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Pitch book 2017_unicorn_report

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2017
Unicorn
Report
PITCHBOOK 2017 VC UNICORN REPORT 2
Contents
Credits & Contact
PitchBook Data, Inc.
JOHN GABBERT Founder, CEO
ADLEY BOWDEN ...
PITCHBOOK 2017 VC UNICORN REPORT 3
Looking past their name,
unicorn returns have
potential to reshape
industry
Introductio...
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Pitch book 2017_unicorn_report

  1. 1. 2017 Unicorn Report
  2. 2. PITCHBOOK 2017 VC UNICORN REPORT 2 Contents Credits & Contact PitchBook Data, Inc. JOHN GABBERT Founder, CEO ADLEY BOWDEN Vice President, Market Development & Analysis Content KYLE STANFORD Analyst BRYAN HANSON Data Analyst JENNIFER SAM Senior Graphic Designer Contact PitchBook pitchbook.com RESEARCH research@pitchbook.com EDITORIAL editorial@pitchbook.com COPYRIGHT © 2017 by PitchBook Data, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, and information storage and retrieval systems— without the express written permission of PitchBook Data, Inc. Contents are based on information from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Nothing herein should be construed as any past, current or future recommendation to buy or sell any security or an offer to sell, or a solicitation of an offer to buy any security. This material does not purport to contain all of the information that a prospective investor may wish to consider and is not to be relied upon as such or used in substitution for the exercise of independent judgment. Introduction 3 Overview 4-7 Exits 8 Terms Tables 10-17 Select Unicorn Statistics 18 Unicorn League Tables 19-21 Methodology 22 The PitchBook Platform The data in this report comes from the PitchBook Platform—our data software for VC, PE and M&A. Contact sales@pitchbook.com to request a free trial.
  3. 3. PITCHBOOK 2017 VC UNICORN REPORT 3 Looking past their name, unicorn returns have potential to reshape industry Introduction When the term unicorn was coined to denote a VC-backed company valued at $1 billion or more, achieving that status was a true distinction of excellence. Today, the term is thrown around and used without hesitation, though it may be followed up by a cringe from one of the parties involved. Although representing a major chunk of overall value created by the venture industry, unicorns have never accounted for any significant portion of the entire venture-backed company population. While their numbers are growing, the overall count is still a small fraction of the entire industry. These billion-dollar companies do, however, play a major role, whether as a role model of the best of what Silicon Valley can achieve or to provide a reference point for comparison. But more importantly, they contain unprecedented value that could produce the largest returns in venture history, should they be realizable. One of the primary reasons that value has not been realized is the same as what enabled the creation of such value at the later stage—the continued availability of plenty of capital at the later stage, which allowed unicorns to continue growing in private markets, and prolonged timelines to liquidity. We’ve already seen enormous distributions to limited partners in 2014 and 2015 recycle back into venture funds. Though distributions have since slowed, unicorns have the potential to foster a renewal. We hope this report is useful in your practice. As always, feel free to send any questions or comments to reports@pitchbook.com. KYLE STANFORD Analyst Look up a company. And its cap table. And its investors. And its EBITDA multiples. And its board members. In seconds. The PitchBook Platform has the data you need to close your next deal. Learn more at pitchbook.com
  4. 4. PITCHBOOK 2017 VC UNICORN REPORT 4 Overview Source: PitchBook *As of 8/11/2017. Note: Unicorns that have completed and exit are not included in next year’s total. 1 3 4 6 10 13 16 24 30 40 76 111 121 128 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* 0 500 1,000 1,500 2,000 2,500 3,000 $0 $5 $10 $15 $20 $25 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q* 2011 2012 2013 2014 2015 2016 2017 Non-unicorn Deals ($B) Unicorn Deals ($B) # of Closed Deals Population growth of unicorns slows Number of active US unicorns by year Unicorn rounds greatly boost overall deal value US VC activity Source: PitchBook *As of 8/11/2017 Unicorns constitute a fifth of 2017 deal value So far in 2017, deals attached to valuations of at least $1 billion have accounted for less than 1% of the total number of completed VC financings in the US. That small fraction of deals is representative of nearly 21% of deal value this year, though, a quick reminder of the influence investments in unicorns have over aggregate industry figures. VC-backed billion- dollar companies are still a somewhat new phenomenon, with just 176 US- based companies ever holding the title. Outside of 2014 and 2015, no more than 18 companies have ever attained unicorn status in a single year, highlighting both the difficulty in scaling to that size, as well as raising enough VC. Through early August, 128 companies have held the title of unicorn at one point this year, the highest per-year mark we have seen. Compare that number with its counterpart in 2004 and it seems astronomical, but since Liquidnet became a unicorn in 2005 somewhere around 85,000 VC deals have been completed. With eight exits completed so far, there currently stand 120 companies able to boast a $1 billion valuation, the highest being Uber’s $68 billion value achieved last year—though Uber is reportedly set to be repriced shortly with investment rumored in the near future.
  5. 5. PITCHBOOK 2017 VC UNICORN REPORT 5 $1.5 $1.8 $2.2 $9.6 $4.9 $6.8 $20.5 $20.3 $18.2 $10.0 57 68 79 116 108 119 144 118 68 43 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Deal Value ($B) # of Deals Closed 4 4 3 10 11 15 43 44 18 17 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* $4.02 $2.86 $2.00 $136.15 $21.26 $9.70 $78.95 $73.89 $182.37 $156.53 $32.55 $35.42 $61.59 $197.09 $227.68 $263.31 $426.85 $545.08 $622.51 $673.96 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Most Recent Post-valua�on Cumula�ve Post-valua�on 0 20 40 60 80 100 120 140 160 180 200 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Cumula�ve unicorns New unicorns Activity has slowed last two years VC activity in US unicorns 2014 and 2015 stand as outliers New US unicorns (#) by year Unrealized value in unicorns is astonishing Aggregate US unicorn post-valuation ($B) by year Number of US unicorns up 16x since 2008 New and cumulative US unicorns (#) by year Source: PitchBook *As of 8/11/2017 Source: PitchBook *As of 8/11/2017 Source: PitchBook *As of 8/11/2017 Source: PitchBook *As of 8/11/2017 The pace of unicorn formation has slowed During 2014 and 2015, 87 companies became unicorns, with each year producing an outlying number when compared to the rest of the decade. Since then, not only has that pace slowed, but the overall number of deals made at these prices has dwindled (this includes unicorns raising follow-on rounds). 35 companies have received a new billion-dollar valuation since the end of 2015, including 17 so far during 2017. This year will also likely fail to reach 100 total unicorn financing rounds, the second consecutive year to miss the mark after a run of five from 2011 through 2015. Nontraditional investors, such as hedge funds and mutual funds, were heavily involved with unicorn deals during the outlier years, but they have largely pulled back from these rounds, and from the venture industry in general. The reason for such a slowdown likely goes beyond that, however. For one, the pace of unicorn investment was simply unsustainable during those years. As nontraditionals have pulled back, VCs stayed disciplined, which has been reflected in the slower pace. Even as VCs are raising larger funds and may have the ability to fund companies worthy of a high valuation, they have remained
  6. 6. PITCHBOOK 2017 VC UNICORN REPORT 6 3.1 3.7 5.2 0 1 2 3 4 5 6 7 8 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Median Average 4.1 5.7 6.1 6.7 0 1 2 3 4 5 6 7 8 9 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Median Average 7.3 7.97.7 8.8 0 1 2 3 4 5 6 7 8 9 10 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Median Average Longer to reach unicorn status Median & average time (years) to US unicorn since founding Time spent in portfolios lengthening Median & average time (years) since first VC round for US unicorns US unicorns aging as exits are scarce Median & average age (years) of all US unicorns Source: PitchBook *As of 8/11/2017 Source: PitchBook *As of 8/11/2017 Source: PitchBook *As of 8/11/2017 diligent and rational in order to stay away from overextending offers to reach a valuation. Both the median and average times from founding and the hold period from initial investment have grown marginally this year, suggesting that investors are looking for more robust business metrics before subscribing to a unicorn round. It should be noted this caution hasn’t been solely restricted to unicorns, as investors across the venture spectrum have set higher benchmarks for growth at every stage. In general, this has led to a decline in the pace of first- time financings across the US over the past few years. The aging unicorn population One of the more telling statistics surrounding unicorns is how the median and average age of current unicorns has moved over time. The average age of unicorns since founding is near nine years, while the median age has moved to almost eight. In order to scale a company so large, it takes more time, but the eventual goal is not different from the rest of the industry, to realize return. It is likely that private secondary transactions have picked up with investors in unicorns, or have at least 1.2 1.61.3 1.9 0 1 2 3 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Median Average Source: PitchBook *As of 8/11/2017 Time before unicorn round growing Median & average time (years) from last VC round to first unicorn round
  7. 7. PITCHBOOK 2017 VC UNICORN REPORT 7 Series D+ valuations outperforming Russell 2000 Median Russell 2000 Growth Index versus median Series D or later post-valuation growth in US $214.4 $250.9 $305.0 $506.0 0 100 200 300 400 500 600 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Russell 2K Growth Series D+ Valua�ons Step-ups regain positive momentum Median & average valuation step-up for US unicorns Source: PitchBook *As of 8/11/2017 become part of subsequent rounds raised, alleviating the liquidity risk for early-stage investors by allowing them to realize a return. The elongated time spent as a unicorn before exit may cause problems for late-stage investors still. When nontraditional investors entered into VC rounds several years ago, it was thought that many of the companies receiving the billion-dollar-plus valuations were likely to exit in the near future. Those exits haven’t happened. Unicorns have been able to stay private while continuing to raise more capital for growth. The aggregate valuation of unicorns has continued to skyrocket. Altogether more than $670 billion has been created (privately) in these companies, though far less has been realized. By and large, unicorns’ paper gains is or will be troublesome for their investors, as well as for the overall market, as many wait to see whether the heights the industry have reached can truly produce lasting, significant value. 1 2 0 1 2 3 4 5 6 7 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Unicorns escaping down rounds Down rounds (#) of us unicorns 2.2 2.4 2.1 1.6 1.8 3.6 3.6 2.9 2.4 3.0 2013 2014 2015 2016 2017* Median Average Source: PitchBook *As of 8/11/2017 Source: PitchBook *As of 8/11/2017
  8. 8. PITCHBOOK 2017 VC UNICORN REPORT 8 Exits $16,977.2 $25,396.0 $15,642.4 $8,683.0 1 0 2 5 5 7 9 8 10 8 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Exit Value Exit Count 0 2 4 6 8 10 12 2010 2011 2012 2013 2014 2015 2016 2017* Acquisi�on IPO Other Exits increasing, but unable to keep up Exit activity by US unicorns Exits increasing, but unable to keep up Exit activity of US unicorns (#) by type $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 2010 2011 2012 2013 2014 2015 2016 2017* Acquisi�on IPO Other IPOs have by far created most wealth Exit post-valuation ($B) of US unicorns by type Source: PitchBook *As of 8/11/2017 Source: PitchBook *As of 8/11/2017 Source: PitchBook *As of 8/11/2017 For unicorns, the most common path to exit is through an IPO, in a marked difference from the rest of the venture industry. While it’s easier for these companies to afford the rising cost of going public, in many cases there isn’t much choice. As valuations grow larger, fewer Corporations have the ability or desire to make a purchase of that size, diverting resources away from other corporate initiatives. We haven’t, however, seen a rush to go public from unicorns, despite markets trading at all-time highs. One reason could be because of overvaluation that has occured through private funding. 2017 could finish with the highest number of unicorn exits ever (eight), but that comes with several caveats. Included in that figure is Jawbone, which has the dubious distinction of the highest-valued unicorn to liquidate its assets, and beyond that, most of the exits completed this year haven’t been what many see as major successes. Cloudera completed its IPO at a valuation less than half of its private value; SimpliVity took a $500 million+ haircut when it was acquired by HP; and even Snap and Blue Apron weren’t able to go public at a valuation equal to their private post- val, and have since performed poorly. The problem with these isn’t that investors were left without a return, as many of them likely received a hefty payout despite the valuation missteps, but that the value assumed to have been created was hardly able to hold its water when outside investors took a look inside the company.
  9. 9. Build your next fund with our Emerging Manager Practice Our dedicated team specializes in banking and guiding next-generation venture firms from coast to coast.  Tap into our network and 30 years of experience as the global bank of the innovation economy. Get support and guidance for you, your fund and your founders.  svb.com/emerging ©2017 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary and commercial banking operation of SVB Financial Group (Nasdaq: SIVB). SIVB, SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the Chevron device are trademarks of SVB Financial Group, used under license. CompID-794
  10. 10. PITCHBOOK 2017 VC UNICORN REPORT PITCHBOOK 2017 VC UNICORN REPORT10 11 Unicorn IPO Protection Terms Acquisition Protection Terms Dividends Participation Multiple liquidation preference IPO auto convert above per share price Each share preferred automatically converts upon an IPO of at least $100 million of proceeds. Series A, B, C, and D share pari passu and receive their original issue price (OIP) prior and in preference over common. Liquidation protection over common stock. 6% non-cumulative dividends on all series of preferred. Pref. dividends also participate with common after they receive their preferential amount. No No No Each share preferred automatically converts upon an IPO of at least $50 million of proceeds. Series A, B, and C share pari passu and receive their OIP prior and in preference over common. Liquidation protection over common stock. 8% non-cumulative dividends on all series of preferred. Pref. dividends also participate with common after they receive their preferential amount. No No No Each share preferred automatically converts upon an IPO of at least $50 million of proceeds and the offering price per share of not less than $2.70. First, Series G & G1 (pari passu), Second, Series F. Third, Series A, B, C, D, E & E1. Non-cumulative dividends at the following rates: Series A= $0.0240. Series B= $0.0288. Series C= $0.0349. Series D= $0.0402. Series E= $0.0482. Series E1= $0.0530. Series E2= $0.0602. Series F= $0.072. Series G= $0.072. Series G1= $0.072. Yes Yes for Series F & G, 1.5. Yes, at $2.70. Each share preferred automatically converts upon an IPO of at least $100 million of proceeds and the offering price per share of not less than $4.2915. Series B senior over A. Series B payout 1, Series A payout 2. Liquidation protection over common stock Non-cumulative dividends of 8% on all series of preferred No No Yes, at $4.2915 Each share preferred automatically converts upon an IPO of at least $150 million of proceeds and a pre-money valuation not less than $2 billion. First, Series D and E senior to other series but pari passu with each other, then Series A, A-2, A-3, B and C share pari passu. Liquidation protection over common stock Non-cumulative dividends on all Series at the following rates: Series A= $0.04, Series A2= 0.0585, Series A3= $0.0604, Series B= $0.4507. Series C= $0.7028. Series D= $1.5984. Series E= $1.947. No No No With Respect to Series A, B, C and D: each share automatically converts upon an IPO of at least $30 million of proceeds. With respect to Series E, each share automatically converts upon an IPO of at least $75 million of proceeds. First, Series B, C, D and E senior to other series but pari passu with each other. Second, Series A. Liquidation protection over common stock. Non-cumulative dividends on all Series at the following rates: Series A= $0.08, Series B= $0.1137. Series C= $0.1774. Series D= $0.5327. Series E= $1.7329. Preferred dividends also participate with common after they receive their preferential amount. No No No Converts upon an IPO resulting in at least $75 million of proceeds, however, Series C is not subject to mandatory conversion unless the holders have consented or the mandatory conversion is in connection with an offering in which the price per share sold to the public is equal to or greater to 1x the Series C OIP. All Series Preferred share pari passu upon liquidation. Liquidation protection over common stock. Dividends may be declared at a rate per share of preferred stock determined by (a) dividing the amount of the dividend payable on each share of such class or series of capital stock by the OIP of such class and (b) multiplying such fraction by an amount equal to the OIP for each series No Yes- 2 for Series A-1, 1.25 for Series D. No for all other series. No Converts upon an IPO resulting in at least $100 million gross proceeds and at a per share offering price greater than or equal to the Series D OIP ($9.3778). First, Series B, C & D share pari passu upon liquidation. Second, Series A-1. Liquidation protection over common stock. Non-cumulative dividends on all Series at the following rates: Series A= $0.08338, Series A-1= $0.08338. Series B= $0.2708. Series C= $0.67202. Series D= $0.750224. Preferred dividends also participate with common after they receive their preferential amount. No Yes- 3 for Series A-1. No for all other series. No Converts upon an IPO resulting in at least $35 million gross proceeds and at a per share offering price greater than or equal to $2.0175. All series share ratably receiving their OIP upon liquidation. Liquidation protection over common stock. Non-cumulative dividends on all Series at the following rates: Series A= $0.053775 Series B= $0.1958. Series C= $0.5483. Series D= $0.9482. Preferred dividends also participate with common after they receive their preferential amount. No No Yes, over amount for Series B, C, & D Converts upon an IPO resulting in at least $200 million gross proceeds and at a per share offering price greater than or equal to $50.2417. All series share pari passu receiving their OIP upon liquidation. Liquidation protection over common stock. The Corporation may declare dividends on a pari passu basis among the series preferred, in an amount at least equal to ”… (ii) in the case of a dividend on any class or series that is not convertible into Common stock, at a rate per share of Preferred Stock determined by (A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock and (B) multiplying such fraction by an amount equal to the applicable OIP; provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of preferred stock pursuant to this section shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest preferred stock dividend. No No Yes, converts at Series C OIP, above series A and B
  11. 11. PITCHBOOK 2017 VC UNICORN REPORT PITCHBOOK 2017 VC UNICORN REPORT12 13 Unicorn IPO Protection Terms Acquisition Protection Terms Dividends Participation Multiple liquidation preference IPO auto convert above per share price Series preferred converts upon an IPO resulting in at least $60 million gross proceeds. All series share ratably receiving their OIP upon liquidation. Liquidation protection over common stock. Non-cumulative dividends on all Series at the following rates: Series A= $0.0745056. Series A1= $0.0745056. Series B= $0.280184. Series B1= $0.280184. Series C= $0.472. Series C1= $0.472. Series D= $0.779. Series D-1= $0.779. Preferred dividends also participate with common after they receive their preferential amount. No. However, pref. holders automatically convert to common if, as a result of the conversion, such holder would receive a greater amount than if they did not convert No No Series preferred converts upon an IPO resulting in at least $75 million gross proceeds at a fully- diluted pre-offering valuation of the Corporation of no less than $1 billion. First, Series B, C and D. Second, Series A. Liquidation protection over common stock. Non-cumulative dividends at the rate of 6% on all series on a pari passu basis. Preferred dividends also participate with common after they receive their preferential amount. Yes No No Each share of preferred automatically converts into common upon the earlier of (i) the closing of sale of common in in a firm commitment underwritten public offering with a price no less than $35.72 per share and for gross proceeds of at least $100 million (Qualified Public Offering) or (ii) the date, or occurrence of an event, specified by vote or written consent or agreement of the holders of at least a majority of the then outstanding preferred. All series share ratably upon liquidation. Liquidation protection over common stock. Non-cumulative dividends at the rate of 6% on all series on a pari passu basis. Preferred dividends also participate with common after they receive their preferential amount. No. However, pref. holders automatically convert to common if, as a result of the conversion, such holder would receive a greater amount than if they did not convert. No Yes, IPO converts at $35.72. Highest OIP is Series D at $28.5745. Each share of Class B Common, Series C Preferred, Series C1 Preferred and any other class of common or preferred convertible into Class A common automatically converts into Class A Common at any time upon the affirmative election of the holders of a majority of the then outstanding shares of the Series C1 preferred. First, Series C1. Second, Series C and C2 on a pari passu basis. Liquidation protection over common stock. 10% cumulative dividends on Series C-1 only, in preference to other Series (Series C and C2 dividends not given) No No No Series preferred converts upon an IPO resulting in at least $50 million gross proceeds and price per share of $9.86835 (1.5x Series D OIP). All series share Pari Passu receiving their OIP upon liquidation. Liquidation protection over common stock. Non-cumulative dividends on all Series at the following rates: Series A= $0.03170. Series B= $.1096. Series C= $0.3589. Series C1= $0.2871. Series D= $0.5263. Series D-1= $0.4737. Preferred dividends also participate with common after they receive their preferential amount. No. However, pref. holders automatically convert to common if, as a result of the conversion, such holder would receive a greater amount than if they did not convert No Yes Series preferred converts to common upon aggregate gross proceeds of not less than $50 million. First, Series C1 receives payout. Second, Series A, B, and C receive payout and share pari passu. Third, Series A1. Liquidation protection over common stock. Non-cumulative dividends on all Series at the following rates: Series A= $0.00835. Series A1= $0.00835. Series A2= $0.00104. Series B= $.0270. Series C= $0.29875. Series C1= $0.40189. Preferred dividends also participate with common after they receive their preferential amount. No. However, pref. holders automatically convert to common if, as a result of the conversion, such holder would receive a greater amount than if they did not convert No No Series preferred converts to common upon an IPO providing that the offering price per share is not less than $26.4692 and the aggregate gross proceeds are not less than $50 million. All series share pari passu upon liquidation. Liquidation protection over common stock. Non-cumulative dividends on all Series at the following rates: Series A= $0.04375. Series B= $..27408. Series C= $1.05877. No No Yes, converts at $26.4692 (highest OIP is Series C at $17.6461. Each share Series A preferred automatically converts into Class A Common at the then effective conversion rate, upon an IPO of no less than $75 million. Series A receive their OIP prior and in preference to Common Stock. Liquidation protection over common stock. Non-cumulative dividends on Series A. No No No. Converts at OIP Each share of Preferred automatically converts into Common at the then conversion price upon an IPO of no less than $150 million. Preferred receive their OIP pari passu, prior and in preference to Common Stock. Liquidation protection over common stock Non-cumulative dividends at the rate of $0.01801333 Seed, $0.06101333 Series A, $0.1682 Series B, $0.339792 Series C, $0.810552 Series D, $1.5556 Series E, $2.143112 Series F, $2.572 Series G. Preferred dividends also participate with common after they receive their preferential amount. No No NO. Converts at OIP Each share of Preferred automatically converts into Common at the then conversion price upon an IPO of no less than $40 million. Preferred receive their OIP pari passu, prior and in preference to Common Stock. Liquidation protection over common stock Non-cumulative dividends at the rate of $0.01106752 Series A, $0.07335428 Series B, $0.22673952 Series C, $0.35785540 Series D, $0.3584 Series E, $0.385568 Series F. No No No. Converts at OIP Each share of Preferred automatically converts into Common at the then conversion price upon an IPO of no less than $100 million. First Series F, E1 & E2, second Series A, B, C, D, E2 and F, (Series F & E2 receive 2/3 of OIP in first preference and an additional 1/3 along with Series A, B, C & D) third Series A1, prior and in preference to Common Stock. Liquidation protection over common stock. Non-cumulative dividends. Preferred dividends also participate with common after they receive their preferential amount. Yes Series A Participating, rest of preferred non-participating. Yes, for Series A1 only. (OIP $0.0000002 Liquidation $2.00) No. Converts at OIP Each share of Preferred automatically converts into Class A or Class B Common at the then conversion price upon an IPO of no less than $50 million. Preferred receive their OIP pari passu, prior and in preference to Common Stock. Liquidation protection over common stock. 8% non-cumulative dividends. Preferred dividends also participate with common after they receive their preferential amount. No No No. Converts at OIP
  12. 12. PITCHBOOK 2017 VC UNICORN REPORT PITCHBOOK 2017 VC UNICORN REPORT14 15 Unicorn IPO Protection Terms Acquisition Protection Terms Dividends Participation Multiple liquidation preference IPO auto convert above per share price Each share of Series A8 automatically converts into Class A Common, all other Series preferred automatically converts into Common Stock at the then conversion price upon an IPO of no less than $50 million. Preferred receive their OIP pari passu, prior and in preference to Common Stock. Liquidation protection over common stock. Non-cumulative dividends at the rate of $0.03484 Series A, $0.06968 Series A1, $0.04450 Series AA, $0.04450 Series AAA, $0.10371 Series A4, $0.21925 Series A5, $0.36047 Series A6, $0.41495 Series A7, $0.54038 Series A8. Preferred dividends also participate with common after they receive their preferential amount. No No No. Converts at OIP Each share of preferred stock automatically converts into Common at the then conversion price upon an IPO of no less than $25 million. Series E & F first, Series A, B, C & D second, prior and in preference to common stock. Liquidation protection over common stock Non-cumulative dividends at the rate of $0.0096 Series A, $0.0424 Series B, $0.0856 Series C, $0.1553 Series D, $0.1936 Series E, $0.929 Series F. Preferred dividends also participate with common after they receive their preferential amount. No No No. Converts at OIP Each share of preferred stock automatically converts into Common upon an IPO of no less than $50 million. Series D first, Series A, B & C second, prior and in preference to common stock. Liquidation protection over common stock. 8% non-cumulative dividends. No No No. Converts at OIP Each share of preferred stock automatically converts into Common upon an IPO of no less than $200 million and a per share price of 2x Series B OIP (which is $12.84). First, Series A, B and C1. Second, Series C-2 and C-3. Liquidation protection over common stock. Cumulative dividends on Series A, B, and C1 at a rate of 8% for Series A & B, and 5% on Series C-1. No dividends payable on Series C2 or C3. No No Yes, converts at $12.84, which is 2x Series B OIP. Each share of preferred stock automatically converts into Common upon an IPO of no less than $50 million. All series preferred share pari passu upon liquidation. Liquidation protection over common stock. Non-Cumulative (the only dividend provision states “... any dividends out of any assets legally available therefore shall be distributed among all holders of Common, Series A, Series B, Series C and Series D Preferred Stock in proportion to the number of shares of common stock that would be held by each such holder if all shares of Series A Preferred Stock, Series B, Series C and Series D were converted to Class A common at the then-effective conversion rate”.) No No No Each share of preferred stock automatically converts into Common upon an IPO of no less than $50 million. First, Series B and B-1 are paid out pari passu. Second, all other series (A+, A, Seed, Seed-2) are paid out pari passu. Non-cumulative dividends on all series at the rate of 8%. No No No Each share of preferred stock automatically converts into Common upon an IPO of no less than $50 million and a share price of at least $5. All series are paid out pari passu. Liquidation protection over common stock. Cumulative dividends on all series at the rate of 8%. Non-participating. No Yes, converts at $5 (highest OIP is B-2 at $4) In regard to Series A, B, C, D, E, E-1, E-2 and F (the junior preferred): Each share of preferred stock automatically converts into Common upon an IPO of no less than $50 million and a share price of at least $10. In regard to Series G: Each share automatically converts into Common upon an IPO of no less than $50 million and a share price of at least $14.83. First, Series G. Second, Series F. Third, Series E-2, E-1, E and D. Fourth, Series D-1. Fifth, Series C and B. Sixth, Series A. Liquidation protection over common stock. Dividends at the rate of 8% payable on all series ratably when, as, and if declared by the Board of Directors. No No Yes Each share of preferred stock automatically converts into Common upon an IPO of no less than $50 million. all series paid pari passu Liquidation protection over common stock. Dividends at the rate of $0.672 for Series A, $6.822 for Series B. For Series A1: In the case of a dividend on any class or series that is convertible into Series I common stock, Dividend for Series A1 shall equal the product of (A) the dividend payable on each share of such class or series as if all shares of such class or series had been converted into Series I common stock and (B0 the number of shares of Series I common stock issuable upon conversion of a share of Series A-1 preferred. In the case of a dividend on any class or series that is not convertible into Series I common stock, Dividend for Series A1 at a rate determined by (A) dividing the amount of the dividend payable on each share by the OIP and (B) multiplying such fraction by the Series A1 OIP ($13.48) provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of stock, the dividend payable to the holders of Series A1 shall be calculated based upon the dividend on the class or series of stock that would result in the highest Series A1 stock dividend. No No No
  13. 13. PITCHBOOK 2017 VC UNICORN REPORT PITCHBOOK 2017 VC UNICORN REPORT16 17 Unicorn IPO Protection Terms Acquisition Protection Terms Dividends Participation Multiple liquidation preference IPO auto convert above per share price Each share of preferred stock other than the Series E2 automatically converts into Class A Common, and Series E2 automatically converts into Class C common upon an IPO of no less than $100 million. First, Series E1 and E2 ratably with each other. Second, Series A1, A2, A3, B, C, D1, and D2. Liquidation protection over common stock. When, as, and if declared by the Board of Directors. No No No Each share of preferred stock automatically converts into common upon an IPO of no less than $200 million. All series share pari passu Liquidation protection over common stock. Non-cumulative 8% dividend on all series pari passu. No No No Each share of preferred stock automatically converts into common upon an IPO (unstated amount) or upon the date and time, or the occurrence of an event, specified by vote or written consent of the holders of the majority of each respective series. All series share pari passu Liquidation protection over common stock. Dividends may be issued, rate not specified. No No No Each share of preferred stock automatically converts into common at the then effective conversion rate upon an IPO of no less than $50 million. First, Series A, B, and D-1. Second, Series C, D, and Class A & B Common. Liquidation protection over common stock. Non-cumulative dividends may be issued when as and if declared by the board of directors, rate not specified. Yes - Series C and D participates with common. Series A, B, and D1 Non- participating. No No Each share of preferred stock automatically converts into common at the then effective conversion rate upon an IPO of no less than $50 million. All series are paid out pari passu Liquidation protection over common stock. Non-cumulative dividends of 8% on all Series. Yes - Series G and G1 participate with common. Series A, B, C, D, E, F, F-1 Non- participating. No No Each share of preferred stock automatically converts into common at the then effective conversion rate upon an IPO of no less than $75 million, provided that the pre-IPO valuation of the Corporation is equal to or greater than $750 million. All series are paid out pari passu Liquidation protection over common stock Non-cumulative dividends on a pro rata, pari passu basis (rate not specified) when declared by the Board of Directors. No No No Each share of preferred stock automatically converts into common at the then effective conversion rate upon an IPO of no less than $50 million, and a share price of at least $3.304374 (1.5x Series E OIP). First, Series E1, Second, Series E. Third, Series D-1, D Prime, D, C-1 and C on a pari passu basis. Fourth, Series A and B. May receive dividends in an amount at least equal to (i) in the case of a dividend on common or any class that is convertible into common, that dividend per share of each series of the preferred stock as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into common stock and (B) the number of shares of common stock issuable upon conversion of a share of each series of the preferred, in each case calculated on the record date for determination of holders entitled to receive such dividend or (ii) in the case of a dividend on any class or series that is NOT convertible into common stock, at a rate per share of each series of the preferred stock determined by (A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the OIP of such class or series of stock and () multiplying such fraction by an amount equal to the applicable OIP for each series; provided that if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of Series A, B, C, C1, D, D Prime, D1, E or E1 shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Series A, B, C, C1, D, D Prime, D1, E or E1 dividend, as applicable. No No Yes, $3.304374 (1.5x Series E OIP). Each share of preferred stock automatically converts into Class B Common at the then conversion price upon an IPO of no less than $100 million. Series G & G1 first, then Series A, B, C, D, E, F & F1 second and finally Series A1, prior and in preference to Common Stock. Liquidation protection over common stock. Non-cumulative dividends at the rate of $0.08 Series A, $0.01263 Series A1, $0.14541 Series B, $0.2468 Series C, $0.64226 Series D, $2.4907 Series E, $3.6032 Series F, F1, G & G1. Series G and G1 received dividends first, then Series A, B, C, D, E, F & F1 second and finally Series A1. Preferred dividends also participate with common after they receive their preferential amount. No No No. Converts at OIP Each share of preferred stock automatically converts into Class A Common at the then conversion price upon an IPO of no less than $50 million and the price per share is at least $5.375. Series B, C, D, E & E1 first, then Series A second, prior and in preference to Common Stock. Liquidation protection over common stock. 8% non-cumulative dividends. Preferred dividends also participate with common after they receive their preferential amount. No No No. Converts at OIP
  14. 14. PITCHBOOK 2017 VC UNICORN REPORT 18 Select Unicorn Statistics Company VC raised in last 18 months ($M) VC raised in last 12 months ($M) VC raised in 2017 YTD ($M) # of employees # of active investors Uber Technologies $6,630.0 $30.0 $0.0 15,000 136 WeWork $1,750.0 $1,750.0 $1,060.0 2,200 23 Airbnb $1,003.3 $1,003.3 $1,003.3 2,500 67 Pivotal Software $653.0 - - 2,000 5 Outcome Health $609.9 $609.9 $609.9 600 8 Lyft $600.0 $600.0 $600.0 1,700 77 Unity $581.0 $400.0 $400.0 1,400 13 Wish $500.0 $500.0 $500.0 900 45 Intarcia Therapeutics $475.7 $475.7 $475.7 201 35 Moderna $474.0 $474.0 - 500 15 Domo $472.8 $106.8 $106.8 906 46 SoFi $452.9 $452.9 $452.9 800 52 Instacart $449.0 $413.0 $413.0 723 37 Oscar $400.0 - - 342 31 Houzz $400.0 $400.0 $400.0 1,290 22 Tri Alpha Energy $375.0 - - 64 9 SpaceX $356.0 $351.0 $351.0 5,000 24 Essential Products $330.0 $300.0 $300.0 80 8 AvidXchange $328.0 $328.0 $300.0 1,000 20 Peloton $325.0 $325.0 $325.0 300 17 Zoox $302.0 $50.0 - 200 9 Clover Health $290.0 $130.0 $130.0 172 21 Kabbage $250.0 $250.0 $250.0 380 32 Rubrik $241.0 $241.0 $180.0 400 13 Human Longevity $220.0 - - 146 23 Opendoor $210.0 $210.0 - 200 81 Katerra $205.6 $130.0 $130.0 550 10 Reddit $200.0 $200.0 $200.0 - - Slack Technologies $200.0 $0.0 $0.0 650 39 BuzzFeed $200.0 $200.0 - 1,500 19
  15. 15. PITCHBOOK 2017 VC UNICORN REPORT 19 Unicorn League Tables Fidelity Investments 34 Sequoia Capital 30 Andreessen Horowitz 30 SV Angel 29 T. Rowe Price 27 Kleiner Perkins Caufield & Byers 27 GV 23 The Goldman Sachs Group 22 New Enterprise Associates 22 IVP 22 SharesPost 21 Tiger Global Management 21 Wellington Management 21 Khosla Ventures 21 Founders Fund 19 Accel 19 MicroVentures 18 Greylock Partners 17 Salesforce Ventures 14 Open Field Capital 14 Hartford Financial Services Group (Mutual Fund Business) 14 DST Global 14 Draper Fisher Jurvetson 14 DFJ Growth 14 Meritech Capital Partners 13 Glynn Capital Management 13 Benchmark Capital 13 CapitalG 13 Thrive Capital 12 Technology Crossover Ventures 12 Investors with the most US unicorns in portfolio Optimum Asset Management 12 GGV Capital 12 AME Cloud Ventures 12 Peter Thiel 11 Industry Ventures 11 General Catalyst Partners 11 Insight Venture Partners 11 John Hancock Investments 11 GSV Capital 11 Dave Morin 11 DAG Ventures 11 Comcast Ventures 11 Coatue Management 11 Variable Annuity Life Insurance Company 10 Ronald Conway 10 Lightspeed Venture Partners 10 Morgan Stanley Expansion Capital 10 First Round Capital 10 Jeremy Stoppelman 10 General Atlantic 10 GSV Equity 10 Bezos Expeditions 10 TPG Growth 9 Union Square Ventures 9 TriplePoint Capital 9 Kaplan Group Investments 9 Lowercase Capital 9 ICONIQ Capital 9 Baillie Gifford 9 Bessemer Venture Partners 9 Sapphire Ventures 8 Temasek Holdings 8 Redpoint Ventures 8 Index Ventures (UK) 8 Hercules Capital 8 Firsthand Technology Value Fund 8 BlackRock Private Equity Partners 8 Battery Ventures 8 Saints Capital 7 VSL Partners 7 Tao Capital Partners 7 Slow Ventures 7 Spark Capital 7 Western Technology Investment 7 Raptor Group 7 Microsoft 7 M13 7 MassMutual Financial Group 7 Millennium Technology Value Partners 7 Intel Capital 7 Felicis Ventures 7 J.P. Morgan 7 In-Q-Tel 7 Initialized Capital Management 7 Allen & Company 7 Altimeter Capital Management 7
  16. 16. PITCHBOOK 2017 VC UNICORN REPORT 20 Initialized Capital Management 4 Y Combinator 4 Sequoia Capital 3 SV Angel 3 First Round Capital 2 FundersClub 2 GV 2 Bessemer Venture Partners 2 Signatures Capital 2 Transmedia Capital 2 Rothenberg Ventures 2 Collaborative Fund 2 Unicorn investors making first investment at seed stage SV Angel 15 Khosla Ventures 10 Accel 9 Benchmark Capital 8 First Round Capital 8 Sequoia Capital 7 Lightspeed Venture Partners 6 Union Square Ventures 6 Draper Fisher Jurvetson 6 T. Rowe Price 5 Andreessen Horowitz 5 Thrive Capital 4 New Enterprise Associates 4 Founders Fund 4 Greylock Partners 4 General Catalyst Partners 4 The UCLA Venture Capital Fund 3 Millennium Technology Value Partners 3 Slow Ventures 3 Unicorn investors making first investment at Series A Norwest Venture Partners 3 Felicis Ventures 3 GV 3 Baseline Ventures 3 Bessemer Venture Partners 3 Bezos Expeditions 3 Hummer Winblad Venture Partners 3 Andreessen Horowitz 9 Greylock Partners 8 Sequoia Capital 8 IVP 6 Kleiner Perkins Caufield & Byers 5 The Goldman Sachs Group 5 SV Angel 5 General Catalyst Partners 5 Fidelity Investments 4 AME Cloud Ventures 4 New Enterprise Associates 3 Accel 3 Felicis Ventures 3 Khosla Ventures 3 Founders Fund 3 GE Ventures 3 GGV Capital 3 US Venture Partners 3 Unicorn investors making first investment at Series B Founders Fund 7 Kleiner Perkins Caufield & Byers 7 Sequoia Capital 7 Unicorn investors making first investment at Series C DFJ Growth 6 Tiger Global Management 6 Salesforce Ventures 5 Allen & Company 5 Meritech Capital Partners 5 Fidelity Investments 5 Khosla Ventures 5 MicroVentures 4 Comcast Ventures 4 GV 4 Thrive Capital 4 The Goldman Sachs Group 3 Tenaya Capital 3 SV Angel 3 Greenoaks Capital 3 New Enterprise Associates 3 Dragoneer Investment Group 3 Bezos Expeditions 3 Microsoft 3 Tao Capital Partners 3 Andreessen Horowitz 3 GGV Capital 3 Morgan Stanley Expansion Capital 3 Valor Capital Group 3 Insight Venture Partners 3 GV 8 Fidelity Investments 6 Kleiner Perkins Caufield & Byers 5 New Enterprise Associates 5 IVP 5 Andreessen Horowitz 4 SharesPost 4 Sapphire Ventures 4 Unicorn investors making first investment at Series D
  17. 17. PITCHBOOK 2017 VC UNICORN REPORT 21 DFJ Growth 4 Technology Crossover Ventures 4 TPG Growth 4 Industry Ventures 4 Glynn Capital Management 3 DAG Ventures 3 Optimum Asset Management 3 GSV Capital 3 T. Rowe Price 3 Hartford Financial Services Group (Mutual Fund Business) 3 Open Field Capital 3 The Goldman Sachs Group 3 Passport Capital 3 Coatue Management 3 CapitalG 3 MicroVentures 3 Accel 3 Morgan Stanley Expansion Capital 3 Credit Suisse 3 Wellington Management 3 Tiger Global Management 7 Fidelity Investments 7 T. Rowe Price 6 Wellington Management 6 General Atlantic 5 IVP 5 New Enterprise Associates 4 SharesPost 4 Kleiner Perkins Caufield & Byers 4 TriplePoint Capital 3 Sapphire Ventures 3 Baillie Gifford 3 Unicorn investors making first investment at Series E Draper Fisher Jurvetson 3 J.P. Morgan 3 DST Global 3 Man Capital 3 Alibaba Group 3 Salesforce Ventures 3 GGV Capital 3 In-Q-Tel 3 Kaplan Group Investments 3 T. Rowe Price 6 Wellington Management 6 Temasek Holdings 4 MicroVentures 4 The Goldman Sachs Group 4 Glynn Capital Management 4 VSL Partners 4 Variable Annuity Life Insurance Company 3 SharesPost 3 Optimum Asset Management 3 BlackRock Private Equity Partners 3 John Hancock Investments 3 CapitalG 3 Meritech Capital Partners 3 Fidelity Investments 3 Pokora Capital 3 General Atlantic 3 IT Ventures 3 Hartford Financial Services Group (Mutual Fund Business) 3 Unicorn investors making first investment at Series F Fidelity Investments 5 Variable Annuity Life Insurance Company 3 Hartford Financial Services Group (Mutual Fund Business) 3 Unicorn investors making first investment at Series G Mithril Capital Management 1 Tamares Group 1 Pokora Capital 1 Aeon Funds 1 Abbott Laboratories 1 BlackRock Private Equity Partners 1 Nima Capital 1 Broad Beach Ventures 1 Seed-Resolute 1 Dover Madison Capital Management 1 TJNS Capital 1 EDB Investments 1 MicroVentures 1 FJ Labs 1 Nautilus Ventures 1 Founders Equity Partners 1 GSV Equity 1 Rising Tide Fund 1 Hercules Capital 1 Surender Punia 1 IT Ventures 1 Third Point Ventures 1 M13 1 VSL Partners 1 Unicorn investors making first investment at Series H+
  18. 18. PITCHBOOK 2017 VC UNICORN REPORT 22 Methodology Unicorns If a company’s post-money valuation reaches above $1 billion, they are categorized as a unicorn. If they fall below a $1 billion valuation they will fall out of the categorization for any subsequent rounds that continue below the $1 billion valuation. Only the first round for each company that reaches $1 billion in post-valuation will count as a “new unicorn” round. For aggregate valuation calculation, the most recent valuation for each company is counted, and will be carried forward until the company raises a new round. Deals We include equity investments into startup companies from an outside source. Investment does not necessarily have to be taken from an institutional investor. This can include investment from individual angel investors, angel groups, seed funds, venture capital firms, corporate venture firms, and corporate investors. Investments received as part of an accelerator program are not included, however, if the accelerator continues to invest in follow-on rounds, those further financings are included. All financings are of companies headquartered in the US. Angel/seed: We define financings as angel rounds if there are no PE or VC firms involved in the company to date and we cannot determine if any PE or VC firms are participating. In addition, if there is a press release that states the round is an angel round, it is classified as such. Finally, if a news story or press release only mentions individuals making investments in a financing, it is also classified as angel. As for seed, when the investors and/or press release state that a round is a seed financing, or it is for less than $500,000 and is the first round as reported by a government filing, it is classified as such. If angels are the only investors, then a round is only marked as seed if it is explicitly stated. Early-stage: Rounds are generally classified as Series A or B (which we typically aggregate together as early stage) either by the series of stock issued in the financing or, if that information is unavailable, by a series of factors including: the age of the company, prior financing history, company status, participating investors, and more. Late-stage: Rounds are generally classified as Series C or D or later (which we typically aggregate together as late stage) either by the series of stock issued in the financing or, if that information is unavailable, by a series of factors including: the age of the company, prior financing history, company status, participating investors, and more. Down Rounds: Down rounds are calculated using the change between a company’s new pre-money valuation and previous post-money valuation. Exits We include the first majority liquidity event for holders of equity securities of venture-backed companies. This includes events where there is a public market for the shares (IPO) or the acquisition of majority of the equity by another entity (corporate or financial acquisition). This does not include secondary sales, further sales after the initial liquidity event, or bankruptcies. M&A value is based on reported or disclosed figures, with no estimation used to assess the value of transactions for which the actual deal size is unknown.
  19. 19. We do data. You close deals. The PitchBook Platform is the leading data software for professionals in VC, PE and M&A. Find out how our 1,800 clients use it to invest smarter, close deals more quickly and win more business. demo@pitchbook.com

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