NVCA Yearbook 2011 Final

NATIONAL
VENTURE
CAPITAL
ASSOCIATION
YEARBOOK 2011
NATIONAL VENTURE CAPITAL ASSOCIATION YEARBOOK 2011
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
March 2011
Dear Reader:
Never before in the nation’s history have financial mechanisms and markets come under
more scrutiny by Congress, the regulators, the media, and the general public. Despite the
turmoil in many sectors of the economy, the closer look reaffirmed venture capital as a
key driver of economic growth. The nation continues to look to the entrepreneurial sector
for job creation, economic development, better healthcare, cleaner technology, and a
faster, better, and more secure internet.
The statistics gathered and tracked by Thomson Reuters for ThomsonONE.com

(formerly VentureXpert) and this Yearbook are essential to enabling analysis of venture capi-
tal by policy think tanks and economists and for use by government officials and other
decision makers. For example, recent analysis of Thomson Reuters data by IHS Global
Insight shows that while venture capital investment represents 0.2% of US GDP, the rev-
enue of companies created by the industry represented 21% of GDP in 2008. We are in
the process of revising these numbers based on recent results.
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. This support has allowed us to
responsibly bring transparency to a part of the economy most people are aware of but few
really understand. Your comments are always welcome at research@nvca.org.
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.
Very truly yours,
Diana Frazier Mark G. Heesen John S. Taylor

FLAG Capital Management NVCA President NVCA VP Research
NVCA Director & Chairman,
NVCA Research Committee
NVCA BOARD OF DIRECTORS 2010-2011
Executive Committee
Kate Mitchell Paul Maeder

Chairman Chairman-Elect
Scale Venture Partners Highland Capital Partners
E. Rogers Novak Ray Rothrock

Treasurer Treasurer-Elect
Novak Biddle Venture Partners Venrock Associates
Jack Lasersohn
Rotating At-Large
The Vertical Group
Research Committee
Diana Frazier Mike Elliott

Research Chairman Noro-Moseley Partners
FLAG Capital Management, LLC
Bruce Evans Stephen Holmes

Summit Partners InterWest Partners
Board Members At-Large
Ira Ehrenpreis James Fleming

Technology Partners Columbia Capital
Norm Fogelsong Michael Greeley

Institutional Venture Partners Flybridge Capital Partners
Josh Green Jim Hale, III

Mohr, Davidow Ventures FTV Capital
Deepak Kamra Pascal Levensohn

Canaan Partners Levensohn Venture Partners
Trevor Loy James Marver

Flywheel Ventures Vantage Point Partners
Jason Mendelson Sherrill Neff

Foundry Group Quaker BioVentures
Robert Nelsen David Prend

ARCH Venture Partners RockPort Capital Partners
Theresia Ranzetta Jonathan Root

Accel Partners U.S. Venture Partners
Scott Sandell
New Enterprise Associates
2 Thomson Reuters
2011
National Venture Capital Association
Yearbook
For the National Venture Capital Association
Prepared by Thomson Reuters
Copyright © 2011 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
disclaims any liability including incidental or consequential damages arising
from errors or omissions in this report.
Thomson Reuters 3
National Venture Capital Association 2011 Yearbook
National Venture Capital Association Thomson Reuters

1655 Fort Myer Drive, Suite 850 3 Times Square, 18th Floor
Arlington, Virginia 22209-3114 New York, NY 10036
Telephone: 703-524-2549 Telephone: 646-223-4431
Telephone: 703-524-3940 Fax: 646-223-4470
www.nvca.org www.thomsonreuters.com
President Vice President, Head of Private Equity and Desktop

Mark G. Heesen Products
Elizabeth Benson
Vice President of Research
John S. Taylor Vice President, Deals and Private Equity Operations
Shariq Kajiji
Senior Vice President
Molly M. Myers Global Business Manager – Private Equity
Jim Beecher
Vice President of Federal Policy & Political Advocacy
Jennifer Connell Dowling Editor-in-Charge
David Toll
Vice President of Strategic Affairs & Public Outreach
Emily Mendell Global Private Equity Operations Manager
Alex Tan
Vice President of Membership & Member Firm
Liaison Press Management
Janice Mawson Matthew Toole
Director of Federal Policy & Political Advocacy Product Manager

Emily A. Baker Lori Ann Silva
Director of Marketing Content Specialist

Jeanne Lazarus Metzger Paul Pantalla
Director of Federal Life Science Policy Senior Analyst

Kelly Slone Francis Base
Public Policy Manager Research Editor

Sumi Singh Eamon Beltran
Membership Coordinator & Database Administrator Senior Art Director

Terry Samm David Cooke
Accounting Manager Sales Manager – Publications (Buyouts, VCJ, peHUB)

Beverley Badley Greg Winterton (646-223-6787)
Manager of Administration and Meetings ThomsonONE.com Sales:

Allyson Chappell Dave Sharma (646-223-4048)
Administrative Assistant
Gwendolyn Taylor
Research Lab
Mavis Moulterd
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 10
Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 15
Capital Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Investments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Portfolio Company Valuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Appendix A: Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Appendix B: MoneyTree Report Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Appendix C: MoneyTree Geographical Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Appendix D: Industry Codes (VEICs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Appendix E: Industry Sector VEIC Ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Appendix F: Stage Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Appendix G: Data Sources and Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Appendix H: Portfolio Company Valuation Guidelines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Appendix I: International Convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Appendix J: Non-US Private Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Thomson Reuters 5
This page is intentionally left blank.
6 Thomson Reuters
What is Venture Capital?
Venture capital has enabled the United States to sup-

port its entrepreneurial talent and appetite by turning
ideas and basic science into products and services
Venture Capital Backed Companies
Known for Innovative Business Models
that are the envy of the world. Venture capital funds
Employment at IPO and Now
build companies from the simplest form – perhaps

just the entrepreneur and an idea expressed as a busi-
Company As of IPO Current # Change
ness plan – to freestanding, mature organizations.

The Home Depot 650 331,000 330,350
Starbucks Corporation 2,521 176,000 173,479
Staples 1,693 75,588 73,895
Risk Capital for Business

Whole Foods Market, Inc. 2,350 52,900 50,550
eBay 138 15,500 15,362
Venture capital firms are professional, institutional

Venture Capital Backed Companies
managers of risk capital that enables and supports the

Known for Innovative Technology and Products
most innovative and promising companies. This

Employment at IPO and Now
money funds new ideas that could not be financed

Company As of IPO Current # Change
with traditional bank financing, that threaten estab-

Microsoft 1,153 91,000 89,847
lished products and services in a corporation, and that

Intel Corporation 460 86,300 85,840
typically require five to eight years to be launched.

Medtronic, Inc. 1,287 40,000 38,713
Apple Inc. 1,015 35,100 34,085
Google 3,021 16,805 13,784
Venture capital is quite unique as an institutional

JetBlue 4,011 11,632 7,621
investor asset class. When an investment is made in a Source: IHS Global Insight. Current data is FY 2007 Year End Data
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
Follow-on investment provides additional funding as way, talent must be recruited and the company scaled
the company grows. These “rounds,” typically occur- up. Ask any venture capitalist who has had an ultra-
ring every year or two, are also equity investment, with successful investment and he or she will tell you that
the shares allocated among the investors and manage- the company that broke through the gravity evolved
ment team based on an agreed “valuation.” But, unless from the original business plan concept with the care-
a company is acquired or goes public, there is little ful 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
that do not lend themselves to being embraced by
The Exit Funnel
Outcomes of the 11,686 Companies
larger companies whose current products could be

First Funded 1991 to 2000
cannibalized by this. Also, with the increased empha-

sis on public company quarterly results, many larger
Went/Going Public
14%
organizations tend to reduce spending on research and

development and product development when things
Still Private
or Unknown*
get tight. Many talented teams have come to the ven-

35%
ture capital process when their projects were turned

Acquired
33%
down by their companies.
Common Structure — Unique Results Known Failed
While the legal and economic structures used to cre-

18%
ate a venture capital fund are similar to those used by

*Of these, most have quietly failed
other alternative investment asset classes, venture pre-agreed formula. Many college endowments, pen-
capital itself is unique. Typically, a venture capital sion funds, charities, individuals, and corporations
firm will create a Limited Partnership with the have benefited far beyond the risk-adjusted returns of
investors as LPs and the firm itself as the General the public markets.
Partner. Each “fund,” or portfolio, is a separate part-
nership. A new fund is established when the venture
Beyond the IPO
capital firm obtains necessary commitments from its
investors, say $100 million. The money is taken from Many of the most exciting venture capital backed
investors as the investments are made. Typically, an companies left the venture portfolios after they went
initial funding of a company will cause the venture public. Far from being a destination, the IPO process
fund to reserve three or four times that first invest- provides needed growth capital for a growing compa-
ment for follow-on financing. Over the next three to ny. A 2009 analysis by IHS Global Insight shows that
eight or so years, the venture firm works with the more than 90% of the jobs at today’s venture backed
founding entrepreneur to grow the company. The pay- public companies were created after it went public.
off comes after the company is acquired or goes pub- That is, these companies on average are 10% of their
lic. Although the investor has high hopes for any com- mature size at the time they go public.
pany 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.
8 Thomson Reuters
Executive Summary
During 2010, the industry continued to right-size and find equilibrium. Capital under management, headcount,
and fundraising all declined, as anticipated. Investment totals were up from 2009 depressed levels, but still
below 2008 levels and well below the 2002-2008 trend line. More than 1,000 new companies were funded by
venture capital firms in 2010.
Initial public offerings in 2010 picked up considerably from the minimal levels of the prior two years. While
this provided some relief for the backlog of mature companies waiting for an opportunity to go public, totals
have to increase far beyond 2010 levels for a sustainable industry. A record number of venture-backed compa-
nies were acquired, but the total proceeds from those purchases were far from a record.
The lack of distributions to the institutional investors who provide the capital to the industry has left these pro-
fessional money managers with little capital to recycle back to the industry. Thus, 2010 remained a difficult
year for many venture capital firms to raise money.
A healthy venture capital ecosystem requires its metrics to be in balance. And while the quality of new busi-
ness opportunities, known as deal flow, remains very high and the best opportunities are getting funded, stress-
es remain.
the ThomsonONE.com (formerly VentureXpert) data-

base of Thomson Reuters, which has been endorsed
Introduction
The National Venture Capital Association 2011 by the NVCA as the official industry activity data-
Yearbook provides a summary of venture capital base. Subscribers to that system can perform consid-
activity in the United States. This ranges from invest- erable further analysis on the underlying data.
ments into portfolio companies to capital managed by
general partners to fundraising from limited partners
to valuations of companies receiving venture capital
Industry Resources
investments to exits of the investments by either IPOs Venture capital under management in the United
or mergers and acquisitions. The statistics for this States by the end of 2010 decreased only slightly
publication were assembled primarily from the from 2009 levels to $176.7 billion. It is, however, the
MoneyTree™ Report by PricewaterhouseCoopers fourth decline in a row and belies the expectation for
and the National Venture Capital Association, based further reduction in industry assets and overall met-
on data from Thomson Reuters and analyzed through rics as the fallout from the technology bubble works
its way through the system almost 10 years later. At
the end of 2010, the industry managed $176.7 billion
dollars, down 38% from the peak a few years back.
Figure 1.0
With the industry in a very constrained fundraising

Venture Capital Under Management
environment in early 2011, further declines are likely.

Summary Statistics
1990 2000 2010
Many of the firm, fund, and headcount declines are
No. of VC Firms in Existence 384 861 791
the result of firms that raised money at the time of the

No. of VC Funds in Existence 716 1,701 1,183
bubble being unable to follow those funds with new

No. of Professionals 3,686 7,921 6,328
funds in recent years. As portfolios are wound down,

No. of First Time VC Funds Raised 13 104 44
these fund managers leave the industry. With 2010

No. of VC Funds Raising Money This Year 86 649 157
fundraising a mere 12% of the amount raised in

VC Capital Raised This Year ($B) 3.2 104.8 12.3
2000, the industry has returned to a more traditional

VC Capital Under Management ($B) 28.3 220.3 176.7
size band. At the end of 2010, 462 firms were active-

Avg VC Capital Under Mgt per Firm ($M) 73.7 255.9 223.4
ly investing. While slightly above 2009 depressed

Avg VC Fund Size to Date ($M) 36.5 88.0 107.8
Avg VC Fund Size Raised This Year ($M) 37.2 161.5 78.3
Largest VC Fund Raised to Date ($M) 1,775.0 5,000.0 6,300.0 levels, this number is a part of a longer term down-
Thomson Reuters 9
trend. Industry headcount continues to decrease, end- and still realize a successful exit. In 2010, first rounds
ing 2010 at 6,328 principals in the industry. overall reflected lower median valuations than these
rounds in the period of 2005-2009, with medical
devices deals being among the exceptions. Follow-on
rounds showed mixed but overall higher valuations in
Commitments
New commitments to venture capital funds in the 2010 than in the reference period.
United States again decreased in 2010 to $12.3 billion
from the post-bubble fundraising peak in 2006, when While IPO exits were more plentiful in 2010, they
$31.8 billion was raised. This reflects an ongoing dif- were not done at higher multiples than in 2009, which
ficult fundraising environment in part created by had only 12 IPOs. IPOs in 2009 had a median valua-
recent economic stress. However, most of the tion of $428.3 billion, an all-time record and almost
decrease reflects the contraction of the U.S. venture double the median valuation of 2010. However, the
capital industry that began after the technology bubble pre-money valuations for 2009 IPOs were 9.7 times
burst in 2000 and the industry sought a more reason- total venture investment, and in 2010 they were only
able size band. 4.4 times total venture investment.
In 2010, 157 funds raised $12.3 billion, down 25%

from 2009, which itself was down 38% from 2008.
Exits
Overall, the 2010 amount raised was down 61% from Venture-backed company exit activity was driven by a
the 2006 post-bubble peak. A look behind the charts record breaking mergers and acquisitions (M&A) mar-
shows that this total was dominated by a small group ket and a strengthening initial public offerings (IPO)
of firms, most of which are the same firms that led market. For full year 2010, there were 72 venture-
fundraising a decade or two ago. backed IPOs, the biggest year for activity since 2007.
More than 400 acquisitions were completed during full
year 2010, the biggest year, by number of deals, for
venture-backed M&A exits since Thomson Reuters
Investments
In 2010, total venture investment increased 20% from started tracking venture capital from the 1970s.
2009 levels from $18.3 billion to $22.0 billion.
Putting this in perspective, 2010 investment remained The most recent three years have seen the number of
22% below 2008 totals and 26% below 2007 which IPOs increase from 6 to 12 to 72. While encouraging,
was a post-bubble high. Many in the industry wel- this is far below the IPO levels seen in 1999 and 2000.
comed the resizing of the industry’s levels from the Remember, too, there is a large pent-up demand for
near $30 billion level seen in 2007 to just above $20 exits by companies funded late in the technology bub-
billion in 2010. Certainly the timing and speed of this ble and shortly thereafter that have not been able to go
downward shift followed the credit crunch in 2008 public up to this point.
and the subsequent questions about world economic
affairs. However, this resizing began after the tech The number of venture-backed companies acquired
bubble burst and is not unexpected. Deal counts fol- during 2010 (427) sets a new record. This follows a
lowed suit, increasing 12% in 2010 from the prior slow acquisition year in 2009 (272) and several years
year, but counts remained 18% below the 2007 post- during and following the technology bubble when
bubble peak. acquisition counts were in the 300s. Despite the larg-
er number of acquisitions, the total disclosed number
dollars ($18.5 billion) is far from a post-bubble
record.
Portfolio Company Post-Money
Valuations
Much has been written about valuation trends for In 2010, IPO and acquisition activity were both far
entrepreneurial companies and whether early round below what is necessary to sustain the industry long
valuations were reasonable enough for a venture cap- term.
ital fund to make a financial and time commitment
10 Thomson Reuters
2011 NVCA Yearbook
Figure 2.0
Capital Under Management
U.S. Venture Funds ($ Billions)
1985 to 2010
300
250
200
($Billions)
150
100
50
0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Figure 3.0
Capital Commitments to
1985 to 2010
120
100
80
($Billions)
60
40
20
0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Thomson Reuters 11
Figure 4.0
Investments
to Portfolio Companies ($ Billions)
1985 to 2010
100
90
80
70
60
($ Billion)
50
40
30
20
10
0
’85 ’86 ’87 ’88 ’89 ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10
Year
Figure 5.0
2010 Investments
By Industry Class
All Investments Initial Investments
No. of No. of Investment No. of No. of Investment
Industry Group Companies Deals Amt ($Bil) Companies Deals Amt ($Bil)
Information Technology 1,596 1,914 10.8 578 578 2.1
Medical/Health/Life Science 679 827 6.3 224 224 1.1
Non-High Technology 474 553 4.9 199 199 1.1
Total 2,749 3,294 22.0 1,001 1,001 4.3
Figure 6.0
2010 Investments
By Company Stage
Seed
8%
Later Stage
29% Early Stage
24%
Expansion
39%
12 Thomson Reuters
2011 NVCA Yearbook
Figure 7.0
Venture Capital Investments in 2010
By Industry Sector
Telecommunications Other
4% 0.10% Biotechnology
17% Business Products
and Services
Software 2% Computers and
18% Peripherals
2%
Consumer Products
Semiconductors and Services
4% 2%
Electronics/
Instrumentation
Retailing/Distribution 2%
1% Financial
Networking and Services
Equipment 2%
3% Healthcare
Services
Medical Devices 1%
and Equipment
Industrial/Energy
10%
Media and Entertainment 16%
IT
6% Services
8%
Figure 8.0
2010 Investments
By State
Number of Pct of Investment Pct of

State Companies Total ($ Millions) Total
California 1,298 39% 11,054.9 50%
Massachusetts 353 11% 2,383.4 11%
New York 264 8% 1,312.8 6%
Texas 144 4% 906.4 4%
Washington 117 4% 624.3 3%
Illinois 59 2% 575.4 3%
Pennsylvania 153 5% 508.5 2%
Colorado 77 2% 469.0 2%
North Carolina 57 2% 456.3 2%
New Jersey 71 2% 450.8 2%
All Others 701 21% 3,233.0 15%
Total 3,294 21,974.8
Thomson Reuters 13
Figure 9.0
Valuations Per Company Industry
2010 Financings ($ Millions)
Avg Upper Lower

Company Industry Val Max Quartile Median Quartile Min
Biotechnology 65.4 390.6 64.1 42.0 13.6 1.2
Business Products and Services 13.5 13.5 13.5 13.5 13.5 13.5
Computers and Peripherals 46.8 66.3 56.6 46.8 37.0 27.2
Consumer Products and Services NA NA NA NA NA NA
Electronics/Instrumentation 12.8 20.1 16.4 12.8 9.1 5.4
Financial Services 102.1 102.1 102.1 102.1 102.1 102.1
Healthcare Services 23.1 23.1 23.1 23.1 23.1 23.1
Industrial/Energy 62.6 102.0 99.8 68.6 31.3 11.1
IT Services 213.3 735.0 286.4 158.3 10.3 6.5
Media and Entertainment 447.6 3,569.0 86.0 45.7 32.9 3.5
Medical Devices and Equipment 75.1 221.3 99.3 68.2 20.1 6.5
Networking and Equipment 18.3 39.2 27.3 15.0 5.9 3.9
Other 17.5 17.5 17.5 17.5 17.5 17.5
Retailing/Distribution 295.3 295.3 295.3 295.3 295.3 295.3
Semiconductors 67.1 88.9 75.7 62.5 56.3 50.0
Software 42.6 161.4 50.6 17.4 7.3 1.7
Telecommunications 10.3 11.0 10.7 10.3 10.0 9.7
Total 115.2 3,569.0 85.5 38.0 11.7 1.2
Figure 10.0
Venture-Backed IPOs
300 25.00
No of IPOs
250 Offer Amount ($B)
20.00
200
15.00 Offer ($ Billion)
No. of IPOs
150
10.00
100
5.00
50
0 0.00
'85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10
Year
14 Thomson Reuters
Industry Resources
Venture capital under management in the United States by the end of 2010 decreased only slightly from 2009
levels to $176.7 billion. It is however the fourth decline in a row and belies the expectation for further reduc-
tion in industry assets and overall metrics as the fallout from the technology bubble works its way through the
system almost 10 years later. At the end of 2010, the industry managed $176.7 billion dollars down 38% from
the peak a few years back. While the number of active firms and professionals in the industry continues to
decline, using our methodology described below, the number of firms remained relative constant through 2010.
With the industry in a very constrained fundraising environment in early 2011, further declines are likely.
Of the 791 firms which raised capital in the last eight vintage years, 45 of these managed more than $1 billion.
A total of 97 firms managed more than $500 million.
Geographic location of the largest venture firms is quite concentrated. California domiciled firms manage 48%
of the industry’s capital although investing partners may be located in other states or even countries. Taken
together, the top five states (California, Massachusetts, New York, Connecticut, and Pennsylvania) hold 81%
of total venture capital in this country.
Many of the firm, fund, and headcount declines are the result of firms which raised money at the time of the
bubble being unable to follow those funds with new funds in recent years. As portfolios are wound down, these
fund managers leave the industry. With 2010 fundraising a mere 12% the amount raised in 2000, the industry
has returned to a more traditional size band. At the end of 2010, 462 firms were actively investing. While slight-
ly above 2009 depressed levels, it is a part of a longer term downtrend. Industry headcount continues to
decrease to 6,328 principals in the industry.
nerships and venture capital funds raised. If a firm

raised both buyout and venture capital funds, only the
METHODOLOGY
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 791 Venture capital under management can be a complex
firms with limited partnerships “in existence”. To statistic to estimate. Indeed, capital under manage-
clarify, this is actually stating that there are 791 firms ment reported by firms can differ from firm to firm as
that have raised a venture capital partnership in the there’s not one singular definition. For example, some
last eight years. In reality, there may well be fewer firms include only cumulative committed capital, oth-
firms actually making new investments. ers may include committed capital plus capital gains,
and still other firms define it as committed capital
For this publication, we are primarily counting the num- after subtracting liquidations. To complicate matters,
ber of firms with limited partnerships and are excluding it is difficult to compare these totals to European pri-
other types of investment vehicles. From that descrip- vate equity firms which include capital gains as part
tion, it may appear that the statistics for total industry of their capital under management measurements.
resources may be underestimated. However, this must
be balanced with the fact capital under management by For purposes of the analysis in this publication, we
captive and evergreen funds is difficult to compare have tried to clarify the industry definition of capital
equitably to typical limited partnerships with fixed under management as the cumulative total of commit-
lives. For this analysis only, the firms counted for capi- ted capital less liquidated funds or those funds that
tal under management include firms with fixed life part- have completed their life cycle. Typically, venture cap-
Thomson Reuters 15
Figure 1.01
Capital Under Management
1985 to 2010
300
250
200
($ Billion)
150
100
50
0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Figure 1.02
Total Capital Under Management
By Firm Type 1985 to 2010 ($ Millions)
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Private Independent 11,366 14,274 16,686 18,110 21,532 22,153 21,356 22,074 24,448 27,566 32,442 38,280 50,261 73,849 116,394 182,187 214,105 216,281 218,222 226,969 234,415 247,575 231,906 192,555 167,382 164,690
Financial Institutions 3,559 3,707 3,911 3,630 3,174 3,160 2,728 2,544 3,071 3,679 4,477 5,779 8,003 10,959 15,827 22,607 23,983 23,290 22,524 21,560 20,625 19,346 15,266 8,322 7,092 7,321
Corporations 1,773 1,766 2,163 2,254 2,276 2,327 2,225 2,342 1,659 1,709 1,616 2,493 2,622 3,523 7,145 13,241 14,279 14,247 13,917 13,508 13,503 13,322 10,246 4,204 3,237 3,743
Other 803 853 841 806 717 660 591 340 222 346 466 548 913 1,169 1,534 2,265 2,933 2,881 2,837 2,863 2,556 2,558 2,182 1,619 989 946
Total 17,500 20,600 23,600 24,800 27,700 28,300 26,900 27,300 29,400 33,300 39,000 47,100 61,800 89,500 140,900 220,300 255,300 256,700 257,500 264,900 271,100 282,800 259,600 206,700 178,700 176,700
ital firms have a stated 10-year fixed life

span, except for life science funds which
Figure 1.03
are often established as 12-year funds.

Distribution of Firms
By Capital Managed 2010
Figure 1.08 shows the reality of fund life.
Thomson Reuters calculates capital under
153
160
management as the cumulative amount

committed to funds on a rolling eight-
140
123 123
117
year basis. Current capital under manage-

120
ment is calculated by taking the capital

93
100 84
under management calculation from the

80
previous year, add in the current year’s

52
funds’ commitments, and subtracting the

60 45
capital raised eight years prior.

40
20
For this analysis, Thomson Reuters clas-

sifies venture capital firms using four
0
0-10 10-25 25-50 50-100 100-250 250-500 500-1000 1000+
distinct types: private independent firms,

Capital Under Management ($ Millions)
financial institutions, corporations, and

This chart shows capital committed to US venture firms in active funds. While much of the
other entities. ‘Private independent’

capital is managed by larger firms, of the 791 firms at the end of 2010, roughly 58% of them
(456) managed $100 million or less. By comparison, just 45 firms managed active funds total-
ing more than $1 billion.
16 Thomson Reuters
2011 NVCA Yearbook
Figure 1.04
Fund and Firm Analysis
Fund Total Total Total Firms That Raised Capital Avg Avg Firms
Vintage Cumulative Cumulative Cumulative Existing Funds in the Last Managed Fund Size Firm Size Actively
Year Funds Firms Capital ($B) Funds 8 Vintage Years ($B) ($M) ($M) Investing
1985 629 322 19.9 530 293 17.5 33.0 59.7 87
1986 705 352 23.3 589 324 20.6 35.0 63.6 107
1987 808 387 27.3 668 352 23.6 35.3 67 101
1988 888 407 30.8 701 366 24.8 35.4 67.8 112
1989 980 436 35.8 727 381 27.7 38.1 72.7 107
1990 1038 452 38.3 716 384 28.3 39.5 73.7 96
1991 1077 459 40.5 642 363 26.9 41.9 74.1 75
1992 1149 478 44.1 604 354 27.3 45.2 77.1 97
1993 1242 508 49.3 613 368 29.4 48.0 79.9 90
1994 1340 539 56.7 635 382 33.3 52.4 87.2 104
1995 1497 604 66.2 689 421 39 56.6 92.6 175
1996 1643 665 77.9 755 464 47.1 62.4 101.5 238
1997 1860 758 97.6 880 537 61.8 70.2 115.1 324
1998 2096 837 127.8 1058 608 89.5 84.6 147.2 374
1999 2433 966 181.4 1356 731 140.9 103.9 192.7 674
2000 2850 1109 264.5 1701 861 220.3 129.5 255.9 1022
2001 3089 1188 304.6 1847 917 255.3 138.2 278.4 734
2002 3164 1202 313.4 1824 914 256.7 140.7 280.9 519
2003 3265 1253 323.8 1768 942 257.5 145.6 273.4 479
2004 3430 1319 342.8 1787 976 264.9 148.2 271.4 531
2005 3603 1389 368.7 1743 1001 271.1 155.5 270.8 508
2006 3781 1459 410.5 1685 1006 282.8 167.8 281.1 538
2007 3989 1545 441 1556 996 259.6 166.8 260.6 580
2008 4166 1602 471.1 1316 858 206.7 157.1 240.9 549
2009 4256 1638 483.2 1167 786 178.7 153.1 227.4 423
2010 4347 1673 490.1 1183 791 176.7 149.4 223.4 462
The correct interpretation of this chart is that since the beginning of the industry to the end of 2010, 1,673 firms had been founded and 4,347 funds had
been raised. Those funds totaled $490.1 billion. At the end of 2010, 791 firms as calculated using our eight-year methodology managed 1,183 individual
funds, each fund typically a separate limited partnership. Capital under management by those funds at the end of 2009 is $176.7 billion. A new column has
been added to this Figure showing the number of firms actively investing which is based on the number of independent and corporate venture groups
investing at least $5 million in MoneyTreeTM deals.
firms are made up of independent private and public agement data referred to in this section consist prima-
firms including both institutionally and non-institu- rily of venture capital firms investing through limited
tionally funded firms and family groups. ‘Financial partnerships with fixed commitment levels and fixed
institutions’ refers to firms that are affiliates and/or lives and does not include infinite lived “evergreen
subsidiaries of investment banks and non-investment funds” or true captive corporate industrial investment
bank financial entities including commercial banks groups without fixed commitment levels. The term
and insurance companies. The ‘Corporations’ classifi- ‘evergreen funds’ refers to funds that have a continu-
cation includes venture capital subsidiaries and affili- ous infusion of capital from a parent organization as
ates of industrial corporations. The capital under man- opposed to the fixed life and commitment level of a
closed-end venture capital fund.
Figure 1.05
Principals Information Figure 1.06
Top 5 States
By Capital Under Management 2010
No. Estimated Avg Mgt
Principals Industry Per Principal State ($ Millions)
Year Per Firm Principals ($M) CA 84,341.9
2007 8.7 8,665 30.0 MA 31,504.6
2008 8.5 7,293 28.3 NY 13,847.1
2009 8.6 6,760 26.4 CT 8,756.8
2010 8.0 6,328 25.7 PA 4,178.1
The correct interpretation of this chart is that at year end 2010, there were Total* 142,628.6
6,328 principals (people who go to board meetings) in the industry. A prin- *Total includes above 5 states only
cipal on average manages $25.7 million and the average firm is made up of
8.0 principals.
Thomson Reuters 17
Figure 1.07
Capital Under Management By State 1985 to 2010 ($ Millions)
State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
CA 4,946 5,905 6,565 6,804 8,007 7,622 7,714 7,628 8,611 9,306 11,565 14,467 19,352 26,449 50,134 82,972 99,657 100,477 102,886 108,550 113,285 122,221 110,640 96,200 83,439 84,342
MA 2,181 2,505 3,392 3,717 4,122 4,255 3,902 4,827 5,015 5,512 6,828 7,328 10,321 14,955 21,542 35,753 44,279 46,852 45,690 46,624 48,176 54,289 52,269 39,469 33,631 31,505
NY 3,458 4,497 4,663 4,483 5,968 6,195 5,850 5,705 6,729 7,884 9,006 10,696 11,442 20,916 27,810 40,781 41,841 39,713 38,698 38,356 37,764 30,624 26,812 14,883 13,274 13,847
CT 1,236 1,380 1,616 1,692 1,531 1,689 1,567 1,660 1,563 1,719 1,817 1,923 3,449 4,459 6,846 8,162 11,427 11,263 11,228 12,684 12,589 13,933 12,645 12,151 8,704 8,757
PA 444 517 547 562 731 773 799 794 573 737 825 1,079 1,499 1,715 2,691 4,944 5,150 4,971 5,254 5,104 5,634 6,152 5,932 4,348 4,093 4,178
NJ 623 721 792 780 777 998 925 592 549 732 961 1,481 1,563 2,175 2,727 3,642 4,323 4,239 4,451 4,102 4,089 5,181 5,040 4,164 3,942 3,814
WA 312 405 383 422 395 383 197 241 228 179 300 461 680 1,080 1,811 2,814 3,637 3,642 3,517 4,503 4,465 4,470 5,038 4,500 3,648 3,604
DC 35 38 38 45 46 47 47 60 28 34 170 1,707 2,378 2,452 2,640 3,624 4,444 4,424 4,286 3,080 3,123 4,200 4,352 4,379 3,594 3,602
TX 451 486 714 713 786 834 770 802 941 1,147 1,162 1,239 1,700 2,986 4,730 7,398 8,465 8,397 8,255 8,654 8,308 8,062 6,339 4,689 3,492 3,320
IL 469 489 788 968 926 942 905 1,101 1,382 1,451 1,476 1,296 1,979 2,430 3,761 4,362 4,768 5,490 5,893 5,997 5,525 5,419 4,552 4,049 3,744 2,882
MD 93 97 122 116 158 163 98 115 377 787 842 1,425 1,749 2,380 3,160 4,898 4,998 4,781 4,736 4,467 4,589 4,569 4,353 2,720 2,955 2,794
VA 72 78 78 84 104 91 56 42 35 32 39 64 148 402 1,143 2,378 2,498 2,512 2,691 2,891 3,459 3,488 3,336 2,188 2,612 2,596
MN 198 294 337 672 744 883 809 763 847 900 880 511 618 714 1,102 2,249 2,188 2,365 2,357 2,367 2,449 2,600 2,473 1,640 1,668 1,323
NC 34 54 87 89 124 114 109 110 109 147 129 280 602 786 999 1,354 1,433 1,582 1,780 1,643 1,470 1,681 1,562 1,212 1,239 1,200
MO 556 580 613 591 599 656 652 641 108 137 120 124 148 111 123 215 241 209 199 296 1,029 1,089 1,272 1,205 1,190 1,193
UT 9 19 19 15 15 16 15 10 10 25 31 31 94 96 132 270 477 450 562 577 534 639 1,240 1,299 1,105 1,108
CO 360 427 326 450 549 507 489 369 456 403 382 451 757 1,012 3,213 4,752 5,259 5,405 5,382 5,210 4,888 4,706 3,028 1,624 990 1,073
MI 111 118 125 121 123 37 13 13 12 9 40 39 64 65 432 580 583 581 623 817 851 869 594 733 788 895
GA 53 58 138 222 225 238 192 191 246 243 239 165 254 557 693 1,286 1,293 1,289 1,213 1,246 1,281 1,141 1,417 863 838 840
OH 867 904 984 871 294 289 297 369 500 559 538 542 862 938 1,426 2,013 2,034 2,016 2,027 2,076 1,895 1,809 1,675 1,033 883 836
TN 102 127 191 183 215 259 276 269 201 293 303 455 525 747 1,071 1,246 1,289 1,169 1,163 1,050 1,040 845 671 572 541 582
FL 124 130 172 192 195 133 110 97 152 224 322 303 380 690 1,081 1,747 1,711 1,643 1,551 1,540 1,768 1,488 1,240 560 542 551
AL 125 130 131 127 134 137 136 137 6 6 6 6 5 24 34 108 108 107 155 174 226 226 217 359 363 364
LA 7 7 7 7 7 5 2 11 23 31 49 90 277 367 448 479 731 727 710 747 585 513 434 420 200 267
WI 178 95 94 91 101 102 78 78 81 164 168 167 138 140 111 184 183 90 90 100 85 255 268 197 199 234
KY 15 16 16 16 0 0 0 0 0 7 21 21 21 21 21 21 21 14 14 14 18 218 219 224 227 227
NM 71 99 135 132 168 256 242 230 207 180 154 151 121 12 12 12 12 12 34 35 70 75 76 78 79 114
IN 28 38 39 37 56 55 56 29 30 21 21 26 7 19 36 510 509 517 516 531 532 545 553 102 113 109
RI 15 16 16 36 36 37 36 36 22 22 23 0 2 2 2 2 26 26 26 26 24 97 98 100 77 77
AZ 40 43 43 73 74 75 75 34 44 43 45 10 10 38 38 101 104 145 180 181 200 172 173 130 119 75
ME 1 1 20 25 26 26 26 28 29 99 89 86 88 89 209 203 291 219 220 216 216 278 161 165 74 74
ID 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 14 14 14 14 14 14 85 85 73 74 74
HI 2 2 2 2 2 2 2 0 0 0 2 2 2 2 12 11 11 11 9 16 16 16 7 14 14 44
IA 49 51 104 101 63 64 61 62 55 55 5 5 16 17 17 16 60 60 55 65 54 60 68 69 39 39
OK 1 29 29 28 37 38 36 37 38 9 10 32 23 67 67 140 140 140 140 118 118 111 112 37 37 37
SD 0 0 0 0 0 0 0 0 0 0 0 10 10 74 74 168 167 167 167 162 163 101 101 19 19 35
OR 168 175 203 239 242 246 227 116 74 74 77 30 30 40 40 100 100 113 83 86 86 77 79 34 40 26
VT 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 15 43 42 42 43 43 43 56 42 14 19
ND 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 13 13 13
NH 24 25 25 49 50 51 50 50 27 27 47 19 66 67 67 66 66 84 65 66 19 30 30 31 31 12
DE 39 40 40 38 47 41 41 14 41 52 100 121 115 117 116 140 106 116 69 56 56 57 57 31 31 10
SC 2 2 2 2 16 16 15 15 15 15 29 52 37 37 37 102 103 117 103 81 86 86 87 21 20 6
MS 0 0 0 0 0 0 0 0 0 0 25 25 25 26 26 25 53 53 28 28 28 30 30 30 1 1
PR 0 0 0 0 0 9 9 9 9 9 9 9 49 40 40 39 68 68 68 69 29 29 30 31 1 1
KS 0 0 0 0 0 13 13 13 14 14 37 37 57 43 43 42 42 42 19 19 0 0 0 0 0 0
NE 0 0 0 1 1 1 1 1 11 11 105 136 139 141 141 176 165 165 71 38 38 38 38 0 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
MT 0 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
NV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 24 23 23 23 23 23 24 24 0 0 0 0
WY 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 118 118 118 117 118 119 119 119 0 0 0
AR 2 2 2 2 2 2 2 0 0 0 0 0 0 0 19 19 19 19 19 19 19 19 0 0 0 0
WV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 21 21 21 21 21 21 21 21 0 0 0
Total 17,500 20,600 23,600 24,800 27,700 28,300 26,900 27,300 29,400 33,300 39,000 47,100 61,800 89,500 140,900 220,300 255,300 256,700 257,500 264,900 271,100 282,800 259,600 206,700 178,700 176,700
Figure 1.08
Life of IT Funds in Years
Life of IT Funds % of
In Years Funds
<= 10 7.4%
11-12 22.2%
13-14 24.1%
15-16 22.2%
17-18 14.8%
>=19 9.3%
100.0%
Source: Adams Street Partners, based on 2010 analysis of dissolved funds.
This chart tracks the year in which a 10-year fund is, in fact, dissolved. These later periods are referred to as “out years.” Historically, after the 10th year,
only a few companies remain in the portfolios that typically do not have huge upside potential. But the slow pace of exits in recent years has resulted a
number of good, mature companies remaining in portfolios well past the nominal 10-year mark. Life science funds tend to have lives 2 years longer than
typical technology funds. In preparing this chart, partial years are rounded to the nearest whole year. So 10.4 years would round to 10 years, and 10.5
years would round up to 11 years. The median life span of a fund in this analysis is 14.17 years.
18 Thomson Reuters
Capital Commitments
New commitments to venture capital funds in the United States again decreased in 2010 to $12.3 billion from
the post-bubble fundraising peak in 2006 when $31.8 billion was raised. This reflects an ongoing difficult
fundraising environment in part created by recent economic stress. However, most of the decrease reflects the
contraction of the U.S. venture capital industry that began after the technology bubble burst in 2000 and the
industry sought a more reasonable size band.
In 2010, 157 funds raised $12.3 billion, down 25% from 2009, which itself was down 38% from 2008. Overall, the
2010 amount raised was down 61% from the 2006 post-bubble peak. A look behind the charts shows that this total
was dominated by a small group of firms, most of which are the same firms that led fundraising a decade or two ago.
For most firms, the fundraising environment in 2010 was difficult, with only the most promising, and in many
cases, established, firms able to raise capital. Over the past few years, it has been very difficult for any firm
not perceived as having top quartile potential to raise money. There are several reasons for fundraising diffi-
culty: (1) the denominator effect where institutional investors found themselves over allocated to the asset class
as their overall portfolio valuations fell, (2) while exit markets have improved from low levels, few distribu-
tions back to investors from exits in recent years impairs the traditional “recycling” of capital from mature
fund exits to newly-emerging funds, and (3) with strong returns difficult in the current environment, top per-
forming firms have a better chance of outperforming other asset classes on a risk-adjusted basis.
Looking at annual commitment totals, 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-allo-
cated to alternative asset classes, including venture capital. This situation has not changed significantly as
fundraising declined through 2010.
The top two fundraising states remained California and Massachusetts. Rounding out the top five states are
New York (moving up from fourth place), Connecticut (new to the top five) and North Carolina (also new to
the top five). Overall, funds domiciled in the top five states accounted for 88% of the capital raised compared
with the top five states raising 82% of the total just two years ago.
Please note that the state of fund domicile matters less than has been true historically. Much of the money is
managed by large, national funds that tend to be domiciled in any of several states with a broad geographic
investing footprint. Readers should not interpret capital available to entrepreneurs in a given state as limited
to the capital raised in that state.
required. The data in this chapter is by calendar year and

As defined by Thomson Reuters, capital commit- incrementally measures how much in new commit-
Methodology
ments, also known as fundraising, are firm capital ments funds raised during the calendar year. For exam-
commitments to private equity/venture capital limited ple, a venture capital firm announces a $200 million
partnerships by outside investors. For purposes of fund in late 2007, raises $75 million in 2008, and sub-
these statistics, the terms “capital commitments,” sequently raises the remaining $125 million in 2009. In
“fundraising,” and “fund closes” are used inter- this chapter, nothing would be reflected in 2007, $75
changeably. There are three sources of data for capi- million would be counted in 2008, and $125 million
tal commitments: (1) SEC filings that are regularly would be counted in 2009. Assuming it started invest-
monitored by our research staff, (2) surveys of the ing and made its first capital call in 2010, the entire fund
industry routinely conducted by Thomson Reuters, would then be considered to be a 2010 vintage year
and (3) verified industry press and press releases from fund. An important note: the fund commitments pre-
venture firms. sented in this publication do not include those corporate
Capital commitments are stated on either a calendar captive venture capital funds that are funded by a cor-
year basis when committed or a vintage year basis once porate parent, nor evergreen funds, which do not typi-
the fund starts investing, depending on the analysis cally raise capital from outside investors.
Thomson Reuters 19
Figure 2.01
Capital Commitments
To U.S. Venture Funds ($ Billions)
1985 to 2010
120
100
80
($ Billion)
60
40
20
0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Figure 2.02
Capital Commitments
To Private Equity Funds 1985-2010
V en t u r e Ca p i t a l Bu you ts a n d Me zz a n ine C a pi tal Pr iv at e Equ i ty Ca pi t al
Year $Mil No. Funds $Mil No. Funds $Mil No. Funds
1985 3,750.7 118 3,074.5 23 6,825.2 141
1986 3,587.4 102 5,001.9 31 8,589.3 133
1987 4,379.1 116 17,528.3 45 21,907.4 161
1988 4,476.7 106 11,653.4 54 16,130.1 160
1989 4,918.8 106 12,034.5 78 16,953.3 184
1990 3,222.7 86 7,744.5 62 10,967.2 148
1991 1,905.7 41 6,186.6 28 8,092.3 69
1992 5,226.8 81 10,795.3 57 16,022.1 138
1993 4,323.2 92 16,043.8 79 20,367.0 171
1994 7,751.6 138 19,490.0 98 27,241.6 236
1995 9,468.9 165 27,129.2 104 36,598.1 269
1996 12,002.6 170 30,103.2 99 42,105.8 269
1997 18,259.9 246 41,343.2 131 59,603.1 377
1998 30,969.8 298 60,831.0 158 91,800.8 456
1999 54,133.6 444 50,458.4 155 104,592.0 599
2000 104,764.3 649 78,232.3 161 182,996.6 810
2001 38,957.8 324 46,903.5 126 85,861.3 450
2002 16,121.4 205 26,547.1 93 42,668.5 298
2003 11,448.9 162 29,256.9 104 40,705.8 266
2004 18,651.9 210 51,492.6 137 70,144.5 347
2005 30,759.6 234 100,893.4 181 131,653.0 415
2006 31,861.9 235 137,849.7 177 169,711.6 412
2007 31,205.0 237 203,913.0 217 235,118.0 454
2008 26,419.2 213 158,964.0 190 185,383.2 403
2009 16,321.5 150 34,153.7 113 50,475.2 263
2010 12,307.9 157 36,404.7 131 48,712.6 288
20 Thomson Reuters
2011 NVCA Yearbook
Figure 2.03
Venture Capital Fund Commitments
1985 to 2010 ($ Millions)
State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
CA 997.7 944.7 1,158.6 936.2 1,519.1 810.7 546.1 1,331.2 1,334.7 1,829.1 3,107.0 3,724.0 5,431.9 8,510.1 21,984.1 43,935.6 13,580.1 2,747.5 5,614.0 8,891.6 12,714.8 13,533.9 13,763.5 14,139.4 8,919.8 5,480.0
MA 534.3 356.1 973.1 813.5 338.5 674.7 180.1 1,051.1 331.5 1,158.4 1,956.3 1,892.5 2,930.3 5,278.5 7,852.9 16,776.8 9,743.2 2,514.5 1,597.0 1,797.1 9,148.4 4,301.5 5,411.6 2,736.4 3,564.5 2,624.1
NY 213.6 1,460.4 694.1 378.9 2,260.1 489.8 473.9 493.9 940.2 1,894.6 2,364.1 2,066.1 3,867.8 9,346.1 9,005.5 17,047.0 3,282.9 7,899.4 1,245.3 1,847.6 1,799.6 2,610.4 4,344.9 1,832.6 1,405.1 1,357.7
CT 271.1 155.9 236.0 288.2 65.9 309.5 150.0 300.0 272.2 388.3 260.2 424.9 1,324.0 1,082.6 2,992.6 2,328.4 3,904.3 59.7 165.0 1,926.5 1,216.3 3,186.0 289.6 876.8 157.5 938.2
NC 6.5 7.0 31.5 22.8 38.1 0.6 0.0 0.0 0.0 63.5 10.1 183.5 349.0 173.7 226.4 613.4 119.6 72.0 275.9 16.0 106.1 399.9 185.3 102.9 5.4 413.6
IL 57.4 47.0 324.6 157.8 26.2 57.2 94.4 247.2 277.8 182.8 229.7 295.2 575.1 466.4 1,353.6 993.5 1,073.2 477.9 701.8 432.3 80.5 465.2 557.6 264.2 381.3 302.5
CO 31.5 70.6 32.2 69.9 79.7 0.4 0.0 0.0 114.2 0.0 19.4 216.4 252.9 432.6 1,942.1 2,414.3 512.6 118.0 93.9 83.9 68.8 132.5 351.3 220.7 3.5 252.6
PA 54.1 73.1 54.7 12.1 118.0 44.5 166.6 30.1 109.7 181.7 113.6 174.0 608.9 177.0 1,285.8 2,440.5 334.3 85.7 363.0 450.7 685.7 794.4 746.0 952.7 173.7 194.2
MI 5.0 0.0 6.7 32.5 0.0 0.0 0.0 0.0 3.0 13.3 0.0 26.0 11.3 0.3 320.8 241.0 8.0 0.0 64.8 33.3 101.4 13.0 49.0 255.6 83.0 141.5
VA 0.0 3.5 10.0 12.8 15.0 2.0 0.0 0.0 0.0 0.0 7.0 20.0 65.4 256.0 924.0 2,286.9 119.1 37.5 196.3 72.0 418.6 554.7 582.4 105.3 14.4 100.0
MO 643.5 0.0 33.3 0.0 0.0 53.1 0.0 0.0 63.6 0.0 11.3 6.0 45.4 25.0 79.6 64.8 286.2 0.0 0.0 80.3 828.7 39.7 210.3 53.9 0.0 72.0
MD 4.2 7.5 24.2 0.0 49.3 13.6 50.0 0.0 224.9 254.2 66.5 439.0 145.0 787.2 839.7 1,987.9 340.5 480.5 105.0 161.5 532.8 472.2 776.4 368.9 483.8 68.6
TX 37.4 61.1 231.3 40.7 161.5 142.8 58.4 381.9 137.0 282.5 193.6 326.0 387.8 1,437.4 1,820.0 4,311.2 2,232.2 185.5 75.6 793.9 629.8 362.5 283.8 1,177.9 77.9 68.5
WA 25.0 126.1 37.4 59.5 0.0 0.0 5.0 48.0 39.9 36.9 128.5 239.3 180.0 408.8 640.3 1,174.6 938.0 83.0 1.2 995.3 280.6 590.2 1,423.9 492.4 5.3 65.0
TN 20.0 23.5 72.5 0.0 34.1 0.0 0.0 40.0 0.0 115.9 83.8 151.5 109.1 266.4 267.0 261.6 81.6 22.4 101.3 16.0 83.8 61.8 99.5 128.7 68.8 40.0
NM 36.2 27.7 0.0 2.1 0.0 155.0 40.0 0.0 0.0 6.1 1.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 17.8 20.4 34.4 5.4 6.9 0.0 0.0 35.0
OH 2.6 0.0 87.0 102.3 0.0 30.4 0.0 116.0 4.4 106.0 10.0 111.1 365.0 58.0 658.6 697.3 330.0 101.7 40.4 209.7 558.3 151.8 208.4 231.4 2.5 30.3
IN 0.0 10.0 0.0 0.0 16.3 4.7 0.0 0.0 0.0 0.0 0.0 5.0 0.0 12.8 20.0 68.0 0.0 10.0 0.0 17.0 6.0 24.5 1.2 28.8 1.0 28.1
WI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 40.0 0.0 0.0 16.0 0.0 16.6 82.0 14.0 0.0 0.0 10.7 0.0 78.4 101.3 15.1 10.2 27.3
FL 9.7 0.0 36.0 10.7 29.3 0.0 35.0 0.0 133.3 105.0 106.0 0.0 77.7 250.0 325.9 954.7 25.8 8.0 56.0 1.0 313.0 11.2 109.3 25.2 32.3 21.3
UT 0.0 10.5 0.8 0.0 0.0 0.0 0.0 0.0 0.0 11.0 0.0 0.0 33.0 50.0 40.0 126.0 223.6 29.6 34.3 40.3 24.0 169.6 213.2 533.7 53.3 16.5
SD 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 11.0 0.0 22.0 14.0 131.0 1.0 0.0 0.0 5.0 0.0 0.0 0.0 14.5 0.0 16.0
OR 0.0 0.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 32.0 32.0 0.0 0.0 10.0 0.0 65.0 0.0 14.0 0.0 2.2 0.0 0.0 2.0 5.0 5.0 12.3
AL 150.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 30.0 0.0 137.0 16.4 11.0 49.0 18.7 69.7 19.1 0.0 117.9 101.4 1.5
GA 0.0 0.0 15.1 65.0 0.0 14.0 0.0 0.0 56.0 0.0 74.2 34.3 40.9 181.0 30.0 847.9 19.0 0.0 0.0 55.0 103.5 102.6 513.0 18.7 30.7 0.8
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 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 13.2 0.0 0.5
NJ 270.0 61.3 156.9 0.3 125.0 243.5 75.0 110.0 176.6 401.3 213.1 605.8 117.6 1,001.8 569.8 1,040.9 651.7 392.1 560.6 196.7 204.3 1,812.4 235.2 47.8 500.0 0.0
DC 38.7 0.0 0.0 4.8 0.0 0.0 0.0 0.0 0.0 225.0 130.0 820.0 667.6 391.5 219.6 1,423.2 622.2 314.8 0.0 324.5 410.2 1,296.3 239.6 1,292.9 204.1 0.0
MN 265.6 109.7 51.2 417.5 20.0 161.8 16.2 946.3 65.9 164.0 46.8 35.5 443.0 216.7 106.6 1,826.5 16.5 275.5 26.0 49.8 295.0 398.2 275.0 325.1 21.8 0.0
LA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.6 14.2 169.0 18.3 24.0 88.0 51.0 374.5 69.5 111.6 52.0 8.0 75.3 4.0 12.5 0.0 0.0 0.0 0.0
OK 0.0 31.8 0.0 0.0 10.3 0.0 0.0 0.0 0.0 0.0 0.0 24.3 0.0 45.3 0.0 110.1 0.0 0.0 0.0 0.0 12.0 38.0 0.0 0.0 0.0 0.0
IA 10.7 0.0 60.1 0.0 0.0 0.0 0.0 56.0 0.0 0.0 5.0 0.0 10.5 1.8 5.0 21.0 26.0 0.0 0.0 10.0 0.0 42.9 0.0 0.0 15.4 0.0
HI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.6 0.0 0.0 0.0 9.5 0.0 0.0 2.5 0.0 7.9 0.0 0.0 0.0 6.4 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 25.0 0.0 20.0 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
RI 16.6 0.0 0.0 24.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 25.0 0.0 0.0 0.0 0.0 64.2 13.8 0.0 0.0 0.0
MS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 12.0 0.0 0.0 0.0 0.0 30.0 0.0 0.0 0.0 0.0 0.0 1.4 0.0 0.0 0.0 0.0
NH 49.4 0.0 0.0 40.0 0.0 0.0 15.0 0.0 0.0 0.0 20.0 0.0 50.0 0.0 0.0 0.0 0.0 11.2 8.8 0.0 0.0 5.0 6.7 0.0 0.0 0.0
ME 0.0 0.0 22.0 947.6 0.0 0.0 0.0 2.0 0.0 58.8 0.0 21.7 0.0 0.0 126.9 0.0 76.5 15.6 3.0 0.0 0.0 45.6 19.5 0.0 0.0 0.0
AZ 0.0 0.0 0.0 37.0 0.0 0.0 0.0 0.0 10.1 0.0 0.0 0.0 0.0 0.0 29.4 60.0 20.7 42.3 40.8 0.0 19.0 0.0 0.0 20.0 0.0 0.0
ID 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.0 27.0 0.0 0.0 0.0 0.0 0.0 75.0 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 0.0 0.0 0.0 0.0 0.0 5.5 4.0 12.8 2.0 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 14.0 7.4 15.0 0.0 42.0 0.0 0.0 0.0 135.0 8.0 2.1 0.0 5.0 65.0 98.0 12.0 0.0 0.0
SC 0.0 0.0 0.0 0.0 12.5 4.5 0.0 0.0 0.0 0.0 14.0 0.0 0.0 0.0 0.0 70.0 0.0 15.0 0.0 0.0 5.6 0.0 0.0 0.0 0.0 0.0
PR 0.0 0.0 0.0 0.0 0.0 10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 31.2 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0
NV 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 50.0 25.0 0.0 0.0 25.0 0.0 0.0 0.0 0.0 0.0 0.0 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 0.0 111.0 36.0 0.0 0.0 0.0 40.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
DE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 25.0 31.0 64.5 0.0 0.0 28.0 0.0 0.0 22.0 0.0 10.0 0.0 0.0 0.0 0.0 0.0 0.0
UN 0.0 0.0 0.0 0.0 0.0 0.0 0.0 62.5 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
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 26.0 0.0 0.0 0.0 0.0 0.0 0.0 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 0.0 0.0 0.0 0.0 0.0 0.0 20.0 0.0 0.0 0.0 0.0 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 19.7 25.0 0.0 0.0 0.0 0.0 0.0 11.0 3.0 0.0 0.0
Total 3,750.7 3,587.4 4,379.1 4,476.7 4,918.8 3,222.7 1,905.7 5,226.8 4,323.2 7,751.6 9,468.9 12,002.6 18,259.9 30,969.8 54,133.6 104,764.3 38,957.8 16,121.4 11,448.9 18,651.9 30,759.6 31,861.9 31,205.0 26,419.2 16,321.5 12,307.9
Thomson Reuters 21
Figure 2.04
Top 5 States
By Venture Capital Committed 2010
No. of Committed
State Funds ($Mil)
California 54 5,480.0
Massachusetts 22 2,624.1
New York 13 1,357.7
Connecticut 4 938.2
North Carolina 4 413.6
Sub-Total 97 10,813.6
Remaining States 60 1,494.3
Total 157 12,307.9
Figure 2.05
Private Equity
Annual Commitment ($ Billions)
1985 to 2010
220.00
200.00
Venture Capital
180.00
Buyouts and Mezzanine
160.00 Capital
140.00
120.00
($ Billion)
100.00
80.00
60.00
40.00
20.00
-
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
22 Thomson Reuters
Investments
In 2010, total venture investment increased 20% from 2009 levels from $18.3 billion to $22.0 billion. Putting
this in perspective, 2010 investment remained 22% below 2008 totals and 26% below 2007 which was a post-
bubble high. Many in the industry welcomed the resizing of the industry’s levels from the near $30 billion level
seen in 2007 to just above $20 billion in 2010. Certainly the timing and speed of this downward shift followed
the credit crunch in 2008 and the subsequent questions about world economic affairs. However, this resizing
began after the tech bubble burst and is not unexpected. Deal counts followed suit increasing 12% in 2010 from
the prior year, but counts remained 18% below the 2007 post-bubble peak.
After years of taking on 1,000 or more new companies each year, the industry in 2009 funded 772 first time
companies but that count increased in 2010 to 1,001. Regardless of the actual count, it is important to remem-
ber that each first funding represents a fresh commitment by venture capital funds to the future.
The contention for venture capitalist attention (and dollars) between existing later stage portfolio companies
and newly-arriving business plans continues. There are still a record number of companies in portfolios in the
later stage of development which in most other environments would have already gone public or otherwise
been acquired. As the IPO and acquisition counts increased in 2010, the number of later stage rounds fell. In
2010, 29% of investment was made into later stage companies. By contrast, 32% of the capital went into Seed
and Early Stage companies.
The life sciences share of the venture capital investment scene backed off somewhat but remained at near-
record levels. In 2010, 17% of the money went into biotechnology, 10% into devices, and 1% into healthcare
services. By contrast, in 2009, 20% of total dollars went to biotechnology companies, 14% went to medical
devices and equipment and 1% went to healthcare services. Clean technology is the industry’s most visible
emerging sector with $3.7 billion invested in 2010, up 61% from the 2009 total but still below 2008’s record
amount of $4.0 billion. The 2010 investment total represents 17% of all venture investment.
California companies received just over 50% of the total investment dollars although individual centers of sec-
tor strength and strong deal flow drove investment to 46 states and DC.
Investment by corporate venture capital groups increased to 9% of total US investment in 2010. Approximately
14% of all rounds involve at least one corporate venture group down from 19% two years earlier.
database of venture capital investment. Secondly,

Thomson Reuters obtains data from SEC filings that
Methodology
As calculated by Thomson Reuters, venture capital are regularly monitored by our research staff. Finally,
investment data are derived from several sources. publicly available sources such as press releases and
Primarily, survey information is obtained from the trade publications are used.
quarterly survey which drives the MoneyTree
Report™ from PricewaterhouseCoopers and the For detailed information on which transactions quali-
National Venture Capital Association based on data fy as MoneyTree deals and are therefore counted in
from Thomson Reuters. This is the official industry this chapter, please refer to Appendix B.
Thomson Reuters 23
Figure 3.1
Venture Capital Investments ($ Billions)
1985 to 2010
100
90
80
70
60
($ Billions)
50
40
30
20
10
0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Figure 3.2
By Industry Group
All Investments Initial Investments

No. of No. of Investment No. of No. of Investment
Industry Group Companies Deals Amt ($Bil) Companies Deals Amt ($Bil)
Information Technology 1,596 1,914 10.8 578 578 2.1
Medical/Health/Life Science 679 827 6.3 224 224 1.1
Non-High Technology 474 553 4.9 199 199 1.1
Total 2,749 3,294 22.0 1,001 1,001 4.3
24 Thomson Reuters
2011 NVCA Yearbook
Figure 3.3
Venture Capital Investments
Top 5 States in 2010
No. of No. of Amt

State Cos Deals Invested ($Bil)
California 1,070 1,298 11.1
Massachusetts 289 353 2.4
New York 221 264 1.3
Texas 121 144 0.9
Washington 98 117 0.6
Total* 1,799 2,176 16.3
*Total includes top 5 states only
Figure 3.4
By Industry Sector
Telecommunication Other
Biotechnology
4% 0.10%
17%
Business Products and
Services
Software 2%
18%
Computers and
Peripherals
2%
Semiconductor Consumer Products and
4% Services
2%
Retailing/Distribution Electronics/Instrumentation
1% 2%
Financial Services
2%
Networking and Equipment
3% Healthcare
Services
Medical Devices and Equipment 1%
10%
Industrial/Energy
16%
Media and
IT Services
Entertainment
8%
6%
Figure 3.5
By Stage
Seed
8%
Later Stage Early Stage

29% 24%
Expansion
39%
Thomson Reuters 25
Figure 3.6
Amount of Capital Invested By State in 2010
($ Millions)
624 57
574
WA
WA
NH
2
215 33
ND
7
140
263 ME
174 MT
MT
ND MN
VT
101 MN
OR
OR 8 1313 2383 MA
15
10 SD 122
23
NY
ID
ID WI 152
WY
WY WI 65 RI
MI 509
NE
NE
102
84 199 CT
IA
IA 157 PA
29 12 575 69 451 NJ
15
143
178
OH
11055 NV
NV
469
468 IL IN
UT
UT
42 31 18DE
CA CO
CO 8 61
24 12 375 VA DE
KS
KS MO
MO KY
456 NC 358
277 MD
13 52 TN MD
83
111 5 21 107 DC
237 OK AR
AZ
AZ NM
AR SC
NM 1 334
302
MS
0 43
AL GA
GA
18 MS AL
906
645
LA
AK
AK
TX
TX
186 GU
FL
117 4
HIHI PR
VI
Figure 3.7
Number of Companies Invested in By State in 2010
117 1012
NH
NH
WA
21 5
ND
2 26
33
65 ME
33
MT
MT ND VT
VT
MN
MN
250
OR 4 264 353 MA
1 SD 21 9
NY
MA
ID WY WI 33
WY WI
MI 153 13 RI
3 3
NE
PA 55 CT
NE IA 5244
3 14 71 NJ
25
31
59 OH
OH
1298 NV 77 IN 4
UT
UT 56
12 IL 45 59
CA CO
CO 36
15 14 WV
MO12 VA DE
DE
KS
KS MO KY
57 NC 70
57
2 18 TN MD
MD
17 1 13
13
12 OK AR 8
AZ NM AR SC DC
NM 63
38
MS
2
28
GA
GA
MS AL
AL
144
94 3
AK TX
TX LA
39 GU
FL
52 1
HI
HI PR
VI
26 Thomson Reuters
2011 NVCA Yearbook
Figure 3.08
Venture Capital Investments in 1985 to 2010
By Region ($ Millions)
Region 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Silicon Valley 707.6 926.8 819.0 921.8 857.5 825.9 711.0 1043.2 830.9 996.2 1712.9 3308.0 4385.4 5457.4 16766.7 31789.7 11593.5 6800.0 6338.8 7753.6 8055.6 9555.6 10935.4 10966.4 7333.1 8548.9
New England 409.4 395.6 483.3 472.6 399.3 346.9 258.6 392.3 325.2 400.2 670.8 1099.2 1461.0 2155.5 5286.0 11224.7 5004.1 2765.1 2789.8 3187.5 2839.4 3054.9 3740.4 3324.9 2200.2 2548.0
NY Metro 204.4 196.9 247.3 290.9 348.7 185.3 173.4 198.5 180.8 264.2 440.9 683.7 1240.2 1559.0 4298.6 9649.0 3358.6 1468.1 1342.0 1622.2 1971.6 2035.4 1718.7 1956.9 1480.5 1848.9
LA/Orange County 185.1 173.2 266.7 191.6 217.9 163.2 113.3 159.1 152.8 191.8 938.2 638.3 782.1 1149.7 3416.1 6444.4 2174.3 1198.7 1060.7 934.0 1533.7 2033.8 1845.0 1981.8 960.9 1590.1
Midwest 140.3 129.4 193.2 144.9 176.7 146.8 152.8 146.7 258.6 357.6 425.5 679.3 836.2 1528.4 2505.2 5243.2 1947.3 901.0 836.9 615.7 696.9 899.8 1091.4 1258.3 787.6 1194.7
Southeast 161.8 223.0 233.0 223.4 193.5 135.9 93.4 312.7 365.0 301.9 728.5 1039.3 1318.5 1603.1 4284.6 7567.9 2445.5 1699.0 1083.7 1279.5 1048.1 1154.8 1693.4 1129.9 933.1 1048.8
Texas 221.4 221.9 200.9 225.7 214.9 124.8 132.3 145.4 216.4 253.2 454.8 520.1 788.4 1091.2 2873.6 5749.5 2785.9 1180.8 1185.3 1092.5 1164.6 1376.9 1411.7 1276.3 687.7 906.4
San Diego 90.3 76.6 100.8 146.3 132.5 106.2 93.0 101.1 121.3 212.6 242.9 444.7 502.3 567.4 1181.4 2020.3 1456.8 944.1 749.1 1169.1 1113.3 1144.7 1838.5 1158.2 944.0 881.9
DC/Metroplex 91.1 58.1 96.1 116.3 131.9 75.8 37.3 47.0 65.7 132.6 371.0 458.6 540.3 1045.0 2021.6 5176.1 1957.5 1060.9 721.9 913.9 991.7 1121.4 1198.4 1071.5 598.1 844.6
Northwest 132.5 125.8 127.6 95.7 102.4 88.6 59.4 219.4 113.4 156.6 347.4 473.7 528.9 771.3 2746.4 3598.1 1273.5 717.9 610.8 990.2 958.3 1170.1 1568.2 1063.0 717.4 817.5
Colorado 70.0 104.7 106.2 93.4 149.2 87.9 50.3 124.3 132.9 183.3 300.9 241.5 371.7 714.9 1801.4 3850.5 1126.0 498.8 634.1 353.7 600.7 597.4 590.3 833.5 463.0 469.0
Philadelphia Metro 50.0 53.0 77.8 69.0 55.7 99.7 29.3 140.6 421.5 133.9 198.0 343.0 417.2 488.6 1459.0 2530.7 882.2 507.6 492.4 744.4 534.8 752.2 799.9 740.0 435.3 430.6
North Central 30.6 39.2 72.4 41.4 48.6 54.0 45.2 81.5 106.6 80.7 199.9 218.3 333.1 403.1 752.0 1236.7 611.5 444.7 480.7 443.9 383.8 403.0 565.9 619.6 383.4 374.7
SouthWest 39.3 79.5 54.8 58.8 42.2 29.6 24.6 84.6 36.3 31.8 95.5 158.5 305.5 366.8 760.5 1293.2 445.5 342.7 221.6 333.4 462.7 479.1 511.8 490.7 282.1 277.7
South Central 13.7 11.4 19.5 12.6 18.5 11.6 9.1 15.6 13.3 42.4 45.2 70.9 67.0 158.5 407.4 388.0 104.8 62.3 63.0 113.9 2.4 47.7 97.8 78.7 23.4 77.7
Upstate NY 13.4 10.7 9.7 5.3 7.3 8.1 3.4 9.1 5.1 0.7 35.5 22.4 78.0 186.9 204.1 263.4 126.9 84.2 120.6 102.8 53.0 101.7 135.4 70.4 10.0 45.9
Sacramento/N.Cal 12.0 34.0 21.2 33.6 4.2 19.3 15.7 7.6 10.2 14.4 17.0 28.6 20.6 85.8 98.8 313.8 230.8 58.8 32.1 36.5 42.5 36.7 110.1 69.0 18.0 33.9
Unknown 2.7 0.0 0.5 0.8 0.3 0.0 0.0 30.0 0.8 0.1 0.3 2.2 4.4 29.6 2.4 58.8 26.3 0.0 1.0 0.9 57.1 0.0 0.0 0.0 4.4 19.5
AK/HI/PR 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 1.0 22.0 7.8 24.6 14.0 5.5 17.4 233.5 69.8 2.3 12.9 11.2 13.9 47.1 20.9 18.3 7.4 16.0
Total 2,575.6 2,859.8 3,130.2 3,144.2 3,101.4 2,509.4 2,002.3 3,258.4 3,357.7 3,776.2 7,233.0 10,454.9 13,995.0 19,367.7 50,883.4 98,631.7 37,620.7 20,737.1 18,777.4 21,698.7 22,524.2 26,012.0 29,873.4 28,107.3 18,269.6 21,974.8
Figure 3.08b
Venture Capital Investments in 1985 to 2010
By Region (Number of Deals)
Region 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Silicon Valley 323 330 333 348 381 388 333 419 313 331 509 775 875 1,049 1,703 2,169 1,108 808 874 951 996 1,209 1,265 1,253 919 967
New England 236 208 248 227 215 211 172 160 144 141 232 333 378 464 653 884 578 452 437 423 431 445 504 490 361 389
NY Metro 88 99 117 103 117 87 85 72 75 81 128 152 235 263 482 808 435 225 194 222 186 284 275 325 255 351
Midwest 97 111 128 102 126 99 89 85 84 80 128 184 231 244 313 500 272 237 171 164 169 210 256 284 228 244
LA/Orange County 93 98 113 100 107 96 90 96 60 57 89 132 158 213 350 522 249 156 146 152 183 227 226 245 169 206
Southeast 93 117 129 109 108 124 108 106 109 111 170 220 296 308 456 655 396 272 240 235 201 226 229 208 139 187
Northwest 46 46 56 64 63 48 41 48 42 47 82 108 132 132 263 336 193 138 109 149 154 173 214 207 133 157
Texas 106 90 103 101 86 83 69 65 66 65 99 133 172 196 307 474 334 174 170 170 174 193 179 152 120 144
DC/Metroplex 46 42 61 57 49 58 54 45 36 47 74 112 136 160 267 500 265 202 182 180 209 213 213 211 131 138
Philadelphia Metro 37 35 50 43 35 42 42 64 50 44 79 91 139 136 136 225 128 97 86 105 91 114 135 150 95 118
San Diego 43 32 50 54 56 47 41 46 48 61 74 106 100 118 149 233 154 114 120 127 134 126 164 128 110 117
Colorado 43 56 59 59 50 47 34 51 47 49 57 81 95 125 160 222 110 88 73 69 79 99 103 107 79 77
SouthWest 19 29 41 24 30 21 25 35 29 27 37 50 72 86 115 147 89 65 53 55 78 84 95 86 68 58
North Central 36 47 53 52 38 43 40 40 40 37 70 71 117 108 115 148 121 72 74 69 65 66 86 83 59 53
South Central 11 10 12 7 8 5 5 8 7 10 15 20 25 25 30 50 30 23 20 30 8 24 31 41 36 42
Upstate NY 17 10 9 10 12 6 4 9 10 5 8 9 20 32 31 35 29 24 22 29 28 38 33 31 12 23
Unknown 11 0 1 2 2 0 0 1 4 2 2 7 7 14 3 17 14 0 1 2 2 0 0 0 7 9
Sacramento/N.Cal 11 17 11 10 6 10 9 9 7 8 7 9 7 16 17 35 27 7 11 8 10 10 19 19 10 8
AK/HI/PR 1 0 0 0 0 0 3 3 1 2 4 8 6 5 5 14 10 3 6 5 6 14 8 9 3 6
Total 1,357 1,377 1,574 1,472 1,489 1,415 1,244 1,362 1,172 1,205 1,864 2,601 3,201 3,694 5,555 7,974 4,542 3,157 2,989 3,145 3,204 3,755 4,035 4,029 2,934 3,294
Thomson Reuters 27
Figure 3.09
1985 to 2010 By Stage ($ Millions)
Stage 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Seed 494.3 718.1 613.1 635.3 541.7 374.5 219.4 528.0 598.6 725.7 1120.2 1216.2 1272.1 1614.8 3443.5 2895.3 689.0 306.6 326.9 452.5 920.2 1244.5 1492.4 1736.2 1738.9 1700.2
Early Stage 491.6 589.6 694.4 705.9 677.5 647.7 500.7 528.2 563.0 800.9 1644.0 2464.7 3308.9 4945.5 10594.1 23095.7 7942.3 3660.3 3462.2 3761.9 3784.9 4182.5 5690.8 5288.8 4596.9 5321.4
Expansion 1149.8 1108.3 1380.3 1430.7 1483.8 1162.8 967.6 1647.5 1714.3 1372.6 3358.7 5232.9 7217.8 9643.6 28394.7 56821.4 21302.1 11713.9 9356.8 9109.0 8332.5 10993.0 10874.4 10305.2 5774.8 8582.6
Later Stage 439.9 443.8 442.4 372.3 398.4 324.5 314.6 554.8 481.8 877.0 1110.1 1541.1 2196.1 3163.8 8451.1 15819.2 7687.4 5056.3 5631.5 8375.3 9486.6 9591.9 11815.9 10777.0 6159.0 6370.6
Total 2575.6 2859.8 3130.2 3144.2 3101.4 2509.4 2002.3 3258.4 3357.7 3776.2 7233.0 10454.9 13995.0 19367.7 50883.4 98631.7 37620.7 20737.1 18777.4 21698.7 22524.2 26012.0 29873.4 28107.3 18269.6 21974.8
Figure 3.09b
1985 to 2010 By Stage (Number of Deals)
Stage 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Seed 360 382 386 365 352 259 189 251 288 330 429 505 538 671 813 704 280 178 210 222 256 388 497 511 350 364
Early Stage 307 326 391 350 328 367 275 287 183 257 523 767 906 1021 1735 2875 1301 880 810 882 847 966 1070 1087 916 1153
Expansion 525 492 588 594 643 587 532 602 508 424 705 1034 1423 1589 2477 3718 2415 1608 1372 1245 1104 1381 1270 1225 845 1024
Later Stage 165 177 209 163 166 202 248 222 193 194 207 295 334 413 530 677 546 491 597 796 997 1020 1198 1206 823 753
Total 1357 1377 1574 1472 1489 1415 1244 1362 1172 1205 1864 2601 3201 3694 5555 7974 4542 3157 2989 3145 3204 3755 4035 4029 2934 3294
Figure 3.09c-1
Quarterly Venture Capital Investments
1985 1986 1987 1988

Stage 1985-1Q 1985-2Q 1985-3Q 1985-4Q 1985 Total 1986-1Q 1986-2Q 1986-3Q 1986-4Q 1986 Total 1987-1Q 1987-2Q 1987-3Q 1987-4Q 1987 Total 1988-1Q 1988-2Q 1988-3Q 1988-4Q 1988 Total
Seed 140.0 139.7 86.0 128.5 494.3 175.5 265.0 102.1 175.5 718.1 142.5 199.7 142.6 128.3 613.1 154.0 142.1 228.2 111.0 635.3
Early Stage 90.4 165.8 102.6 132.8 491.6 123.6 124.6 170.7 170.7 589.6 155.7 178.5 177.1 183.0 694.4 140.6 219.6 185.2 160.5 705.9
Expansion 193.6 312.7 289.0 354.5 1149.8 263.7 349.7 227.1 267.8 1108.3 381.8 344.4 362.8 291.3 1380.3 299.1 448.8 290.3 392.6 1430.7
Later Stage 132.9 82.2 150.7 74.1 439.9 105.3 79.7 132.3 126.5 443.8 89.8 148.9 102.7 100.9 442.4 107.4 67.9 139.6 57.5 372.3
Total 556.9 700.5 628.3 689.9 2575.6 668.1 819.0 632.2 740.5 2859.8 769.8 871.6 785.2 703.6 3130.2 701.1 878.4 843.3 721.5 3144.2
Figure 3.09c-2
1989 1990 1991 1992

Seed 140.6 166.4 102.3 132.4 541.7 76.6 114.5 102.7 80.7 374.5 42.4 79.5 44.7 52.8 219.4 57.8 207.7 60.6 201.8 528.0
Early Stage 244.2 109.2 154.3 169.8 677.5 139.8 190.6 126.5 190.8 647.7 128.5 127.2 119.2 125.8 500.7 117.9 182.1 75.2 153.0 528.2
Expansion 376.4 428.2 248.9 430.4 1483.8 336.0 297.9 194.6 334.2 1162.8 208.0 222.4 245.5 291.7 967.6 428.3 476.8 302.7 439.7 1647.5
Later Stage 87.7 92.4 78.7 139.6 398.4 79.2 83.9 79.3 82.0 324.5 77.6 91.7 52.2 93.1 314.6 192.5 88.5 93.7 180.1 554.8
Total 848.8 796.2 584.2 872.2 3101.4 631.7 686.9 503.2 687.7 2509.4 456.5 520.8 461.6 563.4 2002.3 796.5 955.1 532.2 974.6 3258.4
28 Thomson Reuters
2011 NVCA Yearbook
Figure 3.09c-3
1993 1994 1995 1996

Seed 141.8 128.5 164.3 164.0 598.6 183.7 204.4 146.9 190.7 725.7 257.1 385.6 205.7 271.8 1120.2 300.1 418.5 196.9 300.7 1216.2
Early Stage 162.1 137.5 104.7 158.7 563.0 161.5 172.2 148.8 318.5 800.9 402.5 376.8 346.8 517.8 1644.0 553.0 659.3 572.2 680.3 2464.7
Expansion 328.1 395.8 415.7 574.6 1714.3 303.6 345.8 302.6 420.6 1372.6 617.5 1363.4 728.7 649.1 3358.7 1087.4 1467.0 1186.2 1492.3 5232.9
Later Stage 155.8 90.2 92.9 143.0 481.8 156.3 169.7 225.2 325.9 877.0 303.8 295.7 259.9 250.6 1110.1 240.3 422.3 390.2 488.3 1541.1
Total 787.8 752.0 777.6 1040.3 3357.7 805.1 892.1 823.4 1255.6 3776.2 1581.0 2421.5 1541.1 1689.3 7233.0 2180.8 2967.0 2345.5 2961.6 10454.9
Figure 3.09c-4
1997 1998 1999 2000
Seed 369.1 303.1 307.4 292.5 1272.1 357.3 391.4 430.2 435.9 1614.8 484.2 782.8 935.1 1241.4 3443.5 764.1 865.9 810.3 455.0 2895.3
Early Stage 716.7 818.0 752.0 1022.3 3308.9 1033.0 971.9 1073.0 1867.7 4945.5 1113.2 1806.9 2502.7 5171.3 10594.1 6720.2 6306.2 5387.1 4682.2 23095.7
Expansion 1282.8 1901.1 1890.4 2143.6 7217.8 1655.6 2950.4 2586.0 2451.5 9643.6 2924.9 4942.8 7463.5 13063.5 28394.7 15579.7 15085.1 14699.9 11456.7 56821.4
Later Stage 463.7 479.2 584.8 668.4 2196.1 744.7 853.9 734.4 830.8 3163.8 1338.5 2462.4 1847.3 2802.9 8451.1 4026.8 3918.5 4034.0 3839.9 15819.2
Total 2832.3 3501.3 3534.6 4126.8 13995.0 3790.6 5167.6 4823.7 5585.8 19367.7 5860.9 9994.8 12748.6 22279.1 50883.4 27090.8 26175.7 24931.3 20433.8 98631.7
Figure 3.09c-5
2001 2002 2003 2004
Seed 234.6 234.6 112.6 107.2 689.0 61.8 89.8 78.3 76.6 306.6 68.7 90.3 86.6 81.2 326.9 90.2 115.2 109.3 137.8 452.5
Early Stage 3296.2 1863.9 1593.0 1189.2 7942.3 1071.0 1069.5 771.7 748.2 3660.3 674.9 981.9 778.0 1027.4 3462.2 861.6 945.8 952.1 1002.4 3761.9
Expansion 6279.6 6175.6 4207.2 4639.7 21302.1 3639.5 3561.6 2334.8 2178.0 11713.9 2311.8 2364.9 2199.3 2480.8 9356.8 2071.7 2751.2 2025.0 2261.0 9109.0
Later Stage 2205.4 2214.8 1671.7 1595.5 7687.4 1669.6 1073.8 1091.1 1221.8 5056.3 1000.8 1295.8 1559.8 1775.2 5631.5 2130.2 2207.0 1671.7 2366.4 8375.3
Total 12015.7 10488.9 7584.6 7531.5 37620.7 6441.8 5794.7 4276.0 4224.6 20737.1 4056.2 4732.9 4623.6 5364.6 18777.4 5153.7 6019.3 4758.1 5767.6 21698.7
Figure 3.09c-6
2005 2006 2007 2008
Seed 119.5 491.0 157.1 152.6 920.2 234.1 368.8 343.8 297.8 1244.5 299.0 346.2 352.8 494.5 1492.4 446.5 497.6 474.3 317.8 1736.2
Early Stage 839.2 932.6 1058.7 954.5 3784.9 847.7 875.3 1053.3 1406.3 4182.5 1166.5 1616.5 1241.3 1666.4 5690.8 1310.1 1396.4 1253.0 1329.4 5288.8
Expansion 2090.1 2312.4 1661.9 2268.0 8332.5 2515.4 3239.1 2896.5 2342.1 10993.0 2888.4 2300.4 2920.9 2764.6 10874.4 3348.9 2509.5 2406.9 2039.9 10305.2
Later Stage 1945.3 2358.4 2860.9 2322.0 9486.6 2686.8 2459.5 2350.3 2095.4 9591.9 2783.1 2946.1 3246.1 2840.5 11815.9 2697.6 2954.3 2954.8 2170.2 10777.0
Total 4994.1 6094.3 5738.6 5697.2 22524.2 6284.0 6942.7 6643.9 6141.5 26012.0 7137.1 7209.3 7761.0 7766.0 29873.4 7803.1 7357.8 7089.1 5857.3 28107.3
Figure 3.09c-7
2009 2010
Stage 2009-1Q 2009-2Q 2009-3Q 2009-4Q 2009 Total 2010-1Q 2010-2Q 2010-3Q 2010-4Q 2010 Total
Seed 279.0 544.1 519.2 396.5 1738.9 421.1 766.6 282.2 230.3 1700.2
Early Stage 702.6 1092.4 1167.0 1634.9 4596.9 1035.3 1578.3 1312.0 1395.9 5321.4
Expansion 916.4 1388.7 1768.7 1701.0 5774.8 1873.4 2793.9 1637.6 2277.7 8582.6
Later Stage 1502.8 1254.4 1756.9 1644.8 6159.0 1608.6 1754.8 1773.1 1234.1 6370.6
Total 3400.8 4279.7 5211.9 5377.2 18269.6 4938.4 6893.6 5004.8 5138.0 21974.8
Thomson Reuters 29
Figure 3.09d-1
1985 1986 1987 1988
Seed 111 89 61 99 360 133 107 62 80 382 115 102 86 83 386 118 78 88 81 365
Early Stage 88 80 61 78 307 109 69 71 77 326 124 83 97 87 391 96 91 87 76 350
Expansion 141 120 114 150 525 166 133 93 100 492 172 131 152 133 588 152 177 127 138 594
Later Stage 59 40 36 30 165 55 49 29 44 177 61 57 45 46 209 48 40 40 35 163
Total 399 329 272 357 1357 463 358 255 301 1377 472 373 380 349 1574 414 386 342 330 1472
Figure 3.09d-2
1989 1990 1991 1992
Seed 106 97 77 72 352 60 70 58 71 259 51 48 42 48 189 49 68 48 86 251
Early Stage 99 63 82 84 328 87 95 74 111 367 79 70 58 68 275 74 87 51 75 287
Expansion 212 156 118 157 643 148 147 140 152 587 129 128 123 152 532 154 160 101 187 602
Later Stage 44 29 38 55 166 47 51 40 64 202 48 65 53 82 248 68 40 41 73 222
Total 461 345 315 368 1489 342 363 312 398 1415 307 311 276 350 1244 345 355 241 421 1362
Figure 3.09d-3
1993 1994 1995 1996
Seed 69 68 66 85 288 89 68 82 91 330 125 95 95 114 429 132 139 98 136 505
Early Stage 40 48 39 56 183 64 62 53 78 257 133 136 116 138 523 151 209 181 226 767
Expansion 144 119 117 128 508 103 109 99 113 424 190 178 165 172 705 233 245 239 317 1034
Later Stage 64 46 41 42 193 46 64 37 47 194 55 46 54 52 207 65 71 75 84 295
Total 317 281 263 311 1172 302 303 271 329 1205 503 455 430 476 1864 581 664 593 763 2601
Figure 3.09d-4
1997 1998 1999 2000
Seed 162 118 120 138 538 150 162 165 194 671 167 212 247 187 813 198 196 172 138 704
Early Stage 204 213 228 261 906 241 223 248 309 1021 249 381 451 654 1735 774 790 687 624 2875
Expansion 312 368 326 417 1423 373 412 410 394 1589 388 568 609 912 2477 1012 991 901 814 3718
Later Stage 87 73 80 94 334 97 112 97 107 413 124 157 127 122 530 170 144 178 185 677
Total 765 772 754 910 3201 861 909 920 1004 3694 928 1318 1434 1875 5555 2154 2121 1938 1761 7974
Figure 3.09d-5
2001 2002 2003 2004
Seed 81 73 67 59 280 47 53 40 38 178 55 59 44 52 210 44 73 42 63 222
Early Stage 437 340 271 253 1301 247 245 192 196 880 192 216 190 212 810 205 236 214 227 882
Expansion 642 675 549 549 2415 417 462 348 381 1608 350 324 349 349 1372 291 359 270 325 1245
Later Stage 136 143 130 137 546 142 108 121 120 491 119 146 148 184 597 184 198 175 239 796
Total 1296 1231 1017 998 4542 853 868 701 735 3157 716 745 731 797 2989 724 866 701 854 3145
30 Thomson Reuters
2011 NVCA Yearbook
Figure 3.09d-6
2005 2006 2007 2008

Seed 49 66 67 74 256 79 93 116 100 388 88 135 130 144 497 132 127 150 102 511
Early Stage 214 216 215 202 847 199 238 227 302 966 243 312 246 269 1070 256 289 266 276 1087
Expansion 273 294 238 299 1104 331 363 348 339 1381 280 320 323 347 1270 340 332 276 277 1225
Later Stage 204 261 274 258 997 274 285 233 228 1020 264 301 318 315 1198 298 326 314 268 1206
Total 740 837 794 833 3204 883 979 924 969 3755 875 1068 1017 1075 4035 1026 1074 1006 923 4029
Figure 3.09d-7
2009 2010
Stage 2009-1Q 2009-2Q 2009-3Q 2009-4Q 2009 Total 2010-1Q 2010-2Q 2010-3Q 2010-4Q 2010 Total
Seed 66 83 98 103 350 87 111 87 79 364
Early Stage 185 202 223 306 916 249 341 276 287 1153
Expansion 172 206 211 256 845 247 298 229 250 1024
Later Stage 215 218 184 206 823 181 213 200 159 753
Total 638 709 716 871 2934 764 963 792 775 3294
Figure 3.10
1985 to 2010 By Industry ($ Millions)
Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Software 569.9 554.6 489.1 451.0 433.2 500.1 435.9 584.6 432.7 613.3 1,069.3 2,152.1 3,191.6 4,192.3 9,982.6 23,166.2 10,019.5 5,072.3 4,401.3 5,342.0 4,798.9 4,911.1 5,431.4 5,165.7 3,281.6 4,009.8
Biotechnology 106.2 211.6 254.1 345.7 305.3 278.2 245.8 511.3 453.5 549.7 745.7 1,123.8 1,304.0 1,458.1 1,975.4 3,971.4 3,270.4 3,181.2 3,591.4 4,229.1 3,757.6 4,338.6 5,201.9 4,443.6 3,553.3 3,736.1
Industrial/Energy 194.3 184.3 271.5 201.8 306.4 164.7 149.9 266.5 278.1 266.2 474.8 497.5 684.9 1,411.1 1,532.2 2,484.6 1,026.8 712.1 692.9 746.0 851.3 1,938.5 3,034.1 4,631.0 2,448.1 3,407.7
Medical Devices and Equipment 170.1 170.7 251.8 334.5 330.7 308.4 213.8 468.4 398.6 406.8 582.0 573.9 983.4 1,062.0 1,376.7 2,212.9 1,845.6 1,781.6 1,478.3 1,762.6 2,164.5 2,827.0 3,630.7 3,443.1 2,547.3 2,260.9
IT Services 21.4 31.0 39.5 28.4 36.1 35.4 38.9 28.2 31.3 110.8 159.3 424.9 653.9 1,016.8 3,860.9 8,525.8 2,167.1 989.5 702.5 766.4 1,001.7 1,428.0 1,828.3 1,914.9 1,181.8 1,659.8
Media and Entertainment 89.4 107.7 141.8 126.7 151.8 89.3 56.3 130.9 242.0 241.8 925.6 1,043.1 924.7 1,695.3 6,458.3 9,824.6 2,126.3 686.3 824.7 883.1 1,111.0 1,699.5 1,978.9 1,706.2 1,209.8 1,426.3
Semiconductors 226.5 271.0 248.1 286.3 158.4 170.9 73.6 140.0 61.6 128.9 189.1 302.9 561.4 623.7 1,191.1 3,447.8 2,249.0 1,491.2 1,770.2 2,031.0 1,955.1 2,109.1 2,018.4 1,499.3 761.3 977.7
Telecommunications 169.7 166.3 145.3 147.0 111.2 120.6 104.5 175.0 214.2 444.1 797.1 1,140.6 1,438.4 2,496.6 7,698.2 15,910.1 4,938.0 2,057.8 1,605.6 1,746.2 2,231.7 2,518.3 1,894.7 1,582.0 517.1 894.7
Networking and Equipment 209.9 148.3 128.5 128.5 194.0 155.0 125.1 234.6 504.8 229.4 339.8 607.8 932.4 1,351.8 4,554.0 11,149.0 5,399.9 2,569.2 1,669.1 1,489.0 1,497.2 1,284.8 1,574.3 822.5 807.9 663.6
Financial Services 78.7 102.3 63.2 203.0 221.1 57.3 20.6 106.7 114.7 115.4 181.8 315.0 348.7 728.0 2,029.2 4,007.2 1,207.6 330.4 387.2 493.8 889.8 418.9 570.7 490.8 378.6 549.3
Consumer Products and Services 60.1 123.1 152.9 148.6 92.1 132.6 124.7 99.3 127.8 155.1 425.5 476.0 715.9 580.7 2,364.3 2,974.9 564.8 211.8 156.2 310.7 318.8 362.7 378.7 404.1 362.1 546.5
Computers and Peripherals 428.5 417.4 382.6 337.3 278.6 219.2 161.0 179.1 148.3 169.0 298.3 344.0 374.3 351.6 863.7 1,520.3 586.9 462.0 369.4 602.2 554.0 471.3 534.9 454.1 388.4 514.6
Electronics/Instrumentation 112.7 117.7 122.4 76.3 110.8 60.8 68.2 51.9 53.7 64.8 119.2 194.0 256.5 222.2 254.0 749.5 377.2 263.9 203.3 365.7 411.7 684.1 534.9 671.9 299.8 410.2
Business Products and Services 24.4 53.9 50.0 42.3 42.4 55.0 70.6 34.2 69.7 35.5 154.9 356.4 390.1 666.3 2,719.9 4,389.7 980.2 433.4 648.0 378.0 324.3 501.3 613.1 443.8 243.4 405.2
Healthcare Services 79.3 116.6 116.6 83.3 138.9 77.2 49.9 151.4 140.4 162.6 448.4 647.5 878.5 846.8 1,282.5 1,286.4 517.7 346.4 216.0 367.3 412.1 333.9 300.0 155.8 136.1 322.9
Retailing/Distribution 31.9 80.7 272.3 203.3 190.4 84.6 30.7 96.3 80.7 77.0 312.2 234.6 295.2 567.7 2,649.3 2,974.7 298.0 144.0 60.1 184.8 187.3 181.4 347.0 278.3 145.6 166.8
Other 2.5 2.5 0.3 0.3 0.0 0.0 32.7 0.0 5.8 5.8 10.0 20.7 61.1 96.7 91.1 36.4 45.7 4.0 1.0 0.9 57.1 3.5 1.4 0.0 7.4 22.6
Total 2,575.6 2,859.8 3,130.2 3,144.2 3,101.4 2,509.4 2,002.3 3,258.4 3,357.7 3,776.2 7,233.0 10,454.9 13,995.0 19,367.7 50,883.4 98,631.7 37,620.7 20,737.1 18,777.4 21,698.7 22,524.2 26,012.0 29,873.4 28,107.3 18,269.6 21,974.8
Figure 3.10b
1985 to 2010 By Industry (Number of Deals)
Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Software 322 320 299 276 294 303 286 297 240 250 429 683 816 969 1,401 2,126 1,268 990 942 936 907 964 984 996 694 837
Biotechnology 73 97 130 145 128 139 136 160 136 140 176 236 248 282 268 357 335 316 353 391 387 462 491 501 426 465
Medical Devices and Equipment 130 111 164 147 180 189 159 190 151 128 180 213 269 285 281 289 250 233 241 272 284 356 396 390 326 326
Media and Entertainment 52 61 82 68 67 55 48 75 74 92 139 178 214 263 695 933 359 157 130 137 191 314 376 396 253 294
Industrial/Energy 126 131 155 134 140 145 122 126 95 95 130 158 217 189 199 247 200 131 136 145 150 219 305 361 237 283
IT Services 24 24 31 22 27 30 30 19 17 31 60 123 166 204 452 691 323 174 145 152 155 216 267 282 218 275
Telecommunications 87 76 91 78 77 55 65 63 69 71 138 210 267 333 531 866 491 277 219 219 246 319 285 238 133 135
Semiconductors 85 71 87 90 78 73 48 56 42 38 62 71 114 121 146 256 207 165 210 250 227 248 223 196 124 125
Consumer Products and Services 46 51 69 57 50 62 43 49 48 65 112 129 159 160 275 280 115 68 47 64 74 78 100 107 85 105
Business Products and Services 21 37 42 33 29 25 18 20 30 21 49 67 95 139 278 459 172 100 95 76 76 100 106 119 79 85
Financial Services 24 29 36 42 40 23 22 23 30 29 44 61 82 111 188 334 142 74 59 66 62 81 78 69 53 73
Computers and Peripherals 158 140 123 132 123 100 79 80 65 65 91 98 111 91 103 136 79 61 59 69 66 68 75 68 57 69
Electronics/Instrumentation 77 67 69 57 60 54 48 42 29 35 49 44 53 58 54 77 60 61 57 72 87 96 96 96 61 66
Networking and Equipment 78 73 72 68 73 75 64 86 63 75 80 122 140 213 290 479 336 228 191 196 183 142 145 114 106 64
Healthcare Services 33 55 55 45 53 41 36 42 46 42 70 130 149 148 154 164 109 72 72 62 69 51 56 50 38 43
Other 2 2 2 1 0 1 2 0 3 2 5 8 10 9 16 10 11 2 1 3 3 1 6 3 15 25
Retailing/Distribution 19 32 67 77 70 45 38 34 34 26 50 70 91 119 224 270 85 48 32 35 37 40 46 43 29 24
Total 1,357 1,377 1,574 1,472 1,489 1,415 1,244 1,362 1,172 1,205 1,864 2,601 3,201 3,694 5,555 7,974 4,542 3,157 2,989 3,145 3,204 3,755 4,035 4,029 2,934 3,294
Thomson Reuters 31
Figure 3.11
Venture Capital Investments By State 1985 to 2010 ($ Millions)
State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
CA 995.0 1,210.6 1,207.7 1,293.3 1,212.0 1,114.7 933.0 1,310.9 1,115.1 1,415.0 2,911.0 4,419.6 5,690.5 7,260.2 21,463.1 40,568.3 15,455.5 9,001.6 8,180.7 9,893.2 10,745.1 12,770.7 14,729.0 14,175.4 9,256.0 11,054.9
MA 372.8 349.7 407.3 374.7 307.2 279.6 217.2 347.6 292.0 349.7 592.7 1,017.6 1,319.8 1,830.8 4,755.5 9,974.6 4,601.2 2,459.5 2,570.1 2,981.2 2,610.0 2,842.0 3,568.1 3,004.2 2,074.8 2,383.4
NY 111.9 68.6 86.2 104.3 156.6 39.5 42.5 129.0 98.5 68.1 265.3 282.8 775.3 1,227.6 3,250.5 6,442.4 1,892.7 696.7 609.1 758.3 1,116.2 1,286.4 1,116.2 1,344.7 935.4 1,312.8
TX 221.4 221.9 200.9 225.7 214.9 124.8 132.3 145.4 216.4 253.2 454.8 520.1 788.4 1,091.2 2,873.6 5,749.5 2,785.9 1,180.8 1,185.3 1,092.5 1,164.6 1,376.9 1,411.7 1,276.3 687.7 906.4
WA 46.6 51.3 74.4 36.7 73.1 56.3 29.1 160.6 94.7 134.1 297.9 379.8 400.2 686.7 2,177.1 2,752.3 1,041.3 545.1 442.6 837.0 790.7 1,035.4 1,261.3 870.4 596.9 624.3
IL 44.4 29.4 38.5 42.0 89.4 71.5 82.6 59.6 80.9 133.4 181.3 320.3 351.5 350.0 1,255.0 2,185.8 956.7 280.1 358.1 200.5 262.5 350.0 440.3 437.7 237.4 575.4
PA 43.0 32.9 77.8 65.7 48.1 101.2 28.2 122.8 418.8 142.3 138.9 294.2 415.3 448.3 1,477.5 2,791.4 928.0 406.0 461.9 619.1 439.0 858.7 809.3 679.0 419.1 508.5
CO 70.0 104.7 106.2 93.4 149.2 87.9 50.3 124.3 132.9 183.3 300.9 241.5 371.7 714.9 1,801.4 3,850.5 1,126.0 498.8 634.1 353.7 600.7 597.4 590.3 833.5 463.0 469.0
NC 17.2 16.8 21.2 13.6 14.8 33.6 10.0 43.3 21.3 60.1 201.7 157.7 270.4 320.2 765.8 1,709.9 542.4 540.6 381.9 285.0 323.1 426.9 462.6 405.7 244.6 456.3
NJ 71.0 114.5 126.6 97.3 152.9 69.0 65.8 82.1 64.3 178.8 193.6 397.0 441.0 398.3 846.3 2,835.9 1,420.4 918.8 828.6 976.9 874.1 716.3 608.2 724.8 536.4 450.8
VA 29.7 20.5 62.5 64.9 46.9 45.6 8.8 24.7 38.7 72.9 252.9 318.8 326.5 706.1 1,126.5 3,104.2 936.1 412.9 340.9 278.9 492.1 433.1 532.9 515.6 252.9 375.4
MD 41.4 20.8 30.5 45.5 85.0 28.4 27.7 17.4 26.0 55.4 117.4 133.2 184.8 311.8 608.4 1,618.2 859.2 608.5 319.5 549.2 465.2 637.9 582.6 490.7 295.6 358.3
GA 54.4 105.3 58.6 86.0 53.1 19.7 31.8 157.4 150.7 83.1 110.5 232.4 387.7 422.2 1,056.2 2,156.3 795.0 554.0 277.0 486.1 241.0 359.9 443.7 382.1 301.1 333.5
CT 58.5 56.5 92.5 159.1 80.6 129.5 83.8 52.8 31.8 78.5 116.8 139.4 251.9 328.5 874.1 1,455.5 519.9 170.3 205.5 228.9 208.2 266.4 274.0 121.2 157.4 199.5
FL 31.1 33.3 68.1 56.8 31.7 31.8 25.9 78.7 85.4 83.8 207.3 359.5 404.7 544.8 1,580.8 2,570.1 723.2 360.7 305.9 382.5 352.7 297.7 540.9 230.4 291.2 185.7
OR 84.2 73.8 50.5 56.4 29.3 32.3 29.3 53.8 18.5 22.5 34.3 93.8 125.4 54.3 537.5 810.6 204.9 164.5 116.1 149.2 128.5 116.1 287.9 154.4 91.4 173.5
OH 29.4 51.0 43.7 67.9 32.7 22.4 14.6 26.2 47.5 58.6 65.7 152.4 213.5 306.6 454.7 917.3 211.3 249.8 180.3 69.1 109.7 69.9 213.5 212.3 116.6 156.8
MI 33.3 19.1 56.0 15.2 21.8 26.4 3.7 14.7 41.7 8.6 65.8 72.4 83.2 120.2 242.1 286.3 131.9 106.3 87.5 116.1 80.8 117.3 101.1 255.3 133.7 151.6
UT 4.0 29.4 5.3 11.4 4.4 0.8 1.5 21.4 3.0 0.0 25.0 52.3 98.7 116.2 402.0 654.1 211.0 109.0 110.1 203.0 153.5 169.6 142.1 210.2 154.5 143.0
MN 22.3 25.5 34.3 25.8 35.0 42.7 39.0 58.8 42.4 48.8 168.6 164.9 249.5 341.6 608.3 909.8 429.4 377.2 224.1 379.5 298.4 326.3 479.9 478.6 266.2 139.5
WI 7.1 12.9 16.4 12.8 11.6 9.9 5.5 21.1 24.1 8.4 8.9 20.9 61.8 34.4 86.4 159.5 83.8 45.5 37.5 55.4 66.8 70.1 78.6 64.0 23.9 122.2
DC 18.9 14.8 2.9 5.9 0.0 1.7 0.8 4.8 1.1 4.3 0.7 6.7 5.2 26.7 286.7 449.1 161.2 23.5 48.8 80.2 26.3 45.8 73.3 35.3 46.6 107.1
IA 0.7 0.7 7.8 1.3 2.0 1.4 0.7 1.6 2.0 19.8 12.1 22.1 17.1 8.8 4.5 31.4 8.4 2.0 0.0 5.3 11.2 0.2 3.3 55.1 83.7 101.5
AZ 15.0 37.6 37.9 43.6 31.4 27.0 16.5 57.2 32.8 30.7 66.3 91.5 170.2 218.7 320.2 594.3 187.8 188.3 72.1 70.7 106.4 259.3 213.7 209.8 107.0 83.0
IN 13.3 15.4 17.6 5.6 7.6 10.5 7.9 0.0 16.5 56.1 8.3 20.8 25.2 31.8 37.0 259.0 38.8 39.6 12.0 67.3 89.0 63.9 58.0 75.9 156.9 68.7
RI 12.6 9.7 6.6 14.2 30.9 2.7 0.4 5.1 8.7 0.0 3.4 0.3 11.5 26.0 23.9 74.6 110.7 95.0 53.1 38.3 76.2 80.7 7.0 40.7 39.2 64.8
MO 3.0 3.8 10.6 1.6 9.4 6.8 34.9 25.2 49.2 39.1 83.1 51.9 67.4 611.6 165.7 555.4 237.2 74.0 74.3 26.0 56.0 41.7 90.7 89.5 18.3 60.9
NH 3.8 14.7 12.8 18.8 15.3 16.2 27.2 4.3 19.8 7.9 27.0 42.6 44.8 153.9 230.0 655.6 218.7 181.8 134.9 124.3 91.4 105.3 129.8 230.3 37.9 56.9
TN 45.5 53.9 51.5 38.7 67.6 36.0 19.2 7.0 44.3 40.6 157.7 141.4 101.8 98.0 476.0 457.9 189.2 110.2 75.9 83.7 99.5 41.0 123.4 71.4 48.0 52.1
KS 2.3 2.2 3.9 5.4 11.4 8.9 7.9 2.3 4.8 1.5 8.7 25.4 9.2 10.4 24.4 211.7 39.6 6.8 24.5 44.9 1.4 20.2 73.6 47.2 7.9 41.7
VT 0.0 6.6 8.0 3.3 7.4 5.5 1.3 3.8 0.0 5.3 4.2 0.3 3.2 1.4 0.0 8.4 11.6 1.5 1.2 5.1 35.2 6.3 6.6 41.8 14.2 32.8
DE 0.3 0.0 4.5 1.4 4.8 1.4 1.2 9.7 3.0 12.4 4.4 3.0 1.1 0.0 16.8 134.7 14.6 19.4 0.4 2.1 11.1 5.3 5.6 59.7 17.5 31.0
NV 0.0 2.4 4.1 0.0 5.5 0.1 2.2 5.9 0.0 1.2 0.6 1.8 9.7 24.2 27.8 27.3 33.3 31.7 37.4 39.6 127.4 19.6 29.4 12.6 15.4 28.6
NM 20.3 10.0 7.5 3.9 1.0 1.8 4.4 0.0 0.5 0.0 3.6 12.9 27.0 7.7 10.5 17.5 13.5 13.7 2.0 20.1 75.4 30.5 126.6 58.1 5.2 23.1
SC 0.9 0.0 12.7 18.1 23.5 7.6 4.0 1.2 10.7 3.8 34.1 91.1 39.3 131.9 135.1 388.4 97.1 76.5 14.3 13.6 1.6 8.3 84.5 21.2 5.0 20.7
UN 2.7 0.0 0.5 0.8 0.3 0.0 0.0 30.0 0.8 0.1 0.3 2.2 4.4 29.6 2.4 58.8 26.3 0.0 1.0 0.9 57.1 0.0 0.0 0.0 4.4 19.5
LA 9.9 3.3 1.9 1.9 0.0 0.0 1.0 3.8 3.8 2.7 25.5 13.7 26.5 40.6 294.0 93.5 29.5 15.1 2.3 0.6 0.8 11.5 15.9 14.9 11.0 18.0
OK 1.5 4.7 13.7 5.3 7.1 2.6 0.3 0.0 0.0 6.8 6.1 31.8 27.8 100.5 64.3 49.4 25.3 30.8 35.1 66.4 0.0 14.6 8.1 16.6 4.5 13.0
KY 2.4 1.9 7.4 2.8 5.8 0.0 5.5 3.9 15.4 17.6 18.6 31.1 24.3 30.7 81.2 201.8 23.9 12.0 3.9 47.2 32.0 26.2 53.4 29.2 13.6 11.9
NE 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 50.3 134.8 88.4 12.6 201.1 0.2 7.4 6.5 0.0 16.0 0.0 11.5
HI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20.5 1.5 4.2 12.8 199.0 37.8 1.8 12.8 9.9 12.4 32.8 4.9 7.5 7.4 11.5
WY 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 3.2 6.5 0.2 1.5 0.0 10.0
ID 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 2.5 8.2 52.1 2.5 10.0 12.0 15.8 21.0 14.7 7.8
AR 0.0 1.2 0.0 0.0 0.0 0.0 0.0 9.5 4.7 31.4 5.0 0.0 3.6 6.9 24.8 33.4 10.4 9.7 1.2 2.0 0.1 1.5 0.2 0.0 0.0 5.0
PR 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 31.0 32.0 0.5 0.1 1.3 1.5 14.3 16.0 10.8 0.0 4.5
WV 1.1 2.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 23.8 0.4 0.0 4.5 1.0 15.9 12.6 5.6 8.0 4.7 9.7 30.0 3.0 3.8
ME 18.0 11.6 15.3 8.7 17.2 4.5 0.8 0.2 3.0 0.0 1.5 1.5 3.7 52.7 42.8 132.4 1.5 15.2 0.9 12.0 4.2 7.6 4.0 4.1 5.4 2.2
MT 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 15.4 16.7 24.8 0.0 0.0 0.0 25.9 0.0 3.0 15.6 14.5 1.9
AL 12.3 13.6 20.9 9.6 2.0 2.3 0.1 10.6 50.9 15.5 17.2 46.7 106.3 82.3 35.0 265.8 68.6 56.3 27.8 25.1 20.2 19.9 32.4 19.0 43.2 0.6
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 0.0 3.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
MS 0.3 0.0 0.0 0.6 0.9 4.9 2.4 14.5 1.7 15.0 0.0 10.6 8.3 3.5 235.7 19.5 30.0 0.8 0.9 3.4 10.0 1.0 5.9 0.0 0.0 0.0
ND 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 2.1 1.0 1.0 0.0 14.5 2.0 0.0 0.0 0.2 5.5 8.8 0.0
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 0.4 0.2 0.5 7.4 3.5 1.5 0.0 0.0 4.0 0.5 0.8 0.0
Total 2,575.6 2,859.8 3,130.2 3,144.2 3,101.4 2,509.4 2,002.3 3,258.4 3,357.7 3,776.2 7,233.0 10,454.9 13,995.0 19,367.7 50,883.4 98,631.7 37,620.7 20,737.1 18,777.4 21,698.7 22,524.2 26,012.0 29,873.4 28,107.3 18,269.6 21,974.8
32 Thomson Reuters
2011 NVCA Yearbook
Figure 3.11b
Number of Venture Capital Deals by State 1985 to 2010
State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
CA 470 477 507 512 550 541 473 570 428 457 679 1,022 1,140 1,396 2,219 2,959 1,538 1,085 1,151 1,238 1,323 1,572 1,674 1,645 1,208 1,298
MA 215 182 216 194 178 167 138 136 127 122 197 292 331 397 585 777 512 385 378 380 377 401 459 437 318 353
NY 46 45 52 46 49 29 23 32 35 35 67 87 155 193 353 608 285 153 118 155 128 223 203 246 180 264
PA 34 44 55 53 38 42 36 61 47 38 66 84 135 145 145 256 145 101 100 109 100 143 168 193 133 153
TX 106 90 103 101 86 83 69 65 66 65 99 133 172 196 307 474 334 174 170 170 174 193 179 152 120 144
WA 20 20 25 23 35 27 26 34 28 34 64 78 86 110 207 259 147 109 82 114 120 137 166 162 108 117
CO 43 56 59 59 50 47 34 51 47 49 57 81 95 125 160 222 110 88 73 69 79 99 103 107 79 77
NJ 43 44 51 42 52 46 48 41 35 39 55 63 81 76 115 183 152 95 91 95 79 91 98 93 74 71
MD 20 17 24 28 19 27 28 23 16 23 34 47 49 55 100 177 95 95 87 89 105 111 95 108 71 70
GA 31 43 43 38 29 31 34 34 37 43 47 54 84 102 166 224 143 79 61 78 64 83 70 79 45 63
IL 27 27 31 31 61 34 36 33 25 34 42 56 81 72 128 199 128 79 60 58 55 58 70 70 44 59
NC 15 21 16 11 17 26 19 18 21 23 36 60 82 82 106 155 88 83 77 53 50 63 64 50 34 57
CT 32 32 39 43 43 37 33 32 25 34 44 46 65 74 89 116 72 38 34 35 34 30 38 37 39 55
OH 25 20 26 22 17 20 20 21 19 19 36 53 54 64 51 77 44 50 30 35 38 44 64 59 55 52
VI 21 19 28 24 29 26 23 19 18 21 39 61 83 101 150 276 144 92 84 80 88 90 96 88 51 51
FL 21 20 28 23 20 30 20 28 24 19 53 57 72 66 118 186 112 62 63 63 56 56 57 38 32 39
KS 1 2 6 4 4 3 3 6 2 2 4 9 6 3 8 22 10 7 12 14 4 8 17 24 18 36
MI 19 22 22 12 16 13 8 5 12 3 13 21 29 32 45 55 22 27 17 15 19 20 23 46 33 33
OR 24 24 29 35 28 21 12 12 12 12 17 29 42 19 52 70 42 27 22 32 25 32 40 35 19 33
MN 23 29 33 29 29 30 31 27 26 21 51 51 90 80 85 109 84 57 59 51 43 40 60 49 34 26
UT 1 12 13 6 5 3 6 10 6 0 7 15 33 34 43 62 44 28 23 30 28 40 33 40 35 25
WI 11 15 17 15 6 11 6 9 8 8 7 9 19 15 18 22 20 9 8 10 16 20 20 19 11 21
TN 17 23 27 29 27 22 24 11 8 11 19 25 25 25 45 48 30 26 22 25 25 13 22 23 14 18
AZ 15 11 20 12 23 14 13 21 21 24 27 28 29 38 57 67 35 25 17 12 26 28 29 22 16 17
IN 8 15 15 6 6 12 8 1 8 7 7 8 12 8 11 27 6 11 8 10 12 14 15 12 13 14
KY 2 4 7 4 5 0 2 2 2 3 9 7 15 16 16 14 4 3 3 4 3 10 7 10 8 14
MO 5 5 12 8 11 10 9 9 12 7 16 24 17 20 23 50 17 28 20 9 10 13 17 23 12 14
DC 4 5 7 4 1 5 3 3 2 3 1 4 2 3 17 45 24 7 6 8 11 9 17 14 8 13
NM 3 4 6 6 1 3 2 0 2 1 2 5 3 4 6 8 4 6 5 8 15 9 24 18 14 13
RI 6 4 7 6 7 7 4 2 3 0 3 1 4 5 10 9 11 14 10 8 13 7 4 10 17 13
NH 3 9 10 7 11 18 17 11 10 4 10 17 17 24 30 58 35 40 33 22 24 22 20 28 13 10
DE 1 1 1 4 3 1 3 2 1 3 4 4 4 0 2 4 1 2 1 1 5 4 4 6 4 9
UN 11 0 1 2 2 0 0 1 4 2 2 7 7 14 3 17 14 0 1 2 2 0 0 0 7 9
SC 1 0 4 3 7 5 9 7 7 6 5 13 14 16 9 11 5 6 4 5 1 2 9 9 3 8
VT 0 3 3 3 2 3 3 1 0 3 4 1 1 2 1 4 3 5 5 4 5 7 5 7 5 6
HI 1 0 0 0 0 0 0 0 0 0 0 3 4 3 3 3 5 2 5 4 5 11 4 7 3 5
ME 9 6 5 4 6 6 4 1 2 0 2 5 2 11 11 15 5 4 2 3 3 4 8 3 3 5
ID 1 0 1 0 0 0 0 1 2 1 1 1 2 3 2 4 2 2 5 2 3 3 6 7 5 4
WV 1 1 2 1 0 0 0 0 0 0 0 0 2 1 0 2 2 8 5 3 5 3 5 1 1 4
IA 1 3 2 3 2 2 3 4 1 4 9 6 4 7 3 5 5 1 1 3 3 2 2 7 8 3
LA 6 2 2 2 0 0 1 1 4 2 7 4 12 9 10 14 10 7 2 2 3 3 7 12 14 3
NE 1 0 0 5 1 0 0 0 5 3 1 5 3 5 7 10 10 3 3 1 3 3 1 3 0 3
NV 0 2 2 0 1 1 4 4 0 2 1 2 7 10 9 10 6 6 8 5 9 7 9 6 3 3
AL 7 9 11 4 7 7 1 4 10 4 10 8 16 15 10 28 15 13 9 6 3 8 5 9 9 2
MT 1 2 1 5 0 0 3 0 0 0 0 0 0 0 2 3 2 0 0 0 2 0 1 2 1 2
OK 4 5 4 1 4 2 1 0 0 5 2 7 5 11 7 9 7 4 3 12 0 8 6 5 4 2
AR 0 1 0 0 0 0 0 1 1 1 2 0 2 2 5 5 3 5 3 2 1 5 1 0 0 1
PR 0 0 0 0 0 0 3 2 1 2 4 5 2 2 2 10 5 1 1 1 1 3 4 2 0 1
WY 0 0 0 1 0 0 0 1 0 0 0 0 2 0 0 0 0 0 0 1 4 1 1 1 0 1
AK 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0
MS 1 1 0 1 1 3 1 4 2 5 0 3 3 2 2 3 3 3 4 5 2 1 2 0 2 0
ND 0 0 1 0 0 0 0 0 0 1 2 0 1 1 1 1 1 0 2 1 0 0 1 4 3 0
SD 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 2 1 3 0 1 2 1 3 0
Total 1,357 1,377 1,574 1,472 1,489 1,415 1,244 1,362 1,172 1,205 1,864 2,601 3,201 3,694 5,555 7,974 4,542 3,157 2,989 3,145 3,204 3,755 4,035 4,029 2,934 3,294
Thomson Reuters 33
Figure 3.12 Figure 3.14

Venture Capital Investments Venture Capital Investments
First vs. Follows-on Rounds Number of Companies Receiving
Total Dollars Invested ($ Millions)
120,000 7,000
6,000
100,000
Series2
Follow-on
Follow-on
5,000 First Series1
First
Number of Companies
80,000
($ Millions)
4,000
60,000
3,000
40,000
2,000
20,000 1,000
0 0
'85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10
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
No. of Cos No. of Cos
Year First Follow-on Total Receiving Receiving No. of Cos
1985 702.0 1,873.6 2,575.6 Initial Deals Follow-On Receiving
1986 835.2 2,024.6 2,859.8 Year Financing Financing Financing*
1987 968.2 2,162.0 3,130.2 1985 447 753 1,164
1988 1,013.7 2,130.4 3,144.2 1986 491 732 1,184
1987 562 824 1,331
1989 879.9 2,221.6 3,101.4 1988 502 765 1,220
1990 770.0 1,739.4 2,509.4 1989 438 808 1,196
1991 492.5 1,509.8 2,002.3 1990 341 762 1,035
1992 1,215.3 2,043.1 3,258.4 1991 264 697 920
1993 1,208.4 2,149.4 3,357.7 1992 389 696 1,022
1994 1,561.9 2,214.3 3,776.2 1993 346 630 920
1995 3,735.8 3,497.2 7,233.0 1994 420 610 965
1996 4,026.4 6,428.5 10,454.9 1995 891 764 1,551
1996 1,146 1,145 2,092
1997 4,619.6 9,375.4 13,995.0
1997 1,302 1,455 2,556
1998 6,607.4 12,760.2 19,367.7 1998 1,426 1,809 3,004
1999 15,160.2 35,723.1 50,883.4 1999 2,453 2,414 4,433
2000 26,376.8 72,254.9 98,631.7 2000 3,394 3,639 6,373
2001 6,915.8 30,704.9 37,620.7 2001 1,231 2,748 3,814
2002 3,999.4 16,737.7 20,737.1 2002 837 1,941 2,668
2003 3,776.2 15,001.2 18,777.4 2003 766 1,814 2,479
2004 4,681.1 17,017.6 21,698.7 2004 931 1,822 2,646
2005 1,043 1,813 2,732
2005 5,581.0 16,943.2 22,524.2
2006 1,234 2,069 3,127
2006 6,035.8 19,976.3 26,012.0 2007 1,338 2,169 3,342
2007 7,332.4 22,541.0 29,873.4 2008 1,248 2,281 3,349
2008 6,202.5 21,904.8 28,107.3 2009 772 1,779 2,466
2009 3,315.0 14,954.6 18,269.6 2010 1,001 1,854 2,749
2010 4,348.9 17,625.9 21,974.8 * No. 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
34 Thomson Reuters
2011 NVCA Yearbook
Figure 3.16
First Sequence by Stage of Development ($ Millions)
Stage 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Seed 287.6 401.7 339.1 343.0 244.8 170.0 86.1 202.9 329.2 479.7 649.1 648.0 746.5 934.1 2,593.4 2,289.6 555.8 241.6 270.4 358.8 798.4 1,044.0 1,105.7 1,280.0 867.3 863.7
Early Stage 122.2 177.7 307.9 288.1 208.5 276.2 187.1 244.9 285.3 384.6 855.5 1,277.3 1,678.3 2,490.3 5,933.1 15,099.3 4,286.2 2,247.7 2,110.5 2,437.6 2,426.1 2,273.8 2,905.4 2,281.0 1,253.5 1,629.0
Expansion 249.0 206.7 268.8 300.0 316.2 284.6 149.5 617.9 488.1 482.7 1,687.6 1,712.5 1,871.1 2,608.9 6,150.1 8,510.9 1,847.4 1,306.3 962.0 1,335.0 1,459.8 1,982.6 2,455.8 1,689.0 743.2 1,113.2
Later Stage 43.3 49.1 52.4 82.7 110.4 39.2 69.8 149.6 105.8 215.0 543.6 388.5 323.7 574.1 483.7 477.0 226.3 203.8 433.2 549.6 896.7 735.4 865.6 952.6 451.1 743.0
Total 702.0 835.2 968.2 1,013.7 879.9 770.0 492.5 1,215.3 1,208.4 1,561.9 3,735.8 4,026.4 4,619.6 6,607.4 15,160.2 26,376.8 6,915.8 3,999.4 3,776.2 4,681.1 5,581.0 6,035.8 7,332.4 6,202.5 3,315.0 4,348.9
Figure 3.17
First Sequence by Stage of Development (No. of Deals)
Stage 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Seed 221 242 227 208 203 119 86 118 144 186 252 314 346 461 656 580 219 128 161 169 207 316 400 364 202 239
Early Stage 96 116 192 167 99 117 77 128 70 111 285 409 476 497 1118 1935 697 472 427 524 530 549 562 521 365 505
Expansion 107 105 117 106 111 90 83 120 105 105 296 365 430 417 639 823 285 203 145 188 246 274 284 224 136 171
Later Stage 23 28 26 21 25 15 18 23 27 18 58 58 50 51 40 56 30 34 33 50 60 95 92 139 69 86
Total 447 491 562 502 438 341 264 389 346 420 891 1,146 1,302 1,426 2,453 3,394 1,231 837 766 931 1,043 1,234 1,338 1,248 772 1,001
Figure 3.18
First Sequence by Industry ($ Millions)
Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Software 87.9 114.5 89.5 121.8 92.8 159.7 100.5 145.4 110.8 283.6 515.6 859.1 998.6 1,144.1 2,667.0 5,464.7 1,544.4 1,108.6 878.8 1,199.0 1,151.4 1,132.5 1,251.1 994.7 639.7 811.8
Biotechnology 31.8 53.4 61.7 64.2 51.0 25.6 13.9 159.0 119.3 150.6 143.4 209.0 343.1 344.5 372.0 702.0 740.6 658.1 393.0 675.8 564.5 897.2 944.4 894.0 482.4 653.3
Industrial/Energy 92.9 76.2 113.3 118.2 212.3 83.8 58.6 152.6 158.4 155.4 411.8 282.5 369.6 938.0 859.0 1,026.2 455.6 368.5 233.7 269.6 311.0 704.3 1,291.9 1,130.0 567.2 440.2
IT Services 16.1 9.1 4.5 9.4 20.6 16.7 10.3 8.8 13.1 91.5 49.4 215.7 243.7 334.1 1,472.5 2,520.7 301.1 185.6 152.2 212.1 335.5 366.2 542.6 594.7 283.3 406.7
Media and Entertainment 69.7 42.6 95.7 90.1 82.4 62.7 13.4 82.0 167.1 88.0 767.3 344.9 384.3 703.6 2,087.7 2,638.2 327.3 177.2 427.3 254.2 545.4 653.7 668.9 509.3 274.8 380.7
Financial Services 63.2 81.0 43.9 155.7 71.3 32.6 8.3 100.6 101.9 66.4 112.0 250.3 222.5 395.2 785.0 1,422.0 323.0 78.6 80.7 240.1 592.8 114.3 248.3 252.2 122.9 296.3
Medical Devices and Equipment 39.5 71.3 82.1 76.7 70.2 57.9 39.2 90.8 139.1 131.5 170.4 187.0 242.9 237.5 258.9 320.1 244.6 252.7 303.9 296.9 404.3 609.5 721.6 646.2 342.8 253.5
Telecommunications 64.5 42.9 37.7 41.1 40.9 52.1 10.8 93.6 59.0 187.1 320.6 384.4 373.2 858.2 1,934.5 4,487.9 805.0 200.7 177.7 255.9 362.4 450.4 387.2 315.7 89.2 210.4
Healthcare Services 16.5 60.2 55.8 16.6 48.0 27.8 16.6 62.5 67.6 109.0 297.4 251.0 321.6 243.5 296.2 421.2 84.4 125.6 63.3 85.7 161.9 118.6 72.6 28.9 39.5 204.0
Networking and Equipment 20.6 28.4 23.9 39.4 54.6 42.0 19.8 53.5 81.0 37.0 71.6 127.4 220.1 304.1 1,532.4 2,466.3 813.1 221.6 119.7 182.7 124.7 167.3 199.1 84.3 68.9 162.0
Consumer Products and Services 44.0 59.4 51.5 74.4 29.5 55.6 52.2 71.2 54.3 100.8 274.1 208.2 193.6 223.1 707.5 878.3 117.8 39.1 75.2 114.3 212.4 122.2 177.8 204.5 124.6 157.7
Business Products and Services 7.7 33.7 25.1 10.5 13.3 38.5 62.4 25.4 61.8 29.6 121.4 248.6 222.0 337.5 931.0 1,698.3 222.8 126.6 341.8 211.1 141.5 200.7 251.0 119.1 135.3 117.8
Computers and Peripherals 38.6 51.4 82.2 59.1 40.3 51.2 17.4 52.7 33.3 34.1 149.2 107.2 100.6 114.1 253.6 335.6 263.3 29.2 90.3 90.3 97.8 60.8 128.1 150.0 63.7 78.5
Retailing/Distribution 19.6 59.0 132.2 54.1 20.3 13.2 10.9 52.5 23.8 49.8 214.4 143.4 108.5 195.9 584.0 849.3 55.8 44.2 11.3 107.6 111.6 43.6 95.3 68.3 10.4 62.0
Semiconductors 45.5 22.4 37.3 56.6 13.2 31.8 10.3 50.5 5.0 38.8 54.5 122.3 170.5 169.6 266.9 965.2 504.5 307.5 381.8 390.8 264.8 247.0 222.8 128.5 30.0 55.8
Electronics/Instrumentation 43.3 28.2 31.9 25.6 19.1 18.7 15.1 14.1 12.8 8.6 52.6 85.0 88.8 42.9 81.1 145.6 84.8 71.6 44.6 94.0 141.8 143.9 128.4 82.0 33.9 44.7
Other 0.5 1.5 0.0 0.3 0.0 0.0 32.7 0.0 0.0 0.2 10.0 0.5 16.1 21.5 70.9 35.2 27.6 4.0 1.0 0.9 57.1 3.5 1.4 0.0 6.4 13.5
Total 702.0 835.2 968.2 1,013.7 879.9 770.0 492.5 1,215.3 1,208.4 1,561.9 3,735.8 4,026.4 4,619.6 6,607.4 15,160.2 26,376.8 6,915.8 3,999.4 3,776.2 4,681.1 5,581.0 6,035.8 7,332.4 6,202.5 3,315.0 4,348.9
Thomson Reuters 35
Figure 3.19
First Sequence by Industry (No. of Deals)
Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Software 74 73 80 85 67 81 59 67 51 99 220 318 325 330 586 867 306 262 228 241 270 266 286 272 181 261
Biotechnology 28 32 54 46 32 26 20 53 46 41 54 70 86 106 79 124 107 108 91 110 113 138 134 139 79 122
IT Services 11 8 5 8 11 6 5 4 6 19 27 66 65 88 227 330 75 29 33 50 60 84 98 117 73 89
Other 1 1 0 1 0 1 2 0 1 1 5 1 6 4 10 8 8 2 1 3 3 1 6 3 14 21
Semiconductors 24 13 15 21 12 11 8 11 5 11 23 30 54 46 48 117 79 49 64 77 44 45 38 32 11 13
Total 447 491 562 502 438 341 264 389 346 420 891 1,146 1,302 1,426 2,453 3,394 1,231 837 766 931 1,043 1,234 1,338 1,248 772 1,001
36 Thomson Reuters
2011 NVCA Yearbook

Internet-Related Investments Top Five States by Internet-Related Investments
By Year 1995-2010 in 2010
Year No. of Cos ($ Millions) State ($ Millions)

1995 404 1,734.9 California 4,642.3
1996 746 3,842.5 New York 1,076.8
1997 1,006 5,677.2 Massachusetts 753.8
1998 1,467 10,624.4 Washington 324.5
1999 3,026 39,474.8 Texas 264.0
2000 4,555 75,575.8 TOTAL* 7,061.4
2001 2,340 23,880.8 * Total includes above 5 states only
2002 1,407 10,381.6
2003 1,192 8,517.3
2004 1,197 9,714.9
2005 1,269 9,967.5
2006 1,539 11,820.7
2007 1,645 13,332.6
2008 1,678 11,445.0
2009 1,264 7,438.9
2010 1,403 8,952.9
TOTAL 26,138 252,381.7
Figure 3.22
2010 Internet-Related Investments
By Regions in 2010
Stage Region ($ Millions)
Silicon Valley 3,912.2
NY Metro 1,218.4
New England 820.6
LA/Orange County 568.6
Southeast 491.9
Northwest 421.6
DC/Metroplex 313.0
Midwest 305.4
Texas 264.0
SouthWest 163.7
San Diego 156.6
Colorado 152.3
Philadelphia Metro 77.0
South Central 30.1
North Central 28.5
AK/HI/PR 10.7
Unknown 8.4
Upstate NY 5.0
Sacramento/N.Cal 5.0
TOTAL 8,952.9
Thomson Reuters 37
Figure 3.23
Sources and Targets of Invested Capital Investments 2010
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 MT
AL 0.0 0.0 0.0 0.0 0.0 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 0.3 0.0 0.0 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 0.0 0.0 0.0 0.0 0.0 0.0 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 0.5 3.8 2.1 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 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0
CA 0.0 0.0 0.0 11.6 5,636.1 90.6 27.5 38.2 3.1 18.7 40.9 3.4 0.0 0.0 89.6 34.7 9.8 2.3 4.3 458.3 149.9 0.0 29.8 43.7 0.0 0.0 0.0
CO 0.0 0.0 0.0 0.0 39.0 50.1 1.3 0.0 0.0 0.0 2.0 0.0 0.0 0.0 4.5 0.0 0.0 0.0 0.0 8.4 1.4 0.0 0.0 0.3 0.0 0.0 0.0
CT 0.0 0.0 0.0 10.8 302.4 6.0 90.4 0.0 0.0 6.8 27.9 0.0 0.0 0.0 18.9 0.0 0.0 0.0 0.0 62.3 5.5 0.0 0.0 3.4 0.0 0.0 0.0
DC 0.0 0.0 0.0 0.0 29.0 4.5 0.0 0.0 0.0 5.0 2.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 26.7 0.6 0.0 0.0 0.4 0.0 0.0 0.0
DE 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 0.0 0.0 0.0 0.0 4.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0
FF 0.0 0.3 0.0 11.8 687.7 57.0 9.6 0.0 20.0 13.1 19.9 0.0 0.0 0.0 37.4 0.0 2.6 0.0 0.0 169.8 14.8 0.0 0.5 6.9 3.4 0.0 0.0
FL 0.0 0.0 0.0 0.0 7.1 12.0 0.0 0.0 0.0 11.3 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.2 0.0 0.0 0.0 0.0 1.7 0.0 0.0
GA 0.0 0.0 3.2 0.0 13.9 6.2 0.0 0.0 0.0 10.4 51.6 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 3.2 0.0 0.0 0.0 2.2 0.0 0.0 0.0
IA 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 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
ID 0.0 0.0 0.0 0.0 0.0 4.0 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 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.8
IL 0.0 0.0 0.0 0.0 219.7 9.0 0.0 0.0 0.0 5.2 4.4 0.0 0.0 0.0 139.5 0.0 0.0 0.0 0.0 8.3 2.0 0.0 8.6 4.6 0.0 0.0 0.0
IN 0.0 0.0 0.6 0.0 14.1 0.5 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 5.0 2.2 0.0 0.0 0.0 0.0 0.0 0.0
KS 0.0 0.0 0.0 0.0 2.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.6 0.0 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 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.4 0.0 0.0 2.4 0.0 0.0 0.0 0.0 0.0 0.0
LA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.8 0.0 0.0 0.0 0.9 1.9 0.0 0.0 0.0 0.0 2.1 0.0 0.0
MA 0.0 0.0 0.0 15.6 619.1 10.9 2.2 5.6 3.3 14.6 25.0 0.0 0.0 0.0 20.8 1.2 4.0 1.4 12.8 875.8 21.6 0.0 13.4 14.7 5.7 0.0 0.4
MD 0.0 0.0 0.0 0.0 61.1 4.7 0.0 17.2 0.0 1.3 7.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14.4 44.0 0.0 10.0 0.0 0.0 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 0.0 0.0 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
MI 0.0 0.0 0.0 0.0 54.2 0.0 0.0 0.0 0.0 0.0 18.9 0.0 0.0 0.0 10.6 5.0 0.0 0.0 0.0 4.3 0.0 0.0 45.9 0.0 0.0 0.0 0.0
MN 0.0 0.0 0.0 3.0 65.7 0.0 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 10.3 0.0 0.0 0.0 15.7 0.0 0.0 0.0
MO 0.0 0.0 0.0 0.0 21.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.3 8.6 0.0 0.0
NC 0.0 0.0 0.0 0.0 12.1 0.0 0.0 0.0 2.5 2.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.5 1.5 0.0 1.8 3.0 0.0 0.0 0.0
NE 0.0 0.0 0.0 0.0 1.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 0.0 0.0 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 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 4.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0
NJ 0.0 0.0 0.0 8.0 213.6 4.9 0.0 0.0 0.1 0.0 6.8 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 68.5 14.3 0.0 0.0 0.7 0.0 0.0 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 0.0
NY 0.0 0.0 0.0 8.3 658.2 50.2 12.0 3.7 0.4 33.7 23.6 0.0 0.0 0.0 39.8 6.0 0.0 0.0 0.0 176.6 49.1 0.0 0.0 6.7 1.8 0.0 0.0
OH 0.0 0.0 0.0 0.0 13.1 0.0 0.0 0.0 0.0 9.9 4.5 0.0 0.0 0.0 0.0 6.5 0.0 0.4 0.0 0.0 0.3 0.0 4.0 1.7 0.0 0.0 0.0
OK 0.0 0.0 0.0 0.0 3.6 0.0 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 3.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0
OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
PA 0.0 0.0 0.0 0.0 62.7 6.3 3.0 3.4 0.1 7.5 0.0 0.0 0.0 0.0 4.1 0.0 0.0 1.4 0.0 52.5 13.5 0.0 0.0 0.0 5.0 0.0 0.0
RI 0.0 0.0 0.0 0.0 5.8 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 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0
SC 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
SD 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 0.9 0.0 0.0 0.0
TN 0.0 0.0 0.0 1.4 0.1 0.0 0.0 0.0 0.0 0.0 4.7 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
TX 0.0 0.3 0.0 0.0 88.2 9.5 0.0 0.0 0.0 5.2 0.3 0.0 0.0 0.0 33.7 2.0 0.0 0.0 0.0 10.2 0.0 0.0 2.3 0.4 1.5 0.0 0.0
UN 0.0 0.0 1.2 9.5 2,061.5 132.7 50.1 38.4 0.9 36.2 69.7 8.1 0.8 0.0 165.0 7.4 9.7 2.1 0.0 357.4 30.4 1.3 31.7 29.6 31.3 0.0 0.8
UT 0.0 0.0 0.0 2.5 5.3 1.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
VA 0.0 0.0 0.0 0.0 32.7 0.0 0.0 0.0 0.0 3.1 16.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 11.8 1.6 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 0.3 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
WA 0.0 0.0 0.0 0.0 111.6 5.0 3.0 0.6 0.0 0.0 0.0 0.0 0.0 6.7 0.0 0.0 0.0 0.0 0.0 20.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
WI 0.0 0.0 0.0 0.0 0.0 1.4 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 6.0 3.1 0.0 3.7 0.5 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 0.0 0.0 0.0 0.0 0.0 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 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.7 0.0 0.0 0.0
Total 0.0 0.6 5.0 83.0 11,055.1 469.0 200.7 107.1 30.9 185.6 333.7 11.5 101.6 7.8 575.4 68.7 41.7 12.0 18.0 2,383.4 358.5 2.1 151.7 139.4 61.1 0.0 2.0
Source State includes U.S. states.FF = other foreign UN = undisclosed or unknown.
38 Thomson Reuters
2011 NVCA Yearbook
Figure 3.23 (continued)

Sources and Targets of Invested Capital Investments 2010
SOURCE Target State

STATE 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
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 2.8 0.0 0.0 0.4 0.0 0.0 3.0 0.00 0.0 0.0 0.0 0.0 0.0 12.6
AR 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 0.00 0.0 0.0 0.0 0.0 0.0 1.3
AZ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.0 7.7
CA 0.0 9.0 3.0 60.3 0.5 1.0 354.4 6.1 0.0 46.0 97.8 0.0 0.0 8.0 0.0 1.5 230.0 7.9 80.2 130.6 0.00 30.1 182.5 11.6 0.0 0.0 8,044.9
CO 0.0 0.0 0.0 0.0 0.0 0.0 4.6 0.0 0.0 3.8 0.0 0.0 0.0 0.0 0.0 0.0 12.2 4.5 0.0 0.4 0.00 0.0 8.9 0.0 0.0 10.0 151.4
CT 0.0 0.0 0.0 19.5 5.5 0.0 47.3 13.8 0.0 5.0 35.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.00 0.0 31.9 0.0 0.0 0.0 698.6
DC 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 0.7 0.0 0.0 0.5 0.0 0.0 3.5 0.00 0.0 1.2 2.5 0.0 0.0 79.4
DE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.0 5.1
FF 0.0 0.0 0.0 48.1 0.0 0.0 66.5 6.4 0.0 5.1 50.9 0.0 2.2 0.0 0.0 0.4 110.8 0.0 2.0 16.6 0.00 0.0 23.0 11.6 0.0 0.0 1,414.1
FL 0.0 0.0 0.0 5.6 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 0.00 0.0 0.0 0.0 0.0 0.0 54.1
GA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.3 0.0 0.0 0.0 0.00 0.0 1.6 0.0 0.0 0.0 97.0
IA 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 0.00 0.0 0.0 0.0 0.0 0.0 4.5
ID 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.0 6.3
IL 0.0 0.0 0.0 13.9 0.0 0.0 7.0 1.0 0.0 0.0 6.9 0.0 0.0 0.0 0.0 0.0 13.6 0.0 0.0 3.8 0.00 0.0 10.7 5.7 0.0 0.0 481.4
IN 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.0 0.0 0.0 0.0 0.00 0.0 3.5 0.0 0.0 0.0 34.3
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 0.00 0.0 0.0 0.0 0.0 0.0 18.3
KY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 0.0 0.0 5.5 0.0 0.0 1.0 0.0 1.5 0.0 0.0 0.0 0.3 0.00 0.0 0.0 1.0 0.0 0.0 18.0
LA 0.0 0.0 0.0 0.0 0.0 0.0 4.3 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 3.6 0.0 0.0 0.0 0.00 0.0 0.0 13.1 0.0 0.0 33.9
MA 0.0 0.0 9.6 22.3 0.1 0.0 197.8 4.0 3.0 9.1 50.4 0.0 18.8 1.7 0.0 0.0 46.8 0.0 1.0 18.7 0.00 0.0 87.0 4.4 0.0 0.0 2,170.8
MD 0.0 0.0 0.0 33.3 0.0 0.0 19.6 0.0 0.0 0.0 7.2 0.0 0.0 0.0 0.0 0.0 6.0 0.0 0.0 11.1 0.00 0.0 6.0 0.0 0.0 0.0 285.8
ME 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.0 1.3
MI 0.0 0.0 0.0 0.2 0.0 0.0 0.0 1.7 0.0 1.4 0.0 0.0 0.0 0.0 0.0 1.5 5.8 0.0 0.0 0.0 0.00 0.0 0.1 0.0 0.0 0.0 149.5
MN 0.0 0.0 3.0 1.6 0.0 0.0 0.9 2.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.1 0.0 0.0 0.0 0.00 0.0 0.2 11.6 0.0 0.0 120.3
MO 0.0 0.0 3.0 0.0 0.7 0.0 6.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 4.9 0.0 0.0 0.0 0.00 0.0 1.8 0.0 0.0 0.0 49.9
NC 0.0 0.0 0.0 6.5 0.0 0.0 0.7 6.0 0.0 0.0 9.6 0.0 0.0 1.0 0.0 2.0 0.7 0.0 0.0 1.4 0.00 0.0 0.0 0.0 0.0 0.0 109.3
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 0.00 0.0 0.0 0.0 0.0 0.0 101.4
NH 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 0.00 0.0 0.0 0.0 0.0 0.0 6.6
NJ 0.0 0.0 8.9 40.0 0.0 0.0 11.4 0.0 0.0 0.0 24.8 0.0 7.5 0.0 0.0 3.0 5.8 0.0 0.7 1.8 0.00 0.0 6.3 0.0 0.0 0.0 445.0
NM 0.0 0.0 0.0 0.0 3.4 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 0.7 0.0 0.00 0.0 0.0 0.0 0.0 0.0 4.3
NY 0.0 0.0 10.1 47.0 0.0 0.0 253.5 9.2 0.0 50.6 39.3 0.0 15.0 1.2 0.0 0.9 49.0 0.0 10.8 18.9 0.00 0.0 17.4 1.0 0.0 0.0 1,664.3
OH 0.0 0.0 0.0 0.0 1.2 0.0 2.5 38.4 0.0 0.0 0.0 0.0 0.0 1.5 0.0 0.0 1.2 0.0 0.0 0.0 0.00 0.0 2.6 0.0 0.0 0.0 87.7
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 0.00 0.0 0.0 0.0 0.0 0.0 8.2
OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.4 3.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.0 7.9
PA 0.0 0.0 0.0 31.9 0.0 0.0 51.4 2.4 0.0 0.9 97.9 0.0 7.4 0.0 0.0 23.0 11.8 0.0 0.0 24.7 0.00 0.0 2.4 0.0 3.0 0.0 450.6
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 4.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.0 14.8
SC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.0 5.0
SD 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 1.5 0.0 0.00 0.0 0.0 0.0 0.0 0.0 6.2
TN 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.4 0.0 0.0 0.8 0.0 0.0 0.0 0.0 10.4 4.0 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.0 0.0 26.8
TX 0.0 0.0 0.0 10.6 0.9 0.0 3.7 15.0 5.0 0.0 3.8 0.0 0.0 0.0 0.0 2.2 172.2 0.2 5.0 3.4 0.00 0.0 6.4 0.1 0.0 0.0 394.7
UN 0.0 0.5 18.3 96.1 10.2 27.6 241.3 27.6 5.0 24.8 74.7 0.0 7.4 2.2 0.0 5.5 206.7 2.7 17.2 47.6 0.00 0.7 113.8 53.1 0.0 0.0 4,113.0
UT 0.0 0.0 0.0 7.0 0.8 0.0 8.7 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 23.8 3.3 0.00 0.0 0.0 0.0 0.0 0.0 55.1
VA 0.0 0.0 0.0 0.2 0.0 0.0 22.4 0.0 0.0 10.0 0.0 4.5 0.0 0.7 0.0 0.0 0.0 0.0 0.0 82.7 0.00 0.0 7.2 0.0 0.0 0.0 195.0
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 0.0 0.00 1.9 0.0 0.0 0.0 0.0 2.3
WA 0.0 0.0 0.0 3.5 0.0 0.0 5.2 0.0 0.0 10.5 0.0 0.0 2.0 0.0 0.0 0.0 10.0 0.0 0.0 0.0 0.00 0.0 107.8 0.0 0.0 0.0 286.5
WI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.8 0.00 0.0 2.0 6.7 0.0 0.0 48.6
WV 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.8 0.0 0.8
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 0.00 0.0 0.0 0.0 0.0 0.0 1.7
Total 0.0 11.5 57.0 450.9 23.3 28.6 1,312.8 156.9 13.0 173.5 508.7 4.5 64.9 20.8 0.0 51.9 906.4 15.3 142.9 375.6 0.0 32.7 624.3 122.4 3.8 10.0 21,976.3
Thomson Reuters 39

2010 Internet-Related Investments 2010 Internet-Related Investments
By Stage By Industry Sector
Industry Group ($ Millions)
Company Stage ($ Millions) Software 3,268.7
Seed 331.0 IT Services 1,495.9
Early Stage 2,333.4 Media and Entertainment 1,323.7
Expansion 4,237.1 Telecommunications 637.0
Later Stage 2,051.4 Networking and Equipment 603.4
TOTAL 8,952.9 Consumer Products and Services 362.0
Computers and Peripherals 351.0
Financial Services 209.4
Business Products and Services 167.9
Retailing/Distribution 123.8
Medical Devices and Equipment 107.9
Healthcare Services 103.7
Semiconductors 73.1
Biotechnology 50.9
Industrial/Energy 48.5
Electronics/Instrumentation 26.1
TOTAL 8,952.9

2010 Internet-Related vs Non Internet-Related 2010 Internet-Related vs Non Internet-Related
Investments By Industry Sector ($ Millions) Investments By Industry Sector (Number of Companies)
Industry Internet Related Non-Internet Related Total Industry Internet Related Non-Internet Related Total
Software 3,268.7 741.2 4,009.8 Software 561 128 689
IT Services 1,495.9 163.9 1,659.8 Media and Entertainment 230 18 248
Media and Entertainment 1,323.7 102.7 1,426.3 IT Services 214 19 233
Telecommunications 637.0 257.7 894.7 Telecommunications 105 16 121
Networking and Equipment 603.4 60.2 663.6 Consumer Products and Services 60 28 88
Consumer Products and Services 362.0 184.5 546.5 Networking and Equipment 53 7 60
Computers and Peripherals 351.0 163.6 514.6 Business Products and Services 36 42 78
Financial Services 209.4 339.9 549.3 Computers and Peripherals 31 21 52
Business Products and Services 167.9 237.4 405.2 Financial Services 30 34 64
Retailing/Distribution 123.8 43.0 166.8 Medical Devices and Equipment 18 245 263
Medical Devices and Equipment 107.9 2,153.0 2,260.9 Retailing/Distribution 15 6 21
Healthcare Services 103.7 219.2 322.9 Healthcare Services 14 24 38
Semiconductors 73.1 904.6 977.7 Industrial/Energy 13 219 232
Biotechnology 50.9 3,685.2 3,736.1 Semiconductors 11 89 100
Industrial/Energy 48.5 3,359.1 3,407.7 Biotechnology 7 377 384
Electronics/Instrumentation 26.1 384.2 410.2 Electronics/Instrumentation 5 50 55
Other NA 22.6 22.6 Other 0 23 23
Total 8,952.9 13,022.0 21,974.8 Total 1,403 1,346 2,749
40 Thomson Reuters
2011 NVCA Yearbook

Top Five States By Percentage Invested Top Five States By Portion Received From
Within State in 2010 In-State Firms 2010
Pct. Invested Pct. Invested
Fund Domicile Within State Company Location From State
California 70% California 51%
Georgia 53% Connecticut 45%
North Carolina 47% Kansas 37%
Ohio 44% Massachusetts 37%
Texas 44% Michigan 30%
*Minimum $20 million invested *Minimum $20 million invested

Number of States Invested Into in 2010 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 37 1990 33
Massachusetts 35 2000 42
New York 29 2010 37
Texas 25
Pennsylvania 23
New Jersey 20
Connecticut 19
Illinois 18
North Carolina 16
Colorado 15
Maryland 15
Thomson Reuters 41

Corporate Investments By Year Clean technology Investments By Year
Corp-Backed % of Overall Deals Clean Technology Average

Investments % of Overall No. of Corp- With at Least One Investments No. of Clean Investment Per
Year ($ Millions) Investments Backed Deals Corp VC Year ($Millions) Technology Deals Deal ($ Millions)
1995 417.1 6% 132 7% 1995 75.9 36 2.1
1996 676.0 6% 237 9% 1996 147.1 47 3.1
1997 944.8 7% 331 10% 1997 145.8 48 3.0
1998 1,637.6 8% 512 14% 1998 118.2 39 3.0
1999 7,889.2 16% 1,286 23% 1999 213.8 47 4.5
2000 15,531.4 16% 2,050 26% 2000 600.3 52 11.5
2001 4,742.6 13% 990 22% 2001 383.0 63 6.1
2002 1,923.9 9% 572 18% 2002 348.4 62 5.6
2003 1,294.2 7% 445 15% 2003 252.9 60 4.2
2004 1,519.6 7% 550 17% 2004 421.5 85 5.0
2005 1,585.0 7% 558 17% 2005 500.8 93 5.4
2006 2,029.6 8% 657 17% 2006 1,669.6 152 11.0
2007 2,644.4 9% 800 20% 2007 2,610.0 248 10.5
2008 2,260.9 8% 774 19% 2008 4,019.2 295 13.6
2009 1,354.5 7% 389 13% 2009 2,288.6 222 10.3
2010 1,920.0 9% 474 14% 2010 3,684.0 286 12.9
Figure 3.34
California Investments as a Percentage of
Overall Investments
100%
90%
80%
52.3% 49.7%
70% 59.8% 58.9%
60%
Other
50%
11.2% SoCal
40% 11.7%
8.6%
16.3% NoCal
30%
20% 36.0% 39.1%
32.5%
10% 23.9%
0%
1995 2000 2005 2010
42 Thomson Reuters
Portfolio Company Valuations
This chapter analyzes trends in round valuation and IPO valuations in recent years. Much has been written
about valuation trends for entrepreneurial companies and whether early round valuations were reasonable
enough for a venture capital fund to make a financial and time commitment and still realize a successful exit.
In 2010, first rounds overall reflected lower median valuations than the period of 2005-2009 with medical
devices being among the exceptions. Additional rounds showed mixed but overall higher valuations in 2010
than in the reference period.
While IPO exits were more plentiful in 2010, they were not done at higher multiples than in 2009 which had
only 12 IPOs. IPOs in 2009 had a median valuation of $428.3 billion, an all-time record and almost double
the median valuation of 2010. However, the pre-money valuations for 2009 IPOs were 9.7 times total venture
investment, and in 2010 they were only 4.4 times total venture investment.
years. Figure 4.07 is the Holmes analysis showing

the ratio of IPO pre-money valuations to total ven-
Methodology and Presentation
Figures 4.01-4.03 show round valuation statistics ture investment into those companies. That is, what
from 2005-2009 for all rounds, first rounds, and multiple of dollars invested was the company worth
additional rounds respectively. The corresponding coming into the IPO? Figure 4.08 shows trends in
2010 round valuations are shown in figures 4.04- IPO post-money valuations. That is, it shows the
4.06. offering share price multiplied by the total number of
shares for the company. (It does not reflect the valu-
Figures 4.07-4.08 look at IPO valuations in recent ation of the company after shares start trading.)
Figure 4.01
Valuations By Company Industry 2005-2009 ($ Millions)
Avg Upper Lower
Biotechnology 68.5 493.5 98.5 44.2 13.3 0.1
Consumer Products and Services 76.4 273.6 92.0 41.1 11.0 1.3
Industrial/Energy 101.1 1,118.4 106.0 28.7 8.1 0.1
IT Services 70.4 403.0 93.5 43.7 14.9 0.3
Other 6.1 6.1 6.1 6.1 6.1 6.1
Semiconductors 64.1 362.9 79.8 52.3 22.9 1.0
Software 55.7 1,610.1 54.2 27.0 12.8 0.5
Total 70.1 1,610.1 86.1 33.0 12.1 0.1
Thomson Reuters 43
Figure 4.02
Valuations By Company Industry 2005-2009 Financings ($ Millions)
First Round Financings
Avg Upper Lower

Biotechnology 21.0 115.0 22.5 10.5 3.4 0.1
IT Services 27.0 93.3 28.6 16.0 7.2 0.3
Media and Entertainment 42.6 406.0 19.2 10.0 5.7 2.0
Other 6.1 6.1 6.1 6.1 6.1 6.1
Semiconductors 66.3 156.0 97.0 38.0 21.5 5.0
Software 18.5 165.0 20.4 9.6 5.1 1.0
Total 25.5 406.0 21.7 9.6 5.0 0.1
Figure 4.03
Valuations By Company Industry 2005-2009 Financings ($ Millions)
Additional Round Financings
Avg Upper Lower
Biotechnology 81.1 493.5 107.5 60.2 23.8 0.5
Industrial/Energy 140.0 1,118.4 161.8 51.9 25.3 4.1
IT Services 83.4 403.0 115.7 50.8 18.8 2.9
Other NA NA NA NA NA NA
Semiconductors 63.6 362.9 79.6 52.3 23.3 1.0
Software 65.7 1,610.1 59.7 32.5 17.8 0.5
Total 84.1 1,610.1 100.0 45.5 20.3 0.2
44 Thomson Reuters
2011 NVCA Yearbook
Figure 4.04
Valuations By Company Industry
2010 Financings ($ Millions)
Avg Upper Lower

Biotechnology 65.4 390.6 64.1 42.0 13.6 1.2
IT Services 213.3 735.0 286.4 158.3 10.3 6.5
Other 17.5 17.5 17.5 17.5 17.5 17.5
Semiconductors 67.1 88.9 75.7 62.5 56.3 50.0
Software 42.6 161.4 50.6 17.4 7.3 1.7
Total 115.2 3,569.0 85.5 38.0 11.7 1.2
Figure 4.05
Valuations By Company Industry 2010 Financings ($ Millions)
First Round Financings
Avg Upper Lower

Biotechnology 3.0 4.7 3.8 3.0 2.1 1.2
Business Products and Services NA NA NA NA NA NA
Computers and Peripherals NA NA NA NA NA NA
Electronics/Instrumentation NA NA NA NA NA NA
Financial Services NA NA NA NA NA NA
Healthcare Services NA NA NA NA NA NA
IT Services 7.8 9.1 8.4 7.8 7.2 6.5
Media and Entertainment 44.8 86.0 65.4 44.8 24.1 3.5
Other 17.5 17.5 17.5 17.5 17.5 17.5
Retailing/Distribution NA NA NA NA NA NA
Semiconductors NA NA NA NA NA NA
Software 4.3 8.5 5.5 3.5 2.3 1.7
Telecommunications NA NA NA NA NA NA
Total 12.5 86.0 10.1 6.6 3.8 1.2
Thomson Reuters 45
Figure 4.06
Valuations By Company Industry 2010 Financings ($ Millions)
Additional Round Financings
Avg Upper Lower
Biotechnology 73.7 390.6 73.5 48.5 24.6 3.7
IT Services 295.5 735.0 329.8 243.0 158.3 11.5
Semiconductors 67.1 88.9 75.7 62.5 56.3 50.0
Software 56.5 161.4 88.2 27.3 16.5 6.0
Total 141.7 3,569.0 101.3 47.4 23.1 3.7
Figure 4.07
2010 Venture-Backed IPOs Valuations as of IPO
Post Offer Value Offer Amt IPO Pre Money Total Venture Inv.
Year ($ Billion) ($ Billion) Valuation ($ Billion) Ratio
1995 32.5 8.3 24.2 2.2 11.0
1996 66.0 12.0 54.0 3.7 14.6
1997 29.8 5.0 24.8 2.7 9.2
1998 17.3 3.5 13.7 2.4 5.7
1999 131.4 18.8 112.7 11.0 10.2
2000 129.1 23.0 106.1 13.0 8.2
2001 18.1 3.4 14.7 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 61.7 10.5 51.2 6.7 7.6
2005 16.6 4.5 12.1 3.1 3.9
2006 22.2 5.1 17.1 4.3 4.0
2007 53.6 10.3 43.2 6.7 6.5
2008 2.6 0.5 2.2 0.4 6.0
2009 7.5 1.6 5.8 0.6 9.7
2010 33.0 7.0 26.0 5.9 4.4
46 Thomson Reuters
2011 NVCA Yearbook
Figure 4.08
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 160.3 1,569.0 171.8 109.8 71.4 12.2
1996 234.8 9,911.4 186.5 111.5 66.9 9.5
1997 210.1 6,517.5 167.9 109.3 66.8 11.4
1998 221.2 1,220.6 269.6 182.2 106.6 12.5
1999 485.0 4,827.7 536.8 332.0 220.5 47.0
2000 490.7 11,965.5 519.6 244.4 135.7 18.0
2001 441.0 1,719.2 527.3 322.2 205.7 57.3
2002 361.4 1,083.3 570.7 223.2 141.7 36.8
2003 284.7 821.9 359.2 227.7 156.2 41.9
2004 656.2 23,053.7 389.6 255.8 152.8 21.6
2005 290.5 1,442.1 387.5 201.9 140.1 23.1
2006 390.2 2,647.5 406.7 255.3 171.9 70.9
2007 622.7 7,963.7 573.0 346.0 271.5 50.0
2008 441.1 1,443.1 380.7 257.7 197.6 88.8
2009 623.2 1,417.1 816.8 428.3 310.0 212.9
2010 458.7 5,284.7 447.0 225.9 129.7 11.0
Thomson Reuters 47
48 Thomson Reuters
Exits: IPOs and Acquisitions
Venture-backed company exit activity was driven by a record-breaking mergers and acquisitions (M&A) market and a
strengthening initial public offerings (IPO) market. For full-year 2010, there were 72 venture-backed IPOs, the biggest
year for activity since 2007. More than 400 acquisitions were completed during full year 2010, the biggest year, by
number of deals, for venture-backed M&A exits since Thomson Reuters started tracking venture capital from the 1970s.
The most recent three years have seen the number of IPOs increase from 6 to 12 to 72. While encouraging, this is far
below the IPO levels seen in 1999 and 2000. Remember too, there is a large pent-up demand for exits by companies
funded late in the technology bubble and shortly thereafter that have not been able to go public up to this point.
To put this in context, approximately 14 percent of the venture-backed companies first funded in the 1990s eventu-
ally went public. In recent years, more than 1,000 companies annually are funded for the first time. That would sug-
gest an annual IPO count of at least 140. While times may have changed and the anticipated percent of first fund-
ings going public is lower, a huge gap between what is needed and current levels is clear.
While we have provided the traditional analytical charts and summaries in this chapter, the reader is reminded that
some years covered by the charts are based on a very small number of companies such as 2008 and 2009. At year
end 2010, there were 31 MoneyTree™ companies in registration.
The number of venture-backed companies acquired during 2010 (427) sets a new record. This follows a slow acqui-
sition year in 2009 (272) and several years during and following the technology bubble when acquisition counts
were in the 300’s. Despite the larger number of acquisitions, the total disclosed number dollars ($18.5 billion) is far
from a post-bubble record. The overall quality of deals was mixed with 23% of the disclosed deals occurring at or
below total venture investment (TVI) in the company, compared with 16% at 10x or greater.
In 2010, IPO and acquisition activity were both far below what is necessary to sustain the industry long term.
Methodology through daily prospectus research; third, through

Initial and secondary public offerings of companies industry surveys. By using this research process, we
that are venture-backed are followed and analyzed by have been successful in identifying virtually all com-
Thomson Reuters. This research is compiled three panies that have gone public that have had venture
ways: first, through cross-referencing venture- backing. However, the term “venture-backed” has
backed companies with IPOs in registration or that different meanings depending on context. There are
have begun trading, which is tracked through the new three decreasingly stringent classifications that
issues online database of Thomson Reuters; second, Thomson Reuters uses in classifying public compa-
Figure 5.01 Venture-Backed IPOs
300 25.00
No of IPOs
250 Offer Amount ($B) 20.00
200
Offer ($Billion)
15.00
No. of IPOs
150
10.00
100
5.00
50
0 0.00
'85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10
Year
Thomson Reuters 49
nies as venture-backed. The most rigorous is that a sense. This is the criterion used in publishing ven-
venture capitalist must be a shareholder at the time of ture-backed IPOs in the Venture Capital Journal. The
the public offering and the investment must have second most strict category still provides that the
been made by a non-buyout venture capital fund. investment be made in a venture round of financing,
Thus, an investment that was exited prior to going but allows that the investment could have been exit-
public or a company financed by a buyout firm ed at some point prior to the IPO. The third and most
would not be counted as venture-backed in this comprehensive definition of venture-backed includes
Figure 5.02 Number of Venture-Backed IPOs

vs. All IPOs
# of Venture-
Year # of All IPOs
Backed IPOs
2000 351 263
2001 83 41
2002 76 22
2003 67 29
2004 187 94
2005 167 57
2006 168 57
2007 160 86
2008 24 6
2009 38 12
2010 104 72
Figure 5.03
Venture-Backed IPOs 1985 to 2010
Value and Age Characteristics
Offer Amount Med Offer Mean Offer Post Offer Med Post Mean Post Median Age Mean Age @
Year Num of IPOs ($Mil) Amt ($Mil) Amt ($Mil) Value ($Mil) Value ($Mil) Value ($Mil) @ IPO (yrs) IPO (yrs)
1985 76 1,267 13 17 5,638 39 75 4 8
1986 154 3,080 14 22 15,287 54 110 5 9
1987 119 2,249 17 22 9,485 56 93 5 8
1988 55 847 14 17 3,399 56 67 5 6
1989 64 1,202 15 21 5,358 54 94 7 8
1990 67 1,285 20 22 4,968 68 84 7 8
1991 153 4,728 25 32 20,033 85 134 7 9
1992 193 7,258 24 39 23,941 76 130 6 9
1993 221 6,769 23 32 22,148 68 104 7 9
1994 164 4,471 23 28 17,163 68 106 8 11
1995 207 8,293 33 41 32,530 110 160 8 10
1996 281 12,011 32 43 65,986 112 235 6 9
1997 142 4,997 30 35 29,832 109 210 7 11
1998 78 3,543 38 45 17,253 182 221 5 7
1999 271 18,750 56 69 131,421 332 485 4 6
2000 263 22,959 68 87 129,063 244 491 5 7
2001 41 3,412 66 83 18,080 322 441 6 12
2002 22 2,067 71 94 7,950 223 361 8 15
2003 29 2,006 66 69 8,257 228 285 8 9
2004 94 10,482 68 112 61,678 256 656 7 8
2005 57 4,482 65 79 16,558 202 290 6 8
2006 57 5,117 76 90 22,242 255 390 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
2009 12 1,642 97 137 7,479 428 623 10 11
2010 72 7,018 82 97 33,023 226 459 9 9
50 Thomson Reuters
2011 NVCA Yearbook
companies invested in by either venture capital or Thus, in this chapter and throughout this book, we
buyout funds and the investor may or may not have use the definition:
exited prior to the IPO. When the term venture- Private Equity = Venture Capital + Buyout/-
backed is used in this particular chapter, it usually Mezzanine
refers to companies covered by the second category.
The term ‘private-equity backed’ will refer to the Therefore, charts reporting private equity activity
third category of company. include venture capital activity.
Figure 5.04
Venture-Backed IPOs by MoneyTree™ Industry
Total Offering Size ($ Millions)
Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Biotechnology 17 318 173 24 65 63 905 892 499 147 495 976 536 141 254 3,661 335 318 440 1,436 782 855 1,315 0 198 1,150
Consumer Products and Services 12 128 119 8 174 5 445 401 372 338 280 191 155 509 452 386 180 39 157 250 103 77 202 0 142 1,008
Software 47 268 208 132 128 135 400 452 807 382 1,960 1,907 810 671 3,885 3,616 348 155 292 2,050 505 576 1,242 62 456 911
Financial Services 208 207 56 9 85 0 166 300 197 323 531 1,272 317 7 485 112 494 191 322 699 755 197 0 0 0 703
Industrial/Energy 223 332 390 242 206 399 350 1,210 767 810 998 1,454 373 130 56 1,154 511 158 0 367 21 257 580 0 0 672
Media and Entertainment 78 778 196 61 15 45 243 346 641 293 160 651 528 100 2,625 1,320 0 197 65 1,624 352 798 184 0 0 511
Semiconductors 13 41 98 74 79 25 178 132 340 131 699 6 276 0 249 1,399 116 0 312 1,407 594 125 636 0 0 479
IT Services 13 21 32 12 0 0 168 848 66 64 280 457 85 251 1,418 1,510 0 102 0 90 122 191 344 0 0 353
Business Products and Services 0 51 4 2 0 62 95 61 116 67 78 429 109 81 1,078 578 0 0 97 324 464 0 828 0 0 306
Networking and Equipment 30 135 113 37 52 71 252 241 356 402 282 567 297 271 2,452 3,021 135 0 0 138 0 427 453 0 80 296
Telecommunications 39 73 361 15 41 167 162 247 758 264 477 1,296 317 679 3,736 4,312 150 0 152 1,001 355 719 2,583 0 386 246
Medical Devices and Equipment 74 80 146 20 100 109 505 831 333 476 893 1,512 447 91 48 701 590 282 53 843 327 756 1,241 57 0 98
Retailing/Distribution 247 236 94 106 34 26 366 257 733 117 67 506 150 264 1,301 251 0 0 65 62 28 139 496 0 0 57
Other 0 55 0 0 0 0 0 10 0 0 7 0 141 0 0 0 0 0 0 0 0 0 0 0 0 0
Total 1,267 3,080 2,249 847 1,202 1,285 4,728 7,258 6,769 4,471 8,293 12,011 4,997 3,543 18,750 22,959 3,412 2,067 2,006 10,482 4,482 5,117 10,326 470 1,642 7,018
Figure 5.05
Venture-Backed IPOs by MoneyTree™ Industry
Total Number of Companies
Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Biotechnology 5 16 13 2 8 4 31 28 25 12 16 34 22 6 6 49 4 4 7 25 14 17 21 0 3 14
Software 3 21 11 8 9 9 15 17 27 19 55 61 26 19 69 55 5 4 4 8 6 6 12 1 4 8
Semiconductors 1 4 4 5 5 1 8 3 16 8 19 1 7 0 5 14 2 0 3 6 8 2 8 0 0 6
IT Services 1 2 3 1 1 0 6 3 3 3 7 12 3 5 27 16 0 1 0 2 1 2 4 0 0 4
Other 0 1 0 0 0 0 0 1 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0
Totals 76 154 119 55 64 67 153 193 221 164 207 281 142 78 271 263 41 22 29 94 57 57 86 6 12 72
Thomson Reuters 51
Figure 5.06
Average and Median Age in Months
by MoneyTree™ Industry Companies at IPO 2000 to 2010
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Industry Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median
Biotechnology 85.2 68.0 202.8 74.5 125.8 106.5 86.3 94.0 84.8 75.0 73.2 67.0 107.6 94.0 92.8 99.0 N/A N/A 152.0 145.0 84.8 82.0
Business Products and Services 43.5 48.5 N/A N/A N/A N/A 61.5 61.5 66.7 66.0 73.8 68.0 N/A N/A 191.3 151.0 N/A N/A N/A N/A 76.0 76.0
Computers and Peripherals 117.8 103.0 N/A N/A 193.0 193.0 N/A N/A 49.0 49.0 71.0 71.0 N/A N/A 83.0 83.0 127.0 127.0 N/A N/A N/A N/A
Consumer Products and Services 26.8 25.5 260.5 269.5 107.0 107.0 130.3 59.0 83.7 82.0 190.0 190.0 76.0 76.0 163.0 163.0 N/A N/A 119.0 119.0 106.8 98.5
Electronics/Instrumentation 62.7 66.0 118.0 118.0 9.0 9.0 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 105.0 105.0 111.0 111.0
Financial Services 52.0 52.0 36.0 36.0 361.5 361.5 119.5 141.5 131.9 71.0 126.0 66.0 126.5 126.5 N/A N/A N/A N/A N/A N/A 135.3 139.0
Healthcare Services 122.7 138.0 141.0 100.0 90.0 90.0 80.0 80.0 N/A N/A 137.0 137.0 N/A N/A 121.0 121.0 163.0 163.0 N/A N/A 89.0 89.0
Industrial/Energy 113.1 82.0 223.0 67.0 40.0 40.0 N/A N/A 44.0 44.0 53.0 53.0 87.7 77.0 102.0 108.5 N/A N/A N/A N/A 81.3 82.0
IT Services 81.7 57.0 N/A N/A 293.0 293.0 N/A N/A 89.0 89.0 99.0 99.0 131.0 131.0 96.5 82.0 N/A N/A N/A N/A 91.8 103.5
Media and Entertainment 52.3 52.0 N/A N/A 248.3 58.0 126.0 126.0 163.0 121.0 187.0 123.5 146.0 137.0 78.5 78.5 N/A N/A N/A N/A 102.0 124.0
Medical Devices and Equipment 177.4 67.5 110.7 68.0 308.7 234.0 123.0 123.0 112.2 95.5 107.8 95.5 120.4 94.5 108.9 88.0 71.0 71.0 N/A N/A 122.0 122.0
Networking and Equipment 48.7 38.0 48.0 48.0 N/A N/A N/A N/A 101.5 101.5 N/A N/A 117.5 97.0 93.8 94.5 N/A N/A 57.0 57.0 124.8 124.0
Retailing/Distribution 49.5 32.0 N/A N/A N/A N/A 70.0 70.0 114.0 114.0 73.0 73.0 75.0 75.0 161.7 148.0 N/A N/A N/A N/A 189.0 189.0
Semiconductors 110.9 80.5 104.0 104.0 N/A N/A 143.0 141.0 112.2 91.0 111.4 98.0 111.0 111.0 113.1 99.5 N/A N/A N/A N/A 73.7 79.0
Software 92.4 69.0 70.5 64.0 81.8 62.0 95.0 89.0 88.3 90.0 84.7 75.5 121.0 112.5 126.9 112.5 93.0 93.0 123.3 123.5 161.0 157.5
Telecommunications 71.9 61.0 18.0 18.0 N/A N/A 102.5 102.5 61.8 58.5 58.8 65.0 91.7 57.0 100.8 94.0 N/A N/A 142.5 142.5 122.8 126.5
Average and Median Age in Months of Companies At IPO 2000-2010 by MoneyTreeTM Industry

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
1985 6 3 271.2 90.4 1985 8 3 271.2 90.4
1986 11 1 86.8 86.8 1986 17 4 214.7 53.7
1987 13 4 398.1 99.5 1987 21 8 854.4 106.8
1988 16 6 481.1 80.2 1988 31 16 1579.5 98.7
1989 18 5 371.8 74.4 1989 37 20 2071.3 103.6
1990 20 9 214.3 23.8 1990 28 12 595.6 49.6
1991 18 5 221.5 44.3 1991 34 14 1059.7 75.7
1992 75 46 2544.8 55.3 1992 91 60 4293.4 71.6
1993 71 42 1656.5 39.4 1993 118 73 6027.7 82.6
1994 100 63 3405.5 54.1 1994 136 88 9970.1 113.3
1995 97 60 3788.3 63.1 1995 160 108 16106.4 149.1
1996 118 77 8531.0 110.8 1996 193 146 37023.7 253.6
1997 163 115 7410.5 64.4 1997 268 200 65122.5 325.6
1998 212 133 9487.6 71.3 1998 325 233 91541.2 392.9
1999 240 164 41904.6 255.5 1999 349 255 222568.6 872.8
2000 318 206 68165.5 330.9 2000 377 249 121780.0 489.1
2001 355 164 16770.3 102.3 2001 407 203 39639.9 195.3
2002 321 154 7586.7 49.3 2002 361 187 24031.8 128.5
2003 285 120 7521.1 62.7 2003 328 146 14605.5 100.0
2004 349 188 16043.8 85.3 2004 391 214 25766.4 120.4
2005 350 163 17324.6 106.3 2005 451 222 43507.1 196.0
2006 378 167 19141.8 114.6 2006 518 231 51079.4 221.1
2007 379 168 29457.5 175.3 2007 569 244 76852.5 315.0
2008 349 120 13974.2 116.5 2008 503 171 29711.0 173.7
2009 272 91 13073.3 143.7 2009 335 120 50647.6 422.1
2010 427 123 18450.7 150.0 2010 591 183 39301.5 214.8
Average acquisition price is calculated by dividing total known Average acquisition price is calculated by dividing total known
acquisition proceeds by the number of transactions where the acquisition proceeds by the number of transactions where the
proceeds are known, not the total number of transactions. proceeds are known, not the total number of transactions. Note:
Private Equity includes venture capital, buyouts, mezzanine, and
other private equity financed companies. Therefore, transactions
from Figure 5.07 are included here.
52 Thomson Reuters
2011 NVCA Yearbook
Figure 5.09
Venture-Backed Acquisitions by MoneyTree™ Industry
Total Transaction Values 1985 to 2010 ($ Million)
Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Biotechnology 0 0 0 0 0 0 68 61 25 39 97 388 426 172 780 1206 430 115 604 709 2637 1779 6045 1594 2021 4642
Software 0 0 5 40 0 104 83 274 141 521 500 1022 2104 2930 10309 15755 3063 1944 2043 4305 4754 4301 5201 3846 1808 3068
IT Services 0 0 0 0 0 0 0 0 0 0 19 485 80 706 676 2077 533 603 1011 1681 1729 509 2395 707 373 1871
Semiconductors 71 0 0 0 15 0 0 0 38 67 327 0 8 468 1269 5353 1439 563 415 740 214 1015 1029 787 524 964
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 195 0 0 95
Total 271 87 398 481 372 214 222 2545 1657 3406 3788 8531 7411 9488 41905 68166 16770 7587 7521 16044 17325 19142 29458 13974 13073 18451
Figure 5.10
Venture-Backed Acquisitions by MoneyTree™ Industry
Number of Companies 1985 to 2010
Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Software 0 3 1 3 2 5 2 12 14 30 26 22 45 63 57 99 88 117 103 118 124 137 126 129 99 146
IT Services 0 1 0 2 1 0 0 1 0 0 4 6 6 11 16 19 28 34 26 27 22 20 28 21 15 39
Biotechnology 0 1 0 1 1 1 2 6 3 5 9 11 10 12 13 14 17 11 15 22 25 29 24 19 19 30
Semiconductors 1 0 0 0 1 1 3 1 2 3 5 1 1 9 8 16 12 13 12 14 11 16 17 23 18 20
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 1 0 0 1 1 0 1 1 0 1
Total 6 11 13 16 18 20 18 75 71 100 97 118 163 212 240 318 355 321 285 349 350 378 379 349 272 427
Thomson Reuters 53
Figure 5.11
Private Equity-Backed Acquisitions by MoneyTree™ Industry
Total Transaction Values 1985 to 2010 ($ Million)
Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Biotechnology 0 0 0 0 809 0 68 228 1057 351 794 999 583 1918 4755 2101 540 2540 660 812 4855 1779 6083 1711 6538 6625
Software 0 0 24 56 443 104 135 696 580 911 1287 5958 6479 4574 39945 22068 3258 1944 4175 4631 5027 5337 6176 5107 2570 3763
IT Services 0 0 0 7 0 0 0 0 0 0 19 485 357 1075 2164 31248 866 670 1809 1848 2079 1051 2633 707 373 3292
Semiconductors 71 0 0 0 15 100 70 0 38 67 327 0 289 792 4705 5353 1564 563 415 740 214 1258 1029 787 550 1589
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 190 330 1039 545 890 324 0 1000
Total 271 215 854 1580 2071 596 1060 4293 6028 9970 16106 37024 65123 91541 222569 121780 39640 24032 14606 25766 43507 51079 76853 29711 50648 39302
Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity financed companies. Therefore, transactions
from Figure 5.09 are included here.
Figure 5.12
Private Equity-Backed Acquisitions by MoneyTree™ Industry
Number of Companies 1985 to 2010
Industry 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Software 0 3 3 4 5 7 5 14 20 33 30 31 54 75 74 106 91 117 108 121 128 146 143 144 105 156
IT Services 0 1 0 3 1 1 0 1 0 0 5 6 8 14 20 24 31 36 29 28 23 24 36 21 19 48
Biotechnology 0 2 0 1 4 1 2 7 6 8 15 14 13 19 22 16 18 13 16 23 28 30 25 21 24 35
Semiconductors 1 0 0 0 1 2 4 1 2 3 5 1 2 12 10 17 13 13 12 14 12 17 19 26 19 23
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 1 0 1 3 4 2 4 7 0 5
Total 8 17 21 31 37 28 34 91 118 136 160 193 268 325 349 377 407 361 328 391 451 518 569 503 335 591
Note: Private Equity includes venture capital, buyouts, mezzanine, and other private equity financed companies. Therefore, transac-
tions from Figure 5.10 are included here.
54 Thomson Reuters
2011 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 37% 40% 15% 8%
2004 34% 32% 23% 11%
2005 27% 40% 20% 13%
2006 26% 36% 20% 18%
2007 23% 31% 25% 21%
2008 26% 30% 26% 18%
2009 37% 21% 28% 14%
2010 23% 33% 28% 16%
This chart is prepared by analyzing all deals where total venture invest-
ment 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 not result in a good return. Four times the investment
to 10 times the investment can be a good outcome. An acquisition for
more than 10 times venture investment is usually a nice outcome.
Figure 5.14
Venture-Backed IPOs
Cos. in Registration vs.
Number of Venture-Backed IPOs
# of Moneytree Cos.
Year in Registration # of IPOs
2003 31 29
2004 57 94
2005 16 57
2006 36 57
2007 31 86
2008 20 6
2009 23 12
2010 31 72
Thomson Reuters 55
Figure 5.15
Venture-Backed IPOs
Maximum Valuation Prior to IPO ($ Mil)
Avg Upper Lower
Biotechnology 125.5 407.7 137.6 94.5 43.1 14.8
Business Products and Services NA NA NA NA NA NA
Computers and Peripherals NA NA NA NA NA NA
Electronics/Instrumentation NA NA NA NA NA NA
Financial Services NA NA NA NA NA NA
Healthcare Services NA NA NA NA NA NA
Industrial/Energy NA NA NA NA NA NA
IT Services NA NA NA NA NA NA
Media and Entertainment NA NA NA NA NA NA
Medical Devices and Equipment NA NA NA NA NA NA
Networking and Equipment NA NA NA NA NA NA
Retailing/Distribution NA NA NA NA NA NA
Semiconductors NA NA NA NA NA NA
Software NA NA NA NA NA NA
Telecommunications NA NA NA NA NA NA
Total 128.2 550.0 172.1 64.0 23.2 0.3
*Categories containing less than 3 companies will not be displayed but their valuation amounts will be included
in bottom line totals.
56 Thomson Reuters
Appendix A: Glossary
“A” round – a financing event whereby angel ownership in a company due to the issuance by the
groups and / or venture capitalists become involved company of additional shares to other entities. The
in a fast growth company that was previously mechanism for making an adjustment that maintains
financed by founders and their friends and families. the same percentage ownership is called a Full
Ratchet. The most commonly used adjustment pro-
Accredited investor – a person or legal entity, such vides partial protection and is called Weighted
as a company or trust fund, that meets certain net Average.
worth and income qualifications and is considered to
be sufficiently sophisticated to make investment “B” round – a financing event whereby investors
decisions in private offerings. Regulation D of the such as venture capitalists and organized angel
Securities Act of 1933 exempts accredited investors groups are sufficiently interested in a company to
from protection of the Securities Act. The Securities provide additional funds after the “A” round of
and Exchange Commission has proposed revisions to financing. Subsequent rounds are called “C”, “D”
the accredited investor qualifying rules, which may and so on.
or may not result in changes for venture investors.
The current criteria for a natural person are: $1 mil- Basis point (“bp”) – one one-hundredth (1/100) of a
lion net worth or annual income exceeding $200,000 percentage unit. For example, 50 basis points equals
individually or $300,000 with a spouse. Directors, one half of one percent. Banks quote variable loan
general partners and executive officers of the issuer rates in terms of an index plus a margin and the mar-
are considered to be accredited investors. gin is often described in basis points, such as LIBOR
plus 400 basis points (or, as the experts say, “beeps”).
Alternative asset class – a class of investments that
includes venture capital, leverage buyouts, hedge Beta – a measure of volatility of a public stock rela-
funds, real estate, and oil and gas, but excludes pub- tive to an index or a composite of all stocks in a mar-
licly traded securities. Pension plans, college endow- ket or geographical region. A beta of more than one
ments and other relatively large institutional indicates the stock has higher volatility than the
investors typically allocate a certain percentage of index (or composite) and a beta of one indicates
their investments to alternative assets with an objec- volatility equivalent to the index (or composite). For
tive to diversify their portfolios. example, the price of a stock with a beta of 1.5 will
change by 1.5% if the index value changes by 1%.
Alpha – a term derived from statistics and finance Typically, the S&P500 index is used in calculating
theory that is used to describe the return produced by the beta of a stock.
a fund manager in excess of the return of a bench-
mark index. Manager returns and benchmark returns Beta product – a product that is being tested by
are measured net of the risk-free rate. In addition, potential customers prior to being formally launched
manager returns are adjusted for the risk of the man- into the marketplace.
ager’s portfolio relative to the risk of the benchmark
index. Alpha is a proxy for manager skill. Board of directors – a group of individuals, typical-
ly composed of managers, investors and experts who
Angel – a wealthy individual that invests in compa- have a fiduciary responsibility for the well being and
nies in relatively early stages of development. proper guidance of a corporation. The board is elect-
Usually angels invest less than $1 million per startup. ed by the shareholders.
Anti-dilution – a contract clause that protects an Book – see Private placement memorandum.
investor from a substantial reduction in percentage
Thomson Reuters 57
Bootstrapping – the actions of a startup to minimize Buyout – a sector of the private equity industry.
expenses and build cash flow, thereby reducing or Also, the purchase of a controlling interest of a com-
eliminating the need for outside investors. pany 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 conditions under which a shareholder must first offer
eventually be replaced by permanent capital from his or her shares for sale to the other shareholders
equity investors or debt lenders. In venture capital, a before being allowed to sell to entities outside the
bridge is usually a short term note (6 to 12 months) company.
that converts to preferred stock. Typically, the bridge
lender has the right to convert the note to preferred C Corporation – an ownership structure that allows
stock at a price that is a 20% to 25% discount from any number of individuals or companies to own
the price of the preferred stock in the next financing shares. A C corporation is a stand-alone legal entity
round. See 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 gen-
weighted average price. See Narrow-based weight- eral partner will make a series of capital calls over
ed average anti-dilution. time 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 Capital gains – a tax classification of investment
every 100 business plans received eventually receive earnings resulting from the purchase and sale of
funding. assets. Typically, a company’s investors and founders
have earnings classified as long term capital gains
58 Thomson Reuters
2011 NVCA Yearbook
(held for a year or longer), which are taxed at a lower Club deal – the act of investing by two or more enti-
rate than ordinary income. ties in the same target company, usually involving a
leveraged buyout transaction.
Capital stock – a description of stock that applies
when there is only one class of shares. This class is Co-investment – the direct investment by a limited
known as “common stock”. partner alongside a general partner in a portfolio
company.
Capital Under Management – A frequently-used
metric for sizing total funds managed by a venture Collateral – hard assets of the borrower, such as real
capital or buyout firm. In practice, there are several estate or equipment, for which a lender has a legal
ways of calculating this. In the US, this is the total interest until a loan obligation is fully paid off.
committed capital for all funds managed by a firm on
which it collects management fees. This calculation Commitment – an obligation, typically the maxi-
ignores whether portions of the committed capital mum amount that a limited partner agrees to invest in
have not yet been called and whether portions of the a fund. See Capital call.
fund have been liquidated and distributed. It typical-
ly does not include aging funds in their “out years” Common stock – a type of security representing
on which fees are not being collected. For purposes ownership rights in a company. Usually, company
of this book in calculating capital managed in figure founders, management and employees own common
1.04, because direct data is not available, the last stock while investors own preferred stock. In the
eight vintage years of capital commitments is consid- event of a liquidation of the company, the claims of
ered a proxy for the industry’s total capital under secured and unsecured creditors, bondholders and
management. preferred stockholders take precedence over com-
mon stockholders. See Preferred stock.
Capped participating preferred stock — preferred
stock whose participating feature is limited so that an Comparable – a private or public company with
investor cannot receive more than a specified similar characteristics to a private or public company
amount. See Participating preferred stock. that is being valued. For example, a telecommunica-
tions equipment manufacturer whose market value is
Carried interest — the share in the capital gains of 2 times revenues can be used to estimate the value of
a venture capital fund which is allocated to the a similar and relatively new company with a new
General Partner. Typically, a fund must return the product in the same industry. See Liquidity discount.
capital given to it by limited partners plus any pref-
erential 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.”
Thomson Reuters 59
Convertible preferred stock – a type of stock that Data room – a specific location where potential buy-
gives an owner the right to convert to common shares of ers / investors can review confidential information
stock. Usually, preferred stock has certain rights that about a target company. This information may
common stock doesn’t have, such as decision-making include detailed financial statements, client con-
management control, a promised return on investment tracts, intellectual property, property leases, and
(dividend), or senior priority in receiving proceeds from compensation agreements.
a sale or liquidation of the company. Typically, convert-
ible preferred stock automatically converts to common Deal flow – a measure of the number of potential
stock if the company makes an initial public offering investments that a fund reviews in any given period.
(IPO). Convertible preferred is the most common tool
for private equity funds to invest in companies. Defined benefit plan – a company retirement plan in
which the benefits are typically based on an employ-
Co-sale right – a contractual right of an investor to ee’s salary and number of years worked. Fixed bene-
sell some of the investor’s stock along with the fits are paid after the employee retires. The employ-
founder’s or majority shareholder’s stock if either the er bears the investment risk and is committed to pro-
founder or majority shareholder elects to sell stock to viding the benefits to the employee. Defined benefit
a third-party. Also known as Tag-along right. plan managers can invest in private equity funds.
Cost of capital – see Weighted average cost of cap- Defined contribution plan – a company retirement
ital. plan in which the employee elects to contribute some
portion of his or her salary into a retirement plan,
Cost of revenue – the expenses generated by the such as a 401(k) or 403(b). The employer may also
core operations of a company. contribute to the employee’s plan. With this type of
plan, the employee bears the investment risk. The
Covenant – a legal promise to do or not do a certain benefits depend solely on the amount of money made
thing. For example, in a financing arrangement, com- from investing the employee’s contributions.
pany management may agree to a negative covenant, Defined contribution plan capital cannot be invested
whereby it promises not to incur additional debt. The in private equity funds.
penalties for violation of a covenant may vary from
repairing the mistake to losing control of the company. Demand rights – a type of registration right.
Demand rights give an investor the right to force a
Coverage ratio – describes a company’s ability to startup to register its shares with the SEC and prepare
pay debt from cash flow or profits. Typical measures for a public sale of stock (IPO).
are EBITDA/Interest, (EBITDA minus Capital
Expenditures)/Interest, and EBIT/Interest. Dilution – the reduction in the ownership percentage
of current investors, founders and employees caused
Cram down round – a financing event upon which by the issuance of new shares to new investors.
new investors with substantial capital are able to
demand and receive contractual terms that effective- Dilution protection – see Anti-dilution and Full
ly cause the issuance of sufficient new shares by the ratchet.
startup company to significantly reduce (“dilute”) the
ownership percentage of previous investors. Direct secondary transaction - A transaction in
which the buyer purchases shares of an operating
Cumulative dividends – the owner of preferred stock company from an existing seller. While the transac-
with cumulative dividends has the right to receive tion is a secondary sale of shares, the transacted
accrued (previously unpaid) dividends in full before interest is a primary issue purchase directly into an
dividends are paid to any other classes of stock. operating company. Sellers are often venture capital-
ists selling their ownership stake in a portfolio com-
Current ratio – the ratio of current assets to current pany. Buyers are often funds that specialize in such
liabilities. investments.
60 Thomson Reuters
2011 NVCA Yearbook
Disbursement – an investment by a fund in a com- all buyers is the price commitment of the buyer of the
pany. last share.
Discount rate – the interest rate used to determine Early stage – the state of a company after the seed
the present value of a series of future cash flows. (formation) stage but before middle stage (generating
revenues). Typically, a company in early stage will
Discounted cash flow (DCF) – a valuation method- have a core management team and a proven concept
ology whereby the present value of all future cash or product, but no positive cash flow.
flows expected from a company is calculated.
Earnings before interest and taxes (EBIT) – a
Distressed debt – the bonds of a company that is measurement of the operating profit of a company.
either in or approaching bankruptcy. Some private One possible valuation methodology is based on a
equity funds specialize in purchasing such debt at deep comparison of private and public companies’ value
discounts with the expectation of exerting influence in as a multiple of EBIT.
the restructuring of the company and then selling the
debt once the company has meaningfully recovered. Earnings before interest, taxes, depreciation and
amortization (EBITDA) – a measurement of the
Distribution – the transfer of cash or securities to a cash flow of a company. One possible valuation
limited partner resulting from the sale, liquidation or methodology is based on a comparison of private and
IPO of one or more portfolio companies in which a public companies’ value as a multiple of EBITDA.
general partner chose to invest.
Earn out – an arrangement in which sellers of a busi-
Dividends – payments made by a company to the ness receive additional future payments, usually
owners of certain securities. Typically, dividends are based on financial performance metrics such as rev-
paid quarterly, by approval of the board of directors, enue or net income.
to owners of preferred stock.
Elevator pitch – a concise presentation, lasting only
Down round – a round of financing whereby the val- a few minutes (an elevator ride), by an entrepreneur to
uation of the company is lower than the value deter- a potential investor about an investment opportunity.
mined by investors in an earlier round.
Employee Stock Ownership Program (ESOP) – a
Drag-along rights – the contractual right of an investor plan established by a company to reserve shares for
in a company to force all other investors to agree to a employees.
specific action, such as the sale of the company.
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-
where-by 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 interests. Equity = Assets – Liabilities.
the next highest bidder, and so on until all the shares
are committed. Note that the price per share paid by ESOP – see Employee Stock Ownership Program.
Thomson Reuters 61
Evergreen fund – a fund that reinvests its profits in but before any interest payments on debt are made. In
order to ensure the availability of capital for future a discounted cash flow model to determine the enter-
investments. prise value of a firm using FCFF, the discount rate
used is the weighted average cost of capital (WACC).
Exit strategy – the plan for generating profits for
owners and investors of a company. Typically, the Friends and family financing – capital provided by
options are to merge, be acquired or make an initial the friends and family of founders of an early stage
public offering (IPO). An alternative is to recapitalize company. Founders should be careful not to create an
(releverage the company and then pay dividends to ownership structure that may hinder the participation
shareholders). of professional investors once the company begins to
achieve success.
Expansion stage – the stage of a company character-
ized by a complete management team and a substan- Full ratchet – an anti-dilution protection mechanism
tial increase in revenues. whereby the price per share of the preferred stock of
investor A is adjusted downward due to the issuance
Fair value – a financial reporting principle for valu- of new preferred shares to new investor B at a price
ing assets and liabilities, for example, portfolio com- lower than the price investor A originally received.
panies in venture capital fund portfolios. This has Investor A’s preferred stock is repriced to match the
received much recent attention as the Financial price of investor B’s preferred stock. Usually as a
Accounting Standards Board (FASB) has issued result of the implementation of a ratchet, company
definitive guidance (FAS 157) on this long standing management and employees who own a fixed
principle. amount of common shares suffer significant dilution.
See Narrow-based weighted average anti-dilution
Fairness opinion – a letter issued by an investment and 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 rel-
to sell. atively small institutional investors participate in a
fund-offunds 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 lim-
ited partners (LPs) being the institutional and high
Free cash flow to the firm (FCFF) – the operating net worth investors that provide most of the capital in
cash flow available after operating expenses, taxes, the partnership. The GP earns a management fee and
reinvestment needs and changes in working capital, a percentage of gains (see Carried interest).
62 Thomson Reuters
2011 NVCA Yearbook
GP – see General partner. High yield debt – debt issued via public offering or
public placement (Rule 144A) that is rated below
GP for hire - In a spin-out or a synthetic secondary, investment grade by S&P or Moody’s. This means
a GP for hire refers to the professional investor who that the debt is rated below the top four rating cate-
may be hired by a purchasing firm to manage the new gories (i.e. S&P BB+, Moody’s Ba2 or below). The
fund created from the orphaned assets purchased. In lower rating is indicative of higher risk of default,
past cases, the GP has often expanded its role to and therefore the debt carries a higher coupon or
fundraise for and run new funds aside from the initial yield than investment grade debt. Also referred to as
fund. Junk bonds or Sub-investment grade debt.
Going-private transaction – when a public compa- Hockey stick – the general shape and form of a chart
ny chooses to pay off all public investors, delist from showing revenue, customers, cash or some other
all stock exchanges, and become owned by manage- financial or operational measure that increases dra-
ment, employees, and select private investors. matically at some point in the future. Entrepreneurs
often develop business plans with hockey stick charts
Golden handcuffs – financial incentives that dis- to impress potential investors.
courage founders and / or important employees from
leaving a company before a predetermined date or Holding period – amount of time an investment
important milestone. remains in a portfolio.
Grossing up – an adjustment of an option pool for Hot issue – stock in an initial public offering that is
management and employees of a company which in high demand.
increases the number of shares available over time.
This usually occurs after a financing round whereby Hot money – capital from investors that have no tol-
one or more investors receive a relatively large per- erance for lack of results by the investment manager
centage of the company. Without a grossing up, man- and move quickly to withdraw at the first sign of
agers and employees would suffer the financial and trouble.
emotional consequences of dilution, thereby potential-
ly affecting the overall performance of the company. Hurdle rate – a minimum rate of return required
before an investor will make an investment.
Growth stage – the state of a company when it has
received one or more rounds of financing and is gen- Incorporation – the process by which a business
erating revenue from its product or service. Also receives a state charter, allowing it to become a cor-
known as “middle stage.” poration. Many corporations choose Delaware
because its laws are business-friendly and up to date.
Hart-Scott-Rodino Act – a law requiring entities
that acquire certain amounts of stock or assets of a Incubator – a company or facility designed to host
company to inform the Federal Trade Commission startup companies. Incubators help startups grow
and the Department of Justice and to observe a wait- while controlling costs by offering networks of con-
ing period before completing the transaction. tacts and shared backoffice resources.
Hedge fund – an investment fund that has the abil- Indenture – the terms and conditions between a
ity to use leverage, take short positions in securi- bond issuer and bond buyers.
ties, or use a variety of derivative instruments in
order to achieve a return that is relatively less cor- Initial public offering (IPO) – the first offering of
related to the performance of typical indices (such stock by a company to the public. New public offer-
as the S&P 500) than traditional long-only funds. ings must be registered with the Securities and
Hedge fund managers are typically compensated Exchange Commission. An IPO is one of the meth-
based on assets under management as well as fund ods that a startup that has achieved significant suc-
performance. cess can use to raise additional capital for further
Thomson Reuters 63
growth. See Qualified IPO. IRR – see Internal rate of return.
In-kind distribution – a distribution to limited part- Issuer – the company that chooses to distribute a
ners of a private equity fund that is in the form of portion of its stock to the public.
publicly trades shares rather than cash.
J curve – a concept that during the first few years of
Inside round – a round of financing in which the a private equity fund, cash flow or returns are nega-
investors are the same investors as the previous tive due to investments, losses, and expenses, but as
round. An inside round raises liability issues since investments produce results the cash flow or returns
the valuation of the company has no third party veri- trend upward. A graph of cash flow or returns versus
fication in the form of an outside investor. In addi- time would then resemble the letter “J”.
tion, the terms of the inside round may be considered
self-dealing if they are onerous to any set of share- Later stage – the state of a company that has proven
holders or if the investors give themselves additional its concept, achieved significant revenues compared
preferential rights. to its competition, and is approaching cash flow break
even or positive net income. Typically, a later stage
Institutional investor – professional entities that company is about 6 to 12 months away from a liquid-
invest capital on behalf of companies or individuals. ity event such as an IPO or buyout. The rate of return
Examples are: pension plans, insurance companies for venture capitalists that invest in later stage, less
and university endowments. risky ventures is lower than in earlier stage ventures.
Intellectual property (IP) – knowledge, techniques, LBO – see Leveraged buyout.

writings and images that are intangible but often pro-
tected by law via patents, copyrights, and trade- Lead investor – the venture capital investor that
marks. makes the largest investment in a financing round
and manages the documentation and closing of that
Interest coverage ratio – earnings before interest round. The lead investor sets the price per share of
and taxes (EBIT) divided by interest expense. This is the financing round, thereby determining the valua-
a key ratio used by lenders to assess the ability of a tion of the company.
company to produce sufficient cash to pay its debt
obligation. Letter of intent – a document confirming the intent
of an investor to participate in a round of financing
Internal rate of return (IRR) – the interest rate at for a company. By signing this document, the subject
which a certain amount of capital today would have company agrees to begin the legal and due diligence
to be invested in order to grow to a specific value at process prior to the closing of the transaction. Also
a specific time in the future. known as a “Term Sheet”.
Investment thesis / Investment philosophy – the Leverage – the use of debt to acquire assets, build
fundamental ideas which determine the types of operations and increase revenues. By using debt, a
investments that an investment fund will choose in company is attempting to achieve results faster than
order to achieve its financial goals. if it only used its cash available from pre-leverage
operations. The risk is that the increase in assets and
IPEV – Stands for International Private Equity revenues does not generate sufficient net income and
Valuation guidelines group. This group is made up of cash flow to pay the interest costs of the debt.
representatives of the international and US venture
capital industry and has published guidelines for Leveraged buyout (LBO) – the purchase of a com-
applying US GAAP and international IFRS valuation pany or a business unit of a company by an outside
rules. See www.privateequityvaluation.com investor using mostly borrowed capital.
IPO – see Initial public offering. Leveraged recapitalization – the reorganization of a
64 Thomson Reuters
2011 NVCA Yearbook
company’s capital structure resulting in more debt tors, bondholders and preferred stockholders take
added to the balance sheet. Private equity funds can precedence over common stockholders.
recapitalize a portfolio company and then direct the
company to issue a one-time dividend to equity Liquidation preference – the contractual right of an
investors. This is often done when the company is investor to priority in receiving the proceeds from the
performing well financially and the debt markets are liquidation of a company. For example, a venture
expanding. capital investor with a “2x liquidation preference”
has the right to receive two times its original invest-
Leverage ratios – measurements of a company’s ment upon liquidation.
debt as a multiple of cash flow. Typical leverage
ratios include Total Debt / EBITDA, Total Debt / Liquidity discount – a decrease in the value of a pri-
(EBITDA minus Capital Expenditures), and Seniore vate company compared to the value of a similar but
Debt / EBITDA. publicly traded company. Since an investor in a pri-
vate company cannot readily sell his or her invest-
L.I.B.O.R. – see The London Interbank Offered ment, the shares in the private company must be val-
Rate. ued less than a comparable public company.
License – a contract in which a patent owner grants to Liquidity event – a transaction whereby owners of a
a company the right to make, use or sell an invention significant portion of the shares of a private compa-
under certain circumstances and for compensation. ny sell their shares in exchange for cash or shares in
another, usually larger company. For example, an
Limited liability company (LLC) – an ownership IPO is a liquidity event.
structure designed to limit the founders’ losses to the
amount of their investment. An LLC itself does not Lock-up agreement – investors, management and
pay taxes, rather its owners pay taxes on their propor- employees often agree not to sell their shares for a
tion of the LLC profits at their individual tax rates. specific time period after an IPO, usually 6 to 12
months. By avoiding large sales of its stock, the com-
Limited partnership – a legal entity composed of a pany has time to build interest among potential buy-
general partner and various limited partners. The ers of its shares.
general partner manages the investments and is liable
for the actions of the partnership while the limited London Interbank Offered Rate (L.I.B.O.R.) – the
partners are generally protected from legal actions average rate charged by large banks in London for
and any losses beyond their original investment. The loans to each other. LIBOR is a relatively volatile
general partner collects a management fee and earns rate and is typically quoted in maturities of one
a percentage of capital gains (see Carried interest), month, three months, six months and one year.
while the limited partners receive income, capital
gains and tax benefits. Management buyout (MBO) – a leveraged buyout
controlled by the members of the management team
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
Thomson Reuters 65
a company. The venture capitalist has the right to weighed average of investor A’s price and investor
consult with management on key operational issues, B’s price. A narrow-based anti-dilution uses only
attend board meetings and review information about common stock outstanding in the denominator of the
the company’s financial situation. formula for determining the new weighted average
price.
Market capitalization – the value of a publicly trad-
ed company as determined by multiplying the num- NDA – see Non-disclosure agreement.
ber of shares outstanding by the current price per
share. No-shop clause – a section of an agreement to pur-
chase a company whereby the seller agrees not to
MBO – see Management buyout. market the company to other potential buyers for a
specific time period.
Mezzanine – a layer of financing that has intermedi-
ate priority (seniority) in the capital structure of a Non-cumulative dividends – dividends that are
company. For example, mezzanine debt has lower pri- payable to owners of preferred stock at a specific
ority than senior debt but usually has a higher interest point in time only if there is sufficient cash flow
rate and often includes warrants. In venture capital, a available after all company expenses have been paid.
mezzanine round is generally the round of financing If cash flow is insufficient, the owners of the pre-
that is designed to help a company have enough ferred stock will not receive the dividends owed for
resources to reach an IPO. See Bridge financing. that time period and will have to wait until the board
of directors declares another set of dividends.
MoneyTree™ Report – Officially known as The
MoneyTree Report from PricewaterhouseCoopers Non-interference – an agreement often signed by
and the National Venture Capital Association based employees and management whereby they agree not
on data provided by Thomson Reuters. This report to interfere with the company’s relationships with
provides much of the data in this report. It is used for employees, clients, suppliers and sub-contractors
investment statistics in United States based compa- within a certain time period after termination of
nies. Specific definition information is available in employment.
several of the appendices of this Yearbook.
Non-solicitation – an agreement often signed by
Multiples – a valuation methodology that compares employees and management whereby they agree not
public and private companies in terms of a ratio of to solicit other employees of the company regarding
value to an operations figure such as revenue or net job opportunities.
income. For example, if several publicly traded com-
puter hardware companies are valued at approxi- Non-disclosure agreement (NDA) – an agreement
mately 2 times revenues, then it is reasonable to issued by entrepreneurs to protect the privacy of their
assume that a startup computer hardware company ideas when disclosing those ideas to third parties.
that is growing fast has the potential to achieve a val-
uation of 2 times its revenues. Before the startup Offering memorandum – a legal document that
issues its IPO, it will likely be valued at less than 2 provides details of an investment to potential
times revenue because of the lack of liquidity of its investors. See Private placement memorandum.
shares. See Liquidity discount.
OID – see Original issue discount.
Narrow-based weighted average anti-dilution – a
type of anti-dilution mechanism. A weighted average Operating cash flow – the cash flow produced from
anti-dilution method adjusts downward the price per the operation of a business, not from investing activ-
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
66 Thomson Reuters
2011 NVCA Yearbook
Option pool – a group of options set aside for long tional stock rather than cash. PIK refers to payment
term, phased compensation to management and in kind.
employees.
PIPEs – see Private investment in public equity.
Outstanding shares – the total amount of common
shares of a company, not including treasury stock, Placement agent – a company that specializes in
convertible preferred stock, warrants and options. finding institutional investors that are willing and able
to invest in a private equity fund. Sometimes a private
Pay to play – a clause in a financing agreement equity fund will hire a placement agent so the fund
whereby any investor that does not participate in a partners can focus on making and managing invest-
future round agrees to suffer significant dilution ments in companies rather than on raising capital.
compared to other investors. The most onerous ver-
sion of “pay to play” is automatic conversion to com- Portfolio company – a company that has received an
mon shares, which in essence ends any preferential investment from a private equity fund.
rights of an investor, such as the right to influence
key management decisions. Post-money valuation – the valuation of a company
including the capital provided by the current round of
Pari passu – a legal term referring to the equal treat- financing. For example, a venture capitalist may
ment of two or more parties in an agreement. For invest $5 million in a company valued at $2 million
example, a venture capitalist may agree to have reg- “pre-money” (before the investment was made). As a
istration rights that are pari passu with the other result, the startup will have a post-money valuation
investors in a financing round. of $7 million.
Participating dividends – the right of holders of PPM – see Private placement memorandum.
certain preferred stock to receive dividends and par-
ticipate in additional distributions of cash, stock or Preemptive rights – the rights of shareholders to
other assets. maintain their percentage ownership of a company
by buying shares sold by the company in future
Participating preferred stock – a unit of ownership financing rounds.
composed of preferred stock and common stock. The
preferred stock entitles the owner to receive a prede- Preference – seniority, usually with respect to divi-
termined sum of cash (usually the original invest- dends and proceeds from a sale or dissolution of a
ment plus accrued dividends) if the company is sold company.
or has an IPO. The common stock represents addi-
tional continued ownership in the company. Preferred return – a minimum return per annum
Participating preferred stock has been characterized that must be generated for limited partners of a pri-
as “having your cake and eating it too”. vate equity fund before the general partner can begin
receiving a percentage of profits from investments.
PEIGG – acronym for Private Equity Industry
Guidelines Group, an ad hoc group of individuals Preferred stock – a type of stock that has certain
and firms involved in the private equity industry for rights that common stock does not have. These spe-
the purpose of establishing valuation and reporting cial rights may include dividends, participation, liq-
guidelines. uidity preference, anti-dilution protection and veto
provisions, among others. Private equity investors
Piggyback rights – rights of an investor to have his usually purchase preferred stock when they make
or her shares included in a registration of a startup’s investments in companies.
shares in preparation for an IPO.
Pre-money valuation – the valuation of a company
PIK dividend – a dividend paid to the holder of a prior to the current round of financing. For example,
stock, usually preferred stock, in the form of addi- a venture capitalist may invest $5 million in a com-
Thomson Reuters 67
pany valued at $2 million pre-money. As a result, the ued at or above a total amount specified in a financ-
startup will have a “post-money” valuation of $7 mil- ing agreement. This amount is usually specified to be
lion. sufficiently large to guarantee that the IPO shares
will trade in a major exchange (NASDAQ or New
Primary shares – shares sold by a corporation (not York Stock Exchange). Usually upon a qualified IPO
by individual shareholders). preferred stock is forced to convert to common stock.
Private equity – equity investments in non-public Quartile – one fourth of the data points in a data set.
companies, usually defined as being made up of ven- Often, private equity investors are measured by the
ture capital funds and buyout funds. Real estate, oil results of their investments during a particular period
and gas, and other such partnerships are sometimes of time. Institutional investors often prefer to invest
included in the definition. in private equity funds that demonstrate consistent
results over time, placing in the upper quartile of the
Private investment in public equity (PIPEs) – investment results for all funds.
investments by a private equity fund in a publicly
traded company, usually at a discount and in the form Ratchet – a mechanism to prevent dilution. An
of preferred stock. antidilution clause in a contract protects an investor
from a reduction in percentage ownership in a com-
Private placement – the sale of a security directly to pany due to the future issuance by the company of
a limited number of institutional and qualified indi- additional shares to other entities.
vidual investors. If structured correctly, a private
placement avoids registration with the Securities and Realization ratio – the ratio of cumulative distribu-
Exchange Commission. tions to paid-in capital. The realization ratio is used
as a measure of the distributions from investment
Private placement memorandum (PPM) – a docu- results of a private equity partnership compared to
ment explaining the details of an investment to the capital under management.
potential investors. For example, a private equity
fund will issue a PPM when it is raising capital from Recapitalization – the reorganization of a compa-
institutional investors. Also, a startup may issue a ny’s capital structure.
PPM when it needs growth capital. Also known as
“Offering Memorandum”. Red herring – a preliminary prospectus filed with
the Securities and Exchange Commission and con-
Private securities – securities that are not registered taining the details of an IPO offering. The name
with the Securities and Exchange Commission and refers to the disclosure warning printed in red letters
do not trade on any exchanges. The price per share is on the cover of each preliminary prospectus advising
negotiated between the buyer and the seller (the potential investors of the risks involved.
“issuer”).
Redemption rights – the right of an investor to force
Prudent man rule – a fundamental principle for pro- the startup company to buy back the shares issued as
fessional money management which serves as a basis a result of the investment. In effect, the investor has
for the Prudent Investor Act. The principle is based the right to take back his/her investment and may
on a statement by Judge Samuel Putnum in 1830: even negotiate a right to receive an additional sum in
“Those with the responsibility to invest money for excess of the original investment.
others should act with prudence, discretion, intelli-
gence and regard for the safety of capital as well as Registration – the process whereby shares of a com-
income.” In the 1970s a favorable interpretation of pany are registered with the Securities and Exchange
this rule enabled pension fund managers to invest in Commission under the Securities Act of 1933 in
venture capital for the first time. preparation for a sale of the shares to the public.
Qualified IPO – a public offering of securities val- Regulation D – an SEC regulation that governs pri-
68 Thomson Reuters
2011 NVCA Yearbook
vate placements. Private placements are investment private equity investors.

offerings for institutional and accredited individual
investors but not for the general public. There is an Royalties – payments made to patent or copyright
exception that 35 non-accredited investors can par- owners in exchange for the use of their intellectual
ticipate. property.
Restricted shares – shares that cannot be traded in Rule 144 – a rule of the Securities and Exchange
the public markets. Commission that specifies the conditions under
which the holder of shares acquired in a private trans-
Return on investment (ROI) – the proceeds from action may sell those shares in the public markets.
an investment, during a specific time period, calcu-
lated as a percentage of the original investment. Also, S corporation – an ownership structure that limits its
net profit after taxes divided by average total assets. number of owners to 100. An S corporation does not
pay taxes, rather its owners pay taxes on their propor-
Rights offering – an offering of stock to current tion of the corporation’s profits at their individual tax
shareholders that entitles them to purchase the new rates.
issue, usually at a discount.
SBIC – see Small Business Investment Company.
Rights of co-sale with founders – a clause in ven-
ture capital investment agreements that allows the Scalability – a characteristic of a new business con-
VC fund to sell shares at the same time that the cept that entails the growth of sales and revenues
founders of a startup chose to sell. with a much slower growth of organizational com-
plexity and expenses. Venture capitalists look for
Right of first refusal – a contractual right to partic- scalability in the startups they select to finance.
ipate in a transaction. For example, a venture capital-
ist may participate in a first round of investment in a Scale-down – a schedule for phased decreases in
startup and request a right of first refusal in any fol- management fees for general partners in a limited
lowing rounds of investment. partnership as the fund reduces its investment activi-
ties toward the end of its term.
Risk-free rate – a term used in finance theory to
describe the return from investing in a riskless secu- Scale-up – the process of a company growing quick-
rity. In practice, this is often taken to be the return on ly while maintaining operational and financial con-
US Treasury Bills. trols in place. Also, a schedule for phased increases
in management fees for general partners in a limited
Road show – presentations made in several cities to partnership as the fund increases its investment activ-
potential investors and other interested parties. For ities over time.
example, a company will often make a road show to
generate interest among institutional investors prior Secondary market – a market for the sale of limited
to its IPO. partnership interests in private equity funds.
Sometimes limited partners chose to sell their inter-
ROI – see Return on investment. est in a partnership, typically to raise cash or because
they cannot meet their obligation to invest more cap-
Rollup – the purchase of relatively smaller compa- ital according to the takedown schedule. Certain
nies in a sector by a rapidly growing company in the investment companies specialize in buying these
same sector. The strategy is to create economies of partnership interests at a discount.
scale. For example, the movie theater industry under-
went significant consolidation in the 1960’s and Secondary shares – shares sold by a shareholder
1970’s. (not by the corporation).
Round – a financing event usually involving several Securities and Exchange Commission (SEC) – the
Thomson Reuters 69
regulatory body that enforces federal securities laws that agrees to invest in a young or a smaller compa-
such as the Securities Act of 1933 and the Securities ny in order to have access to its proprietary technol-
Exchange Act of 1934. ogy, product or service.
Seed capital – investment provided by angels, Subordinated debt – a loan that has a lower priori-
friends and family to the founders of a startup in seed ty than a senior loan in case of a liquidation of the
stage. asset or company. Also known as “junior debt”.
Seed stage – the state of a company when it has just Success rate – the proportion of venture funded
been incorporated and its founders are developing companies that are considered successful. A study of
their product or service. companies funded by VCs during the 1990s indicat-
ed that 14% of the companies went public and anoth-
Senior debt – a loan that has a higher priority in case er 11%were acquired.
of a liquidation of the asset or company.
Sweat equity – ownership of shares in a company
Seniority – higher priority. resulting primarily from work rather than investment
of capital.
Series A preferred stock – preferred stock issued by
a fast growth company in exchange for capital from Syndicate – a group of investors that agree to partic-
investors in the “A” round of financing. This pre- ipate in a round of funding for a company.
ferred stock is usually convertible to common shares Alternatively, a syndicate can refer to a group of
upon the IPO or sale of the company. investment banks that agree to participate in the sale
of stock to the public as part of an IPO.
Shareholder agreement – a contract that sets out,
for example, the basis on which the company will be Synthetic secondary - A popular method of completing a
operated and the shareholders’ rights and obligations. direct secondary transaction in which the buyer becomes a
It provides protection to minority shareholders. limited partner (LP) in a special purpose vehicle (SPV) or
similar entity which has been set up out of the underlying
Sharpe Ratio – a method of calculating the risk- investments in order to create a limited partnership interest.
adjusted return of an investment. The Sharpe Ratio is The term arose because of the synthetic nature of the direct
calculated by subtracting the risk-free rate from the purchase through the LP secondary transaction.
return on a specific investment for a time period
(usually one year) and then dividing the resulting fig- Tag-along right – the right of a minority investor to
ure by the standard deviation of the historical (annu- receive the same benefits as a majority investor.
al) returns for that investment. The higher the Sharpe Usually applies to a sale of securities by investors.
Ratio, the better. Also known as Co-sale right.
Small Business Investment Company (SBIC) – a Takedown – a schedule of the transfer of capital in
company licensed by the Small Business phases in order to complete a commitment of funds.
Administration to receive government capital in the Typically, a takedown is used by a general partner of
form of debt or equity in order to use in private equi- a private equity fund to plan the transfer of capital
ty investing. from the limited partners.
Stock option – a right to purchase or sell a share of Tender offer – an offer to public shareholders of a
stock at a specific price within a specific period of company to purchase their shares.
time. Stock purchase options are commonly used as
long term incentive compensation for employees and Term loan – a bank loan for a specific period of
management of fast growth companies. time, usually up to ten years in leveraged buyout
structures.
Strategic investor – a relatively large corporation
70 Thomson Reuters
2011 NVCA Yearbook
Term sheet – a document confirming the intent of an ments on behalf of those investors. Venture funds are
investor to participate in a round of financing for a generally benchmarked to funds of the same vintage
company. By signing this document, the subject year.
company agrees to begin the legal and due diligence
process prior to the closing of the transaction. Also Voting rights – the rights of holders of preferred and
known as “Letter of Intent”. common stock in a company to vote on certain acts
affecting the company. These matters may include
Tranche – a portion of a set of securities. Each payment of dividends, issuance of a new class of
tranche may have different rights or risk characteris- stock, merger or liquidation.
tics. When venture capital firms finance a company,
a round may be disbursed in two or three tranches, Warrant – a security which gives the holder the
each of which is paid when the company attains one right to purchase shares in a company at a pre-deter-
or more milestones. mined price. A warrant is a long term option, usually
valid for several years or indefinitely. Typically, war-
Turnaround – a process resulting in a substantial rants are issued concurrently with preferred stocks or
increase in a company’s revenues, profits and reputa- bonds in order to increase the appeal of the stocks or
tion. bonds to potential investors.
Under water option – an option is said to be under Washout round – a financing round whereby previ-
water if the current fair market value of a stock is less ous investors, the founders and management suffer
than the option exercise price. significant dilution. Usually as a result of a washout
round, the new investor gains majority ownership
Underwriter – an investment bank that chooses to and control of the company.
be responsible for the process of selling new securi-
ties to the public. An underwriter usually chooses to Weighted average cost of capital (WACC) – the
work with a syndicate of investment banks in order average of the cost of equity and the after-tax cost of
to maximize the distribution of the securities. debt. This average is determined using weight factors
based on the ratio of equity to debt plus equity and
Venture capital – a segment of the private equity the ratio of debt to debt plus equity.
industry which focuses on investing in new compa-
nies with high growth potential and accompanying Weighted average anti-dilution – an anti-dilution
high risk. protection mechanism whereby the conversion rate of
preferred stock is adjusted in order to reduce an
Venture capital method – a pricing valuation investor’s loss due to an increase in the number of
method whereby an estimate of the future value of a shares in a company. Without anti-dilution protection,
company is discounted by a certain interest rate and an investor would suffer from a reduction of his or her
adjusted for future anticipated dilution in order to percentage ownership. Usually as a result of the imple-
determine the current value. Usually, discount rates mentation of a weighted average anti-dilution, compa-
for the venture capital method are considerably high- ny management and employees who own a fixed
er than public stock return rates, representing the fact amount of common shares suffer significant dilution,
that venture capitalists must achieve significant but not as badly as in the case of a full ratchet.
returns on investment in order to compensate for the
risks they take in funding unproven companies. Write-down – a decrease in the reported value of an
asset or a company.
Vesting – a schedule by which employees gain own-
ership over time of a previously agreed upon amount Write-off – a decrease in the reported value of an
of retirement funding or stock options. asset or a company to zero.
Vintage – the year that a private equity fund stops Write-up – an increase in the reported value of an
accepting new investors and begins to make invest- asset or a company.
Thomson Reuters 71
Zombie – a company that has received capital from

investors but has only generated sufficient revenues
and cash flow to maintain its operations without sig-
nificant growth. Sometimes referred to as “walking
dead.” Typically, a venture capitalist has to make a
difficult decision as to whether to liquidate a zombie
or continue to invest funds in the hopes that the zom-
bie will become a winner.
These definitions were graciously provided by the

Center for Private Equity and Entrepreneurship at the
Tuck School of Business at Dartmouth. Please refer
to the Center’s website for additional definitions and
information at http://mba.tuck.dartmouth.edu/pecen-
ter/resources/glossary.html. Used by permission.
Thomson Reuters and National Venture Capital
Association are grateful to the Center for its support.
72 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
Methodology Description closed, it will remain as “blank” in the Round

The MoneyTree™ Report measures cash-for-equity Amount column. Estimated round amounts are not
investments by the professional venture capital com- included.*
munity in private emerging companies in the U.S. It
is based on data provided by Thomson Reuters. Drawdowns on commitments are recognized at the
time the company receives the money rather than
recorded as a lump sum amount at the time the term
sheet is executed. Convertible debt and bridge loans
General Definition
The MoneyTree™ report measures cash-for-equity are recognized only when converted to equity.
investments by the professional venture capital com-
munity in private emerging companies in the U.S. Generally only one Investment Round is recorded
Investee companies must be domiciled in one of the per Quarter for each portfolio company. When a port-
50 U.S. states or the District of Columbia, even if folio company engages in multiple investment
substantial portions of their activities are outside the rounds in one quarter, these will be combined into
United States. One Round with the Sum of All the Amounts and
Round Date based on the date of the latest round. In
MoneyTree™ results exclude non-US companies, the case where 1) Venture Capital and Buyout financ-
non-cash investment, Buyouts and other forms of ing are received in the same quarter or 2) Investments
non-Venture Private Equity investments. Angel of different series are made in the same quarter, these
Investment and direct investment by corporations, will be recorded as separate investment rounds.
unless they are co-investments in an otherwise qual-
ifying round, are also excluded. Pending or Announced Venture Capital transactions
are not included. Pending or Announced Buyouts,
Acquisitions or Acquisitions for Expansion are
including as long as an agreement is in order.
Specific Methodology
Data is obtained from a variety of public and private
sources and augmented by a quarterly survey of ven- A Company’s Nation is determined by the Location
ture capital practitioners conducted by Thomson of the Company’s Main Headquarters. Investments
Reuters. All data is subject to verification with the for a Company’s regional operations are credited
venture capital firms and/or the investee companies. under its Main Headquarters.
Only professional independent venture capital firms,
institutional venture capital groups, and recognized *Reported round amounts may be allocated among
corporate venture capital groups are included in ven- investors in a round based on reported total round
ture capital industry rankings. amount. In cases where one or more investors report
their participation in a round, but the full amount
The reported Round Amounts will be purely com- raised by the company is not disclosed, Thomson
posed of the equity portion of the investment. For Reuters will report the sum of disclosed participation
deals where the actual equity investment was not dis- only.
Thomson Reuters 73
able sources. However, neither of the parties nor

Thomson Reuters can warrant the ultimate validity of
Disclaimer
PricewaterhouseCoopers and the National Venture the data obtained in this manner. Results are updated
Capital Association have taken responsible steps to periodically. Therefore, all data is subject to change
ensure that the information contained in the at any time.
MoneyTree™ Report has been obtained from reli-
ThomsonReutersCriteriaSummary
Thomson Reuters Criteria Summary
Non-US
Com pany Loc ation
US
Thom sonReuters Global Data P P

MoneyTree™ Criteria P O
Other Non Private Equity Investors

CorporateVenture
Investment Banks
Angel Investors
VentureCapital
Governments
Corporations
Institutions
Firm Type
SBIC
Thom sonReuters Global Data P P P P P _o _o _o _o

MoneyTree™ Criteria P P P P P _o _o _o _o
Non-US
Firm Location
US
Thom sonReuters Global Data P P

MoneyTree™ Criteria P P
ConvertibleNotes
SyndicatedLoans
Preferred Stock
Common Stock
Credit Facilities
Bank Debt
Revolvers
Warrants
Options
Sec urity Types

Thom sonReuters Global Data P P P O O O O O O
MoneyTree™ Criteria P P O O O O O O O
Fund of Funds (VC Partnerships)
Recapitalizations/Turnarounds
Private Equity Carve Outs

Acquisitions for Expansion
SecondaryPurchases
MezzanineFinancing
VentureLeasing
Services in Kind
VentureCapital
Infrastructure
BridgeLoans
Acquisitions
Real Estate
Buyouts
PIPEs
TransactionTy pes
Thom sonReuters Global Data P P P P P P P P P P P O O O O
MoneyTree™ Criteria P O O O O O O O O O O O O O O
Announced/PendingAcquisitionsforExpansion*
Announced/PendingVentureInvestments
Announced/PendingAcquisitions*
Completed Venture Investments
Seeking Investor Transactions

Announced/PendingBuyouts*
RumoredTransactions
CompletedBuyouts
TransactionS tatus
Thom sonReuters Global Data P O P P P P O O
MoneyTree™ Criteria P O O O O O O O
Included P
Excl uded O
Included only ifco-inves tingonan otherwise qualifyinground o_
74 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 2010 NVCA Yearbook
are as follows:
Alaska/Hawaii/Puerto Rico: Alaska, Hawaii, and Philadelphia Metro: Eastern Pennsylvania, south-
Puerto Rico ern New Jersey, and Delaware
Colorado: The state of Colorado Sacramento/Northern California: Northeastern

California
DC/Metroplex: Washington, D.C., Virginia, West
Virginia, and Maryland San Diego: San Diego area
LA/Orange County: Los Angeles, Ventura, Orange, Silicon Valley: Northern California, bay area and
and Riverside Counties (i.e., southern California, coastline
except San Diego)
South Central: Kansas, Oklahoma, Arkansas, and
Midwest: Illinois, Missouri, Indiana, Kentucky, Louisiana
Ohio, Michigan, and western Pennsylvania
Southeast: Alabama, Florida, Georgia, Mississippi,
New England: Maine, New Hampshire, Vermont, Tennessee, South Carolina, and North Carolina
Massachusetts, Rhode Island, and parts of
Connecticut (excluding Fairfield county) Southwest: Utah, Arizona, New Mexico, and
Nevada
New York Metro: Metropolitan NY area, northern
New Jersey, and Fairfield County, Connecticut Texas: The state of Texas
North Central: Minnesota, Iowa, Wisconsin, North Upstate New York: Northern New York state, except
Dakota, South Dakota, and Nebraska Metropolitan New York City area
Northwest: Washington, Oregon, Idaho, Montana,

and Wyoming
Thomson Reuters 75
76 Thomson Reuters
Appendix D: Industry Codes (VEIC)
Company VE Primary Company VE Primary Company VE Primary Company VE Primary
Industry Class Industry Sub-Group 1 Industry Sub-Group 2 Industry Sub-Group 3
1000 Information Technology 1000 Communications 1100 Commer. Comm. 1000 Communications and Media
1100 Commercial Communications
1110 Radio & TV Broadcasting Stations
1120 CATV & Pay TV Systems
1125 Cable Service Providers
1130 Radio & TV Broadcasting & Other Related
Equipment
1135 Services to Commercial Communications
1199 Other Commercial Communications
1700 Media and Entertainment
1710 Entertainment
1720 Publishing
1800 Other Communications Related
1200 Telephone Rel. 1200 Telecommunications
1210 Long Distance Telephone Services
1215 Local Exchange Carriers (LEC)
1220 Telephone Interconnect & Other Equipment
1230 Telephone answering and/or
management systems, PBXs
1299 Other Telephone Related
1300 Wireless Communications 1300 Wireless Communications
1310 Mobile Communications, Pagers & Cellular
Radio
1320 Wireless Communications Services
1325 Messaging Services
1330 Wireless Communications Components
1399 Other Wireless Communications
1400 Facsimile Trans 1400 Facsimile Transmission
1500 Data Comm. 1500 Data Communications
1510 Local Area Networks (incl. voice/data PBX
systems)
1515 Wide Area Networks
1520 Data Communications Components
1521 Communications Processors/Network
Management
1522 Protocol Converters & Emulators
1523 Modems and Multiplexers
1524 Other Data Communication Components
1525 Switches/Hubs/Routers/Gateways/ATM
1530 Network test, monitor and support equipment
1549 Other Data Communications
1600 Satellite Comm 1600 Satellite Microwave Communications
1610 Satellite Services/Carriers/Operators
1620 Satellite Ground (and other) Equipment
1630 Microwave Service Facilities
1640 Microwave & Satellite Components
1699 Other Satellite & Microwave
1800 Comm. Other 1810 Defense Communications
1825 Other Communications Services NEC
1899 Other Communications Products (not yet
classified)
2100 Computer Hardware 2100 Computers Hardware 2100 Computers and Hardware
2110 Mainframes & Scientific Computers
2111 Mainframes
2112 Supercomputers and Scientific Computers
2119 Other Mainframes and Scientific Computers
Thomson Reuters 77
2120 Mini & Personal/Desktop Computers
2121 Fail Safe Computers
2122 Mini Computers
2123 Personal Computers (micro/personal)
2124 Other Mini and Personal Computers
2125 Portable Computers (notebooks/laptops)
2126 Handheld Computing (PDA)
2130 Optical computing
2140 Servers and Workstations
2141 Servers
2143 Workstations
2144 Thin Client Hardware
2149 Other Servers and Workstations
2200 Digital Imaging and 2200 Computer Graphics and Digital Imaging
Computer Graphics
2210 CAD/CAM, CAE,EDA Systems
2220 Graphic Systems
2230 Scanning Hardware
2234 OCR (Optical Character Recognition)
2236 OBR (Optical Bar Recognition)
2238 MICR (Magnetic Ink Character Recognition)
2239 Other Scanning Related
2250 Graphics Printers/Plotters
2255 Graphics/Enhanced Video Cards
2260 Other Graphics Peripherals
2280 Other Multimedia NEC
2290 Digital Imaging Hardware and Equipment
2295 Digital Imaging Services
2299 Other Computer Graphics
2300 Turnkey Integrated Systems 2300 Integrated Turnkey Systems and Solutions
1 and Solutions
2311 Business and Office
2312 Consumer
2313 Retailing
2315 Transportation
2316 Finance/Insurance/Real Estate
2317 Agriculture
2318 Recreation/Entertainment
2319 Manufacturing/Industrial/Construction
2320 Medical/Health
2321 Computer related
2322 Communications Products/Servcies
2323 Education
2324 Reference
2325 Scientific
2399 Other Intergrated Systems and Solutions
2500 Computer Peripherals 2500 Peripherals
2510 Terminals
2511 Intelligent Terminals
2512 Portable Terminals
2513 Graphics Terminals
2519 Other Terminals
2520 Printers
2521 Laser Printers
2522 Color Printers
2523 Inkjet Printers
2524 Dot Matrix Printers
2529 Other Printers
2530 Data I/O Devices
2531 Mouse Input Devices
2532 TouchPad Input Devices
2533 Pen based computing
2539 Other Data I/O Devices
78 Thomson Reuters
2011 NVCA Yearbook
2540 Disk Related Memory Devices
2541 Floppy Disks & Drives
2542 Winchester Hard Disks and Drives
2543 Optical Disks & Drives,CD-ROM DVD
2546 Disk Drive Components
2549 Other Disk Related
2550 Tape Related Devices
2551 Magnetic Tapes
2552 Tape Heads & Drives
2553 Continuous Tape Backup Systems
2559 Other Tape Related Devices
2560 Other Memory Devices (excl. semiconductors)
2561 PC or PMCIA cards
2562 Memory Cards
2563 Sound Cards
2564 Communications Cards
2569 Other Peripheral Cards
2590 Other Peripherals (not yet classified)
2700 Computer Software 2600 Computer Services 2600 Computer Services
2630 Time Sharing Firms
2640 Computer Leasing & Rentals
2650 Computer Training Services
2655 Backup and Disaster Recover
2660 Data Processing,Analysis & Input Services
2665 Computer Repair Services
2670 Computerized Billing & Accounting Services
2675 Computer Security Services
2691 Data communications systems management
2699 Other Computer Services
2700 Computer Software 2700 Computer Software
2710 Systems Software
2711 Database & File Management
2712 Operating Systems & Utilities
2713 Program Development Tools/CASE/Languages
2716 Graphics and Digital Imaging Software
2719 Other Systems Software
2720 Communications/Networking Software
2721 Security/Firewalls,Encryption software
2722 Email Software
2723 Groupware
2724 Multimedia software
2729 Other Communications/Networking Software
2730 Applications Software
2731 Business and Office Software
2732 Home Use Software
2733 Educational Software
2734 Manufacturing/Industrial Software
2735 Medical/Health Software
2736 Banks/Financial Institutions Software
2737 Retailing Software
2738 Integrated Software
2739 ERP/Inventory Software
2740 Recreational/Game Software
2741 Scientific Software
2743 Agricultural Software
2744 Transportation Software
2748 Other Industry specific Software
2749 Other Applications Software
2750 Artificial Intelligence Related Software
2751 Expert Systems
2752 Natural Language
2753 Computer-Aided Instruction
2754 Artificial Intel. Programming Aids
Thomson Reuters 79
2755 Other Artificial Intelligence Related
2799 Other Software Related
2710 Computer Programming 2760 Software Services
2761 Programming Services/Systems Engineering
2762 Software Consulting Services
2763 Software Distribution/Clearinghouse
2769 Other Software Services
2800 Internet Specific 1550 Internet Communications 1550 Internet Communications and Infrastructure
NEC
1551 Internet Access Services and Service
Providers
1552 Internet Multimedia Services
1553 Internet Backbone Infrastructure
1559 Other Internet Communications NEC
1560 E-Commerce Technology 1560 E-Commerce Technology
1561 Internet Security and Transaction Services
1562 Ecommerce Services
1569 Other Ecommerce
2100 Computers Hardware 2142 Web Servers
2780 Internet Software 1563 Ecommerce Enabling Software
2780 Internet Systems Software
2781 Site Development and Administration Software
2782 Internet Search Software and Engines
2783 WebServer Software
2784 Web Languages (Java/ActiveX/HTML/XML)
2785 Web Authoring/Development Software
2798 Other Internet Systems Software
2785 Internet Programming 2765 Internet/Web Design and programming
services
2766 Internet Graphics Services
2768 Other Internet Software Services
2800 Internet Ecommerce 2800 Internet and Online Related
2810 E-Commerce—Selling products Online or
Internet
2811 Business and Office Products
2812 Consumer Products
2813 Retailing Products
2814 Publishing Products
2815 Transportation Products
2816 Finance/Insurance/Real Estate products
2817 Agricultural Products
2818 Recreation/Entertainment/Music/Movies
2820 Medical/Health
2821 Computer Related
2822 Communications Products
2823 Education Products
2824 Reference Products
2825 Scientific Products
2826 Legal Products
2829 Other Ecommerce Selling Products
2830 Eccommerce—Selling Services Online/Internet
2831 Business and Office Services
2832 Consumer Services
2833 Retailing Services
2834 Publishing Services
2835 Transportation Services
2836 Finance/Insurance/Real Estate Services
2837 Agricultural Services
2840 Medical/Health Services
80 Thomson Reuters
2011 NVCA Yearbook
2841 Computer Related services
2842 Communications Products/Services
2843 Education Services
2844 Reference
2845 Scientific
2846 Legal
2848 Recreation/Entertainment Services
2849 Other Ecommerce Selling Services
2810 Internet Content 2850 Web Aggregration/Portal Sites/Exchanges
2851 Business and Office Info/content
2852 Consumer Info/Content
2853 Retailing Info/Content
2854 Publishing Info/Content
2855 Transportation Info/Content
2856 Finance/Real Estate/Insurance Info/Content
2857 Agriculture Info/Content
2859 Manufac/Industrial/Constr. Info/Content
2860 Medical/Health Info/Content
2861 Computer Related Info/Content
2862 Communications Info/Content
2863 Education Info/Content
2864 Reference Info/Content
2865 Scientific Info/Content
2866 Legal Info/Content
2869 Other Aggregation/Portal/Exchange Sites
2820 Internet Services 2870 Internet Services
2871 Internet Marketing Services
2873 Data Warehousing Services
2879 Other Internet and Online Services NEC
2900 Computer Other 2900 Computer Other 2000 Computer Related
2900 Other Computer Related
2910 Voice Synthesis
2911 Voice Recognition
2990 Other Computer Related (not yet classified)
3000 Semiconductor/Electr 3100 Semiconductors/Other 3100 Electronic Components 1
Electronics
3110 Semiconductors
3111 Customized Semiconductors
3112 Standard Semiconductors
3114 Flash Memory
3115 Optoelectronics semiconductors (incl laser
diodes)
3119 Other Semiconductors
3120 Microprocessors
3130 Controllers and Sensors
3132 Controllers
3135 Sensors
3139 Other Controllers/Sensors
3140 Circuit Boards
3160 Display Panels
3200 Batteries 3200 Batteries
3300 Power Supplies 3300 Power Supplies
3310 Uninterruptible Power Supply (UPS)
3400 Electronics Equipment 3400 Electronics Related Equipment
3410 Semiconductor Fabrication Equip. & Wafer
Products
3420 Component Testing Equipment
3499 Other Electronics Related Equipment
3500 Laser Related 3500 Laser Related
3510 Laser Components (incl. beamsplitters,
excimers)
Thomson Reuters 81
3599 Other Laser Related
3600 Fiber Optics 3600 Fiber Optics
3610 Fiber Optic Cables
3620 Fiber Optic Couplers and Connectors
3630 Fiber Optic Communication Systems (see 1510)
3699 Other Fiber Optics
3700 Scientific Instrumentation 3700 Analytical & Scientific Instrumentation
3710 Chromatographs & Related Laboratory
Equipment
3720 Other Measuring Devices
3799 Other Analytical & Scientific
Instrumentation
3800 Electronics, Other 3000 Other Electronics Related
3170 Other Electronics Related (including keyboards)
3800 Other Electronics Related
3810 Military Electronics (excluding
communications)
3820 Copiers
3830 Calculators
3835 Security/Alarm/Sensors
3899 Other Electronics Related (incl. alarm
systems)
3900 Optoelectronics 3900 Optoelectronics
3910 Photo diodes
3920 Optoelectronics fabrication equipment
3930 Lenses with Optoelectronics applications
3940 Advanced photographic processes (incl
lithographs)
3989 Other Optoelectrinics Related
3990 Other Electronc Semiconductor
4000 Medical/Health/Life Science 4000 Biotechnology 4100 Biotech-Human 4100 Human Biotechnology
4110 Medical Diagnostic Biotechnology Products
4111 In Vitro Monoclonal Antibody Diagnostics
4112 In Vivo Monoclonal Antibody Diagnostics/
Imaging
4113 DNA/RNA Probes
4119 Other Medical Diagnostic Biotechnology
4120 Therapeutic Biotechnology Products
4121 Therapeutic Monoclonal Antibodies
4122 Immune Response Effectors (interferons,
vaccines)
4123 Other Therapeutic Proteins (incl. hormones
& TPA)
4129 Other Therapeutic Biotechnology
4130 Genetic Engineering
4200 Biotech-Animal 4200 Agricultural/Animal Biotechnology
4210 Genetically Engineered Plants
4220 Genetic. Eng. Microorganisms to raise plant
yield
4230 Other Plant Related Biotechnology
4240 Biotech Related Animal Health & Nutrition
Products
4250 Genetically Engineered Animals
4290 Other Animal Related Biotechnology
4300 Biotech-Industrial 4300 Industrial Biotechnology
4310 Biochemical Products
4311 Biotech Related Fine Chemicals (NOT
Pharmaceuts.)
4312 Biotech Related Commodity Chemicals
4319 Other Biochemical Products
4320 Biotech Processes for Food Industrial 1
Applications
82 Thomson Reuters
2011 NVCA Yearbook
4321 Biotech Related Food Enzymes and Cultures
4322 Biotech Related Food Diagnostics
4329 Other Biotech Process for Food/Industrial
Products
4330 Biotech Processes for Pollution/Toxic Waste
Control
4340 Biotech Processes for Enhanced Oil
Recovery/Mining
4390 Other Industrial Biotechnology
4400 Biosensors 4400 Biosensors
4410 Biosensors for Medical Diagnostic
Applications
4420 Biosensors for Industrial Applications
4490 Other Biosensors
4500 Biotech Equipment 4500 Biotech Related Research & Production
Equipment
4510 Biotech Related Analytical Instruments &
Apparatus
4520 Biotech Related Production Equipment
4525 Biotech laser and optronic applications
4599 Other Biotech Research & Production
Equipment
4600 Biotech Research 4600 Biotech Related Research & Other Services
4610 Pure & Contract Biotechnology Research
4699 Other Biotechnology Services
4700 Biotech Other 4000 Biotechnology and Pharmacology
4900 Other Biotechnology Related
5000 Medical/Health 5100 Medical Diagnostics 5100 Medical Diagnostics
5110 Diagnostic Services
5120 Medical Imaging
5121 X-Rays
5122 CAT Scanning
5123 Ultra Sound Imaging
5124 Nuclear Imaging
5125 Other Medical Imaging
5130 Diagnostic Test Products & Equipment
5140 Other Medical Diagnostics
5200 Medical Therapeutics 5200 Medical Therapeutics
5210 Therapeutic Services
5220 Surgical Instrumentation & Equipment
5221 Surgical lasers (including laser delivery fibers)
5230 Pacemakers & Artificial Organs
5240 Drug Delivery & Other Equipment
5299 Other Therapeutic (including defibrillators)
5300 Med/Health Products 5000 Medical/Health Related
5300 Medical Health Related Products
5310 Disposable Medical Products
5340 Handicap Aids
5350 Medical Monitoring Equipment
5380 Health related optics (including glasses, lenses)
5399 Other Medical/Health (NEC)
5400 Med/Health Services 5400 Medical Health Services
5410 Hospitals/Clinics/Primary Care
5412 Long Term Care/Home Care/Elder Care
5414 Dependent Care (child care/assisted living
5420 Managed care (including PPO/PPM)
5429 Other Healthcare Facilities
5430 Emergency Services/Ambulance
5440 Hospital & Other Institutional Management
5499 Other Medical/Health Services
5500 Pharmaceutical 5500 Pharmaceuticals
Thomson Reuters 83
5510 Pharmaceutical Research
5520 Pharmaceutical Production
5530 Pharmaceutical Services
5540 Pharmaceutical Equipment
5550 Pharmaceuticals/Fine Chemicals (non-biotech)
5599 Other Pharmaceutical NEC
6000 Non-High Technology 7000 Consumer Related 7100 Entertainment and Leisure 7100 Entertainment and Leisure
7110 Movies,Movie Products & Theater Operations
7120 Amusement & Recreational Facilities
7125 Casino and Gambling
7130 Toys & Electronic Games
7140 Sporting Goods,Hobby Equipment &
Athletic Clothes
7150 Sports Facilities (Gyms and Clubs)
7155 Sports
7160 TVs, Radio, Stereo Equipment & Consumer
Electronics
7170 Music,Records,Production and Instruments
7199 Other Leisure/Recreational Products and
Services
7200 Retailing Related 7200 Retailing Related
7210 Drug Stores
7220 Clothing and Shoe Stores
7230 Discount Stores
7240 Computer Stores
7245 Retail Publishing (books, magazines, news-
papers)
7246 Office Supply Stores
7247 Music/Electronics
7248 Specialty Department and retail stores
7250 Franchises(NEC)
7299 Other Retailing Related
7300 Food and Beverage 7300 Food and Beverages
7310 Wine & Liquors
7320 Health Food
7330 Soft Drinks & Bottling Plants
7340 Food Supplements/Vitamins
7350 General Food Products
7399 Other Food and Beverages
7400 Consumer Products 7400 Consumer Products
7410 Clothing,Shoes & Accessories (incl. jewelry)
7420 Health & Beauty Aids
7430 Home Furnishing & Housewares
7431 Housewares
7432 Furnishings & Furniture
7433 Garden and Horticultural Products
7434 Other Home Furnishings (NEC)
7450 Mobile Homes
7499 Other Consumer Products
7500 Consumer Services 7500 Consumer Services
7510 Fast Food Restaurants
7520 Other Restaurants
7530 Hotels and Resorts
7540 Auto Repair Shops
7550 Education & Educational Products and
Materials
7560 Travel Agencies and Services
7599 Other Consumer Services
7600 Consumer, Other 7000 Consumer Related
7999 Other Consumer Related (not yet classified)
8000 Industrial/Energy 3100 Semiconductors/Other 8141 Semiconductor Materials (eg. silicon
Electronics wafers)
84 Thomson Reuters
2011 NVCA Yearbook
8142 III/V Semiconductor Mater. (eg. gallium
arsenide)
6100 Oil & Gas Exploration 6100 Oil & Gas Exploration and Production
6200 Oil & Gas Exploration Services
6300 Oil & Gas Drilling & Support Services
6400 Oil & Gas Drilling,Exploration & Extraction
Equip.
6410 Oil & Gas Drilling & Extraction Equipment
6420 Oil & Gas Drilling Instrumentation
6430 Oil & Gas Exploration Equip.
Instrumentation
6499 Other Oil & Gas (NEC)
6500 Energy, Alternative 6500 Alternative Energy
6510 Solar Energy
6511 Photovoltaic Solar
6512 Other Solar
6520 Wind Energy
6530 Geothermal Energy
6540 Energy Co-Generation
6599 Other Alternative Energy (incl. nuclear
energy)
6600 Energy, Enhanced Recovery 6600 Enhanced Oil Recovery/Heavy Oil/Shale
6700 Energy, Coal 6700 Coal Related
6710 Coal Mining
6720 Coal Related Equipment
6799 Other Coal Related
6800 Energy, Conservation 6800 Energy Conservation Related
6900 Energy, Other 6000 Energy Related
6900 Other Energy Related
8100 Chemicals and Materials 8100 Chemicals & Materials
8110 Plastic Fabricators
8111 Homogeneous Injections/Extrusions
8112 Non-Homogeneous Injections/Extrusions
8113 Fiber-Reinforced (Plastic) Composites
8114 Other Fabricated Plastics
8115 Processes for Working with Plastics
8119 Other Plasti Fabricators
8120 Coatings & Adhesives Manufacturers
8121 Optical coatings
8129 Other Coatings & Adhesives
8130 Membranes & Membrane-Based Products
8140 Specialty/Performance Materials
8143 Specialty Metals (incl. coatings, alloys, clad)
8144 Ceramics
8145 Lubricants & Functional Fluids
8146 Other Specialty Materials
8147 Specialty materials for laser generation
8148 Superconducting materials
8149 Other Special Performance Materials
8150 Commodity Chemicals & Polymers
8151 Industrial Chemicals
8152 Polymer (Plastics) Materials
8160 Specialty/Performance Chemicals
8161 Electronic Chemicals
8162 Other Industrial Chemicals
8170 Agricultural Chemicals
8189 Other Commidity Chemicals and Polymers
8199 Other Chemicals & Materials (not yet
classified)
8200 Industrial Automation 8200 Industrial Automation
8210 Energy Management
8220 Industrial Measurement & Sensing Equipment
Thomson Reuters 85
8221 Laser related measuring & sensing equipment
8230 Process Control Equipment & Systems
8240 Robotics
8250 Machine Vision Software & Systems
8260 Numeric & Computerized Control of
Machine Tools
8299 Other Industrial Automation (NEC)
8300 Industrial Equipment 8300 Industrial Equipment and Machinery
8310 Machine Tools, Other Metalworking
Equipment
8320 Hoists, Cranes & Conveyors
8330 Pumps, Ball Bearings, Compressors, Indus.
Hardware
8340 Mining Machinery
8350 Industrial Trucks and Tractors
8360 Other Industrial Process Machinery
8370 Power Transmission Equipment (generators
& motors)
8399 Other Industrial Equipment & Machinery
8500 Pollution and Recycling 8500 Environmental Related
8510 Air Filters & Air Purification & Monitoring
Equip.
8520 Chemical and Solid Material Recycling
8530 Water Treatment Equipment & Waste
Disposal Systems
8599 Other Environmental Related
8600 Industrial Products, Other 8000 Industrial Products
8600 Other Industrial Products (not yet classified)
8700 Industrial Services 8700 Industrial Services
9100 Transportation 9100 Transportation 9100 Transportation
9110 Airlines and Aviation Related
9120 Trucking
9125 Railway related
9130 Leasing of Railcars,Buses and Cars
9140 Mail and Package Shipment
9150 Motor Vehicles,Transporation Equipment &
Parts
9160 Airfield and Other Transportation Services
9180 Advanced Aircraft/Aerospace
9199 Other Transportation
9200 Financial Services 9200 Financial Services 9200 Financial Services
9210 Insurance Related
9220 Real Estate
9230 Banking
9235 Non Bank Credit
9240 Securities & Commodities Brokers and
Services
9250 Investment Groups
9254 Venture Capital and Private Equity Investors
9255 Financial Transactions Services
9299 Financial Services, 0ther
9300 Business Serv. 9300 Business Services 9300 Services
9310 Engineering Services
9320 Advertising and Public Relations
9330 Leasing (not elsewhere classified)
9340 Distributors,Importers and Wholesalers
9350 Consulting Services
9360 Media Related Services
9399 Other Services NEC
9400 Manufact. 9400 Manufacturing 9400 Product Manufacturing
9410 Business Products and Supplies
9415 Office Automation Equipment
86 Thomson Reuters
2011 NVCA Yearbook
9420 Office Furniture & Other Professional
Furnishings
9430 Textiles (Synthetic & Natural)
9440 Hardware,Plumbing Supplies
9450 Publishing
9460 Packaging Products & Systems
9470 Printing & Binding
9499 Other Manufacturing (not elsewhere
classified)
9500 Agr/Forestr/Fish 9500 Agricultural, Forestry 9500 Agriculture, Forestry, Fishing, Animal
Husbandry,etc.
9510 Agriculture related
9520 Forestry related
9530 Fishing related
9540 Animal husbandry
9599 Other Agriculture,Forestry,Fishing
9600 Mining and Minerals (non-energy related)
9700 Construction 9700 Construction 9700 Construction & Building Products
9710 Construction
9720 Manufacture of Building Products
9730 Manufacture of Pre-Fabricated Buildings &
Systems
9740 Distribution of Building Products & Systems
9750 Construction Services
9799 Other Construction & Building Products
Related
9800 Utilities 9800 Utilities 9800 Utilities and Related Firms
9810 Electric Companies
9820 Water,Sewage,Chem. & Solid Waste
Treatment Plants
9830 Gas Transmission & Distribution
9899 Other Utilities & Related Firms
9900 Other 9900 Other 9000 Other Services and Manufacturing
9900 Other Products and Services
9910 Conglomerates
9912 Socially Responsible
9914 Environment Responsible
9915 Women-Owned
9918 Minority-Owned
9920 Holding Companies
9999 Other Products and Services
Thomson Reuters 87
The page is intentionally left blank.
88 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,
Thomson Reuters 89
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, 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
90 Thomson Reuters
Appendix F: Stage Definitions
profitable, but are more likely to be than in previous

Seed Stage Financing
This stage is a relatively small amount of capital pro- stages of development. Other financial characteris-
vided to an inventor or entrepreneur to prove a con- tics of these companies include positive cash flow.
cept. This involves product development and market This also includes companies considering IPO.
research as well as building a management team and
developing a business plan, if the initial steps are
successful. This is a pre-marketing stage.
Acquisition Financing
An acquisition of 49% stake or less. Firm acquires
minority shares of a company. Thomson Venture
Economics includes these deals in standard venture
Early Stage Financing
This stage provides financing to companies complet- capital disbursement data when calculating venture
ing development where products are mostly in test- capital disbursements where the funding is by a ven-
ing or pilot production. In some cases, product may ture capital firm.
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
Acquisition For Expansion
less. Usually such firms will have made market stud- Funds provided to a company to finance its acquisi-
ies, assembled the key management, developed a tion of other companies or assets. A consolidator of
business plan, and are ready or have already started companies in specific industries.
conducting business.
Management/Leveraged Buyout
These funds enable an operating management group
Expansion Stage Financing
This stage involves working capital for the initial to acquire a product line or business, at any stage of
expansion of a company that is producing and ship- development, from either a public or private compa-
ping and has growing accounts receivables and ny. Often these companies are closely held or family
inventories. It may or may not be showing a profit. owned. Management/leveraged buyouts usually
Some of the uses of capital may include further plant involve revitalizing an operation, with entrepreneurial
expansion, marketing, working capital, or develop- management acquiring a significant equity interest.
ment of an improved product. More institutional
investors are more likely to be included along with
initial investors from previous rounds. The venture
Recap/Turnaround
capitalist’s role in this stage evolves from a support- Financing provided to a company at a time of opera-
ive role to a more strategic role. tional or financial difficulty with the intention of
improving the company’s performance.
Later Stage
Capital in this stage is provided for companies that
Secondary Buyout
have reached a fairly stable growth rate; that is, not A buyout deal on top of a buyout deal. Secondary
growing as fast as the rates attained in the expansion buyouts are distinguished when the initial firm
stages. Again, these companies may or may not be investor is different from the current investing firm.
Thomson Reuters 91
92 Thomson Reuters
Appendix G: Data Sources and Resources
For this publication, the main source for data was ThomsonONE.com, the online research database of
Thomson Reuters. ThomsonONE.com (which replaced VentureXpert™, and Thomson One Banker) is endorsed
by the NVCA as the official United States venture capital 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 contains investment, fund raising, portfolio company information,
and Reuters News along with other statistical data. Over one million private companies can be analyzed with-
in ThomsonONE.com, including sales figures on around 700,000 companies and detailed financials on around
220,000 companies. Through a partnership with VC Experts.com, Inc. the historical breadth and depth of the
Thomson Reuters venture capital content is integrated with private company valuation and deal terms.
ThomsonONE.com includes blogs, events, and articles from the peHUB and the Venture Capital Journal, two
of the industry’s most widely-read publications. Other information contained in this database is gathered
through a variety of public and proprietary source. 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.
PricewaterhouseCoopers, Thomson Reuters, and the Many of the tables and charts presented in this report
MoneyTree™ Data Timeliness of Data
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 infor-
basis, the designated PwC/NVCA MoneyTree Report mation available is more up-to-date than what can be
allows Thomson Reuters unparalleled access to pri- presented in this report. Readers should note that
mary sources of information from general partners. timely industry information on details concerning
venture capital investment is available from other
sources such as PricewaterhouseCoopers at
www.pwcmoneytree.com, the ‘Industry Stats’ sec-
The online database of Thomson Reuters is
Sources of Data
tion of the NVCA website, www.nvca.org, and the
ThomsonONE.com (VentureXpert), the foremost ‘News & Ideas’ segment of the private equity section
information provider for private equity professionals of Thomson Reuters found at http://thomson-
worldwide. The private equity portion of Thomson reuters.com/products_services/financial/financial_pr
Reuters offers an incomparable range of products oducts/deal_making/private_equity/
from directories to conferences, journals, newslet-
ters, research reports, and the ThomsonONE.com
Private Equity database. As of February 2011, the
database included over 87,620 portfolio companies, Collectively, PricewaterhouseCoopers, Thomson
Verification and Updating of Data
197,340 executives, 15,260 private equity firms, Reuters, and the NVCA have the utmost commitment
33,400 private equity funds, and 197,340 financing to provide an accurate historical record of venture
rounds. By establishing working relationships with capital activity. On a daily basis, the database is con-
private equity and venture capital firms, institutional stantly analyzed for consistency, crosschecked with
investors, and industry associations such as the other data sources, and updated as new information
NVCA, PricewaterhouseCoopers and other such comes in. On a quarterly basis, we have worked with
entities around the world, Thomson Reuters has been many venture firms to ensure that that their current
able to gather, on a timely basis, complete and accu- and past data is correct. Primarily for this reason, the
rate information. private equity news releases of Thomson Reuters
Thomson Reuters 93
will often restate statistics from prior news releases. In addition, there are also advantages of using the
With the availability of the online data access, users database for a general partner as well. Although this
are encouraged to always use the most current num- is not an inclusive list, utilizing the database by gen-
bers even regarding historical activity so as to main- eral partners can be helpful to them for among the
tain accuracy and comparability. following reasons:
• Plan your companies’ exits with data on both ven-
ture-backed IPOs and mergers and acquisitions
Reporting Functionality of • Aid in recruiting talented executives from other
venture-backed companies
Users can access information in terms of profiles on
ThomsonONE.com
• Quickly spot venture-backed companies in compe-
private equity companies, funds, firms, executives, tition with your own portfolio companies
IPOs, and limited partners. In addition, users can • Create industry analyses to benchmark both per-
access the analytics portion of the database, which formance and portfolio investments
contains investment, valuation, IPO analytics, merg- • Find other venture capitalists likely to support fol-
er analytics, fund performance, and fund raising low-on rounds
information along with venture capital information • Provide clarity to investment decisions by compar-
such as aggregate fund raising, investments, and ing them to current market conditions
IPOs broken out into state and nation profiles. • Compile valuation reports for comparable portfolio
companies
• Identify prospective investors and their investment
histories
Comprehensiveness of
• Benchmark valuations among recent transactions
Both the breadth and depth of ThomsonONE.com
ThomsonONE.com
and obtain valuation comparables
can perhaps best be shown in that it, among other • Analyze investment trends by industry
types of information, the user can find the answers to • Utilize returns information to limited partners using
the following questions: appropriate benchmarks
• Which venture firms actively co-invest with a firm • Tailor your pitch to investor focus size and limited
I am considering co-investing with? partner type
• Which venture firms are most active in funding
online financial services companies in the Ohio
Valley?
• What does Yearbook Figure 3.15 look like for just Another database is available to users: LPXpert, an
Reporting Functionality of LPXpert
biotech? online portfolio monitoring system that allows insti-

• How much money was raised by each fund stage in tutional investors to analyze their portfolio activity in
2010? both a cost-effective and timely manner. Over 100
• What was a particular venture-backed IPO’s one different types of reports can be produced detailing
year return at the end of 2010? firm, fund, portfolio company, executive, IPO pro-
• As of December 2010, was the 10-year return to files and fund performance analysis. A description of
small buyout funds larger than that of large buyout the features provided include portfolio highlights that
funds? show changes in portfolio activity between reporting
• Who are the most active acquirers of ecommerce periods. These changes can include the number of
security companies? funds invested in, committed capital, the amount of
• How much money was committed to mezzanine capital called, and percent overlap of investments, a
funds from 1997 to 2010? particularly valuable tool for large institutional
• How much money was invested in the venture cap- investors investing in various funds.
ital industry from 1987 to 2010?
• What is the performance at quarter end for private
equity funds that were formed from 1998 to 2010?
The extent to how comprehensive LPXpert is can be
Comprehensiveness of LPXpert Data
• In 2010, how much money was invested at each
development stage in Research Triangle shown by providing the following examples of the types
Pharmaceutical companies? of queries that could be researched using this product:
94 Thomson Reuters
2011 NVCA Yearbook
• What other funds have co-invested alongside the products_services/financial/financial_products/deal_

funds I have invested in? making/private_equity/private_equity_venture_capi-
• What are the other funds managed by the firms I tal or by phone at 1-800-782-5555. For information
have invested with, but that I am not currently on NVCA membership, which can include a free trial
invested in? and discounts on an annual subscription, please con-
• How have my funds performed over the last 10 tact Janice Mawson at the NVCA. You may contact
years ending December 31, 2010? her online through the link on the member benefits
• Of the amount that I have invested in my portfolio section of the NVCA website or at 703-524-2549.
of funds, what is the industry distribution by per- For information on services PricewaterhouseCoopers
centage? provides for venture capital firms as well as emerg-
• Of the funds I have invested in, how has the ing companies, please visit their website at
amountof dollars invested changed between report- www.pwcmoneytree.com.
ing periods?
Accessing ThomsonONE.com, LPXpert,
For more information on ThomsonONE.com or

and Other Services
LPXpert, please visit http://thomsonreuters.com/-
Thomson Reuters 95
96 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 calls for the
use of investment company accounting which mandates that a fair value to be assigned to the individual port-
folio 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. In recent years, the GP-to-LP financial statements have
been subject to numerous rule “clarifications”, convergence with non-US accounting, expanded disclosures,
and more formal presentations. The underlying theory of fair value has not changed in decades.
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 oth- while every portfolio company receives funding with
erwise commented on these standards. Neither high expectations, it can take several years to deter-
NVCA nor Thomson Reuters 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 catego- three or so years of a fund, after that the fund wants
ry: portfolio company valuation guidelines. The to communicate progress to the investors. This is
chronology and sections below refer to this category. where specific valuation rules and processes become
Suffice it to say for now that portfolio valuation guide- important. The agreed valuation procedures for indi-
lines developed by the Private Equity Industry vidual portfolio companies become the basis for
Guidelines Group (PEIGG, www.peigg.org/home.html progress assessment as the fund matures and ulti-
> Valuations), most recently revised in March 2007, are mately distributes cash to the investors.
the most commonly referred to in the US. An unrelat-
ed European consortium has created “international” So while portfolio company valuations are more of
guidelines which they intend to conform to IASB rules. an art than a science, especially for pre-revenue or
That version has received little attention in the US. even pre-EBITDA companies, most limited partner
agreements (LPAs) establishing a venture capital
fund require the venture firm to provide quarterly
and annual financial statements using Generally
Why Valuation Guidelines Matter
What ultimately matters to the investors and private Accepted Accounting Principles (GAAP). GAAP
equity practitioners is the cash which has been dis- requires fair value measurement for portfolio posi-
tributed to the investors during the life of the fund tions. Therefore, most GPs must issue financial state-
compared with the original money put in. However, ments using fair value.
Thomson Reuters 97
March/April 2004 – The Institutional Limited

Partners Association (ILPA) hails NVCA support as
The Evolution of Valuation Guidelines:
welcome support – especially as it relates to the GP
1989 to 2009
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 ver-
Decade of the 1990s – Two noteworthy develop- sion 2. These two wording changes were consistent
ments occurred in the 1990s. Despite no endorsement with, and in part inspired by, language the NVCA
by the NVCA these guidelines became accepted prac- board used in its March 2004 statement of support.
tice by much of the US industry, especially in the ven-
ture capital side of private equity. These guidelines October 2004 – ILPA endorses the PEIGG guidelines.
were referred to by many as being issued by the
NVCA but in fact they were not. The second develop- December 2004 – As most fund accounting year’s end,
ment is international venture associations creating GPs prepare for their first audits since the effective date
localized guidelines based heavily on these guide- of AICPA’s SAS 101 rule. Essentially that rule says that
lines. These were created in Europe and other interna- if a reporting entity claims to be reporting “fair value”
tional regions. In fact, by 2005, there had been multi- – which is required by GAAP – then the auditors must
ple iterations of the European and British guidelines. document and test that this is, in fact, true. It was not
clear to what extent this increased scrutiny would affect
2003 – A self-appointed group of private equity prac- valuation expectation and practices.
titioners, fund managers, fund-of-fund managers and
others formed the Private Equity Industry Guidelines March 2005 – NVCA board issues an updated state-
Groups (PEIGG). The overall constitution of this ment, which now refers to the September 2004 ver-
group is not hugely different from the 1989-1990 sion of the PEIGG guidelines. The NVCA also decid-
group. The PEIGG group announced that it was con- ed to make the PEIGG document widely available to
templating taking on four initiatives, of which port- its members. The text of that statement is below.
folio company valuation guidelines was the first one.
April 2006 – Guidelines issued by a consortium of
December 2003 – After an extensive input phase and three Europe-based venture capital associations
review by various industry groups and service (AFIC, BVCA, EVCA) are released. The authors cite
providers, the first version of the PEIGG guidelines compliance with IASB rules. Informal feedback from
were issued. Throughout the process PEIGG had US venture capital professionals reviewing this docu-
been actively soliciting feedback and input from a ment was that the document was more formulaic than
number of industry groups including the NVCA. PEIGG’s counterpart and only partially compliant
with US GAAP as defined at that time. Subsequently,
March 2004 – NVCA board issued statement of sup- 30 non-US private equity and venture capital associa-
port, but not endorsement as some pundits had tions endorsed this document. Go to http://www.priva-
hoped. NVCA position was widely consistent with teequityvaluation.com. The most recent edition is
input provided by members of the NVCA CFO Task October 2006. These guidelines have gotten little trac-
Force, members at large, and the NVCA Board of tion in the US and expected to be updated in 2009.
Directors. The text of NVCA’s statement is printed
below. September 2006 – Financial Accounting Standards
98 Thomson Reuters
2011 NVCA Yearbook
Board (FASB) issues its long-awaited and long- erally painless implementation of FAS 157 to a fluid
anticipated fair value measurement standard as FAS environment with no precedent and little guidance.
157. Only a few of its 145 pages relate directly to
typical venture capital and private equity funds. December 2008 - The decreases in public market
Because FASB maintains that this is a clarification valuations accelerate. This makes valuation of even
and further definition of fair value which was already on-track, pre-revenue companies tricky. The NVCA
required for portfolio accounting, some auditors issues a one page information letter to its members to
began requiring selective compliance in advance of shed light on applying FAS 157 in a valuation
the 2008 effective date. microburst/whirlpool. (Text below)
March 2007 – PEIGG issues a revised portfolio July 2009 – Effective July 1, authoritative GAAP
company valuation guidelines document to reflect became contained in a single Codification and the
the Fair Value Measurement standard (FAS 157). prior nomenclature went away. Existing US GAAP
was recast in 90 topics which include all related
September 2007 – NVCA board reaffirms its prior FASB pronouncements, AICPA guidance and EITFs
position on the PEIGG guidelines to refer to the most under single “Topics.” Familiar standards will no
recent version. longer exist. For example, FAS157 is now Topic 820
Fair Value Measurements and Disclosure.
March 2008 – the International Private Equity
Valuation & Venture Capital Valuation (IPEV) Board September 2010 – Comments due on a converged
reconstitutes and re-launches itself, expanded to FASB/IASB standard on Fair Value Measurement
include 5 practitioners from the United States. The and Disclosure (Topic 820, formerly known as FAS
initial focus of the group is on convergence of US 157). The NVCA submitted a number of comment
PEIGG and IPEV valuation guidelines. Details at letters expressing a number of concerns.
www.privateequityvaluation.com.
February 2011 – As FASB and IASB converge on a
August 2008 – SEC proposes a roadmap toward “final” Fair Value Measurements and Disclosure
global accounting standards and publishes for public standard, it becomes clear that some anticipated dis-
comment the concept of adoption of International closure requirements either had no relevance to
Financial Reporting Standards. Details are at investment company accounting for venture capital
http://www.sec.gov/news/press/2008/2008-184.htm. funds, or would have be generated at considerable
cost and effort with little financial statement user
September 2008 – At this point, visible signs of a benefit. Several discussions between NVCA and
valuation whirlpool are hard to miss. This changed FASB/IASB senior staff brought some clarity. Final
what appeared a couple of months earlier to be a gen- standard expected later in Q1 2011.
Thomson Reuters 99
The PEIGG Guidelines Financial Accounting Standards No. 157, Fair Value
While the NVCA has not specifically endorsed the Measurements. The Updated U.S. Private Equity
PEIGG portfolio company valuation guidelines (see Valuation Guidelines are intended to assist managers
statement in next section below), it believes that the in their estimation of fair value and are intended to be
guidelines document should be readily accessible to consistent with GAAP (FASB Statement No. 157)
its members for reference and use. Be sure to refer to and the AICPA Audit and Accounting Guide - Audits
www.peigg.org for the latest version and guidance on of Investment Companies. The AICPA Guide’s defi-
the document. The NVCA thanks the members of nition of Investment Companies includes Private
PEIGG for their efforts and for their permission to Equity Investors (paragraph 1.03) and requires invest-
reprint the guidelines here. The guidelines as updat- ments to be reported at fair value (paragraph 1.32).
ed in March 2007 to reflect FAS 157 are printed
below. 3. These Guidelines were created jointly by managers
(i.e., general partners) and investors (i.e., limited part-
ners) incorporating feedback from a wide number of
industry participants. The Guidelines are not intend-
OVERVIEW
ed to be all encompassing, nor are they intended to
eliminate all subjectivity. Rather, they are to be a
Introduction
1. As the U.S. private equity industry (defined as ven- guide to assist managers and investors in agreeing to
ture, buyout, mezzanine, and other investments in pri- a valuation framework while allowing a manager to
vate companies) has grown and matured, its partici- exercise its best judgment in applying the Guidelines.
pants have become increasingly interested in the
appropriate reporting of fund values. The interest 4. Included in these Guidelines are terms that are sub-
stems from a number of sources, such as an investor’s jective in nature, such as materiality, and could have
desire to measure interim performance, investor’s need different meanings in various factual situations.
for fair value data to report investments in their own While it is outside the scope of these Guidelines to
financial statements, a manager’s need to report and force specific definitions upon its users, the manager,
measure valuations in accordance with fund agree- in consultation with the Valuation Policy Committee
ments, and the need to determine the allocation of dis- (as discussed below) may develop and document
tributions of fund realizations. This has led to appropriate definitions of these subjective terms.
increased scrutiny of portfolio company values and the
need for greater consistency of valuation methodolo- 5. The Guidelines are not intended in any way to
gies employed by managers of private equity funds. modify the provisions of the fund agreement relat-
However, by its very nature private equity is an asset ing to the subject matter hereof. To the extent the
class in which judgment plays a significant role. Guidelines are adopted by a manager and a
Accordingly, investors in the same company may have Valuation Policy Committee and in one or more
different, but supportable, views on valuation. respects the Guidelines are inconsistent with the
fund agreement, the fund agreement would govern
2. The objective of the Updated U.S. Private Equity (absent a specific amendment thereto).
Valuation Guidelines (“Guidelines”) is to provide
managers a framework for valuing investments in
portfolio companies at fair value and to provide 6. The Guidelines seek to have all investments in
Fair Value Concept
greater consistency within the private equity industry portfolio companies reported at fair value on a con-
with regard to valuations. Historically there were few sistent, transparent and prudent basis. Fair value as
authoritative guidelines compliant with U.S. general- defined in accordance with GAAP is “the price that
ly accepted accounting principles (GAAP) that would be received to sell an asset or paid to transfer
required specific procedures for estimating fair value a liability in an orderly transaction between market
of investments in portfolio companies held by private participants at the measurement date” (FASB
equity investors. In September, 2006, the Financial Statement No. 157, paragraph 5). The objective is
Accounting Standards Board released Statement of to estimate the exchange price at which hypothetical
100 Thomson Reuters

2011 NVCA Yearbook
willing marketplace participants would agree to formed by a fund’s manager. As a result, it is recom-
transact in the principal market, or lacking a princi- mended that the manager of each private equity fund
pal market, the most advantageous market. No mat- establish a Valuation Policy Committee consisting of
ter which market is deemed most appropriate, fair a subset of the fund’s investor representatives. The
value is the estimated “exit price” in that market. Valuation Policy Committee could be all of, or a por-
tion of, a fund’s advisory committee, if such a com-
7. Securities of private companies, by definition, mittee exists. (Neither these Guidelines nor GAAP
will not have quoted market prices available. require managers to obtain independent valuations).
However, private companies at times engage in
arm’s-length transactions for issuances of their 12. The fund manager, in consultation with the
equity or debt securities. The value of these trans- Valuation Policy Committee, should establish the
actions could serve as an observable market price written valuation parameters to be consistently fol-
similar to a quoted market price if the transaction is lowed by the fund’s manager using these
both recent and between willing parties for the same Guidelines. The agreed upon valuation policy and
securities as those for which the fair value determi- deviations from that policy should be communicat-
nation is being made (deemed a level 2 input by ed to the Valuation Policy Committee and the limit-
FASB Statement No. 157), and could therefore be ed partners by the manager. Private equity fund
used as an estimate of the theoretical exit price. managers are solely responsible for establishing and
documenting valuation policy, practices, procedures
8. When quoted market prices or arm’s-length trans- and methodologies as well as valuing their invest-
action prices as described above are not available, ments in portfolio companies The Valuation Policy
the estimate of fair value should incorporate all rea- Committee should not set, formulate or approve the
sonably available information about the business valuations, except as required by the fund agree-
and utilize assumptions that market participants ment. The Valuation Policy Committee should peri-
would normally use in their estimates of value. The odically discuss the level of the manager’s adher-
estimate of fair value should seek to best replicate ence to the fund’s valuation policy parameters.
the amount at which the investment could be sold in
a current transaction between willing parties.
II. PRIVATE COMPANY VALUATION
9. In determining the fair value of individual invest-
METHODOLOGIES
ments using these Guidelines, managers are expected
to use their judgment. In utilizing judgment, sub-
General Guidelines
stance takes precedence over form. For example, 13. Managers are to fairly value the investments in
when a manager’s past experience indicates that liq- their portfolio companies on a consistent, transparent
uidation preferences will likely be renegotiated or and prudent basis. Since value is often realized
may not be fully enforced at the time of liquidation, through a liquidity event of the entire company, the
the manager is strongly encouraged to use the expect- value of the company as a whole at the reporting date
ed results rather than the form of the agreement. will often provide the best evidence of the value of
the investment in that company. As a result, the
10. Valuations should be updated on each measure- methodologies discussed in this section involve esti-
ment date, generally on a quarterly basis. Of course, mating the value of the company as a whole as an ini-
valuations used for annual and quarterly perform- tial step for valuing the company’s privately issued
ance reporting should be used in private placement securities. The manager will then need to determine
memorandums and other marketing materials. how the total enterprise value is distributed among
the various securities of the company.
11. These Guidelines acknowledge the perception 14. Managers of funds should, without undue cost
Valuation Policy Committee
that bias exists or has the potential to exist in a non- and effort, contact other sophisticated investors to
independent (versus independent) valuation per- discuss the valuations of common investments and
Thomson Reuters 101

the factors considered in their valuations. However, uidation preferences, convertible securities, escrows,
managers are not required to use other investors’ and other rights, privileges and preferences of pre-
valuations since the estimate of fair value is the ferred securities are discussed in paragraph 47.
responsibility of the managers.
20. Determination of valuation adjustments should
15. To value an investment, managers should place typically be based upon actual positive and negative
the most weight on valuation methodologies that are events, not upon expected accomplishments and
clearly objective and timely. On each valuation date performance.
managers need to take into account available infor-
mation from market participants, the relevant mar- 21. Regardless of the valuation methodology used,
ketplace and the global economy along with specif- once used, it should continue to be used until a new
ic facts and circumstances in determining the fair methodology will provide a better approximation of
value of their investments. the investment’s current fair value. It is expected
that there would not be frequent changes in valua-
16. Historically, the Private Equity Industry used tion methodology.
cost or the value of the latest round of financing as
an approximation of fair value; often without taking
into account other facts and circumstances. Such an 22. While entry prices and exit prices are different
Cost / Latest Round of Financing
approach is incompatible with the concept of fair conceptually, for the Private Equity Industry these
value described above. At each valuation date a Guidelines presume the manager at the time of the
manager must make a determination of fair value initial investment has considered near term compa-
for each investment. As further outlined below, ny performance in determining investment valua-
these Guidelines provide a consistent and transpar- tion. Therefore, cost (the transaction price) may be
ent methodology for determining fair value. fair value (the exit price) upon purchase. The trans-
However, a manager may conclude, after consider- action price may not represent fair value upon pur-
ing the facts and circumstances as outlined below, chase when:
that the best indication of fair value is provided by
cost or the value of the latest round of financing. a) The transaction is between related parties;
17. FASB Statement No. 157 allows managers to b) The transaction occurs under duress;
utilize three valuation techniques, either alone or in c) The transaction price includes transaction costs
combination. These Guidelines encourage man- (transaction costs are expensed under GAAP);
agers to use the “market approach” in most situa- d) The market in which the initial transaction takes
tions (see FASB Statement No. 157, paragraph 18a) place is different than the principal or most advan-
utilizing Comparable Company Transactions or tageous market in which the exit transaction would
Performance Multiple inputs, as the primary tech- take place.
nique to estimate the fair value of equity securities
in private companies. For Private Equity, the mar- 23. Managers should reconsider a company’s fair
ket approach usually is the most appropriate. value in connection with each material equity
18. In addition to the market approach technique dis- financing, regardless of the manager’s participation.
cussed above, there are other valuation methodologies, The value of the last round of financing is a factor
some of which are discussed in paragraphs 41 and 42. in determining fair value, but it is not necessarily
These other methodologies or techniques may be the only factor.
appropriate in certain circumstances, and include dis- 24. A subsequent equity financing that includes
counting cash flows, valuing net assets, and industry- substantially the same group of investors as the
specific benchmarking (described in FASB Statement prior financing is an appropriate factor to consider
No.157 as the income and cost approaches). in valuing prior investments unless it can be demon-
strated that the financing no longer represents fair
19. Other valuation matters, including valuing inter- value. This approach may be different from historic
est bearing securities, PIK dividends, warrants, liq- practice, where, typically the value of prior invest-
102 Thomson Reuters

2011 NVCA Yearbook
ments was not increased in a subsequent higher decreased risk factors faced by the company, or sig-
priced financing round unless a new investor ‘vali- nificant fluctuations in share prices of quoted compa-
dated’ the new pricing. nies operating in the same or a related industry.
25. If a private financing will be completed with a c) Substantial decreases in the value of quoted,
high degree of certainty in the near future, and the pric- more senior securities of the company (e.g., public
ing of the transaction has been substantially agreed, to debt), defaults on any obligations of the company, a
establish the value of a previous investment, a manag- bankruptcy filing, significant ownership dilution
er should consider their best estimate of the upcoming caused by recapitalization of the company, or liq-
new financing if it can be objectively determined that uidity concerns that are expected to be more than
the prospective financing is at fair value. short term in nature are circumstances which may
indicate a potential impairment in value.
26. Occasionally a round of financing includes a
significant investment from a strategic investor pay- 28. Estimating the extent of a change in fair value, if
ing a premium due to benefits accruing uniquely to any, may not easily lend itself to an analytical
itself. The manager must evaluate whether such a process. As a result, the manager will be required to
premium is representative of what the most likely exercise prudent judgment and carefully consider the
buyers of the company would also pay upon exit, broad indicators of potential changes to fair value
and therefore, whether the price paid by the strate- (such as market conditions, relevant stock market
gic investor is deemed to be the exit price (fair indices, and other factors as discussed above).
value) expected from market participants.
29. The result of such consideration will provide
indications whether the carrying value of the invest-
27. After some period of time, cost or the latest ment should be increased or decreased to represent
Deviations from Cost / Latest Round of Financing
round of financing becomes less reliable as an fair value. The longer that fair value has been esti-
approximation of fair value. Therefore, the manag- mated using cost or the price paid at the most recent
er must assess whether fair value has changed even round of financing, the more consideration should
though there has not been a new round of financing. be given to reviewing changed circumstances and
Examples of changes in circumstances which indi- potentially determining fair value utilizing other
cate a change in fair value may include, but are not inputs. Managers may consider historic cost or the
limited to, the following: price paid at the most recent round of financing in
making their fair value determination, but should
a) The current performance of the company is signif- not use cost or the most recent financing price as the
icantly above or below the expectations at the time of sole determinate of fair value.
the original investment. Potential indicators of this
situation will include evaluation of the company’s 30. These Guidelines recognize that building long-
success or failure in attaining certain milestones, term value in a private equity backed business is not
achieving technology breakthroughs, developing pro- an easy task. Usually, many positive events need to
prietary technology, progressing through clinical trials happen in order for portfolio companies to succeed.
or significantly exceeding or failing to meet budgets. However, managers often become aware that certain
of their investments are likely to fail given their
b) Market, economic or company specific conditions insight into the company. Even private companies
have significantly improved or deteriorated since the that have significant manager involvement face a
time of the original investment. Potential indicators daunting task to create value for investors. Thus, it is
of this situation will include evaluation of broad natural that decreases in value may be more easily
changes in the economic climate, changes in the identified and justified than increases in value.
financing markets, changes in the legal or regulatory However, both decreases and increases in investment
environment in which the company operates, changes fair value should be recognized when warranted.
in the company’s cost structure, increased or Because of the difficultly in building sustainable,
Thomson Reuters 103

building sustainable, long-term value in a private transactions, the following Performance Multiple
equity backed business, increases in value should methodology should be used, if applicable.
only be made where the manager can support the
increase using the methodologies discussed in
these guidelines or using other techniques common 35. The performance multiple methodology applies
Performance Multiple
to the marketplace, remembering that fair value is a relevant multiple to the performance of the com-
defined as the exit price on the measurement date in pany being valued in order to derive the value of the
a hypothetical transaction. Diligence, prudence company. This approach is most applicable to com-
and caution should be applied when valuing private panies that have achieved positive and sustainable
companies, and in particular when considering the operating performance.
valuation write-up of early-stage companies, in the
absence of market-based financing events. All 36. The valuation determined using this methodolo-
such changes and the factors upon which the gy is calculated by applying the most appropriate and
changes are made should be reviewed with the reasonable multiple derived from reference to market
Valuation Policy Committee. However, managers based conditions of quoted companies or recent pri-
must recognize that there should be no bias toward vate transactions. The multiple to be used, which
either increasing or decreasing carrying value to may need to be adjusted for differences in terms of
record fair value. growth prospects and risk attributes (depending on
the size of the comparison sample, among other fac-
31. When valuation adjustments are necessary, the tors), should be one of the following:
methodology used should be based on relevant
comparable data wherever possible (“relevant com- a) Current average comparable public company
parable data” as used in these Guidelines is intend- multiple for similar companies in the industry;
ed to be consistent with the input hierarchy dis-
cussed in paragraphs 22-31 of FASB Statement No. b) Current average multiples for recent private trans-
157). Recommended methodologies are discussed actions of similar companies in the industry; and
below.
c) The original acquisition multiple when no other
similar public or private multiples can be ascertained.
32. This methodology involves deriving the value
Comparable Company Transactions
of a company through examination of third-party The most appropriate and reasonable multiple as
investments in comparable equity securities of the determined above will be applied to the relevant
company, examination of transactions in equity operating performance metrics of the company to
securities of comparable companies and direct com- estimate fair value.
parisons to similar companies. These comparisons
should be appropriately adjusted for any control 37. The manager should be confident that reason-
premiums, synergistic benefits or other excess ben- able, relevant and sustainable performance metrics
efits or detriments that accrue to the owner when are utilized, which may necessitate the adjustment
determining a proper comparable valuation. for one-time and non-recurring items.
33. These Guidelines acknowledge that until a 38. There may be significant changes in the finan-
company achieves marketplace acceptance for its cial, regulatory, economic or legal climate in which
product or service, it is unlikely that truly compara- the company operates which harm or enhance the
ble companies with determinable fair values will be prospects of the company, but these changes may
readily identifiable. not yet have affected performance. The manager
needs to consider these changes in evaluating a
34. To the extent comparable transactions cannot be company’s sustainable performance. Managers
ascertained and fair value cannot be reasonably should share with the Valuation Policy Committee
assessed and reliably measured using comparable the factual data and their assumptions that support
104 Thomson Reuters

2011 NVCA Yearbook
the sustainable performance used in the valuation pants would utilize in their estimate of fair value.
determination.
39. The multiples used should be those that are

III. VALUATION OF PUBLICLY TRADED
used regularly and routinely to value companies in
SECURITIES
the industry in which the subject company is oper-
ating. If the multiples used are derived from public
Unrestricted
company comparables, a discount to a private com- 43. Actively traded public equity and public debt
pany’s equity value may be appropriate. Discounts securities are required to be valued at the closing
applied to private securities may be higher than price or bid price, except as discussed below. Active
those applied to restricted public securities, which markets are defined as a market in which transactions
are discussed in paragraph 46. Managers should occur with sufficient frequency (daily) and sufficient
share with the Valuation Policy Committee the fac- volume to provide pricing information on an ongoing
tual data that generates the multiples used in the val- basis, regardless of the size of the position held.
uation process.
44. Discount (blockage) factors for unrestricted
40. To the extent fair value cannot be reasonably securities that trade in an active market are prohib-
assessed and reliably measured using performance ited by GAAP (FASB Statement No. 157).
multiples, the following methodologies may be con-
sidered.
45. A discount from values of actively traded securi-
Restricted
ties should be taken for holdings of securities when

41. A few other valuation methodologies, which may there is a formal restriction that limits sale of the secu-
Other Valuation Methodologies
be appropriate in certain circumstances, are as follows: rities. Examples of restrictions that may warrant a
discount include rule 144 holding periods and under-
a) Because of the need to use significant estimates writer’s lock-ups. Discounts for restricted equity
and forward-looking information, discounted cash securities from their market price typically range from
flow (DCF) methodologies should only be used in 0% to 30%. When determining a discount to actively
limited situations using a discount rate commensu- traded restricted securities, factors that should be
rate with the risks involved. These situations would taken into consideration include the company’s trad-
involve instances where the methodologies previ- ing characteristics (the extent to which the market for
ously discussed in these Guidelines prove incapable the security is active), the investor’s ability to sell its
of addressing the specific circumstances. position when the restriction expires, and the term of
the restriction. The adjustment of the discount will
b) Net asset valuation methodologies should be vary depending on the duration of the restriction. As
used for valuing investments in businesses whose the remaining length of the restriction decreases, the
value is derived primarily from the underlying value amount of the discount should also decrease.
of their tangible assets rather than their performance. Limitations on sale based on rule 144’s volume tests
or based on a closed trading window for board mem-
c) Industry-specific benchmarks, which are customar- bers do not qualify as formal restrictions related to the
ily and routinely used in specific industries such as security itself. Therefore discounts are not allowed by
price per subscriber or other industry norms, should GAAP in these situations.
only be used in estimating fair value where appropriate.
42. In those circumstances where there are indica-
tions that a change in carrying value is appropriate 46. A quoted price is not readily available for
Inactive
based on paragraph 27, but the methodologies securities which trade in inactive markets, where
described in paragraphs 32-41 are not applicable, transactions do not occur with sufficient frequen-
the manager should exercise prudent judgment in cy and volume to provide ongoing pricing data.
considering assumptions that marketplace partici- Therefore, the last transacted price may not pro-
Thomson Reuters 105

vide the best indication of fair value. In such sit- liquidation preference.
uations, an adjustment to the last transacted price
may be appropriate or other valuation techniques f) Currently convertible securities should be val-
may be utilized based on all relevant factors. ued at the excess of the value of the underlying
security over the conversion price as if the security
was converted when the conversion feature is “in
the money” (appropriately discounted if restricted).
IV. OTHER MATTERS
If the security is not currently convertible, the use of
47. There are a wide variety of securities and capi- an appropriate discount in valuing the underlying
tal structures used in the private equity industry. security should be considered. If the value of the
Such securities should be valued consistent with the underlying security is less than the conversion
Guidelines set forth above. Some examples and price, the carrying value of the convertible security
valuation guidance for securities and structures should be based on the underlying company’s abili-
which have not been specifically addressed by these ty to service and repay the security.
Guidelines include:
g) If deemed determinable beyond a reasonable
a) The carrying value of private interest bearing doubt (virtually certain) escrows from the sale of a
securities should be based on the underlying compa- portfolio company should be valued at an amount
ny’s ability to service and repay debt. that the manager, using its best estimate, ultimately
expects to receive from the buyer in light of the
b) PIK dividends should be accrued in accordance escrow’s various conditions.
with the terms of the underlying security. A valua-
tion discount may be necessary depending on the h) Because of the inefficiencies of the secondary
health of the company and the realizability of the market, purchase and sale transactions of partner-
underlying securities. ship interests in and of themselves may not be
appropriate in determining the value of portfolio
c) Valuations of securities denominated in currencies company valuations or positions in funds.
other than the base currency of the fund should be
adjusted for changes in the spot prices of the currency. 48. FASB’s Statement No. 157 Fair Value
Measurements utilizes a hierarchy described as Level
d) Warrants should be carried at their fair value. 1, 2 and 3 inputs (Statement No. 157 paragraphs 21-
31). The FASB valuation hierarchy has not been
e) The rights associated with preferred stock are gen- restated in these Guidelines. The concepts outlined
erally divided into two broad categories—economic in these Guidelines are intended to be consistent with
rights and control rights. Once the enterprise value of Level 1, 2 and 3 inputs as defined. The input level is
the company is determined in accordance with these a required GAAP disclosure and provides users of
Guidelines, fair value should be determined by allo- financial statements with additional clarity in how a
cating value to shares of preferred and common stock manager made their determination of fair value.
based on their relative economic and control rights.
In addition, when making their fair value determi-

V. CONCLUSION
nation managers should recognize that liquidation 49. As the private equity industry has matured in
preferences are often granted to investors as an the United States, there is a need for greater consis-
inducement to invest in a company. When a manag- tency of valuation standards/methodologies by both
er’s past experience indicates that liquidation pref- managers of, and investors in, private equity funds.
erences will be renegotiated or will not be fully These Guidelines are designed to provide a frame-
enforced at the time of liquidation, the manager is work for addressing the majority of the private equi-
strongly encouraged to use the expected results in ty industry’s valuation questions on a consistent,
determining the valuation of a security which has a transparent and prudent basis. It is recommended
106 Thomson Reuters

2011 NVCA Yearbook
that managers and investors collaborate to share guidelines, the NVCA board statement of support is
experiences and best practices across relationships. below:
This collaboration will narrow the range of specific
definitions of subjective terms and will enhance the The NVCA recommends that its members create, follow
consistent application of these Guidelines. and communicate clearly the specific procedures and
methodologies used for valuing their portfolios. These
50. The key goals of these Guidelines are as fol- methodologies should be agreed to by the firm’s
lows: investors (LPs), and conform, when required, to
Generally Accepted Accounting Principles and fair value
• Encourage managers to approach valuation from a measurement standards, recognizing that the ultimate
consistent, transparent and prudent basis. responsibility for valuations remains with the general
partner. When evaluating current valuation procedures
• Focus the private equity industry on the need to or developing new approaches, the NVCA suggests its
determine fair value for each of their investments in members include a review of the Private Equity Industry
a manner that is consistent with these Guidelines. Guidelines Group (PEIGG) December 2003 “Private
Equity Valuations Guidelines” document, as reissued in
• Provide greater transparency into valuation results March 2007 (found at www.peigg.org). We commend
through the use of the Valuation Policy Committee the fine efforts of PEIGG, an independent group which
as described in the Guidelines. sought and reflected input from the NVCA and other
industry stakeholders. The NVCA encourages diligence,
51. The Guidelines are not intended to be all encom- prudence, and caution when implementing the specific
passing, nor are they intended to eliminate all sub- elements of any guideline, such as valuation changes to
jectivity. Rather, they are to be a guide to assist early-stage companies in the absence of market-based
managers and investors in agreeing to a valuation financing events.
framework while allowing a manager to exercise its
best judgment in applying the Guidelines.
NVCA Member Alert – Fair Value
52. The Private Equity Industry Guidelines Group
Considerations for Venture Capitalists -
acknowledges that the application of these guidelines December 2008
may result in a departure from past valuation practices. The following alert was sent to the NVCA member-
It is recommended that managers and investors work ship to highlight certain issues and considerations to
jointly to develop a timetable to implement these be explored in the application of FAS 157, the fair
guidelines. It is expected that over time the broad use value measurement standard. The NVCA thanks
of these Guidelines will become industry practice David Larsen of Duff and Phelps and several mem-
bers of the NVCA CFO Task Force for their role in
53. These Guidelines are consistent with US drafting this document:
Generally Accepted Accounting Principles. If man-
agers adopt these Guidelines it is expected that their “We are operating in a severely distressed invest-
determination of fair value will be GAAP compliant. ment environment that has deteriorated rapidly in
However, it is also understood that a manager may be the past few months. What does this mean for ven-
GAAP compliant without utilizing these Guidelines. ture capital investors as they attempt to value pri-
vately-held investments at December 31, 2008? The
short answer is: despite the current very challenging
economic environment, Fund managers must con-
NVCA Position on Portfolio Company
tinue to exercise their sound judgment in estimating
Valuation Guidelines (March 2007
Version) the Fair Value of each portfolio company after con-
The NVCA Board of Directors reaffirmed its support for sidering the relevant facts, including current market
the latest iteration (March 2007) of the PEIGG conditions. The valuation process does not change,
Guidelines on September 18, 2007. While the NVCA has but much more judgment is required when we are in
not specifically endorsed the PEIGG or other valuation a period of economic discontinuity.
Thomson Reuters 107

Virtually all LP agreements require GPs to use US prior to the measurement date to allow for market-
GAAP for financial reporting. US GAAP requires Fair ing activities that are usual and customary…” -
Value reporting for virtually all VC firms because they SFAS 157, Paragraph 7].
are “investment companies.” US GAAP continues to
define Fair Value as: “the price that would be received • The valuations set by the most recent financing
to sell an asset…in an orderly transaction between round – perhaps even one in the third quarter of
market participants at the measurement date.” 2008 – may be stale and inappropriate for determin-
ing Fair Value, especially given current market con-
Fund managers need to establish Fair Values even ditions.
though they may not currently need to sell, or cannot
sell, their private investments in this market. GPs • The Fair Value at December 31 in many cases will
must use their judgment in estimating the current likely be different from the value at September 30,
Fair Values of their investments, even though “exit given the deterioration of the macro economic envi-
markets” may have few buyers, IPO markets appear ronment.
closed, and there are few, if any, relevant comparable
transactions. Such judgment should take into account • Each valuation should reflect a company’s degree
all relevant information, including a financing of progress from the prior reporting date to the cur-
round’s specific terms and conditions. rent one.
There are no easy outs, rules of thumb or safe harbors • To determine a portfolio company’s Fair Value,
for establishing Fair Value. GPs should apply their judgment in a consistent
manner and evaluate the same data they use for
As always, best considerations for Fair Value deter- monitoring a company’s performance and
mination include the following: progress. There is no magic formula or weighting
of factors.
• The Fair Value of an investment portfolio is the sum
of the Fair Value determined for each portfolio In summary, determining Fair Value continues to
company using a “bottoms up” approach. Applying require the exercise of judgment based on objective
a “top-down” overall percentage adjustment to the evidence, such as calibrating the original investment
aggregate portfolio’s value is not compliant with decision with the current performance of the compa-
US GAAP. ny and the current economic environment. The fact
• Valuations should reflect specific factors in a that the macro market is distressed probably adverse-
buy/sell context. For example, a GP could ask: ly impacts the value of most companies. This nega-
“Given my portfolio company’s current cash positive impact may be compounded by disappointing
tion, cash burn rate, performance compared to plan, company performance or mitigated by tangible and
probability of meeting forecasts, the projected envi- sustainable company progress.
ronment for its product or technology, etc., as a
board member, what is the lowest price that I would If you need more details about Fair Value, you might
sell the company’s stock today in an orderly sale consider the 18-page PEIGG Valuation Guidelines at
with a willing buyer?” [Footnote: A fund manager www.peigg.org, or you can download the 158-page
should not assume a “fire sale” of the stock, but SFAS 157 at www.fasb.org.”
should assume “exposure to the market for a period
108 Thomson Reuters

Appendix I: International Convergence
Despite all the discussion and work done on moving toward one global accounting standard, the passage of
time and the efforts of a number of groups have not really made the picture any clearer. As this is written in
early 2011, activity centers on three major areas:
• Decision on whether to adopt international accounting rules, or a modification thereof, as the accepted
accounting practice in the United States;
• Decision on the direction of private company accounting; and
• Convergence of specific U.S. and international accounting rules that affect venture capital and private equity
While making a decision on the adoption of international rules for U.S. accounting remains on the agenda of
the Securities and Exchange Commission for 2011, it is not clear what the priority of this expensive and time-
consuming effort is given all of the other must-do items on the national agenda. A blue-ribbon panel created by
the Financial Accounting Foundation (FASB’s parent) in 2010 is in the late stages of recommending separate
accounting principles for private companies, possibly overseen by a separate board. Meanwhile, FASB and
IASB continue work on converging certain U.S. and international accounting rules that affect this industry.
NVCA staff and the NVCA CFO Task Force have been putting considerable effort into the rules convergence.
industry is being able to continue investment com-

pany (IC) accounting. There are no provisions in
A GP’s Primer on Global Accounting
the international rules for IC reporting, so if cur-

Standards Convergence
A recent flurry of media coverage has focused on the rent GAAP provisions were not continued, venture
possible upcoming convergence of U.S. and interna- fund statements to their investors would become
tional accounting standards. Much of this coverage unusable. Reports are that international venture
discusses which accounting system casts which pub- capital and private equity firms currently subject
lic companies in the most favorable light. While to international rules are simply ignoring those
seemingly distant from the U.S. venture capital provisions or additionally providing side sched-
industry, it is important that all business constituen- ules prepared in accordance with U.S. GAAP. If
cies weigh in on which system (current U.S. GAAP the U.S. GAAP investment company accounting is
vs. International vs. neither) is the best system over- removed from GAAP going forward, for example,
all for the U.S. business community going forward. and the current international rules replaced it, GPs
We would expect this dialogue to center on trans- would likely have to keep an additional set of
parency, reliability, relevance, comparability, and books. One set would be used to create audit
ongoing costs in addition to any conversion costs, GAAP financial statements, although it not clear
which might be significant. who the audience for those statements would be.
The other set would be to provide meaningful port-
More relevant to the U.S. venture capital industry are folio information to investors and other stakehold-
matters specifically affecting fund reporting, specifi- ers.
cally the financial statements provided by GPs to LPs
under international rules, should the international Over the past couple of years, the FASB and IASB
rules become the new U.S. rules. efforts at convergence seem to have preserved the
key aspects of U.S. investment company accounting
In 2009, with a new administration, new SEC lead- for private portfolio companies. That is, the U.S.
ership, and other priorities at the SEC, the direc- approach on FIN 46, now called Topic 946, seems to
tion and timetable for convergence became less have prevailed over IAS 27. Recognition of invest-
clear. A key concern for the U.S. venture capital ment company accounting is significant.
Thomson Reuters 109

and public company rules. Even with two sets of

rules, because venture-backed companies plan to be
The Dialogue and SEC Decision: Should
public companies or a component of a public compa-
international rules become accepted as
ny, most venture-backed private companies would
U.S. GAAP?
For years, the United States has been developing want to use public company accounting from the
generalized accounting principles referred to as start.
Generally Accepted Accounting Principles
(“GAAP”). The keeper/arbiter/decider of GAAP is What is not clear at this time is what the current glob-
the Financial Accounting Standards Board al economic turmoil will do to the priority of this
(“FASB”). FASB develops and updates GAAP and project or its timetable.
the SEC has adopted these accounting rules for pub-
lic company reporting and other situations over
which the SEC has jurisdiction.
U.S. GAAP vs. IFRS – Never Generalize
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,
Standards Board (“IASB”), which was Europe-cen- there is no one flavor of IFRS in use. Much like the
tric. These rules became known as the International original UNIX kernel, each country/jurisdiction has
Financial Reporting Standards (“IFRS,” pronounced been able to create its own version of IFRS. But
“IFF-ers”). unlike UNIX, sometimes the differences among the
localized IFRS versions are large. So an apples-to-
Over recent years, a large number of multinational apples comparison of “IFRS-compliant” financials
corporations complained that they had to endure from different jurisdictions can be difficult. Second,
keeping two sets of books and this prompted the con- it is true that IRFS itself is a very thin document com-
cept of convergence. In early September 2008, the pared to GAAP, which has grown to roughly a two-
SEC and the FASB announced steps to pave the way foot stack of written rules. However, to implement
for U.S. public companies to convert from U.S. IFRS, you need the implementation guide that com-
GAAP to IFRS. The SEC “roadmap” provides for a bines with the original document to create its own
three-year run-up to an SEC “go-no go” decision in two-foot stack. Again, much of the surface compar-
2011. 2011 is also the year that major U.S. trading isons are not useful.
partners Canada, Japan, Korea, and India have indi-
cated plans to adopt IFRS. At about the same time, Until this point, U.S. venture capital firms have been
the FASB and the IASB met to review and re-orient using U.S. GAAP accounting standards exclusively.
their convergence plan to be consistent with the However, in early November, we received a report
SEC’s proposed schedule. The updated FASB-IASB from a member firm with international intermedi-
memorandum of understanding is at aries for overseas investment where the local audi-
http://www.fasb.org/intl/MOU_09-11-08.pdf. In tors raised the question of whether those financial
2009, much of Washington’s attention was focused statements need to be IFRS-compliant.
on rescuing troubled assets and economic stimulus.
The convergence timetable may be delayed. Please
check the NVCA website (www.nvca.org) for
GP-to-LP Reporting
updates. One area already identified as a possible problem area
is GP to LP reporting. Virtually all LP agreements (or
Nothing in the SEC proposal or the FASB-IASB accompanying documents) require GPs to provide
memorandum says that the U.S. will conclusively GAAP-compliant financial reports to LPs. Annual
“converge” by switching over to IFRS. This all con- audits of these reports are GAAP-based. Under
templates a well thought-out and informed decision GAAP, the U.S. venture capital industry provides fair-
in two years. It is worth pointing out that the SEC value portfolio reports under the special rules of
roadmap refers to public company reporting; howev- “investment company reporting.” Our early analysis
er we should logically expect alignment of private of IFRS shows special investment company rules for
110 Thomson Reuters

2011 NVCA Yearbook
portfolios of publicly-traded companies, but no such works toward compliance with the FASB’s
provisions for portfolios of private companies. Statement 157 (now officially called “Topic 820”) on
fair value measurement starting with 2008 financials,
Most of the SEC and FASB efforts to date have dialogue has begun on convergence. In March 2008,
focused on public company reporting. Under the cur- the International Private Equity & Venture Capital
rent IFRS rules, the financial statements for a num- Valuation (IPEV) board reconstituted and relaunched
ber of the portfolio companies would have to be con- itself. IPEV was expanded to include five practition-
solidated into the operating financials of the venture ers from the United States who are familiar with the
capital fund itself. This would create a mish-mash venture industry. The initial focus of the group is on
report that is essentially unusable to the LPs in deter- convergence of U.S. Private Equity Industry
mining the value of their own portfolio holdings. Guidelines Group (“PEIGG”) and IPEV fair value
This would mean an end to fair value reporting as we guidelines. Details, and the September 2009
have known it. A potential further complication could International Private Equity and Venture Capital
arise if DOL ERISA fair value rules remain in place Valuation Guidelines, are online at www.privatee-
for the plan sponsors while accounting rules abandon quityvaluation.com. Check that site for updates, the
the current fair value reporting requirements. press release issued with those guidelines, FAQs, etc.
Since most fund agreements require GAAP finan-

cials, if investment company accounting is eliminat-
Going Forward
ed from GAAP, venture firms might have to maintain With the international and domestic attention on
two sets of books. other economic matters, it is not clear how quickly
any accounting standard convergence activities will
move. As this is being written in early 2011, the
Securities and Exchange Commission (SEC) says it
How International GPs Now Handle LP
is on track to make a decision on the direction of
Reporting
A logical question arising from the above paragraph GAAP and IFRS in 2011. Separately, FASB and
is how venture capital firms operating in IFRS juris- IASB continue their program of converging certain
dictions are currently reporting to LPs, including accounting standards such as the fair value measure
those subject to U.S. ERISA fair value reporting and disclosure, consolidation, and investment com-
rules. A review by the NVCA CFO Task Force sub- pany accounting rules.
group shows that international GPs either ignore
international rules and use U.S. GAAP or create a In fact, FASB’s work on U.S.-only accounting issues
side schedule that is GAAP compliant. that affect venture capital and private equity wound
down a couple of years ago. Instead, anticipating a
single global set of rules at some point in the future,
unresolved accounting issues in the U.S. and differ-
Recent Events
A full chronology of events is posted under Valuation ences between the two systems are being worked
Guidelines on the NVCA website www.nvca.org. under the moniker of “convergence.” That is, these
This document is updated from the chronology in current issues are being addressed jointly by both
Appendix H of the NVCA 2011 Yearbook prepared FASB and IASB. For more information, please con-
by Thomson Reuters. Even as the U.S. industry tact NVCA at research@nvca.org.
Thomson Reuters 111

112 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.
tions between venture capital and buyouts inside and

This appendix highlights various aspects of private outside of the United States, it is perhaps most com-
Introduction
equity activity outside of the United States and pro- parable to analyze aggregate private equity in the
vides valuable information for comparison to the two regions as opposed to any classifications con-
United States private equity environment. However, tained within.
this appendix is not directly comparable to domestic
data found in this Yearbook due to differences in **Special Note: The methodology used to generate
definitions between the regions and variations in the the data within this appendix differs slightly from the
currencies of each region. Additionally, this appen- methodology used in previous years, causing data to
dix provides a brief overview of non-US private vary slightly from previous Yearbook issues.
equity; data herein is not as comprehensive as the However, trends reported in the past remain intact.
United States data presented elsewhere in this publi- Additionally, most data is now replicable on
cation. Despite this, the reader can use this appendix ThomsonONE.com.
to analyze trends in private equity outside of the
United States. All data is provided by Thomson
Reuters.
Commitments
Private equity commitment levels, outside of the
As mentioned previously, readers should note the United States, totaled $61.2 billion in 2010. Asian
differences in methodology and definitions of pri- based funds raised $27 billion equal to 16% of this
vate equity between United States and other regions amount. Meanwhile, European funds had $23.1 bil-
before analyzing the data. For example, private lion in fundraising commitments which is 13.7% of
equity outside of the United States provides equity the total. The Other regions raised $11.1 billion or
capital for entities not publicly traded and consists 6.6%. Venture capital commitments outside the
of buyouts and venture capital. The category of buy- United States accounted for 36.4% of the total.
outs includes management buyouts (management Meanwhile, buyout funds represented 35.9%. Fund
from inside the company investing with private of Funds raised $4 billion in 2010. Generalist fund
equity investors), leveraged buyouts (the target tak- commitments totaled 5.7% of the total or $3.5 bil-
ing on a high level of debt secured by assets), insti- lion. Mezzanine funds raised $2.5 billion with the
tutional buyouts (outside investors buying a busi- remaining commitments in the other private equity
ness from existing shareholders), and management fund stages. It should be noted that these totals reflect
buy-ins (management from outside the company not only the amount raised by independent funds, but
investing with private equity investors). On the other also include capital gains and the amount raised by
hand, venture capital describes the process of captive funds.
financing companies at the seed, start-up, or expan-
sion stages. The United States places more emphasis
on the early stages of development than do other
Investments
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 $63.6 billion in 2010. Buyout stage financ-
capital is considered a subset of private equity. For ing slightly led investment activity in 2010, account-
ease of analysis and to avoid differences in defini- ing for 36.1% of total. The venture capital invest-
Thomson Reuters 113


Investments Outside The U.S. in 2010 Private Equity Fund Commitment In The U.S.
and Outside The U.S. in 2010
Fund No. of
Stage Deals ($ Millions)
Buyout 748 22,987.2 Fund World Location No. Funds Committed $Mil
Venture Capital 2,613 21,338.4 United States 441 107,849.2
Generalist Private Equity 564 13,802.8 Asia 186 26,979.9
Other Private Equity 42 4,509.0 Europe 124 23,058.7
Mezzanine 39 619.6 Other 56 11,086.2
Fund of Funds 57 365.7 Total 807 168,974.1
Total 4,063 63,622.7 Note: Private Equity includes venture capital, buyouts, mezzan-
ments were close behind with 33.5% of the total. By Chinese investments reached $6.9 billion or 10.8%
nine, and other private equity funds.
number of deals, venture capital investments led with of the total investment activity outside of the U.S.
64.3% and the buyouts investments followed with Private equity commitments and investments saw a
18.4% of the total deal activity outside of the United significant increase outside of the United States in
States. Leading all activity outside of the United 2010. Commitments jumped 59% in 2010 from
States, investments in the Canada totaled $19.2 bil- $36.3 billion in the previous year. Similarly, the pri-
lion during 2010 accounting for 30.2% of the total. vate equity investments increased 72% from $46 bil-
The United Kingdom followed with $16.7 billion. lion in 2009.
114 Thomson Reuters

NVCA Yearbook 2011 Final

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

NVCA Yearbook 2011 Final

Uploaded by

Copyright:

Available Formats

NATIONAL

NATIONAL VENTURE CAPITAL ASSOCIATION YEARBOOK 2011

3 Times Square 1655 Fort Myer Drive PREPARED BY

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

Very truly yours,

Diana Frazier Mark G. Heesen John S. Taylor

Kate Mitchell Paul Maeder

E. Rogers Novak Ray Rothrock

Diana Frazier Mike Elliott

Bruce Evans Stephen Holmes

Board Members At-Large

Ira Ehrenpreis James Fleming

Norm Fogelsong Michael Greeley

Josh Green Jim Hale, III

Deepak Kamra Pascal Levensohn

Trevor Loy James Marver

Jason Mendelson Sherrill Neff

Robert Nelsen David Prend

Theresia Ranzetta Jonathan Root

For the National Venture Capital Association

Prepared by Thomson Reuters

Copyright © 2011 Thomson Reuters

National Venture Capital Association Thomson Reuters

President Vice President, Head of Private Equity and Desktop

Director of Federal Policy & Political Advocacy Product Manager

Director of Marketing Content Specialist

Director of Federal Life Science Policy Senior Analyst

Public Policy Manager Research Editor

Membership Coordinator & Database Administrator Senior Art Director

Accounting Manager Sales Manager – Publications (Buyouts, VCJ, peHUB)

Manager of Administration and Meetings ThomsonONE.com Sales:

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

Portfolio Company Valuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Appendix B: MoneyTree Report Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Appendix C: MoneyTree Geographical Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Appendix D: Industry Codes (VEICs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Appendix E: Industry Sector VEIC Ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Appendix F: Stage Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Appendix G: Data Sources and Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Appendix H: Portfolio Company Valuation Guidelines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

Appendix I: International Convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Appendix J: Non-US Private Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

Venture capital has enabled the United States to sup-

build companies from the simplest form – perhaps

ness plan – to freestanding, mature organizations.

Risk Capital for Business

Venture capital firms are professional, institutional

managers of risk capital that enables and supports the

most innovative and promising companies. This

money funds new ideas that could not be financed

with traditional bank financing, that threaten estab-

lished products and services in a corporation, and that

typically require five to eight years to be launched.

Venture capital is quite unique as an institutional

company, it is an equity investment in a company

larger companies whose current products could be

cannibalized by this. Also, with the increased empha-

organizations tend to reduce spending on research and

get tight. Many talented teams have come to the ven-

ture capital process when their projects were turned

down by their companies.