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© Service des relations industrielles (SRI) © EPFL
A History
of
Venture Capital
Hervé Lebret
February 2009 and December 2011
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“Venture Capital is a uniquely
American process, whose specialty
is to combine risk capital with
entrepreneurial management and
advanced technology to create new
products, new companies and new
wealth”
from The New Venturers, Inside the High-
Stakes World of Venture Capital, by John W.
Wilson (Addison Wesley, 1984)
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The Ancestors
pre - 1958
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1957 – The Traitorous 8
Shockley was so difficult with his colleagues that 8 left Shockley Labs. to create a new company
The eight men were Julius
Blank, Victor Grinich, Jean
Hoerni, Eugene Kleiner, Jay
Last, Gordon Moore, Robert
Noyce and Sheldon Roberts.
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1957 – Arthur Rock
Arthur Rock, a banker on the East Coast, is contacted to help them raising $1.5M; an amount he will find in the person of Sherman Fairchild, the largest individual shareholder of IBM and owner of Fairchild Camera. In 1957, Fairchild Semiconductor is founded.
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There had been also…
Georges Doriot (a Harvard professor) founded American R&D in 1946 in Boston.
ARD DGA
William Draper II (VP Dillon Read), Rowan Gaither (founder of Rand Corp.) and Frederick Anderson (retired general) launch DGA with Rockfeller Group money in 1958
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and also hobby of the rich…
Laurence Rockfeller was interested in science and technology and less in his family business. He assembled a team of advisers, backed many entrepreneurs. In 1969, he structured a $7.5M fund into Venrock Associates.
Founded as the one of the first private equity firms in 1946 by "Jock" Whitney, J.H. Whitney & Co. provided capital and professional assistance to entrepreneurs.
He invested in MinuteMaid, Memorex, Genera Signals but also in movies (Gone with the Wind)
He coined the term “venture capital”.
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The Ancestors’ investments
Fairchild Semiconductor was very successful and reached 12,000 employees but the founders were bought back their shares by Fairchild… they still became wealthy. Faichild bought back for $2.4M the stake of the 8 founders.
ARD financed High Voltage (a $1.8M return for a $200k investment) and Digital Equipment in 1957 (a $70k inv. worth $355M after 14 years).
ARD stopped in 1972. ARD biggest flaw was no incentive for associates (no carried interest).
DGA seems to have been less successful though
and closed in 1969 when Rockefeller withdrew.
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The First Generation
Part 1
1958-1965
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The First Generation
Davis joined Rock. They raised $3.5M with Moore, Noyce, Kleiner among others
1961 - Davis & Rock
Tommy Davis, a Harvard-educated
lawyer and then vice president of Kern
County Land Company. Davis wanted
to leave the Land Company because it
had little interest in high-technology
investments though Davis had already
made a successful investment in the
high-technology firm, Watkins-Johnson.
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The First Generation
Bill Draper III who was working since 1958 with his father at DGA and Pitch Johnson (a former Doriot student) launch the Draper & Johnson investment company
1962 – Draper and Johnson
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And also…
Reid Dennis goes back to 1961 to remember
the time he persuaded his then-employer to
make its first venture capital investment,
although the Fireman's Fund Insurance
finance committee didn't call it venture
capital. It was a "special situation."
Don Lucas a General Partner at DGA will
help in the restart of National in 1967; at that
time, he has already left DGA to invest on his
own.
“The Group” is an informal group of
individual investors including Dennis, but
also John Bryan, Bill Edwards and others
Reid Dennis, Don Lucas
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The government got interested
The Small Business Investment Act was proposed in 1950… and signed in 1958!
It gave tax breaks to private investment companies.
By the end of 1961, they were 500 SBICs.
“Despite its flaws (dependant on govt. loans), the SBIC program fueled the creation of today’s venture capital industry”.
Frank Chambers created the 1st SBIC in Northern California, Continental, in June 1959 with $5.5M which returned $90M until 1980.
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Some 1st gen. investments
Davis & Rock After Fairchild, Rock invested $1.8M for 25% of Teledyne founded by
Henry Singleton. In 1984, Teledyne was worth $3B
Rock & Davis $3.5M fund (from individuals) returned $100M. It invested in
Scientific Data Systems (SDS), a company founded by Max Palesky. They
invested $257k in a $1M round for 80% of the company. SDS proposed to
used solid state technology to build computers although Rock and Davis
would have never thought to invest in computers where IBM was tough to
beat. By 1968, SDS was twice the size of Digital with $100M in sales.
Xerox bought it for $1B to compete against IBM and the pay off to D&R
was $60M, a 233x multiple. Davis & Rock 20% carried interest was at least
$16M.
Later Rock would invest in Intel when Moore and Gordon left Fairchild.
Rock put $300k, Palevsky $300k, Gordon & Moore $500k for a total of
$2.5M (fund raising was done in a few days) even if one of Rock’s
investors advised him against investing in memory technologies. Rock was
chairman until 1975.
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Some 1st gen. investments
1961-1965
Fireman's Fund Insurance invested $1
million in an optical-character recognition
company, Recognition Technology. “At the
height of the market, that investment was
worth over $40 million, which, in the 1960s
was an outstanding performance. By the
time it was all over, Fireman's probably
realized a $15 million or $16 million profit on
the investment.”
Continental (Chambers) put $250k in
Dataproducts, which returned $12M. Then
he invested in ROLM, American
Microsystems and KLA. He closed his SBIC
in 1980 to created a $22M VC fund.
One member of “the Group”,
Dennis, investment was $10-
20k? in Ampex which will be
worth $1M in the end. The
Group provided $4.5M to
Linear and 2/3 of $7.7M to
Sierra Semiconductor.
Don Lucas invested in the restart of National. Much later, he
invested in SDA (Cadence) and Oracle. He also seems to have
been a mentor to Costello and Ellison, 2 famous entrepreneurs.
Draper&Johnson invested in
Tandem
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The First Generation
Part 2
1965-1972
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The First Generation
Johnson and Draper go on their own: Johnson launches AMC - the Asset Management Company (still active)
1965 – Sutter Hill, AMC
Draper launches Sutter Hill with Paul Wythes (also still in business) and acquires the assets of J&D. Bill Draper will have a long career and will also launch Draper International in 1996 and Draper India in 2001.
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The First Generation
Tommy Davis leaves Rock to create Mayfield with Wally Davis (no family relation). First fund of $3.8M returned $13M in 1983. Mayfield has always been closed to Stanford (even if informal)
Rock may have helped in the creation of Venrock, the Venture arm of Rockefeller.
Arthur Rock with partner Dick Kramlich raised $10M, invested $6.5M and returned $30M. Then he went on his own and still does with A. Rock and Co. Rock became the VC icon (Time Front Page in 1984). Rock $57k in Apple worth $14M…
1969 – Mayfield, Venrock
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The First Generation
1970 – Palo Alto Investments
Jack Melchor (ex-Sylvania) who had founded MEL Labs in 1956 and HP Associates
and
Burt McMurtry after 10 years at Sylvania
found together
Palo Alto Investments
The company will return $100M out of $3.3M in investments like Rolm, Triad,…
Their success story is famous: 4 inexperienced engineers from Rice and Stanford (Richeson, Oshman, Loewenstern & Maxfield), less than 32 year-old, were looking for money for a computer company. Rock declined and even Melchor who loved to gamble was skeptical. Melchor put $15k of angel money, then PAI led a round at $0.16/share. IBM bought ROLM at $70/share.
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Willian Elfers leaves ARD as Doriot does not let control and creates Greylock with Daniel Gregory and Charles Waite.
1965-70 - Boston The First Generation
(From left to right) Howard E. Cox, Jr., Charles P. Waite, Henry F. McCance, Daniel S.
Gregory, William Elfers.
C.Waite
W. Efers
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1965-70 - Boston The First Generation
ARD alumnus Willian Burnes co-founds Charles River Venture in 1970 with John Carter.
ARD alumnus Peter Brooke (then at FNB Boston) launches TA Associates in 1968 as a division of Tucker Anthony, a regional investment bank.
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Some 1st gen. investments
1965-1972
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The Giants
1972-1978
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Kleiner Perkins
Tom Perkins (HP) and Gene Kleiner (Fairchild) raise together their first fund in 1972.
They consider themselves as the first VCs with an industry and entrepreneur background
1972 Thomas Perkins Eugene Kleiner
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KP First Fund (1972-1984)
$0
$2'000'000
$4'000'000
$6'000'000
$8'000'000
$10'000'000
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Cost ($)
Value on
June
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KP first fund
$7M fund with $4M from Hilman (Wilmington), $1M from Rockefeller University. Both Kleiner and Perkins put $150k each.
1972 Tandem ($152M)
Genentech ($47M)
More on http://www.startup-book.com/2009/02/09/about-kleiner-perkins-first-fund-episode-3
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Sequoia
Don Valentine, a co-founder of National and Fairchild marketing director creates in 1972 the VC arm of the Capital Group, later named Sequoia.
1972
About valuation “When people come as a team (usually it is three or four people and typically
heavyweight on engineering), it is a complex process. But I think all of us have seen it in the
earlier days, times when I can remember saying, "Well, look, we'll put up all the money, you put
up all the blood, sweat and tears and we'll split the company", this with the founders. Then if we
have to hire more people, we'll all come down evenly, it will be kind of a 50/50 arrangement.
Well, as this bubble got bigger and bigger, you know, they were coming and saying, "Well, you
know, we'll give you, for all the money, 5 percent, 10 percent of the deal." And, you know, that
it's a supply and demand thing. It's gone back the other way now. But, in starting with a team,
it's a typical thing to say, well, somewhere 40 to 60 percent, to divide it now. If they've got the
best thing since sliced bread and you think they have it and they think they have it, you know,
then you'll probably lose the deal because one of these guys will grab it.”
Transcript of oral panel – the Pioneers of Venture Capital – September 2002
More on http://www.startup-book.com/2010/11/05/when-valentine-was-talking
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Sequoia
1972
Sequoia at that time called Capital Management Services and got money from the Capital Group (Michael Shanahan) in Los Angeles. Capital had funded AMD in 1968.
Valentine invested $600’000 in Atari in 1975. Mayfield and Time Inc matched the $600k and Fidelity added $300k in a $2.1M round. They got a 4x multiple when Warner bought Atari for $28M in 1976. Founder, Nolan Bushnell, got $15M.
Valentine met Steve Jobs at Atari. Jobs and his friend Wozniak built a low-cost computer. Valentine was reluctant to invest in two very junior engineers. He introduce them to Markkula, a marketing person from Fairchild and Intel.
Venrock ended up investing but Valentine added $200k which he sold for $6M in a private placement before the IPO.
Sequoia also invested in Printonix (Printers), Tandon and Priam (Disk drives) and Dysan (Magnetic Media). Valentine estimates he made about 12 computer-related deals.
Sequoia distributed $120M, a 17x multiple.
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Kleiner Perkins
Perkins and Kleiner
were joined by
Caufield and Byers
(from AMC) in 1977
and the partnership
becomes KPCB.
30 years of activity
Later come
famous icons
John Doerr (Intel)
and
Vinod Khosla
(Sun founder)
KPCB I $15M (1976)
KPCB II $55M (1980)
KPCB III $150M (1982)
KPCB IV $150M (1986)
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Sequoia
Joining Valentine were new partners
(not active anymore):
30 years of activity
Bud MacRae – 1974
Gordon Russell (Fairchild, Syntex) – 1976
focused on medtech
retired in 2000
Walter Baumgartner (Bank of America) – 1979
focused on computer memories
left in 1989
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Sequoia
Joining Valentine, famous to-become partners:
30 years of activity
Pierre Lamond (National) - 1981
Mike Moritz (Time Magazine) – 1986
Doug Leone (HP, Sun) – 1988
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The Reid Dennis Legacy
Reid Dennis, Burton McMurtry (Palo Alto Inv. was stopped in 1973) and Burgess Jamieson (Westven) found Institutional Venture Associates (IVA) in 1974 with $14M inc. American Express money ($5M) and the Ford Foundation.
David Marquardt joins as an associate.
1974
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The Reid Dennis Legacy
1976
The IVA partners soon disagreed on one Dennis deal (Collagen) and separated.
Dennis launched Institutional Venture Partners (IVP) alone in 1976.
The same year, McMurtry and Marquardt found Technology Venture Investors (TVI)
with James Bochnowski (Shugart Assoc.)
Later join Pete Thomas (Intel), James Katzman (Tandem) Robert Kagle (BCG)
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The Giants success stories 1972 and after
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Some investments of the Giants
1974 and after
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Hits and misses
from a couple of interviews
Venture Capitalist First Big Hits First Big Miss
Arthur Rock SDS, Teledyne Bool and Babbage, Compaq
Pitch Johnson Bool and Babbage, then Tandem
Bill Draper Qume Apple
Burton McMurtry Rolm Tandem
Dennis Reid Recognition Technology
Don Valentine Atari but also Apple, Cisco Sun
Tom Perkins Tandem Apple
More on http://www.startup-book.com/2011/11/14/the-missed-deals-of-venture-capitalists
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A genealogy
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What do VCs look for?
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What do VCs look for?
“Some winning venture capitalists
claim to look almost exclusively at the
backgrounds and personalities of the
founders; others focus mostly on the
technology involved and the market
opportunity the venture addresses”
from The New Venturers, Wilson (1984)
a never ending debate
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They look for outstanding people without worrying
too much about the details of product and
marketing strategy.
The right people have integrity, motivation, market
orientation, technical capability, accounting
capability and leadership. The most important is
motivation.
Rock’s style was supportive of entrepreneurs with
an implacable will.
from Wilson (1984)
What do VCs look for?
Davis & Rock
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“Perkins put it in once sentence: If you have good
people, proprietary technology and a high growth
market, you’ll win every time. Like most simple
rules, this one is extremely difficult to follow. […]
The biggest challenge an entrepreneur faces,
Perkins believes is recruiting, motivating and
teaching other employees.
from Wilson (1984)
What do VCs look for?
Perkins
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“There are people risks, markets risks, product development risks
and finance risks. We will not invest in a company unless we
understand and are comfortable with three of these risks.”
“The components of success are product differentiation, a fast-
growing market, a team of dedicated people and money.”
“Arthur Rock and others are along the lines I’d rather have A people
and a B idea than B people with an A idea. The problem with that
approach is that it is seldom clear who the A people are.” Valentine
viewed Apple as a company founded by “modest individuals from any
business experience” that succeeded well beyond any legitimate
expectation.
“People you can change, but you can not change a market”. He avoided biotech: “There is no market, there are few identified problems
that are resolvable [with biotech] and the people are research people. We
looked ta forty companies which had no management, no market
identification, no product application, but were clearly interested in doing
research… we were 90% right. We were embarrassingly wrong. It never
occurred to us that you could raise public money for companies with infinite
losses and little damn prospect of sales”
from Wilson (1984)
What do VCs look for?
Valentine
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“ The debate will never have an
unchallenged winner. Both side can point to
winning investments that seem to vindicate
their point of view and both can point to
losers or missed opportunities.”
from Wilson (1984)
What do VCs look for?
a never ending debate
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The Maturity
1978-1993
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The new players
1978
Founders
Dick Kramlich (Arthur
Rock & Associates )
Franck Bonsal (Alex
Brown)
Chuck Newall
1976
DuBose was a founder of
Menlo Ventures in 1976.
Carlisle joined in 1982 and
Jarve in 1985
Ed Glassmeyer co-
founded in 1978 with
Stewart Greenfield of
Oak Investment Partners.
In 1980, MPAE was
created by Merrill,
Pickard, Anderson and
Eyre (from
BankAmerica).
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The new players
1981
Bill Bowes is the founder and
prior to founding USVP, Bill
was the founding shareholder
(and its first employee) of
Amgen
1982
Paul Ferri, a venture capitalist for more
than 30 years, was the founding partner of
Matrix Partners in 1982. Prior to Matrix, he
founded Hellman Ferri Investment
Associates (1977 to 1982) and was a
general partner of WestVen Management
(1970 to 1978).
Sevin Rosen was founded in 1981 by
L.J. Sevin (Mostek) and Ben Rosen
(MorganStanley). They used KP as a
backer and co-invested with them in
Compaq and Lotus.
1981
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The new players
1983
Bill Davidow, SVP
Sales & Marketing at
Intel launches MDV
In 1979, Adler & Company of
New York established an
office in Silicon Valley. In
1983, two Adler partners,
James Swartz and Arthur
Patterson, spun-off to create
the bi-coastal firm, Accel
Partners, having offices in
New York and Silicon Valley.
1983
1984
Gregory Avis Roe Stamps Stephen Woodsum
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The new players
Tim Draper (3rd gen. Drapers; from Alex Brown) founds Draper associates
and is later joined by
John Fischer (from ABS ventures) and
Steve Juverston (HP)
1985
David Morgenthaler
founded the firm in 1968.
Morgenthaler began
raising institutional funds
in the 1980s and worked
at Whitney before,
1984
Rick Frisbie, founder of
Battery Ventures
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Some investments 1978 and after
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The New Kids
Around the Block
1993-2005
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Benchmark Capital
1995
In 1995 Bruce Dunlevie and Andy Rachleff (MPAE), two veterans of the industry, decided to
create their own company, Benchmark. Their goal was to have a firm with a
"fundamentallydifferent architecture," with no one person at the top. The men had
connections, money and their own brain power and they immediately set to work.
They added two more partners to their ranks in very short order, Bob Kagle (TVI ) from the
venture capital world and Kevin Harvey from the technology sector, and then brought in
David Bierne, who had built a highly successful executive search business centered
around technology.
Bruce Dunlevie Andy Rachleff
Bob Kagle Kevin Harvey
David Bierne
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August, Lightspeed, Redpoint
Redpoint was founded in 1999 by top
partners each from Brentwood Venture
Capital and IVP
The VC arm of Weiss, Peck & Greer
Venture Partners (1971) spun-off in
October 2000
Marquardt (TVI) & John
Johnston (TVI, H&Q) launch August in 1995.
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Some investments 1995 and after
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The funds of founders Mostly web2.0
Web entrepreneurs have set up funds: Pierre Omidyar (eBay), Peter
Thiel and Max Levchin (PayPal), Marc Andreeseen (Netscape)
which in turn invest in web2.0 companies such as Facebook, Twitter,
Slide, Seeismic….
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Super Angels Recycling of old stuff?
Before you had the business angels investing in
the early rounds (up to $1M) and the VCs who
would seldom invest in rounds smaller than $1-
2M. Now the frontier is blurred: you have the
seed VCs (Index Seed being a recent one) and
the Super Angels fighting for the same deals.
More on http://www.startup-book.com/2011/06/22/super-
angels-recycling-of-old-stuff
and http://www.startup-book.com/2010/08/17/super-angels/
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Some historical and economical
perspective
1959-2005
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Some key drivers
1957: some great IPOs: HP, Varian
1958: The SBIC (Small Business Investment Corporation) act provides federal fund matching and will enable the dramatic increase of venture capital
1969-76: Tax Reform acts (as well as 1976) raised tax from 25% to 49% on capital gains, dying up VC after 1969
1974: The oil crisis together with the new ERISA act that mandates criminal penalties for pension fund managers who lose money with high-risk investments nearly stops inv. in venture capital
1979: A new ERISA act which decreases fiduciary responsibility together with a good IPO market in 1980 (Apple, Genentech) creates a new inflow of money
1983: Too much money for two many companies: the Disk Drive companies crash. Venture Capital matures in the 80s. The semiconductor industry competes with Japan and lay-offs. The crisis will end with…
1993: the beginning of the Internet
But what is the real impact?
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The SBIC Ups & Downs
Source: Creating Modern Venture Capital: Institutional Design and Performance in the
Early Years by Caroline Fohlin
1959-1993
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The endowments 1974-…
The 1974 ERISA Act enabled pension funds to put money in venture
capital but what about university endowments?
Managers of endowments followed the “prudent man rule”: consider the
probable income as well as the probable safety.
Walter Cabot, manager of the Harvard Management Company decided in
1977 he could invest in venture capital:
- 2/3 of the 33 endowments he consulted were already making VC
investments
- a condition was to make your homework, i.e. “ check the quality and
credibility” of the funds.
By early 1984, Harvard had committed over $130M to venture capital.
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Median re t urns of vent ure capit a l
-5
0
5
10
15
20
25
30
35
1973 1975 1977 1979 1981 1983 1985 1987 1989
year
The maturity The 1980’s
Source: The Rise and Fall of Venture Capital, Gompers
The late 80s brought maturity, but
was also a big crisis for
technologies. The semiconductor
companies cut their work force
and the technology & VC sectors
suffered until 1993 or so.
0
1
2
3
4
5
6
7
$ B
illio
ns
1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993
Year
Ne w C om m itm e nts to V e ntur e C a pita l Funds in C onsta nt 1 9 9 3
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The Impact of Venture Capital
Source: The Rise and Fall of Venture Capital, Gompers
1993
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The Impact of Venture Capital
Source: The Rise and Fall of Venture Capital, Gompers
1993-2006 Data 1993 Status & Data 2006
Company VC Sales ($M) Jobs Cap. ($M) Status Sales ($M) Jobs Cap. ($M)
Apple Computer Sequoia, A. Rock 7'977 14'910 3'576 19'315 17'787 74'110
Au Bon Pain Angels 123 1'250 223 acquired by Compass Group in 1999
Biogen TA Associates 149 415 1'110 2'442 3'440 16'110
Chiron Burr Egan Deleage 217 2'179 2'171 acquired by Novartis in 2006
Cirrus IVP, NEA 354 1'353 885 647 424 193
CML Group Angels 645 5'608 697 liquidated in 1999
Compaq Computer Sevin Rosen, Mayfield, IVA 7'191 13'010 9'978 acquired by HP in 2002
Conner Peripherals Compaq 2'151 9'097 774 acquired by Seagate in 1996
Cray Computer $8M from misc. investors 352 383 50 bankruptcy in 1995, acquired by SGI
Data General Adler 1'077 6'500 271 acquired by EMC in 1999
Digital Equipment ARD 14'371 94'600 3'223 acquired by Compaq in 1998
Evans & Sutherland Venrock 142 1'100 132 73 268 39
Federal Express Burr Egan Deleage, MPAE 7'808 95'000 4'206 32'294 225'000 33'950
Genentech KP 650 2'510 3'189 9'284 9'500 92'180
Intel A. Rock 8'782 29'500 27'082 35'382 94'100 118'740
Lotus Sevin Rosen 981 4'738 2'705 acquired by IBM in 1995
Micropolis IVA 382 2'298 99 bankruptcy in 1997
Microsoft IVA 3'573 14'430 15'117 44'282 71'000 298'180
Orbital Sciences 190 1'123 315 703 2'600 1'040
Quantum KP 1'167 2'455 695 834 2'320 462
Raychem 1'385 10'772 1'581 acquired by Tyco in 1999
Seagate IVP 3'043 43'000 1'648 9'206 60'000 15'910
Staples 883 7'539 1'063 16'078 36'071 18'760
Starbucks 163 4'585 866 7'786 145'800 26'650
Stratus Computer CRV, IVP 514 2'610 723 acquired by Ascend en 1998
Sun Microsystems KP 4'308 13'300 2'009 13'068 38'000 22'310
Tandem Computer KP, Mayfield, Johnson 2'030 9'963 1'368 acquired by Compaq in 1997
Teledyne A. Rock 2'492 21'000 997 1'433 7'270 1'350
Teradyne Greylock 555 4'500 891 1'376 4'000 2'910
Wellfleet Brentwood, NorthBridge 180 738 784 acquired by Nortel in 1996
Total 73'835 420'466 88'428 194'203 717'580 722'894
Average 4'764 27'127 5'705 12'138 44'849 45'181
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Median I RR ( % )
-30
-20
-10
0
10
20
30
40
50
1985 1987 1989 1991 1993 1995 1997 1999
Year
The Internet bubble
Source: The Venture Capital Industry Report, Dow Jones
The recent numbers may not be accurate as they are too recent;
they however some negative effects of the Internet bubble.
The 90s enthusiasm and 00s crisis Median m ult iples ( 'x ')
1.8
1.61.7
1.9
1.71.6
2.3
2.1
1.6
2
2.2
2.8
1.4
1.1
0.60.7
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
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0
500
1'000
1'500
2'000
2'500
3'000
3'500
4'000
4'500
1971 1976 1981 1986 1991 1996 2001
0
10
20
30
40
50
60
70
80
90
Nasdaq (end year) VC funds ($B)
1
10
100
1'000
10'000
1971 1976 1981 1986 1991 1996 2001
0.01
0.1
1
10
100
Nasdaq (end year) VC funds ($B)
The Nasdaq and the VCs 1971-2006
Natural scale
Log scale
1974: the oil crisis and ERISA act
1990: US recession and
declining IRRs
1984: the HDD crisis
2001: the Internet crash
Source: Compilation HL
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A chronology of funds (1/2)
Fund number and year of creation
Source: Compilation HL
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A chronology of funds (2/2)
Size of funds (in $M)
Source: Compilation HL
Notes
1: fund 2000 back to $471M
2: fund 2001 back to $830M
3: fund 2001 back to $450M
4: fund II (1981) $45M, III (1984) $126M
5: fund 2000 back to $600M
6: fund 2000 down to $650M, then $450M
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TOP US VCs
0
2'000
4'000
6'000
8'000
10'000
12'000
14'000
16'0001
98
6
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
Year
$M
Mohr Davidow
Redpoint
DFJ
Benchmark
USVP
Crosspoint
Brentwood
Accel
Sevin Rosen
Oak
Sierra
NEA
Matrix
CRV
Austin
Sequoia
Onset
Interwest
Menlo
IVP
Battery
Mayfield
KPCB
A subjective “Top VC” list
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And the returns?
Although the data are not so easy to obtain (the numbers below are not fully consistent…), the VC world has generated exceptional returns. The individual success stories are known. Some previous slides give some more numbers. The reader can compare to the typical Wall Street numbers…
Exceptional IRRs Source: Compilation HL
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Exceptional IRRs Source: Compilation HL
VC "Vintage" Size Multiple IRR VC "Vintage" Size Multiple IRR
Fund year ($M) Fund year ($M)
KP 1972 8 31.2 51% Sequoia 1972 7 51%
KPCB II 1980 55 4.3 51% Sequoia II 1974 21 71%
KPCB III 1982 150 1.7 10% Sequoia III 1981 44 1.8 11%
KPCB IV 1986 150 1.7 11% Sequoia IV 1984 90 2.4 18%
KPCB V 1989 150 4.1 36% Sequoia V 1989 63 5.2 40%
KPCB VI 1992 150 3.0 43% Sequoia VI 1992 100 15.5 110%
KPCB VII 1994 225 32.0 122% Sequoia VII 1996 150 16.4 175%
KPCB VIII 1996 299 17.0 286% Sequoia VIII 1998 250 2.5 90%
Mayfield IV 1981 55 2.6 26%
Mayfield V 1983 110 1.3 5%
Mayfield VI 1987 160 3.5 27% NEA V 1990 199 3.8 31%
Mayfield VII 1992 165 1.9 33% NEA VI 1992 230 7.6 66%
Mayfield VIII 1995 185 3.2 63% NEA VII 1996 311 3.5 69%
Mayfield IX 1997 252 4.0 NEA VIII 1998 566 1.2 84%
Battery II 1988 41 4.2 37% Matrix III 1990 80 7.7 75%
Battery III 1994 85 9.7 65% Matrix IV 1995 125 20.0 219%
Battery IV 1997 200 4.5 244% Matrix V 1998 200 3.8 640%
USVP IV 1994 118 5.9 72% DFJ II 1992 20 2.3 31%
USVP V 1996 171 1.6 33%
Accel IV 1993 135 2.9 82% Benchmark I 1995 100 39.3 236%
Accel V 1996 150 14.7 196% Benchmark II 1997 125 2.4 419%
And the returns?
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Israel
1992-2005
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The Israel VC size
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The largest Israel VC funds
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Israel success stories
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More about Israel
More on http://www.startup-book.com/tag/israel/
http://www.startup-book.com/2011/02/05/start-up-nation-israel
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and Europe?
1972-2006
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A list of European funds
Source: Compilation HL
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Timescale
1996-2005 Source: Compilation HL
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Timescale
1996-2005
-
1'000
2'000
3'000
4'000
5'000
6'000
7'000
8'000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
€M
Wellington
Viventures
Ventech
TVM
Sofinnova
Siparex
Quester
Prelude
Polytechnos
Partech
Partcom (Iris)
Nordic VP
Logispring
Kennet
Innovacom
Index
IDG
Holland
Gilde
Galileo
Eqvitec
Ealy bird
DVC
DFJ eplanet
Doughty Hanson
Crescendo
CDC Innovation
Capricorn
Capman
Benchmark
Banexi
Auriga
Atlas
Apax GE
Apax FR
Apax UK
Amadeus
Alta Berkeley
ACT
Accel
3i
Source: Compilation HL
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And a few people
a relatively recent activity
Founded in 1972 by Christian Marbach and Antoine Dupont Fauville
with strong links in the USA: Peter Brooke and Jean Deléage (TA
Associates) will be critical. 22MFF helped by a law on Venture Capital.
The first attempt of Doriot in the UK, Technical Development Corporation, launched in
1962, was sold at a loss to the ancestor of 3i. A second attempt in 1965, European
Enterprises Development (EED), set up in Paris, was more successful despite an
unsupportive environment. The financial uncertainties of mid-70's led it to stop its
activities in 1976. Its example however had led a number of institutions to get interested in
the activity. From 1977, the EEC started to study action plans to finance enterprises, inter
alias high tech start-ups.
http://www.europeanvc.com/history.htm
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And a few people
a relatively recent activity
http://www.europeanvc.com/history.htm
TVM launched
in 1983 with €87M
Sir David Cooksey was the Founder of
Advent Venture Partners in 1981 and was
Chief Executive from 1981 to 1987 and
Chairman from 1987 until his retirement in
2006.
Bryan Wood
Founder 1982
Michiel de Haan
Founder 1980
Vincent Worms and Thomas McKinley
1982
Founded in 1945 by British banks;
the 3i group was created in 1987
when the banks sold their stakes to
a public limited company. A US company created in 1969 by
Alan Patricof which has a
European presence since the 80s
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1997
1998
2001
2000
And a few people
a relatively recent activity
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by the Skype founders by the Alando and Jamba founders
The founders’ fund
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Some European deals
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And recently?
2005...
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Too much or too little money?
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Too much or too little money?
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Silicon Valley leads as ever
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Silicon Valley leads as ever