NJTC

NJTC

Venture Capital Update 2010February 5, 2010

Mark G. HeesenPresident

Capital under mgt & # firms peaked; Industry capital now $197B

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# Firms Cap Und Mgt $B

Source: NVCA 2008 Yearbook prepared by Thomson Reuters

VC Fundraising Matches Investment - DOWN!

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$B Gross 7.8 10.1 11.6 18.1 30.6 58.2 106. 38.0 3.8 10.6 19.2 29.0 31.9 36.1 28.6 15.2

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: Thomson Reuters/NVCADoes not include Corporate Venture groups.

Investment Marches On -

VC Investment Peaked in 2000;

2008 Was Down 8%; 2009 was $18B

$0

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$ M

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Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,Data: Thomson Reuters

$103B

$28B

$18B

$0

$5

$10

Total VC $B 5.1 6.4 5.9 5.8 6.4 7.1 6.7 6.4 7.5 7.4 7.8 8.0 7.7 7.4 7.1 5.9 3.4 4.2 5.1 5.0

1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09

What does 2009 portend for 2010?

Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

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$M 123 197 586 274 315 200 348 453 1,535 2,560 3,986 1,920

# Deals 36 38 44 51 51 54 74 80 135 230 268 185

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Clean Technology investment grows significantly – more than 10% of investment


“Later Stage” is bloated with companies which can’t move on

Metric 1995-1998 Most recent 4 qtrs*

# Venture Deals/Year 2,802 2,814

# Later Stage Deals/Year 311 848

Later as % of Deals 11.1% 30.1%

# First Time Fundings/Year

1,181 721

% of Deals in Seed & Early Stage

47.1% 40.2%


* - Through 3Q 2009

Jersey Boys … and GirlsWhat’s Up?

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

New Jersey Tracks Slightly Better than National –

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$M Inv 435 432 902 3,129 1,462 873 843 992 911 763 640 708 557

# Deals 77 76 114 185 152 95 92 92 78 94 97 90 73

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$ M

illion

s


11

Most Recent 12 Quarters: NJ Totals Driven by Some Large Deals

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$M Invested 124.6 185.5 180.0 149.5 124.1 125.8 235.5 222.2 100.6 90.3 65.7 300.0

# Deals 18 29 27 23 18 17 28 27 22 15 14 22

2007-1 2007-2 2007-3 2007-4 2008-1 2008-2 2008-3 2008-4 2009-1 2009-2 2009-3 2009-4

$ M

illion

s

*


Bubble years aside, NJ has created a steady flow of “first fundings”

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# NJ 1st Rnds 12 30 25 36 33 64 82 50 28 20 20 23 27 28 36 18

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MoneyTree Sector Splits – Life Sciences Run the Show!(NJ 56% vs National 34%)

Biotech32%

MedDev24%

Software10%

Netwrk5%

Other22%

Comm7%

VC Dollar Investment in NJ – 2007-2009


The Exit Scene - the importance of acquisitions has become clear over the past several years

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Offer ($ B) 8.2 11.5 4.8 3.8 20.9 25.6 3.5 2.1 2.0 11.4 4.5 5.1 10.3 0.5 1.6

Count 205 272 138 78 270 265 41 22 29 93 57 57 86 6 12

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

IPO Levels Were Good in 2004 and

Okay in 2007; Awful Now

Source: Thomson Reuters/National Venture Capital Association

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# IPOs 270 264 41 22 29 93 56 57 86 5 0 1 0 0 5 3 4

1999 2000 2001 2002 2003 2004 2005 2006 2007 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09

One word for IPOs in 2008-9: Awful


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IPOs Done 12 31 5 0 1 0 0 5 3 4

In Reg on last day 72 60 37 42 38 28 26 10 18 29

3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09

What’s in the IPO Pipeline?Dismal Short Term…


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Acq $B 7.4 9.1 38.0 68.4 18.1 8.0 7.6 16.1 22.1 19.7 29.4 13.8 12.3

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

M&A Exits Aren’t Providing Much Liquidity Either, but Improving


Acquisitions Market Has Some Potential in 2010 Based on Improvements in 2009

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A E

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>10x TVI 1 2 2 7

4x-10x TVI 2 3 7 10

1x-4x TVI 3 2 2 9

< TVI 8 5 11 8

1Q09 2Q09 3Q09 4Q09

Source: Thomson Reuters/National Venture Capital Association – Undisclosed txns are prorated

Public Policy andThe Venture Industry

Some Wins; Many Challenges …

History has shown VC Deploys Capital To Most Promising Sectors: Four Examples (“Sector Churn”)

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VC

in

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% Disk Drive % Cln Tch % Bio incl. Pharma % Software

Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters

www.nvca.org

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