first annual excellence in investing conference
TRANSCRIPT
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1st Annual Excellence in Investing Conference, in Partnership with the Ira Sohn Research Conference FoundationOctober 6, 2010
A Supply Side View of Tech IPO’s:A Rising Tide Through 2014
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A Global Firm
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Who We Are
Accel works in support of exceptional entrepreneurs to build world-class companies. Our contributions extend far beyond pure financing.
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Who We’ve Backed
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IPOs Filed Monthly IPO Backlog
IPOs Priced Annually IPOs Priced Monthly
Source: Equidesk.Data as of September 12, 2010. Data does not include REITs, Closed End Funds, and SPACs.
0
29
10
150
125
7
0 0
30
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…as the Current IPO Backlog Continues to Build
®Tech IPO Market Peaks About Every15 Years – ’69, ‘83, ‘99, ’14?
Supply: Real Causality
• Quantity of Innovative Companies
- High Growth- High Quality
Demand: “The Watched Pot”
• Positive Cash Flow into mutual/hedge funds with tech/growth small cap charters
• Rising momentum price trend
• Consistent trading of IPO’s to premiums
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Necessary Conditions:
®Supply: Why 15 Years?Forces of Creative Destruction Need Enough Time
• Semiconductors – Moore’s Law is intact• Storage costs and densities • Fiber/Broadband Costs and Ubiquity• Mobile Broadband• Software Development Productivity
10x Productivity improvement at all levels
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CreatingYour
Future
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Supply: Pent-Up
• Hostile Public Market• SOX Costs - $2M plus per year• M&A Alternatives at 5-10x Revenue• IPO Size Minimum at $100MM• Poor IPO Trading Experience
Real but Nuisance Factors
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Convergent Synergistic Platforms
Social Media
Ad Serving/Targeting
Mobile Broadband/LTE
Mobile Apps
SaaS Models
Security
Cloud Utilities Services/Storage
E-commerce Models
Digital Media
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SpectacularAccelerated
Growth
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Build it and they will come:Many Great Companies Await in the Venture Portfolios
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Tech Enabled - ExampleseCommerce Gilt, Diapers, Etsy, Fingerhut, Vente-Privee,
Iron Planet, Groupon, Hautelook, ModCloth, Showroomprive, Chegg
SaaS Jive Software, Trustwave, Meltwater, Service-Now.com, WorkXpress, Cloud9 Analytics, Grid Dynamics, Brightcove, Workday, Cornerstone
Social Media Facebook, Twitter, Yelp, LinkedIn
Financial Technology
Integral Tech, Yodlee, FX Alliance, Liquidnet, Trading Screen, NetSpend, Mercury Payment Systems, FXCM, LPL Financial, Promiss Solutions, Fleetcor, Gain Capital, SunRun
Healthcare/IT ePocrates, Passport Healthcare, Meditech, Epic Systems, MEDecision, ZirMed
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Build it and they will come:Many Great Companies Await in the Venture Portfolios
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Enablers - ExamplesDigital Media Glam Media, Sugar, Inc., HomeAway, Zillow, Trulia,
TheLadders, Kayak, Zynga, MLB.com, eHarmony, NexTag, Gameforge
Mobile Apps/LTE MetroPCS, Sabre Industries, Force10, Skype, NextG
Cloud Utilities Atempo, Fusion-io, Nimbus Data Systems, Asigra
Low-TouchSoftware
Atlassian, Acronis, ExactTarget, Zoho, TeamViewer, SurveyMonkey
Ad Models Adknowledge, Collective Media, Demand Media, Announce Media, Vibrant Media, Media Bank, Responsys, Nextjump
Security SafeNet, Avast, Splunk, Qualys, Imperva, Webroot, Barracuda Networks, AVG, ESET
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Final Points
• Benefits of being Early to the Cycle- Lower Prices- More seasoned companies- Higher Quality- Longest Future Growth Trajectories
• Despite some even larger companies, this Cycle will be more like ‘83 than ’99, moderated by both the memories of excesses and weaker macro environment
• Health Care and CleanTech will participate tangentially but have distinct characteristics – e.g. Government Regulations and Capital Intensivity.
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1st Annual Excellence in Investing Conference, in Partnership with the Ira Sohn Research Conference FoundationOctober 6, 2010
A Supply Side View of Tech IPO’s:A Rising Tide Through 2014