Venture Capital Climate
Seed Stage Funding Options


Investigation
Proof of
Concept
Feasibility
Development Introduction
Seed
Start-up
Excell Partners
Friends,
Founders, Family
Angels, Grants,
Bootstrap
Valley of Death
Early
Growth
Maturity
First,
Second, etc.
VCs
Venture Capital
Equity, Markets,
Banks
©2007
@2010 Excell Partners, Inc., CONFIDENTIAL 6/16/10 Page 2
I2E, Inc.
$ Billions Invested
$120
$100
$100
$80
$60
$51
$39
$40
$20
$14
$20
$21
$19
$22
$23
$0
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report,
Data: Thomson Reuters
@2010 Excell Partners, Inc., CONFIDENTIAL Page 3, 6/18/10
$26
$31
$28
$18
Venture Capital Investments for 2009 by Stage
In Millions
Later
$5,919
Expansion
$5,485
Early
$4,627
$1,650
Startup/Seed
$0
$2,000
$4,000
$6,000
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters
@2010 Excell Partners, Inc., CONFIDENTIAL Page 4, 6/18/10
$8,000
• Biotech
• Computers and Peripherals
• Financial Services
• Industrial Energy
• IT Services
• Media and Entertainment
• Medical Devices and Equipment
• Semiconductors
• Software
• Telecommunications
• All Other
@2010 Excell Partners, Inc., CONFIDENTIAL Page 5, 6/18/10
Venture Capital Investments for 2009 by Industry
In Millions
Biotechnology $3,508
Software $3,116
Medical Devices &
Equipment $2,506
Media & Entertainment
$1,173
IT Services $1,077
Industrial/Energy $2,330
Semiconductors $772
Networking &
Equipment $713
Telecommunications $559
Consumer Products &
Services $371
Financial Services $364
Computers & Peripherals
$338
Electronics/Instrumentation
$305
Business Products &
Services $253
All Other $306
0
500
1000
1500
2000
2500
3000
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters
@2010 Excell Partners, Inc., CONFIDENTIAL Page 6, 6/18/10
3500
4000
Region
Investment ($M)
Silicon Valley *
New England
NY Metro
Southeast
LA/Orange County *
San Diego *
Midwest
Northwest
Texas
DC/Metroplex
Colorado
Philadelphia Metro
North Central
SouthWest
South Central
Upstate NY
Sacramento/N.Cal *
Unknown
AK/HI/PR
Total
% Tot
$6,990
$2,161
$1,413
$986
$943
$903
$740
$705
$645
$546
$468
$424
$377
$310
$24
$18
39.5%
12.2%
8.0%
5.6%
5.3%
5.1%
4.2%
4.0%
3.6%
3.1%
2.6%
2.4%
2.1%
1.8%
0.1%
0.1%
866
348
246
138
157
107
221
133
111
119
72
89
58
69
37
13
$17
$13
$7
$17,691
0.1%
0.1%
0.0%
100%
8
8
2
2,802
2009 Total Annual VC Investment ~$18B
Source: PWC MoneyTree
Deals
>50% to California
@2010 Excell Partners, Inc., CONFIDENTIAL Page 7, 6/18/10
Seed /
Start-Up ,
7.9%
Later, 16.7%
Later,
31.4%
Early ,
29.7%
Expansion,
31.0%
Downstate NY Total
= $1,416 M
Expansion,
83.3%
Upstate NY Total
= $18 M
NOTE: NO Seed or Early Stage recorded by VC in
Upstate NY in 2009!!
Source: PWCmoneytree.com
@2010 Excell Partners, Inc., CONFIDENTIAL Page 8, 6/18/10
Investigation
Proof of
Concept
Feasibility
Development Introduction
Seed
Start-up
Excell Partners
Friends,
Founders, Family
Angels, Grants,
Bootstrap
Valley of Death
Early
Growth
Maturity
First,
Second, etc.
VCs
Venture Capital
Equity, Markets,
Banks
©2007
@2010 Excell Partners, Inc., CONFIDENTIAL 6/16/10 Page 9
I2E, Inc.
@2010 Excell Partners, Inc., CONFIDENTIAL Page 10, 6/18/10
• Significant contributors to job growth
• Responsible for creation of 250,000 new jobs in US in 2009
(4.4 jobs per angel investment)
• Represents 5% of new jobs in nation in 2009
Source: Center for Venture Research
@2010 Excell Partners, Inc., CONFIDENTIAL Page 11, 6/18/10
Sources: Center for Venture Research (pre ‘03 data) and Kauffman Foundation/ACEF (‘04-’09 data)
@2010 Excell Partners, Inc., CONFIDENTIAL Page 12, 6/18/10
2005
2006
2007
2008
2009
Total
$23.1 B
$25.6 B
$26.1 B
$19.2 B
$17.6 B
# of Ventures
49,500
51,000
57,120
55,480
57,225
Active Angels
227,000
234,000
258,000
260,000
259,480
Avg Deal Size (K)
$ 467 K
$ 502 K
$ 455 K
$ 346 K
$ 308 K
Avg $ per Investor (K) $101,762 $109,402 $101,084
$73,846
$67,828
2009: VC $18B + Angel 18B = $36B
Source: Center for Venture Research
@2010 Excell Partners, Inc., CONFIDENTIAL Page 13, 6/18/10
•Western NY Venture Association, Buffalo
• Rochester Angel Network (RAN)
• Seed Capital Partners, Syracuse
• Tech Valley Angel Network, Albany
• Orange County Angels
• New York Angels
• Long Island Angels
Upstate
Upstate
Upstate
Upstate
Downstate
Downstate
Downstate
Positive Trends but …
Once organized, some Angels move downstream to Early Stage
• Shy away from Life Sciences, unfortunate because
o 76% of Downstate R&D is Bio
o 56% of Upstate R&D is Bio
• Not all staffed to lead due diligence, deal syndication, negotiation
•
Excellent syndication partners and source of co-investor capital!
Can’t be expected to shoulder entire burden for hundreds of start-ups!
@2010 Excell Partners, Inc., CONFIDENTIAL Page 14, 6/18/10
ROCHESTER
BUFFALO
SYRACUSE
# of Deals
2
2
6
Total Amount Invested
$1,345,000
$302,000
$1,000,000
Category/Industry
Biotech
Medical Device
Biotech
Mems
Green Materials
Saas
Nanotech/Clean Energy
Functional Foods
Biochemical
Average Size Investment
Adjusted
SUMMARY:
$672,500
$172,500
10 DEALS
$151,000
$1.3 MILLION (Cash)
$166,666
AVG DEAL: $130,000
 Investment commitment represents a loan guarantee by the Angels. Non- cash transaction.
@2010 Excell Partners, Inc., CONFIDENTIAL Page 15, 6/18/10

A 501(c) (4) Not for Profit

Wholly owned by the University

Upstate Footprint

Until recently, Excell was the only seed stage
fund in Upstate
@2010 Excell Partners, Inc., CONFIDENTIAL Page 16, 6/18/10
@2010 Excell Partners, Inc., CONFIDENTIAL Page 17, 6/18/10
Since inception, invested $2.4 million in 21 companies
Portfolio includes technologies in:



Medical Devices, Biotechnology, Industrial/Energy, IT, Consumer
Products
Source of Deals: 50% from University/50% from
Community
Investment Size




Pre-Seed
Seed
$50,000 - $100,000
$100,000 - $250,000 Physical Science
$250,000 - $750,000 Life Science
Deal Terms


Convertible Note, Accrued Interest, 2 Year Maturity, Converts to Equity at a
Discount to the Next Investment Round
OR

Equity

$
@2010 Excell Partners, Inc., CONFIDENTIAL Page 18, 6/18/10
Activity Flow
DEAL FLOW PROCESS
Universities
Center of
Excellence
CATS
DealFlow
Flow
Deal
Pre-Screen
Process
Excell Tech.
Advisory
Board
Due
Diligence
Process
Excell
Board
Approval
Community
Professionals
Excell
Funding
Follow-On
Investors
Co-Investors
Angels
VCs
@2010 Excell Partners, Inc., CONFIDENTIAL Page 19, 6/18/10
EXCELL
TRILLIUM
@2010 Excell Partners, Inc., CONFIDENTIAL Page 20, 6/18/10
Excell Partners
Trillium Group
Rand Capital
Summer Street Capital
Onondaga Ventures
Buffalo
Alfred
Rochester
Syracuse
Ithaca
Corning
Albany
FA Tech Ventures
High Peaks Venture Group
NYS SBTIF
Advantage Capital
Cayuga Venture Fund
BR Ventures
Enhanced Capital
Stonehenge Capital
@2010 Excell Partners, Inc., CONFIDENTIAL 6/16/10 Page 21
700
IPO
Number of Issues
600
M&A
500
400
300
200
100
0
M&A
IPO
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
164
136
209
77
240
260
317
264
353
41
319
24
285
29
348
93
350
56
375
57
378
86
348
6
270
12
Source: Thomson Reuters/National Venture Capital Association
@2010 Excell Partners, Inc., CONFIDENTIAL 6/16/10 Page 22
@2010 Excell Partners, Inc., CONFIDENTIAL Page 23, 6/18/10
VC stats suggest that for every hundred opportunities assessed …
100
More than half
rejected after
20 minute
scan or
conversation
40
15
40% might
make it to a
longer review
e.g. hour
meeting
15% are
investigated
in-depth;
due diligence
5
Only 5% Less than 3%
deemed
agree on
“investable” terms and an
and engaged investment is
in
made
negotiation
Most presenters tank this meeting
@2010 Excell Partners, Inc., CONFIDENTIAL Page 24, 6/18/10
Ref: Pratt’s Guide to Venture Capital Sources, 1997, pp 23-28
3
@2010 Excell Partners, Inc., CONFIDENTIAL Page 25, 6/18/10