Intel Capital CEO Summit Arjun Gupta, CEO and Chief Believer TeleSoft Partners August 1, 2001 .
Transcript of Intel Capital CEO Summit Arjun Gupta, CEO and Chief Believer TeleSoft Partners August 1, 2001 .
Intel Capital CEO Summit
Arjun Gupta, CEO and Chief Believer
TeleSoft Partners
August 1, 2001
www.telesoftvc.com
Page 2
AGENDA
Page
I. Next-Gen Communications Opportunities 2
II. Supply of Venture Capital 3
III. Private Market Pricing Dynamics 4
IV. Public Market Pricing Dynamics 5
V. Macro Trends & Industry Structure 6
VI. Exits – Acquisitions vs. IPO’s 7
VII. Optical Value Chain – The Next Frontier 8
Page 3
TELESOFT KEY INVESTMENT SEGMENTS
I. Next-Gen Communications Opportunities
Optical layer
ROUTING &SWITCHING
SERVER & STORAGE
ARCHITECTURES
TRANSMISSION & OPTO-ELECTRONICS
BROADBANDWIRELESS
INTEGRATEDACCESS
MIDDLEWARE & SERVICES
• Core• Edge• QoS
• QoS• SAN & NAS
• DWDM
• NMS & OSS • “Black hole”
• CPE• CTE• NTE
NETWORK APPLICATIONS
• New s/w category• Internet
HistoricalVC Focus
• p-t-p• p-t-m-p
SEMICONDUCTORs,COMPONENTS,TOOLs, OTHER
NEXT GENERATIONNETWORKS
• Qwest, Level 3, Hermes
• LMDS, MMDS, PCS
• CLECs, CAPs
ROUTING &SWITCHING
SERVER & STORAGE
ARCHITECTURES
TRANSMISSION & OPTO-ELECTRONICS
BROADBANDWIRELESS
INTEGRATEDACCESS
MIDDLEWARE & SERVICES
• Core• Edge• QoS
• QoS• SAN & NAS
• DWDM
• NMS & OSS • “Black hole”
• CPE• CTE• NTE
NETWORK APPLICATIONS
• New s/w category• Internet
HistoricalVC Focus
• p-t-p• p-t-m-p
SEMICONDUCTORs,COMPONENTS,TOOLs, OTHER
NEXT GENERATIONNETWORKS
• Qwest, Level 3, Hermes
• LMDS, MMDS, PCS
• CLECs, CAPs
Page 4
SUPPLY OF VENTURE CAPITAL
II. Supply of Venture Capital
Source: Venture One
Total $ Invested in VC-based Companies
$ 0
$ 5,000
$ 10,000
$ 15,000
$ 20,000
$ 25,000
$ 30,000
Q1'98
Q2'98
Q3'98
Q4'98
Q1'99
Q2'99
Q3'99
Q4'99
Q1'00
Q2'00
Q3'00
Q4'00
Q1'01
($m
m)
Non-Internet
Internet
Total # of Rounds in VC-Funded Companies
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Q1'98
Q2'98
Q3'98
Q4'98
Q1'99
Q2'99
Q3'99
Q4'99
Q1'00
Q2'00
Q3'00
Q4'00
Q1'01
Non-Internet
Internet
Total $ Raised by VC Funds
$ 0
$ 5,000
$ 10,000
$ 15,000
$ 20,000
$ 25,000
Q1'98
Q2'98
Q3'98
Q4'98
Q1'99
Q2'99
Q3'99
Q4'99
Q1'00
Q2'00
Q3'00
Q4'00
($m
m)
Page 5
PRE ‘98 ‘98-’99 ‘99-’00Stage
}M
E
}ProductDevelopment
MarketingDevelopment
L
$100MM
<$20MM - $25MM
4-5x9 Months
2-3x1-2 Years
$200MM - $300MM
<$25MM - $35MM
$200MM - $300MM
5-10x6 Months
2-3x1-2 Years
$400MM - $500M
$40MM - $60MM
<$10MM - $20MM
2-3x1-2 Years
2-3x1-2 Years
$100MM
TRENDS IN PRICING
III. Private Market Pricing Dynamics
Page 6
•LBO’s•Buyout Firms
Morgan Stanley Study (From 1/1/80 – 3/31/96)
• 801 Technology IPO’s
• Average IPO was $147MM
• Largest IPO was MSFT at $300MM
$147MM
Public Market$$$
Private VC Market
$$$
Early Middle Late
$100MM
• Dot.com IPO’s > $1BN
$1BN
PRICING EFFECTS
IV. Public Market Pricing Dynamics
= $50MM•TCV and ICP•“Crossover Funds”1
= $950MM2
Page 7V. Macro Trends & Industry Structure
Personal Computing
Fortune 100 Businesses
Fortune 1000 Businesses
Every Business
Millions of Households
Billions of Consumers
Communications
200 PTT’s
500 – 1,000 Wireless + LD + Local
5,000 Carriers
10,000 Carriers (B/C/D – LEC’s)
Customer Industry Structure
Supplier Industry Structure
Retrenching
Applications
Microprocessors
Databases
Enterprise Applications
Full-Service
LucentCiscoNortel
AlcatelEricssonSiemens
NEC
CUSTOMER AND SUPPLIER INDUSTRY STRUCTURES
Point Players
ADCCienaMotorolaTellabs
Nokia
HitachiToshiba
North America
Europe
Japan
1998-99Over Expansion
2000-01
IBM
OperatingSystems
SAP, Oracle
Oracle
Microsoft, Lotus
Microsoft
Intel
Page 8
EXITS – ACQUISITIONS vs. IPO’s
VI. Exits – Acquisitions vs. IPO’s
Relative Stock Price Performance of Acquiror Post-Acquisition
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
1 41 81 121 161 201 241 281 321 361 401 441 481
Days After Acquisition
Rel
ativ
e S
tock
Pric
e
NT / Promatory (3/23/00)
DELL / ConvergeNet (9/8/99)
CSCO / Cerent (8/26/99)
NT =12% of price
DELL =58% of price
CSCO =55% of price
Relative Stock Price Performance Post-IPO
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
300.0%
350.0%
1 31 61 91 121 151 181 211 241
Days Since IPO
Re
lativ
e S
tock
Pri
ce
C 1
C 2
C 3
C 3 =5% of IPO price
C 2 =9% of IPO price
C 1 =4% of IPO price
Page 9
TELESOFT’S OPTICAL PORTFOLIO
Process & Materials Components Modules & Sub-systems Systems Carriers
AmberWave VersatileLynx-Photonic
CatamaranLara NetworksModeTekNovalux
CalientWINOnFiber
Kymata NP Photonic
VII. Optical Value Chain – The Next Frontier