pitchbook 2q2013 vc rundown report

Better Data. Better Decisions.

RundownVenture Capital2Q 2013

13VC funds closed on $3.3 billion in

1Q 2013

VC firms completed 93 exits

in 1Q 2013, the fewest since

3Q 2009

6Page 5 Page 15

VC deal flow continued to decline in 1Q 2013, with

$6.3B invested across

753 deals

PitchBook®

Bet ter Data. Bet ter Decisions.PitchBook 2Q 2013 Venture Capital Rundown

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2

Table of ContentsIntroduction

VC SnapshotVC Overview

Angel & Seed RoundsEarly Stage Venture RoundsLate Stage Venture Rounds1Q 2013 First Financings

Regional RundownSector Rundown

VC ExitsVC Fundraising

Selected 1Q 2013 Deals1Q 2013 Active Investors

Methodology

3456-78-910-111213141516171819

COPYRIGHT © 2013 by PitchBook Data, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means – graphic, electronic, or mechanical, including photocopying, recording, taping, and information storage and retrieval systems – without the express written permission of PitchBook Data, Inc. Contents are based on information from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Nothing herein should be construed as any past, current or future recommendation to buy or sell any security or an o!er to sell, or a solicitation of an o!er to buy any security. "is material does not purport to contain all of the information that a prospective investor may wish to consider and is not to be relied upon as such or used in substitution for the exercise of independent judgment.


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3

IntroductionVC investing off to a sluggish start in 2013At this time last year, the venture capital (VC) industry looked poised for prolonged growth. Deal-making was steadily increasing quarter-over-quarter—reaching all-time highs in both 1Q and 2Q 2012—and fundraising was also on the upswing. Facebook was preparing to !le one of the largest IPOs of all-time, and overall exit activity appeared to be heading up a"er average performance in 2011.

Investors let o# the gas in mid-2012, however, and have coasted along ever since. To that end, 1Q 2013 marked the third consecutive quarter of declining deal activity. $e 753 !nancings and $6.3 billion of capital invested in 1Q 2013 were the lowest quarterly totals in more than two years. Early stage investing can be blamed for much of this recent trend, as these deals have shrunk from 47% of all VC !nancings in 1Q 2012 to 39% in 1Q 2013. At the same time, angel & seed rounds have grown from 24% to 29% of VC !nancings, an indication that the “Series A Crunch” continues to be an issue.

One of the more interesting developments over the last several years has been the rise in pre-money valuations for investments at all stages. While the increases have not been linear, the median pre-money valuation for both angel & seed and late stage rounds reached a two-year high in 1Q 2013. And despite declining slightly in 1Q 2013, early stage pre-money valuations are still at the second-highest level in the last two years.

Exit activity was abysmal in 1Q 2013 as well, with both exit %ow and capital exited falling to four-year lows. Corporate acquisitions were particularly weak, with just 74 transactions in 1Q 2013 compared to 102 in 4Q 2012.

Raising new funds also continues to be a struggle for investors. In 1Q 2013, VC !rms closed just 13 vehicles with $3.3 billion in total capital commitments. Large funds continued their recent run, with the four biggest vehicles accounting for 60% of the capital raised during the quarter.

We hope the information in this report proves insightful and informs your decision-making process in the coming quarters. If you have any questions, comments, or suggestions, please contact us at [email protected].

PitchBook is an independent and impartial private equity and venture capital research !rm that provides premium data, news and analysis. $rough a combination of publicly available sources and rigorous !rsthand research with industry professionals, PitchBook has developed an extensive database with in-depth information and statistics on more than 65,000 companies, 110,000 deals, and 25,000 investors.

For more information on how PitchBook can enhance your private equity and venture capital intelligence, visit http://pitchbook.com/Solutions.html or email [email protected].

Venture CapitalSnapshot 1Q 2013 Better Data. Better Decisions.

Early Stage

Late Stage

Angel & Seed

295

239

219

481

289

243

$2,009

$4,140

$196

$2,476

$4,870

$185

$4.0

$10.0

$0.75

$3.0

$10.0

$0.64

Deal Count Total $ Invested ($M) Median Deal Size ($M) Industry % Change

Totals 7531,013

$6,345$7,531

$3.3$2.7

877-267-5593 [email protected]

Industry % Change Legend

Graphs represent deal count changes by industry from 1Q 2012 to 1Q 2013.

B2B B2C

Energy Healthcare

Information Technology

-21%

-34%

-11%

-42%-48%

20%

-9% -11%

-30%-48%

-53% -50%

-19%

-53%-47%

6%

-26%

3%

$$

PitchBook is the leading research firm for Private Equity and Venture Capital. For more information visit www.pitchbook.com

1Q 2013 Stat1Q 2012 Statdirectional

trend

PitchBook®

-42%50%


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5

VC Overview

$5.1 $5.4 $5.6 $5.2 $6.0 $6.7 $5.7 $5.9 $9.2 $8.6 $9.0 $7.8 $7.5 $8.7 $7.0 $6.4 $6.3

669 617 664722 734

809755 792

964 966 937 8741,013

1,075

919807

753

0

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$0

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1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2009 2010 2011 2012 2013

Capital Invested ($B) # of Deals Closed

VC deal-making continues to decelerate in early ‘13VC Deal Flow

0% 20% 40% 60% 80% 100%

1Q 2012

2Q 2012

3Q 2012

4Q 2012

1Q 2013

Angel & Seed Early Stage Late Stage

VC Deals by StageSince hitting an all-time high of 1,075 !nancings in 2Q 2012, VC investment in U.S.-based companies has decelerated for three consecutive quarters. $e 753 !nancings and $6.3 billion of capital invested during 1Q 2013 were the lowest quarterly totals since 2010. Most of the decline in VC investing over the last year has come from early stage rounds, where deal %ow dropped 39% and capital invested dipped 19% from 1Q 2012 to 1Q 2013.

Over the same period, angel & seed rounds have expanded from 24% to 29% of total VC deals, suggesting that the “Series A Crunch” continues to be a mounting issue. Furthermore, late stage !nancings have also been growing as a proportion of overall VC activity, increasing from 29% to 32%. It will be interesting to see where VC deal-making goes from here.

Many investors have reduced their fundraising targets for their most

recent vehicles, while the vast majority of new money being raised has been funneled into a handful of funds. $is has led to the aforementioned bifurcation in the market, with some VC !rms refocusing their attention on seed and very early stage deals,

where there is less competition and more opportunity for outsized returns; the !rms that have been able to raise money at-will have predictably gone to the other end of the spectrum, completing massive rounds that are bordering on growth investments.

Source: PitchBook

Source: PitchBook


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6

Angel & Seed Rounds

$63 $35 $51 $61 $71 $78 $74 $106 $161 $158 $161 $178 $184 $230 $266 $235 $196

8151 61 69

11292

111 109

185160 160

173

243264

235204 219

0

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2009 2010 2011 2012 2013

Capital Invested ($M) # of Deals Closed

Angel & seed financings continue to show strength

Angel & Seed Deal Flow

Source: PitchBook

Source: PitchBook

0% 20% 40% 60% 80% 100%

1Q 2012

2Q 2012

3Q 2012

4Q 2012

1Q 2013

Software Media

Commercial Services

B2C Services

OtherRetail

Angel & Seed Deals (count) by 1Q 2013 Top Sectors

Angel & seed !nancings have been one of the few bright spots in VC activity over the last several quarters, with 1Q 2013 marking the !"h consecutive quarter with more than 200 completed rounds. While the number of !nancings ticked up in 1Q 2013, total capital invested in

angel & seed rounds fell 17% to $196 million as the median deal size went from $1.0 million in 4Q 2012 to $750,000 1Q 2013. $e decline in capital invested cannot be attributed to any one sector, as each of the three most active sectors saw at least a 20% drop in capital invested.

"e median pre-money valuation for angel & seed rounds

rose 23% in 1Q 2013.


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7

$3.53

$4.78

$4.01

$4.70

$3.93

$4.63 $4.57 $4.37

$5.38

$0.64 $0.75 $0.77 $0.80 $0.64 $0.75 $0.86 $1.00 $0.75

$0

$1

$2

$3

$4

$5

$6

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2011 2012 2013

Median Pre-Money Valuation ($M) Median Round Amount ($M)

Angel & Seed Median Pre-Money Valuation and Round Amount

Angel vs. Seed Rounds

Seed deals surge while angel rounds remain flat

As we touched on in the opening, angel & seed rounds have steadily been increasing their share of overall VC deal-making in recent quarters. Of course, these rounds are inherently smaller than early and late stage !nancings, so angel & seed !nancings still only represent a scant 3% of the overall VC capital invested.

In recent quarters, the So"ware sector has been shrinking as a proportion of angel & seed rounds as investors have been exploring opportunities in nascent businesses in sectors such as Commercial Services, Media, and Retail. $ere was also strong performance from the Pharmaceuticals & Biotechnology and Healthcare Devices & Supplies sectors, which each brought in more than $9 million in angel & seed capital.

$e median pre-money valuation for companies receiving

As the accompanying chart clearly illustrates, virtually all of the recent increase in angel & seed rounds can be attributed to the seed aspect of the equation. $e number of seed rounds has more than doubled from 90 !nancings in 1Q 2010 to 193 !nancings in 1Q 2013. In that same three-year period, the number of angel rounds has barely budged, experiencing a modest uptick from 22 deals in 1Q 2010 to 26 in 1Q 2013.

$ese numbers suggest that established VC !rms, as opposed to well-endowed individuals, are driving deal-making in the earliest stages of a company’s lifecycle. With an increasing number of VC !rms being forced to cut their fundraising targets, we expect this phenomenon

Source: PitchBook

to only intensify in the coming years. Another potential factor that could come into play here (once the SEC ful!lls its duties) is equity-based crowdfunding. While many

people do not think this will have a signi!cant a#ect on VC investing, the one area where we are most likely to see an impact is in angel & seed rounds.

Source: PitchBook

0

50

100

150

200

250

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2010 2011 2012 2013

Angel Rounds Seed Rounds

angel & seed !nancing rose to $5.4 million in 1Q 2013, a 23% increase from 4Q 2012. Interestingly, the median round size fell a fairly substantial 25% over the same

period. $is resulted in the median round amount being just 14% of the median pre-money valuation, which is the lowest percentage since 1Q 2009.


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8

Early Stage Venture Rounds

$1.8 $2.4 $2.1 $2.4 $2.5 $2.1 $2.6 $2.1 $2.9 $2.7 $3.4 $3.1 $2.5 $3.0 $2.4 $2.2 $2.0

318 307 329375 360

393 371 391

473442 444 438

481 497

411

344295

0

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600

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2009 2010 2011 2012 2013


Early stage rounds fall to just 39% of all VC dealsEarly Stage Deal Flow

Source: PitchBook

Source: PitchBook

0% 20% 40% 60% 80% 100%

1Q 2012

2Q 2012

3Q 2012

4Q 2012

1Q 2013

Software Pharma & Biotech

Commercial Services

Media

OtherHC Devices & Supplies

Early Stage Deals (count) by 1Q 2013 Top SectorsMuch of the recent decline in overall VC investing can be traced to early stage deals, which hit a four-year low with $2.0 billion invested through 295 !nancings in 1Q 2013. With the signi!cant contraction in early stage !nancings, these rounds now represent only 39% of all VC deals. While still the largest proportion of the three stages, this pales in comparison to the 57% of VC rounds that early stage deals comprised in 1Q 2008 and 47% as recently as 1Q 2012.

So"ware continues to be the mainstay of early stage investing, as it was one of the only sectors to see an uptick in deal-making from 4Q 2012 to 1Q 2013, expanding to 49%


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9

0.980.91 0.94

1.03 1.061.00 1.01

0.89

1.22

0.60.70.80.9

11.11.21.3

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2011 2012 2013

Year

s

$8.4

$11.0

$13.8

$11.7$10.8

$13.1 $12.2

$15.6$14.5

$3.3 $3.3$4.1

$3.3 $3.0 $3.4 $3.5 $4.2 $4.0

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2011 2012 2013


Early Stage Median Pre-Money Valuation and Round Amount

Longer wait for early stage fundingIn an e#ort to look at the “Series A Crunch” from a di#erent angle, we examined how long it takes a company to complete its !rst early stage round a"er receiving angel & seed funding. $e !gures hold quite consistent over the last two years—until you come to the most recent quarter. From 4Q 2012 to 1Q 2013, the median time between angel & seed funding and the !rst early stage round jumped by four months. While this may not seem like a lot, keep in mind that the average

of early stage !nancings. All of the other leading sectors saw sharp drops in deal %ow over the same period, including a 40% decline in Commercial Services and a 53% reduction in Media.

$e story was much the same when looking at capital invested, with So"ware improving and most of the other sectors showing a decline. Commercial Services was an exception, as a handful of !nancings in excess of $10 million helped o#set the weak deal %ow. $ere was also fairly strong performance in Healthcare Devices & Supplies, where capital invested hit its highest quarterly total in the last year.

Over the last couple of years, the median pre-money valuation for companies receiving early stage !nancing has shi"ed fairly signi!cantly from quarter-to-quarter, but the overall trajectory has been up. $e median pre-money valuation has climbed 73% from 1Q 2011 to 1Q 2013. $ere has also been a modest rise in the median round amount, from $3.3 million to $4.0 million over the same period. So while there are fewer companies receiving early stage funding, the rounds have been larger and the companies have been carrying a higher price tag.

Median Time Between Angel & Seed and Early Stage Rounds

Source: PitchBook

Source: PitchBook

Despite the slowdown in early stage rounds, So#ware saw more deals and capital

invested in 1Q 2013.

wait time over the last two years was less than one year (.98). As such, the four months represents a 34% increase over the average since 2011.

One quarter does not make a trend, of course, so it will be interesting to see what happens in 2Q. If the “Series A Crunch” is in fact a real phenomenon, one would expect the time between angel & seed funding and the !rst early stage round will continue to increase as competition to procure capital intensi!es.


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Late Stage Venture Rounds

$3.3 $3.0 $3.5 $2.7 $3.4 $4.5 $3.0 $3.7 $6.2 $5.7 $5.4 $4.5 $4.9 $5.5 $4.3 $3.9 $4.1

270 259 274 278262

324

273292 306

364333

263289

314

273 259239

0

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2009 2010 2011 2012 2013


Deal flow down, valuations up for late stage deals

Late Stage Deal Flow

Source: PitchBook

Source: PitchBook

0% 20% 40% 60% 80% 100%

1Q 2012

2Q 2012

3Q 2012

4Q 2012

1Q 2013

Software Commercial Services

HC Devices & Supplies

Media

OtherPharma & Biotech

Late Stage Deals (count) by 1Q 2013 Top Sectors

While not as pronounced as the downturn in early stage deals, late stage !nancings have experienced a prolonged deceleration over the last two years. $e 239 rounds completed in 1Q 2013 is the lowest total since 2Q 2007.

Capital invested was up modestly in the quarter, but the $4.1 billion allocated by VC !rms was still the second lowest total in the last two years. Despite these disappointing !gures, late stage !nancings have actually increased from 29% of all VC rounds in 1Q 2012 to 32% in 1Q 2013 thanks to the even sharper decline in early stage investing.

$e total number of late stage !nancings may be down, but there are areas that have shown strength in recent quarters. $e Commercial Services sector, for example, has seen a steady uptick in deals over


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11

Commercial Services grows share of late stage deals

As was the case in both angel & seed !nancings and early stage rounds, the median pre-money valuation for late stage deals has %uctuated over the last two years but has steadily been moving up. From 1Q 2011 to 1Q 2013, the median pre-money valuation for late stage companies has

risen 73% to $67.8 million. $e median round amount has also increased over the last two years, but has held steady since the beginning of 2012. $e interesting piece is that the median round amount was 22% of a company’s pre-money valuation in 1Q 2011 but just 15% in 1Q 2013.

the last year and was the third-most active sector in 1Q 2013. Healthcare Devices & Supplies also showed strength, with VC !rms completing more than 30 deals in the sector for the !rst time in the last three quarters.

Some of the cornerstone sectors of VC investing, however, saw declines in 1Q 2013. Late stage

deal-making in the So"ware sector hit its lowest level since 4Q 2011, with just 81 !nancings being completed. Pharmaceuticals and Biotechnology saw an even more drastic decline; the 17 deals executed in the sector during 1Q 2013 was barely half the total of the previous quarter and the fewest since 2Q 2008. Commercial Services has been

growing as a share of both angel & seed and early stage !nancings in recent years, and it appears that this is !nally starting to percolate through to late stage rounds as well. In the last year, there has been signi!cant expansion of the Commercial Services sector in late stage VC investing, as the sector has gone from 6.2% to 11.7% of deal %ow and 4.7% to 9.6% of capital invested.

$e recent strong performance comes primarily from a spat of deals in excess of $20 million, such as the $45 million Series E round for Liquid Robotics and the $28 million Series D round for Axiom Legal Solutions.

Commercial Services already consistently ranks as the second-most active sector for VC exits, and this recent in%ux of capital in late stage deals should only lead to more liquidity events in the space.

Commercial Services as % of Late Stage Deals

$39.3

$57.9

$40.6

$50.8 $49.7 $46.3

$64.5

$52.1

$67.8

$8.8 $9.4 $10.0 $8.9 $10.0 $10.1 $10.6 $10.0 $10.0

$0

$10

$20

$30

$40

$50

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$70

$80

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2011 2012 2013


Late Stage Median Pre-Money Valuation & Round Amount

Source: PitchBook

Source: PitchBook

Late stage pre-money valuations and round amounts have been on the rise over

the last two years.

6.2%

11.7%

4.0%

10.4%

0%

2%

4%

6%

8%

10%

12%

14%

1Q 2012 1Q 2013Deal Flow % Capital Invested %


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12

1Q 2013 First Financings

254 227

250 261

380

312 329 324

427 395

324

288 261

0

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450

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2010 2011 2012 2013

Other

Pharma & Biotech

Commercial Services

Media

Software

$6.4$5.6

$4.5$5.1

$6.0 $5.7 $5.4$6.1

$5.4 $5.4

$7.5

$5.9

$6.8

$1.7$1.2 $1.3 $1.5 $1.3 $1.3 $1.3 $1.3 $1.0 $1.1 $1.2 $1.2 $1.0

$0

$1

$2

$3

$4

$5

$6

$7

$8

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2010 2011 2012 2013


First Financing Median Pre-Money Valuation and Round Amount

First Financings from Top Sectors

Source: PitchBook

Source: PitchBook

First financings decline for the fourth straight quarter

First Financing: the first time a company receives equity capital from outside investors

A"er hitting a zenith of 427 deals in 1Q 2012, the number of !rst !nancings has been in free fall over the last year. VC !rms completed just 261 such investments in 1Q 2013—the fewest since 4Q 2010 and a 39% decline from the recent peak. So"ware, which is the backbone of VC investing at any stage, has been one of the more resilient sectors over this period, only seeing a decline of 18%. Media has been the hardest hit, with the number of !rst !nancings tumbling 70%.

Over the last two years, the median pre-money valuation for !rst !nancings has swung widely from quarter-to-quarter while the median round amount has steadily declined from $1.7 million in 1Q 2010 to $1.0 million in 1Q 2013. $ere are several reasons why this may be occurring, including the growing proportion of angel & seed rounds and the fact that companies simply need less money to get started than they used to.

Regional Rundown

While not a particularly exciting place for VC investment over the years, the Midwest has been somewhat of a bright spot for the industry in recent quarters, if only for the fact that deal %ow has remained remarkably steady—within the 10-18 deal range every quarter since 2Q 2010. In 1Q 2013, the region saw 14 VC deals and increased its share of overall VC deal %ow from 1.2% to 1.9% from the previous quarter. Missouri led the way with eight deals, including NewLeaf Symbiotics’ $7 million Series A round, the region’s second-largest venture round a"er Kansas City, KS-based Aratana $erapeutics’ $12 million Series C !nancing.

$e Midwest also appeared to buck the so"ware-and-tech trend with a more diverse set of startups that received funding in 1Q 2013, with a wind-turbine manufacturer, an agricultural-bacteria producer, and internet retail providers among the 14 lucky Midwest companies that received some $41 million in total venture funding last quarter.

Always the bellwether for VC investing, the West Coast mirrored the industry as a whole with a nearly 5% decline in

VC rounds from 4Q 2012 to 1Q 2013, with 384 and 366 deals,

respectively. But it wasn’t all bad news, as the region

actually increased its share of total VC deal %ow by 1% from quarter-to-quarter. As usual,

California led the Paci!c states with 325 deals and $2.88 billion in capital invested in 1Q 2013, while Washington added 27 rounds and $158.4 million to the West Coast’s total.

Much of that money went into the hands of the region’s So"ware and Social Media companies, which took upwards of $1.6 billion in VC funding during the quarter. Pinterest had the largest round ($200 million) and pre-money valuation ($2.4 billion) among the West Coast companies that received venture funding in 1Q, with the median pre-money valuation among such companies coming in at $15.7 million, down from the $19.0 million a quarter prior.

West Coast

Midwest

Mid-Atlantic$e Mid-Atlantic experienced the largest decline in VC deal %ow from 4Q 2012 to 1Q 2013, both in deal count and by percentage change. But despite seeing just 131 VC rounds in the most recent quarter compared to 157 in the !nal three months of last year, capital invested in the Mid-Atlantic actually grew from $965 million to $1.19 billion.

On a more local level, New York, which saw 16 fewer VC deals in 1Q 2013 than in 4Q 2012, was responsible for more than half the region’s decline in deals, while Pennsylvania and the District of Columbia were the only two areas to see an increase.

Mountain New England Great Lakes South Southeast3230

87103

4955

4441

3027

Deal Count by Region 1Q 2013

4Q 2012

1410

131157

366384

1Q 20134Q 2012

1Q 20134Q 2012

1Q 20134Q 2012

13

Source: PitchBook

Source: PitchBook

Source: PitchBook

Source: PitchBook


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14

Sector Rundown

$0

$10

$20

$30

$40

$50

$60

$70

$80

All Sectors Software Media CommercialServices

Angel & Seed Deals Early Stage Deals Late Stage Deals

$13.2

$52.4

$4.7

$14.0

$68.8

$4.2

$11.8

$68.2

$4.5

$12.9

$30.2

$4.5

Median Pre-Money Valuations ($M) by Sector since 1Q 2012

Pharma & Biotech drags down VC deal flow in 1QDespite the slowdown in overall deal-making, VC investing in many of the most active sectors held steady from 4Q 2012 to 1Q 2013. So"ware deal-making was essentially %at in 1Q 2013, as was the case with Healthcare Devices & Supplies, Commercial Services, and Media. With the slowdown in VC investment, there had to be areas of weakness, of course. To that end, deal-making in Pharmaceuticals & Biotechnology plummeted 40% to its lowest point since 2Q 2006.

A similar narrative emerged when looking at capital invested, with many sectors improving on their totals from 4Q 2012. Pharmaceuticals & Biotechnology was once again the laggard, with its $501 million in invested capital representing a 59% decline from the previous quarter.

41%

11%8%6%

8%

26%43%

11%8%

7%

5%

26%Software

Commercial Services

Media

HC Devices & Supplies

Pharma and Biotech

Other

4Q 2012

1Q 2013

Top Sectors (count) as % of VC Deals

Source: PitchBook

Source: PitchBook


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15

VC Exits

VC exits hit four-year low in 1Q 2013

VC Exits by Quarter

Source: PitchBook

No matter how you slice it, 1Q 2013 was a disappointing quarter for VC exit activity. Exit %ow sank 25% and capital exited cratered 84% to the lowest levels seen since 2009. Virtually all of the decline can be attributed to weakness in corporate acquisitions and exits from So"ware companies. VC investors realized just 74 investments through corporate acquisitions in 1Q 2013, down from 102 in 4Q 2012 and the fewest since 2Q 2009. We believe this may be an anomaly, however, as broader M&A activity has been fairly strong recently and corporations maintain large cash reserves and easy access to debt.

IPOs slumped as well, with just seven o#erings from VC-backed companies in 1Q 2013. Interestingly, while we saw a dearth of new !nancings for Pharmaceutical & Biotechnology companies, there were four IPOs in the sector, which is the

most since 2Q 2007. VC !rms completed just 43 exits

from So"ware companies in 1Q 2013, a 31% decline from the previous quarter and the lowest total since 4Q 2009. Exits were down in most of the

other sectors as well, but the decline was not as signi!cant. With So"ware regularly representing more than 40% of VC exits, most of the weak performance in the quarter can be traced to the sector.

$1.4 $3.4 $2.2 $6.2 $6.5 $3.4 $5.8 $7.3 $6.0 $6.7 $6.0 $7.9 $4.9 $21.6 $8.4 $10.5 $1.7

86 7992

114124 118

142

162151

116141

115133 138 136

124

93

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2009 2010 2011 2012 2013

Capital Exited ($B) # of Exits

0%10%20%30%40%50%60%70%80%90%

100%

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2011 2012 2013

Acquisition IPO Buyout

VC Exits (count) by Exit Type

Source: PitchBook


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16

VC Fundraising

Large funds continue to drive VC fundraising

VC Fundraising by Quarter

Source: PitchBook

VC fundraising continues to be a slog, with just 13 U.S.-based funds closing on $3.3 billion in capital commitments in 1Q 2013. As has been the case recently, the lion’s share of the new money being raised has been concentrated in just a few funds, with the four largest vehicles taking in 60% of the capital. At $650 million, Battery Ventures X was the biggest fund to close during the quarter, followed by $ird Rock Ventures III with $516 million and Spark Capital IV with $450 million. $e shi" to larger funds appears poised to continue in 2013, with at least 10 investors looking to raise a minimum of $1 billion for their next vehicle, including Silver Lake, Sequoia Capital, Technology Crossover Ventures, and Mithril Capital Management.

On the other end of the spectrum, VC !rms managed to close just three funds of $25 million or less and failed

$5.2 $1.3 $3.5 $2.6 $8.7 $2.0 $3.0 $3.7 $5.3 $5.5 $1.6 $6.3 $7.6 $3.8 $6.3 $1.8 $3.3

35

10

20

9

29

1621

1814 14 13

16

28

21

28

12 13

0

5

10

15

20

25

30

35

40

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10


2009 2010 2011 2012 2013

Capital Raised ($B) # of Funds Closed

to close a single fund between $50 million and $100 million for the !rst time since 2Q 2011. It does not appear that fundraising will turn around anytime soon, as there have been only 54 new funds opened since the

beginning of 2012. Fortunately for VC investors, the amount of dry powder actually increased to $63.5 billion in 2012, as we highlighted in our 1H 2013 VC Fundraising and Capital Overhang Report.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013*

$1B+

$500M-$1B

$250M-$500M

$100M-$250M

$50M-$100M

Under $50M

VC Fundraising (count) by Fund Size

Source: PitchBook*as of 3/31/2013


[email protected]

17

Selected 1Q 2013 VC DealsStage Company 1Q ’13

RoundDescription Notes

Seed&

Angel

Early Stage

LateStage

$2.0M

$8.5M

$6.6M

$4.0M

$2.2M

$30.8MSeries B

$16MSeries B

$4.2MSeries A

$6.0MSeries B

$41.5MSeries B

$200MSeries A

$42.8MSeries D

$150MSeries B

$50MSeries D

$14MSeries G

Looker Data Sciences provides web-based relational querying tools for analysis in SQL databases.

Blaze Bioscience develops cancer-visualization technology that assists surgeons in treating cancer patients.

Virool provides a social-video advertising and promotion platform designed for use on YouTube.

BlueData is a Santa Clara, CA-based cloud startup currently in stealth mode.

SoMoLend Holdings is a developer of a peer-to-peer lending platform for small businesses.

Leap Motion develops motion-control so"ware and hardware for computers and applications.

Alphabet Energy develops alternative energy technology that converts waste heat into electricity.

Mobilewalla provides data, analytics, and intelligence on mobile applications.

OneOcean provides a platform to easily manage, access, and exchange ocean data.

Warby Parker provides prescription eyewear via an online marketplace and across 11 showrooms in the United States.

Airwatch, an Atlanta-based company founded in 2003, provides mobile-device and application management technology.

LightSail Energy provides technology designed to store energy in compressed air.

SevOne provides network performance management so"ware designed for real-time monitoring and troubleshooting.

Acti!o provides copy data storage and management products for businesses.

ChaCha Search provides real-time answers to questions posed on its website.

Highest pre-money valuation among seed rounds in 1Q ’13: $14.2M

Highest pre-money valuation among angel rounds in 1Q ’13: $17.9M

Largest seed round in 1Q 2013

Largest IT seed round in 1Q 2013

Largest Financial Services seed round in 1Q 2013

Highest early stage pre-money valuation in 1Q 2013: $275.2M

Largest early stage Energy deal in 1Q 2013

Highest early stage pre-money valuation for a sub-$5M round: $44.8M

Most interesting use of big-data analytics tools

Largest early stage Retail deal in 1Q 2013

Tied with Pinterest for largest VC deal in 1Q 2013

Largest late stage Energy deal in 1Q 2013

Largest Mid-Atlantic VC deal in 1Q 2013

Largest late stage Hardware deal in 1Q 2013

1Q 2013 round using the latest letter in the alphabet for stock type

Source: PitchBook


[email protected]

18

Investor# of Deals

Angel & Seed Early Stage Late Stage

1Q 2013 Active Investors

191898866655555

544443333333333

Y Combinator500 StartupsAndreessen HorowitzMuckerLabSV AngelConnecticut InnovationsFortify VenturesTechStarsAccelepriseBlueprint HealthCrunchFundGoogle VenturesGreat Oaks Venture CapitalPortland Seed FundFirst Round CapitalGreylock PartnersLightbankResolute.vcAtlas VentureCapital InnovatorsCowboy VenturesFelicis Ventures# Venture CapitalFounders FundHarrison Metal CapitalLaunchpad LAQuotidian VenturesTrinity Ventures

9

88

8

77776665

55

544444444

444

Bessemer Venture PartnersFirst Round CapitalKleiner Perkins Cau!eld & ByersNew Enterprise Associates500 StartupsAndreessen HorowitzGoogle VenturesGreylock PartnersIntel CapitalSiemer VenturesSV AngelHighland Capital PartnersLerer VenturesLightspeed Venture PartnersTrue VenturesBaseline VenturesCharles River VenturesCrunchFundDraper AssociatesDraper Fisher JurvetsonFounder CollectiveHarrison Metal CapitalNorwest Venture PartnersRRE VenturesSequoia Capital$ird Rock Ventures

866

6

655

544

44444

44444444

44

Intel CapitalInterWest PartnersKleiner Perkins Cau!eld & ByersNorwest Venture PartnersSequoia CapitalMenlo VenturesNew Enterprise AssociatesQualcomm VenturesAccel PartnersAdvanced Technology VenturesBaird Venture PartnersDelphi VenturesDraper Fisher JurvetsonFirstMark CapitalFlybridge Capital PartnersGoogle VenturesGreylock PartnersKhosla VenturesMay!eld FundShasta VenturesTrue VenturesUS Venture PartnersVantagePoint Capital PartnersVersant VenturesVulcan Capital

Investor# of Deals Investor

# of Deals

Send us your deals before the quarter ends and you just might.Don’t see your !rm’s name above?

email: [email protected]

Source: PitchBook

Source: PitchBookSource: PitchBook


[email protected]

19

Methodology

17

Venture Capital

Venture Capital Deals

Fundraising

Exits

For the purposes of this report, venture capital is de!ned as institutional investors that have raised a fund structured as a limited partnership from a group of accredited investors, or a corporate entity, making venture capital investments.

For the purposes of this report, all venture capital !nancings to U.S.-based companies are included. $e deals are broken into stages accordingly:

Angel: Investments by individuals into private companies. For the purposes of this report, only companies that have received angel and venture capital funding are included.

Seed: Investments that are explicitly referred to as “seed” deals or !nancings by the company or investors, or !rst !nancings of less than $500,000. All seed !nancings included involve a venture capital investor or were raised by companies that subsequently raised venture capital funding.

Early: Investments in nascent companies with high growth rates. Early stage rounds include Series A and B, as well as some Series C !nancings.

Late: Investments in established companies that typically have proven products and revenue streams. Late stage rounds include all !nancings Series D or later, as well as some Series C rounds.

$is report includes all U.S.-based venture capital funds that have held a !nal close. Fund of funds and secondary funds are not included.

$is report includes both full and partial exits via mergers and acquisitions, private equity buyouts, and IPOs. Only the !rst liquidity event is taken into consideration. For example, if a VC-backed company has an IPO and is subsequently acquired, only the IPO will be counted as an exit even if the VC investors retained a stake at the time of the ensuing acquisition.

Active Investors CriteriaActive investors lists are compiled using the number of investments in U.S.-based companies.

PitchBook tracks more Private Equity and Venture Capital data than anyone.

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Want the whole pie?

Bet ter Data. Bet ter Decisions.PitchBook Private Deal Comps

Targeted Business Development

Sourcing New Deals

Targeted Buyers Lists

Benchmarking Funds & IRR

Public Company Fundamentals

113,550 26,948

17,358

66,026 6,670

9,221

Limited Partners

Investors

Funds

Companies

Deals

Service Providers

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pitchbook 2q2013 vc rundown report

Documents

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bet ter data

healthcare devices

early stage investing

median round amount

lowest quarterly totals

early stage rounds

early stage nancings