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18

May

2011

Venture Capital Performance Continues to Improve PDF Print E-mail

Mark Heesen

Written by Mark Heesen   
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This morning, the NVCA released the Q4 2010 venture capital performance numbers from our partner Cambridge Associates and the news continues to be encouraging.  As you can see in the press release, venture returns improved at the end of the year in nearly every time horizon, marking the second consecutive quarter in which we saw meaningful increases.  

Based on current exit market activity, we feel that the venture industry is on a steady, upwards trajectory rather than experiencing a quarterly blip.  In other words, barring any unforeseen market dynamics, returns hit bottom last year and are headed back up.  Still, we do have a ways to go before the venture industry can boast the type of performance that compels limited partners to expand their venture capital allocation beyond what it is today.

While we typically discourage analysts from reading too much into the one year numbers, the figure is a good measure for recent exit activity.  At the end of 2010, an opening of the IPO market and quality acquisitions brought the pooled industry 1-year performance number into positive, double digit territory.  The first quarter of 2011 is showing a similar pace.

More detailed information is available and we encourage those interested to review the full Cambridge report which details performance by vintage year and industry.

 

16

May

2011

The Monday Meeting with Jason Matlof PDF Print E-mail

Emily Mendell

Written by Emily Mendell   
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This month's Monday meeting is with Jason Matlof of Battery Ventures.  Jason joined Battery in January 2005 and focuses on investments in the clean technology sector. He is currently a board member at Redwood Systems, SolarBridge Technologies, Qteros, and Ideal Power Converters (Observer). Before joining Battery, Jason spent more than a decade in management roles at leading technology companies. Most recently, he served as Vice President of Marketing and Business Development for Neoteris, which was acquired by NetScreen and then subsequently acquired by Juniper Networks. At Neoteris, Jason was responsible for developing and executing the company’s product strategy and establishing leadership within the emerging SSL VPN product category.

Prior to Neoteris, Jason spent five years at Cisco Systems, where he led the product management team for the company’s multi-billion dollar family of fixed-configuration Catalyst switches. Jason has also held positions with Ford Motor Company, Ericsson Raynet Corporation and MPR Associates. Jason received a BA with honors in Political Science from the University of California, Los Angeles and an MBA from Harvard Business School.

Jason co-authors www.cleanmakesgreen.com, a blog focused on cleantech.

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Jason Matlof, Partner, Battery Ventures

Q.  From which industry sector do you think we will see the most innovation in the next 2 years?

A.  Cleantech, for sure. The first generation of Cleantech investing has been challenging. Capital intensity, scale up, science risk, and other things are just a few of the big learnings of “Cleantech 1.0.” But, the opportunity to generate great venture returns is still significant.  These are the biggest product markets in the world; they suffer from acute economic and political challenges; and, technology is the answer in most cases.  Those are challenges where technology entrepreneurs and venture investors do well.

Q. 2011 is the year of the ...

A.  The Solar Microinverter. Enphase has done a great job building this new product category and is growing wildly fast.  But, this is the just the beginning.  There are a number of great solutions coming to market that will only accelerate the value proposition and growth potential.  Keep your eyes open in 2H11.

Q. The biggest threat to the US venture capital industry is ....

A.  Returns!  The venture industry’s mean average returns have been poor for over a decade. If the industry intends to maintain size or even grow, the industry mean returns need to start growing dramatically.  That means we need new product categories, driving new value propositions, and that drive new categories of strategic buyers to create exit opportunities for our portfolios.  Can you say “Cleantech”?

Q. What is your favorite book of the last year?

A:  The Big Short.  I was already skeptical of the ethics of some bankers and asset managers.  Now…I’m scared to death.

Q.   Name a venture-backed company you are are not invested in but wish you were.

A.  Solar City.

Q.  Name a practicing VC from another firm who you admire and why?

A.  There are a number of them, but they all share the same character traits – intelligent, successful, yet humble and enjoyable to hang out with.

 

04

May

2011

NVCA Webinar on Secondary Markets for PortCos Now Available PDF Print E-mail

Mark Heesen

Written by Mark Heesen   
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As promised at the NVCA meeting in April, last Friday we held a webinar for venture capital firms and their portfolio companies on issues related to secondary market sales.  Led by Frank Currie a partner at Davis Polk & Wardell, the webinar featured guidance and commentary from Josh Green, general partner of Mohr Davidow Ventures and Delida Costin, general counsel of Pandora Media.

The webinar focused on issues for portfolio companies considering secondary sales of their privately held stock as well as guidance for how to mitigate corresponding regulatory and market risks and liabilities.  Many companies are facing pressure from their long time employees to offer various degrees of liquidity.  However, with that strategy comes a host of issues that must be adequately addressed so as not to run afoul of regulations or create a situation in which the company loses its flexibility to make strategic decisions. Frank, Josh and Delida each shared ways in which companies can pursue secondary market transactions most effectively.

Due to the significant interest in this topic, the NVCA is making the archive of this webinar available to the public free of charge.  You can download the full presentation here.  We remain committed to educating our members and their companies about this rapidly evolving area.

 

04

May

2011

Venture Impact 6.0: VC-Backed Companies Continue to Matter PDF Print E-mail

John Taylor

Written by John Taylor   
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For the last decade, IHS Global Insight has regularly measured the impact of venture-backed companies on the U.S. economy. The latest data is now available and demonstrates that even during difficult economic times, these companies outperform their peers.

Using end of year 2010 data, IHS Global Insight used commercial corporate databases to determine headcount and revenues for companies that were once venture-backed. For those venture-backed companies that were acquired, the employee count was either pro-rated or removed from the data base depending on the size of the acquired company, making the final headcount estimate a conservative one. By the end of 2010, the direct counts from these databases showed venture-backed companies employed 12 million people and had revenues of $3.1 trillion. During one of the most difficult recessions in modern history, venture-backed company revenues grew and, while employee headcount declined, it was less so than the U.S private sector and now comprises a higher percentage of jobs in our country.

Consider the following:

In 2010... 

  • Venture-backed companies employed 11 percent of private sector workforce
  • Venture-backed company revenues corresponded to 21 percent of U.S. GDP
  • Venture capital investment is typically 0.1 - 0.2 percent of GDP in a given year

 From 2008 - 2010...

  • Total US private sector employment fell 3.1 percent while venture-backed employment fell 2.0 percent.
  • Total US company sales fell 1.4 percent while venture-backed company sales increased 1.5 percent.

While many of the companies left the venture capital "nest" after going public or being acquired, often years ago, something in the early years of these companies set them on a positive trajectory that serves the U.S. economy well today. Just as universities track the success of their alumni after graduation, in some cases decades after leaving the institution, so too does the venture capital industry. We can say unequivocally, that these companies continue to create tremendous and increasing value for our country.

Previous editions of this study were done for 2000, 2003, 2005, 2006, 2008 year end metrics and can be found on the NVCA website. A full report will be available by the end of this quarter.

Last Updated on Wednesday, 04 May 2011 09:36
 

25

Apr

2011

A New Look for NVCA PDF Print E-mail

Emily Mendell

Written by Emily Mendell   
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NVCA_logo_web_300x120

Those of you who follow the NVCA surely have noticed something different in the past few weeks. After more than two decades of employing our dark green logo, we unveiled a new look for the Association at this year’s annual meeting in Boston.  While the switch may have seemed quick to the general public, the process of developing our refreshed brand identity and designing our new logo took nearly a year.

Spearheaded by immediate past chairman Kate Mitchell and driven by the NVCA Board Communications Committee, our new brand initiative began with a series of NVCA member interviews as we sought to understand, from various perspectives, the essence of the venture capital industry and the stakeholders we represent. From these interviews we came to understand that the NVCA brand must convey a number of truths:

  • Venture capital does not stand alone. Without entrepreneurs, there would be no venture capital.
  • Venture capitalists are passionate about funding innovation and bringing new technologies to the marketplace.
  • Venture capital remains a small and unique asset class.  We have indeed professionalized in the last twenty years, but we are far from institutionalized. 
  • The value of membership in the NVCA is driven largely by the collective voice it has achieved in the market and on Capitol Hill. 

With these guiding principles, we developed a tag line that embodies these facts: “Funding Innovation. Empowering Entrepreneurs.”  The new logo, with the words "national" and "association" surrounding "venture capital", is a visual representation of NVCA’s mission to support and protect the industry - all in a color scheme consistent with the technology VC’s fund and the collective strength we bring to bear.

A special thanks to the NVCA Communications Committee comprised of Michael Greeley, Flybridge Capital Partners; Josh Green, Mohr Davidow Ventures, Jim Hale, FTV Capital; Jason Mendelson, Foundry Group; and Theresia Ranzetta, Accel Partners who provided strategic counsel along the way -- as well as our design firm Frost Miller who created the new look.

It is now up to us to carry this brand forward in our attitudes and actions, conveying the commitment of the venture industry to the public.  You will see this brand manifested in many ways over the next year - especially on our website and here at NVCAccess.  We look forward to conveying all that venture capital stands for and all the NVCA supports. 

Last Updated on Monday, 25 April 2011 13:32
 

18

Apr

2011

The Monday Meeting with John Backus PDF Print E-mail

Emily Mendell

Written by Emily Mendell   
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As we move our Monday meetings to a monthly basis, we are pleased to hear from John Backus, co-founder and managing general partner of New Atlantic Venture Partners located in both Reston, VA and Cambridge, MA.  John is a seasoned technology investor, entrepreneur and policy advocate with more than 25 years of experience investing in and managing emerging, high-growth technology companies. Prior to forming New Atlantic Ventures in 2007, John spent nearly a decade as a general partner with Draper Atlantic.

Before his career as a venture capitalist, John was appointed as President and CEO of InteliData Technologies. He joined InteliData through the acquisition of US Order, a company he founded and led through a successful $65 million IPO in 1995. He currently serves on the board of directors of Qliance, Healthwarehouse.com, Koofers, AppTap, Ftrans and RemitPro. He is the past Chairman of the Wolf Trap Foundation Board of Directors, the past Chairman of the Northern Virginia Technology Council (NVTC), the founding Chairman and current Board member of the NVTC TechPAC, and was appointed by former Virginia Governor Mark Warner to co-chair the Virginia Research and Technology Advisory Commission, which he served on for 4 years. John began his career at Bain & Co. and Bain Capital, where he was the first Bain & Co. management consultant to take a full time operating role (as CFO) in a portfolio company. He received his BA in Economics and his MBA from Stanford University.

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John Backus, Co-Founder and Managing General Partner, New Atlantic Venture Partners

Q.  From which industry sector do you think we will see the most innovation in the next 2 years?

 A.  Healthcare services and delivery.  Working from the National Capital Region, where politics permeates, I seem to have a front row seat watching legislators attempt to modify our country’s health policy. When there’s dramatic change like this, combined with our own personal frustrations with the system, it opens up big opportunities in the business side of healthcare. This is a $2.6 trillion dollar industry crying out for serious change.

The industry incumbents have set up a game and until now, no one challenged their process or pricing structure. Did you know that 40 percent of the cost for a primary care doctor to see you or treat you goes to cover the insurance bureaucracy?  And, that companies routinely receive bills for prescription drugs from their pharmacy benefit managers every two weeks, and are required to pay them within 48 hours without reviewing them? And, you are almost always paying too much for generic drugs when you pay your co-pay and paying cash and not using insurance is almost always cheaper? Consumers and businesses are finding smarter ways around this and entrepreneurs who started companies like Qliance, Truveris and Healthwarehouse.com are changing the healthcare system forever.

Q.  2011 is the year ...

A. ...…that experimentation with the venture capital model - incubators, super-angel funds, mixed stage funds, seed funds inside traditional VC funds, pre-IPO funds, single purpose funds to invest in one company, private stock trading platforms - peaks - before most of these experiments crash and burn in the next few years.

Q.  The biggest threat to the US venture capital industry is ...

A.  …the unintended consequence of well-meaning legislation written in Washington DC.

Q.  What is your favorite book of the last year?

A.  Fall of Giants by Ken Follett. This is a fictional novel that shows how small things can lead to big conflicts around the world.  It puts the Middle East uprisings in perspective. We live in a global economy and US companies need to pay attention to what is happening around the world in order to win big.

Q. Name a venture-backed company you are are not invested in but wish you were. 

A.  It is too easy to pick a big winner by looking through the rear view mirror. I would love to be an investor in Khan Academy, if it was a for profit company. Khan is turning the classroom upside down and has the potential to change our outrageously outdated education system (which I blogged about here).

Q.  Name a practicing VC from another firm who you admire and why?

A.  Peter Barris, the managing general partner at NEA. He steers one of the largest venture capital firms, which consistently delivers solid results, with companies that are reshaping the technology, healthcare and energy business.

 

Last Updated on Monday, 18 April 2011 06:42
 
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