1. NATIONAL
VENTURE
CAPITAL
ASSOCIATION
YEARBOOK 2011
NATIONAL VENTURE CAPITAL ASSOCIATION YEARBOOK 2011
3 Times Square 1655 Fort Myer Drive PREPARED BY
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www.thomsonreuters.com www.nvca.org MoneyTree™ Report based on data from Thomson Reuters

2. March 2011
Dear Reader:
Never before in the nation’s history have financial mechanisms and markets come under
more scrutiny by Congress, the regulators, the media, and the general public. Despite the
turmoil in many sectors of the economy, the closer look reaffirmed venture capital as a
key driver of economic growth. The nation continues to look to the entrepreneurial sector
for job creation, economic development, better healthcare, cleaner technology, and a
faster, better, and more secure internet.
The statistics gathered and tracked by Thomson Reuters for ThomsonONE.com
(formerly VentureXpert) and this Yearbook are essential to enabling analysis of venture capi-
tal by policy think tanks and economists and for use by government officials and other
decision makers. For example, recent analysis of Thomson Reuters data by IHS Global
Insight shows that while venture capital investment represents 0.2% of US GDP the rev-
,
enue of companies created by the industry represented 21% of GDP in 2008. We are in
the process of revising these numbers based on recent results.
On behalf of the National Venture Capital Association board of directors and staff, we are
pleased to present you with the latest statistics that describe the activity of the venture
capital industry in the United States. These statistics reflect yet another all-time high level
of survey participation by venture capital practitioners. This support has allowed us to
responsibly bring transparency to a part of the economy most people are aware of but few
really understand. Your comments are always welcome at research@nvca.org.
NVCA believes that it is more important than ever to effectively tell the story of venture
capital, differentiate it from other forms of alternative assets, and explain what’s needed to
continue creating great, leading-edge companies. We believe that a strong venture capital
industry is essential to America’s future.
Very truly yours,
Diana Frazier Mark G. Heesen John S. Taylor
FLAG Capital Management NVCA President NVCA VP Research
NVCA Director & Chairman,
NVCA Research Committee

3. NVCA BOARD OF DIRECTORS 2010-2011
Executive Committee
Kate Mitchell Paul Maeder
Chairman Chairman-Elect
Scale Venture Partners Highland Capital Partners
E. Rogers Novak Ray Rothrock
Treasurer Treasurer-Elect
Novak Biddle Venture Partners Venrock Associates
Jack Lasersohn
Rotating At-Large
The Vertical Group
Research Committee
Diana Frazier Mike Elliott
Research Chairman Noro-Moseley Partners
FLAG Capital Management, LLC
Bruce Evans Stephen Holmes
Summit Partners InterWest Partners
Board Members At-Large
Ira Ehrenpreis James Fleming
Technology Partners Columbia Capital
Norm Fogelsong Michael Greeley
Institutional Venture Partners Flybridge Capital Partners
Josh Green Jim Hale, III
Mohr, Davidow Ventures FTV Capital
Deepak Kamra Pascal Levensohn
Canaan Partners Levensohn Venture Partners
Trevor Loy James Marver
Flywheel Ventures Vantage Point Partners
Jason Mendelson Sherrill Neff
Foundry Group Quaker BioVentures
Robert Nelsen David Prend
ARCH Venture Partners RockPort Capital Partners
Theresia Ranzetta Jonathan Root
Accel Partners U.S. Venture Partners
Scott Sandell
New Enterprise Associates
2 Thomson Reuters

4. 2011
National Venture Capital Association
Yearbook
For the National Venture Capital Association
Prepared by Thomson Reuters
Copyright © 2011 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. Thomson Reuters
disclaims any liability including incidental or consequential damages arising
from errors or omissions in this report.
Thomson Reuters 3

5. National Venture Capital Association 2011 Yearbook
National Venture Capital Association Thomson Reuters
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Arlington, Virginia 22209-3114 New York, NY 10036
Telephone: 703-524-2549 Telephone: 646-223-4431
Telephone: 703-524-3940 Fax: 646-223-4470
www.nvca.org www.thomsonreuters.com
President Vice President, Head of Private Equity and Desktop
Mark G. Heesen Products
Elizabeth Benson
Vice President of Research
John S. Taylor Vice President, Deals and Private Equity Operations
Shariq Kajiji
Senior Vice President
Molly M. Myers Global Business Manager – Private Equity
Jim Beecher
Vice President of Federal Policy & Political Advocacy
Jennifer Connell Dowling Editor-in-Charge
David Toll
Vice President of Strategic Affairs & Public Outreach
Emily Mendell Global Private Equity Operations Manager
Alex Tan
Vice President of Membership & Member Firm
Liaison Press Management
Janice Mawson Matthew Toole
Director of Federal Policy & Political Advocacy Product Manager
Emily A. Baker Lori Ann Silva
Director of Marketing Content Specialist
Jeanne Lazarus Metzger Paul Pantalla
Director of Federal Life Science Policy Senior Analyst
Kelly Slone Francis Base
Public Policy Manager Research Editor
Sumi Singh Eamon Beltran
Membership Coordinator & Database Administrator Senior Art Director
Terry Samm David Cooke
Accounting Manager Sales Manager – Publications (Buyouts, VCJ, peHUB)
Beverley Badley Greg Winterton (646-223-6787)
Manager of Administration and Meetings ThomsonONE.com Sales:
Allyson Chappell Dave Sharma (646-223-4048)
Administrative Assistant
Gwendolyn Taylor
Research Lab
Mavis Moulterd
4 Thomson Reuters

6. Table of Contents
What is Venture Capital? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Capital Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 10
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Portfolio Company Post-Money Valuations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 10
Industry Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 15
Capital Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Investments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Portfolio Company Valuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Exits: IPOs and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Appendix A: Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Appendix B: MoneyTree Report Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Appendix C: MoneyTree Geographical Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Appendix D: Industry Codes (VEICs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Appendix E: Industry Sector VEIC Ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Appendix F: Stage Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Appendix G: Data Sources and Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Appendix H: Portfolio Company Valuation Guidelines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Appendix I: International Convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Appendix J: Non-US Private Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Thomson Reuters 5

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6 Thomson Reuters

8. What is Venture Capital?
Venture capital has enabled the United States to sup-
port its entrepreneurial talent and appetite by turning
ideas and basic science into products and services
Venture Capital Backed Companies
Known for Innovative Business Models
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 and an idea expressed as a busi-
Company As of IPO Current # Change
ness plan – to freestanding, mature organizations.
The Home Depot 650 331,000 330,350
Starbucks Corporation 2,521 176,000 173,479
Staples 1,693 75,588 73,895
Risk Capital for Business
Whole Foods Market, Inc. 2,350 52,900 50,550
eBay 138 15,500 15,362
Venture capital firms are professional, institutional
Venture Capital Backed Companies
managers of risk capital that enables and supports the
Known for Innovative Technology and Products
most innovative and promising companies. This
Employment at IPO and Now
money funds new ideas that could not be financed
Company As of IPO Current # Change
with traditional bank financing, that threaten estab-
Microsoft 1,153 91,000 89,847
lished products and services in a corporation, and that
Intel Corporation 460 86,300 85,840
typically require five to eight years to be launched.
Medtronic, Inc. 1,287 40,000 38,713
Apple Inc. 1,015 35,100 34,085
Google 3,021 16,805 13,784
Venture capital is quite unique as an institutional
JetBlue 4,011 11,632 7,621
investor asset class. When an investment is made in a Source: IHS Global Insight. Current data is FY 2007 Year End Data
company, it is an equity investment in a company
whose stock is essentially illiquid and worthless until a companies have received funding but no one- or two-
company matures five to eight years down the road. person company has ever gone public! Along the
Follow-on investment provides additional funding as way, talent must be recruited and the company scaled
the company grows. These “rounds,” typically occur- up. Ask any venture capitalist who has had an ultra-
ring every year or two, are also equity investment, with successful investment and he or she will tell you that
the shares allocated among the investors and manage- the company that broke through the gravity evolved
ment team based on an agreed “valuation.” But, unless from the original business plan concept with the care-
a company is acquired or goes public, there is little ful input of an experienced hand.
actual value. Venture capital is a long-term investment.
Deal Flows — Where The Buys Are
More Than Money
For every 100 business plans that come to a venture
The U.S. venture industry provides the capital to cre- capital firm for funding, usually only 10 or so get a
ate some of the most innovative and successful com- serious look, and only one ends up being funded. The
panies. But venture capital is more than money. venture capital firm looks at the management team,
Venture capital partners become actively engaged the concept, the marketplace, fit to the fund’s objec-
with a company, typically taking a board seat. With a tives, the value-added potential for the firm, and the
startup, daily interaction with the management team is capital needed to build a successful business. A busy
common. This limits the number of startups in which venture capital professional’s most precious asset is
any one fund can invest. Few entrepreneurs approach- time. These days, a business concept needs to address
ing venture capital firms for money are aware that world markets, have superb scalability, be made suc-
they essentially are asking for 1/6 of a person! cessful in a reasonable timeframe, and be truly inno-
vative. A concept that promises a 10 or 20 percent
Yet that active engagement is critical to the success of improvement on something that already exists is not
the fledgling company. Many one- and two-person likely to get a close look.
Thomson Reuters 7

9. Many technologies currently under development by
venture capital firms are truly disruptive technologies
that do not lend themselves to being embraced by
The Exit Funnel
Outcomes of the 11,686 Companies
larger companies whose current products could be
First Funded 1991 to 2000
cannibalized by this. Also, with the increased empha-
sis on public company quarterly results, many larger
Went/Going Public
14%
organizations tend to reduce spending on research and
development and product development when things
Still Private
or Unknown*
get tight. Many talented teams have come to the ven-
35%
ture capital process when their projects were turned
Acquired
33%
down by their companies.
Common Structure — Unique Results Known Failed
While the legal and economic structures used to cre-
18%
ate a venture capital fund are similar to those used by
*Of these, most have quietly failed
other alternative investment asset classes, venture pre-agreed formula. Many college endowments, pen-
capital itself is unique. Typically, a venture capital sion funds, charities, individuals, and corporations
firm will create a Limited Partnership with the have benefited far beyond the risk-adjusted returns of
investors as LPs and the firm itself as the General the public markets.
Partner. Each “fund,” or portfolio, is a separate part-
nership. A new fund is established when the venture
Beyond the IPO
capital firm obtains necessary commitments from its
investors, say $100 million. The money is taken from Many of the most exciting venture capital backed
investors as the investments are made. Typically, an companies left the venture portfolios after they went
initial funding of a company will cause the venture public. Far from being a destination, the IPO process
fund to reserve three or four times that first invest- provides needed growth capital for a growing compa-
ment for follow-on financing. Over the next three to ny. A 2009 analysis by IHS Global Insight shows that
eight or so years, the venture firm works with the more than 90% of the jobs at today’s venture backed
founding entrepreneur to grow the company. The pay- public companies were created after it went public.
off comes after the company is acquired or goes pub- That is, these companies on average are 10% of their
lic. Although the investor has high hopes for any com- mature size at the time they go public.
pany getting funded, only one in six ever goes public
and one in three is acquired.
What’s Ahead
Much of venture capital’s success has come from the
Economic Alignment of all Stakeholders —
entrepreneurial spirit pervasive in the American culture,
An American Success Story financial recognition of success, access to good science,
Venture capital is rare among asset classes in that suc- and fair and open capital markets. It is dependent upon
cess is truly shared. It is not driven by quick returns or a good flow of science, motivated entrepreneurs, protec-
transaction fees. Economic success occurs when the tion of intellectual property, and a skilled workforce.
stock price increases above the purchase price. When
a company is successful and has a strong public stock The nascent deployment of venture capital in other
offering, or is acquired, the stock price of the compa- countries is gated by a country’s or region’s cultur-
ny reflects its success. The entrepreneur benefits from al fit, tolerance for failure, services infrastructure
appreciated stock and stock options. The rank and file that supports developing companies, intellectual
employees throughout the organization historically property protection, efficient capital markets, and
also do well with their stock options. The venture cap- the willingness of big business to purchase from
ital fund and its investors split the capital gains per a small companies.
8 Thomson Reuters

10. Executive Summary
During 2010, the industry continued to right-size and find equilibrium. Capital under management, headcount,
and fundraising all declined, as anticipated. Investment totals were up from 2009 depressed levels, but still
below 2008 levels and well below the 2002-2008 trend line. More than 1,000 new companies were funded by
venture capital firms in 2010.
Initial public offerings in 2010 picked up considerably from the minimal levels of the prior two years. While
this provided some relief for the backlog of mature companies waiting for an opportunity to go public, totals
have to increase far beyond 2010 levels for a sustainable industry. A record number of venture-backed compa-
nies were acquired, but the total proceeds from those purchases were far from a record.
The lack of distributions to the institutional investors who provide the capital to the industry has left these pro-
fessional money managers with little capital to recycle back to the industry. Thus, 2010 remained a difficult
year for many venture capital firms to raise money.
A healthy venture capital ecosystem requires its metrics to be in balance. And while the quality of new busi-
ness opportunities, known as deal flow, remains very high and the best opportunities are getting funded, stress-
es remain.
the ThomsonONE.com (formerly VentureXpert) data-
base of Thomson Reuters, which has been endorsed
Introduction
The National Venture Capital Association 2011 by the NVCA as the official industry activity data-
Yearbook provides a summary of venture capital base. Subscribers to that system can perform consid-
activity in the United States. This ranges from invest- erable further analysis on the underlying data.
ments into portfolio companies to capital managed by
general partners to fundraising from limited partners
to valuations of companies receiving venture capital
Industry Resources
investments to exits of the investments by either IPOs Venture capital under management in the United
or mergers and acquisitions. The statistics for this States by the end of 2010 decreased only slightly
publication were assembled primarily from the from 2009 levels to $176.7 billion. It is, however, the
MoneyTree™ Report by PricewaterhouseCoopers fourth decline in a row and belies the expectation for
and the National Venture Capital Association, based further reduction in industry assets and overall met-
on data from Thomson Reuters and analyzed through rics as the fallout from the technology bubble works
its way through the system almost 10 years later. At
the end of 2010, the industry managed $176.7 billion
dollars, down 38% from the peak a few years back.
Figure 1.0
With the industry in a very constrained fundraising
Venture Capital Under Management
environment in early 2011, further declines are likely.
Summary Statistics
1990 2000 2010
Many of the firm, fund, and headcount declines are
No. of VC Firms in Existence 384 861 791
the result of firms that raised money at the time of the
No. of VC Funds in Existence 716 1,701 1,183
bubble being unable to follow those funds with new
No. of Professionals 3,686 7,921 6,328
funds in recent years. As portfolios are wound down,
No. of First Time VC Funds Raised 13 104 44
these fund managers leave the industry. With 2010
No. of VC Funds Raising Money This Year 86 649 157
fundraising a mere 12% of the amount raised in
VC Capital Raised This Year ($B) 3.2 104.8 12.3
2000, the industry has returned to a more traditional
VC Capital Under Management ($B) 28.3 220.3 176.7
size band. At the end of 2010, 462 firms were active-
Avg VC Capital Under Mgt per Firm ($M) 73.7 255.9 223.4
ly investing. While slightly above 2009 depressed
Avg VC Fund Size to Date ($M) 36.5 88.0 107.8
Avg VC Fund Size Raised This Year ($M) 37.2 161.5 78.3
Largest VC Fund Raised to Date ($M) 1,775.0 5,000.0 6,300.0 levels, this number is a part of a longer term down-
Thomson Reuters 9

11. National Venture Capital Association
trend. Industry headcount continues to decrease, end- and still realize a successful exit. In 2010, first rounds
ing 2010 at 6,328 principals in the industry. overall reflected lower median valuations than these
rounds in the period of 2005-2009, with medical
devices deals being among the exceptions. Follow-on
rounds showed mixed but overall higher valuations in
Commitments
New commitments to venture capital funds in the 2010 than in the reference period.
United States again decreased in 2010 to $12.3 billion
from the post-bubble fundraising peak in 2006, when While IPO exits were more plentiful in 2010, they
$31.8 billion was raised. This reflects an ongoing dif- were not done at higher multiples than in 2009, which
ficult fundraising environment in part created by had only 12 IPOs. IPOs in 2009 had a median valua-
recent economic stress. However, most of the tion of $428.3 billion, an all-time record and almost
decrease reflects the contraction of the U.S. venture double the median valuation of 2010. However, the
capital industry that began after the technology bubble pre-money valuations for 2009 IPOs were 9.7 times
burst in 2000 and the industry sought a more reason- total venture investment, and in 2010 they were only
able size band. 4.4 times total venture investment.
In 2010, 157 funds raised $12.3 billion, down 25%
from 2009, which itself was down 38% from 2008.
Exits
Overall, the 2010 amount raised was down 61% from Venture-backed company exit activity was driven by a
the 2006 post-bubble peak. A look behind the charts record breaking mergers and acquisitions (M&A) mar-
shows that this total was dominated by a small group ket and a strengthening initial public offerings (IPO)
of firms, most of which are the same firms that led market. For full year 2010, there were 72 venture-
fundraising a decade or two ago. backed IPOs, the biggest year for activity since 2007.
More than 400 acquisitions were completed during full
year 2010, the biggest year, by number of deals, for
venture-backed M&A exits since Thomson Reuters
Investments
In 2010, total venture investment increased 20% from started tracking venture capital from the 1970s.
2009 levels from $18.3 billion to $22.0 billion.
Putting this in perspective, 2010 investment remained The most recent three years have seen the number of
22% below 2008 totals and 26% below 2007 which IPOs increase from 6 to 12 to 72. While encouraging,
was a post-bubble high. Many in the industry wel- this is far below the IPO levels seen in 1999 and 2000.
comed the resizing of the industry’s levels from the Remember, too, there is a large pent-up demand for
near $30 billion level seen in 2007 to just above $20 exits by companies funded late in the technology bub-
billion in 2010. Certainly the timing and speed of this ble and shortly thereafter that have not been able to go
downward shift followed the credit crunch in 2008 public up to this point.
and the subsequent questions about world economic
affairs. However, this resizing began after the tech The number of venture-backed companies acquired
bubble burst and is not unexpected. Deal counts fol- during 2010 (427) sets a new record. This follows a
lowed suit, increasing 12% in 2010 from the prior slow acquisition year in 2009 (272) and several years
year, but counts remained 18% below the 2007 post- during and following the technology bubble when
bubble peak. acquisition counts were in the 300s. Despite the larg-
er number of acquisitions, the total disclosed number
dollars ($18.5 billion) is far from a post-bubble
record.
Portfolio Company Post-Money
Valuations
Much has been written about valuation trends for In 2010, IPO and acquisition activity were both far
entrepreneurial companies and whether early round below what is necessary to sustain the industry long
valuations were reasonable enough for a venture cap- term.
ital fund to make a financial and time commitment
10 Thomson Reuters

12. 2011 NVCA Yearbook
Figure 2.0
Capital Under Management
U.S. Venture Funds ($ Billions)
1985 to 2010
300
250
200
($Billions)
150
100
50
0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Figure 3.0
Capital Commitments to
U.S. Venture Funds ($ Billions)
1985 to 2010
120
100
80
($Billions)
60
40
20
0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Thomson Reuters 11

13. National Venture Capital Association
Figure 4.0
Investments
to Portfolio Companies ($ Billions)
1985 to 2010
100
90
80
70
60
($ Billion)
50
40
30
20
10
0
’85 ’86 ’87 ’88 ’89 ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10
Year
Figure 5.0
2010 Investments
By Industry Class
All Investments Initial Investments
No. of No. of Investment No. of No. of Investment
Industry Group Companies Deals Amt ($Bil) Companies Deals Amt ($Bil)
Information Technology 1,596 1,914 10.8 578 578 2.1
Medical/Health/Life Science 679 827 6.3 224 224 1.1
Non-High Technology 474 553 4.9 199 199 1.1
Total 2,749 3,294 22.0 1,001 1,001 4.3
Figure 6.0
2010 Investments
By Company Stage
Seed
8%
Later Stage
29% Early Stage
24%
Expansion
39%
12 Thomson Reuters

14. 2011 NVCA Yearbook
Figure 7.0
Venture Capital Investments in 2010
By Industry Sector
Telecommunications Other
4% 0.10% Biotechnology
17% Business Products
and Services
Software 2% Computers and
18% Peripherals
2%
Consumer Products
Semiconductors and Services
4% 2%
Electronics/
Instrumentation
Retailing/Distribution 2%
1% Financial
Networking and Services
Equipment 2%
3% Healthcare
Services
Medical Devices 1%
and Equipment
Industrial/Energy
10%
Media and Entertainment 16%
IT
6% Services
8%
Figure 8.0
2010 Investments
By State
Number of Pct of Investment Pct of
State Companies Total ($ Millions) Total
California 1,298 39% 11,054.9 50%
Massachusetts 353 11% 2,383.4 11%
New York 264 8% 1,312.8 6%
Texas 144 4% 906.4 4%
Washington 117 4% 624.3 3%
Illinois 59 2% 575.4 3%
Pennsylvania 153 5% 508.5 2%
Colorado 77 2% 469.0 2%
North Carolina 57 2% 456.3 2%
New Jersey 71 2% 450.8 2%
All Others 701 21% 3,233.0 15%
Total 3,294 21,974.8
Thomson Reuters 13

15. National Venture Capital Association
Figure 9.0
Valuations Per Company Industry
2010 Financings ($ Millions)
Avg Upper Lower
Company Industry Val Max Quartile Median Quartile Min
Biotechnology 65.4 390.6 64.1 42.0 13.6 1.2
Business Products and Services 13.5 13.5 13.5 13.5 13.5 13.5
Computers and Peripherals 46.8 66.3 56.6 46.8 37.0 27.2
Consumer Products and Services NA NA NA NA NA NA
Electronics/Instrumentation 12.8 20.1 16.4 12.8 9.1 5.4
Financial Services 102.1 102.1 102.1 102.1 102.1 102.1
Healthcare Services 23.1 23.1 23.1 23.1 23.1 23.1
Industrial/Energy 62.6 102.0 99.8 68.6 31.3 11.1
IT Services 213.3 735.0 286.4 158.3 10.3 6.5
Media and Entertainment 447.6 3,569.0 86.0 45.7 32.9 3.5
Medical Devices and Equipment 75.1 221.3 99.3 68.2 20.1 6.5
Networking and Equipment 18.3 39.2 27.3 15.0 5.9 3.9
Other 17.5 17.5 17.5 17.5 17.5 17.5
Retailing/Distribution 295.3 295.3 295.3 295.3 295.3 295.3
Semiconductors 67.1 88.9 75.7 62.5 56.3 50.0
Software 42.6 161.4 50.6 17.4 7.3 1.7
Telecommunications 10.3 11.0 10.7 10.3 10.0 9.7
Total 115.2 3,569.0 85.5 38.0 11.7 1.2
Figure 10.0
Venture-Backed IPOs
300 25.00
No of IPOs
250 Offer Amount ($B)
20.00
200
15.00 Offer ($ Billion)
No. of IPOs
150
10.00
100
5.00
50
0 0.00
'85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10
Year
14 Thomson Reuters

16. Industry Resources
Venture capital under management in the United States by the end of 2010 decreased only slightly from 2009
levels to $176.7 billion. It is however the fourth decline in a row and belies the expectation for further reduc-
tion in industry assets and overall metrics as the fallout from the technology bubble works its way through the
system almost 10 years later. At the end of 2010, the industry managed $176.7 billion dollars down 38% from
the peak a few years back. While the number of active firms and professionals in the industry continues to
decline, using our methodology described below, the number of firms remained relative constant through 2010.
With the industry in a very constrained fundraising environment in early 2011, further declines are likely.
Of the 791 firms which raised capital in the last eight vintage years, 45 of these managed more than $1 billion.
A total of 97 firms managed more than $500 million.
Geographic location of the largest venture firms is quite concentrated. California domiciled firms manage 48%
of the industry’s capital although investing partners may be located in other states or even countries. Taken
together, the top five states (California, Massachusetts, New York, Connecticut, and Pennsylvania) hold 81%
of total venture capital in this country.
Many of the firm, fund, and headcount declines are the result of firms which raised money at the time of the
bubble being unable to follow those funds with new funds in recent years. As portfolios are wound down, these
fund managers leave the industry. With 2010 fundraising a mere 12% the amount raised in 2000, the industry
has returned to a more traditional size band. At the end of 2010, 462 firms were actively investing. While slight-
ly above 2009 depressed levels, it is a part of a longer term downtrend. Industry headcount continues to
decrease to 6,328 principals in the industry.
nerships and venture capital funds raised. If a firm
raised both buyout and venture capital funds, only the
METHODOLOGY
The number of firms in existence will vary on a venture funds would be counted in the calculation of
rolling eight-year basis as firms raise new funds or do venture capital under management.
not raise funds for more than eight years. Under this
methodology, we estimate that there are currently 791 Venture capital under management can be a complex
firms with limited partnerships “in existence”. To statistic to estimate. Indeed, capital under manage-
clarify, this is actually stating that there are 791 firms ment reported by firms can differ from firm to firm as
that have raised a venture capital partnership in the there’s not one singular definition. For example, some
last eight years. In reality, there may well be fewer firms include only cumulative committed capital, oth-
firms actually making new investments. ers may include committed capital plus capital gains,
and still other firms define it as committed capital
For this publication, we are primarily counting the num- after subtracting liquidations. To complicate matters,
ber of firms with limited partnerships and are excluding it is difficult to compare these totals to European pri-
other types of investment vehicles. From that descrip- vate equity firms which include capital gains as part
tion, it may appear that the statistics for total industry of their capital under management measurements.
resources may be underestimated. However, this must
be balanced with the fact capital under management by For purposes of the analysis in this publication, we
captive and evergreen funds is difficult to compare have tried to clarify the industry definition of capital
equitably to typical limited partnerships with fixed under management as the cumulative total of commit-
lives. For this analysis only, the firms counted for capi- ted capital less liquidated funds or those funds that
tal under management include firms with fixed life part- have completed their life cycle. Typically, venture cap-
Thomson Reuters 15

17. National Venture Capital Association
Figure 1.01
Capital Under Management
U.S. Venture Funds ($ Billions)
1985 to 2010
300
250
200
($ Billion)
150
100
50
0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Figure 1.02
Total Capital Under Management
By Firm Type 1985 to 2010 ($ Millions)
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Private Independent 11,366 14,274 16,686 18,110 21,532 22,153 21,356 22,074 24,448 27,566 32,442 38,280 50,261 73,849 116,394 182,187 214,105 216,281 218,222 226,969 234,415 247,575 231,906 192,555 167,382 164,690
Financial Institutions 3,559 3,707 3,911 3,630 3,174 3,160 2,728 2,544 3,071 3,679 4,477 5,779 8,003 10,959 15,827 22,607 23,983 23,290 22,524 21,560 20,625 19,346 15,266 8,322 7,092 7,321
Corporations 1,773 1,766 2,163 2,254 2,276 2,327 2,225 2,342 1,659 1,709 1,616 2,493 2,622 3,523 7,145 13,241 14,279 14,247 13,917 13,508 13,503 13,322 10,246 4,204 3,237 3,743
Other 803 853 841 806 717 660 591 340 222 346 466 548 913 1,169 1,534 2,265 2,933 2,881 2,837 2,863 2,556 2,558 2,182 1,619 989 946
Total 17,500 20,600 23,600 24,800 27,700 28,300 26,900 27,300 29,400 33,300 39,000 47,100 61,800 89,500 140,900 220,300 255,300 256,700 257,500 264,900 271,100 282,800 259,600 206,700 178,700 176,700
ital firms have a stated 10-year fixed life
span, except for life science funds which
Figure 1.03
are often established as 12-year funds.
Distribution of Firms
By Capital Managed 2010
Figure 1.08 shows the reality of fund life.
Thomson Reuters calculates capital under
153
160
management as the cumulative amount
committed to funds on a rolling eight-
140
123 123
117
year basis. Current capital under manage-
120
ment is calculated by taking the capital
93
100 84
under management calculation from the
80
previous year, add in the current year’s
52
funds’ commitments, and subtracting the
60 45
capital raised eight years prior.
40
20
For this analysis, Thomson Reuters clas-
sifies venture capital firms using four
0
0-10 10-25 25-50 50-100 100-250 250-500 500-1000 1000+
distinct types: private independent firms,
Capital Under Management ($ Millions)
financial institutions, corporations, and
This chart shows capital committed to US venture firms in active funds. While much of the
other entities. ‘Private independent’
capital is managed by larger firms, of the 791 firms at the end of 2010, roughly 58% of them
(456) managed $100 million or less. By comparison, just 45 firms managed active funds total-
ing more than $1 billion.
16 Thomson Reuters

18. 2011 NVCA Yearbook
Figure 1.04
Fund and Firm Analysis
Fund Total Total Total Firms That Raised Capital Avg Avg Firms
Vintage Cumulative Cumulative Cumulative Existing Funds in the Last Managed Fund Size Firm Size Actively
Year Funds Firms Capital ($B) Funds 8 Vintage Years ($B) ($M) ($M) Investing
1985 629 322 19.9 530 293 17.5 33.0 59.7 87
1986 705 352 23.3 589 324 20.6 35.0 63.6 107
1987 808 387 27.3 668 352 23.6 35.3 67 101
1988 888 407 30.8 701 366 24.8 35.4 67.8 112
1989 980 436 35.8 727 381 27.7 38.1 72.7 107
1990 1038 452 38.3 716 384 28.3 39.5 73.7 96
1991 1077 459 40.5 642 363 26.9 41.9 74.1 75
1992 1149 478 44.1 604 354 27.3 45.2 77.1 97
1993 1242 508 49.3 613 368 29.4 48.0 79.9 90
1994 1340 539 56.7 635 382 33.3 52.4 87.2 104
1995 1497 604 66.2 689 421 39 56.6 92.6 175
1996 1643 665 77.9 755 464 47.1 62.4 101.5 238
1997 1860 758 97.6 880 537 61.8 70.2 115.1 324
1998 2096 837 127.8 1058 608 89.5 84.6 147.2 374
1999 2433 966 181.4 1356 731 140.9 103.9 192.7 674
2000 2850 1109 264.5 1701 861 220.3 129.5 255.9 1022
2001 3089 1188 304.6 1847 917 255.3 138.2 278.4 734
2002 3164 1202 313.4 1824 914 256.7 140.7 280.9 519
2003 3265 1253 323.8 1768 942 257.5 145.6 273.4 479
2004 3430 1319 342.8 1787 976 264.9 148.2 271.4 531
2005 3603 1389 368.7 1743 1001 271.1 155.5 270.8 508
2006 3781 1459 410.5 1685 1006 282.8 167.8 281.1 538
2007 3989 1545 441 1556 996 259.6 166.8 260.6 580
2008 4166 1602 471.1 1316 858 206.7 157.1 240.9 549
2009 4256 1638 483.2 1167 786 178.7 153.1 227.4 423
2010 4347 1673 490.1 1183 791 176.7 149.4 223.4 462
The correct interpretation of this chart is that since the beginning of the industry to the end of 2010, 1,673 firms had been founded and 4,347 funds had
been raised. Those funds totaled $490.1 billion. At the end of 2010, 791 firms as calculated using our eight-year methodology managed 1,183 individual
funds, each fund typically a separate limited partnership. Capital under management by those funds at the end of 2009 is $176.7 billion. A new column has
been added to this Figure showing the number of firms actively investing which is based on the number of independent and corporate venture groups
investing at least $5 million in MoneyTreeTM deals.
firms are made up of independent private and public agement data referred to in this section consist prima-
firms including both institutionally and non-institu- rily of venture capital firms investing through limited
tionally funded firms and family groups. ‘Financial partnerships with fixed commitment levels and fixed
institutions’ refers to firms that are affiliates and/or lives and does not include infinite lived “evergreen
subsidiaries of investment banks and non-investment funds” or true captive corporate industrial investment
bank financial entities including commercial banks groups without fixed commitment levels. The term
and insurance companies. The ‘Corporations’ classifi- ‘evergreen funds’ refers to funds that have a continu-
cation includes venture capital subsidiaries and affili- ous infusion of capital from a parent organization as
ates of industrial corporations. The capital under man- opposed to the fixed life and commitment level of a
closed-end venture capital fund.
Figure 1.05
Principals Information Figure 1.06
Top 5 States
By Capital Under Management 2010
No. Estimated Avg Mgt
Principals Industry Per Principal State ($ Millions)
Year Per Firm Principals ($M) CA 84,341.9
2007 8.7 8,665 30.0 MA 31,504.6
2008 8.5 7,293 28.3 NY 13,847.1
2009 8.6 6,760 26.4 CT 8,756.8
2010 8.0 6,328 25.7 PA 4,178.1
The correct interpretation of this chart is that at year end 2010, there were Total* 142,628.6
6,328 principals (people who go to board meetings) in the industry. A prin- *Total includes above 5 states only
cipal on average manages $25.7 million and the average firm is made up of
8.0 principals.
Thomson Reuters 17

19. National Venture Capital Association
Figure 1.07
Capital Under Management By State 1985 to 2010 ($ Millions)
State 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
CA 4,946 5,905 6,565 6,804 8,007 7,622 7,714 7,628 8,611 9,306 11,565 14,467 19,352 26,449 50,134 82,972 99,657 100,477 102,886 108,550 113,285 122,221 110,640 96,200 83,439 84,342
MA 2,181 2,505 3,392 3,717 4,122 4,255 3,902 4,827 5,015 5,512 6,828 7,328 10,321 14,955 21,542 35,753 44,279 46,852 45,690 46,624 48,176 54,289 52,269 39,469 33,631 31,505
NY 3,458 4,497 4,663 4,483 5,968 6,195 5,850 5,705 6,729 7,884 9,006 10,696 11,442 20,916 27,810 40,781 41,841 39,713 38,698 38,356 37,764 30,624 26,812 14,883 13,274 13,847
CT 1,236 1,380 1,616 1,692 1,531 1,689 1,567 1,660 1,563 1,719 1,817 1,923 3,449 4,459 6,846 8,162 11,427 11,263 11,228 12,684 12,589 13,933 12,645 12,151 8,704 8,757
PA 444 517 547 562 731 773 799 794 573 737 825 1,079 1,499 1,715 2,691 4,944 5,150 4,971 5,254 5,104 5,634 6,152 5,932 4,348 4,093 4,178
NJ 623 721 792 780 777 998 925 592 549 732 961 1,481 1,563 2,175 2,727 3,642 4,323 4,239 4,451 4,102 4,089 5,181 5,040 4,164 3,942 3,814
WA 312 405 383 422 395 383 197 241 228 179 300 461 680 1,080 1,811 2,814 3,637 3,642 3,517 4,503 4,465 4,470 5,038 4,500 3,648 3,604
DC 35 38 38 45 46 47 47 60 28 34 170 1,707 2,378 2,452 2,640 3,624 4,444 4,424 4,286 3,080 3,123 4,200 4,352 4,379 3,594 3,602
TX 451 486 714 713 786 834 770 802 941 1,147 1,162 1,239 1,700 2,986 4,730 7,398 8,465 8,397 8,255 8,654 8,308 8,062 6,339 4,689 3,492 3,320
IL 469 489 788 968 926 942 905 1,101 1,382 1,451 1,476 1,296 1,979 2,430 3,761 4,362 4,768 5,490 5,893 5,997 5,525 5,419 4,552 4,049 3,744 2,882
MD 93 97 122 116 158 163 98 115 377 787 842 1,425 1,749 2,380 3,160 4,898 4,998 4,781 4,736 4,467 4,589 4,569 4,353 2,720 2,955 2,794
VA 72 78 78 84 104 91 56 42 35 32 39 64 148 402 1,143 2,378 2,498 2,512 2,691 2,891 3,459 3,488 3,336 2,188 2,612 2,596
MN 198 294 337 672 744 883 809 763 847 900 880 511 618 714 1,102 2,249 2,188 2,365 2,357 2,367 2,449 2,600 2,473 1,640 1,668 1,323
NC 34 54 87 89 124 114 109 110 109 147 129 280 602 786 999 1,354 1,433 1,582 1,780 1,643 1,470 1,681 1,562 1,212 1,239 1,200
MO 556 580 613 591 599 656 652 641 108 137 120 124 148 111 123 215 241 209 199 296 1,029 1,089 1,272 1,205 1,190 1,193
UT 9 19 19 15 15 16 15 10 10 25 31 31 94 96 132 270 477 450 562 577 534 639 1,240 1,299 1,105 1,108
CO 360 427 326 450 549 507 489 369 456 403 382 451 757 1,012 3,213 4,752 5,259 5,405 5,382 5,210 4,888 4,706 3,028 1,624 990 1,073
MI 111 118 125 121 123 37 13 13 12 9 40 39 64 65 432 580 583 581 623 817 851 869 594 733 788 895
GA 53 58 138 222 225 238 192 191 246 243 239 165 254 557 693 1,286 1,293 1,289 1,213 1,246 1,281 1,141 1,417 863 838 840
OH 867 904 984 871 294 289 297 369 500 559 538 542 862 938 1,426 2,013 2,034 2,016 2,027 2,076 1,895 1,809 1,675 1,033 883 836
TN 102 127 191 183 215 259 276 269 201 293 303 455 525 747 1,071 1,246 1,289 1,169 1,163 1,050 1,040 845 671 572 541 582
FL 124 130 172 192 195 133 110 97 152 224 322 303 380 690 1,081 1,747 1,711 1,643 1,551 1,540 1,768 1,488 1,240 560 542 551
AL 125 130 131 127 134 137 136 137 6 6 6 6 5 24 34 108 108 107 155 174 226 226 217 359 363 364
LA 7 7 7 7 7 5 2 11 23 31 49 90 277 367 448 479 731 727 710 747 585 513 434 420 200 267
WI 178 95 94 91 101 102 78 78 81 164 168 167 138 140 111 184 183 90 90 100 85 255 268 197 199 234
KY 15 16 16 16 0 0 0 0 0 7 21 21 21 21 21 21 21 14 14 14 18 218 219 224 227 227
NM 71 99 135 132 168 256 242 230 207 180 154 151 121 12 12 12 12 12 34 35 70 75 76 78 79 114
IN 28 38 39 37 56 55 56 29 30 21 21 26 7 19 36 510 509 517 516 531 532 545 553 102 113 109
RI 15 16 16 36 36 37 36 36 22 22 23 0 2 2 2 2 26 26 26 26 24 97 98 100 77 77
AZ 40 43 43 73 74 75 75 34 44 43 45 10 10 38 38 101 104 145 180 181 200 172 173 130 119 75
ME 1 1 20 25 26 26 26 28 29 99 89 86 88 89 209 203 291 219 220 216 216 278 161 165 74 74
ID 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 14 14 14 14 14 14 85 85 73 74 74
HI 2 2 2 2 2 2 2 0 0 0 2 2 2 2 12 11 11 11 9 16 16 16 7 14 14 44
IA 49 51 104 101 63 64 61 62 55 55 5 5 16 17 17 16 60 60 55 65 54 60 68 69 39 39
OK 1 29 29 28 37 38 36 37 38 9 10 32 23 67 67 140 140 140 140 118 118 111 112 37 37 37
SD 0 0 0 0 0 0 0 0 0 0 0 10 10 74 74 168 167 167 167 162 163 101 101 19 19 35
OR 168 175 203 239 242 246 227 116 74 74 77 30 30 40 40 100 100 113 83 86 86 77 79 34 40 26
VT 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 15 43 42 42 43 43 43 56 42 14 19
ND 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 13 13 13
NH 24 25 25 49 50 51 50 50 27 27 47 19 66 67 67 66 66 84 65 66 19 30 30 31 31 12
DE 39 40 40 38 47 41 41 14 41 52 100 121 115 117 116 140 106 116 69 56 56 57 57 31 31 10
SC 2 2 2 2 16 16 15 15 15 15 29 52 37 37 37 102 103 117 103 81 86 86 87 21 20 6
MS 0 0 0 0 0 0 0 0 0 0 25 25 25 26 26 25 53 53 28 28 28 30 30 30 1 1
PR 0 0 0 0 0 9 9 9 9 9 9 9 49 40 40 39 68 68 68 69 29 29 30 31 1 1
KS 0 0 0 0 0 13 13 13 14 14 37 37 57 43 43 42 42 42 19 19 0 0 0 0 0 0
NE 0 0 0 1 1 1 1 1 11 11 105 136 139 141 141 176 165 165 71 38 38 38 38 0 0 0
AK 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
MT 0 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
NV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 24 23 23 23 23 23 24 24 0 0 0 0
WY 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 118 118 118 117 118 119 119 119 0 0 0
AR 2 2 2 2 2 2 2 0 0 0 0 0 0 0 19 19 19 19 19 19 19 19 0 0 0 0
WV 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 21 21 21 21 21 21 21 21 0 0 0
Total 17,500 20,600 23,600 24,800 27,700 28,300 26,900 27,300 29,400 33,300 39,000 47,100 61,800 89,500 140,900 220,300 255,300 256,700 257,500 264,900 271,100 282,800 259,600 206,700 178,700 176,700
Figure 1.08
Life of IT Funds in Years
Life of IT Funds % of
In Years Funds
<= 10 7.4%
11-12 22.2%
13-14 24.1%
15-16 22.2%
17-18 14.8%
>=19 9.3%
100.0%
Source: Adams Street Partners, based on 2010 analysis of dissolved funds.
This chart tracks the year in which a 10-year fund is, in fact, dissolved. These later periods are referred to as “out years.” Historically, after the 10th year,
only a few companies remain in the portfolios that typically do not have huge upside potential. But the slow pace of exits in recent years has resulted a
number of good, mature companies remaining in portfolios well past the nominal 10-year mark. Life science funds tend to have lives 2 years longer than
typical technology funds. In preparing this chart, partial years are rounded to the nearest whole year. So 10.4 years would round to 10 years, and 10.5
years would round up to 11 years. The median life span of a fund in this analysis is 14.17 years.
18 Thomson Reuters

20. Capital Commitments
New commitments to venture capital funds in the United States again decreased in 2010 to $12.3 billion from
the post-bubble fundraising peak in 2006 when $31.8 billion was raised. This reflects an ongoing difficult
fundraising environment in part created by recent economic stress. However, most of the decrease reflects the
contraction of the U.S. venture capital industry that began after the technology bubble burst in 2000 and the
industry sought a more reasonable size band.
In 2010, 157 funds raised $12.3 billion, down 25% from 2009, which itself was down 38% from 2008. Overall, the
2010 amount raised was down 61% from the 2006 post-bubble peak. A look behind the charts shows that this total
was dominated by a small group of firms, most of which are the same firms that led fundraising a decade or two ago.
For most firms, the fundraising environment in 2010 was difficult, with only the most promising, and in many
cases, established, firms able to raise capital. Over the past few years, it has been very difficult for any firm
not perceived as having top quartile potential to raise money. There are several reasons for fundraising diffi-
culty: (1) the denominator effect where institutional investors found themselves over allocated to the asset class
as their overall portfolio valuations fell, (2) while exit markets have improved from low levels, few distribu-
tions back to investors from exits in recent years impairs the traditional “recycling” of capital from mature
fund exits to newly-emerging funds, and (3) with strong returns difficult in the current environment, top per-
forming firms have a better chance of outperforming other asset classes on a risk-adjusted basis.
Looking at annual commitment totals, venture firms had raised considerable funds in 2007 and the first part
of 2008. As the economy worsened toward the end of 2008, many institutional investors (e.g., pension plans,
endowments, money managers) saw the public portion of their portfolios fall and found themselves over-allo-
cated to alternative asset classes, including venture capital. This situation has not changed significantly as
fundraising declined through 2010.
The top two fundraising states remained California and Massachusetts. Rounding out the top five states are
New York (moving up from fourth place), Connecticut (new to the top five) and North Carolina (also new to
the top five). Overall, funds domiciled in the top five states accounted for 88% of the capital raised compared
with the top five states raising 82% of the total just two years ago.
Please note that the state of fund domicile matters less than has been true historically. Much of the money is
managed by large, national funds that tend to be domiciled in any of several states with a broad geographic
investing footprint. Readers should not interpret capital available to entrepreneurs in a given state as limited
to the capital raised in that state.
required. The data in this chapter is by calendar year and
As defined by Thomson Reuters, capital commit- incrementally measures how much in new commit-
Methodology
ments, also known as fundraising, are firm capital ments funds raised during the calendar year. For exam-
commitments to private equity/venture capital limited ple, a venture capital firm announces a $200 million
partnerships by outside investors. For purposes of fund in late 2007, raises $75 million in 2008, and sub-
these statistics, the terms “capital commitments,” sequently raises the remaining $125 million in 2009. In
“fundraising,” and “fund closes” are used inter- this chapter, nothing would be reflected in 2007, $75
changeably. There are three sources of data for capi- million would be counted in 2008, and $125 million
tal commitments: (1) SEC filings that are regularly would be counted in 2009. Assuming it started invest-
monitored by our research staff, (2) surveys of the ing and made its first capital call in 2010, the entire fund
industry routinely conducted by Thomson Reuters, would then be considered to be a 2010 vintage year
and (3) verified industry press and press releases from fund. An important note: the fund commitments pre-
venture firms. sented in this publication do not include those corporate
Capital commitments are stated on either a calendar captive venture capital funds that are funded by a cor-
year basis when committed or a vintage year basis once porate parent, nor evergreen funds, which do not typi-
the fund starts investing, depending on the analysis cally raise capital from outside investors.
Thomson Reuters 19

21. National Venture Capital Association
Figure 2.01
Capital Commitments
To U.S. Venture Funds ($ Billions)
1985 to 2010
120
100
80
($ Billion)
60
40
20
0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Figure 2.02
Capital Commitments
To Private Equity Funds 1985-2010
V en t u r e Ca p i t a l Bu you ts a n d Me zz a n ine C a pi tal Pr iv at e Equ i ty Ca pi t al
Year $Mil No. Funds $Mil No. Funds $Mil No. Funds
1985 3,750.7 118 3,074.5 23 6,825.2 141
1986 3,587.4 102 5,001.9 31 8,589.3 133
1987 4,379.1 116 17,528.3 45 21,907.4 161
1988 4,476.7 106 11,653.4 54 16,130.1 160
1989 4,918.8 106 12,034.5 78 16,953.3 184
1990 3,222.7 86 7,744.5 62 10,967.2 148
1991 1,905.7 41 6,186.6 28 8,092.3 69
1992 5,226.8 81 10,795.3 57 16,022.1 138
1993 4,323.2 92 16,043.8 79 20,367.0 171
1994 7,751.6 138 19,490.0 98 27,241.6 236
1995 9,468.9 165 27,129.2 104 36,598.1 269
1996 12,002.6 170 30,103.2 99 42,105.8 269
1997 18,259.9 246 41,343.2 131 59,603.1 377
1998 30,969.8 298 60,831.0 158 91,800.8 456
1999 54,133.6 444 50,458.4 155 104,592.0 599
2000 104,764.3 649 78,232.3 161 182,996.6 810
2001 38,957.8 324 46,903.5 126 85,861.3 450
2002 16,121.4 205 26,547.1 93 42,668.5 298
2003 11,448.9 162 29,256.9 104 40,705.8 266
2004 18,651.9 210 51,492.6 137 70,144.5 347
2005 30,759.6 234 100,893.4 181 131,653.0 415
2006 31,861.9 235 137,849.7 177 169,711.6 412
2007 31,205.0 237 203,913.0 217 235,118.0 454
2008 26,419.2 213 158,964.0 190 185,383.2 403
2009 16,321.5 150 34,153.7 113 50,475.2 263
2010 12,307.9 157 36,404.7 131 48,712.6 288
20 Thomson Reuters