Blackhorse Silicon Valley Trip:GGV introduction & State of the VC Market презентация

2015
Glenn Solomon
Managing Partner, GGV Capital

Capital Trends

IPOs since 2010

Resulting in 10 Private $1B+ Outcomes

Resulting in 21 $1B+ Outcomes

Tujia

爱屋吉屋

Media /
Marketing Youku-Tudou
Pandora
LightChaser
Percolate
SoundCloud
Buddy Media

Cross-Border Ehang
Zepp
Wish Quixey
Chukong

OnDemand Services Opendoor
51Credit Xiaozhan
IWJW
Didi Dache
FlightCar

SaaS / Cloud
Zendesk
21Vianet
SuccessFactors
Synack
Kingsoft WPS
Domo

Global Discovery
Prynt
Wigo
CareerDean
Grubmarket
Dianhuabang
Totspot

/ GAMES

Baobao

Exutech

Xiaohongshu

GOODS

EDUCATION

AUTO

HOME

FINANCE

爱屋吉屋

51zhangdan

Series A or Series B
Median: $8-10m for 10-20%, double down on winners

in 2006
Prior: DFJ ePlanet, NSTB Singapore, HP
Representative investments: MediaV, Qunar, Youku-Tudou, Meilishuo, Grabtaxi

Founding Partner
Prior: Piper Jaffray
Representative investments: DraftKings, Glu Mobile, Houzz, Youku-Tudou, Soundcloud

Joined GGV in 2008
Prior: Verisign, Founder of R4, QuantumShift, PWC
Representative investments: Appirio, BlueKai, Buddy Media, HotelTonight, Flipboard

Joined GGV in 2006
Prior: Partech, SPO, Goldman, Sachs & Co.
Representative investments: AlienVault, Nimble Storage, Pandora, Square, Zendesk, SuccessFactors

Joined GGV in 2013
Prior: Qiming, Bessemer, Crimson Asia, HelloAsia, Merrill Lynch
Representative investments: Forgame, Wish, Curse, Xiaomi, Xiaohongxu

Jenny Lee

Joined GGV in 2005
Prior: JAFCO Asia, Morgan Stanley, ST Aerospace
Representative investments: YY, 21Vianet, Pactera, Chukong, Zepp, Xiaozhan

CONFIDENTIAL

the National Venture Capital Association.

US venture capital dollar volumes have grown significantly since the recession, reaching nearly $15B in Q4 2014, but are still far off from the high of $28B reached in Q1 2000 at the peak of the tech bubble. Volume of deals has been more stable, reflecting increasing deal sizes.

seed and early stage companies have been relatively stable since 2000, but expansion and later stage round sizes have dipped and rebounded with the market, and are now at around 2000 levels.

Source: MoneyTree, PwC and the National Venture Capital Association.

Thomson Reuters.

The first quarter of 2015 has been slow for venture-backed M&A at $2B in disclosed deal value and 86 total deals, the lowest since Q1 2013.

quarter of 2015 has been slow for tech IPOs as well, with the lowest # for IPOs for a quarter since Q1 2013.

Source: NVCA & Thomson Reuters.

2014 had a median age of 11 years, up significantly from the trough of 4 years in 1999. Since the financial recession starting in 2008, the median age of a tech IPO company has been high relative to historical levels.

Source: Jay Ritter, University of Florida.

revenue at time of IPO was at record levels during 2008-2013, and remained high in 2014 at nearly $100M.

Source: Jay Ritter, University of Florida.

Florida.

Despite the relatively older age and higher revenue levels shown by tech IPOs since 2008, % of companies showing profitability dropped in 2014 to nearly 1999-2000 levels, indicating that lack of profitability has not been a barrier to going public.

as of 6/26/15.

Out of 2014’s >$1B Market Cap, venture-backed tech IPOs, horizontal SaaS (Zendesk, Paylocity) and enterprise infrastructure (New Relic, Hortonworks, Arista Networks) were the best performing categories.

Post-IPO Trading Days

Hortonworks: +64% from Offer

Arista: +91% from Offer

Zendesk: +163% from Offer

New Relic: +54% from Offer

Paylocity: +109% from Offer

Gruhub: +33% from Offer

Wayfair: +32% from Offer

Opower: -39% from Offer

King: -37% from Offer

Coupons.com: -26% from Offer

Lending Club: +2% from Offer

+ 48% from Offer Price

Etsy: - 11% from Offer Price

Box: +36% from Offer Price

Fitbit: +74% from Offer Price

Mindbody: -1% from Offer Price

Source: Capital IQ. Data as of 6/26/15.

Of the 6 major venture / growth-equity backed tech IPOs in 2015, 4 (Fitbit, Shopify, GoDaddy, Box) are trading significantly above their offering prices. The other two, Mindbody and Etsy have both struggled in the public markets.

Post-IPO Trading Days

(All Sectors) by Volume and Aggregate Deal Value

>$1B

deal volumes have both been on a steady increase, reaching nearly $400M in Q4 2014.

Source: CB Insights.

first three quarters of 2014, there were 91 micro-VC funds (<$50M AUM) raised.

as seed funding volumes continue to climb, but Series A volumes stay relatively stable.

Source: CB Insights.

Crowdfunding Platforms

Over $104M raised for early stage tech startups in 2014 (estimated ~$70M in 2013)

Over $300M raised for SMBs in total

Over $200M raised for SMBs in total

Over $189M raised for SMBs in total

Over $135M raised for SMBs in total

Over $100M raised for SMBs in total

Over $90M raised for SMBs in total

Over $70M raised for SMBs in total

Over $35M raised for early stage tech startups over lifetime of platform

Over $10M raised for early stage tech startups over lifetime of platform

Startups have access to an increasing number of fundraising options beyond traditional venture capital, at both the early and late stages.

Mutual Funds & Hedge Funds in VC-Backed Deals

# of Mutual Fund Investments in VC-Backed Companies

# of Hedge Fund Investments in VC-Backed Companies

76

survey of 37 companies who raised money at valuations >$1 Billion in the 12 months prior to March 31st, 2015 to evaluate the impact of deal terms on potential returns. Downside protections were stronger than upside benefits, and liquidation preferences and minimum IPO conversion prices in these unicorn deals significantly reduce downside risk for VCs. As a result, “valuations of these companies could fall on average by 90% before the unicorn investors would suffer a loss on their investment.”

Source: Fenwick & West, “The Terms Behind the Unicorn Valuations.”

Highlights

Downside Protections

For the 37 “unicorns” in the survey, average valuation was $4.4B and median valuation was $1.6B (implying a few super-unicorns in the mix)
The average valuation increase over the prior round was 180%
25% of financings were led by traditional VCs, 75% by non-traditional VCs (mutual funds, hedge funds, sovereign wealth, corporations)
35% of the deals were valued at $1-$1.1B, implying that the companies were optimizing for attaining unicorn status in their negotiations

Upside Participation