US VENTURE CAPITAL in Q1 2020 PREQIN and FIRST REPUBLIC UPDATE: US VENTURE CAPITAL in Q1 2020 Contents

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PREQIN AND FIRST REPUBLIC UPDATE: US VENTURE CAPITAL IN Q1 2020 PREQIN AND FIRST REPUBLIC UPDATE: US VENTURE CAPITAL IN Q1 2020 Contents

3 Foreword

4 Deals & Exits

7 Fundraising

10 Funds in Market

12 Micro Venture Capital

15 Performance

17 Fund Managers

19 Investors

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Following a robust 2019, US venture capital activity slowed considerably in Q1 2020. A total of 963 deals were completed in the US for an aggregate $27bn, a 19% decline from 1,191 deals in Q1 2019. Other key statistics from the quarter include:

• Exit activity increased compared with the prior year, with 147 venture capital-backed exits valued at an aggregate $26bn, in contrast to 142 exits at $14bn in Q1 2019. • In the fundraising market, 83 US-based venture Samir Kaji Senior Managing Director, First Republic Bank capital funds held a final close, down from 109 in Q1 2019. That said, those funds that closed raised $27bn, a substantial total representing over half focus on healthcare, reflecting investor interest in of the capital raised in 2019 ($50bn). Mega funds the sector which is even more pronounced due to drove this number as seven funds closed at over COVID-19. $1bn, compared to just six in all of 2019. • Following 2019’s record totals, micro venture • At the other end of the market, funds that raised capital fundraising momentum slowed significantly $50mn or less accounted for only 42% of all funds in Q1 2020. Micro venture capital funds (sized at closed, the lowest quarterly level in 10 years. The $100mn or less) secured just $1.1bn in aggregate, trend is likely the result of many large managers with only 47 funds reaching a final close. The coming back to market and closing in Q1, along funds that did close, however, did so with success, with the delay many smaller managers are facing spending an average of only 15 months on the due to COVID-19. road. • The fundraising pipeline has grown to record heights, with 1,085 funds seeking $99bn in commitments. Of those funds, 486 early-stage funds seeking $30bn in capital represent 45% of all funds on the road and 31% of targeted capital. Four of the 10 largest US-based funds in market

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Deal flow slowed in Q1 2020 as COVID-19 introduced practical challenges for deal- makers

Following a strong 2019, venture capital activity in completed in the US in Q1 2020 (Fig. 2). Series B and the US got off to a slow start in 2020. With social Seres D and later investments constituted the joint- distancing and travel restrictions imposed across largest share (21%) of aggregate deal value among the US to contain the spread of COVID-19, many financing rounds. Information technology was the most business meetings were canceled. A total of 963 active industry for US-based venture capital investment deals were completed for venture capital companies in the quarter, representing 54% of all deals and 40% in the US in Q1 2020, worth an aggregate $27bn (Fig. of total deal value (Fig. 4). 1). This represents a decline of 19% from 1,191 deals completed in Q1 2019. In Q1 2020, there were 147 venture capital-backed exits for US-based companies, valued at an aggregate Despite the slowdown in activity, some large deals were $26bn (Fig. 5). This represents an increase in activity still completed in Q1. The five largest transactions (Fig. compared to Q1 2019, when 142 exits were completed 3) accounted for 23% ($6.1bn) of the aggregate value for a total $14bn. In line with the historical trend, trade of venture capital deals in the quarter. These included sales were the most common exit type in Q1 2020: they the $2.25bn financing round held by Waymo LLC, a accounted for 78% of all venture capital-backed exits of developer of self-driving car technology which began US-based portfolio companies. Each of the five largest as the Google Self-Driving Car Project in 2009. exits completed in Q1 2020 were also trade sales (Fig. 6), led by the $7.1bn trade sale of Credit Karma, Inc. Early-stage investments (Series A and earlier) to Intuit, Inc. and the $5.3bn trade sale of Plaid Inc. to accounted for half of all venture capital deals Visa Inc.

Fig. 1: Venture Capital Deals* for US-Based Companies, 2009 - 2020 YTD

8,000 120

6,826 Aggregate Deal Value ($bn) 7,000 6,468 6,355 6,057 100 5,773 6,000 5,638 5,489 5,078 4,835 80 5,000 4,200 4,000 3,521 60 3,000 No. of Deals 40 2,000 960 20 1,000 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD No. of Deals Aggregate Deal Value ($bn)

Source: Preqin Pro. Data as of March 2020 *Figures exclude add-ons, grants, mergers, venture debt, and secondary stock purchases.

Fig. 2: Venture Capital Deals for US-Based Companies in Q1 2020 by Stage

30% 28%

25% 22% 21% 21% 20% 18% 16% 16% 15% 10% 10% 9% 10% 6% 7% 7% 5% Proportion of Total Proportion 5% 2% 1% 0.4% 0.04% 0.2%0.4% 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

Fig. 3: Largest Venture Capital Deals* in the US in Q1 2020

Total Known Portfolio Deal Size Funding Primary Company Stage Deal Date ($mn) ($mn) Investor(s) Industry

Silver Lake, CPP Investment Board, Mubadala Investment Company, Magna Waymo LLC Seed Mar-20 2,250 2,250 Industrials International, Andreessen Horowitz, AutoNation, Inc., Alphabet SPARX Group, Intel Capital, Capricorn Management, JetBlue Technology Ventures, Series C/ Joby Aero, Inc. Jan-20 590 720 Toyota AI Ventures, AME Cloud Ventures, Industrials Round 3 Baillie Gifford, Global Oryx Company Limited, Toyota Motor Corporation Mirae Asset Global Investments, Khosla Impossible Series F/ Consumer Mar-20 500 1,223 Ventures, Horizons Ventures, Temasek Foods Inc. Round 6 Discretionary Holdings Altimeter Capital, Iconiq Capital, Madrona Series G/ Venture Group, Redpoint Ventures, Sequoia Information Snowflake Inc. Feb-20 479 1,369 Round 7 Capital, Sutter Hill Ventures, Dragoneer Technology Investment Group, Salesforce Ventures Series C/ Pony.ai, Inc. Feb-20 462 726 Toyota Motor Corporation Industrials Round 3 Shell New Energies, Macquarie Group, Mori Building Company, Pitango Venture Via Series E/ Capital, 83 North, Hearst Ventures, Consumer Transportation, Mar-20 400 757 Round 5 Ervington Investments, Planven Investments, Discretionary Inc. Broadscale Group LLC, RiverPark Advisors, Exor Seeds Tiger Global Management, Greenoaks Capital, TPG, Bessemer Venture Partners, Series F/ Technology Crossover Ventures, Durable Information Toast, Inc. Feb-20 400 896 Round 6 Capital Partners, G Squared, Light Street Technology Capital Management, T Rowe Price, Alta Park Capital Quibi Holdings, Unspecified Telecoms & Mar-20 350 1,780 Unspecified Investor(s) LLC Round Media CPP Investment Board, Public Sector Pension Investment Board, Lightspeed Venture Series G/ Information Netskope, Inc. Feb-20 340 740 Partners, Geodesic Capital, Iconiq Capital, Round 7 Technology Sapphire Ventures, Social Capital, Accel, Base Partners, Sequoia Capital PayU, Boston Consulting Group, Goldfinch Financial & Bakkt Holdings, Series B/ Partners Pty Ltd, CMT Digital, Pantera Mar-20 300 483 Insurance LLC Round 2 Capital, Intercontinental Exchange, Inc., Services M12, SGH Capital, CityBlock Capital Source: Preqin Pro Bold denotes US-based investor. *Figures exclude add-ons, grants, mergers, venture debt, and secondary stock purchases.

Fig. 4: Venture Capital Deals* for US-Based Companies in Q1 2020 by Industry

60% 54% 50% 40% 40% 30% 25% 21% 20% 10% 15% 10% 10% 5% 5% 4% 4% Proportion of Total Proportion 2% 1% 1% 1% 0% 1%0% 1% 1% 0% Real Estate Utilities Services Media Energy & Energy Business Services Insurance Industrials Healthcare Financial & Technology Information Telecoms & 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 - 2020 YTD

1,200 100

90 Aggregate Exit Value ($bn) 1,000 80 70 800 60 600 50 40 No. of Exits 400 30 20 200 10 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD Trade Sale Sale to GP IPO Write-off Aggregate Exit Value ($bn)

Source: Preqin Pro. Data as of March 2020

Fig. 6: Largest Venture Capital-Backed Exits of US-Based Companies in Q1 2020

Initial Total Known Portfolio Investment Funding Acquiror Exit Value Primary Company Date ($mn) Exit Type Exit Date (Exit) ($mn) Industry

Business Credit Karma, Inc. Oct-08 368 Trade Sale 24-Feb Intuit, Inc. 7,100 Services Software & Plaid Inc. Sep-13 309 Trade Sale 13-Jan Visa Inc. 5,300 Related Gilead Forty Seven, Inc. Feb-16 161 Trade Sale 2-Mar 4,900 Healthcare Sciences, Inc. Salesforce. Software & Vlocity, Inc. Apr-15 153 Trade Sale 25-Feb 1,330 com, Inc. Related Eli Lilly and Dermira, Inc. Dec-10 130 Trade Sale 10-Jan 1,100 Healthcare Company

Source: Preqin Pro

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

Capital flocked to mega funds in Q1 2020 despite the challenges posed by COVID-19

With the COVID-19 pandemic roiling economies across Fig. 7: US-Based Venture Capital Fundraising, the globe, raising capital in Q1 2020 was a challenge for 2010 - Q1 2020 some venture capital firms. Just 83 US-based venture

600 60 Aggregate Capital Raised capital funds held a final close (Fig. 7), down from 515 415 445 109 in Q1 2019. The small number of fund closures 500 385 50 reflects the difficulties many market participants faced 400 305 40 290 ($bn) in keeping business operations steady amid social 213 300 175 30 distancing measures. That said, those funds that did 134 124 close raised a substantial amount of capital, at $27bn, 200 20 83 100 10 which is over half of the total capital raised in 2019 Closed No. of Funds ($50bn). 0 0

Mega funds drove the success of US-based venture 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Q1 capital fundraising in Q1 2020. Seven mega funds Date of Final Close (vehicles sized at $1bn or more) closed in the quarter, No. of Funds Closed compared to six mega funds in the whole of 2019. Aggregate Capital Raised ($bn) These were led by Tiger Global Private Investment Source: Preqin Pro Partners XII ($3.75bn) and New Enterprise Associates 17 ($3.6bn, Fig. 8). Mega funds represented 9% of the in January of this year, raising a total of $900mn. It is total number of funds closed in Q1, which is the largest one of the two funds launched by Spark Capital that quarterly proportion in the past 10 years (Fig. 9). The held closes in Q1, and one of the largest funds the firm trend of capital consolidation in the fundraising market has ever closed. continues. At the other end of the market, funds raising $50mn or The seven mega funds that closed in Q1 invest across less accounted for 42% of the number of funds closed a range of sectors, including information technology in Q1 2020. This is one of the lowest quarterly levels and healthcare. B Capital Group raised $750mn for B observed in the past 10 years. The overall trend shows Capital Fund II, almost twice the size of its predecessor venture capital funds are getting larger, as investor fund B Capital Fund ($360mn), and $150mn over its demand for venture capital – and in particular the target size. The firm is led by Facebook co-founder larger, more established managers – persists. Eduardo Saverin and Raj Ganguly, who have worked at Bain Capital and served on the board at a variety of tech companies. The fund invests in a range of industries, from AI-powered health systems to smaller businesses in the fintech space.

Another example of a large venture capital fund entering the market is Spark Capital Growth III, which was launched in early 2019. The fund held a final close

Fig. 8: Largest US-Based Venture Capital Funds Closed in Q1 2020

Fund Size Fund Firm ($mn) Fund Type Geographic Focus

Tiger Global Private Investment Tiger Global 3,750 Venture Capital (General) China, India, US Partners XII Management New Enterprise New Enterprise Associates 17 3,600 Early Stage US Associates Healthcare Royalty Healthcare Royalty Partners IV 1,830 Venture Capital (General) Europe, Asia, US Partners Founders Fund Growth Founders Fund 1,500 Expansion/Late Stage US Battery Ventures XIII Battery Ventures 1,200 Venture Capital (General) North America, Asia Founders Fund VII Founders Fund 1,200 Early Stage US General Catalyst General Catalyst Group X 1,000 Venture Capital (General) US Partners Spark Capital Growth Fund III Spark Capital 900 Expansion/Late Stage US Andreessen Horowitz Bio Fund III Andreessen Horowitz 750 Early Stage US B Capital Fund II B Capital Group 750 Venture Capital (General) North America, Asia

Source: Preqin Pro

Fig. 9: US-Based Venture Capital Funds Closed by Fund Size, 2010 - Q1 2020

1% 1% 3% 2% 1% 2% 1% 100% 5% 4% 3% 2% 4% 7% 3% 4% 4% 4% 6% 5% 5% 9% 90% 9% 9% 7% 10% 8% 14% 11% 8% 12% 10% 12% 80% 17% 19% 12% 17% 17% 20% 13% 70% 16% 22% 21% 25% 60% 17% 16% 14% 14% 7% 6% 18% 14% 18% 18% 13% 50% 10% 40% 30% 55% 56% 53% 53% 54% 52% 48% 20% 43% 47% 47% 42%

Proportion of Funds Closed of Funds Proportion 10% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Date of Final Close Less than $50mn $50-99mn $100-249mn $250-499mn $500-999mn $1bn or More

Source: Preqin Pro

Fig. 10: US-Based Venture Capital Fundraising Success, 2010 - Q1 2020

25 105% Proportion of Target Size Achieved 21.6 21.7 20 18.6 100% 18.3 17.6 18.3 16.5 15.9 15.2 14.8 15 14.1 95%

10 90%

5 85% Time Spent in Market (Months) Time Spent in Market 0 80% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Date of Final Close Average Time Spent in Market (Months) Average Proportion of Target Size Achieved Source: Preqin Pro

Fig. 11: US-Based Venture Capital Fundraising in Q1 2020 by Strategy

40 38 13.0 14 35 Aggregate Capital Raised ($bn) 35 12 10.6 30 10 25 8 20 6 15 4 10 2.8 No. of Funds Closed No. of Funds 6 5 4 2 0.2 0 0 Seed Early Stage Expansion/ Venture Capital Late Stage (General) No. of Funds Closed Aggregate Capital Raised ($bn)

Source: Preqin Pro

Fig. 12: US-Based Venture Capital Funds Closed in Q1 2020 by Primary Geographic Focus

94%

North America 2% 1% Asia Europe

Latin America 1%

Diversified Multi-Regional

Proportion of Funds Closed

Source: Preqin Pro

With COVID-19 disrupting business operations, the fundraising pipeline grows to record heights

The number of US-based venture capital funds in percent of funds on the road are technology focused, market has surpassed 1,000 for the first time. At the seeking an aggregate $32bn, while 12% are looking to beginning of April, 1,085 funds are seeking $99bn in raise $20bn to invest in the healthcare industry. investor commitments – both are record totals. Given that the number of vehicles reaching a final close in Q1 Even before COVID-19 was declared a pandemic, firms 2020 was down on the previous quarter (see page 7), were making large investments in US healthcare this is likely a result of the COVID-19 pandemic. With venture capital. Of the 10 largest US-based venture social distancing and travel restrictions disrupting capital funds in market (Fig. 16), four focus on business operations, conducting a successful fundraise healthcare. Each of these vehicles is targeting a in Q1 2020 was considerably challenging. fundraise of at least $1bn. The largest is Blackstone Life Science’s Blackstone Life Sciences V, a new Early-stage funds represent the greatest share of entrant to the list having launched in Q1 2020. The funds in market as of April 2020. The 486 early-stage fund is seeking $4.6bn to invest in biotechnology and funds seeking capital represent 45% of all funds on pharmaceutical companies, as well as companies the road, and the aggregate $30bn sought by these producing medical devices & equipment and operating vehicles accounts for 31% of all targeted capital (Fig. in the general healthcare sector. 14). General venture capital funds are responsible for the bulk (51%) of targeted capital. The pandemic is also drawing attention to technological capabilities, and there are several Information technology and healthcare remain active information-technology-focused mega funds in market. sectors for venture capital investment. Thirty-six Another new entrant to the top 10 is Bedford Fund, an

Fig. 13: US-Based Venture Capital Funds in Market, 2010 - 2020

1,200 120 1,085 Aggregate Capital Targeted ($bn)

1,000 952 100 780 800 80 563 600 60 475 400 347 40 183 303 No. of Funds Raising No. of Funds 175 200 141 162 20

0 0 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20

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

Source: Preqin Pro

opportunity zone fund run by Bedford Funds, a first- generation, micro-grid, smart city, smart building, time fund manager based in Pennsylvania. As with 94% energy technology, AI, cybersecurity, and workforce of US-based funds currently in market, Bedford Fund development. Two other mega funds in market are invests across the US. The fund is targeting $2bn and focused on the information technology sector: Khosla focuses primarily on Pittsburgh and the Tri-state area, Ventures VI and Y Combinator Continuity Affiliates Fund investing in companies operating in areas of power I, both of which are seeking $1bn.

Fig. 14: US-Based Venture Capital Funds in Fig. 15: US-Based Venture Capital Funds in Market by Strategy Market by Primary Geographic Focus Aggregate Capital Targeted ($bn) 600 60 1,200 85.3 90 Aggregate Capital Targeted ($bn) 50.8 486 1,015 80 500 50 1,000 417 70 400 40 800 60 30.3 300 30 50 600 40 200 20 116 12.7 400 30

No. of Funds Raising No. of Funds 66 100 5.3 10 Raising No. of Funds 20 200 9.1 0.7 4.0 10 0 0 10 31 29 Seed Early Expansion/ Venture 0 0 Stage Late Stage Capital North Europe Asia Rest of (General) America World

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

Source: Preqin Pro. Data as of April 2020 Source: Preqin Pro. Data as of April 2020

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

Target Size Fund Firm ($mn) Fund Type Geographic Focus

Argentina, Brazil, Softbank Latin America Central America, Chile, SoftBank Innovation Fund 5,000 Venture Capital (General) Ventures Colombia, Mexico, South America Blackstone Life Sciences V Blackstone Life Sciences 4,580 Venture Capital (General) US Emerging Markets, The Rise Fund II TPG 2,500 Venture Capital (General) North Africa, South Asia Bedford Fund Bedford Funds 2,000 Venture Capital (General) US NovaQuest Pharma NovaQuest Capital 1,500 Expansion/Late Stage Europe, US Opportunities Fund V Management Deerfield Healthcare Deerfield Management 1,000 Venture Capital (General) US Innovations Fund II Khosla Ventures VI Khosla Ventures 1,000 Venture Capital (General) US OrbiMed Private Investments Europe, North America, OrbiMed Advisors 1,000 Venture Capital (General) VII US, West Europe Y Combinator Continuity Y Combinator 1,000 Venture Capital (General) US Affiliates Fund I DCM IX DCM 750 Venture Capital (General) China, Japan, US

Source: Preqin Pro. Data as of April 2020

Micro venture capital fundraising slows in tandem with the overall market, but funds closed in Q1 did so faster than recent vintages

Following a record fundraising year for US-based micro funds closed, but for a lower total of $360mn. There venture capital funds in 2019, momentum slowed are more early-stage micro vehicles in market, though, significantly in Q1 2020. Micro venture capital funds and they are targeting more capital than general micro (sized at $100mn or less) secured just $1.1bn in the funds (Fig. 20). first quarter of 2020 (Fig. 17). And with only 47 funds reaching a final close, the micro venture capital market The majority of the top performing US-based micro is on track to record its lowest fundraising year since venture capital funds employ an early-stage strategy. 2012. The best performing fund over the 2010-2017 vintages, CRCM Opportunity Fund, is an early-stage vehicle The micro venture capital funds that did close in Q1 focused on Asia; the fund has an IRR of 129.0% as of 2020, however, did so with success. On average, funds 31 December 2018 (Fig. 22). CRCM Opportunity Fund closed in Q1 had spent 15.3 months on the road, which invests across a range of industries and has distributed reflects a significantly faster pace than recent vintages over $1bn to investors. (Fig. 18). And while the pace picked up, funds were still able to secure an average of 99% of their target size. The most common investor type in US-based micro venture capital funds are foundations. With nine known Since 2015, early-stage micro venture capital funds commitments, Grantham Foundation has been the have achieved a greater average proportion of targeted most active such investor in funds of vintages 2010- close size than general micro venture capital funds. 2020 (Fig. 19). Richard King Mellon Foundation and But in Q1 2020 general micro venture capital funds Augustana College (South Dakota) are new entries raised an average of 105% of targeted capital, which to the list of most active investors in US-based micro compares with 93% for early-stage micro venture venture capital this quarter, with eight and seven capital funds. General venture capital funds raised known commitments to vintage 2010-2020 funds, the largest amount of capital at $611mn, through 21 respectively. vehicles. Nearly the same number (20) of early-stage

Fig. 17: US-Based Micro Venture Capital Fundraising, 2010 - Q1 2020

400 10 Aggregate Capital Raised ($bn) 353 305 350 9 8 300 287 265 7 250 6 201 196 200 5 151 4 150 110 47 3 100 76 81 No. of Funds Closed No. of Funds 2 50 1 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Date of Final Close No. of Funds Closed Aggregate Capital Raised ($bn)

Source: Preqin Pro

Fig. 18: US-Based Micro Venture Capital Fundraising Success, 2010 - Q1 2020

30 120% Proportion of Target Size Achieved

25 24.1 100% 20.0 19.1 19.6 18.8 20 17.8 18.3 18.3 17.9 80% 16.4 15.3 15 60%

10 40%

5 20% Time Spent in Market (Months) Time Spent in Market 0 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Date of Final Close Average Time Spent in Market (Months) Average Proportion of Target Size Achieved

Source: Preqin Pro

Fig. 19: Most Active Investors in US-Based Micro Venture Capital Funds by Number of Known Fund Commitments (Vintages 2010-2020)

No. of Known Active VC Investor Type Commitments Mandate?

Retirement Plans of Duke University Private Sector Pension Fund 20 No New York State Common Retirement Fund Public Pension Fund 12 No Grantham Foundation Foundation 9 Yes Industry Ventures Secondary Fund of Funds Manager 9 Yes Cendana Capital Private Equity Fund of Funds Manager 8 Yes Naver Corporate Investor 8 Yes Richard King Mellon Foundation Foundation 8 No Kapor Center for Social Impact Foundation 7 No Sobrato Family Holdings Single-Family Office 7 No Augustana College (South Dakota) Endowment Plan 6 No International Finance Corporation Government Agency 6 No Korea Venture Investment Corporation Government Agency 6 Yes Prudential Financial Insurance Company 6 No Robert Wood Johnson Foundation Foundation 6 No University of Texas Investment Management Company Endowment Plan 6 No International Finance Corporation Government Agency 6 No Commonwealth Financing Authority of Pennsylvania Government Agency 6 No Korea Venture Investment Corporation Government Agency 6 Yes

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 Aggregate Capital Targeted ($bn) 350 13.2 14 700 30 Aggregate Capital Targeted ($bn) 315 583 300 12 600 24.1 25 250 10 8.6 500 193 20 200 8 400 15 150 6 94 300 100 3.3 4 10 200 No. of Funds Raising No. of Funds 1.2 50 2 Raising No. of Funds 20 100 0.3 1.0 0.9 5 0 0 5 16 18 0 0 Seed Early Expansion/ Venture Stage Late Stage Capital North Europe Asia Rest of (General) America World

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

Source: Preqin Pro. Data as of April 2020 Source: Preqin Pro. Data as of April 2020

Fig. 22: Top Performing US-Based Micro Venture Capital Funds (Vintages 2010-2017)

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

Early Stage: Diversified CRCM Opportunity Fund CRCM Ventures 2013 38 129.0 31-Dec-18 Start-up Multi-Regional Expansion/Late Foresite Capital Fund I Foresite Capital 2012 100 North America 67.5 30-Jun-19 Stage Early Stage: Tusk Venture Partners I Tusk Ventures 2016 36 North America 64.6 30-Sep-19 Start-up IA Venture Strategies IA Ventures 2010 50 Early Stage North America 52.9 30-Sep-19 Fund I Cervin Ventures II Cervin Ventures 2016 14 Early Stage North America 51.9 30-Sep-19 Opportunities Fund Diversified TheVentureCity Fund I TheVentureCity 2017 50 Early Stage 51.9 31-Dec-19 Multi-Regional Social Leverage Capital Social Leverage Venture Capital 2015 20 North America 48.4 31-Dec-18 Fund II Capital (General) Cottonwood Technology Cottonwood Early Stage: 2010 20 North America 46.0 31-Dec-19 Fund I Technology Fund Start-up Brightstone Venture Brightstone Venture Venture Capital 2013 20 North America 45.0 30-Sep-18 Capital Fund Capital (General) Forerunner Forerunner Builders I 2017 59 Early Stage North America 43.6 30-Sep-19 Ventures

Source: Preqin Pro

Performance remains robust but capital distributions appear to be slowing

US-based venture capital funds have posted strong The negative net cash flow to investors in H1 2019 performance over the past decade. As shown in Fig. 23, follows two consecutive years of similar activity. The US-based venture capital funds of vintage 2010 have slower distributions may indicate that fund managers consistently delivered median net IRRs above 12%. All are waiting for more favorable market conditions vintages up to and inclusive of 2016 record positive before exiting existing investments. IRRs for even the lower quartile boundary. And while lower-quartile vintage 2017 funds are currently posting The majority of top performing vintage 2010-2017 negative returns, it is anticipated that these will venture capital funds in the US target investment in improve with time as these funds’ investments mature North America. Fig. 25 also features two Asia-focused in the coming years. funds managed by California-based DCM, while the top performing fund in the period analyzed – CRCM Throughout H1 2019, US-based venture capital Opportunity Fund – employs a diverse geographic managers called up an estimated $35bn of investor approach. Foresite Capital Fund I is the only fund in the capital, meaning activity in 2019 is on course to reach top performer table to focus on expansion/late-stage record annual figures for the sixth consecutive year investments. The fund targets healthcare investments, (Fig. 24). On the other hand, distributions appear to be specifically in opportunities arising from the reform of slowing. With $22bn in capital distributions recorded healthcare drug and healthcare service sectors in the over H1 2019, the annual level may fall short of the US. record $46bn distributed in 2018.

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

40% 35% 30% 25% 20% 15% 10% 5% 0% Net IRR since Inception Net IRR since -5% -10% 2010 2011 2012 2013 2014 2015 2016 2017 Vintage Year Top Quartile Net IRR Boundary Median Net IRR Bottom Quartile Net IRR Boundary

Source: Preqin Pro. Most Up-to-Date Data

Fig. 24: US-Based Venture Capital Funds: Annual Amount Called up, Distributed, and Net Cash Flow, 2010 - H1 2019

70 58.8 61.6 60 50 39.4 46.1 46.3 37.5 37.6 39.5 40 34.3 33.2 34.7 35.0 31.2 28.0 29.2 26.1 30 25.5 21.6 23.8 21.9 20 10 0 -10 -20 2010 2011 2012 2013 2014 2015 2016 2017 2018 H1 2019

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

Source: Preqin Pro

Fig. 25: Top Performing US-Based Venture Capital Funds (Vintages 2010-2017)

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

CRCM Opportunity ChinaRock Capital Early Stage: Diversified 2013 38 129.0 31-Dec-18 Fund Management Start-up Multi-Regional Alta Partners Venture Capital Alta Partners 2017 130 North America 79.7 30-Sep-19 NextGen Fund I (General) Foresite Capital Expansion/Late Foresite Capital 2012 100 North America 67.5 30-Jun-19 Fund I Stage DCM Hybrid RMB Venture Capital DCM 2011 150 Asia 65.4 30-Jun-18 Fund (General) Tusk Venture Early Stage: Tusk Ventures 2016 36 North America 64.6 30-Sep-19 Partners I Start-up DCM Ventures China Venture Capital DCM 2014 330 Asia 62.6 30-Jun-18 Fund (DCM VII) (General) Forerunner Partners Forerunner 2017 122 Early Stage North America 54.6 30-Sep-19 III Ventures IA Venture Strategies IA Ventures 2010 50 Early Stage North America 52.9 30-Sep-19 Fund I Cervin Ventures II Cervin Ventures 2016 14 Early Stage North America 51.9 30-Sep-19 Opportunities Fund Flagship Ventures Venture Capital Flagship Pioneering 2010 269 North America 51.9 31-Dec-18 Fund IV (General)

Source: Preqin Pro

The 10 largest US-based venture capital firms welcomed a new entrant in Q1

Tiger Global Management holds on to its position In terms of dry powder, Tiger Global Management as market-leader in US-based venture capital. currently holds the largest amount ($6.5bn) of all US- The closure of tech-focused Tiger Global Private based venture capital firms as of April 2020 (Fig. 27). Investment Partners XII in January means the New The firm’s total has increased significantly from $3.4bn York-based firm has raised in excess of $16bn in in January following its recent fundraise. venture capital over the past 10 years (Fig. 26). New Enterprise Associates has risen to second place following the closure of mega fund New Enterprise Associates 17 in March, which brought the firm’s total capital raised in the past 10 years to $13bn. Fig. 26: Largest US-Based Venture Capital Fund Managers by Aggregate Capital Raised in the All of the 10 largest fund managers are headquartered Past 10 Years in either New York or California, except one. General Total Funds Raised Catalyst Partners has joined the league table since our in Past 10 Years previous study, having raised $2.3bn across three funds Firm Headquarters ($bn) in Q1. A 20-year-old venture capital firm located in Tiger Global New York, NY 16.7 Cambridge, Massachusetts, General Catalyst Partners Management invests opportunistically across a broad range of New Enterprise Menlo Park, CA 12.7 tech-focused systems. With the COVID-19 pandemic Associates highlighting the importance of technology, the firm Sequoia Capital Menlo Park, CA 12.5 is focusing on developing technologies in fields such Andreessen Menlo Park, CA 9.9 as remote education and working, it told Forbes1, and Horowitz Lightspeed Venture brought GC Venture VI ($600mn), General Catalyst Menlo Park, CA 7.0 Endurance Fund ($700mn), and the latest in its flagship Partners Kleiner Perkins series, General Catalyst Group X ($1bn), to a final close Menlo Park, CA 6.8 Caufield & Byers in Q1. Accel Palo Alto, CA 6.1 San Francisco, Altogether, US-based managers raised more than Founders Fund 5.9 CA $26bn in venture capital in the first quarter of the year General Catalyst Cambridge, MA 5.8 (Fig. 28). Stage-agnostic funds once again represented Partners more than half of total capital raised, while seed-stage Technology Menlo Park, CA 5.5 investments accounted for less than 1%. Crossover Ventures GGV Capital Menlo Park, CA 4.7 The 10 largest US-based women-owned venture capital Institutional Venture Menlo Park, CA 4.7 fund managers remain almost unchanged compared Partners with Q4 2019 (Fig. 29). Source: Preqin Pro. Data as of April 2020

1 Forbes, 2020, https://www.forbes.com/sites/stevenbertoni/2020/03/30/venture-capital-firm-general-catalyst-raises-23-billion-amid-coronavirus- crisis/#3553e9506ed4

Fig. 27: Largest US-Based Venture Capital Fund Managers by Estimated Dry Powder

Firm Headquarters Estimated Dry Powder ($bn)

Tiger Global Management New York, NY 6.5 New Enterprise Associates Menlo Park, CA 5.1 Andreessen Horowitz Menlo Park, CA 3.9 Sequoia Capital Menlo Park, CA 3.8 Blackstone Life Sciences Cambridge, MA 3.6 Founders Fund San Francisco, CA 3.1 Norwest Venture Partners Palo Alto, CA 2.9 General Catalyst Partners Cambridge, MA 2.6 Technology Crossover Ventures Menlo Park, CA 2.2 Flagship Pioneering Cambridge, MA 2.1

Source: Preqin Pro. Data as of April 2020

Fig. 28: Aggregate Capital Raised by US-Based Venture Capital Fund Managers in Q1 2020 by Strategy

14 13.0

12 10.6 10

4 2.8 2 Aggregate Capital Raised ($bn) Raised Capital Aggregate 0.2 0 Seed Early Stage Expansion/ Venture Capital (General) Late Stage

Source: Preqin Pro

Fig. 29: Largest US-Based Women-Owned Venture Capital Fund Managers by Aggregate Capital Raised in the Past 10 Years

Firm Headquarters Total Funds Raised in Past 10 Years ($mn)

Oak HC/FT Partners Greenwich, CT 1,900 Scale Venture Partners Foster City, CA 1,290 Greycroft Partners New York, NY 799 Forerunner Ventures San Francisco, CA 725 .406 Ventures Boston, MA 686 Arboretum Ventures Ann Arbor, MI 610 DBL Partners San Francisco, CA 551 Biomatics Capital Partners Seattle, WA 500 Canvas Ventures Portola Valley, CA 475 Defy.vc Woodside, CA 413

Source: Preqin Pro

US venture capital attracts a range of investors, and almost a quarter are located outside of North America

The five most active investors in US venture capital are all investors active in US-based venture capital funds pension funds. San Francisco Employees’ Retirement (Fig. 31). That said, with 24% of investors based outside System and Retirement Plans of Duke University sit of North America, the demand for US venture capital atop the table, each with 69 known commitments to vehicles extends across the globe. vintage 2010-2019 US-based venture capital funds (Fig. 30). Of the investors in Fig. 30, Texas County & District US-based venture capital funds are targeted by Retirement System is the only institution with an active investors of all sizes. The majority (67%) of active mandate. The pension fund is planning to commit investors manage at least $1bn in assets, including $1.8bn across private equity & venture capital funds in 12% that manage at least $50bn (Fig. 33). But smaller the next 12 months. investors still take up a sizable portion of the space, with one-third managing less than $1bn, indicating US-based venture capital funds attract capital from there is room to profit regardless of portfolio size. a range of investors globally. Foundations account for the largest proportion (20%) of investors active in US-based venture capital funds, followed by private sector (13%) and public (12%) pension funds (Fig. 32). North America-based institutions represent 76% of

Fig. 30: Most Active Investors in US-Based Venture Capital Funds by Number of Known Fund Commitments (Vintages 2010-2020)

No. of Known Active VC Investor Type Commitments Mandate?

Retirement Plans of Duke University Private Sector Pension Fund 69 No San Francisco Employees' Retirement System Public Pension Fund 69 No Royal Borough of Kensington and Chelsea Public Pension Fund 64 No Superannuation Fund Texas County & District Retirement System Public Pension Fund 56 Yes Los Angeles Fire and Police Pension System Public Pension Fund 53 No University of Texas Investment Management Company Endowment Plan 50 No MetLife Insurance Company Insurance Company 48 No Penn Mutual Life Insurance Company Insurance Company 48 No Sherman Fairchild Foundation Foundation 47 No University of Michigan Endowment Endowment Plan 47 No

Source: Preqin Pro

Fig. 31: Investors in US-Based Venture Capital Funds by Location (Vintages 2010-2020)

76%

North America 11% 10% Asia Europe

Rest of World Proportion of Investors Source: Preqin Pro

Fig. 32: Investors in US-Based Venture Capital Funds by Investor Type (Vintages 2010-2020)

Foundation 20% Private Sector Pension Fund 13% Public Pension Fund 12% Corporate Investor 9% Endowment Plan 9% Insurance Company 8% Private Equity Firm 7% Fund of Funds Manager 6% Government Agency 4% Investment Company 2% Other 8%

0% 5% 10% 15% 20% 25% Proportion of Investors

Source: Preqin Pro

Fig. 33: Investors in US-Based Venture Capital Funds by Assets under Management (Vintages 2010-2020)

40% 36% 35%

30%

25% 23%

20% 18%

15% 10% 10%

Proportion of Investors Proportion 7% 5% 5%

0% Less than $500mn $500-999mn $1-9.9bn $10-49.9bn $50-99.9bn $100bn or More Assets under Management

Source: Preqin Pro

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