Shaking the MoneyTree™Q4/Full-Year 2006 Update
P w C
PricewaterhouseCoopers/ PricewaterhouseCoopers/ National Venture Capital Association National Venture Capital Association
MoneyTreeMoneyTree™™ ReportReportbased on data from Thomson Financialbased on data from Thomson Financial
Raleigh, NCRaleigh, NCFebruary 2007February 2007
Page 2PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Today’s program
The MoneyTree Report – Q4 2006 Analysis• presented by Jeff Barber, PricewaterhouseCoopers LLP
Venture Capital Panel• Jason Caplain, Southern Capitol Ventures• Garheng Kong, Intersouth Partners
1)
2)
Question and Answer Session3)
Page 3PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Speaker Bios
Page 4PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Jeff BarberJeff Barber is the managing partner of the PricewaterhouseCoopers Raleigh office. He also serves as the partner-in-charge of the PwC Carolinas Technology Industry Group. In this capacity he leads a team of 30 professionals in providing services and support to over 75 technology-based companies. Jeff has over twenty years of experience serving technology companies, including extensive experience working with clients from the organizational stage through the initial public offering and subsequent expansion.
Jeff spent two years in the PwC National Office in New York City where he worked in the Firm’s Accounting and SEC Group. His responsibilities there included researching accounting issues, writing various PricewaterhouseCoopers publications and assisting the Firm’s national consulting partners in their consultation on client related matters.
Jeff is actively involved in the Triangle area business community. He is currently on the board of directors of the Council for Entrepreneurial Development (“CED”), where he is a past chairman of the board, and the North Carolina Technology Association (“NCTA”), where he has served as Treasurer. In January 2006, Jeff received the NCTA “Volunteer of the Year” award. In June 2000, Jeff received the CED “Outstanding Service” award. Jeff is also actively involved in various civic organizations. He currently serves on the board of directors of the North Carolina Museum of Art Foundation and the Juvenile Diabetes Research Foundation. In the past, he has served as a member of the UNC Accounting Advisory Board and a member of the NCSU College of Management Board of Advisors. In addition, Jeff has served as president of Artspace, Inc., chairman of the board of the Community Learning Centers, Inc., a member of the board of directors of the Greater Raleigh Chamber of Commerce and a member of the board of directors of the United Arts Council. Jeff is a graduate of the Leadership Raleigh and Leadership Lexington (KY) training programs. He holds a B.S. in Accounting from the University of Kentucky.
Page 5PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Jason Caplain
Jason is a general partner and co-founder of Southern Capitol Ventures, a Raleigh based venture capital firm. SCV focuses on companies in the Southeast and Mid-Atlantic with investments including ChannelAdvisor, Motricity, Art.com and Batanga. Previously, Jason spent two years at Red Hat where he directed the company's global budgeting process, provided financial analysis for the successful IPO in August 1999 and performed due diligence on many of the company's acquisitions. Prior to Red Hat, Jason was a partner at Harrison Hurley and Company, an investment banking and business-consulting firm headquartered in Providence, RI.
Jason was on the board of directors of Synthematix which was acquired by SymyxTechnologies (NASDAQ:SMMX) and a board observer for Batanga which merged withPlaneta Networks. He is currently on the boards of eMinor and the Council for Entrepreneurial Development which is the largest entrepreneurial support organization in the nation. While at Southern Capitol Ventures, he has also served as interim CFO for one of its portfolio companies.
Jason writes a monthly column for TechJournal South, has a blog called SoutheastVC and he has received the Triangle Business Journal's "40 under 40" leadership award. Jason received his BS in Finance from Bentley College.
Page 6PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Garheng KongSince joining Intersouth Partners in 2000, Garheng has focused primarily on Intersouth’s life science portfolio. His role at Intersouth involves all aspects of venture investing. He has full-cycle investing experience, successfully sourcing, syndicating, managing and exiting investments.
Prior to joining Intersouth, Garheng worked as a clinical scientist at Glaxo Wellcome. While completing his Ph.D., he worked with the Duke University Office of Science and Technology to help commercialize early stage technology. He has performed research in the fields of drug delivery, cancer therapy, bioremediation and self-assembled monolayers. He has published ten peer reviewed scientific articles and numerous abstracts, and has presented at international scientific conferences.
Garheng serves on the board of directors of the North Carolina Medical Device Organization and the SEBIO organization, and has served on the Duke University Medical Center Institutional Review Board. He graduated at the top of his class from Duke’s School of Medicine and received his Ph.D. in Biomedical Engineering from Duke University. He received his M.B.A. from Duke’s Fuqua School of Business, where he also graduated at the top of his class. Dr. Kong holds a B.S. in Chemical Engineering and a B.S. in Biological Sciences from Stanford University.
Page 7PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
About The Report
• PricewaterhouseCoopers and the National Venture Capital Association produce the MoneyTree ™ Report based on data from Thomson Financial
• ‘Core’ measure of equity investments in venture-backed companies in the United States
• Companies have received at least one round of financing involving a professional VC firm or equivalent
• Captures: tranches, not term sheets, foreign VCs, qualified private placement
• Excludes: debt, bridge loans, recaps, roll-ups, IPOs, PIPEs, leasing, etc.
• MoneyTree™ Report in its 12th year
• Results online at www.pwcmoneytree.com, www.nvca.org, www.venturexpert.com
Page 8PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
The National Picture
Historical Trends
Page 9PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
MoneyTree Total Investments: Q1 1998 – Q4 2006
($ in billions)
$4.1
$6.6
$28.
4
$12.
8
$6.8
$4.3 $5
.2
$5.1 $6
.3
$5.7
$11.
0
$28.
0
$11.
4
$6.0
$5.0 $6
.3
$6.4
$6.9
$5.3
$13.
2
$26.
4
$8.3
$4.5
$4.8
$4.8 $5
.6 $6.6
$6.0
$23.
4
$22.
2
$8.1
$4.5 $5
.6
$5.8
$5.7
$5.7
$0.0
$8.0
$16.0
$24.0
$32.0
1998 1999 2000 2001 2002 2003 2004 2005 2006
1998 1999 2000 2001 2002 2003 2004 2005 2006
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
771 798812719
Q1 Q2
839 913
Q3
678
# ofDeals
815
Q4
862 802840698
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
704 7717326887216878448319791001122412891746193121052131186714231303916990910901846
Page 10PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
MoneyTree Total Investments: 1980 – 2006
($ in billions)
$0.6
$1.2
$1.6
$3.0
$3.0
$2.8
$3.1
$3.3
$3.3
$3.3
$2.8
$2.2
$3.6
$3.7
$4.1 $8
.1 $11.
3
$14.
9
$21.
1
$54.
2
$105
.0
$40.
7
$21.
8
$19.
7
$22.
1
$22.
8
$25.
5
$0
$20
$40
$60
$80
$100
$120
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Annual Venture Capital Investments 1980 to 2006
Page 11PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Investments by Region: Q4 2006(dollars in millions)
HA W AII
MA UI
KAHOOLA WE
LANAI
MOLOKAI
O AHU
KAU AI
NIIHA U
Texas$ 169.430 Deals
Silicon Valley$2,159.1
260 Deals
New England$695.2
96 Deals
Midwest$ 233.233 Deals
South Central$17.74 Deals
Northwest$279.341 Deals
Sacramento/N. CA$7.0
2 Deals
San Diego$380.239 Deals
Southeast$330.350 Deals
Southwest$50.2
19 Deals
LA/Orange County$378.9
53 Deals
DC/Metroplex$137.8
48 Deals
NY Metro$550.2
56 Deals
Philadelphia Metro$124.5
22 Deals
North Central$93.4
18 Deals
Q4 2006 Total Investments - $5,722M in 802 deals
Colorado$65.1
16 Deals
AK/HI/PR$12.2
7 Deals
Upstate NY$35.7
6 Deals
**Undisclosed$2.32 deals
Page 12PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Investments by Region: Q4 2006($ in millions)
$2.3
$7.0
$50.2
$65.1
$93.4
$124.5
$137.8
$169.4
$233.2
$279.3
$330.3
$378.9
$380.2
$550.2
$2,159.1
$695.2
$35.7
$17.7
$12.2
$0 $500 $1,000 $1,500 $2,000 $2,500
Unknown
Sacramento/N.Cal
AK/HI/PR
South Central
Upstate NY
SouthWest
Colorado
North Central
Philadelphia Metro
DC/Metroplex
Texas
Midwest
Northwest
Southeast
LA/Orange County
San Diego
NY Metro
New England
Silicon Valley
Region# of
Deals% $ Change from Q3 ‘06
Silicon ValleyNew EnglandNY Metro
San Diego
LA/Orange CountySoutheastNorthwestMidwestTexasDC/MetroplexPhiladelphia MetroNorth CentralColoradoSouth WestUpstate NYSouth Central 4 68.9%
Sacramento/N.Cal 2 -64.9%AK/HI/PR
Undisclosed/Other
Total 802 -13.4%
260 -2.4%96 6.3%56 20.3%
39 26.5%
53 -31.2%
41 41.2%33 47.1%30 -69.0%48 -60.2%22 -39.2%18 -34.5%16 -70.8%19 -76.5%6 1.9%
7 NM
2 NM
50 NM
Q4 2006 Total: $ 5,722 (NM = Not Meaningful)
Page 13PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Investments by Region: Full-Year 2006(dollars in millions)
HA W AII
MA UI
KAHOOLA WE
LANAI
MOLOKAI
O AHU
KAU AI
NIIHA U
Texas$ 1,384.6176 Deals
Silicon Valley$9,156.9
1,108 Deals
New England$3,036.4
413 Deals
Midwest$ 978.1
160 Deals
South Central$77.5
17 Deals
Northwest$1,156.7166 Deals
Sacramento/N. CA$35.17 Deals
San Diego$1,229.9125 Deals
Southeast$1,211.9216 Deals
Southwest$468.5
76 Deals
LA/Orange County$1,820.5205 Deals
DC/Metroplex$1,125.3204 Deals
NY Metro$1,945.0
249 Deals
Philadelphia Metro$690.6
96 Deals
North Central$386.9
59 Deals
Full-Year 2006 Total Investments - $25,505M in 3,416 deals
Colorado$621.892 Deals
AK/HI/PR$31.4
14 Deals
Upstate NY$142.1
30 Deals
*Undisclosed$5.63 deals
PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Investments by Region Full-Year 2006
Full-Year 2006 Total: $25,505
$9,156.9
$5.6
$1,229.9
$1,211.9
$1,156.7
$1,125.3
$978.1
$690.6
$621.8
$468.5
$386.9
$142.1
$77.5
$35.1
$31.4
$1,945.0
$1,820.5
$1,384.6
$3,036.4
$0 $2,000 $4,000 $6,000 $8,000 $10,000
Undisclosed
AK/HI/PR
Sacramento/N.Cal
South Central
Upstate NY
North Central
SouthWest
Colorado
Philadelphia Metro
Midwest
DC/Metroplex
Northwest
Southeast
San Diego
Texas
LA/Orange County
NY Metro
New England
Silicon Valley
(NM=Not Meaningful)
($ in millions)
Region# of
Deals% Change from 2005
Silicon Valley 1,108 12.8%
New England 413 11.0%
NY Metro 249 NM
LA/Orange County 205 24.8%
Texas 176 28.1%
San Diego 125 16.5%
Southeast 216 5.2%
Northwest 166 15.3%
DC/Metroplex 204 12.7%
Midwest 160 17.4%
Philadelphia Metro 96 20.3%
Colorado 92 -4.9%
Southwest 76 -23.3%
North Central 59 25.3%
Upstate NY 30 142.4%
South Central 17 37.9%
Sacramento/N.Cal 7 -54.1%
AK/HI/PR 14 80.9%
Undisclosed 3 NM
2005 Total 3,416 12.0%
Page 15PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Q4 2006 Top 10 States Garnering Venture FundsQ4 2006 Top 10 States Garnering Venture Funds
State Deals Investment Amount
1. California 354 $ 2,295,154,700
2. Massachusetts 86 $ 659,710,900
3. New York 43 $ 436,818,500
4. Washington 35 $ 260,468,200
5. New Jersey 23 $ 176,410,300
6. Texas 30 $ 169,391,400
7. North Carolina 14 $ 118,846,700
8. Pennsylvania 21 $ 114,639,300
9. Georgia 17 $ 113,371,700
10. Illinois 14 $ 94,729,200
Page 16PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Full Year 2006 Top 10 States Garnering Venture FundsFull Year 2006 Top 10 States Garnering Venture Funds
State Deals Investment Amount
1. California 1,445 $ 12,242,425,300
2. Massachusetts 368 $ 2,819,468,800
3. Texas 176 $ 1,384,577,200
4. New York 190 $ 1,256,823,700
5. Washington 135 $ 1,012,071,100
6. Pennsylvania 102 $ 777,783,000
7. New Jersey 84 $ 771,270,600
8. Maryland 108 $ 636,215,300
9. Colorado 92 $ 621,816,300
10. North Carolina 65 $ 471,606,600
PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Investments by Industry Full-Year 2006($ in millions)
Visit www.pwcmoneytree.comfor Industry Definitions
$26.1
$2,612.3
$1,986.0
$1,765.8
$1,622.4
$1,082.7
$999.7
$681.1
$653.1
$510.7
$424.3
$404.9
$393.5
$207.2
$4,970.3
$4,510.7
$2,654.0
$0 $2,000 $4,000 $6,000
Other
Retailing/Distribution
Healthcare Services
Computers and Peripherals
Financial Services
Consumer Products and Services
Business Products and Services
Electronics/Instrumentation
IT Services
Networking and Equipment
Media and Entertainment
Industrial/Energy
Semiconductors
Telecommunications
Medical Devices and Equipment
Biotechnology
Software
Full-Year 2006 Totals: $25,505
Industry# of
Deals% $ Change from 2005
Software 865 3.2%
Biotechnology 423 16.8%Medical Device & Equip. 308 23.6%Telecommunications 294 4.7%
Semiconductors 219 5.5%
Industrial/Energy 183 107.6%
Media & Entertainment 299 54.3%
Networking and Equipment 134 -25.9%
IT Services 152 9.9%
Electronics/Instrumentation 89 76.2%
Business Prod & Services 116 37.8%
Consumer Products & Srvcs 90 40.1%
Financial Services 74 -46.7%
Computers & Peripherals 64 -19.3%
Healthcare Services 58 -13.5%
Retailing/Distribution 39 -17.7%
Other 9 -58.0%
TOTAL 3,416 12.0%
Page 18PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Investments by Q4 ’06 Top Five Industries –Quarterly Percent of Total U.S. Investments
Top 5 Industries – Q4 ‘04 to Q4 ‘05(% of Total Dollars)
19.8
%
17.6
%
11.7
%
12.7
%
7.9%
21.7
%
14.3
%
11.3
%
9.3%
7.7%
19.8
%
19.5
%
8.3% 9.
3%
8.4%
16.9
%
17.7
%
10.3
%
13.8
%
7.6%
19.7
%
19.2
%
12.2
%
8.2%
7.3%
0%
5%
10%
15%
20%
25%
30%
Softw are Biotechnology Medical Devices andEquipment
Telecommunications Semiconductor
Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06
Page 19PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Life Science Investments –Percent of Total U.S. Investments Life Science Sectors – Q4 ’05 to Q4 ‘06
(% of Total Dollars)
17.6
%
11.7
%
29.3
%
14.3
%
11.3
%
25.6
%
19.5
%
8.3%
27.8
%
17.7
%
10.3
%
28.0
%
19.2
%
12.2
%
31.4
%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Biotechnology Medical Devices and Equipment Life Sciences
Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06
PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Investments by Stage of Development - Full-Year 2006
($ in millions)
$1,159.1
$11,207.9
$9,313.2
$3,824.7
$0 $3,000 $6,000 $9,000 $12,000
Startup/Seed
Early Stage
Later Stage
Expansion Stage
Full-Year 2006 Totals: $25,505
Stage of Development# of
Deals
% Change in $ Amount from
2005
Expansion Stage 1,283 29.9%
Later Stage 957 -3.6%
Early Stage 864 3.7%
Startup/Seed 312 45.5
Total 3,416 12.0%
PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Investments by Sequence of Financing - Full-Year 2006
($ in millions)
$3,948.5
$7,069.3
$5,788.5
$4,572.9
$4,125.6
$0 $3,500 $7,000
Fourth
Third
Second
First
5th & Beyond
Full-Year 2006 Totals: $25,505
FinancingSequence
# of Deals
% Change in$ Amount from
2005
Fifth & Beyond 802 18.4%
First 1,093 3.52%
Second 684 6.78%
Third 464 4.3%
Fourth 373 33.2%
Total 3,416 12%
Page 22PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
First Sequence Financing –Investment Amount
($ in billions)
$8.8
$2.9
$1.3
$0.7 $1.0 $1
.4
$1.3$2
.0
$1.2
$1.0 $1.3
$1.5
$1.6
$6.3
$1.3
$1.0
$1.0
$1.2
$1.2 $1
.6
$5.4
$1.3
$0.8 $1.1
$1.2
$1.4
$1.3
$8.5
$0$1$2$3$4$5$6$7$8$9
$10
2000 2001 2002 2003 2004 2005 2006
Q1 Q2 Q3 Q4
Page 23PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Stage of Development –Quarterly Percent of Total First Sequence Dollars
(% of first sequence dollars)
6.6%
45.3
%
34.1
%
14.1
%
16.3
%
36.7
%
17.0
%
29.8
%
41.4
%
11.8
%19.2
%
34.1
%
34.0
%
12.6
%18.7
%
49.1
%
23.3
%
8.9%
14.2
%
32.8
%
0%
10%
20%
30%
40%
50%
60%
70%
Startup/Seed Early Stage Expansion Later Stage
Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06
Page 24PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
First Sequence Financing –Percent of Total U.S. Investments
30.1%
23.8%24.4%22.4%
17.6%15.2%15.9%
19.6%20.4%22.3%
17.8%17.1%20.6%21.5%20.3%20.0%19.9%
25.4%
21.1%
28.4%
23.4%22.1%24.9%
22.4%24.2%23.4%
44.9%41.5%
38.1%
29.9%26.9%26.5%
24.2%27.0%28.4%
26.8%25.8%24.6%25.4%25.3%27.4%26.9%
29.0%32.3%
30.4%31.8%29.7%
31.8%34.6% 33.3%34.0%
30.5%
20.8%
31.0% 29.9%
44.9%
0%5%
10%15%20%25%30%35%40%45%50%55%60%
Q1
2000
Q2
2000
Q3
2000
Q4
2000
Q1
2001
Q2
2001
Q3
2001
Q4
2001
Q1
2002
Q2
2002
Q3
2002
Q4
2002
Q1
2003
Q2
2003
Q3
2003
Q4
2003
Q1
2004
Q2
2004
Q3
2004
Q4
2004
Q1
2005
Q2
2005
Q3
2005
Q4
2005
Q1
2006
Q2
2006
Q3
2006
Q4
2006
% of Total Dollars % of Total Deals
Page 25PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Median Deal Size vs. Mean Deal Size –Quarterly Total U.S. Investments
$6.0
$7.5$6.8 $7.0 $6.7
$5.0 $5.0$4.4
$5.0 $5.0$4.0 $4.2
$3.7 $4.0 $4.1 $4.3$5.0 $5.0 $5.0 $5.0 $5.0 $5.0 $5.0
$4.1$5.0 $5.0 $5.0
$4.5$4.0
$12.6$13.6 $13.4
$14.1
$8.5 $8.6
$7.4$6.5
$7.1 $7.2$7.8 $7.4 $7.6 $7.4
$8.1 $7.7 $7.4$7.9 $8.1 $8.0
$7.5
$9.4
$13.2
$10.0
$8.7
$6.8 $6.6$7.6 $7.8
$0
$2
$4
$6
$8
$10
$12
$14
Q4
1999
Q1
2000
Q2
2000
Q3
2000
Q4
2000
Q1
2001
Q2
2001
Q3
2001
Q4
2001
Q1
2002
Q2
2002
Q3
2002
Q4
2002
Q1
2003
Q2
2003
Q3
2003
Q4
2003
Q1
2004
Q2
2004
Q3
2004
Q4
2004
Q1
2005
Q2
2005
Q3
2005
Q4
2005
Q1
2006
Q2
2006
Q3
2006
Q4
2006
Median Deal Size Mean Deal Size
Page 26PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Post-Money Valuations – Early Stage Companies 1995 to 2006
12 Month Average
$12.
8
$17.
9
$17.
7
$26.
1
$19.
4
$10.
1
$8.8
$9.8
$6.8
$6.5
$5.8
$5.4
$8.6
$10.
2
$7.8
$5.4
$5.6
$8.7
$6.4
$4.8
$0
$5
$10
$15
$20
$25
$30
$35
$40
Q4 97 Q4 98 Q4 99 Q4 00 Q4 01 Q4 02 Q4 03 Q4 04 Q4 05 Q3 06
Pre-money Valuation Investment Amount
Q4Year
1997 1998 1999 2000 2001 2002 2003 2004 2005
$15.53 $15.51
Q3 2006
$14.17 $12.17$15.41$27.92$36.22$25.45$24.30$17.55Total
Page 27PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Post-Money Valuations – Expansion Stage Companies 1995 to 2006
$30.
8
$34.
3
$62.
9
$87.
3
$48.
5
$33.
4
$32.
3
$49.
6
$47.
2
$54.
0
$12.
0
$11.
4
$13.
8
$21.
7
$16.
5
$12.
5
$13.
6
$14.
3
$8.8
$8.1
-$10
$10
$30
$50
$70
$90
$110
Q4 97 Q4 98 Q4 99 Q4 00 Q4 01 Q4 02 Q4 03 Q4 04 Q4 05 Q3 06
Pre-money Valuation Investment Amount
12 Month Average
Q4Year
1997 1998 1999 2000 2001 2002 2003 2004 2005
$61.66 $61.50
Q3 2006
$43.60 $67.56$45.89$62.27$109.00$79.36$43.02$38.88Total
Page 28PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Post-Money Valuations – Later Stage Companies 1995 to 2006
12 Month Average
$60.
8
$55.
3
$105
.3
$130
.8
$78.
4
$49.
0
$54.
7
$54.
3
$79.
4
$95.
5
$16.
6
$14.
3
$20.
5
$28.
9
$20.
6
$16.
8
$12.
8
$15.
3
$10.
6
$9.8
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
Q4 97 Q4 98 Q4 99 Q4 00 Q4 01 Q4 02 Q4 03 Q4 04 Q4 05 Q3 06
Pre-money Valuation Investment Amount
Q4Year
1997 1998 1999 2000 2001 2002 2003 2004 2005
$70.85 $94.65
Q3 2006
$68.96 $108.32$65.81$98.87$159.72$125.87$65.97$70.58Total
Page 29PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Full Year 2006 – Most Active Venture InvestorsVenture Capital Firm Location Total Deals
Draper Fisher Jurvetson Menlo Park, CA 76
Intel Capital Santa Clara, CA 74
New Enterprise Associates Baltimore, MD 71
Polaris Venture Partners Waltham, MA 63
Kleiner Perkins Caufield & Byers Menlo Park, CA 59
U.S. Venture Partners Menlo Park, CA 59
Sequoia Capital Menlo Park, CA 54
Austin Ventures L.P. Austin, TX 46
Oak Investment Partners Westport, CT 51
Venrock Associates New York, NY 50
Page 30PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Thomson FinancialU.S. Private Equity Performance Index (PEPI)(Investment Horizon Performance as of 9/30/2006)
Fund Type 1 Year 3 Year 5 Year 10 Year 20 Year
38.3 20.514.613.916.513.28.4
14.0
NASDAQ 5.5 7.8 8.7 7.1 11.4S&P 500 9.7 9.9 5.2 7.5 9.7
16.89.4
20.58.85.9
11.2
-5.41.82.7
-1.09.22.95.9
5.512.810.59.4
15.64.7
13.2
Early/Seed VC 2.9Balanced VC 10.7Later Stage VC 27.8All Venture 10.8All Buyouts 23.6Mezzanine -8.1All Private Equity 19.0
Source: Thomson Financial/National Venture Capital Association
*he Private Equity Performance Index is based on the latest quarterly statistics from Thomson Financials’ Private Equity Performance Database analyzing the cashflows and returns for over 1860 US venture capital and private equity partnerships with a capitalization of $678 billion. Sources are financial documents and schedules from Limited Partners investors and General Partners. All returns are calculated by Thomson Financial from the underlying financial cashflows. Returns are net to investors after management fees and carried interest. Buyout funds sizes are defined as the following: Small: 0-250 $Mil, Medium: 250-500 $Mil, Large: 500-1000 $Mil, Mega: 1 Bil +
Page 31PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Analysis of Venture-Backed IPO and M&A Activity
Date Number of IPOs**
Total Venture-Backed Offering Size ($M)
Average Venture-Backed Offering Size ($M)
Number of Venture-backed M&A deals
Average M&A deal size***
2003 29 2,022.7 69.8 291 62.8
2005 Q1 10 720.7 72.1 82 94.9
2005 Q2 10 714.1 71.4 80 133.1
2005 Q3 19 1,458.1 76.7 98 93.1
2005 Q4 17 1,568.1 92.4 87 65.7
2005 56 4,461.0 79.7 347 95.8
2006 Q1 10 540.8 54.1 104 112.2
2006 Q4 21 1,835.1 87.4 56 165.3
2006 58 5,321.1 91.7 335 113.8
2004 93 11,014.9 118.4 339 83.0
2006 Q2 19 20,11.0 105.8 92 101.3
2006 Q3 8 943.2 116.8 83 96.8
* Q4 2006 M&A data, current as of January 2, 2007, is preliminary and subject to change** Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges, regardless of domicile***Only accounts for deals with disclosed valuesSource: Thomson Financial & National Venture Capital Association
Page 32PricewaterhouseCoopers/National Venture Capital Association MoneyTree ™ ReportBased on data from Thomson Financial
Venture Capital and LBO/Mezzanine Fundraising*Venture Capital Buyouts & Mezzanine**
Number of Funds
VC Raised ($M)
Number of Funds
Buyout & Mezzanine ($M)
86 24,831.42003 146 10,707.8 91 28,952.82004 203 18,557.1 139 51,236.42005 214 28,001.8 178 96,087.42006 200 28,596.5 138 102,940.7
Q3 ’06 66 5,432.7 35 23,172.1
Quarter
Q4 ’05 76 9,248.1 52 32,902.0
Q2 ’06 66 13,817.3 44 35,999.8
Q4 ‘05 37 2,830.2 39 17,829.7
Q1 ’06 68 6,516.3 49
2002 172
25,939.1
3,820.4
Year
*These figures take into account the subtractive effort of downsized funds** This category includes LBO, Mezzanine, Turnaround and Recapitalization focused funds
Source: Thomson Financial & National Venture Capital Association
Page 33PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
North Carolina Picture
Historical Trends
Page 34PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
MoneyTree Total North Carolina InvestmentsMoneyTree Total North Carolina Investments1999 1999 –– Q4 2006Q4 2006
1999 2000 2001 2002 2003
# of Deals
2004 2005 2006
$77
$196
$70
$431$408
$625
$497
$224
$119$118$83
$144
$84$119
$150$175
$97
$29
$114
$56
$108
$79$101$87
$158
$304
$118
$82$140
$166
$56
$127
$0
$100
$200
$300
$400
$500
$600
$700
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
45 42 39 28 13 1915 25 19 40 35 31 24 23 15 20 23 22 20 14 9 15 17 14 18 1114 11 19 18
($ in millions)
14 14
Page 35PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
$323$472
$774
$591$441
$352
$556
$1,834
1.42%
1.75%
2.55%
1.94%
1.85%1.79%
1.46%
1.45%
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
1999 2000 2001 2002 2003 2004 2005 20060%
1%
2%
3%
Total NC Investments NC % of U.S. Total Amount
($ in millions)
# of Deals
104 156 93 85 5474 55
MoneyTree Total North Carolina Investments MoneyTree Total North Carolina Investments ––1999 1999 –– 20062006
65
Page 36PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
5565
93
54
7485
156
1041.7%
1.9%2.6%
1.8%
2.1%
2.0%2.8%
1.9%
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
1999 2000 2001 2002 2003 2004 2005 20060%
1%
2%
3%
Total # NC Deals NC % of U.S. Total DealsAmount Invested
(in millions)$774 $1,834 $591 $556 $352 $472$323 $441
MoneyTree Total North Carolina DealsMoneyTree Total North Carolina Deals––1999 1999 –– 20062006
Page 37PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
$3.0
$6.0
$8.0
$14.6
$18.5
$21.0
$24.0
$26.6
$32.2
$41.0
$70.1
$101.1
$102.4
$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110
Other
Business Products & Svcs
Industrial/Energy
Electronics/Instrumentation
Consumer Prods & Svcs
Media & Entertainment
Networking & Equipment
Software
Semiconductors
Financial Services
Healthcare Services
Medical Devices & Equip
Telecommunications
Biotechnology
Total Deals2006
% Change in $ Amount from
2005($ in millions)
6
2
1
Total North Carolina Investments by Industry Total North Carolina Investments by Industry ––Full Year 2006Full Year 2006
2006 Total: $471.6
10
3
4
1
$2.6
1
2
11
3
3
2
16
136%
(19%)
100%
1%
64%
73%
(30%)
(5%)
(19%)
3%
2375%
974%
100%
(43%)
Page 38PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Total North Carolina Amount
$471.6 million
Total U.S. Amount $25.5 billion
18%
7%
20% 6%
10%
8%
10%
21%
Software$5.0
Industrial/Energy
$1.8
Others$5.5
Telecom$2.6
Medical Devices& Equipment
$2.6Media &
Entertainment$1.6
16%
21%5%
15%
9%
7%
21%
6%
Medical Devices & Equipment
$70.1
Healthcare Services
$41.0
Others$74.3
Financial Services$32.2
Biotechnology$102.4
Software$23.9
Telecommunications101.1
(in billions)(in millions)
Biotechnology$4.5
Total North Carolina vs. U.S. Investments by Industry Total North Carolina vs. U.S. Investments by Industry –– Full Year 2006Full Year 2006
Semiconductors$26.6
Semiconductors$1.9
Page 39PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
$112
$141
$191
$118
$160
$227
$103 $102
13.3%
5.0%3.2% 2.7%4.3%4.9% 5.3% 5.0%
12.4%
34.7%
33.6%
23.8%
43.2%
21.7%
28.7%
$0
$50
$100
$150
$200
$250
1999 2000 2001 2002 2003 2004 2005 20060%
10%
20%
30%
40%
50%
Total # NC Deals % of Total U.S. Investment in Biotech % of Total NC Investments
($ in millions)
Biotechnology Investments in NC vs. U.S.Biotechnology Investments in NC vs. U.S.1999 1999 –– 20062006
15 21 17 16 16 1619 17# of Deals
2.3%
Page 40PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
$155
$23$43
$87
$327
$151
$541.7%
19.5%
0.5%1.0% 1.1%1.5%1.5% 1.4%
26.3%
5.3%
12.3%
16.9%15.7%
5.1%
17.8%
$0
$50
$100
$150
$200
$250
$300
$350
1999 2000 2001 2002 2003 2004 2005 20060%
10%
20%
30%
Total # NC Deals % of Total U.S. Investment in Software % of Total NC Investments
($ in millions)
Software Investments in NC vs. U.S.Software Investments in NC vs. U.S.1999 1999 –– 20062006
27 38 27 25 21 1118 8# of Deals
.6%$24
Page 41PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Average Deal Size Average Deal Size –– NC vs. U.S.NC vs. U.S.1999 1999 –– 20062006
$7.3 $7.5$7.3$6.8$7.1
$9.1
$13.3
$9.8
$7.2$8.2
$5.8$4.8
$6.5$6.4
$11.7
$7.4
$0
$5
$10
$15
1999 2000 2001 2002 2003 2004 2005 2006
U.S. Average Deal Size NC Average Deal Size
($ in millions)
Page 42PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
AmountIndustry
AGDATA, Inc. Software undisclosed
Affinergy, Inc. Biotechnology $ 3,000,000
Amphora Discovery Corporation Biotechnology $ 4,371,200
Bright View Technologies, Inc. Media & Entertainment $ 7,500,200
Centice Biotechnology $ 500,000
Chorus Systems, Inc. Software $ 9,000,000
DARA Biosciences, Inc. Biotechnology $ 10,256,000
Hospital Partners of America, Inc. Healthcare Services $ 25,000,000
Immaculate Baking Company Retailing/Distribution $ 2,000,000
Integrian, Inc. Telecommunications $ 18,000,000
Metabolon, Inc. Biotechnology $ 8,000,000
Motricity Telecommunications $ 3,000,000
Company Name
North Carolina Companies Funded in Q1 2006North Carolina Companies Funded in Q1 2006
Page 43PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Company Name AmountIndustry
North Carolina Companies Funded in Q1 2006North Carolina Companies Funded in Q1 2006
(continued)
NContact Surgical, Inc. Medical Devices & Equipment $ 3,000,000
Proventys, Inc. Software $ 1,000,000
Tranzyme Pharma, Inc. Biotechnology $ 10,000,000
VMI, LLC Medical Devices & Equipment $ 2,500,000
Visitar, Inc. Software $ 1,285,000
Ziptronix, Inc. Semiconductors $ 3,100,000
CONFIDENTIAL Financial Services $ 6,714,000
$ 118,226,400
Page 44PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Company Name AmountIndustry
Alveolus, Inc. Medical Devices & Equipment $ 15,000,300
Batanga.com Media & Entertainment $ 5,000,000
Bloodhound, Inc. Software $ 1,000,000
CeNeRx BioPharma, Inc. Biotechnology $ 1,600,000
ChannelAdvisor Corporation Business Products & Services $ 2,999,900
Clinipace, Inc. Software $ 580,000
Hatteras Networks, Inc. Networking & Equipment $ 21,000,100
HyperBranch Medical Technology, Inc. Medical Devices & Equipment $ 500,000
Integrian, Inc. Telecommunications $ 5,120,000
Intervolve, Inc. Software $ 2,000,000
Liquidia Technologies Industrial/Energy $ 6,000,000
Company Name
North Carolina Companies Funded in Q2 2006North Carolina Companies Funded in Q2 2006
Page 45PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Company Name AmountIndustry
North Carolina Companies Funded in Q2 2006North Carolina Companies Funded in Q2 2006
(continued)
Motricity, Inc. Telecommunications $ 37,000,000
Nextreme Thermal Solutions, Inc. Electronics/Instrumentation $ 8,075,000
Nitronex Corporation Semiconductors $ 22,000,000
Overture Networks, Inc. Telecommunications $ 7,500,000
Primo Water Corporation Consumer Products and Services $ 13,160,000
StrikeIron, Inc. IT Services $ 640,000
Visitar, Inc. Software $ 1,317,000
$ 150,492,300
Page 46PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
AmountIndustry
Amphora Discovery Corporation Biotechnology $ 123,000
CareAnyware, Inc. Software $ 400,000
Cempra Pharmaceuticals, Inc. Biotechnology $ 14,000,000
eMinor, Inc. Media & Entertainment $ 1,950,000
HexaTech, Inc. Semiconductors $ 1,475,000
HyperBranch Medical Technology, Inc. Medical Devices & Equipment $ 1,000,000
Inlet Technologies, Inc. Media & Entertainment $ 4,400,000
LipoScience, Inc. Medical Devices & Equipment $ 13,000,000
nContact Surgical, Inc. Medical Devices & Equipment $ 7,500,000
ParinGenix, Inc. Biotechnology $ 20,400,200
Phase Bioscience, Inc. Biotechnology $ 293,000
RadarFind Corporation Medical Devices & Equipment $ 500,000
Sicel Technologies, Inc. Biotechnology $ 12,000,000
CONFIDENTIAL Financial Services $ 7,000,000
$ 84,041,200
Company Name
North Carolina Companies Funded in Q3 2006North Carolina Companies Funded in Q3 2006
Page 47PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
AmountIndustry
Aldagen, Inc. Biotechnology $ 14,299,600
Amphora Discovery Corporation Biotechnology $ 1,307,000
Bariatric Partners, Inc. Medical Devices & Equipment $ 12,000,000
Chorus Systems, Inc. Software $ 33,000
CipherOptics, Inc. Networking & Equipment $ undisclosed
Hospital Partners of America, Inc. Healthcare Services $ 5,000,000
Kolis Scientific, Inc. Medical Devices & Equipment $ 15,075,000
Motricity, Inc. Telecommunications $ 30,499,200
Nascent Pharmaceuticals, Inc. Biotechnology $ 500,000
NewHope Bariatrics, Inc. Healthcare Services $ 11,000,000
ParinGenix, Inc. Biotechnology $ 1,783,000
Primo Water Corporation Consumer Products & Services $ 1,500,000
RPath, Inc. Software $ 7,350,000
CONFIDENTIAL Financial Services $ 18,499,900
$ 118,846,700
Company Name
North Carolina Companies Funded in Q4 2006North Carolina Companies Funded in Q4 2006
Page 48PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
VC Funds Active in North CarolinaBancAmerica Capital Investors
BB&T Capital Partners
CapitalSouth Partners LLC
Carolina Financial Group
Carousel Capital Partners
Centura SBIC Inc.
Core Capital
Fairview Capital LLC
First Union Ventures Group
Franklin Street Partners
Frontier Capital LLC
Gardiner Capital
Glenwood Venture Partners
Golden Pine Ventures
Grotech Capital Group
Halifax Group
Hatteras BioCapital
H.I.G. Ventures
Intersouth Partners
Kodiak Venture Partners
Lovett Miller & Company, Inc.
Massey Burch
NC IDEA
New Enterprise Associates
Noro-Moseley Partners
Novak Biddle Venture Partners
Pappas Ventures
Piedmont Angel Network
Remington Capital Partners
Research Triangle Ventures
River Cities Capital Funds
SJF Ventures
Southern Capitol Ventures
Southeast Interactive Technology Funds
The Atlantis Group
The North Carolina Enterprise Fund
The Aurora Funds
The Trelys Funds
TriState Investment Group
Wachovia Capital Partners
Wakefield Group
Venture First Associates
Page 49PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
Entrepreneurs and Venture Capital OnEntrepreneurs and Venture Capital On--Line Resource ListLine Resource Listwww.pwc.com - The PricewaterhouseCoopers Global website.
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www.barometersurveys.com - PricewaterhouseCoopers’ Trendsetter and Technology Barometers site – result & analysis of the quarterly survey of fast-growth and large company CEO’s.
www.cednc.org - The Council for Entrepreneurial Development
www.nc-tech.org - North Carolina Technologies Association
Page 50PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ ReportBased on data from Thomson Financial
For more information, contact:
Jeff Barberor
Peter Coode
Carolinas Technology Industry GroupPhone 919 755-3000
[email protected]@us.pwc.com