National Venture Capital Association 2009 Venture Capital

National Venture Capital Association2009 Venture Capital Predictions

Survey Results

December 17, 2008

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NVCA 2009 Venture CapitalPredictions Survey

n Third Annual Predictions Surveyn Conducted in Nov. 24 – Dec. 12, 2008n More than 400 responsesn Quotes and press release available:

n Contact: Emily Mendell ([email protected])n Contact: Laura Cruz ([email protected])



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Ninety two percent of VCs predict ventureinvestment to slow in 2009

61%

31%

3% 4% 1%0%

20%

40%

60%

80%

<$27 BN $27-29 BN $30 BN $32-35 BN > $35 BN

What range will venture capital investmentlevels be in 2009?

Range of Investment $

Perc

ent o

f Res

pond

ents

Est.

2008

Inve

stm

ent



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4

In 2009, 53 percent of VCs predict theywill invest in the same or morecompanies.

In 2009, our firm will invest in:

34%

19%

47%

Same # of companies More companies Fewer companies



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5

Clean technology and life sciences werepredicted as having the highest potentialfor stability/growth.

38%

42%

32%

28%

38%

33%

20%

14%

24%

25%

48%

58%

0% 20% 40% 60% 80%

Internet

Medical Devices

Biotech

Clean Tech

IncreaseUnchangedDecrease



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6

Semiconductors and Media were predictedby most VCs to see a slow down ininvestment.

79%

71%

60%

59%

18%

18%

26%

30%

3%

11%

14%

11%

0% 20% 40% 60% 80% 100%

Semiconductors

Media

Wireless

Software




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7

Most VCs predict a slowdown ofinternational investing in 2009.

74%

56%

56%

51%

20%

34%

22%

21%

6%

10%

22%

28%

0% 20% 40% 60% 80%

Europe

Israel

India

China




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8

VCs predict a decrease in seed and earlystage investment in 2009.

60%

64%

48%

35%

18%

21%

22%

20%

22%

15%

30%

45%

0% 20% 40% 60% 80%

Seed

Early

Expansion

Late




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9

Most venture capitalists do not predictIPO relief until 2010 or beyond.

The venture backed IPO market will re-open in:

9%

18%

72%

0%1%

Q1 2009 Q2 2009 Q3 2009 Q4 2009 2010 or beyond



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10

Acquisition volume may increase butvalues are predicted to decline.

In 2009 venture backedacquisition volume will:

34%

43%

23%

Increase Decrease Same

In 2009 venture backed acquisitionvalues will:

4%

87%

9%

Increase Decrease Same



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11

2009 will be a difficult year forentrepreneurs.

It will be harder for newcompanies to get funded.

96%

4%

Agree Disagree

It will be harder to sustain exisitingportfolio companies.

93%

7%

Agree Disagree



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12

The reallocation of institutional funds willresult in fewer venture capital firms goingforward.

Institutional investors willreduce commitments to VC.

85%

15%

Agree Disagree

More VC firms will not be able toraise money.

96%

4%

Agree Disagree



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13

Despite market challenges, venturecapitalists remain bullish on returns –especially in the long term.

VC returns will decline in theshort term (3-5 years)

92%

8%

Agree Disagree

VC returns will decline in the longterm (5 - 10 years)

83%

17%

Agree Disagree



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14

Most venture capitalists believe theeconomy will remain the same or worsenin 2009.

How will the U.S. economy fare in 2009?

25.0%

19.0%

56.0%

Improve Worsen Unchanged



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15

Few VCs predict the Dow Jones to riseabove 10,000 in 2009.

At what level will the DJIA be onDecember 31, 2009?

31.3%

14.0%

13.6%

41.1%

< 8000 8000-9000 9000-10000 >10,000



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Historical Venture Capital Statistics



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Venture Capital Fundraising1998 – 2008 (thru Q3)

Source: NVCA and Thomson Reuters

0.0

20.0

40.0

60.0

80.0

100.0

120.0

$B Gross 29.7 55.8 104.4 39.0 3.8 10.6 19.1 28.0 31.4 35.5 25.4

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Q3



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Venture Capital Investment1998 – Q3 2008

Source: The MoneyTree Report by PricewaterhouseCoopers/National Venture Capital Association; Data: Thomson Reuters

$21.1

$54.0

$105.0

$40.6

$22.0$19.8 $22.5 $23.1 $26.7 $30.8$22.6

$0

$20

$40

$60

$80

$100

$120

$ B

illio

ns In

vest

ed

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Q3



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Venture Exit Counts-IPOs and M&A by Year 1993 – 2008 (Q3)

Source: NVCA and Thomson Reuters

0

100

200

300

400

500

600

700

Year

Num

ber o

f Iss

ues

M&A 74 100 97 116 164 209 240 317 353 316 293 339 351 369 359 199IPO 220 166 202 270 136 77 260 264 41 24 29 93 57 57 86 6

93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08Q3



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