating profit of a company. One possible valuation methodology is based on a comparison of private and public companies’ value as a multiple of EBIT. Earnings before interest, taxes, depreciation and amortization (EBITDA) – a measurement of the cash flow of a company. One possible valuation methodology is based on a comparison of private and public companies’ value as a multiple of EBITDA. Earn out – an arrangement in which sellers of a business receive additional future payments, usually based on financial performance metrics such as revenue or net income. Elevator pitch – a concise presentation, lasting only a few minutes (an elevator ride), by an entrepreneur to a potential investor about an investment opportunity. Employee Stock Ownership Program (ESOP) – a plan established by a company to reserve shares for employees. Entrepreneur – an individual who starts his or her own business.
2014 National Venture Capital Association Yearbook | 95 NVCA THOMSON REUTERS Entrepreneurship – the application of innovative leadership to limited resources in order to create exceptional value. Enterprise Value (EV) – the sum of the market values of the common stock and long term debt of a company, minus excess cash. Equity – the ownership structure of a company represented by common shares, preferred shares or unit interests. Equity = Assets – Liabilities. ESOP – see Employee Stock Ownership Program. Evergreen fund – a fund that reinvests its profits in order to ensure the availability of capital for future investments. Exit strategy – the plan for generating profits for owners and investors of a company. Typically, the options are to merge, be acquired or make an initial public offering (IPO). An alternative is to recapitalize (releverage the company and then pay dividends to shareholders). Expansion stage – the stage of a company characterized by a complete management team and a substantial increase in revenues. Fair value – a financial reporting principle for valuing assets and liabilities, for example, portfolio companies in venture capital fund portfolio. In 2008, more defined rules took effect. See FAS 157. Fairness opinion – a letter issued by an investment bank that charges a fee to assess the fairness of a negotiated price for a merger or acquisition. FAS 157 – the original designation of an accounting standard effective in 2008 for private companies for the fair value measurement of portfolio holdings. Literally, “Financial Accounting Standard number 157,” this standard is now officially Accounting Standard Codification Topic 820 (“ASC 820”) but it is more widely known by its original name. In 2013-2014, the FinancialAccountingFoundationconductedapost-implementation review of this standard to determine if it is working as intended. First refusal – the right of a privately owned company to purchase any shares that employees would like to sell. Founders stock – nominally priced common stock issued to founders, officers, employees, directors, and consultants. Free cash flow to equity (FCFE) – the cash flow available after operating expenses, interest payments on debt, taxes, net principal repayments, preferred stock dividends, reinvestment needs and changes in working capital. In a discounted cash flow model to determine the value of the equity of a firm using FCFE, the discount rate used is the cost of equity. Free cash flow to the firm (FCFF) – the operating cash flow available after operating expenses, taxes, reinvestment needs and changes in working capital, but before any interest payments on debt are made. In a discounted cash flow model to determine the enterprise value of a firm using FCFF, the discount rate used is the weighted average cost of capital (WACC). Friends and family financing – capital provided by the friends and family of founders of an early stage company. Founders should be careful not to create an ownership structure that may hinder the participation of professional investors once the company begins to achieve success. Full ratchet – an anti-dilution protection mechanism whereby the price per share of the preferred stock of investor A is adjusted downwardduetotheissuanceofnewpreferredsharestonewinvestor B at a price lower than the price investor A originally received. InvestorA’s preferred stock is repriced to match the price of investor B’s preferred stock. Usually as a result of the implementation of a ratchet, company management and employees who own a fixed amount of common shares suffer significant dilution. See Narrow- based weighted average anti-dilution and Broad-based weighted average anti-dilution. Fully diluted basis – a methodology for calculating any per share ratios whereby the denominator is the total number of shares issued by the company on the assumption that all warrants and options are exercised and preferred stock. Fund-of-funds – a fund created to invest in private equity funds. Typically, individual investors and relatively small institutional investors participate in a fund-offunds to minimize their portfolio management efforts. Gatekeepers – intermediaries which endowments, pension funds and other institutional investors use as advisors regarding private equity investments. General partner (GP) – a class of partner in a partnership. The general partner retains liability for the actions of the partnership. Historically, venture capital and buyout funds have been structured as limited partnerships, with the venture firm as the GP and limited partners (LPs) being the institutional and high net worth investors that provide most of the capital in the partnership. The GP earns a management fee and a percentage of gains (see Carried interest). GP – see General partner. GP for hire – In a spin-out or a synthetic secondary, a GP for hire
96 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA refers to the professional investor who may be hired by a purchasing firm to manage the new fund created from the orphaned assets purchased. In past cases, the GP has often expanded its role to fundraise for and run new funds aside from the initial fund. Going-private transaction – when a public company chooses to pay off all public investors, delist from all stock exchanges, and become owned by management, employees, and select private investors. Golden handcuffs – financial incentives that discourage founders and / or important employees from leaving a company before a predetermined date or important milestone. Grossing up – an adjustment of an option pool for management and employees of a company which increases the number of shares available over time. This usually occurs after a financing round whereby one or more investors receive a relatively large percentage of the company. Without a grossing up, managers and employees would suffer the financial and emotional consequences of dilution, therebypotentiallyaffectingtheoverallperformanceofthecompany. Growth stage – the state of a company when it has received one or more rounds of financing and is generating revenue from its product or service. Also known as “middle stage.” Hart-Scott-RodinoAct –alawrequiringentitiesthatacquirecertain amounts of stock or assets of a company to inform the Federal Trade Commission and the Department of Justice and to observe a waiting period before completing the transaction. Hedge fund – an investment fund that has the ability to use leverage, take short positions in securities, or use a variety of derivative instruments in order to achieve a return that is relatively less correlated to the performance of typical indices (such as the SP 500) than traditional long-only funds. Hedge fund managers are typically compensated based on assets under management as well as fund performance. High yield debt – debt issued via public offering or public placement (Rule 144A) that is rated below investment grade by SP or Moody’s. This means that the debt is rated below the top four rating categories (i.e. SP BB+, Moody’s Ba2 or below). The lower rating is indicative of higher risk of default, and therefore the debt carries a higher coupon or yield than investment grade debt. Also referred to as Junk bonds or Sub-investment grade debt. Hockey stick – the general shape and form of a chart showing revenue, customers, cash or some other financial or operational measure that increases dramatically at some point in the future. Entrepreneurs often develop business plans with hockey stick charts to impress potential investors. Holding period – amount of time an investment remains in a portfolio. Hot issue – stock in an initial public offering that is in high demand. Hot money – capital from investors that have no tolerance for lack of results by the investment manager and move quickly to withdraw at the first sign of trouble. Hurdle rate – a minimum rate of return required before an investor will make an investment. Incorporation – the process by which a business receives a state charter, allowing it to become a corporation. Many corporations choose Delaware because its laws are business-friendly and up to date. Incubator – a company or facility designed to host startup companies. Incubators help startups grow while controlling costs by offering networks of contacts and shared backoffice resources. Indenture – the terms and conditions between a bond issuer and bond buyers. Initial public offering (IPO) – the first offering of stock by a company to the public. New public offerings must be registered with the Securities and Exchange Commission. An IPO is one of the methods that a startup that has achieved significant success can use to raise additional capital for further growth. See Qualified IPO. In-kind distribution – a distribution to limited partners of a private equity fund that is in the form of publicly trades shares rather than cash. Inside round – a round of financing in which the investors are the same investors as the previous round. An inside round raises liability issues since the valuation of the company has no third party verification in the form of an outside investor. In addition, the terms of the inside round may be considered self-dealing if they are onerous to any set of shareholders or if the investors give themselves additional preferential rights. Institutional investor – professional entities that invest capital on behalf of companies or individuals. Examples are: pension plans, insurance companies and university endowments. Intellectual property (IP) – knowledge, techniques, writings and images that are intangible but often protected by law via patents, copyrights, and trademarks. Interest coverage ratio – earnings before interest and taxes (EBIT)
2014 National Venture Capital Association Yearbook | 97 NVCA THOMSON REUTERS divided by interest expense. This is a key ratio used by lenders to assess the ability of a company to produce sufficient cash to pay its debt obligation. Internal rate of return (IRR) – the interest rate at which a certain amount of capital today would have to be invested in order to grow to a specific value at a specific time in the future. Investment thesis / Investment philosophy – the fundamental ideas which determine the types of investments that an investment fund will choose in order to achieve its financial goals. IPEV – Stands for International Private Equity Valuation guidelines group. This group is made up of representatives of the international and US venture capital industry and has published guidelines for applying US GAAP and international IFRS valuation rules. See www.privateequityvaluation.com. Widely regarded in the US as the global successor to the US-focused PEIGG group. IPO – see Initial public offering. IRR – see Internal rate of return. Issuer – the company that chooses to distribute a portion of its stock to the public. J curve – a concept that during the first few years of a private equity fund, cash flow or returns are negative due to investments, losses, and expenses, but as investments produce results the cash flow or returns trend upward. A graph of cash flow or returns versus time would then resemble the letter “J”. Later stage – the state of a company that has proven its concept, achieved significant revenues compared to its competition, and is approaching cash flow break even or positive net income. Typically, a later stage company is about 6 to 12 months away from a liquidity event such as an IPO or buyout. The rate of return for venture capitalists that invest in later stage, less risky ventures is lower than in earlier stage ventures. LBO – see Leveraged buyout. Lead investor – the venture capital investor that makes the largest investment in a financing round and manages the documentation and closing of that round. The lead investor sets the price per share of the financing round, thereby determining the valuation of the company. Letter of intent – a document confirming the intent of an investor to participate in a round of financing for a company. By signing this document, the subject company agrees to begin the legal and due diligence process prior to the closing of the transaction. Also known as a “Term Sheet”. Leverage – the use of debt to acquire assets, build operations and increase revenues. By using debt, a company is attempting to achieve results faster than if it only used its cash available from pre-leverage operations. The risk is that the increase in assets and revenues does not generate sufficient net income and cash flow to pay the interest costs of the debt. Leveraged buyout (LBO) – the purchase of a company or a business unit of a company by an outside investor using mostly borrowed capital. Leveraged recapitalization – the reorganization of a company’s capital structure resulting in more debt added to the balance sheet. Private equity funds can recapitalize a portfolio company and then direct the company to issue a one-time dividend to equity investors. This is often done when the company is performing well financially and the debt markets are expanding. Leverage ratios – measurements of a company’s debt as a multiple of cash flow. Typical leverage ratios include Total Debt / EBITDA, Total Debt / (EBITDA minus Capital Expenditures), and Seniore Debt / EBITDA. L.I.B.O.R. – see The London Interbank Offered Rate. License – a contract in which a patent owner grants to a company the right to make, use or sell an invention under certain circumstances and for compensation. Limited liability company (LLC) – an ownership structure designed to limit the founders’ losses to the amount of their investment. An LLC itself does not pay taxes, rather its owners pay taxes on their proportion of the LLC profits at their individual tax rates. Limitedpartnership–alegalentitycomposedofageneralpartnerand various limited partners. The general partner manages the investments and is liable for the actions of the partnership while the limited partners are generally protected from legal actions and any losses beyond their original investment. The general partner collects a management fee and earns a percentage of capital gains (see Carried interest), while the limited partners receive income, capital gains and tax benefits. Limited partner (LP) – an investor in a limited partnership. The general partner is liable for the actions of the partnership while the limited partners are generally protected from legal actions and any losses beyond their original investment. The limited partner receives income, capital gains and tax benefits.
98 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Liquidation – the sale of a company. This may occur in the context of an acquisition by a larger company or in the context of selling off all assets prior to cessation of operations (Chapter 7 bankruptcy). In a liquidation, the claims of secured and unsecured creditors, bondholders and preferred stockholders take precedence over common stockholders. Liquidation preference – the contractual right of an investor to priority in receiving the proceeds from the liquidation of a company. For example, a venture capital investor with a “2x liquidation preference” has the right to receive two times its original investment upon liquidation. Liquidity discount – a decrease in the value of a private company compared to the value of a similar but publicly traded company. Since an investor in a private company cannot readily sell his or her investment, the shares in the private company must be valued less than a comparable public company. Liquidity event – a transaction whereby owners of a significant portion of the shares of a private company sell their shares in exchange for cash or shares in another, usually larger company. For example, an IPO is a liquidity event. Lock-up agreement – investors, management and employees often agree not to sell their shares for a specific time period after an IPO, usually 6 to 12 months. By avoiding large sales of its stock, the company has time to build interest among potential buyers of its shares. London Interbank Offered Rate (L.I.B.O.R.) – the average rate charged by large banks in London for loans to each other. LIBOR is a relatively volatile rate and is typically quoted in maturities of one month, three months, six months and one year. Management buyout (MBO) – a leveraged buyout controlled by the members of the management team of a company or a division. Often an MBO is conducted in partnership with a buyout fund. Management fee – a fee charged to the limited partners in a fund by the general partner. Management fees in a private equity fund usually range from 0.75% to 3% of capital under management, depending on the type and size of fund. For venture capital funds, 2% is typical. Management rights – the rights often required by a venture capitalist as part of the agreement to invest in a company. The venture capitalist has the right to consult with management on key operational issues, attend board meetings and review information about the company’s financial situation. Market capitalization – the value of a publicly traded company as determined by multiplying the number of shares outstanding by the current price per share. MBO – see Management buyout. Mezzanine – a layer of financing that has intermediate priority (seniority) in the capital structure of a company. For example, mezzanine debt has lower priority than senior debt but usually has a higher interest rate and often includes warrants. In venture capital, a mezzanine round is generally the round of financing that is designed to help a company have enough resources to reach an IPO. See Bridge financing. MoneyTree™Report–OfficiallyknownasTheMoneyTreeReport from PricewaterhouseCoopers and the National Venture Capital Association based on data provided byThomson Reuters.This report provides much of the data in this report. It is used for investment statistics in United States based companies. Specific definition informationisavailableinseveraloftheappendicesofthisYearbook. Multiples – a valuation methodology that compares public and private companies in terms of a ratio of value to an operations figure such as revenue or net income. For example, if several publicly traded computer hardware companies are valued at approximately 2 times revenues, then it is reasonable to assume that a startup computer hardware company that is growing fast has the potential to achieve a valuation of 2 times its revenues. Before the startup issues its IPO, it will likely be valued at less than 2 times revenue because of the lack of liquidity of its shares. See Liquidity discount. Narrow-based weighted average anti-dilution – a type of anti- dilution mechanism. A weighted average anti-dilution method adjusts downward the price per share of the preferred stock of investor A due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. Investor A’s preferred stock is repriced to a weighed average of investor A’s price and investor B’s price. A narrow-based anti-dilution uses only common stock outstanding in the denominator of the formula for determining the new weighted average price. NDA – see Non-disclosure agreement. No-shop clause – a section of an agreement to purchase a company whereby the seller agrees not to market the company to other potential buyers for a specific time period. Non-cumulative dividends – dividends that are payable to owners of preferred stock at a specific point in time only if there is sufficient cash flow available after all company expenses have been paid. If
2014 National Venture Capital Association Yearbook | 99 NVCA THOMSON REUTERS cash flow is insufficient, the owners of the preferred stock will not receive the dividends owed for that time period and will have to wait until the board of directors declares another set of dividends. Non-interference – an agreement often signed by employees and management whereby they agree not to interfere with the company’s relationships with employees, clients, suppliers and sub-contractors within a certain time period after termination of employment. Non-solicitation – an agreement often signed by employees and management whereby they agree not to solicit other employees of the company regarding job opportunities. Non-disclosure agreement (NDA) – an agreement issued by entrepreneurs to protect the privacy of their ideas when disclosing those ideas to third parties. Offering memorandum – a legal document that provides details of an investment to potential investors. See Private placement memorandum. OID – see Original issue discount. Operating cash flow – the cash flow produced from the operation of a business, not from investing activities (such as selling assets) or financing activities (such as issuing debt). Calculated as net operating income (NOI) plus depreciation. Option pool – a group of options set aside for long term, phased compensation to management and employees. Outstanding shares – the total amount of common shares of a company, not including treasury stock, convertible preferred stock, warrants and options. Pay to play – a clause in a financing agreement whereby any investor that does not participate in a future round agrees to suffer significant dilution compared to other investors. The most onerous version of “pay to play” is automatic conversion to common shares, which in essence ends any preferential rights of an investor, such as the right to influence key management decisions. Pari passu – a legal term referring to the equal treatment of two or more parties in an agreement. For example, a venture capitalist may agree to have registration rights that are pari passu with the other investors in a financing round. Participating dividends – the right of holders of certain preferred stock to receive dividends and participate in additional distributions of cash, stock or other assets. Participating preferred stock – a unit of ownership composed of preferred stock and common stock. The preferred stock entitles the owner to receive a predetermined sum of cash (usually the original investment plus accrued dividends) if the company is sold or has an IPO. The common stock represents additional continued ownership in the company. PEIGG – acronym for Private Equity Industry Guidelines Group, an ad hoc group of individuals and firms involved in the private equity industry for the purpose of establishing valuation and reporting guidelines. With the implementation of FAS 157 in 2008, the group’s mission was essentially complete. Several of its members then joined IPEV, which is viewed by US VCs as the international successor to PEIGG. Piggyback rights – rights of an investor to have his or her shares included in a registration of a startup’s shares in preparation for an IPO. PIK dividend – a dividend paid to the holder of a stock, usually preferred stock, in the form of additional stock rather than cash. PIK refers to payment in kind. PIPEs – see Private investment in public equity. Placementagent–acompanythatspecializesinfindinginstitutional investors that are willing and able to invest in a private equity fund. Sometimes a private equity fund will hire a placement agent so the fund partners can focus on making and managing investments in companies rather than on raising capital. Portfolio company – a company that has received an investment from a private equity fund. Post-money valuation – the valuation of a company including the capital provided by the current round of financing. For example, a venture capitalist may invest $5 million in a company valued at $2 million “pre-money” (before the investment was made). As a result, the startup will have a post-money valuation of $7 million. PPM – see Private placement memorandum. Preemptive rights – the rights of shareholders to maintain their percentage ownership of a company by buying shares sold by the company in future financing rounds. Preference – seniority, usually with respect to dividends and proceeds from a sale or dissolution of a company. Preferred return – a minimum return per annum that must be
100 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA generated for limited partners of a private equity fund before the general partner can begin receiving a percentage of profits from investments. Preferred stock – a type of stock that has certain rights that common stock does not have. These special rights may include dividends, participation, liquidity preference, anti-dilution protection and veto provisions, among others. Private equity investors usually purchase preferred stock when they make investments in companies. Pre-money valuation – the valuation of a company prior to the current round of financing. For example, a venture capitalist may invest $5 million in a company valued at $2 million pre-money.As a result, the startup will have a “post-money” valuation of $7 million. Primary shares – shares sold by a corporation (not by individual shareholders). Private Equity Growth Capital Council (PEGCC) – an advocacy, communications and research organization for the buyout industry in the United States. Private equity – equity investments in non-public companies, usually defined as being made up of venture capital funds and buyout funds. Real estate, oil and gas, and other such partnerships are sometimes included in the definition. Private investment in public equity (PIPEs) – investments by a private equity fund in a publicly traded company, usually at a discount and in the form of preferred stock. Private placement – the sale of a security directly to a limited number of institutional and qualified individual investors. If structured correctly, a private placement avoids registration with the Securities and Exchange Commission. Private placement memorandum (PPM) – a document explaining the details of an investment to potential investors. For example, a private equity fund will issue a PPM when it is raising capital from institutional investors. Also, a startup may issue a PPM when it needs growth capital. Also known as “Offering Memorandum”. Private securities – securities that are not registered with the Securities and Exchange Commission and do not trade on any exchanges. The price per share is negotiated between the buyer and the seller (the “issuer”). Prudent man rule – a fundamental principle for professional money management which serves as a basis for the Prudent Investor Act. The principle is based on a statement by Judge Samuel Putnum in 1830: “Those with the responsibility to invest money for others should act with prudence, discretion, intelligence and regard for the safety of capital as well as income.” In the 1970s a favorable interpretation of this rule enabled pension fund managers to invest in venture capital for the first time. Qualified IPO – a public offering of securities valued at or above a total amount specified in a financing agreement. This amount is usually specified to be sufficiently large to guarantee that the IPO shares will trade in a major exchange (NASDAQ or New York Stock Exchange). Usually upon a qualified IPO preferred stock is forced to convert to common stock. Quartile – one fourth of the data points in a data set. Often, private equity investors are measured by the results of their investments during a particular period of time. Institutional investors often prefer to invest in private equity funds that demonstrate consistent results over time, placing in the upper quartile of the investment results for all funds. Ratchet – a mechanism to prevent dilution. An antidilution clause in a contract protects an investor from a reduction in percentage ownership in a company due to the future issuance by the company of additional shares to other entities. Realization ratio – the ratio of cumulative distributions to paid-in capital. The realization ratio is used as a measure of the distributions from investment results of a private equity partnership compared to the capital under management. Recapitalization – the reorganization of a company’s capital structure. Red herring – a preliminary prospectus filed with the Securities and Exchange Commission and containing the details of an IPO offering. The name refers to the disclosure warning printed in red letters on the cover of each preliminary prospectus advising potential investors of the risks involved. Redemption rights – the right of an investor to force the startup company to buy back the shares issued as a result of the investment. In effect, the investor has the right to take back his/her investment and may even negotiate a right to receive an additional sum in excess of the original investment. Registration – the process whereby shares of a company are registered with the Securities and Exchange Commission under the Securities Act of 1933 in preparation for a sale of the shares to the public. Regulation D – Often referred to as simply “Reg D,” an SEC regulation that governs private placements. Private placements
2014 National Venture Capital Association Yearbook | 101 NVCA THOMSON REUTERS are investment offerings for institutional and accredited individual investors, but not the general public. Restricted shares – shares that cannot be traded in the public markets. Return on investment (ROI) – the proceeds from an investment, during a specific time period, calculated as a percentage of the original investment. Also, net profit after taxes divided by average total assets. Rights offering – an offering of stock to current shareholders that entitles them to purchase the new issue, usually at a discount. Rights of co-sale with founders – a clause in venture capital investment agreements that allows the VC fund to sell shares at the same time that the founders of a startup chose to sell. Right of first refusal – a contractual right to participate in a transaction. For example, a venture capitalist may participate in a first round of investment in a startup and request a right of first refusal in any following rounds of investment. Risk-free rate – a term used in finance theory to describe the return from investing in a riskless security. In practice, this is often taken to be the return on US Treasury Bills. Road show – presentations made in several cities to potential investors and other interested parties. For example, a company will often make a road show to generate interest among institutional investors prior to its IPO. ROI – see Return on investment. Rollup – the purchase of relatively smaller companies in a sector by a rapidly growing company in the same sector. The strategy is to create economies of scale. For example, the movie theater industry underwent significant consolidation in the 1960’s and 1970’s. Round – a financing event usually involving several private equity investors. Royalties – payments made to patent or copyright owners in exchange for the use of their intellectual property. Rule 144 – a rule of the Securities and Exchange Commission that specifies the conditions under which the holder of shares acquired in a private transaction may sell those shares in the public markets. S corporation – an ownership structure that limits its number of owners to 100. An S corporation does not pay taxes, rather its owners pay taxes on their proportion of the corporation’s profits at their individual tax rates. SBIC – see Small Business Investment Company. Scalability – a characteristic of a new business concept that entails the growth of sales and revenues with a much slower growth of organizational complexity and expenses. Venture capitalists look for scalability in the startups they select to finance. Scale-down – a schedule for phased decreases in management fees for general partners in a limited partnership as the fund reduces its investment activities toward the end of its term. Scale-up – the process of a company growing quickly while maintaining operational and financial controls in place. Also, a schedule for phased increases in management fees for general partners in a limited partnership as the fund increases its investment activities over time. Secondary market – a market for the sale of limited partnership interests in private equity funds. Sometimes limited partners chose to sell their interest in a partnership, typically to raise cash or because they cannot meet their obligation to invest more capital according to the takedown schedule. Certain investment companies specialize in buying these partnership interests at a discount. Secondary shares – shares sold by a shareholder (not by the corporation). Securities and Exchange Commission (SEC) – the regulatory body that enforces federal securities laws such as the Securities Act of 1933 and the Securities Exchange Act of 1934. Seed capital – investment provided by angels, friends and family to the founders of a startup in seed stage. Seedstage–thestateofacompanywhenithasjustbeenincorporated and its founders are developing their product or service. Senior debt – a loan that has a higher priority in case of a liquidation of the asset or company. Seniority – higher priority. Series A preferred stock – preferred stock issued by a fast growth company in exchange for capital from investors in the “A” round of financing. This preferred stock is usually convertible to common shares upon the IPO or sale of the company. Shareholder agreement – a contract that sets out, for example, the
102 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA basis on which the company will be operated and the shareholders’ rightsandobligations.Itprovidesprotectiontominorityshareholders. Sharpe Ratio – a method of calculating the risk-adjusted return of an investment. The Sharpe Ratio is calculated by subtracting the risk-free rate from the return on a specific investment for a time period (usually one year) and then dividing the resulting figure by the standard deviation of the historical (annual) returns for that investment. The higher the Sharpe Ratio, the better. Small Business Investment Company (SBIC) – a company licensedbytheSmallBusinessAdministrationtoreceivegovernment capital in the form of debt or equity in order to use in private equity investing. Stock option – a right to purchase or sell a share of stock at a specific price within a specific period of time. Stock purchase options are commonly used as long term incentive compensation for employees and management of fast growth companies. Strategic investor – a relatively large corporation that agrees to invest in a young or a smaller company in order to have access to its proprietary technology, product or service. Subordinated debt – a loan that has a lower priority than a senior loan in case of a liquidation of the asset or company. Also known as “junior debt”. Success rate – the proportion of venture funded companies that are considered successful. A study of companies funded by VCs during the 1990s indicated that 14% of the companies went public and another 11%were acquired. Sweat equity – ownership of shares in a company resulting primarily from work rather than investment of capital. Syndicate – a group of investors that agree to participate in a round of funding for a company. Alternatively, a syndicate can refer to a group of investment banks that agree to participate in the sale of stock to the public as part of an IPO. Synthetic secondary – A popular method of completing a direct secondary transaction in which the buyer becomes a limited partner (LP) in a special purpose vehicle (SPV) or similar entity which has been set up out of the underlying investments in order to create a limited partnership interest. The term arose because of the synthetic nature of the direct purchase through the LP secondary transaction. Tag-along right – the right of a minority investor to receive the same benefits as a majority investor. Usually applies to a sale of securities by investors. Also known as Co-sale right. Takedown – a schedule of the transfer of capital in phases in order to complete a commitment of funds. Typically, a takedown is used by a general partner of a private equity fund to plan the transfer of capital from the limited partners. Tender offer – an offer to public shareholders of a company to purchase their shares. Term loan – a bank loan for a specific period of time, usually up to ten years in leveraged buyout structures. Term sheet – a document confirming the intent of an investor to participate in a round of financing for a company. By signing this document, the subject company agrees to begin the legal and due diligence process prior to the closing of the transaction. Also known as “Letter of Intent”. Tranche – a portion of a set of securities. Each tranche may have different rights or risk characteristics. When venture capital firms finance a company, a round may be disbursed in two or three tranches, each of which is paid when the company attains one or more milestones. Turnaround – a process resulting in a substantial increase in a company’s revenues, profits and reputation. Under water option – an option is said to be under water if the current fair market value of a stock is less than the option exercise price. Underwriter – an investment bank that chooses to be responsible for the process of selling new securities to the public.An underwriter usually chooses to work with a syndicate of investment banks in order to maximize the distribution of the securities. Venture capital – a segment of the private equity industry which focuses on investing in new companies with high growth potential and accompanying high risk. Venture capital method – a pricing valuation method whereby an estimate of the future value of a company is discounted by a certain interest rate and adjusted for future anticipated dilution in order to determine the current value. Usually, discount rates for the venture capital method are considerably higher than public stock return rates, representing the fact that venture capitalists must achieve significant returns on investment in order to compensate for the risks they take in funding unproven companies. Vesting – a schedule by which employees gain ownership over time of a previously agreed upon amount of retirement funding or stock options.
2014 National Venture Capital Association Yearbook | 103 NVCA THOMSON REUTERS Vintage – the year that a private equity fund stops accepting new investors and begins to make investments on behalf of those investors. Venture funds are generally benchmarked to funds of the same vintage year. Voting rights – the rights of holders of preferred and common stock in a company to vote on certain acts affecting the company. These matters may include payment of dividends, issuance of a new class of stock, merger or liquidation. Warrant – a security which gives the holder the right to purchase shares in a company at a pre-determined price. A warrant is a long term option, usually valid for several years or indefinitely. Typically, warrants are issued concurrently with preferred stocks or bonds in order to increase the appeal of the stocks or bonds to potential investors. Washout round – a financing round whereby previous investors, the founders and management suffer significant dilution. Usually as a result of a washout round, the new investor gains majority ownership and control of the company. Weighted average cost of capital (WACC) – the average of the cost of equity and the after-tax cost of debt. This average is determined using weight factors based on the ratio of equity to debt plus equity and the ratio of debt to debt plus equity. Weighted average anti-dilution – an anti-dilution protection mechanism whereby the conversion rate of preferred stock is adjusted in order to reduce an investor’s loss due to an increase in the number of shares in a company. Without anti-dilution protection, an investor would suffer from a reduction of his or her percentage ownership. Usually as a result of the implementation of a weighted average anti-dilution, company management and employees who own a fixed amount of common shares suffer significant dilution, but not as badly as in the case of a full ratchet. Write-down – a decrease in the reported value of an asset or a company. Write-off – a decrease in the reported value of an asset or a company to zero. Write-up – an increase in the reported value of an asset or a company. Zombie – a company that has received capital from investors but has only generated sufficient revenues and cash flow to maintain its operations without significant growth. Sometimes referred to as “walking dead.” Typically, a venture capitalist has to make a difficult decision as to whether to liquidate a zombie or continue to invest funds in the hopes that the zombie will become a winner. These definitions were graciously provided by the Center for Private Equity and Entrepreneurship at the Tuck School of Business at Dartmouth. Please refer to the Center’s website for additional definitionsandinformationathttp://mba.tuck.dartmouth.edu/­pecenter/ resources/glossary.html. Used by permission. Thomson Reuters and National Venture Capital Association are grateful to the Center for its support.
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2014 National Venture Capital Association Yearbook | 105 NVCA THOMSON REUTERS The MoneyTree Report is a quarterly study of venture capital investment activity in the United States. As a collaboration between Pricewater- houseCoopers and the National Venture Capital Association, based upon data from Thomson Reuters, it is the only industry-endorsed research of its kind. The MoneyTree Report is the definitive source of information on emerging companies that receive financing and the venture capital firms that provide it. The study is a staple of the financial community, entrepre- neurs, government policymakers and the business press worldwide. Report Criteria The MoneyTree™ Report records cash for equity investments as the cash is actually received by the company (also called a tranche) as opposed to when financing is committed (often referred to as a “term sheet”) to a company. Accordingly, the amount reported in a given quarter may be less than the total round amount committed to the company at the time when the round of financing closed. The type of financing as it is used in the MoneyTree™ Report refers to the number of tranches a company has received. The number designation (1, 2, 3, etc.) does not refer to the round of financing. Rounds are usually designated alphabetically, e.g. Series A, Series B, and so on. The Money- Tree™ Report does not track rounds. Summary Description The MoneyTree™ Report measures cash-for-equity investments by the professional venture capital community in private emerging companies in the U.S. It is based on data provided by Thomson Reuters. General Definition The report includes the investment activity of professional venture capital firms with or without a US office, SBICs, venture arms of corporations, institutions, investment banks and similar entities whose primary activity is financial investing. Where there are other participants such as angels, corporations, and governments in a qualified and verified financing round the entire amount of the round is included. Qualifying transactions include cash investments by these entities either directly or by participation in various forms of private placement. All re- cipient companies are private, and may have been newly-created or spun- out of existing companies. The report excludes debt, buyouts, recapitalizations, secondary purchases, IPOs, investments in public companies such as PIPES (private invest- ments in public entities), investments for which the proceeds are primarily intended for acquisition such as roll-ups, change of ownership, and other forms of private equity that do not involve cash such as services-in-kind and venture leasing. Investee companies must be domiciled in one of the 50 US states or DC even if substantial portions of their activities are outside the United States. Specific Methodology The focus of the report is on cash received by the company. Therefore, tranches not term sheets are the determining factor. Drawdowns on com- mitments are recognized at the time the company receives the money rather than recorded as a lump sum amount at the time the term sheet is executed. Convertible debt and bridge loans are recognized only when converted to equity. Once a company has received a qualifying venture capital financing round, all subsequent equity financing rounds are included regardless of whether the round involved a venture capital firm as long as all other investment criteria are met (e.g. cash-for-equity, not buyout or services in kind). Angel, incubator and similar investments are considered pre-venture fi- nancing if the company has received no prior qualifying venture capital investment and are not included in the MoneyTree™ results. Angel, incu- bator and similar investments that are part of a qualifying venture capital round or follow a qualifying venture capital round are included to the ex- tent that such investments can be fully verified as meeting all other criteria (e.g. cash for equity, not buyout or services in kind). Direct investment by corporations (not through a corporate venture capital arm) is excluded unless (a) the investment is clearly demonstrated to be primarily a financial investment rather than outsourced RD or market development, (b) it is a co-investment in an otherwise qualifying round, or (c) it follows a qualifying venture round in a company and meets all other criteria (e.g. cash-for-equity, not buyout or services in kind). Data is primarily obtained from a quarterly survey of venture capital prac- titioners conducted by Thomson Reuters. Information is augmented by other research techniques including other public and private sources. All data is subject to verification with the venture capital firms and/or the investee companies. Only professional independent venture capital firms, institutional venture capital groups, and recognized corporate venture capital groups are in- cluded in venture capital industry rankings. Disclaimer PricewaterhouseCoopers and the National Venture Capital Association have taken responsible steps to ensure that the information contained in the MoneyTree™ Report has been obtained from reliable sources. How- ever, neither of the parties nor Thomson Reuters can warrant the ultimate validity of the data obtained in this manner. Results are updated periodi- cally. Therefore, all data is subject to change at any time. APPENDIX B MoneyTree Report Criteria PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report™, Data: Thomson Reuters
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2014 National Venture Capital Association Yearbook | 107 NVCA THOMSON REUTERS APPENDIX C MoneyTree Geographical Definitions The Geographical Regions identified in the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters and used in this NVCA Yearbook are as follows: Alaska/Hawaii/Puerto Rico: Alaska, Hawaii, and Puerto Rico Colorado: The state of Colorado DC/Metroplex: Washington, D.C., Virginia, West Virginia, and Maryland LA/Orange County: LosAngeles, Ventura, Orange, and Riverside Counties (i.e., southern California, except San Diego) Midwest: Illinois, Missouri, Indiana, Kentucky, Ohio, Michigan, and western Pennsylvania New England: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and parts of Connecticut (excluding Fairfield county) New York Metro: Metropolitan NY area, northern New Jersey, and Fairfield County, Connecticut North Central: Minnesota, Iowa, Wisconsin, North Dakota, South Dakota, and Nebraska Northwest: Washington, Oregon, Idaho, Montana, and Wyoming Philadelphia Metro: Eastern Pennsylvania, southern New Jersey, and Delaware Sacramento/Northern California: Northeastern California San Diego: San Diego area Silicon Valley: Northern California, bay area and coastline South Central: Kansas, Oklahoma, Arkansas, and Louisiana Southeast: Alabama, Florida, Georgia, Mississippi, Tennessee, South Carolina, and North Carolina Southwest: Utah, Arizona, New Mexico, and Nevada Texas: The state of Texas Upstate NewYork: Northern New York state, except Metropolitan New York City area
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2014 National Venture Capital Association Yearbook | 109 NVCA THOMSON REUTERS APPENDIX D Industry Codes (VEIC) 1000 Communications and Media 1100 Commercial Communications 1110 Radio TV Broadcasting Stations 1120 CATV Pay TV Systems 1125 Cable Service Providers 1130 Radio TV Broadcasting Other Related Equipment 1135 Services to Commercial Communications 1199 Other Commercial Communications 1200 Telecommunications 1210 Long Distance Telephone Services 1215 Local Exchange Carriers (LEC) 1220 Telephone Interconnect Other Equip- ment 1230 Telephone answering and/or manage- ment systems,PBXs 1299 Other Telephone Related 1300 Wireless Communications 1310 Mobile Communications, Pagers Cel- lular Radio 1320 Wireless Communications Services 1325 Messaging Services 1330 Wireless Communications Components 1399 Other Wireless Communications 1400 Facsimile Transmission 1500 Data Communications 1510 Local Area Networks (incl. voice/data PBX systems) 1515 Wide Area Networks 1520 Data Communications Components 1521 Communications Processors/Network Management 1522 Protocol Converters Emulators 1523 Modems and Multiplexers 1524 Other Data Communication Components 1525 Switches/Hubs/Routers/Gateways/ATM 1530 Network test, monitor and support equip- ment 1549 Other Data Communications 1550 Internet Communications and Infrastruc- ture NEC 1551 Internet Access Services and Service Providers 1552 Internet Multimedia Services 1553 Internet Backbone Infrastructure 1559 Other Internet Communications NEC 1560 E-Commerce Technology 1561 Internet Security and Transaction Services 1562 Ecommerce Services 1563 Ecommerce Enabling Software 1569 Other Ecommerce 1600 Satellite Microwave Communications 1610 Satellite Services/Carriers/Operators 1620 Satellite Ground (and other) Equipment 1630 Microwave Service Facilities 1640 Microwave Satellite Components 1699 Other Satellite Microwave 1700 Media and Entertainment 1710 Entertainment 1720 Publishing 1800 Other Communications Related 1810 Defense Communications 1825 Other Communications Services NEC 1899 Other Communications Products (not yet classified) 2000 Computer Related 2100 Computers and Hardware 2110 Mainframes Scientific Computers 2111 Mainframes 2112 Supercomputers and Scientific Computers 2119 Other Mainframes and Scientific Computers 2120 Mini Personal/Desktop Computers 2121 Fail Safe Computers 2122 Mini Computers 2123 Personal Computers (micro/personal) 2124 Other Mini and Personal Computers 2125 Portable Computers (notebooks/laptops) 2126 Handheld Computing (PDA) 2130 Optical computing 2140 Servers and Workstations 2141 Servers 2142 Web Servers 2143 Workstations 2144 Thin Client Hardware 2149 Other Servers and Workstations 2200 Computer Graphics and Digital Imaging 2210 CAD/CAM, CAE,EDA Systems 2220 Graphic Systems 2230 Scanning Hardware 2234 OCR (Optical Character Recognition) 2236 OBR (Optical Bar Recognition) 2238 MICR (Magnetic Ink Character Recognition) 2239 Other Scanning Related 2250 Graphics Printers/Plotters 2255 Graphics/Enhanced Video Cards 2260 Other Graphics Peripherals 2280 Other Multimedia NEC 2290 Digital Imaging Hardware and Equipment 2295 Digital Imaging Services 2299 Other Computer Graphics 2300 Integrated Turnkey Systems and Solutions 2311 Business and Office 2312 Consumer 2313 Retailing 2315 Transportation 2316 Finance/Insurance/Real Estate 2317 Agriculture 2318 Recreation/Entertainment 2319 Manufacturing/Industrial/Construction 2320 Medical/Health 2321 Computer related 2322 Communications Products/Services 2323 Education 2324 Reference 2325 Scientific 2399 Other Intergrated Systems and Solutions 2500 Peripherals 2510 Terminals 2511 Intelligent Terminals 2512 Portable Terminals 2513 Graphics Terminals 2519 Other Terminals 2520 Printers 2521 Laser Printers 2522 Color Printers 2523 Inkjet Printers 2524 Dot Matrix Printers 2529 Other Printers 2530 Data I/O Devices 2531 Mouse Input Devices 2532 TouchPad Input Devices 2533 Pen based computing 2539 Other Data I/O Devices 2540 Disk Related Memory Devices 2541 Floppy Disks Drives 2542 Winchester Hard Disks and Drives 2543 Optical Disks Drives,CD-ROM DVD 2546 Disk Drive Components 2549 Other Disk Related 2550 Tape Related Devices 2551 Magnetic Tapes 2552 Tape Heads Drives 2553 Continuous Tape Backup Systems 2559 Other Tape Related Devices 2560 Other Memory Devices (excl. semicon- ductors) 2561 PC or PMCIA cards 2562 Memory Cards 2563 Sound Cards 2564 Communications Cards 2569 Other Peripheral Cards 2590 Other Peripherals (not yet classified) 2600 Computer Services 2630 Time Sharing Firms 2640 Computer Leasing Rentals 2650 Computer Training Services 2655 Backup and Disaster Recover 2660 Data Processing,Analysis Input Services 2665 Computer Repair Services 2670 Computerized Billing Accounting Services 2675 Computer Security Services 2691 Data communications systems manage- ment 2699 Other Computer Services 2700 Computer Software 2710 Systems Software 2711 Database File Management 2712 Operating Systems Utilities 2713 Program Development Tools/CASE/Lan- guages 2716 Graphics and Digital Imaging Software 2719 Other Systems Software 2720 Communications/Networking Software 2721 Security/Firewalls,Encryption software 2722 Email Software 2723 Groupware 2724 Multimedia software 2729 Other Communications/Networking Software
110 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA 2730 Applications Software 2731 Business and Office Software 2732 Home Use Software 2733 Educational Software 2734 Manufacturing/Industrial Software 2735 Medical/Health Software 2736 Banks/Financial Institutions Software 2737 Retailing Software 2738 Integrated Software 2739 ERP/Inventory Software 2740 Recreational/Game Software 2741 Scientific Software 2743 Agricultural Software 2744 Transportation Software 2748 Other Industry specific Software 2749 Other Applications Software 2750 Artificial Intelligence Related Software 2751 Expert Systems 2752 Natural Language 2753 Computer-Aided Instruction 2754 Artificial Intel. Programming Aids 2755 Other Artificial Intelligence Related 2760 Software Services 2761 Programming Services/Systems Engi- neering 2762 Software Consulting Services 2763 Software Distribution/Clearinghouse 2765 Internet/Web Design and programming services 2766 Internet Graphics Services 2768 Other Internet Software Services 2769 Other Software Services 2780 Internet Systems Software 2781 Site Development and Administration Software 2782 Internet Search Software and Engines 2783 WebServer Software 2784 Web Languages (Java/ActiveX/HTML/XML) 2785 Web Authoring/Development Software 2798 Other Internet Systems Software 2799 Other Software Related 2800 Internet and Online Related 2810 E-Commerce--Selling products Online or Internet 2811 Business and Office Products 2812 Consumer Products 2813 Retailing Products 2814 Publishing Products 2815 Transportation Products 2816 Finance/Insurance/Real Estate products 2817 Agricultural Products 2818 Recreation/Entertainment/Music/Movies 2819 Manufacturing/Industrial/Construction 2820 Medical/Health 2821 Computer Related 2822 Communications Products 2823 Education Products 2824 Reference Products 2825 Scientific Products 2826 Legal Products 2829 Other Ecommerce Selling Products 2830 Ecommerce--Selling Services Online/ Internet 2831 Business and Office Services 2832 Consumer Services 2833 Retailing Services 2834 Publishing Services 2835 Transportation Services 2836 Finance/Insurance/Real Estate Services 2837 Agricultural Services 2838 Recreation/Entertainment/Music/Movies 2839 Manufacturing/Industrial/Construction 2840 Medical/Health Services 2841 Computer Related services 2842 Communications Products/Services 2843 Education Services 2844 Reference 2845 Scientific 2846 Legal 2848 Recreation/Entertainment Services 2849 Other Ecommerce Selling Services 2850 Web Aggregration/Portal Sites/Exchanges 2851 Business and Office Info/content 2852 Consumer Info/Content 2853 Retailing Info/Content 2854 Publishing Info/Content 2855 Transportation Info/Content 2856 Finance/Real Estate/Insurance Info/ Content 2857 Agriculture Info/Content 2858 Recreation/Entertainment/Music/Movies 2859 Manufac/Industrial/Constr. Info/Content 2860 Medical/Health Info/Content 2861 Computer Related Info/Content 2862 Communications Info/Content 2863 Education Info/Content 2864 Reference Info/Content 2865 Scientific Info/Content 2866 Legal Info/Content 2869 Other Aggregation/Portal/Exchange Sites 2870 Internet Services 2871 Internet Marketing Services 2873 Data Warehousing Services 2879 Other Internet and Online Services NEC 2900 Other Computer Related 2910 Voice Synthesis 2911 Voice Recognition 2990 Other Computer Related (not yet classified) 3000 Other Electronics Related 3100 Electronic Components 3110 Semiconductors 3111 Customized Semiconductors 3112 Standard Semiconductors 3114 Flash Memory 3115 Optoelectronics semiconductors (incl laser diodes) 3119 Other Semiconductors 3120 Microprocessors 3130 Controllers and Sensors 3132 Controllers 3135 Sensors 3139 Other Controllers/Sensors 3140 Circuit Boards 3160 Display Panels 3170 Other Electronics Related (including keyboards) 3200 Batteries 3300 Power Supplies 3310 Uninterruptible Power Supply (UPS) 3400 Electronics Related Equipment 3410 Semiconductor Fabrication Equip. Wafer Products 3420 Component Testing Equipment 3499 Other Electronics Related Equipment 3500 Laser Related 3510 Laser Components (incl. beamsplitters, excimers) 3599 Other Laser Related 3600 Fiber Optics 3610 Fiber Optic Cables 3620 Fiber Optic Couplers and Connectors 3630 Fiber Optic Communication Systems (see 1510) 3699 Other Fiber Optics 3700 Analytical Scientific Instrumentation 3710 Chromatographs Related Laboratory Equipment 3720 Other Measuring Devices 3799 Other Analytical Scientific Instrumenta- tion 3800 Other Electronics Related 3810 Military Electronics (excluding communi- cations) 3820 Copiers 3830 Calculators 3835 Security/Alarm/Sensors 3899 Other Electronics Related (incl. alarm systems) 3900 Optoelectronics 3910 Photo diodes 3920 Optoelectronics fabrication equipment 3930 Lenses with Optoelectronics applications 3940 Advanced photographic processes (incl lithographs) 3989 Other Optoelectrinics Related 3990 Other Electronc Semiconductor 4000 Biotechnology and Pharmacology 4100 Human Biotechnology 4110 Medical Diagnostic Biotechnology Products 4111 In Vitro Monoclonal Antibody Diagnostics 4112 In Vivo Monoclonal Antibody Diagnostics/ Imaging 4113 DNA/RNA Probes 4119 Other Medical Diagnostic Biotechnology 4120 Therapeutic Biotechnology Products 4121 Therapeutic Monoclonal Antibodies 4122 Immune Response Effectors (interferons,vaccines) 4123 Other Therapeutic Proteins (incl. hor- mones TPA) 4129 Other Therapeutic Biotechnology 4130 Genetic Engineering 4200 Agricultural/Animal Biotechnology 4210 Genetically Engineered Plants 4220 Genetic. Eng. Microorganisms to raise plant yield 4230 Other Plant Related Biotechnology 4240 Biotech Related Animal Health Nutri- tion Products 4250 Genetically Engineered Animals 4290 Other Animal Related Biotechnology 4300 Industrial Biotechnology 4310 Biochemical Products 4311 Biotech Related Fine Chemicals (NOT Pharmaceuts.) 4312 Biotech Related Commodity Chemicals 4319 Other Biochemical Products 4320 Biotech Processes for Food Industrial Ap- plications
2014 National Venture Capital Association Yearbook | 111 NVCA THOMSON REUTERS 4321 Biotech Related Food Enzymes and Cultures 4322 Biotech Related Food Diagnostics 4329 Other Biotech Process for Food/Industrial Products 4330 Biotech Processes for Pollution/Toxic Waste Contrl 4340 Biotech Processes for Enhanced Oil Recovery/Mining 4390 Other Industrial Biotechnology 4400 Biosensors 4410 Biosensors for Medical Diagnostic Ap- plications 4420 Biosensors for Industrial Applications 4490 Other Biosensors 4500 Biotech Related Research Production Equipment 4510 Biotech Related Analytical Instruments Apparatus 4520 Biotech Related Production Equipment 4525 Biotech laser and optronic applications 4599 Other Biotech Research Production Equipment 4600 Biotech Related Research Other Services 4610 Pure Contract Biotechnology Research 4699 Other Biotechnology Services 4900 Other Biotechnology Related 5000 Medical/Health Related 5100 Medical Diagnostics 5110 Diagnostic Services 5120 Medical Imaging 5121 X-Rays 5122 CAT Scanning 5123 Ultra Sound Imaging 5124 Nuclear Imaging 5125 Other Medical Imaging 5130 Diagnostic Test Products Equipment 5140 Other Medical Diagnostics 5200 Medical Therapeutics 5210 Therapeutic Services 5220 Surgical Instrumentation Equipment 5221 Surgical lasers (including laser delivery fibers) 5230 Pacemakers Artificial Organs 5240 Drug Delivery Other Equipment 5299 Other Therapeutic (including defibrillators) 5300 Medical Health Related Products 5310 Disposable Medical Products 5340 Handicap Aids 5350 Medical Monitoring Equipment 5380 Health related optics (including glasses, lenses) 5399 Other Medical/Health (NEC) 5400 Medical Health Services 5410 Hospitals/Clinics/Primary Care 5412 Long Term Care/Home Care/Elder Care 5414 Dependent Care (child care/assisted living 5420 Managed care (including PPO/PPM) 5429 Other Healthcare Facilities 5430 Emergency Services/Ambulance 5440 Hospital Other Institutional Management 5499 Other Medical/Health Services 5500 Pharmaceuticals 5510 Pharmaceutical Research 5520 Pharmaceutical Production 5530 Pharmaceutical Services 5540 Pharmaceutical Equipment 5550 Pharmaceuticals/Fine Chemicals (non- biotech) 5599 Other Pharmaceutical NEC 6000 Energy Related 6100 Oil Gas Exploration and Production 6200 Oil Gas Exploration Services 6300 Oil Gas Drilling Support Services 6400 Oil Gas Drilling,Exploration Extrac- tion Equip. 6410 Oil Gas Drilling Extraction Equipment 6420 Oil Gas Drilling Instrumentation 6430 Oil Gas Exploration Equip. Instrumen- tation 6499 Other Oil Gas (NEC) 6500 Alternative Energy 6510 Solar Energy 6511 Photovoltaic Solar 6512 Other Solar 6520 Wind Energy 6530 Geothermal Energy 6540 Energy Co-Generation 6599 Other Alternative Energy (incl. nuclear energy) 6600 Enhanced Oil Recovery/Heavy Oil/Shale 6700 Coal Related 6710 Coal Mining 6720 Coal Related Equipment 6799 Other Coal Related 6800 Energy Conservation Related 6900 Other Energy Related 7000 Consumer Related 7100 Entertainment and Leisure 7110 Movies,Movie Products Theater Opera- tions 7120 Amusement Recreational Facilities 7125 Casino and Gambling 7130 Toys Electronic Games 7140 Sporting Goods,Hobby Equipment Athletic Clothes 7150 Sports Facilities (Gyms and Clubs) 7155 Sports 7160 TVs,Radio,Stereo Equipment Consumer Electronics 7170 Music,Records,Production and Instruments 7199 Other Leisure/Recreational Products and Services 7200 Retailing Related 7210 Drug Stores 7220 Clothing and Shoe Stores 7230 Discount Stores 7240 Computer Stores 7245 Retail Publishing (books,magazines, newspapers) 7246 Office Supply Stores 7247 Music/Electronics 7248 Specialty Department and retail stores 7250 Franchises(NEC) 7299 Other Retailing Related 7300 Food and Beverages 7310 Wine Liquors 7320 Health Food 7330 Soft Drinks Bottling Plants 7340 Food Supplements/Vitamins 7350 General Food Products 7399 Other Food and Beverages 7400 Consumer Products 7410 Clothing,Shoes Accessories (incl. jew- elry) 7420 Health Beauty Aids 7430 Home Furnishing Housewares 7431 Housewares 7432 Furnishings Furniture 7433 Garden and Horticultural Products 7434 Other Home Furnishings (NEC) 7450 Mobile Homes 7499 Other Consumer Products 7500 Consumer Services 7510 Fast Food Restaurants 7520 Other Restaurants 7530 Hotels and Resorts 7540 Auto Repair Shops 7550 Education Educational Products and Materials 7560 Travel Agencies and Services 7599 Other Consumer Services 7999 Other Consumer Related (not yet classified) 8000 Industrial Products 8100 Chemicals Materials 8110 Plastic Fabricators 8111 Homogeneous Injections/Extrusions 8112 Non-Homogeneous Injections/Extrusions 8113 Fiber-Reinforced (Plastic) Composites 8114 Other Fabricated Plastics 8115 Processes for Working with Plastics 8119 Other Plasti Fabricators 8120 Coatings Adhesives Manufacturers 8121 Optical coatings 8129 Other Coatings Adhesives 8130 Membranes Membrane-Based Products 8140 Specialty/Performance Materials 8141 Semiconductor Materials (eg. silicon wafers) 8142 III/V Semiconductor Mater. (eg. gallium arsenide) 8143 Specialty Metals (incl. coatings, alloys, clad) 8144 Ceramics 8145 Lubricants Functional Fluids 8146 Other Specialty Materials 8147 Specialty materials for laser generation 8148 Superconducting materials 8149 Other Special Performance Materials 8150 Commodity Chemicals Polymers 8151 Industrial Chemicals 8152 Polymer (Plastics) Materials 8160 Specialty/Performance Chemicals 8161 Electronic Chemicals 8162 Other Industrial Chemicals 8170 Agricultural Chemicals 8189 Other Commidity Chemicals and Polymers 8199 Other Chemicals Materials (not yet classified) 8200 Industrial Automation 8210 Energy Management 8220 Industrial Measurement Sensing Equip- ment 8221 Laser related measuring sensing equip- ment 8230 Process Control Equipment Systems
112 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA 8240 Robotics 8250 Machine Vision Software Systems 8260 Numeric Computerized Control of Machine Tools 8299 Other Industrial Automation (NEC) 8300 Industrial Equipment and Machinery 8310 Machine Tools, Other Metalworking Equipment 8320 Hoists,Cranes Conveyors 8330 Pumps,Ball Bearings,Compressors,Indus. Hardware 8340 Mining Machinery 8350 Industrial Trucks and Tractors 8360 Other Industrial Process Machinery 8370 Power Transmission Equipment (genera- tors motors) 8399 Other Industrial Equipment Machinery 8500 Environmental Related 8510 Air Filters Air Purification Monitoring Equip. 8520 Chemical and Solid Material Recycling 8530 Water Treatment Equipment Waste Disposal Systems 8599 Other Environmental Related 8600 Other Industrial Products (not yet classified) 8700 Industrial Services 9000 Other Services and Manufacturing 9100 Transportation 9110 Airlines and Aviation Related 9120 Trucking 9125 Railway related 9130 Leasing of Railcars,Buses and Cars 9140 Mail and Package Shipment 9150 Motor Vehicles,Transporation Equipment Parts 9160 Airfield and Other Transportation Services 9180 Advanced Aircraft/Aerospace 9199 Other Transportation 9200 Financial Services 9210 Insurance Related 9220 Real Estate 9230 Banking 9235 Non Bank Credit 9240 Securities Commodities Brokers and Services 9250 Investment Groups 9254 Venture Capital and Private Equity Investors 9255 Financial Transactions Services 9299 Financial Services,0ther 9300 Services 9310 Engineering Services 9320 Advertising and Public Relations 9330 Leasing (not elsewhere classified) 9340 Distributors,Importers and Wholesalers 9350 Consulting Services 9360 Media Related Services 9399 Other Services NEC 9400 Product Manufacturing 9410 Business Products and Supplies 9415 Office Automation Equipment 9420 Office Furniture Other Professional Furnishings 9430 Textiles (Synthetic Natural) 9440 Hardware, Plumbing Supplies 9450 Publishing 9460 Packaging Products Systems 9470 Printing Binding 9499 Other Manufacturing (not elsewhere clas- sified) 9500 Agriculture,Forestry,Fishing,Animal Husbandry,etc. 9510 Agriculture related 9520 Forestry related 9530 Fishing related 9540 Animal husbandry 9599 Other Agriculture,Forestry,Fishing 9600 Mining and Minerals (non-energy related) 9700 Construction Building Products 9710 Construction 9720 Manufacture of Building Products 9730 Manufacture of Pre-Fabricated Buildings Systems 9740 Distribution of Building Products Systems 9750 Construction Services 9799 Other Construction Building Products Related 9800 Utilities and Related Firms 9810 Electric Companies 9820 Water,Sewage,Chem. Solid Waste Treatment Plants 9830 Gas Transmission Distribution 9899 Other Utilities Related Firms 9900 Other Products and Services 9910 Conglomerates 9912 Socially Responsible 9914 Environment Responsible 9915 Women-Owned 9918 Minority-Owned 9920 Holding Companies 9999 Other Products and Services
2014 National Venture Capital Association Yearbook | 113 NVCA THOMSON REUTERS Industry analysis is based upon the following industry sectors: Biotechnology, Business Products and Services,Computers and Peripherals, Consumer Products and Services, Computer Software, Electronics/Instrumentation, Financial Services, Healthcare Services, Industrial/Energy, IT Services, Me- dia and Entertainment, Medical Devices and Equipment, Networking and Equipment, Retailing/Distribution, Semiconductors, Telecommunications and Other. These sectors are based on the 17 industry classifications of the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. Biotechnology 4000, 4100, 4110, 4111, 4112, 4113, 4119, 4120, 4121, 4122, 4123, 4129, 4130, 4200, 4210, 4220, 4230, 4240, 4250, 4290, 4300, 4310, 4311, 4312, 4319, 4320, 4321, 4322, 4329, 4330, 4340, 4390, 4400, 4410, 4420, 4490, 4500, 4510, 4520, 4525, 4599, 4600, 4610, 4699, 4900, 5500, 5510, 5520, 5530, 5540, 5550, 5599 Business Products and Services 2811, 2824, 2831, 2844, 9300, 9310, 9320, 9330, 9340, 9350, 9360, 9399 Computers and Peripherals 2000, 2100, 2110, 2111, 2112, 2119, 2120, 2121, 2122, 2123, 2124, 2125, 2126, 2130, 2140, 2141, 2142, 2143, 2144, 2149, 2220, 2230, 2234, 2236, 2238, 2239, 2250, 2255, 2260, 2280, 2290, 2295, 2299, 2500, 2510, 2511, 2512, 2513, 2519, 2520, 2521, 2522, 2523, 2524, 2529, 2530, 2531, 2532, 2533, 2539, 2540, 2541, 2542, 2543, 2546, 2549, 2550, 2551, 2552, 2553, 2559, 2560, 2561, 2562, 2563, 2564, 2569, 2590, 3170 Consumer Products and Services 2812, 2832, 7000, 7300, 7310, 7320, 7330, 7340, 7399, 7400, 7410, 7420, 7430, 7431, 7432, 7433, 7434, 7450, 7499, 7500, 7510, 7520, 7530, 7540, 7550, 7560, 7599, 7999 Computer Software 1563, 2200, 2210, 2300, 2311, 2312, 2313, 2315, 2316, 2317, 2318, 2319, 2320, 2321, 2322, 2323, 2324, 2325, 2399, 2700, 2710, 2711, 2712, 2713, 2716, 2719, 2720, 2721, 2722, 2723, 2724, 2729, 2730, 2731, 2732, 2733, 2734, 2735, 2736, 2737, 2738, 2739, 2740, 2741, 2743, 2744, 2748, 2749, 2750, 2751, 2752, 2753, 2754, 2755, 2780, 2781, 2782, 2783, 2784, 2785, 2798, 2799, 2900, 2910, 2911, 2990, 8250 Electronics/Instrumentation 3000, 3100, 3160, 3200, 3300, 3310, 3400, 3420, 3499, 3500, 3510, 3599, 3700, 3710, 3720, 3799, 3800, 3810, 3820, 3830, 3835, 3899 Financial Services 2816, 2836, 9200, 9210, 9220, 9230, 9235, 9240, 9250, 9254, 9255, 9299 Healthcare Services 2820, 2840, 5400, 5410, 5412, 5414, 5420, 5429, 5430, 5440, 5499 Industrial/Energy 2819, 2837, 2839, 6000, 6100, 6200, 6300, 6400, 6410, 6420, 6430, 6499, 6500, 6510, 6511, 6512, 6520, 6530, 6540, 6599, 6600, 6700, 6710, 6720, 6799, 6800, 6900, 8000, 8100, 8110, 8111, 8112, 8113, 8114, 8115, 8119, 8120, 8121, 8129, 8130, 8140, 8143, 8144, 8145, 8146, 8147, 8148, 8149, 8150, 8151, 8152, 8160, 8161, 8162, 8170, 8189, 8199, 8200, 8210, 8220, 8221, 8230, 8240, 8260, 8299, 8300, 8310, 8320, 8330, 8340, 8350, 8360, 8370, 8399, 8500, 8510, 8520, 8530, 8599, 8600, 8700, 9000, 9100, 9110, 9120, 9125, 9130, 9140, 9150, 9160, 9180, 9199, 9400, 9410, 9415, 9420, 9430, 9440, 9460, 9470, 9499, 9500, 9510, 9520, 9530, 9540, 9599, 9600, 9700, 9710, 9720, 9730, 9740, 9750, 9799, 9800, 9810, 9820, 9830, 9899 IT Services 1560, 1561, 1562, 1569, 2600, 2630, 2640, 2650, 2655, 2660, 2665, 2670, 2675, 2691, 2699, 2760, 2761, 2762, 2763, 2765, 2766, 2768, 2769, 2800, 2870, 2871, 2873, 2879 APPENDIX E Industry Codes (VEIC)
114 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Media and Entertainment 1110, 1120, 1125, 1130, 1135, 1199, 1700, 1720, 2814, 2818, 2834, 2838, 2843, 2848, 2850, 2851, 2852, 2853, 2854, 2855, 2856, 2857, 2858, 2859, 2860, 2861, 2862, 2863, 2864, 2865, 2866, 2869, 7100, 7110, 7120, 7125, 7130, 7140, 7150, 7155, 7160, 7170, 7199, 9450 Medical Devices and Equipment 5000, 5100, 5110, 5120, 5121, 5122, 5123, 5124, 5125, 5130, 5140, 5200, 5210, 5220, 5221, 5230, 5240, 5299, 5300, 5310, 5340, 5350, 5380, 5399 Networking and Equipment 1400, 1500, 1510, 1515, 1520, 1521, 1522, 1523, 1524, 1525, 1530, 1549, 3600, 3610, 3620, 3630, 3699 Retailing/Distribution 2810, 2813, 2815, 2817, 2821, 2823, 2825, 2826, 2829, 2830, 2833, 2835, 2841, 2845, 2846, 2849, 7200, 7210, 7220, 7230, 7240, 7245, 7246, 7247, 7248, 7250, 7299, 7350 Semiconductors 3110, 3111, 3112, 3114, 3115, 3119, 3120, 3130, 3132, 3135, 3139, 3140, 3410, 3900, 3910, 3920, 3930, 3940, 3989, 3990, 8141, 8142 Telecommunications 1000, 1100, 1200, 1210, 1215, 1220, 1230, 1299, 1300, 1310, 1320, 1325, 1330, 1399, 1550, 1551, 1552, 1553, 1559, 1600, 1610, 1620, 1630, 1640, 1699, 1710, 1800, 1810, 1825, 1899, 2822, 2842 Other 9900, 9910, 9912, 9914, 9915, 9918, 9920, 9999
2014 National Venture Capital Association Yearbook | 115 NVCA THOMSON REUTERS APPENDIX F Stage Definitions SEED STAGE FINANCING This stage is a relatively small amount of capital provided to an inventor or entrepreneur to prove a concept. This involves product development and market research as well as building a management team and developing a business plan, if the initial steps are successful. This is a pre-marketing stage. EARLY STAGE FINANCING This stage provides financing to companies completing development where products are mostly in testing or pilot production. In some cases, product may have just been made commercially available. Companies may be in the process of organizing or they may already be in business for three years or less. Usually such firms will have made market studies, assembled the key management, developed a business plan, and are ready or have already started conducting business. EXPANSION STAGE FINANCING This stage involves working capital for the initial expansion of a company that is producing and shipping and has growing accounts receivables and inventories. It may or may not be showing a profit. Some of the uses of capital may include further plant expansion, mar- keting, working capital, or development of an improved product. More institutional investors are more likely to be included along with initial investors from previous rounds. The venture capitalist’s role in this stage evolves from a supportive role to a more strategic role. LATER STAGE Capital in this stage is provided for companies that have reached a fairly stable growth rate; that is, not growing as fast as the rates at- tained in the expansion stages. Again, these companies may or may not be profitable, but are more likely to be than in previous stages of development. Other financial characteristics of these companies include positive cash flow. This also includes companies considering IPO. ACQUISITION FINANCING An acquisition of 49% stake or less. Firm acquires minority shares of a company. Thomson Reuters includes these deals in standard venture capital disbursement data when calculating venture capital disbursements where the funding is by a venture capital firm. ACQUISITION FOR EXPANSION Funds provided to a company to finance its acquisition of other companies or assets. A consolidator of companies in specific indus- tries. MANAGEMENT/LEVERAGED BUYOUT These funds enable an operating management group to acquire a product line or business, at any stage of development, from either a public or private company. Often these companies are closely held or family owned. Management/leveraged buyouts usually involve revitalizing an operation, with entrepreneurial management acquiring a significant equity interest.
116 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA RECAP/TURNAROUND Financing provided to a company at a time of operational or financial difficulty with the intention of improving the company’s perfor- mance. SECONDARY BUYOUT A buyout deal on top of a buyout deal. Secondary buyouts are distinguished when the initial firm investor is different from the current investing firm.
2014 National Venture Capital Association Yearbook | 117 NVCA THOMSON REUTERS APPENDIX G Data Sources and Resources DATA SOURCES AND RESOURCES MONEYTREE™ DATA PricewaterhouseCoopers, Thomson Reuters, and the National Venture Capital Association joined forces in December 2001 to produce what was then known as the PricewaterhouseCoopers/Thomson Venture Econom- ics/National Venture Capital Association MoneyTree™ Survey. Conduct- ed on a quarterly basis, the designated PwC/NVCA MoneyTree Report allows Thomson Reuters unparalleled access to primary sources of infor- mation from general partners. SOURCES OF DATA The online database of Thomson Reuters is ThomsonONE.com (Ven- tureXpert), the foremost information provider for private equity profes- sionals worldwide. The private equity portion of Thomson Reuters of- fers an incomparable range of products from directories to conferences, journals, newsletters, research reports, and the ThomsonONE.com Private Equity database. As of January 2014, the database included over 110,000 portfolio companies, over 18,000 private equity firms, over 31,000 private equity funds, and nearly 250,000 financing rounds. By establishing work- ing relationships with private equity and venture capital firms, institutional investors, and industry associations such as the NVCA, Pricewaterhouse- Coopers and other such entities around the world, Thomson Reuters has been able to gather, on a timely basis, complete and accurate information. TIMELINESS OF DATA Many of the tables and charts presented in this reportcan be produced by using ThomsonONE.com. One of advantages of using ThomsonONE. com is that the reader can customize a report to better fit the needs of what they are seeking. In addition, because the online database is con- tinuously updated, the information available is more up-to-date than what can be presented in this report. Readers should note that timely industry information on details concerning venture capital investment is available from other sources such as PricewaterhouseCoopers at www.pwcmoney- tree.com, the ‘Industry Stats’ section of the NVCA website, www.nvca. org, and the Private Equity section ofThomson Reuters’Deals Intelligence found at http://dmi.thomsonreuters.com/PrivateEquity. VERIFICATION AND UPDATING OF DATA Collectively, PricewaterhouseCoopers, Thomson Reuters, and the NVCA have the utmost commitment to provide an accurate historical record of venture capital activity. On a daily basis, the database is con- stantly analyzed for consistency, crosschecked with other data sources, and updated as new information comes in. On a quarterly basis, we have worked with many venture firms to ensure that that their current and past data is correct. Primarily for this reason, the private equity news releases of Thomson Reuters will often restate statistics from prior news releases. With the availability of the online data access, users are encouraged to always use the most current numbers even regarding historical activity so as to maintain accuracy and comparability. REPORTING FUNCTIONALITY OF THOMSONONE.COM Users can access information in terms of profiles on private equity com- panies, funds, firms, executives, IPOs, and limited partners. In addition, users can access the analytics portion of the database, which contains in- vestment, valuation, IPO analytics, merger analytics, fund performance, and fund raising information along with venture capital information such as aggregate fund raising, investments, and IPOs broken out into state and nation profiles. COMPREHENSIVENESS OF THOMSONONE.COM Both the breadth and depth of ThomsonONE.com can perhaps best be shown in that it, among other types of information, the user can find the answers to the following questions: • Which venture firms actively co-invest with a firm I am considering co-investing with? • Which venture firms are most active in funding online financial ser- vices companies in the Ohio Valley? • What does Yearbook Figure 3.15 look like for just biotech? • How much money was raised by each fund stage in 2010? • What was a particular venture-backed IPO’s one year return at the end of 2010? • As of December 2011, was the 10-year return to small buyout funds larger than that of large buyout funds? For this publication, the main source for data was ThomsonONE.com, the online research database of Thomson Reuters. ThomsonONE.com (which replaced VentureXpert™, and Thomson One Banker) is endorsed by the NVCA as the official United States venture capital activity database. By using data gathered through the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thom- son Reuters, ThomsonONE.com contains investment, fund raising, portfolio company information, and Reuters News along with other statistical data. Over 950,000 global private companies can be analyzed within ThomsonONE.com, including historical revenue figures on over 670,000 companies and detailed financials on over 200,000 companies. Through a partnership withVC Experts.com, Inc.the historical breadth and depth of the Thomson Reuters venture capital content is integrated with private company valuation and deal terms. ThomsonONE.com includes blogs, events, and articles from the peHUB and the Venture Capital Journal, two of the industry’s most widely-read publications. Other information contained in this database is gathered through a variety of public and proprietary source. This publication is produced on an annual basis primarily using year-end data. However, the underlying databases can be accessed online to provide the most up-to-date and comprehensive global private equity statistics and profile informa- tion available.
118 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA • Who are the most active acquirers of ecommerce security companies? • How much money was committed to mezzanine funds from 1997 to 2011? • How much money was invested in the venture capital industry from 1987 to 2011? • What is the performance at quarter end for private equity funds that were formed from 1998 to 2011? • In 2011, how much money was invested at each development stage in Research Triangle Pharmaceutical companies? In addition, there are also advantages of using the database for a general partner as well. Although this is not an inclusive list, utilizing the database by general partners can be helpful to them for among the following reasons: • Plan your companies’ exits with data on both venture-backed IPOs and mergers and acquisitions • Aid in recruiting talented executives from otherventure-backed com- panies • Quickly spot venture-backed companies in competition with your own portfolio companies • Create industry analyses to benchmark both performance and portfo- lio investments • Find other venture capitalists likely to support follow-on rounds • Provide clarity to investment decisions by comparingthem to current market conditions • Compile valuation reports for comparable portfolio companies • Identify prospective investors and their investment histories • Benchmark valuations among recent transactions and obtain valuation comparables • Analyze investment trends by industry • Utilize returns information to limited partners using appropriate benchmarks • Tailor your pitch to investor focus size and limited partner type ACCESSING THOMSONONE.COM AND OTHER SERVICES For more information on ThomsonONE.com, please visit http://thom- sonreuters.com/private-equity-venture-capital/ or by phone at 1-877-365- 1455. For information on NVCA membership, which can include a free trial and discounts on an annual subscription, please contact Hannah Veith at the NVCA. You may contact her online through the link on the mem- ber benefits section of the NVCA website or at 703-524-2549. For infor- mation on services PricewaterhouseCoopers provides for venture capital firms as well as emerging companies, please visit their website at www. pwcmoneytree.com.
2014 National Venture Capital Association Yearbook | 119 NVCA THOMSON REUTERS APPENDIX H International Convergence The discussions and work focused on moving toward one high quality set of standards for financial reporting have begun to provide a picture of the future. While that picture is more gray scale than vivid color, the following facts and expectations highlight the current state of play at this point in time: • The SEC issued a report in 2012, without a recommendation, on whether to adopt international accounting rules, or a modification thereof, as the accepted accounting practice in the United States. It appears increasingly unlikely that the SEC will move 100% into the International Financial Reporting Standards (IFRS) camp; • FASB’s parent, the Financial Accounting Foundation, created a new Private Company Council (PCC) to advise them on private company ac- counting. Their work is just beginning; • The AICPA is considering whether the PCC will provide an appropriate framework for private companies or if the AICPA should continue with efforts to develop an alternative non-GAAP basis of accounting for private companies; • The International Accounting Standards Board (IASB) modified IFRS consolidation rules to effectively create Investment Company accounting substantially similar to that used under U.S. GAAP; and • While Fair Value accounting rules are now virtually identical under U.S. GAAP and IFRS, auditors are raising questions related to “unit of account” and valuing minority positions that could impact how venture capital and private equity funds estimate Fair Value. The Dialogue and SEC Decision: Should international rules become accepted as U.S. GAAP? For years, the United States has been developing generalized accounting principles referred to as GenerallyAcceptedAccounting Principles (“GAAP”). The keeper/arbiter/ decider of GAAP is the Financial Accounting Standards Board (“FASB”). The FASB develops and updates GAAP and the SEC has adopted these accounting rules for public company reporting and other situations over which the SEC has jurisdiction. In recent years, on a parallel track, a sep- arate set of rules emerged from the International Accounting Standards Board (“IASB”), which was Europe-centric. These rules became known as the International Financial Reporting Standards (“IFRS,” pronounced “EYE-fers”). IFRS has now been adopted by most developed and many developing countries around the world, with the exception of the United States. Over recent years, a large number of multinational corporations com- plained that they had to endure keeping two sets of books and this prompt- ed the concept of convergence. In early September 2008, the SEC and the FASB announced steps to pave the way for United States public companies to convert from U.S. GAAP to IFRS. The SEC “roadmap” provided for a three-year run- up to an SEC “go-no go” decision in 2011, but the decision was deferred. At about the same time, the FASB and the IASB met to review and re- orient their convergence plan to be consistent with the SEC’s proposed schedule. The 2008-2009 world financial crisis deferred and deprioritized much of the work in this area. The SEC’s 2012 staff report on adopting IFRS did not make a recom- mendation, but raised questions about consistent application, transpar- ency, reliability, relevance, comparability, and ongoing costs in addition to any conversion costs, which might be significant. More relevant to the United States venture capital industry are matters specifically affecting fund reporting, the financial statements provided by GPs to LPs under the eventual rules. Because of the recent change in IFRS consolidation rules, United States venture capital firms would conceptually not be impacted by a change to IFRS. How United States GAAP and International IFRS Compare – Never Generalize Even viewed from 30,000 feet, it is difficult to generalize on how the two systems compare. First, while the IASB produces plain vanilla IFRS stan- dards, there is no one flavor of IFRS in use. Much like the original UNIX kernel, each country/jurisdiction has been able to create its own version of IFRS. But unlike UNIX, sometimes the differences among the local- ized IFRS versions are large. So apples-to apples comparison of “IFRS- compliant” financials from different jurisdictions can be difficult. Second, it is true that IRFS itself is a very thin document compared to GAAP, which has grown to roughly a two-foot stack of written rules. However, to implement IFRS, you need the implementation guide that combines with the original document to create its own two-foot stack. Again, much of the surface comparisons are not useful. Until now, United States venture capi- tal firms have been using U.S. GAAP accounting standards exclusively. While seemingly distant from the United States venture capital industry, it is important that all business constituencies weigh in on which system (current U.S. GAAP vs. International vs. neither) is the best system over- all for the United States business community going forward. GP-to LP Reporting – Can Meaningful Statements Continue? A key priority for the United States venture capital industry is being able to continue producing quarterly financial statements using invest- ment company (IC) accounting. Virtually all LP agreements (or accom-
120 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA panying documents) require GPs to provide GAAP-compliant financial reports to LPs. Annual audits include testing to ensure GAAP compliance. Under GAAP, the United States venture capital industry now provides Fair Value portfolio reports under the special rules of “investment compa- ny reporting.” In 2012, IFRS was modified to effectively create a financial reporting framework substantially similar to U.S. GAAP. GP’s should not lose sight of the fact their LP’s who pre- pare financial statements using either U.S. GAAP or IFRS, in almost all cases, must report their LP fund positions on a Fair Value basis. LPs are increasingly awakening to the specific condi- tions outlined in a change to U.S. GAAP from 2009, which codified an LP’s ability to use Net Asset Value (NAV) as an LP’s estimate of the Fair Value of their fund interest. These conditions include that the LP must satisfy themselves that the GP reported NAV is based on the Fair Value of underlying investments, that NAV is “in-phase” (no time lag, unless deemed insignificant), and that the LP interest is in a fund as defined by ASC Topic 946. If these three conditions are not met, or if the LP chooses not to use NAV, then Fair Value would be determined using other tech- niques. The point here for GPs is that LPs need robustly determined Fair Value on a timely basis, generally at least quarterly. How the Same Words have Different Meanings The 2012 change in IFRS consolidation rules for Investment Entities and the 2011 adoption of a common definition of Fair Value for U.S. GAAP and IFRS should have created a framework where financial report- ing to investors would be identical for funds using IFRS and funds using U.S. GAAP. If it were only that easy! While we enter 2013 with a consistent framework under U.S. GAAP and IFRS where venture capital and private equity funds report all invest- ments at Fair Value; and while we now have an identical definition of Fair Value (the amount a market participant would pay in an orderly transac- tion), schisms are developing. Because of nuances in the way IFRS is drafted, IFRS auditors are ques- tioning whether Fair Value should be determined based on the “invest- ment” or on a “single share” basis. While the reasons for such a question are beyond the scope of this document, the question and potential results could mean that IFRS and U.S. GAAP, though identical in principle, would result in different Fair Value estimates (as an aside, this is an ex- ample of one situation that concerns the SEC in moving the United States towards IFRS). At the same time, many auditors of U.S. GAAP, as a reaction to their regulators the PCAOB, and because of pressure from the SEC, which now regulates private equity funds, are questioning whether or not the sale or exit of an enterprise can be assumed when determining the Fair Value of minority positions. Some auditors have gone so far as to indicate that they may require the use of option pricing models for determining the Fair Value of all minority positions. Going Forward With questions regarding whether or not IFRS should be interpreted as requiring all Fair Value estimates to be on a single share basis, and with U.S. auditors appearing to feel some pressure to use mathematical models to document their audit conclusions, both GPs and LPs in the venture capital and private equity industry could be faced with financial report- ing that is either very costly and/or is not representative of how deals are done in the industry. In December 2012, the International Private Equity Venture Capital Valuation (IPEV) Board updated its Valuation Guide- lines. The updated valuation guidelines address both the “unit of account” and mathematical model questions. In addition, IPEV released Investor Reporting Guidelines in October 2012. While each fund manager must decide both what information to report and how to estimate Fair Value, the IPEV Valuation Guidelines and the IPEV Investor Reporting Guidelines provide balanced, and industry created, assistance in dealing with report- ing and valuation questions. NVCA and Thomson Reuters acknowledge and appreciate the assis- tance of David Larsen of Duff and Phelps in updating and refocusing the material in this Appendix.
2014 National Venture Capital Association Yearbook | 121 NVCA THOMSON REUTERS APPENDIX I US Accounting Rulemaking and Valuation Guidelines In the United States, a venture capital fund is usually organized as a limited partnership. The institutional investors providing capital to a fund typically become the limited partners (LPs). The venture firm itself becomes a general partner (GP) in the limited partnership. In most of the limited partnership agreements defining the GP-LP relationship, the GPs are required to provide financial reports quarterly (unaudited) and annually (audited) prepared according to United States Generally Accepted Accounting Principles (“GAAP”). GAAP calls for the use of investment company accounting, which mandates that a Fair Value be assigned to the individual investments (portfolio companies). This is consistent with the LP’s need for Fair Value of their investments, as well as third-party or regulatory requirements, e.g., ERISA-regulation. In recent years, the GP-to-LP financial statements have been subject to numerous rule “clarifications,” convergence with non-U.S. accounting, expanded disclosures, and more formal presentations. Industry groups (PEIGG a decade ago and IPEV today) have released guidelines that, if adopted, can reduce questions from LPs and provide a basis to respond to questions posed by auditors. Guidelines fall into two categories. The first is portfolio performance presentation formats, calculations, and disclosure. Examples of such Guidelines are the Private Equity Provisions of the Global Investment Performance Standards (GIPS), developed by the CFA Institute and the IPEV Investor Reporting Guidelines. While many of the specifications and terminology line up with current practice in the United States, the NVCA has not endorsed or otherwise commented on these Guidelines. Neither NVCA nor Thomson Reuters has determined how widespread the adoption of those guidelines is or will likely be. These documents and ac- companying guidance can be currently found at http://www.cfainstitute. org/centre/codes/gips/ and www.privateequityvaluation.com. The second important category of guidelines is focused on valuation. Why Valuation Guidelines Matter What ultimately matters to investors and private equity practitioners is the cash that has been distributed to the investors during the life of the fund compared with the original money put in. However, the specified life of a typical venture fund is at least 10 years and often longer in the life scienc- es arena. During that period, the venture capital fund reports progress to the limited partners. In many cases, this means quarterly portfolio updates and a complete annual audited financial statement. For a typical venture fund, very little money is paid out in the first four or five years.Also, while every portfolio company receives funding with high expectations, it can take several years to determine if a particular company is a likely winner. Therefore, understanding progress in the portfolio requires some estimate of the success of the investee companies by the venture capital or private equity firm. While many investors and fund managers agree that financial measurements mean little for the first three or so years of a fund, investors are required to report the Fair Value of their fund positions on a quarterly or annual basis. This is where specific valuation rules and processes be- come important. The agreed valuation procedures for individual portfolio companies become the basis for progress assessment as the fund matures and ultimately distributes cash to the investors. Thus, while portfolio company valuations are more of an art than a sci- ence, especially for pre-revenue or even pre-EBITDA companies, most limited partner agreements (LPAs) establishing a venture capital fund require the venture firm to provide quarterly and annual financial state- ments using Generally Accepted Accounting Principles (GAAP). GAAP requires Fair Value measurement for portfolio positions. Therefore, most GPs must issue financial statements using Fair Value. Most important, if industry-created valuation guidelines are not used, those outside the industry, such as auditors or regulators could impose their view on the industry. A non-industry view could adversely impact the LPs desire and ability to invest if interim values are not representative of the way the industry sees value, and costs for determining valuation could increase. The Evolution of Reporting and Valuation Guidelines To understand the pressure on valuation and reporting in today’s environ- ment, a historical background review is instructive. • 1940 – United States Investment Company legislation (“the 40 Act”) required investment companies to report the Fair Value of investments. While the application of accounting standards has evolved over the past 70+ years, the underlying basis of reporting has always been Fair Value. • 1989-90 – A group of investors, private equity fund managers, and fund-of-fund managers formed a group to develop a set of portfolio company valuation guidelines for financial reporting. Contrary to a very persistent rumor, the NVCA did not endorse, adopt, bless, publish, or otherwise opine on the guidelines. Using the principle of conservatism, these non-endorsed guidelines used cost or the value of the last round of financing to approximate Fair Value. • Decade of the 1990s – Two noteworthy developments occurred in the 1990s. Despite no endorsement by the NVCA, these guidelines became accepted practice by much of the United States industry, especially in the venture capital side of private equity. These guidelines were referred to by many as being issued by the NVCAbut in fact they were not. The sec- ond development is that international venture associations created local- ized guidelines based heavily on these guidelines. These were created in Europe and other international regions. In fact, by 2005, there had been multiple iterations of the European and British guidelines, again gener- ally focused on cost or the value of the last round of financing.
122 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA • December 2003/September 2004 – The Private Equity Industry Guide- lines Group (PEIGG), a self-appointed group of private equity practitio- ners, fund managers, LPs and others, issued U.S. Private Equity Valu- ation Guidelines. The Guidelines were issued after extensive input and review soliciting feedback and input from a number of industry groups that included NVCA. • 2005 – In part as a reaction to the PEIGG Guidelines, three Europe- based venture capital associations (AFIC, BVCA, EVCA) created the International Private Equity and Venture Capital (IPEV) Valuation Board. • April 2006 – IPEV released its Valuation Guidelines. • September 2006 – Financial Accounting Standards Board (FASB) issued its long-awaited and long anticipated Fair Value measurement standard as FAS 157. Only a few of its 145 pages relate directly to typi- cal venture capital and private equity funds. Because the FASB main- tains that this is a clarification and further definition of Fair Value that was already required for portfolio accounting, some auditors began re- quiring selective compliance in advance of the 2008 effective date. • March 2007 – PEIGG issued a revised portfolio company valuation guidelines document to reflect the Fair Value Measurement standard (FAS 157). • September 2007 – NVCA board reaffirmed its prior position on the PEIGG guidelines to refer to the most recent version. • March 2008 – the IPEV Board reconstituted and re-launched itself and adds five practitioners from the United States. The initial focus of the group was on convergence of U.S. PEIGG and IPEV valuation guide- lines. Details at www.privateequityvaluation.com. • July 2009 – Effective July 1, authoritative GAAP became contained in a single codification and the prior nomenclature went away. Existing U.S. GAAP was recast into 90 topics, which include all related FASB pronouncements, AICPA guidance and EITFs under single “Topics.” Familiar standards would no longer exist. For example, FAS 157 be- came Topic 820 Fair Value Measurements and Disclosure. Investment Company accounting became ASC Topic 946. • May 2011 – FASB amended ASC Topic 820 and the IASB issues IFRS 13, resulting in nearly identical Fair Value guidance. • October 2012 – IPEV released Investor Reporting Guidelines • December 2012 – IPEV updated its Valuation Guidelines to harmonize with ASC Topic 820 and IFRS 13. • May 28, 2013 – In an unprecedented action, the NVCA Board formal- ly endorsed the IPEV valuation guidelines issued in December 2012. NVCA was joined in doing this by the Private Equity and Growth Capi- tal Council (PEGCC). • February 25, 2014 – The Financial Accounting Foundation (FASB’s parent organization) issues its findings of a Post Implementation Re- view of the fair value measurement standard (Topic 820) which is better known by its original nomenclature: FAS 157. FAF’s overall finding was that overall the FASB got the standard basically correct, a point with which NVCA does not disagree. However, the findings acknowledged concerns raised by NVCA, LPs, and others while simultaneously declar- ing no unintended consequences. NVCA Position on Portfolio Company Valuation Guidelines While publicly supportive of prior peer and eco-system generated valua- tion guidance (for example, PEIGG), NVCA’s endorsement of IPEV valu- ation guidelines in May 2013 is the first such action it has taken. NVCA Member Alert –Fair Value Considerations for Venture Capitalists–December 2008 In 2008, as a response to the economic crisis at the time, the NVCA issued a membership alert. Much of that alert remains relevant today. The fol- lowing alert was sent to the NVCA membership to highlight certain issues and considerations to be explored in the application of FAS 157, the Fair Value measurement standard. The NVCA thanks David Larsen of Duff and Phelps and several members of the NVCA CFO Task Force for their role in drafting this document: “We are operating in a severely distressed investment environment that has deteriorated rapidly in the past few months. What does this mean for venture capital investors as they attempt to value privately-held invest- ments at December 31, 2008? The short answer is: despite the current very challenging economic environment, fund managers must continue to exercise their sound judgment in estimating the Fair Value of each portfo- lio company after considering the relevant facts, including current market conditions. The valuation process does not change, but much more judg- ment is required when we are in a period of economic discontinuity. Virtu- ally all LP agreements require GPs to use U.S. GAAP for financial report- ing. U.S. GAAP requires Fair Value reporting for virtually all VC firms because they are “investment companies.” U.S. GAAP continues to define Fair Value as: “the price that would be received to sell an asset…in an orderly transaction between market participants at the measurement date.” Fund managers need to establish Fair Values even though they may not currently need to sell, or cannot sell, their private investments in this mar- ket. GPs must use their judgment in estimating the current Fair Values of their investments, even though “exit markets” may have few buyers, IPO markets appear closed, and there are few, if any, relevant compa- rable transactions. Such judgment should take into account all relevant information, including a financing round’s specific terms and conditions. There are no easy outs, rules of thumb or safe harbors for establishing Fair Value. As always, best considerations for Fair Value determination include the following: • The Fair Value of an investment portfolio is the sum of the Fair Value determined for each portfolio company using a “bottoms up” approach. Applying a “top-down” overall percentage adjustment to the aggregate portfolio’s value is not compliant with U.S. GAAP.
2014 National Venture Capital Association Yearbook | 123 NVCA THOMSON REUTERS • Valuations should reflect specific factors in a buy/sell context. For ex- ample, a GP could ask: “Given my portfolio company’s current cash position, cash burn rate, performance compared to plan, probability of meeting forecasts, the projected environment for its product or technol- ogy, etc., as a board member, what is the lowest price that I would sell the company’s stock today in an orderly sale with a willing buyer?” [Footnote: A fund manager should not assume a “fire sale” of the stock, but should assume “exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary …” from SFAS 157, Paragraph 7]. • The valuations set by the most recent financing round – perhaps even one in the third quarter of 2008 – may be stale and inappropriate for determining Fair Value, especially given current market conditions. • The Fair Value at December 31 in many cases will likely be different from the value at September 30, given the deterioration of the macro- economic environment. • Each valuation should reflect a company’s degree of progress from the prior reporting date to the current one. • To determine a portfolio company’s Fair Value, GPs should apply their judgment in a consistent manner and evaluate the same data they use for monitoring a company’s performance and progress. There is no magic formula or weighting of factors. In summary, determining Fair Value continues to require the exercise of judgment based on objective evidence, such as calibrating the original investment decision with the current performance of the company and the current economic environment. The fact that the macro market is dis- tressed probably adversely impacts the value of most companies. This negative impact may be compounded by disappointing company perfor- mance or mitigated by tangible and sustainable company progress. If you need more details about Fair Value, you might consider the IPEV Valua- tion Guidelines at www.privateequityvaluation.com.” 2014 Headwinds As noted above, new pressure is emerging that could impact how venture capital and private equity managers estimate Fair Value. Key factors in- clude: 1. LPs are awakening to the fact that they need to obtain more information from the GP about how the GP estimates Fair Value so the LP can use NAV to estimate the Fair Value of their LP interest. a. LPs are revisiting their internal valuation policies. b. LPs are asking more detailed valuation questions of the GP. 2. The IASB has created “investment company accounting” by requiring venture capital and private equity funds to report all investments at Fair Value rather than consolidating control positions. 3. Auditors of IFRS have raised questions concerning the level of aggre- gation (unit of account) that should be used to value venture capital and private equity investments. a. Some auditors believe that unit of account is a single share of an investee company. b. Single share valuations would likely result in reporting understated Fair Values. c. Reporting understated Fair Values would exacerbate the “J” curve, and could cause some LPs to reduce investments in the industry be- cause of lower interim returns. d. IFRS could deviate from U.S. GAAP even though the Fair Value principles are identical. 4. Auditors of U.S. GAAP have raised questions concerning how to esti- mate the Fair Value of non-control positions. a. Is it appropriate to assume that the entire enterprise is being sold when estimating Fair Value? b. For non-control positions, is it appropriate or required to use option pricing models and theory to estimate Fair Value? The IASB is expected to address the Unit of Account question during early 2013. The AICPA has formed a task force to provide guidance on investments of venture capital and private equity funds. Part of the reason the AICPA has formed a task force is because the IPEV guidelines have not been as widely accepted or acknowledged in the U.S. as they have been in Europe. Further, while some parties have voiced concern that the AICPA task force conclusions may be relatively auditor-friendly, several members of that task force are from NVCA members. All of this raises the question: could GPs reduce LP questions and increase LP valuation comfort by stating that they comply with the IPEV Valuation Guidelines? Will current efforts at non-authoritative accounting guidance provide a framework with which the great compliance community will be comfortable? Over the next year, greater clarity should emerge. NVCA and Thomson Reuters acknowledge and appreciate the assistance of David Larsen of Duff and Phelps in updating and refocusing the mate- rial in this Appendix
124 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA This page is intentionally left blank.
2014 National Venture Capital Association Yearbook | 125 NVCA THOMSON REUTERS APPENDIX J Non-US Private Equity As interest in globalization increases with each year, private equity investors have continued to broaden their investment criteria to include overseas ventures so as to increase portfolio diversification and search for higher returns. As such, Appendix J is produced for readers to analyze non-US private equity data. All data is reported in US dollars. INTRODUCTION This appendix highlights various aspects of private equity activity out- side of the United States and provides valuable information for compari- son to the United States private equity environment. However, this appen- dix is not directly comparable to domestic data found in this Yearbook due to differences in definitions between the regions and variations in the currencies of each region. Additionally, this appendix provides a brief overview of non-US private equity; data herein is not as comprehensive as the United States data presented elsewhere in this publication. Despite this, the reader can use this appendix to analyze trends in private equity outside of the United States. All data is provided by Thomson Reuters. As mentioned previously, readers should note the differences in methodol- ogy and definitions of private equity between United States and other re- gions before analyzing the data. For example, private equity outside of the United States provides equity capital for entities not publicly traded and consists of buyouts and venture capital. The category of buyouts includes management buyouts (management from inside the company investing with private equity investors), leveraged buyouts (the target taking on a high level of debt secured by assets), institutional buyouts (outside inves- tors buying a business from existing shareholders), and management buy- ins (management from outside the company investing with private equity investors). On the other hand, venture capital describes the process of fi- nancing companies at the seed, start-up, or expansion stages. The United States places more emphasis on the early stages of development than do other regions, based on historical analysis of investments by stage. Like in the United States, non-US venture capital is considered a subset of private equity. For ease of analysis and to avoid differences in definitions between venture capital and buyouts inside and outside of the United States, it is perhaps most comparable to analyze aggregate private equity in the two regions as opposed to any classifications contained within. **Special Note: The methodology used to generate the data within this appendix differs slightly from the methodology used in previous years, causing data to vary slightly from previous Yearbook issues. However, trends reported in the past remain intact. Additionally, most data is now replicable on ThomsonONE.com. COMMITMENTS Private equity commitment levels, outside of the United States, totaled $130.8 billion in 2013. European-based funds raised the bulk, raising $77.5 billion, equal to 59% of this amount. Meanwhile, Asian funds had $30.9 billion in fundraising commitments which is 24% of the total. Funds in the Other Regions raised the remaining $22.4 billion or 17% of the to- tal. In the stage level, Buyout commitments outside the United States ac- counted for $68.3 billion or 52% of the total. The second largest part of the commitments was Other Private Equity/Special Situations which raised $19.9 billion or 15% of the total. Venture Capital funds represented 8% ($10.2 billion). Private Real Estate funds raised $13.5 billion or 10% of the share. Fund of funds, Generalist, and Mezzanine funds raised $6 bil- lion, $10 billion, and $3.1 billion, respectively. It should be noted that these totals reflect not only the amount raised by independent funds, but also include capital gains and the amount raised by captive funds. INVESTMENTS Overall, private equity investing outside of the United States reached $46.6 billion. Buyout stage financing led investment activity, accounting for 43% of the total dollars. The Venture Capital investments followed with 32% of the total. By number of deals, Venture Capital investments led with 56% and the Buyouts investments followed with 37% of the total deal activity outside of the United States. Canada received the biggest share of private equity outside the United States in 2013 with $9 billion worth of investments or 19% of the total value. The United Kingdom fol- lowed with $5.2 billion. China comes in at third with $4.9 billion or 10% of the total. Private equity commitments experienced an increase while investments saw a decrease outside of the United States in 2013. Commit- ments saw an increase of 16% from $113 billion in 2012. Private equity investments dropped 21% from $59 billion of the previous year. Figure J1 Private Equity Commitments Outside of the United States in 2013 Fund World Location # Funds Amount Raised in Range (USD Mil) Europe 170 77,544.94 Asia 116 30,943.34 Other Regions 88 22,354.11 Total 374 130,842.38
126 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure J2 Private Equity Commitments Outside of the United States by Fund Stage in 2013 Fund Stage # Funds Amount Raised in Range (USD Mil) Buyouts 98 68,253.15 Venture Capital 137 10,181.76 Generalist 47 9,952.74 Mezzanine Stage 9 3,065.56 Fund of Funds 22 5,984.68 Other Private Equity/ Special Situations 19 19,856.58 Real Estate 42 13,547.92 Total 374 130,842.38 Figure J3 Private Equity Investments Outside of the United States By Location in 2013 Company Nation # Deals # Companies Sum of Equity Invested (USD Mil) Canada 845 747 9,018.66 United Kingdom 742 696 5,223.91 China 310 291 4,862.14 Germany 442 405 4,821.09 India 355 321 3,169.58 Other Nations 2343 2215 19,455.95 Total 5037 4675 46,551.33 Figure J4 Private Equity Investments Outside of the United States By Stage in 2013 Company Stage # Deals # Companies Sum of Equity Invested (USD Mil) Buyout/Acquisition 1881 1769 20,119.97 Venture Capital 2805 2609 14,752.98 Other 351 327 11,678.38 Total 5037 4675 46,551.33

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National Venture Capital Association

  • 1. NATIONALVENTURECAPITALASSOCIATION2014 NATIONALVENTURE CAPITAL ASSOCIATION YEARBOOK 2014 INCLUDING STATISTICS FROM THE PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters
  • 2. 2014 National Venture Capital Association Yearbook | 1 NVCA THOMSON REUTERS March 2014 Dear Colleague: We are delighted to present to you the NVCA 2014 Yearbook, prepared by Thomson Reuters. This is the 17th edition in a series launched in early 1998. Since then, much has changed in the industry. One thing that has not changed, however, is our commitment to bring accurate and responsible transparency to this powerful economic force called venture capital. You will find in this publication new and updated charts that track investment activity in the United States. Reflecting our dynamic environment, for the first time we provide a chapter on Growth Equity – an asset subclass that did not exist in its present form when we printed the first edition of this publication. More changes are already in the works. For example, in recognition of the strong and broad emergence of corporate venture capital groups and direct corporate investment over the past few quarters, we will soon be changing our methodology to be more inclusive of solo (i.e., without a traditional venture investor in the round) and early corporate investment into companies. Further, we will also include corporate direct investment from the corporation itself, not just from a separate or captive entity. Stay tuned. The industry’s goal remains the same: to create fast-growing and sustainable companies, introduce new technologies, and improve medical care and patient well-being, while providing an attractive return to those who trust the industry with their capital. Whether by traditional venture capital, corporate venture capital, growth equity, or a number of new and energized investment vehicles, we are here to report that the beat goes on. As always, your feedback and suggestions are welcome. Please feel free to contact us at research@nvca. org or through any NVCA director or staff member. Very truly yours, Diana Frazier Bobby Franklin John S. Taylor FLAG Capital Management NVCA President and CEO NVCA Head of Research NVCA Director and Chair, Research Committee
  • 3. 2 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA NVCA BOARD OF DIRECTORS 2013-2014 EXECUTIVE COMMITTEE Josh Green Scott Sandell Mohr, Davidow Ventures New Enterprise Associates Chair Chair-Elect Anne Rockhold Jonathan Callaghan Accel Partners True Ventures Treasurer Executive Committee At-Large Bruce Evans Jonathan Leff Summit Partneer Deerfield Management Executive Committee At-Large Executive Committee At-Large, Research Committee AT-LARGE Diana Frazier Mark Leschly FLAG Capital Rho Ventures Research Chair Research Committee John Backus Maria Cirino New Atlantic Ventures .406 Ventures David Douglass Claudia Fan Munce Delphi Ventures IBM Venture Capital Group Norm Fogelsong Venky Ganesan Institutional Venture Partners Menlo Ventures Robert Goodman Mark Gorenberg Bessemer Venture Partners Zetta Venture Partners Jason Green Adam Grosser Emergence Capital Partners Silver Lake Kraftwerk James Healy Ross Jaffe Sofinnova Ventures Versant Ventures Scott Kupor Ray Leach Andreessen Horowitz Jumpstart, Inc David Lincoln Robert Nelsen Element Partners ARCH Venture Partners Art Pappas Sue Siegel Pappas Ventures GE Ventures
  • 4. 2014 National Venture Capital Association Yearbook | 3 NVCA THOMSON REUTERS 2014 National Venture Capital Association Yearbook For the National Venture Capital Association Prepared by Thomson Reuters Copyright 2014 Thomson Reuters The information presented in this report has been gathered with the utmost care from sources believed to be reliable, but is not guaranteed. Thomson Reuters disclaims any liability including incidental or consequential damages arising from errors or omissions in this report.
  • 5. 4 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA National Venture Capital Association 1655 Fort Myer Drive, Suite 850 Arlington, Virginia 22209-3114 Telephone: 703-524-2549 Telephone: 703-524-3940 www.nvca.org President and CEO Bobby Franklin President Emeritus Mark G. Heesen Head of Research John S. Taylor Senior Vice President of Federal Policy and Political Advocacy Jennifer Connell Dowling Vice President of Federal Life Science Policy Kelly Slone Vice President of Federal Policy and Political Advocacy Emily Baker Vice President of Communications Ben Veghte Vice President of Membership and Member Firm Liaison Janice Mawson Vice President of Administration Roberta Catucci Director of Business Development Hannah Veith Manager of Administration and Meetings Allyson Chappell Accounting Manager Beverley Badley Research Lab Mavis Moulterd (Emeritus), Annie Black, Liberty Benjamin Lab Assistants Thea Shepherd, Lexi Oscar, Gracie Baker Thomson Reuters 3 Times Square, 18th Floor New York, NY 10036 Telephone: 646-223-4431 Fax: 646-223-4470 www.thomsonreuters.com Global Head of Deals & Private Equity Stephen N. Case II Head of Deals and Private Equity Operations Katarzyna Namiesnik Global Business Manager – Private Equity Jim Beecher Editor-in-Charge David Toll Global Private Equity Operations Manager Anna Aquino-Chavez Press Management Matthew Toole Senior Content Specialist Michael D. Smith Content Specialist Paul Pantalla Data Specialist Francis S. Tan Senior Art Director David Cooke Sales Manager – Publications (Buyouts, VCJ, peHUB) Greg Winterton (646-223-6787) ThomsonONE.com Sales: 1-877-365-1455 National Venture Capital Association 2014 Yearbook
  • 6. 2014 National Venture Capital Association Yearbook | 5 NVCA THOMSON REUTERS TABLE OF CONTENTS What is Venture Capital? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 11 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Exits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 14 Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 17 Capital Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Investments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 Growth Equity Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 Appendix A: Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Appendix B: MoneyTree Report Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105 Appendix C: MoneyTree Geographical Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Appendix D: Industry Codes (VEICs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Appendix E: Industry Sector VEIC Ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 Appendix F: Stage Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .115 Appendix G: Data Sources and Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Appendix H: International Convergence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .119 Appendix I: US Accounting Rulemaking and Valuation Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .121 Appendix J: Non-US Private Equity . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . . . . . 125
  • 7. 6 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA This page is intentionally left blank.
  • 8. 2014 National Venture Capital Association Yearbook | 7 NVCA THOMSON REUTERS WHAT IS VENTURE CAPITAL? Venture capital has enabled the United States to support its entrepreneur- ial talent and appetite by turning ideas and basic science into products and services that are the envy of the world. Venture capital funds build companies from the simplest form – perhaps just the entrepreneur and an idea expressed as a businessplan – to freestanding, mature organizations. Risk Capital for Business Venture capital firms are professional, institutional managers of risk capi- tal that enables and supports the most innovative and promising compa- nies. This money funds new ideas that could not be financed with tradi- tional bank financing, that threaten established products and services in a corporation, and that typically require five to eight years to be launched. Venture capital is quite unique as an institutional investor asset class. When an investment is made in a company, it is an equity investment in a company whose stock is essentially illiquid and worthless until a company matures five to eight years down the road. Follow-on investment provides additional funding as the company grows. These “rounds,” typically oc- curring every year or two, are also equity investment, with the shares al- located among the investors and management team based on an agreed “valuation.” But, unless a company is acquired or goes public, there is little actual value.Venture capital is a long-term investment. More Than Money The U.S. venture industry provides the capital to create some of the most innovative and successful companies. But venture capital is more than money. Venture capital partners become actively engaged with a com- pany, typically taking a board seat. With a startup, daily interaction with the management team is common. This limits the number of startups in which any one fund can invest. Few entrepreneurs approaching venture capital firms for money are aware that they essentially are asking for 1/6 of a person! Yet that active engagement is critical to the success of the fledgling company. Many one- and two-person companies have received funding but no one- or twoperson company has ever gone public!Along the way, talent must be recruited and the company scaled up. Ask any venture capitalist who has had an ultra-successful investment and he or she will tell you that the company that broke through the gravity evolved from the original business plan concept with the careful input of an expe- rienced hand. Deal Flows — Where The Buys Are For every 100 business plans that come to a venture capital firm for fund- ing, usually only 10 or so get a serious look, and only one ends up being funded. Theventure capital firm looks at the management team, the con- cept, the marketplace, fit to the fund’s objectives, the value-added po- tential for the firm, and the capital needed to build a successful business. A busy venture capital professional’s most precious asset is time. These days, a business concept needs to address world markets, have superb scalability, be made successful in a reasonable timeframe, and be truly innovative. A concept that promises a 10 or 20 percent improvement on something that already exists is not likely to get a close look. Many technologies currently under development by venture capital firms are truly disruptive technologies that do not lend themselves to being em- braced by larger companies whose current products could be cannibalized by this. Also, with the increased emphasis on public company quarterly results, many larger organizations tend to reduce spending on research and development and product development when things get tight. Many tal- ented teams have come to the venture capital process when their projects were turned down by their companies. Common Structure — Unique Results While the legal and economic structures used to create a venture capi- tal fund are similar to those used by other alternative investment asset classes, venture capital itself is unique. Typically, a venture capital firm will create a Limited Partnership with the investors as LPs and the firm itself as the General Partner. Each “fund,” or portfolio, is a separate part- nership. A new fund is established when the venture capital firm obtains necessary commitments from its investors, say $100 million. The money is taken from investors as the investments are made. Typically, an initial funding of a company will cause the venture fund to reserve three or four times that first investment for follow-on financing. Over the next three to eight or so years, the venture firm works with the founding entrepreneur to grow the company. The payoff comes after the company is acquired or goes public. Although the investor has high hopes for any company get- ting funded, only one in six ever goes public and one in three is acquired. Venture Capital Backed Companies Known for Innovative Business Models Employment at IPO and Now Company As of IPO Current # Change The Home Depot 650 331,000 330,350 Starbucks Corporation 2,521 160,000 157,479 Staples 1,693 89,019 87,326 Whole Foods Market, Inc. 2,350 69,500 67,150 eBay 138 31,500 31,362 Venture Capital Backed Companies Known for Innovative Technology Products Employment at IPO and Now Company As of IPO Current # Change Microsoft 1,153 94,000 92,847 Intel Corporation 460 100,100 99,640 Medtronic, Inc. 1,287 45,000 43,713 Apple Inc. 1,015 76,100 75,085 Google 3,021 53,861 50,840 JetBlue 4,011 12,070 8,059 Source: Global Insight; Updated fromThomsonOne 2/2013
  • 9. 8 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Economic Alignment of all Stakeholders — An American Success Story Venture capital is rare among asset classes in that success is truly shared. It is not driven by quick returns or transaction fees. Economic success occurs when the stock price increases above the purchase price. When a company is successful and has a strong public stock offering, or is ac- quired, the stock price of the company reflects its success. The entrepre- neur benefits from appreciated stock and stock options. The rank and file employees throughout the organization historically also do well with their stock options. The venture capital fund and its investors split the capi- tal gains per a pre-agreed formula. Many college endowments, pension funds, charities, individuals, and corporations have benefited far beyond the risk-adjusted returns of the public markets. What’s Ahead Much of venture capital’s success has come from the entrepreneurial spirit pervasive in theAmerican culture, financial recognition of success, access to good science, and fair and open capital markets. It is dependent upon a good flow of science, motivated entrepreneurs, protection of intellec- tual property, and a skilled workforce. The nascent deployment of ven- ture capital in other countries is gated by a country’s or region’s cultural fit, tolerance for failure, services infrastructure that supports developing companies, intellectual property protection, efficient capital markets, and the willingness of big business to purchase from small companies.
  • 10. 2014 National Venture Capital Association Yearbook | 9 NVCA THOMSON REUTERS EXECUTIVE SUMMARY During 2013, many of the metrics describing the venture capital indus- try in the United States were similar to those of the prior three years, with the exception of a pickup in the breadth of the IPO markets. The decline in capital managed continued as expected, but not as much as some were anticipating. A record proportion of venture deals focused on companies in the seed and early stages, while a number of companies long in the portfolios finally went public, led by Biotechnology companies in the first half of 2013. Investment in early-stage life science companies continued to fall during the year, although a fourth-quarter increase in first fundings of Biotechnology companies was encouraging. Fundraising remained very challenging for the majority of venture firms. This is largely because of a dearth of healthy exits through 2012 that would have distributed yet-unrealized returns to current fund inves- tors. Aside from the Facebook IPO in 2012 ($16.0B of the $21.5B raised in 2012), 2013 was a much-improved year with 81 venture-backed IPOs. Remarkably, over half of them were Biotechnology companies. Early signs for 2014 suggest that IPO momentum carried forward into at least the first part of the year. A healthy venture capital ecosystem requires its metrics to be in bal- ance. And while the quality of new business opportunities, known as deal flow, remains very high and the best opportunities are getting funded, stresses remain. Introduction The National Venture Capital Association 2014 Yearbook provides a summary of venture capital activity in the United States. This ranges from investments into portfolio companies to capital managed by general partners to fundraising from limited partners to valuations of companies receiving venture capital investments to exits of the investments by ei- ther IPOs or mergers and acquisitions. The statistics for this publication were assembled primarily from the MoneyTree™ Report by Pricewater- houseCoopers and the National Venture Capital Association, based on data from Thomson Reuters and analyzed through the Thomson ONE. com (formerly VentureXpert) database of Thomson Reuters, which has been endorsed by the NVCA as the official industry activity database. Subscribers to Thomson ONE can recreate most of the charts in this pub- lication and report individual deal detail and more granular statistics than those provided herein. Industry Resources The activity level of the US venture capital industry is roughly half of what it was at the 2000-era peak. For example, in 2000, 1,050 firms each invested $5 million or more during the year. In 2013, the count was roughly half that at 548. Venture capital under management in the United States by the end of 2013 decreased to $192.9 billion. However, looking behind the numbers, we know that the industry continues to contract from the circa 2004 high of $288.9 billion. The peak capital under management that year was a statistical anomaly caused when funds raised at the height of the 2000 tech bubble were joined by new capital raised post bubble. The slight downtick in firms and capital managed (Fig. 1.04) in 2013 understates a consolidating industry. The average venture capital firm shrunk to 6.7 principals per firm from 8.7 just six years earlier. The corre- sponding drop in headcount to under 6,000 principals is almost one-third lower than 2007 levels. This meant that there was a general increase in the average amount of capital managed by each principal. It is possible going forward that the number of principals per firm will increase as the number of firms decreases. This is because the bulk of the capital being commit- ted today is being raised by larger, specialty, and boutique firms. For our purposes here, we define a principal to be someone who goes to portfolio company board meetings. That is, deal partners would be included and firm CFOs would not be included. Contrary to some popular misconceptions, only 43 firms managed more than $1 billion. By comparison, 277 firms managed less than $25 million. Commitments The year 2013 continued to be a very challenging fundraising year for most venture capital firms in the United States. This was due to a lack of recent distributions caused by the tight exit markets, lackluster returns by many venture funds over the past decade compared with the prior decade, and a challenge for the largest alternative asset investors to place money in many of the smaller funds in this asset class because of scale. Only $16.8 billion was raised by 187 funds. This was considerably less than the $19.6 billion raised in 2012 or the $19.0 billion raised in 2011. The amount of new commitments each year by venture capital funds continued to be less than the amount they invested in companies. Investments Measuring industry activity by the total dollars invested in a given year shows that the industry has remained generally in the $20 billion to $30 billion range since 2002. In 2013, $29.5 billion was invested in 3,382 companies through 4,041 deals. The number of deals was 4% higher than 2012 counts, but was essentially the same as 2011. The number of first- time fundings increased in 2013 to 1,334 companies from the previous 1,275, but it remains near the top of the healthy range of 1,000 to 1,400 Figure 1.0 Venture Capital Under Management Summary Statistics 1993 2003 2013 No. of VC Firms in Existence 370 951 874 No. of VC Funds in Existence 613 1,788 1,331 No. of Professionals 5,217 14,777 5,891 No. of First Time VC Funds Raised 25 34 53 No. of VC Funds Raising Money This Year 93 160 187 VC Capital Raised This Year ($B) 4.5 9.1 16.8 VC Capital Under Management ($B) 29.3 263.9 192.9 Avg VC Capital Under Mgt per Firm ($M) 79.2 277.5 220.7 Avg VC Fund Size to Date ($M) 40.2 94.4 110.3 Avg VC Fund Size Raised This Year ($M) 48.3 102.9 89.7 Largest VC Fund Raised to Date ($M) 1,775.0 6,300.0 6,300.0
  • 11. 10 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA first-time fundings in a year. Further parsing the data shows 50% of the in- vestment dollars going to California companies, down from 53% in 2012 but consistent with the previous three years. The year 2013 saw a record 56% of the financing rounds going to seed and early stage companies, compared with a more typical one-third of deals. A carefully watched sta- tistic is the investment in the life sciences. It is possible that the downward plummet in first-time life sciences investment is starting to reverse, led by Biotechnology, but it is still too early to be sure. Corporate Venture investment continues to gain considerable strength and presence in the overall industry. Software was the leading sector in 2013, receiving 37.3% of the total dollars. The second largest sector was Biotechnology, which was less than half that amount at 15.4% of total investment. Among first fundings, Soft- ware led the way with 591 companies getting their initial venture capital rounds. This is more than 46% of the first fundings. Again in 2013, the second most active first-funding sector is Media and Entertainment at 170 first fundings. California-domiciled venture capital firms made investments in 38 states in 2013. Approximately 48% of all the money invested in Califor- nia came from California-domiciled firms. Conversely, California-based firms concentrated 68% of their investment dollars within the state. The number and reach of corporate venture capital groups increased in 2013, along with the visibility of this group. These groups provided an estimated 10.5% of the venture capital invested by all venture groups. They were involved in 16.9% of the deals – the highest level in five years. Going forward, all signs suggest that these groups are becoming more involved alongside traditional venture firms in deals, as well as initiating corporate venture group syndicates to do deals in lieu of, or in advance of, investment rounds by traditional venture firms. Exits Once successful portfolio companies mature, venture funds generally exit their positions in those companies by taking them public through an initial public offering (IPO) or by selling them to presumably larger orga- nizations (acquisition, “M&A”, or trade sale). This then lets the venture fund distribute the proceeds to investors, raise a new fund for future in- vestment, and invest in the next generation of companies. We consider each type of exit separately. During 2013, 81 venture-backed companies went public in the United States, marking the strongest full-year total for the number of new ven- ture-backed listings since 2007. Remarkably, more than half of them were Biotechnology IPOs, many of those being modestly sized. While the total dollars raised in 2012 was higher at $21.5 billion, it is important to re- member that $16.0 billion of that came from the Facebook IPO alone. The remaining $5.5 billion was raised by the remaining 48 IPOs in 2012. It was a very different story in 2013. $11.1 billion was raised by 81 com- panies. The increase in mean and median time to exit reflects the fact that many of these IPOs were mature companies, and many of them were in the life sciences space, which had been awaiting an IPO opportunity for months, and in some cases, years. NVCA is encouraged by the increase in smaller IPOs and biotech IPOs in light of its 2012 legislative successes with the JOBS Act and creating a pathway for FDA Reform. The M&A space continued to soften in 2013, with the total number of deals falling from 473 in the prior year to 376. Total proceeds fell by 27%. Note that only 94 of the 376 acquisitions had reported deal values. Histori- cally, deals with unreported sales prices are fairly diminutive, and in many cases, fire sales. However, an increasing number of deal term sheets spec- ify a non-disclosure restriction on all parties. So going forward, all but the largest and most visible acquisitions may be hard to measure. Observers have wondered why, given the huge amounts of cash on the balance sheets of technology and Biotechnology giants, more acquisitions are not occur- ring. We did see a flurry of acquisitions in early 2014, perhaps signaling an increase in that kind of activity. Growth Equity This edition of the NVCAYearbook, prepared by Thomson Reuters, for the first time profiles US growth equity investment in its own chapter. The NVCA believes growth equity investing is an important segment of the overall venture capital industry. Venture capitalists help create and grow companies; growth equity investors are strongly focused on the growth component of that mission and help companies scale through fat part of their hiring curves. The NVCA also believes that growth equity invest- ing is a critical component of the emerging growth company financing continuum and has become, in many respects, the private alternative to the public markets for both emerging growth companies and their earlier stage venture capital backers. Growth equity really emerged as an asset class in 2000 and continues strong today. In 2013, we identified 342 growth equity deals in the United States. This compares with 406 in 2012, but is very much in line with the past several years. A disclosed $12.3 billion in equity investment was reported for 2013. This does not count the approximately 105 deals for which no dollar equity amounts were disclosed.
  • 12. 2014 National Venture Capital Association Yearbook | 11 NVCA THOMSON REUTERS 0 50 100 150 200 250 300 350 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Figure 2.0 Capital Under Management U.S. Venture Funds ($ Billions) 1985 to 2013 0 20 40 60 80 100 120 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Figure 3.0 Capital Commitments To U.S. Venture Funds ($ Billions) 1985 to 2013
  • 13. 12 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 5.0 Venture Capital Investments in 2013 By Industry Group Industry Group # Companies # Deals Investment Amt ($Bil) # Companies # Deals Investment Amt ($Bil) Information Technology 2,360 2,784 20 1009 1009 3.5 Medical/Health/Life Science 649 816 6.9 167 167 1.2 Non-High Technology 373 440 2.7 157 157 0.4 Total 3,382 4,041 29.6 1,334 1,334 5.1 Initial InvestmentsAll Investments 0 20 40 60 80 100 120 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Figure 4.0 Venture Capital Investments ($ Billions) 1985 to 2013
  • 14. 2014 National Venture Capital Association Yearbook | 13 NVCA THOMSON REUTERS Seed 3% Early Stage 34% Expansion 33% Later Stage 30% Figure 6.0 Venture Capital Investments in 2013 By Stage Biotechnology 15% Business Products and Services 0.4% Computers and Peripherals 2% Consumer Products and Services 4% Electronics/Instrumentation 1% Financial Services 2% Healthcare Services 1% Industrial/Energy 5% IT Services 7% Media and Entertainment 10% Medical Devices and Equipment 7% Networking and Equipment 2% Retailing/Distribution 1% Semiconductors 2% Software 37% Telecommunications 2% Other 0.2% Figure 7.0 Venture Capital Investments in 2013 By Industry Sector
  • 15. 14 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 8.0 2013 Investments By State State Number of Companies Pct of Total Investment ($ Millions) Pct of Total California 1,280 40% 14,769.7 50% Massachusetts 326 10% 3,079.3 10% New York 287 9% 2,870.4 10% Texas 101 3% 1,315.5 4% Washington 134 4% 913.2 3% Maryland 76 2% 664.5 2% Virginia 85 3% 593.8 2% Pennsylvania 154 5% 446.5 2% Illinois 49 2% 434.9 1% Colorado 62 2% 428.8 1% All Others 676 21% 4,028.6 14% Total 3,230 29,545.2 Figure 9.0 Venture-Backed IPOs Year Num of IPOs Offer Amount ($Mil) Med Offer Amt ($Mil) Mean Offer Amt ($Mil) Post Offer Value ($Mil) Med Post Value ($Mil) Mean Post Value ($Mil) Median Age At IPO (Years) Mean Age At IPO (Years) 1985 48 763 13 16 2,020 37 48 3.0 4.0 1986 105 2,417 13 23 166,032 52 1866 4.0 4.0 1987 86 2,125 17 25 10,972 46 155 4.0 4.0 1988 43 769 15 18 21,117 51 571 3.0 4.0 1989 42 873 16 21 4,443 50 131 4.0 4.0 1990 47 1,108 20 24 5,886 60 178 4.0 4.0 1991 120 3,726 27 31 17,611 81 202 5.0 5.0 1992 150 5,443 24 36 15,955 68 146 5.0 5.0 1993 175 6,154 25 35 14,808 75 130 5.0 6.0 1994 138 3,952 24 29 10,344 68 94 5.0 5.0 1995 184 7,859 36 43 19,300 104 152 4.0 5.0 1996 256 12,716 35 50 51,511 112 240 3.0 4.0 1997 141 5,829 33 41 19,101 99 148 3.0 6.0 1998 78 4,125 43 53 24,655 164 324 3.0 3.0 1999 280 23,975 69 86 147,341 304 532 3.0 3.0 2000 238 27,443 83 115 108,783 325 494 3.0 4.0 2001 37 4,130 80 112 19,233 327 534 4.0 4.0 2002 24 2,333 89 97 8,322 266 347 3.0 5.0 2003 26 2,024 71 78 7,412 252 285 5.0 6.0 2004 82 10,032 70 122 50,268 254 613 6.0 6.0 2005 59 5,113 68 87 39,702 202 673 5.0 5.0 2006 67 7,065 86 105 71,124 283 1078 5.0 6.0 2007 91 12,339 98 136 68,203 365 749 6.0 6.0 2008 7 765 83 109 3,645 278 521 7.0 7.0 2009 13 1,980 123 152 9,192 548 707 6.0 7.0 2010 70 7,774 93 111 114,981 428 1643 5.0 6.0 2011 51 10,690 106 210 94,657 606 1856 6.0 7.0 2012 49 21,460 89 438 122,168 371 2493 7.0 8.0 2013 81 11,068 91 137 62,700 354 784 7.0 8.0 *Age at IPO is defined as time elapsed from first funding round until IPO date.
  • 16. 2014 National Venture Capital Association Yearbook | 15 NVCA THOMSON REUTERS Figure 10.0 Venture-Backed Mergers & Acquisitions by Year Year Number Total Number Known Price Average 1985 7 3 300.2 100.1 1986 8 1 63.4 63.4 1987 11 4 667.2 166.8 1988 17 9 920.7 102.3 1989 21 10 746.9 74.7 1990 19 7 120.3 17.2 1991 16 4 190.5 47.6 1992 69 43 2119.1 49.3 1993 59 36 1332.9 37.0 1994 84 57 3208.4 56.3 1995 92 58 3801.8 65.5 1996 108 76 8230.8 108.3 1997 145 100 7798.0 78.0 1998 189 113 8002.0 70.8 1999 228 155 38710.6 249.7 2000 379 245 79996.4 326.5 2001 384 175 25115.6 143.5 2002 365 166 11913.2 71.8 2003 323 134 8240.8 61.5 2004 402 199 28846.1 145.0 2005 446 201 19717.3 98.1 2006 484 208 24291.0 116.8 2007 488 201 30745.5 153.0 2008 417 134 16236.9 121.2 2009 351 109 12364.9 113.4 2010 523 150 17707.3 118.0 2011 490 169 24093.2 142.6 2012 473 132 22694.2 171.9 2013 376 94 16586.5 176.5 ($ Millions)
  • 17. 16 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 11.0 Growth Equity Investments ($ Billions) 2000 to 2013* 0 5 10 15 20 25 30 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Totals include only disclosed amounts. Many growth equity deal amounts are not reported.
  • 18. 2014 National Venture Capital Association Yearbook | 17 NVCA THOMSON REUTERS INDUSTRY RESOURCES The activity level of the US venture capital industry is roughly half of what it was at the 2000-era peak. For example, in 2000, 1,050 firms each invested $5 million or more during the year. In 2013, the count was roughly half that at 548. Venture capital under management in the United States by the end of 2013 decreased to $192.9 billion as calculated using the methodology described below. However, looking behind the numbers, we know that the industry continues to contract from the circa 2006 high of $288.9 billion. The peak capital under management that year was a statistical anomaly caused by funds raised at the height of the 2000 tech bubble were joined by new capital raised post bubble. The slight downtick in firms and capital managed (Fig. 1.04) in 2013 perhaps understates a consolidating industry. The average venture capital firm shrunk to 6.7 principals per firm from 8.7 just six years earlier. The corresponding drop in headcount to under 6,000 principals is almost one-third lower than 2007 levels. This meant that there was a general increase in the average amount of capital managed by each principal. It is possible going forward that the number of principals per firm will increase as the number of firms decreases. This is because the bulk of the capital being committed today is being raised by larger, specialty, and boutique firms. For our purposes here, we define a principal to be someone who goes to portfolio company board meetings. That is, deal partners would be included and firm CFOs would not be included. Geographic location of the largest venture firms is quite concentrated. 49% of the industry’s California-domiciled firms manage capital, although these firms may be actively investing in other states and countries. This concentration has been consistent for several years and may increase going forward, given the movement of some East Coast funds westward. Taken together, the top five states (California, Massachusetts, New York, Connecticut, and Illinois) hold 81.1% of total venture capital in this country, essentially the same as a year ago. Contrary to some popular misconceptions, only 43 firms managed more than $1 billion. By comparison, 277 firms managed less than $25 million. Methodology Historically, we have calculated industry size using a “rolling eight years of fundraising” proxy for capital managed, number of funds, num- ber of firms, etc. The number of firms in existence will vary on a rolling eight-year basis as firms raise new funds or do not raise funds for more than eight years. Currently, we know the industry is consolidating, but the eight-year model now includes fund vintage years 2006-2013.  Under this methodology, we estimate that there are currently 874 firms with limited partnerships “in existence.” To clarify, this is actually stating that there are 874 firms that have raised a venture capital fund in the last eight years. In reality, only 548 of them invested at least $5 million in companies in 2013, and 136 of them invested more than $5 million in first rounds for a company. For this publication, we are primarily counting the number of firms with limited partnerships and are excluding other types of investment vehicles. From that description, it may appear that the statistics for total industry resources may be underestimated. However, this must be balanced with the fact that capital under management by captive and evergreen funds is difficult to compare equitably to typical limited partnerships with fixed lives. For this analysis only, the firms counted for capital under manage- ment include firms with fixed-life partnerships and venture capital funds they raised. If a firm raised both buyout and venture capital funds, only the venture funds would be counted in the calculation of venture capital under management. Venture capital under management can be a complex statistic to esti- mate. Indeed, capital under management reported by firms can differ from firm to firm as there’s not one singular definition. For example, some firms include only cumulative committed capital, others may include commit- ted capital plus capital gains, and still other firms define it as committed capital after subtracting liquidations. To complicate matters, it is difficult to compare these totals to European private equity firms, which include capital gains as part of their capital under management measurements. For purposes of the analysis in this publication, we have tried to clarify the industry definition of capital under management as the cumulative to- tal of committed capital less liquidated funds or those funds that have completed their life cycle. Typically, venture capital firms have a stated 10-year fixed life span, except for life science funds, which are often established as 12-year funds. Figure 1.09 shows the reality of fund life. Thomson Reuters calculates capital under management as the cumulative amount committed to funds on a rolling eight-year basis. Current capital under management is calculated by taking the capital under management calculation from the previous year, adding in the current year’s funds’ commitments, and subtracting the capital raised eight years prior. For this analysis, Thomson Reuters classifies venture capital firms us- ing four distinct types: private independent firms, financial institutions, corporations, and other entities. ‘Private independent’ firms are made up of independent private and public firms including both institutionally and non-institutionally funded firms and family groups. ‘Financial institu- tions’ refers to firms that are affiliates and/or subsidiaries of investment banks and non-investment bank financial entities, including commercial banks and insurance companies. The ‘corporations’classification includes venture capital subsidiaries and affiliates of industrial corporations. In 2013, we will modify the methodology to reflect virtually all direct cor- porate investment because many of the corporate venture investors do not operate out of a separate fund or group. The capital under management statistics reported in this section consist primarily of venture capital firms investing through limited partnerships with fixed commitment levels and fixed lives and do not include non-vintage “evergreen funds” or true cap- tive corporate industrial investment groups without fixed commitment levels. The term ‘evergreen funds’ refers to funds that have a continuous infusion of capital from a parent organization, as opposed to the fixed life and commitment level of a closed-end venture capital fund.
  • 19. 18 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 1.01 Capital Under Management U.S. Venture Funds ($ Billions) 1985 to 2013 0 50 100 150 200 250 300 350 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year
  • 20. 2014 National Venture Capital Association Yearbook | 19 NVCA THOMSON REUTERS Figure 1.03 Distribution of Firms By Capital Managed 2013 Figure 1.02 Total Capital Under Management By Firm Type 1985 to 2013 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Private Independent 11,766 14,721 17,459 18,850 22,369 22,722 21,893 22,643 25,162 28,490 33,308 40,201 51,940 76,560 119,121 Financial Institutions 3,388 3,520 3,447 3,190 2,719 2,793 2,384 2,214 2,431 2,873 3,688 5,070 7,061 10,238 15,291 Corporations 1,582 1,545 1,895 1,989 1,931 1,963 1,907 2,032 1,517 1,564 1,526 2,219 2,531 3,425 8,169 Other 864 914 900 871 781 722 616 312 190 273 378 410 667 877 1,119 Total 17,600 20,700 23,700 24,900 27,800 28,200 26,800 27,200 29,300 33,200 38,900 47,900 62,200 91,100 143,700 Figure 1.02 (Continued) Total Capital Under Management By Firm Type 1985 to 2013 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Private Independent 187,356 221,327 222,028 224,828 233,595 241,637 255,315 239,643 194,573 171,016 174,722 186,032 186,676 179,202 Financial Institutions 22,980 24,459 23,945 23,015 21,659 21,110 18,325 13,914 6,034 4,708 5,620 7,734 7,970 6,615 Corporations 12,995 14,153 14,126 13,886 13,627 13,467 13,297 8,990 4,294 3,125 3,688 4,860 4,892 6,401 Other 1,469 2,061 2,201 2,170 2,219 1,986 1,963 1,754 1,399 851 670 674 662 682 Total 224,800 262,000 262,300 263,900 271,100 278,200 288,900 264,300 206,300 179,700 184,700 199,300 200,200 192,900 0 50 100 150 200 0-10 10-25 25-50 50-100 100-250 250-500 500-1000 1000+ 164 113 114 107 132 82 53 43 This chart shows capital committed to US venture firms in active funds. While much of the capital is managed by larger firms, of the 808 firms included in this calculation at the end of 2013, roughly 62% of them (498) managed $100 million or less. By comparison, just 43 firms managed active funds totaling more than $1 billion.
  • 21. 20 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 1.04 Fund and Firm Analysis 2013 Fund Vintage Year Total Cumulative Funds Total Cumulative Firms Total Cumulative Capital ($B) Existing Funds Firms That Raised Funds in the Last 8 Vintage Years Capital Managed ($B) Avg Fund Size ($M) Avg Firm Size ($M) 1985 631 323 20 532 294 17.6 33.1 59.9 1986 707 353 23.4 590 324 20.7 35.1 63.9 1987 810 388 27.4 670 353 23.7 35.4 67.1 1988 888 406 30.9 701 365 24.9 35.5 68.2 1989 980 435 35.9 728 380 27.8 38.2 73.2 1990 1037 451 38.2 716 383 28.2 39.4 73.6 1991 1075 458 40.4 639 360 26.8 41.9 74.4 1992 1147 478 44.1 601 352 27.2 45.3 77.3 1993 1244 509 49.3 613 370 29.3 47.8 79.2 1994 1342 542 56.7 635 385 33.2 52.3 86.2 1995 1498 608 66.2 688 425 38.9 56.5 91.5 1996 1648 670 78.8 760 471 47.9 63.0 101.7 1997 1862 764 98.1 882 545 62.2 70.5 114.1 1998 2099 843 129.3 1062 616 91.1 85.8 147.9 1999 2435 969 184.1 1360 736 143.7 105.7 195.2 2000 2851 1111 268.9 1704 866 224.8 131.9 259.6 2001 3096 1194 311.3 1852 923 262 141.5 283.9 2002 3178 1211 319 1836 921 262.3 142.9 284.8 2003 3286 1264 330.1 1788 951 263.9 147.6 277.5 2004 3451 1332 349.9 1803 985 271.1 150.4 275.2 2005 3626 1402 376.3 1764 1009 278.2 157.7 275.7 2006 3815 1481 418.2 1716 1022 288.9 168.4 282.7 2007 4034 1567 448.4 1599 1016 264.3 165.3 260.1 2008 4221 1631 475.2 1370 886 206.3 150.6 232.8 2009 4327 1672 491 1231 823 179.7 146.0 218.3 2010 4456 1736 503.7 1278 853 184.7 144.5 216.5 2011 4621 1801 529.4 1335 881 199.3 149.3 226.2 2012 4785 1868 550 1334 883 200.2 150.1 226.7 2013 4957 1938 569.2 1331 874 192.9 144.9 220.7 The correct interpretation of this chart is that since the beginning of the industry to the end of 2013, 1,938 firms had been founded and 4,957 funds had been raised. Those funds totaled $569.2 billion. At the end of 2013, 874 firms as calculated using our eight-year methodol- ogy managed 1,331 individual funds, with each fund typically being a separate limited partnership. Capital under management, again calculated using a rolling eight years of fundraising, by those firms at the end of 2013 was $192.9 billion.
  • 22. 2014 National Venture Capital Association Yearbook | 21 NVCA THOMSON REUTERS Figure 1.05 Number of Active Investors 1985 to 2013 Year # of Active Investors # of Active First Round Investors # of Active Life Science Investors 1985 92 11 1 1986 115 24 12 1987 112 29 13 1988 119 32 26 1989 116 22 23 1990 101 25 18 1991 81 14 15 1992 104 34 31 1993 92 35 29 1994 110 46 33 1995 184 95 53 1996 251 122 63 1997 344 138 83 1998 411 169 87 1999 717 321 106 2000 1,050 546 148 2001 760 220 155 2002 534 137 147 2003 509 136 165 2004 579 202 201 2005 562 183 193 2006 572 192 197 2007 630 238 236 2008 602 212 219 2009 463 105 173 2010 508 136 177 2011 549 159 195 2012 534 139 175 2013 548 136 179 Firms included in each count must have invested $5 million in that year in that category. Life Sciences investor count includes investment in companies in the two MoneyTree Categories: Biotechnology/Pharma and Medical Devices/ Equipment. Figure 1.06 Principals Information Year No. Principals Per Firm Estimated Industry Principals Avg Mgt Per Principal ($M) 2007 8.7 8665 30.0 2008 8.5 7293 28.3 2009 8.6 6760 26.4 2010 8.0 6328 25.7 2011 7.4 6231 28.6 2012 7.0 5887 33.8 2013 6.7 5891 32.8 Figure 1.07 Top 5 States By Capital Under Management 2013 State ($ Millions) CA 94,076.6 MA 32,636.6 NY 19,480.4 CT 5,815.1 IL 4,517.3 Total* 156,526.1 *Total includes above 5 states only The correct interpretation of this chart is that since the beginning of the in- dustry to the end of 2013, 1,938 firms had been founded and 4,957 funds had been raised. Those funds totaled $569.2 billion. At the end of 2013, 874 firms as calculated using our eight-year methodology managed 1,331 individual funds, with each fund typically being a separate limited partnership. Capital under management, again calculated using a rolling eight years of fundrais- ing, by those firms at the end of 2013 was $192.9 billion.
  • 23. 22 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 1.08 Capital Under Management By State 1985-2013 State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 CA 5,024 5,974 6,815 7,051 8,318 8,192 8,257 8,258 9,062 9,978 12,015 15,379 20,289 27,452 51,226 MA 2,252 2,580 3,409 3,775 4,179 4,057 3,761 4,636 4,830 5,179 6,553 6,980 9,859 15,397 22,905 NY 3,382 4,428 4,370 4,160 5,598 5,805 5,455 5,308 5,904 6,968 8,246 9,995 10,311 19,676 26,659 CT 1,297 1,444 1,807 1,876 1,714 1,713 1,570 1,665 1,927 2,088 2,064 2,194 3,323 4,492 6,787 IL 474 493 725 907 863 876 840 944 1,202 1,275 1,419 1,263 1,939 2,191 3,693 TX 458 493 727 726 798 840 777 809 935 1,143 1,145 1,233 1,688 3,001 4,797 PA 281 347 376 396 564 601 604 598 569 738 822 1,332 1,750 2,105 3,090 NJ 616 713 752 740 736 954 885 549 511 695 958 1,489 1,563 2,177 2,715 DC 36 38 38 40 41 42 42 40 25 24 146 1,698 2,382 2,504 2,661 WA 316 409 387 425 398 385 199 243 227 178 299 463 680 1,081 1,796 MD 91 95 121 117 159 164 98 115 374 784 914 1,523 2,012 2,649 3,513 CO 365 431 399 518 618 575 557 531 616 565 475 552 867 1,165 3,337 VA 73 79 79 85 105 92 56 42 35 32 48 73 252 508 1,238 NC 34 55 87 90 125 114 110 111 108 146 123 294 620 806 1,009 MN 200 297 340 677 749 886 815 768 841 896 877 514 618 715 1,093 UT 9 19 20 15 15 16 16 10 10 25 31 31 94 96 131 MI 112 120 126 123 124 38 14 14 13 10 41 41 66 77 439 GA 89 95 176 260 263 276 264 263 433 432 434 361 765 1,077 1,164 TN 103 128 192 185 216 260 278 271 199 291 306 455 465 745 1,059 DE 39 41 40 39 47 41 41 14 41 51 100 122 115 117 116 MO 562 586 619 596 603 658 656 645 107 137 119 125 148 111 217 OH 860 897 976 838 256 259 275 305 427 469 447 377 692 766 1,247 FL 125 131 173 193 196 133 110 98 151 223 321 304 380 690 1,072 IN 45 56 56 78 97 88 80 97 99 109 111 194 176 192 207 WI 183 100 99 96 104 104 79 79 81 163 168 196 180 204 174 AL 126 132 132 128 135 137 137 138 6 6 6 6 5 24 33 AZ 41 44 44 73 75 76 75 34 44 43 44 10 10 38 38 LA 7 7 7 7 7 5 2 11 22 31 49 90 277 367 444 KY 15 16 16 16 0 0 0 0 0 7 21 21 21 21 21 ME 1 1 20 25 26 26 26 28 29 98 89 87 88 89 207 ID 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ND 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 OK 1 29 29 28 37 38 37 37 38 9 10 32 23 67 66 OR 170 177 205 241 244 247 229 117 73 74 77 30 30 40 40 NM 71 100 136 133 170 257 244 232 205 179 154 152 121 12 12 SD 0 0 0 0 0 0 0 0 0 0 0 10 10 85 84 HI 2 2 2 2 2 2 2 0 0 0 2 2 2 2 11 KS 0 0 0 0 0 13 13 13 14 14 37 37 57 43 43 IA 50 52 105 102 81 82 62 62 54 55 5 5 16 17 16 VT 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
  • 24. 2014 National Venture Capital Association Yearbook | 23 NVCA THOMSON REUTERS Figure 1.08 (Continued) Capital Under Management By State 1985-2013 State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 NH 24 25 25 50 50 51 50 51 27 27 47 19 66 67 66 NE 0 0 0 1 1 1 1 1 11 11 105 137 139 141 140 MT 0 1 1 1 1 1 1 1 1 0 0 0 0 0 0 MS 0 0 0 0 0 0 0 0 0 0 11 11 11 12 11 PR 0 0 0 0 0 9 9 9 9 9 9 9 49 40 40 WY 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 SC 1 1 1 1 15 15 15 15 15 15 29 52 37 37 37 RI 15 16 16 36 37 37 36 36 22 22 23 0 2 2 2 NV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 24 WV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 AR 2 2 2 2 2 2 2 0 0 0 0 0 0 0 19 UNK 46 48 48 47 31 31 21 0 0 0 0 0 0 0 0 AK 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 17,600 20,700 23,700 24,900 27,800 28,200 26,800 27,200 29,300 33,200 38,900 47,900 62,200 91,100 143,700 Figure 1.08b Capital Under Management By State 1985-2013 State 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 CA 85,153 105,283 105,172 107,896 113,719 119,881 128,655 117,244 100,374 87,469 90,424 96,923 99,386 94,077 MA 37,341 45,970 47,440 47,019 47,553 48,784 53,712 50,417 37,146 30,861 30,528 30,209 32,914 32,637 NY 38,938 39,981 38,421 37,176 36,710 36,242 29,115 25,441 13,205 12,198 13,599 18,628 17,653 19,480 CT 8,260 10,623 10,462 10,431 12,066 11,984 13,336 11,699 10,426 7,428 8,201 8,940 6,928 5,815 IL 4,308 4,747 5,202 5,559 5,685 5,163 5,286 4,239 3,620 3,282 3,065 4,595 4,451 4,517 TX 6,881 8,001 7,932 7,806 8,259 8,486 8,242 6,589 5,467 4,193 4,057 4,735 4,455 4,215 PA 6,241 6,344 6,241 6,532 6,439 6,509 7,037 7,143 4,642 4,482 4,495 4,250 4,220 3,623 NJ 3,633 4,315 4,231 4,444 4,083 4,074 5,160 5,022 4,135 3,917 3,965 3,691 3,503 3,447 DC 3,899 4,172 4,739 4,616 3,401 3,582 4,641 5,047 4,833 4,632 4,049 4,527 4,193 3,369 WA 2,803 3,687 3,691 3,568 4,629 4,590 4,597 5,174 4,625 3,721 3,691 3,708 2,943 3,303 MD 5,119 5,383 5,165 5,047 4,811 4,762 4,744 4,433 2,934 3,005 2,927 3,134 3,282 2,854 CO 4,781 5,293 5,438 5,416 5,229 4,882 4,664 3,011 1,603 974 1,139 1,148 1,187 1,635 VA 2,524 2,638 2,652 2,822 2,868 3,338 3,367 3,014 1,801 2,226 2,271 2,081 2,056 1,583 NC 1,367 1,448 1,599 1,803 1,644 1,468 1,678 1,564 1,211 1,238 1,730 1,631 1,726 1,558 MN 2,238 2,189 2,366 2,359 2,361 2,441 2,593 2,473 1,639 1,657 1,319 1,323 1,426 1,531 UT 268 475 449 560 589 546 651 1,259 1,335 1,144 1,209 1,245 1,422 1,429 MI 588 591 590 631 859 912 946 685 919 976 1,065 1,263 1,045 1,203 GA 2,311 2,160 2,154 2,077 2,109 1,835 1,940 1,931 808 783 787 921 882 1,122 TN 1,237 1,281 1,162 1,174 1,043 1,089 887 716 624 614 840 857 845 795 DE 114 80 69 28 15 15 15 251 256 404 504 653 755 756 MO 307 450 418 407 504 1,232 1,293 1,385 1,317 1,182 1,189 1,192 1,324 561 OH 1,850 1,874 1,876 1,855 1,986 1,806 1,722 1,329 713 565 522 573 456 529 FL 1,785 1,751 1,684 1,592 1,577 1,802 1,525 1,284 557 801 875 832 834 529
  • 25. 24 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 1.08b (Continued) Capital Under Management By State 1985-2013 State 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 IN 663 662 651 684 593 595 608 617 136 342 343 309 344 345 WI 246 245 152 152 133 105 207 254 182 185 212 237 309 339 AL 107 107 107 155 173 225 227 219 359 363 366 391 376 317 AZ 101 104 145 180 180 199 171 173 130 118 263 261 311 295 LA 476 651 648 631 663 502 431 353 336 196 265 282 217 249 KY 21 21 14 14 14 21 219 221 226 228 230 216 223 216 ME 202 290 218 219 214 215 310 194 198 108 109 109 110 110 ID 14 14 14 14 14 14 84 86 73 74 74 74 75 75 ND 0 0 0 0 0 0 0 0 13 13 14 14 14 58 OK 140 140 139 139 117 117 111 121 47 47 48 48 48 50 OR 100 100 112 83 85 85 76 78 34 40 29 29 38 46 NM 12 12 12 33 35 69 74 77 79 80 114 84 83 42 SD 178 178 177 177 175 175 103 113 32 32 48 48 40 40 HI 11 11 11 9 16 16 16 7 14 14 43 44 36 36 KS 42 42 42 19 19 0 0 0 0 0 0 14 14 34 IA 16 60 60 55 65 53 60 67 69 39 39 39 29 29 VT 16 43 43 43 43 43 43 57 41 14 19 19 19 29 NH 65 65 65 46 47 0 11 11 11 11 11 11 16 16 NE 175 165 164 71 38 38 38 38 0 0 2 2 3 3 MT 0 0 0 0 0 0 2 2 2 2 2 2 2 2 MS 11 39 39 28 28 28 29 30 30 1 1 1 1 1 PR 39 68 68 68 68 29 29 30 31 1 1 1 1 1 WY 118 117 117 117 117 118 118 119 0 0 0 0 0 0 SC 36 37 51 38 15 20 20 20 21 20 5 6 6 0 RI 2 26 26 35 35 33 33 33 34 10 10 0 0 0 NV 23 23 33 33 33 33 33 9 10 10 0 0 0 0 WV 21 21 21 21 21 21 21 21 0 0 0 0 0 0 AR 19 19 19 19 19 19 19 0 0 0 0 0 0 0 UNK 0 0 0 0 0 0 0 0 0 0 0 0 0 0 AK 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 224,800 262,000 262,300 263,900 271,100 278,200 288,900 264,300 206,300 179,700 184,700 199,300 200,200 192,900 Figure 1.09 Life of IT Funds in Years Life of IT Funds In Years % of Funds <= 10 7% 11-12 20% 13-14 27% 15-16 22% 17-18 14% >=19 10% This chart tracks the year in which a 10-year fund is, in fact, dissolved. These later periods are referred to as “out years.” Historically, after the 10th year, only a few companies that typically do not have huge upside potential remain in the portfolios. But the slow pace of exits in recent years has resulted in a number of good, mature companies remaining in portfolios well past the nominal 10-year mark. Life science funds tend to have lives two years longer than typical technology funds. In preparing this chart, partial years are rounded to the nearest whole year. So 10.4 years would round to 10 years, and 10.5 years would round up to 11 years. The median life span of a fund in this analysis is 14.17 years. Source: Adams Street Partners, based on 2010 analysis of dissolved funds.
  • 26. 2014 National Venture Capital Association Yearbook | 25 NVCA THOMSON REUTERS CAPITAL COMMITMENTS Methodology The Thomson Reuters/National Venture Capital Association sample in- cludes US-based venture capital funds. Classifications are based on the headquarters location of the fund, not the location of the venture capital firm. The sample excludes fund of funds. Effective November 1, 2010, Thomson Reuters venture capital fund data has been updated in order to provide more consistent and relevant categories for searching and reporting. As a result of these changes, there may be shifts in fundraising statistics from legacy editions of this publica- tion due to reclassification of funds based on analysis of actual activity by primary market, nation, and/or fund stages. As defined by Thomson Reuters, capital commitments, also known as fundraising, are firm capital commitments to private equity/venture capi- tal limited partnerships by outside investors. For purposes of these statis- tics, the terms “capital commitments,” “fundraising,” and “fund closes” are used interchangeably. There are three data sources for tracking capital commitments: (1) SEC filings that are regularly monitored by our research staff, (2) surveys of the industry routinely conducted by Thomson Re- uters, and (3) verified industry press and press releases from venture firms. Capital commitments are stated on either (1) a calendar-year basis when committed (for example, throughout this chapter) or (2) a vintage-year basis, which is designated once the fund starts investing (for example, figure 1.04). The data in this chapter is by calendar year and incrementally measures how much in new commitments funds raised during the calen- dar year. Consider, for example, a venture capital firm that announces it will begin raising a $200-million fund in late 2011, raises $75 million in 2012, and subsequently raises the remaining $125 million in 2013. In this chapter, nothing would be reflected in 2011, $75 million would be counted in 2012, and $125 million would be counted in 2013. Assuming it started investing and made its first capital call in 2013, the entire fund would then be considered to be a vintage year 2013 fund. In Figure 1.04, for example, this hypothetical fund would show in the totals for 2013. Note that fund commitments presented in this publication do not in- clude those corporate captive venture capital funds that are funded by a corporate parent, which do not typically raise capital from outside inves- tors. The year 2013 continued to be a very challenging fundraising year for most venture capital firms in the United States. This is due to a lack of recent distributions caused by the tight exit markets, lackluster returns by many venture funds over the past decade compared with the prior decade, and a challenge for the largest alternative asset investors to place money in many of the smaller funds in this asset class because of scale. Only $16.8 billion was raised by 187 funds. This is considerably less than the $19.6 billion raised in 2012 or the $19.0 billion raised in 2011. The amount of new commit- ments each year by venture capital funds continues to be less than the amount they invested in companies. The top fundraising state in 2013 was Massachusetts at $5.5 billion, which edged typical leader California at $5.3 billion. New York was third largest at about half that amount. Much further behind, Washington state and Virginia rounded out the top five. Combined, Massachusetts and California funds raised 64% of the total. Adding in New York, the top three states raised more than three-quarters (77%) of the total amount. The Thomson Reuters taxonomy considers venture capital and buyout/mezzanine to be the two components of Private Equity. Figures 2.02 and 2.05 show venture capital’s decreasing share of the private equity dollars. Venture capital raised 24% of the asset class allocations in 2009 compared with 11% in 2013.
  • 27. 26 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA 0 20 40 60 80 100 120 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Figure 2.01 Capital Commitments To U.S. Venture Funds ($ Billions) 1985 to 2013
  • 28. 2014 National Venture Capital Association Yearbook | 27 NVCA THOMSON REUTERS Figure 2.02 Capital Commitments To Private Equity Funds 1985-2013 Year Sum ($Mil) % of Total PE No. Funds Sum ($Mil) No. Funds Sum ($Mil) No. Funds 1985 3,759.9 56% 118 2,971.8 21 6,731.7 139 1986 3,584.5 42% 101 5,043.7 32 8,628.2 133 1987 4,379.1 21% 116 16,234.6 47 20,613.6 163 1988 4,209.7 28% 104 10,946.4 54 15,156.1 158 1989 4,918.8 29% 106 12,068.5 78 16,987.3 184 1990 3,077.5 26% 85 8,831.5 64 11,909.0 149 1991 1,900.3 31% 40 4,242.1 27 6,142.4 67 1992 5,223.1 33% 80 10,752.5 58 15,975.6 138 1993 4,489.2 21% 93 16,961.7 81 21,451.0 174 1994 7,636.7 27% 136 20,157.0 99 27,793.7 235 1995 9,387.3 26% 161 27,040.7 108 36,428.0 269 1996 11,550.0 26% 168 32,789.4 104 44,339.3 272 1997 17,741.9 30% 242 42,165.3 134 59,907.2 376 1998 30,641.7 33% 290 61,636.4 172 92,278.1 462 1999 53,420.2 51% 428 51,363.2 164 104,783.4 592 2000 101,417.9 56% 634 79,164.8 170 180,582.7 804 2001 38,923.4 43% 324 51,388.3 137 90,311.7 461 2002 10,388.1 23% 203 35,123.3 124 45,511.4 327 2003 9,144.7 20% 160 35,946.4 123 45,091.1 283 2004 17,656.3 23% 211 59,837.4 158 77,493.7 369 2005 30,071.9 22% 233 107,746.6 206 137,818.6 439 2006 31,107.6 17% 236 152,899.7 219 184,007.3 455 2007 29,401.0 11% 235 234,460.4 266 263,861.4 501 2008 25,052.7 12% 214 176,340.7 232 201,393.5 446 2009 16,122.0 24% 159 50,145.9 149 66,267.9 308 2010 13,243.3 20% 173 51,901.5 177 65,144.8 350 2011 18,962.3 21% 186 70,344.2 210 89,306.5 396 2012 19,554.6 15% 208 108,076.4 226 127,631.0 434 2013 16,765.7 11% 187 130,256.2 214 147,021.9 401 Venture Capital Buyouts and Mezzanine Capital Total Private Equity
  • 29. 28 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 2.03 Venture Capital Fund Commitments 1985-2013 ($ Millions) State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 MA 201.88 1,460.41 546.89 279.00 2,260.07 489.77 473.90 493.63 940.19 1,860.48 2,364.08 1,516.09 3,757.76 9,346.10 9,065.81 15,399.96 3,092.69 7,754.42 1,233.34 2,148.71 CA 1,249.69 972.35 1,268.36 966.91 1,523.51 1,010.69 549.12 1,331.19 1,388.50 1,829.06 3,106.99 3,724.04 5,717.43 8,525.24 21,928.12 44,218.83 14,166.13 2,767.31 5,634.15 8,731.29 NY 534.28 356.09 973.09 813.49 338.52 529.47 180.08 1,051.12 367.79 1,158.41 1,954.71 1,875.06 2,601.56 5,200.95 7,586.57 16,691.77 9,721.17 2,598.46 1,596.98 1,797.30 WA 37.41 33.48 231.25 40.69 161.45 142.81 55.43 381.89 137.00 282.50 193.64 326.00 393.97 1,406.64 1,802.52 3,687.77 2,232.20 185.50 75.63 893.91 VA 299.07 155.86 310.63 357.37 61.50 129.50 150.00 300.30 419.25 388.28 260.20 424.93 1,165.98 1,067.56 2,842.58 1,813.40 3,464.30 46.73 165.00 1,756.45 TN 253.67 61.34 119.67 0.35 125.00 243.46 75.00 110.00 176.58 401.30 213.13 605.75 117.61 1,001.84 569.79 1,040.86 651.68 392.11 560.62 196.70 CO 4.20 7.47 24.18 0.00 49.25 13.61 50.00 0.00 224.90 479.20 66.50 439.00 145.00 768.15 839.70 1,989.92 340.45 380.50 105.00 161.52 TX 89.43 47.02 324.62 157.79 26.20 57.20 94.40 247.17 277.82 182.81 229.68 295.21 575.13 466.35 1,298.59 964.19 1,103.18 477.86 701.08 432.30 PA 31.50 70.55 32.23 69.90 79.71 0.40 0.00 0.00 114.22 0.00 19.35 216.40 252.88 432.62 1,942.08 2,414.30 512.63 117.96 93.92 83.89 OH 25.00 126.13 37.40 59.51 0.00 0.00 5.00 48.00 39.90 36.87 128.50 239.32 179.99 408.79 640.30 1,174.61 888.01 83.03 1.20 955.27 MI 38.74 0.00 0.00 4.80 0.00 0.00 0.00 0.00 0.00 0.00 130.00 820.00 667.60 391.50 359.60 778.29 622.18 314.80 0.00 324.48 MN 20.00 23.45 72.50 0.00 34.07 0.00 0.00 40.00 0.00 115.90 83.77 149.00 109.07 266.36 254.81 261.55 36.93 22.40 93.25 0.00 IL 0.00 3.50 10.00 12.80 15.00 2.00 0.00 17.00 5.00 0.00 7.00 20.00 165.40 255.99 884.03 2,211.92 119.15 37.48 196.27 71.95 NC 9.70 0.00 36.00 10.70 29.30 0.00 35.00 0.00 133.28 105.00 106.00 0.00 77.70 250.00 325.88 954.75 25.75 7.95 56.00 1.00 UT 13.60 109.75 51.20 417.50 20.00 161.80 16.20 946.30 65.85 164.05 46.80 35.50 207.97 216.70 106.57 1,826.52 16.50 275.50 26.00 49.80 GA 0.00 0.00 15.10 65.00 0.00 14.00 0.00 0.00 56.00 0.00 74.19 34.30 40.85 181.00 30.00 917.90 19.00 0.00 0.00 55.00 MO 54.05 73.06 54.65 12.10 117.98 44.52 166.60 30.10 109.70 181.65 113.60 264.00 783.90 177.00 1,240.76 2,751.47 536.61 85.66 387.97 450.73 WI 6.50 7.00 31.48 22.80 38.12 0.60 0.00 0.00 0.00 63.45 10.10 183.50 349.00 173.68 180.41 613.41 119.64 74.90 275.86 17.31 ND 2.56 0.00 86.98 75.00 0.00 30.38 0.00 67.00 4.43 85.97 10.00 0.00 364.95 58.00 658.58 662.03 329.95 101.70 4.88 209.72 DC 0.00 0.00 0.00 0.00 0.00 0.00 0.00 10.60 14.20 169.00 18.26 23.95 87.95 51.00 373.35 69.50 26.50 52.00 0.00 72.98 LA 0.00 10.50 0.80 0.00 0.00 0.00 0.00 0.00 0.00 27.00 0.00 0.00 17.00 50.00 61.50 126.00 231.65 0.00 34.30 40.30 KS 0.00 31.82 0.00 0.00 10.30 0.00 0.00 0.00 0.00 0.00 0.00 24.29 0.00 45.30 0.00 110.10 0.00 0.00 0.00 0.00 MS 150.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.00 30.00 0.00 137.00 16.35 11.00 49.00 18.70 OR 643.50 0.00 33.26 0.00 0.00 53.13 0.00 0.00 63.60 0.00 11.30 6.00 45.40 25.03 79.63 64.77 286.20 0.00 0.00 80.30 VT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 11.00 0.00 22.00 14.00 131.00 1.00 0.00 0.00 5.00 IN 0.00 10.00 0.00 27.30 16.30 4.70 0.00 49.00 0.00 20.00 0.00 116.11 0.00 12.80 20.00 103.30 0.00 10.00 35.56 17.00 FL 0.00 0.00 30.00 0.00 0.00 0.00 0.00 0.00 0.00 32.00 32.00 0.00 0.00 10.00 0.00 65.00 0.00 14.00 0.00 2.20 CT 10.73 0.00 60.05 0.00 0.00 0.00 0.00 56.00 0.00 0.00 5.00 0.00 10.50 1.78 5.00 21.00 26.00 0.00 0.00 10.00 NJ 5.00 0.00 6.70 32.50 0.00 0.00 0.00 0.00 3.00 13.50 0.00 26.00 11.30 0.30 320.80 241.00 8.00 0.00 64.84 63.33 MD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 OK 16.60 0.00 0.00 24.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 25.00 0.00 0.00 0.00 AL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.60 0.00 0.00 0.00 9.50 0.00 0.00 2.53 0.00 7.86 SD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 IA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 12.00 0.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00 0.00 RI 49.42 0.00 0.00 40.00 0.00 0.00 15.00 0.00 0.00 0.00 20.00 0.00 50.00 0.00 0.00 0.00 0.00 11.20 8.80 0.00 HI 0.00 0.00 22.04 947.60 0.00 0.00 0.00 2.00 0.00 58.80 0.00 21.65 0.00 0.00 126.89 0.00 76.45 15.60 2.95 0.00 MT 0.00 0.00 0.00 37.00 0.00 0.00 0.00 0.00 10.10 0.00 0.00 0.00 0.00 0.00 29.40 60.00 20.70 42.61 40.80 0.00 NH 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.50 4.00 12.75 2.00 0.00 ME 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 19.65 25.00 0.00 0.00 0.00 AZ 0.00 0.00 0.00 0.00 12.50 4.50 0.00 0.00 0.00 0.00 14.00 0.00 0.00 0.00 0.00 0.00 0.00 15.00 0.00 0.00 WV 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15.00 27.00 0.00 0.00 0.00 SC 0.00 0.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 31.20 0.00 0.00 0.00 ID 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 50.00 25.00 0.00 0.00 25.00 0.00 0.00 10.00 0.00 0.00 PR 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 NV 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 111.01 36.00 0.00 0.00 0.00 40.60 0.00 0.00 0.00 0.00 NE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 25.00 31.00 64.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 10.00 DE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 62.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 UN 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 26.00 0.00 0.00 0.00 0.00 WY 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 0.00 AR 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 40.00 0.00 31.00 30.15 0.00 16.60 82.00 14.00 0.00 0.00 10.68 NM 36.15 27.70 0.00 2.06 0.00 155.00 40.00 0.00 0.00 6.10 1.90 0.00 0.00 0.00 0.00 0.00 0.00 0.00 17.76 20.35 KY 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 14.00 7.40 15.00 0.00 42.00 0.00 0.00 0.00 135.00 8.00 2.14 0.00 Total 3,782.66 3,587.47 4,379.07 4,476.68 4,918.80 3,097.52 1,905.73 5,243.80 4,565.30 7,733.72 9,442.31 11,553.58 17,993.04 30,842.67 53,638.36 101,740.87 38,952.18 15,928.95 11,465.28 18,696.01
  • 30. 2014 National Venture Capital Association Yearbook | 29 NVCA THOMSON REUTERS Figure 2.03 (Continued) Venture Capital Fund Commitments 1985-2013 ($ Millions) State 2005 2006 2007 2008 2009 2010 2011 2012 2013 MA 1,735.74 2,252.82 4,409.92 1,949.58 1,652.22 1,259.41 4,096.04 659.75 5,474.78 CA 13,319.31 13,635.99 12,533.51 13,972.15 8,635.34 6,337.42 9,678.38 14,708.16 5,315.87 NY 9,150.90 4,365.57 5,121.96 2,516.05 3,573.19 2,664.92 2,339.74 1,414.73 2,200.41 WA 629.84 379.48 263.77 1,037.91 26.79 82.72 209.64 51.34 561.77 VA 143.06 2,910.97 286.64 227.29 157.73 938.22 11.00 23.15 446.06 TN 204.27 1,812.38 235.17 52.79 503.67 112.40 100.27 64.78 310.39 CO 432.75 472.23 782.73 368.88 484.14 67.60 543.52 28.93 275.10 TX 80.46 421.96 544.90 258.01 215.60 237.65 215.05 131.67 274.35 PA 68.76 132.45 358.26 220.75 3.50 262.09 6.13 280.36 259.59 OH 280.57 562.85 1,376.20 492.38 5.28 0.00 0.00 398.81 240.19 MI 392.62 896.30 314.60 1,122.94 204.06 0.00 475.00 0.40 236.24 MN 83.75 61.83 99.50 133.96 88.79 56.95 160.93 277.79 222.01 IL 418.62 555.42 582.42 105.28 14.42 121.37 35.63 44.70 187.62 NC 313.00 11.20 109.26 25.20 32.25 74.55 1.57 268.00 154.98 UT 295.00 473.24 275.00 325.10 21.80 0.00 0.00 150.00 136.85 GA 103.50 361.70 203.00 18.73 18.75 30.00 25.55 17.15 126.45 MO 688.16 794.40 825.81 962.73 233.18 205.17 126.81 281.89 101.38 WI 108.01 401.37 185.28 102.93 5.37 457.40 109.58 479.98 67.50 ND 558.16 152.22 81.45 83.38 1.88 30.27 82.40 29.44 45.27 DC 4.00 12.00 0.00 0.00 0.00 0.00 0.00 0.00 44.80 LA 23.98 169.59 213.15 576.50 34.26 16.45 160.42 159.33 40.00 KS 12.00 37.96 10.50 0.00 0.00 0.00 0.00 0.14 25.86 MS 69.65 19.10 0.00 117.93 101.35 1.53 58.10 19.90 14.23 OR 828.70 39.65 210.30 53.94 0.00 72.00 0.00 155.00 12.02 VT 0.00 3.28 0.00 14.48 0.00 16.00 0.00 0.00 10.00 IN 6.00 24.49 1.16 28.80 1.00 28.05 0.00 38.95 8.00 FL 0.00 0.00 2.03 5.00 5.90 12.25 2.03 6.98 2.00 CT 0.00 42.91 0.00 0.00 15.35 0.00 0.00 0.00 0.00 NJ 122.44 23.00 49.00 255.56 84.00 176.51 193.98 20.11 0.00 MD 0.00 0.25 10.04 19.97 0.00 0.00 7.85 0.00 0.00 OK 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 AL 0.00 0.00 0.00 6.39 0.00 0.00 0.00 0.00 0.00 SD 0.00 1.75 0.00 0.00 0.00 0.00 0.00 0.00 0.00 IA 0.00 1.35 0.00 0.00 0.00 0.00 0.00 0.00 0.00 RI 0.00 5.00 6.66 0.00 0.00 0.00 0.00 4.50 0.00 HI 0.00 45.55 19.45 0.00 0.00 0.00 5.50 4.64 0.00 MT 19.00 0.00 0.00 20.00 0.00 0.00 222.18 57.16 0.00 NH 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 ME 0.00 0.00 11.00 3.00 0.00 0.00 0.00 0.00 0.00 AZ 5.60 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 WV 0.00 0.00 75.75 0.00 0.00 0.00 0.00 0.00 0.00 SC 0.00 0.00 1.00 0.00 0.00 0.00 0.00 0.00 0.00 ID 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 PR 0.00 0.00 0.00 13.20 0.00 0.48 0.00 0.18 0.00 NV 0.00 0.00 0.00 0.00 0.00 2.00 0.00 1.00 0.00 NE 0.00 0.00 0.00 0.00 0.00 100.00 100.00 0.00 0.00 DE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 UN 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 WY 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 AR 0.00 80.68 102.33 15.09 9.20 27.32 0.15 40.00 0.00 NM 25.65 5.20 1.27 0.00 0.00 35.00 1.14 0.00 0.00 KY 7.95 65.00 98.00 12.00 0.00 0.00 0.00 7.00 0.00 Total 30,131.45 31,231.10 29,400.99 25,117.84 16,128.99 13,425.72 18,968.57 19,825.91 16,793.70
  • 31. 30 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 2.04 Top 5 States By Venture Capital Committed 2013 State No of Funds Committed ($Mil) Massachusetts 24 5,474.8 California 58 5,315.9 New York 25 2,200.5 Washington 5 561.8 Virginia 5 446.1 Subtotal 117 13,999.1 Remaining States 70 2,766.8 Total 187 16,765.9 - 20 40 60 80 100 120 140 160 180 200 220 240 260 280 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Venture Capital Buyouts and Mezzanine Figure 2.5 Private Equity Annual Commitment ($ Billions) 1985 to 2013
  • 32. 2014 National Venture Capital Association Yearbook | 31 NVCA THOMSON REUTERS Measuring industry activity by the total dollars invested in a given year shows that the industry has remained generally in the $20 billion to $30 billion range since 2002. In 2013, $29.5 billion was invested in 3,382 companies through 4,041 deals. The number of deals is 4% higher than 2012 counts, but is essentially the same as 2011. The number of first-time fundings increased in 2013 to 1,334 companies from the previous 1,275, but it remains near the top of the healthy range of 1,000 to 1,400 first-time fundings in a year. Further parsing the data shows 50% of the investment dollars going to California companies, down from 53% in 2012 but consistent with the previous three years. The year 2013 saw a record 56% of the financing rounds going to seed and early stage companies, compared with a more typical one-third of deals. A carefully watched statistic is the investment in the life sci- ences. It is possible that the downward plummet in first-time life sciences investment is starting to reverse, led by Biotechnology, but it is still too early to be sure. Corporate Venture investment continues to gain considerable strength and presence in the overall industry. INVESTMENTS Sectors Software was the leading sector in 2013, receiving 37.3% of the total dollars. The second largest sector was Biotechnology, which was less than half that amount at 15.4% of total investment. Media and Entertainment, where much of the social networking is categorized, received 9.9% and Medical Devices and Equipment received 7.2%. The life sciences share of the venture capital investment dollars de- creased in 2013 to its lowest level since 2001 at 23.6% of the total dollars. (For purposes of this paragraph, life sciences is made up of all three life science categories. Some industry observers choose to exclude the health- care services sector from the life sciences totals.) This is down from the recent peak of 32.7% in 2009. (The all-time peak was 36.3% in 1992.) This recent downward life sciences trend is very visible when just looking at first fundings. In 2013, only 155 life sciences (defined in this paragraph as Biotech/pharma and Medical Devices/therapeutics, but not healthcare services) received first fundings, up just slightly form 148 in 2012. While the uptick driven by Biotechnology first fundings may be an early indicator of a rebound, these last two years are the lowest counts since 1996. The possible recovery in Biotechnology investing may have been driven in part by the success of recent efforts at FDA reform and the strong number of Biotechnology company IPOs in 2013 (count = 42). Among first fundings, Software led the way with 591 companies get- ting their initial venture capital rounds. This is more than 46% of the first fundings. Again in 2013, the second most active first-funding sector is Media and Entertainment at 170 first fundings. Stages and First-Time Fundings Investment activity in the industry seems to be bifurcated by the large number of later stage companies hoping to join fairly strong public mar- kets at year end 2013 and the very large number of new companies being funded by the industry. While many of the larger portfolio companies, IPOs, and big acquisitions have gotten the headlines and visibility, 2013 actually saw the highest percentage of seed- and early-stage deals ever at 55.7% of all deals. This surpasses the prior record of 52.6% in 2012. This certainly would challenge the suggestion that the industry’s attention is single-focused on later-stage companies. Despite the flurry of IPO activity in 2013 and acquisitions announced for early 2014, there remains a record number of companies in portfolios in the later stage of development that in most other positions in the business cycle would have already gone public or otherwise been acquired. With the rule of thumb that a healthy venture capital industry invests in 1,000-1,300 new companies each year, the 1,334 first fundings in 2013 is very much in that range. Not surprisingly, 83% of those first round invest- ments were made at the seed and early stage. Geographical Spread Across the United States The year 2013 provided an interesting contrast in geographic disper- sion. The slight majority of investment dollars went to California compa- nies at 50.01%. This is down from the record 53.2% in 2012. Interestingly, companies in 48 states and DC received financing, which ties the 2012 record high. Ranked by total dollars invested, the top five states (Califor- nia, Massachusetts, New York, Washington and Texas) received 78% of all the dollars invested nationally. This compares to 2011, when California companies received a then- record 51.2% of the dollars. That year, companies in a record 47 states and DC received venture capital funding. Together, the top five states (Cali- fornia, Massachusetts, New York, Texas, and Washington State) received 77% of the total dollars. California-domiciled venture capital firms made investments in 38 states in 2013. Approximately 48% of all the money invested in Califor- nia came from California-domiciled firms. Conversely, California-based firms concentrated 68% of their investment dollars within the state. Corporate Venture Group Involvement The number and reach of corporate venture capital groups increased in 2013, along with the visibility of this group. These groups provided an estimated 10.5% of the venture capital invested by all venture groups. They were involved in 16.9% of the deals – the highest level in five years. Going forward, all signs suggest that these groups are becoming more involved alongside traditional venture firms in deals, as well as initiating corporate venture group syndicates to do deals in lieu of, or in advance of, investment rounds by traditional venture firms. Methodology As calculated by Thomson Reuters, venture capital investment data are derived from several sources. Primarily, survey information is obtained from the quarterly survey that drives the MoneyTree Report™ from Price- waterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. This is the official industry database of venture capital investment. Secondly, Thomson Reuters obtains data from SEC filings that are regularly monitored by our research staff. Finally, publicly available sources such as press releases and trade publications are used. For detailed information on which transactions qualify as MoneyTree deals and are therefore counted in this chapter, please refer to Appendix B.
  • 33. 32 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA 0 20 40 60 80 100 120 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Figure 3.01 Venture Capital Investments ($ Billions) 1985 to 2013 Figure 3.03 Venture Capital Investments Top 5 States in 2013 State # Companies # Deals Invested ($Bil) California 1,362 1,616 14.8 Massachusetts 307 364 3.1 New York 344 403 2.9 Texas 134 154 1.3 Washington 107 126 0.9 Total* 2,254 2,663 23.0 *Total includes top 5 states only Figure 3.02 Venture Capital Investments in 2013 By Industry Group Industry Group # Companies # Deals Investment Amt ($Bil) # Companies # Deals Investment Amt ($Bil) Information Technology 2,360 2,784 20 1,009 1,009 3.5 Medical/Health/Life Science 649 816 6.9 167 167 1.2 Non-High Technology 373 441 2.7 158 158 0.4 Total 3,382 4,041 29.6 1,334 1,334 5.1 Initial InvestmentsAll Investments
  • 34. 2014 National Venture Capital Association Yearbook | 33 NVCA THOMSON REUTERS Biotechnology 15% Business Products and Services 0.4% Computers and Peripherals 2% Consumer Products and Services 4% Electronics/Instrumentation 1% Financial Services 2% Healthcare Services 1% Industrial/Energy 5% IT Services 7% Media and Entertainment 10% Medical Devices and Equipment 7% Networking and Equipment 2% Retailing/Distribution 1% Semiconductors 2% Software 37% Telecommunications 2% Other 0.2% Figure 3.04 Venture Capital Investments in 2013 By Industry Sector (Dollars Invested) Seed 3% Early Stage 34% Expansion 33% Later Stage 30% Figure 3.05 Venture Capital Investments in 2013 By Stage (Dollars Invested)
  • 35. 34 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA USA AK AR NE WY PR VI GU 5 AL 113 AZ CA 429 CO 182 CT 286 DC 71 DE 421 FL 412 GA 2 HI 23 IA 7 ID IL 25 IN33 KS 11 KY 15 LA 3,079 MA 664 MD 27 ME 108 MI 270 MN 77 MO 1 MS MT 260 NC 24 ND 74 NH 322 NJ 26 NM 7 NV 2,870 NY 319 OH 8 OK 138 OR 447 PA 82 RI 86 SC 12 SD 109 TN 1,316 TX 315 UT 594 VA 21 VT 913 WA 36 WI 1 WV 14,770 10 86 435 0 Figure 3.06 Amount of Capital Invested By State in 2013 ($ Millions) USA AK AR NE WY PR VI GU 4 AL 19 AZ CA 62 CO 43 CT 27 DC 5 DE 37 FL 35 GA 2 HI 2 IA 2 ID 74 IL 11 IN6 KS 6 KY 6 LA 307 MA 63 MD 4 ME 58 MI 32 MN 32 MO 2 MS 1 MT 40 NC 1 ND 13 NH 38 NJ 13 NM 3 NV 344 NY 68 OH 8 OK 30 OR 196 PA 11 RI 12 SC 1 SD 35 TN 134 TX 30 UT 58 VA 8 VT 107 WA 18 WI 1 WV 1,362 9 3 Figure 3.07 Number of Companies Invested in By State in 2013
  • 36. 2014 National Venture Capital Association Yearbook | 35 NVCA THOMSON REUTERS Figure 3.08 Venture Capital Investments in 1985-2013 By Region ($ Millions) Region 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Silicon Valley 758.8 1,016.0 849.9 985.9 918.1 914.1 780.5 1,121.1 903.7 1,073.8 1,807.8 3,417.7 4,632.3 5,881.4 17,797.4 New England 435.4 436.6 524.3 496.9 404.7 424.9 287.0 417.0 358.4 440.4 796.6 1,159.4 1,611.8 2,353.4 5,622.0 NY Metro 221.2 215.2 273.9 308.0 360.4 190.1 181.5 239.0 221.3 275.8 509.7 743.2 1,289.4 1,817.3 4,611.8 LA/Orange County 196.5 186.9 276.9 222.5 242.1 174.7 119.4 179.4 176.4 189.1 1,004.1 702.9 875.2 1,230.6 3,593.7 DC/Metroplex 99.1 61.5 111.8 129.9 139.5 96.9 51.3 65.8 384.1 137.8 420.2 586.3 515.1 1,148.5 2,395.1 Texas 248.6 228.4 211.0 240.7 229.2 141.0 161.4 150.5 241.9 313.8 479.2 553.4 908.7 1,205.6 3,163.1 Southeast 166.4 237.6 269.5 272.1 235.4 145.9 109.1 346.9 408.2 362.3 878.6 1,166.0 1,396.7 1,794.8 4,831.0 Midwest 160.5 139.9 198.4 132.3 183.2 166.7 181.4 165.2 276.9 432.6 470.4 736.2 913.5 1,644.5 2,631.1 Northwest 142.2 142.9 153.3 141.2 118.0 88.2 59.9 252.1 118.4 164.7 379.7 557.6 564.4 820.3 2,874.6 San Diego 99.6 95.4 107.8 149.8 145.5 113.3 115.7 128.2 133.0 221.0 276.8 485.2 516.0 669.4 1,437.0 SouthWest 40.1 82.5 57.5 59.7 50.7 30.3 49.0 98.4 49.7 38.0 113.1 184.6 303.1 411.2 843.1 Colorado 77.0 113.8 111.4 107.8 157.8 93.7 54.2 129.7 135.0 197.4 325.1 321.2 405.0 838.9 1,832.9 Philadelphia Metro 52.6 63.3 79.2 71.8 65.3 105.9 40.6 168.9 111.4 138.1 220.9 356.2 534.2 703.9 1,732.6 North Central 37.0 44.5 73.6 41.4 51.2 92.2 44.9 77.1 109.6 87.4 223.8 208.5 341.6 429.6 770.0 South Central 13.7 11.4 19.8 11.7 14.5 11.6 4.2 6.5 8.6 15.2 45.2 81.1 67.4 196.7 360.1 Upstate NY 14.2 10.7 10.2 5.3 7.3 11.1 3.4 9.1 5.7 0.7 35.5 22.7 90.3 195.4 212.4 Sacramento/N.Cal 16.0 45.5 32.0 33.6 4.2 19.5 15.7 8.5 19.1 20.0 20.0 28.6 21.4 86.8 119.1 Unknown - - 0.5 0.8 6.1 13.0 0.2 30.8 0.8 0.1 0.3 2.2 4.4 39.1 2.4 AK/HI/PR - - - - - - 0.3 0.0 1.0 22.0 7.8 28.7 14.0 5.5 17.4 Total 2,779.0 3,132.3 3,361.3 3,411.3 3,333.0 2,833.1 2,259.7 3,594.2 3,663.2 4,130.1 8,014.8 11,341.6 5,004.6 21,473.0 54,846.7
  • 37. 36 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.08 (Continued) Venture Capital Investments in 1985-2013 By Region ($ Millions) Region 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Silicon Valley 33,430.9 12,618.7 7,249.2 6,766.5 8,021.2 8,133.6 9,806.9 11,610.0 11,551.3 8,263.4 9,436.2 12,037.2 11,237.6 12,225.7 New England 12,000.6 5,397.2 2,999.3 2,990.4 3,359.7 2,969.9 3,319.2 4,004.1 3,754.8 2,603.7 2,577.9 3,344.5 3,391.6 3,307.7 NY Metro 10,275.4 3,497.1 1,548.7 1,385.0 1,635.7 1,972.7 2,172.1 1,936.2 2,169.7 1,748.9 1,872.8 2,862.5 2,366.9 3,194.7 LA/Orange County 6,782.0 2,264.7 1,286.8 1,069.4 1,319.8 1,506.1 1,898.7 1,925.3 2,041.4 1,080.9 1,687.8 2,076.7 2,092.5 1,748.2 DC/Metroplex 5,795.2 2,103.1 1,095.6 797.4 1,086.6 1,208.3 1,356.3 1,423.7 1,167.9 684.3 973.9 1,014.0 756.8 1,545.9 Texas 6,270.8 3,137.3 1,191.6 1,221.0 1,212.3 1,170.7 1,518.2 1,493.8 1,127.7 678.2 1,079.4 1,622.4 948.9 1,315.5 Southeast 7,967.1 2,684.7 1,768.7 1,115.0 1,418.1 1,094.2 1,206.3 1,841.0 1,352.0 1,032.0 1,101.2 1,193.4 801.1 1,293.9 Midwest 5,776.7 2,184.5 976.9 913.6 712.5 916.5 1,009.7 1,159.2 1,369.5 952.3 1,368.2 1,554.1 1,436.8 1,107.3 Northwest 3,627.9 1,426.8 766.7 643.5 1,001.2 1,003.9 1,288.0 1,612.5 1,075.6 673.9 728.9 785.4 998.5 1,056.7 San Diego 2,297.6 1,579.1 997.4 825.8 1,197.8 1,203.9 1,231.0 1,846.4 1,209.4 939.5 881.2 928.0 1,191.6 767.7 SouthWest 1,387.5 515.1 393.8 220.5 393.6 524.8 526.6 589.0 545.7 291.2 275.9 571.5 600.4 455.4 Colorado 4,091.9 1,244.4 588.0 609.9 363.2 622.9 703.3 686.3 872.3 458.9 445.9 619.7 589.0 428.8 Philadelphia Metro 2,591.5 1,073.3 636.6 555.1 734.6 592.6 795.9 890.5 803.0 389.4 452.2 456.7 415.3 420.0 North Central 1,397.3 669.6 433.7 268.5 464.0 367.0 385.6 532.7 632.6 410.5 336.7 380.9 359.9 375.3 South Central 446.9 110.4 69.3 65.5 130.1 96.1 64.3 152.8 91.3 25.3 75.2 102.1 96.0 141.1 Upstate NY 293.9 159.1 104.5 122.7 104.8 60.1 156.1 136.5 92.3 26.9 44.8 112.7 48.6 112.5 Sacramento/N.Cal 372.3 203.0 65.4 32.2 38.4 37.7 29.4 82.0 71.3 18.8 16.5 67.8 20.0 25.2 Unknown 50.4 14.3 - - - - - - - 0.5 - - - 21.1 AK/HI/PR 248.6 69.8 4.9 17.9 15.1 43.3 47.1 20.9 21.3 7.4 14.0 0.6 0.7 2.5 Total 105,104.6 40,952.1 22,177.1 19,620.0 23,208.8 23,524.5 27,514.5 31,942.9 29,948.9 20,286.2 23,368.6 29,730.0 27,352.3 9,545.2
  • 38. 2014 National Venture Capital Association Yearbook | 37 NVCA THOMSON REUTERS Figure 3.09 Venture Capital Investments in 1985-2013 By Region (Number of Deals) Region 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Silicon Valley 323 339 343 362 395 398 337 422 315 335 509 771 869 1,045 1,687 2,159 1,106 819 879 NY Metro 89 101 131 108 121 90 89 81 79 84 136 158 240 273 491 816 446 231 192 New England 235 214 257 231 222 217 170 159 149 146 232 333 384 469 662 905 595 458 446 Midwest 100 116 133 101 127 103 99 93 85 83 132 190 237 249 309 515 276 243 174 LA/Orange County 90 101 114 106 112 97 89 97 63 54 92 134 166 216 355 516 250 164 149 Southeast 91 118 134 115 115 131 111 108 117 112 182 226 294 308 454 664 391 268 247 DC/Metroplex 45 46 65 59 51 62 54 48 41 47 72 113 135 162 272 509 261 198 183 Northwest 47 49 62 70 64 48 41 50 49 50 84 112 134 132 263 331 192 141 108 Texas 106 93 106 105 91 85 70 70 72 68 101 135 172 197 318 485 343 174 174 Philadelphia Metro 38 35 54 44 41 48 43 65 47 45 78 91 142 138 145 231 142 103 88 San Diego 43 35 54 56 56 47 43 47 49 61 77 109 100 124 162 235 156 114 125 Colorado 43 58 62 63 53 49 35 53 48 53 58 83 98 127 161 222 115 91 71 SouthWest 20 30 42 25 32 22 30 34 30 29 37 55 71 88 116 146 89 68 55 North Central 38 50 54 51 39 44 40 39 38 37 70 69 116 107 114 151 126 76 71 Upstate NY 17 10 10 10 12 6 4 9 10 5 8 9 21 31 31 36 29 24 22 South Central 11 10 12 6 7 5 4 5 6 9 15 22 25 27 30 50 28 24 21 Unknown - - 1 2 3 1 1 2 4 2 2 7 7 14 3 16 8 - - Sacramento/N.Cal 11 18 12 10 6 10 9 9 8 10 7 9 7 17 19 36 27 7 11 AK/HI/PR 1 - - - - - 3 3 1 2 4 9 6 5 5 15 10 3 8 Total 1,348 1,423 1,646 1,524 1,547 1,463 1,272 1,394 1,211 1,232 1,896 2,635 3,224 3,729 5,597 8,038 4,590 3,206 3,024 Figure 3.09 (Continued) Venture Capital Investments in 1985-2013 By Region (Number of Deals) Region 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Silicon Valley 970 1,006 1,235 1,311 1,300 997 1,108 1,269 1,225 1,257 NY Metro 226 191 295 299 343 285 387 424 411 446 New England 430 441 458 524 508 388 414 457 466 418 Midwest 178 181 228 271 304 250 277 316 311 416 LA/Orange County 151 177 219 236 245 177 228 233 268 253 Southeast 244 198 235 247 230 158 215 209 172 211 DC/Metroplex 187 221 218 221 210 138 154 167 166 171 Northwest 148 159 182 217 201 128 156 165 154 165 Texas 176 181 201 188 162 126 168 172 163 154 Philadelphia Metro 104 96 116 135 150 97 127 123 126 135 San Diego 132 143 130 169 134 114 135 114 106 98 Colorado 72 91 112 114 116 91 84 109 105 81 SouthWest 58 84 92 107 86 71 60 85 84 79 North Central 77 66 73 94 87 69 59 70 53 73 Upstate NY 29 28 40 33 31 13 21 22 23 36 South Central 31 11 26 31 41 33 42 59 23 29 Unknown - - - 1 - 1 1 1 - 10 Sacramento/N.Cal 9 11 8 18 20 9 7 6 5 6 AK/HI/PR 6 8 14 10 9 3 4 3 4 3 Total 3,228 3,293 3,882 4,226 4,177 3,148 3,647 4,004 3,865 4,041
  • 39. 38 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.10 Venture Capital Investments in 1985-2013 By Stage Stage 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Seed 528.9 759.7 623.4 670.2 559.3 396.6 241.8 557.7 629.6 781.2 1,273.0 1,275.0 1,366.6 1,769.3 3,617.8 3,150.4 803.5 Early Stage 506.8 624.0 748.8 714.6 737.9 684.8 548.4 577.9 574.9 839.7 1,733.1 2,636.8 3,455.1 5,460.1 11,480.6 25,292.6 8,591.3 Expansion 1,243.9 1,198.2 1,490.6 1,568.8 1,600.3 1,265.6 1,099.6 1,770.1 1,867.0 1,506.9 3,561.7 5,503.0 7,564.1 10,322.5 29,254.7 59,047.2 22,898.7 Later Stage 499.4 550.4 498.5 457.7 435.5 486.0 369.8 688.5 591.7 1,002.4 1,447.0 1,926.9 2,618.8 3,921.0 10,493.6 17,614.5 8,658.6 Total 2,779.0 3,132.3 3,361.3 3,411.3 3,333.0 2,833.1 ,259.7 3,594.2 3,663.2 4,130.1 8,014.8 11,341.6 15,004.6 21,473.0 54,846.7 105,104.6 40,952.1 Figure 3.10 (Continued) Venture Capital Investments in 1985-2013 By Stage Stage 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Seed 340.7 364.9 916.9 995.6 1,291.6 1,837.0 1,923.1 1,735.2 1,676.3 1,079.4 836.4 966.4 Early Stage 3,979.7 3,582.2 4,040.8 4,057.9 4,770.4 6,087.3 5,888.9 4,940.6 5,913.8 8,926.9 8,315.1 9,896.0 Expansion 12,122.6 9,764.9 9,053.6 8,521.7 11,123.5 1,065.7 10,725.1 6,841.2 8,706.9 9,829.3 9,446.6 9,814.2 Later Stage 5,734.1 5,908.0 9,197.5 9,949.3 0,329.0 2,952.9 11,411.9 6,769.2 7,071.6 9,894.4 8,754.2 8,868.7 Total 22,177.1 19,620.0 23,208.8 23,524.5 7,514.5 1,942.9 29,948.9 20,286.2 23,368.6 9,730.0 27,352.3 29,545.2 Figure 3.11 Venture Capital Investments in 1985-2013 By Stage (Number of Deals) Stage 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Seed 358 388 387 370 355 258 193 252 290 332 431 503 542 672 811 705 281 Early Stage 290 333 411 358 338 371 277 292 181 255 519 751 897 1,019 1,735 2,852 1,298 Expansion 523 502 614 614 665 600 541 603 513 422 705 1,043 1,399 1,569 2,438 3,698 2,391 Later Stage 177 200 234 182 189 234 261 247 227 223 241 338 386 469 613 783 620 Total 1,348 1,423 1,646 1,524 1,547 1,463 1,272 1,394 1,211 1,232 1,896 2,635 3,224 3,729 5,597 8,038 4,590 Figure 3.11 (Continued) Venture Capital Investments in 1985-2013 By Stage (Number of Deals) Stage 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Seed 182 217 235 264 398 528 536 374 410 446 296 221 Early Stage 879 800 903 855 1,002 1,137 1,152 979 1,287 1,603 1,738 2,031 Expansion 1,580 1,352 1,203 1,113 1,381 1,269 1,240 894 1,077 1,026 987 991 Later Stage 565 655 887 1,061 1,101 1,292 1,249 901 873 929 844 798 Total 3,206 3,024 3,228 3,293 3,882 4,226 4,177 3,148 3,647 4,004 3,865 4,041
  • 40. 2014 National Venture Capital Association Yearbook | 39 NVCA THOMSON REUTERS Figure 3.12a Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 1985 1986 1987 Stage 1985-1Q 1985-2Q 1985-3Q 1985-4Q 1985 Total 1986-1Q 1986-2Q 1986-3Q 1986-4Q 1986 Total 1987-1Q 1987-2Q 1987-3Q 1987-4Q 1987 Total Seed 153.0 149.3 93.7 133.0 528.9 185.6 270.0 114.7 189.4 759.7 145.7 199.4 142.0 136.3 623.4 Early Stage 95.9 185.3 95.2 130.4 506.8 129.6 139.5 176.6 178.2 624.0 170.7 183.9 204.2 190.0 748.8 Expansion 219.2 319.2 312.8 392.7 1,243.9 270.2 381.4 252.3 294.3 1,198.2 421.8 352.2 402.5 314.1 1,490.6 Later Stage 154.6 89.8 175.5 79.5 499.4 125.6 96.7 180.4 147.7 550.4 100.1 167.0 119.8 111.7 498.5 Total 622.6 743.6 677.2 735.6 2,779.0 711.0 887.5 724.1 809.6 3,132.3 838.2 902.4 868.5 752.2 3,361.3 Figure 3.12b Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 1988 1989 1990 Stage 1988-1Q 1988-2Q 1988-3Q 1988-4Q 1988 Total 1989-1Q 1989-2Q 1989-3Q 1989-4Q 1989 Total 1990-1Q 1990-2Q 1990-3Q 1990-4Q 1990 Total Seed 164.5 150.0 240.6 115.2 670.2 138.1 174.6 116.3 130.3 559.3 81.9 116.7 114.3 83.8 396.6 Early Stage 144.0 216.6 184.7 169.4 714.6 255.9 128.0 163.1 190.9 737.9 139.7 199.1 133.1 212.9 684.8 Expansion 314.5 494.6 320.2 439.5 1,568.8 399.6 426.5 305.5 468.8 1,600.3 307.2 352.6 208.0 397.9 1,265.6 Later Stage 135.3 105.0 151.4 66.0 457.7 95.5 105.3 78.3 156.4 435.5 123.1 119.9 126.3 116.7 486.0 Total 758.3 966.1 896.9 790.0 3,411.3 889.1 834.4 663.1 946.4 3,333.0 651.9 788.2 581.6 811.3 2,833.1 Figure 3.12c Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 1991 1992 1993 Stage 1991-1Q 1991-2Q 1991-3Q 1991-4Q 1991 Total 1992-1Q 1992-2Q 1992-3Q 1992-4Q 1992 Total 1993-1Q 1993-2Q 1993-3Q 1993-4Q 1993 Total Seed 45.8 84.6 53.4 58.0 241.8 67.6 210.4 71.8 207.8 557.7 139.7 144.1 164.3 181.5 629.6 Early Stage 137.7 130.3 140.4 140.0 548.4 134.0 187.6 102.7 153.6 577.9 164.0 136.1 106.6 168.2 574.9 Expansion 249.5 276.2 257.0 317.0 1,099.6 496.0 434.8 343.9 495.4 1,770.1 357.1 412.3 461.3 636.3 1,867.0 Later Stage 89.5 115.8 63.7 100.8 369.8 211.2 163.2 115.3 198.8 688.5 189.5 111.6 116.8 173.8 591.7 Total 522.5 606.9 514.5 615.7 2,259.7 908.8 996.1 633.8 1,055.5 3,594.2 850.3 804.1 849.0 1,159.8 3,663.2 Figure 3.12d Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 1994 1995 1996 Stage 1994-1Q 1994-2Q 1994-3Q 1994-4Q 1994 Total 1995-1Q 1995-2Q 1995-3Q 1995-4Q 1995 Total 1996-1Q 1996-2Q 1996-3Q 1996-4Q 1996 Total Seed 190.0 225.8 160.2 205.1 781.2 316.8 396.6 229.9 329.8 1,273.0 330.0 427.9 200.6 316.5 1,275.0 Early Stage 177.6 196.4 157.8 307.9 839.7 408.8 393.6 366.8 563.8 1,733.1 596.2 712.9 573.6 754.1 2,636.8 Expansion 310.5 388.5 327.7 480.1 1,506.9 620.0 1,325.7 800.4 815.7 3,561.7 1,151.9 1,506.8 1,277.0 1,567.3 5,503.0 Later Stage 201.3 192.5 262.0 346.6 1,002.4 344.5 430.5 308.7 363.4 1,447.0 348.0 461.3 546.5 571.1 1,926.9 Total 879.4 1,003.3 907.8 1,339.7 4,130.1 1,690.0 2,546.4 1,705.8 2,072.6 8,014.8 2,426.1 3,109.0 2,597.6 3,208.9 11,341.6
  • 41. 40 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.12e Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 1997 1998 1999 Stage 1997-1Q 1997-2Q 1997-3Q 1997-4Q 1997 Total 1998-1Q 1998-2Q 1998-3Q 1998-4Q 1998 Total 1999-1Q 1999-2Q 1999-3Q 1999-4Q 1999 Total Seed 392.9 330.8 323.4 319.5 1,366.6 405.4 426.4 459.9 477.6 1,769.3 591.5 799.7 990.1 1,236.5 3,617.8 Early Stage 773.5 846.8 760.1 1,074.7 3,455.1 1,164.7 1,014.5 1,290.4 1,990.6 5,460.1 1,302.0 2,026.8 2,661.8 5,489.9 11,480.6 Expansion 1,354.4 1,938.5 1,970.1 2,301.0 7,564.1 1,753.9 3,350.1 2,690.5 2,528.0 10,322.5 3,108.3 5,487.4 7,325.5 13,333.5 29,254.7 Later Stage 601.4 551.6 669.8 795.9 2,618.8 854.6 973.6 955.0 1,137.9 3,921.0 1,620.2 3,004.2 2,620.1 3,249.1 10,493.6 Total 3,122.3 3,667.8 3,723.4 4,491.2 15,004.6 4,178.5 5,764.5 5,395.7 6,134.2 21,473.0 6,622.0 11,318.1 13,597.5 23,309.1 54,846.7 Figure 3.12f Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2000 2001 2002 Stage 2000-1Q 2000-2Q 2000-3Q 2000-4Q 2000 Total 2001-1Q 2001-2Q 2001-3Q 2001-4Q 2001 Total 2002-1Q 2002-2Q 2002-3Q 2002-4Q 2002 Total Seed 808.6 984.1 870.9 486.8 3,150.4 256.6 265.6 128.5 152.7 803.5 76.4 94.0 84.2 86.1 340.7 Early Stage 7,137.5 6,937.9 5,903.8 5,313.5 25,292.6 3,447.7 2,104.5 1,720.2 1,318.9 8,591.3 1,209.5 1,138.0 827.7 804.5 3,979.7 Expansion 16,100.4 15,726.9 15,253.6 11,966.2 59,047.2 6,905.3 6,622.1 4,588.8 4,782.5 22,898.7 3,804.8 3,535.3 2,461.7 2,320.8 12,122.6 Later Stage 4,382.9 4,357.2 4,582.9 4,291.6 17,614.5 2,459.6 2,515.1 1,793.4 1,890.5 8,658.6 1,932.6 1,345.6 1,096.5 1,359.4 5,734.1 Total 28,429.3 28,006.1 26,611.1 22,058.1 105,104.6 13,069.2 11,507.4 8,230.9 8,144.7 40,952.1 7,023.4 6,112.9 4,470.0 4,570.8 22,177.1 Figure 3.12g Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2003 2004 2005 Stage 2003-1Q 2003-2Q 2003-3Q 2003-4Q 2003 Total 2004-1Q 2004-2Q 2004-3Q 2004-4Q 2004 Total 2005-1Q 2005-2Q 2005-3Q 2005-4Q 2005 Total Seed 83.3 95.3 100.3 86.0 364.9 104.8 124.3 118.1 569.7 916.9 139.3 529.0 165.0 162.2 995.6 Early Stage 676.2 1,011.5 806.8 1,087.7 3,582.2 904.9 1,030.3 1,028.5 1,077.0 4,040.8 907.8 992.9 1,186.2 971.0 4,057.9 Expansion 2,468.1 2,508.0 2,165.5 2,623.3 9,764.9 2,069.3 2,680.0 2,042.6 2,261.7 9,053.6 2,092.9 2,336.1 1,759.6 2,333.2 8,521.7 Later Stage 1,160.2 1,374.6 1,520.5 1,852.6 5,908.0 2,312.6 2,481.9 1,856.6 2,546.4 9,197.5 2,082.1 2,579.1 2,952.5 2,335.5 9,949.3 Total 4,387.8 4,989.4 4,593.1 5,649.7 19,620.0 5,391.6 6,316.6 5,045.8 6,454.8 23,208.8 5,222.1 6,437.1 6,063.2 5,802.0 23,524.5 Figure 3.12h Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2006 2007 2008 Stage 2006-1Q 2006-2Q 2006-3Q 2006-4Q 2006 Total 2007-1Q 2007-2Q 2007-3Q 2007-4Q 2007 Total 2008-1Q 2008-2Q 2008-3Q 2008-4Q 2008 Total Seed 249.2 367.6 372.1 302.7 1,291.6 315.8 500.0 462.4 558.7 1,837.0 459.3 528.3 557.7 377.9 1,923.1 Early Stage 930.6 1,022.2 1,143.1 1,674.5 4,770.4 1,341.1 1,706.4 1,259.8 1,780.0 6,087.3 1,401.6 1,571.4 1,382.2 1,533.6 5,888.9 Expansion 2,594.2 3,218.2 2,863.1 2,448.0 11,123.5 2,641.8 2,335.6 3,102.0 2,986.4 11,065.7 3,421.3 2,657.7 2,549.7 2,096.4 10,725.1 Later Stage 2,832.4 2,778.3 2,473.8 2,244.5 10,329.0 3,151.4 3,297.7 3,378.0 3,125.8 12,952.9 2,827.0 3,275.0 3,126.9 2,183.1 11,411.9 Total 6,606.5 7,386.3 6,852.0 6,669.7 27,514.5 7,450.1 7,839.8 8,202.2 8,450.9 31,942.9 8,109.1 8,032.4 7,616.5 6,191.0 29,948.9
  • 42. 2014 National Venture Capital Association Yearbook | 41 NVCA THOMSON REUTERS Figure 3.12i Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2009 2010 2011 Stage 2009-1Q 2009-2Q 2009-3Q 2009-4Q 2009 Total 2010-1Q 2010-2Q 2010-3Q 2010-4Q 2010 Total 2011-1Q 2011-2Q 2011-3Q 2011-4Q 2011 Total Seed 319.7 536.0 511.0 368.5 1,735.2 416.7 689.0 338.7 231.9 1,676.3 219.6 424.4 227.4 208.1 1,079.4 Early Stage 768.2 1,178.5 1,240.7 1,753.2 4,940.6 1,149.7 1,732.4 1,457.3 1,574.5 5,913.8 1,861.1 2,307.7 2,244.0 2,514.1 8,926.9 Expansion 1,233.0 1,779.0 1,829.0 2,000.2 6,841.2 1,820.2 2,788.6 1,670.2 2,428.0 8,706.9 2,210.7 2,457.8 2,579.8 2,580.9 9,829.3 Later Stage 1,527.1 1,600.6 1,844.7 1,796.7 6,769.2 1,702.2 1,915.0 1,985.5 1,468.8 7,071.6 2,236.0 3,007.4 2,506.0 2,145.1 9,894.4 Total 3,848.0 5,094.2 5,425.5 5,918.6 20,286.2 5,088.8 7,125.0 5,451.7 5,703.2 23,368.6 6,527.4 8,197.3 7,557.2 7,448.2 29,730.0 Figure 3.12j Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2012 2013 Stage 2012-1Q 2012-2Q 2012-3Q 2012-4Q 2012 Total 2013-1Q 2013-2Q 2013-3Q 2013-4Q 2013 Total Seed 187.4 282.5 179.3 187.2 836.4 208.7 227.9 192.2 337.5 966.4 Early Stage 1,956.2 2,184.2 1,932.5 2,242.2 8,315.1 1,551.5 2,536.9 2,862.0 2,945.6 9,896.0 Expansion 1,810.0 2,763.6 2,580.5 2,292.5 9,446.6 2,057.7 2,215.5 2,537.0 3,004.0 9,814.2 Later Stage 2,356.5 2,170.9 1,985.2 2,241.6 8,754.2 2,190.4 2,125.8 2,333.2 2,219.3 8,868.7 Total 6,310.1 7,401.1 6,677.5 6,963.5 27,352.3 6,008.3 7,106.1 7,924.4 8,506.4 29,545.2
  • 43. 42 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.13a Quarterly Venture Capital Investments 1985-2013 By Stage (Number of Deals) 1985 1986 1987 Stage 1985-1Q 1985-2Q 1985-3Q 1985-4Q 1985 Total 1986-1Q 1986-2Q 1986-3Q 1986-4Q 1986 Total 1987-1Q 1987-2Q 1987-3Q 1987-4Q 1987 Total Seed 110 89 61 98 358 134 107 65 82 388 116 101 85 85 387 Early Stage 88 69 59 74 290 111 71 72 79 333 131 83 102 95 411 Expansion 138 121 114 150 523 166 136 95 105 502 182 138 158 136 614 Later Stage 66 41 38 32 177 61 56 31 52 200 64 65 52 53 234 Total 402 320 272 354 1,348 472 370 263 318 1,423 493 387 397 369 1,646 Figure 3.13b Quarterly Venture Capital Investments 1985-2013 By Stage (Number of Deals) 1988 1989 1990 Stage 1988-1Q 1988-2Q 1988-3Q 1988-4Q 1988 Total 1989-1Q 1989-2Q 1989-3Q 1989-4Q 1989 Total 1990-1Q 1990-2Q 1990-3Q 1990-4Q 1990 Total Seed 119 79 88 84 370 106 100 77 72 355 60 69 59 70 258 Early Stage 99 94 87 78 358 101 65 84 88 338 88 97 73 113 371 Expansion 158 181 133 142 614 216 158 127 164 665 148 151 144 157 600 Later Stage 54 48 42 38 182 52 35 38 64 189 55 59 49 71 234 Total 430 402 350 342 1,524 475 358 326 388 1,547 351 376 325 411 1,463 Figure 3.13c Quarterly Venture Capital Investments 1985-2013 By Stage (Number of Deals) 1991 1992 1993 Stage 1991-1Q 1991-2Q 1991-3Q 1991-4Q 1991 Total 1992-1Q 1992-2Q 1992-3Q 1992-4Q 1992 Total 1993-1Q 1993-2Q 1993-3Q 1993-4Q 1993 Total Seed 51 49 42 51 193 49 68 49 86 252 69 68 66 87 290 Early Stage 78 69 60 70 277 73 86 52 81 292 40 48 38 55 181 Expansion 137 127 124 153 541 155 160 103 185 603 144 121 116 132 513 Later Stage 49 69 56 87 261 77 46 45 79 247 68 54 52 53 227 Total 315 314 282 361 1,272 354 360 249 431 1,394 321 291 272 327 1,211 Figure 3.13d Quarterly Venture Capital Investments 1985-2013 By Stage (Number of Deals) 1994 1995 1996 Stage 1994-1Q 1994-2Q 1994-3Q 1994-4Q 1994 Total 1995-1Q 1995-2Q 1995-3Q 1995-4Q 1995 Total 1996-1Q 1996-2Q 1996-3Q 1996-4Q 1996 Total Seed 91 67 83 91 332 125 95 95 116 431 130 139 97 137 503 Early Stage 64 61 53 77 255 130 137 116 136 519 147 205 174 225 751 Expansion 101 110 96 115 422 187 178 164 176 705 235 246 245 317 1,043 Later Stage 53 69 43 58 223 61 56 58 66 241 72 83 86 97 338 Total 309 307 275 341 1,232 503 466 433 494 1,896 584 673 602 776 2,635
  • 44. 2014 National Venture Capital Association Yearbook | 43 NVCA THOMSON REUTERS Figure 3.12e Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 1997 1998 1999 Stage 1997-1Q 1997-2Q 1997-3Q 1997-4Q 1997 Total 1998-1Q 1998-2Q 1998-3Q 1998-4Q 1998 Total 1999-1Q 1999-2Q 1999-3Q 1999-4Q 1999 Total Seed 392.9 330.8 323.4 319.5 1,366.6 405.4 426.4 459.9 477.6 1,769.3 591.5 799.7 990.1 1,236.5 3,617.8 Early Stage 773.5 846.8 760.1 1,074.7 3,455.1 1,164.7 1,014.5 1,290.4 1,990.6 5,460.1 1,302.0 2,026.8 2,661.8 5,489.9 11,480.6 Expansion 1,354.4 1,938.5 1,970.1 2,301.0 7,564.1 1,753.9 3,350.1 2,690.5 2,528.0 10,322.5 3,108.3 5,487.4 7,325.5 13,333.5 29,254.7 Later Stage 601.4 551.6 669.8 795.9 2,618.8 854.6 973.6 955.0 1,137.9 3,921.0 1,620.2 3,004.2 2,620.1 3,249.1 10,493.6 Total 3,122.3 3,667.8 3,723.4 4,491.2 15,004.6 4,178.5 5,764.5 5,395.7 6,134.2 21,473.0 6,622.0 11,318.1 13,597.5 23,309.1 54,846.7 Figure 3.12f Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2000 2001 2002 Stage 2000-1Q 2000-2Q 2000-3Q 2000-4Q 2000 Total 2001-1Q 2001-2Q 2001-3Q 2001-4Q 2001 Total 2002-1Q 2002-2Q 2002-3Q 2002-4Q 2002 Total Seed 808.6 984.1 870.9 486.8 3,150.4 256.6 265.6 128.5 152.7 803.5 76.4 94.0 84.2 86.1 340.7 Early Stage 7,137.5 6,937.9 5,903.8 5,313.5 25,292.6 3,447.7 2,104.5 1,720.2 1,318.9 8,591.3 1,209.5 1,138.0 827.7 804.5 3,979.7 Expansion 16,100.4 15,726.9 15,253.6 11,966.2 59,047.2 6,905.3 6,622.1 4,588.8 4,782.5 22,898.7 3,804.8 3,535.3 2,461.7 2,320.8 12,122.6 Later Stage 4,382.9 4,357.2 4,582.9 4,291.6 17,614.5 2,459.6 2,515.1 1,793.4 1,890.5 8,658.6 1,932.6 1,345.6 1,096.5 1,359.4 5,734.1 Total 28,429.3 28,006.1 26,611.1 22,058.1 105,104.6 13,069.2 11,507.4 8,230.9 8,144.7 40,952.1 7,023.4 6,112.9 4,470.0 4,570.8 22,177.1 Figure 3.12g Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2003 2004 2005 Stage 2003-1Q 2003-2Q 2003-3Q 2003-4Q 2003 Total 2004-1Q 2004-2Q 2004-3Q 2004-4Q 2004 Total 2005-1Q 2005-2Q 2005-3Q 2005-4Q 2005 Total Seed 83.3 95.3 100.3 86.0 364.9 104.8 124.3 118.1 569.7 916.9 139.3 529.0 165.0 162.2 995.6 Early Stage 676.2 1,011.5 806.8 1,087.7 3,582.2 904.9 1,030.3 1,028.5 1,077.0 4,040.8 907.8 992.9 1,186.2 971.0 4,057.9 Expansion 2,468.1 2,508.0 2,165.5 2,623.3 9,764.9 2,069.3 2,680.0 2,042.6 2,261.7 9,053.6 2,092.9 2,336.1 1,759.6 2,333.2 8,521.7 Later Stage 1,160.2 1,374.6 1,520.5 1,852.6 5,908.0 2,312.6 2,481.9 1,856.6 2,546.4 9,197.5 2,082.1 2,579.1 2,952.5 2,335.5 9,949.3 Total 4,387.8 4,989.4 4,593.1 5,649.7 19,620.0 5,391.6 6,316.6 5,045.8 6,454.8 23,208.8 5,222.1 6,437.1 6,063.2 5,802.0 23,524.5 Figure 3.12h Quarterly Venture Capital Investments 1985-2013 By Stage ($ Millions) 2006 2007 2008 Stage 2006-1Q 2006-2Q 2006-3Q 2006-4Q 2006 Total 2007-1Q 2007-2Q 2007-3Q 2007-4Q 2007 Total 2008-1Q 2008-2Q 2008-3Q 2008-4Q 2008 Total Seed 249.2 367.6 372.1 302.7 1,291.6 315.8 500.0 462.4 558.7 1,837.0 459.3 528.3 557.7 377.9 1,923.1 Early Stage 930.6 1,022.2 1,143.1 1,674.5 4,770.4 1,341.1 1,706.4 1,259.8 1,780.0 6,087.3 1,401.6 1,571.4 1,382.2 1,533.6 5,888.9 Expansion 2,594.2 3,218.2 2,863.1 2,448.0 11,123.5 2,641.8 2,335.6 3,102.0 2,986.4 11,065.7 3,421.3 2,657.7 2,549.7 2,096.4 10,725.1 Later Stage 2,832.4 2,778.3 2,473.8 2,244.5 10,329.0 3,151.4 3,297.7 3,378.0 3,125.8 12,952.9 2,827.0 3,275.0 3,126.9 2,183.1 11,411.9 Total 6,606.5 7,386.3 6,852.0 6,669.7 27,514.5 7,450.1 7,839.8 8,202.2 8,450.9 31,942.9 8,109.1 8,032.4 7,616.5 6,191.0 29,948.9
  • 45. 44 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.13i Quarterly Venture Capital Investments 1985-2013 By Stage (Number of Deals) 2009 2010 2011 Stage 2009-1Q 2009-2Q 2009-3Q 2009-4Q 2009 Total 2010-1Q 2010-2Q 2010-3Q 2010-4Q 2010 Total 2011-1Q 2011-2Q 2011-3Q 2011-4Q 2011 Total Seed 70 87 99 118 374 93 120 100 97 410 93 129 114 110 446 Early Stage 195 212 249 323 979 271 361 318 337 1,287 353 398 408 444 1,603 Expansion 186 220 219 269 894 253 305 242 277 1,077 223 277 282 244 1,026 Later Stage 229 242 199 231 901 207 237 228 201 873 237 281 214 197 929 Total 680 761 766 941 3,148 824 1,023 888 912 3,647 906 1,085 1,018 995 4,004 Figure 3.13j Quarterly Venture Capital Investments 1985-2013 By Stage (Number of Deals) 2012 2013 Stage 2012-1Q 2012-2Q 2012-3Q 2012-4Q 2012 Total 2013-1Q 2013-2Q 2013-3Q 2013-4Q 2013 Total Seed 65 88 72 71 296 53 47 53 68 221 Early Stage 359 445 428 506 1,738 420 512 564 535 2,031 Expansion 225 255 252 255 987 236 231 244 280 991 Later Stage 233 195 194 222 844 203 195 187 213 798 Total 882 983 946 1,054 3,865 912 985 1,048 1,096 4,041
  • 46. 2014 National Venture Capital Association Yearbook | 45 NVCA THOMSON REUTERS Figure 3.14 Venture Capital Investments 1985-2013 By Industry ($ Millions) Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Biotechnology 136 223 290 369 336 316 292 599 483 578 832 1,192 1,368 1,554 2,104 4,293 Business Products and Services 29 81 64 53 52 94 77 39 70 30 188 291 437 715 2,561 4,661 Computers and Peripherals 450 473 392 370 312 245 174 205 164 178 316 358 394 383 958 1,636 Consumer Products and Services 69 135 176 153 86 169 126 123 162 176 522 507 742 692 2,715 3,221 Electronics/Instrumentation 119 118 120 72 104 57 72 51 50 63 151 200 307 198 272 779 Financial Services 81 92 62 209 233 63 25 120 102 124 181 319 383 843 2,128 4,131 Healthcare Services 81 129 138 97 155 92 72 191 204 202 460 734 939 959 1,495 1,396 Industrial/Energy 201 208 290 222 345 243 183 272 281 296 527 495 695 1,257 1,427 2,637 IT Services 21 45 51 52 47 38 38 29 54 119 175 534 641 1,076 4,319 8,863 Media and Entertainment 101 119 155 166 151 93 69 132 278 275 944 1,154 1,080 1,865 7,394 0,613 Medical Devices and Equipment 184 182 258 340 347 322 235 515 388 438 668 619 1,027 1,251 1,581 2,404 Networking and Equipment 225 164 143 137 197 174 140 250 516 250 372 628 962 1,436 4,604 1,557 Other 3 3 0 6 - 0 33 0 6 6 38 21 67 90 214 60 Retailing/Distribution 32 121 296 232 217 89 48 97 103 103 303 269 326 749 2,842 3,206 Semiconductors 255 296 257 299 171 191 92 156 93 159 214 346 597 631 1,378 3,802 Software 618 570 519 477 458 519 466 614 460 671 1,188 2,352 3,485 4,769 10,899 25,482 Telecommunications 177 174 148 159 124 128 117 201 250 463 937 1,321 1,556 3,006 7,957 16,364 Unknown - - - - - - - - - - - - - - - - Total 2,779 3,132 3,361 3,411 3,333 2,833 ,260 3,594 3,663 4,130 8,015 11,342 15,005 21,473 54,847 105,105 Figure 3.14 (Continued) Venture Capital Investments 1985-2013 By Industry ($ Millions) Industry 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 3,503 3,331 3,675 4,402 3,987 4,876 5,843 5,138 3,909 3,970 4,777 4,191 4,562 Business Products and Services 1,076 475 673 466 372 593 596 466 252 437 194 130 218 Computers and Peripherals 709 457 362 530 551 394 569 419 341 375 490 436 517 Consumer Products and Services 702 256 157 331 385 420 441 400 492 661 1,432 1,335 1,245 Electronics/Instrumentation 366 300 194 375 397 669 542 605 379 390 423 250 324 Financial Services 1,204 331 413 532 907 524 574 481 381 391 317 276 536 Healthcare Services 556 380 234 382 379 380 344 165 141 250 299 333 286 Industrial/Energy 1,248 823 734 843 1,131 1,941 3,046 4,537 2,564 3,421 3,753 2,904 1,507 IT Services 2,520 1,017 731 771 999 1,510 1,924 2,106 1,257 1,699 2,627 1,893 1,993 Media and Entertainment 2,368 788 669 1,374 1,203 1,863 2,200 1,877 1,650 1,576 2,307 2,134 2,936 Medical Devices and Equipment 2,085 1,894 1,660 1,919 2,170 2,777 3,694 3,648 2,586 2,363 2,935 2,549 2,130 Networking and Equipment 5,714 2,627 1,726 1,537 1,661 1,222 1,388 776 697 564 370 317 670 Other 55 17 - 14 0 - 3 5 28 8 13 48 99 Retailing/Distribution 368 139 64 217 249 189 340 199 133 149 380 370 240 Semiconductors 2,473 1,655 1,761 2,157 1,851 2,307 2,058 1,586 808 1,110 1,350 894 597 Software 10,864 5,525 4,945 5,520 5,251 5,495 6,219 6,008 4,085 5,257 7,472 8,573 11,020 Telecommunications 5,142 2,163 1,620 1,841 2,032 2,355 2,162 1,533 582 746 590 718 644 Unknown - - - - - - - - - - - - 21 Total 40,952 22,177 19,620 23,209 23,524 27,515 31,943 29,949 20,286 23,369 29,730 27,352 29,545
  • 47. 46 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.15 Venture Capital Investments 1985-2013 By Industry (Number of Deals) Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 73 98 138 153 139 146 140 167 136 139 176 235 244 275 264 Business Products and Services 20 42 51 38 32 28 20 25 32 21 53 70 95 138 277 Computers and Peripherals 158 148 131 138 136 104 78 84 65 66 93 94 115 92 106 Consumer Products and Services 43 51 72 59 52 67 48 51 54 66 110 131 162 164 286 Electronics/Instrumentation 74 66 68 55 58 49 46 38 27 36 49 43 52 54 51 Financial Services 22 27 36 43 44 25 24 24 31 31 47 60 89 115 189 Healthcare Services 33 57 56 46 55 41 38 46 53 45 73 139 152 155 159 Industrial/Energy 122 138 162 138 144 158 124 131 102 101 128 155 211 185 202 IT Services 22 26 33 26 28 32 29 22 19 33 62 128 160 207 457 Media and Entertainment 56 68 92 75 71 58 54 79 82 97 138 191 217 263 701 Medical Devices and Equipment 129 117 166 151 184 189 159 187 147 128 179 213 273 297 290 Networking and Equipment 81 76 73 70 71 74 65 83 62 74 82 123 140 211 274 Other 2 2 2 1 2 2 2 3 2 10 9 10 9 20 Retailing/Distribution 19 34 71 81 73 46 38 34 35 27 54 70 91 120 231 Semiconductors 87 74 94 93 82 79 52 60 45 39 64 76 118 119 148 Software 322 322 307 279 297 302 288 296 243 252 436 688 829 988 1,420 Telecommunications 85 77 94 78 81 63 67 65 75 75 142 210 266 337 522 Total 1,348 1,423 1,646 1,524 1,547 1,463 1,272 1,394 1,211 1,232 1,896 2,635 3,224 3,729 5,597 Figure 3.15 Venture Capital Investments 1985-2013 By Industry (Number of Deals) Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 358 342 331 358 404 413 487 539 544 463 504 468 478 474 Business Products and Services 454 176 101 97 83 78 95 111 116 68 76 59 39 66 Computers and Peripherals 133 82 59 57 60 66 62 72 59 52 52 59 43 34 Consumer Products and Services 286 119 72 47 66 77 79 110 103 88 116 139 170 171 Electronics/Instrumentation 73 55 62 53 69 82 93 90 93 61 68 59 51 42 Financial Services 334 136 76 64 70 65 88 87 68 50 73 57 53 62 Healthcare Services 166 106 70 71 63 66 52 57 50 38 46 45 43 42 Industrial/Energy 254 201 128 136 157 152 224 306 358 262 303 320 257 240 IT Services 686 327 174 149 155 174 240 284 282 218 296 366 297 344 Media and Entertainment 950 372 168 129 142 210 330 402 411 279 346 436 410 455 Medical Devices and Equipment 296 259 236 250 284 279 356 395 400 343 345 372 322 311 Networking and Equipment 478 329 227 184 190 183 130 137 106 95 56 48 32 25 Other 12 11 3 1 6 3 2 10 4 6 11 10 13 22 Retailing/Distribution 282 84 49 31 38 40 40 41 39 35 32 64 57 49 Semiconductors 256 209 170 215 257 219 265 228 210 136 146 136 113 92 Software 2,168 1,303 1,006 969 952 952 1,031 1,078 1,115 831 1,066 1,256 1,391 1,547 Telecommunications 852 479 274 213 232 234 308 279 219 123 111 110 96 65 Total 8,038 4,590 3,206 3,024 3,228 3,293 3,882 4,226 4,177 3,148 3,647 4,004 3,865 4,041
  • 48. 2014 National Venture Capital Association Yearbook | 47 NVCA THOMSON REUTERS Figure 3.16 Venture Capital Investments 1985-2013 By State ($ Millions) State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 California 1,070.9 1,343.8 1,266.7 1,391.8 1,309.8 1,221.6 1,031.3 1,437.2 1,232.1 1,503.8 3,108.7 4,634.4 6,044.9 7,868.2 22,947.2 42,882.9 Massachusetts 396.3 379.5 446.0 387.8 296.8 350.9 240.0 366.3 310.9 385.9 697.2 1,053.9 1,438.6 2,002.1 5,065.7 10,557.1 New York 114.5 75.4 100.5 112.1 158.7 48.8 45.0 143.8 103.9 69.9 303.3 293.3 786.2 1,402.1 3,508.1 6,690.8 Texas 248.6 228.4 211.0 240.7 229.2 141.0 161.4 150.5 241.9 313.8 479.2 553.4 908.7 1,205.6 3,163.1 6,270.8 Washington 55.4 66.1 98.3 73.3 74.8 55.2 29.2 191.5 85.4 137.6 325.9 466.9 434.2 736.5 2,340.7 2,792.3 Maryland 46.8 20.8 30.5 46.1 87.7 47.6 36.4 30.1 343.5 55.9 140.0 139.5 188.3 349.9 616.5 1,961.5 Virginia 32.3 23.5 76.4 66.6 51.8 46.7 14.0 30.9 39.5 77.6 279.4 440.1 297.9 749.7 1,238.9 3,320.9 Pennsylvania 48.8 43.3 78.0 68.4 56.2 119.6 41.1 154.0 107.9 149.4 128.0 305.6 540.9 644.9 1,763.5 2,911.7 Illinois 43.5 30.7 38.5 42.7 93.4 72.0 96.6 73.9 89.5 168.9 199.0 358.0 414.3 426.9 1,232.7 2,382.3 Colorado 77.0 113.8 111.4 107.8 157.8 93.7 54.2 129.7 135.0 197.4 325.1 321.2 405.0 838.9 1,832.9 4,091.9 Florida 31.1 34.5 70.8 80.0 44.3 34.6 22.5 71.9 127.7 102.8 270.9 398.9 467.1 625.3 1,697.4 2,691.1 Georgia 55.8 111.4 66.6 105.3 64.7 20.9 46.8 192.7 143.4 93.5 157.8 247.1 371.9 504.5 1,164.1 2,270.7 New Jersey 75.3 116.9 132.3 99.1 156.6 66.5 68.7 106.1 100.2 190.7 241.6 441.8 490.9 501.2 907.8 3,162.9 Ohio 34.7 55.7 44.8 53.4 32.7 27.9 19.6 27.1 34.3 67.3 68.7 160.5 180.9 319.1 421.0 1,013.6 Utah 6.0 32.8 8.3 11.9 4.4 1.0 9.1 24.4 7.3 1.2 23.2 57.5 90.7 116.2 418.4 666.9 D. of Columbia 18.9 15.2 4.7 17.2 0.0 2.5 0.8 4.8 1.1 4.3 0.8 6.7 5.2 46.9 539.7 508.3 Minnesota 24.4 29.9 35.4 25.8 37.6 78.7 38.7 52.0 37.1 55.4 192.3 149.9 256.8 340.0 616.5 951.7 North Carolina 17.3 20.9 21.0 15.7 26.1 36.9 12.1 48.8 22.2 63.6 210.7 180.9 271.8 326.9 853.6 1,821.8 Connecticut 71.6 76.9 101.3 167.7 89.6 134.9 86.5 57.8 33.3 82.5 141.3 146.0 270.0 345.2 889.2 1,550.8 Oregon 84.9 75.0 51.7 66.7 43.2 33.0 29.7 55.6 32.8 27.0 38.6 90.5 126.9 53.5 501.0 810.4 Arizona 15.2 38.1 38.6 43.9 37.8 27.5 33.3 64.9 41.9 35.7 83.4 95.5 170.2 226.1 365.5 668.6 Tennessee 43.5 53.5 74.5 42.7 73.8 38.8 21.1 7.2 46.7 40.6 157.7 178.2 106.6 107.3 581.0 466.3 Michigan 34.8 21.3 59.1 15.7 21.8 26.4 5.7 14.9 58.7 8.6 65.7 79.4 106.2 122.4 253.5 356.4 South Carolina 0.9 - 15.3 18.1 23.7 7.6 4.0 1.2 11.4 21.8 53.1 100.2 61.0 168.0 218.2 415.2 Arkansas - 1.2 - - - - - 1.0 - - 5.0 - 4.0 29.9 25.9 34.3 Rhode Island 12.6 9.9 6.6 14.2 30.9 2.7 0.4 5.1 10.5 - 3.5 20.3 11.5 26.0 35.4 92.6 Missouri 8.8 4.3 11.1 1.6 9.4 7.5 34.9 25.2 55.1 70.5 98.5 56.1 72.6 611.7 309.1 655.8 New Hampshire 5.3 14.8 15.1 27.7 29.5 16.2 29.2 6.8 31.7 7.9 30.5 42.9 53.3 167.8 233.8 767.9 Delaware 0.3 - 4.5 1.4 4.8 2.3 3.8 9.9 3.0 12.5 4.4 4.7 1.1 - 16.8 134.7 Wisconsin 11.4 13.6 16.4 12.8 11.7 10.9 5.5 23.3 32.5 8.5 9.1 26.0 62.9 51.3 88.5 259.7 Kansas 2.3 2.2 3.9 4.6 5.1 8.9 0.4 1.7 4.8 1.5 8.7 35.7 9.2 10.4 30.2 264.8 Maine 19.0 11.6 15.3 8.7 17.2 5.1 4.3 0.5 3.0 - 1.5 1.5 3.7 59.7 44.9 140.2 New Mexico 18.9 9.2 6.6 3.9 3.0 1.8 4.4 - 0.5 - 3.6 12.9 32.5 7.7 12.1 21.1 Indiana 16.0 16.7 17.7 6.4 10.1 10.5 8.3 0.0 16.6 56.3 15.2 20.8 29.7 44.0 46.7 273.3 North Dakota - - 14.0 - - - - - - 0.2 9.8 - 1.1 0.5 3.0 6.1 Iowa 0.7 0.9 7.8 1.3 2.0 2.5 0.7 1.6 2.0 19.8 12.1 22.1 17.1 8.8 3.9 16.4 Vermont - 6.6 8.0 4.5 7.4 7.2 1.3 3.8 - 5.3 13.0 1.8 4.5 4.2 - 46.4 Louisiana 9.9 3.3 1.9 1.9 - - 2.3 3.8 3.8 2.7 25.5 13.7 26.5 41.0 234.0 103.3 South Dakota - - - - - - - - - - - - - - 0.7 0.3 Nebraska 0.5 - - 1.5 - - - 0.1 38.0 3.5 0.5 10.4 3.7 29.1 57.3 163.1
  • 49. 48 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.16 (Continued) Venture Capital Investments 1985-2013 By State ($ Millions) State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Kentucky 2.4 2.3 7.4 2.8 5.8 - 8.5 3.9 15.4 11.9 21.6 31.1 35.0 37.5 81.9 201.8 Nevada - 2.4 4.1 - 5.5 0.1 2.2 9.1 - 1.2 2.9 18.7 9.7 61.2 47.1 30.9 Oklahoma 1.5 4.7 14.1 5.3 9.3 2.6 1.5 - - 11.0 6.1 31.8 27.8 115.4 70.0 44.5 Idaho 0.3 - - - - - - 5.0 0.2 0.1 15.2 0.1 1.2 30.3 16.5 8.5 Alabama 15.5 17.3 21.3 9.6 2.0 2.3 0.3 10.6 55.1 25.0 28.5 50.2 109.9 58.3 65.9 278.5 Hawaii - - - - - - - - - - - 20.5 1.5 4.2 12.8 203.0 Mississippi 2.2 0.0 - 0.6 0.9 4.9 2.4 14.5 1.7 15.0 - 10.6 8.4 4.5 250.7 23.5 West Virginia 1.1 2.0 0.1 0.0 - 0.1 - - 0.0 - - - 23.8 2.0 - 4.5 Montana 1.6 1.7 3.3 1.1 - - 1.0 - - - - - - - 16.3 16.7 Alaska - - - - - - - - - - - - - - - 3.5 Puerto Rico - - - - - - 0.3 0.0 1.0 22.0 7.8 8.2 12.5 1.3 4.6 42.1 Unknown - - 0.5 0.8 6.1 13.0 0.2 30.8 0.8 0.1 0.3 2.2 4.4 39.1 2.4 50.4 Wyoming - 0.1 - - - - - - - - - - 2.0 - - - Total 2,779.0 3,132.3 3,361.3 3,411.3 3,333.0 2,833.1 2,259.7 3,594.2 3,663.2 4,130.1 8,014.8 11,341.6 15,004.6 21,473.0 54,846.7 105,104.6 Figure 3.16b Venture Capital Investments 1985-2013 By State ($ Millions) State 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 California 16,665.4 9,598.7 8,693.9 10,577.2 10,881.4 12,965.9 15,463.7 14,873.4 10,302.7 12,021.7 15,109.7 14,541.6 14,769.7 Massachusetts 4,919.4 2,646.3 2,721.3 3,107.9 2,736.6 3,032.0 3,798.9 3,328.7 2,407.8 2,422.6 3,152.7 3,222.1 3,079.3 New York 1,935.1 746.3 669.8 773.7 1,068.9 1,444.6 1,350.0 1,538.6 1,080.4 1,391.8 2,474.8 1,899.3 2,870.4 Texas 3,137.3 1,191.6 1,221.0 1,212.3 1,170.7 1,518.2 1,493.8 1,127.7 678.2 1,079.4 1,622.4 948.9 1,315.5 Washington 1,150.7 591.0 450.8 854.9 830.3 1,116.9 1,335.2 883.5 565.2 575.8 539.2 853.1 913.2 Maryland 935.6 627.1 331.4 709.5 637.8 844.2 728.9 578.0 424.0 484.2 438.4 407.8 664.5 Virginia 1,004.2 429.0 397.3 291.1 534.8 460.9 626.4 534.6 209.4 376.7 520.1 273.6 593.8 Pennsylvania 1,084.2 526.5 537.6 624.9 518.3 898.7 977.3 787.0 433.6 525.4 515.6 524.4 446.5 Illinois 998.6 313.6 379.9 236.6 315.7 437.2 451.4 477.0 257.1 654.3 799.5 594.4 434.9 Colorado 1,244.4 588.0 609.9 363.2 622.9 703.3 686.3 872.3 458.9 445.9 619.7 589.0 428.8 Florida 937.3 401.7 323.2 422.6 329.2 282.0 599.3 265.2 337.7 234.2 335.5 203.9 421.0 Georgia 847.9 574.9 281.5 500.5 264.4 414.1 431.6 420.9 310.6 334.0 381.3 262.8 411.8 New Jersey 1,542.3 972.0 802.8 968.1 925.4 740.7 578.9 716.0 621.8 460.8 439.6 421.4 322.3 Ohio 249.2 266.0 193.9 89.9 136.5 91.2 228.1 273.6 122.7 199.4 188.1 304.5 319.2 Utah 220.1 135.7 111.8 249.8 248.8 198.1 196.0 254.8 176.3 150.5 249.3 318.4 315.0 D. of Columbia 161.8 23.5 56.1 80.2 25.1 46.2 57.7 25.3 49.1 109.3 53.4 60.8 286.5 Minnesota 475.2 345.5 208.2 388.2 274.0 304.5 413.1 485.0 284.8 145.1 291.4 254.1 270.0 North Carolina 585.6 554.2 379.4 311.1 346.9 422.5 555.4 511.6 254.9 421.6 303.6 180.9 259.6 Connecticut 608.2 191.9 223.6 251.6 209.6 289.0 271.0 236.1 190.2 133.2 157.8 152.6 181.7 Oregon 248.6 165.1 140.5 142.4 132.2 146.8 254.4 152.2 79.6 133.4 237.8 124.6 138.5 Arizona 247.5 212.4 81.9 72.2 134.7 276.7 238.2 228.5 94.0 84.2 230.4 237.4 113.3
  • 50. 2014 National Venture Capital Association Yearbook | 49 NVCA THOMSON REUTERS Figure 3.16b Venture Capital Investments 1985-2013 By State ($ Millions) State 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Tennessee 193.3 122.5 82.6 96.2 101.5 43.2 126.7 84.3 75.0 69.3 108.6 81.3 109.3 Michigan 154.9 109.4 95.2 134.3 93.3 131.3 104.7 214.5 178.5 148.9 83.1 238.9 108.2 South Carolina 10.1 45.3 11.8 13.6 2.7 8.3 86.9 21.2 7.1 41.6 59.7 39.5 85.7 Arkansas 10.4 9.7 1.2 3.7 5.1 6.5 6.2 - - 5.0 - 5.0 85.5 Rhode Island 118.7 95.9 62.8 58.0 72.8 77.2 4.5 16.1 30.0 59.3 42.2 85.1 81.7 Missouri 267.4 81.0 79.5 26.0 127.7 57.8 47.6 92.5 17.4 97.0 134.4 21.5 76.7 New Hampshire 257.9 225.7 167.1 127.6 97.2 123.1 154.1 255.8 52.1 56.9 62.5 60.7 74.4 Delaware 14.6 19.4 0.4 2.1 11.1 5.3 7.3 79.0 20.6 32.2 26.2 9.6 70.8 Wisconsin 92.6 51.2 37.6 66.0 67.8 72.0 87.2 71.6 36.1 134.9 52.9 95.3 35.9 Kansas 40.3 8.9 27.0 48.7 7.2 31.5 123.4 59.5 7.5 39.1 53.8 47.6 32.9 Maine 3.9 16.9 2.7 26.0 5.1 39.9 7.8 5.4 11.4 4.3 38.6 12.8 26.8 New Mexico 14.2 13.9 3.6 24.0 76.4 32.1 131.1 49.8 5.5 12.4 64.9 36.3 25.9 Indiana 56.5 40.1 24.5 67.8 123.7 32.8 70.6 93.7 232.1 80.0 177.9 84.2 25.4 North Dakota 1.0 - 14.5 2.0 - - 0.2 5.5 4.7 3.2 4.0 2.4 24.1 Iowa 9.1 2.0 - 5.3 12.1 1.5 25.3 58.2 84.1 51.5 28.4 5.0 22.5 Vermont 11.6 1.2 0.5 4.5 34.8 24.1 17.6 42.2 47.1 33.1 24.8 4.4 21.4 Louisiana 46.0 17.7 2.3 9.6 3.0 11.4 15.1 14.6 13.3 18.1 21.2 9.4 14.8 South Dakota 1.6 18.1 3.5 2.2 - - 4.0 0.5 0.8 - 4.1 - 11.9 Nebraska 90.1 16.9 4.6 0.2 13.1 7.5 2.9 11.8 - 2.0 - 3.1 11.0 Kentucky 88.9 13.8 5.4 48.2 35.0 28.2 56.9 32.8 17.3 16.7 12.5 23.5 10.8 Nevada 33.3 31.8 23.2 47.6 64.9 19.6 23.7 12.6 15.4 28.8 27.0 8.3 9.6 Oklahoma 13.8 33.0 35.1 68.1 80.8 14.9 8.1 17.3 4.5 13.0 27.1 34.0 8.0 Idaho 2.7 10.6 52.2 2.5 10.0 17.8 18.7 22.8 14.6 7.8 5.1 15.2 6.5 Alabama 80.3 65.1 35.7 69.2 39.7 19.9 36.1 48.8 45.4 0.6 3.5 23.1 5.2 Hawaii 37.8 4.4 17.8 13.7 14.6 32.8 4.9 7.5 7.4 9.5 0.6 0.6 2.5 Mississippi 30.0 5.0 0.9 4.9 10.0 16.2 5.0 - 1.3 - 1.0 9.8 1.2 West Virginia 1.4 15.9 12.6 5.8 10.5 4.9 10.8 30.0 3.0 3.8 2.1 14.6 1.2 Montana 24.8 - - - 27.4 - 4.0 15.6 14.5 1.9 3.2 5.6 0.0 Alaska - - - - - - - - - - - - - Puerto Rico 32.0 0.5 0.1 1.5 28.8 14.3 16.0 13.8 - 4.5 - 0.1 - Unknown 14.3 - - - - - - - 0.5 - - - - Wyoming - - - 1.5 4.1 6.5 0.2 1.5 - 10.0 - - - Total 40,952.1 22,177.1 19,620.0 23,208.8 23,524.5 27,514.5 31,942.9 29,948.9 20,286.2 23,368.6 29,730.0 27,352.3 29,545.2
  • 51. 50 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.17 Venture Capital Investments 1985-2013 By State (Number of Deals) State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 California 467 493 523 534 569 552 478 575 435 460 685 1,023 1,142 1,402 2,223 2,946 1,539 1,104 1,164 1,262 New York 45 47 63 48 49 31 24 38 37 38 74 89 156 195 353 609 293 155 120 158 Massachusetts 215 187 224 195 182 172 136 135 131 127 197 289 334 398 591 791 518 388 384 385 Pennsylvania 35 45 59 54 41 44 37 61 44 38 64 85 139 149 153 261 155 109 106 113 Texas 106 93 106 105 91 85 70 70 72 68 101 135 172 197 318 485 343 174 174 176 Washington 20 21 29 30 37 26 26 37 32 36 66 83 89 111 207 258 146 111 80 114 Illinois 26 27 31 31 61 34 44 40 25 35 44 55 87 73 118 203 128 81 59 62 Ohio 26 21 26 21 18 21 20 21 20 20 36 56 53 66 52 82 45 51 32 37 Colorado 43 58 62 63 53 49 35 53 48 53 58 83 98 127 161 222 115 91 71 72 Michigan 20 24 25 12 16 15 9 6 12 3 12 21 28 29 44 55 22 27 18 17 Maryland 18 17 24 28 19 29 27 25 18 22 32 49 49 58 100 178 92 91 86 98 Virginia 22 22 31 26 30 27 24 20 20 21 39 59 82 99 154 284 145 92 86 78 Connecticut 33 33 41 46 48 41 36 33 26 35 43 45 66 73 96 123 78 41 37 38 North Carolina 14 21 15 11 18 28 20 20 22 20 36 60 80 82 104 153 88 79 76 56 Tennessee 16 22 28 31 27 22 24 11 8 12 21 29 25 24 47 51 30 25 24 27 Florida 21 20 29 23 22 32 19 25 26 19 61 57 74 70 117 189 113 64 66 64 New Jersey 45 43 54 42 55 44 48 44 37 39 56 68 85 83 118 188 156 96 85 94 Georgia 31 44 45 42 33 34 35 37 42 46 50 54 79 98 161 224 138 81 65 79 Minnesota 23 31 34 28 30 32 31 25 24 20 50 47 89 77 84 107 88 59 57 52 Missouri 5 7 13 8 11 11 9 9 13 8 19 26 18 23 29 54 18 29 19 9 Oregon 24 24 30 34 27 22 12 12 15 13 17 28 41 18 52 67 42 28 23 31 Utah 3 14 15 7 6 4 9 8 7 1 6 16 31 35 43 58 44 29 24 31 D. of Columbia 4 6 8 4 2 5 3 3 2 4 1 5 2 4 18 45 22 7 6 8 Arizona 15 11 20 13 24 14 15 22 21 25 27 30 29 38 57 70 35 27 19 12 Wisconsin 13 16 17 15 6 10 6 9 8 9 8 11 19 16 19 27 20 11 8 14 New Hampshire 3 9 11 10 13 18 17 10 10 4 10 17 17 24 31 60 39 41 34 22 New Mexico 2 3 5 5 1 3 2 - 2 1 2 5 4 4 6 8 4 6 5 8 Indiana 9 15 15 6 6 12 8 1 7 7 8 9 13 9 11 28 7 12 8 10 South Carolina 1 - 5 3 7 5 10 7 7 6 5 15 15 17 10 11 4 4 3 5 Rhode Island 6 4 7 6 7 7 4 2 3 - 3 2 4 5 11 11 11 14 10 8 Kansas 1 2 6 3 3 3 1 3 2 2 4 11 6 3 8 22 10 8 13 13 Vermont - 3 3 3 2 3 3 1 - 3 5 3 3 3 1 4 3 4 3 3 Nebraska 1 - - 5 1 - - 1 5 3 1 5 3 6 7 11 10 3 2 2 Oklahoma 4 5 4 1 4 2 1 - - 5 2 7 5 12 8 9 5 4 3 12 Louisiana 6 2 2 2 - - 2 1 4 2 7 4 12 9 9 14 10 7 2 4 Kentucky 2 4 7 4 5 - 2 2 2 3 9 7 15 16 16 14 5 3 3 6 Alabama 7 10 12 4 7 7 2 4 10 4 9 8 17 14 10 30 15 12 10 8 Delaware 1 1 1 4 3 5 4 3 1 3 4 4 4 - 3 5 1 2 1 1 Nevada - 2 2 - 1 1 4 4 - 2 2 4 7 11 10 10 6 6 7 7 Arkansas - 1 - - - - - 1 - - 2 - 2 3 5 5 3 5 3 2
  • 52. 2014 National Venture Capital Association Yearbook | 51 NVCA THOMSON REUTERS Figure 3.17b Venture Capital Investments 1985-2013 By State (Number of Deals) State 2005 2006 2007 2008 2009 2010 2011 2012 2013 California 1,337 1,592 1,735 1,699 1,297 1,478 1,622 1,604 1,616 New York 131 235 221 265 203 292 355 343 403 Massachusetts 392 409 475 452 343 378 402 426 364 Pennsylvania 107 149 176 193 136 163 156 190 233 Texas 181 201 188 162 126 168 172 163 154 Washington 122 142 168 159 107 116 122 114 126 Illinois 60 65 70 74 52 76 103 83 93 Ohio 38 46 69 68 60 64 74 61 86 Colorado 91 112 114 116 91 84 109 105 81 Michigan 21 24 22 45 36 31 35 49 72 Maryland 115 111 100 108 80 76 76 57 71 Virginia 91 94 103 88 49 58 77 79 67 Connecticut 34 30 36 41 42 62 57 50 52 North Carolina 48 58 70 58 39 57 47 34 50 Tennessee 25 14 23 27 17 31 41 33 50 Florida 52 57 60 43 35 45 55 35 47 New Jersey 81 93 100 92 77 70 63 58 43 Georgia 64 91 73 82 47 70 59 55 41 Minnesota 42 46 61 52 39 31 49 32 39 Missouri 11 14 18 25 12 15 22 12 38 Oregon 28 33 39 33 16 32 38 30 38 Utah 32 42 38 40 34 27 48 44 34 D. of Columbia 10 9 13 12 7 16 12 27 33 Figure 3.17 (Continued) Venture Capital Investments 1985-2013 By State (Number of Deals) State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Maine 8 6 5 4 6 6 4 1 2 - 2 5 2 14 11 15 9 6 3 4 Hawaii 1 - - - - - - - - - - 3 4 3 3 3 5 2 7 5 Mississippi 1 1 - 1 1 3 1 4 2 5 - 3 4 3 5 6 3 3 3 5 North Dakota - - 1 - - - - - - 1 2 - 1 1 1 1 1 - 2 1 Idaho 1 - 1 - - - - 1 2 1 1 1 2 3 2 3 2 2 5 2 Iowa 1 3 2 3 2 2 3 4 1 4 9 6 4 7 2 4 5 1 1 4 Montana 2 3 2 6 - - 3 - - - - - - - 2 3 2 - - - South Dakota - - - - - - - - - - - - - - 1 1 2 2 1 4 West Virginia 1 1 2 1 - 1 - - 1 - - - 2 1 - 2 2 8 5 3 Alaska - - - - - - - 1 - - - - - - - 1 - - - - Puerto Rico - - - - - - 3 2 1 2 4 6 2 2 2 11 5 1 1 1 Unknown - - 1 2 3 1 1 2 4 2 2 7 7 14 3 16 8 - - - Wyoming - 1 - - - - - - - - - - 2 - - - - - - 1 Total 1,348 1,423 1,646 1,524 1,547 1,463 1,272 1,394 1,211 1,232 1,896 2,635 3,224 3,729 5,597 8,038 4,590 3,206 3,024 3,228
  • 53. 52 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.17b Venture Capital Investments 1985-2013 By State (Number of Deals) State 2005 2006 2007 2008 2009 2010 2011 2012 2013 Arizona 28 34 34 22 20 18 23 19 25 Wisconsin 18 20 22 20 15 23 14 14 19 New Hampshire 21 22 25 30 14 10 15 8 17 New Mexico 16 9 27 18 13 11 10 16 17 Indiana 13 14 17 14 15 16 14 17 15 South Carolina 1 2 10 10 5 10 4 5 15 Rhode Island 12 7 3 6 15 11 14 15 13 Kansas 5 10 16 25 17 35 47 12 10 Vermont 4 8 7 8 8 7 8 5 10 Nebraska 3 4 4 2 - 2 1 4 9 Oklahoma 1 8 6 5 4 2 4 7 8 Louisiana 3 2 7 11 12 4 8 3 7 Kentucky 4 10 10 10 9 15 9 7 6 Alabama 6 9 10 10 11 2 2 6 5 Delaware 5 4 5 9 6 9 10 7 5 Nevada 8 7 8 6 4 4 4 5 5 Arkansas 2 6 2 - - 1 - 1 4 Maine 3 7 8 4 4 7 5 6 4 Hawaii 6 11 6 7 3 3 3 3 3 Mississippi 2 4 1 - 4 - 1 4 3 North Dakota - - 1 4 3 1 1 1 3 Idaho 3 5 7 6 4 4 3 4 2 Iowa 3 2 3 8 9 2 3 1 2 Montana 2 1 1 2 1 3 2 6 1 South Dakota - 1 3 1 3 - 2 1 1 West Virginia 5 4 5 2 3 4 2 3 1 Alaska - - - - - - - - - Puerto Rico 2 3 4 2 - 1 - 1 - Unknown - - - - 1 1 1 - - Wyoming 4 1 2 1 - 1 - - - Total 3,293 3,882 4,226 4,177 3,148 3,647 4,004 3,865 4,041
  • 54. 2014 National Venture Capital Association Yearbook | 53 NVCA THOMSON REUTERS 0 20,000 40,000 60,000 80,000 100,000 120,000 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 13 ($Millions) Year Follow-on First Figure 3.18 Venture Capital Investments First vs. Follow-on Deals Total Dollars Invested ($ Millions)
  • 55. 54 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.19 Venture Capital Investments First vs. Follow-on Year First Follow-on Total 1985 727.3 2,051.7 2,779.0 1986 905.3 2,226.9 3,132.3 1987 1,008.4 2,352.9 3,361.3 1988 1,098.4 2,312.9 3,411.3 1989 907.4 2,425.6 3,333.0 1990 847.2 1,985.9 2,833.1 1991 551.7 1,707.9 2,259.7 1992 1,302.5 2,291.7 3,594.2 1993 1,274.8 2,388.4 3,663.2 1994 1,644.6 2,485.5 4,130.1 1995 3,976.7 4,038.0 8,014.8 1996 4,198.9 7,142.7 11,341.6 1997 4,869.1 10,135.5 15,004.6 1998 7,154.7 14,318.3 21,473.0 1999 16,333.3 38,513.4 54,846.7 2000 28,542.8 76,561.8 105,104.6 2001 7,300.7 33,651.4 40,952.1 2002 4,343.6 17,833.5 22,177.1 2003 3,692.1 15,927.9 19,620.0 2004 5,402.7 17,806.1 23,208.8 2005 5,885.4 17,639.1 23,524.5 2006 6,266.8 21,247.7 27,514.5 2007 7,721.4 24,221.5 31,942.9 2008 6,515.5 23,433.3 29,948.9 2009 3,506.0 16,780.2 20,286.2 2010 4,294.3 19,074.3 23,368.6 2011 5,498.2 24,231.8 29,730.0 2012 4,440.6 22,911.7 27,352.3 2013 5,104.7 24,440.5 29,545.2
  • 56. 2014 National Venture Capital Association Yearbook | 55 NVCA THOMSON REUTERS 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 (NumberofCompanies) Year Series2 Series1 Follow-on First Figure 3.20 Venture Capital Investments Number of Companies Receiving
  • 57. 56 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.21 Venture Capital Investments First vs Follow-on Year No. of Cos Receiving Initial Deals Financing No. of Cos Receiving Follow-On Financing No. of Cos Receiving Financing* 1985 435 757 1,156 1986 507 760 1,228 1987 580 865 1,387 1988 510 801 1,262 1989 450 841 1,241 1990 351 788 1,072 1991 266 717 941 1992 394 716 1,047 1993 354 652 949 1994 428 626 989 1995 902 776 1,573 1996 1,145 1,170 2,116 1997 1,305 1,473 2,575 1998 1,430 1,831 3,030 1999 2,468 2,440 4,474 2000 3,391 3,692 6,423 2001 1,233 2,785 3,854 2002 847 1,977 2,713 2003 777 1,834 2,511 2004 975 1,847 2,715 2005 1,075 1,852 2,800 2006 1,277 2,128 3,229 2007 1,419 2,255 3,502 2008 1,309 2,348 3,479 2009 830 1,903 2,645 2010 1,091 2,052 3,022 2011 1,346 2,178 3,356 2012 1,275 2,148 3,269 2013 1,334 2,221 3,383 * No. of Cos receiving financing can be less than the sum of the first two columns because any given company can receive initial and follow-on financing in the same year
  • 58. 2014 National Venture Capital Association Yearbook | 57 NVCA THOMSON REUTERS Figure 3.22 First Sequence by Stage of Development ($ Millions) Stage 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Seed 309.0 437.6 353.4 377.9 258.3 178.2 102.7 214.3 356.5 528.1 742.6 639.1 798.3 1,003.4 2,790.6 Early Stage 101.4 88.8 318.5 291.8 215.7 292.6 214.3 266.5 260.1 390.8 898.0 1,356.4 1,722.4 2,700.2 6,367.9 Expansion 65.8 211.4 272.0 321.8 312.4 277.3 153.3 572.5 490.2 471.0 1,641.9 1,742.4 1,866.5 2,815.0 5,840.2 Later Stage 51.1 67.5 64.4 106.9 121.0 99.1 81.4 249.1 168.0 254.8 694.2 460.9 481.9 636.1 1,334.5 Total 727.3 905.3 1,008.4 1,098.4 907.4 847.2 551.7 1,302.5 1,274.8 1,644.6 3,976.7 4,198.9 4,869.1 7,154.7 16,333.3 Figure 3.22 (Continued) First Sequence by Stage of Development ($ Millions) Stage 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Seed 2,522.9 632.4 266.8 302.9 793.6 803.0 1,081.6 1,410.7 1,368.5 878.3 899.2 823.9 558.4 750.2 Early Stage 16,420.1 4,411.0 2,359.3 2,121.4 2,605.1 2,616.9 2,522.1 2,917.8 2,381.0 1,346.1 1,748.5 2,645.7 2,244.3 2,920.4 Expansion 8,673.1 1,891.8 1,333.1 953.4 1,292.3 1,572.6 1,923.0 2,477.3 1,698.1 786.3 946.6 1,047.6 945.7 789.1 Later Stage 926.8 365.4 384.4 314.5 711.6 892.9 740.1 915.5 1,068.0 495.3 700.0 981.0 692.2 644.9 Total 28,542.8 7,300.7 4,343.6 3,692.1 5,402.7 5,885.4 6,266.8 7,721.4 6,515.5 3,506.0 4,294.3 5,498.2 4,440.6 5,104.7 Figure 3.23 First Sequence by Stage of Development (Number of Deals) Stage 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Seed 221 247 230 210 206 119 88 119 145 189 256 309 347 459 661 Early Stage 81 118 199 168 102 122 78 132 70 111 281 401 470 495 1116 Expansion 107 105 118 106 111 86 79 115 105 104 293 360 419 411 626 Later Stage 26 37 33 26 31 24 21 28 34 24 72 75 69 65 65 Total 435 507 580 510 450 351 266 394 354 428 902 1,145 1,305 1,430 2,468 Figure 3.23 (Continued) First Sequence by Stage of Development (Number of Deals) Stage 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Seed 587 221 130 165 178 210 324 426 381 224 281 356 213 177 Early Stage 1913 691 465 424 539 539 570 592 557 387 548 701 827 930 Expansion 799 279 199 142 183 252 275 295 228 142 169 177 149 150 Later Stage 92 42 53 46 75 74 108 106 143 77 93 112 86 77 Total 3,391 1,233 847 777 975 1,075 1,277 1,419 1,309 830 1,091 1,346 1,275 1,334
  • 59. 58 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.24 First Sequence by Industry ($ Millions) Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Software 97.8 110.6 94.6 130.1 94.3 167.9 106.8 149.8 123.0 296.0 542.1 923.8 1,060.5 1,375.8 2,980.7 Biotechnology 34.5 54.3 66.0 66.9 54.8 26.1 16.1 181.1 123.0 161.1 159.3 212.8 346.3 383.7 417.9 Media and Entertainment 69.8 43.2 100.3 114.1 80.4 63.7 13.9 81.3 195.6 115.3 775.1 364.3 419.3 686.4 2,466.9 IT Services 15.3 16.6 5.5 12.8 20.6 18.3 10.3 8.9 36.0 93.0 44.9 312.9 231.3 377.1 1,545.9 Medical Devices and Equipment 44.4 75.0 85.0 84.8 74.3 59.6 45.9 127.2 117.2 123.9 188.4 212.6 260.1 263.0 310.4 Healthcare Services 16.5 70.2 56.4 17.1 48.8 31.5 31.7 66.6 92.5 109.5 300.4 273.9 342.5 239.2 368.5 Consumer Products and Services 46.8 63.9 57.9 77.0 31.1 88.4 53.8 76.9 74.8 113.2 306.6 206.5 195.1 257.8 835.8 Financial Services 61.1 75.6 43.9 165.9 71.4 35.3 8.3 100.6 78.9 62.9 114.0 253.2 253.2 443.6 765.0 Industrial/Energy 93.6 81.3 114.5 123.5 222.5 108.0 68.2 148.9 150.2 156.4 434.1 274.5 352.3 782.4 708.2 Other 0.5 2.0 - 6.0 - 0.0 32.7 0.0 - 0.2 13.0 0.5 15.3 26.8 92.3 Computers and Peripherals 39.0 69.0 87.0 70.5 46.3 52.4 19.1 59.9 35.1 48.5 148.1 115.2 110.2 122.5 273.5 Business Products and Services 12.3 49.7 26.6 11.3 13.3 37.7 63.7 28.1 61.9 24.3 135.7 159.3 267.6 367.0 963.1 Telecommunications 64.2 45.0 38.6 30.9 44.2 53.6 10.8 93.5 64.2 192.8 365.2 416.4 387.1 955.6 1,960.1 Retailing/Distribution 19.7 64.6 137.8 63.3 22.4 13.2 25.1 52.7 28.4 60.5 217.7 131.0 114.2 335.3 698.7 Electronics/Instrumentation 42.1 27.6 31.9 25.7 12.7 14.7 15.1 14.2 16.0 6.6 67.1 85.7 123.8 47.5 79.2 Unknown - - - - - - - - - - - - - - - Semiconductors 47.5 22.4 38.9 56.7 14.5 36.3 10.2 51.7 5.1 42.9 69.5 130.5 166.2 165.0 292.2 Networking and Equipment 22.2 34.1 23.5 41.8 55.9 40.4 19.9 61.0 73.0 37.7 95.5 125.7 224.3 325.9 1,574.8 Total 727.3 905.3 1,008.4 1,098.4 907.4 847.2 551.7 1,302.5 1,274.8 1,644.6 3,976.7 4,198.9 4,869.1 7,154.7 16,333.3 Figure 3.24 First Sequence by Industry ($ Millions) Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Software 6,120.9 1,649.4 1,270.5 936.3 1,236.5 1,170.4 1,320.9 1,492.4 1,184.3 817.8 1,006.2 1,687.9 1,883.0 2,279.1 Biotechnology 807.9 804.2 698.8 423.7 724.5 622.6 1,098.4 1,070.4 955.7 472.8 613.6 891.3 465.7 818.0 Media and Entertainment 2,848.6 344.6 208.5 223.3 680.5 525.5 649.4 652.7 495.6 247.8 378.1 568.1 518.4 433.9 IT Services 2,616.3 310.4 129.0 143.2 198.8 338.6 342.4 517.1 632.7 298.7 444.2 494.2 277.7 371.1 Medical Devices and Equipment 339.5 281.8 279.3 309.7 333.4 389.4 548.6 776.2 682.9 321.7 245.9 244.4 223.2 207.3 Healthcare Services 428.0 84.4 155.1 70.5 87.5 144.7 78.7 76.2 28.7 59.5 148.7 91.2 112.3 181.1 Consumer Products and Services 954.3 131.6 44.9 78.0 123.7 225.7 130.5 205.9 193.4 125.0 193.2 351.6 199.8 177.3 Financial Services 1,484.8 297.5 76.3 94.4 249.2 646.1 164.9 326.1 245.9 132.0 149.9 50.5 29.0 142.0 Industrial/Energy 1,106.8 472.8 433.0 251.0 308.9 525.3 698.0 1,262.0 1,218.3 584.9 443.9 597.0 264.4 127.9 Other 37.0 36.6 17.0 - 13.6 0.1 - 2.7 - 3.5 2.0 12.4 25.2 85.9 Computers and Peripherals 346.8 259.8 17.2 85.0 91.1 84.4 55.7 101.4 129.4 62.2 50.9 99.3 27.4 67.9 Business Products and Services 1,907.7 277.1 117.3 342.6 235.8 152.0 208.3 239.6 97.5 122.8 81.9 49.7 40.2 66.7 Telecommunications 4,755.3 796.6 189.5 180.6 285.9 342.0 410.0 423.4 304.1 84.2 158.2 71.1 136.4 55.3 Retailing/Distribution 869.8 59.1 34.7 12.4 118.3 135.9 39.9 84.5 34.6 21.5 56.1 79.0 43.0 25.0 Electronics/Instrumentation 144.1 103.3 82.3 45.4 98.8 130.1 134.9 114.2 65.7 37.9 66.2 30.0 70.6 23.8 Unknown - - - - - - - - - - - - - 19.7 Semiconductors 1,145.2 514.9 344.7 375.4 417.6 281.5 260.5 212.9 196.0 69.0 110.0 99.6 91.0 19.6 Networking and Equipment 2,629.8 876.5 245.4 120.5 198.4 171.2 125.6 163.7 50.7 44.6 145.3 80.8 33.2 3.0 Total 28,542.8 7,300.7 4,343.6 3,692.1 5,402.7 5,885.4 6,266.8 7,721.4 6,515.5 3,506.0 4,294.3 5,498.2 4,440.6 5,104.7
  • 60. 2014 National Venture Capital Association Yearbook | 59 NVCA THOMSON REUTERS Figure 3.25 First Sequence by Industry (Number of Deals) Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Software 73 73 83 87 68 83 61 66 51 97 223 327 330 335 596 Media and Entertainment 29 33 46 33 33 23 11 27 27 31 70 76 107 113 379 IT Services 11 9 6 9 11 7 5 5 8 20 28 67 62 90 230 Biotechnology 28 32 57 47 37 26 21 54 45 42 54 69 85 106 81 Consumer Products and Services 26 30 33 18 23 26 18 21 19 28 55 52 71 69 139 Industrial/Energy 57 59 73 69 73 52 28 33 35 40 80 79 96 84 100 Medical Devices and Equipment 40 53 61 57 61 36 28 45 41 36 55 85 109 96 87 Business Products and Services 12 27 22 13 9 8 9 10 17 10 32 39 50 74 146 Financial Services 14 19 24 22 12 7 10 13 17 12 32 37 43 63 101 Healthcare Services 9 33 19 11 9 7 12 17 13 20 42 59 53 37 52 Retailing/Distribution 13 26 39 26 13 9 6 12 13 9 36 36 33 45 116 Telecommunications 25 25 25 20 24 10 13 18 27 23 69 88 93 139 228 Electronics/Instrumentation 26 18 23 18 15 8 10 10 6 10 21 19 19 17 15 Semiconductors 25 13 17 21 13 14 7 11 6 12 25 29 54 43 51 Other 1 1 - 1 - 2 2 2 1 1 6 1 5 5 10 Computers and Peripherals 28 34 33 35 28 17 11 27 15 20 42 35 43 32 35 Networking and Equipment 18 22 19 23 21 16 14 23 13 17 32 47 52 82 102 Total 435 507 580 510 450 351 266 394 354 428 902 1,145 1,305 1,430 2,468 Figure 3.25 (Continued) First Sequence by Industry (Number of Deals) Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Software 877 315 269 232 249 285 300 329 319 228 338 469 517 591 Media and Entertainment 393 73 43 39 57 101 157 181 165 89 146 210 192 170 IT Services 327 75 26 32 51 67 90 99 117 73 99 140 98 124 Biotechnology 123 109 115 91 110 121 149 149 149 93 117 113 87 100 Consumer Products and Services 100 29 24 20 30 41 43 58 52 32 41 58 81 79 Industrial/Energy 124 81 59 52 70 69 115 149 156 84 90 91 75 57 Medical Devices and Equipment 70 63 63 77 80 84 126 123 108 79 70 71 61 55 Business Products and Services 223 52 25 29 37 36 40 55 47 26 29 29 16 34 Financial Services 172 40 29 19 36 32 32 47 30 17 34 21 18 22 Healthcare Services 58 20 20 17 15 25 18 17 9 13 20 11 14 18 Retailing/Distribution 121 19 9 5 20 23 10 13 15 11 15 25 23 18 Telecommunications 393 128 44 39 58 70 96 75 44 24 32 44 38 17 Electronics/Instrumentation 26 25 18 18 22 32 22 26 30 16 16 10 13 11 Semiconductors 116 76 53 65 79 43 47 41 35 15 15 21 15 11 Other 9 8 2 1 6 3 - 9 3 5 9 8 12 18 Computers and Peripherals 51 28 11 21 18 19 13 25 19 16 13 14 9 7 Networking and Equipment 208 92 37 20 37 24 19 23 11 9 7 11 6 2 Total 3,391 1,233 847 777 975 1,075 1,277 1,419 1,309 830 1,091 1,346 1,275 1,334
  • 61. 60 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.26 Internet-Related Investments By Year Year # Companies ($ Millions) 1995 433 1,946.0 1996 763 4,236.4 1997 1,030 6,375.9 1998 1,492 11,875.9 1999 3,069 42,540.5 2000 4,615 80,915.1 2001 2,391 26,620.0 2002 1,473 11,394.5 2003 1,255 9,343.2 2004 1,278 10,991.5 2005 1,367 11,002.1 2006 1,680 13,007.0 2007 1,805 14,959.7 2008 1,860 13,444.9 2009 1,450 9,434.3 2010 1,725 11,061.2 2011 2,136 15,949.3 2012 2,170 16,067.8 2013 2,281 19,009.3 Total 15,177 330,174.5 Figure 3.27 Top 5 States by Internet-Related Investments State ($ Millions) California 10,056.9 New York 2,320.1 Massachusetts 1,253.5 Texas 882.1 Washington 624.6 Total* 15,137.2 *Total includes above 5 states only
  • 62. 2014 National Venture Capital Association Yearbook | 61 NVCA THOMSON REUTERS Figure 3.28 Internet-Related Investments by Region in 2013 Stage Region ($ Millions) Silicon Valley 8,735.3 NY Metro 2,406.6 New England 1,358.8 LA/Orange County 1,132.9 DC/Metroplex 911.2 Texas 882.1 Southeast 873.3 Northwest 742.3 Midwest 655.1 SouthWest 329.8 Colorado 259.2 Philadelphia Metro 211.5 North Central 166.9 San Diego 164.8 South Central 127.0 Upstate NY 28.6 Sacramento/N.Cal 23.9 Total 19,009.3
  • 63. 62 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.29 Sources and Targets of Invested Capital Investments 2013 ($ Millions) SOURCE STATE AK AL AR AZ CA CO CT DC DE FL GA HI IA ID IL IND KS KY LA MA MD ME MI AL 0.0 1.3 0.0 0.0 0.7 0.0 0.0 1.7 0.0 0.0 2.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 AR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 AZ 0.0 0.0 0.0 5.1 1.9 0.0 0.0 0.0 0.0 5.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 CA 0.0 0.0 0.0 17.0 6,882.1 86.6 9.4 98.7 7.8 112.5 65.8 1.8 14.0 0.0 77.9 9.6 5.3 1.5 3.0 669.2 52.1 1.2 13.5 CO 0.0 0.0 0.0 4.7 65.0 115.0 0.0 10.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 4.3 9.0 0.0 0.0 CT 0.0 0.0 83.2 0.5 173.1 5.9 24.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.1 0.0 0.0 3.0 0.0 82.6 125.4 0.0 0.0 DC 0.0 0.0 0.0 0.0 16.3 2.2 0.0 27.0 0.0 12.0 6.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.3 11.6 0.0 0.0 DE 0.0 0.0 0.0 0.0 7.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 FF 0.0 0.0 0.0 11.2 1,386.5 87.8 7.2 3.1 0.6 45.0 2.7 0.4 0.0 0.0 20.2 0.0 9.1 0.0 0.0 229.3 12.7 0.0 0.1 FL 0.0 0.0 0.0 0.0 26.8 0.0 0.0 0.0 0.0 24.8 4.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 5.4 0.0 0.0 0.0 GA 0.0 1.6 0.0 0.0 14.2 1.1 0.0 0.0 0.0 2.0 43.3 0.0 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ID 0.0 0.0 0.0 0.1 0.0 3.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IL 0.0 0.0 0.0 0.0 102.7 19.3 0.0 0.0 0.0 21.0 0.0 0.0 0.0 0.0 147.0 0.0 0.0 0.0 0.0 35.7 60.8 0.0 3.7 IN 0.0 0.0 0.0 0.0 13.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.7 3.5 0.8 0.0 0.0 7.2 0.0 0.0 0.0 KS 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.2 0.0 0.0 0.0 KY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.0 1.5 0.0 0.0 0.0 LA 0.0 0.0 0.0 0.0 8.5 0.0 2.7 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.4 0.1 0.0 0.0 0.0 MA 0.0 0.0 0.0 3.8 938.4 21.7 42.3 0.3 30.0 21.8 4.8 0.0 0.8 5.0 36.9 0.1 0.8 2.3 6.0 976.1 2.2 19.5 1.9 MD 0.0 0.0 0.0 1.4 84.9 13.0 0.0 14.9 0.0 5.0 0.0 0.0 0.0 0.0 14.4 0.0 0.0 0.0 1.2 32.5 54.3 0.0 0.0 ME 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.4 0.0 1.1 0.0 MI 0.0 0.0 0.0 0.0 33.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.1 0.0 0.0 0.0 0.0 8.2 0.0 0.0 38.7 MN 0.0 0.0 0.0 0.0 55.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.0 0.0 3.6 0.0 0.0 0.0 MO 0.0 0.0 0.0 0.0 22.9 1.1 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 5.6 0.0 0.0 2.1 9.8 0.0 1.1 MT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NC 0.0 0.0 0.0 0.0 26.8 0.0 0.0 0.0 0.0 2.1 5.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20.3 1.9 0.0 0.3 ND 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NE 0.0 0.0 0.0 0.0 0.0 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 NH 0.0 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.8 0.0 1.0 0.0 NJ 0.0 0.0 0.0 9.1 139.9 2.5 4.8 6.7 2.3 1.2 2.0 0.0 0.0 0.0 11.8 0.0 0.0 0.0 0.0 43.5 0.0 0.0 0.0 NM 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.9 0.0 0.0 0.0 NV 0.0 0.0 0.0 0.0 4.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 NY 0.0 1.0 0.0 17.6 1150.1 14.8 14.3 5.5 9.5 65.5 168.7 0.0 1.7 0.0 7.5 4.7 4.5 0.0 0.9 183.5 22.7 3.5 1.8 OH 0.0 0.0 0.0 0.0 7.8 0.1 0.0 0.0 0.0 8.3 0.0 0.0 0.0 0.0 14.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 OK 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 OR 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.0 PA 0.0 0.0 0.0 2.3 153.2 0.1 3.3 14.0 30.0 18.4 8.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 64.0 9.8 0.0 1.3 RI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 SC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 SD 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.0 Target State
  • 64. 2014 National Venture Capital Association Yearbook | 63 NVCA THOMSON REUTERS Figure 3.29 (Continued) Sources and Targets of Invested Capital Investments 2013 ($ Millions) SOURCE STATE AK AL AR AZ CA CO CT DC DE FL GA HI IA ID IL IND KS KY LA MA MD ME MI TN 0.0 0.0 0.3 0.0 3.4 0.0 0.0 0.0 0.0 0.0 4.6 0.0 0.0 0.0 2.5 0.0 0.0 0.0 0.0 6.2 0.0 0.0 0.0 TX 0.0 0.0 1.1 0.0 238.4 1.6 0.0 0.0 0.0 46.6 0.0 0.0 0.0 0.0 4.2 0.0 0.0 0.0 0.0 1.1 0.0 0.0 1.9 UN 0.0 1.3 0.1 35.3 2,698.2 37.8 53.9 86.6 8.0 27.2 88.2 0.4 6.0 1.5 50.7 7.6 5.2 3.1 2.6 631.0 225.5 0.5 22.1 UT 0.0 0.0 0.0 5.0 28.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 VA 0.0 0.0 0.0 0.0 30.8 11.8 0.0 6.0 0.0 2.1 6.7 0.0 0.0 0.0 2.1 0.0 0.0 0.0 0.0 18.0 63.8 0.0 1.6 VT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 WA 0.0 0.0 0.0 0.0 141.8 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 10.2 0.8 0.0 3.5 WI 0.0 0.0 0.0 0.0 12.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.8 0.0 0.0 0.0 0.0 0.8 0.0 0.0 6.4 WV 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total 0.0 5.2 86.6 113.3 14,471.5 431.3 162.6 274.6 88.4 421.0 413.4 2.5 22.5 6.5 427.5 25.4 32.9 10.8 14.8 3,062.1 662.8 26.8 99.9 Target State Figure 3.29b Sources and Targets of Invested Capital Investments 2013 ($ Millions) SOURCE STATE MN MO MS MT NC ND NE NH NJ NM NV NY OH OK ORE PA PR RI SC SD TN TX UN AL 0.0 0.0 0.0 0.0 1.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.1 0.0 0.0 0.0 0.0 AR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.5 0.0 AZ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 CA 67.7 0.2 0.0 0.0 36.9 0.0 10.0 12.3 75.5 3.4 0.4 757.7 86.2 0.0 43.6 79.7 0.0 27.0 15.3 0.0 3.8 384.7 0.0 CO 2.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 5.6 0.0 0.0 3.3 0.0 0.0 0.5 0.0 0.0 0.0 2.6 0.0 CT 0.0 10.0 0.0 0.0 5.3 0.0 0.0 0.0 4.6 0.0 0.0 32.9 0.0 0.0 0.0 2.5 0.0 0.0 0.0 6.0 0.0 4.2 0.0 DC 11.0 0.0 0.0 0.0 5.3 0.0 0.0 0.0 0.0 0.0 0.0 5.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 DE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 FF 12.7 1.5 0.0 0.0 57.0 2.3 0.0 0.2 19.0 1.7 0.0 257.5 21.5 0.0 3.9 34.8 0.0 18.9 8.6 0.0 0.0 69.8 0.0 FL 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 3.7 3.5 0.0 0.0 5.9 0.0 0.0 0.0 0.0 0.4 9.5 0.0 GA 5.2 0.0 0.0 0.0 0.9 0.0 0.0 0.6 0.0 0.0 0.0 4.7 0.0 0.0 0.0 0.0 0.0 0.0 3.7 0.0 5.8 0.7 0.0 IA 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ID 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IL 5.7 11.6 0.0 0.0 0.7 0.0 0.0 1.5 0.0 0.0 0.0 2.7 12.9 0.0 0.0 2.1 0.0 0.0 0.0 0.0 18.1 22.6 0.0 IN 2.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.0 0.0 1.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 LA 0.0 0.2 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.7 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 6.7 0.0 MA 54.9 0.0 0.0 0.0 6.9 0.0 0.0 32.5 9.8 0.9 0.0 248.9 30.5 0.0 2.1 43.5 0.0 18.8 10.0 0.0 6.5 47.9 0.0 MD 0.0 0.0 0.0 0.0 11.3 0.0 0.0 0.0 6.0 0.0 8.0 37.1 0.0 0.0 0.0 9.5 0.0 0.0 0.0 0.0 0.0 0.2 0.0 ME 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 MI 12.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.1 0.0 2.0 0.6 0.0 0.4 1.0 0.0 0.0 4.3 0.0 0.0 1.1 0.0 MN 17.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.5 0.0 0.0 0.0 0.8 0.0 6.0 0.0 0.0 0.0 0.0 0.0 5.4 0.0 0.0 MO 0.0 7.3 0.0 0.0 1.3 0.0 0.0 0.0 0.0 2.1 0.0 0.4 2.8 0.0 0.0 0.0 0.0 0.0 4.6 0.0 4.0 4.3 0.0 MT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Target State
  • 65. 64 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.29b Sources and Targets of Invested Capital Investments 2013 ($ Millions) SOURCE STATE MN MO MS MT NC ND NE NH NJ NM NV NY OH OK ORE PA PR RI SC SD TN TX UN NC 0.0 0.0 0.0 0.0 53.4 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 3.0 0.0 0.0 4.0 0.0 0.9 20.5 0.0 ND 5.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NE 0.0 0.2 0.0 0.0 0.0 0.0 3.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NH 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NJ 10.2 1.8 0.0 0.0 0.0 11.2 0.0 5.0 35.8 0.0 0.0 26.1 0.0 0.0 0.0 8.9 0.0 0.0 0.0 0.0 0.0 1.9 0.0 NM 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NV 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 2.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 NY 0.0 0.2 0.0 0.0 16.4 0.0 0.1 7.0 83.8 0.0 0.0 519.0 21.9 0.0 2.0 28.8 0.0 5.0 8.6 6.0 0.0 199.3 0.0 OH 2.7 0.0 0.0 0.0 2.3 0.0 0.0 0.0 0.0 0.2 0.1 8.8 56.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 OK 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 0.0 4.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.2 0.0 OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 PA 3.0 5.2 0.0 0.0 0.1 0.0 0.0 6.0 13.9 0.0 0.0 81.8 1.6 0.0 2.3 82.6 0.0 3.7 0.0 0.0 0.0 9.6 0.0 RI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.6 0.0 0.0 0.0 0.0 0.0 SC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 SD 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TN 0.0 0.0 0.1 0.0 10.1 0.0 0.0 0.0 0.0 0.0 0.0 4.1 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 30.4 20.0 0.0 TX 0.0 6.6 0.0 0.0 0.0 0.0 0.0 0.0 5.0 1.6 0.0 2.7 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.3 275.6 0.0 UN 48.0 20.4 0.8 0.0 45.8 10.6 5.9 4.1 87.3 1.8 1.0 639.1 43.0 3.1 52.2 133.4 0.0 5.0 24.6 0.0 30.9 174.4 0.0 UT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.7 0.0 14.9 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 VA 5.0 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.0 0.0 0.0 12.3 0.0 0.0 0.0 3.1 0.0 0.0 0.0 0.0 2.8 0.2 0.0 VT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 WA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.3 0.0 0.0 8.6 13.5 0.0 11.1 0.0 0.0 0.0 0.0 0.0 0.0 9.0 0.0 WI 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 WV 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total 267.0 65.0 1.2 0.0 255.6 24.1 21.0 74.4 351.3 25.9 9.6 2,686.3 301.8 8.0 130.3 441.1 0.0 81.7 85.7 11.9 109.3 1,272.4 0.0 Target State
  • 66. 2014 National Venture Capital Association Yearbook | 65 NVCA THOMSON REUTERS Figure 3.29c Sources and Targets of Invested Capital Investments 2013 ($ Millions) SOURCE STATE UT VA VI VT WA WI WV WY TOT AL 0.0 4.7 0.0 0.0 0.0 0.0 0.0 0.0 14.2 AR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.5 AZ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 13.0 CA 96.7 50.0 0.0 0.0 176.6 6.1 0.0 0.0 10,062.8 CO 0.0 20.0 0.0 0.0 19.2 0.0 0.0 0.0 263.7 CT 0.1 0.0 0.0 0.0 21.2 0.0 0.0 0.0 591.1 DC 0.0 59.9 0.0 0.0 0.0 0.0 0.0 0.0 164.9 DE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.8 FF 3.7 57.5 0.0 0.9 30.1 0.2 0.0 0.0 2,417.5 FL 0.0 0.0 0.0 0.0 5.7 0.0 0.0 0.0 90.4 GA 0.0 8.0 0.0 1.3 0.0 0.0 0.0 0.0 93.5 IA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 ID 1.5 0.0 0.0 0.0 0.1 0.0 0.0 0.0 4.8 IL 0.0 3.3 0.0 0.0 37.9 2.1 0.0 0.0 511.4 IN 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 32.7 KS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.4 KY 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 3.8 LA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 25.1 MA 16.0 44.5 0.0 5.2 44.4 0.0 0.0 0.0 2,738.1 MD 1.0 11.1 0.0 0.0 25.0 0.0 0.0 0.0 331.0 ME 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.5 MI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 119.0 MN 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 97.4 MO 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 69.5 MT 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.1 Target State
  • 67. 66 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.29c Sources and Targets of Invested Capital Investments 2013 ($ Millions) SOURCE STATE UT VA VI VT WA WI WV WY TOT NC 2.2 0.1 0.0 0.0 3.3 0.0 0.0 0.0 146.0 ND 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 5.3 NE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.7 NH 0.0 0.0 0.0 0.0 2.5 0.0 0.0 0.0 15.6 NJ 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.0 329.8 NM 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 12.0 NV 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 7.8 NY 34.1 37.5 0.0 0.0 43.3 4.3 0.0 0.0 2694.8 OH 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 103.3 OK 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.1 OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 9.3 PA 0.0 90.0 0.0 0.0 34.9 0.0 0.2 0.0 639.3 RI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.1 SC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 SD 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.7 TN 7.2 0.0 0.0 0.0 0.5 0.0 0.0 0.0 90.2 TX 1.0 4.7 0.0 0.0 2.8 0.0 0.0 0.0 595.2 UN 66.1 146.8 0.0 10.0 286.4 15.7 1.0 0.0 5,850.1 UT 60.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 111.3 VA 0.0 53.0 0.0 0.0 17.3 0.0 0.0 0.0 237.5 VT 0.0 0.0 0.0 3.6 0.0 0.0 0.0 0.0 3.6 WA 6.5 0.0 0.0 0.0 113.7 0.0 0.0 0.0 329.8 WI 13.1 0.0 0.0 0.0 3.3 6.2 0.0 0.0 53.8 WV 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 Total 313.8 591.0 0.0 21.0 874.1 35.9 1.2 0.0 28,922.8 Figure 3.30 2013 Internet-Related Investments By Stage Company Stage ($ Millions) Seed 348.75 Early Stage 6,036.86 Expansion 7,559.33 Later Stage 5,064.38 TOTAL 19,009.32
  • 68. 2014 National Venture Capital Association Yearbook | 67 NVCA THOMSON REUTERS Figure 3.31 2013 Internet-Related Investments By Industry Sector Industry Group ($ Millions) Software 10,821.33 Media and Entertainment 2,771.45 IT Services 1,966.98 Consumer Products and Services 1,074.01 Networking and Equipment 669.55 Telecommunications 572.39 Financial Services 324.00 Retailing/Distribution 228.44 Computers and Peripherals 222.24 Semiconductors 132.53 Healthcare Services 107.14 Business Products and Services 53.76 Industrial/Energy 22.52 Biotechnology 16.23 Medical Devices and Equipment 15.65 Other 5.61 Electronics/Instrumentation 5.50 Total 19,009.32 Figure 3.32 2013 Internet-Related vs. Non Internet-Related By Industry Sector ($ Million) Industry Internet Related Non-Internet Related Total Biotechnology 16.2 4,545.7 4,561.9 Business Products and Services 53.8 164.2 218.0 Computers and Peripherals 222.2 295.0 517.2 Consumer Products and Services 1,074.0 171.5 1,245.5 Electronics/Instrumentation 5.5 318.8 324.3 Financial Services 324.0 212.4 536.4 Healthcare Services 107.1 179.0 286.1 Industrial/Energy 22.5 1,484.0 1,506.5 IT Services 1,967.0 25.9 1,992.9 Media and Entertainment 2,771.4 164.1 2,935.5 Medical Devices and Equipment 15.6 2,114.5 2,130.2 Networking and Equipment 669.6 - 669.6 Other 5.6 93.0 98.6 Retailing/Distribution 228.4 12.0 240.4 Semiconductors 132.5 464.9 597.4 Software 10,821.3 198.7 11,020.0 Telecommunications 572.4 71.2 643.6 Total 19,009.3 10,514.8 29,524.1
  • 69. 68 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.33 2013 Internet-Related vs. Non Internet-Related By Industry Sector (Number of Companies) Industry Internet Related Non-Internet Related Total Biotechnology 4 367 371 Business Products and Services 17 41 58 Computers and Peripherals 18 11 29 Consumer Products and Services 114 35 149 Electronics/Instrumentation 2 31 33 Financial Services 26 25 51 Healthcare Services 13 24 37 Industrial/Energy 7 191 198 IT Services 292 5 297 Media and Entertainment 368 15 383 Medical Devices and Equipment 6 244 250 Networking and Equipment 22 22 Other 1 10 11 Retailing/Distribution 38 2 40 Semiconductors 13 60 73 Software 1,291 25 1,316 Telecommunications 49 6 55 Total 2,281 1,092 3,373 Figure 3.34 Top 5 States By Pecentage Invested Within State in 2013 Fund Domicile Pct. Invested Within State California 68% Ohio 55% Utah 55% Texas 46% Georgia 46% *Minimum $20 million invested Figure 3.35 Top 5 States By Portion Received From In-State Firms 2013 Fund Domicile Pct. Invested Within State California 48% New Mexico 40% Michigan 39% Illinois 34% Massachusetts 32% *Minimum $20 million invested
  • 70. 2014 National Venture Capital Association Yearbook | 69 NVCA THOMSON REUTERS Figure 3.36 Number of States Invested Into in 2013 By State of Venture Firm Location of Venture Firm No. of States Invested In California 38 Massachusetts 36 New York 36 Pennsylvania 27 Illinois 19 Connecticut 18 Maryland 18 New Jersey 18 Virginia 18 Texas 17 Georgia 16 Missouri 16 Figure 3.37 Number of States California Venture Firms Into By Year Year No. of States Invested In 1993 32 2003 34 2013 38 Figure 3.38 Corporate Investments By Year Year # All Venture Capital Deals # Deals with CVC Involvement Calculated Percentage of Deals with Corporate VC Involvement $M Average Amount of All VC Deals $M Average Amount of CVC Participation Total VC Investment $M Total CVC Investment $M Calculated Percentage of Dollars Coming from CVCs 1995 1,896 140 7.4% 4.23 3.08 8,015 431 5.4% 1996 2,635 234 8.9% 4.30 3.37 11,342 787 6.9% 1997 3,224 324 10.0% 4.65 2.85 15,005 922 6.1% 1998 3,729 495 13.3% 5.76 3.63 21,473 1,795 8.4% 1999 5,597 1230 22.0% 9.80 6.43 54,847 7,908 14.4% 2000 8,038 1950 24.3% 13.08 7.63 105,105 14,877 14.2% 2001 4,590 964 21.0% 8.92 4.81 40,952 4,639 11.3% 2002 3,206 551 17.2% 6.92 3.33 22,177 1,837 8.3% 2003 3,024 439 14.5% 6.49 2.91 19,620 1,279 6.5% 2004 3,228 545 16.9% 7.19 2.76 23,209 1,505 6.5% 2005 3,293 565 17.2% 7.14 2.68 23,524 1,514 6.4% 2006 3,882 817 21.0% 7.09 3.16 27,515 2,581 9.4% 2007 4,226 846 20.0% 7.56 3.21 31,943 2,714 8.5% 2008 4,177 896 21.5% 7.17 2.99 29,949 2,679 8.9% 2009 3,148 405 12.9% 6.44 3.28 20,286 1,327 6.5% 2010 3,647 487 13.4% 6.41 3.86 23,369 1,879 8.0% 2011 4,004 590 14.7% 7.43 3.80 29,730 2,243 7.5% 2012 3,865 611 15.8% 7.08 3.69 27,352 2,256 8.2% 2013 4,041 683 16.9% 7.31 4.55 29,545 3,105 10.5%
  • 71. 70 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 3.39 Clean Technology Investments By Year Year Clean Technology Investments ($ Millions) # Clean Technology Deals Average Investment Per Deal ($ Millions) 1995 64.6 34 1.9 1996 141.5 44 3.2 1997 180.4 51 3.5 1998 170.2 40 4.3 1999 262.1 53 4.9 2000 592.7 49 12.1 2001 335.4 57 5.9 2002 350.3 49 7.1 2003 237.5 58 4.1 2004 417.5 78 5.4 2005 614.7 97 6.3 2006 1,772.8 152 11.7 2007 3,036.0 261 11.6 2008 4,225.7 306 13.8 2009 2,244.6 234 9.6 2010 3,944.8 305 12.9 2011 4,392.0 333 13.2 2012 3,081.0 246 12.5 2013 1,468.0 184 8.0 27.8% 9.7% 39.0% 41.5% 8.8% 55.7% 11.0% 8.5% 63.4% 34.7% 50.0% 50.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1998 2003 2008 2013 Other SoCal NoCal Figure 3.40 California Investments as a Percentage of Overall Investment (Dollars Invested)
  • 72. 2014 National Venture Capital Association Yearbook | 71 NVCA THOMSON REUTERS EXITS IPOs and Acquisitions 0.00 5.00 10.00 15.00 20.00 25.00 30.00 0 50 100 150 200 250 300 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 13 Offer($Billion) No.ofIPOs Year No of IPOs Offer Amount ($B) Figure 4.01 Venture-Backed IPOs Once successful portfolio companies mature, venture funds generally exit their positions in those companies by taking them public through an initial public offering (IPO) or by selling them to presumably larger organizations (acquisition, “M&A”, or trade sale). This then lets the venture fund dis- tribute the proceeds to investors, raise a new fund for future investment, and invest in the next generation of companies. This chapter considers each type of exit separately. During 2013, 81 venture-backed companies went public in the United States, marking the strongest full year total for the number of new venture-backed listings since 2007. Remarkably, more than half of them were biotechnology IPOs, many of those being modestly sized. While the total dollars raised in 2012 was higher at $21.5 billion, it is important to remember that $16.0 billion of that came from the Facebook IPO alone. The remaining $5.5 billion was raised by the remaining 48 IPOs in 2012. It was a very different story in 2013. $11.1 billion was raised by 81 companies. The increase in mean and median time to exit reflects the fact that many of these IPOs were mature companies, and many of them were in the life sciences space, which had been awaiting an IPO opportunity for months, and in some cases, years. NVCA is encouraged by the increase in smaller IPOs and biotech IPOs in light of its 2012 legislative successes with the JOBS Act and creating a pathway for FDA Reform. The M&A space continued to soften in 2013, with the total number of deals falling from 473 in the prior year to 376. Total proceeds fell by 27%. Note that only 94 of the 376 acquisitions had reported deal values. Historically, deals with unreported sales prices are fairly diminutive, and in many cases, fire sales. However, an increasing number of deal term sheets specify a non-disclosure restriction on all parties. So going forward, all but the largest and most visible acquisitions may be hard to measure. Observers have wondered why, given the huge amounts of cash on the balance sheets of technol- ogy and biotechnology giants, more acquisitions are not occurring. We did see a flurry of acquisitions in early 2014, perhaps signaling an increase in that kind of activity. Methodology This chapter focuses on company exits by venture funds through IPOs and through acquisitions (trade sale, M&A). Some additional charts are provided on private equity-backed acquisitions because of the venture in- dustry’s interest in that data. With Thomson’s expansion of global deals coverage beginning in 2012, the criteria used to report these exits were redefined and refined. These are explained below. In this chapter and throughout this Yearbook, we use the classic nomen- clature for describing the two main types of private equity: Private Equity = Venture Capital + Buyout/Mezzanine Therefore, charts describing Private Equity in this chapter and through- out this Yearbook include both buyout/mezzanine activity and venture capital activity. The Thomson Reuters venture capital (private equity) exits coverage
  • 73. 72 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.02 Number of Venture-Backed IPOs vs. All IPOs Year # of All IPOs # of Venture- Backed IPOs 2000 353 238 2001 84 37 2002 75 24 2003 70 26 2004 189 82 2005 171 59 2006 168 67 2007 164 91 2008 25 7 2009 39 13 2010 103 70 2011 98 51 2012 113 49 2013 169 81 Note: IPO counts reflect IPOs on US stock exchanges and markets. Venture-backed IPOs are those with at least one US-domiciled venture fund investor. includes full history for the US and Canada as well as Global Exits from 2005 to the present. Multiple exits per company are now tracked, includ- ing IPOs (although secondary offerings are not tracked, since the first IPO is considered the exit), Secondary Sales (sponsor to sponsor), Trade Sales (VC (PE) Firm to Non-PE Firm), Buybacks, Reverse Takeovers and Writeoffs. All values are sourced from the industry-leading Thomson Reuters Deals database with hyperlinks to the Tearsheets to view the un- derlying details of the transactions. The private equity-backed exits com- ponent in ThomsonONE.com can be used to further analyze all of the VC and PE Exits content herein. Specifically, venture capital IPO exits reported in this chapter are those done on United States stock exchanges/markets with at least one United States domiciled venture fund investor. Specifically, venture capital (private equity) acquisition exits reported in this chapter are completed secondary sales and trade sales where the company was domiciled in the United States and had at least one United States domiciled venture capital (private equity) investor.
  • 74. 2014 National Venture Capital Association Yearbook | 73 NVCA THOMSON REUTERS Fig. 4.03 Venture-Backed IPOs 1985 to 2013 Value and Age Characteristics Year Num of IPOs Offer Amount ($Mil) Med Offer Amt ($Mil) Mean Offer Amt ($Mil) Post Offer Value ($Mil) Med Post Value ($Mil) Mean Post Value ($Mil) Median Time to Exit (yrs) Mean Time to Exit (yrs) 1985 48 763 13 16 2,020 37 48 2.8 3.9 1986 105 2,417 13 23 166,032 52 1866 3.9 4.2 1987 86 2,125 17 25 10,972 46 155 3.7 3.9 1988 43 769 15 18 21,117 51 571 3.2 3.7 1989 42 873 16 21 4,443 50 131 3.9 4.2 1990 47 1,108 20 24 5,886 60 178 3.6 4.2 1991 120 3,726 27 31 17,611 81 202 4.7 5.0 1992 150 5,443 24 36 15,955 68 146 4.5 5.0 1993 175 6,154 25 35 14,808 75 130 5.4 5.7 1994 138 3,952 24 29 10,344 68 94 4.7 5.3 1995 184 7,859 36 43 19,300 104 152 3.8 4.8 1996 256 12,716 35 50 51,511 112 240 3.2 4.1 1997 141 5,829 33 41 19,101 99 148 3.0 6.4 1998 78 4,125 43 53 24,655 164 324 2.5 3.1 1999 280 23,975 69 86 147,341 304 532 2.9 3.1 2000 238 27,443 83 115 108,783 325 494 3.1 3.7 2001 37 4,130 80 112 19,233 327 534 4.0 4.4 2002 24 2,333 89 97 8,322 266 347 3.3 5.0 2003 26 2,024 71 78 7,412 252 285 5.4 5.6 2004 82 10,032 70 122 50,268 254 613 5.5 6.1 2005 59 5,113 68 87 39,702 202 673 5.2 5.3 2006 67 7,065 86 105 71,124 283 1078 5.3 5.6 2007 91 12,339 98 136 68,203 365 749 6.0 6.0 2008 7 765 83 109 3,645 278 521 7.4 7.3 2009 13 1,980 123 152 9,192 548 707 5.9 6.9 2010 70 7,774 93 111 114,981 428 1643 5.0 5.9 2011 51 10,690 106 210 94,657 606 1856 6.3 7.0 2012 49 21,460 89 438 122,168 371 2493 7.2 7.8 2013 81 11,068 91 137 62,700 354 784 7.4 8.1
  • 75. 74 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.04 Venture-Backed IPOs by MoneyTree Industry Total Offering Size ($ Million) Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 38 349 217 26 51 66 964 860 486 257 437 1,250 575 197 562 Business Products and Services 58 33 0 2 0 44 66 70 193 70 35 496 185 58 1,137 Computers and Peripherals 135 306 267 116 150 74 118 295 203 122 339 357 75 59 215 Consumer Products and Services 7 177 7 8 91 5 186 240 169 58 335 177 160 541 602 Electronics/Instrumentation 7 60 17 0 0 48 0 91 372 155 296 224 111 76 135 Financial Services 0 91 39 10 47 0 21 1,248 51 237 273 1,597 209 45 521 Healthcare Services 89 15 22 0 14 69 435 144 132 180 162 269 235 123 458 Industrial/Energy 29 58 177 75 127 242 346 325 670 437 495 1,064 794 138 207 IT Services 15 4 32 27 0 0 163 48 41 68 308 396 151 239 2,141 Media and Entertainment 51 599 22 3 17 10 103 253 710 562 207 727 505 199 2,872 Medical Devices and Equipment 61 89 147 22 71 90 241 601 254 388 995 1,666 444 90 0 Networking and Equipment 25 105 136 42 43 82 346 284 233 457 313 749 416 235 2,912 Other 0 54 0 0 0 0 0 12 0 0 0 0 203 0 46 Retailing/Distribution 154 67 48 146 35 18 29 265 718 71 111 358 159 344 1,736 Semiconductors 15 47 368 79 62 29 210 86 311 164 696 36 319 37 221 Software 52 270 206 134 135 192 476 409 846 447 2,366 1,851 912 870 5,618 Telecommunications 27 92 421 79 30 141 22 212 766 277 492 1,498 377 877 4,592 Total 763 2,417 2,125 769 873 1,108 3,726 5,443 6,154 3,952 7,859 12,716 5,829 4,125 23,975 Fig. 4.04 (Continued) Venture-Backed IPOs by MoneyTree Industry Total Offering Size ($ Million) Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 4,211 353 342 442 1,616 897 895 1,292 6 153 1,155 997 854 3,507 Business Products and Services 594 0 248 62 0 507 0 1,202 0 0 190 322 152 0 Computers and Peripherals 617 0 63 0 0 8 0 124 188 0 0 367 0 193 Consumer Products and Services 295 120 39 82 280 3 542 154 0 163 727 847 262 631 Electronics/Instrumentation 251 46 0 0 0 0 0 0 0 438 0 95 0 0 Financial Services 50 771 231 353 1,447 706 551 1,178 0 0 558 0 185 253 Healthcare Services 156 306 83 59 124 77 0 130 94 132 138 0 0 0 Industrial/Energy 1,107 747 0 0 638 299 1,114 1,007 0 88 955 984 247 0 IT Services 2,030 0 0 0 49 140 207 836 0 0 379 163 636 576 Media and Entertainment 1,243 0 353 75 1,434 376 864 209 0 0 830 3,210 16,236 2,839 Medical Devices and Equipment 634 673 456 0 806 380 633 1,407 134 0 299 145 115 283 Networking and Equipment 4,339 275 0 0 69 0 479 313 0 0 267 0 316 301 Other 177 100 0 0 0 0 0 0 0 0 0 0 0 0 Retailing/Distribution 459 26 259 65 0 28 144 452 0 0 178 0 0 0 Semiconductors 1,052 133 0 381 522 472 136 975 0 0 534 255 130 274 Software 4,924 405 259 330 2,506 570 768 1,471 344 604 1,368 2,500 2,022 2,022 Telecommunications 5,304 173 0 175 542 651 731 1,591 0 402 197 805 305 187 Total 27,443 4,130 2,333 2,024 10,032 5,113 7,065 12,339 765 1,980 7,774 10,690 21,460 11,068
  • 76. 2014 National Venture Capital Association Yearbook | 75 NVCA THOMSON REUTERS Fig. 4.05 Venture-Backed IPOs by MoneyTree Industry Total Number of Companies Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 5 16 14 2 6 4 31 27 22 13 16 33 21 7 9 Business Products and Services 1 2 0 1 0 1 3 3 6 3 1 6 3 1 16 Computers and Peripherals 9 14 9 5 4 3 3 11 9 6 8 11 3 3 4 Consumer Products and Services 1 5 1 1 3 1 6 7 4 2 9 7 6 7 9 Electronics/Instrumentation 1 6 3 0 0 2 0 4 13 5 9 9 3 1 2 Financial Services 0 3 2 1 3 0 1 6 2 8 5 10 4 2 7 Healthcare Services 4 1 2 0 1 3 13 6 4 4 3 5 7 3 7 Industrial/Energy 3 5 13 6 4 6 10 9 19 14 11 18 18 3 3 IT Services 1 1 3 1 0 0 5 1 1 3 5 9 4 5 28 Media and Entertainment 4 10 2 1 1 2 3 7 10 9 4 13 7 3 32 Medical Devices and Equipment 3 10 8 4 5 8 12 27 14 17 20 44 13 2 0 Networking and Equipment 1 2 5 2 2 2 8 11 6 13 10 10 6 5 25 Other 0 1 0 0 0 0 0 1 0 0 0 0 1 0 1 Retailing/Distribution 5 3 3 5 1 1 1 6 12 3 3 9 4 6 17 Semiconductors 1 4 5 5 3 1 9 4 13 9 16 1 8 1 4 Software 3 15 10 7 8 9 14 13 26 19 56 53 26 20 80 Telecommunications 6 7 6 2 1 4 1 7 14 10 8 18 7 9 36 Total 48 105 86 43 42 47 120 150 175 138 184 256 141 78 280 Fig. 4.05 Venture-Backed IPOs by MoneyTree Industry Total Number of Companies Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 47 4 4 7 26 15 16 20 1 2 13 11 12 42 Business Products and Services 8 0 1 1 0 4 0 4 0 0 1 2 1 0 Computers and Peripherals 6 0 1 0 0 1 0 1 1 0 0 2 0 1 Consumer Products and Services 3 3 1 2 3 1 4 1 0 1 5 2 3 3 Electronics/Instrumentation 3 1 0 0 0 0 0 0 0 1 0 1 0 0 Financial Services 1 2 2 4 7 2 4 3 0 0 5 0 2 1 Healthcare Services 2 4 1 1 1 1 0 1 1 1 1 0 0 0 Industrial/Energy 7 4 0 0 3 3 7 5 0 1 5 3 3 0 IT Services 16 0 0 0 1 1 2 6 0 0 4 2 6 4 Media and Entertainment 11 4 1 7 4 6 2 0 0 6 9 4 6 Medical Devices and Equipment 11 7 4 0 13 8 11 11 2 0 4 2 1 4 Networking and Equipment 17 2 0 0 1 0 4 3 0 0 3 0 3 3 Other 1 1 0 0 0 0 0 0 0 0 0 0 0 0 Retailing/Distribution 4 1 1 1 0 1 1 2 0 0 2 0 0 0 Semiconductors 10 2 0 3 6 6 2 10 0 0 6 3 2 3 Software 58 5 5 4 10 6 7 13 2 5 12 9 9 13 Telecommunications 33 1 0 2 4 6 3 9 0 2 3 5 3 1 Total 238 37 24 26 82 59 67 91 7 13 70 51 49 81
  • 77. 76 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.06 Average and Median Age in Years by MoneyTree Industry Companies at IPO 2000-2013 2000 2001 2002 2003 2004 2005 2006 Industry Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Biotechnology 4.5 4.3 4.5 4.6 8.4 6.7 6.0 5.1 5.6 5.1 5.6 5.5 5.3 5.0 Business Products and Services 2.0 1.7 N/A N/A 2.7 2.7 5.7 5.7 N/A N/A 4.3 4.4 N/A N/A Computers and Peripherals 4.3 2.8 N/A N/A 15.7 15.7 N/A N/A N/A N/A 0.8 0.8 N/A N/A Consumer Products and Services 1.4 1.5 3.7 4.6 4.6 4.6 4.3 4.3 5.5 5.2 5.5 5.5 4.9 4.9 Electronics/Instrumentation 3.4 2.7 6.3 6.3 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Financial Services 1.0 1.0 12.9 12.9 1.9 1.9 5.0 4.7 5.5 5.3 3.0 3.0 4.7 4.8 Healthcare Services 3.3 3.3 5.2 5.2 7.1 7.1 5.7 5.7 8.9 8.9 3.9 3.9 N/A N/A Industrial/Energy 3.4 3.2 1.1 0.4 N/A N/A N/A N/A 7.7 3.4 8.2 7.0 2.1 0.6 IT Services 1.9 1.8 N/A N/A N/A N/A N/A N/A 5.3 5.3 3.8 3.8 6.0 6.0 Media and Entertainment 4.3 3.2 N/A N/A 4.4 3.5 5.7 5.7 6.0 5.8 4.6 4.4 8.4 8.2 Medical Devices and Equipment 5.1 4.8 4.8 4.5 3.7 3.2 N/A N/A 8.1 7.3 6.6 7.1 6.9 5.3 Networking and Equipment 3.3 3.0 4.2 4.2 N/A N/A N/A N/A 6.1 6.1 N/A N/A 7.0 6.6 Other 1.3 1.3 2.6 2.6 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Retailing/Distribution 1.9 1.8 4.3 4.3 3.4 3.4 4.0 4.0 N/A N/A 6.1 6.1 1.5 1.5 Semiconductors 5.5 3.7 2.9 2.9 N/A N/A 5.3 4.1 6.5 6.4 4.3 5.0 6.7 6.7 Software 3.4 3.3 4.2 4.6 3.3 3.0 6.1 5.6 5.3 5.5 5.4 5.6 6.5 6.0 Telecommunications 3.6 3.1 1.4 1.4 N/A N/A 6.5 6.5 5.3 5.0 5.0 4.1 4.2 3.9 Fig. 4.06 (Continued) Average and Median Age in Years by MoneyTree Industry Companies at IPO 2000-2013 2007 2008 2009 2010 2011 2012 2013 Industry Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Biotechnology 5.1 5.1 7.0 7.0 10.4 10.4 5.7 4.8 6.6 5.5 5.9 6.0 8.2 7.5 Business Products and Services 6.1 5.2 N/A N/A N/A N/A 0.6 0.6 4.2 4.2 5.7 5.7 N/A N/A Computers and Peripherals 6.7 6.7 8.7 8.7 N/A N/A N/A N/A 7.3 7.3 N/A N/A 5.0 5.0 Consumer Products and Services 17.8 17.8 N/A N/A 5.3 5.3 5.1 4.3 3.8 3.8 7.2 8.3 6.4 3.9 Electronics/Instrumentation N/A N/A N/A N/A 7.8 7.8 N/A N/A 12.5 12.5 N/A N/A N/A N/A Financial Services 3.1 3.4 N/A N/A N/A N/A 7.0 8.9 N/A N/A 9.3 9.3 6.7 6.7 Healthcare Services 9.9 9.9 10.2 10.2 2.0 2.0 2.6 2.6 N/A N/A N/A N/A N/A N/A Industrial/Energy 1.0 0.9 N/A N/A 1.4 1.4 2.8 3.1 7.0 7.2 5.2 5.4 N/A N/A IT Services 6.1 6.5 N/A N/A N/A N/A 7.6 8.6 8.9 8.9 10.1 7.9 9.9 9.1 Media and Entertainment 6.4 6.4 N/A N/A N/A N/A 7.9 7.4 6.4 6.1 6.3 6.4 7.9 7.6 Medical Devices and Equipment 6.7 6.6 6.0 6.0 N/A N/A 5.2 5.2 5.5 5.5 4.9 4.9 7.5 7.7 Networking and Equipment 6.3 6.7 N/A N/A N/A N/A 7.4 7.4 N/A N/A 10.1 9.9 5.7 6.2 Other N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Retailing/Distribution 3.1 3.1 N/A N/A N/A N/A 2.2 2.2 N/A N/A N/A N/A N/A N/A Semiconductors 7.9 7.2 N/A N/A N/A N/A 4.9 4.4 7.6 7.6 13.1 13.1 8.8 9.5 Software 6.5 5.9 6.7 6.7 6.4 7.3 7.1 6.1 8.0 9.0 8.5 7.6 8.0 6.8 Telecommunications 6.8 7.2 N/A N/A 10.4 10.4 8.7 9.1 8.0 9.8 9.4 8.8 16.9 16.9
  • 78. 2014 National Venture Capital Association Yearbook | 77 NVCA THOMSON REUTERS Fig. 4.07 Venture-Backed Merger & Acquisitions by Years Year Number Total Number Known ($ Millions) Price Average Mean Time To Exit (Years) Median Time To Exit To Exit (Years) 1985 7 3 300.2 100.1 7.0 4.8 1986 8 1 63.4 63.4 3.4 3.5 1987 11 4 667.2 166.8 4.9 3.5 1988 17 9 920.7 102.3 4.7 4.1 1989 21 10 746.9 74.7 4.3 3.6 1990 19 7 120.3 17.2 5.8 5.5 1991 16 4 190.5 47.6 6.0 5.0 1992 69 43 2119.1 49.3 4.7 4.0 1993 59 36 1332.9 37.0 5.3 4.7 1994 84 57 3208.4 56.3 5.8 5.3 1995 92 58 3801.8 65.5 4.6 4.1 1996 108 76 8230.8 108.3 5.2 4.1 1997 145 100 7798.0 78.0 4.5 3.1 1998 189 113 8002.0 70.8 4.5 2.8 1999 228 155 38710.6 249.7 3.6 2.8 2000 379 245 79996.4 326.5 3.2 2.7 2001 384 175 25115.6 143.5 3.0 2.2 2002 365 166 11913.2 71.8 3.5 2.9 2003 323 134 8240.8 61.5 4.3 3.6 2004 402 199 28846.1 145.0 5.0 4.6 2005 446 201 19717.3 98.1 5.4 5.2 2006 484 208 24291.0 116.8 5.7 5.7 2007 488 201 30745.5 153.0 5.8 6.3 2008 417 134 16236.9 121.2 5.8 5.6 2009 351 109 12364.9 113.4 5.7 5.5 2010 523 150 17707.3 118.0 5.8 5.0 2011 490 169 24093.2 142.6 5.8 5.0 2012 473 132 22694.2 171.9 6.2 5.6 2013 376 94 16586.5 176.5 5.9 5.0 Fig. 4.08 Private Equity-Backed Merger & Acquisitions by Years Year Number Total Number Known ($ Millions) Price Average Mean Time To Exit (Years) Median Time To Exit To Exit (Years) 1985 8 3 300.2 100.1 7.2 5.3 1986 13 4 246.4 61.6 3.6 4.0 1987 17 8 1422.2 177.8 4.1 3.3 1988 35 21 4139.2 197.1 3.8 3.4 1989 30 17 2594.8 152.6 4.4 3.6 1990 29 12 929.7 77.5 6.1 5.3 1991 29 11 774.5 70.4 5.2 4.7 1992 92 59 3652.8 61.9 4.7 4.0 1993 101 61 4355.5 71.4 5.1 4.7 1994 110 71 7848.2 110.5 5.6 5.0 1995 144 90 11057.4 122.9 5.1 4.8 1996 160 117 19587.9 167.4 4.8 3.9 1997 221 150 31562.5 210.4 5.0 3.8 1998 276 182 35578.7 195.5 4.5 3.0 1999 307 204 62827.4 308.0 3.8 3.0 2000 475 304 136325.6 448.4 3.5 2.8 2001 462 219 64564.5 294.8 3.4 2.4 2002 443 221 36264.2 164.1 3.8 3.0 2003 428 201 26264.8 130.7 4.5 3.8 2004 560 290 56179.7 193.7 5.2 4.6 2005 685 316 68468.5 216.7 5.4 5.2 2006 777 337 112915.0 335.1 5.6 5.5 2007 879 362 183217.8 506.1 5.6 5.2 2008 672 226 64078.8 283.5 5.3 4.6 2009 495 163 57883.9 355.1 5.5 4.9 2010 849 288 101808.3 353.5 5.7 4.7 2011 846 297 95368.7 321.1 5.8 5.0 2012 968 302 134158.0 444.2 5.9 5.3 2013 802 203 91618.3 451.3 5.9 5.4 Average acquisition price is calculated by dividing total known acquisition proceeds by the number of transactions where the proceeds are known, not the total number of transactions. Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity financed companies. Therefore, data from fig. 4.07 is included here. Average acquisition price is calculated by dividing total known acquisition proceeds by the number of transactions where the proceeds are known, not the total number of transactions.
  • 79. 78 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.09 Fig. 4.09 Venture-Backed Acquisitions by MoneyTree Industry Total Transaction Values 1985 to 2013 Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 0 0 0 0 0 0 68 33 25 9 89 388 265 141 846 Business Products and Services 0 0 640 0 0 0 0 0 0 0 0 109 181 47 397 Computers and Peripherals 0 0 0 149 61 79 0 16 110 58 140 827 373 422 721 Consumer Products and Services 0 0 0 0 0 0 10 1 0 26 23 46 237 388 503 Electronics/Instrumentation 0 0 0 81 0 0 0 36 13 49 42 12 105 60 133 Financial Services 0 0 0 140 0 0 0 1,204 91 144 734 67 34 459 1,299 Healthcare Services 0 0 0 199 60 0 0 88 0 178 475 130 180 64 0 Industrial/Energy 99 63 0 238 59 20 0 203 122 764 53 1,127 193 381 962 IT Services 0 0 0 0 0 0 0 0 0 0 15 315 80 523 699 Media and Entertainment 0 0 0 0 0 0 30 0 119 29 38 2,160 2,106 343 10,878 Medical Devices and Equipment 201 0 3 0 317 0 0 234 43 295 110 298 507 130 298 Networking and Equipment 0 0 0 18 250 0 0 0 317 352 1,024 1,090 178 981 11,521 Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Retailing/Distribution 0 0 0 95 0 0 0 35 80 0 29 0 39 28 689 Semiconductors 0 0 0 0 0 0 0 0 0 59 84 54 11 627 1,903 Software 0 0 25 0 0 22 83 264 116 455 617 1,228 2,176 2,888 5,621 Telecommunications 0 0 0 0 0 0 0 4 298 790 328 381 1,133 521 2,241 Total 300 63 667 921 747 120 190 2,119 1,333 3,208 3,802 8,231 7,798 8,002 38,711 Fig. 4.09 (Continued) Fig. 4.09 Venture-Backed Acquisitions by MoneyTree Industry Total Transaction Values 1985 to 2013 Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 1,206 679 115 259 688 2,462 2,104 6,050 1,266 843 3,720 3,948 2,967 3,075 Business Products and Services 1,637 157 870 151 3,024 132 409 2,124 570 314 181 315 697 0 Computers and Peripherals 4,610 357 51 47 680 248 492 6 49 500 348 557 764 945 Consumer Products and Services 2,611 519 343 418 444 582 486 245 284 0 141 1,143 615 0 Electronics/Instrumentation 3,456 167 71 6 116 72 38 87 80 0 0 510 0 115 Financial Services 1,355 617 557 98 250 890 985 1,896 988 0 812 466 435 0 Healthcare Services 286 177 818 37 6,227 624 968 542 27 5 755 601 756 250 Industrial/Energy 1,396 858 182 1,006 2,128 1,117 1,425 1,799 832 886 1,276 1,674 1,141 455 IT Services 2,384 491 612 1,002 1,999 1,066 795 2,482 745 203 1,415 2,084 2,077 898 Media and Entertainment 3,227 6,315 999 324 3,355 2,980 2,599 3,039 2,251 892 1,051 1,013 2,430 1,382 Medical Devices and Equipment 433 932 414 465 1,168 1,268 1,704 1,832 499 2,569 1,571 3,809 1,779 1,528 Networking and Equipment 18,359 5,425 818 813 1,311 1,290 628 549 609 643 678 24 146 430 Other 0 0 350 0 0 212 0 246 0 0 95 0 0 0 Retailing/Distribution 824 4 0 857 118 0 463 180 10 930 14 0 0 30 Semiconductors 7,210 2,099 2,703 359 688 575 1,029 964 664 628 1,047 743 1,284 1,601 Software 23,475 3,689 1,886 2,098 4,972 4,886 7,879 6,923 5,575 1,745 3,775 6,756 5,623 5,328 Telecommunications 7,528 2,630 1,125 301 1,678 1,313 2,287 1,785 1,789 2,205 826 451 1,980 550 Total 79,996 25,116 11,913 8,241 28,846 19,717 24,291 30,746 16,237 12,365 17,707 24,093 22,694 16,587
  • 80. 2014 National Venture Capital Association Yearbook | 79 NVCA THOMSON REUTERS Fig. 4.10 Venture-Backed Acquisitions by MoneyTree Industry Number of Companies 1985 to 2013 Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 0 0 0 0 1 1 1 4 2 4 10 10 9 11 12 Business Products and Services 0 0 1 1 0 0 1 1 0 1 0 3 2 4 4 Computers and Peripherals 1 0 2 2 4 4 2 9 8 4 5 9 8 7 11 Consumer Products and Services 0 0 0 0 0 0 1 2 3 1 1 5 7 7 11 Electronics/Instrumentation 0 0 1 3 2 0 1 4 2 1 1 4 6 4 3 Financial Services 0 0 0 0 0 0 0 5 2 4 4 5 4 5 13 Healthcare Services 0 1 0 1 2 0 1 4 1 8 9 4 3 9 2 Industrial/Energy 1 2 2 3 3 3 2 8 3 10 5 8 9 18 11 IT Services 0 1 0 1 1 1 0 0 0 0 2 5 7 11 16 Media and Entertainment 0 0 0 0 0 0 1 1 4 2 3 7 11 10 19 Medical Devices and Equipment 2 0 1 2 5 2 0 13 4 8 7 6 13 11 10 Networking and Equipment 0 0 1 2 1 0 0 2 7 8 8 13 4 8 22 Other 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 Retailing/Distribution 2 0 0 1 0 1 2 2 3 1 1 0 4 2 7 Semiconductors 0 0 0 0 0 1 2 1 1 3 3 2 2 8 9 Software 1 3 3 0 1 6 1 11 15 24 29 21 44 62 59 Telecommunications 0 1 0 0 1 0 1 2 4 5 3 6 12 12 19 Total 7 8 11 17 21 19 16 69 59 84 92 108 145 189 228 Fig. 4.10 (Continued) Venture-Backed Acquisitions by MoneyTree Industry Number of Companies 1985 to 2013 Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 16 21 9 15 24 29 32 32 24 19 38 34 33 22 Business Products and Services 15 29 14 15 20 22 24 35 14 13 14 13 15 5 Computers and Peripherals 13 6 2 8 8 8 10 3 7 4 6 7 6 7 Consumer Products and Services 16 14 7 11 10 11 10 11 11 7 7 8 11 7 Electronics/Instrumentation 4 6 7 4 5 3 5 5 7 4 5 4 5 6 Financial Services 13 19 13 9 14 12 16 12 10 5 12 9 9 8 Healthcare Services 9 5 13 3 7 12 12 11 12 7 14 15 9 5 Industrial/Energy 13 12 12 9 12 22 18 19 22 16 24 20 29 14 IT Services 23 31 38 25 33 22 30 38 27 22 46 48 51 26 Media and Entertainment 40 51 27 16 33 31 26 49 36 33 63 65 46 46 Medical Devices and Equipment 9 19 12 9 23 27 25 27 13 26 21 37 32 25 Networking and Equipment 24 16 20 23 30 22 28 15 25 23 23 18 12 7 Other 0 0 1 1 1 1 0 2 2 0 1 2 0 1 Retailing/Distribution 14 15 7 7 7 8 9 9 5 1 5 1 4 5 Semiconductors 21 14 14 11 17 17 20 19 24 22 27 15 18 14 Software 118 94 129 120 133 163 177 157 148 120 171 171 162 162 Telecommunications 31 32 40 37 25 36 42 44 30 29 46 23 31 16 Total 379 384 365 323 402 446 484 488 417 351 523 490 473 376
  • 81. 80 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.11 Private Equity-Backed Acquisitions by MoneyTree Industry Total Transaction Values 1985 to 2013 Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 0 0 0 0 766 0 68 33 25 93 448 412 472 498 904 Business Products and Services 0 0 640 0 263 7 12 0 0 750 419 220 1331 694 Computers and Peripherals 0 0 0 149 61 79 0 16 110 81 140 827 387 620 758 Consumer Products and Services 0 116 0 1444 798 45 10 30 634 1729 706 1078 1360 1676 827 Electronics/Instrumentation 0 0 0 81 0 115 0 36 13 49 42 375 107 162 312 Financial Services 0 0 0 340 0 0 0 1204 461 695 2305 2728 2745 1520 1605 Healthcare Services 0 0 0 199 60 0 0 94 0 178 598 1494 3702 317 112 Industrial/Energy 99 63 275 1490 311 20 102 792 1881 922 2490 2120 4610 4783 2841 IT Services 0 0 0 7 0 0 0 0 0 0 15 485 1620 533 2820 Media and Entertainment 0 0 100 100 32 220 30 0 213 351 398 3428 3195 11433 19721 Medical Devices and Equipment 201 68 383 0 317 167 0 575 182 1731 244 1000 1378 2075 1341 Networking and Equipment 0 0 0 18 250 0 0 0 317 354 1024 1090 178 1497 12000 Other 0 0 0 0 0 0 0 0 0 0 0 0 0 229 0 Retailing/Distribution 0 0 0 295 0 0 475 96 94 90 472 452 8034 3738 3265 Semiconductors 0 0 0 0 0 0 0 0 0 67 97 54 11 640 3066 Software 0 0 25 16 0 22 83 686 128 467 629 1228 2357 3196 10115 Telecommunications 0 0 0 0 0 0 0 79 299 1042 698 2399 1187 1331 2449 Total 300 246 1422 4139 2595 930 775 3653 4356 7848 11057 19588 31563 35579 62827 Fig. 4.11 (Continued) Private Equity-Backed Acquisitions by MoneyTree Industry Total Transaction Values 1985 to 2013 Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 2102 801 2584 986 1805 3047 2384 7904 1830 6963 9043 6488 15784 7207 Business Products and Services 2532 520 1381 254 4077 1982 11642 4709 6517 567 2262 2540 3711 6515 Computers and Peripherals 4732 528 229 47 995 739 492 29 769 500 348 754 851 1473 Consumer Products and Services 3666 1628 2711 3656 5264 6074 10591 22156 2252 1451 7257 2413 4720 1137 Electronics/Instrumentation 3456 1204 381 6 447 1698 77 2997 392 0 1333 2517 2275 1240 Financial Services 1383 1116 3435 292 564 2957 1406 3349 3796 3463 2271 9887 7102 7267 Healthcare Services 668 617 1223 37 7417 3440 3646 4214 780 581 8210 4950 8403 1010 Industrial/Energy 2973 3360 4073 7492 12455 20938 24190 56947 12165 1998 25034 26358 31086 17253 IT Services 3138 533 674 1312 2135 2192 935 5362 5604 373 3717 2172 3960 4426 Media and Entertainment 42607 6332 4460 1733 7223 5397 26597 8756 3066 1708 2446 3816 15613 3213 Medical Devices and Equipment 556 1196 954 1168 2395 2364 3121 6691 6285 3610 8212 6201 8215 13093 Networking and Equipment 22320 6226 854 942 1420 2373 1561 991 782 1281 678 3838 590 2613 Other 0 176 350 200 143 1676 630 426 8358 0 2865 871 3521 635 Retailing/Distribution 1660 2227 175 3174 1042 978 1700 31001 924 945 6524 3108 4266 7021 Semiconductors 7493 2224 3248 422 805 1276 1272 1591 850 628 1789 890 1408 1799 Software 25737 3796 2134 4087 5761 5603 10034 21470 7546 2327 15871 14993 13333 9841 Telecommunications 11303 32082 7399 458 2232 5736 12634 4624 2162 31490 3948 3574 9320 5874 Total 136326 64565 36264 26265 56180 68468 112915 183218 64079 57884 101808 95369 134158 91618
  • 82. 2014 National Venture Capital Association Yearbook | 81 NVCA THOMSON REUTERS Fig. 4.12 Private Equity-Backed Acquisitions by MoneyTree Industry Number of Companies 1985 to 2013 Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Biotechnology 0 0 0 0 3 1 1 4 3 7 13 11 10 15 14 Business Products and Services 0 0 1 3 0 2 2 2 3 1 3 5 7 9 7 Computers and Peripherals 1 0 2 2 4 4 2 9 9 5 6 9 9 8 13 Consumer Products and Services 0 2 1 3 3 1 2 6 10 4 5 13 14 19 15 Electronics/Instrumentation 0 0 1 3 2 1 1 4 2 1 1 9 8 5 5 Financial Services 0 0 0 2 0 0 1 5 8 6 10 12 12 11 17 Healthcare Services 0 1 0 1 2 0 1 5 1 9 10 8 5 12 4 Industrial/Energy 2 3 4 9 5 4 8 17 20 13 25 20 35 39 33 IT Services 0 1 0 3 1 1 0 1 0 0 3 6 12 12 21 Media and Entertainment 0 1 1 1 2 1 1 1 6 8 5 12 17 19 28 Medical Devices and Equipment 2 1 2 2 5 3 0 15 5 9 11 9 17 17 14 Networking and Equipment 0 0 1 2 1 0 0 2 7 8 10 13 4 11 24 Other 0 0 0 0 0 0 0 0 0 0 1 0 0 1 0 Retailing/Distribution 2 0 0 3 0 3 5 3 5 2 3 2 10 8 13 Semiconductors 0 0 0 0 0 1 2 1 1 3 4 2 2 10 11 Software 1 3 3 1 1 6 2 13 17 26 30 21 45 66 67 Telecommunications 0 1 1 0 1 1 1 4 4 8 4 8 14 14 21 Total 8 13 17 35 30 29 29 92 101 110 144 160 221 276 307 Fig. 4.12 (Continued) Private Equity-Backed Acquisitions by MoneyTree Industry Number of Companies 1985 to 2013 Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 18 22 11 17 28 34 33 36 28 26 48 42 46 31 Business Products and Services 23 34 21 18 29 34 42 65 33 19 32 39 54 43 Computers and Peripherals 15 7 3 9 9 13 11 5 9 6 7 10 12 12 Consumer Products and Services 23 25 22 25 39 33 55 62 40 25 43 43 49 57 Electronics/Instrumentation 4 11 9 4 10 7 9 18 14 4 11 15 10 14 Financial Services 16 26 19 13 19 19 22 23 19 14 27 28 29 35 Healthcare Services 11 8 15 4 14 25 30 30 22 10 33 38 40 30 Industrial/Energy 37 35 33 45 66 128 113 148 115 57 122 137 219 154 IT Services 26 32 41 27 36 26 42 49 30 24 56 52 65 39 Media and Entertainment 54 58 31 28 43 43 54 84 50 48 76 84 82 68 Medical Devices and Equipment 13 20 14 14 27 35 32 41 20 40 42 55 51 39 Networking and Equipment 26 17 20 25 31 28 32 21 30 25 25 25 16 14 Other 0 1 1 3 4 10 4 8 14 1 8 8 7 7 Retailing/Distribution 19 18 9 15 14 21 24 28 17 7 29 16 29 24 Semiconductors 26 15 16 11 19 19 21 23 30 22 30 19 20 16 Software 126 98 133 127 143 171 200 184 165 132 203 206 200 196 Telecommunications 38 35 45 43 29 39 53 54 36 35 57 29 39 23 Total 475 462 443 428 560 685 777 879 672 495 849 846 968 802 *Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity-financed companies. Therefore, transactions from Figure 4.10 are included here.
  • 83. 82 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.13 Venture-Backed M&A Transaction Values vs. Amount Invested Year < TVI 1x-4x TVI 4x-10x TVI >10x TVI 1995 14% 26% 22% 38% 1996 8% 27% 30% 34% 1997 10% 41% 15% 34% 1998 15% 22% 31% 32% 1999 14% 15% 26% 45% 2000 8% 23% 22% 46% 2001 41% 19% 23% 17% 2002 50% 26% 13% 11% 2003 45% 38% 11% 5% 2004 36% 33% 20% 11% 2005 30% 37% 19% 14% 2006 29% 37% 18% 16% 2007 22% 30% 24% 23% 2008 28% 29% 25% 18% 2009 44% 21% 25% 10% 2010 31% 31% 22% 16% 2011 15% 27% 34% 24% 2012 18% 25% 29% 28% 2013 18% 37% 29% 16% Fig. 4.14 Venture-Backed IPOs Cos In Registration vs. Number of Venture-Backed IPOs Year # of Venture Backed IPOs # of Moneytree Cos. in Registration 2003 26 31 2004 82 57 2005 59 16 2006 67 36 2007 91 31 2008 7 20 2009 13 23 2010 70 31 2011 51 60 2012 49 27 2013 81 22 Fig. 4.15 Post-Offer Value Ranges by Number of Companies Year $10B or Greater >$1B $500M-$1B $100M-$500M <$100M 1995 - 2 4 59 62 1996 - 5 11 110 89 1997 - 1 4 58 66 1998 - 6 3 50 17 1999 1 28 46 181 22 2000 - 27 37 138 18 2001 - 5 7 18 6 2002 - - 7 15 2 2003 - - 2 22 2 2004 1 4 10 64 4 2005 1 4 7 35 13 2006 1 7 11 44 4 2007 1 15 16 57 3 2008 - 2 - 4 1 2009 - 3 4 6 - 2010 2 21 6 41 2 2011 2 17 13 19 2 2012 2 9 9 29 2 2013 1 13 12 50 5 * Count only includes IPOs with disclosed post-offer values This chart is prepared by analyzing all deals where total venture investment and ac- quisition price are confirmed. Each deal is classified as a ratio of company acquisi- tion (exit) price to total venture investment from all rounds. This chart compares the number of deals in each category. An acquisition where deal price is less than the total venture investment (“<TVI”) clearly did not result in a good return. Four times the investment to 10 times the investment can be a good outcome. An acquisition for more than 10 times venture investment is usually a nice outcome. *Beginning in 2012, companies could elect confidential registration. Those, of course, cannot be counted in the number in registration. As of this writing, it appears that half or more of companies seeking to go public are electing confidential registration.
  • 84. 2014 National Venture Capital Association Yearbook | 83 NVCA THOMSON REUTERS Fig. 4.16 Deal Value Ranges by Number of Companies Year >$1B $500M-$1B $100M-$500M <$100M 1995 - 1 10 47 1996 1 2 17 56 1997 - 1 22 77 1998 - - 27 86 1999 2 12 58 84 2000 15 23 101 106 2001 3 4 43 125 2002 1 3 28 134 2003 - 2 29 103 2004 5 6 45 143 2005 1 3 58 139 2006 2 3 62 141 2007 1 15 74 112 2008 2 4 42 87 2009 - 8 34 68 2010 - 11 49 90 2011 1 12 63 93 2012 5 10 53 64 2013 3 8 45 39 * Count only includes transactions with disclosed values Fig. 4.17 Venture-Backed US Company IPOs by Year by Country Country # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) # Exits Offer Amt ($ Mil) Argentina - - - - 1 332.8 - - - - - - - - - - - - 1 332.8 Bahamas - - 1 137.5 - - - - - - - - - - - - - - 1 137.5 Bermuda - - - - - - - - - - - - 1 621.3 - - - - 1 621.3 Canada 1 91.1 - - 1 57.5 - - - - - - - - - - - - 2 148.6 China 5 621.1 5 624.7 12 2,482.5 - - 2 220.0 21 2,838.3 8 1,739.7 2 165.7 4 556.3 59 9,248.2 France - - - - - - - - - - - - 1 77.0 - - 1 288.1 2 365.1 Hong Kong - - - - - - - - - - 1 103.3 - - - - - - 1 103.3 India - - - - - - - - - - 1 80.5 - - - - - - 1 80.5 Israel 2 67.5 1 78.0 - - - - - - - - - - - - 2 208.2 5 353.7 Netherlands - - - - - - - - - - - - 1 304.6 - - 1 89.7 2 394.3 Norway - - 1 43.8 - - - - - - - - - - - - - - 1 43.8 Russia - - 1 380.5 - - - - - - - - 1 1,434.8 - - - - 2 1,815.3 South Korea 2 190.8 1 144.1 - - - - - - - - - - - - - - 3 334.9 Taiwan 1 70.4 - - - - - - - - - - - - - - - - 1 70.4 United Kingdom - - - - - - - - - - - - - - - - 1 74.0 1 74.0 United States 48 4,072.5 57 5,655.9 77 9,466.5 7 765.026 11 1,759.8 47 4,752.3 39 6,512.1 47 21,294.2 72 9,852.0 405 64,130.4 *To be included in this chart, non-US based companies must be trading on a U.S. exchange/market and have at least 1 U.S. venture fund investor. 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total
  • 85. 84 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Fig. 4.18 Ratio of IPO Pre-Money Valuation to Amount Invested Year Post Offer Value ($ Billion) Offer Amt ($ Billion) IPO Pre Money Valuation Total Venture Inv. ($ Billion) Ratio 1995 19.3 7.9 11.4 2.2 5.2 1996 51.5 12.7 38.8 3.7 10.5 1997 19.1 5.8 13.3 2.7 4.9 1998 24.7 4.1 20.5 2.4 8.6 1999 147.3 24.0 123.4 11.0 11.2 2000 108.8 27.4 81.3 13.0 6.3 2001 19.2 4.1 15.1 2.6 5.8 2002 8.3 2.3 6.0 1.7 3.5 2003 7.4 2.0 5.4 2.4 2.2 2004 50.3 10.0 40.2 6.7 6.0 2005 39.7 5.1 34.6 3.1 11.2 2006 71.1 7.1 64.1 4.3 14.9 2007 68.2 12.3 55.9 6.7 8.3 2008 3.6 0.8 2.9 0.4 8.0 2009 9.2 2.0 7.2 0.6 12.0 2010 115.0 7.8 107.2 5.9 18.2 2011 94.7 10.7 84.0 6.6 12.7 2012 122.2 21.5 100.7 6.7 15.0 2013 62.7 11.1 51.6 9.4 5.5 Fig. 4.19 2013 Venture-Backed IPOs Valuations as of IPOs Year of IPO Avg Val ($ Mil) Max ($ Mil) Upper Quartile ($ Mil) Median ($ Mil) Lower Quartile ($ Mil) Min ($ Mil) 1995 152.0 2,128.6 144.8 104.2 61.4 10.4 1996 239.6 9,989.8 183.4 111.6 65.2 9.5 1997 148.1 1,106.3 161.1 99.3 57.2 6.6 1998 324.4 4,623.9 288.0 163.9 106.9 7.1 1999 531.9 10,203.2 537.0 303.7 186.7 5.9 2000 494.5 4,227.7 550.7 325.4 185.0 1.7 2001 534.2 3,464.1 617.7 326.6 158.6 46.6 2002 346.7 822.4 537.8 266.2 175.6 36.8 2003 285.1 821.9 353.2 251.9 171.2 41.9 2004 613.0 23,053.7 389.2 254.1 152.3 21.6 2005 672.9 22,422.9 392.2 201.9 136.6 4.6 2006 1,077.6 39,248.4 529.2 283.2 179.9 70.9 2007 749.5 14,035.4 762.8 364.7 274.1 50.0 2008 520.7 1,443.1 713.2 278.5 210.7 75.8 2009 707.1 1,622.0 852.5 547.9 313.0 212.9 2010 1,642.6 23,725.8 1,419.9 428.1 222.7 23.4 2011 1,856.0 16,465.6 1,496.6 606.3 336.2 94.8 2012 2,493.2 81,247.2 704.0 371.0 247.3 75.2 2013 783.8 14,435.1 587.8 354.1 212.7 42.9 Note: To be included in this chart, non-US based companies must be trading on a US exchange/market and have at least one US venture fund investor.
  • 86. 2014 National Venture Capital Association Yearbook | 85 NVCA THOMSON REUTERS GROWTH EQUITY INVESTMENTS This edition of the NVCA Yearbook, prepared by Thomson Reuters, for the first time profiles US growth equity investment in its own chapter. The NVCA believes growth equity investing is an important segment of the overall venture capital industry. Venture capitalists help create and grow companies; growth equity investors are strongly focused on the growth component of that mission and help companies scale through fat part of their hiring curves. The NVCA also believes that growth equity investing is a critical component of the emerging growth company financing continuum and has become, in many respects, the private alternative to the public markets for both emerging growth companies and their earlier stage venture capital backers. Growth equity really emerged as an asset class in 2000 and continues strong today. In 2013, we identified 342 growth equity deals in the United States. This compares with 406 in 2012, but is very much in line with the past several years. A disclosed $12.3 billion in equity investment was reported for 2013. This does not count the approximately 105 deals for which no dollar equity amounts were disclosed. An analysis of the charts in this chapter helps profile the growth equity activity. Approximately 38% of disclosed equity dollars went to Califor- nia companies. This compares with 50% of traditional venture capital dol- lars going to California companies. As with traditional venture capital, the sector receiving the most dol- lars through the most deals is Software. By count, 148 of the 342 deals, or 43%, were into software companies. By contrast, no other MoneyTree sector garnered more than 10% of the total number of deals. The definition of a growth equity company: • Company’s revenues are growing rapidly • Company is cash flow positive, profitable or approaching profit- ability • Company is often founder-owned and/or managed • Investor is agnostic about taking a controlling position and usually purchases minority ownership position • Industry investment mix is similar to that of earlier stage venture capital investors • Capital is used for company needs or shareholder liquidity • Additional financing rounds are not usually expected until exit • Investments are unlevered or use light leverage at purchase • Investment returns are primarily a function of growth, not leverage Methodology The growth equity asset class really emerged after the 2000 tech bubble. Therefore, our statistics begin in 2000. These growth equity transactions for the most part were already captured in the Thomson One database. But they were, and still are, reported under the respective venture capital or buyout categories. For purposes of this chapter, they are aggregated and reported as if they were a standalone dataset. While still nascent in its application, our 2014 Yearbook methodology for tagging growth equity transactions from the full venture capital/buy- out database bears some explanation. We expect these criteria to mature over time as we gain more experience defining the asset class. For now: • Date: 1/1/2000 and later • Equity dollar amount invested: Zero (not disclosed) or more than$15 million • Geographic location of company: United States ª Deal stage: expansion, later stage, acquisition for expansion, ac- quisition, LBO, mezzanine, MBO, recap or turnaround, secondary buyout, secondary purchase • Firms investing: Must include at least one firm from a list of 65 known, active growth equity investors It should also be noted that the dollar value of many of these growth equity transactions are not disclosed, so therefore the dollar amounts re- ported in the charts will understate the amount of equity investment made by growth equity firms. For this chapter, we have excluded equity invest- ment reported from $1 to $14.99 million, because growth equity deals tend to be larger in size. Also, unlike traditional venture capital portfolio companies that enter the portfolios with smaller and earlier stage rounds and exit with an IPO, acquisition, or failure, growth equity-backed companies enter those port- folios with more maturity, and, presumably, with a shorter track to liquid- ity.
  • 87. 86 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 5.01 Growth Equity Investments ($ Billions) 2000 to 2013* 0 5 10 15 20 25 30 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ($Billions) Year Software 34% Computers and Peripherals 21% Media and Entertainment 10% Industrial/Energy 8% Consumer Products and Services 6% IT Services 5% Financial Services 3% Medical Devices and Equipment 2% Biotechnology 2% Telecommunications 2% Healthcare Services 1% Semiconductors 1% Retailing/Distribution 1% Business Products and Services 1% 1% Electronics/Instrumentation 1% Networking and Equipment Figure 5.02 Growth Equity Investments By Industry Sector
  • 88. 2014 National Venture Capital Association Yearbook | 87 NVCA THOMSON REUTERS Fig. 5.03 Growth Equity Investments By Company State* State # Companies # Deals Amt. Invested ($Bil) California 153 141 4,677.6 Texas 27 25 3,368.8 New York 35 33 1,060.6 Massachusetts 21 20 650.4 Georgia 11 10 300.3 Total* 247 229 10,057.8 *Total includes top 5 states only Figure 5.04 Growth Equity Investments 2000-2013 By Industry ($ Millions)* Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 797.01 361 551 743 781 959 829 1,098 819 298 398 409 489 240 Business Products and Services 612.08 222 444 75 154 139 158 368 2,451 94 83 41 - 137 Computers and Peripherals 778.08 136 196 88 187 122 83 97 55 - 73 118 261 2,549 Consumer Products and Services 839.55 186 221 176 739 61 1,224 448 93 228 442 987 924 747 Electronics/ Instrumentation 197.00 83 30 96 96 110 164 251 212 164 115 123 129 72 Financial Services 1,304.76 224 66 296 672 914 464 316 482 249 1,904 94 198 410 Healthcare Services 221.88 48 99 175 270 145 149 274 129 383 194 287 161 Industrial/Energy 728.69 53 312 121 325 2,519 622 1,304 1,239 996 1,147 1,856 1,162 927 IT Services 2,678.90 595 323 71 178 3,700 528 785 814 670 457 1,151 685 666 Media and Entertainment 2,007.22 607 215 458 589 297 487 1,020 713 1,061 1,127 1,848 794 1,277 Medical Devices and Equipment 395.22 571 482 240 447 485 531 1,050 875 469 963 1,217 284 290 Networking and Equipment 4,240.43 2,500 1,226 570 532 654 414 590 268 176 441 199 696 100 Other - - 46 - 130 266 - 350 306 - 52 - - - Retailing/Distribution 860.80 79 193 - 55 103 - 207 107 44 30 392 154 143 Semiconductors 944.95 622 407 461 478 528 3,049 665 357 89 365 504 289 161 Software 6,409.81 2,298 825 1,011 2,079 1,471 2,526 1,358 3,034 1,058 1,316 3,645 3,695 4,229 Telecommunications 5,727.49 1,471 1,008 619 781 1,375 1,268 913 430 531 285 185 325 220 Total 28,743.86 10,055.40 6,643.83 5,200.68 8,490.98 13,848.92 12,493.56 11,094.65 12,384.40 6,127.02 9,579.65 12,961.99 10,370.76 12,329.17
  • 89. 88 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 5.05 Growth Equity Investments 2000-2013 By Industry (Number of Deals)* Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Biotechnology 22 11 16 22 32 30 25 37 32 12 17 13 18 14 Business Products and Services 20 9 3 2 6 9 11 14 13 9 10 7 9 13 Computers and Peripherals 12 4 6 3 8 5 4 6 2 3 7 7 9 Consumer Products and Services 27 6 7 5 10 11 13 23 10 10 14 24 27 16 Electronics/ Instrumentation 6 1 1 3 4 4 6 10 7 5 6 5 6 3 Financial Services 16 6 4 8 12 14 12 16 19 16 14 13 9 12 Healthcare Services 6 2 5 7 10 3 6 7 6 1 11 10 13 4 Industrial/Energy 16 2 6 5 13 15 19 43 38 22 39 37 25 18 IT Services 76 24 15 6 12 17 27 54 43 33 33 53 35 33 Media and Entertainment 65 15 4 13 17 12 23 32 35 27 30 35 41 31 Medical Devices and Equipment 15 19 19 13 18 23 21 38 34 14 29 20 14 13 Networking and Equipment 80 63 32 25 21 23 16 21 14 8 20 11 8 3 Other - - 1 - 4 5 4 11 4 1 1 - - - Retailing/Distribution 23 4 2 1 2 8 2 6 6 1 6 7 5 9 Semiconductors 27 21 17 16 23 27 27 28 16 5 14 19 10 8 Software 203 86 42 32 62 58 64 83 87 57 91 117 168 148 Telecommunications 99 44 25 22 32 17 28 25 20 14 15 10 11 8 Total 713 317 205 183 286 281 308 454 386 235 353 388 406 342
  • 90. 2014 National Venture Capital Association Yearbook | 89 NVCA THOMSON REUTERS Figure 5.06 Growth Equity Investments 2000-2013 By MoneyTree Region ($ Millions)* State 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Silicon Valley 11,021 2,966 1,852 1,347 1,988 2,121 2,060 2,849 3,385 2,675 3,396 5,207 4,151 4,062 Texas 1,968 1,072 594 522 1,246 1,048 3,121 738 521 101 432 1,974 332 3,369 NY Metro 2,342 808 320 270 920 3,415 1,404 1,233 815 455 750 1,274 679 1,112 New England 3,976 1,811 556 742 890 576 846 1,329 950 285 1,882 585 709 828 Southeast 1,773 426 674 571 478 481 2,127 464 1,293 828 644 365 581 656 LA/Orange County 1,421 417 284 323 630 658 1,036 1,076 651 200 659 1,398 1,149 496 DC/Metroplex 1,239 786 307 278 375 463 229 341 436 98 278 515 435 377 Midwest 1,163 428 862 210 375 253 320 645 272 362 588 849 555 377 SouthWest 197 89 153 30 480 128 217 727 212 55 60 181 345 255 Northwest 993 320 113 159 300 254 276 427 134 243 420 105 394 219 North Central 310 96 20 113 153 160 109 123 2,409 70 56 - 68 181 San Diego 404 229 137 119 182 277 441 286 241 233 106 198 98 120 Philadelphia Metro 453 212 416 287 261 3,674 139 345 234 218 229 94 143 109 South Central 42 36 - - - 45 - - - 150 17 35 173 83 Colorado 1,232 331 138 230 126 245 139 446 831 154 38 105 560 70 Upstate NY - - 190 - 85 - 30 47 - - 24 63 - 16 AK/HI/PR 190 - - - - - - - - - - - - - Sacramento/N.Cal 19 30 27 - - 50 - 19 - - - 16 - - Total 28,743 10,055 6,644 5,201 8,491 13,849 12,494 11,095 12,384 6,126 9,580 12,963 10,371 12,329
  • 91. 90 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure 5.07 Growth Equity Investments 2000-2013 By MoneyTree Region (Number of Deals)* State 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Silicon Valley 274 98 69 53 85 82 83 121 141 70 136 144 143 125 NY Metro 44 23 10 12 16 30 32 49 36 25 36 49 41 41 Southeast 38 15 21 17 18 20 25 29 30 19 22 19 22 28 Texas 46 33 16 18 24 15 23 33 24 16 25 29 21 27 LA/Orange County 38 12 13 8 15 21 26 39 24 11 26 27 26 25 New England 108 57 22 32 40 28 32 53 32 21 19 30 33 25 Midwest 29 11 9 8 13 9 19 33 17 17 21 27 37 17 DC/Metroplex 38 22 11 6 19 15 13 21 21 12 18 17 22 11 SouthWest 6 3 5 2 12 7 8 10 9 6 5 2 13 10 Colorado 16 6 4 4 4 6 5 14 9 7 9 6 10 7 North Central 12 4 3 5 6 8 4 7 9 5 8 2 6 7 Northwest 30 11 6 5 16 11 11 12 10 9 11 12 14 7 Philadelphia Metro 16 9 6 7 9 13 12 13 14 8 7 12 9 5 San Diego 13 9 6 6 7 13 10 12 8 8 6 7 4 3 South Central 3 2 - - - 1 3 2 1 1 3 2 3 3 Upstate NY - - 2 - 2 1 1 2 - - 1 2 - 1 AK/HI/PR 1 1 - - - - - 2 1 - - - - - Sacramento/N.Cal 1 1 2 - - 1 1 2 - - - 1 2 - Total 713 317.0 205.0 183.0 286.0 281.0 308.0 454.0 386.0 235.0 353.0 388.0 406.0 342.0 *Data used for the Growth Equity charts is based on the following criteria: The investment dollar totals include investments in US-based companies that are relevant to Growth Equity (Expansion, Later Stage, Acq. for Expansion, Acquisition, LBO, Mezzanine, MBO, Recap or Turnaround, Second- ary Buyout, Secondary Purchase), with a total equity investment amount of $15 million and up, and participation from at least one firm classified as a Growth Equity investor. Participating firms include the following: 3i, 3i Group PLC, ABS Capital Partners, Inc., Accel Partners Co Inc, Adams Street Partners LLC, Andreessen Horowitz LLC, Apax Partners LLP, Austin Ventures LP, Bain Capital Venture Partners LLC, Battery Ventures LP, Bessemer Venture Partners LP, Bregal Capital LLP, Carrick Capital Management Company LLC, Catalyst Investors LLC, Catterton Partners Corp, Chicago Growth Partners, Columbia Capital, Columbia Capital Group, Inc., Edison Ventures, Francisco Partners LP, Frazier Healthcare, FTV Capital, General Atlantic LLC, General Catalyst Partners LLC, GGV Capital, Great Hill Equity Partners LLC, Highland Capital Partners LLC, Insight Venture Partners LLC, Institutional Venture Partners, JMI Equity, Kennet Venture Partners Ltd, Kleiner Perkins Caufield Byers LLC, Level Equity, LLR Partners Inc, M/C Partners, Mainsail Partners LP, Meritech Capital Partners, New Enterprise Associates, Inc., Newspring Capital, Noro-Moseley Partners, North Bridge Venture Partners L P, Norwest Venture Partners, Oak Investment Partners, Pine Brook Road Partners LLC, Polaris Partners, Redpoint Ventures, Rho Capital Partners Inc, Sequoia Capital, Serent Capital LLC, Silver Lake Partners LP, Spectrum Equity, Stripes Group LLC, Summit Partners LP, Susquehanna Growth Equity LLC, Symmetric Capital, TA Associates Management, L.P., Trident Capital, Updata Partners, Volition Capital LLC, Weston Presidio Capital, WestView Capital Partners, Duff Ackerman Goodrich LLC, Draper Fisher Jurvetson International Inc, Draper Fisher Jur- vetson Gotham Venture Partners, Draper Fisher Jurvetson New England (AKA DFJ/NE), Technology Crossover Ventures, Revolution Ventures LLC, Element Partners, Riveria Investment Group. Company and deal counts include ‘Growth Equity’ transactions with disclosed and undisclosed equity investment totals.
  • 92. 2014 National Venture Capital Association Yearbook | 91 NVCA THOMSON REUTERS APPENDIX A Glossary “A” round – a financing event whereby angel groups and / or venture capitalists become involved in a fast growth company that was previously financed by founders and their friends and families. Accredited investor – a person or legal entity, such as a company or trust fund, that meets certain net worth and income qualifications and is considered to be sufficiently sophisticated to make investment decisions in private offerings. Regulation D of the Securities Act of 1933 exempts accredited investors from protection of the Securities Act. The Securities and Exchange Commission has proposed revisions to the accredited investor qualifying rules, which may or may not result in changes for venture investors. The current criteria for a natural person are: $1 million net worth or annual income exceeding $200,000 individually or $300,000 with a spouse. Directors, general partners and executive officers of the issuer are considered to be accredited investors. Alternative asset class – a class of investments that includes venture capital, leverage buyouts, hedge funds, real estate, and oil and gas, but excludes publicly traded securities. Pension plans, college endowments and other relatively large institutional investors typically allocate a certain percentage of their investments to alternative assets with an objective to diversify their portfolios. Alpha – a term derived from statistics and finance theory that is used to describe the return produced by a fund manager in excess of the return of a benchmark index. Manager returns and benchmark returns are measured net of the risk-free rate. In addition, manager returns are adjusted for the risk of the manager’s portfolio relative to the risk of the benchmark index. Alpha is a proxy for manager skill. Angel – a wealthy individual that invests in companies in relatively early stages of development. Usually angels invest less than $1 million per startup. Anti-dilution – a contract clause that protects an investor from a substantial reduction in percentage ownership in a company due to the issuance by the company of additional shares to other entities. The mechanism for making an adjustment that maintains the same percentage ownership is called a Full Ratchet. The most commonly used adjustment provides partial protection and is called Weighted Average. “B” round – a financing event whereby investors such as venture capitalists and organized angel groups are sufficiently interested in a company to provide additional funds after the “A” round of financing. Subsequent rounds are called “C”, “D” and so on. Basis point (“bp”) – one one-hundredth (1/100) of a percentage unit. For example, 50 basis points equals one half of one percent. Banks quote variable loan rates in terms of an index plus a margin and the margin is often described in basis points, such as LIBOR plus 400 basis points (or, as the experts say, “beeps”). Beta – a measure of volatility of a public stock relative to an index or a composite of all stocks in a market or geographical region. A beta of more than one indicates the stock has higher volatility than the index (or composite) and a beta of one indicates volatility equivalent to the index (or composite). For example, the price of a stock with a beta of 1.5 will change by 1.5% if the index value changes by 1%. Typically, the SP500 index is used in calculating the beta of a stock. Beta product – a product that is being tested by potential customers prior to being formally launched into the marketplace. Board of directors – a group of individuals, typically composed of managers, investors and experts who have a fiduciary responsibility for the well being and proper guidance of a corporation. The board is elected by the shareholders. Book – see Private placement memorandum. Bootstrapping – the actions of a startup to minimize expenses and build cash flow, thereby reducing or eliminating the need for outside investors. Bp – see Basis point. Bridge financing – temporary funding that will eventually be replaced by permanent capital from equity investors or debt lenders. In venture capital, a bridge is usually a short term note (6 to 12 months) that converts to preferred stock. Typically, the bridge lender has the right to convert the note to preferred stock at a price that is a 20% to 25% discount from the price of the preferred stock in the next financing round. See Mezzanine and Wipeout bridge. Broad-based weighted average anti-dilution – A weighted average anti-dilution method adjusts downward the price per share of the preferred stock of investor A due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. Investor A’s preferred stock is
  • 93. 92 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA repriced to a weighted average of investor A’s price and investor B’s price. A broad-based anti-dilution method uses all common stock outstanding on a fully diluted basis (including all convertible securities, warrants and options) in the denominator of the formula for determining the new weighted average price. See Narrow-based weighted average anti-dilution. Burn rate – the rate at which a startup with little or no revenue uses available cash to cover expenses. Usually expressed on a monthly or weekly basis. Business Development Company (BDC) – a publicly traded company that invests in private companies and is required by law to provide meaningful support and assistance to its portfolio companies. Business plan – a document that describes a new concept for a business opportunity. A business plan typically includes the following sections: executive summary, market need, solution, technology, competition, marketing, management, operations, exit strategy, and financials (including cash flow projections). For most venture capital funds fewer than 10 of every 100 business plans received eventually receive funding. Buyout – a sector of the private equity industry. Also, the purchase of a controlling interest of a company by an outside investor (in a leveraged buyout) or a management team (in a management buyout). Buy-sell agreement – a contract that sets forth the conditions under which a shareholder must first offer his or her shares for sale to the other shareholders before being allowed to sell to entities outside the company. C Corporation – an ownership structure that allows any number of individuals or companies to own shares. A C corporation is a stand-alone legal entity so it offers some protection to its owners, managers and investors from liability resulting from its actions. Capital Asset Pricing Model (CAPM) – a method of estimating the cost of equity capital of a company. The cost of equity capital is equal to the return of a risk-free investment plus a premium that reflects the risk of the company’s equity. Capital call – when a private equity fund manager (usually a “general partner” in a partnership) requests that an investor in the fund (a “limited partner”) provide additional capital. Usually a limited partner will agree to a maximum investment amount and the general partner will make a series of capital calls over time to the limited partner as opportunities arise to finance startups and buyouts. Capital gap – the difficulty faced by some entrepreneurs in trying to raise between $2 million and $5 million. Friends, family and angel investors are typically good sources for financing rounds of less than $2 million, while many venture capital funds have become so large that investments in this size range are difficult. Capitalization table – a table showing the owners of a company’s shares and their ownership percentages as well as the debt holders. It also lists the forms of ownership, such as common stock, preferred stock, warrants, options, senior debt, and subordinated debt. Capital gains – a tax classification of investment earnings resulting from the purchase and sale of assets. Typically, a company’s investors and founders have earnings classified as long term capital gains (held for a year or longer), which are taxed at a lower rate than ordinary income. Capital stock – a description of stock that applies when there is only one class of shares. This class is known as “common stock”. Capital Under Management – A frequently-used metric for sizing total funds managed by a venture capital or buyout firm. In practice, there are several ways of calculating this. In the US, this is the total committed capital for all funds managed by a firm on which it collects management fees. This calculation ignores whether portions of the committed capital have not yet been called and whether portions of the fund have been liquidated and distributed. It typically does not include aging funds in their “out years” on which fees are not being collected. For purposes of this book in calculating capital managed in figure 1.04, because direct data is not available, the last eight vintage years of capital commitments is considered a proxy for the industry’s total capital under management. Capped participating preferred stock – preferred stock whose participating feature is limited so that an investor cannot receive more than a specified amount. See Participating preferred stock. Carried interest – the share in the capital gains of a venture capital fund which is allocated to the General Partner. Typically, a fund must return the capital given to it by limited partners plus any preferential rate of return before the general partner can share in the profits of the fund. The general partner will typically receive a 20% carried interest, although some successful firms receive 25%-30%. Also known as “carry” or “promote.” Clawback – a clause in the agreement between the general partner and the limited partners of a private equity fund. The clawback gives limited partners the right to reclaim a portion of disbursements to a general partner for profitable investments based on significant losses from later investments in a portfolio.
  • 94. 2014 National Venture Capital Association Yearbook | 93 NVCA THOMSON REUTERS Closing – the conclusion of a financing round whereby all necessary legal documents are signed and capital has been transferred. Club deal – the act of investing by two or more entities in the same target company, usually involving a leveraged buyout transaction. Co-investment–thedirectinvestmentbyalimitedpartneralongside a general partner in a portfolio company. Collateral – hard assets of the borrower, such as real estate or equipment, for which a lender has a legal interest until a loan obligation is fully paid off. Commitment – an obligation, typically the maximum amount that a limited partner agrees to invest in a fund. See Capital call. Common stock – a type of security representing ownership rights in a company. Usually, company founders, management and employees own common stock while investors own preferred stock. In the event of a liquidation of the company, the claims of secured and unsecured creditors, bondholders and preferred stockholders take precedence over common stockholders. See Preferred stock. Comparable – a private or public company with similar characteristics to a private or public company that is being valued. For example, a telecommunications equipment manufacturer whose market value is 2 times revenues can be used to estimate the value of a similar and relatively new company with a new product in the same industry. See Liquidity discount. Control – the authority of an individual or entity that owns more than 50% of equity in a company or owns the largest block of shares compared to other shareholders. Consolidation – see Rollup. Conversion – the right of an investor or lender to force a company to replace the investor’s preferred shares or the lender’s debt with common shares at a preset conversion ratio. A conversion feature was first used in railroad bonds in the 1800’s. Convertible debt – a loan which allows the lender to exchange the debt for common shares in a company at a preset conversion ratio. Also known as a “convertible note.” Convertible preferred stock – a type of stock that gives an owner the right to convert to common shares of stock. Usually, preferred stock has certain rights that common stock doesn’t have, such as decision-making management control, a promised return on investment (dividend), or senior priority in receiving proceeds from a sale or liquidation of the company. Typically, convertible preferred stock automatically converts to common stock if the company makes an initial public offering (IPO). Convertible preferred is the most common tool for private equity funds to invest in companies. Co-sale right – a contractual right of an investor to sell some of the investor’s stock along with the founder’s or majority shareholder’s stock if either the founder or majority shareholder elects to sell stock to a third-party. Also known as Tag-along right. Cost of capital – see Weighted average cost of capital. Cost of revenue – the expenses generated by the core operations of a company. Covenant – a legal promise to do or not do a certain thing. For example, in a financing arrangement, company management may agree to a negative covenant, whereby it promises not to incur additional debt. The penalties for violation of a covenant may vary from repairing the mistake to losing control of the company. Coverage ratio – describes a company’s ability to pay debt from cash flow or profits. Typical measures are EBITDA/Interest, (EBITDA minus Capital Expenditures)/Interest, and EBIT/Interest. Cram down round – a financing event upon which new investors with substantial capital are able to demand and receive contractual terms that effectively cause the issuance of sufficient new shares by the startup company to significantly reduce (“dilute”) the ownership percentage of previous investors. Cumulative dividends – the owner of preferred stock with cumulative dividends has the right to receive accrued (previously unpaid) dividends in full before dividends are paid to any other classes of stock. Current ratio – the ratio of current assets to current liabilities. Data room – a specific location where potential buyers / investors can review confidential information about a target company. This information may include detailed financial statements, client contracts, intellectual property, property leases, and compensation agreements. Deal flow – a measure of the number of potential investments that a fund reviews in any given period. Defined benefit plan – a company retirement plan in which the benefits are typically based on an employee’s salary and number of years worked. Fixed benefits are paid after the employee retires. The employer bears the investment risk and is committed to providing
  • 95. 94 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA the benefits to the employee. Defined benefit plan managers can invest in private equity funds. Defined contribution plan – a company retirement plan in which the employee elects to contribute some portion of his or her salary into a retirement plan, such as a 401(k) or 403(b). The employer may also contribute to the employee’s plan. With this type of plan, the employee bears the investment risk. The benefits depend solely on the amount of money made from investing the employee’s contributions. Demand rights – a type of registration right. Demand rights give an investor the right to force a startup to register its shares with the SEC and prepare for a public sale of stock (IPO). Dilution – the reduction in the ownership percentage of current investors, founders and employees caused by the issuance of new shares to new investors. Dilution protection – see Anti-dilution and Full ratchet. Direct secondary transaction – A transaction in which the buyer purchases shares of an operating company from an existing seller. While the transaction is a secondary sale of shares, the transacted interest is a primary issue purchase directly into an operating company. Sellers are often venture capitalists selling their ownership stake in a portfolio company. Buyers are often funds that specialize in such investments. Disbursement – an investment by a fund in a company. Discount rate – the interest rate used to determine the present value of a series of future cash flows. Discounted cash flow (DCF) – a valuation methodology whereby the present value of all future cash flows expected from a company is calculated. Distressed debt – the bonds of a company that is either in or approaching bankruptcy. Some private equity funds specialize in purchasing such debt at deep discounts with the expectation of exerting influence in the restructuring of the company and then selling the debt once the company has meaningfully recovered. Distribution – the transfer of cash or securities to a limited partner resulting from the sale, liquidation or IPO of one or more portfolio companies in which a general partner chose to invest. Dividends – payments made by a company to the owners of certain securities. Typically, dividends are paid quarterly, by approval of the board of directors, to owners of preferred stock. Down round – a round of financing whereby the valuation of the company is lower than the value determined by investors in an earlier round. Drag-along rights – the contractual right of an investor in a company to force all other investors to agree to a specific action, such as the sale of the company. Drawdown schedule – an estimate of the gradual transfer of committed investment funds from the limited partners of a private equity fund to the general partners. Due diligence – the investigatory process performed by investors to assess the viability of a potential investment and the accuracy of the information provided by the target company. Dutch auction – a method of conducting an IPO where-by newly issued shares of stock are committed to the highest bidder, then, if any shares remain, to the next highest bidder, and so on until all the shares are committed. Note that the price per share paid by all buyers is the price commitment of the buyer of the last share. Early stage – the state of a company after the seed (formation) stage but before middle stage (generating revenues). Typically, a company in early stage will have a core management team and a proven concept or product, but no positive cash flow. Earnings before interest and taxes (EBIT) – a measurement of the operating profit of a company. One possible valuation methodology is based on a comparison of private and public companies’ value as a multiple of EBIT. Earnings before interest, taxes, depreciation and amortization (EBITDA) – a measurement of the cash flow of a company. One possible valuation methodology is based on a comparison of private and public companies’ value as a multiple of EBITDA. Earn out – an arrangement in which sellers of a business receive additional future payments, usually based on financial performance metrics such as revenue or net income. Elevator pitch – a concise presentation, lasting only a few minutes (an elevator ride), by an entrepreneur to a potential investor about an investment opportunity. Employee Stock Ownership Program (ESOP) – a plan established by a company to reserve shares for employees. Entrepreneur – an individual who starts his or her own business.
  • 96. 2014 National Venture Capital Association Yearbook | 95 NVCA THOMSON REUTERS Entrepreneurship – the application of innovative leadership to limited resources in order to create exceptional value. Enterprise Value (EV) – the sum of the market values of the common stock and long term debt of a company, minus excess cash. Equity – the ownership structure of a company represented by common shares, preferred shares or unit interests. Equity = Assets – Liabilities. ESOP – see Employee Stock Ownership Program. Evergreen fund – a fund that reinvests its profits in order to ensure the availability of capital for future investments. Exit strategy – the plan for generating profits for owners and investors of a company. Typically, the options are to merge, be acquired or make an initial public offering (IPO). An alternative is to recapitalize (releverage the company and then pay dividends to shareholders). Expansion stage – the stage of a company characterized by a complete management team and a substantial increase in revenues. Fair value – a financial reporting principle for valuing assets and liabilities, for example, portfolio companies in venture capital fund portfolio. In 2008, more defined rules took effect. See FAS 157. Fairness opinion – a letter issued by an investment bank that charges a fee to assess the fairness of a negotiated price for a merger or acquisition. FAS 157 – the original designation of an accounting standard effective in 2008 for private companies for the fair value measurement of portfolio holdings. Literally, “Financial Accounting Standard number 157,” this standard is now officially Accounting Standard Codification Topic 820 (“ASC 820”) but it is more widely known by its original name. In 2013-2014, the FinancialAccountingFoundationconductedapost-implementation review of this standard to determine if it is working as intended. First refusal – the right of a privately owned company to purchase any shares that employees would like to sell. Founders stock – nominally priced common stock issued to founders, officers, employees, directors, and consultants. Free cash flow to equity (FCFE) – the cash flow available after operating expenses, interest payments on debt, taxes, net principal repayments, preferred stock dividends, reinvestment needs and changes in working capital. In a discounted cash flow model to determine the value of the equity of a firm using FCFE, the discount rate used is the cost of equity. Free cash flow to the firm (FCFF) – the operating cash flow available after operating expenses, taxes, reinvestment needs and changes in working capital, but before any interest payments on debt are made. In a discounted cash flow model to determine the enterprise value of a firm using FCFF, the discount rate used is the weighted average cost of capital (WACC). Friends and family financing – capital provided by the friends and family of founders of an early stage company. Founders should be careful not to create an ownership structure that may hinder the participation of professional investors once the company begins to achieve success. Full ratchet – an anti-dilution protection mechanism whereby the price per share of the preferred stock of investor A is adjusted downwardduetotheissuanceofnewpreferredsharestonewinvestor B at a price lower than the price investor A originally received. InvestorA’s preferred stock is repriced to match the price of investor B’s preferred stock. Usually as a result of the implementation of a ratchet, company management and employees who own a fixed amount of common shares suffer significant dilution. See Narrow- based weighted average anti-dilution and Broad-based weighted average anti-dilution. Fully diluted basis – a methodology for calculating any per share ratios whereby the denominator is the total number of shares issued by the company on the assumption that all warrants and options are exercised and preferred stock. Fund-of-funds – a fund created to invest in private equity funds. Typically, individual investors and relatively small institutional investors participate in a fund-offunds to minimize their portfolio management efforts. Gatekeepers – intermediaries which endowments, pension funds and other institutional investors use as advisors regarding private equity investments. General partner (GP) – a class of partner in a partnership. The general partner retains liability for the actions of the partnership. Historically, venture capital and buyout funds have been structured as limited partnerships, with the venture firm as the GP and limited partners (LPs) being the institutional and high net worth investors that provide most of the capital in the partnership. The GP earns a management fee and a percentage of gains (see Carried interest). GP – see General partner. GP for hire – In a spin-out or a synthetic secondary, a GP for hire
  • 97. 96 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA refers to the professional investor who may be hired by a purchasing firm to manage the new fund created from the orphaned assets purchased. In past cases, the GP has often expanded its role to fundraise for and run new funds aside from the initial fund. Going-private transaction – when a public company chooses to pay off all public investors, delist from all stock exchanges, and become owned by management, employees, and select private investors. Golden handcuffs – financial incentives that discourage founders and / or important employees from leaving a company before a predetermined date or important milestone. Grossing up – an adjustment of an option pool for management and employees of a company which increases the number of shares available over time. This usually occurs after a financing round whereby one or more investors receive a relatively large percentage of the company. Without a grossing up, managers and employees would suffer the financial and emotional consequences of dilution, therebypotentiallyaffectingtheoverallperformanceofthecompany. Growth stage – the state of a company when it has received one or more rounds of financing and is generating revenue from its product or service. Also known as “middle stage.” Hart-Scott-RodinoAct –alawrequiringentitiesthatacquirecertain amounts of stock or assets of a company to inform the Federal Trade Commission and the Department of Justice and to observe a waiting period before completing the transaction. Hedge fund – an investment fund that has the ability to use leverage, take short positions in securities, or use a variety of derivative instruments in order to achieve a return that is relatively less correlated to the performance of typical indices (such as the SP 500) than traditional long-only funds. Hedge fund managers are typically compensated based on assets under management as well as fund performance. High yield debt – debt issued via public offering or public placement (Rule 144A) that is rated below investment grade by SP or Moody’s. This means that the debt is rated below the top four rating categories (i.e. SP BB+, Moody’s Ba2 or below). The lower rating is indicative of higher risk of default, and therefore the debt carries a higher coupon or yield than investment grade debt. Also referred to as Junk bonds or Sub-investment grade debt. Hockey stick – the general shape and form of a chart showing revenue, customers, cash or some other financial or operational measure that increases dramatically at some point in the future. Entrepreneurs often develop business plans with hockey stick charts to impress potential investors. Holding period – amount of time an investment remains in a portfolio. Hot issue – stock in an initial public offering that is in high demand. Hot money – capital from investors that have no tolerance for lack of results by the investment manager and move quickly to withdraw at the first sign of trouble. Hurdle rate – a minimum rate of return required before an investor will make an investment. Incorporation – the process by which a business receives a state charter, allowing it to become a corporation. Many corporations choose Delaware because its laws are business-friendly and up to date. Incubator – a company or facility designed to host startup companies. Incubators help startups grow while controlling costs by offering networks of contacts and shared backoffice resources. Indenture – the terms and conditions between a bond issuer and bond buyers. Initial public offering (IPO) – the first offering of stock by a company to the public. New public offerings must be registered with the Securities and Exchange Commission. An IPO is one of the methods that a startup that has achieved significant success can use to raise additional capital for further growth. See Qualified IPO. In-kind distribution – a distribution to limited partners of a private equity fund that is in the form of publicly trades shares rather than cash. Inside round – a round of financing in which the investors are the same investors as the previous round. An inside round raises liability issues since the valuation of the company has no third party verification in the form of an outside investor. In addition, the terms of the inside round may be considered self-dealing if they are onerous to any set of shareholders or if the investors give themselves additional preferential rights. Institutional investor – professional entities that invest capital on behalf of companies or individuals. Examples are: pension plans, insurance companies and university endowments. Intellectual property (IP) – knowledge, techniques, writings and images that are intangible but often protected by law via patents, copyrights, and trademarks. Interest coverage ratio – earnings before interest and taxes (EBIT)
  • 98. 2014 National Venture Capital Association Yearbook | 97 NVCA THOMSON REUTERS divided by interest expense. This is a key ratio used by lenders to assess the ability of a company to produce sufficient cash to pay its debt obligation. Internal rate of return (IRR) – the interest rate at which a certain amount of capital today would have to be invested in order to grow to a specific value at a specific time in the future. Investment thesis / Investment philosophy – the fundamental ideas which determine the types of investments that an investment fund will choose in order to achieve its financial goals. IPEV – Stands for International Private Equity Valuation guidelines group. This group is made up of representatives of the international and US venture capital industry and has published guidelines for applying US GAAP and international IFRS valuation rules. See www.privateequityvaluation.com. Widely regarded in the US as the global successor to the US-focused PEIGG group. IPO – see Initial public offering. IRR – see Internal rate of return. Issuer – the company that chooses to distribute a portion of its stock to the public. J curve – a concept that during the first few years of a private equity fund, cash flow or returns are negative due to investments, losses, and expenses, but as investments produce results the cash flow or returns trend upward. A graph of cash flow or returns versus time would then resemble the letter “J”. Later stage – the state of a company that has proven its concept, achieved significant revenues compared to its competition, and is approaching cash flow break even or positive net income. Typically, a later stage company is about 6 to 12 months away from a liquidity event such as an IPO or buyout. The rate of return for venture capitalists that invest in later stage, less risky ventures is lower than in earlier stage ventures. LBO – see Leveraged buyout. Lead investor – the venture capital investor that makes the largest investment in a financing round and manages the documentation and closing of that round. The lead investor sets the price per share of the financing round, thereby determining the valuation of the company. Letter of intent – a document confirming the intent of an investor to participate in a round of financing for a company. By signing this document, the subject company agrees to begin the legal and due diligence process prior to the closing of the transaction. Also known as a “Term Sheet”. Leverage – the use of debt to acquire assets, build operations and increase revenues. By using debt, a company is attempting to achieve results faster than if it only used its cash available from pre-leverage operations. The risk is that the increase in assets and revenues does not generate sufficient net income and cash flow to pay the interest costs of the debt. Leveraged buyout (LBO) – the purchase of a company or a business unit of a company by an outside investor using mostly borrowed capital. Leveraged recapitalization – the reorganization of a company’s capital structure resulting in more debt added to the balance sheet. Private equity funds can recapitalize a portfolio company and then direct the company to issue a one-time dividend to equity investors. This is often done when the company is performing well financially and the debt markets are expanding. Leverage ratios – measurements of a company’s debt as a multiple of cash flow. Typical leverage ratios include Total Debt / EBITDA, Total Debt / (EBITDA minus Capital Expenditures), and Seniore Debt / EBITDA. L.I.B.O.R. – see The London Interbank Offered Rate. License – a contract in which a patent owner grants to a company the right to make, use or sell an invention under certain circumstances and for compensation. Limited liability company (LLC) – an ownership structure designed to limit the founders’ losses to the amount of their investment. An LLC itself does not pay taxes, rather its owners pay taxes on their proportion of the LLC profits at their individual tax rates. Limitedpartnership–alegalentitycomposedofageneralpartnerand various limited partners. The general partner manages the investments and is liable for the actions of the partnership while the limited partners are generally protected from legal actions and any losses beyond their original investment. The general partner collects a management fee and earns a percentage of capital gains (see Carried interest), while the limited partners receive income, capital gains and tax benefits. Limited partner (LP) – an investor in a limited partnership. The general partner is liable for the actions of the partnership while the limited partners are generally protected from legal actions and any losses beyond their original investment. The limited partner receives income, capital gains and tax benefits.
  • 99. 98 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Liquidation – the sale of a company. This may occur in the context of an acquisition by a larger company or in the context of selling off all assets prior to cessation of operations (Chapter 7 bankruptcy). In a liquidation, the claims of secured and unsecured creditors, bondholders and preferred stockholders take precedence over common stockholders. Liquidation preference – the contractual right of an investor to priority in receiving the proceeds from the liquidation of a company. For example, a venture capital investor with a “2x liquidation preference” has the right to receive two times its original investment upon liquidation. Liquidity discount – a decrease in the value of a private company compared to the value of a similar but publicly traded company. Since an investor in a private company cannot readily sell his or her investment, the shares in the private company must be valued less than a comparable public company. Liquidity event – a transaction whereby owners of a significant portion of the shares of a private company sell their shares in exchange for cash or shares in another, usually larger company. For example, an IPO is a liquidity event. Lock-up agreement – investors, management and employees often agree not to sell their shares for a specific time period after an IPO, usually 6 to 12 months. By avoiding large sales of its stock, the company has time to build interest among potential buyers of its shares. London Interbank Offered Rate (L.I.B.O.R.) – the average rate charged by large banks in London for loans to each other. LIBOR is a relatively volatile rate and is typically quoted in maturities of one month, three months, six months and one year. Management buyout (MBO) – a leveraged buyout controlled by the members of the management team of a company or a division. Often an MBO is conducted in partnership with a buyout fund. Management fee – a fee charged to the limited partners in a fund by the general partner. Management fees in a private equity fund usually range from 0.75% to 3% of capital under management, depending on the type and size of fund. For venture capital funds, 2% is typical. Management rights – the rights often required by a venture capitalist as part of the agreement to invest in a company. The venture capitalist has the right to consult with management on key operational issues, attend board meetings and review information about the company’s financial situation. Market capitalization – the value of a publicly traded company as determined by multiplying the number of shares outstanding by the current price per share. MBO – see Management buyout. Mezzanine – a layer of financing that has intermediate priority (seniority) in the capital structure of a company. For example, mezzanine debt has lower priority than senior debt but usually has a higher interest rate and often includes warrants. In venture capital, a mezzanine round is generally the round of financing that is designed to help a company have enough resources to reach an IPO. See Bridge financing. MoneyTree™Report–OfficiallyknownasTheMoneyTreeReport from PricewaterhouseCoopers and the National Venture Capital Association based on data provided byThomson Reuters.This report provides much of the data in this report. It is used for investment statistics in United States based companies. Specific definition informationisavailableinseveraloftheappendicesofthisYearbook. Multiples – a valuation methodology that compares public and private companies in terms of a ratio of value to an operations figure such as revenue or net income. For example, if several publicly traded computer hardware companies are valued at approximately 2 times revenues, then it is reasonable to assume that a startup computer hardware company that is growing fast has the potential to achieve a valuation of 2 times its revenues. Before the startup issues its IPO, it will likely be valued at less than 2 times revenue because of the lack of liquidity of its shares. See Liquidity discount. Narrow-based weighted average anti-dilution – a type of anti- dilution mechanism. A weighted average anti-dilution method adjusts downward the price per share of the preferred stock of investor A due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. Investor A’s preferred stock is repriced to a weighed average of investor A’s price and investor B’s price. A narrow-based anti-dilution uses only common stock outstanding in the denominator of the formula for determining the new weighted average price. NDA – see Non-disclosure agreement. No-shop clause – a section of an agreement to purchase a company whereby the seller agrees not to market the company to other potential buyers for a specific time period. Non-cumulative dividends – dividends that are payable to owners of preferred stock at a specific point in time only if there is sufficient cash flow available after all company expenses have been paid. If
  • 100. 2014 National Venture Capital Association Yearbook | 99 NVCA THOMSON REUTERS cash flow is insufficient, the owners of the preferred stock will not receive the dividends owed for that time period and will have to wait until the board of directors declares another set of dividends. Non-interference – an agreement often signed by employees and management whereby they agree not to interfere with the company’s relationships with employees, clients, suppliers and sub-contractors within a certain time period after termination of employment. Non-solicitation – an agreement often signed by employees and management whereby they agree not to solicit other employees of the company regarding job opportunities. Non-disclosure agreement (NDA) – an agreement issued by entrepreneurs to protect the privacy of their ideas when disclosing those ideas to third parties. Offering memorandum – a legal document that provides details of an investment to potential investors. See Private placement memorandum. OID – see Original issue discount. Operating cash flow – the cash flow produced from the operation of a business, not from investing activities (such as selling assets) or financing activities (such as issuing debt). Calculated as net operating income (NOI) plus depreciation. Option pool – a group of options set aside for long term, phased compensation to management and employees. Outstanding shares – the total amount of common shares of a company, not including treasury stock, convertible preferred stock, warrants and options. Pay to play – a clause in a financing agreement whereby any investor that does not participate in a future round agrees to suffer significant dilution compared to other investors. The most onerous version of “pay to play” is automatic conversion to common shares, which in essence ends any preferential rights of an investor, such as the right to influence key management decisions. Pari passu – a legal term referring to the equal treatment of two or more parties in an agreement. For example, a venture capitalist may agree to have registration rights that are pari passu with the other investors in a financing round. Participating dividends – the right of holders of certain preferred stock to receive dividends and participate in additional distributions of cash, stock or other assets. Participating preferred stock – a unit of ownership composed of preferred stock and common stock. The preferred stock entitles the owner to receive a predetermined sum of cash (usually the original investment plus accrued dividends) if the company is sold or has an IPO. The common stock represents additional continued ownership in the company. PEIGG – acronym for Private Equity Industry Guidelines Group, an ad hoc group of individuals and firms involved in the private equity industry for the purpose of establishing valuation and reporting guidelines. With the implementation of FAS 157 in 2008, the group’s mission was essentially complete. Several of its members then joined IPEV, which is viewed by US VCs as the international successor to PEIGG. Piggyback rights – rights of an investor to have his or her shares included in a registration of a startup’s shares in preparation for an IPO. PIK dividend – a dividend paid to the holder of a stock, usually preferred stock, in the form of additional stock rather than cash. PIK refers to payment in kind. PIPEs – see Private investment in public equity. Placementagent–acompanythatspecializesinfindinginstitutional investors that are willing and able to invest in a private equity fund. Sometimes a private equity fund will hire a placement agent so the fund partners can focus on making and managing investments in companies rather than on raising capital. Portfolio company – a company that has received an investment from a private equity fund. Post-money valuation – the valuation of a company including the capital provided by the current round of financing. For example, a venture capitalist may invest $5 million in a company valued at $2 million “pre-money” (before the investment was made). As a result, the startup will have a post-money valuation of $7 million. PPM – see Private placement memorandum. Preemptive rights – the rights of shareholders to maintain their percentage ownership of a company by buying shares sold by the company in future financing rounds. Preference – seniority, usually with respect to dividends and proceeds from a sale or dissolution of a company. Preferred return – a minimum return per annum that must be
  • 101. 100 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA generated for limited partners of a private equity fund before the general partner can begin receiving a percentage of profits from investments. Preferred stock – a type of stock that has certain rights that common stock does not have. These special rights may include dividends, participation, liquidity preference, anti-dilution protection and veto provisions, among others. Private equity investors usually purchase preferred stock when they make investments in companies. Pre-money valuation – the valuation of a company prior to the current round of financing. For example, a venture capitalist may invest $5 million in a company valued at $2 million pre-money.As a result, the startup will have a “post-money” valuation of $7 million. Primary shares – shares sold by a corporation (not by individual shareholders). Private Equity Growth Capital Council (PEGCC) – an advocacy, communications and research organization for the buyout industry in the United States. Private equity – equity investments in non-public companies, usually defined as being made up of venture capital funds and buyout funds. Real estate, oil and gas, and other such partnerships are sometimes included in the definition. Private investment in public equity (PIPEs) – investments by a private equity fund in a publicly traded company, usually at a discount and in the form of preferred stock. Private placement – the sale of a security directly to a limited number of institutional and qualified individual investors. If structured correctly, a private placement avoids registration with the Securities and Exchange Commission. Private placement memorandum (PPM) – a document explaining the details of an investment to potential investors. For example, a private equity fund will issue a PPM when it is raising capital from institutional investors. Also, a startup may issue a PPM when it needs growth capital. Also known as “Offering Memorandum”. Private securities – securities that are not registered with the Securities and Exchange Commission and do not trade on any exchanges. The price per share is negotiated between the buyer and the seller (the “issuer”). Prudent man rule – a fundamental principle for professional money management which serves as a basis for the Prudent Investor Act. The principle is based on a statement by Judge Samuel Putnum in 1830: “Those with the responsibility to invest money for others should act with prudence, discretion, intelligence and regard for the safety of capital as well as income.” In the 1970s a favorable interpretation of this rule enabled pension fund managers to invest in venture capital for the first time. Qualified IPO – a public offering of securities valued at or above a total amount specified in a financing agreement. This amount is usually specified to be sufficiently large to guarantee that the IPO shares will trade in a major exchange (NASDAQ or New York Stock Exchange). Usually upon a qualified IPO preferred stock is forced to convert to common stock. Quartile – one fourth of the data points in a data set. Often, private equity investors are measured by the results of their investments during a particular period of time. Institutional investors often prefer to invest in private equity funds that demonstrate consistent results over time, placing in the upper quartile of the investment results for all funds. Ratchet – a mechanism to prevent dilution. An antidilution clause in a contract protects an investor from a reduction in percentage ownership in a company due to the future issuance by the company of additional shares to other entities. Realization ratio – the ratio of cumulative distributions to paid-in capital. The realization ratio is used as a measure of the distributions from investment results of a private equity partnership compared to the capital under management. Recapitalization – the reorganization of a company’s capital structure. Red herring – a preliminary prospectus filed with the Securities and Exchange Commission and containing the details of an IPO offering. The name refers to the disclosure warning printed in red letters on the cover of each preliminary prospectus advising potential investors of the risks involved. Redemption rights – the right of an investor to force the startup company to buy back the shares issued as a result of the investment. In effect, the investor has the right to take back his/her investment and may even negotiate a right to receive an additional sum in excess of the original investment. Registration – the process whereby shares of a company are registered with the Securities and Exchange Commission under the Securities Act of 1933 in preparation for a sale of the shares to the public. Regulation D – Often referred to as simply “Reg D,” an SEC regulation that governs private placements. Private placements
  • 102. 2014 National Venture Capital Association Yearbook | 101 NVCA THOMSON REUTERS are investment offerings for institutional and accredited individual investors, but not the general public. Restricted shares – shares that cannot be traded in the public markets. Return on investment (ROI) – the proceeds from an investment, during a specific time period, calculated as a percentage of the original investment. Also, net profit after taxes divided by average total assets. Rights offering – an offering of stock to current shareholders that entitles them to purchase the new issue, usually at a discount. Rights of co-sale with founders – a clause in venture capital investment agreements that allows the VC fund to sell shares at the same time that the founders of a startup chose to sell. Right of first refusal – a contractual right to participate in a transaction. For example, a venture capitalist may participate in a first round of investment in a startup and request a right of first refusal in any following rounds of investment. Risk-free rate – a term used in finance theory to describe the return from investing in a riskless security. In practice, this is often taken to be the return on US Treasury Bills. Road show – presentations made in several cities to potential investors and other interested parties. For example, a company will often make a road show to generate interest among institutional investors prior to its IPO. ROI – see Return on investment. Rollup – the purchase of relatively smaller companies in a sector by a rapidly growing company in the same sector. The strategy is to create economies of scale. For example, the movie theater industry underwent significant consolidation in the 1960’s and 1970’s. Round – a financing event usually involving several private equity investors. Royalties – payments made to patent or copyright owners in exchange for the use of their intellectual property. Rule 144 – a rule of the Securities and Exchange Commission that specifies the conditions under which the holder of shares acquired in a private transaction may sell those shares in the public markets. S corporation – an ownership structure that limits its number of owners to 100. An S corporation does not pay taxes, rather its owners pay taxes on their proportion of the corporation’s profits at their individual tax rates. SBIC – see Small Business Investment Company. Scalability – a characteristic of a new business concept that entails the growth of sales and revenues with a much slower growth of organizational complexity and expenses. Venture capitalists look for scalability in the startups they select to finance. Scale-down – a schedule for phased decreases in management fees for general partners in a limited partnership as the fund reduces its investment activities toward the end of its term. Scale-up – the process of a company growing quickly while maintaining operational and financial controls in place. Also, a schedule for phased increases in management fees for general partners in a limited partnership as the fund increases its investment activities over time. Secondary market – a market for the sale of limited partnership interests in private equity funds. Sometimes limited partners chose to sell their interest in a partnership, typically to raise cash or because they cannot meet their obligation to invest more capital according to the takedown schedule. Certain investment companies specialize in buying these partnership interests at a discount. Secondary shares – shares sold by a shareholder (not by the corporation). Securities and Exchange Commission (SEC) – the regulatory body that enforces federal securities laws such as the Securities Act of 1933 and the Securities Exchange Act of 1934. Seed capital – investment provided by angels, friends and family to the founders of a startup in seed stage. Seedstage–thestateofacompanywhenithasjustbeenincorporated and its founders are developing their product or service. Senior debt – a loan that has a higher priority in case of a liquidation of the asset or company. Seniority – higher priority. Series A preferred stock – preferred stock issued by a fast growth company in exchange for capital from investors in the “A” round of financing. This preferred stock is usually convertible to common shares upon the IPO or sale of the company. Shareholder agreement – a contract that sets out, for example, the
  • 103. 102 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA basis on which the company will be operated and the shareholders’ rightsandobligations.Itprovidesprotectiontominorityshareholders. Sharpe Ratio – a method of calculating the risk-adjusted return of an investment. The Sharpe Ratio is calculated by subtracting the risk-free rate from the return on a specific investment for a time period (usually one year) and then dividing the resulting figure by the standard deviation of the historical (annual) returns for that investment. The higher the Sharpe Ratio, the better. Small Business Investment Company (SBIC) – a company licensedbytheSmallBusinessAdministrationtoreceivegovernment capital in the form of debt or equity in order to use in private equity investing. Stock option – a right to purchase or sell a share of stock at a specific price within a specific period of time. Stock purchase options are commonly used as long term incentive compensation for employees and management of fast growth companies. Strategic investor – a relatively large corporation that agrees to invest in a young or a smaller company in order to have access to its proprietary technology, product or service. Subordinated debt – a loan that has a lower priority than a senior loan in case of a liquidation of the asset or company. Also known as “junior debt”. Success rate – the proportion of venture funded companies that are considered successful. A study of companies funded by VCs during the 1990s indicated that 14% of the companies went public and another 11%were acquired. Sweat equity – ownership of shares in a company resulting primarily from work rather than investment of capital. Syndicate – a group of investors that agree to participate in a round of funding for a company. Alternatively, a syndicate can refer to a group of investment banks that agree to participate in the sale of stock to the public as part of an IPO. Synthetic secondary – A popular method of completing a direct secondary transaction in which the buyer becomes a limited partner (LP) in a special purpose vehicle (SPV) or similar entity which has been set up out of the underlying investments in order to create a limited partnership interest. The term arose because of the synthetic nature of the direct purchase through the LP secondary transaction. Tag-along right – the right of a minority investor to receive the same benefits as a majority investor. Usually applies to a sale of securities by investors. Also known as Co-sale right. Takedown – a schedule of the transfer of capital in phases in order to complete a commitment of funds. Typically, a takedown is used by a general partner of a private equity fund to plan the transfer of capital from the limited partners. Tender offer – an offer to public shareholders of a company to purchase their shares. Term loan – a bank loan for a specific period of time, usually up to ten years in leveraged buyout structures. Term sheet – a document confirming the intent of an investor to participate in a round of financing for a company. By signing this document, the subject company agrees to begin the legal and due diligence process prior to the closing of the transaction. Also known as “Letter of Intent”. Tranche – a portion of a set of securities. Each tranche may have different rights or risk characteristics. When venture capital firms finance a company, a round may be disbursed in two or three tranches, each of which is paid when the company attains one or more milestones. Turnaround – a process resulting in a substantial increase in a company’s revenues, profits and reputation. Under water option – an option is said to be under water if the current fair market value of a stock is less than the option exercise price. Underwriter – an investment bank that chooses to be responsible for the process of selling new securities to the public.An underwriter usually chooses to work with a syndicate of investment banks in order to maximize the distribution of the securities. Venture capital – a segment of the private equity industry which focuses on investing in new companies with high growth potential and accompanying high risk. Venture capital method – a pricing valuation method whereby an estimate of the future value of a company is discounted by a certain interest rate and adjusted for future anticipated dilution in order to determine the current value. Usually, discount rates for the venture capital method are considerably higher than public stock return rates, representing the fact that venture capitalists must achieve significant returns on investment in order to compensate for the risks they take in funding unproven companies. Vesting – a schedule by which employees gain ownership over time of a previously agreed upon amount of retirement funding or stock options.
  • 104. 2014 National Venture Capital Association Yearbook | 103 NVCA THOMSON REUTERS Vintage – the year that a private equity fund stops accepting new investors and begins to make investments on behalf of those investors. Venture funds are generally benchmarked to funds of the same vintage year. Voting rights – the rights of holders of preferred and common stock in a company to vote on certain acts affecting the company. These matters may include payment of dividends, issuance of a new class of stock, merger or liquidation. Warrant – a security which gives the holder the right to purchase shares in a company at a pre-determined price. A warrant is a long term option, usually valid for several years or indefinitely. Typically, warrants are issued concurrently with preferred stocks or bonds in order to increase the appeal of the stocks or bonds to potential investors. Washout round – a financing round whereby previous investors, the founders and management suffer significant dilution. Usually as a result of a washout round, the new investor gains majority ownership and control of the company. Weighted average cost of capital (WACC) – the average of the cost of equity and the after-tax cost of debt. This average is determined using weight factors based on the ratio of equity to debt plus equity and the ratio of debt to debt plus equity. Weighted average anti-dilution – an anti-dilution protection mechanism whereby the conversion rate of preferred stock is adjusted in order to reduce an investor’s loss due to an increase in the number of shares in a company. Without anti-dilution protection, an investor would suffer from a reduction of his or her percentage ownership. Usually as a result of the implementation of a weighted average anti-dilution, company management and employees who own a fixed amount of common shares suffer significant dilution, but not as badly as in the case of a full ratchet. Write-down – a decrease in the reported value of an asset or a company. Write-off – a decrease in the reported value of an asset or a company to zero. Write-up – an increase in the reported value of an asset or a company. Zombie – a company that has received capital from investors but has only generated sufficient revenues and cash flow to maintain its operations without significant growth. Sometimes referred to as “walking dead.” Typically, a venture capitalist has to make a difficult decision as to whether to liquidate a zombie or continue to invest funds in the hopes that the zombie will become a winner. These definitions were graciously provided by the Center for Private Equity and Entrepreneurship at the Tuck School of Business at Dartmouth. Please refer to the Center’s website for additional definitionsandinformationathttp://mba.tuck.dartmouth.edu/­pecenter/ resources/glossary.html. Used by permission. Thomson Reuters and National Venture Capital Association are grateful to the Center for its support.
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  • 106. 2014 National Venture Capital Association Yearbook | 105 NVCA THOMSON REUTERS The MoneyTree Report is a quarterly study of venture capital investment activity in the United States. As a collaboration between Pricewater- houseCoopers and the National Venture Capital Association, based upon data from Thomson Reuters, it is the only industry-endorsed research of its kind. The MoneyTree Report is the definitive source of information on emerging companies that receive financing and the venture capital firms that provide it. The study is a staple of the financial community, entrepre- neurs, government policymakers and the business press worldwide. Report Criteria The MoneyTree™ Report records cash for equity investments as the cash is actually received by the company (also called a tranche) as opposed to when financing is committed (often referred to as a “term sheet”) to a company. Accordingly, the amount reported in a given quarter may be less than the total round amount committed to the company at the time when the round of financing closed. The type of financing as it is used in the MoneyTree™ Report refers to the number of tranches a company has received. The number designation (1, 2, 3, etc.) does not refer to the round of financing. Rounds are usually designated alphabetically, e.g. Series A, Series B, and so on. The Money- Tree™ Report does not track rounds. Summary Description The MoneyTree™ Report measures cash-for-equity investments by the professional venture capital community in private emerging companies in the U.S. It is based on data provided by Thomson Reuters. General Definition The report includes the investment activity of professional venture capital firms with or without a US office, SBICs, venture arms of corporations, institutions, investment banks and similar entities whose primary activity is financial investing. Where there are other participants such as angels, corporations, and governments in a qualified and verified financing round the entire amount of the round is included. Qualifying transactions include cash investments by these entities either directly or by participation in various forms of private placement. All re- cipient companies are private, and may have been newly-created or spun- out of existing companies. The report excludes debt, buyouts, recapitalizations, secondary purchases, IPOs, investments in public companies such as PIPES (private invest- ments in public entities), investments for which the proceeds are primarily intended for acquisition such as roll-ups, change of ownership, and other forms of private equity that do not involve cash such as services-in-kind and venture leasing. Investee companies must be domiciled in one of the 50 US states or DC even if substantial portions of their activities are outside the United States. Specific Methodology The focus of the report is on cash received by the company. Therefore, tranches not term sheets are the determining factor. Drawdowns on com- mitments are recognized at the time the company receives the money rather than recorded as a lump sum amount at the time the term sheet is executed. Convertible debt and bridge loans are recognized only when converted to equity. Once a company has received a qualifying venture capital financing round, all subsequent equity financing rounds are included regardless of whether the round involved a venture capital firm as long as all other investment criteria are met (e.g. cash-for-equity, not buyout or services in kind). Angel, incubator and similar investments are considered pre-venture fi- nancing if the company has received no prior qualifying venture capital investment and are not included in the MoneyTree™ results. Angel, incu- bator and similar investments that are part of a qualifying venture capital round or follow a qualifying venture capital round are included to the ex- tent that such investments can be fully verified as meeting all other criteria (e.g. cash for equity, not buyout or services in kind). Direct investment by corporations (not through a corporate venture capital arm) is excluded unless (a) the investment is clearly demonstrated to be primarily a financial investment rather than outsourced RD or market development, (b) it is a co-investment in an otherwise qualifying round, or (c) it follows a qualifying venture round in a company and meets all other criteria (e.g. cash-for-equity, not buyout or services in kind). Data is primarily obtained from a quarterly survey of venture capital prac- titioners conducted by Thomson Reuters. Information is augmented by other research techniques including other public and private sources. All data is subject to verification with the venture capital firms and/or the investee companies. Only professional independent venture capital firms, institutional venture capital groups, and recognized corporate venture capital groups are in- cluded in venture capital industry rankings. Disclaimer PricewaterhouseCoopers and the National Venture Capital Association have taken responsible steps to ensure that the information contained in the MoneyTree™ Report has been obtained from reliable sources. How- ever, neither of the parties nor Thomson Reuters can warrant the ultimate validity of the data obtained in this manner. Results are updated periodi- cally. Therefore, all data is subject to change at any time. APPENDIX B MoneyTree Report Criteria PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report™, Data: Thomson Reuters
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  • 108. 2014 National Venture Capital Association Yearbook | 107 NVCA THOMSON REUTERS APPENDIX C MoneyTree Geographical Definitions The Geographical Regions identified in the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters and used in this NVCA Yearbook are as follows: Alaska/Hawaii/Puerto Rico: Alaska, Hawaii, and Puerto Rico Colorado: The state of Colorado DC/Metroplex: Washington, D.C., Virginia, West Virginia, and Maryland LA/Orange County: LosAngeles, Ventura, Orange, and Riverside Counties (i.e., southern California, except San Diego) Midwest: Illinois, Missouri, Indiana, Kentucky, Ohio, Michigan, and western Pennsylvania New England: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and parts of Connecticut (excluding Fairfield county) New York Metro: Metropolitan NY area, northern New Jersey, and Fairfield County, Connecticut North Central: Minnesota, Iowa, Wisconsin, North Dakota, South Dakota, and Nebraska Northwest: Washington, Oregon, Idaho, Montana, and Wyoming Philadelphia Metro: Eastern Pennsylvania, southern New Jersey, and Delaware Sacramento/Northern California: Northeastern California San Diego: San Diego area Silicon Valley: Northern California, bay area and coastline South Central: Kansas, Oklahoma, Arkansas, and Louisiana Southeast: Alabama, Florida, Georgia, Mississippi, Tennessee, South Carolina, and North Carolina Southwest: Utah, Arizona, New Mexico, and Nevada Texas: The state of Texas Upstate NewYork: Northern New York state, except Metropolitan New York City area
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  • 110. 2014 National Venture Capital Association Yearbook | 109 NVCA THOMSON REUTERS APPENDIX D Industry Codes (VEIC) 1000 Communications and Media 1100 Commercial Communications 1110 Radio TV Broadcasting Stations 1120 CATV Pay TV Systems 1125 Cable Service Providers 1130 Radio TV Broadcasting Other Related Equipment 1135 Services to Commercial Communications 1199 Other Commercial Communications 1200 Telecommunications 1210 Long Distance Telephone Services 1215 Local Exchange Carriers (LEC) 1220 Telephone Interconnect Other Equip- ment 1230 Telephone answering and/or manage- ment systems,PBXs 1299 Other Telephone Related 1300 Wireless Communications 1310 Mobile Communications, Pagers Cel- lular Radio 1320 Wireless Communications Services 1325 Messaging Services 1330 Wireless Communications Components 1399 Other Wireless Communications 1400 Facsimile Transmission 1500 Data Communications 1510 Local Area Networks (incl. voice/data PBX systems) 1515 Wide Area Networks 1520 Data Communications Components 1521 Communications Processors/Network Management 1522 Protocol Converters Emulators 1523 Modems and Multiplexers 1524 Other Data Communication Components 1525 Switches/Hubs/Routers/Gateways/ATM 1530 Network test, monitor and support equip- ment 1549 Other Data Communications 1550 Internet Communications and Infrastruc- ture NEC 1551 Internet Access Services and Service Providers 1552 Internet Multimedia Services 1553 Internet Backbone Infrastructure 1559 Other Internet Communications NEC 1560 E-Commerce Technology 1561 Internet Security and Transaction Services 1562 Ecommerce Services 1563 Ecommerce Enabling Software 1569 Other Ecommerce 1600 Satellite Microwave Communications 1610 Satellite Services/Carriers/Operators 1620 Satellite Ground (and other) Equipment 1630 Microwave Service Facilities 1640 Microwave Satellite Components 1699 Other Satellite Microwave 1700 Media and Entertainment 1710 Entertainment 1720 Publishing 1800 Other Communications Related 1810 Defense Communications 1825 Other Communications Services NEC 1899 Other Communications Products (not yet classified) 2000 Computer Related 2100 Computers and Hardware 2110 Mainframes Scientific Computers 2111 Mainframes 2112 Supercomputers and Scientific Computers 2119 Other Mainframes and Scientific Computers 2120 Mini Personal/Desktop Computers 2121 Fail Safe Computers 2122 Mini Computers 2123 Personal Computers (micro/personal) 2124 Other Mini and Personal Computers 2125 Portable Computers (notebooks/laptops) 2126 Handheld Computing (PDA) 2130 Optical computing 2140 Servers and Workstations 2141 Servers 2142 Web Servers 2143 Workstations 2144 Thin Client Hardware 2149 Other Servers and Workstations 2200 Computer Graphics and Digital Imaging 2210 CAD/CAM, CAE,EDA Systems 2220 Graphic Systems 2230 Scanning Hardware 2234 OCR (Optical Character Recognition) 2236 OBR (Optical Bar Recognition) 2238 MICR (Magnetic Ink Character Recognition) 2239 Other Scanning Related 2250 Graphics Printers/Plotters 2255 Graphics/Enhanced Video Cards 2260 Other Graphics Peripherals 2280 Other Multimedia NEC 2290 Digital Imaging Hardware and Equipment 2295 Digital Imaging Services 2299 Other Computer Graphics 2300 Integrated Turnkey Systems and Solutions 2311 Business and Office 2312 Consumer 2313 Retailing 2315 Transportation 2316 Finance/Insurance/Real Estate 2317 Agriculture 2318 Recreation/Entertainment 2319 Manufacturing/Industrial/Construction 2320 Medical/Health 2321 Computer related 2322 Communications Products/Services 2323 Education 2324 Reference 2325 Scientific 2399 Other Intergrated Systems and Solutions 2500 Peripherals 2510 Terminals 2511 Intelligent Terminals 2512 Portable Terminals 2513 Graphics Terminals 2519 Other Terminals 2520 Printers 2521 Laser Printers 2522 Color Printers 2523 Inkjet Printers 2524 Dot Matrix Printers 2529 Other Printers 2530 Data I/O Devices 2531 Mouse Input Devices 2532 TouchPad Input Devices 2533 Pen based computing 2539 Other Data I/O Devices 2540 Disk Related Memory Devices 2541 Floppy Disks Drives 2542 Winchester Hard Disks and Drives 2543 Optical Disks Drives,CD-ROM DVD 2546 Disk Drive Components 2549 Other Disk Related 2550 Tape Related Devices 2551 Magnetic Tapes 2552 Tape Heads Drives 2553 Continuous Tape Backup Systems 2559 Other Tape Related Devices 2560 Other Memory Devices (excl. semicon- ductors) 2561 PC or PMCIA cards 2562 Memory Cards 2563 Sound Cards 2564 Communications Cards 2569 Other Peripheral Cards 2590 Other Peripherals (not yet classified) 2600 Computer Services 2630 Time Sharing Firms 2640 Computer Leasing Rentals 2650 Computer Training Services 2655 Backup and Disaster Recover 2660 Data Processing,Analysis Input Services 2665 Computer Repair Services 2670 Computerized Billing Accounting Services 2675 Computer Security Services 2691 Data communications systems manage- ment 2699 Other Computer Services 2700 Computer Software 2710 Systems Software 2711 Database File Management 2712 Operating Systems Utilities 2713 Program Development Tools/CASE/Lan- guages 2716 Graphics and Digital Imaging Software 2719 Other Systems Software 2720 Communications/Networking Software 2721 Security/Firewalls,Encryption software 2722 Email Software 2723 Groupware 2724 Multimedia software 2729 Other Communications/Networking Software
  • 111. 110 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA 2730 Applications Software 2731 Business and Office Software 2732 Home Use Software 2733 Educational Software 2734 Manufacturing/Industrial Software 2735 Medical/Health Software 2736 Banks/Financial Institutions Software 2737 Retailing Software 2738 Integrated Software 2739 ERP/Inventory Software 2740 Recreational/Game Software 2741 Scientific Software 2743 Agricultural Software 2744 Transportation Software 2748 Other Industry specific Software 2749 Other Applications Software 2750 Artificial Intelligence Related Software 2751 Expert Systems 2752 Natural Language 2753 Computer-Aided Instruction 2754 Artificial Intel. Programming Aids 2755 Other Artificial Intelligence Related 2760 Software Services 2761 Programming Services/Systems Engi- neering 2762 Software Consulting Services 2763 Software Distribution/Clearinghouse 2765 Internet/Web Design and programming services 2766 Internet Graphics Services 2768 Other Internet Software Services 2769 Other Software Services 2780 Internet Systems Software 2781 Site Development and Administration Software 2782 Internet Search Software and Engines 2783 WebServer Software 2784 Web Languages (Java/ActiveX/HTML/XML) 2785 Web Authoring/Development Software 2798 Other Internet Systems Software 2799 Other Software Related 2800 Internet and Online Related 2810 E-Commerce--Selling products Online or Internet 2811 Business and Office Products 2812 Consumer Products 2813 Retailing Products 2814 Publishing Products 2815 Transportation Products 2816 Finance/Insurance/Real Estate products 2817 Agricultural Products 2818 Recreation/Entertainment/Music/Movies 2819 Manufacturing/Industrial/Construction 2820 Medical/Health 2821 Computer Related 2822 Communications Products 2823 Education Products 2824 Reference Products 2825 Scientific Products 2826 Legal Products 2829 Other Ecommerce Selling Products 2830 Ecommerce--Selling Services Online/ Internet 2831 Business and Office Services 2832 Consumer Services 2833 Retailing Services 2834 Publishing Services 2835 Transportation Services 2836 Finance/Insurance/Real Estate Services 2837 Agricultural Services 2838 Recreation/Entertainment/Music/Movies 2839 Manufacturing/Industrial/Construction 2840 Medical/Health Services 2841 Computer Related services 2842 Communications Products/Services 2843 Education Services 2844 Reference 2845 Scientific 2846 Legal 2848 Recreation/Entertainment Services 2849 Other Ecommerce Selling Services 2850 Web Aggregration/Portal Sites/Exchanges 2851 Business and Office Info/content 2852 Consumer Info/Content 2853 Retailing Info/Content 2854 Publishing Info/Content 2855 Transportation Info/Content 2856 Finance/Real Estate/Insurance Info/ Content 2857 Agriculture Info/Content 2858 Recreation/Entertainment/Music/Movies 2859 Manufac/Industrial/Constr. Info/Content 2860 Medical/Health Info/Content 2861 Computer Related Info/Content 2862 Communications Info/Content 2863 Education Info/Content 2864 Reference Info/Content 2865 Scientific Info/Content 2866 Legal Info/Content 2869 Other Aggregation/Portal/Exchange Sites 2870 Internet Services 2871 Internet Marketing Services 2873 Data Warehousing Services 2879 Other Internet and Online Services NEC 2900 Other Computer Related 2910 Voice Synthesis 2911 Voice Recognition 2990 Other Computer Related (not yet classified) 3000 Other Electronics Related 3100 Electronic Components 3110 Semiconductors 3111 Customized Semiconductors 3112 Standard Semiconductors 3114 Flash Memory 3115 Optoelectronics semiconductors (incl laser diodes) 3119 Other Semiconductors 3120 Microprocessors 3130 Controllers and Sensors 3132 Controllers 3135 Sensors 3139 Other Controllers/Sensors 3140 Circuit Boards 3160 Display Panels 3170 Other Electronics Related (including keyboards) 3200 Batteries 3300 Power Supplies 3310 Uninterruptible Power Supply (UPS) 3400 Electronics Related Equipment 3410 Semiconductor Fabrication Equip. Wafer Products 3420 Component Testing Equipment 3499 Other Electronics Related Equipment 3500 Laser Related 3510 Laser Components (incl. beamsplitters, excimers) 3599 Other Laser Related 3600 Fiber Optics 3610 Fiber Optic Cables 3620 Fiber Optic Couplers and Connectors 3630 Fiber Optic Communication Systems (see 1510) 3699 Other Fiber Optics 3700 Analytical Scientific Instrumentation 3710 Chromatographs Related Laboratory Equipment 3720 Other Measuring Devices 3799 Other Analytical Scientific Instrumenta- tion 3800 Other Electronics Related 3810 Military Electronics (excluding communi- cations) 3820 Copiers 3830 Calculators 3835 Security/Alarm/Sensors 3899 Other Electronics Related (incl. alarm systems) 3900 Optoelectronics 3910 Photo diodes 3920 Optoelectronics fabrication equipment 3930 Lenses with Optoelectronics applications 3940 Advanced photographic processes (incl lithographs) 3989 Other Optoelectrinics Related 3990 Other Electronc Semiconductor 4000 Biotechnology and Pharmacology 4100 Human Biotechnology 4110 Medical Diagnostic Biotechnology Products 4111 In Vitro Monoclonal Antibody Diagnostics 4112 In Vivo Monoclonal Antibody Diagnostics/ Imaging 4113 DNA/RNA Probes 4119 Other Medical Diagnostic Biotechnology 4120 Therapeutic Biotechnology Products 4121 Therapeutic Monoclonal Antibodies 4122 Immune Response Effectors (interferons,vaccines) 4123 Other Therapeutic Proteins (incl. hor- mones TPA) 4129 Other Therapeutic Biotechnology 4130 Genetic Engineering 4200 Agricultural/Animal Biotechnology 4210 Genetically Engineered Plants 4220 Genetic. Eng. Microorganisms to raise plant yield 4230 Other Plant Related Biotechnology 4240 Biotech Related Animal Health Nutri- tion Products 4250 Genetically Engineered Animals 4290 Other Animal Related Biotechnology 4300 Industrial Biotechnology 4310 Biochemical Products 4311 Biotech Related Fine Chemicals (NOT Pharmaceuts.) 4312 Biotech Related Commodity Chemicals 4319 Other Biochemical Products 4320 Biotech Processes for Food Industrial Ap- plications
  • 112. 2014 National Venture Capital Association Yearbook | 111 NVCA THOMSON REUTERS 4321 Biotech Related Food Enzymes and Cultures 4322 Biotech Related Food Diagnostics 4329 Other Biotech Process for Food/Industrial Products 4330 Biotech Processes for Pollution/Toxic Waste Contrl 4340 Biotech Processes for Enhanced Oil Recovery/Mining 4390 Other Industrial Biotechnology 4400 Biosensors 4410 Biosensors for Medical Diagnostic Ap- plications 4420 Biosensors for Industrial Applications 4490 Other Biosensors 4500 Biotech Related Research Production Equipment 4510 Biotech Related Analytical Instruments Apparatus 4520 Biotech Related Production Equipment 4525 Biotech laser and optronic applications 4599 Other Biotech Research Production Equipment 4600 Biotech Related Research Other Services 4610 Pure Contract Biotechnology Research 4699 Other Biotechnology Services 4900 Other Biotechnology Related 5000 Medical/Health Related 5100 Medical Diagnostics 5110 Diagnostic Services 5120 Medical Imaging 5121 X-Rays 5122 CAT Scanning 5123 Ultra Sound Imaging 5124 Nuclear Imaging 5125 Other Medical Imaging 5130 Diagnostic Test Products Equipment 5140 Other Medical Diagnostics 5200 Medical Therapeutics 5210 Therapeutic Services 5220 Surgical Instrumentation Equipment 5221 Surgical lasers (including laser delivery fibers) 5230 Pacemakers Artificial Organs 5240 Drug Delivery Other Equipment 5299 Other Therapeutic (including defibrillators) 5300 Medical Health Related Products 5310 Disposable Medical Products 5340 Handicap Aids 5350 Medical Monitoring Equipment 5380 Health related optics (including glasses, lenses) 5399 Other Medical/Health (NEC) 5400 Medical Health Services 5410 Hospitals/Clinics/Primary Care 5412 Long Term Care/Home Care/Elder Care 5414 Dependent Care (child care/assisted living 5420 Managed care (including PPO/PPM) 5429 Other Healthcare Facilities 5430 Emergency Services/Ambulance 5440 Hospital Other Institutional Management 5499 Other Medical/Health Services 5500 Pharmaceuticals 5510 Pharmaceutical Research 5520 Pharmaceutical Production 5530 Pharmaceutical Services 5540 Pharmaceutical Equipment 5550 Pharmaceuticals/Fine Chemicals (non- biotech) 5599 Other Pharmaceutical NEC 6000 Energy Related 6100 Oil Gas Exploration and Production 6200 Oil Gas Exploration Services 6300 Oil Gas Drilling Support Services 6400 Oil Gas Drilling,Exploration Extrac- tion Equip. 6410 Oil Gas Drilling Extraction Equipment 6420 Oil Gas Drilling Instrumentation 6430 Oil Gas Exploration Equip. Instrumen- tation 6499 Other Oil Gas (NEC) 6500 Alternative Energy 6510 Solar Energy 6511 Photovoltaic Solar 6512 Other Solar 6520 Wind Energy 6530 Geothermal Energy 6540 Energy Co-Generation 6599 Other Alternative Energy (incl. nuclear energy) 6600 Enhanced Oil Recovery/Heavy Oil/Shale 6700 Coal Related 6710 Coal Mining 6720 Coal Related Equipment 6799 Other Coal Related 6800 Energy Conservation Related 6900 Other Energy Related 7000 Consumer Related 7100 Entertainment and Leisure 7110 Movies,Movie Products Theater Opera- tions 7120 Amusement Recreational Facilities 7125 Casino and Gambling 7130 Toys Electronic Games 7140 Sporting Goods,Hobby Equipment Athletic Clothes 7150 Sports Facilities (Gyms and Clubs) 7155 Sports 7160 TVs,Radio,Stereo Equipment Consumer Electronics 7170 Music,Records,Production and Instruments 7199 Other Leisure/Recreational Products and Services 7200 Retailing Related 7210 Drug Stores 7220 Clothing and Shoe Stores 7230 Discount Stores 7240 Computer Stores 7245 Retail Publishing (books,magazines, newspapers) 7246 Office Supply Stores 7247 Music/Electronics 7248 Specialty Department and retail stores 7250 Franchises(NEC) 7299 Other Retailing Related 7300 Food and Beverages 7310 Wine Liquors 7320 Health Food 7330 Soft Drinks Bottling Plants 7340 Food Supplements/Vitamins 7350 General Food Products 7399 Other Food and Beverages 7400 Consumer Products 7410 Clothing,Shoes Accessories (incl. jew- elry) 7420 Health Beauty Aids 7430 Home Furnishing Housewares 7431 Housewares 7432 Furnishings Furniture 7433 Garden and Horticultural Products 7434 Other Home Furnishings (NEC) 7450 Mobile Homes 7499 Other Consumer Products 7500 Consumer Services 7510 Fast Food Restaurants 7520 Other Restaurants 7530 Hotels and Resorts 7540 Auto Repair Shops 7550 Education Educational Products and Materials 7560 Travel Agencies and Services 7599 Other Consumer Services 7999 Other Consumer Related (not yet classified) 8000 Industrial Products 8100 Chemicals Materials 8110 Plastic Fabricators 8111 Homogeneous Injections/Extrusions 8112 Non-Homogeneous Injections/Extrusions 8113 Fiber-Reinforced (Plastic) Composites 8114 Other Fabricated Plastics 8115 Processes for Working with Plastics 8119 Other Plasti Fabricators 8120 Coatings Adhesives Manufacturers 8121 Optical coatings 8129 Other Coatings Adhesives 8130 Membranes Membrane-Based Products 8140 Specialty/Performance Materials 8141 Semiconductor Materials (eg. silicon wafers) 8142 III/V Semiconductor Mater. (eg. gallium arsenide) 8143 Specialty Metals (incl. coatings, alloys, clad) 8144 Ceramics 8145 Lubricants Functional Fluids 8146 Other Specialty Materials 8147 Specialty materials for laser generation 8148 Superconducting materials 8149 Other Special Performance Materials 8150 Commodity Chemicals Polymers 8151 Industrial Chemicals 8152 Polymer (Plastics) Materials 8160 Specialty/Performance Chemicals 8161 Electronic Chemicals 8162 Other Industrial Chemicals 8170 Agricultural Chemicals 8189 Other Commidity Chemicals and Polymers 8199 Other Chemicals Materials (not yet classified) 8200 Industrial Automation 8210 Energy Management 8220 Industrial Measurement Sensing Equip- ment 8221 Laser related measuring sensing equip- ment 8230 Process Control Equipment Systems
  • 113. 112 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA 8240 Robotics 8250 Machine Vision Software Systems 8260 Numeric Computerized Control of Machine Tools 8299 Other Industrial Automation (NEC) 8300 Industrial Equipment and Machinery 8310 Machine Tools, Other Metalworking Equipment 8320 Hoists,Cranes Conveyors 8330 Pumps,Ball Bearings,Compressors,Indus. Hardware 8340 Mining Machinery 8350 Industrial Trucks and Tractors 8360 Other Industrial Process Machinery 8370 Power Transmission Equipment (genera- tors motors) 8399 Other Industrial Equipment Machinery 8500 Environmental Related 8510 Air Filters Air Purification Monitoring Equip. 8520 Chemical and Solid Material Recycling 8530 Water Treatment Equipment Waste Disposal Systems 8599 Other Environmental Related 8600 Other Industrial Products (not yet classified) 8700 Industrial Services 9000 Other Services and Manufacturing 9100 Transportation 9110 Airlines and Aviation Related 9120 Trucking 9125 Railway related 9130 Leasing of Railcars,Buses and Cars 9140 Mail and Package Shipment 9150 Motor Vehicles,Transporation Equipment Parts 9160 Airfield and Other Transportation Services 9180 Advanced Aircraft/Aerospace 9199 Other Transportation 9200 Financial Services 9210 Insurance Related 9220 Real Estate 9230 Banking 9235 Non Bank Credit 9240 Securities Commodities Brokers and Services 9250 Investment Groups 9254 Venture Capital and Private Equity Investors 9255 Financial Transactions Services 9299 Financial Services,0ther 9300 Services 9310 Engineering Services 9320 Advertising and Public Relations 9330 Leasing (not elsewhere classified) 9340 Distributors,Importers and Wholesalers 9350 Consulting Services 9360 Media Related Services 9399 Other Services NEC 9400 Product Manufacturing 9410 Business Products and Supplies 9415 Office Automation Equipment 9420 Office Furniture Other Professional Furnishings 9430 Textiles (Synthetic Natural) 9440 Hardware, Plumbing Supplies 9450 Publishing 9460 Packaging Products Systems 9470 Printing Binding 9499 Other Manufacturing (not elsewhere clas- sified) 9500 Agriculture,Forestry,Fishing,Animal Husbandry,etc. 9510 Agriculture related 9520 Forestry related 9530 Fishing related 9540 Animal husbandry 9599 Other Agriculture,Forestry,Fishing 9600 Mining and Minerals (non-energy related) 9700 Construction Building Products 9710 Construction 9720 Manufacture of Building Products 9730 Manufacture of Pre-Fabricated Buildings Systems 9740 Distribution of Building Products Systems 9750 Construction Services 9799 Other Construction Building Products Related 9800 Utilities and Related Firms 9810 Electric Companies 9820 Water,Sewage,Chem. Solid Waste Treatment Plants 9830 Gas Transmission Distribution 9899 Other Utilities Related Firms 9900 Other Products and Services 9910 Conglomerates 9912 Socially Responsible 9914 Environment Responsible 9915 Women-Owned 9918 Minority-Owned 9920 Holding Companies 9999 Other Products and Services
  • 114. 2014 National Venture Capital Association Yearbook | 113 NVCA THOMSON REUTERS Industry analysis is based upon the following industry sectors: Biotechnology, Business Products and Services,Computers and Peripherals, Consumer Products and Services, Computer Software, Electronics/Instrumentation, Financial Services, Healthcare Services, Industrial/Energy, IT Services, Me- dia and Entertainment, Medical Devices and Equipment, Networking and Equipment, Retailing/Distribution, Semiconductors, Telecommunications and Other. These sectors are based on the 17 industry classifications of the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. Biotechnology 4000, 4100, 4110, 4111, 4112, 4113, 4119, 4120, 4121, 4122, 4123, 4129, 4130, 4200, 4210, 4220, 4230, 4240, 4250, 4290, 4300, 4310, 4311, 4312, 4319, 4320, 4321, 4322, 4329, 4330, 4340, 4390, 4400, 4410, 4420, 4490, 4500, 4510, 4520, 4525, 4599, 4600, 4610, 4699, 4900, 5500, 5510, 5520, 5530, 5540, 5550, 5599 Business Products and Services 2811, 2824, 2831, 2844, 9300, 9310, 9320, 9330, 9340, 9350, 9360, 9399 Computers and Peripherals 2000, 2100, 2110, 2111, 2112, 2119, 2120, 2121, 2122, 2123, 2124, 2125, 2126, 2130, 2140, 2141, 2142, 2143, 2144, 2149, 2220, 2230, 2234, 2236, 2238, 2239, 2250, 2255, 2260, 2280, 2290, 2295, 2299, 2500, 2510, 2511, 2512, 2513, 2519, 2520, 2521, 2522, 2523, 2524, 2529, 2530, 2531, 2532, 2533, 2539, 2540, 2541, 2542, 2543, 2546, 2549, 2550, 2551, 2552, 2553, 2559, 2560, 2561, 2562, 2563, 2564, 2569, 2590, 3170 Consumer Products and Services 2812, 2832, 7000, 7300, 7310, 7320, 7330, 7340, 7399, 7400, 7410, 7420, 7430, 7431, 7432, 7433, 7434, 7450, 7499, 7500, 7510, 7520, 7530, 7540, 7550, 7560, 7599, 7999 Computer Software 1563, 2200, 2210, 2300, 2311, 2312, 2313, 2315, 2316, 2317, 2318, 2319, 2320, 2321, 2322, 2323, 2324, 2325, 2399, 2700, 2710, 2711, 2712, 2713, 2716, 2719, 2720, 2721, 2722, 2723, 2724, 2729, 2730, 2731, 2732, 2733, 2734, 2735, 2736, 2737, 2738, 2739, 2740, 2741, 2743, 2744, 2748, 2749, 2750, 2751, 2752, 2753, 2754, 2755, 2780, 2781, 2782, 2783, 2784, 2785, 2798, 2799, 2900, 2910, 2911, 2990, 8250 Electronics/Instrumentation 3000, 3100, 3160, 3200, 3300, 3310, 3400, 3420, 3499, 3500, 3510, 3599, 3700, 3710, 3720, 3799, 3800, 3810, 3820, 3830, 3835, 3899 Financial Services 2816, 2836, 9200, 9210, 9220, 9230, 9235, 9240, 9250, 9254, 9255, 9299 Healthcare Services 2820, 2840, 5400, 5410, 5412, 5414, 5420, 5429, 5430, 5440, 5499 Industrial/Energy 2819, 2837, 2839, 6000, 6100, 6200, 6300, 6400, 6410, 6420, 6430, 6499, 6500, 6510, 6511, 6512, 6520, 6530, 6540, 6599, 6600, 6700, 6710, 6720, 6799, 6800, 6900, 8000, 8100, 8110, 8111, 8112, 8113, 8114, 8115, 8119, 8120, 8121, 8129, 8130, 8140, 8143, 8144, 8145, 8146, 8147, 8148, 8149, 8150, 8151, 8152, 8160, 8161, 8162, 8170, 8189, 8199, 8200, 8210, 8220, 8221, 8230, 8240, 8260, 8299, 8300, 8310, 8320, 8330, 8340, 8350, 8360, 8370, 8399, 8500, 8510, 8520, 8530, 8599, 8600, 8700, 9000, 9100, 9110, 9120, 9125, 9130, 9140, 9150, 9160, 9180, 9199, 9400, 9410, 9415, 9420, 9430, 9440, 9460, 9470, 9499, 9500, 9510, 9520, 9530, 9540, 9599, 9600, 9700, 9710, 9720, 9730, 9740, 9750, 9799, 9800, 9810, 9820, 9830, 9899 IT Services 1560, 1561, 1562, 1569, 2600, 2630, 2640, 2650, 2655, 2660, 2665, 2670, 2675, 2691, 2699, 2760, 2761, 2762, 2763, 2765, 2766, 2768, 2769, 2800, 2870, 2871, 2873, 2879 APPENDIX E Industry Codes (VEIC)
  • 115. 114 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Media and Entertainment 1110, 1120, 1125, 1130, 1135, 1199, 1700, 1720, 2814, 2818, 2834, 2838, 2843, 2848, 2850, 2851, 2852, 2853, 2854, 2855, 2856, 2857, 2858, 2859, 2860, 2861, 2862, 2863, 2864, 2865, 2866, 2869, 7100, 7110, 7120, 7125, 7130, 7140, 7150, 7155, 7160, 7170, 7199, 9450 Medical Devices and Equipment 5000, 5100, 5110, 5120, 5121, 5122, 5123, 5124, 5125, 5130, 5140, 5200, 5210, 5220, 5221, 5230, 5240, 5299, 5300, 5310, 5340, 5350, 5380, 5399 Networking and Equipment 1400, 1500, 1510, 1515, 1520, 1521, 1522, 1523, 1524, 1525, 1530, 1549, 3600, 3610, 3620, 3630, 3699 Retailing/Distribution 2810, 2813, 2815, 2817, 2821, 2823, 2825, 2826, 2829, 2830, 2833, 2835, 2841, 2845, 2846, 2849, 7200, 7210, 7220, 7230, 7240, 7245, 7246, 7247, 7248, 7250, 7299, 7350 Semiconductors 3110, 3111, 3112, 3114, 3115, 3119, 3120, 3130, 3132, 3135, 3139, 3140, 3410, 3900, 3910, 3920, 3930, 3940, 3989, 3990, 8141, 8142 Telecommunications 1000, 1100, 1200, 1210, 1215, 1220, 1230, 1299, 1300, 1310, 1320, 1325, 1330, 1399, 1550, 1551, 1552, 1553, 1559, 1600, 1610, 1620, 1630, 1640, 1699, 1710, 1800, 1810, 1825, 1899, 2822, 2842 Other 9900, 9910, 9912, 9914, 9915, 9918, 9920, 9999
  • 116. 2014 National Venture Capital Association Yearbook | 115 NVCA THOMSON REUTERS APPENDIX F Stage Definitions SEED STAGE FINANCING This stage is a relatively small amount of capital provided to an inventor or entrepreneur to prove a concept. This involves product development and market research as well as building a management team and developing a business plan, if the initial steps are successful. This is a pre-marketing stage. EARLY STAGE FINANCING This stage provides financing to companies completing development where products are mostly in testing or pilot production. In some cases, product may have just been made commercially available. Companies may be in the process of organizing or they may already be in business for three years or less. Usually such firms will have made market studies, assembled the key management, developed a business plan, and are ready or have already started conducting business. EXPANSION STAGE FINANCING This stage involves working capital for the initial expansion of a company that is producing and shipping and has growing accounts receivables and inventories. It may or may not be showing a profit. Some of the uses of capital may include further plant expansion, mar- keting, working capital, or development of an improved product. More institutional investors are more likely to be included along with initial investors from previous rounds. The venture capitalist’s role in this stage evolves from a supportive role to a more strategic role. LATER STAGE Capital in this stage is provided for companies that have reached a fairly stable growth rate; that is, not growing as fast as the rates at- tained in the expansion stages. Again, these companies may or may not be profitable, but are more likely to be than in previous stages of development. Other financial characteristics of these companies include positive cash flow. This also includes companies considering IPO. ACQUISITION FINANCING An acquisition of 49% stake or less. Firm acquires minority shares of a company. Thomson Reuters includes these deals in standard venture capital disbursement data when calculating venture capital disbursements where the funding is by a venture capital firm. ACQUISITION FOR EXPANSION Funds provided to a company to finance its acquisition of other companies or assets. A consolidator of companies in specific indus- tries. MANAGEMENT/LEVERAGED BUYOUT These funds enable an operating management group to acquire a product line or business, at any stage of development, from either a public or private company. Often these companies are closely held or family owned. Management/leveraged buyouts usually involve revitalizing an operation, with entrepreneurial management acquiring a significant equity interest.
  • 117. 116 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA RECAP/TURNAROUND Financing provided to a company at a time of operational or financial difficulty with the intention of improving the company’s perfor- mance. SECONDARY BUYOUT A buyout deal on top of a buyout deal. Secondary buyouts are distinguished when the initial firm investor is different from the current investing firm.
  • 118. 2014 National Venture Capital Association Yearbook | 117 NVCA THOMSON REUTERS APPENDIX G Data Sources and Resources DATA SOURCES AND RESOURCES MONEYTREE™ DATA PricewaterhouseCoopers, Thomson Reuters, and the National Venture Capital Association joined forces in December 2001 to produce what was then known as the PricewaterhouseCoopers/Thomson Venture Econom- ics/National Venture Capital Association MoneyTree™ Survey. Conduct- ed on a quarterly basis, the designated PwC/NVCA MoneyTree Report allows Thomson Reuters unparalleled access to primary sources of infor- mation from general partners. SOURCES OF DATA The online database of Thomson Reuters is ThomsonONE.com (Ven- tureXpert), the foremost information provider for private equity profes- sionals worldwide. The private equity portion of Thomson Reuters of- fers an incomparable range of products from directories to conferences, journals, newsletters, research reports, and the ThomsonONE.com Private Equity database. As of January 2014, the database included over 110,000 portfolio companies, over 18,000 private equity firms, over 31,000 private equity funds, and nearly 250,000 financing rounds. By establishing work- ing relationships with private equity and venture capital firms, institutional investors, and industry associations such as the NVCA, Pricewaterhouse- Coopers and other such entities around the world, Thomson Reuters has been able to gather, on a timely basis, complete and accurate information. TIMELINESS OF DATA Many of the tables and charts presented in this reportcan be produced by using ThomsonONE.com. One of advantages of using ThomsonONE. com is that the reader can customize a report to better fit the needs of what they are seeking. In addition, because the online database is con- tinuously updated, the information available is more up-to-date than what can be presented in this report. Readers should note that timely industry information on details concerning venture capital investment is available from other sources such as PricewaterhouseCoopers at www.pwcmoney- tree.com, the ‘Industry Stats’ section of the NVCA website, www.nvca. org, and the Private Equity section ofThomson Reuters’Deals Intelligence found at http://dmi.thomsonreuters.com/PrivateEquity. VERIFICATION AND UPDATING OF DATA Collectively, PricewaterhouseCoopers, Thomson Reuters, and the NVCA have the utmost commitment to provide an accurate historical record of venture capital activity. On a daily basis, the database is con- stantly analyzed for consistency, crosschecked with other data sources, and updated as new information comes in. On a quarterly basis, we have worked with many venture firms to ensure that that their current and past data is correct. Primarily for this reason, the private equity news releases of Thomson Reuters will often restate statistics from prior news releases. With the availability of the online data access, users are encouraged to always use the most current numbers even regarding historical activity so as to maintain accuracy and comparability. REPORTING FUNCTIONALITY OF THOMSONONE.COM Users can access information in terms of profiles on private equity com- panies, funds, firms, executives, IPOs, and limited partners. In addition, users can access the analytics portion of the database, which contains in- vestment, valuation, IPO analytics, merger analytics, fund performance, and fund raising information along with venture capital information such as aggregate fund raising, investments, and IPOs broken out into state and nation profiles. COMPREHENSIVENESS OF THOMSONONE.COM Both the breadth and depth of ThomsonONE.com can perhaps best be shown in that it, among other types of information, the user can find the answers to the following questions: • Which venture firms actively co-invest with a firm I am considering co-investing with? • Which venture firms are most active in funding online financial ser- vices companies in the Ohio Valley? • What does Yearbook Figure 3.15 look like for just biotech? • How much money was raised by each fund stage in 2010? • What was a particular venture-backed IPO’s one year return at the end of 2010? • As of December 2011, was the 10-year return to small buyout funds larger than that of large buyout funds? For this publication, the main source for data was ThomsonONE.com, the online research database of Thomson Reuters. ThomsonONE.com (which replaced VentureXpert™, and Thomson One Banker) is endorsed by the NVCA as the official United States venture capital activity database. By using data gathered through the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thom- son Reuters, ThomsonONE.com contains investment, fund raising, portfolio company information, and Reuters News along with other statistical data. Over 950,000 global private companies can be analyzed within ThomsonONE.com, including historical revenue figures on over 670,000 companies and detailed financials on over 200,000 companies. Through a partnership withVC Experts.com, Inc.the historical breadth and depth of the Thomson Reuters venture capital content is integrated with private company valuation and deal terms. ThomsonONE.com includes blogs, events, and articles from the peHUB and the Venture Capital Journal, two of the industry’s most widely-read publications. Other information contained in this database is gathered through a variety of public and proprietary source. This publication is produced on an annual basis primarily using year-end data. However, the underlying databases can be accessed online to provide the most up-to-date and comprehensive global private equity statistics and profile informa- tion available.
  • 119. 118 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA • Who are the most active acquirers of ecommerce security companies? • How much money was committed to mezzanine funds from 1997 to 2011? • How much money was invested in the venture capital industry from 1987 to 2011? • What is the performance at quarter end for private equity funds that were formed from 1998 to 2011? • In 2011, how much money was invested at each development stage in Research Triangle Pharmaceutical companies? In addition, there are also advantages of using the database for a general partner as well. Although this is not an inclusive list, utilizing the database by general partners can be helpful to them for among the following reasons: • Plan your companies’ exits with data on both venture-backed IPOs and mergers and acquisitions • Aid in recruiting talented executives from otherventure-backed com- panies • Quickly spot venture-backed companies in competition with your own portfolio companies • Create industry analyses to benchmark both performance and portfo- lio investments • Find other venture capitalists likely to support follow-on rounds • Provide clarity to investment decisions by comparingthem to current market conditions • Compile valuation reports for comparable portfolio companies • Identify prospective investors and their investment histories • Benchmark valuations among recent transactions and obtain valuation comparables • Analyze investment trends by industry • Utilize returns information to limited partners using appropriate benchmarks • Tailor your pitch to investor focus size and limited partner type ACCESSING THOMSONONE.COM AND OTHER SERVICES For more information on ThomsonONE.com, please visit http://thom- sonreuters.com/private-equity-venture-capital/ or by phone at 1-877-365- 1455. For information on NVCA membership, which can include a free trial and discounts on an annual subscription, please contact Hannah Veith at the NVCA. You may contact her online through the link on the mem- ber benefits section of the NVCA website or at 703-524-2549. For infor- mation on services PricewaterhouseCoopers provides for venture capital firms as well as emerging companies, please visit their website at www. pwcmoneytree.com.
  • 120. 2014 National Venture Capital Association Yearbook | 119 NVCA THOMSON REUTERS APPENDIX H International Convergence The discussions and work focused on moving toward one high quality set of standards for financial reporting have begun to provide a picture of the future. While that picture is more gray scale than vivid color, the following facts and expectations highlight the current state of play at this point in time: • The SEC issued a report in 2012, without a recommendation, on whether to adopt international accounting rules, or a modification thereof, as the accepted accounting practice in the United States. It appears increasingly unlikely that the SEC will move 100% into the International Financial Reporting Standards (IFRS) camp; • FASB’s parent, the Financial Accounting Foundation, created a new Private Company Council (PCC) to advise them on private company ac- counting. Their work is just beginning; • The AICPA is considering whether the PCC will provide an appropriate framework for private companies or if the AICPA should continue with efforts to develop an alternative non-GAAP basis of accounting for private companies; • The International Accounting Standards Board (IASB) modified IFRS consolidation rules to effectively create Investment Company accounting substantially similar to that used under U.S. GAAP; and • While Fair Value accounting rules are now virtually identical under U.S. GAAP and IFRS, auditors are raising questions related to “unit of account” and valuing minority positions that could impact how venture capital and private equity funds estimate Fair Value. The Dialogue and SEC Decision: Should international rules become accepted as U.S. GAAP? For years, the United States has been developing generalized accounting principles referred to as GenerallyAcceptedAccounting Principles (“GAAP”). The keeper/arbiter/ decider of GAAP is the Financial Accounting Standards Board (“FASB”). The FASB develops and updates GAAP and the SEC has adopted these accounting rules for public company reporting and other situations over which the SEC has jurisdiction. In recent years, on a parallel track, a sep- arate set of rules emerged from the International Accounting Standards Board (“IASB”), which was Europe-centric. These rules became known as the International Financial Reporting Standards (“IFRS,” pronounced “EYE-fers”). IFRS has now been adopted by most developed and many developing countries around the world, with the exception of the United States. Over recent years, a large number of multinational corporations com- plained that they had to endure keeping two sets of books and this prompt- ed the concept of convergence. In early September 2008, the SEC and the FASB announced steps to pave the way for United States public companies to convert from U.S. GAAP to IFRS. The SEC “roadmap” provided for a three-year run- up to an SEC “go-no go” decision in 2011, but the decision was deferred. At about the same time, the FASB and the IASB met to review and re- orient their convergence plan to be consistent with the SEC’s proposed schedule. The 2008-2009 world financial crisis deferred and deprioritized much of the work in this area. The SEC’s 2012 staff report on adopting IFRS did not make a recom- mendation, but raised questions about consistent application, transpar- ency, reliability, relevance, comparability, and ongoing costs in addition to any conversion costs, which might be significant. More relevant to the United States venture capital industry are matters specifically affecting fund reporting, the financial statements provided by GPs to LPs under the eventual rules. Because of the recent change in IFRS consolidation rules, United States venture capital firms would conceptually not be impacted by a change to IFRS. How United States GAAP and International IFRS Compare – Never Generalize Even viewed from 30,000 feet, it is difficult to generalize on how the two systems compare. First, while the IASB produces plain vanilla IFRS stan- dards, there is no one flavor of IFRS in use. Much like the original UNIX kernel, each country/jurisdiction has been able to create its own version of IFRS. But unlike UNIX, sometimes the differences among the local- ized IFRS versions are large. So apples-to apples comparison of “IFRS- compliant” financials from different jurisdictions can be difficult. Second, it is true that IRFS itself is a very thin document compared to GAAP, which has grown to roughly a two-foot stack of written rules. However, to implement IFRS, you need the implementation guide that combines with the original document to create its own two-foot stack. Again, much of the surface comparisons are not useful. Until now, United States venture capi- tal firms have been using U.S. GAAP accounting standards exclusively. While seemingly distant from the United States venture capital industry, it is important that all business constituencies weigh in on which system (current U.S. GAAP vs. International vs. neither) is the best system over- all for the United States business community going forward. GP-to LP Reporting – Can Meaningful Statements Continue? A key priority for the United States venture capital industry is being able to continue producing quarterly financial statements using invest- ment company (IC) accounting. Virtually all LP agreements (or accom-
  • 121. 120 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA panying documents) require GPs to provide GAAP-compliant financial reports to LPs. Annual audits include testing to ensure GAAP compliance. Under GAAP, the United States venture capital industry now provides Fair Value portfolio reports under the special rules of “investment compa- ny reporting.” In 2012, IFRS was modified to effectively create a financial reporting framework substantially similar to U.S. GAAP. GP’s should not lose sight of the fact their LP’s who pre- pare financial statements using either U.S. GAAP or IFRS, in almost all cases, must report their LP fund positions on a Fair Value basis. LPs are increasingly awakening to the specific condi- tions outlined in a change to U.S. GAAP from 2009, which codified an LP’s ability to use Net Asset Value (NAV) as an LP’s estimate of the Fair Value of their fund interest. These conditions include that the LP must satisfy themselves that the GP reported NAV is based on the Fair Value of underlying investments, that NAV is “in-phase” (no time lag, unless deemed insignificant), and that the LP interest is in a fund as defined by ASC Topic 946. If these three conditions are not met, or if the LP chooses not to use NAV, then Fair Value would be determined using other tech- niques. The point here for GPs is that LPs need robustly determined Fair Value on a timely basis, generally at least quarterly. How the Same Words have Different Meanings The 2012 change in IFRS consolidation rules for Investment Entities and the 2011 adoption of a common definition of Fair Value for U.S. GAAP and IFRS should have created a framework where financial report- ing to investors would be identical for funds using IFRS and funds using U.S. GAAP. If it were only that easy! While we enter 2013 with a consistent framework under U.S. GAAP and IFRS where venture capital and private equity funds report all invest- ments at Fair Value; and while we now have an identical definition of Fair Value (the amount a market participant would pay in an orderly transac- tion), schisms are developing. Because of nuances in the way IFRS is drafted, IFRS auditors are ques- tioning whether Fair Value should be determined based on the “invest- ment” or on a “single share” basis. While the reasons for such a question are beyond the scope of this document, the question and potential results could mean that IFRS and U.S. GAAP, though identical in principle, would result in different Fair Value estimates (as an aside, this is an ex- ample of one situation that concerns the SEC in moving the United States towards IFRS). At the same time, many auditors of U.S. GAAP, as a reaction to their regulators the PCAOB, and because of pressure from the SEC, which now regulates private equity funds, are questioning whether or not the sale or exit of an enterprise can be assumed when determining the Fair Value of minority positions. Some auditors have gone so far as to indicate that they may require the use of option pricing models for determining the Fair Value of all minority positions. Going Forward With questions regarding whether or not IFRS should be interpreted as requiring all Fair Value estimates to be on a single share basis, and with U.S. auditors appearing to feel some pressure to use mathematical models to document their audit conclusions, both GPs and LPs in the venture capital and private equity industry could be faced with financial report- ing that is either very costly and/or is not representative of how deals are done in the industry. In December 2012, the International Private Equity Venture Capital Valuation (IPEV) Board updated its Valuation Guide- lines. The updated valuation guidelines address both the “unit of account” and mathematical model questions. In addition, IPEV released Investor Reporting Guidelines in October 2012. While each fund manager must decide both what information to report and how to estimate Fair Value, the IPEV Valuation Guidelines and the IPEV Investor Reporting Guidelines provide balanced, and industry created, assistance in dealing with report- ing and valuation questions. NVCA and Thomson Reuters acknowledge and appreciate the assis- tance of David Larsen of Duff and Phelps in updating and refocusing the material in this Appendix.
  • 122. 2014 National Venture Capital Association Yearbook | 121 NVCA THOMSON REUTERS APPENDIX I US Accounting Rulemaking and Valuation Guidelines In the United States, a venture capital fund is usually organized as a limited partnership. The institutional investors providing capital to a fund typically become the limited partners (LPs). The venture firm itself becomes a general partner (GP) in the limited partnership. In most of the limited partnership agreements defining the GP-LP relationship, the GPs are required to provide financial reports quarterly (unaudited) and annually (audited) prepared according to United States Generally Accepted Accounting Principles (“GAAP”). GAAP calls for the use of investment company accounting, which mandates that a Fair Value be assigned to the individual investments (portfolio companies). This is consistent with the LP’s need for Fair Value of their investments, as well as third-party or regulatory requirements, e.g., ERISA-regulation. In recent years, the GP-to-LP financial statements have been subject to numerous rule “clarifications,” convergence with non-U.S. accounting, expanded disclosures, and more formal presentations. Industry groups (PEIGG a decade ago and IPEV today) have released guidelines that, if adopted, can reduce questions from LPs and provide a basis to respond to questions posed by auditors. Guidelines fall into two categories. The first is portfolio performance presentation formats, calculations, and disclosure. Examples of such Guidelines are the Private Equity Provisions of the Global Investment Performance Standards (GIPS), developed by the CFA Institute and the IPEV Investor Reporting Guidelines. While many of the specifications and terminology line up with current practice in the United States, the NVCA has not endorsed or otherwise commented on these Guidelines. Neither NVCA nor Thomson Reuters has determined how widespread the adoption of those guidelines is or will likely be. These documents and ac- companying guidance can be currently found at http://www.cfainstitute. org/centre/codes/gips/ and www.privateequityvaluation.com. The second important category of guidelines is focused on valuation. Why Valuation Guidelines Matter What ultimately matters to investors and private equity practitioners is the cash that has been distributed to the investors during the life of the fund compared with the original money put in. However, the specified life of a typical venture fund is at least 10 years and often longer in the life scienc- es arena. During that period, the venture capital fund reports progress to the limited partners. In many cases, this means quarterly portfolio updates and a complete annual audited financial statement. For a typical venture fund, very little money is paid out in the first four or five years.Also, while every portfolio company receives funding with high expectations, it can take several years to determine if a particular company is a likely winner. Therefore, understanding progress in the portfolio requires some estimate of the success of the investee companies by the venture capital or private equity firm. While many investors and fund managers agree that financial measurements mean little for the first three or so years of a fund, investors are required to report the Fair Value of their fund positions on a quarterly or annual basis. This is where specific valuation rules and processes be- come important. The agreed valuation procedures for individual portfolio companies become the basis for progress assessment as the fund matures and ultimately distributes cash to the investors. Thus, while portfolio company valuations are more of an art than a sci- ence, especially for pre-revenue or even pre-EBITDA companies, most limited partner agreements (LPAs) establishing a venture capital fund require the venture firm to provide quarterly and annual financial state- ments using Generally Accepted Accounting Principles (GAAP). GAAP requires Fair Value measurement for portfolio positions. Therefore, most GPs must issue financial statements using Fair Value. Most important, if industry-created valuation guidelines are not used, those outside the industry, such as auditors or regulators could impose their view on the industry. A non-industry view could adversely impact the LPs desire and ability to invest if interim values are not representative of the way the industry sees value, and costs for determining valuation could increase. The Evolution of Reporting and Valuation Guidelines To understand the pressure on valuation and reporting in today’s environ- ment, a historical background review is instructive. • 1940 – United States Investment Company legislation (“the 40 Act”) required investment companies to report the Fair Value of investments. While the application of accounting standards has evolved over the past 70+ years, the underlying basis of reporting has always been Fair Value. • 1989-90 – A group of investors, private equity fund managers, and fund-of-fund managers formed a group to develop a set of portfolio company valuation guidelines for financial reporting. Contrary to a very persistent rumor, the NVCA did not endorse, adopt, bless, publish, or otherwise opine on the guidelines. Using the principle of conservatism, these non-endorsed guidelines used cost or the value of the last round of financing to approximate Fair Value. • Decade of the 1990s – Two noteworthy developments occurred in the 1990s. Despite no endorsement by the NVCA, these guidelines became accepted practice by much of the United States industry, especially in the venture capital side of private equity. These guidelines were referred to by many as being issued by the NVCAbut in fact they were not. The sec- ond development is that international venture associations created local- ized guidelines based heavily on these guidelines. These were created in Europe and other international regions. In fact, by 2005, there had been multiple iterations of the European and British guidelines, again gener- ally focused on cost or the value of the last round of financing.
  • 123. 122 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA • December 2003/September 2004 – The Private Equity Industry Guide- lines Group (PEIGG), a self-appointed group of private equity practitio- ners, fund managers, LPs and others, issued U.S. Private Equity Valu- ation Guidelines. The Guidelines were issued after extensive input and review soliciting feedback and input from a number of industry groups that included NVCA. • 2005 – In part as a reaction to the PEIGG Guidelines, three Europe- based venture capital associations (AFIC, BVCA, EVCA) created the International Private Equity and Venture Capital (IPEV) Valuation Board. • April 2006 – IPEV released its Valuation Guidelines. • September 2006 – Financial Accounting Standards Board (FASB) issued its long-awaited and long anticipated Fair Value measurement standard as FAS 157. Only a few of its 145 pages relate directly to typi- cal venture capital and private equity funds. Because the FASB main- tains that this is a clarification and further definition of Fair Value that was already required for portfolio accounting, some auditors began re- quiring selective compliance in advance of the 2008 effective date. • March 2007 – PEIGG issued a revised portfolio company valuation guidelines document to reflect the Fair Value Measurement standard (FAS 157). • September 2007 – NVCA board reaffirmed its prior position on the PEIGG guidelines to refer to the most recent version. • March 2008 – the IPEV Board reconstituted and re-launched itself and adds five practitioners from the United States. The initial focus of the group was on convergence of U.S. PEIGG and IPEV valuation guide- lines. Details at www.privateequityvaluation.com. • July 2009 – Effective July 1, authoritative GAAP became contained in a single codification and the prior nomenclature went away. Existing U.S. GAAP was recast into 90 topics, which include all related FASB pronouncements, AICPA guidance and EITFs under single “Topics.” Familiar standards would no longer exist. For example, FAS 157 be- came Topic 820 Fair Value Measurements and Disclosure. Investment Company accounting became ASC Topic 946. • May 2011 – FASB amended ASC Topic 820 and the IASB issues IFRS 13, resulting in nearly identical Fair Value guidance. • October 2012 – IPEV released Investor Reporting Guidelines • December 2012 – IPEV updated its Valuation Guidelines to harmonize with ASC Topic 820 and IFRS 13. • May 28, 2013 – In an unprecedented action, the NVCA Board formal- ly endorsed the IPEV valuation guidelines issued in December 2012. NVCA was joined in doing this by the Private Equity and Growth Capi- tal Council (PEGCC). • February 25, 2014 – The Financial Accounting Foundation (FASB’s parent organization) issues its findings of a Post Implementation Re- view of the fair value measurement standard (Topic 820) which is better known by its original nomenclature: FAS 157. FAF’s overall finding was that overall the FASB got the standard basically correct, a point with which NVCA does not disagree. However, the findings acknowledged concerns raised by NVCA, LPs, and others while simultaneously declar- ing no unintended consequences. NVCA Position on Portfolio Company Valuation Guidelines While publicly supportive of prior peer and eco-system generated valua- tion guidance (for example, PEIGG), NVCA’s endorsement of IPEV valu- ation guidelines in May 2013 is the first such action it has taken. NVCA Member Alert –Fair Value Considerations for Venture Capitalists–December 2008 In 2008, as a response to the economic crisis at the time, the NVCA issued a membership alert. Much of that alert remains relevant today. The fol- lowing alert was sent to the NVCA membership to highlight certain issues and considerations to be explored in the application of FAS 157, the Fair Value measurement standard. The NVCA thanks David Larsen of Duff and Phelps and several members of the NVCA CFO Task Force for their role in drafting this document: “We are operating in a severely distressed investment environment that has deteriorated rapidly in the past few months. What does this mean for venture capital investors as they attempt to value privately-held invest- ments at December 31, 2008? The short answer is: despite the current very challenging economic environment, fund managers must continue to exercise their sound judgment in estimating the Fair Value of each portfo- lio company after considering the relevant facts, including current market conditions. The valuation process does not change, but much more judg- ment is required when we are in a period of economic discontinuity. Virtu- ally all LP agreements require GPs to use U.S. GAAP for financial report- ing. U.S. GAAP requires Fair Value reporting for virtually all VC firms because they are “investment companies.” U.S. GAAP continues to define Fair Value as: “the price that would be received to sell an asset…in an orderly transaction between market participants at the measurement date.” Fund managers need to establish Fair Values even though they may not currently need to sell, or cannot sell, their private investments in this mar- ket. GPs must use their judgment in estimating the current Fair Values of their investments, even though “exit markets” may have few buyers, IPO markets appear closed, and there are few, if any, relevant compa- rable transactions. Such judgment should take into account all relevant information, including a financing round’s specific terms and conditions. There are no easy outs, rules of thumb or safe harbors for establishing Fair Value. As always, best considerations for Fair Value determination include the following: • The Fair Value of an investment portfolio is the sum of the Fair Value determined for each portfolio company using a “bottoms up” approach. Applying a “top-down” overall percentage adjustment to the aggregate portfolio’s value is not compliant with U.S. GAAP.
  • 124. 2014 National Venture Capital Association Yearbook | 123 NVCA THOMSON REUTERS • Valuations should reflect specific factors in a buy/sell context. For ex- ample, a GP could ask: “Given my portfolio company’s current cash position, cash burn rate, performance compared to plan, probability of meeting forecasts, the projected environment for its product or technol- ogy, etc., as a board member, what is the lowest price that I would sell the company’s stock today in an orderly sale with a willing buyer?” [Footnote: A fund manager should not assume a “fire sale” of the stock, but should assume “exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary …” from SFAS 157, Paragraph 7]. • The valuations set by the most recent financing round – perhaps even one in the third quarter of 2008 – may be stale and inappropriate for determining Fair Value, especially given current market conditions. • The Fair Value at December 31 in many cases will likely be different from the value at September 30, given the deterioration of the macro- economic environment. • Each valuation should reflect a company’s degree of progress from the prior reporting date to the current one. • To determine a portfolio company’s Fair Value, GPs should apply their judgment in a consistent manner and evaluate the same data they use for monitoring a company’s performance and progress. There is no magic formula or weighting of factors. In summary, determining Fair Value continues to require the exercise of judgment based on objective evidence, such as calibrating the original investment decision with the current performance of the company and the current economic environment. The fact that the macro market is dis- tressed probably adversely impacts the value of most companies. This negative impact may be compounded by disappointing company perfor- mance or mitigated by tangible and sustainable company progress. If you need more details about Fair Value, you might consider the IPEV Valua- tion Guidelines at www.privateequityvaluation.com.” 2014 Headwinds As noted above, new pressure is emerging that could impact how venture capital and private equity managers estimate Fair Value. Key factors in- clude: 1. LPs are awakening to the fact that they need to obtain more information from the GP about how the GP estimates Fair Value so the LP can use NAV to estimate the Fair Value of their LP interest. a. LPs are revisiting their internal valuation policies. b. LPs are asking more detailed valuation questions of the GP. 2. The IASB has created “investment company accounting” by requiring venture capital and private equity funds to report all investments at Fair Value rather than consolidating control positions. 3. Auditors of IFRS have raised questions concerning the level of aggre- gation (unit of account) that should be used to value venture capital and private equity investments. a. Some auditors believe that unit of account is a single share of an investee company. b. Single share valuations would likely result in reporting understated Fair Values. c. Reporting understated Fair Values would exacerbate the “J” curve, and could cause some LPs to reduce investments in the industry be- cause of lower interim returns. d. IFRS could deviate from U.S. GAAP even though the Fair Value principles are identical. 4. Auditors of U.S. GAAP have raised questions concerning how to esti- mate the Fair Value of non-control positions. a. Is it appropriate to assume that the entire enterprise is being sold when estimating Fair Value? b. For non-control positions, is it appropriate or required to use option pricing models and theory to estimate Fair Value? The IASB is expected to address the Unit of Account question during early 2013. The AICPA has formed a task force to provide guidance on investments of venture capital and private equity funds. Part of the reason the AICPA has formed a task force is because the IPEV guidelines have not been as widely accepted or acknowledged in the U.S. as they have been in Europe. Further, while some parties have voiced concern that the AICPA task force conclusions may be relatively auditor-friendly, several members of that task force are from NVCA members. All of this raises the question: could GPs reduce LP questions and increase LP valuation comfort by stating that they comply with the IPEV Valuation Guidelines? Will current efforts at non-authoritative accounting guidance provide a framework with which the great compliance community will be comfortable? Over the next year, greater clarity should emerge. NVCA and Thomson Reuters acknowledge and appreciate the assistance of David Larsen of Duff and Phelps in updating and refocusing the mate- rial in this Appendix
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  • 126. 2014 National Venture Capital Association Yearbook | 125 NVCA THOMSON REUTERS APPENDIX J Non-US Private Equity As interest in globalization increases with each year, private equity investors have continued to broaden their investment criteria to include overseas ventures so as to increase portfolio diversification and search for higher returns. As such, Appendix J is produced for readers to analyze non-US private equity data. All data is reported in US dollars. INTRODUCTION This appendix highlights various aspects of private equity activity out- side of the United States and provides valuable information for compari- son to the United States private equity environment. However, this appen- dix is not directly comparable to domestic data found in this Yearbook due to differences in definitions between the regions and variations in the currencies of each region. Additionally, this appendix provides a brief overview of non-US private equity; data herein is not as comprehensive as the United States data presented elsewhere in this publication. Despite this, the reader can use this appendix to analyze trends in private equity outside of the United States. All data is provided by Thomson Reuters. As mentioned previously, readers should note the differences in methodol- ogy and definitions of private equity between United States and other re- gions before analyzing the data. For example, private equity outside of the United States provides equity capital for entities not publicly traded and consists of buyouts and venture capital. The category of buyouts includes management buyouts (management from inside the company investing with private equity investors), leveraged buyouts (the target taking on a high level of debt secured by assets), institutional buyouts (outside inves- tors buying a business from existing shareholders), and management buy- ins (management from outside the company investing with private equity investors). On the other hand, venture capital describes the process of fi- nancing companies at the seed, start-up, or expansion stages. The United States places more emphasis on the early stages of development than do other regions, based on historical analysis of investments by stage. Like in the United States, non-US venture capital is considered a subset of private equity. For ease of analysis and to avoid differences in definitions between venture capital and buyouts inside and outside of the United States, it is perhaps most comparable to analyze aggregate private equity in the two regions as opposed to any classifications contained within. **Special Note: The methodology used to generate the data within this appendix differs slightly from the methodology used in previous years, causing data to vary slightly from previous Yearbook issues. However, trends reported in the past remain intact. Additionally, most data is now replicable on ThomsonONE.com. COMMITMENTS Private equity commitment levels, outside of the United States, totaled $130.8 billion in 2013. European-based funds raised the bulk, raising $77.5 billion, equal to 59% of this amount. Meanwhile, Asian funds had $30.9 billion in fundraising commitments which is 24% of the total. Funds in the Other Regions raised the remaining $22.4 billion or 17% of the to- tal. In the stage level, Buyout commitments outside the United States ac- counted for $68.3 billion or 52% of the total. The second largest part of the commitments was Other Private Equity/Special Situations which raised $19.9 billion or 15% of the total. Venture Capital funds represented 8% ($10.2 billion). Private Real Estate funds raised $13.5 billion or 10% of the share. Fund of funds, Generalist, and Mezzanine funds raised $6 bil- lion, $10 billion, and $3.1 billion, respectively. It should be noted that these totals reflect not only the amount raised by independent funds, but also include capital gains and the amount raised by captive funds. INVESTMENTS Overall, private equity investing outside of the United States reached $46.6 billion. Buyout stage financing led investment activity, accounting for 43% of the total dollars. The Venture Capital investments followed with 32% of the total. By number of deals, Venture Capital investments led with 56% and the Buyouts investments followed with 37% of the total deal activity outside of the United States. Canada received the biggest share of private equity outside the United States in 2013 with $9 billion worth of investments or 19% of the total value. The United Kingdom fol- lowed with $5.2 billion. China comes in at third with $4.9 billion or 10% of the total. Private equity commitments experienced an increase while investments saw a decrease outside of the United States in 2013. Commit- ments saw an increase of 16% from $113 billion in 2012. Private equity investments dropped 21% from $59 billion of the previous year. Figure J1 Private Equity Commitments Outside of the United States in 2013 Fund World Location # Funds Amount Raised in Range (USD Mil) Europe 170 77,544.94 Asia 116 30,943.34 Other Regions 88 22,354.11 Total 374 130,842.38
  • 127. 126 | 2014 National Venture Capital Association Yearbook THOMSON REUTERS NVCA Figure J2 Private Equity Commitments Outside of the United States by Fund Stage in 2013 Fund Stage # Funds Amount Raised in Range (USD Mil) Buyouts 98 68,253.15 Venture Capital 137 10,181.76 Generalist 47 9,952.74 Mezzanine Stage 9 3,065.56 Fund of Funds 22 5,984.68 Other Private Equity/ Special Situations 19 19,856.58 Real Estate 42 13,547.92 Total 374 130,842.38 Figure J3 Private Equity Investments Outside of the United States By Location in 2013 Company Nation # Deals # Companies Sum of Equity Invested (USD Mil) Canada 845 747 9,018.66 United Kingdom 742 696 5,223.91 China 310 291 4,862.14 Germany 442 405 4,821.09 India 355 321 3,169.58 Other Nations 2343 2215 19,455.95 Total 5037 4675 46,551.33 Figure J4 Private Equity Investments Outside of the United States By Stage in 2013 Company Stage # Deals # Companies Sum of Equity Invested (USD Mil) Buyout/Acquisition 1881 1769 20,119.97 Venture Capital 2805 2609 14,752.98 Other 351 327 11,678.38 Total 5037 4675 46,551.33