Silicon ValleyBay Area VC Update

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Silicon Valley/Bay Area VC Update

• Bus 290/291
• Dr. MARK FRUIN

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Improving Outlook 2004

• Traditional hardware and software products
  shifting to slower growth path
• Adaptable Web-hosted business services picking
  up software as hosted service is trend
• Buy only what you need online/on-demand/via
  subscription
• As opposed to traditonal client-server programs,
  like Oracle and Microsoft
• In 2004, VC reversed three-year downward trend
  investing
• 20.9 billion in 2,876 deals
• Up 11 percent from 18.9 billion in 2003

3
Healthcare Ahead of Softwarein Bay Area VC
Investing

• In 2004, 5.6 billion invested in healthcare,
  including biotech, medical devices, and other
  healthcare related areas,
• In 2004, 5.1 billion in software, up from
  previous 3 years but lower than healthcare

4
Valuations Up

• In 2004, valuations of companies receiving
  venture financing rose to median of 13 mil
• Highest median figure since 2001
• Part of the reason for this is that later stage
  companies are getting the lions share of funds

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Sources of Information

• National Venture Capitalist Association
• Thomson Venture Economics
• VentureOne, unit of Dow Jones Newswires
• Vector Capital, SF-based private-equity firm