NVCA2009 Yearbook

NATIONAL
VENTURE
CAPITAL
ASSOCIATION
YEARBOOK 2009
NATIONAL VENTURE CAPITAL ASSOCIATION YEARBOOK 2009
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New York, NY 10036 Arlington, VA 22209 PricewaterhouseCoopers/National Venture Capital Association
www.thomsonreuters.com www.nvca.org MoneyTree™ Report based on data from Thomson Reuters
March 2009
Dear Reader:
On behalf of the National Venture Capital Association board of directors and staff, we are
pleased to present you with the latest statistics that describe the activity of the venture
capital industry in the United States. These statistics reflect yet another all-time high level
of survey participation by venture capital practitioners. While accurately tracking the inputs
into this economic growth engine is important, these dollars represent a small portion of
what many of these companies have and will contribute to the United States economy in
terms of revenue, employment, and quality of medical care and living.
The statistics gathered and tracked by Thomson Reuters for ThomsonONE.com

(VentureXpert) and this Yearbook are essential to enabling analysis of venture capital by
policy think tanks and economists for use by government officials and foreign govern-
ments. For example, recent analysis of Thomson Reuters data by Global Insight shows
that while venture capital investment represents 0.2% of US GDP, the revenue of compa-
nies created by the industry represented 17.6% of GDP in 2006. For every venture capital
dollar invested in 1970-2001, there was $7.90 in US revenue during 2006 in those compa-
nies. In these companies, for every $28,463 of venture capital invested in 1970-2001,
there was one ongoing job in the year 2006.
Venture capital is unique. NVCA believes that it is more important than ever to effectively
tell the story of venture capital, differentiate it from other forms of alternative assets, and
explain what’s needed to continue creating great, leading-edge companies. We believe
that a strong venture capital industry is essential to America’s future and improving our
quality of life.
Your comments are always welcome at research@nvca.org.
Very truly yours,
Dan Broderick Mark G. Heesen John S. Taylor

Prolog Ventures NVCA President NVCA VP Research
NVCA Director & Chairman
of the NVCA Research Committee
NVCA BOARD OF DIRECTORS 2008-09
Executive Committee
Dixon Doll Terry McGuire

Chairman Chairman-elect
DCM Polaris Venture Partners
E. Rogers Novak Kate Mitchell

Treasurer At-Large
Novak Biddle Venture Partners Scale Venture Partners
Paul Maeder
At-Large
Highland Capital Partners
Research Committee
Dan Broderick Diana Frazier

Chairman FLAG Capital Management, LLC
Prolog Ventures
Stephen Holmes John Jaggers

InterWest Partners Sevin Rosen Funds
Board Members At-Large
Keith Crandell Thomas Crotty

ARCH Venture Partners Battery Ventures
Barbara Dalton Ira Ehrenpreis

Pfizer, Inc. Technology Partners
James Fleming Jim Hale, III

Columbia Capital FTV Capital
Deepak Kamra Robert Kibble

Canaan Partners Mission Ventures
Jack Lasersohn Pascal Levensohn

The Vertical Group Levensohn Venture Partners
Trevor Loy David Prend

Flywheel Ventures RockPort Capital Partners
Jonathan Root Ray Rothrock

U.S. Venture Partners Venrock Associates
Rob Soni R. David Spreng

Matrix Partners Crescendo Ventures
Bess Weatherman
Warburg Pincus
2 Thomson Reuters
2009
National Venture Capital Association
Yearbook
For the National Venture Capital Association
Prepared by Thomson Reuters
Copyright © 2009 Thomson Reuters
The information presented in this report has been gathered with the utmost care
from sources believed to be reliable, but is not guaranteed. Thomson Reuters dis-
claims any liability including incidental or consequential damages ariising from
errors or omissions in this report.
Thomson Reuters 3
National Venture Capital Association 2009 Yearbook
National Venture Capital Association Thomson Reuters

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Elizabeth Benson
President
Mark G. Heesen Vice President, Deals and Private Equity Operations
Shariq Kajiji
Vice President of Research
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Jim Beecher
Senior Vice President
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4 Thomson Reuters
Table of Contents
What is Venture Capital? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Capital Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 10
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Portfolio Company Post-Money Valuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 11
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 15
Capital Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Portfolio Company Valuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 51
Appendix A: Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Appendix B: MoneyTree Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Appendix C: MoneyTree Geographical Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Appendix D: Industry Codes (VEICs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Appendix E: Industry Sector VEIC Ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Appendix F: Stage Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Appendix G: Data Sources and Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Appendix H: Portfolio Company Valuation Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Appendix I: International Convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Appendix J: Non-US Private Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Thomson Reuters 5
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6 Thomson Reuters
What is Venture Capital?
Venture capital has enabled the United States to sup-

port its entrepreneurial talent and appetite by turning Venture Capital Backed Companies
ideas and basic science into products and services Known for Innovative Business Models
Employment at IPO and Now
that are the envy of the world. Venture capital funds
and builds companies from the simplest form – per- Company As of IPO Current # Change
haps just the entrepreneur and an idea expressed as a The Home Depot 650 331,000 330,350
Starbucks Corporation 2,521 176,000 173,479
business plan – to freestanding, mature organizations. Staples 1,693 75,588 73,895
Whole Foods Market, Inc. 2,350 52,900 50,550
eBay 138 15,500 15,362
Risk Capital for Business
Venture Capital Backed Companies
Venture capital firms are professional, institutional Known for Innovative Technology and Products
managers of risk capital that enables and supports the Employment at IPO and Now
most innovative and promising companies. This
Company As of IPO Current # Change
money funds new ideas that could not be financed Microsoft 1,153 91,000 89,847
with traditional bank financing, that threaten estab- Intel Corporation 460 86,300 85,840
lished products and services in a corporation, and that Medtronic, Inc. 1,287 40,000 38,713
Apple Inc. 1,015 35,100 34,085
typically require five to eight years to be launched. Google 3,021 16,805 13,784
JetBlue 4,011 11,632 7,621
Venture capital is quite unique as an institutional
Source: IHS Global Insight. Current data is FY 2007 Year End Data
investor asset class. When an investment is made in a
company, it is an equity investment in a company
whose stock is essentially illiquid and worthless until a companies have received funding but no one- or two-
company matures five to eight years down the road. person company has ever gone public! Along the way,
Follow-on investment provides additional funding as talent must be recruited and the company scaled up.
the company grows. These “rounds,” typically occur- Ask any venture capitalist who has had an ultra-suc-
ring every year or two, are also equity investment, with cessful investment and he or she will tell you that the
the shares allocated among the investors and manage- company that broke through the gravity evolved from
ment team based on an agreed “valuation.” But, unless the original business plan concept with the careful
a company is acquired or goes public, there is little input of an experienced hand.
actual value. Venture capital is a long-term investment.
Deal Flows — Where The Buys Are
More Than Money
For every 100 business plans that come to a venture
The U.S. venture industry provides the capital to cre- capital firm for funding, usually only 10 or so get a
ate some of the most innovative and successful com- serious look, and only one ends up being funded. The
panies. But venture capital is more than money. venture capital firm looks at the management team,
Venture capital partners become actively engaged the concept, the marketplace, fit to the fund’s objec-
with a company, typically taking a board seat. With a tives, the value-added potential for the firm, and the
startup, daily interaction with the management team is capital needed to build a successful business. A busy
common. This limits the number of startups in which venture capital professional’s most precious asset is
any one fund can invest. Few entrepreneurs approach- time. These days, a business concept needs to address
ing venture capital firms for money are aware that world markets, have superb scalability, be made suc-
they essentially are asking for 1/6 of a person! cessful in a reasonable timeframe, and be truly inno-
vative. A concept that promises a 10 or 20 percent
Yet that active engagement is critical to the success of improvement on something that already exists is not
the fledgling company. Many one- and two-person likely to get a close look.
Thomson Reuters 7
Many technologies currently under development by
venture capital firms are truly disruptive technologies The Exit Funnel
that do not lend themselves to being embraced by Outcomes of the 11,686 Companies
First Funded 1991 to 2000
larger companies whose current products could be
cannibalized by this. Also, with the increased empha- Went/Going Public
sis on public company quarterly results, many larger 14%
organizations tend to reduce spending on research and Still Private

or Unknown*
development and product development when things 35%
get tight. Many talented teams have come to the ven- Acquired
33%
ture capital process when their projects were turned
down by their companies. Known Failed 18%
Common Structure — Unique Results

*Of these, most have quietly failed
While the legal and economic structures used to create

a venture capital fund are similar to those used by other
alternative investment asset classes, venture capital sion funds, charities, individuals, and corporations
itself is unique. Typically, a venture capital firm will have benefited far beyond the risk-adjusted returns of
create a Limited Partnership with the investors as LPs the public markets.
and the firm itself as the General Partner. Each “fund,”
or portfolio, is a separate partnership. A new fund is
Beyond the IPO
established when the venture capital firm obtains nec-
essary commitments from its investors, say $100 mil- Many of the most exciting venture capital backed
lion. The money is taken from investors as the invest- companies left the venture portfolios after they went
ments are made. Typically, an initial funding of a com- public. Far from being a destination, the IPO process
pany will cause the venture fund to reserve three or provides needed growth capital for a growing compa-
four times that first investment for follow-on financ- ny. A 2009 analysis by IHS Global Insight shows that
ing. Over the next three to eight or so years, the ven- more than 90% of the jobs at today’s venture backed
ture firm works with the founding entrepreneur to public companies were created after it went public.
grow the company. The payoff comes after the compa- That is, these companies on average are 10% of their
ny is acquired or goes public. Although the investor mature size at the time they go public.
has high hopes for any company getting funded, only
one in six ever goes public and one in three is acquired.
What’s Ahead
Much of venture capital’s success has come from the
Economic Alignment of all Stakeholders —
entrepreneurial spirit pervasive in the American culture,
An American Success Story financial recognition of success, access to good science,
Venture capital is rare among asset classes in that suc- and fair and open capital markets. It is dependent upon
cess is truly shared. It is not driven by quick returns or a good flow of science, motivated entrepreneurs, protec-
transaction fees. Economic success occurs when the tion of intellectual property, and a skilled workforce.
stock price increases above the purchase price. When
a company is successful and has a strong public stock The nascent deployment of venture capital in other
offering, or is acquired, the stock price of the compa- countries is gated by a country’s or region’s cultur-
ny reflects its success. The entrepreneur benefits from al fit, tolerance for failure, services infrastructure
appreciated stock and stock options. The rank and file that supports developing companies, intellectual
employees throughout the organization historically property protection, efficient capital markets, and
also do well with their stock options. The venture cap- the willingness of big business to purchase from
ital fund and its investors split the capital gains per a small companies.
pre-agreed formula. Many college endowments, pen-
8 Thomson Reuters
Executive Summary
The year 2008 was a difficult year for the US venture capital industry in many ways. While overall fundraising
and company investment each retreated from post-bubble highs in 2007, very bad exit opportunities stifled the
forward progress of the large number of companies just reaching the maturity level at which they would typi-
cally go public or be acquired.
In the second quarter of 2008, no venture backed companies went public – a situation which had not occurred
for over 30 years! In fact, only six venture-backed companies went public in 2008. Instead, these later stage
companies needed large, later rounds of financing as well as the continued attention and support by the invest-
ing venture capitalists. The required time and capital made it difficult for the industry to turn its attention to
launching the next generation of great companies. Nonetheless, over 1,100 new companies were added to ven-
ture fund portfolios during 2008.
The lack of distributions to the institutional investors who provide the capital to the industry have left these pro-
fessional money managers with little capital to recycle back to the industry. The year started with a difficult
fundraising environment for all but the most demonstrably promising funds and ended with tough conditions for
all.
Even when this overview is being written several weeks into 2009, little has improved. Exits and fundraising
remain challenging. But the industry is very much open for business. Reports from across the industry are that
excellent teams are coming to venture firms with very strong business plans. That part of the venture capital
ecosystem is working well.
The most recent industry performance index continues to show that over the long haul the industry pays 15-
20% IRR to its investors. All indications are that this will continue. However, a continued poor exit market will
stress returns both because of lower exit valuations and delayed realizations.
Introduction investments to exits of the investments by either IPOs

or mergers and acquisitions to performance of private
The 2009 National Venture Capital Association equity funds with data from the Thomson Reuters
Yearbook provides a summary of all of venture capi- Performance Database. The statistics for this publica-
tal activity in the United States. This includes invest- tion were assembled primarily from the MoneyTree™
ments into portfolio companies to capital managed by Report by PricewaterhouseCoopers and the National
general partners to fund raising from limited partners Venture Capital Association based on data from
to valuations of companies receiving venture capital Thomson Reuters and analyzed through the
Figure 1.0 ThomsonONE.com (VentureXpert) database of
Venture Capital Under Management Thomson Reuters, which has been endorsed by the
Summary Statistics NVCA as the official industry database.
1988 1998 2008
No. of VC Firms in Existence 377 624 882 Industry Resources
No. of VC Funds in Existence 715 1,085 1,366
No. of Professionals 3,468 5,616 7,497 Venture capital under management in the United
No. of First Time VC Funds Raised 15 58 44 States by the end of 2008 decreased 24% from 2007
No. of VC Funds Raising Money This Year 104 288 210 year-end levels because large funds, raised during
VC Capital Raised This Year ($B) 4.4 29.7 27.9 2000 ($105 billion total raised) at the height of the
VC Capital Under Management ($B) 25.5 92.0 197.3 bubble, rolled out of the industry’s managed capital
Avg VC Capital Under Mgt per Firm ($M) 67.6 147.4 223.7 and were replaced with smaller and more targeted
Avg VC Fund Size to Date ($M) 34.7 60.6 104.4 funds ($28 billion raised in 2008). The overall con-
Avg VC Fund Size Raised This Year ($M) 42.3 103.1 132.9 traction in capital under management is reflected in
Largest VC Fund Raised to Date ($M) 1,175.0 5,000.0 5,000.0 the anticipated decrease in active firms and funds. We
Thomson Reuters 9
expect further declines in the number of firms and capital. This “denominator” effect made it difficult
funds from this current level as firms which most for institutional investors to make any new commit-
recently raised money and invested at the height of the ments near year end 2008.
bubble, wrap up their portfolios and exit the industry.
At year end 2008, 882 venture firms managed 1,366
Investment
funds which had committed capital of $197.3 billion.
Venture capital investment in United States portfo-
lio companies decreased 8% from the post-bubble
Commitments
high in 2007, but the total was still above 2006 lev-
New commitments to venture capital funds in the els. In 2008, venture capitalists invested $28.4 bil-
United States decreased in 2008 to $27.9 billion from lion dollars in 3,832 deals. This modest decline fol-
their post-bubble record levels in 2007. In 2008, 210
funds got investor commitments — a decrease of 15%. Figure 3.0
Capital Commitments to
The dollar amount of those commitments fell 21%.
U.S. Venture Funds ($ Billions)
Most of the successful fundraising during 2008 1980 to 2008
occurred in the first nine months. That said, overall
fundraising (new capital committed by investors) 120
remained in line with the amount of previously-raised 100

capital being deployed or invested by venture capital-
80
ists in companies. That is, new commitments of capital
($ Billions)
and capital deployed remained pretty much in balance. 60
40
As the economy worsened toward the end of 2008,
20
many institutional investors (e.g., pension plans,
endowments, money managers) saw the public por- 0
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allocated to alternative asset classes including venture Year
Figure 2.0 Figure 4.0

Capital Under Management Investments
U.S. Venture Funds ($ Billions) to Portfolio Companies ($ Billions)
1980 to 2008 1980 to 2008
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($ Billions)
($ Billions)
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Year Year
10 Thomson Reuters
2009 NVCA Yearbook
lows 4 consecutive years of modest increases. MoneyTree™ sectors, 12 saw no IPOs.
Despite these global economic concerns, the United The number of venture-backed companies acquired
States venture capital industry invested in 1,179 first during 2008 (335) declined from 2007 (378) to a level
time companies in 2008. While this is below the level consistent with other post-bubble years. While 2007
of the prior two years, new portfolio companies are was the post-bubble high water mark for strong acqui-
being sought out and funded. sition exits, in 2008 the total disclosed proceeds
dropped 59% to $13.3 billion. While M&A exits were
During 2008, a near-record number of later stage at best a mixed picture, 18% of those companies sold
deals were done. This is not surprising because of a for more than ten times the total venture investment
large number of portfolio companies reaching maturi- (TVI) in those companies.
ty with no or lousy exit opportunities open to them.
Despite the time and capital commitments to these
Performance
mature portfolio holdings, venture capitalists also
invested in companies in the seed state and early stage Over the long-term, venture capital funds have paid
at near post-bubble levels. out a net 15-20% IRR to their investors. The most
recent performance statistics confirm this. For the 20
year period ended on September 30, 2008, venture
Portfolio Company Post-Money
funds overall returned 17.0% annualized IRR. Among
Valuations the fund segments, those designating themselves as
Round valuations overall appeared to be significantly early stage led the way with 21.6% annualized IRR.
lower in 2008 than they were overall in the period Shorter horizon returns are less significant. For exam-
1995-2008. In 2008, the median financing round was
at a reported $13.3 million, compared with the recent Figure 5.0
history of $30.0 million. The calculated average (or 2008 Investments
mean) round valuation, which of course can be affect- By Industry Class
ed by particularly large rounds, was $46.7 million in
All Investments Initial Investments
2008 versus $72.9 million over the 14-year compari- No. of Investment No. of Investment
son period. Of those sectors with sufficient reported Industry Group Companies Amt ($Bil) Companies Amt ($Bil)
results, only two reported an increase in median round Information Technology 1,905 14.0 659 2.9
valuations: the media and entertainment sector and Medical/Health/Life Science 734 8.2 234 1.5
the medical devices and equipment sector. Non-High Technology 553 6.2 286 1.8
Total 3,192 28.4 1,179 6.2
Exits
Figure 6.0
The year 2008 was an awful year for venture-backed 2008 Investments
companies exiting through initial public offerings or By Company Stage
acquisitions. Only six venture-backed companies went
public and the proceeds from acquisitions dropped by Startup-Seed
more than 50%. This comes at a time when a record 5%
Early
number of companies founded during or just after the 19%
tech bubble entered the “later stage” of maturity and, Later
38%
in more typical times, would have exited.
One has to go back to the 1970s to find years with fewer

IPOs. The six companies which did go public brought in
less than one-half billion dollars in proceeds. Of the six
IPOs, two were Healthcare Services companies and two Expansion
were in Medical Devices and Equipment. Of the 16 38%
Thomson Reuters 11

Venture Capital Investments in 2008 2008 Investments
By Industry Sector By State
Telecommunications Biotechnology
Number of Pct of Investment Pct of
6% 16%
Business Products and Services State Companies Total ($ Millions) Total
2%
Software
17%
Computers and Peripherals
1%
CA 695 47% 5,917.3 55.2%
Consumer Products and Services
MA 138 9% 898.2 8.4%
2%
Electronics/Instrumentation
NY 125 8% 768.0 7.2%
2%
Financial Services
TX 56 4% 510.2 4.8%
Semiconductors
2% WA 69 5% 405.2 3.8%
Healthcare Services
6%
1% VA 37 3% 291.3 2.7%
Retailing/Distribution
1% IL 23 2% 229.5 2.1%
Networking and Equipment
2%
Industrial/Energy
16%
MD 32 2% 220.6 2.0%
NJ 33 2% 182.0 1.7%
Medical Devices and Equipment
12% PA 51 3% 168.0 1.6%
Media and Entertainment
7%
IT Services
7% All Others 223 15% 1,123.7 10.5%
Total 1,482 10,713.8
ple, the one year returns reflect falling valuations for
public companies which then affect the valuations of When analyzing the performance results from
private companies. Amplifying this effect in 2008, Thomson Reuters, several points need to be empha-
likely continuing into 2009 is the large number of later sized. For example, a large portion of the investment
stage companies still in portfolios. These companies performance of the funds in any analysis of venture
typically have positive EBITDA. Their portfolio valu- capital performance is dependent on unrealized
ations would be influenced by public markets through returns that are subject to the various valuation meth-
the use of ratios and comparables for pricing. Much of ods used by firms for valuing year-end portfolio
this IRR “exists” in the net asset values of portfolios. investments. By definition, these investments are usu-
A continued awful exit market will delay exits (timing) ally illiquid and the valuations applied to them could
and could reduce the values of the companies now have a liquidity premium applied to them. Later stage
awaiting an IPO or acquisition (amount realized). Both funds may be a bit more efficient in pricing since they
suggest lower short-term returns going forward. tend to have valuations that are more closely correlat-
ed with public stocks.
Figure 9.0
Valuations Per Company Industry
Figure 10.0
2008 Financings ($ Millions)
Venture-Backed IPOs
Avg Upper Lower
Company Industry Val Max Quartile Median Quartile Min
300 30
Biotechnology 44.2 158.2 94.0 14.6 3.1 0.1 No. of IPOs
Business Products and Services 17.0 42.2 23.8 12.0 5.2 2.0 250 Offer ($ Billions) 25
Computers and Peripherals NA NA NA NA NA NA
Consumer Products and Services 24.8 77.0 27.0 10.2 8.0 2.0
200 20
Offer ($ Billions)
Electronics/Instrumentation NA NA NA NA NA NA
No. of IPOs
Financial Services NA NA NA NA NA NA
Healthcare Services NA NA NA NA NA NA
150 15
Industrial/Energy 33.7 200.0 33.8 5.9 2.2 0.1
IT Services 36.5 188.0 33.0 10.1 4.5 0.3
Media and Entertainment 161.6 1,000.0 68.7 28.1 17.6 3.0 100 10
Medical Devices and Equipment 44.5 140.0 63.1 34.1 13.6 1.2
Networking and Equipment NA NA NA NA NA NA
Other NA NA NA NA NA NA 50 5
Retailing/Distribution NA NA NA NA NA NA
Semiconductors 38.9 70.0 42.3 37.8 30.0 14.2 0 0
Software 25.9 113.0 36.9 22.4 7.5 0.5 '80'81'82'83'84'85'86'87'88'89'90'91'92'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08
Telecommunications 40.3 141.3 30.0 12.0 9.0 6.0
Total 46.7 1,000.0 57.9 13.3 4.7 0.1 Year
12 Thomson Reuters
2009 NVCA Yearbook
Although these measures seem to make venture capi- Venture capital funds by their nature are long-term
tal returns and public market returns directly compa- investments and should be measured with this in
rable, the returns to public markets are almost always mind. Short-term performance can be misleading
stated as time-weighted returns while it is recom- because the underlying investments are highly illiq-
mended that venture capital returns be calculated as uid. Also, since performance is in large part affect-
money-weighted returns, or internal rates of return. ed by capital gains that have not been distributed
By definition, neither method is “right” or “wrong”, yet, short-term performance is more of an indicator
but just different calculations of performance. of performance as opposed to a truer representa-
Therefore, readers should bear in mind that addition- tion. Readers should bear this in mind when com-
al care must be taken when directly comparing public paring short-term versus long-term asset class per-
and private market performance. formance.
Figure 11.0
Performance of Private Equity funds
Net IRR to Investors For Investment Horizon

Ending 09/30/2008 for Private Equity Funds
Fund Type 1YR 3YR 5YR 10YR 20YR
Seed/Early Focused -1.5 3.7 5.0 37.1 21.6
Balanced Focused -5.6 7.3 11.4 14.9 14.7
Later Stage Focused 9.1 11.1 10.1 8.7 14.5
All Venture -1.5 6.4 8.5 17.1 17.0
Buyout Funds -8.3 7.1 12.2 7.3 11.1
Mezzanine Debt 10.8 4.4 4.8 5.4 7.8
All Private Equity -7.1 7.6 11.0 9.3 12.9
Figure 12.0
Five Year Rolling Averages:
Venture Capital vs. Public Market Indexes
Five-Year
Period Venture
Ending Capital S&P 500 NASDAQ
1990 6.5 9.4 2.8
1991 8.6 11.5 10.9
1992 8.7 12.0 15.4
1993 11.7 10.9 15.3
1994 13.1 5.4 10.6
1995 20.1 13.8 24.0
1996 22.4 12.2 17.1
1997 26.1 17.4 18.3
1998 26.6 21.4 23.1
1999 48.2 26.2 40.2
2000 48.2 16.5 18.6
2001 36.8 9.2 8.6
2002 26.9 -1.9 -3.2
2003 25.0 -2.0 -1.8
2004 -2.1 -3.8 -11.8
2005 -6.5 -1.1 -2.2
2006 1.3 4.5 4.6
2007 8.6 10.8 14.7
2008 8.5 -4.1 -4.7
Thomson Reuters 13
14 Thomson Reuters
Industry Resources
Venture capital under management in the United States by the end of 2008 decreased 24% from 2007 year-end
levels because large funds raised in during 2000 ($105 billion total raised) at the height of the bubble rolled
out of the industry’s managed capital and were replaced with smaller and more targeted funds ($28 billion
raised in 2008). The overall contraction in capital under management is reflected in the anticipated decrease
in active firms and funds. The industry’s current investment and fundraising levels are approximately 1/3 of the
bubble peak. We would expect further declines in the number of firms and funds from this current level as firms
which raised money and invested at the height of the bubble wrap up their portfolios and exit the industry.
Industry headcount fell as well. The number of estimated industry principals fell 16% in 2008 also as part of
the ongoing post-bubble contraction to approximately 7,500. At year end 2008, 882 venture firms managed
1,366 funds which had committed capital of $197.3 billion.
METHODOLOGY raised both buyout and venture capital funds, only the
The number of firms in existence will vary on a venture funds would be counted in the calculation of
rolling eight-year basis as firms raise new funds or do venture capital under management.
not raise funds for more than eight years. Under this
methodology, we estimate that there are currently 882 Figure 1.01
firms with limited partnerships “in existence”. To Capital Under Management
U.S. Venture Funds ($ Billions)
clarify, this is actually stating that there are 882 firms
1980 to 2008
that have raised a venture capital partnership in the
last eight years. In reality, there may well be fewer
firms actually making new investments. 300
250
For this publication, we are primarily counting the
number of firms with limited partnerships and are 200
excluding other types of investment vehicles. From that
($ Billions)
description, it may appear that the statistics for total 150
industry resources may be underestimated. However,

100
this must be balanced with the fact capital under man-
agement by captive and evergreen funds is difficult to 50
compare equitably to typical limited partnerships with
fixed lives. For this analysis only, the firms counted for 0
2
3
4
5
6
7
8
9
0
1
2
3
4
0
1
2
3
4
5
6
7
8
9
0
1
5
6
7
8
capital under management include firms with fixed life

200
200
200
200
200
199
199
199
199
199
199
199
199
198
198
198
198
198
198
198
198
198
198
199
199
200
200
200
200
partnerships and venture capital funds raised. If a firm Year
Figure 1.02
Total Capital Under Management
By Firm Type 1980 to 2008 ($ Millions)
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Private Independent 2,062 2,909 4,314 6,824 9,194 11,175 14,549 16,745 17,898 21,667 22,144 21,403 22,245 24,399 28,502 33,519 40,096 51,566 75,265 118,970 184,432 209,055 209,655 211,470 220,242 229,247 236,708 223,869 176,672
Financial Institutions 1,218 1,993 2,234 3,099 3,539 4,124 4,296 4,408 4,466 4,060 4,014 3,515 3,344 3,419 4,038 4,924 5,705 8,521 12,220 17,853 25,504 27,405 26,710 26,382 26,273 25,244 24,473 20,928 13,182
Corporations 516 759 744 1,018 1,179 1,773 1,772 2,172 2,296 2,137 2,370 2,281 2,454 1,753 1,805 1,698 2,555 2,715 3,421 6,973 13,135 14,304 14,444 14,103 14,073 14,898 14,913 11,938 6,440
Other 304 439 509 459 689 828 883 875 840 735 671 601 357 229 356 459 544 899 1,094 1,503 2,129 2,336 2,290 2,244 2,311 2,012 2,006 1,565 1,006
Total 4,100 6,100 7,800 11,400 14,600 17,900 21,500 24,200 25,500 28,600 29,200 27,800 28,400 29,800 34,700 40,600 48,900 63,700 92,000 145,300 225,200 253,100 253,100 254,200 262,900 271,400 278,100 258,300 197,300
Thomson Reuters 15
Figure 1.03 Venture capital under management can be a complex

Distribution of Firms statistic to estimate. Indeed, capital under manage-
By Capital Managed 2008
ment reported by firms can differ from firm to firm as
150
there’s not one singular definition. For example, some
160 143
135 135
firms include only cumulative committed capital, oth-
140
119
ers may include committed capital plus capital gains,
120 and still other firms define it as committed capital
100 89 after subtracting liquidations. To complicate matters,
it is difficult to compare these totals to European pri-
80
58 53 vate equity firms which include capital gains as part
60 of their capital under management measurements.
40
20 For purposes of the analysis in this publication, we

have tried to clarify the industry definition of capital
0
under management as the cumulative total of commit-
0
0+
25
50
100
0
0
0
0-1
-25
-50
0
10-
25-
-10
100
ted capital less liquidated funds or those funds that

50-
100
250
500
have completed their life cycle. Typically, venture

Capital Under Management ($ Millions) capital firms have a stated 10-year fixed life span,
This chart shows capital committed to US venture firms in active funds.
While much of the capital is managed by larger firms, of the 882 firms in
except for life science funds which are often estab-
existence at the end of 2008, roughly 60% of them (532) managed $100 mil- lished as 12-year funds. Figure 1.07 shows the reality
lion or less. By comparison, 53 firms managed active funds totaling more of fund life. Thomson Reuters calculates capital under
than $1 billion.
management as the cumulative amount committed to
Figure 1.04
Fund and Firm Analysis
Total Total Total Firms That Raised Capital Avg Avg

Cumulative Cumulative Cumulative Existing Funds in the Last Managed Fund Size Firm Size
Year Funds Firms Capital ($B) Funds 8 Vintage Years ($B) ($M) ($M)
1980 186 117 5.8 129 92 4.1 31.8 44.6
1981 250 154 7.9 188 127 6.1 32.4 48
1982 321 192 9.8 248 162 7.8 31.5 48.1
1983 434 236 13.4 355 208 11.4 32.1 54.8
1984 550 288 16.8 459 260 14.6 31.8 56.2
1985 639 320 20.2 541 297 17.9 33.1 60.3
1986 718 354 24.1 603 332 21.5 35.7 64.8
1987 820 390 27.7 681 362 24.2 35.5 66.9
1988 901 411 31.3 715 377 25.5 35.7 67.6
1989 996 440 36.5 746 392 28.6 38.3 73
1990 1055 457 39 734 393 29.2 39.8 74.3
1991 1094 465 41.2 660 373 27.8 42.1 74.5
1992 1170 486 45.2 620 365 28.4 45.8 77.8
1993 1264 518 50 625 376 29.8 47.7 79.3
1994 1369 549 58.7 651 389 34.7 53.3 89.2
1995 1527 615 68.3 707 429 40.6 57.4 94.6
1996 1674 675 80.2 773 469 48.9 63.3 104.3
1997 1899 774 100.2 903 548 63.7 70.5 116.2
1998 2140 859 131 1085 624 92 84.8 147.4
1999 2488 994 186.5 1394 752 145.3 104.2 193.2
2000 2907 1138 270.3 1737 881 225.2 129.6 255.6
2001 3147 1222 303.1 1883 943 253.1 134.4 268.4
2002 3221 1238 311.8 1852 938 253.1 136.7 269.8
2003 3327 1293 322.5 1800 968 254.2 141.2 262.6
2004 3497 1358 343.1 1823 1003 262.9 144.2 262.1
2005 3677 1428 371.6 1778 1024 271.4 152.6 265
2006 3862 1502 409.1 1722 1027 278.1 161.5 270.8
2007 4081 1592 444.7 1593 1019 258.3 162.1 253.5
2008 4273 1648 467.6 1366 882 197.3 144.4 223.7
The correct interpretation of this chart is that since the beginning of the industry to the end of 2008, 1,648 firms had been founded and 4,273 funds had
been raised. Those funds totaled $467.6 billion. At the end of 2008, 882 firms as calculated using our eight-year methodology managed 1,366 individual
funds, each fund typically a separate limited partnership. Capital under management by those funds at the end of 2008 is $197.3 billion. The average firm
size is $223.7 million.
16 Thomson Reuters
2009 NVCA Yearbook

Principals Information Top 5 States
By Capital Under Management 2008
State ($ Millions)
No. Estimated Avg Mgt CA 84,479.5
Principals Industry Per Principal MA 36,148.6
Year Per Firm Principals ($M) NY 17,950.0
2007 8.7 8892 28.9 CT 11,780.9
2008 8.5 7497 26.3
MD 7,316.1
The correct interpretation of this chart is that at year end 2008, there were
Total* 157,675.0
7,497 principals (people who go to board meetings) in the industry. A prin- *Total includes above 5 states only
cipal on average manages $26.3 million and the average firm is made up of
8.5 principals.
Figure 1.07
Capital Under Management By State 1980 to 2008 ($ Millions)
State 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
CA 1,099 1,349 2,288 3,051 4,090 4,880 5,871 6,458 6,720 7,849 7,428 7,524 7,678 8,282 9,087 11,421 14,192 19,455 26,254 48,317 78,830 89,359 90,067 92,500 97,866 104,497 110,241 103,763 84,479
MA 530 761 990 1,509 1,830 2,200 2,769 3,419 3,793 4,263 4,364 4,003 4,967 4,990 5,285 6,762 7,409 10,297 14,779 22,006 35,805 43,276 45,776 44,610 45,415 47,665 50,391 48,159 36,149
NY 1,247 1,659 1,811 2,765 3,245 3,598 4,672 4,840 4,664 6,347 6,531 6,208 6,092 6,845 8,168 9,307 10,893 11,714 21,639 30,728 44,727 46,033 43,733 43,021 43,217 42,890 35,581 30,874 17,950
CT 255 528 607 753 879 1,287 1,440 1,678 1,757 1,614 1,762 1,638 1,741 1,583 1,743 1,827 1,902 3,396 4,578 6,975 9,021 12,286 12,112 12,065 13,924 13,874 15,057 13,083 11,781
MD 42 84 55 120 258 252 403 431 417 451 634 565 476 1,011 1,249 1,260 2,144 2,243 3,090 4,878 8,709 8,458 8,430 8,418 8,906 9,417 11,396 10,868 7,316
WA 27 61 76 264 267 316 411 388 428 406 391 201 247 231 182 302 464 677 1,083 1,796 2,814 3,638 3,640 3,512 4,493 4,469 4,467 5,508 4,954
TX 89 96 111 331 409 500 539 792 791 874 917 852 889 976 1,186 1,097 1,249 1,716 3,019 4,667 7,211 8,373 8,207 8,127 8,446 8,122 7,794 6,165 4,591
DC 1 1 1 1 3 36 38 49 56 58 59 59 57 23 1,039 1,307 2,850 3,496 3,579 3,716 4,478 5,268 4,223 3,956 2,733 3,046 4,153 4,346 4,410
NJ 109 86 85 216 547 617 718 757 747 752 970 896 558 543 757 1,017 1,487 1,550 2,175 2,699 3,635 4,296 4,181 4,389 4,092 4,091 5,177 5,073 4,174
IL 84 133 167 337 405 444 465 688 876 841 849 811 1,047 1,316 1,388 1,484 1,306 1,769 2,221 3,539 4,172 4,590 5,294 5,692 5,789 5,536 5,430 4,575 3,851
PA 18 30 38 101 140 435 510 540 557 649 685 712 691 488 655 727 987 1,493 1,662 2,598 4,892 5,093 4,911 5,304 5,182 5,104 5,680 5,370 3,803
VA 3 1 17 51 67 73 79 79 85 107 93 57 43 38 35 86 111 194 583 1,312 2,554 2,752 2,763 2,943 3,141 3,720 3,613 3,494 2,310
MN 59 51 55 137 192 200 299 343 683 765 914 839 795 872 926 899 529 629 717 1,093 2,202 2,141 2,317 2,307 2,315 2,403 2,550 2,441 1,644
CO 138 147 190 213 342 365 434 330 457 565 517 498 378 462 408 370 440 753 1,015 3,186 4,751 5,266 5,408 5,394 5,218 4,897 4,686 3,033 1,571
NC 13 14 26 29 30 34 55 88 90 127 116 111 112 110 149 129 264 580 769 971 1,314 1,394 1,542 1,738 1,619 1,449 1,658 1,540 1,204
UT 4 4 4 4 9 9 19 20 15 16 16 16 11 10 26 31 31 94 96 130 272 479 452 526 540 499 603 1,130 1,159
OH 214 835 833 877 924 860 901 981 845 261 262 279 310 436 478 451 378 689 768 1,243 1,856 1,878 1,878 1,855 2,053 1,878 1,790 1,652 1,008
GA 0 0 3 47 51 53 59 140 226 231 243 196 195 249 246 240 166 253 558 687 1,286 1,279 1,274 1,197 1,229 1,267 1,268 1,443 853
TN 2 2 2 4 30 103 129 193 186 221 264 281 276 203 297 305 459 522 750 1,062 1,197 1,289 1,169 1,161 1,048 1,040 844 675 569
FL 8 8 70 111 126 126 132 174 194 199 134 111 99 153 227 324 305 448 763 1,142 1,765 1,730 1,661 1,567 1,556 1,718 1,436 1,166 530
MI 0 0 83 109 141 142 152 238 231 237 150 125 94 95 92 27 27 253 259 620 709 712 711 751 944 780 796 510 503
MO 3 3 17 17 34 577 604 637 615 631 669 665 656 109 139 120 125 147 112 122 215 241 209 198 296 276 335 547 460
LA 4 1 3 6 6 7 7 7 7 7 5 2 11 23 32 49 90 275 368 444 478 731 727 709 745 585 512 437 421
KY 0 16 15 16 16 16 16 16 16 0 0 0 0 0 7 7 7 7 7 7 7 7 0 14 14 18 218 220 225
WI 93 131 127 181 184 180 97 96 93 104 104 79 80 82 166 169 168 137 140 110 184 183 90 89 100 85 255 258 185
ME 1 1 1 1 1 1 1 21 26 26 26 26 28 29 100 89 87 87 89 207 203 291 218 219 215 217 278 162 165
AL 0 0 0 0 0 127 132 133 129 138 139 139 140 6 6 6 6 5 24 33 108 108 107 107 125 178 177 169 161
AZ 15 16 15 16 57 41 44 44 74 76 77 76 35 45 44 45 10 9 38 38 37 48 89 124 125 143 116 117 139
IN 13 14 23 32 60 45 56 57 78 99 89 82 99 101 111 112 194 176 192 207 479 477 466 499 409 417 429 415 119
RI 1 1 1 2 2 15 16 16 36 37 38 36 37 23 23 23 0 0 0 0 0 24 24 24 24 24 97 98 100
NM 0 0 15 27 42 72 101 137 135 173 261 247 235 209 182 155 152 120 12 12 12 12 12 34 35 70 75 77 78
ID 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 14 14 14 14 14 14 85 86 73
IA 0 38 37 41 42 50 52 106 102 65 66 63 63 55 56 5 5 16 17 16 16 60 60 55 65 54 60 68 69
OK 23 25 24 1 1 1 29 29 28 38 38 37 38 39 10 10 32 23 67 66 140 140 140 139 117 118 111 117 42
VT 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 15 41 41 41 41 41 41 55 40
PR 0 0 0 0 0 0 0 0 0 0 9 9 9 9 9 9 9 9 40 40 39 69 68 68 68 69 29 31 31
DE 1 1 7 7 35 39 41 40 39 48 42 42 14 9 52 101 122 114 117 115 140 140 116 68 56 56 57 57 31
NH 0 0 0 1 1 24 25 25 50 51 52 51 51 28 28 47 19 66 67 66 66 66 84 65 66 19 30 30 31
MS 3 3 3 0 0 0 0 0 0 0 0 0 0 0 0 25 25 25 26 26 25 53 53 28 28 28 29 30 30
OR 0 0 1 18 130 170 178 206 243 249 251 232 118 75 75 78 30 30 40 40 100 100 113 83 85 86 76 79 23
SC 0 1 1 2 2 2 2 2 2 16 16 15 15 16 16 29 29 13 13 13 79 80 93 80 80 86 86 87 21
SD 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 10 74 73 168 168 167 167 162 163 101 102 19
HI 0 0 0 0 2 2 2 2 2 2 2 2 0 0 0 2 2 2 2 11 11 11 11 9 16 16 16 8 14
ND 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 13
KS 0 0 0 0 0 0 0 0 0 0 13 13 13 14 14 38 47 66 53 52 52 51 51 28 19 0 0 0 0
NE 0 0 0 0 0 0 0 0 1 1 1 1 1 12 12 106 137 138 141 140 176 165 165 71 38 38 38 39 0
MT 0 0 0 0 0 0 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
WV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 21 21 21 21 21 21 21 21 0
WY 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 118 118 117 117 118 119 119 120 0
AR 0 0 0 0 2 2 2 2 2 2 2 2 0 0 0 0 0 0 0 72 71 71 71 71 71 72 72 0 0
NV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 24 23 23 23 23 23 24 24 0 0
AK 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total 4,100 6,100 7,800 11,400 14,600 17,900 21,500 24,200 25,500 28,600 29,200 27,800 28,400 29,800 34,700 40,600 48,900 63,700 92,000 145,300 225,200 253,100 253,100 254,200 262,900 271,400 278,100 258,300 197,300
Thomson Reuters 17
Figure 1.08 ture capital firms using four distinct types: private
Life of IT Funds in Years independent firms, financial institutions, corpora-
tions, and other entities. ‘Private independent’ firms
Life of IT Funds % of are made up of independent private and public firms
In Years Funds including both institutionally and non-institutional-
<= 10 7% ly funded firms and family groups. ‘Financial insti-
11-12 20%
tutions’ refers to firms that are affiliates and/or sub-
13-14 27%
sidiaries of investment banks and non-investment
15-16 22%
17-18 14% bank financial entities including commercial banks
>=19 10% and insurance companies. The ‘Corporations’ classi-
fication includes venture capital subsidiaries and
Source: Adams Street Partners, based on 2006 analysis of funds then dis- affiliates of industrial corporations. The capital
solved. This chart tracks the year in which a 10-year fund is, in fact, dis- under management data referred to in this section
solved. These later periods are referred to as "out years." By this point in
time, most of the strong exits have occurred, the companies that are going
consist primarily of venture capital firms investing
to outright fail have done so, and the portfolio consists of a few portfolio through limited partnerships with fixed commit-
company holdings which are difficult to sell at a favorable price. ment levels and fixed lives and does not include
infinite lived “evergreen funds” or true captive cor-
funds on a rolling eight-year basis. Current capital porate industrial investment groups without fixed
under management is calculated by taking the capital commitment levels. The term ‘evergreen funds’
under management calculation from the previous year, refers to funds that have a continuous infusion of
add in the current year’s funds’ commitments, and capital from a parent organization as opposed to the
subtracting the capital raised eight years prior. fixed life and commitment level of a closed-end
For this analysis, Thomson Reuters classifies ven- venture capital fund.
18 Thomson Reuters
Capital Commitments
New commitments to venture capital funds in the United States decreased in 2008 to $27.9 billion from their post-
bubble record levels in 2007. In 2008, 210 funds got investor commitments — a decrease of 15%. The dollar amount
of those commitments fell 21%. Most of the successful fundraising during 2008 occurred in the first nine months.
That said, overall fundraising (new capital committed by investors) remained in line with the amount of previously-
raised capital being deployed or invested by venture capitalists in companies. That is, new commitments of capital
and capital deployed remained pretty much in balance.
The fundraising environment remained difficult for all but the most proven and demonstrably promising firms
throughout the year, and for virtually all funds as year end neared. Venture firms had raised considerable funds in
2007 and the first part of 2008. As the economy worsened toward the end of 2008, many institutional investors (e.g.,
pension plans, endowments, money managers) saw the public portion of their portfolios fall and found themselves
over-allocated to alternative asset classes including venture capital. This “denominator” effect made it difficult for
institutional investors to make any new commitments near year end 2008.
Much of the fundraising was done by established, often larger, firms. Capital was also successfully raised by new
funds in promising sectors, such as clean technology, and those with proprietary deal flow prospects. The top
fundraising states remained California, Massachusetts, and New York. The list of top states shifted in 2008 with DC
and Texas joining the top 5, replacing Washington state and Pennsylvania. Overall, funds domiciled in the top 5
states accounted for 82% of the capital raised and 63% of the funds raising money.
Please note that fund domicile by state is less meaningful than it has been historically viewed. Much of the money
is managed by large, national funds which tend to be domiciled in any of several states. Some of these firms, for
example, may have their largest concentration of investing partners in California but the firm is actually headquar-
tered and administered elsewhere.
Methodology capital commitments: (1) SEC filings that are regularly

monitored by our research staff, (2) surveys of the indus-
As defined by Thomson Reuters, capital commitments are try routinely conducted by Thomson Reuters, and (3)
funds raised by private equity limited partnerships from industry press and press releases from venture firms.
their limited partners. There are three sources of data for Commitments are stated on either a calendar year basis

Capital Commitments Capital Commitments
To U.S. Venture Funds ($ Billions) To Private Equity Funds 1980-2008
1980 to 2008 Venture Buyouts and Mezzanine Private Equity
Year Capital $Mil No. Funds Capital $Mil No. Funds Capital $Mil No. Funds
1980 2,025.6 52 183.5 4 2,209.1 56
1981 1,486.5 75 126.8 4 1,613.3 79
120 1982 1,705.4 87 611.3 13 2,316.7 100
1983 3,949.2 143 1,351.3 15 5,300.5 158
1984 2,964.3 116 3,482.5 22 6,446.8 138
100 1985
1986
3,988.5
3,788.4
121
103
3,024.5
5,001.9
22
31
7,013.0
8,790.3
143
134
1987 4,376.7 116 15,565.7 41 19,942.4 157
1988 4,435.0 104 11,326.4 50 15,761.4 154
80 1989 4,902.6 105 11,966.2 78 16,868.8 183
1990 3,229.0 87 7,861.1 62 11,090.1 149
($ Billions)
1991 2,002.8 42 5,886.6 27 7,889.4 69

1992 5,215.3 80 11,031.3 58 16,246.6 138
60 1993 3,943.6 88 16,128.9 79 20,072.5 167
1994 8,928.0 140 20,415.3 98 29,343.3 238
1995 9,859.6 172 26,293.3 102 36,152.9 274
1996 11,845.2 162 29,655.2 99 41,500.4 261
40 1997 19,772.5 244 41,055.4 129 60,827.9 373
1998 29,692.0 288 61,568.7 160 91,260.7 448
1999 55,808.9 451 53,556.5 153 109,365.4 604
20 2000 105,004.6 653 75,254.7 154 180,259.3 807
2001 39,056.4 321 49,904.1 120 88,960.5 441
2002 9,329.8 206 24,118.2 88 33,448.0 294
2003 11,607.8 163 31,040.1 101 42,647.9 264
0 2004 19,845.2 219 50,908.7 137 70,753.9 356
2005 28,727.5 235 97,403.2 179 126,130.7 414
7
8
9
0
1
2
3
0
1
2
3
4
4
5
6
5
4
6
7
8
9
0
1
2
3
7
8
6
2006 31,827.6 241 147,989.7 179 179,817.3 420

198
198
198
198
198
198
198
199
199
199
200
200
200
200
200
198
198
198
199
199
199
199
199
199
199
20 0
200
200
200
2007 35,398.0 247 205,260.1 208 240,658.1 455

2008 27,947.8 210 177,980.1 179 205,927.9 389
Year
Thomson Reuters 19
Figure 2.03
Venture Capital Fund Commitments
1980 to 2008 ($ Millions)
State 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
CA 380 363 731 913 948 1044 770 1235 934 1501 736 546 1407 1169 2031 3330 3539 5555 7593 21854 41901 13328 2735 4652 9203 14930 10902 14866 15096
MA 223 115 438 494 357 559 557 935 788 335 557 242 1051 170 1030 2012 1998 2439 4994 7984 16173 9563 2577 1597 1692 5144 4641 6257 3501
NY 228 402 193 1043 424 302 1460 654 363 2242 490 509 470 695 1895 2154 1848 3966 8381 9601 16588 2504 1025 1245 2183 2096 2583 5223 1973
DC 0 0 0 0 0 39 0 12 5 0 0 0 0 0 1310 280 820 2338 395 220 1423 1122 315 0 392 566 1413 240 1293
TX 12 57 0 240 118 87 61 256 41 162 143 58 382 137 283 194 326 388 1411 1792 4160 2739 186 76 794 652 363 284 1172
PA 0 9 0 57 69 54 73 55 12 118 45 167 30 110 182 114 174 609 157 1253 2290 334 86 488 463 349 486 754 1025
CT 70 309 44 333 130 316 156 236 288 66 310 150 300 272 388 260 425 1324 1093 3038 3050 3904 60 165 2327 1216 3186 625 886
UT 0 0 0 0 6 0 11 1 0 0 0 0 0 0 11 0 0 33 50 40 129 224 29 34 40 24 130 142 559
WA 9 37 17 113 0 25 126 37 60 0 0 5 48 40 37 179 204 180 409 640 1195 938 83 1 995 281 590 1882 489
MD 0 45 0 0 219 4 182 24 2 74 213 50 0 415 272 21 775 172 1272 1681 4039 521 478 1100 278 833 2868 1377 447
MN 2 0 3 168 0 266 110 51 418 20 162 16 946 66 164 19 36 527 585 131 2473 17 276 26 50 295 398 275 325
IL 1000 65 48 158 74 57 47 235 158 26 57 94 247 278 183 230 295 360 466 1364 1007 1073 478 702 432 81 465 558 236
OH 0 16 30 0 34 3 0 87 75 0 30 0 67 4 86 10 0 366 58 659 662 330 102 5 276 544 125 209 194
CO 0 0 40 29 112 32 71 32 70 80 0 0 0 114 0 19 216 253 433 1942 2414 513 140 94 84 69 133 371 157
TN 0 0 0 0 30 20 24 73 0 34 0 0 40 0 116 84 151 109 266 267 262 82 22 101 16 84 62 100 129
MI 0 0 0 36 0 5 0 97 33 0 0 0 0 3 13 0 26 226 5 329 286 8 11 51 33 101 13 49 106
VA 0 0 34 0 2 0 4 10 13 15 2 0 0 3 0 53 20 65 322 996 2345 201 41 238 72 428 555 599 83
AL 0 0 0 0 0 150 0 0 0 0 0 0 0 0 0 0 0 5 30 0 80 16 11 7 19 60 19 0 68
NJ 41 23 13 96 216 254 61 120 0 125 244 75 110 177 401 363 456 118 1002 720 1206 652 392 561 197 344 1962 235 48
MO 0 0 0 0 15 644 0 33 0 0 53 0 0 64 0 11 6 45 25 80 65 286 0 0 80 29 40 220 45
FL 60 3 87 39 171 10 0 36 11 29 0 35 0 133 105 106 0 78 250 326 936 26 8 56 1 313 11 109 25
AZ 0 0 0 0 19 0 0 0 37 0 0 0 0 10 0 0 0 0 0 29 0 21 42 41 0 19 0 0 20
GA 0 0 0 52 0 0 0 15 65 0 14 0 0 56 0 74 34 41 181 30 861 19 0 0 55 104 103 518 19
SD 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 11 0 22 14 131 1 0 0 5 0 0 0 15
ND 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 13
KY 0 17 0 0 0 0 0 0 0 0 0 0 0 14 7 15 0 42 0 0 0 135 8 2 0 5 65 98 12
HI 0 0 0 0 2 0 0 0 0 0 0 0 0 0 0 3 0 0 0 10 0 0 3 0 8 0 0 0 6
OR 0 0 0 20 0 0 0 30 0 0 0 0 0 0 32 32 0 0 10 0 65 0 14 0 2 0 0 2 5
VT 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20 25 0 0 0 0 0 11 3
NC 0 0 0 0 0 7 7 32 23 38 1 0 0 0 63 10 164 349 174 209 601 120 72 291 3 101 398 166 1
LA 0 0 0 0 0 0 0 0 0 0 0 0 11 14 169 18 24 88 51 375 70 112 52 8 75 4 13 0 0
OK 0 0 0 0 0 0 32 0 0 10 0 0 0 0 0 0 24 0 45 0 110 0 0 0 0 12 38 5 0
IN 0 0 12 10 2 0 10 0 27 16 5 0 49 0 20 0 116 0 13 20 103 40 10 36 17 6 24 1 0
KS 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 25 10 20 0 0 0 0 0 0 0 0 0 0 0
IA 0 20 0 25 0 11 0 60 0 0 0 0 56 0 0 5 0 12 0 5 21 26 0 0 10 0 43 0 0
RI 0 0 5 0 0 17 0 0 25 0 0 0 0 0 0 0 0 0 0 0 0 25 0 0 0 0 64 14 0
MS 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12 0 0 0 0 30 0 0 0 0 0 1 0 0
NH 0 7 4 34 0 49 0 0 40 0 0 15 0 0 0 20 0 50 0 0 0 0 11 9 0 0 5 7 0
ME 1 0 0 0 0 0 0 22 948 0 0 0 2 0 59 0 22 0 0 127 0 77 16 3 0 0 46 20 0
ID 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 15 27 0 0 0 0 0 75 0
WV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6 4 13 2 0 0 0 0 0
SC 0 1 0 2 0 0 0 0 0 13 5 0 0 0 0 14 0 0 0 0 70 0 15 0 0 6 0 0 0
PR 0 0 0 0 0 0 0 0 0 0 10 0 0 0 0 0 0 0 0 0 0 31 0 0 0 0 0 1 0
NV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 50 25 0 0 25 0 0 0 0 0 0 0 0 0
NE 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 111 36 0 0 0 41 0 0 0 0 0 0 0 0
DE 0 0 8 0 0 0 0 0 0 0 0 0 0 0 25 31 65 0 0 28 0 0 22 0 10 0 0 0 0
UN 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
WY 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 26 0 0 0 0 0 0 0 0
AR 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7 69 0 0 0 0 0 0 0 0
WI 0 0 0 58 0 0 0 0 0 0 0 0 0 0 40 0 0 16 0 17 82 14 0 0 11 0 78 101 0
NM 0 0 2 31 17 36 28 0 2 0 155 40 0 0 6 2 0 0 0 0 0 0 0 18 22 34 5 7 0
Total 2026 1487 1705 3949 2964 3989 3788 4377 4435 4903 3229 2003 5215 3944 8928 9860 11845 19773 29692 55809 105005 39056 9330 11608 19845 28728 31828 35398 27948
20 Thomson Reuters
2009 NVCA Yearbook
or a vintage year basis depending on the analysis and made its first capital call in 2008, the entire fund
required. The data in this chapter is calendar year and would then be considered to be a 2008 vintage year fund.
incrementally measures how much capital a fund raised An important note: the fund commitments presented in
during the calendar year. For example, if a venture capi- this publication do not include those corporate captive
tal firm announces a $175 million fund in 2007, raises venture capital funds that are provided its financing by
$75 million in 2007, and subsequently raises the remain- the corporate parent as well as evergreen funds since
ing $100 million in 2008, the fund commitments would they do not raise capital from outside investors in the tra-
be counted in two calendar years at $75 million and ditional sense.
$100 million, respectively. Assuming it started investing

Top 5 States Private Equity
By Venture Capital Committed 2008 Annual Commitment ($ Billions)
1980 to 2008
No. of Committed
State Funds ($Mil) 220
California 89 15095.7 200

Venture Capital
Massachusetts 22 3500.6 180 Buyouts and Mezzanine Capital
New York 11 1972.8 160
District of Columbia 3 1292.9 140
Texas 7 1172.2
($ Billions)
120
Sub-Total 132 23034.2
100
Remaining States 78 4913.6
Total 210 27947.8 80
60
40
20
0
0
1
5
2
3
6
7
4
8
5
6
7
8
9
0
1
2
3
4
5
6
7
8
9
0
1
2
3
4
1 98
198
2 00
1 98
200
1 98
198
2 00
2 00
198
198
198
1 98
1 98
1 99
1 99
1 99
1 99
1 99
1 99
199
199
199
199
200
200
200
200
200
Year
Thomson Reuters 21
22 Thomson Reuters
Investments
Venture capital investment in United States portfolio companies decreased 8% from the post-bubble high in
2007, but the total was still above 2006 levels. In 2008, venture capitalists invested $28.4 billion dollars in 3,832
deals into 3,192 companies. This modest decline follows 4 consecutive years of modest increases. Much of the
investment attention was focused on new companies, as well as later stage companies already in the portfolios
which are unable to move onto an initial public offering or acquisition. As the year ended and concerns mount-
ed over global economic problems, the investment pace fell in the fourth quarter. It is not clear whether that trend
will continue into 2009.
Despite these global economic concerns, the United States venture capital industry invested in 1,179 first
time companies in 2008. While this is below the level of the prior two years, it shows that the industry is very
much open for business.
During 2008, a near-record number of later stage deals were done. This is not surprising because of a large
number of portfolio companies reaching maturity with no or lousy exit opportunities open to them. Except for
the fourth quarter of 2008 when activity overall fell, this ever-increasing accumulation of companies in need of
later stage financing kept the number of such deals above 300 per quarter – a level unheard of until the sec-
ond quarter of 2007. Despite the time and capital commitments to these mature portfolio holdings, venture cap-
italists did also invest in companies in the seed and early stage at near post-bubble levels.
Life science investment remained around 30% of all invested capital and investment in California increased
slightly to 50% of the capital deployed nationally. Clean technology investment increased to $4.1 billion, which
is 7.5 times the amount three years earlier.
Investment by corporate venture capital groups remained steady at 8% of total US investment. Approximately
19% of all rounds involve at least one corporate venture group. However, both of these statics trended down in
the fourth quarter.
Several factors were in play which will put upward pressure on the amount of venture capital invested in the com-
ing quarters: (1) there are a record number of later stage companies which need continued funding but are unable
to exit through IPO or acquisition at this time; (2) the emerging sectors such as biotechnology, medical devices, and
clean technology tend to be more capital intensive than typical information technology companies;(3) many venture
firms report an increasing number of high-quality opportunities and teams in the marketplace; and (4) increased
government R&D funding will undoubtedly make certain sectors more investible. On the other hand, those factors
suppressing investment levels in the near term are (1) the need for capital efficiency at the portfolio companies –
lengthening the runway and reducing the burn rate; (2) possible difficulty in additional fundraising from institution-
al investors over the next several quarters because of stretched allocations to this asset class; and (3) a lack of exits
means lack of distributions which means a lack of capital which can be recycled for future investment.
Methodology Finally, publicly available sources such as press

As calculated by Thomson Reuters, venture capital releases and trade publications are used.
investment data are derived from several sources.
Primarily, survey information is obtained from the For detailed information on which transactions quali-
quarterly survey which drives the MoneyTree fy as MoneyTree and are therefore counted in this
Report™ from PricewaterhouseCoopers and the chapter, please refer to Appendix B.
National Venture Capital Association based on data
from Thomson Reuters. This is the official industry
database of venture capital investment. Secondly,
Thomson Reuters obtains data from SEC filings that
are regularly monitored by our research staff.
Thomson Reuters 23
Figure 3.01
Venture Capital Investments ($ Billions)
1980 to 2008
120
100
80
($ Billions)
60
40
20
0
7
8
9
0
1
2
0
1
2
3
4
5
6
3
4
5
6
5
6
7
8
7
8
9
0
1
2
3
4
198
198
199
199
199
198
198
198
198
198
198
198
198
199
199
199
199
200
200
200
200
199
199
199
200
200
200
200
200
Year
Figure 3.02
Venture Capital Investments in 2008
By Industry Group
All Investments Initial Investments

No. of Investment No. of Investment
Industry Group Companies Amt ($Bil) Companies Amt ($Bil)
Information Technology 1,905 14.0 659 2.9
Medical/Health/Life Science 734 8.2 234 1.5
Non-High Technology 553 6.2 286 1.8
Total 3,192 28.4 1,179 6.2
24 Thomson Reuters
2009 NVCA Yearbook
Figure 3.03
Venture Capital Investments
Top 5 States in 2008
Num of Amt
State Cos Invested ($Bil)
California 1,292 14.3
Massachusetts 346 3.0
New York 195 1.3
Texas 125 1.3
Washington 126 1.0
Total* 2,084 20.8
*Total includes top 5 states only
Figure 3.04
By Industry Sector
Telecommunications Biotechnology
6% 16%
Business Products and Services
2%
Software Computers and Peripherals
17% 1%
Consumer Products and Services

2%
Electronics/Instrumentation
2%
Financial Services
Semiconductors 2%
6%
Healthcare Services
1%
Retailing/Distribution
1%
Networking and Equipment

2%
Medical Devices and Equipment Industrial/Energy

12% IT Services 16%
Media and Entertainment
7% 7%
Figure 3.05
By Stage
Startup-Seed
5%
Early
19%
Later
38%
Expansion
38%
Thomson Reuters 25
Figure 3.06
Amount of Capital Invested By State in 2008
($ Millions)
92 181
181
962
WA
WA NHNH 20
4343 20
16
16 00 ME
MT 487 ME
MT ND
ND
487
MN
VTVT
176
176 MN
OR
OR 1298 2997
2997 MA
1212 1 75 1298 MA
1
75
IDID WI NY
NY
22 SD
SD 246
246
WI
39 RI
39
WY MI
MI
WY 701 RI
40
40 701
1616 130
130 CT
IA
IA 258 PA
PA CT
NE
134 258 695
695 NJ
13
13
NE OH 31
445 134 OH 31 NJ
194 445
NV
194 IN
14278
14278 NV IN DC
DC
UT 817
817 IL IL 24
24
CA 63 DE
UT CO 486 63
CA 45
45 8686 WV
WV 486 VA
CO 29 VA DE
KS
KS MO 29
MO KY
KY
461
459
459 NC 461 MD
65 65 TN NC
MD
17 TN
208
208 17
69
69 OK
00 34
AZ OK 34
AZ NM AR
NM AR SCSC
423
423
0
24 0
24 GA
MS AL
MS GA
8 AL 0
1287
1287 0
8
TX LA GU
GU
TX LA
238
238
FL
FL
77 14
HI HI 14
PR
PR 00
VI
VI
Figure 3.07
Number of Companies Invested in By State in 2008
126
126 2323
NH
WA NH
WA
2 88 44
1
2 1 ME
MT 43
43 VT
ME
ND VT
MT ND MN
29
29 MN
OR
OR 346
66 195
346
MA
MA
1 18
18 195
1 NY
IDID SD
WI NY
11 SD WI 33
33
WY MI 99 RI
WY MI 152 RI
2 44 152
2 30
NE IA PA
PA 30
CT
CT
44
NE IA 44 76
33 13 OH 88
76
NJ
NJ
29 13
NV 29 57
57 OH DC
1292 IN
78
1292 NV UT 78 IL
IN 11 DC
CA UT IL 5
CO 65
65
CA 20
20 WV
WV 5
CO 19
19 10 VA
VA DE
KS MO 10 DE
KS MO KY
KY
4545 NC 87
87
20 MD
20TN
TN NC MD
44
19
19
16
16 OK 00 10
AZ OK 10
AZ NM AR
NM SC SC
AR 59
59
00
88 GA
MS AL
AL GA
125 MS 00
125
9
6
TX GU
GU
TX LA
LA
29
29
FL
FL
66
HI
22
PRPR
HI 00
VIVI
26 Thomson Reuters
2009 NVCA Yearbook
Figure 3.08
Venture Capital Investments in 1980 to 2008
By Region ($ Millions)
Region 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Silicon Valley 131.3 325.8 532.3 1066.6 1044.4 741.6 941.8 825.0 949.1 874.6 863.2 742.8 1073.6 875.2 1080.3 1808.3 3421.9 4703.5 5967.2 18106.0 33335.4 12703.6 7119.0 6568.5 8003.1 8221.3 9636.3 11009.4 10997.4
New England 71.2 170.2 242.0 428.3 451.5 434.4 405.5 500.5 488.7 409.3 407.6 277.0 443.1 347.0 460.3 759.8 1155.2 1569.3 2356.9 5506.4 11736.8 5206.8 2867.6 2986.6 3356.3 2814.3 3189.8 3900.5 3283.1
LA/Orange County 38.5 112.3 189.4 343.3 261.3 203.3 191.7 273.3 200.2 241.7 182.7 143.6 170.5 186.9 201.0 1021.5 687.3 803.6 1253.4 3587.9 6681.3 2087.1 1296.2 1111.9 951.7 1602.7 1970.7 1619.4 1994.7
NY Metro 54.7 67.5 95.4 143.0 160.4 210.7 210.0 259.7 306.3 361.5 196.1 177.5 223.1 196.7 281.6 480.9 726.1 1268.3 1684.6 4534.4 10437.5 3528.6 1492.3 1421.6 1603.9 1983.5 2038.1 1692.7 1867.2
Midwest 29.7 68.2 98.0 164.3 209.0 153.0 134.7 201.7 158.9 194.4 163.7 158.0 168.3 310.6 386.4 450.0 737.0 869.1 1624.5 2739.7 5606.2 1966.5 956.7 863.7 655.2 773.5 990.1 1215.8 1368.6
Texas 76.3 128.4 119.2 144.1 200.4 241.6 228.3 206.3 237.1 237.6 143.5 161.1 148.4 220.2 284.3 464.4 532.1 830.8 1158.9 3135.6 6003.0 2943.0 1296.0 1246.9 1154.5 1174.9 1389.4 1468.5 1287.3
Southeast 23.5 49.8 73.2 134.5 122.8 165.6 229.2 252.0 238.8 200.3 142.4 98.5 319.3 415.0 350.6 820.8 1124.7 1385.9 1634.4 4388.3 8007.4 2742.5 1793.7 1114.3 1301.1 1096.0 1247.1 2038.4 1244.1
San Diego 20.3 32.4 14.3 65.8 60.9 95.8 74.8 101.7 149.5 142.1 106.4 105.8 107.1 124.3 222.1 271.2 444.7 496.0 591.5 1208.6 2201.7 1523.5 964.3 823.7 1215.7 1092.3 1203.1 1991.6 1213.0
Northwest 6.0 21.5 44.0 129.3 89.2 142.1 128.9 140.5 115.1 115.3 88.6 62.0 219.9 135.9 157.5 380.6 494.4 538.3 813.4 2508.2 3598.4 1382.3 741.6 623.2 1011.3 1012.1 1267.1 1709.6 1167.3
DC/Metroplex 24.3 26.5 25.9 80.8 53.6 103.5 58.5 99.8 128.6 140.7 83.9 37.6 50.0 67.2 131.1 415.8 510.1 551.6 1139.4 2104.0 5607.3 2097.0 1096.3 823.0 937.7 1049.3 1150.1 1268.1 1002.1
Colorado 30.3 32.1 39.7 82.2 82.6 77.4 112.7 106.8 100.8 159.3 92.3 50.6 128.2 133.9 189.5 327.7 306.5 379.8 725.8 1738.4 4103.7 1222.4 536.5 621.4 408.0 643.7 645.1 609.7 817.4
Philadelphia Metro 21.3 27.7 18.9 38.8 72.4 52.3 54.7 78.9 71.5 56.3 104.8 41.6 178.0 425.1 124.0 232.3 352.1 492.7 625.5 1593.7 2566.0 1111.7 584.0 535.6 736.3 559.1 756.5 822.6 758.1
North Central 18.2 22.2 30.2 55.1 70.1 32.8 43.0 77.4 41.5 49.4 60.4 46.4 87.6 113.5 89.9 203.4 225.9 350.7 477.0 796.3 1387.0 645.1 486.2 493.0 453.4 353.3 407.6 588.7 619.4
SouthWest 9.0 18.7 41.8 31.7 41.8 40.6 79.8 53.9 55.3 49.3 30.1 30.9 90.9 46.6 31.8 111.4 172.0 288.8 356.8 745.9 1348.1 446.6 406.1 223.7 370.1 550.3 495.2 549.1 483.5
Upstate NY 7.2 13.1 3.0 10.4 17.7 14.2 10.7 9.7 6.2 7.3 11.1 3.4 9.1 5.1 0.7 35.5 22.4 84.5 179.7 214.5 289.7 159.1 104.5 128.2 105.2 54.1 149.9 136.5 87.4
Sacramento/N.Cal 2.4 7.9 19.4 9.2 19.1 16.0 41.3 23.0 34.1 4.2 19.3 15.7 17.7 7.4 16.6 31.4 28.9 21.4 85.8 104.1 350.1 227.0 65.4 32.2 37.9 45.7 34.2 99.9 72.8
South Central 12.8 24.0 7.2 31.6 8.2 13.7 11.7 19.8 12.6 24.2 11.6 3.9 15.2 13.3 46.6 48.2 71.6 67.4 186.7 418.1 464.3 160.9 69.4 58.5 119.5 18.3 87.1 106.3 70.9
AK/HI/PR 0.0 0.1 4.5 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 1.0 22.0 7.8 24.2 14.0 5.5 17.4 237.6 69.8 4.9 12.9 15.1 13.6 46.4 20.9 21.0
Unknown 0.0 0.0 19.1 1.1 0.8 4.5 0.5 0.6 0.8 0.3 0.0 0.0 30.0 0.8 0.2 0.3 2.2 4.4 42.1 2.4 58.8 26.3 0.0 0.0 0.9 57.1 0.0 0.0 0.0
Total 576.9 1,148.4 1,617.3 2,960.3 2,966.1 2,742.9 2,958.0 3,230.6 3,295.0 3,267.9 2,707.7 2,156.6 3,480.1 3,625.8 4,076.3 7,871.3 11,039.2 14,720.2 20,909.3 53,449.8 104,020.5 40,250.0 21,880.3 19,688.8 22,436.9 23,115.1 26,703.7 30,847.6 28,355.2
Figure 3.08b
Venture Capital Investments in 1980 to 2008
By Region (Number of Deals)
Region 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Silicon Valley 100 158 270 347 395 324 327 335 338 378 385 329 412 308 334 498 763 870 1,041 1,699 2,158 1,101 806 857 943 985 1,196 1,240 1,179
New England 62 132 158 219 251 237 211 249 228 217 212 168 160 145 142 233 331 380 461 652 873 573 440 440 424 417 440 497 465
NY Metro 32 69 88 114 86 91 102 118 105 120 88 80 69 69 78 127 152 226 264 474 808 429 221 193 213 183 274 258 309
Midwest 30 51 79 95 109 98 111 130 104 128 101 92 86 87 84 130 181 224 239 314 497 269 233 163 155 166 198 248 267
LA/Orange County 45 82 91 132 115 99 105 118 106 111 99 93 97 61 55 88 132 159 215 345 513 246 153 144 146 184 219 207 238
Northwest 11 26 38 60 45 49 47 56 64 63 48 41 47 41 47 80 104 129 130 259 329 189 136 109 147 161 176 223 208
Southeast 28 40 80 69 82 95 117 132 109 108 121 104 104 107 106 163 217 293 299 444 650 393 267 237 231 196 221 246 206
DC/Metroplex 13 17 40 57 44 46 42 61 57 50 59 53 45 35 44 72 113 134 160 262 496 253 190 180 178 204 211 211 194
Texas 39 53 71 82 90 109 90 103 102 86 82 70 65 65 63 95 133 168 188 301 465 332 172 168 164 168 188 173 147
Philadelphia Metro 14 20 20 28 29 38 35 50 43 35 42 41 63 49 43 78 89 134 130 135 222 125 92 83 99 88 108 128 143
San Diego 6 15 15 33 37 42 31 49 54 56 47 41 46 47 60 71 106 97 115 146 232 153 110 123 126 131 127 163 126
Colorado 15 40 36 41 57 44 57 59 59 51 47 34 50 48 51 57 77 93 122 157 218 106 88 70 71 76 98 97 101
SouthWest 18 21 23 19 25 18 28 40 22 27 21 25 34 29 26 37 50 67 83 110 143 84 65 49 56 77 84 94 78
North Central 21 21 37 55 66 36 47 52 52 38 43 39 40 40 38 71 71 117 108 115 146 121 73 72 68 66 65 84 77
South Central 8 16 9 12 8 11 11 12 7 8 5 3 7 7 10 15 20 25 27 30 51 31 24 17 29 10 22 30 38
Upstate NY 5 9 8 13 18 17 10 9 10 12 6 4 9 10 5 8 9 20 31 32 34 29 24 22 28 27 37 32 29
Sacramento/N.Cal 2 3 7 11 14 11 17 11 11 6 10 9 13 7 9 10 11 7 16 17 35 25 6 11 7 10 7 16 19
AK/HI/PR 0 1 2 1 0 1 0 0 0 0 0 3 3 1 2 4 7 6 5 5 14 10 3 6 5 5 13 8 8
Unknown 0 0 25 4 1 14 1 1 2 2 0 0 1 4 2 2 7 7 15 3 17 14 0 0 3 2 0 0 0
Total 449 774 1,097 1,392 1,472 1,380 1,389 1,585 1,473 1,496 1,416 1,229 1,351 1,160 1,199 1,839 2,573 3,156 3,649 5,500 7,901 4,483 3,103 2,944 3,093 3,156 3,684 3,955 3,832
Thomson Reuters 27
Figure 3.09
1980 to 2008 By Stage ($ Millions)
Stage 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Startup-Seed 161.4 353.8 347.2 560.1 658.1 527.6 742.1 625.2 663.3 563.9 398.2 232.5 552.0 637.4 791.5 1261.6 1292.1 1332.1 1737.1 3656.9 3197.8 766.7 333.8 357.5 465.5 897.7 1176.8 1279.7 1500.3
Early 153.5 302.8 408.6 757.8 710.3 516.5 600.5 721.5 721.0 715.8 692.8 548.8 572.6 620.8 825.9 1724.2 2687.3 3526.9 5552.1 11464.3 25176.2 8545.5 3834.5 3548.0 4004.0 3806.9 4172.9 5476.4 5363.4
Expansion 189.2 392.1 627.4 1266.1 1196.4 1238.1 1154.4 1425.5 1521.8 1585.7 1269.9 1040.0 1772.4 1862.5 1535.1 3660.5 5418.9 7608.6 10430.1 29549.2 59334.5 22801.5 12341.3 10028.6 9148.4 8649.3 11533.2 11688.1 10637.1
Later 72.7 99.6 234.1 376.3 401.4 460.7 461.0 458.3 388.9 402.5 346.8 335.4 583.2 505.1 923.8 1224.9 1640.9 2252.5 3190.0 8779.5 16312.0 8136.3 5370.7 5754.8 8818.9 9761.2 9820.8 12403.4 10854.3
Total 576.9 1148.4 1617.3 2960.3 2966.1 2742.9 2958.0 3230.6 3295.0 3267.9 2707.7 2156.6 3480.1 3625.8 4076.3 7871.3 11039.2 14720.2 20909.3 53449.8 104020.5 40250.0 21880.3 19688.8 22436.9 23115.1 26703.7 30847.6 28355.2
Figure 3.09b
1980 to 2008 By Stage (Number of Deals)
Stage 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Startup-Seed 113 225 270 361 388 361 382 386 364 354 259 185 249 285 329 430 505 531 661 808 696 274 178 205 209 239 360 450 444
Early 180 241 397 454 422 315 327 392 351 328 370 270 282 180 250 507 759 884 1007 1710 2843 1280 851 783 865 822 943 1038 1018
Expansion 130 255 320 475 528 537 502 595 595 648 586 527 600 505 426 695 1018 1407 1569 2454 3691 2385 1586 1362 1211 1095 1367 1261 1187
Later 26 53 110 102 134 167 178 212 163 166 201 247 220 190 194 207 291 334 412 528 671 544 488 594 808 1000 1014 1206 1183
Total 449 774 1097 1392 1472 1380 1389 1585 1473 1496 1416 1229 1351 1160 1199 1839 2573 3156 3649 5500 7901 4483 3103 2944 3093 3156 3684 3955 3832
Figure 3.10
1980 to 2008 By Industry ($ Millions)
Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Software 39.9 132.5 244.7 588.3 700.5 602.3 563.5 497.6 474.9 454.3 514.6 449.4 605.6 466.9 667.2 1,144.0 2,295.6 3,348.0 4,475.7 10,515.0 24,391.4 10,341.9 5,282.7 4,534.7 5,422.6 4,824.3 4,974.5 5,457.3 4,921.8
Telecommunications 8.7 45.2 96.6 137.3 164.6 175.7 173.1 143.0 155.9 114.5 113.3 106.6 152.7 235.1 454.6 951.9 1,197.8 1,594.4 2,860.1 7,935.1 16,635.6 5,303.3 2,346.4 1,803.9 1,911.4 2,362.4 2,657.0 2,283.1 1,675.7
Media and Entertainment 19.0 51.3 66.9 100.1 61.8 88.0 110.1 153.2 138.4 163.7 93.4 65.6 150.4 333.0 277.7 914.8 1,077.8 953.0 1,823.7 6,639.0 10,491.3 2,333.4 734.1 890.1 976.0 1,151.3 1,641.0 1,948.9 2,002.5
Biotechnology 46.0 105.2 78.8 128.7 94.9 131.9 220.4 260.1 354.0 326.6 291.3 271.1 563.9 453.5 569.9 800.4 1,161.5 1,413.2 1,555.9 2,088.1 4,171.2 3,439.5 3,236.2 3,669.3 4,267.5 3,916.3 4,575.5 5,216.7 4,527.6
Medical Devices and Equipment 32.8 48.4 74.3 146.0 204.8 185.8 173.9 257.4 343.5 344.0 326.8 226.0 490.9 423.5 433.7 641.7 658.2 1,022.6 1,169.1 1,529.8 2,435.6 2,022.2 1,839.7 1,649.4 1,928.1 2,213.3 2,921.1 4,063.6 3,481.1
Industrial/Energy 156.5 250.8 221.0 229.3 233.0 207.8 199.2 311.1 210.2 330.5 199.2 170.0 302.2 295.2 276.2 542.8 506.5 707.8 1,441.0 1,688.0 2,534.2 1,157.0 748.9 758.8 777.0 850.9 1,955.9 3,273.1 4,674.8
Consumer Products and Services 21.8 12.3 46.6 47.3 43.8 70.6 129.8 159.1 149.9 104.0 169.0 130.2 114.1 133.5 186.8 521.5 508.4 748.2 647.1 2,566.5 3,398.7 692.7 244.0 174.7 317.2 372.0 501.3 494.0 434.5
Healthcare Services 18.1 12.0 34.7 81.4 90.2 79.3 121.1 130.5 89.8 151.1 84.1 63.4 171.8 154.5 184.2 455.7 682.4 892.3 932.0 1,435.8 1,371.2 501.9 371.2 224.8 358.2 398.4 395.4 268.4 195.1
Networking and Equipment 27.7 66.4 65.7 204.0 210.6 218.9 158.7 131.3 140.1 200.4 168.7 138.7 273.3 508.5 243.3 352.5 621.9 946.9 1,451.5 4,375.5 11,513.0 5,595.5 2,665.4 1,754.3 1,519.0 1,457.1 1,059.3 1,294.7 657.1
Computers and Peripherals 93.7 227.5 430.2 833.0 662.7 446.2 428.5 386.9 356.5 283.8 233.1 166.6 188.1 158.6 180.0 326.3 395.2 391.6 377.0 909.9 1,655.7 662.7 453.7 369.6 618.4 555.4 548.6 611.7 409.4
Retailing/Distribution 27.1 6.8 14.5 82.2 67.6 32.0 82.2 267.3 226.3 218.6 88.7 48.5 96.9 89.4 96.6 317.6 258.1 316.1 628.1 2,841.7 3,143.4 329.7 157.2 68.3 184.4 231.3 214.1 386.4 267.5
Semiconductors 25.8 90.4 117.2 232.3 255.0 245.2 278.0 250.0 288.7 159.9 183.6 76.1 148.7 94.5 152.4 202.3 302.4 572.9 625.6 1,307.8 3,626.2 2,450.9 1,546.5 1,794.7 2,174.3 1,915.7 2,158.5 2,070.4 1,650.1
Financial Services 13.8 15.5 12.4 26.8 13.7 86.0 102.6 63.2 209.4 221.4 60.2 21.5 107.1 123.0 124.8 193.5 329.4 371.3 820.9 2,232.7 4,229.9 1,446.3 347.8 411.4 523.8 915.5 468.0 567.4 534.5
IT Services 3.3 4.9 16.6 28.1 21.2 21.4 31.9 42.8 28.7 36.2 37.8 41.4 28.4 31.3 112.8 184.9 445.6 659.1 1,085.5 4,204.5 8,632.3 2,462.0 1,091.0 772.3 697.5 1,067.6 1,353.2 1,560.9 1,844.0
Business Products and Services 8.4 17.1 22.3 31.4 34.6 29.4 60.2 52.3 44.9 43.9 76.9 70.6 34.2 62.7 45.4 176.8 383.3 439.5 693.9 2,809.4 4,975.9 1,065.5 482.0 591.9 398.2 395.4 590.9 758.6 483.9
Electronics/Instrumentation 33.4 53.8 68.9 56.5 100.0 119.9 121.8 124.4 78.0 115.0 66.9 78.3 52.0 56.9 64.8 134.6 194.4 286.8 227.0 287.6 770.1 371.4 315.0 220.5 362.3 431.0 681.9 588.8 572.8
Other 1.1 8.4 5.9 7.7 7.2 2.5 3.0 0.3 6.0 0.0 0.0 32.7 0.0 5.8 5.8 10.0 20.7 56.3 95.3 83.5 44.7 74.2 18.4 0.0 1.1 57.1 7.5 3.6 22.7
Total 576.9 1,148.4 1,617.3 2,960.3 2,966.1 2,742.9 2,958.0 3,230.6 3,295.0 3,267.9 2,707.7 2,156.6 3,480.1 3,625.8 4,076.3 7,871.3 11,039.2 14,720.2 20,909.3 53,449.8 104,020.5 40,250.0 21,880.3 19,688.8 22,436.9 23,115.1 26,703.7 30,847.6 28,355.2
Figure 3.10b
1980 to 2008 By Industry (Number of Deals)
Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Telecommunications 11 37 56 69 98 88 77 91 76 75 55 62 59 67 69 140 212 271 331 521 860 493 277 223 227 254 317 299 234
Networking and Equipment 12 37 30 68 67 80 73 74 70 73 76 65 86 63 76 79 122 142 214 283 478 327 221 183 180 170 129 132 97
Computers and Peripherals 69 124 186 239 244 161 143 124 133 124 101 78 81 67 68 91 97 111 86 101 135 74 54 58 62 63 76 67 66
IT Services 3 8 22 27 31 24 24 31 22 27 30 30 19 17 31 60 121 158 206 450 680 322 167 145 137 156 198 226 267
Software 40 95 168 304 336 326 318 298 273 292 301 282 298 240 247 415 670 798 952 1,387 2,100 1,235 971 918 926 885 927 944 887
Semiconductors 20 42 49 76 96 86 72 87 89 78 75 49 56 41 37 60 68 110 112 138 252 209 168 209 258 226 251 215 180
Electronics/Instrumentation 38 49 49 47 82 77 69 70 58 62 54 47 42 29 35 49 43 53 57 53 72 57 58 51 63 82 93 94 87
Biotechnology 19 46 59 68 48 71 97 130 145 128 139 135 157 132 137 170 231 247 276 266 348 332 309 340 377 382 450 486 486
Medical Devices and Equipment 39 51 70 104 118 135 113 165 149 184 189 154 188 147 128 179 217 264 280 283 286 248 231 243 268 279 352 398 374
Healthcare Services 4 2 18 36 48 33 55 57 45 54 41 35 42 45 40 69 128 147 149 159 163 101 67 67 59 66 54 52 52
Industrial/Energy 102 164 181 157 161 131 131 158 134 140 143 121 124 93 94 129 152 208 186 188 239 190 125 133 146 137 205 301 346
Media and Entertainment 28 45 70 64 41 53 62 83 68 68 57 48 74 76 91 139 174 208 261 690 934 360 157 140 139 195 316 371 406
Retailing/Distribution 6 6 14 25 18 19 32 66 80 72 44 38 34 34 26 49 69 90 117 226 271 83 50 34 37 37 43 54 41
Consumer Products and Services 23 25 50 42 37 48 51 68 55 48 61 43 49 48 66 115 129 160 161 272 277 117 67 46 65 73 84 101 104
Financial Services 16 18 27 25 12 25 30 36 42 41 23 22 22 31 31 43 65 83 113 189 340 147 76 62 71 64 80 85 74
Business Products and Services 15 20 34 32 29 21 39 45 33 30 26 18 20 27 21 47 67 98 139 280 456 175 102 92 75 84 107 124 121
Other 4 5 14 9 6 2 3 2 1 0 1 2 0 3 2 5 8 8 9 14 10 13 3 0 3 3 2 6 10
Total 449 774 1,097 1,392 1,472 1,380 1,389 1,585 1,473 1,496 1,416 1,229 1,351 1,160 1,199 1,839 2,573 3,156 3,649 5,500 7,901 4,483 3,103 2,944 3,093 3,156 3,684 3,955 3,832
28 Thomson Reuters
2009 NVCA Yearbook
Figure 3.11
Venture Capital Investments By State 1980 to 2008 ($ Millions)
State 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
CA 192.5 478.4 755.3 1,484.9 1,385.7 1,056.7 1,249.6 1,223.1 1,332.9 1,262.6 1,171.6 1,007.9 1,368.9 1,193.8 1,520.0 3,132.4 4,582.7 6,024.5 7,898.0 23,006.7 42,568.6 16,541.3 9,444.8 8,536.2 10,208.4 10,962.0 12,844.3 14,720.2 14,277.8
MA 66.3 163.4 225.3 399.2 416.5 395.3 359.4 424.3 389.1 318.6 337.3 231.0 362.2 310.6 409.6 672.1 1,070.1 1,396.5 1,989.7 4,942.1 10,337.8 4,775.8 2,532.7 2,733.3 3,114.4 2,582.5 2,995.0 3,721.4 2,996.7
NY 53.8 46.3 57.5 68.4 78.4 114.4 72.1 88.7 113.3 158.9 48.8 44.5 133.6 104.9 68.1 253.6 299.8 804.8 1,271.6 3,390.6 6,795.6 2,015.9 779.7 658.8 761.6 1,127.4 1,273.2 1,129.7 1,297.8
TX 76.3 128.4 119.2 144.1 200.4 241.6 228.3 206.3 237.1 237.6 143.5 161.1 148.4 220.2 284.3 464.4 532.1 830.8 1,158.9 3,135.6 6,003.0 2,943.0 1,296.0 1,246.9 1,154.5 1,174.9 1,389.4 1,468.5 1,287.3
WA 3.7 13.4 17.1 58.2 27.4 55.5 52.1 86.1 45.0 74.4 56.3 31.3 159.3 116.9 134.9 327.1 399.7 408.2 729.6 1,929.7 2,773.8 1,124.7 579.8 463.5 863.6 838.3 1,106.3 1,377.2 962.3
CO 30.3 32.1 39.7 82.2 82.6 77.4 112.7 106.8 100.8 159.3 92.3 50.6 128.2 133.9 189.5 327.7 306.5 379.8 725.8 1,738.4 4,103.7 1,222.4 536.5 621.4 408.0 643.7 645.1 609.7 817.4
PA 25.4 29.8 26.0 40.0 75.2 48.1 34.6 83.5 74.5 48.7 117.1 38.2 163.7 421.5 130.5 140.4 304.0 473.8 557.1 1,619.2 2,853.2 927.1 451.8 498.0 602.3 481.9 854.0 820.2 700.9
NJ 9.8 26.1 33.4 70.3 85.8 74.6 116.9 135.8 103.1 156.7 71.1 66.9 101.2 68.6 201.9 260.8 412.8 446.2 473.6 921.3 3,271.6 1,528.4 904.7 870.1 1,004.5 886.4 807.3 607.6 694.8
MN 11.5 19.6 28.3 44.0 57.4 24.4 28.5 35.0 25.9 35.7 45.5 39.8 63.8 45.3 53.8 170.0 168.3 260.9 359.7 634.9 1,023.3 455.9 402.7 233.0 386.9 239.6 327.3 488.1 487.0
VA 1.9 9.9 7.8 48.9 23.6 31.7 21.0 64.2 65.0 49.7 46.6 9.1 26.4 41.0 77.4 291.7 366.2 339.8 762.2 1,169.5 3,307.0 936.1 423.9 408.2 301.9 525.8 439.6 556.7 486.4
MD 19.7 13.4 10.8 26.9 24.4 51.8 20.8 32.5 46.4 88.0 34.8 27.6 18.8 25.2 49.3 123.4 137.2 182.8 328.3 648.2 1,817.7 997.4 636.1 346.0 549.8 486.6 661.9 610.7 460.7
NC 2.1 4.7 25.0 26.7 14.6 17.8 18.4 21.2 15.7 14.5 33.9 9.0 44.3 20.1 60.7 211.8 181.8 269.3 324.0 789.2 1,823.7 584.5 562.2 380.7 306.7 392.5 418.8 546.7 459.1
IL 10.1 14.9 21.1 54.3 67.9 45.2 30.7 38.5 42.7 93.4 72.0 82.6 75.7 93.3 157.9 199.6 355.1 361.3 418.1 1,412.0 2,350.5 964.2 308.9 374.1 208.9 276.7 403.4 505.4 444.9
GA 9.1 26.3 11.2 35.3 31.0 54.5 108.1 62.1 91.8 53.1 19.1 36.0 158.7 150.9 97.1 150.4 244.4 393.2 428.6 1,130.0 2,314.5 890.3 564.7 295.3 501.2 253.1 369.5 474.9 423.4
OH 8.3 35.4 21.7 24.0 36.2 30.3 51.0 46.0 71.7 44.4 27.0 15.5 26.3 49.1 62.4 69.7 162.7 213.3 309.2 490.7 973.6 233.6 264.8 179.0 76.6 139.9 78.5 192.8 258.1
MI 3.6 7.1 33.4 46.6 43.0 33.3 21.2 56.2 17.7 21.8 26.4 4.2 14.7 58.7 8.6 65.8 85.7 112.0 124.0 250.4 337.2 153.6 107.8 80.2 129.6 80.8 116.9 104.7 245.7
FL 7.9 7.7 20.1 58.8 33.9 31.6 34.5 68.4 60.2 31.7 32.5 26.2 79.8 126.8 94.5 221.2 402.5 450.3 551.5 1,685.8 2,682.5 846.5 410.2 308.7 363.7 329.0 387.2 767.5 238.4
AZ 5.6 16.4 33.2 25.4 32.7 14.6 37.9 35.1 39.7 36.4 27.5 20.6 57.4 35.6 30.6 96.1 95.3 158.1 208.1 302.2 622.6 196.0 191.1 73.3 70.7 123.4 262.6 202.9 208.0
UT 1.4 2.1 7.2 5.0 6.6 4.0 29.5 5.7 11.7 4.4 0.8 3.3 24.4 10.5 0.0 11.2 52.3 94.0 116.7 408.2 673.6 208.1 129.5 106.5 227.8 192.0 180.9 188.3 193.6
NH 1.3 3.7 3.8 11.7 13.6 5.3 14.8 12.9 18.8 13.8 16.2 30.1 6.8 23.0 7.9 28.8 42.4 53.3 184.8 235.5 750.6 224.6 207.8 154.3 135.6 92.4 78.7 135.2 181.1
OR 2.3 8.1 24.2 56.6 61.8 84.8 76.1 51.7 67.5 40.9 32.3 29.7 55.6 18.8 22.5 38.3 94.6 126.9 53.5 545.7 789.5 230.1 151.1 107.5 143.7 134.4 152.8 312.1 176.0
IN 0.0 0.0 0.6 9.0 17.2 13.3 16.7 17.7 6.4 9.7 10.9 8.3 0.0 27.0 56.1 8.3 22.8 25.2 39.0 46.7 269.0 39.7 40.0 24.5 67.8 103.6 70.3 82.8 133.6
CT 1.5 15.4 23.9 47.2 54.9 61.6 64.0 94.0 160.9 87.4 133.3 86.1 71.9 37.9 74.8 134.1 147.3 269.3 366.8 924.5 1,509.4 549.8 182.7 212.3 205.1 201.6 269.7 295.9 129.7
MO 1.0 0.0 4.1 4.6 8.5 8.8 3.8 10.6 1.6 9.5 7.5 34.9 27.4 50.4 39.1 83.3 50.4 67.9 611.0 168.2 590.3 237.4 76.0 78.4 26.0 56.0 43.7 91.7 86.5
WI 0.1 1.7 0.4 7.8 8.3 7.2 13.6 16.4 12.8 11.7 12.4 5.5 22.2 27.5 8.5 8.9 25.1 68.0 90.2 86.4 191.8 93.1 50.8 37.5 57.1 68.5 72.3 90.1 75.2
NM 2.0 0.2 0.2 1.1 1.6 22.0 10.0 9.0 3.9 3.0 1.8 4.4 0.0 0.5 0.0 3.6 22.4 27.0 7.7 12.1 21.1 14.2 53.7 3.6 24.0 76.4 32.1 128.5 69.4
TN 3.8 7.2 8.5 13.5 31.2 46.3 53.9 66.6 42.8 74.1 42.2 20.8 8.1 46.7 36.6 155.2 146.8 108.0 107.5 493.2 453.3 212.8 115.8 84.4 85.0 88.6 41.5 124.7 65.1
DE 0.0 0.0 0.6 0.0 0.0 0.3 0.0 4.5 1.4 4.8 1.4 3.8 9.7 3.0 12.4 4.4 4.7 1.1 0.0 16.8 134.7 164.6 19.4 0.4 2.1 7.2 5.3 6.5 62.7
KS 0.0 0.8 0.4 0.7 0.9 2.3 2.2 3.9 5.4 14.9 8.9 0.4 1.9 4.8 1.5 6.6 26.2 9.2 10.4 30.2 264.8 40.3 7.4 24.9 48.7 1.7 21.5 82.1 45.5
VT 1.8 0.2 0.0 0.5 1.0 0.0 6.6 8.0 4.5 7.4 7.2 1.5 19.0 0.0 5.3 12.0 2.0 3.2 1.4 0.0 46.4 11.6 3.7 5.2 5.1 35.2 10.1 8.7 42.9
IA 6.5 0.2 1.4 2.8 3.1 0.7 0.9 11.9 1.3 2.0 2.5 1.1 1.6 2.8 23.9 14.2 22.1 17.1 8.8 13.9 30.8 6.0 2.0 0.0 5.3 32.1 1.5 6.3 40.2
RI 0.0 1.9 4.6 4.8 6.9 12.6 9.9 6.6 14.2 30.9 2.7 0.4 5.1 8.7 0.0 3.4 0.3 11.5 26.0 31.4 74.6 118.7 95.9 61.3 58.0 76.3 82.7 7.0 39.2
SC 0.0 0.0 0.0 0.0 0.1 0.9 0.0 12.8 18.1 23.6 7.6 4.0 1.2 11.4 21.8 53.1 91.9 47.7 137.0 135.1 447.6 98.1 79.5 14.3 13.6 2.7 10.3 87.2 34.0
DC 2.7 3.3 4.2 1.2 2.8 18.9 14.8 2.9 17.2 0.0 2.5 0.8 4.8 1.1 4.3 0.7 6.7 5.2 46.9 286.3 478.1 162.2 20.3 56.1 80.2 26.4 43.9 90.5 31.0
KY 0.2 2.5 1.1 1.5 0.0 2.4 2.3 7.7 2.8 5.8 0.0 8.5 3.9 24.8 18.2 20.7 31.1 35.0 37.5 81.9 201.8 23.9 13.8 4.8 47.2 32.0 27.7 53.4 29.5
AL 0.7 1.5 8.2 0.3 9.6 12.3 14.2 20.9 9.6 2.3 2.3 0.1 10.6 57.3 25.0 29.2 46.7 109.4 82.3 64.6 266.3 80.3 56.3 29.9 26.0 20.2 18.9 31.5 24.1
WV 0.0 0.0 3.1 3.8 2.9 1.1 2.0 0.1 0.0 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 23.8 2.0 0.0 4.5 1.4 15.9 12.6 5.8 10.5 4.7 10.2 24.0
ME 1.1 0.0 0.3 2.8 6.0 19.0 11.6 15.3 8.7 17.2 4.5 0.8 0.2 3.0 0.0 1.5 1.5 9.7 61.5 57.4 140.2 3.9 15.4 0.9 12.0 4.5 7.6 5.0 20.2
OK 5.8 5.6 5.5 13.7 5.9 1.5 4.7 14.1 5.3 9.3 2.6 1.5 0.0 0.0 11.0 6.1 31.8 27.8 101.4 68.0 52.5 29.8 33.0 31.1 63.9 0.0 14.9 8.1 17.3
NE 0.0 0.7 0.0 0.5 0.8 0.5 0.0 0.0 1.5 0.0 0.0 0.0 0.0 38.0 3.5 0.5 10.4 3.7 17.9 57.3 134.8 88.6 12.6 204.6 0.2 13.1 6.5 0.0 16.0
MT 0.0 0.0 0.0 0.0 0.0 1.5 0.7 2.7 0.4 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 16.3 16.7 24.8 0.0 0.0 0.0 27.4 0.0 4.0 15.6
PR 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 1.0 22.0 7.8 4.1 12.5 1.3 4.6 31.1 32.0 0.5 0.1 1.5 1.7 14.3 16.0 13.8
NV 0.0 0.0 1.3 0.2 1.0 0.0 2.4 4.1 0.0 5.5 0.1 2.7 9.1 0.0 1.2 0.6 2.0 9.7 24.2 23.4 30.8 28.2 31.8 40.2 47.6 158.5 19.6 29.4 12.6
ID 0.0 0.0 0.7 14.5 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 5.0 0.2 0.1 15.2 0.1 1.2 30.3 16.5 18.5 2.7 10.6 52.2 2.5 8.0 1.5 16.2 11.9
LA 6.6 17.6 1.3 17.2 1.4 9.9 3.3 1.9 1.9 0.0 0.0 2.0 3.8 3.8 2.7 30.5 13.7 26.5 68.0 294.0 112.7 80.5 19.3 1.3 3.2 4.1 11.5 15.9 8.2
HI 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20.2 1.5 4.2 12.8 203.0 37.8 4.4 12.8 13.7 11.9 32.1 4.9 7.2
WY 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 4.1 6.5 0.2 1.5
SD 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 0.3 0.5 18.1 3.5 1.9 0.0 0.0 4.0 0.5
ND 0.0 0.0 0.0 0.0 0.5 0.0 0.0 14.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 9.8 0.0 1.1 0.5 3.0 6.1 1.0 0.0 14.5 2.0 0.0 0.0 0.2 0.4
MS 0.0 2.4 0.2 0.0 2.5 2.2 0.0 0.0 0.6 0.9 4.9 2.4 16.7 1.7 15.0 0.0 10.6 8.0 3.5 90.4 19.5 30.0 5.0 0.9 4.9 10.0 1.0 5.9 0.0
UN 0.0 0.0 19.1 1.1 0.8 4.5 0.5 0.6 0.8 0.3 0.0 0.0 30.0 0.8 0.2 0.3 2.2 4.4 42.1 2.4 58.8 26.3 0.0 0.0 0.9 57.1 0.0 0.0 0.0
AR 0.4 0.0 0.0 0.0 0.0 0.0 1.5 0.0 0.0 0.0 0.0 0.0 9.5 4.7 31.4 5.0 0.0 4.0 6.9 25.9 34.3 10.4 9.7 1.2 3.7 12.6 39.2 0.2 0.0
AK 0.0 0.0 4.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total 576.9 1,148.4 1,617.3 2,960.3 2,966.1 2,742.9 2,958.0 3,230.6 3,295.0 3,267.9 2,707.7 2,156.6 3,480.1 3,625.8 4,076.3 7,871.3 11,039.2 14,720.2 20,909.3 53,449.8 104,020.5 40,250.0 21,880.3 19,688.8 22,436.9 23,115.1 26,703.7 30,847.6 28,355.2
Thomson Reuters 29
Figure 3.11b
Number of Venture Capital Deals by State 1980 to 2008
State 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
CA 153 258 383 523 561 476 480 513 509 551 541 472 568 423 458 667 1,012 1,133 1,387 2,207 2,938 1,525 1,075 1,135 1,222 1,310 1,549 1,626 1,562
MA 53 114 142 192 222 216 185 217 195 180 168 134 135 128 123 198 291 332 393 581 768 512 374 381 380 365 395 447 410
NY 23 44 54 71 50 48 47 52 46 49 29 22 32 33 35 65 86 152 192 348 605 281 153 118 150 129 209 193 235
PA 11 17 20 23 30 35 44 56 55 38 42 36 61 46 37 65 82 127 138 146 254 142 96 97 103 100 136 159 174
WA 8 14 20 34 17 23 21 25 23 35 27 26 33 27 34 62 74 84 109 205 254 142 108 83 115 127 143 175 164
TX 39 53 71 82 90 109 90 103 102 86 82 70 65 65 63 95 133 168 188 301 465 332 172 168 164 168 188 173 147
CO 15 40 36 41 57 44 57 59 59 51 47 34 50 48 51 57 77 93 122 157 218 106 88 70 71 76 98 97 101
MD 6 8 16 23 17 20 17 24 28 19 27 27 23 15 20 31 45 48 54 98 175 91 91 87 88 101 111 96 100
NJ 18 28 31 42 40 45 45 52 44 55 47 47 41 33 39 56 63 75 76 113 185 152 91 90 90 74 94 92 88
VA 5 7 16 26 21 21 19 28 24 29 27 23 19 18 21 40 64 82 102 148 275 136 85 82 79 87 89 94 81
GA 9 15 14 17 26 31 43 44 38 29 29 34 34 37 41 46 53 84 98 161 223 138 79 58 77 63 81 76 79
IL 13 16 21 33 35 27 27 31 31 62 34 36 33 26 35 43 56 79 70 129 199 126 77 56 50 54 55 69 66
OH 8 17 15 9 21 25 20 27 22 18 22 22 21 21 22 37 53 52 63 51 77 43 49 28 35 38 41 56 52
NC 6 4 16 17 13 15 21 16 11 16 24 17 18 20 22 35 61 82 82 104 153 89 85 77 53 51 62 69 51
MN 18 16 34 44 51 23 29 33 29 29 30 30 27 26 21 51 51 90 79 85 109 84 56 58 50 43 39 57 47
MI 2 10 22 29 27 19 22 22 12 16 13 8 5 12 3 13 21 29 32 43 53 21 26 16 17 19 18 22 43
CT 7 19 26 36 35 32 32 39 43 43 37 30 30 23 31 44 46 65 74 89 116 70 38 34 33 32 30 37 37
FL 10 13 36 21 21 22 20 28 23 20 31 20 27 24 18 48 55 70 62 118 185 113 58 62 61 55 56 65 35
OR 3 10 15 23 27 24 24 29 35 28 21 12 12 12 12 17 29 41 18 50 68 43 26 21 29 26 31 42 35
UT 5 4 6 1 5 1 12 13 6 5 3 6 10 6 0 6 15 30 33 42 61 43 28 22 30 28 39 33 33
NH 3 7 5 7 6 3 9 10 7 11 18 17 11 10 4 10 16 17 26 31 56 30 38 32 23 24 21 23 28
MO 1 0 5 5 4 5 5 12 8 11 10 9 9 12 7 15 22 17 19 23 49 17 28 19 8 10 13 17 24
KS 0 2 1 2 2 1 2 6 4 4 3 1 5 2 2 3 9 6 3 8 22 10 7 11 14 4 7 16 23
TN 1 3 5 13 10 17 23 29 29 28 22 22 10 8 10 19 24 25 24 40 45 29 22 23 25 21 11 20 21
AZ 8 15 15 15 15 14 10 19 10 20 14 13 20 21 23 28 28 27 36 54 64 33 24 16 12 25 29 28 20
WI 1 3 1 7 11 11 15 16 15 6 11 6 9 7 8 7 9 19 16 18 21 21 11 8 10 16 20 21 19
NM 5 2 1 1 4 3 4 6 6 1 3 2 0 2 1 2 5 3 4 6 8 4 7 5 8 15 9 25 19
IN 0 0 3 8 7 8 15 15 6 6 12 8 1 8 7 7 8 12 8 11 26 6 11 8 10 10 15 17 17
SC 0 0 0 0 2 1 0 4 3 7 5 9 7 7 6 5 13 14 16 9 13 6 7 4 5 1 3 10 12
DC 2 2 6 6 5 4 5 7 4 1 5 3 3 2 3 1 4 2 3 16 44 24 6 6 8 11 8 17 12
KY 1 1 3 2 1 2 4 7 4 5 0 2 2 2 3 10 7 15 16 16 14 4 3 3 4 3 7 8 10
LA 4 9 5 4 2 6 2 2 2 0 0 1 1 4 2 8 4 12 11 10 15 11 8 1 3 4 3 7 10
RI 0 4 4 7 10 6 4 7 6 7 7 4 2 3 0 3 1 4 5 10 9 11 14 10 8 13 7 4 10
VT 1 3 0 1 1 0 3 3 3 2 3 3 1 0 3 4 1 1 2 1 4 3 6 6 4 5 9 8 9
AL 2 2 8 1 8 8 9 11 4 7 7 1 4 9 4 10 8 16 15 10 28 15 13 9 5 3 7 4 8
DE 0 0 1 0 0 1 1 1 4 3 1 3 2 1 3 4 4 4 0 2 4 2 2 1 1 3 3 4 6
HI 0 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 2 4 3 3 3 5 2 5 4 4 10 4 6
NV 0 0 1 2 1 0 2 2 0 1 1 4 4 0 2 1 2 7 10 8 10 4 6 6 6 9 7 8 6
ID 0 0 2 3 1 1 0 1 0 0 0 0 1 2 1 1 1 2 3 2 4 2 2 5 2 2 1 4 6
OK 3 5 3 6 4 4 5 4 1 4 2 1 0 0 5 2 7 5 11 7 9 7 4 2 11 0 6 6 5
IA 2 1 2 3 2 1 3 2 3 2 2 3 4 2 5 10 6 4 7 3 4 4 1 0 3 4 2 3 5
ME 2 1 1 4 4 9 6 5 4 6 6 4 1 2 0 2 5 3 11 13 15 5 4 2 3 2 4 7 4
NE 0 1 0 1 1 1 0 0 5 1 0 0 0 5 3 1 5 3 5 7 10 10 3 3 1 3 3 0 3
PR 0 0 0 1 0 0 0 0 0 0 0 3 2 1 2 4 5 2 2 2 10 5 1 1 1 1 3 4 2
ND 0 0 0 0 1 0 0 1 0 0 0 0 0 0 1 2 0 1 1 1 1 1 0 2 1 0 0 1 2
MT 0 1 0 0 0 1 2 1 5 0 0 3 0 0 0 0 0 0 0 2 3 2 0 0 0 2 0 1 2
WY 0 1 1 0 0 0 0 0 1 0 0 0 1 0 0 0 0 2 0 0 0 0 0 0 1 4 1 1 1
WV 0 0 2 2 1 1 1 2 1 1 0 0 0 0 0 0 0 2 1 0 2 2 8 5 3 5 3 4 1
SD 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 2 1 3 0 1 2 1
UN 0 0 25 4 1 14 1 1 2 2 0 0 1 4 2 2 7 7 15 3 17 14 0 0 3 2 0 0 0
MS 0 3 1 0 2 1 1 0 1 1 3 1 4 2 5 0 3 2 2 2 3 3 3 4 5 2 1 2 0
AR 1 0 0 0 0 0 2 0 0 0 0 0 1 1 1 2 0 2 2 5 5 3 5 3 1 2 6 1 0
AK 0 0 2 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0
Total 449 774 1,097 1,392 1,472 1,380 1,389 1,585 1,473 1,496 1,416 1,229 1,351 1,160 1,199 1,839 2,573 3,156 3,649 5,500 7,901 4,483 3,103 2,944 3,093 3,156 3,684 3,955 3,832
30 Thomson Reuters
2009 NVCA Yearbook

Venture Capital Investments Venture Capital Investments
First vs. Follows-on Rounds Number of Companies Receiving
Total Dollars Invested ($ Millions)
120,000
7,000
Follow-on
100,000 First 6,000 Follow-on
First
(Number of Companies)
80,000 5,000
($ Millions)
4,000
60,000
3,000
40,000
2,000
20,000 1,000
0
0
'80
'81
'82
'83
'84
'85
'86
'87
'88
'89
'90
'91
'92
'93
'94
'95
'96
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
'07
'08
'90
'91
'85
'86
'87
'88
'89
'92
'93
'94
'95
'96
'80
'81
'82
'83
'84
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
'07
'08
Year Year

Venture Capital Investments Venture Capital Investments
First vs. Follows-on Rounds First vs. Follows-on Rounds
Total Dollars Invested ($ Millions) Total Number of Companies
# of Cos # of Cos
Year First Follow-on Total Receiving Receiving # of Cos
1980 337.3 239.6 576.9 Initial Round Follow-On Receiving
1981 629.1 519.2 1,148.4 Year Financing Financing Financing*
1982 614.4 1,003.0 1,617.3 1980 293 139 413
1981 501 235 695
1983 946.4 2,013.9 2,960.3
1982 578 436 971
1984 863.5 2,102.6 2,966.1 1983 672 611 1,217
1985 738.1 2,004.8 2,742.9 1984 586 739 1,257
1986 863.4 2,094.6 2,958.0 1985 453 769 1,186
1987 996.2 2,234.4 3,230.6 1986 493 741 1,195
1988 1,076.5 2,218.5 3,295.0 1987 563 831 1,338
1989 945.4 2,322.5 3,267.9 1988 503 766 1,222
1990 845.9 1,861.8 2,707.7 1989 440 813 1,203
1990 340 764 1,037
1991 555.9 1,600.7 2,156.6
1991 258 691 908
1992 1,307.1 2,173.1 3,480.1 1992 387 691 1,016
1993 1,392.0 2,233.7 3,625.8 1993 343 625 913
1994 1,705.5 2,370.8 4,076.3 1994 417 608 960
1995 4,003.2 3,868.1 7,871.3 1995 886 751 1,539
1996 4,298.3 6,740.9 11,039.2 1996 1,144 1,130 2,077
1997 4,843.5 9,876.6 14,720.2 1997 1,288 1,445 2,538
1998 7,125.8 13,783.5 20,909.3 1998 1,412 1,794 2,976
1999 2,441 2,393 4,408
1999 15,904.0 37,545.8 53,449.8
2000 3,370 3,626 6,342
2000 28,756.7 75,263.8 104,020.5 2001 1,216 2,730 3,786
2001 7,391.2 32,858.8 40,250.0 2002 832 1,910 2,633
2002 4,335.4 17,545.0 21,880.3 2003 763 1,791 2,456
2003 3,980.3 15,708.5 19,688.8 2004 922 1,798 2,617
2004 4,869.8 17,567.0 22,436.9 2005 1,022 1,793 2,698
2005 5,791.1 17,324.0 23,115.1 2006 1,205 2,037 3,069
2006 6,156.8 20,546.9 26,703.7 2007 1,301 2,128 3,274
2008 1,179 2,179 3,192
2007 7,492.0 23,355.6 30,847.6
2008 6,173.2 22,182.0 28,355.2 * # of Cos receiving financing can be less than the sum of the
prior two columns because a given company can receive initial
and follow-on financing in the same year
Thomson Reuters 31
Figure 3.16
First Sequence by Stage of Development ($ Millions)
Stage 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Startup-Seed 141.1 305.7 274.4 410.5 437.7 306.8 421.6 346.5 367.5 263.9 181.1 97.2 212.8 367.0 536.9 732.2 681.3 790.2 987.8 2,742.1 2,503.8 608.3 260.9 302.8 363.2 784.8 1,018.1 1,023.6 1,089.2
Early 74.6 137.4 169.4 307.0 198.7 128.9 176.7 318.2 300.6 215.6 300.7 214.7 275.3 333.0 410.1 913.8 1,418.2 1,823.8 2,879.0 6,360.6 16,567.5 4,578.1 2,414.0 2,224.3 2,628.9 2,504.8 2,416.0 3,038.8 2,421.9
Expansion 61.9 132.4 131.3 180.6 204.2 258.5 214.2 276.4 324.5 354.4 320.3 165.2 648.4 559.6 529.9 1,765.4 1,772.2 1,903.5 2,908.3 6,300.4 9,090.8 1,944.3 1,430.3 1,009.4 1,295.6 1,579.8 2,050.6 2,574.6 1,673.2
Later 59.7 53.6 39.4 48.3 22.9 44.0 50.8 55.2 83.9 111.4 43.8 78.9 170.5 132.4 228.6 591.7 426.6 326.0 350.8 500.8 594.6 260.5 230.2 443.8 582.1 921.7 672.1 855.1 988.9
Total 337.3 629.1 614.4 946.4 863.5 738.1 863.4 996.2 1,076.5 945.4 845.9 555.9 1,307.1 1,392.0 1,705.5 4,003.2 4,298.3 4,843.5 7,125.8 15,904.0 28,756.7 7,391.2 4,335.4 3,980.3 4,869.8 5,791.1 6,156.8 7,492.0 6,173.2
Figure 3.17
First Sequence by Stage of Development (No. of Deals)
Stage 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Startup-Seed 101 201 211 291 280 221 242 227 207 204 119 85 117 144 186 254 314 341 450 650 575 215 130 157 160 194 302 375 330
Early 117 160 245 247 179 102 116 192 169 100 118 74 127 69 108 283 414 474 496 1112 1928 691 468 429 531 525 558 565 506
Expansion 59 109 96 106 112 107 107 118 106 111 89 81 120 104 105 290 358 423 417 640 810 280 203 144 179 243 256 274 211
Later 16 31 26 28 15 23 28 26 21 25 14 18 23 26 18 59 58 50 49 39 57 30 31 33 52 60 89 87 132
Total 293 501 578 672 586 453 493 563 503 440 340 258 387 343 417 886 1,144 1,288 1,412 2,441 3,370 1,216 832 763 922 1,022 1,205 1,301 1,179
Figure 3.18
First Sequence by Industry ($ Millions)
Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Industrial/Energy 115.6 162.5 88.4 101.2 82.1 98.1 81.1 130.9 124.1 222.5 100.3 66.4 174.6 169.5 163.1 453.6 289.8 363.5 984.6 1,033.9 1,122.0 471.2 426.1 313.6 277.0 361.1 765.2 1,349.2 1,242.4
Software 26.8 68.4 108.8 233.5 203.4 98.5 114.0 90.2 126.2 96.7 164.0 108.9 152.3 130.9 303.1 547.6 902.2 1,023.6 1,205.1 2,820.5 6,105.3 1,568.6 1,180.9 955.3 1,262.1 1,156.3 1,184.9 1,172.2 904.7
Biotechnology 13.8 57.2 31.9 22.5 22.1 34.5 54.3 62.4 65.7 51.1 27.2 17.4 165.1 131.3 150.6 148.4 206.8 354.8 359.2 404.7 824.7 785.4 694.8 424.4 698.3 587.7 903.8 937.6 838.9
IT Services 3.1 4.9 13.8 9.0 14.2 16.1 9.6 4.5 9.4 20.6 18.3 10.3 8.8 13.1 92.9 56.2 229.5 245.4 360.4 1,539.3 2,501.4 373.6 185.9 145.9 195.6 360.7 358.4 507.4 616.7
Medical Devices and Equipment 19.6 22.2 28.8 45.9 72.2 42.6 71.8 83.5 80.0 74.0 60.5 45.3 105.2 153.4 133.1 193.3 237.0 277.7 259.5 310.4 361.8 246.8 270.6 325.9 325.4 396.9 621.0 807.5 593.4
Media and Entertainment 8.7 41.4 36.3 42.3 41.9 62.8 43.2 99.5 100.9 94.1 65.1 17.7 101.5 257.7 121.3 735.7 368.5 411.1 773.7 2,229.2 2,970.6 363.6 196.1 427.7 253.8 534.5 581.3 655.9 572.1
Financial Services 7.3 13.0 9.9 9.8 7.1 70.2 81.3 43.9 160.6 71.4 34.0 8.7 100.2 110.2 66.9 123.8 259.5 234.7 443.4 872.4 1,584.3 353.6 81.6 84.7 247.6 613.0 152.7 225.0 288.3
Telecommunications 3.3 26.2 37.0 41.7 52.9 65.3 45.0 37.9 39.0 43.6 52.8 10.8 92.3 61.2 188.5 407.2 418.0 387.2 997.9 2,003.5 4,819.0 850.2 213.2 218.4 284.8 420.4 499.9 415.4 264.9
Consumer Products and Services 9.9 6.5 36.7 22.1 29.1 48.1 60.4 52.7 77.2 50.3 88.4 57.5 79.3 56.5 132.1 317.7 227.6 205.2 241.9 772.8 925.3 127.1 36.6 80.6 128.0 241.9 146.5 215.2 198.2
Computers and Peripherals 39.9 86.0 110.1 160.0 115.0 38.7 57.5 84.1 67.4 43.8 52.5 19.2 61.2 43.2 39.3 160.7 143.0 117.2 121.3 250.6 373.3 260.1 25.0 89.8 112.1 119.4 59.4 145.7 143.0
Business Products and Services 4.5 7.1 18.7 15.9 9.8 12.6 35.4 25.2 11.3 13.3 40.6 62.4 25.4 54.7 39.5 133.4 258.1 259.7 344.4 976.2 2,026.0 245.1 148.9 254.2 198.0 151.6 207.6 352.6 127.3
Semiconductors 24.2 55.2 12.9 54.5 79.3 46.4 22.4 38.1 56.7 14.5 32.5 12.8 51.7 3.1 36.4 64.0 123.8 184.2 163.7 277.6 1,073.3 557.4 336.9 396.7 420.7 257.6 210.7 217.0 127.0
Electronics/Instrumentation 22.0 24.8 15.1 32.4 29.2 43.3 28.6 32.4 25.6 19.5 21.4 16.1 14.2 16.0 8.6 55.5 83.6 119.1 43.0 97.2 151.1 94.9 80.8 58.7 89.1 127.7 134.3 160.0 84.3
Networking and Equipment 4.5 28.5 22.0 66.6 33.7 24.0 33.9 24.9 45.7 56.4 43.5 19.9 58.8 81.0 37.7 82.1 131.8 222.1 319.2 1,238.1 2,558.9 903.9 232.7 101.8 181.1 104.3 93.6 162.2 69.6
Healthcare Services 6.1 12.0 26.0 54.9 43.8 16.5 62.7 59.9 17.1 48.8 31.5 24.4 63.9 81.7 130.7 298.9 253.5 312.7 266.0 333.8 431.9 82.1 162.1 88.6 91.3 164.9 159.2 52.4 47.3
Retailing/Distribution 27.1 4.8 13.8 33.0 26.9 19.7 60.3 126.2 63.5 24.7 13.3 25.4 52.7 28.4 61.6 215.1 165.1 110.2 210.5 670.4 884.5 54.0 44.7 13.9 103.8 136.0 70.9 113.0 37.7
Other 1.1 8.4 4.2 1.0 0.8 0.5 2.0 0.0 6.0 0.0 0.0 32.7 0.0 0.0 0.2 10.0 0.5 15.3 32.1 73.5 43.5 53.6 18.4 0.0 1.1 57.1 7.5 3.6 17.3
Total 337.3 629.1 614.4 946.4 863.5 738.1 863.4 996.2 1,076.5 945.4 845.9 555.9 1,307.1 1,392.0 1,705.5 4,003.2 4,298.3 4,843.5 7,125.8 15,904.0 28,756.7 7,391.2 4,335.4 3,980.3 4,869.8 5,791.1 6,156.8 7,492.0 6,173.2
32 Thomson Reuters
2009 NVCA Yearbook
Figure 3.19
First Sequence by Industry (No. of Deals)
Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Software 24 61 82 164 132 73 72 79 85 67 81 58 68 52 97 214 319 317 321 584 861 295 262 228 245 257 262 258 242
Biotechnology 13 31 33 24 17 28 32 54 46 32 26 21 52 46 40 54 69 87 101 80 123 107 108 90 106 112 138 135 128
IT Services 2 8 17 12 13 11 8 5 8 11 6 5 4 6 19 27 66 64 90 226 323 77 26 32 47 58 79 89 110
Semiconductors 18 25 11 35 39 25 13 15 21 12 12 8 11 4 10 23 29 54 44 48 116 79 50 62 83 43 43 30 26
Other 4 5 13 6 3 1 2 0 1 0 1 2 0 1 1 5 1 5 5 9 8 9 3 0 3 3 2 6 8
Total 293 501 578 672 586 453 493 563 503 440 340 258 387 343 417 886 1,144 1,288 1,412 2,441 3,370 1,216 832 763 922 1,022 1,205 1,301 1,179
Thomson Reuters 33

Internet-Related Investments Top Five States by Internet-Related Investments
By Year 1994-2008 in 2008
Year No. of Cos ($ Millions) State ($ Millions)

1994 164 720.9 California 5,917.3
1995 393 1,822.4 Massachusetts 898.2
1996 738 3,958.8 New York 768.0
1997 990 5,961.6 Texas 510.2
1998 1,451 11,394.0 Washington 405.2
1999 3,018 41,438.2 TOTAL* 8,498.8
2000 4,538 79,140.4
2001 2,317 25,347.6 * Total includes above 5 states only
2002 1,377 10,941.6
2003 1,149 8,744.3
2004 1,143 9,627.6
2005 1,193 9,705.0
2006 1,441 11,332.8
2007 1,497 12,339.6
2008 1,482 10,713.8
TOTAL 22,891 243,188.8
Figure 3.22
2008 Internet-Related Investments
By Regions in 2008
Stage Region ($ Millions)

Silicon Valley 4,906.3
NY Metro 972.5
New England 950.1
LA/Orange County 740.9
DC/Metroplex 516.9
Texas 510.2
Northwest 435.1
Midwest 374.8
Southeast 361.1
San Diego 240.3
Philadelphia Metro 189.7
SouthWest 158.7
Colorado 151.8
North Central 146.0
Sacramento/N.Cal 29.9
Upstate NY 15.1
South Central 7.6
AK/HI/PR 6.9
TOTAL 10,713.8
34 Thomson Reuters
2009 NVCA Yearbook
Figure 3.23
Sources and Targets of Invested Capital Investments 2008
($ Millions)
SOURCE Target State

STATE AK AL AR AZ CA CO CT DC DE FL GA HI IA ID IL IND KS KY LA MA MD ME MI MN MO MS
AB 0.0 0.0 0.0 0.0 15.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
AC 0.0 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
AL 0.0 2.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
AZ 0.0 0.0 0.0 1.8 3.7 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0
BC 0.0 0.0 0.0 0.0 11.7 2.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.4 0.0 0.0 0.0 0.0 0.0 0.0
CA 0.0 1.5 0.0 32.8 6,223.5 172.3 24.6 0.0 7.7 19.4 52.2 1.1 0.0 6.3 63.0 14.2 2.4 0.0 0.0 440.3 67.6 2.0 14.7 81.9 4.0 0.0
CO 0.0 0.0 0.0 0.0 57.1 59.1 0.0 0.0 0.0 3.5 0.0 0.0 0.0 0.0 3.0 0.0 0.0 0.0 0.0 37.1 0.0 0.0 0.0 5.4 0.0 0.0
CT 0.0 0.0 0.0 2.2 452.6 26.3 16.2 0.0 15.3 0.0 9.7 0.0 0.0 0.0 1.1 0.0 0.0 0.0 0.0 87.4 10.3 0.0 0.0 15.0 0.0 0.0
DC 0.0 0.0 0.0 0.0 57.4 1.7 0.0 0.0 0.0 0.0 4.1 0.0 0.0 0.0 3.7 0.0 0.9 6.7 0.0 11.0 1.9 0.0 50.0 0.0 0.0 0.0
DE 0.0 0.0 0.0 0.0 1.9 0.0 0.6 0.0 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.1 0.0 0.0 0.0 0.0 0.0 0.0
FF 0.0 0.0 0.0 0.0 799.1 16.7 4.0 0.0 1.0 21.7 42.3 0.2 2.0 0.0 9.1 2.3 0.0 0.0 0.0 191.1 24.2 0.0 20.0 8.9 2.5 0.0
FL 0.0 0.0 0.0 2.2 11.5 1.8 0.0 0.0 0.0 17.4 8.0 0.0 0.0 0.0 11.0 0.0 0.0 0.0 0.0 4.6 0.0 0.0 0.0 0.0 0.0 0.0
GA 0.0 0.0 0.0 0.0 10.6 7.1 0.0 4.4 0.0 7.8 38.3 0.0 0.0 0.0 0.2 1.2 0.0 0.0 0.0 9.3 0.0 0.0 0.0 4.2 0.0 0.0
HI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.1 0.0 0.0 0.0 0.0 0.0
IA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.7 0.0 0.0
ID 0.0 0.0 0.0 0.0 0.0 2.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
IL 0.0 0.0 0.0 0.0 330.1 9.9 0.2 0.0 2.0 0.0 8.6 0.0 0.0 0.0 53.7 3.9 1.0 4.4 0.0 31.6 0.0 0.0 15.7 4.3 1.0 0.0
IN 0.0 0.0 0.0 0.0 5.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.5 3.2 0.0 0.0 0.0 11.5 0.0 0.0 0.0 2.6 0.0 0.0
KS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
KY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.6 0.0 6.8 5.5 0.0 0.6 0.0 2.0 0.0
LA 0.0 0.2 0.0 0.0 0.9 0.9 0.0 0.0 0.0 0.6 0.0 1.1 0.0 0.0 0.0 0.0 0.0 0.0 4.6 1.0 0.0 0.0 0.0 0.0 17.7 0.0
MA 0.0 0.0 0.0 5.4 1,001.5 32.4 16.7 0.0 7.7 70.8 52.0 4.5 33.6 0.0 94.3 3.1 0.0 5.3 0.0 1,027.5 31.8 0.0 16.8 102.5 3.0 0.0
MB 0.0 0.0 0.0 0.0 66.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
MD 0.0 0.0 0.0 74.2 392.2 6.8 0.0 3.4 0.0 7.3 20.5 0.0 0.0 0.0 37.3 0.0 0.0 0.0 0.0 61.7 60.0 0.0 0.0 23.2 0.0 0.0
ME 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.3 0.0 0.4 0.0 0.0 0.0 0.0
MI 0.0 0.0 0.0 0.0 20.0 0.0 0.0 11.0 0.0 0.0 0.0 0.0 0.0 0.0 5.3 1.6 0.0 0.0 0.0 0.6 0.0 0.0 42.0 0.9 2.0 0.0
MN 0.0 0.0 0.0 3.0 58.7 6.6 7.0 0.0 0.0 1.0 0.0 0.0 0.1 0.3 2.3 0.1 0.0 0.0 0.0 5.1 0.0 0.0 0.0 54.6 0.0 0.0
MO 0.0 0.0 0.0 0.0 20.9 12.5 1.6 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 1.7 0.0 0.0 0.0 4.0 0.0 0.0 0.0 4.5 6.0 0.0
NC 0.0 7.8 0.0 0.0 16.5 0.0 0.0 5.0 0.0 6.6 9.7 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 14.2 4.9 0.0 0.0 0.0 0.0 0.0
NE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
NH 0.0 0.0 0.0 0.0 2.7 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.6 0.0 0.0 0.0 0.0 0.0 0.0
NJ 0.0 0.0 0.0 8.3 340.3 20.1 5.0 0.0 1.2 9.0 15.8 0.0 0.0 0.0 0.9 0.0 0.0 0.0 0.0 53.0 8.9 0.0 2.6 19.2 0.1 0.0
NM 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
NW 0.0 0.0 0.0 0.0 14.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
NY 0.0 0.0 0.0 19.6 862.3 81.3 12.1 0.0 0.0 16.2 20.1 0.0 0.0 0.0 13.6 3.0 18.0 2.5 0.0 261.7 67.0 0.0 13.7 23.7 3.3 0.0
OH 0.0 0.0 0.0 5.6 20.1 0.4 0.1 0.0 0.0 0.0 4.3 0.0 0.0 0.0 7.2 2.6 0.0 1.4 0.0 2.0 0.8 0.0 2.8 2.6 0.0 0.0
OK 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
ON 0.0 0.0 0.0 0.0 25.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 0.0 0.0 0.0 0.0 11.7 0.0 0.0 0.0 3.2 0.0 0.0
OR 0.0 0.0 0.0 0.0 5.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.1 0.0 0.0 0.0 0.0 0.0 0.0
PA 0.0 0.0 0.0 0.0 135.5 4.2 2.7 0.0 1.8 1.2 2.2 0.0 0.0 0.0 0.2 22.0 0.0 0.0 0.0 31.1 9.7 4.4 3.4 0.0 0.0 0.0
QL 0.0 0.0 0.0 0.0 6.1 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.2 0.0 0.0 0.0 0.0 0.0 0.0
QU 0.0 0.0 0.0 0.0 16.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 4.4 0.0 0.0 0.0 0.0
RI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.5 0.0 0.0 0.0 0.0 6.3 0.0 0.0 0.0 0.0 0.0 0.0
TN 0.0 0.0 0.0 6.0 0.0 0.0 0.0 0.0 0.0 0.0 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0
TX 0.0 1.5 0.0 0.0 198.0 2.6 0.0 0.0 0.0 8.5 1.2 0.0 0.0 0.0 8.2 0.0 0.0 0.0 0.3 16.3 9.2 0.0 4.7 0.0 0.0 0.0
UN 0.0 10.8 0.0 33.5 2,805.7 310.4 27.2 7.2 24.5 44.4 116.1 0.4 2.5 5.4 113.8 71.7 9.2 4.7 2.7 567.2 128.3 8.9 55.9 114.8 44.8 0.0
UT 0.0 0.0 0.0 6.0 37.0 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 3.6 0.0 0.0 0.7 0.0 0.0
VA 0.0 0.0 0.0 0.0 78.7 5.9 1.7 0.0 0.0 3.1 2.1 0.0 0.0 0.0 8.7 3.1 0.0 0.0 0.0 46.0 21.8 0.0 0.0 0.0 0.0 0.0
VC 0.0 0.0 0.0 0.0 25.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.3 0.0 0.0 0.0 0.0 0.0 0.0
VT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0
WA 0.0 0.0 0.0 7.5 142.8 24.6 10.0 0.0 0.0 0.0 11.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 17.0 0.0 0.0 0.0 1.7 0.0 0.0
WI 0.0 0.0 0.0 0.0 3.4 2.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 2.8 7.2 0.0 0.0
WY 0.0 0.0 0.0 0.0 1.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0
Total 0.0 24.1 0.0 208.1 14,278.1 817.5 129.7 31.0 62.7 238.5 423.5 7.3 40.3 12.0 445.1 133.6 45.5 29.6 8.3 2,996.7 460.6 20.1 245.7 486.8 86.4 0.0
Source State includes U.S. states, Australian states and Canadian provinces.
FF = other foreign UN = undisclosed or unknown.
Thomson Reuters 35
Figure 3.23 (continued)

Sources and Targets of Invested Capital Investments 2008
($ Millions)
SOURCE Target State
STATE MT NC ND NE NH NJ NM NV NY OH OK ORE PA PR RI SC SD TN TX UN UT VA VI VT WA WI WV WY TOT
AB 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.5
AC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8
AL 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 3.5
AZ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 0.0 0.0 0.0 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.4
BC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.0 0.0 0.0 0.0 4.2 0.0 0.0 0.0 0.0 0.0 11.0 0.0 0.0 0.0 39.6
CA 1.2 36.2 0.0 16.0 34.9 97.3 19.1 6.1 192.2 50.4 0.0 52.0 164.0 0.0 0.7 7.8 0.0 4.1 267.8 0.0 30.4 95.6 0.0 0.0 249.7 2.2 0.0 0.0 8,559.3
CO 0.0 0.0 0.0 0.0 0.0 0.0 2.1 0.0 13.8 0.0 0.0 0.0 4.9 0.0 0.0 0.0 0.0 0.0 12.9 0.0 0.0 5.6 0.0 0.0 10.3 0.0 0.0 0.0 214.8
CT 0.0 5.8 0.0 0.0 0.0 14.9 13.5 0.0 22.2 0.0 0.0 7.0 4.1 0.0 1.4 0.0 0.0 0.0 20.8 0.0 0.0 0.0 0.0 0.3 24.1 4.9 0.0 0.0 755.0
DC 0.0 5.0 0.0 0.0 0.0 10.7 0.0 0.0 4.3 0.0 0.0 4.5 0.0 0.0 0.0 2.0 0.0 3.0 5.5 0.0 0.0 25.9 0.0 0.0 5.0 0.6 0.0 0.0 203.8
DE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 12.3
FF 2.5 20.2 0.0 0.0 0.0 60.8 2.5 0.0 52.8 15.9 0.0 4.3 17.0 0.0 0.0 0.0 0.0 0.0 35.3 0.0 1.0 2.7 0.0 0.0 56.4 0.0 0.0 1.5 1,418.2
FL 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.1 0.0 0.7 0.0 0.0 1.0 7.4 0.0 0.0 0.0 0.0 0.0 6.7 0.0 0.0 0.0 75.3
GA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 1.0 0.0 0.0 0.9 0.0 0.0 0.0 0.0 4.7 2.1 0.0 0.0 1.3 0.0 0.0 0.0 0.0 0.0 0.0 93.3
HI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.1
IA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0
ID 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 9.0
IL 0.0 4.3 0.0 0.0 1.5 6.1 0.2 0.0 13.6 11.7 0.0 4.6 5.8 0.0 0.0 0.0 0.0 2.5 35.4 0.0 0.0 5.8 0.0 0.0 27.3 4.0 0.0 0.0 589.1
IN 0.0 4.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.1 0.0 0.0 0.5 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 3.0 0.0 0.0 0.0 34.7
KS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14.0
KY 0.0 5.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 24.9
LA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8.7 10.0 0.0 0.0 1.5 0.0 0.0 0.0 0.0 0.0 6.5 0.0 0.0 0.0 0.0 0.0 0.0 8.3 0.0 0.0 61.9
MA 2.9 40.5 0.0 0.0 33.1 127.2 0.4 0.0 195.4 8.2 0.0 7.6 53.9 10.8 4.1 9.2 0.0 3.1 148.2 0.0 16.2 45.6 0.0 12.8 36.7 8.7 0.0 0.0 3,273.7
MB 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 66.0
MD 1.2 11.8 0.0 0.0 3.6 19.4 0.0 0.0 41.0 1.0 0.0 7.0 7.5 0.0 0.0 0.0 0.0 1.0 19.9 0.0 11.9 84.2 0.0 0.0 18.2 0.0 0.0 0.0 914.5
ME 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 2.9 0.0 0.0 0.0 4.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.9 0.0 0.0 0.0 0.0 17.3
MI 0.0 6.7 0.0 0.0 0.3 0.0 1.8 0.0 3.0 1.5 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 4.5 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 101.8
MN 0.0 7.8 0.1 0.0 7.1 1.5 0.0 0.0 13.1 2.3 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.3 1.1 0.0 0.0 0.0 0.0 0.0 0.7 0.0 0.0 0.0 173.0
MO 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 1.5 0.0 1.1 0.0 2.3 0.0 0.0 0.0 0.0 0.0 3.5 0.0 0.0 0.0 0.0 0.0 0.7 0.5 0.0 0.0 63.0
NC 0.0 68.2 0.0 0.0 0.1 8.0 0.0 0.0 3.2 0.0 0.0 0.0 1.5 0.0 0.0 5.6 0.0 1.0 0.0 0.0 0.0 6.1 0.0 0.0 1.6 0.0 0.0 0.0 162.0
NE 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8
NH 0.0 0.0 0.0 0.0 2.1 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 12.4
NJ 0.0 35.8 0.0 0.0 10.3 56.6 0.0 0.0 31.5 0.0 0.0 0.2 28.2 0.0 0.0 0.0 0.0 1.5 6.0 0.0 6.5 14.1 0.0 0.0 4.0 0.0 0.0 0.0 679.2
NM 0.0 0.0 0.0 0.0 0.0 0.0 8.9 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 9.8
NW 0.0 0.0 0.0 0.0 0.0 3.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 17.4
NY 1.2 37.3 0.0 0.0 18.7 62.9 1.1 6.0 364.3 47.7 0.0 5.7 58.1 0.0 5.3 2.0 0.0 1.0 252.4 0.0 5.4 13.2 0.0 12.8 35.0 1.3 0.0 0.0 2,349.7
OH 1.2 5.0 0.0 0.0 0.0 0.0 0.2 0.0 12.6 46.6 0.0 0.0 0.3 0.0 0.0 0.5 0.0 6.4 1.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 123.8
OK 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6
ON 0.0 1.0 0.0 0.0 6.1 0.0 0.0 0.0 10.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.3 0.0 0.0 61.2
OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 11.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 18.5
PA 1.2 11.8 0.0 0.0 7.0 34.5 0.0 0.0 36.7 3.4 0.0 5.6 191.0 0.0 1.3 0.0 0.0 0.6 29.9 0.0 0.3 9.7 0.0 0.0 0.0 0.0 0.0 0.0 551.3
QL 0.0 0.0 0.0 0.0 0.0 1.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.3 0.0 0.0 0.0 16.1
QU 0.0 2.1 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 22.7
RI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.6 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.8
TN 0.0 1.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.1 0.0 0.0 9.0 0.0 0.0 0.0 0.0 10.5 7.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 37.0
TX 0.0 5.7 0.0 0.0 0.0 11.1 0.0 0.0 1.2 3.2 0.0 1.2 9.4 0.0 0.0 0.0 0.0 6.7 175.9 0.0 0.9 3.2 0.0 0.0 27.2 0.0 0.0 0.0 496.1
UN 4.1 124.4 0.3 0.0 52.1 167.8 17.1 0.5 251.8 50.7 14.9 36.4 131.8 3.0 8.1 4.4 0.3 14.2 234.7 0.0 74.8 110.5 0.0 15.0 241.1 30.3 24.0 0.0 6,122.0
UT 0.0 0.0 0.0 0.0 0.0 2.0 2.4 0.0 2.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 36.4 0.5 0.0 0.0 1.2 0.0 0.0 0.0 98.9
VA 0.0 15.9 0.0 0.0 4.1 4.5 0.0 0.0 8.8 0.0 0.0 0.0 2.2 0.0 0.0 2.0 0.0 0.0 3.8 0.0 0.3 61.6 0.0 0.0 0.0 0.0 0.0 0.0 274.2
VC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 32.7
VT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 1.8
WA 0.0 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.3 0.0 0.0 21.1 0.0 0.0 16.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.0 197.0 0.0 0.0 0.0 459.3
WI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 14.1 0.0 0.0 39.4
WY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.7
Total 15.5 459.3 0.4 16.0 181.2 694.8 69.3 12.6 1,297.8 258.0 17.2 176.0 701.0 13.8 39.2 34.0 0.6 64.9 1,287.4 0.0 193.5 486.5 0.0 42.8 962.2 75.3 24.0 1.5 28,355.2
Source State includes U.S. states, Australian states and Canadian provinces.
FF = other foreign UN = undisclosed or unknown.
36 Thomson Reuters
2009 NVCA Yearbook

2008 Internet-Related Investments 2008 Internet-Related Investments
By Stage By Industry Sector
Company Stage ($ Millions) Industry Group ($ Millions)
Software 3,601.5
Startup/Seed 407.7 Media and Entertainment 1,863.1
Early Stage 1,950.1 IT Services 1,598.4
Expansion 3,838.5 Telecommunications 1,426.3
Later Stage 4,517.6 Networking and Equipment 493.9
TOTAL 10,713.8 Semiconductors 390.2
Business Products and Services 273.5
Financial Services 230.2
Retailing/Distribution 213.6
Figure 3.26 Computers and Peripherals 170.3
2008 Internet-Related vs Non Internet-Related Medical Devices and Equipment 166.3
Investments By Industry Sector ($ Millions) Consumer Products and Services 155.4
Industry Internet Related Non-Internet Related Total Industrial/Energy 81.7
Software 3,601.5 1,320.3 4,921.8
Media and Entertainment 1,863.1 139.4 2,002.5
Healthcare Services 22.7
IT Services 1,598.4 245.6 1,844.0 Electronics/Instrumentation 19.8
Telecommunications 1,426.3 249.5 1,675.7 Biotechnology 7.0
Networking and Equipment 493.9 163.2 657.1
Semiconductors 390.2 1,259.9 1,650.1 TOTAL 10,713.8
Business Products and Services 273.5 210.4 483.9
Financial Services 230.2 304.3 534.5
Retailing/Distribution 213.6 54.0 267.6
Computers and Peripherals 170.3 239.1 409.4
Figure 3.28
Medical Devices and Equipment 166.3 3,314.8 3,481.1 Top Five States By Percentage Invested
Consumer Products and Services 155.4 279.1 434.5 Within State in 2008
Industrial/Energy 81.7 4,593.1 4,674.8
Healthcare Services 22.7 172.5 195.1
Electronics/Instrumentation 19.8 553.0 572.8 Pct. Invested
Biotechnology 7.0 4,520.6 4,527.6 Fund Domicile Within State
Other NA 22.7 22.7
Total 10,713.8 17,641.4 28,355.2
California 73%
Washington 43%
North Carolina 42%
Figure 3.27 Michigan 41%
2008 Internet-Related vs Non Internet-Related Georgia 41%
Investments By Industry Sector (Number of Companies) *Minimum $20 million invested
Industry Internet Related Non-Internet Related Total

Software 526 221 747
Media and Entertainment 305 25 330
IT Services 207 25 232
Figure 3.29
Telecommunications 168 33 201 Top Five States By Portion Received From
Networking and Equipment 61 17 78 In-State Firms 2008
Business Products and Services 43 60 103
Consumer Products and Services 40 55 95
Retailing/Distribution 27 8 35 Pct. Invested
Financial Services 25 38 63 Company Location From State
Computers and Peripherals 23 31 54
Semiconductors 19 123 142
California 44%
Medical Devices and Equipment 12 301 313 Massachusetts 34%
Healthcare Services 11 29 40 New York 28%
Industrial/Energy 10 277 287
Electronics/Instrumentation 3 71 74 Pennsylvania 27%
Biotechnology 2 387 389 Washington 20%
Other 0 9 9
Total 1,482 1,710 3,192 *Minimum $20 million invested
Thomson Reuters 37

Number of States Invested Into in 2008 Number of States California Venture Firms
By State of Venture Firm Invested Into By Year
Location of No. of States No. of States
Venture Firm Invested In Year Invested In
California 38 1988 29
Massachusetts 36 1998 34
New York 34 2008 38
Illinois 26
Pennsylvania 25
New Jersey 24
Maryland 23
Connecticut 21
Minnesota 21
Ohio 21
Texas 21

Corporate Investments By Year Clean technology Investments By Year
Corpp-
Backed N u m o f Co r p - % o f Ov e r a l l D e a l s Clean Nu m of
Investments % of Overall Backed W i t h at L east O ne Technology Clean Average
Year ($ Millions) Investments Deals C o rp V C Investments Technology I n ve st me n t P e r
1995 434.9 6% 136 7% Year ( $ Mi l l i o n s) Deals D e a l ( $ Mi l l i o n s)
1996 734.9 7% 237 9% 1995 76.7 36 2.1
1996 156.9 46 3.4
1997 971.3 7% 338 11%
1997 143.6 46 3.1
1998 1,717.6 8% 517 14%
1998 107.3 36 3.0
1999 7,986.0 15% 1,288 23%
1999 202.9 37 5.5
2000 16,166.8 16% 2,101 27%
2000 577.8 46 12.6
2001 4,863.3 12% 995 22%
2001 398.9 61 6.5
2002 1,914.0 9% 570 18% 2002 388.4 65 6.0
2003 1,282.5 7% 448 15% 2003 266.2 59 4.5
2004 1,534.9 7% 554 18% 2004 444.1 79 5.6
2005 1,568.0 7% 554 18% 2005 550.1 90 6.1
2006 2,034.6 8% 660 18% 2006 1,439.0 139 10.4
2007 2,594.3 8% 800 20% 2007 2,666.3 238 11.2
2008 2,233.0 8% 742 19% 2008 4,118.9 277 14.9
Figure 3.34
California Investments as a Percentage of
Overall Investments
100%
90%
29% 32%
80% 39%
70% 9%
60% 9% NoCal
11%
50% SoCal
40% Other
30% 62% 59%
50%
20%
10%
0%
1998 2000 2008
38 Thomson Reuters
Portfolio Company Valuations
Round valuations overall appeared to be significantly lower in 2008 (Figure 4.04) than they were overall in the
period 1995-2008 (Figure 4.01). As round valuations fell, fewer were reported and this pushed some sectors
below the analysis threshold. In 2008, the median financing round was at a reported $13.3 million, compared
with the recent history of $30.0 million. The calculated average (or mean) round valuation, which of course can
be affected by particularly large rounds, was $46.7 million in 2008 versus $72.9 million over the 14-year com-
parison period. Of those industries which sufficient reported results, only two reported an increase in median
round valuations: the media and entertainment sector and the medical devices and equipment sector.
Venture investment in 2008 was a competing mix of tured to provide for additional rounds and investors
(A) later stage companies receiving large rounds later on. Later stage companies needed cash infu-
anticipating an acquisition (M&A) or initial public sions at a time when they would have otherwise gone
offering (IPO), and (B) early investment in compa- public or been acquired. Depressed public markets
nies just getting going. With the activity focused on did not allow for a step up in valuation.
the two ends of the spectrum, it is worth looking at a
company’s first financings (Figures 4.02 and 4.05) With the door essentially slammed shut in 2008 for
and subsequent financings separately (Figures 4.03 initial public offerings, only six companies went
and 4.06). The overall drop in the public markets for public. In contrast to 2007 which saw record medi-
technology company stocks of more than 30% affect- an valuations, those companies which did go public
ed valuations of companies at both ends of the matu- in 2008 saw IPO valuations consistent with the
rity spectrum. Early stage fundings had to be struc- 2002-2006 period.
Figure 4.01
Valuations By Company Industry 1995-2008 ($ Millions)
Avg Upper Lower
Biotechnology 64.4 864.0 91.8 42.1 16.0 0.1
Business Products and Services 51.6 600.0 52.7 23.5 12.0 0.3
Computers and Peripherals 58.1 525.0 70.0 31.4 14.3 1.8
Electronics/Instrumentation 44.8 559.5 42.9 16.5 8.5 1.2
Financial Services 78.7 904.8 90.0 32.0 10.0 0.2
Healthcare Services 49.2 658.5 51.0 27.6 12.5 0.7
IT Services 64.8 1,400.0 80.1 32.0 13.0 0.3
Media and Entertainment 74.4 2,777.8 74.4 28.0 13.0 0.1
Networking and Equipment 136.6 1,537.2 149.8 56.2 22.2 0.3
Other 137.7 495.6 150.0 30.0 8.3 4.8
Retailing/Distribution 84.1 3,650.5 76.3 30.4 11.5 0.3
Semiconductors 83.8 922.0 89.5 45.5 20.0 1.6
Software 57.5 1,353.5 67.9 28.5 12.6 0.0
Telecommunications 99.2 2,200.0 112.0 42.0 18.9 0.1
Total 72.9 3,650.5 90.0 30.0 10.0 0.0
Thomson Reuters 39
Figure 4.02
Valuations By Company Industry 1995-2008 Financings ($ Millions)
First Round Financings
Avg Upper Lower

Biotechnology 18.9 266.0 20.8 10.0 4.9 0.0
IT Services 21.4 276.0 25.0 11.9 6.4 0.2
Networking and Equipment 25.9 454.0 27.0 15.3 8.0 0.3
Other NA NA NA NA NA NA
Retailing/Distribution 25.8 310.0 28.0 11.0 6.5 0.3
Semiconductors 25.0 285.0 25.0 15.0 10.0 0.6
Software 18.7 373.3 20.0 10.1 6.0 0.3
Total 23.5 2,777.8 25.5 11.4 5.0 0.0
Figure 4.03
Valuations By Company Industry 1995-2008 Financings ($ Millions)
Additional Round Financings
Avg Upper Lower
Biotechnology 75.4 864.0 101.0 56.0 23.2 0.5
IT Services 86.9 1,400.0 112.0 50.0 22.0 0.7
Networking and Equipment 167.9 1,537.2 201.4 78.8 35.0 1.7
Retailing/Distribution 114.2 3,650.5 93.6 46.5 20.9 0.8
Semiconductors 100.9 922.0 105.0 60.8 31.6 1.0
Software 70.4 1,353.5 85.5 37.9 18.5 0.0
Telecommunications 122.9 2,200.0 140.9 63.2 27.3 1.8
Total 86.1 3,650.5 107.0 43.9 18.2 0.0
40 Thomson Reuters
2009 NVCA Yearbook
Figure 4.04
Valuations By Company Industry
2008 Financings ($ Millions)
Avg Upper Lower

Biotechnology 44.2 158.2 94.0 14.6 3.1 0.1
IT Services 36.5 188.0 33.0 10.1 4.5 0.3
Semiconductors 38.9 70.0 42.3 37.8 30.0 14.2
Software 25.9 113.0 36.9 22.4 7.5 0.5
Total 46.7 1,000.0 57.9 13.3 4.7 0.1
Figure 4.05
Valuations By Company Industry 2008 Financings ($ Millions)
First Round Financings
Avg Upper Lower

Biotechnology 7.8 27.4 11.4 2.9 1.3 0.1
Business Products and Services NA NA NA NA NA NA
Consumer Products and Services NA NA NA NA NA NA
IT Services NA NA NA NA NA NA
Media and Entertainment NA NA NA NA NA NA
Semiconductors NA NA NA NA NA NA
Software 16.2 40.0 23.6 13.2 3.3 2.5
Telecommunications NA NA NA NA NA NA
Total 14.1 156.0 15.9 4.5 1.2 0.1
Thomson Reuters 41
Figure 4.06
Valuations By Company Industry 2008 Financings ($ Millions)
Additional Round Financings
Avg Upper Lower
Biotechnology 54.4 158.2 103.5 27.2 7.4 0.5
Business Products and Services NA NA NA NA NA NA
Consumer Products and Services NA NA NA NA NA NA
IT Services 50.7 188.0 47.8 10.0 5.0 2.9
Semiconductors 38.9 70.0 42.3 37.8 30.0 14.2
Software 30.3 113.0 39.1 30.2 14.0 0.5
Total 68.5 1,000.0 95.7 32.0 8.2 0.5
Figure 4.07
Venture-Backed IPOs Valuations as of IPO ($ Millions)
By Year of IPO
Avg Upper Lower
Year of IPO Val Max Quartile Median Quartile Min
1995 154.6 1,026.5 170.9 109.7 71.3 12.2
1996 208.1 9,911.4 182.8 110.3 66.8 9.5
1997 160.3 2,139.2 161.0 108.1 63.9 11.4
1998 221.2 1,220.6 269.6 182.2 106.6 12.5
1999 499.0 4,827.7 538.8 343.8 222.4 47.0
2000 504.3 11,965.5 521.1 248.8 134.9 18.0
2001 439.1 1,719.2 527.3 322.2 205.7 57.3
2002 361.4 1,083.3 570.7 223.3 141.7 36.8
2003 284.7 821.9 359.2 227.7 156.2 41.9
2004 656.2 23,053.7 389.6 255.9 152.8 21.6
2005 290.5 1,442.1 387.5 201.9 140.1 23.1
2006 394.4 2,647.5 409.3 256.7 177.6 70.9
2007 622.7 7,963.7 573.0 346.0 271.5 50.0
2008 441.1 1,443.1 380.7 257.8 197.6 88.8
42 Thomson Reuters
Exits: IPOs and Acquisitions
The year 2008 was an awful year for venture-backed companies exiting through initial public offerings or acquisi-
tions. Only six venture-backed companies went public and the proceeds from acquisitions dropped by more than
50%. This comes at a time when a record number of companies founded during or just after the tech bubble entered
the “later stage” of maturity and, in more typical times, would have exited.
One has to go back to the 1970s to find years with fewer IPOs. The six companies which did go public brought in
less than one-half billion dollars in proceeds. The second and fourth quarters had no venture-backed IPOs at all. Of
the six IPOs, two were Healthcare Services companies and two were in Medical Devices and Equipment. Of the 16
MoneyTree™ sectors, 12 had none. At the end of 2007, interestingly, there were 31 venture-backed companies in reg-
istration. Five of the six venture-backed IPOs took place in the first quarter. To put this in context, approximately
14% of the venture-backed companies first funded in the 1990s eventually went public. In recent years, more than
1,000 companies annually are funded for the first time. This suggests an IPO count well above 100 each year for
that ratio to continue.
While we have provided the traditional analytical charts and summaries in this chapter, the reader is reminded that
2008 results are based on this very small sample of six IPOs.
The number of venture-backed companies acquired during 2008 (335) declined from 2007 (378) to a level consis-
tent with other post-bubble years. While 2007 was the post-bubble high water mark for strong acquisition exits, in
2008 the total disclosed proceeds dropped 59% to $13.3 billion. While M&A exits were at best a mixed picture, 18%
of those companies sold for more than ten times the total venture investment (TVI) in those companies.
Methodology However, the term “venture-backed” has different

meanings depending on context. There are three
Initial and secondary public offerings of companies decreasingly stringent classifications that Thomson
that are venture-backed are followed and analyzed by Reuters uses in classifying public companies as ven-
Thomson Reuters. This research is compiled three ture-backed. The most rigorous is that a venture cap-
ways: first, through cross-referencing venture- italist must be a shareholder at the time of the public
backed companies with IPOs in registration or that offering and the investment must be made by a non-
have begun trading, which is tracked through the new buyout venture capital fund. Thus, an investment that
issues online database of Thomson Reuters; second, was exited prior to going public or a company
through daily prospectus research; third, through financed by a buyout firm would not be counted as
industry surveys. By using this research process, we venture-backed in this sense. This is the criterion
have been successful in identifying virtually all com- used in publishing venture-backed IPOs in the
panies that have gone public that have had venture
Figure 5.02 Number of Venture-Backed IPOs
backing. vs. All IPOs
Figure 5.01 Venture-Backed IPOs # of Venture-Backed

Year # of All IPOs
300 30.00
IPOs
250
No. of IPOs
25.00
1999 477 269
Offer ($ Billions)
2000 352 265
200 20.00 2001 83 41
Offer ($ Billions)
No. of IPOs
150 15.00
2002 77 22
2003 67 29
100 10.00 2004 187 94
50 5.00
2005 166 57
2006 167 56
0 0.00
'80'81'82'83'84'85'86'87'88'89'90'91'92'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08 2007 156 86
Year 2008 23 6
Thomson Reuters 43
Venture Capital Journal. The second most strict cate- in by either venture capital or buyout funds and the
gory still provides that the investment be made in a investor may or may not have exited prior to the IPO.
venture round of financing, but allows that the invest- When the term venture-backed is used in this partic-
ment could have been exited at some point prior to ular chapter, it usually refers to companies covered
the IPO. The third and most comprehensive defini- by the second category. The term ‘private equity-
tion of venture-backed includes companies invested backed’ will refer to the third category of company.
Figure 5.03
Venture-Backed IPOs 1980 to 2008
Value and Age Characteristics
Median
Num of Offer Amount Med Offer Mean Offer Post Offer Med Post Mean Post Age @ IPO Mean Age @
Year IPOs ($Mil) Amt ($Mil) Amt ($Mil) Value ($Mil) Value ($Mil) Value ($Mil) (yrs) IPO (yrs)
1980 59 664 9 12 3,517 28 62 9 11
1981 97 1,068 8 11 4,886 26 51 7 10
1982 39 577 8 16 2,663 35 76 4 7
1983 196 3,770 12 20 18,787 44 98 5 8
1984 83 1,005 9 12 4,672 31 57 5 8
1985 76 1,293 13 17 6,480 38 86 4 9
1986 153 3,423 14 23 23,902 55 160 6 11
1987 126 2,318 15 21 9,789 56 91 5 9
1988 54 846 14 17 3,391 57 68 5 6
1989 65 1,223 15 21 5,577 55 96 7 8
1990 70 1,396 20 23 5,274 67 85 6 9
1991 157 4,923 25 32 20,836 87 136 7 9
1992 195 7,204 24 39 31,404 77 169 6 8
1993 219 6,683 22 32 23,194 68 110 7 9
1994 167 4,671 23 28 18,321 70 111 8 10
1995 205 8,147 33 41 31,073 110 155 7 9
1996 272 11,482 32 42 56,399 110 207 5 8
1997 138 4,826 30 35 22,126 108 160 6 8
1998 78 3,782 41 48 17,253 182 221 5 7
1999 269 20,823 63 77 133,727 343 497 4 5
2000 265 25,618 73 97 133,639 249 504 5 7
2001 41 3,490 71 85 18,004 322 439 6 11
2002 22 2,109 71 96 7,950 223 361 7 11
2003 29 2,023 66 70 8,257 228 285 8 9
2004 94 11,378 69 121 61,678 256 656 7 8
2005 57 4,485 65 79 16,558 202 290 6 8
2006 56 5,075 76 91 22,086 257 394 8 10
2007 86 10,326 84 120 53,556 346 623 9 9
2008 6 470 71 78 2,646 258 441 10 10
44 Thomson Reuters
2009 NVCA Yearbook
Figure 5.04
Venture-Backed IPOs by MoneyTree™ Industry
Total Offering Size ($ Millions)
Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Software 68 164 43 487 137 47 399 222 130 128 135 394 517 800 360 1,933 1,837 834 731 4,337 4,019 365 155 289 2,050 505 576 1,242 62
Medical Devices and Equipment 45 51 40 274 37 74 80 152 20 108 124 498 817 333 476 878 1,492 450 91 48 759 610 300 53 844 327 714 1,241 57
Biotechnology 35 143 44 397 45 17 318 173 24 65 63 928 769 485 166 527 856 536 147 328 4,085 335 331 440 1,436 782 855 1,315 0
Business Products and Services 10 2 0 191 10 8 51 17 2 0 62 103 61 116 67 78 429 109 90 1,152 683 0 0 97 324 464 0 828 0
Financial Services 25 0 0 39 0 208 271 56 9 85 0 174 281 197 328 442 1,272 245 7 505 104 490 201 322 699 755 197 0 0
Industrial/Energy 90 148 8 324 199 264 340 418 242 155 399 358 1,293 787 768 1,022 1,337 333 130 78 1,317 522 158 0 367 21 257 580 0
IT Services 0 21 43 66 25 13 21 32 12 0 0 177 848 66 64 284 457 85 262 1,643 1,711 0 90 0 90 122 191 344 0
Media and Entertainment 0 49 7 41 12 78 778 196 61 15 40 251 258 666 466 160 485 457 116 2,888 1,499 0 207 65 1,669 352 798 184 0
Networking and Equipment 24 76 61 108 34 30 135 113 37 52 71 312 241 356 405 285 567 316 319 2,704 3,361 135 0 0 138 0 427 453 0
Other 0 0 0 0 0 0 54 0 0 0 0 0 10 0 0 7 0 141 0 0 0 0 0 0 0 0 0 0 0
Retailing/Distribution 0 7 0 120 41 223 336 94 106 34 33 379 257 729 101 67 551 175 309 1,521 275 0 0 65 62 28 139 496 0
Semiconductors 87 34 0 278 79 14 41 98 74 79 25 186 132 340 214 669 6 204 0 269 1,591 122 0 332 2,218 594 125 636 0
Telecommunications 11 28 27 104 34 39 73 361 15 41 207 170 234 737 269 599 1,215 325 694 4,123 4,730 150 0 152 1,040 358 719 2,583 0
Total 664 1,068 577 3,770 1,005 1,293 3,423 2,318 846 1,223 1,396 4,923 7,204 6,682 4,672 8,147 11,482 4,827 3,782 20,823 25,618 3,490 2,109 2,023 11,378 4,485 5,075 10,326 470
Figure 5.05
Venture-Backed IPOs by MoneyTree™ Industry
Total Number of Companies
Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Software 4 10 6 25 9 3 23 12 7 9 9 15 18 27 19 55 59 27 19 69 55 5 4 4 8 6 6 12 1
Biotechnology 1 5 4 24 4 5 16 13 2 8 4 33 29 24 13 17 31 22 6 6 49 4 4 7 25 14 17 21 0
IT Services 0 2 1 5 3 1 2 3 1 1 0 6 3 3 3 7 12 3 5 27 16 0 1 0 2 1 2 4 0
Other 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0
Semiconductors 8 5 0 8 5 2 4 4 5 5 1 8 3 16 9 18 1 6 0 5 14 2 0 3 6 8 2 8 0
Totals 59 97 39 196 83 76 153 126 54 65 70 157 195 219 167 205 272 138 78 269 265 41 22 29 94 57 56 86 6
Thomson Reuters 45
Figure 5.06
Average and Median Age in Months
of Companies at IPO 2000 to 2008
2000 2001 2002 2003 2004 2005 2006 2007 2008

Industry Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median
Telecommunications 55.3 40.0 18.0 NA NA NA 102.5 102.5 85.6 81.0 68.5 68.5 91.7 57.0 89.4 88.0 127.0 NA
Computer Hardware and Services 100.1 53.5 87.0 87.0 243.0 243.0 91.0 NA 77.0 83.0 119.4 77.0 131.0 131.0 106.6 103.0 127.0 NA
Computer Software 90.2 67.0 60.0 56.0 120.4 71.0 95.0 89.0 82.1 90.0 73.9 67.0 125.1 109.5 126.6 112.5 110.0 110.0
Business/Financial 55.5 47.0 106.0 47.0 111.0 111.0 105.9 108.0 122.2 83.0 94.0 66.0 131.2 136.0 147.6 135.0 NA NA
Semiconductors and Electronics 135.3 70.0 108.7 118.0 9.0 NA 143.0 141.0 96.2 78.0 106.9 96.0 111.5 111.5 111.1 95.0 NA NA
Biotechnology 102.0 67.0 67.0 67.0 145.0 145.0 77.5 72.5 83.8 75.0 76.8 72.5 96.1 94.0 89.6 100.0 103.0 NA
Healthcare Related 152.1 67.0 125.8 83.5 111.5 95.0 80.0 80.0 119.5 98.0 106.0 93.0 116.2 99.0 109.6 106.0 121.7 157.0
Retailing and Media 45.6 40.0 176.0 176.0 204.0 64.5 79.7 64.5 107.9 75.5 136.1 74.0 134.2 122.0 113.3 112.0 NA NA
Industrial/Energy 100.3 82.0 223.0 67.0 40.0 NA NA NA 57.0 55.0 124.0 129.0 109.0 98.0 105.7 113.0 NA NA

Venture-Backed Private Equity-Backed
Merger & Acquisitions by Year Merger & Acquisitions by Year
Number Number ($ Millions) Number Number ($ Millions)
Year Total Known Price Average Year Total Known Price Average
1980 1 0 0.0 0.0 1980 1 0 0.0 0.0
1981 0 0 0.0 0.0 1981 1 1 217.5 217.5
1982 1 0 0.0 0.0 1982 1 0 0.0 0.0
1983 2 0 0.0 0.0 1983 3 0 0.0 0.0
1984 4 1 4.5 4.5 1984 5 2 643.5 321.8
1985 6 3 271.2 90.4 1985 9 4 282.2 70.6
1986 17 4 214.7 53.7
1986 11 1 86.8 86.8
1987 21 8 854.4 106.8
1987 13 4 398.1 99.5
1988 32 16 1579.5 98.7
1988 16 6 481.1 80.2
1989 35 20 2071.3 103.6
1989 16 5 371.8 74.4 1990 27 12 595.6 49.6
1990 19 9 214.3 23.8 1991 33 13 1038.7 79.9
1991 17 4 200.5 50.1 1992 91 60 4293.4 71.6
1992 75 46 2544.8 55.3 1993 121 76 6141.4 80.8
1993 73 44 1701.2 38.7 1994 136 89 9972.2 112.0
1994 100 64 3407.6 53.2 1995 162 109 16348.4 150.0
1995 97 60 3788.3 63.1 1996 193 146 37023.7 253.6
1996 118 77 8531.0 110.8 1997 270 202 65422.5 323.9
1997 165 117 7535.5 64.4 1998 324 233 91566.8 393.0
1998 209 132 9350.6 70.8 1999 353 259 223150.6 861.6
1999 240 165 41663.4 252.5 2000 376 249 125326.7 503.3
2000 317 206 69089.3 335.4 2001 406 203 39596.8 195.1
2001 354 164 16769.9 102.3 2002 359 187 24018.8 128.4
2002 319 154 7586.7 49.3 2003 326 146 14561.0 99.7
2003 286 120 7465.1 62.2 2004 383 210 25171.1 119.9
2004 347 187 15919.6 85.1 2005 448 223 41470.4 186.0
2006 502 221 48894.7 221.2
2005 352 166 17410.5 104.9
2007 549 238 76547.0 321.6
2006 368 160 18693.6 116.8
2008 473 155 26018.3 167.9
2007 378 170 32254.6 189.7
2008 335 114 13271.9 116.4 Note: Private Equity includes venture capital, buyouts, mezzanine,
and other private equity financed companies. Therefore, data
from fig. 5.07 is included here.
46 Thomson Reuters
2009 NVCA Yearbook
Figure 5.09
Venture-Backed Acquisitions by MoneyTree™ Industry
Total Transaction Values 1980 to 2008 ($ Million)
Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Software 0 0 0 0 0 0 0 5 40 0 104 83 274 186 523 500 1022 2104 2897 10359 15725 3063 1944 2037 4305 4772 4263 5308 3732
Biotechnology 0 0 0 0 0 0 0 0 0 0 0 68 61 25 39 97 388 426 172 780 1206 430 115 604 713 2637 1765 5513 1659
Semiconductors 0 0 0 0 0 71 0 0 0 15 0 0 0 38 67 327 0 8 468 1269 5243 1439 563 415 612 214 922 896 677
IT Services 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 19 485 80 706 676 2361 533 603 1011 1681 1729 490 2495 538
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 195 0
Total 0 0 0 0 5 271 87 398 481 372 214 201 2545 1701 3408 3788 8531 7536 9351 41663 69089 16770 7587 7465 15920 17411 18694 32255 13272
Figure 5.10
Venture-Backed Acquisitions by MoneyTree™ Industry
Number of Companies 1980 to 2008
Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Software 0 0 0 0 2 0 3 1 3 1 5 2 12 16 30 26 22 45 61 58 98 88 116 105 117 126 135 122 121
Semiconductors 0 0 0 0 0 1 0 0 0 1 1 3 1 2 3 5 1 1 9 8 16 12 13 12 14 11 15 15 21
Biotechnology 0 0 0 0 0 0 1 0 1 1 1 2 6 3 5 9 11 10 12 13 14 17 11 14 23 25 30 22 20
IT Services 0 0 0 0 0 0 1 0 2 1 0 0 1 0 0 4 6 6 11 15 18 28 33 26 27 22 19 28 20
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 1 0 0 1 1 0 1 1
Total 1 0 1 2 4 6 11 13 16 16 19 17 75 73 100 97 118 165 209 240 317 354 319 286 347 352 368 378 335
Thomson Reuters 47
Figure 5.11
Private Equity-Backed Acquisitions by MoneyTree™ Industry
Total Transaction Values 1980 to 2008 ($ Million)
Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Software 0 0 0 0 0 0 0 24 56 443 104 135 696 625 913 1287 5958 6479 4541 39995 22039 3258 1944 4169 4631 5045 5299 5773 4452
Biotechnology 0 0 0 0 0 0 0 0 0 809 0 68 228 1057 351 794 999 583 1696 4977 1972 540 2540 660 816 4855 1765 5513 1776
Semiconductors 0 218 0 0 0 71 0 0 0 15 100 70 0 38 67 327 0 289 792 4705 5243 1564 563 415 612 214 922 896 677
IT Services 0 0 0 0 0 0 0 0 7 0 0 0 0 0 0 19 485 357 1075 2164 31248 866 670 1809 1848 2079 520 2643 538
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 190 245 1039 545 1055 100
Total 0 218 0 0 644 282 215 854 1580 2071 596 1039 4293 6141 9972 16348 37024 65423 91567 223151 125327 39597 24019 14561 25171 41470 48895 76547 26018
Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity financed companies. Therefore, data from
fig. 5.09 is included here.
Figure 5.12
Private Equity-Backed Acquisitions by MoneyTree™ Industry
Number of Companies 1980 to 2008
Industry 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Software 0 0 0 0 2 0 3 3 4 4 7 5 14 22 33 30 31 54 73 75 105 91 116 110 120 130 144 135 134
Semiconductors 0 1 0 0 0 1 0 0 0 1 2 4 1 2 3 5 1 2 12 10 17 13 13 12 14 12 15 17 24
Biotechnology 0 0 0 0 0 0 2 0 1 4 1 2 7 6 8 15 14 13 18 23 16 18 13 15 24 28 31 22 22
IT Services 0 0 0 0 0 0 1 0 3 1 1 0 1 0 0 5 6 8 14 19 22 31 35 29 28 23 22 36 20
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 1 0 1 2 4 2 5 6
Total 1 1 1 3 5 9 17 21 32 35 27 33 91 121 136 162 193 270 324 353 376 406 359 326 383 448 502 549 473
Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity financed companies. Therefore, data from
fig. 5:10 is included here.
48 Thomson Reuters
2009 NVCA Yearbook
Figure 5.13
Venture-Backed
Merger & Acquisitions by Year
Relationship Between Transaction
Values vs. Cumulative Total Venture Investment
Year < TVI 1x-4x TVI 4x-10x TVI >10x TVI
2003 40% 40% 13% 7%
2004 35% 34% 21% 10%
2005 28% 40% 20% 12%
2006 27% 36% 20% 17%
2007 23% 37% 22% 18%
2008 29% 28% 25% 18%
This chart is prepared by analyzing all deals where total venture investment and acquisition price
are confirmed. Each deal is classified as a ratio of company acquisition (exit) price to total venture
investment from all rounds. This chart compares the number of deals in each category.
An acquisition where deal price is less than the total venture investment (“<TVI”) clearly did result
in a good return. Four times the investment to ten times the investment is usually a good out-
come. An acquisition for more than ten times venture investment is usually a very nice outcome.
Thomson Reuters 49
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50 Thomson Reuters
Performance
Over the long-term, venture capital funds have paid out a net 15-20% IRR to their investors. The most recent per-
formance statistics confirm this. For the 20 year period ended on September 30, 2008, venture funds overall
returned 17.0% annualized IRR. Among the fund segments, those designating themselves as early stage led the way
with 21.6% annualized IRR. Shorter horizon returns are less significant. For example, the one year returns reflect
falling valuations for public companies which then affect the valuations of private companies. Amplifying this effect
in 2008, likely continuing into 2009 is the large number of later stage companies still in portfolios. These compa-
nies typically have positive EBITDA. Their portfolio valuations would be influenced by public markets through the
use of ratios and comparables for pricing. Much of this IRR exists in the net asset values of portfolios. A continued
awful exit market will delay exits (timing) and could reduce the values of the companies now awaiting an IPO or
acquisition (amount realized). Both suggest lower short-term returns going forward.
METHODOLOGY the fund is used as a terminal positive cash flow.

In the past, private equity performance has generally The investment horizon return uses the same invest-
been measured in two ways. One way is an annualized ment and distribution cash flow data as above, except
internal rate of return (IRR) calculated since fund that in addition to using the net asset value of the
inception on a cumulative basis; the second is meas- fund at the end of the period being measured as a ter-
uring the rate of return over the last one year, three minal positive cash flow, it also uses the net asset
years, five years, etc, otherwise known as the invest- value at the beginning of the period being measured
ment horizon. In both cases, returns of funds are cal- as a negative initial cash flow. Both of these measures
culated by Thomson Reuters net to limited partners of performance use the net asset value as provided by
after management fees and general partners’ carried the partnership, which is a subjective appraised unre-
interest (that is, the capital gains split). The IRR is cal- alized value. However, these values can often be ver-
culated by Thomson Reuters by treating cash inflows ified by the fund reports provided by general partners
as negative cash flows and distributions of cash and to their investors. For further information on valua-
common shares from realized gains to investors as tions, readers should consult Appendix H in this pub-
positive cash flows. In addition, the net asset value of lication on portfolio company valuations.
Figure 6.01
Performance of Private Equity Funds
Net IRR to Investors For Investment Horizon

Ending 09/30/2008 for Private Equity Funds
Fund Type 1YR 3YR 5YR 10YR 20YR
Seed/Early Focused -1.5 3.7 5.0 37.1 21.6
Balanced Focused -5.6 7.3 11.4 14.9 14.7
Later Stage Focused 9.1 11.1 10.1 8.7 14.5
All Venture -1.5 6.4 8.5 17.1 17.0
Buyout Funds -8.3 7.1 12.2 7.3 11.1
Mezzanine Debt 10.8 4.4 4.8 5.4 7.8
All Private Equity -7.1 7.6 11.0 9.3 12.9
Venture funds were classified into seed/early stage, balanced fund (investing in a variety of stages), or later stage categories
depending on their investment focus. Returns information was provided on a time horizon basis, meaning for the one-year,
three-year, five-year, 10-year, or 20-year time periods ending September 30, 2008. All returns are annualized and net to the LP
investors. For example, the correct reading of the five-year all-venture number is: “over the five year period from October 2003
through September 2008, the industry as a whole returned a net annualized IRR to its investors of 8.5%.
Thomson Reuters 51
Figure 6.02
Five Year Rolling Averages
Venture Capital vs. Public Markets
as of 12/31/08
50
*VC
40
S&P 500
NASDAQ
30
20
10
-10
-20
*
08
98
99
00
01
02
03
04
05
06
07
90
91
92
93
94
95
96
97
20
20
19
19
20
20
20
20
20
20
20
19
19
19
19
19
19
19
19
*2008 venture is through 9/30/2008
Figure 6.03
Five Year Rolling Averages:
Venture Capital vs. Public Markets
Five-Year
Period Venture
Ending Capital S&P 500 NASDAQ
1990 6.5 9.4 2.8
1991 8.6 11.5 10.9
1992 8.7 12.0 15.4
1993 11.7 10.9 15.3
1994 13.1 5.4 10.6
1995 20.1 13.8 24.0
1996 22.4 12.2 17.1
1997 26.1 17.4 18.3
1998 26.6 21.4 23.1
1999 48.2 26.2 40.2
2000 48.2 16.5 18.6
2001 36.8 9.2 8.6
2002 26.9 -1.9 -3.2
2003 25.0 -2.0 -1.8
2004 -2.1 -3.8 -11.8
2005 -6.5 -1.1 -2.2
2006 1.3 4.5 4.6
2007 8.6 10.8 14.7
2008 *8.5 -4.1 -4.7
*Data as of 9/30/08
The comparison to major indices on a rolling five-year period basis is intended to smooth the effect of short term fluctuations.
Remember that the 5-year statistics reflect significant devaluations and failures of the post-bubble period.
Readers should note that a direct assessment of private equity returns with S&P 500 and NASDAQ total returns is misleading
in the sense that the returns presented in this analysis for venture capital funds are IRRs (money-weighted returns), while the
S&P 500 and NASDAQ index returns are geometric mean returns (time-weighted). Specifically, money-weighted returns are
affected by the time value of money by application of a discount rate (the IRR), while time-weighted returns are simply the geo-
metric mean of various holding period returns.
Also remember that the venture capital statistic is for the asset class overall, and the two public-market indices are made up of
selected, generally-successful public companies. A fairer comparison might be between the top quartile venture funds and the
public indices but those statistics are not available for publication.
52 Thomson Reuters
2009 NVCA Yearbook
Figure 6.04
Venture Year Results for Selected Years
Venture Funds as of 9/30/08
Annualized Realized Unrealized

Year of Fund Pooled Return Return Return
Formation Since Inception (DPI) (RVPI)
(times) (times)
1990 28.50 2.82 0.17
1995 61.60 3.81 0.33
2000 1.20 0.43 0.63
2005 8.00 0.15 0.99
All Vintage Years 15.60 1.16 0.48
Vintage year is defined by the year funds started investing. The vintage years presented are 1990, 1995, 2000, and 2005. In
addition, combined results for all vintage years are presented as well. These returns are driven by both realized exits in the form
of capital gains and unrealized valuations based upon interim valuations provided by the individual venture funds and verifiable
by underlying fund reports. The valuations are used for the IRR analysis during the life of a portfolio, but do not reflect the cap-
ital distributions to the investors. For all of venture capital on a cumulative basis from inception of the funds through September
30, 2008, 1.16 times the original investment was realized and 0.48 times the original investment remained in unrealized portfo-
lio valuations. Therefore, for all venture capital, this meant that 71% (1.16/(1.16+0.48)) of the overall gains reflected in the per-
formance statistics were realized.
Figure 6.05
Venture Capital Investment
vs. Net New Stock Mutual Fund Inflows
200
150
100
50
($ Billions)
0
-50
-100 Venture Capital Investment
-150 New Equity Mutual Fund Investment
-200
-250
-300
2001 2002 2003 2004 2005 2006 2007 2008
This chart compares venture capital invested each year with new sales of equity mutual funds. The concept is to estimate cap-
ital entering public markets which could eventually be used as liquidity (exits) for venture portfolio companies. In 2008, while
venture capital firms invested $28 billion, investors bled $234 billion from stock mutual funds. (Source: Investment Company
Institute www.ici.org.) Clearly this bodes ill. Stepping back a year earlier, in 2007 the venture capital industry put $31 billion into
companies and stock mutual funds attracted $93 billion. This gives a ratio of about 3 to 1. If both 2007 metrics became “run
rates” for the next few years, could the US venture capital industry be successful? No one has estimated what the ideal or min-
imum multiples should be. But we know that 3 to 1 is probably far short of what is needed. For one thing, venture-backed com-
panies represent between 1/3 and 1/4 of total IPOs. Also, for even a modest IRR on a particular portfolio company held for just
four years, the holding would need to appreciate more than 3x. Plus the venture investors typically own half of the company or
less. So even at 2007 levels, liquidity falls short.
Given that the success of the venture capital ecosystem is dependent upon liquidity directly (IPOs) and indirectly (acquisitions
by public companies) for exits, logic would suggest inflows at a strong multiple of venture investment are needed. Much
thought work needs to be done on what that multiple needs to be. It’s clear that for the level of new liquidity seen in 2007 was
insufficient. The 2008 outflow explains the lack of exits.
Thomson Reuters 53
Figure 6.06
Amount of Distributors
to Limited Partners
Amt of
Distributions
Year ($ Billions)
1996 15.6
1997 17.5
1998 12.8
1999 30.2
2000 84.8
2001 14.7
2002 10.7
2003 7.8
2004 15.0
2005 21.0
2006 15.8
2007 19.7
2008 *5.9
*Data through 9/30/08
This chart reflects capital paid out to limited partner investors by venture capital funds net of all fees, capital gains splits, and
expenses.
Figure 6.07
Ratio of IPO Pre-Money
Valuation of Amount Invested
IPO Pre
Post Offer Value Offer Amt Money Total Venture Inv.
Year ($ Billion) ($ Billion) Valuation ($ Billion) Ratio
1995 31.1 8.1 23.0 2.2 10.5
1996 56.4 11.5 44.9 3.7 12.1
1997 22.1 4.8 17.3 2.7 6.4
1998 17.3 3.8 13.5 2.4 5.6
1999 134.0 20.8 113.2 11.0 10.3
2000 133.2 25.6 107.6 13.0 8.3
2001 18.0 3.5 14.5 2.6 5.6
2002 8.0 2.1 5.9 1.7 3.5
2003 8.3 2.0 6.3 2.4 2.6
2004 61.1 11.4 49.7 6.7 7.4
2005 16.5 4.5 12.0 3.1 3.9
2006 22.2 5.1 17.1 4.3 4.0
2007 53.6 10.3 43.3 6.7 6.5
2008 2.6 0.5 2.1 0.4 5.3
This chart quantifies the quality of a year’s initial public offerings by comparing the IPO pre-money valuation to the total venture
investment in those companies. For example, looking at 2008: “For the offering itself (not the first trade, end of first day, end
of first week, etc.), subtracting the IPO amount ($0.5 billion) from the IPO valuation ($2.6 billion) gives the IPO pre-money val-
uation ($2.1 billion). The venture-backed companies which went public in 2008 had a cumulative (total) venture investment of
$0.4 billion. This gives a ratio of 5.3x which is considerably stronger than the 4.0x ratio in 2006”. But the sample size is small
and the conclusions are of limited use.
54 Thomson Reuters
Appendix A: Glossary
“A” round – a financing event whereby angel groups company of additional shares to other entities. The
and / or venture capitalists become involved in a fast mechanism for making an adjustment that maintains
growth company that was previously financed by the same percentage ownership is called a Full
founders and their friends and families. Ratchet. The most commonly used adjustment pro-
vides partial protection and is called Weighted
Accredited investor – a person or legal entity, such Average.
as a company or trust fund, that meets certain net
worth and income qualifications and is considered to “B” round – a financing event whereby investors
be sufficiently sophisticated to make investment such as venture capitalists and organized angel
decisions in private offerings. Regulation D of the groups are sufficiently interested in a company to
Securities Act of 1933 exempts accredited investors provide additional funds after the “A” round of
from protection of the Securities Act. The Securities financing. Subsequent rounds are called “C”, “D”
and Exchange Commission has proposed revisions to and so on.
the accredited investor qualifying rules, which may
or may not result in changes for venture investors. Basis point (“bp”) – one one-hundredth (1/100) of a
The current criteria for a natural person are: $1 mil- percentage unit. For example, 50 basis points equals
lion net worth or annual income exceeding $200,000 one half of one percent. Banks quote variable loan
individually or $300,000 with a spouse. Directors, rates in terms of an index plus a margin and the mar-
general partners and executive officers of the issuer gin is often described in basis points, such as LIBOR
are considered to be accredited investors. plus 400 basis points (or, as the experts say, “beeps”).
Alternative asset class – a class of investments that Beta – a measure of volatility of a public stock rela-
includes venture capital, leverage buyouts, hedge tive to an index or a composite of all stocks in a mar-
funds, real estate, and oil and gas, but excludes pub- ket or geographical region. A beta of more than one
licly traded securities. Pension plans, college endow- indicates the stock has higher volatility than the
ments and other relatively large institutional investors index (or composite) and a beta of one indicates
typically allocate a certain percentage of their invest- volatility equivalent to the index (or composite). For
ments to alternative assets with an objective to diversi- example, the price of a stock with a beta of 1.5 will
fy their portfolios. change by 1.5% if the index value changes by 1%.
Typically, the S&P500 index is used in calculating
Alpha – a term derived from statistics and finance the beta of a stock.
theory that is used to describe the return produced by
a fund manager in excess of the return of a bench- Beta product – a product that is being tested by
mark index. Manager returns and benchmark returns potential customers prior to being formally launched
are measured net of the risk-free rate. In addition, into the marketplace.
manager returns are adjusted for the risk of the man-
ager’s portfolio relative to the risk of the benchmark Board of directors – a group of individuals, typical-
index. Alpha is a proxy for manager skill. ly composed of managers, investors and experts who
have a fiduciary responsibility for the well being and
Angel – a wealthy individual that invests in compa- proper guidance of a corporation. The board is elect-
nies in relatively early stages of development. ed by the shareholders.
Usually angels invest less than $1 million per startup.
Book – see Private placement memorandum.
Anti-dilution – a contract clause that protects an
investor from a substantial reduction in percentage Bootstrapping – the actions of a startup to minimize
ownership in a company due to the issuance by the expenses and build cash flow, thereby reducing or
Thomson Reuters 55
eliminating the need for outside investors. by an outside investor (in a leveraged buyout) or a
management team (in a management buyout).
Bp – see Basis point.
Buy-sell agreement – a contract that sets forth the
Bridge financing – temporary funding that will even- conditions under which a shareholder must first offer
tually be replaced by permanent capital from equity his or her shares for sale to the other shareholders
investors or debt lenders. In venture capital, a bridge is before being allowed to sell to entities outside the
usually a short term note (6 to 12 months) that converts company.
to preferred stock. Typically, the bridge lender has the
right to convert the note to preferred stock at a price C Corporation – an ownership structure that allows
that is a 20% to 25% discount from the price of the pre- any number of individuals or companies to own
ferred stock in the next financing round. See shares. A C corporation is a stand-alone legal entity
Mezzanine and Wipeout bridge. so it offers some protection to its owners, managers
and investors from liability resulting from its actions.
Broad-based weighted average anti-dilution - A
weighted average anti-dilution method adjusts down- Capital Asset Pricing Model (CAPM) – a method
ward the price per share of the preferred stock of of estimating the cost of equity capital of a company.
investor A due to the issuance of new preferred The cost of equity capital is equal to the return of a
shares to new investor B at a price lower than the risk-free investment plus a premium that reflects the
price investor A originally received. Investor A’s pre- risk of the company’s equity.
ferred stock is repriced to a weighted average of
investor A’s price and investor B’s price. A broad- Capital call – when a private equity fund manager
based anti-dilution method uses all common stock (usually a “general partner” in a partnership) requests
outstanding on a fully diluted basis (including all that an investor in the fund (a “limited partner”) pro-
convertible securities, warrants and options) in the vide additional capital. Usually a limited partner will
denominator of the formula for determining the new agree to a maximum investment amount and the gener-
weighted average price. See Narrow-based weight- al partner will make a series of capital calls over time
ed average anti-dilution . to the limited partner as opportunities arise to finance
startups and buyouts.
Burn rate – the rate at which a startup with little or
no revenue uses available cash to cover expenses. Capital gap - the difficulty faced by some entrepre-
Usually expressed on a monthly or weekly basis. neurs in trying to raise between $2 million and $5
million. Friends, family and angel investors are typi-
Business Development Company (BDC) – a pub- cally good sources for financing rounds of less than
licly traded company that invests in private compa- $2 million, while many venture capital funds have
nies and is required by law to provide meaningful become so large that investments in this size range
support and assistance to its portfolio companies. are difficult.
Business plan – a document that describes a new Capitalization table – a table showing the owners of
concept for a business opportunity. A business plan a company’s shares and their ownership percentages
typically includes the following sections: executive as well as the debt holders. It also lists the forms of
summary, market need, solution, technology, compe- ownership, such as common stock, preferred stock,
tition, marketing, management, operations, exit strat- warrants, options, senior debt, and subordinated debt.
egy, and financials (including cash flow projections).
For most venture capital funds fewer than 10 of every Capital gains – a tax classification of investment
100 business plans received eventually receive fund- earnings resulting from the purchase and sale of
ing. assets. Typically, a company’s investors and founders
have earnings classified as long term capital gains
Buyout – a sector of the private equity industry. Also, (held for a year or longer), which are taxed at a lower
the purchase of a controlling interest of a company rate than ordinary income.
56 Thomson Reuters
2009 NVCA Yearbook
Capital stock – a description of stock that applies tion of the company, the claims of secured and unse-
when there is only one class of shares. This class is cured creditors, bondholders and preferred stockholders
known as “common stock”. take precedence over common stockholders. See
Preferred stock.
Capped participating preferred stock – preferred
stock whose participating feature is limited so that an Comparable – a publicly traded company with sim-
investor cannot receive more than a specified ilar characteristics to a private company that is being
amount. See Participating preferred stock. valued. For example, a telecommunications equip-
ment manufacturer whose market value is 2 times
Carried interest — the share in the capital gains of revenues can be used to estimate the value of a simi-
a venture capital fund which is allocated to the lar and relatively new company with a new product in
General Partner. Typically, a fund must return the the same industry. See Liquidity discount.
capital given to it by limited partners plus any prefer-
ential rate of return before the general partner can Control – the authority of an individual or entity that
share in the profits of the fund. The general partner owns more than 50% of equity in a company or owns
will typically receive a 20% carried interest, although the largest block of shares compared to other share-
some successful firms receive 25%-30%. Also holders.
known as “carry” or “promote.”
Consolidation – see Rollup.
Clawback – a clause in the agreement between the
general partner and the limited partners of a private Conversion – the right of an investor or lender to
equity fund. The clawback gives limited partners the force a company to replace the investor’s preferred
right to reclaim a portion of disbursements to a gen- shares or the lender’s debt with common shares at a
eral partner for profitable investments based on sig- preset conversion ratio. A conversion feature was
nificant losses from later investments in a portfolio. first used in railroad bonds in the 1800’s.
Closing – the conclusion of a financing round where- Convertible debt – a loan which allows the lender to
by all necessary legal documents are signed and cap- exchange the debt for common shares in a company
ital has been transferred. at a preset conversion ratio. Also known as a “con-
vertible note.”
Club deal – the act of investing by two or more enti-
ties in the same target company, usually involving a Convertible preferred stock – a type of stock that
leveraged buyout transaction. gives an owner the right to convert to common shares
of stock. Usually, preferred stock has certain rights
Co-investment –the direct investment by a limited that common stock doesn’t have, such as decision-
partner alongside a general partner in a portfolio making management control, a promised return on
company. investment (dividend), or senior priority in receiving
proceeds from a sale or liquidation of the company.
Collateral – hard assets of the borrower, such as real Typically, convertible preferred stock automatically
estate or equipment, for which a lender has a legal converts to common stock if the company makes an
interest until a loan obligation is fully paid off. initial public offering (IPO). Convertible preferred is
the most common tool for private equity funds to
Commitment – an obligation, typically the maxi- invest in companies.
mum amount that a limited partner agrees to invest in
a fund. See Capital call. Co-sale right – a contractual right of an investor to
sell some of the investor’s stock along with the
Common stock – a type of security representing own- founder’s or majority shareholder’s stock if either the
ership rights in a company. Usually, company founders, founder or majority shareholder elects to sell stock to
management and employees own common stock while a third-party. Also known as Tag-along right.
investors own preferred stock. In the event of a liquida-
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Cost of capital – see Weighted average cost of cap- ing the benefits to the employee. Defined benefit
ital. plan managers can invest in private equity funds.
Cost of revenue – the expenses generated by the core Defined contribution plan – a company retirement
operations of a company. plan in which the employee elects to contribute some
portion of his or her salary into a retirement plan,
Covenant – a legal promise to do or not do a certain such as a 401(k) or 403(b). The employer may also
thing. For example, in a financing arrangement, com- contribute to the employee’s plan. With this type of
pany management may agree to a negative covenant, plan, the employee bears the investment risk. The
whereby it promises not to incur additional debt. The benefits depend solely on the amount of money made
penalties for violation of a covenant may vary from from investing the employee’s contributions. Defined
repairing the mistake to losing control of the compa- contribution plan capital cannot be invested in private
ny. equity funds.
Coverage ratio – describes a company’s ability to Demand rights – a type of registration right.
pay debt from cash flow or profits. Typical measures Demand rights give an investor the right to force a
are EBITDA/Interest, (EBITDA minus Capital startup to register its shares with the SEC and prepare
Expenditures)/Interest, and EBIT/Interest. for a public sale of stock (IPO).
Cram down round – a financing event upon which Dilution – the reduction in the ownership percentage
new investors with substantial capital are able to of current investors, founders and employees caused
demand and receive contractual terms that effective- by the issuance of new shares to new investors.
ly cause the issuance of sufficient new shares by the
startup company to significantly reduce (“dilute”) Dilution protection – see Anti-dilution and Full
the ownership percentage of previous investors. ratchet.
Cumulative dividends – the owner of preferred Disbursement – an investment by a fund in a compa-

stock with cumulative dividends has the right to ny.
receive accrued (previously unpaid) dividends in full
before dividends are paid to any other classes of Discount rate – the interest rate used to determine
stock. the present value of a series of future cash flows.
Current ratio – the ratio of current assets to current Discounted cash flow (DCF) – a valuation method-
liabilities. ology whereby the present value of all future cash
flows expected from a company is calculated.
Data room – a specific location where potential buy-
ers / investors can review confidential information Distressed debt – the bonds of a company that is
about a target company. This information may include either in or approaching bankruptcy. Some private
detailed financial statements, client contracts, intellec- equity funds specialize in purchasing such debt at
tual property, property leases, and compensation deep discounts with the expectation of exerting
agreements. influence in the restructuring of the company and
then selling the debt once the company has mean-
Deal flow – a measure of the number of potential ingfully recovered.
investments that a fund reviews in any given period.
Distribution – the transfer of cash or securities to a
Defined benefit plan – a company retirement plan in limited partner resulting from the sale, liquidation or
which the benefits are typically based on an employ- IPO of one or more portfolio companies in which a
ee’s salary and number of years worked. Fixed bene- general partner chose to invest.
fits are paid after the employee retires. The employer
bears the investment risk and is committed to provid- Dividends – payments made by a company to the
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2009 NVCA Yearbook
owners of certain securities. Typically, dividends are ness receive additional future payments, usually
paid quarterly, by approval of the board of directors, based on financial performance metrics such as rev-
to owners of preferred stock. enue or net income.
Down round – a round of financing whereby the val- Elevator pitch – a concise presentation, lasting only
uation of the company is lower than the value deter- a few minutes (an elevator ride), by an entrepreneur to
mined by investors in an earlier round. a potential investor about an investment opportunity.
Drag-along rights – the contractual right of an Employee Stock Ownership Program (ESOP) – a
investor in a company to force all other investors to plan established by a company to reserve shares for
agree to a specific action, such as the sale of the com- employees.
pany.
Entrepreneur – an individual who starts his or her
Drawdown schedule – an estimate of the gradual own business.
transfer of committed investment funds from the lim-
ited partners of a private equity fund to the general Entrepreneurship – the application of innovative
partners. leadership to limited resources in order to create
exceptional value.
Due diligence – the investigatory process performed
by investors to assess the viability of a potential Enterprise Value (EV) – the sum of the market val-
investment and the accuracy of the information pro- ues of the common stock and long term debt of a
vided by the target company. company, minus excess cash.
Dutch auction – a method of conducting an IPO Equity – the ownership structure of a company rep-
whereby newly issued shares of stock are committed resented by common shares, preferred shares or unit
to the highest bidder, then, if any shares remain, to the interests. Equity = Assets – Liabilities.
next highest bidder, and so on until all the shares are
committed. Note that the price per share paid by all ESOP – see Employee Stock Ownership Program.
buyers is the price commitment of the buyer of the last
share. Evergreen fund – a fund that reinvests its profits in
order to ensure the availability of capital for future
Early stage – the state of a company after the seed investments.
(formation) stage but before middle stage (generating
revenues). Typically, a company in early stage will Exit strategy – the plan for generating profits for
have a core management team and a proven concept owners and investors of a company. Typically, the
or product, but no positive cash flow. options are to merge, be acquired or make an initial
public offering (IPO). An alternative is to recapitalize
Earnings before interest and taxes (EBIT) – a meas- (releverage the company and then pay dividends to
urement of the operating profit of a company. One pos- shareholders).
sible valuation methodology is based on a comparison
of private and public companies’ value as a multiple of Expansion stage – the stage of a company character-
EBIT. ized by a complete management team and a substan-
tial increase in revenues.
Earnings before interest, taxes, depreciation and
amortization (EBITDA) – a measurement of the Fair value – a financial reporting principle for valuing
cash flow of a company. One possible valuation assets and liabilities, for example, portfolio companies
methodology is based on a comparison of private and in venture capital fund portfolios. This has received
public companies’ value as a multiple of EBITDA. much recent attention as the Financial Accounting
Standards Board (FASB) has issued definitive guid-
Earn out – an arrangement in which sellers of a busi- ance (FAS 157) on this long standing principle.
Thomson Reuters 59
Fairness opinion – a letter issued by an investment Broad-based weighted average anti-dilution.

bank that charges a fee to assess the fairness of a
negotiated price for a merger or acquisition. Fully diluted basis – a methodology for calculating
any per share ratios whereby the denominator is the
FAS 157 – an an accounting standard developed by total number of shares issued by the company on the
the Financial Accounting Standards Board (FASB) assumption that all warrants and options are exer-
regarding the application of a fair value principle. cised and preferred stock.
First refusal – the right of a privately owned compa- Fund-of-funds – a fund created to invest in private
ny to purchase any shares that employees would like equity funds. Typically, individual investors and rela-
to sell. tively small institutional investors participate in a
fund-of-funds to minimize their portfolio manage-
Founders stock – nominally priced common stock ment efforts.
issued to founders, officers, employees, directors,
and consultants. Gatekeepers – intermediaries which endowments,
pension funds and other institutional investors use as
Free cash flow to equity (FCFE) – the cash flow advisors regarding private equity investments.
available after operating expenses, interest payments
on debt, taxes, net principal repayments, preferred General partner (GP) – a class of partner in a part-
stock dividends, reinvestment needs and changes in nership. The general partner retains liability for the
working capital. In a discounted cash flow model to actions of the partnership. Historically, venture capi-
determine the value of the equity of a firm using tal and buyout funds have been structured as limited
FCFE, the discount rate used is the cost of equity. partnerships, with the venture firm as the GP and
limited partners (LPs) being the institutional and
Free cash flow to the firm (FCFF) – the operating high net worth investors that provide most of the cap-
cash flow available after operating expenses, taxes, ital in the partnership. The GP earns a management
reinvestment needs and changes in working capital, fee and a percentage of gains (see Carried interest).
but before any interest payments on debt are made. In
a discounted cash flow model to determine the enter- GP – see General partner.
prise value of a firm using FCFF, the discount rate
used is the weighted average cost of capital (WACC). Going-private transaction – when a public compa-
ny chooses to pay off all public investors, delist from
Friends and family financing – capital provided by all stock exchanges, and become owned by manage-
the friends and family of founders of an early stage ment, employees, and select private investors.
company. Founders should be careful not to create an
ownership structure that may hinder the participation Golden handcuffs – financial incentives that dis-
of professional investors once the company begins to courage founders and / or important employees from
achieve success. leaving a company before a predetermined date or
important milestone.
Full ratchet – an anti-dilution protection mechanism
whereby the price per share of the preferred stock of Grossing up – an adjustment of an option pool for
investor A is adjusted downward due to the issuance management and employees of a company which
of new preferred shares to new investor B at a price increases the number of shares available over time.
lower than the price investor A originally received. This usually occurs after a financing round whereby
Investor A’s preferred stock is repriced to match the one or more investors receive a relatively large per-
price of investor B’s preferred stock. Usually as a centage of the company. Without a grossing up,
result of the implementation of a ratchet, company managers and employees would suffer the financial
management and employees who own a fixed amount and emotional consequences of dilution, thereby
of common shares suffer significant dilution. See potentially affecting the overall performance of the
Narrow-based weighted average anti-dilution and company.
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2009 NVCA Yearbook
Growth stage – the state of a company when it has Incorporation – the process by which a business
received one or more rounds of financing and is gen- receives a state charter, allowing it to become a cor-
erating revenue from its product or service. Also poration. Many corporations choose Delaware
known as “middle stage.” because its laws are business-friendly and up to date.
Hart-Scott-Rodino Act – a law requiring entities Incubator – a company or facility designed to host
that acquire certain amounts of stock or assets of a startup companies. Incubators help startups grow
company to inform the Federal Trade Commission while controlling costs by offering networks of con-
and the Department of Justice and to observe a wait- tacts and shared backoffice resources.
ing period before completing the transaction.
Indenture – the terms and conditions between a
Hedge fund – an investment fund that has the ability bond issuer and bond buyers.
to use leverage, take short positions in securities, or
use a variety of derivative instruments in order to Initial public offering (IPO) – the first offering of
achieve a return that is relatively less correlated to the stock by a company to the public. New public offer-
performance of typical indices (such as the S&P 500) ings must be registered with the Securities and
than traditional long-only funds. Hedge fund man- Exchange Commission. An IPO is one of the methods
agers are typically compensated based on assets that a startup that has achieved significant success can
under management as well as fund performance. use to raise additional capital for further growth. See
Qualified IPO.
High yield debt – debt issued via public offering or
public placement (Rule 144A) that is rated below In-kind distribution – a distribution to limited part-
investment grade by S&P or Moody’s. This means that ners of a private equity fund that is in the form of
the debt is rated below the top four rating categories (i.e. publicly trades shares rather than cash.
S&P BB+, Moody’s Ba2 or below). The lower rating is
indicative of higher risk of default, and therefore the Inside round – a round of financing in which the
debt carries a higher coupon or yield than investment investors are the same investors as the previous
grade debt. Also referred to as Junk bonds or Sub- round. An inside round raises liability issues since
investment grade debt. the valuation of the company has no third party veri-
fication in the form of an outside investor. In addi-
Hockey stick – the general shape and form of a chart tion, the terms of the inside round may be considered
showing revenue, customers, cash or some other self-dealing if they are onerous to any set of share-
financial or operational measure that increases dra- holders or if the investors give themselves additional
matically at some point in the future. Entrepreneurs preferential rights.
often develop business plans with hockey stick charts
to impress potential investors. Institutional investor – professional entities that
invest capital on behalf of companies or individuals.
Holding period – amount of time an investment Examples are: pension plans, insurance companies
remains in a portfolio. and university endowments.
Hot issue – stock in an initial public offering that is Intellectual property (IP) – knowledge, techniques,
in high demand. writings and images that are intangible but often pro-
tected by law via patents, copyrights, and trademarks.
Hot money – capital from investors that have no tol-
erance for lack of results by the investment manager Interest coverage ratio – earnings before interest
and move quickly to withdraw at the first sign of and taxes (EBIT) divided by interest expense. This is
trouble. a key ratio used by lenders to assess the ability of a
company to produce sufficient cash to pay its debt
Hurdle rate – a minimum rate of return required obligation.
before an investor will make an investment.
Thomson Reuters 61
Internal rate of return (IRR) – the interest rate at Leverage – the use of debt to acquire assets, build
which a certain amount of capital today would have operations and increase revenues. By using debt, a
to be invested in order to grow to a specific value at company is attempting to achieve results faster than
a specific time in the future. if it only used its cash available from pre-leverage
operations. The risk is that the increase in assets and
Investment thesis / Investment philosophy – the revenues does not generate sufficient net income and
fundamental ideas which determine the types of cash flow to pay the interest costs of the debt.
investments that an investment fund will choose in
order to achieve its financial goals. Leveraged buyout (LBO) – the purchase of a com-
pany or a business unit of a company by an outside
IPO – see Initial public offering. investor using mostly borrowed capital.
IRR – see Internal rate of return. Leveraged recapitalization – the reorganization of a

company’s capital structure resulting in more debt
Issuer – the company that chooses to distribute a added to the balance sheet. Private equity funds can
portion of its stock to the public. recapitalize a portfolio company and then direct the
company to issue a one-time dividend to equity
J curve – a concept that during the first few years of investors. This is often done when the company is per-
a private equity fund, cash flow or returns are nega- forming well financially and the debt markets are
tive due to investments, losses, and expenses, but as expanding.
investments produce results the cash flow or returns
trend upward. A graph of cash flow or returns versus Leverage ratios – measurements of a company’s debt
time would then resemble the letter “J”. as a multiple of cash flow. Typical leverage ratios
include Total Debt / EBITDA, Total Debt / (EBITDA
Later stage – the state of a company that has proven minus Capital Expenditures), and Seniore Debt /
its concept, achieved significant revenues compared EBITDA.
to its competition, and is approaching cash flow
break even or positive net income. Typically, a later L.I.B.O.R. – see The London Interbank Offered
stage company is about 6 to 12 months away from a Rate.
liquidity event such as an IPO or buyout. The rate of
return for venture capitalists that invest in later stage, License – a contract in which a patent owner grants to
less risky ventures is lower than in earlier stage ven- a company the right to make, use or sell an invention
tures. under certain circumstances and for compensation.
LBO – see Leveraged buyout. Limited liability company (LLC) – an ownership

structure designed to limit the founders’ losses to the
Lead investor – the venture capital investor that amount of their investment. An LLC itself does not
makes the largest investment in a financing round and pay taxes, rather its owners pay taxes on their propor-
manages the documentation and closing of that round. tion of the LLC profits at their individual tax rates.
The lead investor sets the price per share of the
financing round, thereby determining the valuation of Limited partnership – a legal entity composed of a
the company. general partner and various limited partners. The
general partner manages the investments and is liable
Letter of intent – a document confirming the intent for the actions of the partnership while the limited
of an investor to participate in a round of financing partners are generally protected from legal actions
for a company. By signing this document, the subject and any losses beyond their original investment. The
company agrees to begin the legal and due diligence general partner collects a management fee and earns
process prior to the closing of the transaction. Also a percentage of capital gains (see Carried interest),
known as a “Term Sheet”. while the limited partners receive income, capital
gains and tax benefits.
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2009 NVCA Yearbook
Limited partner (LP) – an investor in a limited part- of a company or a division. Often an MBO is con-
nership. The general partner is liable for the actions ducted in partnership with a buyout fund.
of the partnership while the limited partners are gen-
erally protected from legal actions and any losses Management fee – a fee charged to the limited part-
beyond their original investment. The limited partner ners in a fund by the general partner. Management
receives income, capital gains and tax benefits. fees in a private equity fund usually range from
0.75% to 3% of capital under management, depend-
Liquidation – the sale of a company. This may occur ing on the type and size of fund. For venture capital
in the context of an acquisition by a larger company funds, 2% is typical.
or in the context of selling off all assets prior to ces-
sation of operations (Chapter 7 bankruptcy). In a liq- Management rights – the rights often required by a
uidation, the claims of secured and unsecured credi- venture capitalist as part of the agreement to invest in
tors, bondholders and preferred stockholders take a company. The venture capitalist has the right to
precedence over common stockholders. consult with management on key operational issues,
attend board meetings and review information about
Liquidation preference – the contractual right of an the company’s financial situation.
investor to priority in receiving the proceeds from the
liquidation of a company. For example, a venture Market capitalization – the value of a publicly trad-
capital investor with a “2x liquidation preference” ed company as determined by multiplying the num-
has the right to receive two times its original invest- ber of shares outstanding by the current price per
ment upon liquidation. share.
Liquidity discount – a decrease in the value of a pri- MBO – see Management buyout.
vate company compared to the value of a similar but
publicly traded company. Since an investor in a pri- Mezzanine – a layer of financing that has intermedi-
vate company cannot readily sell his or her invest- ate priority (seniority) in the capital structure of a
ment, the shares in the private company must be val- company. For example, mezzanine debt has lower
ued less than a comparable public company. priority than senior debt but usually has a higher
interest rate and often includes warrants. In venture
Liquidity event – a transaction whereby owners of a capital, a mezzanine round is generally the round of
significant portion of the shares of a private compa- financing that is designed to help a company have
ny sell their shares in exchange for cash or shares in enough resources to reach an IPO. See Bridge
another, usually larger company. For example, an financing.
IPO is a liquidity event.
Multiples – a valuation methodology that compares
Lock-up agreement – investors, management and public and private companies in terms of a ratio of
employees often agree not to sell their shares for a value to an operations figure such as revenue or net
specific time period after an IPO, usually 6 to 12 income. For example, if several publicly traded
months. By avoiding large sales of its stock, the com- computer hardware companies are valued at approx-
pany has time to build interest among potential buy- imately 2 times revenues, then it is reasonable to
ers of its shares. assume that a startup computer hardware company
that is growing fast has the potential to achieve a
London Interbank Offered Rate (L.I.B.O.R.) – the valuation of 2 times its revenues. Before the startup
average rate charged by large banks in London for issues its IPO, it will likely be valued at less than 2
loans to each other. LIBOR is a relatively volatile rate times revenue because of the lack of liquidity of its
and is typically quoted in maturities of one month, shares. See Liquidity discount.
three months, six months and one year.
Narrow-based weighted average anti-dilution – a
Management buyout (MBO) – a leveraged buyout type of anti-dilution mechanism. A weighted average
controlled by the members of the management team anti-dilution method adjusts downward the price per
Thomson Reuters 63
share of the preferred stock of investor A due to the ities (such as selling assets) or financing activities
issuance of new preferred shares to new investor B at (such as issuing debt). Calculated as net operating
a price lower than the price investor A originally income (NOI) plus depreciation.
received. Investor A’s preferred stock is repriced to a
weighed average of investor A’s price and investor B’s Option pool – a group of options set aside for long
price. A narrow-based anti-dilution uses only com- term, phased compensation to management and
mon stock outstanding in the denominator of the for- employees.
mula for determining the new weighted average
price. Outstanding shares – the total amount of common
shares of a company, not including treasury stock,
NDA – see Non-disclosure agreement. convertible preferred stock, warrants and options.
No-shop clause – a section of an agreement to pur- Pay to play – a clause in a financing agreement
chase a company whereby the seller agrees not to whereby any investor that does not participate in a
market the company to other potential buyers for a future round agrees to suffer significant dilution com-
specific time period. pared to other investors. The most onerous version of
“pay to play” is automatic conversion to common
Non-cumulative dividends – dividends that are shares, which in essence ends any preferential rights
payable to owners of preferred stock at a specific of an investor, such as the right to influence key man-
point in time only if there is sufficient cash flow agement decisions.
available after all company expenses have been paid.
If cash flow is insufficient, the owners of the pre- Pari passu – a legal term referring to the equal treat-
ferred stock will not receive the dividends owed for ment of two or more parties in an agreement. For
that time period and will have to wait until the board example, a venture capitalist may agree to have reg-
of directors declares another set of dividends. istration rights that are pari passu with the other
investors in a financing round.
Non-interference – an agreement often signed by
employees and management whereby they agree not Participating dividends – the right of holders of cer-
to interfere with the company’s relationships with tain preferred stock to receive dividends and participate
employees, clients, suppliers and sub-contractors in additional distributions of cash, stock or other assets.
within a certain time period after termination of
employment. Participating preferred stock – a unit of ownership
composed of preferred stock and common stock. The
Non-solicitation – an agreement often signed by preferred stock entitles the owner to receive a prede-
employees and management whereby they agree not termined sum of cash (usually the original invest-
to solicit other employees of the company regarding ment plus accrued dividends) if the company is sold
job opportunities. or has an IPO. The common stock represents addi-
tional continued ownership in the company.
Non-disclosure agreement (NDA) – an agreement Participating preferred stock has been characterized
issued by entrepreneurs to protect the privacy of their as “having your cake and eating it too”.
ideas when disclosing those ideas to third parties.
PEIGG – acronym for Private Equity Industry
Offering memorandum – a legal document that pro- Guidelines Group, an ad hoc group of individuals
vides details of an investment to potential investors. and firms involved in the private equity industry for
See Private placement memorandum. the purpose of establishing valuation and reporting
guidelines.
OID – see Original issue discount.
Piggyback rights – rights of an investor to have his
Operating cash flow – the cash flow produced from or her shares included in a registration of a startup’s
the operation of a business, not from investing activ- shares in preparation for an IPO.
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2009 NVCA Yearbook
PIPEs – see Private investment in public equity. Primary shares – shares sold by a corporation (not
by individual shareholders).
Placement agent – a company that specializes in
finding institutional investors that are willing and Private equity – equity investments in non-public
able to invest in a private equity fund. Sometimes a companies, usually defined as being made up of ven-
private equity fund will hire a placement agent so the ture capital funds and buyout funds. Real estate, oil
fund partners can focus on making and managing and gas, and other such partnerships are sometimes
investments in companies rather than on raising cap- included in the definition.
ital.
Private investment in public equity (PIPEs) –
Portfolio company – a company that has received an investments by a private equity fund in a publicly
investment from a private equity fund. traded company, usually at a discount and in the form
of preferred stock.
Post-money valuation – the valuation of a company
including the capital provided by the current round of Private placement – the sale of a security directly to
financing. For example, a venture capitalist may invest a limited number of institutional and qualified indi-
$5 million in a company valued at $2 million “pre- vidual investors. If structured correctly, a private
money” (before the investment was made). As a result, placement avoids registration with the Securities and
the startup will have a post-money valuation of $7 mil- Exchange Commission.
lion.
Private placement memorandum (PPM) – a docu-
PPM – see Private placement memorandum. ment explaining the details of an investment to poten-
tial investors. For example, a private equity fund will
Preemptive rights – the rights of shareholders to issue a PPM when it is raising capital from institution-
maintain their percentage ownership of a company by al investors. Also, a startup may issue a PPM when it
buying shares sold by the company in future financ- needs growth capital. Also known as “Offering
ing rounds. Memorandum”.
Preference – seniority, usually with respect to divi- Private securities – securities that are not registered
dends and proceeds from a sale or dissolution of a with the Securities and Exchange Commission and
company. do not trade on any exchanges. The price per share is
negotiated between the buyer and the seller (the
Preferred return – a minimum return per annum “issuer”).
that must be generated for limited partners of a pri-
vate equity fund before the general partner can begin Prudent man rule – a fundamental principle for pro-
receiving a percentage of profits from investments. fessional money management which serves as a basis
for the Prudent Investor Act. The principle is based
Preferred stock – a type of stock that has certain on a statement by Judge Samuel Putnum in 1830:
rights that common stock does not have. These special “Those with the responsibility to invest money for
rights may include dividends, participation, liquidity others should act with prudence, discretion, intelli-
preference, anti-dilution protection and veto provi- gence and regard for the safety of capital as well as
sions, among others. Private equity investors usually income.” In the 1970s a favorable interpretation of
purchase preferred stock when they make investments this rule enabled pension fund managers to invest in
in companies. venture capital for the first time.
Pre-money valuation – the valuation of a company Qualified IPO – a public offering of securities val-
prior to the current round of financing. For example, a ued at or above a total amount specified in a financ-
venture capitalist may invest $5 million in a company ing agreement. This amount is usually specified to be
valued at $2 million pre-money. As a result, the start- sufficiently large to guarantee that the IPO shares
up will have a “post-money” valuation of $7 million. will trade in a major exchange (NASDAQ or New
Thomson Reuters 65
York Stock Exchange). Usually upon a qualified IPO Restricted shares – shares that cannot be traded in
preferred stock is forced to convert to common stock. the public markets.
Quartile – one fourth of the data points in a data set. Return on investment (ROI) – the proceeds from an
Often, private equity investors are measured by the investment, during a specific time period, calculated
results of their investments during a particular period as a percentage of the original investment. Also, net
of time. Institutional investors often prefer to invest profit after taxes divided by average total assets.
in private equity funds that demonstrate consistent
results over time, placing in the upper quartile of the Rights offering – an offering of stock to current
investment results for all funds. shareholders that entitles them to purchase the new
issue, usually at a discount.
Ratchet – a mechanism to prevent dilution. An anti-
dilution clause in a contract protects an investor Rights of co-sale with founders – a clause in ven-
from a reduction in percentage ownership in a com- ture capital investment agreements that allows the
pany due to the future issuance by the company of VC fund to sell shares at the same time that the
additional shares to other entities. founders of a startup chose to sell.
Realization ratio – the ratio of cumulative distribu- Right of first refusal – a contractual right to partic-
tions to paid-in capital. The realization ratio is used ipate in a transaction. For example, a venture capital-
as a measure of the distributions from investment ist may participate in a first round of investment in a
results of a private equity partnership compared to startup and request a right of first refusal in any fol-
the capital under management. lowing rounds of investment.
Recapitalization – the reorganization of a compa- Risk-free rate – a term used in finance theory to
ny’s capital structure. describe the return from investing in a riskless secu-
rity. In practice, this is often taken to be the return on
Red herring – a preliminary prospectus filed with US Treasury Bills.
the Securities and Exchange Commission and con-
taining the details of an IPO offering. The name Road show – presentations made in several cities to
refers to the disclosure warning printed in red letters potential investors and other interested parties. For
on the cover of each preliminary prospectus advising example, a company will often make a road show to
potential investors of the risks involved. generate interest among institutional investors prior to
its IPO.
Redemption rights – the right of an investor to force
the startup company to buy back the shares issued as ROI – see Return on investment.
a result of the investment. In effect, the investor has
the right to take back his/her investment and may Rollup – the purchase of relatively smaller compa-
even negotiate a right to receive an additional sum in nies in a sector by a rapidly growing company in the
excess of the original investment. same sector. The strategy is to create economies of
scale. For example, the movie theater industry under-
Registration – the process whereby shares of a com- went significant consolidation in the 1960’s and
pany are registered with the Securities and Exchange 1970’s.
Commission under the Securities Act of 1933 in
preparation for a sale of the shares to the public. Round – a financing event usually involving several
private equity investors.
Regulation D – an SEC regulation that governs private
placements. Private placements are investment offer- Royalties – payments made to patent or copyright
ings for institutional and accredited individual investors owners in exchange for the use of their intellectual
but not for the general public. There is an exception that property.
35 non-accredited investors can participate.
66 Thomson Reuters
2009 NVCA Yearbook
Rule 144 – a rule of the Securities and Exchange Seed stage – the state of a company when it has just
Commission that specifies the conditions under been incorporated and its founders are developing
which the holder of shares acquired in a private trans- their product or service.
action may sell those shares in the public markets.
Senior debt – a loan that has a higher priority in case
S corporation – an ownership structure that limits its of a liquidation of the asset or company.
number of owners to 100. An S corporation does not
pay taxes, rather its owners pay taxes on their propor- Seniority – higher priority.
tion of the corporation’s profits at their individual tax
rates. Series A preferred stock – preferred stock issued by
a fast growth company in exchange for capital from
SBIC – see Small Business Investment Company. investors in the “A” round of financing. This pre-
ferred stock is usually convertible to common shares
Scalability – a characteristic of a new business con- upon the IPO or sale of the company.
cept that entails the growth of sales and revenues
with a much slower growth of organizational com- Sharpe Ratio – a method of calculating the risk-
plexity and expenses. Venture capitalists look for adjusted return of an investment. The Sharpe Ratio is
scalability in the startups they select to finance. calculated by subtracting the risk-free rate from the
return on a specific investment for a time period
Scale-down – a schedule for phased decreases in (usually one year) and then dividing the resulting fig-
management fees for general partners in a limited ure by the standard deviation of the historical (annu-
partnership as the fund reduces its investment activi- al) returns for that investment. The higher the Sharpe
ties toward the end of its term. Ratio, the better.
Scale-up – the process of a company growing quick- Small Business Investment Company (SBIC) – a
ly while maintaining operational and financial con- company licensed by the Small Business
trols in place. Also, a schedule for phased increases Administration to receive government capital in the
in management fees for general partners in a limited form of debt or equity in order to use in private equi-
partnership as the fund increases its investment activ- ty investing.
ities over time.
Stock option – a right to purchase or sell a share of
Secondary market – a market for the sale of limited stock at a specific price within a specific period of
partnership interests in private equity funds. time. Stock purchase options are commonly used as
Sometimes limited partners chose to sell their interest long term incentive compensation for employees and
in a partnership, typically to raise cash or because they management of fast growth companies.
cannot meet their obligation to invest more capital
according to the takedown schedule. Certain invest- Strategic investor – a relatively large corporation
ment companies specialize in buying these partnership that agrees to invest in a young or a smaller company
interests at a discount. in order to have access to its proprietary technology,
product or service.
Secondary shares – shares sold by a shareholder
(not by the corporation). Subordinated debt – a loan that has a lower priority
than a senior loan in case of a liquidation of the asset
Securities and Exchange Commission (SEC) – the or company. Also known as “junior debt”.
regulatory body that enforces federal securities laws
such as the Securities Act of 1933 and the Securities Success rate – the proportion of venture funded
Exchange Act of 1934. companies that are considered successful. A study of
companies funded by VCs during the 1990s indicat-
Seed capital – investment provided by angels, friends ed that 14% of the companies went public and anoth-
and family to the founders of a startup in seed stage. er 11%were acquired.
Thomson Reuters 67
Sweat equity – ownership of shares in a company Underwriter – an investment bank that chooses to
resulting primarily from work rather than investment be responsible for the process of selling new securi-
of capital. ties to the public. An underwriter usually chooses to
work with a syndicate of investment banks in order to
Syndicate – a group of investors that agree to partic- maximize the distribution of the securities.
ipate in a round of funding for a company.
Alternatively, a syndicate can refer to a group of Venture capital – a segment of the private equity
investment banks that agree to participate in the sale industry which focuses on investing in new compa-
of stock to the public as part of an IPO. nies with high growth potential and accompanying
high risk.
Tag-along right – the right of a minority investor to
receive the same benefits as a majority investor. Venture capital method – a pricing valuation
Usually applies to a sale of securities by investors. method whereby an estimate of the future value of
Also known as Co-sale right. a company is discounted by a certain interest rate
and adjusted for future anticipated dilution in order
Takedown – a schedule of the transfer of capital in to determine the current value. Usually, discount
phases in order to complete a commitment of funds. rates for the venture capital method are consider-
Typically, a takedown is used by a general partner of ably higher than public stock return rates, repre-
a private equity fund to plan the transfer of capital senting the fact that venture capitalists must
from the limited partners. achieve significant returns on investment in order
to compensate for the risks they take in funding
Tender offer – an offer to public shareholders of a unproven companies.
company to purchase their shares.
Vesting – a schedule by which employees gain own-
Term loan – a bank loan for a specific period of ership over time of a previously agreed upon amount
time, usually up to ten years in leveraged buyout of retirement funding or stock options.
structures.
Vintage – the year that a private equity fund stops
Term sheet – a document confirming the intent of an accepting new investors and begins to make invest-
investor to participate in a round of financing for a ments on behalf of those investors. Venture funds are
company. By signing this document, the subject com- generally benchmarked to funds of the same vintage
pany agrees to begin the legal and due diligence year.
process prior to the closing of the transaction. Also
known as “Letter of Intent”. Voting rights – the rights of holders of preferred and
common stock in a company to vote on certain acts
Tranche – a portion of a set of securities. Each affecting the company. These matters may include
tranche may have different rights or risk characteris- payment of dividends, issuance of a new class of
tics. When venture capital firms finance a company, stock, merger or liquidation.
a round may be disbursed in two or three tranches,
each of which is paid when the company attains one Warrant – a security which gives the holder the right
or more milestones. to purchase shares in a company at a pre-determined
price. A warrant is a long term option, usually valid
Turnaround – a process resulting in a substantial for several years or indefinitely. Typically, warrants
increase in a company’s revenues, profits and reputa- are issued concurrently with preferred stocks or
tion. bonds in order to increase the appeal of the stocks or
bonds to potential investors.
Under water option – an option is said to be under
water if the current fair market value of a stock is less Washout round – a financing round whereby previ-
than the option exercise price. ous investors, the founders and management suffer
significant dilution. Usually as a result of a washout
68 Thomson Reuters
2009 NVCA Yearbook
round, the new investor gains majority ownership and Write-off – a decrease in the reported value of an
control of the company. asset or a company to zero.
Weighted average cost of capital (WACC) – the Write-up – an increase in the reported value of an
average of the cost of equity and the after-tax cost of asset or a company.
debt. This average is determined using weight factors
based on the ratio of equity to debt plus equity and Zombie – a company that has received capital from
the ratio of debt to debt plus equity. investors but has only generated sufficient revenues
and cash flow to maintain its operations without sig-
Weighted average anti-dilution – an anti-dilution nificant growth. Sometimes referred to as “walking
protection mechanism whereby the conversion rate dead.” Typically, a venture capitalist has to make a
of preferred stock is adjusted in order to reduce an difficult decision as to whether to liquidate a zombie
investor’s loss due to an increase in the number of or continue to invest funds in the hopes that the zom-
shares in a company. Without anti-dilution protec- bie will become a winner.
tion, an investor would suffer from a reduction of
his or her percentage ownership. Usually as a result
of the implementation of a weighted average anti- These definitions were graciously provided by the
dilution, company management and employees who Center for Private Equity and Entrepreneurship at the
own a fixed amount of common shares suffer signif- Tuck School of Business at Dartmouth. Please refer
icant dilution, but not as badly as in the case of a to the Center’s website for additional definitions and
full ratchet. information at http://mba.tuck.dartmouth.edu/pecen-
ter/resources/glossary.html. Used by permission.
Write-down – a decrease in the reported value of an Thomson Reuters and National Venture Capital
asset or a company. Association are grateful to the Center for its support.
Thomson Reuters 69
70 Thomson Reuters
Appendix B: MoneyTree Report Criteria
The MoneyTree™ Report by PricewaterhouseCoopers and the National Venture

Capital Association based on data from Thomson Reuters
REPORT CRITERIA
Summary Description determining factor. Drawdowns on commitments are

The MoneyTree™ Report measures cash-for-equity recognized at the time the company receives the
investments by the professional venture capital com- money rather than recorded as a lump sum amount at
munity in private emerging companies in the U.S. the time the term sheet is executed. Convertible debt
and bridge loans are recognized only when converted
to equity. Once a company has received a qualifying
General Definition
venture capital financing round, all subsequent equi-
The report includes the investment activity of profes- ty financing rounds are included regardless of
sional venture capital firms with or without a US whether the round involved a venture capital firm as
office, SBICs, venture arms of corporations, institu- long as all other investment criteria are met (e.g.
tions, investment banks and similar entities whose cash-for-equity, not buyout or services in kind).
primary activity is financial investing. Where there
are other participants such as angels, corporations, Angel, incubator and similar investments are consid-
and governments in a qualified and verified financ- ered pre-venture financing if the company has
ing round the entire amount of the round is included. received no prior qualifying venture capital invest-
ment and are not included in the MoneyTree results.
Qualifying transactions include cash investments by Angel, incubator and similar investments that are
these entities either directly or by participation in part of a qualifying venture capital round or follow a
various forms of private placement. All recipient qualifying venture capital round are included to the
companies are private, and may have been newly-cre- extent that such investments can be fully verified as
ated or spunout of existing companies. meeting all other criteria (e.g. cash for equity, not
buyout or services in kind).
The report excludes debt, buyouts, recapitalizations,
secondary purchases, IPOs, investments in public Direct investment by corporations (not through a ven-
companies such as PIPES (private investments in ture capital arm) is excluded unless (a) the investment
public entities), investments for which the proceeds is clearly demonstrated to be primarily a financial
are primarily intended for acquisition such as roll- investment rather than outsourced R&D or market
ups, change of ownership, and other forms of private development, (b) it is co-investment in an otherwise
equity that do not involve cash such as services-in- qualifying round, or (c) it follows a qualifying venture
kind and venture leasing. Investee companies must round in a company and meets all other criteria (e.g.
be domiciled in one of the 50 US states or DC even cash-for-equity, not buyout or services in kind).
if substantial portions of their activities are outside
the United States. Data is primarily obtained from a quarterly survey of
venture capital practitioners. Information is aug-
mented by other research techniques including other
Specific Methodology
public and private sources. All data is subject to ver-
The focus of the report is on cash received by the ification with the venture capital firms and/or the
company. Therefore, tranches not term sheets are the investee companies.
Thomson Reuters 71
Only professional independent venture capital firms,

institutional venture capital groups, and recognized
corporate venture capital groups are included in ven-
ture capital industry rankings.
Disclaimer
PricewaterhouseCoopers, the National Venture
Capital Association, and Thomson Reuters have
taken responsible steps to ensure that the information
contained in the MoneyTree Report has been
obtained from reliable sources. However, none of the
parties can warrant the ultimate validity of the data
obtained in this manner. Results are updated periodi-
cally. Therefore, all data is subject to change at any
time.
72 Thomson Reuters
Appendix C: MoneyTree Geographical Definitions
The Geographical Regions identified in the MoneyTree™ Report by PricewaterhouseCoopers and the National
Venture Capital Association based on data provided by Thomson Reuters and used in the 2009 NVCA Yearbook
are as follows:
Alaska/Hawaii/Puerto Rico: Alaska, Hawaii, and Puerto Rico
Colorado: The state of Colorado
DC/Metroplex: Washington, D.C., Virginia, West Virginia, and Maryland
LA/Orange County: Los Angeles, Ventura, Orange, and Riverside Counties (i.e., southern California, except
San Diego)
Midwest: Illinois, Missouri, Indiana, Kentucky, Ohio, Michigan, and western Pennsylvania
New England: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and parts of Connecticut
(excluding Fairfield county)
New York Metro: Metropolitan NY area, northern New Jersey, and Fairfield County, Connecticut
North Central: Minnesota, Iowa, Wisconsin, North Dakota, South Dakota, and Nebraska
Northwest: Washington, Oregon, Idaho, Montana, and Wyoming
Philadelphia Metro: Eastern Pennsylvania, southern New Jersey, and Delaware
Sacramento/Northern California: Northeastern California
San Diego: San Diego area
Silicon Valley: Northern California, bay area and coastline
South Central: Kansas, Oklahoma, Arkansas, and Louisiana
Southeast: Alabama, Florida, Georgia, Mississippi, Tennessee, South Carolina, and North Carolina
Southwest: Utah, Arizona, New Mexico, and Nevada
Texas: The state of Texas
Upstate New York: Northern New York state, except Metropolitan New York City area
Thomson Reuters 73
74 Thomson Reuters
Appendix D: Industry Codes (VEIC)
VEIC INDUSTRY DESCRIPTION VEIC INDUSTRY DESCRIPTION
1000 COMMUNICATIONS 1530 Network test, monitor and support

equipment
1100 Commercial Communications 1549 Other Data Communications
1110 Radio & TV Broadcasting Stations 1550 Internet Communications and
1120 CATV & Pay TV Systems Infrastructure NEC
1125 Cable Service Providers 1551 Internet Access Services and Service
1130 Radio & TV Broadcasting & Other Providers
Related Equipment 1552 Internet Multi-media services (fax,
1135 Services to Commercial phone, email, video, television)
Communications 1553 Internet backbone Infrastructure
1199 Other Commercial Communications 1559 Other Internet Communications
1200 Telephone Related 1560 E-Commerce Technology
1210 Long Distance Telephone Services 1561 Internet Security and Transactions
1215 Local Exchange Carriers (LEC) services
1220 Telephone Interconnect & Other 1562 E-Commerce Services
Equipment 1563 E-Commerce Enabling Software
1230 Telephone answering and/or 1569 Other E-Commerce
management systems, PBXs 1600 Satellite Microwave
1299 Other Telephone Related Communications
1300 Wireless Communications 1610 Satellite Services/Carriers/Operators
1310 Mobile Communications, Cellular, 1620 Satellite Ground (and other)
Pagers Equipment
1320 Wireless Communications Services 1630 Microwave Service Facilities
1325 Messaging Services 1640 Microwave & Satellite Components
1330 Wireless Communications 1699 Other Satellite & Microwave
Components 1700 Media and Entertainment
1399 Other Wireless Communications 1710 Entertainment
1400 Facsimile Transmission 1720 Publishing
1500 Data Communications 1800 Other Communications Related
1510 Local Area Networks (incl. 1810 Defense Communications
voice/data PBX systems) 1825 Communications Services
1515 Wide Area Networks 1899 Other Communications Products
1520 Data Communications Components (not yet classified)
1521 Communications Processors/
Network Management 2000 COMPUTER RELATED
1522 Protocol Converters & Emulators 2100 Computers and Hardware
1523 Modems and Multiplexers 2110 Mainframes & Scientific Computers
1524 Other Data Communication 2111 Mainframes
Components 2112 Scientific Computers and Super
1525 Switches/Hubs/Routers/Gateways/ Computers
ATM 2119 Other Mainframe and & Scientific
Computers
Thomson Reuters 75
2120 Mini & Micro Computers 2320 Medical/Health

2121 Fail Safe Computers 2321 Computer Related
2122 Mini Computers (small business) 2322 Communications Products/Services
2123 Personal Computers (microcomput- 2323 Education
ers/desktop) 2324 Reference
2124 Other Mini & Micro Computers 2325 Scientific
2125 Portable Computers (notebooks/lap- 2399 Other Integrated Systems and
tops) Solutions
2126 HandHeld Computing (PDA) 2500 Peripherals
2130 Optical computing 2510 Terminals
2140 Servers & Workstations 2511 Intelligent Terminals
2141 Servers 2512 Portable Terminals
2142 Web Servers 2513 Graphics Terminals
2143 Workstations 2519 Other Terminals
2144 Thin Client hardware 2520 Printers
2149 Other Servers & Workstations 2521 Laser Printers
2200 Computer Graphics & Digital Imaging 2522 Color Printers
2210 CAD/CAM, CAE, EDA Systems 2523 Inkjet Printers
2220 Graphic Systems 2524 Dot-Matrix printers
2230 Scanning Hardware 2529 Other Printers
2234 OCR (Optical Character Recognition) 2530 Data I/O Devices
2236 OBR (Optical Bar Recognition) 2531 Mouse input devices
2238 MICR (Magnetic Ink Character 2532 Touch Pad devices
Recognition) 2533 Pen based Computing Devising
2239 Other Scanning Hardware NEC 2539 Other Data I/O Devices
2250 Graphics Printers/Plotters 2540 Disk Related Memory Devices
2255 Graphics/Enhanced Video Cards 2541 Floppy Disks & Drives
2260 Other Graphics Peripherals 2542 Winchester Disks & Drives
2280 Multimedia Graphics NEC 2543 Optical Disks & Drives, CD-ROM, DVD
2290 Digital Imaging Hardware and 2546 Disk Drive Components
Equipment 2549 Other Disk Related
2295 Digital Imaging Services 2550 Tape Related Devices
2299 Other Computer Graphics and 2551 Magnetic Tapes
Digital Imaging 2552 Tape Heads & Drives
2300 Integrated Turnkey Systems and 2553 Continuous Tape Backup Systems
Solutions 2559 Other Tape Related Devices
2311 Business and Office 2560 Other Memory Devices and
2312 Consumer Peripheral Cards (exc. semiconduc-
2313 Retailing tors)
2315 Transportation 2561 PC or PMCIA Cards
2316 Finance/Insurance/Real Estate 2562 Memory Cards
2317 Agriculture 2563 Sound Cards
2318 Recreation/Entertainment 2564 Communication Cards
2319 Manufacturing/Industrial/ 2569 Other Memory Devices and
Construction Peripherals
76 Thomson Reuters
2009 NVCA Yearbook
2590 Other Peripherals (not yet classified) 2739 ERP Software

2600 Computer Services 2740 Recreational Software
2630 Time Sharing Services 2741 Scientific Software
2640 Computer Leasing & Rentals 2743 Agricultural Software
2650 Computer Training Services 2744 Transportation Software
2655 Backup and Disaster Recovery 2748 Other Industry Specific Software
2660 Data Processing, Analysis & Input 2749 Other Applications Software
Services 2750 Artificial Intelligence Related
2665 Computer Repair Services Software
2670 Computerized Billing & Accounting 2751 Expert Systems
Services 2752 Natural Language
2675 Computer Security Services 2753 Computer-Aided Instruction
2691 Data Communications Systems 2754 Artificial Intel Programming Aids
Management 2755 Other Artificial Intelligence Related
2699 Other Computer Services 2760 Software Services
2700 Computer Software 2761 Programming Services/Systems
2710 Systems Software Engineering
2711 Database & File Management 2762 Software Consulting Services
2712 Operating Systems & Utilities 2763 Software Distribution/Clearinghouse
2713 Program Development Tools/ 2765 Internet/Web design and program-
Languages (Including CASE/engi- ming Services
neering) 2766 Internet graphics services
2716 Graphics Software and Digital 2768 Other Internet Software Services
Imaging Software 2769 Other Software Services
2719 Other Systems Software NEC 2780 Internet Systems Software
2720 Communications/Networking 2781 Site Development and
Software Administration Software
2721 Security/firewalls/encryption 2782 Internet Search software and engines
Software 2783 WebServer Software
2722 Email software 2784 JAVA/ActiveX
2723 GroupWare 2785 Web Authoring/Development
2724 Multimedia software (video, fax, 2798 Other Internet Systems Software
television) 2799 Other Software Related
2729 Other Communications/Networking 2800 Internet and Online Related NEC
Software 2810 E-Commerce — Selling Products via
2730 Applications Software the Internet
2731 Business and Office Software 2811 Business and Office
2732 Home Use Software 2812 Consumer
2733 Educational Software 2813 Retailing
2734 Manufacturing/Industrial Software 2814 Publishing
2735 Medical/Health Software 2815 Transportation
2736 Banks/Financial Institutions 2816 Finance/Insurance/Real Estate
Software 2817 Agriculture
2737 Retailing software 2818 Recreation/Entertainment
2738 Integrated Software 2819 Manufacturing/Industrial/Construction
Thomson Reuters 77
2820 Medical/Health 2864 Reference

2821 Computer Related 2865 Scientific
2822 Communications Products/Services 2866 Legal
2823 Education 2869 Other Information via the Internet
2824 Reference 2870 Internet Services
2825 Scientific 2871 Internet Marketing Services
2826 Legal 2873 Data warehousing Services
2829 Other Ecommerce selling Products 2879 Other Internet Services and Online
2830 Ecommerce — Selling Services via databases
the Internet 2900 Other Computer Related
2831 Business and Office 2910 Voice Synthesis
2832 Consumer 2911 Voice Recognition
2833 Retailing 2990 Other Computer Related (not yet
2834 Publishing classified)
2835 Transportation
3000 OTHER ELECTRONICS RELATED
2836 Finance/Insurance/Real Estate
2837 Agriculture 3100 Electronic Components
2838 Recreation/Entertainment 3110 Semiconductors
2839 Manufacturing/Industrial/ 3111 Customized Semiconductors
Construction 3112 Standard Semiconductors
2840 Medical/Health 3113 Other Semiconductors
2841 Computer Related 3114 Flash Memory
2842 Communications Products/Services 3115 Optoelectronics semiconductors
2843 Education (incl. laser diodes)
2844 Reference 3119 Other Semiconductors
2845 Scientific 3120 Microprocessors Controllers and
2846 Legal Sensors
2847 Recreation/Entertainment Services 3132 Controllers Sensors
2849 Other E-Commerce selling Services 3139 Other Controllers/Sensors
2850 Providing Information via the 3140 Circuit Boards
Internet (non Ecommerce) 3160 Display Panels
2851 Business and Office 3170 Other Electronics Related (including
2852 Consumer keyboards)
2853 Retailing 3200 Batteries
2854 Publishing 3300 Power Supplies
2855 Transportation 3310 Uninterruptible Power Supply (UPS)
2856 Finance/Insurance/Real Estate 3400 Electronics Related Equipment
2857 Agriculture 3410 Semiconductor Fabrication Equip.
2858 Recreation/Entertainment Wafer Products
2859 Manufacturing/Industrial/ 3420 Component Testing Equipment
Construction 3499 Other Electronics Related
2860 Medical/Health Equipment
2861 Computer Related 3500 Laser Related
2862 Communications Products/Services 3510 Laser Components (incl. beamsplitters,
2863 Education excimers) 3599Other Laser Related
78 Thomson Reuters
2009 NVCA Yearbook
3600 Fiber Optics 4121 Therapeutic Monoclonal Antibodies

3610 Fiber Optic Cables 4122 Immune Response Effectors (inter-
3620 Fiber Optic Couplers and ferons, vaccines)
Connectors 4123 Other Therapeutic Proteins (incl.
3630 Fiber Optic Communication hormones & TPA)
Systems (see 1510) 4129 Other Therapeutic Biotechnology
3699 Other Fiber Optics Genetic Engineering
3700 Analytical & Scientific 4200 Agricultural/Animal Biotechnology
Instrumentation 4210 Genetically Engineered Plants
3710 Chromatographs & Related 4220 Genetic Eng Microorganisms to
Laboratory Equipment raise plant yield
3720 Other Measuring Devices 4230 Other Plant Related Biotechnology
3799 Other Analytical & Scientific 4240 Biotech Related Animal Health &
Instrumentation Nutrition Products
3800 Other Electronics Related 4250 Genetically Engineered Animals
3810 Military Electronics (excluding com- 4290 Other Animal Related Biotechnology
munications) 4300 Industrial Biotechnology
3820 Copiers 4310 Biochemical Products
3830 Calculators 4311 Biotech Related Fine Chemicals
3835 Security/Alarm Sensors/Detectors (NOT Pharmaceuticals.)
3899 Other Electronics Related 4312 Biotech Related Commodity
3900 Optoelectronics Chemicals
3910 Photo diodes 4319 Other Biochemical Products
3920 Optoelectronics fabrication equip- 4320 Biotech Processes for Food
ment Industrial Applications
3930 Lenses with Optoelectronics appli- 4321 Biotech Related Food Enzymes and
cations Cultures
3940 Advanced photographic processes 4322 Biotech Related Food Diagnostics
(incl. lithographs) 4329 Other Biotech Processes for Food
3989 Other Optoelectronics Related Industrial Products
3990 Other Electronics and 4330 Biotech Processes for Pollution/Toxic
Semiconductor Related Waste Control
4340 Biotech Processes for Enhanced Oil
4000 BIOTECHNOLOGY
Recovery/Mining
4100 Human Biotechnology 4390 Other Industrial Biotechnology
4110 Medical Diagnostic Biotechnology 4400 Biosensors
Products 4410 Biosensors for Medical Diagnostic
4111 In Vitro Monoclonal Antibody Applications
Diagnostics 4420 Biosensors for Industrial
4112 In Vivo Monoclonal Antibody Applications
Diagnostics/Imaging 4490 Other Biosensors
4113 DNA/RNA Probes 4500 Biotech Related Research &
4119 Other Medical Diagnostic Production Equipment
Biotechnology 4510 Biotech Related Analytical
4120 Therapeutic Biotechnology Products Instruments & Apparatus
Thomson Reuters 79
4520 Biotech Related Production 5414 Dependent Care (child care, assisted
Equipment living)
4525 Biotech laser and optronic applications 5420 Managed Care (PPO and other)
4599 Other Biotech Research & 5429 Other Healthcare Facilities
Production Equipment 5430 Ambulance and Emergency
4600 Biotech Related Research & Other Services
Services 5440 Hospital/Institutional Management
4610 Pure & Contract Biotechnology and Medical Office Management
Research 5499 Other Medical/Health Services NEC
4699 Other Biotechnology Services 5500 Pharmaceuticals
4900 Other Biotechnology Related 5510 Pharmaceutical Research
5520 Pharmaceutical Production
5000 MEDICAL/HEALTH RELATED
5530 Pharmaceutical Services
5100 Medical Diagnostics 5540 Pharmaceutical Equipment
5110 Diagnostic Services 5550 Pharmaceutical Drugs/Fine
5120 Medical Imaging Chemicals (non-biotech)
5121 X-Rays 5599 Other Pharmaceuticals
5122 CAT Scanning
6000 ENERGY RELATED
5123 Ultra Sound Imaging
5124 Nuclear Imaging 6100 Oil & Gas Exploration and
5125 Other Medical Imaging Production
5130 Diagnostic Test Products & 6200 Oil & Gas Exploration Services
Equipment 6300 Oil & Gas Drilling & Support
5140 Other Medical Diagnostics Services
5200 Medical Therapeutics 6400 Oil & Gas Drilling, Exploration &
5210 Therapeutic Services Extraction Equipment
5220 Surgical Instrumentation & 6410 Oil & Gas Drilling & Extraction
Equipment Equipment
5221 Surgical lasers (including laser 6420 Oil & Gas Drilling Instrumentation
delivery fibers) 6430 Oil & Gas Exploration Equip
5230 Pacemakers & Artificial Organs Instrumentation
5240 Drug Delivery & Other Equipment 6499 Other Oil & Gas (NEC)
5299 Other Therapeutic (including defib- 6500 Alternative Energy
rillators) 6510 Solar Energy
5300 Medical/Health Products 6511 Photovoltaic Solar
5310 Disposable Medical Products 6512 Other Solar
5340 Handicap Aids 6520 Wind Energy
5350 Medical Monitoring Equipment 6530 Geothermal Energy
5380 Health related optics (including 6540 Energy Co-Generation
glasses, lenses) 6599 Other Alternative Energy (inc.
5399 Other Medical/Health Products (NEC) nuclear energy)
5400 Medical Health Services 6600 Enhanced Oil Recovery/Heavy
5410 Hospitals/Clinics/Primary Care Oil/Shale
5412 Long Term Care/Home Care/Elder 6700 Coal Related
Care 6710 Coal Mining
80 Thomson Reuters
2009 NVCA Yearbook
6720 Coal Related Equipment 7399 Other Food and Beverages

6799 Other Coal Related 7400 Consumer Products
6800 Energy Conservation Related 7410 Clothing, Shoes & Accessories (incl.
6900 Other Energy Related jewelry)
7420 Health & Beauty Aids
7000 CONSUMER RELATED
7430 Home Furnishings and Housewares
7100 Leisure & Recreational Products and 7431 Housewares
Services 7432 Furnishings & Furniture
7110 Movies, Movie Products & Theater 7433 Garden and Horticultural Products
Operations 7434 Other Home Furnishings (NEC)
7120 Amusement & Recreational 7450 Mobile Homes
Facilities 7499 Other Consumer Products
7125 Casinos and Gaming 7500 Consumer Services
7130 Toys & Electronic Games 7510 Fast Food Restaurants
7140 Sporting Goods, Hobby Equipment 7520 Other Restaurants
& Athletic Clothes 7530 Hotels and Resorts
7150 Sports Facilities (Gyms and Clubs, 7540 Auto Repair Shops
Golf Courses) 7550 Education & Educational Products
7155 Sports and Materials
7160 TVs, Radio, Stereo Equipment & 7560 Travel Agencies and Services
Consumer Electronics 7599 Other Consumer Services
7170 Music, Records, Production and 7999 Other Consumer Related (not yet
Instruments classified)
7199 Other Leisure/Recreational Products
8000 INDUSTRIAL PRODUCTS
and Services
7200 Retailing Related 8100 Chemical & Materials
7210 Drug Stores 8110 Plastic Fabricators
7220 Clothing and Shoe Stores 8111 Homogeneous Injections/Extrusions
7230 Discount Stores 8112 Non-Homogeneous Injections/
7240 Computer Stores Extrusions
7245 Retail Publishing (Books, Magazines, 8113 Fiber-Reinforced (Plastic)
newsletters) Composites
7246 Office Supply Stores 8114 Other Fabricated Plastics
7247 Music and Electronics Stores 8115 Processor for Working with Plastics
7248 Specialty Department and Retail 8119 Other Plastic Fabrication
Stores 8120 Coating & Adhesive Manufacturers
7250 Franchises (NEC) 8121 Optical coatings
7299 Other Retailing Related 8129 Other Coating and Adhesive
7300 Food and Beverages 8130 Membrane & Membrane-Based
7310 Wine & Liquors Products
7320 Health Food 8140 Specialty/Performance Materials
7330 Soft Drinks & Bottling Plants 8141 Semiconductor Material(e.g.. silicon
7340 Food Supplements/Vitamins wafers)
7350 General Food Products/Grocery/ 8142 III/V Semiconductor Mater(e.g. galli-
Convenience Stores um arsenide)
Thomson Reuters 81
8143 Specialty Metal(s) incl. coatings, 8399 Other Industrial Equipment &
alloys, clad Machinery
8144 Ceramics 8500 Pollution and Recycling Related
8145 Lubricant & Functional Fluids 8510 Air Filter & Air Purification &
8146 Other Specialty Materials Monitoring Equip.
8147 Specialty material for laser genera- 8520 Chemical and Solid Material
tion Recycling
8148 Superconducting materials 8530 Water Treatment Equipment & Waste
8149 Other Specialty/Performance Disposal Systems
Materials 8599 Other Pollution & Recycling Related
8150 Commodity Chemical & Polymers 8600 Other Industrial Product (not yet
8151 Industrial Chemicals classified)
8152 Polymer (Plastics) Materials 8700 Industrial Services
8160 Specialty/Performance Chemicals
9000 OTHER SERVICES AND
8161 Electronic Chemicals
MANUFACTURING
8162 Other Industrial Chemicals
8170 Agricultural Chemicals 9100 Transportation
8189 Other Commodity Chemical and 9110 Airlines and aviation related9120
Polymers Trucking
8199 Other Chemical & Material(not yet 9125 Railway Related
classified) 9130 Leasing of Railcars, Buses and Cars
8200 Industrial Automation 9140 Mail and Package Shipment
8210 Energy Management 9150 Motor Vehicles, Transportation
8220 Industrial Measurement & Sensing Equipment & Parts
Equipment 9160 Airfield and Other Transportation
8221 Laser related measuring & sensing Services
equipment 9180 Advanced Aircraft/Aerospace
8230 Process Control Equipment & 9199 Other Transportation
Systems 9200 Finance, Insurance, Real Estate
8240 Robotics 9210 Insurance Related
8250 Machine Vision Software & Systems 9220 Real Estate
8260 Numeric & Computerized Control of 9230 Banking
Machine Tools 9235 Non Bank Credit
8299 Other Industrial Automation (NEC) 9240 Securities & Commodities Brokers
8300 Industrial Equipment and Machinery and Services
8310 Machine Tools, Other Metalworking 9250 Investment Groups
Equipment 9254 Venture Capital and Private Equity
8320 Hoists, Crane & Conveyors Investors
8330 Pumps, Ball Bearings, Compressors, 9255 Financial Transaction Services
Industrial Hardware 9299 Other Financial, Insurance & Real
8340 Mining Machinery Estate
8350 Industrial Truck and Tractors 9300 Business Services
8360 Other Industrial Process Machinery 9310 Engineering Services
8370 Power Transmission Equipment 9320 Advertising and Public Relations
(generator & motors) 9330 Leasing (not elsewhere classified)
82 Thomson Reuters
2009 NVCA Yearbook
9340 Distributors, Importers and 9700 Construction and Building Products

Wholesalers 9710 Construction
9350 Consulting Services 9720 Manufacturer of Building Products
9360 Media Related Services 9730 Manufacturer of Pre-Fabricated
9399 Other Services (not elsewhere clas- Buildings & Systems
sified) 9740 Distribution of Building Products &
9400 Manufacturing Systems
9410 Business Products and Supplies 9750 Construction Services
9415 Office Automation Equipment 9799 Other Construction & Building
9420 Office Furniture & Other Products Related
Professional Furnishings 9800 Utilities
9430 Textiles (Synthetic & Natural) 9810 Electric Companies
9440 Hardware, Plumbing Supplies 9820 Water, Sewage, Chem & Solid Waste
9450 Books, Cards and Other Publishings Treatment Plants
9460 Packaging Products & Systems 9830 Gas Transmission & Distribution
9470 Printing & Binding 9899 Other Utilities & Related Firms
9499 Other Manufacturing (not elsewhere 9900 Other Products NEC
classified) 9910 Conglomerates
9500 Agriculture, Forestry, Fishing 9912 Socially Responsible
9510 Agriculture related 9914 Environmentally Responsible
9520 Forestry related 9915 Women-Owned
9530 Fishing related 9918 Minority-Owned
9540 Animal husbandry 9920 Holding Companies
9599 Other Agriculture, Forestry, Fishing 9999 Other2008 NVCA Yearbook
9600 Mining (non-energy related)
Thomson Reuters 83
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84 Thomson Reuters
Appendix E: Industry Sector VEIC Ranges
Industry analysis is based upon the following industry sectors: Biotechnology, Business Products and Services,
Computers and Peripherals, Consumer Products and Services, Computer Software,
Electronics/Instrumentation, Financial Services, Healthcare Services, Industrial/Energy, IT Services, Media
and Entertainment, Medical Devices and Equipment, Networking and Equipment, Retailing/Distribution,
Semiconductors, Telecommunications and Other. These sectors are based on the 17 industry classifications of
the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on
data from Thomson Reuters.
Biotechnology 4000, 4100, 4110, 4111, 4112, 4113, 4119, 4120, 4121, 4122, 4123, 4129, 4130, 4200, 4210,
4220, 4230, 4240, 4250, 4290, 4300, 4310, 4311, 4312, 4319, 4320, 4321, 4322, 4329, 4330, 4340, 4390,
4400, 4410, 4420, 4490, 4500, 4510, 4520, 4525, 4599, 4600, 4610, 4699, 4900, 5500, 5510, 5520, 5530,
5540, 5550, 5599
Business Products and Services 2811, 2824, 2831, 2844, 9300, 9310, 9320, 9330, 9340, 9350, 9360, 9399
Computers and Peripherals 2000, 2100, 2110, 2111, 2112, 2119, 2120, 2121, 2122, 2123, 2124, 2125, 2126,
2130, 2140, 2141, 2142, 2143, 2144, 2149, 2220, 2230, 2234, 2236, 2238, 2239, 2250, 2255, 2260, 2280,
2290, 2295, 2299, 2500, 2510, 2511, 2512, 2513, 2519, 2520, 2521, 2522, 2523, 2524, 2529, 2530, 2531,
2532, 2533, 2539, 2540, 2541, 2542, 2543, 2546, 2549, 2550, 2551, 2552, 2553, 2559, 2560, 2561, 2562
2563 2564 2569 2590 3170
Consumer Products and Services 2812, 2832, 7000, 7300, 7310, 7320, 7330, 7340, 7399, 7400, 7410, 7420,
7430, 7431, 7432, 7433, 7434, 7450, 7499, 7500, 7510, 7520, 7530, 7540, 7550, 7560, 7599, 7999
Computer Software 1563, 2200, 2210, 2300, 2311, 2312, 2313, 2315, 2316, 2317, 2318, 2319, 2320, 2321,
2322, 2323, 2324, 2325, 2399, 2700, 2710, 2711, 2712, 2713, 2716, 2719, 2720, 2721, 2722, 2723, 2724,
2729, 2730, 2731, 2732, 2733, 2734, 2735, 2736, 2737, 2738, 2739, 2740, 2741, 2743, 2744, 2748, 2749,
2750, 2751, 2752, 2753, 2754, 2755, 2780, 2781, 2782, 2783, 2784, 2785, 2798, 2799, 2900, 2910, 2911,
2990, 8250
Electronics/Instrumentation 3000, 3100, 3160, 3200, 3300, 3310, 3400, 3420, 3499, 3500, 3510, 3599, 3700,
3710, 3720, 3799, 3800, 3810, 3820, 3830, 3835, 3899
Financial Services 2816, 2836, 9200, 9210, 9220, 9230, 9235, 9240, 9250, 9254, 9255, 9299
Healthcare Services 2820, 2840, 5400, 5410, 5412, 5414, 5420, 5429, 5430, 5440, 5499
Industrial/Energy 2819, 2837, 2839, 6000, 6100, 6200, 6300, 6400, 6410, 6420, 6430, 6499, 6500, 6510,
6511, 6512, 6520, 6530, 6540, 6599, 6600, 6700, 6710, 6720, 6799, 6800, 6900, 8000, 8100, 8110, 8111,
8112, 8113, 8114, 8115, 8119, 8120, 8121, 8129, 8130, 8140, 8143, 8144, 8145, 8146, 8147, 8148, 8149,
8150, 8151, 8152, 8160, 8161, 8162, 8170, 8189, 8199, 8200, 8210, 8220, 8221, 8230, 8240, 8260, 8299,
8300, 8310, 8320, 8330, 8340, 8350, 8360, 8370, 8399, 8500, 8510, 8520, 8530, 8599, 8600, 8700, 9000,
9100, 9110, 9120, 9125, 9130, 9140, 9150, 9160, 9180, 9199, 9400, 9410, 9415, 9420, 9430, 9440, 9460,
9470, 9499, 9500, 9510, 9520, 9530, 9540, 9599, 9600, 9700, 9710, 9720, 9730, 9740, 9750, 9799, 9800,
Thomson Reuters 85
9810, 9820, 9830, 9899
IT Services 1560, 1561, 1562, 1569, 2600, 2630, 2640, 2650, 2655, 2660, 2665, 2670, 2675, 2691, 2699,
2760, 2761, 2762, 2763, 2765, 2766, 2768, 2769, 2800, 2870, 2871, 2873, 2879
Media and Entertainment 1110, 1120, 1125, 1130, 1135, 1199, 1700, 1720, 2814, 2818, 2834, 2838, 2843,
2848, 2850, 2851, 2852, 2853, 2854, 2855, 2856, 2857, 2858, 2859, 2860, 2861, 2862, 2863, 2864, 2865,
2866, 2869, 7100, 7110, 7120, 7125, 7130, 7140, 7150, 7155, 7160, 7170, 7199, 9450
Medical Devices and Equipment 5000, 5100, 5110, 5120, 5121, 5122, 5123, 5124, 5125, 5130, 5140, 5200,
5210, 5220, 5221, 5230, 5240, 5299, 5300, 5310, 5340, 5350, 5380, 5399
Networking and Equipment 1400, 1500, 1510, 1515, 1520, 1521, 1522, 1523, 1524, 1525, 1530, 1549, 3600,
3610, 3620, 3630, 3699
Retailing/Distribution 2810, 2813, 2815, 2817, 2821, 2823, 2825, 2826, 2829, 2830, 2833, 2835, 2841,
2845, 2846, 2849, 7200, 7210, 7220, 7230, 7240, 7245, 7246, 7247, 7248, 7250, 7299, 7350
Semiconductors 3110, 3111, 3112, 3114, 3115, 3119, 3120, 3130, 3132, 3135, 3139, 3140, 3410, 3900,
3910, 3920, 3930, 3940, 3989, 3990, 8141, 8142
Telecommunications 1000, 1100, 1200, 1210, 1215, 1220, 1230, 1299, 1300, 1310, 1320, 1325, 1330, 1399,
1550, 1551, 1552, 1553, 1559, 1600, 1610, 1620, 1630, 1640, 1699, 1710, 1800, 1810, 1825, 1899, 2822,
2842
Other 9900, 9910, 9912, 9914, 9915, 9918, 9920, 9999
86 Thomson Reuters
Appendix F: Stage Definitions
SEED/START-UP STAGE FINANCING
This stage is a relatively small amount of capital provided to an inventor or entrepreneur to prove a concept.
This involves product development and market research as well as building a management team and develop-
ing a business plan, if the initial steps are successful. This is a pre-marketing stage.
EARLY STAGE FINANCING

This stage provides financing to companies completing development where products are mostly in testing or
pilot production. In some cases, product may have just been made commercially available. Companies may be
in the process of organizing or they may already be in business for three years or less. Usually such firms will
have made market studies, assembled the key management, developed a business plan, and are ready or have
already started conducting business.
EXPANSION STAGE FINANCING

This stage involves working capital for the initial expansion of a company that is producing and shipping and
has growing accounts receivables and inventories. It may or may not be showing a profit. Some of the uses of
capital may include further plant expansion, marketing, working capital, or development of an improved prod-
uct. More institutional investors are more likely to be included along with initial investors from previous
rounds. The venture capitalist’s role in this stage evolves from a supportive role to a more strategic role.
LATER STAGE
Capital in this stage is provided for companies that have reached a fairly stable growth rate; that is, not grow-
ing as fast as the rates attained in the expansion stages. Again, these companies may or may not be profitable,
but are more likely to be than in previous stages of development. Other financial characteristics of these com-
panies include positive cash flow. This also includes companies considering IPO.
ACQUISITION FINANCING
An acquisition of 49% stake or less. Firm acquires minority shares of a company. Thomson Reuters includes
these deals in standard venture capital disbursement data when calculating venture capital disbursements
where the funding is by a venture capital firm.
ACQUISITION FOR EXPANSION

Funds provided to a company to finance its acquisition of other companies or assets. A consolidator of com-
panies in specific industries.
MANAGEMENT/LEVERAGED BUYOUT
These funds enable an operating management group to acquire a product line or business, at any stage of devel-
opment, from either a public or private company. Often these companies are closely held or family owned.
Management/leveraged buyouts usually involve revitalizing an operation, with entrepreneurial management
acquiring a significant equity interest.
Thomson Reuters 87
RECAP/ TURNAROUND
Financing provided to a company at a time of operational or financial difficulty with the intention of improv-
ing the company’s performance.
SECONDARY BUYOUT
A buyout deal on top of a buyout deal. Secondary buyouts are distinguished when the initial firm investor is
different from the current investing firm.
88 Thomson Reuters
Appendix G: Data Sources and Resources
For this publication, the main source for data was ThomsonONE.com (VentureXpert), the online research data-
base of Thomson Reuters.ThomsonONE.com is endorsed by the NVCA as the official United States venture cap-
ital activity database. By using data gathered through the MoneyTree™ Report by PricewaterhouseCoopers
and the National Venture Capital Association based on data from Thomson Reuters, ThomsonONE.com con-
tains investment, fund raising, portfolio company information, Deals Insight and Reuters News along with other
statistical data. Other information contained in this database is gathered through a variety of public and pro-
prietary sources including, but not limited to, the Thomson Reuters performance surveys. This publication is
produced on an annual basis primarily using year-end data; however, the underlying databases can be
accessed online to provide the most up-to-date and comprehensive global private equity statistics and profile
information available.
MoneyTree™ Data Timeliness of Data

PricewaterhouseCoopers, Thomson Reuters, and the Many of the tables and charts presented in this report
National Venture Capital Association joined forces in can be produced by using ThomsonONE.com. One
December 2001 to produce what was then known as of advantages of using ThomsonONE.com is that the
the PricewaterhouseCoopers/Thomson Venture reader can customize a report to better fit the needs
Economics/National Venture Capital Association of what they are seeking. In addition, because the
MoneyTree™ Survey. Conducted on a quarterly online database is continuously updated, the informa-
basis, the designated PwC/NVCA MoneyTree tion available is more up-to-date than what can be
Report allows Thomson Reuters unparalleled access presented in this report. Readers should note that
to primary sources of information from general part- timely industry information on details concerning
ners. venture capital investment is available from other
sources such as PricewaterhouseCoopers at
www.pwcmoneytree.com, the ‘Industry Stats &
Sources of Data News’ section of the NVCA website, www.nvca.org,
The online database of Thomson Reuters is and the ‘Financial Press Releases’ segment of the pri-
ThomsonONE.com (VentureXpert), the foremost vate equity section of Thomson Reuters found at
information provider for private equity professionals http://f inancial.thomsonreuters.com/thom-
worldwide. The private equity portion of Thomson sononecom_pevc. Also, additional information on
Reuters offers an incomparable range of products data such as fund raising and fund performance are
from directories to conferences, journals, newslet- available on both the NVCA website and the private
ters, research reports, and the ThomsonONE.com equity portion of the Thomson Reuters website.
Private Equity database. As of February 2009, the
database included over 77,400 portfolio companies,
250,900 executives, 13,580 private equity firms, Verification and Updating of Data
28,700 private equity funds, and 138,800 financing Collectively, PricewaterhouseCoopers, Thomson
rounds. By establishing working relationships with Reuters, and the NVCA have the utmost commitment
private equity and venture capital firms, institutional to provide an accurate historical record of venture
investors, and industry associations such as the capital activity. On a daily basis, the database is con-
NVCA, PricewaterhouseCoopers and other such stantly analyzed for consistency, crosschecked with
entities around the world, Thomson Reuters has been other data sources, and updated as new information
able to gather, on a timely basis, complete and accu- comes in. On a quarterly basis, we have worked with
rate information. many venture firms to ensure that that their current
and past data is correct. Primarily for this reason, the
private equity news releases of Thomson Reuters will
often restate statistics from prior news releases. With
Thomson Reuters 89
the availability of the online data access, users are • Plan your companies’ exits with data on both ven-
encouraged to always use the most current numbers ture-backed IPOs and mergers and acquisitions
even regarding historical activity so as to maintain • Aid in recruiting talented executives from other
accuracy and comparability. venture-backed companies
• Quickly spot venture-backed companies in com-
petition with your own portfolio companies
Reporting Functionality of • Create industry analyses to benchmark both per-
ThomsonONE.com formance and portfolio investments
Users can access information in terms of profiles on • Find other venture capitalists likely to support fol-
private equity companies, funds, firms, executives, low-on rounds
IPOs, and limited partners. In addition, users can • Provide clarity to investment decisions by compar-
access the analytics portion of the database, which ing them to current market conditions
contains investment, valuation, IPO analytic, merger • Compile valuation reports for comparable portfo-
analytic, fund performance, fund raising, and fund lio companies
statistic information along with venture capital infor- • Identify prospective investors and their investment
mation such as aggregate fund raising, investments, histories
and IPOs broken out into state and nation profiles. • Benchmark valuations among recent transactions
and obtain valuation comparables
• Analyze investment trends by industry
Comprehensiveness of
• Utilize returns information to limited partners
ThomsonONE.com using appropriate benchmarks
Both the breadth and depth of ThomsonONE.com • Tailor your pitch to investor focus size and limited
can perhaps best be shown in that it, among other partner type
types of information, the user can find the answers to
the following questions:
Reporting Functionality of LPXpert
• What is the performance at quarter end for private Another database is available to users: LPXpert, an
equity funds that were formed from 1998 to 2008? online portfolio monitoring system that allows insti-
• Which venture firms are most active in funding tutional investors to analyze their portfolio activity in
online financial services companies in the Ohio both a cost-effective and timely manner. Over 100
Valley? different types of reports can be produced detailing
• How much money was raised by each fund stage firm, fund, portfolio company, executive, IPO pro-
in 2008? files and fund performance analysis. A description of
• What was a particular venture-backed IPO’s one- the features provided include portfolio highlights that
year return at the end of 2008? show changes in portfolio activity between reporting
• As of December 2008, was the 10-year return to periods. These changes can include the number of
small buyout funds larger than that of large buyout funds invested in, committed capital, the amount of
funds? capital called, and percent overlap of investments, a
• How much money was committed to mezzanine particularly valuable tool for large institutional
funds from 1997 to 2008? investors investing in various funds.
• How much money was invested in the venture cap-
ital industry from 1987 to 2008?
• In 2008, how much money was invested at each Comprehensiveness of Data of LPXpert
development stage in Research Triangle The extent to how comprehensive LPXpert is can be
Pharmaceutical companies? shown by providing the following examples of the
types of queries that could be researched using this
In addition, there are also advantages of using the product:
database for a general partner as well. Although this
is not an inclusive list, utilizing the database by gen- • What other funds have co-invested alongside the
eral partners can be helpful to them for among the funds I have invested in?
following reasons: • What are the other funds managed by the firms I
90 Thomson Reuters
2009 NVCA Yearbook
have invested with, but that I am not currently 800-782-5555. For information on NVCA member-
invested in? ship, which can include a free trial, certain free
• How have my funds performed over the last 10 reports for participating members, and discounts on
years ending December 31, 2008? an annual subscription, please contact Janice
• Of the amount that I have invested in my portfolio Mawson at the NVCA. You may contact her online
of funds, what is the industry distribution by per- through the link on the member benefits section of
centage? the NVCA website or at 703-524-2549. For informa-
• Of the funds I have invested in, how has the tion on services PricewaterhouseCoopers provides
amount of dollars invested changed between for venture capital firms as well as emerging compa-
2008 NVCA Yearbook

reporting periods? nies, please visit their website at www.pwc-
moneytree.com or contact them at 1-877-PwC-TICE.
Accessing ThomsonONE.com, LPXpert,

and Other Services
For more information on ThomsonONE.com or
LPXpert, please visit http://financial.thomson-
reuters.com/thomsononecom_pevc or by phone at 1-
Thomson Reuters 91
92 Thomson Reuters
Appendix H: Portfolio Company
Valuation Guidelines
In the United States, a venture capital fund is usually organized as a limited partnership. The institutional
investors providing capital to a fund typically become limited partners (LPs). The venture firm becomes a gen-
eral partner (GP) in the limited partnership. In most of the limited partnership agreements defining GP-LP
relationship, the GPs are required to provide financial reports quarterly (unaudited) and annually (audited)
prepared according to United States Generally Accepted Accounting Principles (“GAAP”). GAAP generally
requires the use of investment company accounting which mandates that a fair value to be assigned to the indi-
vidual portfolio companies. This is consistent with the LPs need for fair values of their investments as well as
3rd party or regulatory requirements, e.g., ERISA-regulation.
Guidelines fall into two categories. The first is port- the life of a typical venture fund is at least 10 years,
folio performance presentation formats, calculations, longer in the life sciences arena. During that period
and disclosure. An example of the former is the the venture capital fund reports progress to the limit-
Private Equity Provisions of the Global Investment ed partners. In many cases, this means quarterly port-
Performance Standards (GIPS). This was developed folio updates and a complete audited annual financial
by the CFA Institute. While many of the specifica- statement. For a typical venture fund, very little
tions and terminology line up with current practice in money is paid out in the first four or five years. Also,
the United States, the NVCA has not endorsed or while every portfolio company receives funding with
otherwise commented on these standards. Neither high expectations, it can take several years to deter-
NVCA nor Thomson Financial has determined how mine if a particular company is a likely winner.
widespread the adoption of those standards is or will Therefore, understanding progress in the portfolio
likely be. This document and accompanying guid- requires some estimate of the success of the investee
ance can be currently found at http://www.cfainsti- companies by the venture capital or private equity
tute.org/centre/codes/gips/. firm. While many investors and fund managers agree
that financial measurements mean little for the first
Much more attention is being paid to the other cat- three or so years of a fund, after that the fund wants
egory: portfolio company valuation guidelines. to communicate progress to the investors. This is
The chronology and sections below refer to this where specific valuation rules and processes become
category. Suffice it to say for now that portfolio important. The agreed valuation procedures for indi-
valuation guidelines developed by the Private vidual portfolio companies become the basis for
Equity Industry Guidelines Group (PEIGG, progress assessment as the fund matures and ulti-
www.peigg.org/home.html > Valuations), most mately distributes cash to the investors.
recently revised in March 2007, are the most com-
monly referred to in the US. An unrelated So while portfolio company valuations are more of
European consortium has created “international” an art than a science, especially for pre-revenue or
guidelines which they intend to conform to IASB even pre-EBITDA companies, most limited partner
rules. That version has received little attention in agreements (LPAs) establishing a venture capital
the US. fund require the venture firm to provide quarterly
and annual financial statements using Generally
Accepted Accounting Principles (GAAP). GAAP
Why Valuation Guidelines Matter
requires fair value measurement for portfolio posi-
What ultimately matters to the investors and private tions. Therefore, most GPs must issue financial state-
equity practitioners is the cash which has been dis- ments using fair value.
tributed to the investors during the life of the fund
compared with the original money put in. However,
Thomson Reuters 93
The Evolution of Valuation Guidelines: March/April 2004 – The Institutional Limited

1989 to 2008 Partners Association (ILPA) hails NVCA support as
welcome support – especially as it relates to the GP
This section reviews the various efforts to create and LPs mutually agreeing to the valuation process.
comprehensive portfolio company valuation guide- PEIGG also hails the NVCA support.
lines for US private equity.
July 2004 – After consulting quietly with various
1989-1990 – A group of investors, private equity industry groups, PEIGG issues guidance on contro-
fund managers, and fund-of-fund managers formed a versial paragraph 30 which was the most discussed
group to develop a set of portfolio company valua- and debated provision in the guidelines.
tion guidelines. Contrary to a very persistent rumor,
the NVCA did not endorse, adopt, bless, publish, or September 2004 – Based on input from ILPA and
otherwise opine on the guidelines. others, PEIGG agrees to minor wording changes in
two paragraphs. This becomes PEIGG guidelines
Decade of the 1990s – Two noteworthy developments version 2. These two wording changes were consis-
occurred in the 1990s. Despite no endorsement by the tent with, and in part inspired by, language the
NVCA these guidelines became accepted practice by NVCA board used in its March 2004 statement of
much of the US industry, especially in the venture support.
capital side of private equity. These guidelines were
referred to by many as being issued by the NVCA but October 2004 – ILPA endorses the PEIGG guide-
in fact they were not. The second development is lines.
international venture associations creating localized
guidelines based heavily on these guidelines. These December 2004 – As most fund accounting year’s
were created in Europe and other international end, GPs prepare for their first audits since the effec-
regions. In fact, by 2005, there had been multiple iter- tive date of AICPA’s SAS 101 rule. Essentially that
ations of the European and British guidelines. rule says that if a reporting entity claims to be report-
ing “fair value” – which is required by GAAP – then
2003 – A self-appointed group of private equity prac- the auditors must document and test that this is, in
titioners, fund managers, fund-of-fund managers and fact, true. It was not clear to what extent this
others formed the Private Equity Industry Guidelines increased scrutiny would affect valuation expectation
Groups (PEIGG). The overall constitution of this and practices.
group is not hugely different from the 1989-1990
group. The PEIGG group announced that it was con- March 2005 – NVCA board issues an updated state-
templating taking on four initiatives, of which portfo- ment, which now refers to the September 2004 ver-
lio company valuation guidelines was the first one. sion of the PEIGG guidelines. The NVCA also decid-
ed to make the PEIGG document widely available to
December 2003 – After an extensive input phase and its members. The text of that statement is below.
review by various industry groups and service
providers, the first version of the PEIGG guidelines April 2006 – Guidelines issued by a consortium of
were issued. Throughout the process PEIGG had three Europe-based venture capital associations
been actively soliciting feedback and input from a (AFIC, BVCA, EVCA) are released. The authors cite
number of industry groups including the NVCA. compliance with IASB rules. Informal feedback
from US venture capital professionals reviewing this
March 2004 – NVCA board issued statement of sup- document was that the document was more formula-
port, but not endorsement as some pundits had ic than PEIGG’s counterpart and only partially com-
hoped. NVCA position was widely consistent with pliant with US GAAP as defined at that time.
input provided by members of the NVCA CFO Task Subsequently, 30 non-US private equity and venture
Force, members at large, and the NVCA Board of capital associations endorsed this document. Go to
Directors. The text of NVCA’s statement is printed http://www.privateequityvaluation.com. The most
below. recent edition is October 2006. These guidelines have
94 Thomson Reuters
2009 NVCA Yearbook
gotten little traction in the US and expected to be include 5 practitioners from the United States. The
updated in 2009. initial focus of the group is on convergence of US
PEIGG and IPEV valuation guidelines. Details at
September 2006 – Financial Accounting Standards www.privateequityvaluation.com.
Board (FASB) issues its long-awaited and long-antic-
ipated fair value measurement standard as FAS 157. August 2008 – SEC proposes a roadmap toward
Only a few of its 145 pages relate directly to typical global accounting standards and publishes for public
venture capital and private equity funds. Because comment the concept of adoption of International
FASB maintains that this is a clarification and further Financial Reporting Standards. Details are at
definition of fair value which was already required http://www.sec.gov/news/press/2008/2008-184.htm.
for portfolio accounting, some auditors began requir-
ing selective compliance in advance of the 2008 September 2008 – At this point, visible signs of a val-
effective date. uation whirlpool are hard to miss. This changed what
appeared a couple of months earlier to be a generally
March 2007 – PEIGG issues a revised portfolio com- painless implementation of FAS 157 to a fluid envi-
pany valuation guidelines document to reflect the ronment with no precedent and little guidance.
Fair Value Measurement standard (FAS 157).
September 2007 – NVCA board reaffirms its prior December 2008 - The decreases in public market val-
position on the PEIGG guidelines to refer to the most uations accelerate. This makes valuation of even on-
recent version. track, pre-revenue companies tricky. The NVCA
issues a one page information letter to its members to
March 2008 – the International Private Equity shed light on applying FAS 157 in a valuation
Valuation & Venture Capital Valuation (IPEV) Board microburst/whirlpool. (Text below)
reconstitutes and re-launches itself, expanded to
The PEIGG Guidelines investor’s need for fair value data to report invest-
ments in their own financial statements, a manager’s
While the NVCA has not specifically endorsed the need to report and measure valuations in accordance
PEIGG portfolio company valuation guidelines (see with fund agreements, and the need to determine the
statement in next section below), it believes that the allocation of distributions of fund realizations. This
guidelines document should be readily accessible to its has led to increased scrutiny of portfolio company
members for reference and use. Be sure to refer to values and the need for greater consistency of valu-
www.peigg.org for the latest version and guidance on ation methodologies employed by managers of pri-
the document. The NVCA thanks the members of vate equity funds. However, by its very nature pri-
PEIGG for their efforts and for their permission to vate equity is an asset class in which judgment plays
reprint the guidelines here. The guidelines as updated a significant role. Accordingly, investors in the
in March 2007 to reflect FAS 157 are printed below. same company may have different, but supportable,
views on valuation.
OVERVIEW
2. The objective of the Updated U.S. Private Equity
Introduction Valuation Guidelines (“Guidelines”) is to provide
1. As the U.S. private equity industry (defined as managers a framework for valuing investments in
venture, buyout, mezzanine, and other investments portfolio companies at fair value and to provide
in private companies) has grown and matured, its greater consistency within the private equity indus-
participants have become increasingly interested in try with regard to valuations. Historically there
the appropriate reporting of fund values. The inter- were few authoritative guidelines compliant with
est stems from a number of sources, such as an U.S. generally accepted accounting principles
investor’s desire to measure interim performance, (GAAP) that required specific procedures for esti-
Thomson Reuters 95
mating fair value of investments in portfolio compa- a liability in an orderly transaction between market
nies held by private equity investors. In September, participants at the measurement date” (FASB
2006, the Financial Accounting Standards Board Statement No. 157, paragraph 5). The objective is
released Statement of Financial Accounting to estimate the exchange price at which hypothetical
Standards No. 157, Fair Value Measurements. The willing marketplace participants would agree to
Updated U.S. Private Equity Valuation Guidelines transact in the principal market, or lacking a princi-
are intended to assist managers in their estimation pal market, the most advantageous market. No mat-
of fair value and are intended to be consistent with ter which market is deemed most appropriate, fair
GAAP (FASB Statement No. 157) and the AICPA value is the estimated “exit price” in that market.
Audit and Accounting Guide - Audits of Investment
Companies. The AICPA Guide’s definition of 7. Securities of private companies, by definition,
Investment Companies includes Private Equity will not have quoted market prices available.
Investors (paragraph 1.03) and requires investments However, private companies at times engage in
to be reported at fair value (paragraph 1.32). arm’s-length transactions for issuances of their equi-
ty or debt securities. The value of these transactions
3. These Guidelines were created jointly by managers could serve as an observable market price similar to
(i.e., general partners) and investors (i.e., limited part- a quoted market price if the transaction is both
ners) incorporating feedback from a wide number of recent and between willing parties for the same
industry participants. The Guidelines are not intend- securities as those for which the fair value determi-
ed to be all encompassing, nor are they intended to nation is being made (deemed a level 2 input by
eliminate all subjectivity. Rather, they are to be a FASB Statement No. 157), and could therefore be
guide to assist managers and investors in agreeing to used as an estimate of the theoretical exit price.
a valuation framework while allowing a manager to
exercise its best judgment in applying the Guidelines. 8. When quoted market prices or arm’s-length trans-
action prices as described above are not available,
4. Included in these Guidelines are terms that are sub- the estimate of fair value should incorporate all rea-
jective in nature, such as materiality, and could have sonably available information about the business and
different meanings in various factual situations. utilize assumptions that market participants would
While it is outside the scope of these Guidelines to normally use in their estimates of value. The esti-
force specific definitions upon its users, the manager, mate of fair value should seek to best replicate the
in consultation with the Valuation Policy Committee amount at which the investment could be sold in a
(as discussed below) may develop and document current transaction between willing parties.
appropriate definitions of these subjective terms.
9. In determining the fair value of individual invest-
5. The Guidelines are not intended in any way to ments using these Guidelines, managers are expected
modify the provisions of the fund agreement relat- to use their judgment. In utilizing judgment, sub-
ing to the subject matter hereof. To the extent the stance takes precedence over form. For example,
Guidelines are adopted by a manager and a when a manager’s past experience indicates that liq-
Valuation Policy Committee and in one or more uidation preferences will likely be renegotiated or
respects the Guidelines are inconsistent with the may not be fully enforced at the time of liquidation,
fund agreement, the fund agreement would govern the manager is strongly encouraged to use the expect-
(absent a specific amendment thereto). ed results rather than the form of the agreement.
Fair Value Concept 10. Valuations should be updated on each measure-

6. The Guidelines seek to have all investments in ment date, generally on a quarterly basis. Of
portfolio companies reported at fair value on a con- course, valuations used for annual and quarterly
sistent, transparent and prudent basis. Fair value as performance reporting should be used in private
defined in accordance with GAAP is “the price that placement memorandums and other marketing
would be received to sell an asset or paid to transfer materials.
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2009 NVCA Yearbook
Valuation Policy Committee

14. Managers of funds should, without undue cost
11. These Guidelines acknowledge the perception and effort, contact other sophisticated investors to
that bias exists or has the potential to exist in a non- discuss the valuations of common investments and
independent (versus independent) valuation per- the factors considered in their valuations. However,
formed by a fund’s manager. As a result, it is recom- managers are not required to use other investors’
mended that the manager of each private equity fund valuations since the estimate of fair value is the
establish a Valuation Policy Committee consisting of responsibility of the managers.
a subset of the fund’s investor representatives. The
Valuation Policy Committee could be all of, or a por- 15. To value an investment, managers should place
tion of, a fund’s advisory committee, if such a com- the most weight on valuation methodologies that are
mittee exists. (Neither these Guidelines nor GAAP clearly objective and timely. On each valuation date
require managers to obtain independent valuations). managers need to take into account available infor-
mation from market participants, the relevant mar-
12. The fund manager, in consultation with the ketplace and the global economy along with specif-
Valuation Policy Committee, should establish the ic facts and circumstances in determining the fair
written valuation parameters to be consistently fol- value of their investments.
lowed by the fund’s manager using these Guidelines.
The agreed upon valuation policy and deviations 16. Historically, the Private Equity Industry used
from that policy should be communicated to the cost or the value of the latest round of financing as
Valuation Policy Committee and the limited part- an approximation of fair value; often without taking
ners by the manager. Private equity fund managers into account other facts and circumstances. Such an
are solely responsible for establishing and docu- approach is incompatible with the concept of fair
menting valuation policy, practices, procedures and value described above. At each valuation date a
methodologies as well as valuing their investments manager must make a determination of fair value
in portfolio companies The Valuation Policy for each investment. As further outlined below,
Committee should not set, formulate or approve the these Guidelines provide a consistent and transpar-
valuations, except as required by the fund agree- ent methodology for determining fair value.
ment. The Valuation Policy Committee should peri- However, a manager may conclude, after consider-
odically discuss the level of the manager’s adher- ing the facts and circumstances as outlined below,
ence to the fund’s valuation policy parameters. that the best indication of fair value is provided by
cost or the value of the latest round of financing.
II. PRIVATE COMPANY VALUATION
17. FASB Statement No. 157 allows managers to
METHODOLOGIES utilize three valuation techniques, either alone or in
General Guidelines
combination. These Guidelines encourage managers
to use the “market approach” in most situations (see
13. Managers are to fairly value the investments in FASB Statement No. 157, paragraph 18a) utilizing
their portfolio companies on a consistent, transpar- Comparable Company Transactions or Performance
ent and prudent basis. Since value is often realized Multiple inputs, as the primary technique to esti-
through a liquidity event of the entire company, the mate the fair value of equity securities in private
value of the company as a whole at the reporting companies. For Private Equity, the market approach
date will often provide the best evidence of the usually is the most appropriate.
value of the investment in that company. As a result,
the methodologies discussed in this section involve 18. In addition to the market approach technique
estimating the value of the company as a whole as discussed above, there are other valuation method-
an initial step for valuing the company’s privately ologies, some of which are discussed in paragraphs
issued securities. The manager will then need to 41 and 42. These other methodologies or tech-
determine how the total enterprise value is distrib- niques may be appropriate in certain circumstances,
uted among the various securities of the company. and include discounting cash flows, valuing net
Thomson Reuters 97
assets, and industry-specific benchmarking 24. A subsequent equity financing that includes
(described in FASB Statement No.157 as the substantially the same group of investors as the
income and cost approaches). prior financing is an appropriate factor to consider
in valuing prior investments unless it can be demon-
19. Other valuation matters, including valuing strated that the financing no longer represents fair
interest bearing securities, PIK dividends, warrants, value. This approach may be different from historic
liquidation preferences, convertible securities, practice, where, typically the value of prior invest-
escrows, and other rights, privileges and preferences ments was not increased in a subsequent higher
of preferred securities are discussed in paragraph priced financing round unless a new investor ‘vali-
47. dated’ the new pricing.
20. Determination of valuation adjustments should 25. If a private financing will be completed with a
typically be based upon actual positive and negative high degree of certainty in the near future, and the
events, not upon expected accomplishments and pricing of the transaction has been substantially
performance. agreed, to establish the value of a previous invest-
ment, a manager should consider their best estimate
21. Regardless of the valuation methodology used, of the upcoming new financing if it can be objec-
once used, it should continue to be used until a new tively determined that the prospective financing is
methodology will provide a better approximation of at fair value.
the investment’s current fair value. It is expected
that there would not be frequent changes in valua- 26. Occasionally a round of financing includes a
tion methodology. significant investment from a strategic investor pay-
ing a premium due to benefits accruing uniquely to
Cost / Latest Round of Financing itself. The manager must evaluate whether such a
22. While entry prices and exit prices are different premium is representative of what the most likely
conceptually, for the Private Equity Industry these buyers of the company would also pay upon exit,
Guidelines presume the manager at the time of the and therefore, whether the price paid by the strate-
initial investment has considered near term compa- gic investor is deemed to be the exit price (fair
ny performance in determining investment valua- value) expected from market participants.
tion. Therefore, cost (the transaction price) may be
fair value (the exit price) upon purchase. The trans- Deviations from Cost / Latest Round of Financing
action price may not represent fair value upon pur- 27. After some period of time, cost or the latest
chase when: round of financing becomes less reliable as an
approximation of fair value. Therefore, the manag-
a) The transaction is between related parties; er must assess whether fair value has changed even
b) The transaction occurs under duress; though there has not been a new round of financing.
c) The transaction price includes transaction costs Examples of changes in circumstances which indi-
(transaction costs are expensed under GAAP); cate a change in fair value may include, but are not
d) The market in which the initial transaction takes limited to, the following:
place is different than the principal or most advanta-
geous market in which the exit transaction would a) The current performance of the company is sig-
take place. nificantly above or below the expectations at the
time of the original investment. Potential indicators
23. Managers should reconsider a company’s fair of this situation will include evaluation of the com-
value in connection with each material equity pany’s success or failure in attaining certain mile-
financing, regardless of the manager’s participation. stones, achieving technology breakthroughs, devel-
The value of the last round of financing is a factor oping proprietary technology, progressing through
in determining fair value, but it is not necessarily clinical trials or significantly exceeding or failing to
the only factor. meet budgets.
98 Thomson Reuters
2009 NVCA Yearbook
b) Market, economic or company specific condi- insight into the company. Even private companies
tions have significantly improved or deteriorated that have significant manager involvement face a
since the time of the original investment. Potential daunting task to create value for investors. Thus, it
indicators of this situation will include evaluation of is natural that decreases in value may be more easi-
broad changes in the economic climate, changes in ly identified and justified than increases in value.
the financing markets, changes in the legal or regu- However, both decreases and increases in invest-
latory environment in which the company operates, ment fair value should be recognized when warrant-
changes in the company’s cost structure, increased or ed. Because of the difficultly in building sustain-
decreased risk factors faced by the company, or sig- able, long-term value in a private equity backed
nificant fluctuations in share prices of quoted com- business, increases in value should only be made
panies operating in the same or a related industry. where the manager can support the increase using
the methodologies discussed in these guidelines or
c) Substantial decreases in the value of quoted, using other techniques common to the marketplace,
more senior securities of the company (e.g., public remembering that fair value is defined as the exit
debt), defaults on any obligations of the company, a price on the measurement date in a hypothetical
bankruptcy filing, significant ownership dilution transaction. Diligence, prudence and caution
caused by recapitalization of the company, or liquid- should be applied when valuing private companies,
ity concerns that are expected to be more than short and in particular when considering the valuation
term in nature are circumstances which may indi- write-up of early-stage companies, in the absence of
cate a potential impairment in value. market-based financing events. All such changes
and the factors upon which the changes are made
28. Estimating the extent of a change in fair value, should be reviewed with the Valuation Policy
if any, may not easily lend itself to an analytical Committee. However, managers must recognize
process. As a result, the manager will be required to that there should be no bias toward either increasing
exercise prudent judgment and carefully consider the or decreasing carrying value to record fair value.
broad indicators of potential changes to fair value
(such as market conditions, relevant stock market 31. When valuation adjustments are necessary, the
indices, and other factors as discussed above). methodology used should be based on relevant com-
parable data wherever possible (“relevant compara-
29. The result of such consideration will provide ble data” as used in these Guidelines is intended to
indications whether the carrying value of the invest- be consistent with the input hierarchy discussed in
ment should be increased or decreased to represent paragraphs 22-31 of FASB Statement No. 157).
fair value. The longer that fair value has been esti- Recommended methodologies are discussed below.
mated using cost or the price paid at the most recent
round of financing, the more consideration should Comparable Company Transactions
be given to reviewing changed circumstances and 32. This methodology involves deriving the value
potentially determining fair value utilizing other of a company through examination of third-party
inputs. Managers may consider historic cost or the investments in comparable equity securities of the
price paid at the most recent round of financing in company, examination of transactions in equity
making their fair value determination, but should securities of comparable companies and direct com-
not use cost or the most recent financing price as the parisons to similar companies. These comparisons
sole determinate of fair value. should be appropriately adjusted for any control
premiums, synergistic benefits or other excess ben-
30. These Guidelines recognize that building long- efits or detriments that accrue to the owner when
term value in a private equity backed business is not determining a proper comparable valuation.
an easy task. Usually, many positive events need to
happen in order for portfolio companies to succeed. 33. These Guidelines acknowledge that until a com-
However, managers often become aware that certain pany achieves marketplace acceptance for its prod-
of their investments are likely to fail given their uct or service, it is unlikely that truly comparable
Thomson Reuters 99
companies with determinable fair values will be pany, but these changes may not yet have affected perform-
readily identifiable. ance. The manager needs to consider these changes in eval-
uating a company’s sustainable performance. Managers
34. To the extent comparable transactions cannot be should share with the Valuation Policy Committee the fac-
ascertained and fair value cannot be reasonably tual data and their assumptions that support the sustainable
assessed and reliably measured using comparable performance used in the valuation determination.
transactions, the following Performance Multiple
methodology should be used, if applicable. 39. The multiples used should be those that are used
regularly and routinely to value companies in the
Performance Multiple industry in which the subject company is operating.
35. The performance multiple methodology applies If the multiples used are derived from public compa-
a relevant multiple to the performance of the com- ny comparables, a discount to a private company’s
pany being valued in order to derive the value of the equity value may be appropriate. Discounts applied
company. This approach is most applicable to com- to private securities may be higher than those applied
panies that have achieved positive and sustainable to restricted public securities, which are discussed in
operating performance. paragraph 46. Managers should share with the
Valuation Policy Committee the factual data that
36. The valuation determined using this methodolo- generates the multiples used in the valuation process.
gy is calculated by applying the most appropriate and
reasonable multiple derived from reference to market 40. To the extent fair value cannot be reasonably
based conditions of quoted companies or recent pri- assessed and reliably measured using performance
vate transactions. The multiple to be used, which multiples, the following methodologies may be con-
may need to be adjusted for differences in terms of sidered.
growth prospects and risk attributes (depending on
the size of the comparison sample, among other fac- Other Valuation Methodologies
tors), should be one of the following: 41. A few other valuation methodologies, which may
be appropriate in certain circumstances, are as follows:
a) Current average comparable public company
multiple for similar companies in the industry; a) Because of the need to use significant estimates
and forward-looking information, discounted cash
b) Current average multiples for recent private trans- flow (DCF) methodologies should only be used in
actions of similar companies in the industry; and limited situations using a discount rate commensu-
rate with the risks involved. These situations would
c) The original acquisition multiple when no other involve instances where the methodologies previ-
similar public or private multiples can be ascertained. ously discussed in these Guidelines prove incapable
of addressing the specific circumstances.
The most appropriate and reasonable multiple as
determined above will be applied to the relevant b) Net asset valuation methodologies should be
operating performance metrics of the company to used for valuing investments in businesses whose
estimate fair value. value is derived primarily from the underlying value
of their tangible assets rather than their performance.
37. The manager should be confident that reason-
able, relevant and sustainable performance metrics c) Industry-specific benchmarks, which are customar-
are utilized, which may necessitate the adjustment ily and routinely used in specific industries such as
for one-time and non-recurring items. price per subscriber or other industry norms, should
only be used in estimating fair value where appropriate.
38. There may be significant changes in the financial, reg-
ulatory, economic or legal climate in which the company 42. In those circumstances where there are indica-
operates which harm or enhance the prospects of the com- tions that a change in carrying value is appropriate
100 Thomson Reuters

2009 NVCA Yearbook
based on paragraph 27, but the methodologies rities which trade in inactive markets, where trans-
described in paragraphs 32-41 are not applicable, actions do not occur with sufficient frequency and
the manager should exercise prudent judgment in volume to provide ongoing pricing data. Therefore,
considering assumptions that marketplace partici- the last transacted price may not provide the best
pants would utilize in their estimate of fair value. indication of fair value. In such situations, an
adjustment to the last transacted price may be
appropriate or other valuation techniques may be
III. VALUATION OF PUBLICLY TRADED
utilized based on all relevant factors.
SECURITIES
Unrestricted IV. OTHER MATTERS

43. Actively traded public equity and public debt
securities are required to be valued at the closing 47. There are a wide variety of securities and capi-
price or bid price, except as discussed below. Active tal structures used in the private equity industry.
markets are defined as a market in which transactions Such securities should be valued consistent with the
occur with sufficient frequency (daily) and sufficient Guidelines set forth above. Some examples and val-
volume to provide pricing information on an ongoing uation guidance for securities and structures which
basis, regardless of the size of the position held. have not been specifically addressed by these
Guidelines include:
44. Discount (blockage) factors for unrestricted
securities that trade in an active market are prohib- a) The carrying value of private interest bearing
ited by GAAP (FASB Statement No. 157). securities should be based on the underlying compa-
ny’s ability to service and repay debt.
Restricted
45. A discount from values of actively traded securi- b) PIK dividends should be accrued in accordance
ties should be taken for holdings of securities when with the terms of the underlying security. A valua-
there is a formal restriction that limits sale of the tion discount may be necessary depending on the
securities. Examples of restrictions that may warrant health of the company and the realizability of the
a discount include rule 144 holding periods and underlying securities.
underwriter’s lock-ups. Discounts for restricted equi-
ty securities from their market price typically range c) Valuations of securities denominated in currencies
from 0% to 30%. When determining a discount to other than the base currency of the fund should be
actively traded restricted securities, factors that adjusted for changes in the spot prices of the currency.
should be taken into consideration include the com-
pany’s trading characteristics (the extent to which the d) Warrants should be carried at their fair value.
market for the security is active), the investor’s abili-
ty to sell its position when the restriction expires, and e) The rights associated with preferred stock are
the term of the restriction. The adjustment of the dis- generally divided into two broad categories—eco-
count will vary depending on the duration of the nomic rights and control rights. Once the enterprise
restriction. As the remaining length of the restriction value of the company is determined in accordance
decreases, the amount of the discount should also with these Guidelines, fair value should be deter-
decrease. Limitations on sale based on rule 144’s mined by allocating value to shares of preferred and
volume tests or based on a closed trading window for common stock based on their relative economic and
board members do not qualify as formal restrictions control rights.
related to the security itself. Therefore discounts are
not allowed by GAAP in these situations. In addition, when making their fair value determina-
tion managers should recognize that liquidation
Inactive preferences are often granted to investors as an
46. A quoted price is not readily available for secu- inducement to invest in a company. When a manag-
Thomson Reuters 101

er’s past experience indicates that liquidation prefer- tency of valuation standards/methodologies by both
ences will be renegotiated or will not be fully managers of, and investors in, private equity funds.
enforced at the time of liquidation, the manager is These Guidelines are designed to provide a frame-
strongly encouraged to use the expected results in work for addressing the majority of the private equi-
determining the valuation of a security which has a ty industry’s valuation questions on a consistent,
liquidation preference. transparent and prudent basis. It is recommended
that managers and investors collaborate to share
f) Currently convertible securities should be valued experiences and best practices across relationships.
at the excess of the value of the underlying security This collaboration will narrow the range of specific
over the conversion price as if the security was con- definitions of subjective terms and will enhance the
verted when the conversion feature is “in the consistent application of these Guidelines.
money” (appropriately discounted if restricted). If
the security is not currently convertible, the use of 50. The key goals of these Guidelines are as fol-
an appropriate discount in valuing the underlying lows:
security should be considered. If the value of the
underlying security is less than the conversion price, • Encourage managers to approach valuation from
the carrying value of the convertible security should a consistent, transparent and prudent basis.
be based on the underlying company’s ability to
service and repay the security. • Focus the private equity industry on the need to
determine fair value for each of their investments in
g) If deemed determinable beyond a reasonable a manner that is consistent with these Guidelines.
doubt (virtually certain) escrows from the sale of a
portfolio company should be valued at an amount • Provide greater transparency into valuation results
that the manager, using its best estimate, ultimately through the use of the Valuation Policy Committee
expects to receive from the buyer in light of the as described in the Guidelines.
escrow’s various conditions.
51. The Guidelines are not intended to be all
h) Because of the inefficiencies of the secondary encompassing, nor are they intended to eliminate all
market, purchase and sale transactions of partner- subjectivity. Rather, they are to be a guide to assist
ship interests in and of themselves may not be managers and investors in agreeing to a valuation
appropriate in determining the value of portfolio framework while allowing a manager to exercise its
company valuations or positions in funds. best judgment in applying the Guidelines.
48. FASB’s Statement No. 157 Fair Value 52. The Private Equity Industry Guidelines Group
Measurements utilizes a hierarchy described as acknowledges that the application of these guide-
Level 1, 2 and 3 inputs (Statement No. 157 para- lines may result in a departure from past valuation
graphs 21-31). The FASB valuation hierarchy has practices. It is recommended that managers and
not been restated in these Guidelines. The concepts investors work jointly to develop a timetable to
outlined in these Guidelines are intended to be con- implement these guidelines. It is expected that over
sistent with Level 1, 2 and 3 inputs as defined. The time the broad use of these Guidelines will become
input level is a required GAAP disclosure and pro- industry practice
vides users of financial statements with additional
clarity in how a manager made their determination 53. These Guidelines are consistent with US
of fair value. Generally Accepted Accounting Principles. If man-
agers adopt these Guidelines it is expected that their
determination of fair value will be GAAP compli-
V. CONCLUSION
ant. However, it is also understood that a manager
49. As the private equity industry has matured in may be GAAP compliant without utilizing these
the United States, there is a need for greater consis- Guidelines.
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2009 NVCA Yearbook
NVCA Position on Portfolio Company investors as they attempt to value privately-held

Valuation Guidelines (March 2007 investments at December 31, 2008? The short answer
is: despite the current very challenging economic
Version)
environment, Fund managers must continue to exer-
cise their sound judgment in estimating the Fair
The NVCA Board of Directors reaffirmed its support Value of each portfolio company after considering
for the latest iteration (March 2007) of the PEIGG the relevant facts, including current market condi-
Guidelines on September 18, 2007. While the NVCA tions. The valuation process does not change, but
has not specifically endorsed the PEIGG or other valu- much more judgment is required when we are in a
ation guidelines, the NVCA board statement of support period of economic discontinuity.
is below:
Virtually all LP agreements require GPs to use US
The NVCA recommends that its members create, fol- GAAP for financial reporting. US GAAP requires
low and communicate clearly the specific procedures Fair Value reporting for virtually all VC firms
and methodologies used for valuing their portfolios. because they are “investment companies.” US GAAP
These methodologies should be agreed to by the firm’s continues to define Fair Value as: “the price that
investors (LPs), and conform, when required, to would be received to sell an asset…in an orderly
Generally Accepted Accounting Principles and fair transaction between market participants at the meas-
value measurement standards, recognizing that the ulti- urement date.”
mate responsibility for valuations remains with the gen-
eral partner. When evaluating current valuation proce- Fund managers need to establish Fair Values even
dures or developing new approaches, the NVCA sug- though they may not currently need to sell, or cannot
gests its members include a review of the Private Equity sell, their private investments in this market. GPs
Industry Guidelines Group (PEIGG) December 2003 must use their judgment in estimating the current Fair
“Private Equity Valuations Guidelines” document, as Values of their investments, even though “exit mar-
reissued in March 2007 (found at www.peigg.org). We kets” may have few buyers, IPO markets appear
commend the fine efforts of PEIGG, an independent closed, and there are few, if any, relevant comparable
group which sought and reflected input from the NVCA transactions. Such judgment should take into account
and other industry stakeholders. The NVCA encour- all relevant information, including a financing
ages diligence, prudence, and caution when implement- round’s specific terms and conditions.
ing the specific elements of any guideline, such as val-
uation changes to early-stage companies in the absence There are no easy outs, rules of thumb or safe harbors
of market-based financing events. for establishing Fair Value.
As always, best considerations for Fair Value deter-

NVCA Member Alert – Fair Value
mination include the following:
Considerations for Venture Capitalists - • The Fair Value of an investment portfolio is the sum
December 2008 of the Fair Value determined for each portfolio
company using a “bottoms up” approach. Applying
The following alert was sent to the NVCA member- a “top-down” overall percentage adjustment to the
ship to highlight certain issues and considerations to aggregate portfolio’s value is not compliant with
be explored in the application of FAS 157, the fair US GAAP.
value measurement standard. The NVCA thanks
David Larsen of Duff and Phelps and several mem- • Valuations should reflect specific factors in a
bers of the NVCA CFO Task Force for their role in buy/sell context. For example, a GP could ask:
drafting this document: “Given my portfolio company’s current cash posi-
tion, cash burn rate, performance compared to plan,
“We are operating in a severely distressed investment probability of meeting forecasts, the projected envi-
environment that has deteriorated rapidly in the past ronment for its product or technology, etc., as a
few months. What does this mean for venture capital board member, what is the lowest price that I would
Thomson Reuters 103

sell the company’s stock today in an orderly sale • To determine a portfolio company’s Fair Value, GPs
with a willing buyer?” [Footnote: A fund manager should apply their judgment in a consistent manner
should not assume a “fire sale” of the stock, but and evaluate the same data they use for monitoring
should assume “exposure to the market for a period a company’s performance and progress. There is no
prior to the measurement date to allow for market- magic formula or weighting of factors.
ing activities that are usual and customary…” -
SFAS 157, Paragraph 7]. In summary, determining Fair Value continues to
require the exercise of judgment based on objective
• The valuations set by the most recent financing evidence, such as calibrating the original investment
round – perhaps even one in the third quarter of decision with the current performance of the compa-
2008 – may be stale and inappropriate for determin- ny and the current economic environment. The fact
ing Fair Value, especially given current market con- that the macro market is distressed probably adverse-
ditions. ly impacts the value of most companies. This nega-
tive impact may be compounded by disappointing
• The Fair Value at December 31 in many cases will company performance or mitigated by tangible and
likely be different from the value at September 30, sustainable company progress.
given the deterioration of the macro economic envi-
ronment. If you need more details about Fair Value, you might
consider the 18-page PEIGG Valuation Guidelines at
• Each valuation should reflect a company’s degree www.peigg.org, or you can download the 158-page
of progress from the prior reporting date to the cur- SFAS 157 at www.fasb.org.”
rent one.
104 Thomson Reuters

Appendix I: International Convergence
A GP’s Primer on Global Accounting Standards Board (“IASB”) which was Europe-cen-
Standards Convergence tric. These rules became known as the International
Financial Reporting Standards (“IFRS,” pronounced
A recent flurry of media coverage has focused on the “IFF-ers” or “EYE-fers”).
possible upcoming convergence of US and interna-
tional accounting standards. Much of this coverage Over recent years, the large number of multinational
discusses which accounting system casts which pub- corporations complained that they had to endure keep-
lic companies in the most favorable light. While that ing two sets of books and this prompted the concept of
particular matter seems distant from the US venture convergence. In early September 2008, the SEC and
capital industry, there are two key aspects of conver- the FASB announced steps to pave the way for US
gence that it appears we need to focus on: public companies to convert from US GAAP to IFRS.
• Determining which system (current US GAAP vs. The SEC “roadmap” provides for a three-year run-up
International vs neither) is the best system overall to an SEC “go-no go” decision in 2011. 2011 is also
for the US business community going forward. We the year that major US trading partners, Canada,
would expect this dialogue to center on transparen- Japan, Korea and India have indicated plans to adopt
cy, reliability, relevance, comparability, and ongo- IFRS. At about the same time, the FASB and the IASB
ing costs in addition to any conversion costs, which met to review and re-orient their convergence plan to
might not be insignificant. be consistent with the SEC’s proposed schedule. The
• Addressing matters which specifically affect our updated FASB-IASB memorandum of understanding
funds. One area already identified is the financial is at http://www.fasb.org/intl/MOU_09-11-08.pdf. As
statements provided by GPs to LPs under interna- 2008 drew to a close and much Washington attention
tional rules, should the international rules become was focused on rescuing troubled assets and econom-
the new US rules. ic stimulus, it was not clear what the direction or pri-
ority for this would be going forward. Please check the
As a first step towards understanding and engaging www.nvca.org website for updates.
in constructive dialogue in both of these areas, the
NVCA CFO Task Force has appointed a subgroup to Nothing in the SEC proposal or the FASB-IASB
begin gathering facts, analysis, and expert opinion on memorandum says that the US will conclusively
what all of this means to our industry. “converge” to or switch over to IFRS. This all con-
templates a well-thought-out and informed decision
in three years. But large processes are being set in
Why Has The Convergence Issue Come
motion that may be difficult to stop. It is worth point-
to the Surface at This Time? ing out that the SEC roadmap refers to public compa-
ny reporting; however we should logically expect
For years, the United States has been developing gen- alignment of private and public company rules.
eralized accounting principles referred to as Generally
Accepted Accounting Principles (“GAAP”). The What is not clear at this time is what the current glob-
keeper/arbiter/decider of GAAP is the Financial al economic turmoil will do the priority of this proj-
Accounting Standards Board (“FASB”). FASB devel- ect or its timetable.
ops and updates GAAP and the SEC has adopted these
accounting rules for public company reporting and
US GAAP vs IFRS – Never Generalize
other situations over which the SEC has jurisdiction.
Even viewed from 30,000 feet, it is difficult to gen-
In recent years, on a parallel track, a separate set of eralize on how the two systems compare. First, while
rules emerged from the International Accounting the IASB produces plain vanilla IFRS standards,
Thomson Reuters 105

there is no one flavor of IFRS in use. Much like the for the plan sponsors while accounting rules abandon
original UNIX kernel, each country/jurisdiction has the current fair value reporting requirements.
been able to create its own version of IFRS. But
unlike UNIX, sometimes the differences among the
localized IFRS versions are large. So an apples-to-
How International GPs Now Handle LP
apples comparison of “IFRS-compliant” financials Reporting
from different jurisdictions can be difficult. Second, A logical question arising from the above paragraph is
it is true that IRFS itself is a very thin document how venture capital firms operating in IFRS jurisdic-
compared to GAAP, which has grown to roughly a 2- tions are currently reporting to LPs, including those
foot stack of written rules. However, to implement subject to Department of Labor ERISA fair-value
IFRS, you need the implementation guide which reporting rules. The initial, and somewhat limited,
combines with the original document to create its review by the NVCA CFO Task Force subgroup is that
own 2-foot stack. Again, much of the surface com- they simply are not doing so. Many of international
parisons are not useful. GPs continue to produce financial statements in accor-
dance with US GAAP for both their US and interna-
Until this point, US venture capital firms have been tional LPs. Those reporting under IFRS are incurring
using exclusively US GAAP accounting standards. the additional effort and expense of also providing a
However, in early November, we received a report separate US GAAP-type fair value schedule.
from a member firm with international intermedi-
aries for overseas investment where the local auditors
raised the question of whether those financial state-
Recent Events
ments need to be IFRS-compliant. A full chronology of events is posted under Valuation
Guidelines on the NVCA website www.nvca.org. This
document is updated from the chronology in Appendix
GP-to-LP Reporting H of the NVCA 2008 Yearbook prepared by Thomson
One area already identified as a possible problem area Reuters. Even as the US industry works toward com-
is GP to LP reporting. Virtually all LP agreements (or pliance with the FASB’s Statement 157 on fair value
accompanying documents) require GPs to provide measurement starting with 2008 financials, dialogue
GAAP-compliant financial reports to LPs. Annual has begun on convergence. In March 2008, the
audits of these reports are GAAP-based. Under International Private Equity & Venture Capital
GAAP, the US venture capital industry provides fair- Valuation (IPEV) board reconstituted and re-launched
value portfolio reports under the special rules of itself. IPEV was expanded to include five practitioners
“investment company reporting”. Our early analysis from the United States who are familiar with the ven-
of IFRS shows special investment company rules for ture industry. The initial focus of the group is on con-
portfolios of publicly-traded companies but no such vergence of US Private Equity Industry Guidelines
provisions for portfolios of private companies. Group (“PEIGG”) and IPEV fair value guidelines.
Details are online at www.privateequityvaluation.com.
Most of the SEC and FASB efforts to date have
focused on public company reporting. We are very
early on in verifying and creating awareness of the
Going Forward
lack of private portfolio provisions. The initial read- With the international and domestic attention on
ing is that, under IFRS, the financial statements for a other economic matters, it is not clear how quickly
number of the portfolio companies would have to be any accounting standard convergence activities will
consolidated into the operating financials of the ven- move. However, the NVCA CFO Task Force has
ture capital fund itself. This would create a mish- begun the process of preparing for the future dia-
mash report, essentially unusable to the LPs in deter- logue and the NVCA has several efforts underway to
mining the value of their own portfolio holdings. understand the implications. For more information,
This would mean an end to fair value reporting as we please contact NVCA Vice President of Research,
have known it. A potential further complication could John Taylor, john.taylor@nvca.org.
arise if DOL ERISA fair value rules remain in place
106 Thomson Reuters

Appendix J: Non-US Private Equity
As interest in globalization increases with each year, private equity investors have continued to broaden their
investment criteria to include overseas ventures so as to increase portfolio diversification and search for high-
er returns. As such, Appendix J is produced for readers to analyze non-US private equity data. All data is
reported in US dollars.
Introduction and outside of the United States, it is perhaps most

This appendix highlights various aspects of private comparable to analyze aggregate private equity in
equity activity outside of the United States and pro- the two regions as opposed to any classifications
vides valuable information for comparison to the contained within.
United States private equity environment. However,
this appendix is not directly comparable to domestic **Special Note: The methodology used to generate
data found in this Yearbook due to differences in def- the data within this appendix differs slightly from the
initions between the regions and variations in the cur- methodology used in previous years, causing data to
rencies of each region. Additionally, this appendix vary slightly from previous Yearbook issues.
provides a brief overview of non-US private equity; However, trends reported in the past remain intact.
data herein is not as comprehensive as the United Additionally, most data is now replicable on Thomson
States data presented elsewhere in this publication. ONE Banker Private Equity and VentureXpert.
Despite this, the reader can use this appendix to ana-
lyze trends in private equity outside of the United
Commitments
States. All data is provided by Thomson Reuters.
Private equity commitment levels, outside of the
As mentioned previously, readers should note the United States, increased in 2008 from the record lev-
differences in methodology and definitions of pri- els previously set in 2006. During 2008 commit-
vate equity between United States and other regions ments totaled $150.8 billion, a 7% increase from the
before analyzing the data. For example, private previous year. 2008 represents the biggest year for
equity outside of the United States provides equity commitments outside of the United States on record.
capital for entities not publicly traded and consists Buyouts funds accounted for a vast majority of the
of buyouts and venture capital. The category of buy- funds, 76%, of committed funds, a 1.8 percentage
outs includes management buyouts (management point increase from 2007. Balanced stage financing
from inside the company investing with private accounted for 12%, a decline from 17% in the previ-
equity investors), leveraged buyouts (the target tak- ous year, while early stage financing accounted for
ing on a high level of debt secured by assets), insti- 3.4%, a slight increase from 2006 when early stage
tutional buyouts (outside investors buying a busi- financing account for 2.9% of commitments. It
ness from existing shareholders), and management should be noted that these totals reflect not only the
buy-ins (management from outside the company amount raised by independent funds, but also include
investing with private equity investors). On the capital gains and the amount raised by both captive
other hand, venture capital describes the process of funds and funds of funds, as well.
financing companies at the seed, start-up, or expan-
sion stages. The United States places more empha-
Investments
sis on the early stages of development than do other
regions, based on historical analysis of investments Private equity investing outside of the United States
by stage. Like in the United States, non-US venture reached $43.3 billion in 2008, a 12.5% decrease from
capital is considered a subset of private equity. For $49.5 billion invested in the previous year. Buyout
ease of analysis and to avoid differences in defini- stage financing, which typically garners the largest
tions between venture capital and buyouts inside percentage of investment dollars due the large trans-
Thomson Reuters 107

action size associated with these deals, led activity in

2007, accounting for 63.3% of total investments.
Leading all activity outside of the United States,
investments in the United Kingdom totaled $6.6 bil-
lion during 2008, a 21% decrease from 2007 levels.
Investments in German totaled $5.7 billion, a 21%
increase compared to year-earlier levels. In the
emerging markets, private equity investments in
India reached $4.4 billion, a 2% increase from 2007
and investments in China totaled $4.1 billion a 24%
increase from a year ago.
108 Thomson Reuters

NATIONAL
VENTURE
CAPITAL
ASSOCIATION
YEARBOOK 2009
NATIONAL VENTURE CAPITAL ASSOCIATION YEARBOOK 2009
3 Times Square 1655 Fort Myer Drive PREPARED BY

18th Floor Suite 850 INCLUDING STATISTICS FROM THE
New York, NY 10036 Arlington, VA 22209 PricewaterhouseCoopers/National Venture Capital Association
www.thomsonreuters.com www.nvca.org MoneyTree™ Report based on data from Thomson Reuters

NVCA2009 Yearbook

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NATIONAL

NATIONAL VENTURE CAPITAL ASSOCIATION YEARBOOK 2009

3 Times Square 1655 Fort Myer Drive PREPARED BY

The statistics gathered and tracked by Thomson Reuters for ThomsonONE.com

Your comments are always welcome at research@nvca.org.

Very truly yours,

Dan Broderick Mark G. Heesen John S. Taylor

Dixon Doll Terry McGuire

E. Rogers Novak Kate Mitchell

Dan Broderick Diana Frazier

Stephen Holmes John Jaggers

Board Members At-Large

Keith Crandell Thomas Crotty

Barbara Dalton Ira Ehrenpreis

James Fleming Jim Hale, III

Deepak Kamra Robert Kibble

Jack Lasersohn Pascal Levensohn

Trevor Loy David Prend

Jonathan Root Ray Rothrock

Rob Soni R. David Spreng

For the National Venture Capital Association

Prepared by Thomson Reuters

Copyright © 2009 Thomson Reuters

National Venture Capital Association Thomson Reuters

Vice President, Private Equity Products

What is Venture Capital? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Portfolio Company Valuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Appendix B: MoneyTree Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Appendix C: MoneyTree Geographical Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Appendix D: Industry Codes (VEICs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Appendix E: Industry Sector VEIC Ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

Appendix F: Stage Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

Appendix G: Data Sources and Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Appendix H: Portfolio Company Valuation Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Appendix I: International Convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

Appendix J: Non-US Private Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Venture capital has enabled the United States to sup-

organizations tend to reduce spending on research and Still Private

Common Structure — Unique Results

While the legal and economic structures used to create

Introduction investments to exits of the investments by either IPOs

remained in line with the amount of previously-raised 100

and capital deployed remained pretty much in balance. 60

Figure 2.0 Figure 4.0

lows 4 consecutive years of modest increases. MoneyTree™ sectors, 12 saw no IPOs.

One has to go back to the 1970s to find years with fewer

Figure 7.0 Figure 8.0

Net IRR to Investors For Investment Horizon

This page is intentionally left blank.

description, it may appear that the statistics for total 150

industry resources may be underestimated. However,

capital under management include firms with fixed life

partnerships and venture capital funds raised. If a firm Year

Figure 1.03 Venture capital under management can be a complex

20 For purposes of the analysis in this publication, we

ted capital less liquidated funds or those funds that

have completed their life cycle. Typically, venture

Total Total Total Firms That Raised Capital Avg Avg

Figure 1.05 Figure 1.06

Methodology capital commitments: (1) SEC filings that are regularly

Figure 2.01 Figure 2.02

1991 2,002.8 42 5,886.6 27 7,889.4 69