YEARBOOK 2015 NATIONAL VENTURE CAPITAL ASSOCIATION INCLUDING STATISTICS FROM THE PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from Thomson Reuters 2015 National Venture Capital Association Yearbook | 1 March 2015 Dear Reader: We are delighted to present you with the 18th edition of this publication, which docu- ments the past year and summarizes the recent history of the venture capital ecosystem in the United States. Since the very first edition, much has changed. One thing that has not changed, however, is NVCA’s commitment to bringing accurate and responsible transparency to this powerful economic force called venture capital. You will find in this publication updated and reformatted charts that track investment activity in the United States. With this edition, we report for the second time Growth Equity investing activ- ity – an asset subclass that did not exist in its present form when we printed the first edition of this publication. Going forward, expect expanded coverage of direct corporate investment and the emergence of new players and co-investors in traditional venture-led rounds. Through all this change, great entrepreneurs continue to be empowered and great companies continue to be built! The industry’s goal remains the same: to create fast-growing and sustainable companies, introduce new technologies, and improve medical care and patient well-being, while pro- viding an attractive return to those who trust the industry with their capital. As always, your feedback and suggestions are welcome. Please feel free to contact us at [email protected] or through any NVCA director or staff member. Bobby Franklin John S. Taylor NVCA President and CEO NVCA Head of Research NVCA THOMSON REUTERS 2 | 2015 National Venture Capital Association Yearbook NVCA BOARD OF DIRECTORS 2014-2015 EXECUTIVE COMMITTEE Scott Sandell Jon Callaghan Chair Chair-Elect New Enterprise Associates True Ventures Scott Kupor Jonathan Leff Treasurer At-Large Andreessen Horowitz Deerfield Maria Cirino Ray Leach At-Large At-Large .406 Ventures Jumpstart, Inc AT-LARGE John Backus Alexis Borisy New Atlantic Ventures Third Rock Ventures Jeff Crowe Timothy Curt Norwest Venture Partners Warburg Pincus LLC David Douglass John Drew Delphi Ventures Technology Crossover Ventures Venky Ganesan Robert Goodman Menlo Ventures Bessemer Venture Partners Mark Gorenberg Jason Green Zetta Venture Partners Emergence Capital Partners James Healy, MD, PhD Ross Jaffe, MD Sofinnova Ventures Versant Ventures Mark Leschly David Lincoln Rho Ventures Element Partners Mike Maples, Jr Kate Mitchell Floodgate Fund Scale Venture Partners Claudia Fan Munce Ashton Newhall IBM Venture Capital Group Greenspring Associates Art Pappas Sue Siegel Pappas Ventures GE Ventures THOMSON REUTERS NVCA 2015 National Venture Capital Association Yearbook | 3 2015 National Venture Capital Association Yearbook For the National Venture Capital Association Prepared by Buyouts Insider Copyright 2015 Thomson Reuters The information presented in this report has been gathered with the utmost care from sources believed to be reliable, but is not guaranteed. Buyouts Insider disclaims any liability, including incidental or consequential damages arising from errors or omissions in this report. NVCA THOMSON REUTERS 4 | 2015 National Venture Capital Association Yearbook National Venture Capital Association 2015 Yearbook National Venture Capital Association Thomson Reuters Buyouts Insider 25 Massachusetts Avenue NW, Suite 730 3 Times Square 747 Third Ave Washington, DC 20001 New York, NY 10036 New York, NY 10017 Telephone: 202-864-5920 (646) 223-4000 (301) 591-1833 Fax: 202-864-5930 www.thomsonreuters.com www.buyoutsinsider.com www.nvca.org Global Head of Contributions President President and CEO Stephen N. Case II Jim Beecher Bobby Franklin [email protected] Head of Deals and (301) 591-1851 Head of Research Private Equity Operations John S. Taylor Katarzyna Namiesnik Executive Editor David Toll Vice President of Government Affairs Content Operations Manager [email protected] Emily Baker Anna Aquino-Chavez Graphic Designer Vice President of Administration Team Leader for Private Equity Allison Brown Roberta Catucci Pauline Henson Creative Director Vice President of Government Affairs Director of Deals Intelligence Janet Yuen-Paldino Justin Field Matthew Toole Buyouts Insider Sales Vice President of Outreach & Development Senior Content Specialist Robert Raidt Janice Mawson Michael D. Smith [email protected] (301) 591-1834 Vice President of Government Affairs Senior Content Specialist Kelly Slone Paul Pantalla Vice President of Communications Content Specialist Ben Veghte Francis S. 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Baker THOMSON REUTERS NVCA 2015 National Venture Capital Association Yearbook | 5 TABLE OF CONTENTS What is Venture Capital? ..................................................................7 Executive Summary.. .9 Introduction ............................................................................9 Industry Resources . .. ....................................................................9 Commitments . ......................................................................... 9 Investments. .......................................................................... 9 Exits . ....................................................... .. 10 Growth Equity . ............................................... .. 10 Industry Resources . ............................ 17 Methodology . ..................... .. 17 Capital Commitments . .................... 25 Methodology . .................................................... .25 Investments.. .. .. .31 Exits: IPOs and Acquisitions . .. .. .75 Methodology . .......................................... .75 Growth Equity Investments . ................................... .89 Methodology . ......................................... .89 Appendix A: Glossary. ............................................. 95 Appendix B: MoneyTree Report Criteria . ........................................ .109 Appendix C: MoneyTree Geographical Definitions . ................................. .111 Appendix D: Industry Codes (VEICs). .................................. 113 Appendix E: Industry Sector VEIC Ranges . .. ................................ .117 Appendix F: Stage Definitions . .. ............................. .119 Appendix G: Data Sources and Resources. .. ........................... 121 Appendix H: International Convergence. ........................... .123 Appendix I: US Accounting Rulemaking and Valuation Guidelines . .. ..................... .125 Appendix J: Non-US Private Equity . ........................................................129 NVCA THOMSON REUTERS 6 | 2015 National Venture Capital Association Yearbook This page is intentionally left blank. THOMSON REUTERS NVCA 2015 National Venture Capital Association Yearbook | 7 WHAT IS VENTURE CAPITAL? Venture capital has enabled the United States to support its entrepre- Venture Capital Backed Companies neurial talent and appetite by turning ideas and basic science into prod- Known for Innovative Business Models ucts and services that are the envy of the world. Venture capital funds Employment at IPO and Now build companies from the simplest form – perhaps just the entrepreneur Company As of IPO Current # Change and an idea expressed as a business plan – to freestanding, mature orga- Facebook 3,200 9,199 5,999 nizations. Starbucks Corporation 2,521 191,000 188,479 Risk Capital for Business Staples 1,693 83,008 81,315 Venture capital firms are professional, institutional managers of risk capital that enables and supports the most innovative and promising Whole Foods Market, Inc. 2,350 84,200 81,850 companies. This money funds new ideas that could not be financed with eBay 138 34,600 34,462 traditional bank financing, that threaten established products and ser- JetBlue 4,011 15,500 11,489 vices in a corporation, and that typically require five to eight years to be launched. Venture capital is quite unique as an institutional investor Venture Capital Backed Companies asset class. When an investment is made in a company, it is an equity in- Known for Innovative Technology Products vestment in a company whose stock is essentially illiquid and worthless Employment at IPO and Now until a company matures five to eight years down the road. Follow-on investment provides additional funding as the company grows. These Company As of IPO Current # Change “rounds,” typically occurring every year or two, are also equity invest- Microsoft 1,153 128,000 126,847 ment, with the shares allocated among the investors and management Intel 460 106,700 106,240 team based on an agreed “valuation.” But, unless a company is acquired or goes public, there is little actual value.Venture capital is a long-term Apple 1,015 92,600 91,585 investment. Google 3,021 53,600 50,579 More Than Money Source: Global Insight; Updated from ThomsonOne 2/2015 The U.S. venture industry provides the capital to create some of the most innovative and successful companies. But venture capital is more ment on something that already exists