Ken Morse Nextgen Vcs

“ NextGen VCs – After the Storm” PolyTechnos Venture-Partners GmbH Third Annual Meeting “CEO Day” Berlin 06 November 2001 Kenneth P. Morse, Senior Lecturer and Managing Director MIT Entrepreneurship Center

Desired Outcomes of this Presentation ,[object Object],[object Object],[object Object],I want to express special thanks to Jesse Reyes, Venture Economics and John Taylor, NVCA for their permission to use their excellent data, analysis, and presentations from VentureXpert ™, the Venture Capital Institute, and the DRI-WEFA study which were just released in the USA.

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MIT Entrepreneurship Center Mission To train and develop leaders who will make high tech ventures successful MIT President Charles M. Vest, July 1996 “ I want you to be the premier global center for entrepreneurship, and to be recognized as such.” “ We must not only be the best. We must also serve as a model for others and ensure that, together, we all make a significant global impact in this vital field.”

Why Focus on High Tech? ,[object Object],[object Object],[object Object]

To Compete Successfully… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],“ MIT startups must attack global markets.” To teach global high tech entrepreneurship effectively, we need a network of partners:

The Inevitable Business Cycle “ In times of great commercial prosperity there has been a tendency [toward] over-speculation on several occasions. The success of one project generally produces others of a similar kind. Popular imitativeness will … drag a community too anxious for profits into an abyss …” - Charles Mackay, 1841

The Impact of US Venture Capital ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],DRI-WEFA Study – Commissioned by NVCA: Source: DRI-WEFA (analysis as of 8/2001)

Key Findings - Preliminary ,[object Object],[object Object],[object Object],[object Object],[object Object],Source: DRI-WEFA (analysis as of 8/2001)

The VC Industry has Grown Dramatically in the Past Few Years Source: VentureXpert ™ Database by VE & NVCA

Venture Capital Fundraising Continues at a Strong Pace Source: VentureXpert ™ Database by VE & NVCA This does not include money available for investment by Corporate Venture groups.

The US Venture Industry Has Grown Source: 2000 NVCA Yearbook

How Big is Big in a Venture Fund? Have VCs Abandoned Seed? ,[object Object],Source: VentureXpert™ Database by VE & NVCA

Corporate Venture Capital Groups Have Become Very Involved Source: VentureXpert ™ Database by VE & NVCA

Corporate VC Groups are Involved in more than ¼ of all Deals Source: VentureXpert ™ Database by VE & NVCA

Recent Quarters Portend a Return to Traditional Activity Levels Source: VentureXpert ™ Database by VE & NVCA

2000 IPOs Edge Out 1999 Record Levels Despite a Bouncy Road Source: VentureXpert ™ Database by VE & NVCA

Acquisitions are an Increasingly Important Exit Strategy Source: VentureXpert ™ Database by VE & NVCA

Why Invest If You Can’t Find the Exit Door? Source: VentureXpert ™ Database by VE & NVCA IPO Markets are Dormant

These are Increasingly Important Acquisition Markets Have Slowed Down Too ,[object Object],[object Object]

Average Early and Seed Stage Round Sizes Have Crested Source: VentureXpert ™ Database by VE & NVCA

Venture Capitalists Continue to Fund Early and Seed Stage Companies – Future Pipeline Source: VentureXpert ™ Database by VE & NVCA

First Venture Rounds into Internet-Related Companies Continue Source: VentureXpert ™ Database by VE & NVCA Although at a Much-Reduced Level from 2000

Scaling the Industry: Growth in VC Principals Has Not Kept Up With Growing Fund Sizes Source: VentureXpert ™ Database by VE & NVCA

Venture Principals are Busier than Ever! Source: VentureXpert™ Database by VE & NVCA

Source: Venture Economics US Venture Capital Partnership Returns Versus Public Market Returns Funds Formed 1969-2000 (quarterly returns)

US Venture Capital Partnership Returns Versus Public Market Returns Funds Formed 1969-2000 (quarterly returns) Source: Venture Economics

Five Year Performance Trends US Venture vs Buyouts Source: Venture Economics

US Private Equity Performance Benchmarks US Limited Partnerships Formed 1969-1999 Investment Horizon Returns Net to Investors as of 9/30/2000 Source: Venture Economics

US Limited Partnerships Formed 1969-2000 Investment Horizon Returns Net to Investors as of 12/31/2000 Source: Venture Economics

Companies Receiving First Venture Round (Series A) During Last Downturn (1/1990-6/1992) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Current Scene: B2B = Back to Basics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Entrepreneurs: Building Your Company ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],YOUR VALUE PROPOSITION MUST BE COMPELLING, QUANTIFIABLE, PROVEABLE, REFERENCEABLE, AND EASILY EXPLAINABLE…

Our Message to Entrepreneurs: – Selecting Your Financial Partners ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Entrepreneurs’ Funding: Many Options ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Future Outlook: After the Shakeout ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Ken Morse Nextgen Vcs

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