High level view of the venture capital trends as presented to Claremont McKenna College students, January 2015

1. 1 | ©2012, Cognizant Confidential. Not for distribution.
A VENTURE CAPITAL
PERSPECTIVE
GAMIEL GRAN
JANUARY 2015

2. ENTREPRENEURS
(Starting and Building
Companies)
VENTURE CAPITALISTS
(Finding and Funding
Entrepreneurial Companies)
The Venture Capital Process
INSTITUTIONAL INVESTORS
(Limited Partners – e.g.
Endowments, Pension Funds)
• Long-term funders of VC firms
(10-year contract, funds flow slowly)
• Need out-sized returns (DJIA+5);
Want access to best firms; Comp
issues
• Can drive cyclicality
• Past 12 months very constrained
• Some “Super Angel” funds may
have just individual limited partners,
not institutions
• Equity investors (Not lenders);
strike deals
• Pick winners and add value;
wide variety of outcomes
• Firms often specialize and
have multiple funds
• Long-term funds, but liquidity
focused
• Disintermediation – “crowd
funding”
• Defining and focusing the
pursuit of an opportunity
• Marshalling resources /
maintaining control
• Attempting to create “virtuous
cycle of success”
• Outcomes vary widely, thus
creating “inefficient market” for
VC’s

3. • 1958 Small Business Administration
• 1960 Venrock
• 1962 Draper
• 1964 Sutter Hill
• 1972 Kleiner Perkins
• 1974 ERISA killed
• 1978 ERISA renewed VC flow:
• 1977 $39M
• 1978 $570M
• 1981 Capital Gains down to 20%
For every dollar of venture capital
invested from 1970 to 2010, $6.27 of
revenue was generated
Annual venture investment equals less than
0.2 percent of U.S. GDP. Annually,
VC-backed companies have generated
revenue equal to 21 percent of U.S. GDP
History of Venture Capital

4. Historical View: Correlation to Tax Policy

6. 6

9. Venture Benchmark Performance

10. 10

11. Crowdfunding

12. 12

13. 13

14. 14

15. 15

16. 16

17. Company
Raise(M)
Offer$
Opening$
Current$
Alibaba
22,000
$68
$92
$108
King
Digital
$500
$22
$20
$16
GoPro
$425
$24
$31
$57
Virgin
America
$306
$23
$27
$33
GrubHub
$200
$26
$40
$35
OnDeck
Capital
$200
$20
$26
$25
Coupons.com
$168
$16
$32
$15
Zendesk
$100
$9
$11
$24
Truecar
$70
$9
$9
$22
$64B raised in Tech IPOs in 2014
As hedge funds, mutual funds, corporates,
sovereign wealth and private equity
investors piled into U.S. tech companies in
2014, the 588 companies in the pipeline
have raised a whopping $64.27B across
more than 2,700 financing deals. $24B
(38.4%) of that funding came in 2014.

18. 18
The billion dollar valuation
club spikes
• The number of Tech IPO Pipeline
companies that entered the billion-
dollar valuation club skyrocketed in
2014
• 160%+ increase from the number of
companies that first raised at a $1B+
valuation in 2013
• There are 42 companies in the $1B+
IPO pipeline
• Actfiio
• AirBnB
• AppDynamics
• AppNexus
• Automattic
• Box
• Cloudera
• CloudFlare
• CreditKarma
• Deem
• Docusign
• Eventbrite
• Evernote
• Fanatics
• Gilt
• Good Technology
• Houzz
• Insidesales.com
• Jasper
Technologies
• Jawboine
• JustFab
• Kabam
• Lookout
• MongoDB
• Nutanix
• Palantir
• Pinterest
• PureStorage
• Qualtrics
• Razer
• Slack
• Snapchat
• SpaceX
• Square
• Stripe
• Survey
• Monkey
• Tango
• Uber
• Unity Tech
• Vice Media

21. 21
• Insert new bullets
• Insert new bullets

22. 22

23. Historical: VC Deals# and Funding $’s
23

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26. 26

27. 27

29. VC Funding …
http://www.bothsidesofthetable.com/2010/07/22/want-to-know-how-vcs-calculate-valuation-differently-from-founders/

30. 30

31. 31

32. 32

33. © 2014 SOASTA. All rights reserved.
May 4, 2015
33
Forrester: Top Technology Trends "
for 2014 And Beyond
1. Digital convergence erodes
boundaries
Physical and digital worlds are
converging. As a result consumers
expect uniform service whether they
are in the physical world or if they
are in the digital world.
2. Digital experience delivery
makes (or breaks) firms
Forrester makes the point that “A
great digital experience is no longer
a nice-to-have; it’s a make-or-break
point for your business as we more
fully enter the digital age.”

34. 34 | ©2012, Cognizant Confidential. Not for distribution.
WE ARE INCREDIBLY LUCKY

35. We have the opportunity to build (and
manage) the “vast, silent, unseen
Second Economy”
“By 2025 the
Second Economy
will be as large as
the 1995 physical
economy”
W. Brian Arthur, Santa Fe Institute – McKinsey Quarterly, Oct 2011;
http://www.mckinsey.com/insights/strategy/the_second_economy

36. 36 | ©2012, Cognizant Confidential. Not for distribution.
THE
50 – 50
MARKET of 2020

37. 37 | ©2012, Cognizant Confidential. Not for distribution.
50 – 50
Billion Devices Times the Data

38. 38 | ©2012, Cognizant Confidential. Not for distribution.
NEW TECHNOLOGIES ARE
TRANSFORMING WORK
A NEW TYPE OF DIGITAL
ENTERPRISE IS EMERGING

39. Some client voices on Digital: CXOs
“Advances in technology and shifts in customer
expectations show no signs of abating. They bring in
their wake both disruption and opportunity. We need
to recognize that banking is a digital business.”
Every business is a digital business. Every
customer is a digital customer. AIG must evolve
to compete
Robert Benmosche, CEO, AIG
Simon McNamara, CAO, RBS
Martin Sorrell, CEO, WPP
"We increased our target for digital to 40%-45% of our
business. If you asked — what do I regret about the past
five or ten years? We didn't go fast enough."

41. The mobile revolution is being televised

42. The mobilization of
everything
1991 Radio Shack ad
All items now
available with a
standard smart
phone.
$3,465.06 for entire ad
$6,229.82 in real terms

43. Facebook can watch you fall in love….
“During the 100 days before the relationship starts, we
observe a slow but steady increase in the number of timeline
posts shared between the future couple.”

44. 44

47. Some key
trends
• Snapchat: Social communications
• Tinder: Social connections
• AirBnB: Shared economy
• Spotify: On Demand Music
• Oculus: Virtual Reality
• Quanergy: Self-driving in a chip
• Houzz: Digital Remodel
• Instacart: Local but Digital retail
• Pinterest: Share Ad model v2
• Bitcoin: New currency
• Github: Community Programmer
• Invensense: Contextual chips

48. 48 | ©2012, Cognizant Confidential. Not for distribution.
GAMIEL GRAN
JANUARY 2015