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SINET Showcase 2011

A view from 3000 Sand Hill Road

Gerald BradyHead of Entrepreneur Services Group

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SVB - Focused on one thing

Banking the innovation economy

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Some numbers from a banker – of course!

47% 1 in 6$5.9m

£27bnSources: National Cyber Security Alliance; Help Net Security; Ponemon Institute; Detica

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Mega-trends drive disruption

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Countries need to drive:• Growth

• Employment

• Innovation

• Wealth creation

Mega-trends:• Globalization

• Shift to knowledge based economies

• Globally mobile workforce

• Globally connected (everyone to everything)

Companies are impacted by:• Traditional innovation models

• Exponential innovation

• Pressure on growth

• China moving up the value chain

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Innovation, Capital Markets and Growth

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Innovation is back on the CEO’s agenda…

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Companies are talking-up their innovation activities

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And not to be outdone….

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And in pharma:

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And at P&G

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The sell-side is also talking about innovation

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However, given the speed at which the innovation curve continues to progress, new entrants with new products and redefined business models also have a chance to succeed, re-shaping profit pools across the industry. This is all the more so given a well funded venture capital industry (staffed with industry veterans), creating dilemmas for the leaders of the past and a driving force for deal-making activity:

‘Invent or Dent’: If you cannot innovate, dent your balance sheet to procure innovation. This is either a defensive strategy (to fend off disruptive threats) or an offensive strategy (to pursue new areas of growth).

‘Reply or Die’: If something new is about to supersede your approach, swallow the threat early. Otherwise, your own historical growth profile will turn into another company’s future growth.

‘Corroborate or commiserate’: Consolidate to sustain your and your partners’ innovation paths, especially when well-funded competitors can cyclically outspend you.

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Corporate innovation is different this time

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Internally focused

Driven byR&D

EvolutionNOT

Revolution

Cost not outcome focused

Little correlation with Corporate Venture

Capital

Internally focused

Isolated / little correlation with CVC

Cost not outcome focused

Evolution NOT Revolution

Driven by R&D

Internally focused

Driven byR&D

EvolutionNOT

Revolution

Cost not outcome focused

Little correlation with Corporate Venture

Capital

Greater external focus

Innovation partnering (VC,

M&A, JVs & licensing)

Outcome driven

Open to cannibalization

CEO / Chief Innovation Officer led

Traditional corporate Innovation The new model for corporate innovation

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Companies’ are tracking the innovation landscape

Mature

Disruptive trends,white spaces& roadmaps

CorporateVC

M&APartneringDistributionVenture Portfolio:

Segmentation bycompany stage Growth

Start-ups

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Start-up formation remains robust in Silicon Valley

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Q32011: No summer slow down – 2nd highest new account openings

Q1 09 Q2 Q3 Q4 Q1 10 Q2 Q3 Q4 Q1 11 Q2 11 Q3 110

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100

150

200

250

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SVB’s: At the center of the innovation economy

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SVB

VCs

Portfolio companies

Corporates

Globalinnovation

centers

SVB’s Role• Positioned like Switzerland

• Neutral about:- Investors- Location- Stage- Sector

• Able to connect:

Corporate CompaniesCorporate VCsCorporate Corporate

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