NVCA Yearbook 2014

8/11/2019 NVCA Yearbook 2014

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NATIONAL VENTURE

CAPITAL ASSOCIATION

YEARBOOK 2014

INCLUDING STATISTICS FROM THE

PricewaterhouseCoopers/National Venture Capital Association

MoneyTree Report based on data from Thomson Reuters


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2014 National Venture Capital Association Yearbook|1

NVCA THOMSON REUTERS

March 2014

Dear Colleague:

We are delighted to present to you the NVCA 2014 Yearbook, prepared by Thomson Reuters. This is the17thedition in a series launched in early 1998. Since then, much has changed in the industry. One thingthat has not changed, however, is our commitment to bring accurate and responsible transparency to thispowerful economic force called venture capital. You will nd in this publication new and updated chartsthat track investment activity in the United States. Reecting our dynamic environment, for the rst timewe provide a chapter on Growth Equity an asset subclass that did not exist in its present form when weprinted the rst edition of this publication.

More changes are already in the works. For example, in recognition of the strong and broad emergence ofcorporate venture capital groups and direct corporate investment over the past few quarters, we will soon

be changing our methodology to be more inclusive of solo (i.e., without a traditional venture investor inthe round) and early corporate investment into companies. Further, we will also include corporate directinvestment from the corporation itself, not just from a separate or captive entity. Stay tuned.

The industrys goal remains the same: to create fast-growing and sustainable companies, introduce newtechnologies, and improve medical care and patient well-being, while providing an attractive return tothose who trust the industry with their capital. Whether by traditional venture capital, corporate venturecapital, growth equity, or a number of new and energized investment vehicles, we are here to report thatthe beat goes on.

As always, your feedback and suggestions are welcome. Please feel free to contact us at [email protected] through any NVCA director or staff member.

Very truly yours,

Diana Frazier Bobby Franklin John S. Taylor

FLAG Capital Management NVCA President and CEO NVCA Head of Research

NVCA Director and

Chair, Research Committee


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2 | 2014 National Venture Capital Association Yearbook

THOMSON REUTERS NVCA

NVCA BOARD OF DIRECTORS 2013-2014

EXECUTIVE COMMITTEE

Josh Green Scott Sandell

Mohr, Davidow Ventures New Enterprise Associates

Chair Chair-Elect

Anne Rockhold Jonathan Callaghan

Accel Partners True Ventures

Treasurer Executive Committee At-Large

Bruce Evans Jonathan Leff

Summit Partneer Deereld Management

Executive Committee At-Large Executive Committee At-Large,

Research Committee

AT-LARGE

Diana Frazier Mark Leschly

FLAG Capital Rho Ventures

Research Chair Research Committee

John Backus Maria Cirino

New Atlantic Ventures .406 Ventures

David Douglass Claudia Fan Munce

Delphi Ventures IBM Venture Capital Group

Norm Fogelsong Venky Ganesan

Institutional Venture Partners Menlo Ventures

Robert Goodman Mark Gorenberg

Bessemer Venture Partners Zetta Venture Partners

Jason Green Adam Grosser

Emergence Capital Partners Silver Lake Kraftwerk

James Healy Ross Jaffe

Sonnova Ventures Versant Ventures

Scott Kupor Ray Leach

Andreessen Horowitz Jumpstart, Inc

David Lincoln Robert Nelsen

Element Partners ARCH Venture Partners

Art Pappas Sue Siegel

Pappas Ventures GE Ventures


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2014

National Venture Capital Association Yearbook

For the National Venture Capital Association

Prepared by Thomson Reuters

Copyright 2014 Thomson Reuters

The information presented in this report has been gathered with the utmost care

from sources believed to be reliable, but is not guaranteed. Thomson Reuters disclaims

any liability including incidental or consequential damages arising from

errors or omissions in this report.


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National Venture Capital Association

1655 Fort Myer Drive, Suite 850Arlington, Virginia 22209-3114

Telephone: 703-524-2549

Telephone: 703-524-3940

www.nvca.org

President and CEO

Bobby Franklin

President Emeritus

Mark G. Heesen

Head of Research

John S. Taylor

Senior Vice President of Federal Policy and Political Advocacy

Jennifer Connell Dowling

Vice President of Federal Life Science Policy

Kelly Slone

Vice President of Federal Policy and Political Advocacy

Emily Baker

Vice President of Communications

Ben Veghte

Vice President of Membership and Member Firm Liaison

Janice Mawson

Vice President of Administration

Roberta Catucci

Director of Business Development

Hannah Veith

Manager of Administration and Meetings

Allyson Chappell

Accounting Manager

Beverley Badley

Research Lab

Mavis Moulterd (Emeritus), Annie Black, Liberty Benjamin

Lab Assistants

Thea Shepherd, Lexi Oscar, Gracie Baker

Thomson Reuters

3 Times Square, 18th FloorNew York, NY 10036

Telephone: 646-223-4431

Fax: 646-223-4470

www.thomsonreuters.com

Global Head of Deals & Private Equity

Stephen N. Case II

Head of Deals and Private Equity Operations

Katarzyna Namiesnik

Global Business Manager Private Equity

Jim Beecher

Editor-in-Charge

David Toll

Global Private Equity Operations Manager

Anna Aquino-Chavez

Press Management

Matthew Toole

Senior Content Specialist

Michael D. Smith

Content Specialist

Paul Pantalla

Data Specialist

Francis S. Tan

Senior Art Director

David Cooke

Sales Manager Publications (Buyouts, VCJ, peHUB)

Greg Winterton (646-223-6787)

ThomsonONE.com Sales:

1-877-365-1455

National Venture Capital Association 2014 Yearbook


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TABLE OF CONTENTS

What is Venture Capital? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 11

Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Exits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 14

Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 17

Capital Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Investments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71

Growth Equity Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85

Appendix A: Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Appendix B: MoneyTree Report Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105

Appendix C: MoneyTree Geographical Denitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107

Appendix D: Industry Codes (VEICs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Appendix E: Industry Sector VEIC Ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113

Appendix F: Stage Denitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .115

Appendix G: Data Sources and Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117

Appendix H: International Convergence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .119

Appendix I: US Accounting Rulemaking and Valuation Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .121

Appendix J: Non-US Private Equity . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . . . . . 125


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WHAT IS VENTURE CAPITAL?

Venture capital has enabled the United States to support its entrepreneur-

ial talent and appetite by turning ideas and basic science into productsand services that are the envy of the world. Venture capital funds build

companies from the simplest form perhaps just the entrepreneur and an

idea expressed as a businessplan to freestanding, mature organizations.

Risk Capital for BusinessVenture capital rms are professional, institutional managers of risk capi -

tal that enables and supports the most innovative and promising compa-

nies. This money funds new ideas that could not be nanced with tradi -

tional bank nancing, that threaten established products and services in a

corporation, and that typically require ve to eight years to be launched.

Venture capital is quite unique as an institutional investor asset class.

When an investment is made in a company, it is an equity investment in a

company whose stock is essentially illiquid and worthless until a company

matures ve to eight years down the road. Follow-on investment provides

additional funding as the company grows. These rounds, typically oc-

curring every year or two, are also equity investment, with the shares al-

located among the investors and management team based on an agreed

valuation. But, unless a company is acquired or goes public, there is

little actual value.Venture capital is a long-term investment.

More Than MoneyThe U.S. venture industry provides the capital to create some of the most

innovative and successful companies. But venture capital is more than

money. Venture capital partners become actively engaged with a com-

pany, typically taking a board seat. With a startup, daily interaction with

the management team is common. This limits the number of startups in

which any one fund can invest. Few entrepreneurs approaching venture

capital rms for money are aware that they essentially are asking for 1/6

of a person! Yet that active engagement is critical to the success of the

edgling company. Many one- and two-person companies have received

funding but no one- or twoperson company has ever gone public!Along

the way, talent must be recruited and the company scaled up. Ask any

venture capitalist who has had an ultra-successful investment and he or

she will tell you that the company that broke through the gravity evolved

from the original business plan concept with the careful input of an expe-

rienced hand.

Deal Flows Where The Buys AreFor every 100 business plans that come to a venture capital rm for fund-ing, usually only 10 or so get a serious look, and only one ends up being

funded. Theventure capital rm looks at the management team, the con-

cept, the marketplace, t to the funds objectives, the value-added po-

tential for the rm, and the capital needed to build a successful business.

A busy venture capital professionals most precious asset is time. These

days, a business concept needs to address world markets, have superb

scalability, be made successful in a reasonable timeframe, and be truly

innovative. A concept that promises a 10 or 20 percent improvement on

something that already exists is not likely to get a close look.

Many technologies currently under development by venture capital rms

are truly disruptive technologies that do not lend themselves to being em-

braced by larger companies whose current products could be cannibalized

by this. Also, with the increased emphasis on public company quarterly

results, many larger organizations tend to reduce spending on research and

development and product development when things get tight. Many tal

ented teams have come to the venture capital process when their projects

were turned down by their companies.

Common Structure Unique ResultsWhile the legal and economic structures used to create a venture capi-

tal fund are similar to those used by other alternative investment asse

classes, venture capital itself is unique. Typically, a venture capital rm

will create a Limited Partnership with the investors as LPs and the rm

itself as the General Partner. Each fund, or portfolio, is a separate part-nership. A new fund is established when the venture capital rm obtains

necessary commitments from its investors, say $100 million. The money

is taken from investors as the investments are made. Typically, an initial

funding of a company will cause the venture fund to reserve three or four

times that rst investment for follow-on nancing. Over the next three to

eight or so years, the venture rm works with the founding entrepreneur to

grow the company. The payoff comes after the company is acquired or

goes public. Although the investor has high hopes for any company get-

ting funded, only one in six ever goes public and one in three is acquired

Venture Capital Backed CompaniesKnown for Innovative Business Models

Employment at IPO and Now

Company As of IPO Current # Chang

The Home Depot 650 331,000 330,350

Starbucks Corporation 2,521 160,000 157,479

Staples 1,693 89,019 87,326

Whole Foods Market, Inc. 2,350 69,500 67,150

eBay 138 31,500 31,36

Venture Capital Backed CompaniesKnown for Innovative Technology Products

Employment at IPO and Now

Company As of IPO Current # Chang

Microsoft 1,153 94,000 92,84

Intel Corporation 460 100,100 99,640

Medtronic, Inc. 1,287 45,000 43,713

Apple Inc. 1,015 76,100 75,08

Google 3,021 53,861 50,840

JetBlue 4,011 12,070 8,059

Source: Global Insight; Updated fromThomsonOne 2/2013


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Economic Alignment of all Stakeholders An American Success StoryVenture capital is rare among asset classes in that success is truly shared.

It is not driven by quick returns or transaction fees. Economic success

occurs when the stock price increases above the purchase price. When

a company is successful and has a strong public stock offering, or is ac-

quired, the stock price of the company reects its success. The entrepre-neur benets from appreciated stock and stock options. The rank and le

employees throughout the organization historically also do well with their

stock options. The venture capital fund and its investors split the capi-

tal gains per a pre-agreed formula. Many college endowments, pension

funds, charities, individuals, and corporations have beneted far beyond

the risk-adjusted returns of the public markets.

Whats AheadMuch of venture capitals success has come from the entrepreneurial spirit

pervasive in theAmerican culture, nancial recognition of success, access

to good science, and fair and open capital markets. It is dependent upon

a good ow of science, motivated entrepreneurs, protection of intellec-

tual property, and a skilled workforce. The nascent deployment of ven-

ture capital in other countries is gated by a countrys or regions cultural

t, tolerance for failure, services infrastructure that supports developing

companies, intellectual property protection, efcient capital markets, and

the willingness of big business to purchase from small companies.


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EXECUTIVE SUMMARY

During 2013, many of the metrics describing the venture capital indus-

try in the United States were similar to those of the prior three years, with

the exception of a pickup in the breadth of the IPO markets. The decline

in capital managed continued as expected, but not as much as some wereanticipating. A record proportion of venture deals focused on companies

in the seed and early stages, while a number of companies long in the

portfolios nally went public, led by Biotechnology companies in the rst

half of 2013. Investment in early-stage life science companies continued

to fall during the year, although a fourth-quarter increase in rst fundings

of Biotechnology companies was encouraging.

Fundraising remained very challenging for the majority of venture

rms. This is largely because of a dearth of healthy exits through 2012

that would have distributed yet-unrealized returns to current fund inves-

tors. Aside from the Facebook IPO in 2012 ($16.0B of the $21.5B raised

in 2012), 2013 was a much-improved year with 81 venture-backed IPOs.

Remarkably, over half of them were Biotechnology companies. Early

signs for 2014 suggest that IPO momentum carried forward into at least

the rst part of the year.

A healthy venture capital ecosystem requires its metrics to be in bal-

ance. And while the quality of new business opportunities, known as deal

ow, remains very high and the best opportunities are getting funded,

stresses remain.

IntroductionThe National Venture Capital Association 2014 Yearbook provides

a summary of venture capital activity in the United States. This ranges

from investments into portfolio companies to capital managed by general

partners to fundraising from limited partners to valuations of companies

receiving venture capital investments to exits of the investments by ei-

ther IPOs or mergers and acquisitions. The statistics for this publication

were assembled primarily from the MoneyTree Report by Pricewater-

houseCoopers and the National Venture Capital Association, based on

data from Thomson Reuters and analyzed through the Thomson ONE.

com (formerly VentureXpert) database of Thomson Reuters, which has

been endorsed by the NVCA as the ofcial industry activity database

Subscribers to Thomson ONE can recreate most of the charts in this pub-

lication and report individual deal detail and more granular statistics thanthose provided herein.

Industry ResourcesThe activity level of the US venture capital industry is roughly half

of what it was at the 2000-era peak. For example, in 2000, 1,050 rms

each invested $5 million or more during the year. In 2013, the count was

roughly half that at 548.

Venture capital under management in the United States by the end o

2013 decreased to $192.9 billion. However, looking behind the numbers

we know that the industry continues to contract from the circa 2004 high

of $288.9 billion. The peak capital under management that year was a

statistical anomaly caused when funds raised at the height of the 2000 tech

bubble were joined by new capital raised post bubble.

The slight downtick in rms and capital managed (Fig. 1.04) in 2013

understates a consolidating industry. The average venture capital rm

shrunk to 6.7 principals per rm from 8.7 just six years earlier. The corre

sponding drop in headcount to under 6,000 principals is almost one-third

lower than 2007 levels. This meant that there was a general increase in the

average amount of capital managed by each principal. It is possible going

forward that the number of principals per rm will increase as the numbe

of rms decreases. This is because the bulk of the capital being commit

ted today is being raised by larger, specialty, and boutique rms. For our

purposes here, we dene a principal to be someone who goes to portfolio

company board meetings. That is, deal partners would be included and

rm CFOs would not be included.

Contrary to some popular misconceptions, only 43 rms managed more

than $1 billion. By comparison, 277 rms managed less than $25 million

CommitmentsThe year 2013 continued to be a very challenging fundraising year for

most venture capital rms in the United States. This was due to a lack of

recent distributions caused by the tight exit markets, lackluster returns by

many venture funds over the past decade compared with the prior decade

and a challenge for the largest alternative asset investors to place money in

many of the smaller funds in this asset class because of scale. Only $16.8

billion was raised by 187 funds. This was considerably less than the $19.6

billion raised in 2012 or the $19.0 billion raised in 2011. The amount o

new commitments each year by venture capital funds continued to be lesthan the amount they invested in companies.

InvestmentsMeasuring industry activity by the total dollars invested in a given year

shows that the industry has remained generally in the $20 billion to $30

billion range since 2002. In 2013, $29.5 billion was invested in 3,382

companies through 4,041 deals. The number of deals was 4% higher than

2012 counts, but was essentially the same as 2011. The number of rst

time fundings increased in 2013 to 1,334 companies from the previous

1,275, but it remains near the top of the healthy range of 1,000 to 1,400

Figure 1.0

Venture Capital Under Management Summary Statistics

1993 2003 2013

No. of VC Firms in Existence 370 951 874

No. of VC Funds in Existence 613 1,788 1,331

No. of Professionals 5,217 14,777 5,891

No. of First Time VC Funds Raised 25 34 53

No. of VC Funds Raising Money This Year 93 160 187

VC Capital Raised This Year ($B) 4.5 9.1 16.8

VC Capital Under Management ($B) 29.3 263.9 192.9

Avg VC Capital Under Mgt per Firm ($M) 79.2 277.5 220.7

Avg VC Fund Size to Date ($M) 40.2 94.4 110.3

Avg VC Fund Size Raised This Year ($M) 48.3 102.9 89.7

Largest VC Fund Raised to Date ($M) 1,775.0 6,300.0 6,300.0


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rst-time fundings in a year. Further parsing the data shows 50% of the in-

vestment dollars going to California companies, down from 53% in 2012

but consistent with the previous three years. The year 2013 saw a record

56% of the nancing rounds going to seed and early stage companies,

compared with a more typical one-third of deals. A carefully watched sta-

tistic is the investment in the life sciences. It is possible that the downward

plummet in rst-time life sciences investment is starting to reverse, ledby Biotechnology, but it is still too early to be sure. Corporate Venture

investment continues to gain considerable strength and presence in the

overall industry.

Software was the leading sector in 2013, receiving 37.3% of the total

dollars. The second largest sector was Biotechnology, which was less than

half that amount at 15.4% of total investment. Among rst fundings, Soft-

ware led the way with 591 companies getting their initial venture capital

rounds. This is more than 46% of the rst fundings. Again in 2013, the

second most active rst-funding sector is Media and Entertainment at 170

rst fundings.

California-domiciled venture capital rms made investments in 38

states in 2013. Approximately 48% of all the money invested in Califor-

nia came from California-domiciled rms. Conversely, California-based

rms concentrated 68% of their investment dollars within the state.

The number and reach of corporate venture capital groups increased

in 2013, along with the visibility of this group. These groups provided

an estimated 10.5% of the venture capital invested by all venture groups.

They were involved in 16.9% of the deals the highest level in ve years.

Going forward, all signs suggest that these groups are becoming more

involved alongside traditional venture rms in deals, as well as initiating

corporate venture group syndicates to do deals in lieu of, or in advance of,

investment rounds by traditional venture rms.

ExitsOnce successful portfolio companies mature, venture funds generally

exit their positions in those companies by taking them public through an

initial public offering (IPO) or by selling them to presumably larger orga-

nizations (acquisition, M&A, or trade sale). This then lets the venture

fund distribute the proceeds to investors, raise a new fund for future in-

vestment, and invest in the next generation of companies. We consider

each type of exit separately.

During 2013, 81 venture-backed companies went public in the United

States, marking the strongest full-year total for the number of new ven-

ture-backed listings since 2007. Remarkably, more than half of them were

Biotechnology IPOs, many of those being modestly sized. While the total

dollars raised in 2012 was higher at $21.5 billion, it is important to re-

member that $16.0 billion of that came from the Facebook IPO alone

The remaining $5.5 billion was raised by the remaining 48 IPOs in 2012

It was a very different story in 2013. $11.1 billion was raised by 81 com-

panies. The increase in mean and median time to exit reects the fact tha

many of these IPOs were mature companies, and many of them were in

the life sciences space, which had been awaiting an IPO opportunity formonths, and in some cases, years.

NVCA is encouraged by the increase in smaller IPOs and biotech IPO

in light of its 2012 legislative successes with the JOBS Act and creating a

pathway for FDA Reform.

The M&A space continued to soften in 2013, with the total number o

deals falling from 473 in the prior year to 376. Total proceeds fell by 27%

Note that only 94 of the 376 acquisitions had reported deal values. Histori

cally, deals with unreported sales prices are fairly diminutive, and in many

cases, re sales. However, an increasing number of deal term sheets spec

ify a non-disclosure restriction on all parties. So going forward, all but the

largest and most visible acquisitions may be hard to measure. Observers

have wondered why, given the huge amounts of cash on the balance sheet

of technology and Biotechnology giants, more acquisitions are not occur-

ring. We did see a urry of acquisitions in early 2014, perhaps signaling

an increase in that kind of activity.

Growth EquityThis edition of the NVCA Yearbook, prepared by Thomson Reuters, for

the rst time proles US growth equity investment in its own chapter. Th

NVCA believes growth equity investing is an important segment of the

overall venture capital industry. Venture capitalists help create and grow

companies; growth equity investors are strongly focused on the growth

component of that mission and help companies scale through fat part of

their hiring curves. The NVCA also believes that growth equity invest-

ing is a critical component of the emerging growth company nancing

continuum and has become, in many respects, the private alternative to

the public markets for both emerging growth companies and their earlier

stage venture capital backers.

Growth equity really emerged as an asset class in 2000 and continues

strong today. In 2013, we identied 342 growth equity deals in the United

States. This compares with 406 in 2012, but is very much in line with

the past several years. A disclosed $12.3 billion in equity investment was

reported for 2013. This does not count the approximately 105 deals for

which no dollar equity amounts were disclosed.


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2009

2010

2011

2012

2013

($

Billions)

Year

Figure 3.0Capital Commitments

To U.S. Venture Funds ($ Billions)1985 to 2013


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Figure 5.0Venture Capital Investments in 2013 By Industry Group

Industry Group # Companies # Deals InvestmentAmt ($Bil)

# Companies # Deals InvestmentAmt ($Bil)

Information Technology 2,360 2,784 20 1009 1009 3.5

Medical/Health/Life Science 649 816 6.9 167 167 1.2

Non-High Technology 373 440 2.7 157 157 0.4

Total 3,382 4,041 29.6 1,334 1,334 5.1

Initial InvestmentsAll Investments

0

20

40

60

80

100

120

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

ons

Year

Figure 4.0Venture Capital Investments ($ Billions)

1985 to 2013


14/127



Seed

3%

Early Stage

34%

Expansion

33%

Later Stage

30%

Figure 6.0Venture Capital Investments in 2013

By Stage

Biotechnology

15%Business Products and

Services 0.4%

Computers and Peripherals 2%

Consumer Products and

Services 4%

Electronics/Instrumentation

1%Financial Services

2%

Healthcare Services

1%

Industrial/Energy

5%IT Services

7%

Media and Entertainment

10%

Medical Devices and

Equipment

7%

Networking and Equipment

2%

Retailing/Distribution

1%

Semiconductors

2%

Software

37%

Telecommunications

2%

Other

0.2%

Figure 7.0Venture Capital Investments in 2013

By Industry Sector


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Figure 8.0 2013 Investments By State

State Number of Companies

Pct ofTotal

Investment($ Millions)

Pct ofTotal

California 1,280 40% 14,769.7 50%

Massachusetts 326 10% 3,079.3 10%

New York 287 9% 2,870.4 10%

Texas 101 3% 1,315.5 4%

Washington 134 4% 913.2 3%

Maryland 76 2% 664.5 2%

Virginia 85 3% 593.8 2%

Pennsylvania 154 5% 446.5 2%

Illinois 49 2% 434.9 1%

Colorado 62 2% 428.8 1%

All Others 676 21% 4,028.6 14%

Total 3,230 29,545.2

Figure 9.0 Venture-Backed IPOs

Year Num of IPOs Offer Amount($Mil)

Med Offer Amt($Mil)

Mean Offer Amt($Mil)

Post Offer Value($Mil)

Med Post Value($Mil)

Mean Post Value($Mil)

Median Age AtIPO (Years)

Mean Age At IPO(Years)

1985 48 763 13 16 2,020 37 48 3.0 4.0

1986 105 2,417 13 23 166,032 52 1866 4.0 4.0

1987 86 2,125 17 25 10,972 46 155 4.0 4.0

1988 43 769 15 18 21,117 51 571 3.0 4.0

1989 42 873 16 21 4,443 50 131 4.0 4.0

1990 47 1,108 20 24 5,886 60 178 4.0 4.0

1991 120 3,726 27 31 17,611 81 202 5.0 5.0

1992 150 5,443 24 36 15,955 68 146 5.0 5.0

1993 175 6,154 25 35 14,808 75 130 5.0 6.0

1994 138 3,952 24 29 10,344 68 94 5.0 5.01995 184 7,859 36 43 19,300 104 152 4.0 5.0

1996 256 12,716 35 50 51,511 112 240 3.0 4.0

1997 141 5,829 33 41 19,101 99 148 3.0 6.0

1998 78 4,125 43 53 24,655 164 324 3.0 3.0

1999 280 23,975 69 86 147,341 304 532 3.0 3.0

2000 238 27,443 83 115 108,783 325 494 3.0 4.0

2001 37 4,130 80 112 19,233 327 534 4.0 4.0

2002 24 2,333 89 97 8,322 266 347 3.0 5.0

2003 26 2,024 71 78 7,412 252 285 5.0 6.0

2004 82 10,032 70 122 50,268 254 613 6.0 6.0

2005 59 5,113 68 87 39,702 202 673 5.0 5.0

2006 67 7,065 86 105 71,124 283 1078 5.0 6.0

2007 91 12,339 98 136 68,203 365 749 6.0 6.0

2008 7 765 83 109 3,645 278 521 7.0 7.0

2009 13 1,980 123 152 9,192 548 707 6.0 7.0

2010 70 7,774 93 111 114,981 428 1643 5.0 6.0

2011 51 10,690 106 210 94,657 606 1856 6.0 7.0

2012 49 21,460 89 438 122,168 371 2493 7.0 8.0

2013 81 11,068 91 137 62,700 354 784 7.0 8.0

*Age at IPO is defined as time elapsed from first funding round until IPO date.


16/127



Figure 10.0Venture-Backed Mergers & Acquisitions by Year

Year Number Total Number Known Price Average

1985 7 3 300.2 100.1

1986 8 1 63.4 63.4

1987 11 4 667.2 166.8

1988 17 9 920.7 102.3

1989 21 10 746.9 74.7

1990 19 7 120.3 17.2

1991 16 4 190.5 47.6

1992 69 43 2119.1 49.3

1993 59 36 1332.9 37.0

1994 84 57 3208.4 56.3

1995 92 58 3801.8 65.5

1996 108 76 8230.8 108.3

1997 145 100 7798.0 78.0

1998 189 113 8002.0 70.8

1999 228 155 38710.6 249.7

2000 379 245 79996.4 326.5

2001 384 175 25115.6 143.5

2002 365 166 11913.2 71.8

2003 323 134 8240.8 61.5

2004 402 199 28846.1 145.0

2005 446 201 19717.3 98.1

2006 484 208 24291.0 116.8

2007 488 201 30745.5 153.0

2008 417 134 16236.9 121.2

2009 351 109 12364.9 113.4

2010 523 150 17707.3 118.0

2011 490 169 24093.2 142.6

2012 473 132 22694.2 171.9

2013 376 94 16586.5 176.5

($ Millions)


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Figure 11.0Growth Equity Investments ($ Billions)

2000 to 2013*

0

5

10

15

20

25

30

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

($

Billions)

Year

Totals include only disclosed amounts. Many growth equity deal amounts are not reported.


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INDUSTRY RESOURCES

The activity level of the US venture capital industry is roughly half of what it was at the 2000-era peak. For example, in 2000, 1,050 rms each invested

$5 million or more during the year. In 2013, the count was roughly half that at 548.

Venture capital under management in the United States by the end of 2013 decreased to $192.9 billion as calculated using the methodology described

below. However, looking behind the numbers, we know that the industry continues to contract from the circa 2006 high of $288.9 billion. The peakcapital under management that year was a statistical anomaly caused by funds raised at the height of the 2000 tech bubble were joined by new capita

raised post bubble.

The slight downtick in rms and capital managed (Fig. 1.04) in 2013 perhaps understates a consolidating industry. The average venture capital rm

shrunk to 6.7 principals per rm from 8.7 just six years earlier. The corresponding drop in headcount to under 6,000 principals is almost one-third

lower than 2007 levels. This meant that there was a general increase in the average amount of capital managed by each principal. It is possible going

forward that the number of principals per rm will increase as the number of rms decreases. This is because the bulk of the capital being committed

today is being raised by larger, specialty, and boutique rms. For our purposes here, we dene a principal to be someone who goes to portfolio company

board meetings. That is, deal partners would be included and rm CFOs would not be included.

Geographic location of the largest venture rms is quite concentrated. 49% of the industrys California-domiciled rms manage capital, although these

rms may be actively investing in other states and countries. This concentration has been consistent for several years and may increase going forward

given the movement of some East Coast funds westward. Taken together, the top ve states (California, Massachusetts, New York, Connecticut, and

Illinois) hold 81.1% of total venture capital in this country, essentially the same as a year ago.

Contrary to some popular misconceptions, only 43 rms managed more than $1 billion. By comparison, 277 rms managed less than $25 million.

Methodology

Historically, we have calculated industry size using a rolling eight

years of fundraising proxy for capital managed, number of funds, num-

ber of rms, etc. The number of rms in existence will vary on a rolling

eight-year basis as rms raise new funds or do not raise funds for more

than eight years. Currently, we know the industry is consolidating, but the

eight-year model now includes fund vintage years 2006-2013.

Under this methodology, we estimate that there are currently 874 rms

with limited partnerships in existence. To clarify, this is actually stating

that there are 874 rms that have raised a venture capital fund in the last

eight years. In reality, only 548 of them invested at least $5 million in

companies in 2013, and 136 of them invested more than $5 million in rst

rounds for a company.

For this publication, we are primarily counting the number of rms with

limited partnerships and are excluding other types of investment vehicles.

From that description, it may appear that the statistics for total industry

resources may be underestimated. However, this must be balanced with

the fact that capital under management by captive and evergreen funds is

difcult to compare equitably to typical limited partnerships with xed

lives. For this analysis only, the rms counted for capital under manage -

ment include rms with xed-life partnerships and venture capital funds

they raised. If a rm raised both buyout and venture capital funds, onlythe venture funds would be counted in the calculation of venture capital

under management.

Venture capital under management can be a complex statistic to esti-

mate. Indeed, capital under management reported by rms can differ from

rm to rm as theres not one singular denition. For example, some rms

include only cumulative committed capital, others may include commit-

ted capital plus capital gains, and still other rms dene it as committed

capital after subtracting liquidations. To complicate matters, it is difcult

to compare these totals to European private equity rms, which include

capital gains as part of their capital under management measurements.

For purposes of the analysis in this publication, we have tried to clarify

the industry denition of capital under management as the cumulative to

tal of committed capital less liquidated funds or those funds that have

completed their life cycle. Typically, venture capital rms have a stated

10-year xed life span, except for life science funds, which are often

established as 12-year funds. Figure 1.09 shows the reality of fund life

Thomson Reuters calculates capital under management as the cumulative

amount committed to funds on a rolling eight-year basis. Current capital

under management is calculated by taking the capital under management

calculation from the previous year, adding in the current years funds

commitments, and subtracting the capital raised eight years prior.

For this analysis, Thomson Reuters classies venture capital rms us

ing four distinct types: private independent rms, nancial institutions

corporations, and other entities. Private independent rms are made up

of independent private and public rms including both institutionally and

non-institutionally funded rms and family groups. Financial institu

tions refers to rms that are afliates and/or subsidiaries of investmen

banks and non-investment bank nancial entities, including commercia

banks and insurance companies. The corporations classication includes

venture capital subsidiaries and afliates of industrial corporations. In

2013, we will modify the methodology to reect virtually all direct cor

porate investment because many of the corporate venture investors do no

operate out of a separate fund or group. The capital under managemenstatistics reported in this section consist primarily of venture capital rms

investing through limited partnerships with xed commitment levels and

xed lives and do not include non-vintage evergreen funds or true cap

tive corporate industrial investment groups without xed commitmen

levels. The term evergreen funds refers to funds that have a continuous

infusion of capital from a parent organization, as opposed to the xed life

and commitment level of a closed-end venture capital fund.


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Figure 1.01Capital Under Management U.S. Venture Funds ($ Billions)

1985 to 2013

0

50

100

150

200

250

300

350

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

($

Billions)

Year


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Figure 1.03Distribution of Firms By Capital Managed 2013

Figure 1.02Total Capital Under Management By Firm Type 1985 to 2013

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Private Independent 11,766 14,721 17,459 18,850 22,369 22,722 21,893 22,643 25,162 28,490 33,308 40,201 51,940 76,560 119,121

Financial Institutions 3,388 3,520 3,447 3,190 2,719 2,793 2,384 2,214 2,431 2,873 3,688 5,070 7,061 10,238 15,291

Corporations 1,582 1,545 1,895 1,989 1,931 1,963 1,907 2,032 1,517 1,564 1,526 2,219 2,531 3,425 8,169

Other 864 914 900 871 781 722 616 312 190 273 378 410 667 877 1,119

Total 17,600 20,700 23,700 24,900 27,800 28,200 26,800 27,200 29,300 33,200 38,900 47,900 62,200 91,100 143,700

Figure 1.02 (Continued)Total Capital Under Management By Firm Type 1985 to 2013

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Private Independent 187,356 221,327 222,028 224,828 233,595 241,637 255,315 239,643 194,573 171,016 174,722 186,032 186,676 179,202

Financial Institutions 22,980 24,459 23,945 23,015 21,659 21,110 18,325 13,914 6,034 4,708 5,620 7,734 7,970 6,615

Corporations 12,995 14,153 14,126 13,886 13,627 13,467 13,297 8,990 4,294 3,125 3,688 4,860 4,892 6,401Other 1,469 2,061 2,201 2,170 2,219 1,986 1,963 1,754 1,399 851 670 674 662 682

Total 224,800 262,000 262,300 263,900 271,100 278,200 288,900 264,300 206,300 179,700 184,700 199,300 200,200 192,900

0

50

100

150

200

0-10

10-25

25-50

50-100

100-25

0

250-50

0

500-10

00

1000

+

164

113 114

107

132

82

5343

This chart shows capital committed to US venture firms in active funds. While much of the capital is managed by larger firms, of the 808 firms included in this calculation at theend of 2013, roughly 62% of them (498) managed $100 million or less. By comparison, just 43 firms managed active funds totaling more than $1 billion.


21/127


22/127



Figure 1.05Number of Active Investors 1985 to 2013

Year # of ActiveInvestors

# of Active FirstRound Investors

# of Active LifeScience Investors

1985 92 11 1

1986 115 24 12

1987 112 29 13

1988 119 32 26

1989 116 22 23

1990 101 25 18

1991 81 14 15

1992 104 34 31

1993 92 35 29

1994 110 46 33

1995 184 95 53

1996 251 122 631997 344 138 83

1998 411 169 87

1999 717 321 106

2000 1,050 546 148

2001 760 220 155

2002 534 137 147

2003 509 136 165

2004 579 202 201

2005 562 183 193

2006 572 192 197

2007 630 238 236

2008 602 212 219

2009 463 105 173

2010 508 136 177

2011 549 159 195

2012 534 139 175

2013 548 136 179

Firms included in each count must have invested $5 million in that year in thatcategory. Life Sciences investor count includes investment in companies inthe two MoneyTree Categories: Biotechnology/Pharma and Medical Devices/

Equipment.

Figure 1.06Principals Information

Year No.PrincipalsPer Firm

EstimatedIndustry

Principals

Avg MgtPer Principal

($M)

2007 8.7 8665 30.0

2008 8.5 7293 28.3

2009 8.6 6760 26.4

2010 8.0 6328 25.7

2011 7.4 6231 28.6

2012 7.0 5887 33.8

2013 6.7 5891 32.8

Figure 1.07Top 5 States By Capital Under

Management 2013

State ($ Millions)

CA 94,076.6

MA 32,636.6

NY 19,480.4

CT 5,815.1

IL 4,517.3

Total* 156,526.1

*Total includes above 5 states only

The correct interpretation of this chart is that since the beginning of the in-dustry to the end of 2013, 1,938 firms had been founded and 4,957 funds hadbeen raised. Those funds totaled $569.2 billion. At the end of 2013, 874 firmsas calculated using our eight-year methodology managed 1,331 individualfunds, with each fund typically being a separate limited partnership. Capitalunder management, again calculated using a rolling eight years of fundrais-

ing, by those firms at the end of 2013 was $192.9 billion.


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Figure 1.08Capital Under Management By State 1985-2013

State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

CA 5,024 5,974 6,815 7,051 8,318 8,192 8,257 8,258 9,062 9,978 12,015 15,379 20,289 27,452 51,226

MA 2,252 2,580 3,409 3,775 4,179 4,057 3,761 4,636 4,830 5,179 6,553 6,980 9,859 15,397 22,905

NY 3,382 4,428 4,370 4,160 5,598 5,805 5,455 5,308 5,904 6,968 8,246 9,995 10,311 19,676 26,659

CT 1,297 1,444 1,807 1,876 1,714 1,713 1,570 1,665 1,927 2,088 2,064 2,194 3,323 4,492 6,787

IL 474 493 725 907 863 876 840 944 1,202 1,275 1,419 1,263 1,939 2,191 3,693

TX 458 493 727 726 798 840 777 809 935 1,143 1,145 1,233 1,688 3,001 4,797

PA 281 347 376 396 564 601 604 598 569 738 822 1,332 1,750 2,105 3,090

NJ 616 713 752 740 736 954 885 549 511 695 958 1,489 1,563 2,177 2,715

DC 36 38 38 40 41 42 42 40 25 24 146 1,698 2,382 2,504 2,661

WA 316 409 387 425 398 385 199 243 227 178 299 463 680 1,081 1,796

MD 91 95 121 117 159 164 98 115 374 784 914 1,523 2,012 2,649 3,513

CO 365 431 399 518 618 575 557 531 616 565 475 552 867 1,165 3,337

VA 73 79 79 85 105 92 56 42 35 32 48 73 252 508 1,238

NC 34 55 87 90 125 114 110 111 108 146 123 294 620 806 1,009

MN 200 297 340 677 749 886 815 768 841 896 877 514 618 715 1,093

UT 9 19 20 15 15 16 16 10 10 25 31 31 94 96 131

MI 112 120 126 123 124 38 14 14 13 10 41 41 66 77 439

GA 89 95 176 260 263 276 264 263 433 432 434 361 765 1,077 1,164

TN 103 128 192 185 216 260 278 271 199 291 306 455 465 745 1,059

DE 39 41 40 39 47 41 41 14 41 51 100 122 115 117 116

MO 562 586 619 596 603 658 656 645 107 137 119 125 148 111 217

OH 860 897 976 838 256 259 275 305 427 469 447 377 692 766 1,247

FL 125 131 173 193 196 133 110 98 151 223 321 304 380 690 1,072

IN 45 56 56 78 97 88 80 97 99 109 111 194 176 192 207

WI 183 100 99 96 104 104 79 79 81 163 168 196 180 204 174

AL 126 132 132 128 135 137 137 138 6 6 6 6 5 24 33

AZ 41 44 44 73 75 76 75 34 44 43 44 10 10 38 38

LA 7 7 7 7 7 5 2 11 22 31 49 90 277 367 444

KY 15 16 16 16 0 0 0 0 0 7 21 21 21 21 21

ME 1 1 20 25 26 26 26 28 29 98 89 87 88 89 207

ID 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

ND 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

OK 1 29 29 28 37 38 37 37 38 9 10 32 23 67 66

OR 170 177 205 241 244 247 229 117 73 74 77 30 30 40 40

NM 71 100 136 133 170 257 244 232 205 179 154 152 121 12 12

SD 0 0 0 0 0 0 0 0 0 0 0 10 10 85 84

HI 2 2 2 2 2 2 2 0 0 0 2 2 2 2 11

KS 0 0 0 0 0 13 13 13 14 14 37 37 57 43 43

IA 50 52 105 102 81 82 62 62 54 55 5 5 16 17 16

VT 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0


24/127



Figure 1.08 (Continued)Capital Under Management By State 1985-2013

State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

NH 24 25 25 50 50 51 50 51 27 27 47 19 66 67 66

NE 0 0 0 1 1 1 1 1 11 11 105 137 139 141 140

MT 0 1 1 1 1 1 1 1 1 0 0 0 0 0 0

MS 0 0 0 0 0 0 0 0 0 0 11 11 11 12 11

PR 0 0 0 0 0 9 9 9 9 9 9 9 49 40 40

WY 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

SC 1 1 1 1 15 15 15 15 15 15 29 52 37 37 37

RI 15 16 16 36 37 37 36 36 22 22 23 0 2 2 2

NV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 24

WV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

AR 2 2 2 2 2 2 2 0 0 0 0 0 0 0 19

UNK 46 48 48 47 31 31 21 0 0 0 0 0 0 0 0

AK 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total 17,600 20,700 23,700 24,900 27,800 28,200 26,800 27,200 29,300 33,200 38,900 47,900 62,200 91,100 143,700

Figure 1.08bCapital Under Management By State 1985-2013

State 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CA 85,153 105,283 105,172 107,896 113,719 119,881 128,655 117,244 100,374 87,469 90,424 96,923 99,386 94,077

MA 37,341 45,970 47,440 47,019 47,553 48,784 53,712 50,417 37,146 30,861 30,528 30,209 32,914 32,637

NY 38,938 39,981 38,421 37,176 36,710 36,242 29,115 25,441 13,205 12,198 13,599 18,628 17,653 19,480

CT 8,260 10,623 10,462 10,431 12,066 11,984 13,336 11,699 10,426 7,428 8,201 8,940 6,928 5,815

IL 4,308 4,747 5,202 5,559 5,685 5,163 5,286 4,239 3,620 3,282 3,065 4,595 4,451 4,517

TX 6,881 8,001 7,932 7,806 8,259 8,486 8,242 6,589 5,467 4,193 4,057 4,735 4,455 4,215

PA 6,241 6,344 6,241 6,532 6,439 6,509 7,037 7,143 4,642 4,482 4,495 4,250 4,220 3,623

NJ 3,633 4,315 4,231 4,444 4,083 4,074 5,160 5,022 4,135 3,917 3,965 3,691 3,503 3,447

DC 3,899 4,172 4,739 4,616 3,401 3,582 4,641 5,047 4,833 4,632 4,049 4,527 4,193 3,369

WA 2,803 3,687 3,691 3,568 4,629 4,590 4,597 5,174 4,625 3,721 3,691 3,708 2,943 3,303

MD 5,119 5,383 5,165 5,047 4,811 4,762 4,744 4,433 2,934 3,005 2,927 3,134 3,282 2,854

CO 4,781 5,293 5,438 5,416 5,229 4,882 4,664 3,011 1,603 974 1,139 1,148 1,187 1,635

VA 2,524 2,638 2,652 2,822 2,868 3,338 3,367 3,014 1,801 2,226 2,271 2,081 2,056 1,583

NC 1,367 1,448 1,599 1,803 1,644 1,468 1,678 1,564 1,211 1,238 1,730 1,631 1,726 1,558

MN 2,238 2,189 2,366 2,359 2,361 2,441 2,593 2,473 1,639 1,657 1,319 1,323 1,426 1,531

UT 268 475 449 560 589 546 651 1,259 1,335 1,144 1,209 1,245 1,422 1,429

MI 588 591 590 631 859 912 946 685 919 976 1,065 1,263 1,045 1,203

GA 2,311 2,160 2,154 2,077 2,109 1,835 1,940 1,931 808 783 787 921 882 1,122

TN 1,237 1,281 1,162 1,174 1,043 1,089 887 716 624 614 840 857 845 795

DE 114 80 69 28 15 15 15 251 256 404 504 653 755 756

MO 307 450 418 407 504 1,232 1,293 1,385 1,317 1,182 1,189 1,192 1,324 561

OH 1,850 1,874 1,876 1,855 1,986 1,806 1,722 1,329 713 565 522 573 456 529

FL 1,785 1,751 1,684 1,592 1,577 1,802 1,525 1,284 557 801 875 832 834 529


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Figure 1.08b (Continued)Capital Under Management By State 1985-2013

State 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

IN 663 662 651 684 593 595 608 617 136 342 343 309 344 345

WI 246 245 152 152 133 105 207 254 182 185 212 237 309 339

AL 107 107 107 155 173 225 227 219 359 363 366 391 376 317

AZ 101 104 145 180 180 199 171 173 130 118 263 261 311 295

LA 476 651 648 631 663 502 431 353 336 196 265 282 217 249

KY 21 21 14 14 14 21 219 221 226 228 230 216 223 216

ME 202 290 218 219 214 215 310 194 198 108 109 109 110 110

ID 14 14 14 14 14 14 84 86 73 74 74 74 75 75

ND 0 0 0 0 0 0 0 0 13 13 14 14 14 58

OK 140 140 139 139 117 117 111 121 47 47 48 48 48 50

OR 100 100 112 83 85 85 76 78 34 40 29 29 38 46

NM 12 12 12 33 35 69 74 77 79 80 114 84 83 42

SD 178 178 177 177 175 175 103 113 32 32 48 48 40 40

HI 11 11 11 9 16 16 16 7 14 14 43 44 36 36

KS 42 42 42 19 19 0 0 0 0 0 0 14 14 34

IA 16 60 60 55 65 53 60 67 69 39 39 39 29 29

VT 16 43 43 43 43 43 43 57 41 14 19 19 19 29

NH 65 65 65 46 47 0 11 11 11 11 11 11 16 16

NE 175 165 164 71 38 38 38 38 0 0 2 2 3 3

MT 0 0 0 0 0 0 2 2 2 2 2 2 2 2

MS 11 39 39 28 28 28 29 30 30 1 1 1 1 1

PR 39 68 68 68 68 29 29 30 31 1 1 1 1 1

WY 118 117 117 117 117 118 118 119 0 0 0 0 0 0

SC 36 37 51 38 15 20 20 20 21 20 5 6 6 0

RI 2 26 26 35 35 33 33 33 34 10 10 0 0 0

NV 23 23 33 33 33 33 33 9 10 10 0 0 0 0

WV 21 21 21 21 21 21 21 21 0 0 0 0 0 0

AR 19 19 19 19 19 19 19 0 0 0 0 0 0 0

UNK 0 0 0 0 0 0 0 0 0 0 0 0 0 0

AK 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total 224,800 262,000 262,300 263,900 271,100 278,200 288,900 264,300 206,300 179,700 184,700 199,300 200,200 192,900

Figure 1.09Life of IT Funds in Years

Life of IT Funds In Years % of Funds

=19 10%

This chart tracks the year in which a 10-year fund is, infact, dissolved. These later periods are referred to asout years. Historically, after the 10th year, only a fewcompanies that typically do not have huge upside potentiaremain in the portfolios. But the slow pace of exits in recenyears has resulted in a number of good, mature companiesremaining in portfolios well past the nominal 10-year markLife science funds tend to have lives two years longer thantypical technology funds. In preparing this chart, partialyears are rounded to the nearest whole year. So 10.4 yearswould round to 10 years, and 10.5 years would round up to11 years. The median life span of a fund in this analysis is14.17 years.

Source: Adams Street Partners, based on2010 analysis of dissolved funds.


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CAPITAL COMMITMENTS

MethodologyThe Thomson Reuters/National Venture Capital Association sample in-

cludes US-based venture capital funds. Classications are based on the

headquarters location of the fund, not the location of the venture capital

rm. The sample excludes fund of funds.

Effective November 1, 2010, Thomson Reuters venture capital fund

data has been updated in order to provide more consistent and relevant

categories for searching and reporting. As a result of these changes, there

may be shifts in fundraising statistics from legacy editions of this publica-

tion due to reclassication of funds based on analysis of actual activity by

primary market, nation, and/or fund stages.

As dened by Thomson Reuters, capital commitments, also known as

fundraising, are rm capital commitments to private equity/venture capi-

tal limited partnerships by outside investors. For purposes of these statis-

tics, the terms capital commitments, fundraising, and fund closes

are used interchangeably. There are three data sources for tracking capital

commitments: (1) SEC lings that are regularly monitored by our research

staff, (2) surveys of the industry routinely conducted by Thomson Re-

uters, and (3) veried industry press and press releases from venture rms

Capital commitments are stated on either (1) a calendar-year basis when

committed (for example, throughout this chapter) or (2) a vintage-year

basis, which is designated once the fund starts investing (for example

gure 1.04). The data in this chapter is by calendar year and incrementally

measures how much in new commitments funds raised during the calen

dar year. Consider, for example, a venture capital rm that announces i

will begin raising a $200-million fund in late 2011, raises $75 million in

2012, and subsequently raises the remaining $125 million in 2013. In this

chapter, nothing would be reected in 2011, $75 million would be counted

in 2012, and $125 million would be counted in 2013. Assuming it started

investing and made its rst capital call in 2013, the entire fund would then

be considered to be a vintage year 2013 fund. In Figure 1.04, for example

this hypothetical fund would show in the totals for 2013.

Note that fund commitments presented in this publication do not in

clude those corporate captive venture capital funds that are funded by a

corporate parent, which do not typically raise capital from outside inves-

tors.

The year 2013 continued to be a very challenging fundraising year for most venture capital rms in the United States. This is due to a lack of recent

distributions caused by the tight exit markets, lackluster returns by many venture funds over the past decade compared with the prior decade, and a

challenge for the largest alternative asset investors to place money in many of the smaller funds in this asset class because of scale. Only $16.8 billion

was raised by 187 funds. This is considerably less than the $19.6 billion raised in 2012 or the $19.0 billion raised in 2011. The amount of new commit-ments each year by venture capital funds continues to be less than the amount they invested in companies.

The top fundraising state in 2013 was Massachusetts at $5.5 billion, which edged typical leader California at $5.3 billion. New York was third largest

at about half that amount. Much further behind, Washington state and Virginia rounded out the top ve. Combined, Massachusetts and California funds

raised 64% of the total. Adding in New York, the top three states raised more than three-quarters (77%) of the total amount.

The Thomson Reuters taxonomy considers venture capital and buyout/mezzanine to be the two components of Private Equity. Figures 2.02 and 2.05

show venture capitals decreasing share of the private equity dollars. Venture capital raised 24% of the asset class allocations in 2009 compared with

11% in 2013.


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0

20

40

60

80

100

120

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

($

Billions)

Year

Figure 2.01Capital Commitments To U.S. Venture Funds ($ Billions)

1985 to 2013


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Figure 2.02Capital Commitments To Private Equity Funds 1985-2013

Year Sum ($Mil) % of Total PE No. Funds Sum ($Mil) No. Funds Sum ($Mil) No. Funds

1985 3,759.9 56% 118 2,971.8 21 6,731.7 139

1986 3,584.5 42% 101 5,043.7 32 8,628.2 133

1987 4,379.1 21% 116 16,234.6 47 20,613.6 163

1988 4,209.7 28% 104 10,946.4 54 15,156.1 158

1989 4,918.8 29% 106 12,068.5 78 16,987.3 184

1990 3,077.5 26% 85 8,831.5 64 11,909.0 149

1991 1,900.3 31% 40 4,242.1 27 6,142.4 67

1992 5,223.1 33% 80 10,752.5 58 15,975.6 138

1993 4,489.2 21% 93 16,961.7 81 21,451.0 174

1994 7,636.7 27% 136 20,157.0 99 27,793.7 235

1995 9,387.3 26% 161 27,040.7 108 36,428.0 269

1996 11,550.0 26% 168 32,789.4 104 44,339.3 272

1997 17,741.9 30% 242 42,165.3 134 59,907.2 376

1998 30,641.7 33% 290 61,636.4 172 92,278.1 462

1999 53,420.2 51% 428 51,363.2 164 104,783.4 592

2000 101,417.9 56% 634 79,164.8 170 180,582.7 804

2001 38,923.4 43% 324 51,388.3 137 90,311.7 461

2002 10,388.1 23% 203 35,123.3 124 45,511.4 327

2003 9,144.7 20% 160 35,946.4 123 45,091.1 283

2004 17,656.3 23% 211 59,837.4 158 77,493.7 369

2005 30,071.9 22% 233 107,746.6 206 137,818.6 439

2006 31,107.6 17% 236 152,899.7 219 184,007.3 455

2007 29,401.0 11% 235 234,460.4 266 263,861.4 501

2008 25,052.7 12% 214 176,340.7 232 201,393.5 446

2009 16,122.0 24% 159 50,145.9 149 66,267.9 308

2010 13,243.3 20% 173 51,901.5 177 65,144.8 350

2011 18,962.3 21% 186 70,344.2 210 89,306.5 396

2012 19,554.6 15% 208 108,076.4 226 127,631.0 434

2013 16,765.7 11% 187 130,256.2 214 147,021.9 401

Venture Capital Buyouts and Mezzanine Capital Total Private Equity


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Figure 2.03Venture Capital Fund Commitments 1985-2013 ($ Millions)

State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

MA 201.88 1,460.41 546.89 279.00 2,260.07 489.77 473.90 493.63 940.19 1,860.48 2,364.08 1,516.09 3,757.76 9,346.10 9,065.81 15,399.96 3,092.69 7,754.42 1,233.34 2,148.71

CA 1,249.69 972.35 1,268.36 966.91 1,523.51 1,010.69 549.12 1,331.19 1,388.50 1,829.06 3,106.99 3,724.04 5,717.43 8,525.24 21,928.12 44,218.83 14,166.13 2,767.31 5,634.15 8,731.29

NY 534.28 356.09 973.09 813.49 338.52 529.47 180.08 1,051.12 367.79 1,158.41 1,954.71 1,875.06 2,601.56 5,200.95 7,586.57 16,691.77 9,721.17 2,598.46 1,596.98 1,797.30

WA 37.41 33.48 231.25 40.69 161.45 142.81 55.43 381.89 137.00 282.50 193.64 326.00 393.97 1,406.64 1,802.52 3,687.77 2,232.20 185.50 75.63 893.91

VA 299.07 155.86 310.63 357.37 61.50 129.50 150.00 300.30 419.25 388.28 260.20 424.93 1,165.98 1,067.56 2,842.58 1,813.40 3,464.30 46.73 165.00 1,756.45

TN 253.67 61.34 119.67 0.35 125.00 243.46 75.00 110.00 176.58 401.30 213.13 605.75 117.61 1,001.84 569.79 1,040.86 651.68 392.11 560.62 196.70

CO 4.20 7.47 24.18 0.00 49.25 13.61 50.00 0.00 224.90 479.20 66.50 439.00 145.00 768.15 839.70 1,989.92 340.45 380.50 105.00 161.52

TX 89.43 47.02 324.62 157.79 26.20 57.20 94.40 247.17 277.82 182.81 229.68 295.21 575.13 466.35 1,298.59 964.19 1,103.18 477.86 701.08 432.30

PA 31.50 70.55 32.23 69.90 79.71 0.40 0.00 0.00 114.22 0.00 19.35 216.40 252.88 432.62 1,942.08 2,414.30 512.63 117.96 93.92 83.89

OH 25.00 126.13 37.40 59.51 0.00 0.00 5.00 48.00 39.90 36.87 128.50 239.32 179.99 408.79 640.30 1,174.61 888.01 83.03 1.20 955.27

MI 38.74 0.00 0.00 4.80 0.00 0.00 0.00 0.00 0.00 0.00 130.00 820.00 667.60 391.50 359.60 778.29 622.18 314.80 0.00 324.48

MN 20.00 23.45 72.50 0.00 34.07 0.00 0.00 40.00 0.00 115.90 83.77 149.00 109.07 266.36 254.81 261.55 36.93 22.40 93.25 0.00

IL 0.00 3.50 10.00 12.80 15.00 2.00 0.00 17.00 5.00 0.00 7.00 20.00 165.40 255.99 884.03 2,211.92 119.15 37.48 196.27 71.95

NC 9.70 0.00 36.00 10.70 29.30 0.00 35.00 0.00 133.28 105.00 106.00 0.00 77.70 250.00 325.88 954.75 25.75 7.95 56.00 1.00

UT 13.60 109.75 51.20 417.50 20.00 161.80 16.20 946.30 65.85 164.05 46.80 35.50 207.97 216.70 106.57 1,826.52 16.50 275.50 26.00 49.80

GA 0.00 0.00 15.10 65.00 0.00 14.00 0.00 0.00 56.00 0.00 74.19 34.30 40.85 181.00 30.00 917.90 19.00 0.00 0.00 55.00

MO 54.05 73.06 54.65 12.10 117.98 44.52 166.60 30.10 109.70 181.65 113.60 264.00 783.90 177.00 1,240.76 2,751.47 536.61 85.66 387.97 450.73

WI 6.50 7.00 31.48 22.80 38.12 0.60 0.00 0.00 0.00 63.45 10.10 183.50 349.00 173.68 180.41 613.41 119.64 74.90 275.86 17.31

ND 2.56 0.00 86.98 75.00 0.00 30.38 0.00 67.00 4.43 85.97 10.00 0.00 364.95 58.00 658.58 662.03 329.95 101.70 4.88 209.72

DC 0.00 0.00 0.00 0.00 0.00 0.00 0.00 10.60 14.20 169.00 18.26 23.95 87.95 51.00 373.35 69.50 26.50 52.00 0.00 72.98

LA 0.00 10.50 0.80 0.00 0.00 0.00 0.00 0.00 0.00 27.00 0.00 0.00 17.00 50.00 61.50 126.00 231.65 0.00 34.30 40.30

KS 0.00 31.82 0.00 0.00 10.30 0.00 0.00 0.00 0.00 0.00 0.00 24.29 0.00 45.30 0.00 110.10 0.00 0.00 0.00 0.00

MS 150.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.00 30.00 0.00 137.00 16.35 11.00 49.00 18.70

OR 643.50 0.00 33.26 0.00 0.00 53.13 0.00 0.00 63.60 0.00 11.30 6.00 45.40 25.03 79.63 64.77 286.20 0.00 0.00 80.30

VT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 11.00 0.00 22.00 14.00 131.00 1.00 0.00 0.00 5.00

IN 0.00 10.00 0.00 27.30 16.30 4.70 0.00 49.00 0.00 20.00 0.00 116.11 0.00 12.80 20.00 103.30 0.00 10.00 35.56 17.00

FL 0.00 0.00 30.00 0.00 0.00 0.00 0.00 0.00 0.00 32.00 32.00 0.00 0.00 10.00 0.00 65.00 0.00 14.00 0.00 2.20

CT 10.73 0.00 60.05 0.00 0.00 0.00 0.00 56.00 0.00 0.00 5.00 0.00 10.50 1.78 5.00 21.00 26.00 0.00 0.00 10.00

NJ 5.00 0.00 6.70 32.50 0.00 0.00 0.00 0.00 3.00 13.50 0.00 26.00 11.30 0.30 320.80 241.00 8.00 0.00 64.84 63.33

MD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

OK 16.60 0.00 0.00 24.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 25.00 0.00 0.00 0.00

AL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.60 0.00 0.00 0.00 9.50 0.00 0.00 2.53 0.00 7.86

SD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

IA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 12.00 0.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00 0.00

RI 49.42 0.00 0.00 40.00 0.00 0.00 15.00 0.00 0.00 0.00 20.00 0.00 50.00 0.00 0.00 0.00 0.00 11.20 8.80 0.00

HI 0.00 0.00 22.04 947.60 0.00 0.00 0.00 2.00 0.00 58.80 0.00 21.65 0.00 0.00 126.89 0.00 76.45 15.60 2.95 0.00

MT 0.00 0.00 0.00 37.00 0.00 0.00 0.00 0.00 10.10 0.00 0.00 0.00 0.00 0.00 29.40 60.00 20.70 42.61 40.80 0.00

NH 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.50 4.00 12.75 2.00 0.00

ME 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 19.65 25.00 0.00 0.00 0.00

AZ 0.00 0.00 0.00 0.00 12.50 4.50 0.00 0.00 0.00 0.00 14.00 0.00 0.00 0.00 0.00 0.00 0.00 15.00 0.00 0.00

WV 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15.00 27.00 0.00 0.00 0.00

SC 0.00 0.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 31.20 0.00 0.00 0.00

ID 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 50.00 25.00 0.00 0.00 25.00 0.00 0.00 10.00 0.00 0.00

PR 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

NV 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 111.01 36.00 0.00 0.00 0.00 40.60 0.00 0.00 0.00 0.00

NE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 25.00 31.00 64.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 10.00

DE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 62.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

UN 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 26.00 0.00 0.00 0.00 0.00

WY 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 0.00

AR 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 40.00 0.00 31.00 30.15 0.00 16.60 82.00 14.00 0.00 0.00 10.68

NM 36.15 27.70 0.00 2.06 0.00 155.00 40.00 0.00 0.00 6.10 1.90 0.00 0.00 0.00 0.00 0.00 0.00 0.00 17.76 20.35

KY 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 14.00 7.40 15.00 0.00 42.00 0.00 0.00 0.00 135.00 8.00 2.14 0.00

Total 3 ,782 .66 3 ,587.47 4, 379.07 4 ,476 .68 4, 918.80 3 ,097.52 1 ,905.73 5 ,243 .80 4, 565 .3 0 7, 73 3.7 2 9,442.31 11,553 .5 8 17, 993.04 3 0,842.67 53, 63 8.36 101 ,740.87 3 8, 952 .18 15,928 .95 11, 465 .2 8 18,696.01


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Figure 2.03 (Continued)Venture Capital Fund Commitments 1985-2013 ($ Millions)

State 2005 2006 2007 2008 2009 2010 2011 2012 2013

MA 1,735.74 2,252.82 4,409.92 1,949.58 1,652.22 1,259.41 4,096.04 659.75 5,474.78

CA 13,319.31 13,635.99 12,533.51 13,972.15 8,635.34 6,337.42 9,678.38 14,708.16 5,315.87

NY 9,150.90 4,365.57 5,121.96 2,516.05 3,573.19 2,664.92 2,339.74 1,414.73 2,200.41

WA 629.84 379.48 263.77 1,037.91 26.79 82.72 209.64 51.34 561.77

VA 143.06 2,910.97 286.64 227.29 157.73 938.22 11.00 23.15 446.06

TN 204.27 1,812.38 235.17 52.79 503.67 112.40 100.27 64.78 310.39

CO 432.75 472.23 782.73 368.88 484.14 67.60 543.52 28.93 275.10

TX 80.46 421.96 544.90 258.01 215.60 237.65 215.05 131.67 274.35

PA 68.76 132.45 358.26 220.75 3.50 262.09 6.13 280.36 259.59

OH 280.57 562.85 1,376.20 492.38 5.28 0.00 0.00 398.81 240.19

MI 392.62 896.30 314.60 1,122.94 204.06 0.00 475.00 0.40 236.24

MN 83.75 61.83 99.50 133.96 88.79 56.95 160.93 277.79 222.01

IL 418.62 555.42 582.42 105.28 14.42 121.37 35.63 44.70 187.62

NC 313.00 11.20 109.26 25.20 32.25 74.55 1.57 268.00 154.98

UT 295.00 473.24 275.00 325.10 21.80 0.00 0.00 150.00 136.85

GA 103.50 361.70 203.00 18.73 18.75 30.00 25.55 17.15 126.45

MO 688.16 794.40 825.81 962.73 233.18 205.17 126.81 281.89 101.38

WI 108.01 401.37 185.28 102.93 5.37 457.40 109.58 479.98 67.50

ND 558.16 152.22 81.45 83.38 1.88 30.27 82.40 29.44 45.27

DC 4.00 12.00 0.00 0.00 0.00 0.00 0.00 0.00 44.80

LA 23.98 169.59 213.15 576.50 34.26 16.45 160.42 159.33 40.00

KS 12.00 37.96 10.50 0.00 0.00 0.00 0.00 0.14 25.86

MS 69.65 19.10 0.00 117.93 101.35 1.53 58.10 19.90 14.23

OR 828.70 39.65 210.30 53.94 0.00 72.00 0.00 155.00 12.02

VT 0.00 3.28 0.00 14.48 0.00 16.00 0.00 0.00 10.00

IN 6.00 24.49 1.16 28.80 1.00 28.05 0.00 38.95 8.00

FL 0.00 0.00 2.03 5.00 5.90 12.25 2.03 6.98 2.00

CT 0.00 42.91 0.00 0.00 15.35 0.00 0.00 0.00 0.00

NJ 122.44 23.00 49.00 255.56 84.00 176.51 193.98 20.11 0.00

MD 0.00 0.25 10.04 19.97 0.00 0.00 7.85 0.00 0.00

OK 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

AL 0.00 0.00 0.00 6.39 0.00 0.00 0.00 0.00 0.00

SD 0.00 1.75 0.00 0.00 0.00 0.00 0.00 0.00 0.00

IA 0.00 1.35 0.00 0.00 0.00 0.00 0.00 0.00 0.00

RI 0.00 5.00 6.66 0.00 0.00 0.00 0.00 4.50 0.00

HI 0.00 45.55 19.45 0.00 0.00 0.00 5.50 4.64 0.00

MT 19.00 0.00 0.00 20.00 0.00 0.00 222.18 57.16 0.00

NH 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

ME 0.00 0.00 11.00 3.00 0.00 0.00 0.00 0.00 0.00

AZ 5.60 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

WV 0.00 0.00 75.75 0.00 0.00 0.00 0.00 0.00 0.00

SC 0.00 0.00 1.00 0.00 0.00 0.00 0.00 0.00 0.00

ID 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

PR 0.00 0.00 0.00 13.20 0.00 0.48 0.00 0.18 0.00

NV 0.00 0.00 0.00 0.00 0.00 2.00 0.00 1.00 0.00

NE 0.00 0.00 0.00 0.00 0.00 100.00 100.00 0.00 0.00

DE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

UN 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

WY 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

AR 0.00 80.68 102.33 15.09 9.20 27.32 0.15 40.00 0.00

NM 25.65 5.20 1.27 0.00 0.00 35.00 1.14 0.00 0.00

KY 7.95 65.00 98.00 12.00 0.00 0.00 0.00 7.00 0.00

To ta l 3 0,131 .45 3 1, 23 1. 10 29, 400.99 25 ,1 17.84 16, 12 8.99 13,425 .7 2 18, 968.57 19, 825 .9 1 16,7 93.70


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Figure 2.04Top 5 States

By Venture Capital Committed 2013

State No ofFunds

Committed($Mil)

Massachusetts 24 5,474.8

California 58 5,315.9

New York 25 2,200.5

Washington 5 561.8

Virginia 5 446.1

Subtotal 117 13,999.1

Remaining States 70 2,766.8

Total 187 16,765.9

-

20

40

60

80

100

120

140

160

180

200

220

240

260

280

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

($Bi

llions)

Year

Venture Capital Buyouts and Mezzanine

Figure 2.5Private Equity Annual Commitment ($ Billions)

1985 to 2013


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Measuring industry activity by the total dollars invested in a given year shows that the industry has remained generally in the $20 billion to $30 billion

range since 2002. In 2013, $29.5 billion was invested in 3,382 companies through 4,041 deals. The number of deals is 4% higher than 2012 counts

but is essentially the same as 2011. The number of rst-time fundings increased in 2013 to 1,334 companies from the previous 1,275, but it remains

near the top of the healthy range of 1,000 to 1,400 rst-time fundings in a year. Further parsing the data shows 50% of the investment dollars going toCalifornia companies, down from 53% in 2012 but consistent with the previous three years. The year 2013 saw a record 56% of the nancing rounds

going to seed and early stage companies, compared with a more typical one-third of deals. A carefully watched statistic is the investment in the life sci

ences. It is possible that the downward plummet in rst-time life sciences investment is starting to reverse, led by Biotechnology, but it is still too early

to be sure. Corporate Venture investment continues to gain considerable strength and presence in the overall industry.

INVESTMENTS

SectorsSoftware was the leading sector in 2013, receiving 37.3% of the total

dollars. The second largest sector was Biotechnology, which was less than

half that amount at 15.4% of total investment. Media and Entertainment,

where much of the social networking is categorized, received 9.9% and

Medical Devices and Equipment received 7.2%.

The life sciences share of the venture capital investment dollars de-

creased in 2013 to its lowest level since 2001 at 23.6% of the total dollars.

(For purposes of this paragraph, life sciences is made up of all three life

science categories. Some industry observers choose to exclude the health-

care services sector from the life sciences totals.) This is down from the

recent peak of 32.7% in 2009. (The all-time peak was 36.3% in 1992.)

This recent downward life sciences trend is very visible when just

looking at rst fundings. In 2013, only 155 life sciences (dened in this

paragraph as Biotech/pharma and Medical Devices/therapeutics, but not

healthcare services) received rst fundings, up just slightly form 148 in

2012. While the uptick driven by Biotechnology rst fundings may be an

early indicator of a rebound, these last two years are the lowest counts

since 1996. The possible recovery in Biotechnology investing may have

been driven in part by the success of recent efforts at FDA reform and the

strong number of Biotechnology company IPOs in 2013 (count = 42).

Among rst fundings, Software led the way with 591 companies get-

ting their initial venture capital rounds. This is more than 46% of the rst

fundings. Again in 2013, the second most active rst-funding sector is

Media and Entertainment at 170 rst fundings.

Stages and First-Time FundingsInvestment activity in the industry seems to be bifurcated by the large

number of later stage companies hoping to join fairly strong public mar-

kets at year end 2013 and the very large number of new companies being

funded by the industry. While many of the larger portfolio companies,

IPOs, and big acquisitions have gotten the headlines and visibility, 2013

actually saw the highest percentage of seed- and early-stage deals ever at55.7% of all deals. This surpasses the prior record of 52.6% in 2012. This

certainly would challenge the suggestion that the industrys attention is

single-focused on later-stage companies. Despite the urry of IPO activity

in 2013 and acquisitions announced for early 2014, there remains a record

number of companies in portfolios in the later stage of development that

in most other positions in the business cycle would have already gone

public or otherwise been acquired.

With the rule of thumb that a healthy venture capital industry invests in

1,000-1,300 new companies each year, the 1,334 rst fundings in 2013 is

very much in that range. Not surprisingly, 83% of those rst round invest-

ments were made at the seed and early stage.

Geographical Spread Across the United StatesThe year 2013 provided an interesting contrast in geographic disper-

sion. The slight majority of investment dollars went to California compa

nies at 50.01%. This is down from the record 53.2% in 2012. Interestingly

companies in 48 states and DC received nancing, which ties the 2012

record high. Ranked by total dollars invested, the top ve states (Califor

nia, Massachusetts, New York, Washington and Texas) received 78% o

all the dollars invested nationally.

This compares to 2011, when California companies received a then-

record 51.2% of the dollars. That year, companies in a record 47 states and

DC received venture capital funding. Together, the top ve states (Cali

fornia, Massachusetts, New York, Texas, and Washington State) received

77% of the total dollars.

California-domiciled venture capital rms made investments in 38

states in 2013. Approximately 48% of all the money invested in Califor

nia came from California-domiciled rms. Conversely, California-based

rms concentrated 68% of their investment dollars within the state.

Corporate Venture Group InvolvementThe number and reach of corporate venture capital groups increased

in 2013, along with the visibility of this group. These groups provided

an estimated 10.5% of the venture capital invested by all venture groups

They were involved in 16.9% of the deals the highest level in ve years

Going forward, all signs suggest that these groups are becoming more

involved alongside traditional venture rms in deals, as well as initiating

corporate venture group syndicates to do deals in lieu of, or in advance of

investment rounds by traditional venture rms.

MethodologyAs calculated by Thomson Reuters, venture capital investment data are

derived from several sources. Primarily, survey information is obtainedfrom the quarterly survey that drives the MoneyTree Report from Price

waterhouseCoopers and the National Venture Capital Association based

on data from Thomson Reuters. This is the ofcial industry database of

venture capital investment. Secondly, Thomson Reuters obtains data from

SEC lings that are regularly monitored by our research staff. Finally

publicly available sources such as press releases and trade publications

are used.

For detailed information on which transactions qualify as MoneyTree

deals and are therefore counted in this chapter, please refer to Appendix B


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0

20

40

60

80

100

120

1

985

1

986

1

987

1

988

1

989

1

990

1

991

1

992

1

993

1994

1

995

1

996

1

997

1

998

1

999

2

000

2

001

2

002

2

003

2004

2

005

2

006

2

007

2

008

2

009

2

010

2

011

2

012

2

013

($

Billions)

Year

Figure 3.01Venture Capital Investments ($ Billions)

1985 to 2013

Figure 3.03Venture Capital Investments

Top 5 States in 2013

State # Companies # Deals Invested($Bil)

California 1,362 1,616 14.8

Massachusetts 307 364 3.1

New York 344 403 2.9

Texas 134 154 1.3

Washington 107 126 0.9

Total* 2,254 2,663 23.0

*Total includes top 5 states only

Figure 3.02Venture Capital Investments in 2013 By Industry Group

Industry Group # Companies # Deals InvestmentAmt ($Bil)

# Companies # Deals InvestmentAmt ($Bil)

Information Technology 2,360 2,784 20 1,009 1,009 3.5

Medical/Health/Life Science 649 816 6.9 167 167 1.2

Non-High Technology 373 441 2.7 158 158 0.4

Total 3,382 4,041 29.6 1,334 1,334 5.1

Initial InvestmentsAll Investments


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AK

AR

NE

WY

PR

VI

GU

5

AL

113

AZ

CA

429

CO

182

CT

286

DC 71

DE

421

FL

412

GA

2

HI

23

IA

7

ID

IL

25

IN33

KS

11

KY

15

LA

3,079

MA

664

MD

27

ME

108

MI

270

MN

77

MO

1

MS

MT

260

NC

24

ND

74

NH

322

NJ

26

NM

7

NV

2,870

NY

319

OH

8

OK

138

OR

447

PA

82

RI

86

SC

12

SD

109

TN

1,316

TX

315

UT594

VA

21

VT

913

WA

36

WI

1

WV

14,770

10

86

435

0

Figure 3.06Amount of Capital Invested By State in 2013 ($ Millions)

USA

AK

AR

NE

WY

PR

VI

GU

4

AL

19

AZ

CA

62

CO

43

CT

27

DC 5

DE

37

FL

35

GA

2

HI

2

IA

2

ID

74

IL

11

IN6

KS

6

KY

6

LA

307

MA

63

MD

4

ME

58

MI

32

MN

32

MO

2

MS

1

MT

NVCA Yearbook 2014

Documents

Transcript of NVCA Yearbook 2014