webguild startup idol vc perspective
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Ethan Kurzweil
Bessemer Venture Partners
Startup Idol Conference
July 23, 2009
VC Perspective on Trends in Investing
Presentation online at: http://www.slideshare.net/ethankurz
Bessemer Venture PartnersFounded 1911
Mumbai (India)
IsraelBostonNew York
Califonia
Presentation online at: http://www.slideshare.net/ethankurz
Andre PeroldFinance Professor
Harvard Business School
$100 Trillion
And so you asked for trends…
Page 13
USA Venture-backed M&A and IPO transactionsExit activity falls in the wake of the financial crisis
45
101
2111 13
2430 33
51
25
3
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Q1200
9
19.5 19.2
1.8 1.6 1.53.7
6.8
0.6
5
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Q1200
9
US venture-backed M&A transactions $Band number of transactions
US venture-backed IPO amount raised by transactions $B and number of transactions302 200 390 393 361 480 465 471 462 348 68 250 202 22 20 23 67 43 56 76 7
Source: Dow Jones VentureSource Note: chart scales vary for clarity
2.4
$3.9
$6.0
$7.8$8.2
$7.8$7.9$8.1$8.1
$7.3$6.6
$7.8$7.6
$6.5477
601635
701706725683
791
653640695713
640
$0
$2
$4
$6
$8
$10
1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09
0
150
300
450
600
750
Amount Invested ($B) Number of Deals
Investment Activity Declines in 1Q ‘09Deal Flow and Equity into Venture-Backed Companies
Am
ount
Inve
sted
($B) N
um
ber of Deals
Source: Dow Jones VentureSource
Signs of hope in Q2…
And even better, first-time financings are on the rise
When Great Companies Were Founded…
1980 1982 1984 1986 1988 1990 1992 1994 1996
FORE SYSTEMS
When Great Companies Were Founded…
2001 2002 2003 2004 2005 2006 2007
What’s hot right now?
Big Markets
• Energy• Internet• Stem Cells• Security• Mobile• Consumerization of
enterprise software
• India• Web Video• Social Gaming• Virtualization• SaaS
Resistant: Open Source, Virtualization, Low Cost Recurring
Revenue Models
Portfolio Analysis of Exposure to Changes in GDP
Immune: Cure Cancer , Cost Saving Non-Elective HC Services
Exposed: Consumer Products, Internet Display Ads, Elective
Surgery
Source: Scale Venture Partners
Benefited by GDPChanges
Page 18
Israel: Current status of VC-backed companies by year of initial financing
30
8
108
23
169
276 18
1996-2001
2002-2008
IPO M&A Private & Independent Out of Business
225
Source: Dow Jones VentureSource
Year of initial VC financing
325
► In Israel 325 companies have received initial VC financing globally since 2002 and US$2.8 billion has been invested in them to date.
► In the israel 70 Venture-backed M&A and IPO transactions were at 2007-2008
532
Page 19
Total capital invested to date in Israel VC-backed companies by year of initial financing and current status
$2,536.3
76
$134.9
$28.0
1996-2001
2002-2008
Source: Dow Jones VentureSource
Year of initial VC financing
►Israel Venture-backed M&A and IPO transactions value at 2007-2008 is $ 3.9B
$2.8B
$5.7B
Source: Dow Jones VentureSource
Failure *is* an option...
Bessemer’s Law of Internet Efficiency
Cost
1995 1999 2003 2007
“The time and money required to
produce (design, develop, test, launch,
scale) a basic e-commerce application
drops in half every two years.”
$300
$20,000
NetScape
Apache
Java
ActiveX
Flash
Shockwave
PHP
XML
Ruby on Rails
service APIs
Amazon EC2
AJAX
Web Application Development
And here’s why…
Piryx
MashLogic
“It’s like a frickin Swiss Army Knife for hyperlinks…I’m putting this on my must-have list of Firefox addons.”
What’s hot right now?
CAPITALEFFICIENT
Tip #1: Meet your new sales force…
Tip #1: Meet your new sales force…
Tip #3: Design: less is more…
Tip #4: Who are your customers?
Tip #5: Offices are overrated
If Bessemer won’t invest…
Ethan Kurzweil
Bessemer Venture Partners
ethankurz@bvp.com
Twitter: @ethankurz
Slides available at: http://www.slideshare.net/ethankurz
Startup Idol Conference
July 23, 2009
Thanks!
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