pandoland 2015: q1-q2 state of startups | mattermark

© 2015 ALL RIGHTS RESERVED ● MATTERMARK TRACTION REPORT ● MATTERMARK.COM ● (415) 366-6587

PANDOLAND 2015: Q1-Q2 2015 STATE OF STARTUPSby Andy Sparks Mattermark Co-founder & COO

@SparksZilla

1

http://MATTERMARK.COM


Q1-Q2 2015: ACQUISITIONS & IPO ACTIVITYMattermark tracked over 500 investor backed acquisitions and 140 IPOs in the United States between Q1 2014 and Q2 2015. These are companies that had received venture or private equity financing prior to liquidity and indicated positive growth according to the Mattermark Growth Score.

2



EXITS

3

Investor Backed Exits Q1 2014 - Q2 2015

Num

ber o

f IPO

s

0

40

80

120

160

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015Acquisitions IPO



EXITS

4

Investor Backed Acquisitions by Industry, Q1 - Q2 2015

Num

ber o

f Exit

s

0

10

20

30

40

Enterprise Software Analytics Healthcare Advertising & Marketing E-CommerceCompanies that were acquired in 2015



EXITS

5

Time Taken to Acquisition, Q1 - Q2 2015

Num

ber o

f Com

panie

s

0

3

6

9

12

15

18

Time taken to Exit (Years)1 2 3 4 5 6 7 8 9 10 Untitled 1

Years to Acquisition

Of all the investor-backed companies that were acquired in Q1 and Q2 of 2015, the the median time taken was 7 years.



EXITS - M&A

6

Most Active Acquirers, Q1 - Q2 2015

Company Name: Google Website: google.com Acquisitions Launchpad Toys, InMobi, Tilt Brush, Timeful, Pulse.io, Lumedyne Technologies

Company Name: Apple Website: apple.com Acquisitions Semetric, OttoCat, Dryft, LinX Imaging, Coherent Navigation, Metaio

Company Name: Amazon Website: amazon.com Acquisitions Annapurna Labs, 21emetry, Shoefitr, Clusterk

Company Name: Sprinklr Website: sprinklr.com Acquisitions Launchpad Toys, InMobi, Tilt Brush, Timeful, Pulse.io, Lumedyne Technologies, Get Satisfaction

Company Name: Dropbox Website: dropbox.com Acquisitions CloudOn, Pixelapse, Umano



EXITS - IPO

7

Volume of IPOs, Q1 2014 - Q2 2015

Num

ber o

f IPO

s

0

25

50

75

100

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015

2129

70

44

58

33

16

109

24

3539

Investor Backed IPOsOther IPOs


© 2015 ALL RIGHTS RESERVED ● MATTERMARK TRACTION REPORT ● MATTERMARK.COM ● (415) 366-6587 8

Investor Backed IPOs by Industry, Q1 - Q2 2015

Num

ber o

f Exit

s

0

4

8

12

16

Healthcare (Inc. Biotech) Enterprise Software Finance Human Resources Clean Technology

Companies that IPO’d in 2015

EXITS - IPO



Market Capitalization of Investor Backed IPOs, Q1 - Q2 2015

Mar

ket C

apita

lizat

ion

(In M

M)

0

1000

2000

3000

4000

Healthcare (Inc. Biotech) Enterprise Software E-Commerce Finance Clean Technology

Total Market Capitalization

EXITS - IPO



EXITS - IPO

10

Selected Investor Backed IPOs, Q1 - Q2 2015

Company

Total Funding $130,000,000 $564,000,000 $122,000,000 $85,000,000

Key Funding

04/11 Series A: $40M01/14 Series B: $25M11/14 Series C: $50M 03/15 Series D: $15M

10/06 Series A: $15M02/08 Series B: $6M

04/10 Series C: $15M10/11 Series D: $81M01/13 Series E: $125M12/13 Series F: $100M 07/14 Series G: $150M

12/10 Series A: $7M10/11 Series B: $15M

12/13 Series C: $100M

10/09 Series A: $23M10/10 Series B: $25M10/11 Series C: $37M

Key Investors

Redmile Group, Cowen Investments, RA Capital

Partners, Third Rock Ventures, Fidelity Biosciences

TPG, Coatue Management, Draper Fisher Jurvetson (DFJ),

Andreessen Horowitz, New Enterprise Associates

Felicis Ventures, Bessemer Venture Partners, OMERS

Ventures, Georgian Partners, FirstMark Capital

Norwest Venture Partners, Walden International, Opus Capital, Lightspeed Venture

Partners, GE Capital

*certain funding rounds were excluded for the purposes of this presentation



EXITS - IPO

11

Selected Technology IPO 1st Day Performance

Pric

e ($

USD

)

$0

$10

$20

$30

$40

$12.89

$29.27

$35.15

$17.19$16.42 $16.68

$26.15$25.86

$23.15

$30

$17

$20

$17

$14$16

IPO Share Price End of Day 1 Share Price Price 6/15/15

\



Selected Technology IPO: 1st Day v. Total Return to Date

Return (%)-22.5 0 22.5 45 67.5 90

-13%

45%

61%

24%

-4%

-2%

31%

51%

66%

88%

1st Day Return Total Return (to 6/4/15)

EXITS - IPO



Q1-Q2 2015 VENTURE CAPITAL FINANCING ACTIVTY

13

Mattermark identified over 1,600 venture capital financing events using natural language processing technology. Our analysis indicates that although deal volume is down, deal size is increasing, particularly at later stages.



VENTURE CAPITAL FINANCING

14

2015 Venture-Backed Startups: Key Statistics

# Startups Funded Avg. Company Size Avg. MoM Employee Growth Avg. Company Age

1,661 83 4.5% 5 Years

Number of Deals Venture Capital Deployed Avg. Deal Size # Startups Receiving Follow-on Investments

1,681 $27.6B $16.4M 46




15

Q1-Q2 Venture Investment Amount and Deal Volume Comparison

Q1-Q2 Deal Volume

Num

er o

f Dea

ls0

100

200

300

400

500

600

700

800

900

1000

1100

Pre-Series A A B C D Late

6374

171

283

477

1,009

7887

170

297

445

584

2015 2014

Q1-Q2 Venture Investment Amount

Tota

l Ven

ture

Cap

ital D

eplo

yed

$0.00B

$1.00B

$2.00B

$3.00B

$4.00B

$5.00B

$6.00B

$7.00B

$8.00B

$9.00B

$10.00B


3.69

4.534.54.5

3.48

0.84

$9.03

$4.23

$4.84

$5.53

$3.74

$0.84

2015 2014




16

Q1-Q2 Venture Investment Amount and Deal Volume Comparison

Q1-Q2 Deal Volume

Num

er o

f Dea

ls0

100

200

300

400

500

600

700

800

900

1000

1100


6374

171

283

477

1,009

7887

170

297

445

584

2015 2014

Q1-Q2 Venture Investment Amount

Tota

l Ven

ture

Cap

ital D

eplo

yed

$0.00B

$1.00B

$2.00B

$3.00B

$4.00B

$5.00B

$6.00B

$7.00B

$8.00B

$9.00B

$10.00B


3.69

4.534.54.5

3.48

0.84

$9.03

$4.23

$4.84

$5.53

$3.74

$0.84

2015 2014



Q1-Q2 Average Deal Size ComparisonAv

erag

e D

eal S

ize

$0.00M

$25.00M

$50.00M

$75.00M

$100.00M


$38.73M

$61.15M

$26.30M

$15.89M

$7.29M

$0.93M

$82.44M

$48.61M

$28.50M

$18.63M

$8.41M

$1.63M

2015 2014





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2015 Venture Backed Startups: Total by Metropolitan Region

Bay Area

New York

Boston

Los Angeles

Seattle

Washington

Austin

Chicago

San Diego

Atlanta

Number of Startups (Financed in 2015)0 100 200 300 400 500

29

32

44

50

50

55

84

154

230

446




19

2015 Venture Backed Startups: Average Company Size by Metropolitan RegionAv

erag

e C

ompa

ny S

ize

0

25

50

75

100

125

Seattle Los Angeles Bay Area New York Chicago Atlanta Boston San Diego Austin Washington

3543

4851

60

7276

90

103

121



Largest Seattle Companies (Financed from Q1 - Q2 2015)

Company Name: Docusign Website: docusign.com Employees: 1225 6 Month Employee Growth Rate; 22%

Company Name: Avalara Website: avalara.com Employees: 849 6 Month Employee Growth Rate; 18%

Company Name: K2 Website: k2.com Employees: 529 6 Month Employee Growth Rate; 13%

Company Name: Porch Website: porch.com Employees: 421 6 Month Employee Growth Rate; 43%

Company Name: Tune Website: tune.com Employees: 278 6 Month Employee Growth Rate; 22%





21

2015 Venture-Backed Startups: Avg. MoM Employee Growth by Metropolitan Region

Chicago

Los Angeles

New York

Atlanta

Boston

Seattle

San Diego

Bay Area

Washington

Austin

Average Month over Month Employee Growth0% 3% 6% 9% 12%

3%

3%

3%

4%

4%

4%

5%

5%

8%

12%



Fastest Growing Chicago Companies (Financed from Q1 - Q2 2015)

Company Name: TurboAppeal Website: turboappeal.com Employees: 7 MoM Employee Growth Rate; 200%

Company Name: Iris Mobile Website: irismobile.com Employees: 37 MoM Employee Growth Rate; 55%

Company Name: Thoughtly Website: thoughtly.co Employees: 3 MoM Employee Growth Rate; 50%

Company Name: Avant Website: avant.com Employees: 306MoM Employee Growth Rate; 13%

Company Name: Pangea Payments Website: gopangea.com Employees: 25 MoM Employee Growth Rate; 10%




STARTUP SPACESMattermark identifies a subset of startups that are growing at a rate, which will require them to move within the next few months. The following slides examine the properties of these companies.

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STARTUP SPACES

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High Growth Startups: Key Statistics - San Francisco

Number of High Growth Startups Avg. Company Size Avg. MoM Employee Growth Avg. Compound

Monthly Growth

6,380 28 26 9%

Number of Venture Backed High Growth Startups Venture Capital Received Avg. Office Size Total SF Needed

1,717 $6.8B 5,075 32M SF



STARTUP SPACES

25

High Growth Startups: US Geographic Distribution



STARTUP SPACES

26

High Growth Startups: Bay Area Geographic Distribution

City!Total

Number of Startups!

Venture-Backed Startups!

Average Number of Employees!

Average Employee

MoM Growth!

Average Compound

Monthly Employee

Growth!

Average Office Size (SF) Needed!

Total SF Needed!

San Francisco! 502! 276! 32! 25%! 9%! 5,614 ! 2,728,239 !

Palo Alto! 76! 53! 16! 24%! 7%! 2,751 ! 187,068 !

San Jose! 44! 18! 12! 25%! 8%! 2,194 ! 92,166 !

Sunnyvale! 39! 21! 15! 21%! 5%! 2,587 ! 121,581 !

Mountain View! 39! 31! 57! 22%! 8%! 9,802 ! 382,294 !

Santa Clara! 28! 11! 16! 23%! 11%! 2,779 ! 77,808 !

Menlo Park! 23! 17! 20! 17%! 9%! 3,385 ! 74,474 !

San Mateo! 22! 10! 20! 22%! 10%! 3,374 ! 74,233 !

Redwood City! 20! 11! 31! 19%! 8%! 5,239 ! 104,783 !

Berkeley! 16! 5! 33! 17%! 9%! 5,614 ! 89,827 !



STARTUP SPACES

27

High Growth Startups: Bay Area Geographic Distribution

City!Total

Number of Startups!



Average Employee

MoM Growth!

Average Compound

Monthly Employee

Growth!

Average Office Size (SF) Needed!

Total SF Needed!

San Francisco! 502! 276! 32! 25%! 9%! 5,614 ! 2,728,239 !

Palo Alto! 76! 53! 16! 24%! 7%! 2,751 ! 187,068 !

San Jose! 44! 18! 12! 25%! 8%! 2,194 ! 92,166 !

Sunnyvale! 39! 21! 15! 21%! 5%! 2,587 ! 121,581 !

Mountain View! 39! 31! 57! 22%! 8%! 9,802 ! 382,294 !

Santa Clara! 28! 11! 16! 23%! 11%! 2,779 ! 77,808 !

Menlo Park! 23! 17! 20! 17%! 9%! 3,385 ! 74,474 !

San Mateo! 22! 10! 20! 22%! 10%! 3,374 ! 74,233 !

Redwood City! 20! 11! 31! 19%! 8%! 5,239 ! 104,783 !

Berkeley! 16! 5! 33! 17%! 9%! 5,614 ! 89,827 !



STARTUP SPACES

28

High Growth Startups: Los Angeles Geographic Distribution

City! Total Number of Startups!



Average Employee

MoM Growth!

Average Compound Monthly Employee

Growth!

Average Office Size

(SF) Needed ! Total SF Needed !

Los Angeles! 121! 36! 17! 25%! 6%! 3,025 ! 344,875 !

Santa Monica ! 41! 17! 16! 20%! 8%! 2,807 ! 106,669 !

Irvine ! 23! 6! 30! 16%! 7%! 5,059 ! 116,368 !

Venice! 18! 10! 16! 24%! 10%! 2,846 ! 51,234 !

Beverly Hills! 12! 3! 11! 24%! 7%! 1,870 ! 22,436 !

Culver City! 11! 3! 20! 30%! 7%! 3,490 ! 38,394 !

Lake Forest! 9! 1! 26! 29%! 11%! 4,437 ! 39,937 !

Newport Beach ! 8! 3! 15! 16%! 8%! 2,500 ! 19,997 !

Pasadena! 8! 5! 22! 13%! 5%! 3,626 ! 29,008 !

Anaheim! 7! 1! 12! 18%! 4%! 2,120 ! 14,841 !



STARTUP SPACES

29

High Growth Startups: New York Geographic Distribution

City!Total

Number of Startups!


Average Number of Employee

s!

Average Employee

MoM Growth!


Growth!

Average Office Size

(SF) Needed!Total SF Needed!

Manhattan! 576! 196! 32 ! 26%! 8%! 5,993 ! 3,361,821 !

Brooklyn! 45! 11! 12 ! 28%! 10%! 2,137 ! 96,154 !

Newark! 6! 1! 10 ! 33%! 4%! 1,769 ! 8,844 !Long

Island City! 4! 1! 9 ! 14%! 2%! 1,446 ! 5,785 !

Melville! 4! 1! 27 ! 15%! 3%! 4,513 ! 18,051 !

Allentown ! 3! 0! 10 ! 15%! 5%! 1,732 ! 5,197 !

Edison! 3! 1! 14 ! 27%! 5%! 2,413 ! 7,238 !

Fairfield! 3! 1! 21 ! 9%! 3%! 3,422 ! 10,265 !

Fort Lee! 3! 0! 20 ! 11%! 3%! 3,383 ! 10,149 !

Hoboken! 3! 0! 15 ! 44%! 28%! 2,625 ! 7,876 !



STARTUP SPACES

30

High Growth Startups: New York Geographic Distribution

City!Total

Number of Startups!


Average Number of Employee

s!

Average Employee

MoM Growth!


Growth!

Average Office Size

(SF) Needed!Total SF Needed!

Manhattan! 576! 196! 32 ! 26%! 8%! 5,993 ! 3,361,821 !

Brooklyn! 45! 11! 12 ! 28%! 10%! 2,137 ! 96,154 !

Newark! 6! 1! 10 ! 33%! 4%! 1,769 ! 8,844 !Long

Island City! 4! 1! 9 ! 14%! 2%! 1,446 ! 5,785 !

Melville! 4! 1! 27 ! 15%! 3%! 4,513 ! 18,051 !

Allentown ! 3! 0! 10 ! 15%! 5%! 1,732 ! 5,197 !

Edison! 3! 1! 14 ! 27%! 5%! 2,413 ! 7,238 !

Fairfield! 3! 1! 21 ! 9%! 3%! 3,422 ! 10,265 !

Fort Lee! 3! 0! 20 ! 11%! 3%! 3,383 ! 10,149 !

Hoboken! 3! 0! 15 ! 44%! 28%! 2,625 ! 7,876 !



THE CURVE OF DEATHWhile several investors use Mattermark to identify burgeoning startups, other dealmakers including real estate brokers and recruiters are using Mattermark to identify companies that are downsizing. Most failed startups demonstrate strongly similar growth score patterns. We call this pattern the “Curve of Death.”

31



THE CURVE OF DEATH

32

KOLOS: The First iPad Racing WheelKolos, the first racing wheel for full-sized iPads failed because the product did not serve a market need.

“I obviously thought I was going to create a new category. Yeah, right.”

Ivaylo Kalburdzhiev, KOLOS founder



THE CURVE OF DEATH

33

Secret Inc.: Share Personal Secrets AnonymouslyAfter raising $35 million in one year, Secret failed to gain much traction. Founder David Byttow stated that the product was not well aligned with his vision.

“ Secret does not represent the vision I had when starting the company.”

David Byttow, Secret CEO



THE CURVE OF DEATH

34

Moped: Making messaging more web-friendlyAlthough Moped had lofty ambitions - to revolutionize communication by making messaging and messaging infrastructure more web-friendly - but the company was unable to attract or retain users.

“But instead of focusing on why users weren’t coming back, we were trying to attract new users. We started costly development cycles that, in the end, won us some users, but, unfortunately, not enough…” Schuyler Deerman


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