Where Is The Money?

In 2nd Quarter

A LOOK INTO THE

Venture capitalism is a way for young companies or startups to receive funding from investors that provide the capital necessary to grow or expand a fledgling business. Venture capitalism is traditionally seen as a high risk, high reward type of investment and investors are typically seated on the board of the company with a say in decisions and partial equity.

Although venture capitalism is high risk, high reward, it is a huge business and is responsible for funding many of the businesses that would otherwise fail. Small businesses are crucial to the US economy, and venture capitalism supports that ecosystem.

$1.3 billion

$7.1 billion

$1.2 billion

$538 million

$497 million

$411 million

$364 million

$354 million

8%Media

6%IT

$247 million

$222 million

JAN FEB MAR APR MAY JUN

Software

47%

SILICON VALLEY

NEW ENGLAND

NEW YORK METRO

LA / ORANGE COUNTY

MIDWEST

NORTHEAST

SOUTHEAST

TEXAS

The top 10 regions of investments by venture capitalists:

InvestmentLife-Cycle

Common Stages of Venture Capital Investing?

Total InvestmentsAs of the first two quarters in 2014 venture Capitalists have invested approximately

TWO DIFFERENT TYPES OF VENTURE CAPITALISTS

$9.8 BillionIn 1st Quarter

$13 Billion14%Biotech

BUSINESS PLAN SUBMITTED: venture capitalists review the business plan and speak with the entrepreneurs

1

EXIT: Sometimes known as a liquidity event; at maturation, the venture funds exit the business, through IPOs (Initial Public Offerings), acquisitions, and mergers

5

INVESTMENT: capital is provided to the business, usually as a part of a deal trading equity and/or debt

3

EXECUTION: The investor(s) become actively involved, providing funds, advice, and oversee milestone completion

4

DUE DILIGENCE: the prospective investor looks into the business in great detail to get a full picture of the company’s strengths, weaknesses, and operations

2

Life-cycles typically last about 10 years, but can be longer or shorter depending on each

Investors are not looking to be involved in the business they’ve invested in forever. Typically the investment life-cycle has an entry and exit strategy planned out in advance.

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Focus on young startups or high-growth companies

Take high risks at the hope of high reward

Participate in boards, management, structuring, and decision making

Plan for longer investment maturation

IndustRYIndustRY

VENTUREVENTURECAPITALCAPITAL

Invest capital

3

4

EARLY STAGE: capital provided to support growth in capabilities, encompasses start-ups that need support for product development and marketing, as well as first stages that need support for manufacturing and are testing, or beginning testing

LATER STAGE: capital provided for companies that are in business but possibly not turning a profit

A. THIRD STAGE: capital provided for expansions, improvements, and marketing

B. EXPANSION STAGE: encompasses second and third stages

C. MEZZANINE OR BRIDGE STAGE: capital provided to go public

As part of the fourth stage of the investment life-cycle, there are typical stages for the release of funds into the business.

IT’S ALL IN THE

NUMBERSNUMBERS

investopedia.com/terms/v/venturecapital.asp

sba.gov/content/venture-capital

securedocs.com/blog/2013/11/vc-fund-lifecycle/

investopedia.com/exam-guide/cfa-level-1/alternative-investments/venture-capital-investing-stages.asp

pwcmoneytree.com/CurrentQuarter/ByIndustry

pwc.com/en_US/us/health-industries/publications/assets/pwc-moneytree-venture-funding-q3-2013.pdf

cbinsights.com/blog/active-venture-capital-firms-h1-2014-silicon-valley-york-massachusetts/

entrepreneur.com/vc100

created by

SAN DIEGO

SEED STAGE: capital provided, usually directed toward early development, products, research, and/or developing a business plan

1

2FORMATIVE STAGE: This stage includes the seed and early stages

$596 million 45 deals

$533 million$563 million 34 deals34 deals

$491million 31 deals

$440 million 57 deals $427 million 40 deals

$325 million 28 deals $319 million 36 deals

$488 million

33 deals

$667 million 82 deals

The Firms Behindthe Money

Andreessen Horowitz1

Google Venture3

New Enterprise Associates2

Lightspeed Venture Partners5

General Catalyst Partners8

Battery Ventures9 Khosla Venture10

Kleiner Perkins Caufield & Byers4

Accel Partners6

First Round Capital7

Who is behind the funding? In 2013, the top 10 most active venture capital firms were.{

$6 Billion

$1.8 Billion

$1 Billion

$747 M

VENTURE CAPITAL FIRMSA group or partnership of investors

ANGEL INVESTORSIndividuals with high net worth looking for high returns on their investments; often former entrepreneurs

DC/METROPLEX