1. San Diego Venture Group
VC Outlook 2012
January 24, 2012
Mark G. Heesen
NVCA President

2. The Number of US VC Firms Has Peaked ...
Thankfully
At Year # Active Capital
End Firms Managed
1970 28 $1B
1980 87 $4B
1990 96 $28B
2000 1,022 $220B
2010 462 $177B
Source: 2011 NVCA Yearbook, prepared by Thomson Reuters, figure 1.04

3. VC Fundraising Has Slowed Down – New commitments
continue below company investment
120
100
80
60
40
20
0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
$B 10 12 18 31 58 107 38 4 11 19 31 32 31 26 16 14 18
Does not include Corporate Venture groups.
Source: Thomson Reuters/NVCA

4. The Vast Bulk of the Capital Goes to Existing
Managers Raising a Follow-On Fund
35
$B Raised by First-Time Managers vs. Follow-On
30
25
20
15
10
5
0 2005 2006 2007 2008 2009 2010 2011
$B First 2.4 1.4 2.9 2.2 0.9 1.6 1.9
$B Follow On 27.9 30.5 27.7 23.2 15.5 12.2 16.9
Source: Thomson Reuters/National Venture Capital Association

5. Investment Marches On -
The industry is in a new size band but it is very much
open for business!

6. VC Investment Peaked in 2000;
Industry is Smaller Now
$100
$99b
$90
$80
$31b
$ Billion Invested
$70
$60 $28b
$50
$40
$30
$20
$10
$0
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,
Data: Thomson Reuters

7. Despite economic turbulence and uncertainty, VCs
funded Over 1100 in 2011; 1000-1300 is typical
3,500
3,000
2,500
2,000
1,500
1,000
500
- 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
# Cos 1,428 2,459 3,388 1,236 840 768 950 1,067 1,259 1,361 1,281 795 1,047 1,159
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,
Data: Thomson Reuters

8. First Fundings of Life Sciences Companies is
Way Down…
300
250
200
150
100
50
0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
# LS FF 153 192 202 166 192 167 173 165 185 206 268 259 242 157 188 153
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,
Data: Thomson Reuters

9. SoCal under a Microscope…
Note that data “cuts” can be done from the historical trend
data section of www.pwcmoneytree.com or from the
National Aggregate Spreadsheet which can be downloaded
from that site.

10. So. California Investing Generally
Tracked National Trends …
$ Millions Invested in Companies
$10,000 800
$9,000 700
$8,000
600
$7,000
$6,000 500
$5,000 400
$4,000 300
$3,000
200
$2,000
$1,000 100
$0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
0
$M Inv 1,171 1,081 1,298 1,707 4,539 8,591 3,583 2,158 1,783 2,441 2,588 3,112 3,704 3,136 1,921 2,493 2,805
# Deals 165 240 264 333 505 751 402 275 268 274 313 354 394 375 277 341 315
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,
Data: Thomson Reuters
10

11. … and first time funding are rebounding
nicely
350
300
250
200
150
100
50
- 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
# 1st Fundings 102 127 228 323 110 63 65 82 119 122 131 126 61 84 95
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,
Data: Thomson Reuters

12. SoCal’s 37% focus on life sciences is higher
than national; clean tech makes up the bulk of
Ind/Energy
$ Invested 2009 through 2011
IT Services
5% Semi
2% Other
Consumer Bio
5% 12%
22%
Media/Ent
5%
Ind/Energy
SW 22%
12% Med Dev
15%
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,
Data: Thomson Reuters

13. The Exit Scene -
the importance of acquisitions has become clear
over the past several years
but the IPO market remains the key!

14. IPO Levels Far Below What is Needed
25.00 300
250
20.00
200
Number of IPOs
15.00
Offer $B
150
10.00
100
5.00
50
0.00 0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
$Offer B 12.01 5.00 3.54 18.75 22.96 3.41 2.07 2.01 10.48 4.48 4.48 10.33 0.47 1.64 7.02 9.88
Count 281 142 78 271 263 41 22 29 94 57 57 86 6 12 75 52
Source: Thomson Reuters/National Venture Capital Association

15. Median Age at IPO is Off Its Peak – but Still
Historically High
12.00 Med Age - Yrs
10.00
8.00
Offer $B
6.00
4.00
2.00
0.00
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Med Age - Yrs 5.78 6.54 4.74 4.29 5.26 7.15 7.93 7.70 6.86 6.20 8.02 8.78 9.59 10.30 9.18 8.30
Source: Thomson Reuters/National Venture Capital Association, As of 5/27/2011

16. What’s in the Venture-Backed IPO Pipeline?
IPOs During Period and Registration Counts at
Period End; Are we seeing a comeback?
100
90
# of Companies 80
70
60
50
40
30
20
10
0
2003 2004 2005 2006 2007 2008 2009 2010 2011
IPOs Done 29 94 57 57 86 6 12 75 52
In Reg on last day 31 57 16 36 60 28 29 42 60
As of 11/4/2011, there were 65 port cos in registration with 3 IPOs QTD including Groupon.
Source: Thomson Reuters/National Venture Capital Association

17. Volume of M&A Exits has Increased to Record Levels
Source: Thomson Reuters/National Venture Capital Association

18. Venture Exit Counts- IPOs and M&A by Year
700 #M&A
600 #IPO
500
Number of Issues
400
300
200
100
0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
#M&A 100 97 116 164 209 240 317 353 319 284 349 350 378 382 348 273 436 429
#IPO 166 202 270 136 77 260 264 41 24 29 94 57 57 86 6 12 75 52
Source: Thomson Reuters/National Venture Capital Association

19. www.nvca.org
nvcaccess.nvca.org