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Nanotechnology: A Look Into the Invisible Future. Prepared for Technology Awareness Forum January 19, 2005. Agenda. Venture Capital Industry Funding Environment for Nanotech Is the VC Industry Interested in Nanotech Venture Firms Investing in the Category What Venture Capitalists Look for - PowerPoint PPT Presentation
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1
Prepared for
Technology Awareness Forum
January 19, 2005
Nanotechnology: A Look Into the Invisible Future
2
Agenda
Venture Capital Industry Funding Environment for Nanotech
Is the VC Industry Interested in Nanotech Venture Firms Investing in the Category
What Venture Capitalists Look for Capturing the Attention of Venture Investors Summary
4
Venture Capital Investments($ in 000s)
Source: Thomson Venture Economics
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Est. $20.0 B
~ ~
$54.5 B
$105.9 B
5
Uninvested Venture Capital“Overhang” still Significant
Source: SVB Estimates & Venture Economics
0
10
20
30
40
50
60
70
80
Billio
ns
$53.4 Billion
6
Overhang AnalysisAvailable Cash/Investment Rate
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
High = 4.4x
Low = 0.6x
Median = 2.2x
Mean = 2.4x
Cur
rent
Ove
rhan
g / E
xpec
ted
Inve
stm
ent
7
Capital Raised by Venture Funds
$-
$5,000
$10,000
$15,000
$20,000
Fund Raising(millions)
$3,700 $10,500 $17,000
2002 2003 2004(e)
8
Early-Stage as a % of All Venture Capital
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Minnesota U.S.
10
Deals / Companies / VC Firms2001 - 2004
0
20
40
60
80
100
2001 2002 2003 2004
No. Of Deals No.Of Company No.Of Firm
11
Avg. per Deal / Company / VC Firm2001 -2004
0
2
4
6
8
10
2001 2002 2003 2004Average Per Deal Average Per Company Average Per Firm
($'s in Millions)
12
Nanotech Investments by VCs2001 - 2004
247.3 31%
166.32 21%
179.3 22%
205.04 26%
2001 2002 2003 2004
Total Investments = 798.4 millions
16
Leading Nanotech Investors
Draper Fisher (10 deals) Harris & Harris group (9) Ardesta/MEMS Tech (4) NGEN Partners
(NextGen Partners) (4) Sevin Rosen (4) Zero Stage (4)
Alloy Ventures (3) Arch Venture Partners (3) CB Health Ventures (3) Eastman Ventures (3) Morgenthaler (3) New Enterprise
Associates (3) SBV Venture Partners
(Sigefi, Burnette & Vallee) (3)
17
Top Ten > 25% of Market
0
50
100
150
200
250
300
350
400
450
No.Of Deal No.Of Company No.Of Firm
Total Top Ten Investment Total Investment
18
Top Ten Venture Investor vs.Industry Average
0
5
10
15
20
25
Average Per Deal Average PerCompany
Average Per Firm
Average Top Ten Investment Average Investment
($'s in Millions)
19
Which Way is the Wind Blowing?
Bulk of the Investments Tools
Distant Second Optics
Close Third Bio/Pharma; Materials; and, Solar/Power
23
New User ExperienceTop 10 Wired 40
Google Amazon.com Apple Computer Genentech eBay
Samsung Electronics Yahoo! Electronic Arts Pixar Cisco Systems
24
Mini Due Diligence ProcessIs it “Venture Capable”
Management Relevant domain expertise Fundable
Product/Service Explicit customer need Clear and compelling value
proposition (ROI)
Market Size (> $100M) and
sustainable business drivers Target segment well defined
Validation Customers, customers,
customers Maturity of the
distribution plan
Deal Reasonable valuation and
terms Raising enough money to
hit meaningful milestones
26
Investing In TalentFactors considered most important by investment professionals
(Weighted importance out of 100*)
Management Team
Market Sector
Business Model
Proprietary Product/Service
37
24
20
19
Source: Spencer Stuart/NVCA VC-backed Leadership survey
27
“As a founder, think hardest about the team. Are these the people I want to
be in trouble with for the next 5, 10, 15 years of my life? Because as you
build a new business, one thing’s for sure: you will get into trouble.”
John Doerr, Kleiner Perkins Caufield & Byers
29
Sustaining vs. Disruptive Technologies
Sustaining Technology Foster improved product performance
Disruptive Technology Bring to the market a very different value
proposition
The Innovator’s Dilemma – Clayton Christensen
30
Sustaining vs. Disruptive Technologies
Sustaining Technology Improves
performance along an existing utility curve
A
BSustaining Technology
Cost
Performance
31
Sustaining vs. Disruptive Technologies
Disruptive Technology Moves the market to
new utility curve
A
Disruptive Technology
B
Cost
Performance
33
Market Characteristics
Worth Winning $250 million
Sustainable Drivers Y2k
Well Defined Subsegment
40
“It is not the strongest of the species that survives, nor the
most intelligent; it is the one that is most adaptable to change.”
Charles Darwin, British Naturalist