US Venture Capital - Realistic Optimism
description
Transcript of US Venture Capital - Realistic Optimism
![Page 1: US Venture Capital - Realistic Optimism](https://reader033.fdocuments.net/reader033/viewer/2022061119/5462ece1af7959f84e8b508f/html5/thumbnails/1.jpg)
US Venture Capital – Realistic OptimismJune 29, 2009
![Page 2: US Venture Capital - Realistic Optimism](https://reader033.fdocuments.net/reader033/viewer/2022061119/5462ece1af7959f84e8b508f/html5/thumbnails/2.jpg)
Sand Hill Road
Step One Ventures
Stanford University
StepOne’s US Office is In Silicon Valley…
![Page 3: US Venture Capital - Realistic Optimism](https://reader033.fdocuments.net/reader033/viewer/2022061119/5462ece1af7959f84e8b508f/html5/thumbnails/3.jpg)
…And we’ve seen the worst of it
Sequoia CapitalOct 10, 2008
TheFunded.comOct 2008
![Page 4: US Venture Capital - Realistic Optimism](https://reader033.fdocuments.net/reader033/viewer/2022061119/5462ece1af7959f84e8b508f/html5/thumbnails/4.jpg)
IT Services Have Been Hit as Companies Cut Back Budgets
$M
•IT funding is highly correlated with the economy
•IT spending is highly scrutinized in a down economy
•Depressed earnings expectations from comparable companies push down valuations for startups
Source: PWC MoneyTree Report
US VC Funding in IT Services by Quarter
![Page 5: US Venture Capital - Realistic Optimism](https://reader033.fdocuments.net/reader033/viewer/2022061119/5462ece1af7959f84e8b508f/html5/thumbnails/5.jpg)
Even Life Sciences Has Had Less Funding
Source: PWC MoneyTree Report
• Bio-tech, as a sector, is more resistant to downturns
Less funding = less $$ available in VC
• Recent large deals between public pharma and biotech companies indicate significant sector potential
$M
US VC Funding in Biotech and
Med Devices by Quarter
![Page 6: US Venture Capital - Realistic Optimism](https://reader033.fdocuments.net/reader033/viewer/2022061119/5462ece1af7959f84e8b508f/html5/thumbnails/6.jpg)
Cleantech Remains One of the Few Bright Spots
Source: Ernst & Young and Dow Jones Venture Source
• Cleantech is still a high growth industry; although many predicted a bubble in 2008
• Latest data indicates a sharp downturn in funding (63% $ decrease YoY in Q1 2009)
• Solar, alternative fuels, and energy efficiency were the three largest funding categories in 2008; Battery technology led funding in Q1 2009
$M
US VC Funding in Cleantech by Year
![Page 7: US Venture Capital - Realistic Optimism](https://reader033.fdocuments.net/reader033/viewer/2022061119/5462ece1af7959f84e8b508f/html5/thumbnails/7.jpg)
VCs Will Strive to Fix a Broken Investing Model
![Page 8: US Venture Capital - Realistic Optimism](https://reader033.fdocuments.net/reader033/viewer/2022061119/5462ece1af7959f84e8b508f/html5/thumbnails/8.jpg)
Startups Will Try to Survive
8
![Page 9: US Venture Capital - Realistic Optimism](https://reader033.fdocuments.net/reader033/viewer/2022061119/5462ece1af7959f84e8b508f/html5/thumbnails/9.jpg)
Today’s views
• Optimism remains as VCs vow to cautiously “stay the course”
• The US government is expected to be highly supportive of VC, especially clean-tech
• Important lessons from the 2001 bubble burst are being applied to today
• Certain verticals will remain hot (e.g., clean-tech, transaction processing, mobile applications and components)
![Page 10: US Venture Capital - Realistic Optimism](https://reader033.fdocuments.net/reader033/viewer/2022061119/5462ece1af7959f84e8b508f/html5/thumbnails/10.jpg)
VC Investing in Context
• Remained within historical norms even with market turmoil• Likely will see impact in next quarters – Q12009 VC funding was down 60%
YoY from Q1 2008
![Page 11: US Venture Capital - Realistic Optimism](https://reader033.fdocuments.net/reader033/viewer/2022061119/5462ece1af7959f84e8b508f/html5/thumbnails/11.jpg)
Why is there any optimism?
• “It is reasonable to be optimistic for 2010”-Eric Schmidt, Google CEO
• Cisco has made 10 acquisitions in the past year• Roche, Applied Bio, Schering-Plough indicate that
there is still acquisition money available for Life Sciences / good companies
• 1930s: General Electric grew• 1970s: Apple and Microsoft grew• 2000s: Google grew
Corporate Support
Corporate Support
History On Our Side
History On Our Side
![Page 12: US Venture Capital - Realistic Optimism](https://reader033.fdocuments.net/reader033/viewer/2022061119/5462ece1af7959f84e8b508f/html5/thumbnails/12.jpg)
Some investing areas to note
• Cleantech– Energy alone is a $6 trillion market, compared to $100 billion for the Internet– Obama calling for creation of 5M green jobs– Energy bill likely to be passed in Obama’s first term, initiating a nation-wide cap-
and-trade regime– Several funds focused only on cleantech
• Other Attractive Areas– Time and Cost reduction, (e.g. BPO, SaaS)– Transaction processing / Micropayments– iPhone / Mobile Applications– Niche businesses
![Page 13: US Venture Capital - Realistic Optimism](https://reader033.fdocuments.net/reader033/viewer/2022061119/5462ece1af7959f84e8b508f/html5/thumbnails/13.jpg)