Venture Northwest

1

• Venture Northwest
• Keynote Address
• November 2, 2007
• Mark G. Heesen
• President

2

• Venture Capital
• Barely a macroeconomics rounding error in the
  world of US finance.

3
US Venture Capital Investment in Perspective

• US GDP 12.5 trillion annually
• Hedge fund intake 1.5 trillion over last 3 years
  estimated
• Mutual fund intake 158 billion in 2006
• Buyout intake 103 billion in 2006
• Venture capital intake 28.6 billion in 2006
• Venture capital fundraising investment Is 0.2
  of total GDP

Source BLS website, Investment Company
Institute, Thomson Financial, NVCA
4
Global Insight Study

• In 2006, venture backed companies
• Provided 10.4 million US jobs
• Had sales of 2.3 trillion
• Represents 17.6 of GDP
• Still dominated venture-created sectors
• 56 of biotech revenue
• 78 of computer and peripherals revenue
• 94 of computer and peripherals jobs
• 88 of software sector jobs
• Outgrew the economy 2003-2006 in every sector

Source Venture Impact 2006 by Global Insight
5
Venture-Backed Employment
VC-Backed US Jobs (millions)
As a of total US Pvt Jobs in 2006
VC-Backed Jobs 9
Outpaces 2003 - 2006 Total US Job Growth
Source Venture Impact 2006 by Global Insight
6
VC-Backed Companies Share of Total Employment Top
Sectors 2006
Source Venture Impact 2006 by Global Insight
7
Fundraising Resources
8
The Number of US VC Firms Has Peaked .. Thankfully
Source 2007 NVCA Yearbook, prepared by Thomson
Financial, figure 1.04
9
Investment Marches On -Rumors that the
Venture Industry has stopped investing are
greatly exaggerated
10
VC Investment Peaked in 2000 Recently 20-23 of
Peak 2006 Was Higher
Source PricewaterhouseCoopers/National Venture
Capital Association MoneyTree Report, Data
Thomson Financial
11
1998 to 2006 IT share from 53 to 50LS share
from 13 to 28In 2007, LS is 31 (Was 35 in Q1
2007!)
Source PricewaterhouseCoopers/National Venture
Capital Association MoneyTree Report, Data
Thomson Financial
12
Cleantech/Greentech shows significant growth
nationally
Source PricewaterhouseCoopers/National Venture
Capital Association MoneyTree Report, Data
Thomson Financial
13
Whats Happening in the Northwest?Latest Data
from the PricewaterhouseCoopers/National Venture
Capital Association MoneyTree Report, Data
Thomson FinancialFor an interactive state
analysis tool www.pwcmoneytree.comMoneyTree
defines the Northwest as Washington, Oregon,
Idaho, Wyoming and Montana. Virtually all the
activity is in Washington and Oregon.
14
The Northwest Region by State
Source PricewaterhouseCoopers/National Venture
Capital Association MoneyTree Report, Data
Thomson Financial
15
Washington Oregon Investment Considerably
ahead of national trends(national totals are
close to 1997/1998 now at ¼ of bubble peak and
2007 slightly higher than 2006)
Source PricewaterhouseCoopers/National Venture
Capital Association MoneyTree Report, Data
Thomson Financial
16
As with National, WA/OR Life Sciences is 30,
but Software is more dominant overall
Source PricewaterhouseCoopers/National Venture
Capital Association MoneyTree Report, Data
Thomson Financial
17
Just looking at Oregon far less life science,
software still around ¼ of total
Source PricewaterhouseCoopers/National Venture
Capital Association MoneyTree Report, Data
Thomson Financial
18
The Exit Scene - the importance of acquisitions
has become clear over the past several years
19
IPO Levels Jumped in 2004 but not sustained New
hope in 2007?
Source Thomson Financial/National Venture
Capital Association
20
Recent Median IPO Valuations Are Strong But Are
The Valuations Better or the Smaller Deals
Suppressed?
Source Thomson Financial/National Venture
Capital Association
21
Whats in the IPO Pipeline?IPOs During Period
and Registration Counts at Period End
Source Thomson Financial/National Venture
Capital Association
22
VB Acquisition Had Not Changed Much Slowing in
2007 As IPO Markets Pick Up
Source Thomson Financial/National Venture
Capital Association
23
MA Exits Recent Quarters Show Significant
Strengthening
Source Thomson Financial/National Venture
Capital Association
24
Venture Exit Counts- IPOs and MA by Year
Source Thomson Financial/National Venture
Capital Association
25
For First Fundings From 1991 to 2000,
Approximately 33 Were Acquired and 14 Went
Public11,686 Companies Total
Source PricewaterhouseCoopers/National Venture
Capital Association MoneyTree Report, Data
Thomson Financial
26
Of Companies Receiving First Funding in 2001 and
2002, There Are Few Exits2040 Companies Total
Source PricewaterhouseCoopers/National Venture
Capital Association MoneyTree Report, Data
Thomson Financial
27
Number of First Time Fundings (New Projects) is
On Track to Post-Bubble High!
Source PricewaterhouseCoopers/National Venture
Capital Association MoneyTree Report, Data
Thomson Financial
28
Whats Running the Show in 2007?

• An expensive war
• Congressional eagerness to eliminate middle class
  AMT
• Revenue scoring
• Its silly season
• Vague legislation creating less predictable
  outcomes
• - Defined as the 4-year period leading up to a
  presidential election

29

• Mark G. Heesen
• President