The United States of Unicorns

By | Unicorn Technology, Venture Capital | No Comments

Collectively, US unicorns are worth approximately $360B. Combined, these companies have raised just over $73B. To see the full list of US unicorns and associated data, check out the CB Insights blog.

The United States is home to 105 unicorn companies valued at $1B+. As of 7/25/2017, six private US companies are worth over $10B. The two most valuable unicorns in the US are Uber ($68B) and Airbnb ($29.3B). Palantir Technologies and WeWork, both valued at $20B, are tied for third.

Of the top four highest valued, only WeWork (which is based in NYC) is headquartered outside California. California has the highest unicorn “population” of any US state by far, with 62 billion-dollar startups inside its borders. New York ranks second with 15, followed by Massachusetts and Illinois with five each. Eight other states and the District of Columbia are also home to at least one company worth $1B+.

Using the CB Insights database and our real-time global unicorn tracker, we visualized the locations of every US-based unicorn in the map below.

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KEY INSIGHTS ABOUT THE COMPANIES IN THIS MAP:

  • Collectively, US unicorns are worth approximately $360B.
  • Combined, these companies have raised just over $73B.
  • After California, New York, Massachusetts, and Illinois, the next-highest unicorn populations are found in Utah (with four) and Florida (with three).
  • The top five most well-funded US unicorns are: Uber ($15.1B raised), Airbnb ($4.4B), WeWork ($2.76), Infor ($2.63B), and Lyft ($2.46B).
  • The oldest unicorn in the US is the greentech company Bloom Energy, which reached a valuation above $1B in 2009.
  • The newest unicorn in the US is 3D printing startup Desktop Metal, which became a unicorn in July 2017 after raising a $115M Series D.
  • The three most active investors in US-based unicorns, by total number of deals to these companies, are the VC firms Sequoia Capital, Andreessen Horowitz, and Tiger Global Management.

Learn about our Unicorn Technology Fund by registering here: https://www.endowmentwm.com/accredited-investor-signup/

Source: CBInsights

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What percentage of Startups Fail?

By | Venture Capital | No Comments

I have been anecdotally using the statistic that: “Nine out of 10 startups fail.” The problem? It’s not true.

Cambridge Associates, a global investment firm based in Boston, tracked the performance of venture investments in 27,259 startups between 1990 and 2010. Its research reveals that the real percentage of venture-backed startups that fail—as defined by companies that provide a 1X return or less to investors—has not risen above 60% since 2001. Even amid the dotcom bust of 2000, the failure rate topped out at 79%.

Read the full article here: http://fortune.com/2017/06/27/startup-advice-data-failure/

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Internet Trends Report 2017

By | Alternative Investments, Venture Capital | No Comments

Here’s a first look at the most highly anticipated slide deck in Silicon Valley. This year’s report includes 355 slides and tons of information, including a new section on healthcare that Meeker didn’t present live.

Here are some takeaways:

  • Global smartphone growth is slowing: Smartphone shipments grew 3 percent year over year last year, versus 10 percent the year before. This is in addition to continued slowing internet growth, which Meeker discussed last year.
  • Voice is beginning to replace typing in online queries. Twenty percent of mobile queries were made via voice in 2016, while accuracy is now about 95 percent.
  • In 10 years, Netflix went from 0 to more than 30 percent of home entertainment revenue in the U.S. This is happening while TV viewership continues to decline.
  • Entrepreneurs are often fans of gaming, Meeker said, quoting Elon Musk, Reid Hoffman and Mark Zuckerberg. Global interactive gaming is becoming mainstream, with 2.6 billion gamers in 2017 versus 100 million in 1995. Global gaming revenue is estimated to be around $100 billion in 2016, and China is now the top market for interactive gaming.
  • China remains a fascinating market, with huge growth in mobile services and payments and services like on-demand bike sharing.
  • While internet growth is slowing globally, that’s not the case in India, the fastest growing large economy. The number of internet users in India grew more than 28 percent in 2016. That’s only 27 percent online penetration, which means there’s lots of room for internet usership to grow. Mobile internet usage is growing as the cost of bandwidth declines.
  • In the U.S. in 2016, 60 percent of the most highly valued tech companies were founded by first- or second-generation Americans and are responsible for 1.5 million employees. Those companies include tech titans Apple, Alphabet, Amazon and Facebook.
  • Healthcare: Wearables are gaining adoption with about 25 percent of Americans owning one, up 12 percent from 2016. Leading tech brands are well-positioned in the digital health market, with 60 percent of consumers willing to share their health data with the likes of Google in 2016.

Download the Internet Trends Report here: Internet+Trends+2017+Report

Source: KPCB, Recode

The 9 most active investors in Bay Area startups

By | Venture Capital | No Comments

It’s true that more and more startups based outside the Bay Area are receiving significant VC funding—last year was the first time in a decade Silicon Valley investors made more non-local than local deals. But the San Francisco region still receives far more capital than any other area.

Since the beginning of last year, 1,697 investors have participated in at least one round involving a Bay Area-based company, per PitchBook data, putting $38.3 billion in capital to work across 1,813 completed deals. The majority (54.6%) of those transactions have been in the software sector, followed in frequency by commercial services (6.5%) and healthcare devices & supplies (5.2%). In terms of round size, a plurality of investments (31.7%) have ranged between $1 million and $5 million, with the $10 million to $25 million bucket ranking second (24.8%).

Here are the top 9 investors in Bay Area-based companies since the beginning of 2016, along with their investment counts (excluding accelerator rounds):

1. NEA (66)
2. Khosla Ventures (55)
3. GV (49)
4. Andreessen Horowitz (47)
5. Y Combinator (43)
6. Kleiner Perkins Caufield & Byers (40)
7. Sequoia (40)
8. SV Angel (37)
9. First Round Capital (37)

Source: Pitchbook

Mary Meeker’s Internet Trends Report 2016

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Here are some highlights from the above report:

  • India is the one country where internet usage is growing, up 40 percent compared with 33 percent a year ago. India passed the U.S. to become the No. 2 global market behind China in 2015.
  • The Asia Pacific region represented 52 percent of smartphone users globally in 2015. The rapid growth in recent years has begun to slow, dropping to 23 percent in 2015 from 35 percent in 2014.
  • North America, Europe, and Japan represented 63 percent of global GDP in 1985. By 2015, their contribution dropped to 29 percent. China and emerging markets in Asia represented 63 percent of global GDP last year.
  • Online advertising is still not very effective. Advertisers are spending an outsize amount on legacy media.
  • Global birth rates are down 39 percent since 1960. So where will technology growth come from? Who knows, but at least there’s this: Global life expectancy is up 36 percent since 1960.

Meeker co-authored the first Internet Report in 1995 as an analyst at Morgan Stanley. A copy of the report can be downloaded here: Internet Trends Report 2016.

2014 VC Investment Tops $48B

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Venture capitalists invested $48.3 billion in 4,356 deals in 2014, an increase of 61 percent in dollars and a 4 percent increase in deals over the prior year, according to the MoneyTree™ Report by PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA), based on data from Thomson Reuters. In Q4 2014, $14.8 billion went into 1,109 deals. Internet-specific companies captured $11.9 billion in 2014, marking the highest level of Internet-specific investments since 2000.  Additionally, annual investments into the Software industry also reached the highest level since 2000 with $19.8 billion flowing into 1,799 deals in 2014. Dollars going into Software companies accounted for 41 percent of total venture capital investments in 2014, the highest percentage since the inception of the MoneyTree Report in 1995. “With the fundraising environment improving in 2014 and non-traditional investors increasingly joining venture capital firms in later-stage funding rounds, more capital was deployed to the startup ecosystem in 2014 than any year since 2000,” said Bobby Franklin, President and CEO of NVCA. “

Read the full article here: http://bit.ly/EWM2014VCInvestment

(Source: PWC)

Mutual Funds investing in Early Stage venture backed companies

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Is this a new trend? Or are the public markets not offering enough investment opportunities with favorable risk-return trade offs?

Following blurb copied from Fortune/TermSheet:

Last Tuesday’s big deal was that cancer immunotherapy startup Juno Therapeutics had raised $134 million in Series B funding from “ten public mutual funds and healthcare-focused funds.” This came less than one year after the Seattle-based company had raised $176 million from a group of venture capital funds, Jeff Bezos and strategic partners like The Fred Hutchinson Cancer Research Center, Memorial Sloan-Kettering Cancer Center and the Seattle Children’s Research Institute.

Now we’ve learned that Fidelity Investments led the new round, making it one of the mutual fund manager’s earliest-stage private deals to date (it notably led Uber’s recent round). No word yet on the other nine participants.

(Source: Fortune)

Changing Venture Capital Landscape

By | Venture Capital | No Comments

Where are we today?

  • We have 2.4 billion Internet users, or 50x more than before.
  • Online connections are 180x faster at 10.5 Mbps.
  • 164 million US smartphone users gives us “always-on” mobile connectivity
  • We’re all socially connected, so great businesses spread faster.
  • We all have one-click purchase power through Apple, Google, Amazon and eBay.
  • The VC market has right-sized, returning back to mid 90’s levels with less competition.
  • The cost to start a business is 95% lower, meaning many more companies are created and funded by angel and seed investors.
  • It still takes venture capital to scale a business, which means large amounts of capital go into industry winners like Uber, Airbnb and Snapchat.

It doesn’t take a huge leap to see how well the VC industry is positioned for the immediate future. LPs have taken notice as 2014 is by all accounts the busiest year for LPs since the Great Recession began as it is forecast that between $25-30 billion to be invested in some 200 venture funds. Where will these dollars go and how is the industry changing?

Read the slide deck below to get an excellent overview of the venture capital industry:

It’s morning in VC

(Sources: Upfront Ventures, Fortune Term Sheet)