Venture Capital Update: 2012

Transcription

1 Reseau capital Conference 2013 Venture Capital Update: 2012 Peter van der Velden President, CVCA Managing General Partner, Lumira Capital Data from the CVCA and Thomson Reuters 1

2 Venture Capital, not so long ago VC Investment Averaging $1 billion annually, Approximately 5% of US VC investment activity U.S. VCs investing significantly more per portfolio than Canadian VC funds, Most corporate investors, plus all Canadian banks, have closed their VC arms, Most Canadian pension plans had moved out of the venture asset class, The number of companies being financed by Canadian VC s was on a steady decline and the number of new financing had eroded at an even faster rate, World Economic Forum report put Canada at 9 th in overall competitiveness, but 18 th for Venture Capital Availability, and labelled this a competitive disadvantage, VC fund raising Averaging $ M million (deficit to investment rate), half of that institutional and half of that retail VC Competitive positioning funds are too small, too inexperienced, Americans are doing all the best deals VC Performance Perception that it is difficult to make money in the asset class 2

3 2013 a new Reality % 6/ % / % 3

4 VC Financing $1.5 Billion Invested in 2012 Equal to 2011 and highest since Canadian Companies in 2012, A Five Year High 41% of Capital Flows To New Investments, A 15 Year High 4

5 VC Financing Information Technology: 214 Investments & $719 Million Life Sciences: 76 Investments & $368 Million Cleantech: 33 Investments & $144 Million Non technology: 135 Investments & $230 Million 5

6 VC Financings Ont, Que, BC Rank 6 th, 11 th, and 19 th in NA 6

7 VC Financing VCs appear to be nesting closer to home Foreign VC Activity in Canada Down 22% Canadian Fund Activity in Non-Resident Companies Down by 16% But the good news the increased level of domestic VC activity (up $100 M from 2011) completely offset the foreign investment shortfall. If you don t think a domestic VC infrastructure matters this is absolutely the best kind of proof Foreign VC Activity in Canada Down 22% Capital deployed by CDN VCs Abroad down 16% 7

8 VC Financing US Commitments Still Larger but the Gap has Narrowed Average Amount Invested (CAD $ Millions) 8

9 VC Financing 6/24 Largest North American VC Deals are Canadian Company Prov. Value Disclosed Investors Desire2Learn Inc. (4 th ) ON $80 New Enterprise Associates, OMERS Ventures Engineered Power Inc. (9 th ) AB $50 Thrasos Innovation Inc. (16th) QC $35 32 Degrees Capital, Export Development Canada, Business Development Bank of Canada, Enertech Lumira Capital, SR One, GSK Canada Life Sciences Innovation Fund, Advanced Technology Ventures, Fonds de solidarité FTQ, MP Healthcare Venture Management, Pappas Ventures D-Wave Systems Inc. (17 th ) BC $35 In Q Tel, Bezos Expeditions LightSpeed Retail Inc. (22 nd ) QC $31 Accel Partners SecureKey Technologies Inc. (24 th ) ON $30 Intel Capital, Visa, MasterCard, Discover Financial Services, Rogers Venture Partners, TELUS Corporation US Top 50 investments compiled by CB Insights 9

10 VC Performance Continued Improvement for Top Tier (as of 06/30/2012, based on net IRR calculation) Pooled Avg Top Quartile IRR Top Quartile Net Horizon Returns (All periods ending Jun 30, 2012) Fund Type Venture Capital Buyouts & Mezzanine All Private Equity 22.0% 32.2% 27.1% 3-Year 5-Year 10-Year 15.6% 10.4% 7.6% 32.5% 23.3% 40.3% 23.7% 18.5% 27.8% Source: Thomson Reuters and CVCA Note: All data is continuously updated and subject to change. 10

11 VC New Fund Formation $1.8 Billion in 2012, A Six Year High Key Enablers Government Corporations Provincial FoFs BDC Individuals 11

12 New Fund Formation Canadian Fund Raising Aligns with US in

13 New Fund Formation Private Independent Funds lead the charge 13

14 New Fund Formation Quebec based Funds Lead Capital Formation 14

15 New Fund Formation The Rise of the Strategic LP During 2011 and 2012, 13 VC funds reported Strategics among their core Limited Partners 15

16 New Fund Formation the road ahead 2013 is likely to be a down year, Provincially enabled Funds of Funds (BC, ALTA, ONT) are tapped out and Que is getting closer, Despite the massive positive changes in the ecosystem, traditional capital sources remain relatively unengaged, New Federal Initiatives (the FED 400) will not likely have a meaningful impact until

17 New Fund Formation the Role for Government Venture capital and the building of innovation centric, knowledge based and high growth companies is a on the agenda of government s worldwide, Every major economy from Europe, North America to China has deep involvement of government in venture capital both directly and via procurement policies and related incentives, Governments are engaged because the data are very very clear venture capital, in partnership with entrepreneurs creates, high quality economic growth and jobs*. In the five year period after a VC financing event, VC backed companies generate 846% more revenue growth and 608% more employment growth than their non VC backed counterparts.. On the flip side they also found that, an unsuccessful raise is expected to yield the following results: slower growth (71%); hiring fewer employees than planned (54%); and reducing the number of employees (23%). * Did They Build That? The Role of Private Equity and Venture Capital in Small and Medium- Sized Businesses, John K. Paglia and Marentno A. Harjoto, July 2012 School of Business at Pepperdine University.

18 The Federal $400 Million Potentially very good timing Provide top up to a select number of recently closed funds Provide a recharge for provincial strategies that have become fully committed Private sector led Provide incentives for engagement of private sector capital sources that can and should be the foundation for sustainability 18

19 VC in Canada: 2013 and beyond Best in Class Canadian General Partnerships are delivering returns Canadian GPs are today characterized by maturity and experience paired with deep strategic insight and domain expertise and broad sector and ecosystem relationships A consolidated industry brings pricing power to funds with dry powder and provides focus for that capital Venture backed companies are emerging as a core part of the broader PE food chain Innovation continues to underpin growth globally Macro trends in health and wellness, energy, water and information technology are the foundation for significant businesses and outsized returns for GPs and their Limited Partners 19

20 Venture Capital Update: 2012 Peter van der Velden President, CVCA Managing General Partner, Lumira Capital Data from the CVCA and Thomson Reuters 20