1、State of the MarketsInside Views on the Health and Productivity of the Global Innovation EconomyFirst Quarter 2019As Good as it Gets?With all the dire headlines, lets not forget the epic run that venture has been on. Were now approaching a full decade of compounding tailwinds, with low rates and abu

2、ndant capital bringing in risk-incentivized asset managers from around the globe. Weve only just begun harvesting this decade of innovation investing.Yet some investors are left pondering: Is this as good as it gets? For starters, it appears we have entered into a new era of higher volatility in pub

3、lic markets. Trade turmoil, anti-globalization rhetoric and fears of a slowing global economy are also giving investors pause. And the US is no longer alone in shaping the future of technology or regulating its changing landscape.But much of what got us here will take us further. After a decade of s

4、upport from private markets, the caliber of IPO candidates approaching 2019 is unmatched. The unicorns of today have raised nearly 4x the historical average for venture-backed tech companies at IPO. And new opportunities continue to open for entrepreneurs, as technology takes hold in long-unaffected

5、 industries.So while acknowledging the risks coming into focus, we also know that change and disruption are inherent to the venture economy. Its what we do. No matter what the future holds, its unlikely that innovation will be stifled.Bob BleeHead of Corporate Finance Silicon Valley BankPredictions:

6、 SVBs 2019 Outlook for VentureUS Venture: A Decade of Capital9IPO Conditions: Ample Opportunities, Few Takers14Exit Readiness: The Unicorn Generation19Emerging Sectors: Disrupting the Old Guard23Global Venture: International Exits Shine27Geopolitical Tensions: Technology in the CrosshairsRecords wer

7、e broken in 2018 as both venture-backed companies and their investors stockpiled private capital. Will this be the year we finally see exits for many of the high-profile startups built during this decade of prosperity?2018 ThemesCategory2019 PredictionDeal counts at the early stages fell for another

8、 year from their 2015 highs. Capital remained robust, however; the median Seed deal size reached $2M for the first time.Records were shattered at the later stages, with nearly 200 venture deals of $100M+ in the US in 2018. Median pre-money valuations for Series D+ crossed $300M.International startup

9、s took advantage of calm markets and strong valuations to list in 2018. The US, however, still has$500B worth of unicorns on paper waiting to be realized.US venture firms secured more than $50B in committed capital, the highest total since the dot-com era. 43% went to funds of $1B+, like Sequoias $8

10、B Global Growth III.Corporates participated in one-in-six US VC deals in 2018, with new CVC groups forming in old guard industries facing disruption late in the economic cycle.Early Stage Late Stage Exits Fundraising CorporatesWithout the robustpool of Seed-funded companies from years past, SVB anti

11、cipates another year of steady capital in the early stages, despite declining deal counts.2018 could well be an anomaly for mega-round activity without renewed supportfrom SoftBank or sovereign wealth funds. Expect valuations in aggregate to slide.If the marquee names in venture set a positive senti

12、ment early, 2019 could represent the tipping pointbetween demand for private and public capital at the late stage.The velocity of US venture firms fundraising efforts foreshadows another big year for capital commitments. 2019 should top $40B, even with a decrease from 2018.If stock prices (and manag

13、ement teams) remain stable, CVCs will remain heavily involved. Look for nearly 1,000 tech venture deals to have corporate participation.US Venture:A Decade of CapitalSizeable Cash Piles as Bull Run Breaks RecordsA decade of prosperity following the recovery from the Global Financial Crisis has left

14、both traditional and emerging investors flush with cash for venture investing.Longest S&P 500 Bull Market Runs Since 1945Accumulated Net Cash: 12/31/2018450%June 1949 - Aug 1956Dot-Com BubbleLikely to be Invested in TechPotential to be Invested in Tech$125B400%350%300%250% Oct 1974 - Nov 1980Aug 198

15、2 - Aug 1987Oct 1990 - Mar 2000Oct 2002 - Oct 2007Mar 2009 - PresentCurrent$123B$115B$100B$80B$75B200%150%$50B$55B100%50%0%Duration of Bull Market (Years)0123456789$25B$0B$44B$64BUS VC1 US PE1Dry Powder$41BSB VF2$6BNet Cash3Notes: 1) VC and PE dry powder as of 3/31/2018 with SVB estimates for amount

16、 expected for tech investment. 2) Vision Fund dry powder remaining as of year-end. 3) Cash includes cash and ST and LT investments, net ST and LT debt.Thanks to risk-incentivized investors and their buckets of cash, capital raises at every stage have more than doubled since the beginning of this dec

17、ade. In fact, in order to make the top 100 deals of 2018, a startup would need to have raised a nine-figure round.US Tech Venture: Median Round Size by SeriesUS Tech Venture: 100th Largest DealSeries C: 3.0 x Series B: 2.5x Series A: 3.2x Seed: 4.0 x$18M$10M$7M$8M$3M$0.5M$2M$30M$100M$25M$32M$40M$63M

18、$74M$60M$70M2010201220142016201820102012201420162018US interest rates have begun their measured climb back to historical norms, thus changing the risk- return profile for financial assets. If rate hikes continue, venture capital could see a pull back from rate-sensitive, late-stage investors like mu

19、tual funds, hedge funds, and sovereign wealth funds.US Federal Funds: Target RateUS Tech Venture: $50M+ Rounds by Source of Capital6.0%$40B5.0%4.0%$30B3.0%$20B2.0%1.0%$10B0.0%Capital from Interest Rate-Sensitive Investors1 Capital from Traditional Venture Sources2006200820102012201420162018$0B200620

20、0820102012201420162018Note: 1) Estimate of capital contributed by rate-sensitive investors, which include asset managers, mutual funds, hedge funds, government and sovereign wealth funds and family offices.IPO Conditions: Ample Opportunities, Few TakersHistorically, high volatility has slowed the pa

21、ce of venture-backed tech IPOs, which rely not only on first day pricing, but also on maintaining lofty valuations after a six-month lock-up. But with abundant private capital, 20162017 was an anomaly with relatively few IPOs despite calm markets.S&P 500 Volatility Index (Daily) vs. US Venture-Backe

22、d Tech IPOs (Semiannual): 2006201880 VIX Close604020200Days Above 20: 470Days Above 20: 14Days Above 20: 42/1/20061/1/20081/1/20101/1/20121/1/20141/1/20161/1/2018200620072008200920102011201220132014201520162017201815IPO CountUS Tech IPOs: 12US Tech IPOs: 48US Tech IPOs: 291050Public investors have l

23、argely agreed with private investors when it comes to unicorn valuations. Seven of the top ten billion-dollar debuts in 2018 priced and remained above their last private round. The IPO is just the beginning, as evidenced by Snap and Squares reversal over the last two years.Valuation Relative to Last

24、 Private Valuation1: 2018 US $1B+ Tech IPOsMarket Cap: Square and Snap200%150%100%$40BSnap LPV1$35B$30B$25B50%$20B0%-50%$15B$10B$5BZscaler, Inc. (NasdaqGS:ZS)ZSPLANDOCUAVLRPVTLPSEBDBXSVMKDOMO-100%+357%Value at 12/31/2018Value at IPO$0B20172018Square LPV1Anaplan, Inc. (NYSE:PLAN)DocuSign, Inc. (Nasda

25、qGS:DOCU)Avalara, Inc. (NYSE:AVLR)Pivotal Software, Inc. (NYSE:PVTL)Pluralsight, Inc. (NasdaqGS:PS)Eventbrite, Inc. (NYSE:EB)Dropbox, Inc. (NasdaqGS:DBX)SVMK Inc.(NasdaqGS:SVMK)Domo, Inc. (NasdaqGM:DOMO)Note: 1) LPV is last private valuation from a priced venture equity round prior to IPO.Despite si

26、milarities to the IPO cohorts of earlier years including negative operating margins and similar revenue growth the class of 2018 software-as-a-service companies fetched superior valuations in an improved market environment. Multiples remained locked to topline growth.“Rule of 40”1 Metrics from 20162

27、018 SaaS IPOsOKTATWLOAVLROperating Margin (Loss)EBSMARESTCMULERevenue Growth100%IPO Rev. Run Rate Multiple2 vs. YoY Rev. Growth3ESTCSMAREBTWLORevenue Growth at IPO2018y = 16.84x + 4.76 R = 0.6320162017y = 10.70 x + 3.79 R = 0.61OKTAAVLRMULE25x90%80%70%60%20 x15x-80%-60%-40%-20%0%50%40%30%20%10%0%10

28、x 5x 0 x0%20%40%60%80%100%Notes: 1) The “Rule of 40” is a guideline developed in 2015 for software-as-a-service companies to manage growth (approximated by revenue) in sacrifice of profitability (approximated by operating margin). Growth rate + profitability should exceed 40%.Revenue run rate = Most

29、 Recent Quarters Revenue x 4. 3) Most recent quarter relative to year prior.One of the primary benefits for publicly listed companies is permanent access to capital, whether in the form of additional equity or debt. 2018 saw a flurry of recently listed companies opt for a combination convertible deb

30、t issuances which raised more than $12B.Follow-On Capital Raises by Type: 20102018 US Tech IPO Cohort1100%Percentage of IPO Cohort1 to Have Completed Follow-On over Time100%Post-IPO Convertible Debt Raises by Year of Issuance: IPO Cohort13580%60%40%20%Neither Debt Both Equity3080% 2560%2040%151020%5

31、0%0%IPO+1 Yr.+2+3+4+5020102012201420162018Note: 1) IPO Cohort includes all venture-backed technology IPOs from 20102018.Exit Readiness:The Unicorn GenerationBefore the flurry of private capital began in 2015, the average venture-backed tech company would raise $100M in private capital ahead of their

32、 $100M public offering. Looking at the current crop of US unicorns, more than 90% have already raised at least $100M in a single private financing.Median Equity Raised Prior to IPO and via IPO by US Venture-Backed Tech CompaniesCapital Raised Prior to IPO Capital Raised at IPO20102012201420162018Cur

33、rent US Unicorns$400MPercentage That Raised a Private Venture Round of $50M+ and $100M+ Prior to IPO$50M+ Round$100M+ Round20102012201420162018Current US Unicorns100%$300M75%$200M50%$100M25%20192019$0M0%With an abundance of capital at their disposal, venture-backed startups have more than doubled th

34、eir average revenue base at IPO this decade. However, this scaling has come at the expense of profitability and few have demonstrated significantly higher revenue growth at their debut.US Tech IPOs1: LTM2 Rev. at IPOPercentage Profitable2 at IPORevenue Growth Rates (YoY3)$250M$200M$150MMiddle 50% Me

35、dian$185M80%70%60%50%100%90%80%70%60%Middle 50%Median $100M$50M$0M$85M2010201220142016201840%30%20%10%0%EBITDA EBITNet Income2010201220142016201850%40%30%20%10%0%20102012201420162018Notes: 1) IPO cohort includes all venture-backed technology IPOs. 2) Last 12 months prior to IPO date.Most recent quar

36、ter relative to year prior.Could 2019 finally be the year? After employing workarounds in secondary markets, a number of high-profile tech IPOs are anticipated, relieving demands for full liquidity. Pressure to access public capital remains secondary: two-thirds of US unicorns raised private rounds

37、in 2018.US Tech Unicorns: Time Since Founding & Last Financing (Sized by Private Value as of 12/31/18)1Pressure to Go Public for Capital036912151821242730+Pressure to Go Public for Liquidity0Months Since Last FinancingYears from Founding24681012+Note: 1) Only includes US unicorns with valuations $3B

38、+; logos represent valuations $5B+.San Francisco may soon find itself flush with the wealth created by its venture darlings. These startups have a combined private value equivalent to all those located across the rest of the US.Aggregate Valuation of US Venture-Backed Tech IPOs: 20102018201020122014

39、20162018UnicornsUnicornsSan Francisco US Ex-SF79 USUnicorns$10B39 SFUnicorns$10B.$250B$200B$150B$100B$50B2020$0BEmerging Sectors: Disrupting the Old GuardThe fastest unicorns ride scooters: Bird and Lime rolled to billion-dollar valuations as quickly as any in history. Startups are benefitting from

40、advances in fundamental hardware, artificial intelligence, and communications not to mention plentiful capital from the likes of SoftBanks Vision Fund.Mobility Tech and Notable US Tech Decacorns: Age at Which Unicorn Status AchievedSoftBank $100M+ Global Investments in Mobility$40BUS Unicorn Average

41、Mobility TechOther$30B$20B$10BMobility TechOther$72B Valuation$56B Valuation$11B Valuation$4B ValuationAcquired for $1BAge:0246810$0B201620172018$0.9B ValuationThe what and how of eating is changing. Venture capital is flowing to FoodTech opportunities ranging from meat substitutes to pre-packaged d

42、inner delivery. In response, food industry stalwarts are eagerly investing in new ways to reach consumers.FoodTech: New Development US Venture InvestmentFoodTech: Delivery & Meal Kits US Venture InvestmentMost Active Food Corporates byUS Venture Deal Count: 20122018$1.2B$1.0BNew Foods Urban Farms$3.

43、0BDelivery Instacart Meal Kits$2.5B$0.8B$2.0B$0.6B$1.5B$0.4B$1.0B$0.2B$0.5B$0.0B2012201420162018$0.0B2012201420162018Deals:03691215Perhaps more than other industries, startups in digital health rely on strategics to accelerate growth. Eight of the ten best-funded startups of the last two years have

44、tapped corporate capital. Its no wonder then that states rich in partnership opportunities have attracted the most funding.Digital Health Startups:$1B+$200M+$50M+$10M+MassachusettsMost Capital Raised 20172018Digital Health: Funding and Notable Strategics by State: 20172018GoogleTexasCaliforniaMinnes

45、otaNew YorkCompanyEquity RaisedStrategics$540M$362M$360M$350M$200M$130M$117M$105M$100M$100MGlobal Venture: International Exits ShineListings from startups in China and Europe far outpaced those of the US during 2018. And while much of the “paper” value backlog has been realized in those regions, pri

46、vate investors still hold nearly 90% of aggregate US unicorn value from the start of 2018.Largest Venture-Backed Technology Exits1 by Region: 2018China Exit US Exit Europe ExitROW Exit Acquisition$50B$40BUnicorn Value Realized in 2018 Exits Relative to Total Remaining ValueUS13%China30%56%EuropeROW1

47、3%$30B$20Bng Meituan-Dianpingc Tencent Music$10Bmi Xiaomio Pinduoduoy Spotifyn Adyenx DropboxI iQIYIe Ele.mes Stonech Farfetchb GitHubO NIOri Mercari n DOCU $0BNote: 1) As of first day of trading or acquisition value.Venture capital from Sand Hills elite is increasingly finding a home outside the Ba

48、y Area. More than one-in-four deals from the most active US investors in 2018 was international. American investors have helped boost mega-rounds to new heights around the globe.Top 50 Most Active US Tech Venture Investors: Percentage of Deals Outside of the US$100M+ Tech Venture Rounds Outside of t

49、he US with Participation from a US-Based Investor30%25%20%ROWUnited StatesIsrael Southeast Asia Latin America IndiaChina CanadaUnited Kingdom Europe120Rounds without US Participation Rounds with US Participation1008015%6010%405%200%20102012201420162018020102012201420162018After a busy 2018, just a h

50、andful of venture-backed decacorns remain outside the US, with ascendant ByteDance now leading the pack. The rest of the field is a mix of decade-old firms from developed markets and fast-rising consumer startups from emerging markets.Tech Unicorns: Time Since Founding & Last Financing (Sized by Pri

51、vate Value as of 12/31/18)1003Months Since Last Financing6912151821242730+Years from Founding24681012+Top 20 EuropeTop 20 ChinaTop 20 Rest of WorldPressure to Go Public for LiquidityPressure to Go Public for CapitalNote: 1) Logos represent valuations $5B+.Geopolitical Tensions: Technology in the Cro

52、sshairsChina has cemented itself as the #2 venture market, more than tripling its share of global venture capital in the matter of a decade. Despite rising geopolitical tensions, US venture-backed companies are finding opportunities given Chinas development as a hub for trade and talent.Share of Glo

53、bal Technology Venture Investment80%SVB Client Fund Transaction Destinations: Relative Proportion by Currency: 2018United States70%60%50%40%China30%20%10%0%201020122014201620180.00.81.0For myriad reasons, Chinas growing investment into US tech is being scrutinized by government and media. H

54、owever, restrictions on all foreign investment would have a larger impact on the meaningful amount of capital flowing from the rest of the world.Participation by International Investors by Region in $25M+ US Tech Venture DealsEuropeAsia Ex-China ChinaRest of World30%Most Active International Investo

55、rs by Region in $25M+ US Tech Venture Deals: 20102018InvestorDeals25%20%15%Index (U.K.)98UKGERDeutsche Telekom30UKAtomico15IREAtlantic Bridge14UKBailie Gifford14UKEight Roads14Telstra Ventures26InvestorDeals83North18Georgian Partners18AUS Future Fund15Pitango VC11Viola Ventures1110%5%0%2010201220142

56、0162018SoftBank49JAPSKSamsung42SG EDBI28SG Temasek27HKDST Global24InvestorDealsInvestorDealsTencent15IDG Capital14Alibaba13Baidu12China Broadband11AppendixAuthorsBob BleeHead ofCorporate Finance HYPERLINK mailto:bblee bbleeSteven Pipp, CFAVice President, Research HYPERLINK mailto:spipp spippAndrew P

57、ardoSr. Associate, Research HYPERLINK mailto:apardo apardoBob Blee heads Silicon Valley Banks Corporate Finance Group, which leads SVBs relationships with public and late-stage private companies in the Innovation sector throughout North America, providing a full suite of lending and banking products, as well as guidance as a trusted partner, helping our clients succeed and quickly scale.Previously, Bob held a variety of