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A brief deck covering trends in the angel and venture capital space for the ABA Angel Venture Capital Subcomnittee by Adley Bowden of PitchBook.
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VALUATION TRENDS – ABA ANGEL VC SUBCOMMITTEESEPTEMBER 2014
ADLEY BOWDENSENIOR DIRECTOR, ANALYSIS [email protected]
LEARN MORE ABOUT THE PITCHBOOK PLATFORM ATPITCHBOOK.COM
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THE PITCHBOOK PLATFORM
GLOBAL COVERAGE OF THE ENTIRE PE & VC
LIFECYCLE13,582LPs
70,291Commitments
48,149GPs/Investors
27,144Funds
355,920
Performance Data Lines128,470
Portfolio Companies
220,052Transactions
14,774Valuations
16,224Advisory Firms
542,137People
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VCFUNDRAISING»
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U.S. VC FUNDRAISING BY QUARTER
» VC fundraising is off to a strong start in 2014, bolstered in part by six new mega-funds ($1 billion+) that closed in the first half.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q2009 2010 2011 2012 2013 2014
$0
$2
$4
$6
$8
$10
$12
0
10
20
30
40
50
60
70
$4.0
$10.9
$4.0
$5.8
$8.7
$8.7
40
21
50
3246
30
53 54
61
Capital Raised ($B) # of Funds Closed
Source: PitchBookas of 6/30/2014
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VC FUNDRAISING (#) BY SIZE
» Significant structural changes may be underway in the VC industry, as mega-funds ($1b+) and micro-funds (>$50m) are beginning to dominate the market.
2005 2006 2007 2008 2009 2010 2011 2012 2013 20140%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$1B+
$500M-$1B
$250M-$500M
$100M-$250M
$50M-$100M
Under $50M
Source: PitchBookas of 6/30/2014
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VC DEALS & VALUATIONS»
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GLOBAL QUARTERLY VENTURE CAPITAL DEAL FLOW
Venture deal flow has tapered recently as a result of high valuations at the early
stage level»
*Through 6/30/14
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q2009 2010 2011 2012 2013 2014
$0
$5
$10
$15
$20
$25
0
500
1,000
1,500
2,000
2,500
$7
.9
$8
.9
$1
5.3
$1
3.2
$1
2.2
$2
2.8
1,078
1,377
1,991
2,284 2,307
1,852
Capital Invested ($B) # of Deals Closed
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U.S. VC DEALS BY STAGE» Seed and angel deals have fallen precipitously in recent quarters.
Source: PitchBook
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q2010 2011 2012 2013 2014
0
100
200
300
400
500
600
700
182
502
433
Seed/Angel Early Stage Late StageSource: PitchBook
Seed
Late Stage
Early Stage
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U.S. VC DEALS (#) BY SIZE
2005 2006 2007 2008 2009 2010 2011 2012 2013 1H 2014
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$25M+
$10M-$25M
$5M-$10M
$1M-$5M
$500K-$1M
Under $500K
Source: PitchBook
» Larger deals have also taken a larger share of deals than previous years.
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U.S. VC DEALS BY SECTOR» Investors have continued to increase their interest in software startups.
Source: PitchBook
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014*
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
939 253 110142167 661
Software Commercial Services Media HC Devices & Supplies Pharma & Biotech Non-Core VC
* As of 6/30/14Source: PitchBook
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MEDIAN PRE-MONEY VALUATIONS ($M) BY SERIES
Increases in public markets, growth hungry strategics and changes in funding
timelines has caused venture company valuations to dramatically increase over
the last five years
»
*Through 6/30/14
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14$0
$5
$10
$15
$20
$25
$30
$35
$40
$4.7
$5.7$7.8 $6.6
$10.1$12.1
$22.9
$18.1
$26.0
$35.2
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
$48.9
$29.6
$55.9
$70.0
$86.7
$49.0
$105.2
$171.5
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PREVAL DISTRIBUTIONS –SERIES A & B ($M)
Though valuations are rising across the board, valuations for the highest valued
companies have been increasing at a faster pace than those of lower valued
companies
»
*Through 6/30/14
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14$0
$5
$10
$15
$20
$25
$4.5 $3.9 $4.8$7.0
$12.1$12.3 $12.0
$16.5
$19.5
25th Median 75th'05 '06 '07 '08 '09 '10 '11 '12 '13 '14
$0
$10
$20
$30
$40
$50
$60
$70
$80
$13.5$9.4
$13.2$19.8
$35.2$37.2$31.2
$47.0
$74.5
25th Median 75th
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MEDIAN % ACQUIRED BY SERIESIncreases in valuations but steady funding sizes has resulted in a steady decline in
ownership stakes acquired across various funding rounds. »
*Through 6/30/14
'05 '06 '07 '08 '09 '10 '11 '12 '13 '140%
5%
10%
15%
20%
25%
30%
35%
40%36.5%
32.6%
27.5%
16.5%13.8%
12.0%
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MEDIAN VALUATION STEP UP % FROM PREVIOUS VC ROUND
Landing funding rounds after the seed stage offer significant increases in valuation»
*Through 6/30/14
Seed to A A to B B to C C to D0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
157%
173%
119%
93%
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MEDIAN PREVALS ($M) BY METRO AREA
As the hub of the VC universe, the Bay Area leads the nation in tech company
valuations, which is especially pronounced in the later stage rounds»
*Through 6/30/14
ALL VC
Austin
Bay Area
Boston
ChicagoL.A.
New York
Seattle
London
$0
$5
$10
$15
$20
EARLY STAGE
ALL VC
Austin
Bay Area
Boston
ChicagoL.A.
New York
Seattle
London
$0
$100
$200
LATE STAGE
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EXIT TRENDS»
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U.S. VC EXIT FLOW» Exit activity has held fairly steady over recent quarters.
Source: PitchBook
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q2010 2011 2012 2013 2014
$0
$5
$10
$15
$20
$25
$30
0
50
100
150
200
250
$7.6
$13.7
$25.9
$17.9
$13.4
$13.0
$12.1
147
189
155
205
198171
Capital Exited ($B) # of ExitsSource: PitchBook
pitchbook.com
EXITS (#) BY TYPE» The proportion of IPOs nearly doubled in 1H 2014, reaching the highest level since 2004.
Source: PitchBook
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
20
11
20
12
20
13
20
14
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Acquisition IPO Buyout Source: PitchBook
pitchbook.com
MEDIAN EXIT VALUATION ($M) BY TYPE
Though IPOs are a relatively rare exit, the benefit to investors is clear»
*Through 6/30/14
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$139
$426
$278
$49 $57$38
IPO Acquisition/Buyout
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MEDIAN VALUATION STEP UP % FROM LAST VC ROUND TO EXIT
More mature companies tend to see smaller increases in valuation at exit»
*Through 6/30/14
Series A Series B Series C Series D+0%
20%
40%
60%
80%
100%
120%
140% 132.0%
95.7%85.7%
51.7%
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