RateItAll's lawyer, Cooley Godward Kronish, hosted a two hour "MoneyTree Report" this morning presented PricewatershouseCoopers (and panel) covering about the state of venture capital in Q1 '09. They were kind enough to invite me.
The panelists were Stephen Bernardez (ONSET Ventures), Rich Brenner (The Brenner Group), Ted Driscoll (Claremont Creek Ventures), Matt Hemington (Cooley), Prashant Shah (Hummer Winblad), and Santosh Vadivelu (Canaan Partners).
Here are my notes:
- Total venture funding (all stages, all geographies) is down almost 50% Q109 vs Q408
- Silicon Valley accounted for about 40% of the total of all investments in Q109
- Silicon Valley investments are down 43% off Q408, vs 47% for overall investments
- # of deals in Silicon Valley is at its lowest point since Q1 '03
- Top three Industries receiving venture investment in Q109: Software, Biotech, Medical Devices - Cleantech has fallen off cliff since Q408
- Not much investment going to early stage / first sequence deals - Q109 was the lowest amount and number during the 2001-2009 time period, as well as the lowest percentage of overall deals
- The mean deal size has fallen to $5.5M
- Three most active funds in Q1 by number of deals: Oak Investment Partners (13), Draper Fisher Jurvetson (11), Venrock (11) - also notable was First Round Capital (9)
- Total Venture Return handily beating both Nasdaq and S&P 500 over 1, 3, 5, 10, and 20 year periods - however results skewed by top 25% of venture firms which deliver the bulk of the returns.
- Between 2004 and 2007 there were an average of 73 venture backed IPOs. In 2008 there were 6, 5 of which were in Q1. None so far in 2009.
- Size of M&A deals plummeting
PWC says the good news is:
- 2008 was the fifth biggest year ever in terms of venture capital investment $$
- Ad $$ still shifting online
PWC's predictions:
- VCs to stop funding many of their portfolio companies
- New deals must be perfect
- Lots of down rounds
- Fewer deals per fund, syndicated deals more important
- VC fundraising problematic, fear of capital calls
The primary panelist messages were:
- VCs moving slower, being pickier
- Terms favoring investors
- Many VCs moving upstream to later stage deals
