PREQIN AND FIRST REPUBLIC US UPDATE: H1 2018 DOWNLOAD DATA PACK: www.preqin.com/FRUSVCH118 CONTENTS

p3 Fundraising

p5 Funds in Market

p6 Fund Managers

p7 In Focus: Micro Venture Capital

p9 Deals

p10 Exits

p11 Performance

p12 Investors

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PREQIN’S VENTURE CAPITAL DATA AND INTELLIGENCE

Preqin tracks all aspects of the venture capital industry, with comprehensive data on institutional investors, fundraising, fund managers, fund terms and conditions, fund performance, deals and exits, service providers and more.

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.

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Preqin partnered with First Republic Bank to prepare this information regarding US Venture Capital. This report is for information purposes only and is not intended as an offer, solicitation, advice (investment, legal, tax, or otherwise), or as the basis for any contract. First Republic Bank has not independently verified the information contained herein and shall not have liability to any third party in any respect for this report or any actions taken or decisions made based upon anything contained herein. This information is valid only as of July 2018 and neither Preqin nor First Republic Bank will undertake to update this report with regard to changes in market conditions, information, laws, or regulations after the date of this report. This report may not be further reproduced or circulated without the written permission of Preqin and First Republic Bank.

All rights reserved. The entire contents of Preqin and First Republic Update: US Venture Capital in H1 2018 are the Copyright of Preqin Ltd. No part of this publication or any information contained in it may be copied, transmitted by any electronic means, or stored in any electronic or other data storage medium, or printed or published in any document, report or publication, without the express prior written approval of Preqin Ltd. The information presented in Preqin and First Republic Update: US Venture Capital in H1 2018 is for information purposes only and does not constitute and should not be construed as a solicitation or other offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction, or as advice of any nature whatsoever. If the reader seeks advice rather than information then he should seek an independent financial advisor and hereby agrees that he will not hold Preqin Ltd. responsible in law or Debt for any decisions of whatever nature the reader makes or refrains from making following its use of Preqin and First Republic Update: US Venture Capital in H1 2018. While reasonable efforts have been made to obtain information from sources that are believed to be accurate, and to confirm the accuracy of such information wherever possible, Preqin Ltd. does not make any representation or warranty that the information or opinions contained in Preqin and First Republic Update: US Venture Capital in H1 2018 are accurate, reliable, up-to-date or complete. Although every reasonable effort has been made to ensure the accuracy of this publication Preqin Ltd. does not accept any responsibility for any errors or omissions within Preqin and First Republic Update: US Venture Capital in H1 2018 or for any expense or other loss alleged to have arisen in any way with a reader’s use of this publication.

2 PREQIN AND FIRST REPUBLIC US VENTURE CAPITAL UPDATE: H1 2018 FUNDRAISING

1 2018 saw 152 US-based venture Fig. 1: US-Based Venture Capital Fundraising, 2009 - H1 2018 Hcapital funds reach a final close, 350 333 50 securing $18bn in aggregate capital (Fig. 1). 45 300 Sixty-five funds closed in the first quarter, 272 280 Aggregate Capital Raised 260 42.9 40 raising an aggregate $6.3bn, while Q2 250 35 saw 87 funds reach a final close at nearly 208 33.9 30 double the value of Q1 ($12bn). The first 200 32.3 32.8 172 25 half of 2018 had a successful start, with 26.0 152 150 fundraising levels at more than 50% of the 119 125 123 20 19.0 final figures seen in 2017 and on the heels 100 17.6 18.0 15

No. of Funds Closed 15.4 15.6 of the record year seen in 2016 (333 funds 10 50 closed on $43bn). 5 0 0 The largest proportion of funds closed by 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 US-based managers have typically fallen Year of Final Close 2018 into the micro VC (sub-$100mn) category, No. of Funds Closed Aggregate Capital Raised ($bn) accounting for 62% of all vehicles closed Source: Preqin since 2009 and 64% of vehicles closed in H1 2018 (Fig. 2). At the other end of Fig. 2: US-Based Venture Capital Fundraising by Fund Size, 2009 - H1 2018 the spectrum, just 1% of US-based funds 2% 1% 1% 3% 2% 3% 1% 1% 100% 5% closed in H1 2018 reached $1bn or more 3% 7% 5% 3% 4% 5% 5% 5% 3% 5% 9% 7% 90% 14% 10% 9% 13% in size. 15% 12% 8% 13% 11% $1bn or More 80% 17% 12% 23% 18% $500-999mn Massachusetts-based General Catalyst 70% 22% 17% 23% 23% 26% 20% Partners raised the largest venture capital 60% 17% 7% 19% 14% 15% $250-499mn 9% fund closed in H1 2018: General Catalyst 50% 17% 18% 15% 18% $100-249mn Group IX concentrates on investments 40% in US-based technology, software and 30% $50-99mn internet companies (Fig. 3). The fund 48% 53% 52% 49% 49% 49% 20% 42% 42% 42% 42% secured nearly $1.4bn at its final close in Proportion of Funds Closed Less than $50mn March 2018, achieving 135% of its initial 10% $1bn target. Headline commitments 0% included $100mn from Tennessee 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018 Consolidated Retirement System and Year of Final Close Source: Preqin

Fig. 3: Largest US-Based Venture Capital Funds Closed in H1 2018 Fund Firm Fund Size (mn) Fund Type Geographic Focus General Catalyst Group IX General Catalyst Partners 1,375 USD Venture Capital (General) US Lightspeed Venture Partners Global, India, Israel, Lightspeed Venture Partners 1,050 USD Expansion/Late Stage Select III North America, US Battery Ventures XII Battery Ventures 800 USD Venture Capital (General) Asia, North America Foresite Capital Fund IV Foresite Capital 668 USD Expansion/Late Stage US 8VC Fund II 8VC 640 USD Venture Capital (General) US Meritech Capital Partners VI Meritech Capital Partners 630 USD Expansion/Late Stage US CRV XVII CRV 600 USD Early Stage North America, US Pfizer Venture Capital Fund Pfizer Venture Investments 600 USD Venture Capital (General) US WiL Fund II World Innovation Lab (WiL) 521 USD Early Stage: Start-up Japan, US Matrix Partners XI Matrix Partners 450 USD Venture Capital (General) US

Source: Preqin

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$70mn from the University of Michigan Fig. 4: US-Based Venture Capital Fundraising Success, 2009 - H1 2018 Endowment. 25 120% Proportion of Target Size Achieved 99% 101% 102% 102% 101% 94% 93% 97% 100% US-based venture capital funds have, 20 89% on average, met or exceeded their 82% 80% target size for the past four years (Fig. 15 4). Funds closed in the first half of 2018 60% secured 101% of their initial targets, and 22 22 10 19 19 19 19 spent slightly less time on the road than 17 18 40% 15 funds closed in 2017 (18 vs. 19 months 14 5 respectively). 20% Time Spent in Market (Months) The majority (56%) of funds closed in H1 0 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018 were early-stage vehicles: 86 early- 2018 stage funds reached a final close in the Year of Final Close past six months securing nearly $6bn, Average Time Spent in Market (Months) Average Proportion of Target Size Achieved including 23 seed funds which collectively Source: Preqin raised $1.2bn (Fig. 5). Generalist venture capital vehicles continue to raise the most capital of all venture strategies, securing Fig. 5: US-Based Venture Capital Fundraising in H1 2018 by Strategy $9.1bn across 59 funds in H1 2018. 70 10 63 9.1 59 9 Aggregate Capital Raised ($bn) 60 As in 2017, the largest proportion (90%) 8 of US-based venture capital funds target 50 7 investment opportunities in North 5.9 6 America, followed by 5% that are Rest of 0 5 World focused, 3% that are Asia focused 30 and 2% that are Europe focused (Fig. 23 3 6).The 10 largest funds closed in H1 2018 20 No. of Funds Closed 1.8 are all targeting North America, while three 2 10 1.2 7 also target opportunities in Asia, such as 1 Lightspeed Venture Partners Select III, 0 0 Battery Ventures XII and WiL Fund II. Seed Early Stage Expansin enture apital Late Stage (General)

N. f Funds lsed Aggregate apital aised ($bn) Source: Preqin

Fig. 6: US-Based Venture Capital Funds Closed in H1 2018 by Primary Geographic Focus

North America Europe 90% 2% Asia 3%

Rest of World 5%

Source: Preqin

4 PREQIN AND FIRST REPUBLIC US VENTURE CAPITAL UPDATE: H1 2018 FUNDS IN MARKET

S-based venture capital fundraising Fig. 7: US-Based Venture Capital Funds in Market over Time, 2009 - 2018 Uhas continued to break its own (As at July 2018) records for both the number of funds in 900 80 74 market and the aggregate target size of Aggregate Capital Targeted ($bn) 800 70 these vehicles since 2013. This first half 700 of 2018 saw this trend continue with 833 55 60 funds on the road seeking $74bn in capital; 600 50 50 compared to one year prior, there are 33% 45 500 40 more vehicles targeting 35% more capital. 35 40 400 34 833 24 26 30 Managers in the US continue to favour 300 22 626 strategies offering wider investment No. of Funds Raising 489 20 200 372 mandates: there are 343 general venture 307 100 194 10 capital funds in market targeting $34bn 178 161 163 185 and 347 early stage funds targeting $20bn 0 0 (Fig. 8). Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18

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

Fig. 8: US-Based Venture Capital Funds in Market by Strategy Fig. 9: US-Based Venture Capital Funds in Market by Primary (As at July 2018) Geographic Focus (As at July 2018)

00 0 800 761 70

Aggregate Capital Targeted ($bn) 66.0

37 Aggregate Capital Targeted ($bn) 350 33 3. 35 700 60 300 30 600 50 250 25 20. 500 200 20 0 00 1.2 150 15 30 96 300 No. of Funds Raising 100 10 20 .7 7 No. of Funds Raising 200 50 5 10 0 0 100 5.8 39 2 Seed Early Stage Expansin enture 9 0.8 1.1 0 0 Late Stage apital Nrth America Eurpe Asia est f rld (General)

N. f Funds aisng Aggregate apital argeted ($bn) N. f Funds aising Aggregate apital argeted ($bn)

Source: Preqin Source: Preqin Fig. 10: Largest US-Based Venture Capital Funds in Market (As at July 2018) Fund Firm Fund Type Target Size (mn) Geographic Focus Tiger Global Private Investment Partners XI Tiger Global Management Venture Capital (General) 3,000 USD Global, US Asia, Europe, Global, Deerfield Private Design Fund IV Deerfield Management Venture Capital (General) 2,500 USD North America Sequoia Capital China Yuan Fund Sequoia Capital Venture Capital (General) 10,000 CNY China NovaQuest Capital NovaQuest Pharma Opportunities Fund V Venture Capital (General) 1,500 USD Europe, US Management Vivo Capital Fund IX Vivo Capital Expansion/Late Stage 1,500 USD China, US Khosla Ventures VI Khosla Ventures Venture Capital (General) 1,000 USD US Europe, North America, OrbiMed Private Investments VII OrbiMed Advisors Venture Capital (General) 1,000 USD US, West Europe Y Combinator Continuity Affiliates Fund I Y Combinator Expansion/Late Stage 1,000 USD US DCM IX DCM Venture Capital (General) 750 USD China, Japan, US Foundry Group Next 2018 Foundry Group Expansion/Late Stage 750 USD US H.I.G. Strategic Partners Fund H.I.G. BioHealth Partners Venture Capital (General) 750 USD US

Source: Preqin

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he 10 largest US venture capital $3.6bn available to invest. The California- The top 10 women-owned venture capital Tmanagers have collectively raised based firm recently closed the largest US- firms in the US have raised just a small nearly $67bn over the past 10 years (Fig. based venture capital fund of 2017, New portion (9%) of capital in the past 10 11) and have $23bn available to invest Enterprise Associates 16, which is also the years compared to the top 10 US-based (Fig. 12). California is home to the majority firm’s largest fund to date. managers overall (Fig. 14). California-based of the top US managers in terms of both Scale Venture Partners has secured the capital raised (70%) and estimated dry US-based venture capital managers have most capital ($1.3bn) among US-based powder (50%). raised over $250bn since 2009, with women-owned firms in the past decade. generalist venture vehicles accounting for The firm primarily targets investments in New Enterprise Associates leads as the the largest proportion (52%) of capital, US telecoms, communication and internet most active venture capital manager, with followed by broader early-stage strategies, sectors. $11.5bn raised in the last 10 years and which account for 30% (Fig. 13).

Fig. 11: Largest US-Based Venture Capital Fund Managers by Fig. 12: Largest US-Based Venture Capital Fund Managers by Aggregate Capital Raised in the Last 10 Years (As at July 2018) Estimated Dry Powder (As at July 2018) Total Funds Raised in Estimated Dry Firm Headquarters Firm Headquarters Last 10 Years (bn) Powder (bn) New Enterprise Associates Menlo Park, CA 11.5 USD New Enterprise Associates Menlo Park, CA 3.6 USD Sequoia Capital Menlo Park, CA 9.7 USD Norwest Venture Partners Palo Alto, CA 3.6 USD Tiger Global Management New York, NY 9.2 USD Sequoia Capital Menlo Park, CA 2.9 USD Andreessen Horowitz Menlo Park, CA 6.5 USD Deerfield Management New York, NY 2.7 USD Deerfield Management New York, NY 6.0 USD Andreessen Horowitz Menlo Park, CA 2.0 USD Kleiner Perkins Caufield & Tiger Global Management New York, NY 1.9 USD Menlo Park, CA 5.5 USD Byers Access Technology Ventures New York, NY 1.9 USD Lightspeed Venture Partners Menlo Park, CA 5.2 USD TPG Fort Worth, TX 1.6 USD Accel Palo Alto, CA 4.9 USD Institutional Venture Partners Menlo Park, CA 1.5 USD Institutional Venture Partners Menlo Park, CA 4.7 USD General Catalyst Partners Cambridge, MA 1.5 USD General Catalyst Partners Cambridge, MA 3.4 USD Source: Preqin Source: Preqin

Fig. 14: Largest US-Based Women-Owned Venture Capital Fund Fig. 13: Aggregate Capital Raised by US-Based Venture Capital Managers by Aggregate Capital Raised in the Last 10 Years (As Fund Managers by Strategy, Funds Closed 2009 - H1 2018 at July 2018) Total Funds Raised in 140 132 Firm Headquarters Last 10 Years (mn) 120 Scale Venture Partners Foster City, CA 1,290 USD Oak HC/FT Partners Greenwich, CT 1,100 USD 100 DBL Partners San Francisco, CA 551 USD 80 76 Greycroft Partners New York, NY 543 USD

60 Canvas Ventures Portola Valley, CA 475 USD Arboretum Ventures Ann Arbor, MI 433 USD 40 37 .406 Ventures Boston, MA 392 USD Aggregate Capital Raised ($bn) 20 Floodgate Palo Alto, CA 356 USD 8 0 Aspect Ventures San Francisco, CA 331 USD Seed Early Stage Expansion/ Venture Capital Forerunner Ventures San Francisco, CA 299 USD Late Stage (General) Source: Preqin Source: Preqin

6 PREQIN AND FIRST REPUBLIC US VENTURE CAPITAL UPDATE: H1 2018 IN FOCUS: MICRO VENTURE CAPITAL icro venture capital (sub-$100mn) Fig. 15: US-Based Micro Venture Capital Fundraising, 2009 - H1 2018 Mfundraising has grown substantially 250 7 over the past decade: 185 funds closed Aggregate Capital Raised ($bn) 5.8 6.0 in 2017, securing a record $6.0bn in 6 200 5.2 aggregate capital, representing a 194% 5 and 233% increase in the number of funds 4.3 4.3 150 closed and aggregate capital raised versus 4 3.2 2009 respectively (Fig. 15). 2.8 100 2.5 213 3 182 185 1.8 157 1.6 142 2

Micro venture capital fundraising in 2018 No. of Funds Closed is off to a strong start andis on track to 50 105 105 63 72 67 1 surpass 2017 levels, with 105 funds closed on an aggregate $3.2bn, representing 57% 0 0 of the number of funds closed in 2017 and 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018 53% of capital raised. Year of Final Close No. of Funds Closed Aggregate Capital Raised ($bn) Source: Preqin Micro venture capital Fig. 16: US-Based Micro Venture Capital Fundraising Success, 2009 - H1 2018

fundraising in 2018 is 25 120% Proportion of Target Size Achieved off to a strong start 103% 102% 101% 100% 95% 97% 87% 94% 100% and is on track to 20 86% 87% surpass 2017 levels 80% 15 60% 10 21 California-based Ribbit Capital closed 19 18 18 19 19 17 16 40% 14 four seed funds in H1 2018, securing an 12 5 aggregate $46mn in capital. RH-D Ribbit 20%

Opportunity II, TL-C Ribbit Opportunity III Time Spent in Market (Months) 0 0% and BX-B Ribbit Opportunity IV will target 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 early-stage investments in the global 2018 financial sector, and Ribbit TG Holdings Year of Final Close will target investments in the US business Average Time Spent in Market (Months) Average Proportion of Target Size Achieved services sector. Source: Preqin

Fig. 17: Most Active Investors in US-Based Micro Venture Capital Funds by Number of Known Fund Commitments, (Vintages 2009-2018) Investor Type No. of Known Commitments Active VC Mandate Retirement Plans of Duke University Private Sector 12 Likely Cendana Capital Manager 8 Yes Industry Ventures Private Equity Fund of Funds Manager 7 Yes Sobrato Family Holdings Single 7 Yes Grantham Foundation Foundation 6 Likely Oregon Growth Board Government Agency 6 Yes Prudential Financial Company 6 Likely TIFF Private Equity Fund of Funds Manager 6 Yes

Source: Preqin

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In terms of fundraising success, micro Fig. 18: US-Based Micro Venture Capital Fundraising in H1 2018 by Strategy venture capital funds have, on average, 50 1.8 5 achieved or surpassed their target size for 1.6 Aggregate Capital Raised ($bn) 5 1.6 the past four years (Fig. 16). The average 0 time spent in market for micro venture 36 1. 35 capital funds reached a record low of 12 1.2 30 months for funds closed in 2017. Funds 1.0 25 closed in H1 2018 have, on average, spent 21 0.8 0.7 0.8 75% longer fundraising than those closed 20 0.6 the previous year; however, this figure may 15 No. of Funds Closed adjust as funds continue to report and 10 0. more data becomes available. 5 3 0.1 0.2 0 0.0 Among micro venture capital funds, early- Seed Early Stage Expansin enture apital stage strategies (including seed) accounted Late Stage (General) for almost double (66) the number of N. f Funds lsed Aggregate apital aised ($bn) generalist venture capital vehicles (36) Source: Preqin closed in H1 2018, and represented 77% of aggregate capital raised in the period (Fig. 18). Fig. 19: US-Based Micro Venture Capital Funds Closed in H1 2018 by Primary Geographic Focus Moreover, half of the top performing micro venture capital vintage 2007-2015 funds are early-stage vehicles, led by CRCM Opportunity Fund (Fig. 20); the vintage Europe 2013 start-up vehicle targets opportunities North America in a range of industries in China and the 1% Asia US. 92% 1%

Rest of World 6%

Fig. 20: Top Performing US-Based Micro Venture Capital Funds (Vintages 2007-2015) Fund Size Net IRR Date Rank Fund Firm Vintage Fund Type (mn) (%) Reported 1 CRCM Opportunity Fund CRCM Ventures 2013 38 USD Early Stage: Start-up 122.8 31-Mar-18 2 Foresite Capital Fund I Foresite Capital 2012 100 USD Expansion/Late Stage 66.5 31-Mar-18 3 Revel Venture Fund I Revel Partners 2011 10 USD Early Stage: Seed 58.7 31-Dec-16 4 New Science Ventures 2014 A New Science Ventures 2014 98 USD Venture Capital (General) 58.6 31-Dec-17 5 IA Venture Strategies Fund I IA Ventures 2010 50 USD Early Stage 50.9 31-Dec-17 6 Cottonwood Technology Fund I Cottonwood Technology Fund 2010 17 USD Early Stage: Start-up 46.0 31-Mar-18 7 YL Ventures II YL Ventures 2013 38 USD Early Stage: Start-up 42.1 31-Mar-18 8 Brightstone Venture Capital Fund Brightstone Venture Capital 2013 20 USD Venture Capital (General) 42.0 31-Mar-18 9 Ecosystem Integrity Fund I Ecosystem Integrity Fund 2011 20 USD Venture Capital (General) 36.3 31-Dec-17 10 Artis Ventures I ARTIS Ventures 2010 95 USD Venture Capital (General) 34.6 31-Dec-16

Source: Preqin

8 PREQIN AND FIRST REPUBLIC US VENTURE CAPITAL UPDATE: H1 2018 DEALS

enture capital deals for US-based Fig. 21: Venture Capital Deals* for US-Based Companies, 2009 - H1 2018 portfolio companies have been on the V 7,000 6,542 90 decline since the records seen in 2014. 6,342 5,992 5,885 76 80 However, 2018 may break this trend if H2 6,000 Aggregate Deal Value ($bn) 75 continues at the same pace as H1, as the 5,000 65 70 5,000 61 first two quarters of the year have already 4,515 60 4,147 4,923 seen more than half the number (53%) 4,000 3,476 50 and value (56%) of deals completed in the 41 43 37 39 3,000 40 whole of 2017. 31 2,415 No. of Deals 27 30 2,000 Early-stage investments (Series A and 20 earlier) accounted for 56% of venture 1,000 10 capital deals in H1 2018 and 21% of capital invested (Fig. 22). Software was the most 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 active industry for US-based venture 2018 capital investment, representing 31% of No. of Deals Aggregate Deal Value ($bn) deals and 26% of deal value in H1 2018 Source: Preqin (Fig. 23).

Fig. 22: Venture Capital Deals for US-Based Companies in Fig. 23: Venture Capital Deals* for US-Based Companies in H1 2018 by Stage H1 2018 by Industry 35% 35% 30% 31% 30% 26% 30% 28% 26% 26% 25% 25% 19% 20% 18% 20% 17% 15% 20% 18% 15% 16% 15% 10% 7% 6% 8% 7% 5% 6% Proportion of Total 9% 5% 3% 3% 10% 8% 8% 8% 2% 1% 0% Proportion of Total 0.4%1% 4% 4% 0% 5% 3% 3% 3% 2% 3%2% 3% 2% 0% PIPE Grant Debt Other 3 Round 1 Round 2 Series C/ Series SeriesA/ Series B/ Series Add-on & Other Angel/Seed Internet Other IT Other Services Expansion Business and Later and Food & Related Telecoms Industrials Healthcare Agriculture Software & GrowthCapital/ Consumer Series D/Round 4 Discretionary

No. of Deals Aggregate Deal Value No. of Deals Aggregate Deal Value

Source: Preqin Source: Preqin

Fig. 24: Largest US-Based Venture Capital Deals* in H1 2018 Portfolio Deal Deal Size Total Known Primary Stage Investor(s) Company Date (mn) Funding (mn) Industry CPP Investment Board, DFJ Growth, DivcoWest, Foxconn Ventures, Series D/ Katerra Inc. Jan-18 865 USD 1,130 USD Greenoaks Capital, Khosla Ventures, Navitas Capital, SB Software Round 4 Investment Advisers, Soros Fund Management, Tavistock Group Series I/ Fidelity Management & Research Company, Senator Lyft, Inc. Jun-18 600 USD 4,913 USD Telecoms Round 9 Investment Group DoorDash, Series D/ Mar-18 535 USD 722 USD GIC, SB Investment Advisers, Sequoia Capital, Wellcome Trust Internet Inc. Round 4 Abu Dhabi Investment Authority, Alexandria Venture Moderna Series G/ Investments, ArrowMark Partners, BB Biotech Ventures, EDBI, Therapeutics, Feb-18 500 USD 1,999 USD Pharmaceuticals Round 7 Fidelity Investments, Julius Baer Trust and Bank, Pictet Group, Inc. Sequoia Capital, Viking Global Investors Magic Leap, Series D/ Mar-18 461 USD 2,349 USD Public Technology Inc. Round 4

*Figures exclude add-ons, grants, mergers, and secondary stock purchases. Source: Preqin US-based investor.

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1 2018 saw 282 exits valued at an Fig. 25: Venture Capital-Backed Exits of US-Based Companies by Type, 2009 - H1 2018 Haggregate $40bn, with 137 exits in the 1,200 80 first quarter at $11bn and 145 exits in the 70 second quarter at $29bn. While the annual 1,000 Aggregate Exit Value ($bn) number of exits has been declining since 60 2014, the exit environment is showing signs 800 50 of improvement: aggregate exit value in the first half of 2018 is already at 80% of the 600 40 $50bn annual average from 2009-2017, and

No. of Exits 30 will likely surpass the 2017 total of $51bn. 400 20 200 As in years prior, trade sales were the most 10 common exit type in H1 2018, accounting 0 0 for 73% of all exits of US-based venture- 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 backed portfolio companies (Fig. 24). All of 2018 the 10 largest exits seen in H1 2018 were Trade Sale Sale to GP IPO Write-off Aggregate Exit Value ($bn) trade sales, with an aggregate exit value Source: Preqin of $28bn, led by the $8.7bn trade sale of AveXis to Novartis International AG in March 2018.

Fig. 26: Largest Venture Capital-Backed Exits of US-Based Companies in H1 2018 Initial Total Known Exit Portfolio Exit Exit Acquiror Primary Investment Investors (Entry) Funding Value Company Type Date (Exit) Industry Date (mn) (mn) Adage Capital Management, Boxer Capital, Deerfield Management, Foresite Novartis Capital, Janus Capital Group, QVT Funds, Trade 8,700 AveXis, Inc. Jan-15 75 USD Mar-18 International Biotechnology RA Capital, Roche Venture Fund, Rock Sale USD AG Springs Capital, RTW Investments, T Rowe Price, Venrock

Andreessen Horowitz, Institutional Trade 7,500 GitHub, Inc. Jul-12 Venture Partners, Sequoia Capital, SV 350 USD Jan-18 Microsoft Software Angel, Thrive Capital Sale USD Allen & Company, Andreessen Horowitz, Baillie Gifford,BoxGroup , Casdin Capital, Flatiron First Round Capital, Grape Arbor VC, Great Trade 1,900 Jan-13 Oaks Venture Capital, GV, IA Ventures, 313 USD Mar-18 Roche Healthcare IT Health, Inc. Laboratory Corporation of America, Sale USD Roche, Social Capital, Stripes Group, SV Angel Coriolis Ventures, Deutsche Telekom Capital Partners, Fidelity Investments, First Round AppNexus Capital, Khosla Ventures, Kodiak Venture Trade 1,600 Dec-07 Partners, Microsoft, News Corporation, 404 USD Jan-18 AT&T Software Inc. SV Angel, Technology Crossover Ventures, Sale USD Tribeca Venture Partners, Venrock, WPP Group plc, Yahoo Japan Corporation Celgene, Clough Capital Partners, DAG Ventures, Decheng Capital, GV, HBM ARMO Partners, Industrial Investors, Kleiner Trade Eli Lilly & 1,600 BioSciences Nov-13 Perkins Caufield & Byers, NanoDimension, 167 USD Feb-18 Pharmaceuticals Sale Company USD Inc. OrbiMed Advisors, Qiming Venture Partners, Quan Capital, RTW Investments, Sequoia Capital

US-based investor/acquiror Source: Preqin

10 PREQIN AND FIRST REPUBLIC US VENTURE CAPITAL UPDATE: H1 2018 PERFORMANCE

S-based venture capital funds have Fig. 27: US-Based Venture Capital Funds: Median Net IRRs and Quartile Boundaries by Uposted relatively strong returns for vintages 2007-2015, with a median net 35% IRR of 12.4% (Fig. 27). When looking at 30% median net IRRs and quartile boundaries by vintage year, 2010-2013 vintages have 25% Top Quartile Net tended to perform better than those that 20% IRR Boundary began investing in the years leading into 15% the Global Financial Crisis (vintages 2007- Median Net IRR 2009). 10%

5% Bottom Quartile Venture capital managers continue to Net IRR Boundary Net IRR since Inception 0% distribute significant sums of capital to investors: net cash outflows from US-based -5% venture capital funds reached a record -10% high of $58bn in 2016, as fund managers 2007 2008 2009 2010 2011 2012 2013 2014 2015 returned capital faster than they called it Vintage Year up (Fig. 28). 2016 saw the largest net cash Source: Preqin flow on record ($19bn) for 2007-2015 vintage funds. Fig. 28: US-Based Venture Capital Funds: Annual Amount Called up, Distributed and Net Cash Flow, 2007 - 2017

Column Group II leads vintage 2007-2015 70 US-based venture capital funds with a net 60 58 IRR of 434.4% (Fig. 29). The vintage 2014 50 early-stage fund targets investments in 41 39 40 36 39 36 the biotechnology industry and received 34 32 29 30 32 commitments from Hartford HealthCare 30 26 27 25 25 27 25 23 23 23 Pension and Endowment Fund, Regents 20 20 of the University of California, and Texas 12 County & District Retirement System. Half 10 of the top performing US-based funds are 0 micro venture capital funds, including three -10 early-stage vehicles, one late-stage and one -20 generalist venture capital fund. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Annual Called up ($bn) Annual Distributed ($bn) Net Cash Flow ($bn) Source: Preqin

Fig. 29: Top Performing US-Based Venture Capital Funds (Vintages 2007-2015)

Fund Size Geographic Net IRR Date Rank Fund Firm Vintage Fund Type (mn) Focus (%) Reported

1 Column Group II The Column Group 2014 322 USD Early Stage US 434.4 31-Dec-17

Diversified 2 CRCM Opportunity Fund CRCM Ventures 2013 38 USD Early Stage: Start-up 122.8 31-Mar-18 Multi-Regional

3 Foresite Capital Fund I Foresite Capital 2012 100 USD Expansion/Late Stage US 66.5 31-Mar-18

4 Revel Venture Fund I Revel Partners 2011 10 USD Early Stage: Seed US 58.7 31-Dec-16

5 New Science Ventures 2014 A New Science Ventures 2014 98 USD Venture Capital (General) US 58.6 31-Dec-17

6 OrbiMed Private Investments V OrbiMed Advisors 2013 735 USD Venture Capital (General) US 54.1 31-Dec-17

7 Spark Capital II Spark Capital 2008 360 USD Early Stage: Start-up US 51.4 31-Dec-17

8 IA Venture Strategies Fund I IA Ventures 2010 50 USD Early Stage US 50.9 31-Dec-17

9 Avalon Ventures VIII Avalon Ventures 2007 150 USD Early Stage: Seed US 50.6 30-Sep-17

10 Frazier Healthcare VII Frazier Healthcare Partners 2013 377 USD Venture Capital (General) US 47.5 31-Mar-18

Source: Preqin

11 © Preqin Ltd. 2018 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/FRUSVCH118 INVESTORS

mong the 10 most active investors Fig. 30: Most Active Investors in US-Based Venture Capital Funds by Number of Known Ain US venture capital, six are Fund Commitments, (Vintages 2009-2018) pension funds, led by San Francisco No. of Active VC Investor Type Employees’ Retirement System with 54 Commitments Mandate San Francisco Employees' Retirement known commitments to vintage 2009- Public Pension Fund 54 No System 2018 venture capital funds (Fig. 30). In comparison, just one pension fund is MetLife Insurance Company Insurance Company 51 Likely counted among the top investors to Retirement Plans of Duke University Private Sector Pension Fund 49 Likely US micro venture capital funds of the University of Michigan Endowment Endowment Plan 48 Likely same vintages: Retirement Plans of Duke Texas County & District Retirement Public Pension Fund 45 Yes University, with 12 known commitments System (Fig. 17, page 7). The US venture capital Liberty Mutual Retirement Benefit Plan Private Sector Pension Fund 40 Likely industry tends to attract larger, more University of Texas Investment Endowment Plan 39 Yes sophisticated investors, with the majority Management Company (68%) managing over $1bn in assets, Alaska Permanent Fund Corporation 38 Yes including 13% that manage at least $50bn Industry Pension Insurance Private Sector Pension Fund 37 Likely (Fig. 32). Los Angeles Fire and Police Pension Public Pension Fund 35 Yes System

Four of the top 10 US micro venture capital Source: Preqin investors are private equity fund of funds Fig. 31: Investors in US-Based Venture Capital Funds by Location (Vintages 2009-2018) managers, while two are foundations.

Over 15 different LP types commit to US-based venture capital. Foundations account for the largest proportion (20%) North America Europe Asia of investors in US venture capital, followed 10% Asia9% by private sector (15%) and public pension 79% funds (14%, Fig. 33).

To no surprise, the majority (79%) of investors in US-based venture capital are Rest of World North America based, followed by Europe (10%), Asia (9%) and Rest of World (2%, Fig. 2% 31).

Source: Preqin

Fig. 32: Investors in US-Based Venture Capital Funds by Assets Fig. 33: Investors in US-Based Venture Capital Funds by Investor under Management (Vintages 2009-2018) Type (Vintages 2009-2018)

40% 37% Foundation 20% 35% Private Sector Pension Fund 15% 30% Public Pension Fund 14%

25% 22% Endowment Plan 10% 20% 18% Fund of Fund Managers 8% 15% Corporate Investor 8% 10% Insurance Company 6% 10% 7%

Proportion of Investors 6% Private Equity Firm 5% 5% Government Agency 4% 0% Investment Company 3% Other 7% $100bn or More $1-9.9bn $500mn Less than

$10-49.9bn $50-99.9bn 0% 5% 10% 15% 20% 25% $500-999mn Proportion of Investors Source: Preqin Source: Preqin

12 PREQIN AND FIRST REPUBLIC UPDATE: US VENTURE CAPITAL IN H1 2018

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