PREQIN AND NEVCA UPDATE: NEW ENGLAND IN H1 2018

In association with PREQIN AND NEVCA UPDATE: NEW ENGLAND VENTURE CAPITAL IN H1 2018 FOREWORD

he New England Venture Capital Association (NEVCA) is pleased to share this first-half overview of New England’s venture capital Tactivity, the second instalment in our partnership with leading industry data and insights provider Preqin.

Given the recent news that the region’s venture capital investment activity is on pace to surpass New York’s for the first time since 2012, there is no better time to dive into the data from a fund perspective. With this report, we offer multi-year comparisons of fundraising activity, investment focus and performance – as well as deeper dives into activity in specific sectors.

Below are some highlights to whet your whistle: ■■ Managers are raising aggressively: 33% of funds closed in H1 2018 secured in the range of $250-499mn (up from 19% in 2017). ■■ Managers are also spending aggressively: Q2 2018 saw by far the highest aggregate capital invested of any quarter in the past decade. ■■ The few still rule: while total deal count has begun to pick up alongside the increase in total dollars invested, average deal size has remained close to the record high. ■■ New England and then the rest: horizon IRRs for New England-based funds are significantly higher than US averages across one-, three- and five-year periods to December 2017.

That last bullet is perhaps the most encouraging, but the report as a whole contains a number of other compelling tidbits, and we encourage you to dive all the way in. And once again, let us know what you think. What additional data would be useful? Is anything extraneous? What components should be further developed?

We’ll see you next quarter,

Jody Rose President, New England Venture Capital Association

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Our dedicated teams of analysts are strategically placed in key industry centres across the globe, ensuring our venture capital data is up to date and of the highest quality.

Preqin’s platform can be used to: ■■ Identify potential LPs for funds and as a powerful investor relations and fund marketing tool. ■■ Conduct market analysis and track industry trends. ■■ Carry out competitor analysis. ■■ Conduct due diligence, with net-to-LP returns showing how well individual fund managers have performed over time.

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p4 Fundraising p6 Funds in Market p8 Fund Managers p10 Deals and Exits p12 In Focus: Healthcare p14 Performance p15 Investors

KEY FACTS

$5.7bn 77 $5.9bn 105 was raised by New England- New England-based venture was invested in New England- New England-based firms have based venture capital capital funds are currently in based portfolio companies in at least one female investment managers in H1 2018. market (as at July 2018). H1 2018. partner.

DEFINITIONS

HEALTHCARE Preqin’s healthcare universe includes: biotechnology, pharmaceuticals, medical devices, healthcare, healthcare IT and medical technologies.

TECHNOLOGY Preqin’s technology universe includes: software & related, internet, telecoms, other IT and cleantech sectors.

NEW ENGLAND-BASED Indicates a New England-based office, including both headquarters and satellite offices.

NEW ENGLAND-HEADQUARTERED Indicates a New England-based headquarters.

EARLY STAGE: SEED Allows a business concept to be developed, perhaps involving the production of a business plan, prototypes and additional research, prior to bringing a product to market and commencing large-scale manufacturing.

EARLY STAGE: START-UP Supports a non-commercial company’s product development and marketing.

EXPANSION/LATE STAGE Invests in companies towards the end of the venture stage cycle. Provides capital injections for expansion into a position of stable profit streams.

VENTURE CAPITAL (GENERAL) Provides capital to new or growing businesses with perceived long-term growth potential.

3 PREQIN AND NEVCA UPDATE: NEW ENGLAND VENTURE CAPITAL IN H1 2018 FUNDRAISING

H1 2018 saw 19 New England-based Fig. 1: Venture Capital Fundraising: All US- vs. New England-Based Firms, 2009 - H1 2018 venture capital funds reach a final close,

350 50 Aggregate Capital Raised ($bn) securing $5.7bn in aggregate capital (Fig. 45 300 1). Eleven funds closed in the first quarter, 40 raising an aggregate $3.3bn, while in Q2 250 35 eight funds reached a final close for a total 200 30 of $2.4bn. New England-based fundraising 25 in the first half of 2018 accounted for 11% 150 20 of all US venture capital funds closed and 100 15

26% of total capital raised, notably smaller No. of Funds Closed 10 50 proportions than the average of 19% and 5 31% respectively for the 2009-2017 period. 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018 The largest proportion of funds closed Year of Final Close by New England-based managers have All US: No. of Funds Closed New England: No. of Funds Closed typically fallen into the micro VC (sub- $100mn) category, accounting for an All US: Aggregate Capital Raised ($bn) New England: Aggregate Capital Raised ($bn) average of 53% of all vehicles closed each Source: Preqin year from 2009 to 2017 (Fig. 2). Yet, micro VC funds in H1 2018 accounted for 28% fund secured nearly $1.4bn at its final this number will likely revert back towards of New England-based vehicles closed, close in March 2018, achieving 135% of its the mean as more data becomes available. while the largest proportion (33%) of funds initial $1bn target. Headline commitments closed were sized between $250mn and included $100mn from Tennessee General venture capital vehicles have $499mn. Moreover, the proportion of Consolidated Retirement System and dominated the New England-based New England-based vehicles sized $1bn or $70mn from University of Michigan fundraising market: 10 funds secured a more has doubled from 3% of funds closed Endowment. total of $3.9bn in H1 2018, 3x more capital in 2017 to 6% in H1 2018. than early-stage funds (Fig. 4). In regards New England-based venture capital to sector, information technology-focused -based General Catalyst funds have, on average, exceeded their funds accounted for the largest proportion Partners closed the largest US-based target size for the past two years, and (63%) of funds closed in the first half of venture capital fund in H1 2018: General funds closed in H1 2018 secured a record 2018, equating to 86% of the total number Catalyst Group IX concentrates on 113% of their initial target (Fig. 3). Early of funds raised for the industry in 2017 investments in technology, software and indications suggest a quicker fundraising (Fig. 5). internet companies in the US (Fig. 6). The pace for funds closed in H1 2018; however,

Fig. 2: New England-Based Venture Capital Fundraising by Fund Fig. 3: New England-Based Venture Capital Fundraising Success, Size, 2009 - H1 2018 2009 - H1 2018

100% 35 120% Average Proportion of Target Size 110% 113% 105% 90% 102% $1bn or More 30 98% 97% 96% 92% 100% 80% 25 90% 80% $500-999mn Achieved 70% 79% 20 60% $250-499mn 60% 15 31 50% 23 40% $100-249mn 10 21 22 40% 19 18 12 14 20% 30% $50-99mn 5 9

Time Spent in Market (Months) 5

Proportion of Funds Closed 20% 0 0% Less than 10% $50mn H1 2009 2010 2011 2012 2013 2014 2015 2016 2017 0% 2018* Year of Final Close 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018 Average Time Spent in Market (Months) Year of Final Close Average Proportion of Target Size Achieved Source: Preqin Source: Preqin *As more information becomes available, these figures will likely revert towards the mean.

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Fig. 4: New England-Based Venture Capital Fundraising in Fig. 5: New England-Based Venture Capital Funds Closed by H1 2018 by Strategy Industry Focus, 2009 - H1 2018

20 iersified 18 Telecos Media 3 Counications 16 Materials Expansion/ 14 noration Technolog 6 Late Stage 12 ealthcare All Early Stage 10 ood Agriculture 8 Energ tilities Venture Capital Consuer iscretionar 6 0.6 (General) Proportion of Funds Closed 10 Cleantech 4 1.2 Business erices 2 3.9 0

No. of Funds Closed Aggregate Capital Raised ($bn) Year of Final Close Source: Preqin Source: Preqin

Fig. 6: Largest New England-Headquartered Venture Capital Funds Closed in H1 2018 Fund Firm Fund Type Geographic Focus Primary Industry Fund Size (mn) General Catalyst General Catalyst Group IX Venture Capital (General) North America Information Technology 1,375 USD Partners Battery Ventures XII Battery Ventures Venture Capital (General) North America Information Technology 800 USD Matrix Partners XI Matrix Partners Venture Capital (General) North America Information Technology 450 USD Dementia Discovery Fund SV Health Investors Venture Capital (General) Europe Healthcare 250 GBP OpenView Venture OpenView Venture Expansion/Late Stage North America Information Technology 297 USD Partners V Partners Elephant Partners II Elephant Early Stage North America Information Technology 250 USD Activant Ventures II Activant Capital Group Expansion/Late Stage North America Information Technology 129 USD Underscore VC Fund II Underscore VC Early Stage North America Information Technology 117 USD LRV IV LRVHealth Early Stage North America Healthcare 100 USD Romulus Capital III Romulus Capital Early Stage North America Information Technology 83 USD

Source: Preqin

5 PREQIN AND NEVCA UPDATE: NEW ENGLAND VENTURE CAPITAL IN H1 2018 FUNDS IN MARKET

here has been a new record number Fig. 7: New England-Based Venture Capital Funds in Market over Time, 2009 - 2018 Tof New England-based venture (As at July 2018) capital funds in market at the beginning 80 12 Aggregate Capital Targeted ($bn) of each year since 2014 (Fig. 7). As at 11.0 70 July 2018, there are 77 funds on the 10 9.0 road, an increase of seven from January, 60 8.9 8.9 8.6 8 seeking an aggregate $7.6bn in capital. 50 7.6 6.7 6.7 Massachusetts-based MPM Capital’s 6.4 40 5.5 77 6 seventh fund is the largest on the road: 70 5.1 MPM BioVentures 2018 is a general 30 53 57 4 venture vehicle targeting $400mn (Fig. 10). 49 No. of Funds Raising 20 44 35 34 34 36 35 2 There are 34 general venture capital funds 10 in market targeting a total of $4.0bn and 0 0 23 early-stage funds targeting $1.5bn Jul-18

(Fig. 8). Information technology- and Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 healthcare-focused vehicles dominate the No. of Funds Raising Aggregate Capital Targeted ($bn) fundraising space, accounting for 35% and Source: Preqin 27% of funds raising respectively (Fig. 9).

Fig. 8: New England-Based Venture Capital Funds in Market by Fig. 9: New England-Based Venture Capital Funds in Market by Fund Type (As at July 2018) Industry Focus (As at July 2018)

35 34 30 27 30 25 21 25 23 20 17 20 15 15 10 10 10 6 4 4.0 No. of Funds Raising 5 4 5 2 2 1.5 0.9 0.3 1.0 1 1 1 1 0 0 Seed Materials Start-up Cleantech Late Stage Early Stage Early Industrials Diversified Expansion/ Healthcare Early Stage: Early Stage: Early Technology (General) Consumer Information Discretionary Infrastructure Venture Capital Business Services Business Telecoms, Media Telecoms,

No. of Funds Raising Aggregate Capital Targeted ($bn) & Communications Source: Preqin Source: Preqin

Fig. 10: Largest New England-Headquartered Venture Capital Funds in Market (As at July 2018) Fund Firm Fund Type Geographic Focus Target Size (mn) MPM BioVentures 2018 MPM Capital Venture Capital (General) North America 400 USD Media / Communications Partners VIII M/C Partners Venture Capital (General) North America 350 USD Highland Capital Partners X Highland Capital Partners Venture Capital (General) North America 300 USD Altimeter Private Partners Fund III Altimeter Capital Management Expansion/Late Stage North America 250 USD Biomark Capital Fund II Biomark Capital Venture Capital (General) North America 250 USD New Technology Ventures I New Technology Ventures Venture Capital (General) North America 250 USD Galen Partners VI Galen Partners Venture Capital (General) North America 200 USD MPM Oncology Innovations Fund MPM Capital Venture Capital (General) North America 200 USD MedCap Fund I MedCap Advisors Venture Capital (General) North America 150 USD HLM Venture Partners IV HLM Venture Partners Venture Capital (General) North America 125 USD

Source: Preqin

6 © Preqin Ltd. 2018 / www.preqin.com REASONS TO CONTRIBUTE DATA BE SEEN by thousands of investors and decision-makers around the world ENSURE that the data we hold for your firm and funds is correct GENERATE incoming leads from industry professionals seeing your profile CONTRIBUTE to industry benchmarks and help further research into this area

Contributing data is free and simple. For more information, please visit:

www.preqin.com/sharedata PREQIN AND NEVCA UPDATE: NEW ENGLAND VENTURE CAPITAL IN H1 2018 FUND MANAGERS

he 10 largest New England- Women-owned the past 10 years, including 39% of general Theadquartered venture capital venture capital and 28% of early stage: managers have collectively raised nearly firms in New start-up capital (Fig. 13). $22bn in capital over the past 10 years, England have secured and have over $8bn in available capital $1.8bn in the past The top women-owned firms in the (Figs. 11 and 12). The majority of the top decade region have raised a small portion (8%) of New England-headquartered managers capital compared to the top New England- in terms of capital raised (90%) and New England-based venture capital firms headquartered managers, led by Oak HC/ capital available (80%) are located in contributed more than a quarter (29%) of FT Partners, with $1.1bn raised in the past Massachusetts. the total capital raised by US firms over decade.

Fig. 11: Largest New England-Headquartered Venture Capital Fig. 12: Largest New England-Headquartered Venture Capital Fund Managers by Aggregate Capital Raised in the Last 10 Years Fund Managers by Estimated Dry Powder Total Capital Raised Estimated Dry Firm Headquarters Firm Headquarters Last 10 Years (bn) Powder (bn) General Catalyst Partners Cambridge, MA 3.4 USD General Catalyst Partners Cambridge, MA 1.5 USD Healthcare Royalty Flagship Pioneering Cambridge, MA 1.0 USD Stamford, CT 3.3 USD Partners Battery Ventures , MA 1.0 USD Battery Ventures Boston, MA 2.9 USD Clarus Ventures Cambridge, MA 0.9 USD Bain Capital Ventures Boston, MA 2.3 USD Spark Capital Boston, MA 0.8 USD Spark Capital Boston, MA 2.2 USD Healthcare Royalty Stamford, CT 0.7 USD Flagship Pioneering Cambridge, MA 1.9 USD Partners Third Rock Ventures Boston, MA 1.6 USD 6 Dimensions Capital Boston, MA 0.6 USD Matrix Partners Cambridge, MA 1.5 USD Oak HC/FT Partners Greenwich, CT 0.6 USD Clarus Ventures Cambridge, MA 1.4 USD MPM Capital Cambridge, MA 0.5 USD SV Health Investors Boston, MA 1.3 USD Matrix Partners Cambridge, MA 0.5 USD

Source: Preqin Source: Preqin

Fig. 14: Largest New England-Headquartered Women-Owned Fig. 13: Aggregate Capital Raised in the Last 10 Years by Fund Venture Capital Firms by Aggregate Capital Raised in the Last 10 Type: All US- vs. New England-Based Venture Capital Firms Years Total Capital Female Firm Headquarters Raised in Last Founder(s) 160 10 Years (mn) 141 Annie Lamont & 140 Oak HC/FT Partners Greenwich, CT 1,100 USD Patricia Kemp 120 .406 Ventures Boston, MA 392 USD Maria Cirino 100 Glasswing Ventures Boston, MA 112 USD Rudina Seseri 80 71 Fletcher Spaght Boston, MA 101 USD Linda Tufts 60 56 Ventures 40 40 Agent Capital Cambridge, MA 58 USD Geeta Vemuri InTeahouse Cambridge, MA 30 USD Xin Liu Aggregate Capital Raised ($bn) 20 13 9 11 4 2 3 Eveline 0 One Way Ventures Boston, MA 16 USD Buchatskiy Early Stage Early Stage: Early Stage: Expansion/ Venture Seed Start-up Late Stage Capital First Star Ventures Boston, MA 10 USD Millie Liu (General) All US New England 1843 Capital Greenwich, CT 7 USD Tracy Chadwell Source: Preqin Source: Preqin

8 © Preqin Ltd. 2018 / www.preqin.com PREQIN AND NEVCA UPDATE: NEW ENGLAND VENTURE CAPITAL IN H1 2018 DEALS AND EXITS

ew England venture capital deal Fig. 15: Venture Capital Deals* for New England-Based Companies, Q1 2009 - Q2 2018 Nactivity is off to a strong start in 2018 180 4.0 and is likely to surpass 2017 levels, with

160 3.5 Aggregate Deal Value ($bn) 237 deals valued at an aggregate $5.9bn, 140 representing 59% of all deals seen in 3.0 120 2017 and 80% of total deal value (Fig. 15). 2.5 Aggregate deal value reached new record 100 2.0 highs in both Q1 and Q2, first at $2.5bn 80 1.5 and then at $3.4bn respectively; total deal No. of Deals 60 value in H1 is already 7% higher than the 40 1.0 $5.5bn annual historical average for 2009- 0.5 2017. 20 0 0.0 The majority (54%) of venture financings in Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 New England-based portfolio companies 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 in H1 2018 were Series A and earlier; such No. of Deals Aggregate Deal Value ($bn) transactions accounted for 26% of total Source: Preqin deal value in the period (Fig. 17). Series D and later investments accounted for the largest proportion (28%) of deal value. Fig. 16: Venture Capital-Backed Exits of New England-Based Companies by Type, 2009 - H1 2018 Exit activity for New England-based 140 7 portfolio companies has slowed compared Aggregate Exit Value ($bn) to 2017: the first half of 2018 saw 30 120 6 venture capital-backed exits valued at an 100 5 aggregate $1.3bn, representing a third of the total exits seen in 2017 and 23% of exit 80 4 value (Fig. 16). 60 3 No. of Exits While trade sales have historically 40 2 accounted for the largest proportion 20 1 of venture capital-backed exits, the 0 0 prominence of IPOs is growing: IPO & 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 follow-on activity accounted for double the 2018 proportion of exits in H1 2018 as in 2017 Trade Sale Sale to GP (37% vs. 18% respectively). Yet, in the New IPO & Follow-on Write-off England technology sector, the majority Aggregate Exit Value ($bn) (92%) of exits seen in the first half of 2018 Source: Preqin were trade sales, led by the $195mn sale of Shyft Analytics to Medidata Solutions (Fig. 20).

*Figures exclude add-ons, grants, mergers, and secondary stock purchases.

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Fig. 17: Venture Capital Deals for New England-Based Fig. 18: Venture Capital Deals* for New England-Based Companies in H1 2018 by Stage Companies in H1 2018 by Industry

30% 28% 28% 70% 26% 63% 25% 23% 60% 20% 20% 20% 50% 15% 15% 40% 38% 11% 10% 7% 30% 26% 5% 5% Proportion of Total 5% 3% 3% 3% 1% 20% 16% 1% 1%0.3% Proportion of Total 0% 11% 10% 6% 7% 6% 4% 3% 3% 2% 2% 2% 2%1% 2% 1% 2%2% PIPE

Grant 0% Angel/Seed Other Expansion Venture Debt Venture and Later and Internet Other IT Other Services Business Food & Related / Add-on & Other Telecoms Cleantech Industrials Series C/Round 3 Series A/Round 1 Series B/Round 2 Healthcare Series D/Round 4 Agriculture Software &

No. of Deals Aggregate Deal Value No. of Deals Aggregate Deal Value Source: Preqin Source: Preqin

Fig. 19: Largest Venture Capital Deals* for New England-Based Technology Companies in H1 2018 Deal Size Primary Portfolio Company Stage Deal Date Investor(s) (mn) Industry Fuze, Inc. Unspecified Round May-18 150 USD Bessemer Venture Partners, Summit Partners Software Toast, Inc. Series D/Round 4 Jul-18 115 USD T Rowe Price, Tiger Global Management Software Accel, Bitmain Technologies Inc, Blockchain Capital, Circle Internet Financial, Breyer Capital, Digital Currency Group, General Series E/Round 5 May-18 110 USD Internet Inc. Catalyst Partners, IDG Capital, Pantera Capital, Tusk Ventures Flywire Payments Bain Capital Ventures, F-Prime Capital, Temasek Series D/Round 4 Jul-18 100 USD Internet Corporation Holdings Scout Exchange LLC Unspecified Round Mar-18 100 USD TRI Ventures Software Starry, Inc. Series C/Round 3 Jul-18 100 USD FirstMark Capital, Tiger Global Management, KKR Internet XebiaLabs, Inc. Series B/Round 2 Feb-18 100 USD Accel, Susquehanna Growth Equity Software Growth Capital/ B-Stock Solutions, Inc. Jun-18 65 USD Spectrum Equity Internet Expansion Desktop Metal, Inc. Unspecified Round Mar-18 65 USD Ford Motor Company, Future Fund Technology Ionic Materials, Inc. Series C/Round 3 Feb-18 65 USD Alliance Ventures Cleantech

Source: Preqin

Fig. 20: Largest Venture Capital-Backed Exits of New England-Based Technology Companies in H1 2018

Date of Total Known Portfolio Exit Exit Exit Value Primary Initial Funding Investor(s) Acquiror (Exit) Company Date Type (mn) Industry Investment (mn) Activate Venture Partners, Health Shyft Analytics, Enterprise Partners, McKesson Trade Medidata Dec-13 39 USD Jun-18 195 USD Software Inc. Ventures, Medidata Solutions, Inc., Sale Solutions, Inc. Optum Ventures Baird Capital Partners, City National Corporation, Egan Trade Gannett Co., WordStream, Inc. Jun-08 28 USD May-18 130 USD Software Managed Capital, Sigma Prime Sale Inc. Ventures Alumni Ventures Group, Link Ventures, Oceania Capital Partners, EverQuote, Inc.** Apr-15 38 USD Oceanic Partners, Savano Capital Jun-18 IPO 84 USD - Internet Partners, Second Alpha Partners, Stratim Capital, T Capital Partners Source: Preqin

*Figures exclude add-ons, grants, mergers, venture debt and secondary stock purchases. **Denotes a partial exit.

10 PREQIN AND NEVCA UPDATE: NEW ENGLAND VENTURE CAPITAL IN H1 2018 IN FOCUS: HEALTHCARE

he healthcare industry dominates Fig. 21: Venture Capital Deals* for New England-Based Healthcare Companies, Tventure capital deal activity in New Q1 2009 - Q2 2018 England, accounting for 38% of total deals 60 2.5 and 63% of deal value in H1 2018 (Fig. Aggregate Deal Value ($bn) 50 18). There were 91 healthcare venture 2.0 financings valued at an aggregate $3.7bn 40 in the first half of the year, with the 1.5 number and value already at 60% and 30 86% of the final figures seen in 2017 1.0 respectively (Fig. 21). Q2 2018 alone No. of Deals 20 recorded the most deals (54) since Q2 0.5 2014, valued at a record $2.1bn. Average 10 deal size has nearly quadrupled since 2009, and is 45% higher than in 2017, at an 0 0.0 average of $41mn for H1 2018. Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 The biotechnology sector accounted for No. of Deals Aggregate Deal Value ($bn) the largest proportion (34%) of healthcare Source: Preqin deals in New England in H1 2018, while the pharmaceuticals sector accounted for the largest proportion (42%) of deal value, Pictet Group and Sequoia Capital, among valued at $1.8bn for 2009-2017. Of the led by the $500mn Series G financing others (Fig. 22). 10 largest New England-based healthcare of Massachusetts-based exits in H1 2018, eight were IPOs, led by Therapeutics, with known investments While the number and value of healthcare Homology Medicines ($144mn) in March from Abu Dhabi Investment Authority, exits in New England has declined since (Fig. 25). Alexandria Venture Investments, BB 2016, exit activity in 2018 is expected to be Biotech Ventures, Fidelity Investments, close to the historical average of 28 exits

Fig. 22: Largest Venture Capital Deals* for New England-Based Healthcare Companies in H1 2018 Deal Size Primary Portfolio Company Stage Deal Date Investor(s) (mn) Industry Abu Dhabi Investment Authority, Alexandria Venture Investments, ArrowMark Partners, BB Moderna Therapeutics, Inc. Series G/Round 7 Feb-18 500 USD Biotech Ventures, EDBI, Fidelity Investments, Julius Pharmaceuticals Baer Trust and Bank, Pictet Group, Sequoia Capital, Viking Global Investors American Well Corporation Unspecified Round Jun-18 291 USD Allianz X, Royal Philips Healthcare IT Everbright , Henan Maisheng Growth Capital/ Mevion Medical Systems, Inc. Jun-18 150 USD Medical Technology Co., Ltd, Hopu Investment Medical Devices Expansion Management, YuanMing Capital Moderna Therapeutics, Inc. Series H/Round 8 May-18 125 USD Merck Pharmaceuticals 6 Dimensions Capital, Alexandria Venture Investments, ArrowMark Partners, Cathay Fortune Corporation, Curative Ventures, F2 Ventures, Haitong International Securities Group, Hillhouse TCR2 Therapeutics Inc. Series B/Round 2 Mar-18 125 USD Biotechnology Capital Management, Leerink Partners, Lucion Venture Capital Group, Mirae Asset Venture Investment, MPM Capital, Redmile Group, Sirona Capital, Syno Capital

Source: Preqin

*Figures exclude add-ons, grants, mergers, venture debt and secondary stock purchases.

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Fig. 23: Venture Capital Deals* for New England-Based Fig. 24: Venture Capital-Backed Exits of New England-Based Healthcare Companies in H1 2018 by Industry Healthcare Companies, 2009 - H1 2018

45% 42% 45 3.0 40% 2.8 2.8 34% 35% 40 35% 2.5 Aggregate Exit Value ($bn) 30% 30% 35 2.2 2.2 25% 30 2.0 2.0 20% 16% 25 15% 1.5 1.5 10% 7% 9% 8% 9% Proportion of Total 20 40 5% 1.2 5% 3% 2% No. of Exits 1.2 33 34 15 29 31 1.0 0% 0.9 24 23 10 0.8 21 17 0.5 5 12 Medical Healthcare 0 0.0 Technologies Healthcare IT Healthcare

Biotechnology 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 Medical Devices Medical Pharmaceuticals 2018 No. of Deals Aggregate Deal Value No. of Exits Aggregate Exit Value ($bn) Source: Preqin Source: Preqin

Fig. 25: Largest Venture Capital-Backed Exits of New England-Based Healthcare Companies in H1 2018 Total Date of Exit Portfolio Known Exit Acquiror Primary Initial Investor(s) Exit Type Value Company Funding Date (Exit) Industry Investment (mn) (mn) 1,000 Amazon. PillPack, Inc. Mar-13 94 USD - Jun-18 Tradesale Pharmaceuticals USD com 5AM Ventures, Alexandria Venture Investments, ARCH Overage Fund, ARCH Homology Venture Partners, Deerfield Capital Medicines, May-16 127 USD Management, Deerfield Management, Mar-18 IPO 144 USD - Biotechnology Inc.** Fidelity Investments, HBM Partners, Maverick Ventures Israel, Novartis, Rock Springs Capital, Temasek Holdings, Vida Ventures, Vivo Capital Bain Capital, Biogen, Cormorant Asset Solid Management, LLC, Foresite Capital, Janus Biosciences, Nov-15 93 USD Capital Group, Janus Henderson Investors, Jan-18 IPO 134 USD - Biotechnology LLC** Perceptive Advisors, RA Capital, RTW Investments Atlas Venture, Baupost Group, Merck Global Translate Bio, Nov-11 129 USD Health Innovation Fund, Monsanto Company, Jun-18 IPO 122 USD - Pharmaceuticals Inc.** Partners Healthcare Innovation Fund, SR One Amgen Ventures, Atlas Venture, F-Prime Surface Capital, Lilly Ventures, New Enterprise Oncology, Jun-14 47 USD Apr-18 IPO 108 USD - Pharmaceuticals Associates, Novartis Institute for Biomedical Inc.** Research Aisling Capital, Atlas Venture, Brace Pharma Capital, Clarus Ventures, Cormorant Avrobio, Feb-16 85 USD Asset Management, LLC, Eventide Asset Jun-18 IPO 100 USD - Biotechnology Inc.** Management, Morningside Group, Surveyor Capital, SV Health Investors Evelo Alexandria Venture Investments, Celgene, Biosciences, Nov-15 133 USD May-18 IPO 85 USD - Pharmaceuticals Flagship Pioneering, GV, Mayo Clinic Ventures Inc.** ARCH Venture Partners, Cormorant Asset Management, LLC, EcoR1 Capital, Fidelity Scholar Rock, Dec-12 104 USD Management & Research Company, Invus May-18 IPO 75 USD - Biotechnology Inc.** Group, , Redmile Group, The Kraft Group Atlas Venture, Brace Pharmaceuticals, Cowen Group Inc., F-Prime Capital, Jennison Unum Associates, New Leaf Venture Partners, Novo Therapeutics Oct-14 92 USD Mar-18 IPO 69 USD - Pharmaceuticals A/S, Sabby Capital, Sanofi Ventures, Seattle Inc.** Genetics, Inc., Sectoral Asset Management, Square 1 Bank, Wellington Management 5AM Ventures, ARCH Venture Partners, Pulmatrix, Defense Advanced Research Projects Agency, Private Apr-07 97 USD Mar-18 15 USD - Pharmaceuticals Inc.** National Institutes of Health, Novartis Venture Placement Fund, Polaris Partners Source: Preqin *Figures exclude add-ons, grants, mergers, venture debt and secondary stock purchases. **Denotes a partial exit.

12 PREQIN AND NEVCA UPDATE: NEW ENGLAND VENTURE CAPITAL IN H1 2018 PERFORMANCE

ew England-based venture capital Fig. 26: Horizon IRRs: All US- vs. New England-Based Venture Capital Funds (All Nfunds have outperformed all US- Vintages) based venture capital vehicles across one- 20% (+15.6%), three- (+14.8%) and five- (+17.4%) 18% year horizons to December 2017 (the most recent performance data available, Fig. 26). 16% 14% New England-based 2011 vintage funds New England 12% have posted the strongest returns among 2007-2015 vintage funds, with a median 10% All US net IRR of 23.6% (Fig. 28). Massachusetts- 8%

based Spark Capital II is the top Annualized Return 6% performing fund of this group, with a net IRR of 51.4% (Fig. 29). 4% 2%

0% 1 Year to Dec-17 3 Years to Dec-17 5 Years to Dec-17

Source: Preqin

Fig. 27: New England-Based Venture Capital Funds: Annual Fig. 28: New England-Based Venture Capital Funds: Median Net Capital Called up, Distributed and Net Cash Flow, 2008 - 2017 IRRs by

12 30% 10 25% 23.6% 8 20% 6 14.8% 4 15% 14.3% 15.2% 13.4% 11.9% 2 10% 11.9% 10.1% 0 5% -2 3.9% -4 0%

-6 Median Net IRR since Inception -5% -8 -10% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2007 2008 2009 2010 2011 2012 2013 2014 2015 Capital Called up ($bn) Capital Distributed ($bn) Net Cash Flow ($bn) Vintage Year Source: Preqin Source: Preqin

Fig. 29: Top Performing New England-Headquarted Venture Capital Funds (Vintage 2007-2015 Funds) Fund Size Geographic Net IRR Date Fund Firm Vintage Type (mn) Focus (%) Reported Spark Capital II Spark Capital 2007 360 USD Early Stage: Start-up N. America 51.4 31-Dec-17 Third Rock Ventures II Third Rock Ventures 2010 426 USD Early Stage N. America 42.9 30-Sep-17 Third Rock Ventures Third Rock Ventures 2007 378 USD Early Stage N. America 32.3 31-Dec-17 Spark Capital III Spark Capital 2011 360 USD Early Stage: Start-up N. America 30.9 31-Dec-17 MPM BioVentures V MPM Capital 2010 173 USD Venture Capital (General) N. America 29.4 31-Mar-16 Omega Fund IV Omega Funds 2012 183 USD Venture Capital (General) N. America 28.0 31-Dec-17 Battery Ventures IX Battery Ventures 2011 750 USD Venture Capital (General) N. America 25.7 31-Dec-17 Polaris Venture Partners VI Polaris Partners 2011 364 USD Venture Capital (General) N. America 23.6 31-Mar-18 Oak HC/FT Partners Fund I Oak HC/FT Partners 2015 500 USD Venture Capital (General) N. America 20.6 31-Dec-17 Highland Capital Partners IX Highland Capital Partners 2013 400 USD Venture Capital (General) N. America 20.2 31-Dec-17

Source: Preqin

13 © Preqin Ltd. 2018 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/NEVCAH118 INVESTORS

ublic and private sector pension Fig. 30: US-Based Investor Commitments to New England-Based Venture Capital Funds Pfunds each account for 21% of known by Investor Location (Vintage 2009-2018 Funds) investors in New England-based venture capital funds (vintage 2009-2018, Fig. 31). The venture capital industry in New England typically attracts larger, more West sophisticated investors, with the majority Northeast Midwest (77%) managing over $1bn in assets, 22% 39% including 13% that manage over $50bn 24% (Fig. 32).

While the Northeast US is home to the Southwest largest proportion (39%) of investors by 8% Southeast region with past commitments to New England-based venture capital, - 7% based investors are the most active by state, with 137 known commitments to New England-based 2009-2018 vintage funds. Massachusetts follows closely with 118 known commitments (Fig. 33).

Fig. 31: Investors in New England-Based Venture Capital by Fig. 32: Investors in New England-Based Venture Capital by Investor Type (Vintage 2009-2018 Funds) (Vintage 2009-2018 Funds)

70% Private Sector 21% 64% Public Pension Fund 21% 60% Foundation 17% Manager 12% 50% Endowment Plan 9% Company 7% 40% Corporate Investor 3% 30% Government Agency 2% Asset Manager 2% 20%

Bank 1% Proportion of Investors 13% 13% 1% 10% 8% 3% Investment Company 1% 0% Other 3% Less than $100-499mn $500-999mn $1-49bn $50bn or 0% 5% 10% 15% 20% 25% $100mn More Proportion of Investors Assets under Management Source: Preqin Source: Preqin

Fig. 33: Top Investor Locations by Number of Known Commitments to New England-Based Venture Capital Funds (Vintage 2009-2018 Funds)

California Massachusetts New York Texas

137 past commitments 118 past commitments 105 past commitments 70 past commitments (13% of US commitments) (11% of US commitments) (10% of US commitments) (6% of US commitments)

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