US VENTURE CAPITAL in H1 2019 PREQIN and FIRST REPUBLIC UPDATE: US VENTURE CAPITAL in H1 2019 Contents

PREQIN AND FIRST REPUBLIC UPDATE: US VENTURE CAPITAL IN H1 2019 PREQIN AND FIRST REPUBLIC UPDATE: US VENTURE CAPITAL IN H1 2019 Contents

3 Foreword

4 Deals & Exits

8 Fundraising

10 Funds in Market

12 Micro Venture Capital

15 Peformance

17 Fund Managers

19 Investors

Data Pack

The data behind all of the charts featured in this report is available to download for free. Ready-made charts are also included that can be used for presentations, marketing materials and company reports.

To download the data pack, please visit: www.preqin.com/FRUSVCH119

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 2019 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 2019 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 2019 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 equity 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 2019. 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 2019 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 2019 or for any expense or other loss alleged to have arisen in any way with a reader’s use of this publication.

Venture capital investment in US-based companies got off to a strong start in 2019 and the trend of fewer, but larger deals continued to amplify. To note, there were 2,179 deals completed for a total value of $55bn in H1, which represented a 17% increase in deal value but a 20% drop in the number of deals from H1 2018.

The average size of deals has increased by $7.8mn in the period. The largest 10 deals alone represented 16% ($8.8bn) of the total amount of venture capital invested in US-based portfolio companies in H1 2019. Mike Selfridge Chief Banking Officer, First Republic Bank Early-stage investments (Series A and earlier stages) accounted for 51% of all venture capital deals but only We continue to observe a trend where fund managers 19% of total dollars raised by venture-backed are coming back to market earlier than expected, companies. driven by the deployment pace of funds being quicker than anticipated and firms raising preemptively, So far in 2019 there have been 304 venture capital- potentially as a defense to any future macro-economic backed exits of US-based companies, valued at an disruption. aggregate $47bn. (Please note that exit value for IPOs accounts for amounts raised in IPO versus market Coming off a record year for micro venture capital, the capitalization of company.) growth of the institutional seed space continues. An aggregate $3.4bn was raised by 128 funds reaching a Fundraising continues at a rapid pace, with nearly 200 final close in H1 2019, exceeding the annual number of new funds closing in H1 2019. Despite the activity of funds and capital raised by this category of funds from closed funds, over 1,000 funds are in market seeking 2009- 2012. an aggregate $95bn in capital. This represents an almost 8x increase of the number of funds in market from the same period in 2011.

First Republic Bank

Founded in 1985, First Republic and its subsidiaries offer private banking, private business banking and private wealth management, including investment, trust and brokerage services. First Republic specializes in delivering exceptional, relationship-based service and offers a complete line of products, including residential, commercial and personal loans, deposit services, and wealth management.

Venture capital financings of US companies on track for a solid year

Venture capital investment in US-based companies got Founders Fund, SB Investment Advisers, SF Express off to a strong start in 2019: 2,179 deals completed for and Susa Ventures. a total value of $55bn in H1 (Fig. 1). Looking at how this compares to H1 2018, aggregate deal value was higher So far in 2019 there have been 304 venture capital- in H1 2019 by some $8bn, but through 566 fewer deals. backed exits of US-based companies, valued at an The average size of deals has increased by $7.8mn in aggregate $47bn (Fig. 5). The number of exits in H1 the period. The largest 10 deals alone represented 16% 2019 has declined compared to H1 2018 (307); however, ($8.8bn) of the total amount of venture capital invested the aggregate exit value is up from $42bn. in US-based portfolio companies in H1 2019. As in periods prior, trade sales were the most common Early-stage investments (Series A and earlier stages) exit type in H1 2019, accounting for 75% of all venture accounted for 51% of all venture capital deals in capital-backed exits for US-based portfolio companies. H1 2019 and 19% of total deal value, while Series B However, three of the five largest exits in H1 2019 were investments accounted for 21% of capital invested (Fig. IPOs (Fig. 6); together, they amounted to $15bn in 3). Information technology was the most active sector value, led by the $8.1bn IPO for Uber Technologies, Inc. for US-based venture capital investment, representing In total, 42 IPOs took place in H1 2019 and were valued 57% of deals and 51% of deal value (Fig. 4). Notable at an aggregate $22bn. investments in the sector include the financing of OneWeb LLC by Qualcomm Ventures, Softbank, Grupo Salinas and the Government of Rwanda, valued at $1.25bn. In addition, Flexport, Inc. was financed at a value of $1bn by Cherubic Ventures, DST Global,

Fig. 1: Venture Capital Deals* for US-Based Companies, 2009 - H1 2019

6,746 101 6,449 6,065 6,230 5,421 5,400 5,064 5,231 77 4,193 76 3,509 62 67 55

39 2,179 41 38 31 27

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 H1 2019 No. of Deals Aggregate Deal Value ($bn)

Source: Preqin Pro

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

Fig. 2: Largest Venture Capital Deals* for US-Based Companies in H1 2019

Total Known Portfolio Deal Size Funding Primary Company Stage Deal Date (mn) (mn) Investor(s) Industry WeWork Unspecified Companies Jan-19 2,000 USD 7,486 USD SoftBank Real Estate Round Inc.** Unspecified Government of Rwanda, Grupo Salinas, Information OneWeb LLC Mar-19 1250 USD 3,400 USD Round Qualcomm Ventures, SoftBank Technology Cherubic Ventures, DST Global, Founders Unspecified Information Flexport, Inc. Feb-19 1000 USD 1,302 USD Fund, SB Investment Advisers, SF Express, Round Technology Susa Ventures Uber Advanced Unspecified DENSO Corporation, SB Investment Information Technologies Apr-19 1000 USD 1,000 USD Round Advisers, Toyota Motor Corporation Technology Group Verily Life Unspecified Jan-19 1000 USD 1,800 USD Ontario Teachers' Pension Plan, Silver Lake Healthcare Sciences LLC Round Unspecified Consumer Nuro, Inc. Feb-19 940 USD 1,032 USD SB Investment Advisers Round Discretionary Coatue Management, Darsana Capital Partners, Dragoneer Investment Group, Series G/ Information DoorDash, Inc. May-19 600 USD 1,972 USD DST Global, Sands Capital Ventures, SB Round 7 Technology Investment Advisers, Sequoia Capital, Temasek Holdings Accel, CapitalG, Coatue Management, Dragoneer Investment Group, Institutional Series D/ Information UiPath Inc. Apr-19 568 USD 1,016 USD Venture Partners, Madrona Venture Group, Round 4 Technology Sands Capital Ventures, Sequoia Capital, T Rowe Price, Wellington Management Amazon.com, Inc., Geodesic Capital, Greylock Partners, Index Ventures, Aurora Series B/ Feb-19 530 USD 623 USD Lightspeed Venture Partners, Reinvent, Industrials Innovation, Inc. Round 2 Sequoia Capital, Shell Ventures, T Rowe Price

Source: Preqin Pro

Bold denotes US-based investor

Fig. 3: Venture Capital Deals for US-Based Companies in H1 2019 by Stage

30% 27% 24% 21% 17% 16% 15%

8% 9% 8% 7% Proportion of Total Proportion 7% 4% 3% 3% 2% 1% 0% 0% 0%

Angel/ Series A/ Series B/ Series C/ Series D/ Growth Grant PIPE Venture Add-on & Seed Round 1 Round 2 Round 3 Round 4 Capital/ Debt Other and Later Expansion

No. of Deals Aggregate Deal Value

Source: Preqin Pro

*Figures exclude add-ons, grants, mergers, venture debt and secondary stock purchases. **Softbank is a recurring investor in WeWork Companies. The capital invested by Softbank did not come from its 'Vision' fund.

Fig. 4: Venture Capital Deals* for US-Based Companies in H1 2019 by Industry

57% 51%

19%20%

Proportion of Total Proportion 7% 9% 5% 4% 3% 5% 4% 4% 3% 2% 2% 2% 1% 1% 1% 1% 0% 0% Real Estate Utilities Services Media Energy & Business Food & Services Insurance Industrials Healthcare Financial & Agriculture Technology Information Telecoms & Consumer Natural Discretionary Resources Raw Materials &

No. of Deals Aggregate Deal Value

Source: Preqin Pro

Fig. 5: Venture Capital-Backed Exits of US-Based Companies by Type, 2009 - H1 2019

1,200 100 87.2 90 1,000 72 Aggregate Exit Value ($bn) 76.3 80 62.6 64 70 800 91 66 60.1 58 60 37 29 59.4 42 15 600 50 51.0 757 52.5 43.1 46.7 40

No. of Exits 674 58 621 647 400 36.7 609 479 557 577 529 30 5 23.7 397 20 200 49 228 39 43 54 52 75 10 9 18 25 26 29 0 20 53 55 72 107 138 88 50 60 78 42 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 H1 2019 IPO Sale to GP Trade Sale Write-off Aggregate Exit Value ($bn)

Source: Preqin Pro

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

Fig. 6: Largest Venture Capital-Backed Exits of US-Based Companies in H1 2019

Total Initial Known Exit Portfolio Investment Funding Exit Exit Acquiror Value Primary Company Date Investors (Entry) (mn) Type Date (Exit) (mn) Industry Axel Springer AG, Baidu, Barclays, Benchmark Capital, BlackRock, Caspian Venture Capital, Citigroup, Didi Chuxing, Dragoneer Investment Group, Fidelity Investments, First Round Capital, Founder Collective, Glade Brook Capital Partners, Goldman Sachs, Goldman Sachs Merchant Banking Division, GV, Innovation Endeavors, Kleiner Perkins Caufield & Byers, Kumpulan Wang Persaraan, Uber LetterOne, Lone Pine Capital, Lowercase 14,741 8,100 Consumer Technologies, Aug-09 Capital, Menlo Ventures, Microsoft, Morgan IPO May-19 - USD USD Discretionary Inc. Stanley, New Enterprise Associates, Public Investment Fund, Qatar Investment Authority, SB Investment Advisers, SBT Venture Capital, Sequoia Capital, Signatures Capital Partners, SoftBank, Summit Partners, Summit Series, Tata Capital Private Equity, Tencent, Times Internet, Toyota Financial Services, Toyota Motor Corporation, TPG, Tuesday Capital, Valiant Capital Partners, Wellington Management Accel, Andreessen Horowitz, Atlassian Pty. Ltd., Baillie Gifford, Comcast Ventures, Dragoneer Investment Group, DST Global, FundersClub, General Atlantic, GGV Capital, Slack Global Founders Capital, GV, Horizons 1,217 4,560 Information Technologies, Jan-09 Ventures, Index Ventures, Institutional Venture IPO Jun-19 - USD USD Technology Inc. Partners, Kleiner Perkins Caufield & Byers, Riverside Ventures, Sands Capital Ventures, SB Investment Advisers, Social Capital, Spark Capital, SV Angel, T Rowe Price, Thrive Capital, Wellington Management Coatue Management, D1 Capital Partners, Highland Capital, Highland Capital Partners, Lux Capital Management, Mithril Capital Auris Health, 783 Trade Ethicon, 3,400 Jun-09 Management, NaviMed Capital, Partner Fund Feb-19 Healthcare Inc. USD Sale Inc. USD Management, Section 32, Senator Investment Group, Viking Global Investors, Wellington Management CapitalG, Cross Creek Advisors, First Round Capital, Geodesic Capital, Goldman Sachs, Looker Data 281 Trade Google 2,600 Information Aug-12 Kleiner Perkins Caufield & Byers, Meritech Jun-19 Sciences, Inc. USD Sale Inc. USD Technology Capital Partners, PivotNorth Capital, Premji- Invest, Redpoint Ventures, Sapphire Ventures AB, Alibaba Group, Andreessen Horowitz, AutoTech Ventures, Baillie Gifford, CapitalG, Chromo Invest, Coatue Management, Didi Chuxing, Facebook, Fidelity Management & Research Company, Flat World Partners, Floodgate, Fontinalis Partners, Fortress Investment Group, Founders Fund, General Motors, Glade Brook Capital Partners, 4,913 2,340 Consumer Lyft, Inc. Jul-08 Graphene Ventures, Icahn Enterprises, IPO Mar-19 - USD USD Discretionary InMotion Ventures, Janus Capital Group, K9 Ventures, Kingdom Holding Company, KKR, Machine Shop Ventures, Magna International, Mayfield, Olympus Partners, Ooga Labs, Public Sector Pension Investment Board, Rakuten, Inc., Senator Investment Group, SharesPost, Tencent, Third Point Management, UTA Capital

Source: Preqin Pro

Bold denotes US-based investor

Investor interest is unwavering as H1 posts strong fundraising totals

Fundraising figures thus far in 2019 forecast an equally, Steve Jurvetson and his celebrated track record at DFJ. if not more, successful year, than 2018 for US-based US-based venture capital funds closed in H1 2019 venture capital funds. Already this year 189 such funds spent an average of 13 months in market, which is have closed, collectively securing $24bn, which is just significantly lower than in previous years (Fig. 10). over half of the aggregate capital brought in last year What’s more, venture capital funds closed in H1 2019 (435 funds raised $47bn, Fig. 7). secured an average of 105% of their initial target size, demonstrating continued investor interest in the US Following the closure of Technology Crossover venture capital space. Ventures X in Q1, two more experienced US-based managers closed mega funds in Q2 2019 (Fig. 9). Expansion-stage funds continue to dominate in terms Andreessen Horowitz closed both LSV Fund I ($2bn) of fund size, with the three largest expansion-stage and Andreessen Horowitz Fund VI ($750mn); LSV funds closed in H1 2019 bringing in more capital than represents the firm’s first fund focused solely on all 80 general venture capital funds closed in the same expansion-stage investments, while the flagship fund period ($6.3bn vs. $5.7bn respectively, Fig. 9). Six of concentrates on early-stage opportunities. Lightspeed the 10 largest funds closed in H1 2019 focus on early- Venture Partners brought Lightspeed Venture Partners stage investments and are run by well-established Select III to over $1.3bn and Lightspeed Venture managers. Partners XII to $752mn. Most (95%) venture capital funds closed in the US At the other end of the spectrum, Future Ventures thus far in 2019 focus on domestic investments (Fig. closed the largest fund raised by an emerging manager 12). Reinforcing this, the few funds focused on Rest of at $200mn, which is sizeable for a newly established World investments are all micro venture capital funds firm. The impressive debut is likely due to co-founder (under $100mn in size).

Fig. 7: Annual US-Based Venture Capital Fig. 8: US-Based Venture Capital Funds Closed Fundraising, 2009 - H1 2019 by Size, 2009 - H1 2019

47 100% 43 435 90% 378 80% 34 374 32 70% 35 60% 285 299 26 24 50% 212 40% 18 189 15 16 173 30% 19 20% 119 123 131 10% 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 H1 2019

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Less than $50mn $50-99mn

H1 2019 $100-249mn $250-499mn No. of Funds Closed Aggregate Capital Raised ($bn) $500-$999mn $1bn or More

Source: Preqin Pro Source: Preqin Pro

Fig. 9: Largest US-Based Venture Capital Funds Closed in H1 2019

Fund Firm Fund Size (mn) Fund Type Geographic Focus Technology Crossover Technology Crossover Ventures X 3,000 USD Expansion/Late Stage Europe, North America, US Ventures Andreessen Horowitz LSV Fund I Andreessen Horowitz 2,000 USD Expansion/Late Stage US Lightspeed Venture Partners Lightspeed Venture Global, India, Israel, North 1,362 USD Expansion/Late Stage Select III Partners America, US Flagship Pioneering Special Venture Capital Flagship Pioneering 824 USD US Opportunities Fund II (General) Third Rock Ventures V Third Rock Ventures 770 USD Early Stage US Lightspeed Venture India, Israel, North Lightspeed Venture Partners XII 752 USD Early Stage Partners America, US Andreessen Horowitz Fund VI Andreessen Horowitz 750 USD Early Stage US Kleiner Perkins Caufield & Byers Kleiner Perkins Caufield 600 USD Early Stage US XVIII & Byers Accel London VI Accel 575 USD Early Stage Europe, Israel Accel XIV Accel 525 USD Early Stage US

Source: Preqin Pro

Fig. 10: US-Based Venture Capital Fundraising Fig. 11: US-Based Venture Capital Fundraising in Success, 2009 - H1 2019 H1 2019 by Strategy

25 103% 102% 104% 101% 80 88% 100% 96% 99% 77 81% 20 91% 20 20 18 105% 17 17 17 16 14 14 15 13 13

10 19 13 5 9.9 7.6 5.7 1.1 0 Average Time Spent on Road (Months) Time Spent on Road Average Seed 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Early Stage Capital H1 2019 Venture (General) Late Stage Average Time Spent on Road Expansion/ Average of Proportion of Target Size Achieved No. of Funds Closed Aggregate Capital Raised ($bn)

Source: Preqin Pro Source: Preqin Pro

Fig. 12: US-Based Venture Capital Funds Closed in H1 2019 by Primary Geographic Focus

95%

North America 1% 1% Asia Europe 1% Proportion of Funds Closed 1% Middle East 1% & Israel Latin America 1% Africa Australasia

Source: Preqin Pro

A huge pipeline of funds on the road make for a positive outlook

Nearly 200 US-based venture capital funds closed in Although nine of the 11 mega funds raising have a H1 2019; however, there are still another 1,004 funds general venture capital focus, stage-agnostic funds in market collectively seeking over $95bn (Fig. 13). still record a significantly lower average fund size This is a 20% increase in the number of funds on the than funds with an expansion-stage focus ($173mn vs. road from the same time last year and, when combined $283mn respectively). Since inexperienced managers with an already robust H1 for fundraising, is a strong will often take a stage-agnostic approach, fund sizes indicator that 2019 will outpace 2018 for full-year vary greatly between new and established managers. fundraising. Expansion-stage funds are typically run by experienced managers with a specific fundraising goal. Eleven funds in market are mega funds targeting $1bn or more, and represent nearly a quarter (24%) of total Venture capital funds in market have a wide geographic capital sought (Fig. 16). Of these mega funds, six have scope: twice as many funds focus on Rest of World a geographic scope that includes regions outside the investments as on European opportunities (25 vs. 11, US; however, only two funds aim to invest their entire Fig. 15). SoftBank Innovation Fund is responsible for pool of capital internationally. SoftBank Innovation most of the capital targeting the Rest of World region, Fund and The Rise Fund II were established to invest as it looks for $5bn to invest in Latin America. in Latin America and emerging markets respectively in line with each manager’s dedicated strategy to invest outside the US.

Fig. 13: US-Based Venture Capital Funds in Market over Time, 2009 - 2019

95.2

73.6 1,004

836 54.7

49.5 42.2 44.7 626 35.3 489 27.1 372 24.4 22.9 21.9 307 204 163 161 174 185

Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 No. of Funds Raising Aggregate Capital Targeted ($bn)

Source: Preqin Pro

Fig. 14: US-Based Venture Capital Funds in Fig. 15: US-Based Venture Capital Funds in Market by Strategy Market by Primary Geographic Focus

463 931 80.9 49.6 383

28.1

104 12.7 4.7 54

9.9 3.5 11 1.0 37 25 Early Stage Capital Seed Venture (General) North America Europe Asia Rest of World Late Stage Expansion/ Early Stage: Early No. of Funds Raising Aggregate Capital Targeted ($bn) No. of Funds Raising Aggregate Capital Targeted ($bn)

Source: Preqin Pro. Data as of July 2019 Source: Preqin Pro. Data as of July 2019

Fig. 16: Largest US-Based Venture Capital Funds in Market

Target Size Fund Firm (mn) Fund Type Geographic Focus Argentina, Brazil, Central America, Softbank Latin Venture Capital SoftBank Innovation Fund 5,000 USD Chile, Colombia, Mexico, South America Ventures (General) America New Enterprise Venture Capital New Enterprise Associates 17 3,600 USD US Associates (General) Venture Capital Emerging Markets, North Africa, The Rise Fund II TPG 3,500 USD (General) South Asia Deerfield Venture Capital Asia, Europe, Global, North Deerfield Private Design Fund IV 2,500 USD Management (General) America NovaQuest Pharma NovaQuest Capital Venture Capital 1,500 USD Europe, US Opportunities Fund V Management (General) Vivo Capital Fund IX Vivo Capital 1,500 USD Expansion/Late Stage China, US Venture Capital Vy Capital Holdings Vy Capital 1,200 USD US (General) Deerfield Healthcare Deerfield Venture Capital 1,000 USD US Innovations Fund II Management (General) Venture Capital Khosla Ventures VI Khosla Ventures 1,000 USD US (General) Venture Capital Europe, North America, US, West OrbiMed Private Investments VII OrbiMed Advisors 1,000 USD (General) Europe Y Combinator Continuity Y Combinator 1,000 USD Expansion/Late Stage US Affiliates Fund I

Source: Preqin Pro. Data as of July 2019

H1 2019 fundraising has responded well to the records set last year; some way to go to reach gender parity in the micro venture capital universe

US-based micro venture capital funds (those sized though still far from gender parity. In the past 10 at $100mn or less) have gained traction throughout years, women-owned micro venture capital funds the past decade, peaking at $7.7bn raised across 296 have secured $2.3bn, which is just under 6% of the vehicles in 2018 (Fig. 17). Coming off a record year total micro venture capital raised. From 2009 to 2014, for micro venture capital, 2019 is off to a solid start women-owned micro venture capital funds spent, on and seems poised for another good year, although it average, a lengthier time on the road than their male is slightly behind the torrid pace of 2018. With $3.4bn counterparts, although these funds tended to achieve a collected across 128 funds in H1, 2019 has already greater proportion of their initial target size. surpassed the aggregate capital raised and the number of funds closed yearly from 2009 to 2012. In more recent years, though, women-owned micro venture capital funds are spending less time on the Private equity fund of funds managers constitute road on average, while attaining similar levels of their the largest proportion of active investors in micro fundraising targets. In the past few years, the average venture capital funds, and represent two of the top time spent on the road by all micro venture capital 10 firms investing in micro venture capital funds (Fig. funds has increased from a low of 14 months in 2017 to 19). Retirement Plans of Duke University, a private hover at 17 months in both 2018 and H1 2019 (Fig. 18). sector pension fund, leads the group with 13 known commitments to funds of vintages 2009-2019. Early-stage funds are the most prominent among micro venture capital funds in market, with 314 such Data for the venture capital industry as a whole vehicles targeting an aggregate $12bn in H1 2019 (Fig. indicates that women receive significantly less funding 20). Seed funds lag behind general venture capital than men. For the micro venture capital industry, the funds in number, and target just under a third ($2.9bn) outlook is slightly better for women-owned firms, of the capital general venture funds are hoping to raise

Fig. 17: Annual US-Based Micro Venture Capital Fundraising, 2009 - H1 2019

6.9 296 7.7 253 5.7 256 6.5 4.8 193 185

2.8 150 4.4 3.4 2.7 128 2.3 2.0 109 74 71 78

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 H1 2019 No. of Funds Closed Aggregate Capital Raised ($bn)

Source: Preqin Pro

($9.2bn). Unsurprisingly, micro venture capital funds aggregate target of $1bn, while fundraising for Europe operating at the expansion stage, which secured just ($315mn) and Rest of World ($484mn) is not expected $125mn in H1 2019, are the smallest in number – the to cross the billion-dollar threshold. resource constraints of a sub-$100mn fund make deal- sourcing considerably more difficult than for larger CRCM Ventures’ Opportunity Fund holds the title as the funds. top performing US-based micro venture capital fund over vintages 2007-2015, with an IRR of 129% as of Q4 US-based micro venture capital funds in market 2018 – this marks a small dip from the 133% reported primarily focus on North American investment: a year prior (Fig. 22). The fund has now invested all the $24bn targeted across 581 vehicles dwarfs the committed capital and has been able to yield a DPI of targeted fundraising of Europe, Asia and the rest of the 2,910% in the five years since its inception. world (Fig. 21). Eighteen Asia-focused funds have an

Fig. 18: US-Based Micro Venture Capital Fundraising Success, 2009 - H1 2019

99% 22 99% 101% 102% 106% 92% 96% 96%

18 18 18 20 18 18 19 17 17 85% 15 82% 74%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 H1 2019

Average Time Spent on Road (Months) Average Proportion of Target Size Achieved

Source: Preqin Pro

Fig. 19: Most Active US-Based Micro Venture Capital Investors by Number of Known Fund Commitments (Vintages 2009-2019)

No. of Known Active VC Firm Type Commitments Mandate? Retirement Plans of Duke University Private Sector Pension Fund 14 No Grantham Foundation Foundation 9 No Commonwealth Financing Authority of Pennsylvania Government Agency 9 No Naver Corporate Investor 8 No New York State Common Retirement Fund Public Pension Fund 8 No Cendana Capital Private Equity Fund of Funds Manager 8 Yes Industry Ventures Private Equity Fund of Funds Manager 8 Yes Sobrato Family Holdings Single-Family Office 7 No Oregon Growth Board Government Agency 7 Yes Prudential Financial Insurance Company 7 No Kapor Center for Social Impact Foundation 7 No

Source: Preqin Pro

Fig. 20: US-Based Micro Venture Capital Funds Fig. 21: US-Based Micro Venture Capital Funds in Market by Strategy in Market by Primary Geographic Focus

23.7 314 12.3 581

9.2 197

85 2.9

18 1.2 1.0 6 0.3 18 9 0.5 Seed Early Stage Asia Capital World Venture Rest of Rest North Europe (General) America Late Stage Expansion/

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

Source: Preqin Pro Source: Preqin Pro

Fig. 22: Top Performing US-Based Micro Venture Capital Funds (Vintages 2007-2015)

Fund Size Geographic Net IRR Date Fund Firm Vintage (mn) Fund Type Focus (%) Reported Diversified Early Stage: CRCM Opportunity Fund CRCM Ventures 2013 38 USD Multi- 129.0 31-Dec-18 Start-up Regional Expansion/ Foresite Capital Fund I Foresite Capital 2012 100 USD US 65.8 31-Dec-18 Late Stage Vertical Venture Early Stage: Vertical Venture Partners Fund I 2014 51 USD US 65.8 30-Sep-18 Partners Start-up Early Stage: Revel Venture Fund I Revel Partners 2011 10 USD US 58.7 31-Dec-16 Seed IA Venture Strategies Fund I IA Ventures 2010 50 USD Early Stage US 51.6 31-Dec-18 Venture Social Leverage Social Leverage Capital Fund II 2015 20 USD Capital US 48.4 31-Dec-18 Capital (General) Cottonwood Early Stage: Cottonwood Technology Fund I 2010 20 USD US 46.0 31-Dec-18 Technology Fund Start-up Venture Brightstone Venture Capital Brightstone 2013 20 USD Capital US 45.0 30-Sep-18 Fund Venture Capital (General) Venture RiverVest RiverVest Venture Fund III 2014 80 USD Capital US 44.7 30-Sep-18 Ventures (General) Early Stage: Middle East YL Ventures II YL Ventures 2013 38 USD 42.1 31-Mar-18 Start-up & Israel

Source: Preqin Pro

Returns are impressing investors, and distributions are on course for an increase

Since the Global Financial Crisis (GFC), the Venture capital managers have continued to performance of US-based venture capital funds has successfully distribute capital to their investors at been exceptionally strong across all vintages. This has impressive returns, and institutions are responding been especially true in the last decade, with funds of accordingly. Between 2009 and 2017, annual called vintages 2010-2015 posting median IRRs in the double capital figures have more than doubled (Fig. 24). digits (Fig. 23). Distributions are on course for another increase: more capital was distributed over the first three quarters of In the vintage range examined, the top 10 performing 2018 than in the whole of 2017. Such growth should funds are all of vintage 2010 or later (Fig. 25), which affirm the reputation of the US venture capital industry reflects how fund managers were able to pick up the among LPs, and bodes well for the 1,000+ US-based pieces in the wake of the GFC and enjoy increasing venture capital funds currently trying to raise capital. success in their activities. Leading the way, the vintage 2014 fund Column Group II has a net IRR of 397% as of Q3 2018. In a short period of time, the fund has invested 80% of committed capital effectively, resulting in a DPI of 116% and RVPI of 120%.

Fig. 23: US-Based Venture Capital Funds: Median Net IRRs and Quartile Boundaries by Vintage Year

40%

30%

20%

10%

0% Net IRR since Inception Net IRR since -10%

-20% 2007 2008 2009 2010 2011 2012 2013 2014 2015

Top Quartile Net IRR Boundary Median Net IRR Bottom Quartile Net IRR Boundary

Source: Preqin Pro

Fig. 24: US-Based Venture Capital Funds: Annual Amount Called up, Distributed and Net Cash Flow, 2007 - Q3 2018

70 60 57

50 44 39 38 40 36 36 37 37 34 33 34 28 28 30 30 26 25 25 27 25 21 23 21 22 20 12 10 0 -10 -20 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q3 2018

Capital Called up ($bn) Capital Distributed ($bn) Net Cash Flow ($bn)

Source: Preqin Pro

Fig. 25: Top Performing US-Based Venture Capital Funds (Vintages 2007-2015)

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

The Column Group 2014 322 USD Early Stage US 397.0 30-Sep-18

Early Stage: Diversified Multi- CRCM Ventures 2013 38 USD 129.0 31-Dec-18 Start-up Regional Expansion/Late Foresite Capital 2012 100 USD US 65.8 31-Dec-18 Stage Early Stage: Vertical Venture Partners 2014 51 USD US 65.8 30-Sep-18 Start-up Venture Capital DCM 2011 150 USD Asia 65.4 30-Jun-18 (General) Venture Capital DCM 2014 330 USD Asia 62.6 30-Jun-18 (General) Revel Partners 2011 10 USD Early Stage: Seed US 58.7 31-Dec-16 Venture Capital Flagship Pioneering 2010 269 USD US 56.4 31-Dec-17 (General) Venture Capital OrbiMed Advisors 2013 735 USD US 56.1 30-Sep-18 (General) IA Ventures 2010 50 USD Early Stage US 51.6 31-Dec-18

Source: Preqin Pro

No movement in the top 10 managers but women-owned firms gather momentum

The league table of the 10 largest US-based venture Oak HC/FT Partners has raised the two largest funds capital fund managers remains unchanged from of a women-owned firm, with both closing well over last quarter, even though several managers have their targets on $500mn and $600mn. Neither Scale since closed additional funds (Fig. 26). Tiger Global nor Oak are currently raising a fund, but women-owned Management tops the table by total capital raised. managers are responsible for 101 funds currently in However, with no venture capital fund currently in market, which are collectively seeking more than $5bn. market, other firms such as Sequoia Capital, which is raising several funds concurrently, are snapping at its While nine of the top 10 women-owned firms are based heels. on the East or West Coast, their locations are more varied than the top 10 firms generally as they spread Firms on the East and West Coast dominate the across six states, including Arboretum Ventures in venture capital fundraising market with all top 10 Michigan. To compete with established managers, it managers headquartered in either New York or is possible that women-owned firms are attempting California. Although GPs are concentrated on either to plant roots in smaller or up-and-coming venture coast, many of the firms employ a global investment capital hubs. strategy or separate fund series dedicated to investments in different markets. Accel, Sequoia Capital and Lightspeed Venture Partners each have Fig. 26: Largest US-Based Venture Capital Fund series dedicated to India and China among other Managers by Aggregate Capital Raised in the geographies. Last 10 Years

Menlo Park-based Sequoia Capital is estimated to Total Funds Raised in Last 10 hold the largest amount of dry powder of all US-based Firm Headquarters Years ($bn) venture capital firms ($4.9bn, Fig. 28). The firm focuses Tiger Global New York, NY 13.0 on early-stage investments in the electronics sector, Management including components, systems, software and services Sequoia Capital Menlo Park, CA 12.3 companies, preferring to partner with businesses early New Enterprise Menlo Park, CA 11.5 on and accelerate company growth. Associates Andreessen Menlo Park, CA 9.2 US-based venture capital firms owned by women have Horowitz Lightspeed Venture collectively raised more than $11bn over the past 10 Menlo Park, CA 7.5 Partners years, bringing in over $1bn in 2019 thus far. Of the 16 Kleiner Perkins funds closed in 2019 YTD by women-owned firms, only Menlo Park, CA 6.1 Caufield & Byers three secured more than $100mn; that being said, the Deerfield New York, NY 5.5 funds achieved an average of 103% of their targeted Management capital. Technology Menlo Park, CA 5.5 Crossover Ventures The largest women-owned venture capital firm, Scale Accel Palo Alto, CA 5.5 Venture Partners is also one of the oldest firms on the Bessemer Venture Larchmont, NY 5.1 list (Fig. 27). Founded in 2000, the firm has raised just Partners under $1.3bn across four funds in the past 10 years. Source: Preqin Pro

Fig. 27: Largest US-Based Women-Owned Venture Capital Firms by Aggregate Capital Raised in the Last 10 Years

Firm Headquarters Total Funds Raised in Last 10 Years ($mn) Scale Venture Partners Foster City, CA 1,290 Oak HC/FT Partners Greenwich, CT 1,100 Greycroft Partners New York, NY 799 Forerunner Ventures San Francisco, CA 725 Arboretum Ventures Ann Arbor, MI 683 DBL Partners San Francisco, CA 551 Biomatics Capital Partners Seattle, WA 500 Canvas Ventures Portola Valley, CA 475 Defy.vc Woodside, CA 413 .406 Ventures Boston, MA 392

Source: Preqin Pro

Fig. 28: Largest US-Based Venture Capital Fund Managers by Estimated Dry Powder

Firm Headquarters Estimated Dry Powder ($bn) Sequoia Capital Menlo Park, CA 4.9 Tiger Global Management New York, NY 4.1 Andreessen Horowitz Menlo Park, CA 3.9 Technology Crossover Ventures Menlo Park, CA 3.4 Lightspeed Venture Partners Menlo Park, CA 3.0 Accel Palo Alto, CA 2.6 Apple Advanced Manufacturing Fund Cupertino, CA 2.6 GGV Capital Menlo Park, CA 2.1 New Enterprise Associates Menlo Park, CA 2.0 Bessemer Venture Partners Larchmont, NY 1.8

Source: Preqin Pro

Fig. 29: Aggregate Capital Raised by US-Based Venture Capital Fund Managers by Strategy over the Last 10 Years

180 160.4 160

140

120 98.7 100

60 52.5

40 Aggregate Capital Raised ($bn) Raised Capital Aggregate 20 11.2

0 Seed Early Stage Expansion/Late Stage Venture Capital (General)

Source: Preqin Pro

Foundations start to drop off in the US venture capital space

Foundations are the most prominent investor in US located in North America, indicating a clear preference venture capital, accounting for 20% of all LP activity in for domestic managers (Fig. 31). the venture capital market for funds of vintages 2009- 2019, followed by private and public sector pension A large share of US-based investors currently hold less funds at 14% and 13% respectively (Fig. 32). Although than $1bn in assets: 24% manage less than $500mn venture capital features frequently in foundations’ and 10% manage between $500mn and $999mn in investment portfolios, only one foundation, Sherman assets (Fig. 33). Only 7% of venture capital investors Fairchild Foundation, has a place in the top 10 investors located in the US hold more than $100bn in assets. by number of known commitments (Fig. 30). US-based venture capital firms continue to attract When compared to Q1 2019, foundations have dropped larger and more sophisticated investors compared from representing 19% of US-based venture capital to managers in other regions, reinforcing the strong investors to 17%, suggesting a more well-rounded preference for the market in North America. base of LP types targeting the space.

US-based venture capital firms have consistently held the attention of larger, more sophisticated investors. A total of five pension funds – three public and two private sector – feature in the top 10 most active investors in US-based venture capital. San Francisco Employees’ Retirement System remains at the top of the group with 66 known venture capital commitments across vintage 2009-2019 funds.

Unchanged from our previous study, the majority (78%) of investors in US-based venture capital funds are

Fig. 30: Most Active Investors in US-Based Venture Capital Funds by Number of Known Fund Commitments (Vintages 2009-2019)

No. of Known Active VC Firm Type Commitments Mandate? San Francisco Employees' Retirement System Public Pension Fund 66 No MetLife Insurance Company Insurance Company 53 No Texas County & District Retirement System Public Pension Fund 52 No Retirement Plans of Duke University Private Sector Pension Fund 49 No University of Texas Investment Management Company Endowment Plan 49 No Alaska Permanent Fund Corporation Sovereign Wealth Fund 47 No University of Michigan Endowment Endowment Plan 47 No Liberty Mutual Retirement Benefit Plan Private Sector Pension Fund 44 No Los Angeles Fire and Police Pension System Public Pension Fund 44 No Sherman Fairchild Foundation Foundation 41 No

Source: Preqin Pro

Fig. 31: Investors in US-Based Venture Capital Funds by Investor Location (Vintages 2009-2019)

78%

North America 10% 10% Asia Europe Proportion of Funds Closed

Rest of World Source: Preqin Pro

Fig. 32: Investors in US-Based Venture Capital Funds by Investor Type (Vintages 2009-2019)

20%

14% 13% 9% 9% 8% 7% 7% 6% 4% 3% Proportion of Investors Proportion Other Foundation Fund Endowment Plan Funds Manager Funds Corporate Investor Private Equity Firm Insurance Company Insurance Government Agency Public Pension Fund Investment Company Investment Private Equity Fundof Private Sector Pension

Source: Preqin Pro

Fig. 33: Investors in US-Based Venture Capital Funds by Assets under Management (Vintages 2009-2019)

37%

24%

17%

10% Proportion of Investors Proportion 7% 6%

Less than $500mn $500-999mn $1-9.9bn $10-49.9bn $50-99.9bn $100bn or More

Source: Preqin Pro