Moneytree Analyst Call Q408

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The MoneyTree™ Report

Overview of Venture Capital InvestmentsFourth Quarter and Year End 2008

PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report

based on data from Thomson Reuters

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Host of the Analyst CallMaryanne Coughlin Director, Technology Sector Analyst PricewaterhouseCoopers

Maryanne Coughlin is a director at PricewaterhouseCoopers, serving as sector analyst for the Firm's US technology and venture capital industry practices. In this role, she advises partners and client teams on marketplace trends and their impact on technology sector firms.

Prior to joining PwC in 2007, Maryanne was director of global services model and forecast management at IDC, a technology research firm. While at IDC, Maryanne launched and managed two new research services,presented at the firm's flagship US vendor conferences, and authored one of the firm's most popular research documents. Before joining IDC, Maryanne held positions in client services, marketing, interactive communications and editorial at marchFIRST (formerly USWeb/CKS),Tenet Healthcare, and the US Naval Institute. While at USWeb/CKSMaryanne led the engagement to design and create an award-winning online insurance marketplace. While at Tenet, Coughlin authored the Fortune 500 company's Internet business plan, established the company's brand on the Internet, and served on the Tenet Marketing Council. Earlier in her career, Maryanne worked for international startup Americom International Corp., assisting an entrepreneur in raising funding to build and operate a hotel and business center as a joint venture with Radisson Hotels International and Intourist in Moscow, Russia.

Maryanne holds a Master's degree from the University of Virginia and a bachelor's degree from Loyola College in Maryland. She completed the Stanford Professional Publishing Course at Stanford University.

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National Fourth Quarter and Year End Results$ Invested and # Deals by QuarterInvestments by Stage of Development Investments by Industry/SectorFirst-time Financing

PricewaterhouseCoopers Commentary on Results

NVCA Commentary on Results

Levensohn Venture Partners

Frazier Healthcare Ventures

MoneyTree Report Q&A

Overview

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Thomson Reuters

Matthew TooleResearch Director, Private EquityThomson Reuters

Matthew Toole is the director of research for Thomson Reuters’ Investment Banking content, which includes mergers & acquisitions, venture capital, private equity and capital markets.

Prior to this appointment, Matthew managed Thomson Financial’s capital markets content strategy and development including debt and equity research and banking contributor relations. Matthew started his career as a research analyst in the fixed income group at Thomson Financial Securities Data.

Matthew received his Bachelor of Science in Biology from Providence College.

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Investments Decline 8% Over 2007US Venture Capital Investments: 2001-2008

PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Reuters

0

5

10

15

20

25

30

35

40

45

2001 2002 2003 2004 2005 2006 2007 2008

Tota

l Am

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Inve

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($bi

l)

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1,500

2,000

2,500

3,000

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5,000

Num

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Q1 Q2 Q3 Q4 Number of Deals

$40.6

$21.9 $22.5 $23.2

$26.7

$30.9

$19.7

$28.3

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Bulk of the $$ Going to Expansion & Later Stage DealsUS Venture Capital Investments: 2001-2008


9.44.2 3.9 4.5 4.7 5.3 6.8 6.8

23.0

12.410.1 9.2 8.7

11.511.7 10.6

8.2

5.55.8 8.8 9.8

9.912.5

10.8

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45

2001 2002 2003 2004 2005 2006 2007 2008

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Seed/Early Stage Expansion Later Stage

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First Sequence Financing accounts for 22% of 2008 venture capital investments


21.7%

24.2%23.1%

24.8%

21.6%20.0%20.0%

18.3%

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3

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2001 2002 2003 2004 2005 2006 2007 2008

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% o

f Inv

estm

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olla

rs

Total Amount Invested ($bil) % of Investment Dollars

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IT

$4,500.4

$3,459.9

$195.0

Biotechnology Medical Devices &Equipment

Healthcare Services

$4,918.8

$2,039.0$1,832.0 $1,687.9 $1,650.9

$644.8 $573.3

Software Media &Entertainment

IT Services Telecom Semiconductors Networking &Equipment

Electronics &Instrumentation

$13.3 billion

$9.5 billion

IT Investments ($M)

Life Sciences Investments ($M)

Software and Biotech Have Investor’s InterestUS Venture Capital Investments By Industry – 2008


LS

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PricewaterhouseCoopers

Tracy T. LefteroffGlobal Managing PartnerPrivate Equity & Venture Capital and Life Sciences Industry Services

As Global Managing Partner of Private Equity and Venture Capital as well as Life Sciences Industry Services, Mr. Lefteroff is in charge of services provided to the venture capital community, venture-funded technology companies and publicly-held, privately-owned and venture-funded life sciences companies worldwide. Mr. Lefteroff has been key to the development of strategic collaborative agreements with many of the major international pharmaceutical companies and has recently assisted in several high profile industry mergers. He also co-authored the Firm’s Practice Standards and Aids for the Life Sciences Industry.

Mr. Lefteroff currently serves on the Board of Directors of the Stanford Venture Laboratory and the California Healthcare Institute. He has served as Treasurer of the Washington State Biotechnology Association, Chairman of the MIT Enterprise Forum of the Northwest and as a Committee Member of the Washington Society of CPA’s High Technology Committee. He is also a member of the American Institute of Certified Public Accountants and the California, Washington and Idaho Societies of CPA’s. Mr. Lefteroff has been with PricewaterhouseCoopers for approximately 16 years, including three years in the Seattle, Washington office, where he was extensively involved with the Firm’s venture capital and life sciences clients. Today he resides in the San Jose, California office.

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$411

$1,391

$1,327

$1,022 $1,005

$496

$1,289$1,300$1,345

$947$1,016

$1,021

$814

$550

$432

Sof tw are Biotechnology Industrial/Energy Medical Devices and Equipment Media and Entertainment

Q4 2007Q3 2008

Q4 2008

Investment Activity – Q4 2008 Top IndustriesQ4 2007, Q3 2008, Q4 2008


Total Amount Invested ($M)

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$1,974

$5,028

$1,956

$4,594

$2,924

$1,641

$5,239

$3,248

$5,462

$4,069

$4,651

$4,919

$4,500

$3,460

$2,039

Sof tw are Industrial/Energy Biotechnology Medical Devices and Equipment Media and Entertainment

20062007

2008

Investment Activity – Full-Year 2008 Top Industries2006, 2007, 2008



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$4,267$3,916

$4,594

$5,239

$1,936$2,222

$2,924

$4,069

$3,460

$4,500

2004 2005 2006 2007 2008

Medical Devices and Equipment Biotechnology

Life Sciences Investments2004 – 2008



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$444 $550

$1,440

$2,666

$4,115

2004 2005 2006 2007 20080

50

100

150

200

250

300

$ Invested # of deals

Internet-Specific & Clean Tech Investments2004 – 2008


Clean Tech Investments ($M)

$4,900$5,015$4,291

$3,300$2,904

2004 2005 2006 2007 20080

200

400

600

800

1,000

$ Invested # of deals

Internet-Specific Investments ($M)

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National Venture Capital Association

John S. TaylorVice President of ResearchNational Venture Capital Association

John S. Taylor is Vice President of Research at the National Venture Capital Association (NVCA) which is based in the Washington, DC area. He is responsible for developing and overseeing association data and research efforts. The key element in this effort is the creation of a research consortium which was announced in 1998 involving the NVCA, Thomson Venture Economics, and the Ewing Marion Kauffman Foundation. In December 2001, PricewaterhouseCoopers joined the team and the tri-branded MoneyTree™ survey became the definitive source for venture capital investment information. This team was created to ensure accurate, impartial, durable, and practical data on the venture capital and private equity industries. He joined the NVCA in 1996.

Mr. Taylor is frequently quoted by major newspapers and magazines on the subject of venture capital and private equity and has recently provided live commentary on CNBC, CNNfn, Bloomberg radio, and NPR Morning Edition.

Mr. Taylor’s career began with the company now known as Accenture where he was a senior consultant advising small business clients. He has since held senior product manager and IT positions in both large and small organizations. At a national computer services provider, he helped develop a new generation of minicomputer and microcomputer products for the residential real estate industry.

He has served as a board member of both for-profit businesses and non-profit organizations. In 1998, he was awarded the Maryland Governors Citation for outstanding volunteer service. He recently joined the Advisory Board of the Center for Private Equity and Entrepreneurship at the Amos Tuck School.

He received an MBA degree from the Amos Tuck School at Dartmouth College, and a BS degree in chemistry from Dickinson College.

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Number of Deals by StageUS Venture Capital Investments: 2001-2008


15451022 976 1076 1061 1295 1486 1453

2388

15821352 1209 1093

1366 1259 1178

545

488594 808 1001

10141207 1177

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2001 2002 2003 2004 2005 2006 2007 2008

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Seed/Early Stage Expansion Later Stage

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Number of Deals by StageUS Venture Capital Investments: Quarterly 2006-2008


72 84 109 90 82 120 120 128 115 108 131 86

197 231226 286 229

306 242 259 245 279249 240

330 360338 338

289306

320 344 326 322 273 257

273 280 234 227268 308 311 320 302 334 306 235

0%

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20%

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40%

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80%

90%

100%

Q106 Q206 Q306 Q406 Q105 Q205 3Q05 4Q05 1Q08 2Q08 3Q08 4Q08

Per

cent

age

of D

eals

Seed Early Stage Expansion Later Stage

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Number of First-Time vs. Follow-On DealsUS Venture Capital Investments: 2001-2008


1213836 753 921 1019 1201 1299 1171

3264

2255 21672172 2136

24742653 2637

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2001 2002 2003 2004 2005 2006 2007 2008

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First-Time Follow-On

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Levensohn Venture Partners Pascal LevensohnManaging Partner and FounderLevensohn Venture PartnersPascal Levensohn has been a finance professional for twenty six years and a venture capitalist since 1996, when he founded Levensohn Venture Partners ("LVP") in San Francisco. He invests in early stage software, semiconductor, and communications companies.

A frequent speaker on corporate governance issues, Pascal has published numerous articles on venture capital trends since 1999. In May 2006, Pascal established and now chairs the Working Group on Director Accountability and Board Effectiveness, a 33 member VC industry group that promotes director education and best governance practices. The group’s first effort, “A Simple Guide to the Basic Responsibilities of Venture–Backed Company Directors”, was released in January 2007. Pascal co-authored the first governance white paper in the VC industry in November 2003, "After the Term Sheet: How Venture Boards Influence the Success or Failure of Technology Companies". A second white paper, “Rites of Passage: Managing CEO Transition in Venture-Backed Technology Companies”, was published in January 2006. Pascal's VC governance work is now part of the curriculum at several universities, including the Harvard Business School and Stanford's Graduate School of Engineering (Department of Management Science & Engineering).

Pascal was elected to the board of the National Venture Capital Association in April 2007, where he serves on the education committee. He currently serves as the Chairman of the San Francisco Jewish Community Federation’s Business Leadership Council and as co-chair of the Steering Committee of the Aspen Institute’s Socrates Society a leadership development program with which he has been involved since 1997.

Pascal received a BA in Government from Harvard University and is a graduate of the Lawrenceville School. He is a member of the Council on Foreign Relations and the Pacific Council on International Policy

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Frazier Healthcare Ventures Robert MoreGeneral PartnerFrazier Healthcare Ventures

Mr. More joined Frazier Healthcare Ventures in 2008 as a General Partner and is a member of the firm’s biopharma and medical device investment teams. Prior to Frazier Healthcare, Mr. More was a Partner with Domain Associates, having joined the firm in 1996 as a Kauffman Fellow and becoming a Partner in 2000. From 1997-1998, Mr. More served as the Chief Operating Officer of Small Molecule Therapeutics, a Domain portfolio company subsequently purchased by Morphochem AG. And from 1992 to 1995, Mr. More was with Pharmacia Biotech in sales. Prior to joining Pharmacia, Mr. More held a research position at Somatogen, a company developing a recombinant blood substitute that was subsequently bought by Baxter. While attending business school, Mr. More worked with MedVest, an early-stage venture group in Washington, D.C.

Mr. More managed successful investments in and served on the boards of ESP Pharma (acquired by Protein Design Labs, Inc.), Proxima Therapeutics (acquired by Cytyc Corporation), Onux Medical (acquired by C.R. Bard), NovaCardia (acquired by Merck), Esprit Pharma (acquired by Allergan) and IntraLase (acquired by Advanced Medical Optics, Inc.).

Mr. More serves as an advisory board member for Montagu Newhall Associates, Okapi Ventures, The Medical Industry Group of the NVCA and The Sulpizio Family Cardiovascular Center. He is also a past founding board member of the Kauffman Fellows Program.

Mr. More received his MBA from the Darden School of Business Administration at the University of Virginia and a BA from Middlebury College.

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MoneyTree™ ReportQ&A

Moneytree Analyst Call Q408

Economy & Finance

Transcript of Moneytree Analyst Call Q408