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Venture View 2011

Venture Capital Predictions

Survey
December 2010
 Venture View 2011
5th annual venture capital predictions
survey
Conducted November 29 – December 12
2010
Surveyed venture capitalists and venture-
backed CEOs across the United States
More than 500 responses

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 2
Venture Investments
 In 2011, total U.S. venture investment will:

60% 58%
51%
50%

40%

30% 28%
24% 24%
20%
14%
10%

0%
VCs CEOs

Increase Decrease Remain Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 4
VCs: How will U.S. VC investment dollars fare
by industry in 2011?

Consumer Internet 11% 7% 82%

Software (Cloud) 18% 2% 80%

Healthcare IT 15% 8% 77%

Mobile Telecom 23% 11% 66%

Software (SaaS) 40% 9% 51%

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

Same Decrease Increase

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 5
VCs: How will U.S. VC investment dollars fare
by industry in 2011?

Energy 22% 40% 38%

Med Devices 35% 30% 35%

Biopharma 34% 33% 33%

Fin Serv 34% 38% 28%

Hardware 34% 55% 10%

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

Same Decrease Increase

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 6
 VCs: In which industries to you expect to see
investment “froth” in 2011

Consumer Internet 69%

Software (Cloud) 47%
Mobile Telecom 29%
Clean Tech 28%
Software (SaaS) 19%
Health IT 17%
Biotech 6%
Financial Services 4%
Med Devices 3%
Hardware 2%

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

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 7
 VCs: Do you plan to invest in any of the
following global regions in 2011?
60%
53%
50%

40%

30% 26%
19% 18%
20%
13% 11%
10% 7%
2%
0%
VCs

None China Western Europe India

Canada Latin America Eastern Europe Africa

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 8
VCs: How will U.S. VC investment dollars fare
by company stage in 2011?

Seed 25% 26% 49%

Early 29% 25% 46%

Expansion 35% 16% 49%

Late 35% 14% 51%

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

Same Decrease Increase

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 9
 VCs: How difficult will it be for companies to
raise the following rounds?

Seed 63% 16% 21%

Series A 68% 20% 12%

Series B 65% 29% 6%

Series C and
42% 35% 23%
Beyond

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

Very/Somewhat Difficult Neutral Very/Somewhat Easy

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 10
 VCs: In 2011 the number of investments I will
make into new (vs. follow on) companies will:
44% 43%
45%
40%
35%
30%
25%
20%
12%
15%
10%
5%
0%

Increase Decrease Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 11
 VCs: For early stage investors: How will you
invest with angels in 2011?
47%
50%

40%
30%
30%

18%
20%

10% 5%

0%

More Less Same Not at all

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 12
How will term sheets be structured in 2011?

VCs CEOs

16% 17% 22%

42%

42%
61%

More favorable to entrepreneurs More favorable to entrepreneurs

More favorable to VCs More favorable to VCs
Equally favorable Equally favorable

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 13
How will company valuations fare in 2011?

VCs CEOs

15%
37% 8%

50%

13% 77%

Increase Decrease Same Increase Decrease Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 14
Venture Exits
VCs: How will venture backed IPO volume fare
in 2011?

Overall 28% 5% 67%

Tech IPOs 24% 5% 72%

Life Sciences 45% 19% 36%

Clean Tech 31% 25% 34%

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

Same Decrease Increase

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 16
VCs: How will venture backed IPO quality fare
in 2011?

Overall 39% 6% 55%

Tech IPOs 39% 9% 52%

Life Sciences 51% 12% 37%

Clean Tech 53% 16% 31%

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

Same Decrease Increase

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 17
 VCs: How will venture backed acquisition
volume fare in 2011?

Overall 15% 3% 82%

Tech IPOs 14% 2% 84%

Life Sciences 35% 6% 59%

Clean Tech 43% 21% 36%

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

Same Decrease Increase

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 18
 VCs: How will venture backed acquisition
quality fare in 2011?

Overall 45% 4% 51%

Tech IPOs 44% 5% 51%

Life Sciences 52% 8% 40%

Clean Tech 55% 19% 26%

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

Same Decrease Increase

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 19
VCs: How will alternative venture-backed exits
fare in 2011?

Sales to PE 31% 14% 55%

Secondary
33% 14% 53%
Market

Private to Private 44% 8% 48%

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

Same Decrease Increase

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 20
CEOs: How will venture-backed IPO volume
fare in 2011?

32%

58%

10%

Increase Decrease Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 21
CEOs: How will venture-backed IPO quality
fare in 2011?

44% 44%

12%

Increase Decrease Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 22
CEOs: How will venture-backed acquisition
volume fare in 2011?

15%
4%

81%

Increase Decrease Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 23
CEOs: How will venture-backed acquisition
quality fare in 2011?

40%

52%

8%

Increase Decrease Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 24
VCs: From which exits do you think the best
returns will come?

1% 3% 2%

29%

65%

Acquisitions IPOs Secondary Sales

Sales to PE Private to Private

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 25
 VCs: How will funding rounds address
founder’s liquidity?

40% 38%

22%

More partial liquidity Less partial liquidity Same partial liquidity

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 26
 CEOs: Do you anticipate your company
engaging in any of the following in 2011
60%
52%
50%

40% 37%

28%
30%

20%
9%
10% 4% 4%
0%
None Acquisition by Public Co Acquisition by Private Co
Acquisition by PE IPO Secondary market sale

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 27
Venture Fundraising
VCs: How will US venture capital fundraising
fare in 2011?

30%
38%

32%

Increase Decrease Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 29
VCs: In 2011, US VC funds will see foreign
limited partners in:

25%

48%

27%

More funds Fewer funds Same funds

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 30
VCs: How will limited partner agreements be
structured in 2011?

21%

3%

76%

More favorable to LPs More favorable to VCs

Equal favor to LPs and VCs

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 31
The Economy
How will the U.S. economy fare in 2011?

VCs CEOs

33% 30%

63% 6% 64%
4%

Improve Decline Same Improve Decline Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 33
CEOs: How will corporate technology
spending fare in 2011?

29%

5% 66%

Increase Decrease Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 34
How will these start-up ecosystems fare in
2011?

Silicon Valley

50% 47%
43% 44%
40%
40%

30%

20% 16%
10%
10%

0%
VCs CEOs

Improve Decline Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 35
How will these start-up ecosystems fare in
2011?

New England
49%
50%
42%
39%
40% 36%

30%
19%
20% 15%
10%

0%
VCs CEOs

Improve Decline Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 36
How will these start-up ecosystems fare in
2011?

New York

50% 45% 43% 43% 43%

40%

30%

20% 15%
12%
10%

0%
VCs CEOs

Improve Decline Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 37
VCs: Name a U.S. region other than Silicon
Valley, New England or NY that is poised for
growth in 2011.
25%
21%
20%
16%
15% 14%
12%
11% 11%
10% 8%
6%
5%
2%
0%
VCs

So Cal Rocky Mountain Mid Atlantic

Southwest Southeast Midwest
None Northwest Texas

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 38
CEOs: Name a U.S. region other than Silicon
Valley, New England or NY that is poised for
growth in 2011.
16% 15% 15%
14%
14%
12% 11% 11%
10% 10% 10%
10%
8%
6%
4%
2%
2%
0%
CEOs

Southwest Midwest Southeast

So Cal Rocky Mountain Northwest
Mid Atlantic None Texas

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 39
This or That
 THIS OR THAT?
(Who will fare better in 2011?)

China or India

70% 64%
59%
60%
50% 41%
40% 36%
30%
20%
10%
0%
VCs CEOs

China India

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 41
 THIS OR THAT?
(Who will fare better in 2011?)

Infotech or Cleantech or Biotech

69%
70%
60%
50%
39%
40% 32% 29%
30%
19%
20% 12%
10%
0%
VCs CEOs

Info Tech Clean Tech Biotech

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 42
 THIS OR THAT?
(Who will fare better in 2011?)

Small VC firms or Large VC firms

70%
70%
60% 52%
48%
50%
40%
30%
30%
20%
10%
0%
VCs CEOs

Small VC Firms Large VC Firms

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 43
 THIS OR THAT?
(Who will fare better in 2011?)

Entrepreneurs or VCs

70% 62%
60% 56%
50% 44%
38%
40%
30%
20%
10%
0%
VCs CEOs

Entrepreneurs VCs

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 44
 THIS OR THAT?
(Who will fare better in 2011?)

Angels or VC or PE
50%
50%

40% 38%
33%
30% 29%
30%
20%
20%

10%

0%
VCs CEOs

Angels VC PE

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 45
 THIS OR THAT?
(Who will fare better in 2011?)

Silicon Valley or Silicon Alley

79%
80%
68%

60%

40% 32%
21%
20%

0%
VCs CEOs

Silicon Valley Silicon Alley

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 46
Company Operations
CEOs: Does your company plan to raise
additional funding in 2011?

36%

64%

Yes No

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 48
CEOs: Compared to 2010, how difficult will it
be for companies to raise VC in 2011?

11% 1% 17%

35%
36%

Very difficult Somewhat difficult Neutral

Somewhat easy Very easy

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 49
CEOs: What is your prediction for your
company’s headcount in 2011?

15%
3%

82%

Increase Decrease Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 50
 CEOs: In terms of global activity in 2011, my
company will
60%
60%

50%

40%
28%
30%

20% 12%
10%
0%
0%

Increase revenues overseas Decrease revenues overseas

Maintain revenue levels overseas No business overseas

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 51
 CEOs: How do you predict your total
compensation package will fare in 2011?

47%

50%

3%

Increase Decrease Same

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 52
CEOs: Do you plan to cash out a portion of
your equity in 2011?

10%

90%

Yes No

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 53
 In 2011, I will use social media:

VCs CEOs

11%
28%

47%

53%
41%
18%
1% 1%

More Less Same Not at all More Less Same Not at all

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 54
For more information:

Emily Mendell, NVCA, emendell@nvca.org, 610-565-3904

Tiffany Richardson, Dow Jones, tiffany.richardson@dowjones.com, 609-627-2101

Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource 55