venture numbers and trends
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Venture Capital Industry Overview
John GabbertManaging Director, Private Markets, Dow Jones/VentureOne
Fundraising on Pace to Exceed 2005
Commitments to Venture Capital Funds (Annual)
Fu
nd
s R
ais
ed
($
B) N
um
ber o
f Fu
nd
s
$20
$25$18$9
$13
$50
$83
$58
$27
$17$12 67
12411377
145
278
489
350
235
191
124
$0
$20
$40
$60
$80
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 YTD06*
0
100
200
300
400
500
Funds Raised ($B) Number of Funds
Source: Dow Jones VentureOneYTD06*: 1Q06 – 3Q06
U.S. Investment: Overall
Am
ou
nt
Investe
d
($B
)N
um
ber o
f Deals
$19.5$22.4 $23.7
$19.6$22.1
$36.4
$94.8
$49.5
$17.9$13.1
$9.2
1851240323182213
2417
3296
6341
4590
25472211
1912
$0
$25
$50
$75
$100
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 YTD06*
0
1,000
2,000
3,000
4,000
5,000
6,000
Amount Invested ($B) Number of Deals
Investment Level On Track to Surpass 2005
Deal Flow and Equity into Venture-Backed Companies
Source: Dow Jones VentureOne/Ernst &Young
YTD06*: 1Q06 – 3Q06
Industry Deal Flow Consistent @ 60/25/10/5
Deal Flow Allocation by Industry Sector (Annual)
10791264
1453
2504
3751
1997
14701376 1451 1460
1115
455
195
0
600
1,200
1,800
2,400
3,000
3,600
1996 1998 2000 2002 2004 YTD06*
Healthcare Information Technology Business, Consumer, Retail
Tota
l N
um
ber
of
Deals
Source: Dow Jones VentureOne/Ernst &Young
YTD06*: 1Q06 – 3Q06
Majority of New Cos in Four Segments
Initial VC Financing, 1Q06 - 3Q’06
1.9%1.4%
4.8%1.1%1.4%
2.3%8.3%
0.2%1.5%
2.5%
2.8%2.9%
7.7%
9.2%12.9%
18.0%21.2%
0% 10% 20%
Other Companies (12)Adv Spec Mat & Chem
Energy (31)Retailers (7)
Cons/Bus Products (9)Media/Content/Info.
Cons/Bus Services (54)Other Healthcare (1)
Med Software & IS (10)Healthcare Services
Med Devices/Equip (60)Biopharm (84)
Elec & Computers (18)Semiconductors (19)
Comm & Networks (50)Info Services (117)
Software (138)
Source: Dow Jones VentureOne/Ernst &Young
Early Stage Investment Slowly Growing
Deal Flow Allocation by Round Class (Annual)
0%
20%
40%
60%
80%
100%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005YTD06*
Restart
Later
Second
First
Seed
% o
f Tota
l V
C
Rou
nd
s
*28%
*Seed and First Rounds Combined
*36%
22%
33%
39% 36%
6%
*54%
22%
36%
11% 8%
Source: Dow Jones VentureOne/Ernst &Young
YTD06*: 1Q06 – 3Q06
Round Sizes Hold Steady in 2006Median Amount Invested by Round Class (Annual), VC Only
$8.8
$5.0
$1.0
$10.0
$5.0
$4.3
$3.5$0.8
$0
$5
$10
$15
$20
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 YTD06*
Later Round Second Round First Round Seed Round
Med
ian
Am
ou
nt
Investe
d
($M
)
Source: Dow Jones VentureOne/Ernst &Young
YTD06*: 1Q06 – 3Q06
Valuations Continue Upward TrendMedian Premoney Valuation by Year
$9.3$11.1
$13.0
$15.5
$21.0
$25.2
$16.0
$10.7 $10.0
$13.0
$15.0
$20.0
$0
$5
$10
$15
$20
$25
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1H06
Med
ian
Pre
mon
ey V
alu
ati
on
($
M)
Second & Later Round Valuations Climb
Median Premoney Valuations by Round Class (All Industries)
$1.3
$36.8
$19.5$22.8
$13.1
$5.6$4.1
$1.8$0
$10
$20
$30
$40
2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06
Later Stage Second Round First Round Seed Round
Med
ian
Pre
mon
ey V
alu
ati
on
($
M)
U.S. Investment: Regions
43% of Deals in California Companies
Regional Deal Flow in the United States YTD 2006
Bay Area 33%
Southern California
10%New England12%
Texas5%
All Other US21%
New York Metro 8%
Potomac4%
Washington State4%
Oregon1%
Research Triangle
2%
Source: Dow Jones VentureOne/Ernst &Young
Am
ou
nt
Investe
d
($B
)N
um
ber o
f Deals
$836.0$1,004.0$916.0
$575.0$773.0
$1,197.0
$3,740.0
85
114116
82
103
136
300
$0
$1,000
$2,000
$3,000
$4,000
2000 2001 2002 2003 2004 2005 YTD06*
0
100
200
300
Amount Invested ($B) Number of Deals
Northwest Deal Flow Consistent Past 3 Yrs.
Deal Flow and Equity into Pacific Northwest Venture-Backed Companies
Source: Dow Jones VentureOne/Ernst &Young
YTD06*: 1Q06 – 3Q06
Northwest Deals by Industry Segment
Deal Flow in Pacific Northwest, 1Q’06 - 3Q’06
Software36%
All Other 10%
Information Services
10%Biopharma
10%
Consumer/Bus. Services
10%
Healthcare Services
5%
Communications4%
Semiconductors1%
Medical IS4%
Electronics2%
Medical Devices8%
Source: Dow Jones VentureOne/Ernst &Young
U.S. Liquidity
Amount Paid in M&As on Track in 2006
Transactions and Amount Paid in M&As
$98.1
$23.0$29.7
$23.9
$13.1$10.9
$22.0
$43.1
$14.8$12.7
$26.0
311
402420
340383
404
458
304
253232
197
$0
$25
$50
$75
$100
1996 1998 2000 2002 2004 YTD06*
0
150
300
450
Amount Paid ($B) Number of Transactions
Am
ou
nt
Paid
($
B)
Nu
mb
er o
f Tra
nsactio
ns
YTD06*: 1Q06 – 3Q06
Gains from M&A Exits Hold Steady in ’06
Median Amount Paid in M&As vs. Median Amount Raised Prior to M&A
$17$19
$23$21$20$15
$10$11$7$6$6
$50$47$39
$23$18
$27
$100
$55
$31$33$40
$0
$25
$50
$75
$100
1996 1998 2000 2002 2004 YTD06*
$0
$25
$50
$75
$100
Median Equity Raised Prior to M&A Median Amount Paid ($M)
Med
ian
Am
ou
nt
Rais
ed
Pri
or
to
M&
A (
$M
)M
ed
ian
Am
ou
nt P
aid
($
M)
YTD06*: 1Q06 – 3Q06
2006 IPO Activity On Track to Surpass 2005
Deals and Amount Raised Through IPOs
$2.5$2.3
$5.0
$1.4$1.6$1.8
$19.2$19.5
$3.7$4.6
$8.7
$5.0 3742
67
222022
202
250
68
120
216
144
$0
$5
$10
$15
$20
$25
$30
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005YTD06*
0
50
100
150
200
250
Amount Raised ($B) Venture-Backed IPOs
Am
ou
nt
Rais
ed
($
B)
Ven
ture
-Backed
IP
Os
YTD06*: 1Q06 – 3Q06
