Mark G. Heesen, President, NVCA - A CVG Second Thursday Event, 6/13/13

THANK YOU CVG SPONSORS

B Round

A Round

Venture Capital Sponsors Professional Service Firms

Mark Heesen President, National Venture Capital Association

Welcome

Nat Brinn Principal, Vital Financial

President, CVG Hartford Chapter

@CTVenture

Three Minute Pitches

@CTVenture @CTNEXT

Jeremy McCool

Joseph Glick

Paul Hallenbeck

Rhodemann Li

Chris Woods

Expertool Paradigm, LLC

Mark Heesen President, National Venture Capital Association

Introduction

Jacqueline Pennino Scheib Partner, Robinson & Cole LLP

Board Member, CVG Hartford Chapter

@CTVenture

Mark G. Heesen President National Venture

Capital Association

The State of Venture Investing and Observations on the Industry

@CTVenture

The Number of US VC Firms Has Peaked

At Year End

# Active Firms

Capital Managed

1970 28 $1B

1980 87 $4B

1990 100 $28B 2000 1,053 $224B

2012 522 $199B

Source: 2013 NVCA Yearbook, prepared by Thomson Reuters, figure 1.04

$0

$20

$40

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$80

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$1201988

1989

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2012

1Q

13

$ B

illi

on

In

ve

ste

d

VC Investment Peaked in 2000;

Industry is Smaller Now; $27B in 2012

Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,

Data: Thomson Reuters

$105b

$32b

$27b

$6b

First Fundings - VCs Continue To Invest in Promising

Companies – 1,000-1,300 Considered Healthy; Life Sci particularly slow now

-

500

1,000

1,500

2,000

2,500

3,000

3,500

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q13

# Cos 1,430 2,469 3,390 1,234 850 776 975 1,076 1,280 1,417 1,305 828 1,086 1,325 1,203 263

# F

irst

Tim

e F

un

din

gs



The Number of First Fundings of Life Sciences

Companies is Way Down…

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q13

# LS FF 153 193 203 167 191 170 178 168 190 205 275 270 256 173 188 180 140 20

0

50

100

150

200

250

300

Note: For this chart, biotech, pharmaceuticals, med devices, and therapeutics are included. HC services is not.



Investment Trends from

NVCA 2013 Yearbook

• A record 48 states and DC reported venture deals in 2012

• That said, a record 53% of the $ went to CA cos

• In 2012, 522 traditional and CVC groups invested vs 1,053

in bubble

• In 2012, 10 largest funds raised 48% of capital leaving 173

funds with the other 52%

• # of IPOs down from 2011 to 2012, but total IPO valuation

$122.3 (hi since 1986) and proceeds of 21.5B

• Corporate VC 8.2% of dollars and engaged in 15.2% of

deals

• 51.8% of deals are seed and early – highest since 1985

Source: NVCA 2013 Yearbook, prepared by Thomson Reuters

10

A Closer Look at Recent Connecticut Investing

Note that data “cuts” can be done from the historical trend

data section of www.pwcmoneytree.com or from the

National Aggregate Spreadsheet which can be downloaded

from that site.

11

http://www.pwcmoneytree.com/

Recent Connecticut Investing –

First Quarter Was Soft Everywhere…

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q13

$M 270.0 345.2 889.2 1,550 608.2 191.9 223.6 251.6 209.6 289.0 271.0 236.1 190.2 133.2 156.7 157.6 29.8

# Deals 66 73 96 123 78 41 38 38 34 30 36 42 42 62 56 52 11

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First Fundings in Connecticut

Have Been Averaging 12-20/year Recently Big $ for Biotech, Almost ½ the Deals into Software

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20

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35

40

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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q13

# Cos 30 39 47 19 13 7 9 10 8 18 16 10 21 19 12 3

# F

irst

Tim

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un

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gs



Recent Connecticut Investment by Dollars -

Biotech & Medical Get the Majority of $

Biot41%

SW23%

Ind/Ener16%

Med Dev10%

IT Svcs5%

Other5%

VC Dollar Investment – 2Q 2011 to 1Q 2013



Recent Connecticut Investment by # Deals -

Software Gets More Than 1/3 of the Attention

SW40%

Biotech17%

Ind/Ener11%

Med Dev10%

IT Svcs6%

Other16%

VC Dollar Investment – 2Q 2011 to 1Q 2013



The Exit Scene -

the importance of acquisitions has become clear

over the past several years

but the IPO market remains the key!

16

IPO Levels Overall Below What is Needed; 2012 Numbers Driven by Facebook & friends ($16.0B)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q13

$Offer B 5.8 4.2 24.0 27.4 4.1 2.3 2.0 10.3 5.1 7.1 12.4 0.8 2.0 7.7 10.7 21.5 0.7

Count 141 79 280 238 37 24 26 83 59 68 92 7 13 69 51 49 8

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10.0

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Source: Thomson Reuters/National Venture Capital Association

M&A Exits for Venture-Backed Companies are Improving –

But There is a Long Way to Go!


1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q13

$B 7.9 8.3 39.6 81.8 25.6 12.5 9.2 30.0 20.0 25.4 30.7 16.2 12.4 17.7 24.1 21.5 1.0

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10.0

20.0

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60.0

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$ B

illi

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Disclosed Acquisition Price Paid $B

Venture Exit Counts- IPOs and M&A by Year

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q13

#M&A 97 116 143 189 227 380 384 363 323 402 443 485 488 422 360 545 498 469 77

#IPO 202 270 141 79 280 238 37 24 26 83 59 68 92 7 13 69 51 49 8

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#M&A

#IPO


2012 Was First Post-Bubble Year That

Distributions Exceeded Contributions in the US

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Dist/Contrib 149% 226% 92% 35% 42% 64% 96% 71% 95% 47% 47% 94% 94% 162%

0%

50%

100%

150%

200%

250%

US VC - Ratio of LP Distributions to LP Contributions

Source: Cambridge Associates, NVCA

Recent Battles

• J.O.B.S. Act of 2012

• VC fund registration/regulation

• Taxation of long term capital gains taken as

carried interest

• FDA reform

• Clean technology science funding/supportive

policies (ARPA-E support)

• Healthcare

• Internet regulation

• Preserving investment company accounting 21

www.nvca.org

nvcaccess.nvca.org

22

http://www.nvca.org/

http://twittericonfactory.com/twittericon-1632/



Closing Remarks

Liddy Karter Executive Director, Crossroads Venture Group

Managing Director, Enhanced Capital Partners

@CTVenture 23

Welcome New CVG Members!

Jon Brodeur, Emme, Inc.

Glen Cohen, Click Flick LLC

Carrie Collins, CTNEXT

Len Doherty, L.J. Doherty & Associates

Joseph Dornfried, Carmody & Torrance LLP

Ryan Duques, TutaPoint.com

Joseph Glick, Expertool Paradigm LLC

Ansong Sam Omari, Afram Integrated Biotechnologies

Andy Zaback, Long Meadow Capital Partners

CVG Upcoming Hartford Events

Boardroom Series 7:30 AM – 9:00 AM

Second Thursday 4:30 PM – 7:00 PM

Fall Schedule

to be

announced!

October 10

Advanced Manufacturing

January 2014

Healthcare IT

CVG Regional Upcoming Events

Boardroom Series 7:30 AM – 9:00 AM

Second Thursday 4:30 PM – 7:00 PM

June 14

M&A: Tax Considerations

Stamford

June 19

Employment & Immigration Issues

New Haven

July 11

Grow with the Grove

New Haven

August 8

Summer Networking Party

Stamford

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Mark G. Heesen, President, NVCA - A CVG Second Thursday Event, 6/13/13

Investor Relations

Transcript of Mark G. Heesen, President, NVCA - A CVG Second Thursday Event, 6/13/13