1. www.dealystrategy.com, lisa.ghezzi@dealystrategy.com
The Dealy Strategy Group LLC
Presentation to Health TechNet
March 21, 2000 by
Lisa Marie Ghezzi
The DEALY STRATEGY GROUP LLC, March 21, 2000

2. Venture Capital Investment Trends
Increasing Funds Raised and Invested
Internet-related firms receive a majority of funds
Healthcare Industry related investments increase over 1998
Venture Capital increasingly important to driving economic development
The DEALY STRATEGY GROUP LLC, March 21, 2000

3. Venture Capital Funds Raised
Source: National Venture Capital Association
The DEALY STRATEGY GROUP LLC, March 21, 2000

4. Companies Receiving Funding
Source: National Venture Capital Association, Venture Economics
The DEALY STRATEGY GROUP LLC, March 21, 2000

5. Venture Capital Investments
1999 Total Investments 2.5 times Investments in 1998
Source: National Venture Capital Association
The DEALY STRATEGY GROUP LLC, March 21, 2000

6. Venture Capital Financing by Industry Sector
Source: National Venture Capital Association, Venture Economics
* Internet Specific - companies that would not exist without the Internet and that would not fit in any other industry sector; Internet related companies are found in all industry sectors; total investment $31.9B compared to $7.0B in 1998.
The DEALY STRATEGY GROUP LLC, March 21, 2000

7. Venture Capital Investment in Healthcare Industry
Source: National Venture Capital Association, Venture Economics
The DEALY STRATEGY GROUP LLC, March 21, 2000

8. Venture Capital Financing by Region
Every region experienced a minimum of 60% growth.
Leaders:
Northern California %
Northwest - 210%
Mid-Atlantic %
Average venture size varies by region (1/99 - 9/99):
Mid-Atlantic led with $13M
Southern California -- exceeding $12M
Northern California, NE and Rocky Mt -- $11M
SW, NW, Midwest and SE -- range from $8 to $9.5M
Growth in investments is indicative that the entrepreneurial communities are maturing -- supported by strong technology community, educated workforce and efficient infrastructure
Source: National Venture Capital Association, Venture Economics
The DEALY STRATEGY GROUP LLC, March 21, 2000

9. Internet vs. Non-Internet Venture Capital Investments by Region
Internet-related Venture Capital financing in the Mid-Atlantic ranked 4th with $2.2B (roughly 55%); non-Internet investments -- $1.8B, or 45%.
Mid-Atlantic ranked among the highest for non-Internet-related investments.
Source: National Venture Capital Association, Venture Economics
The DEALY STRATEGY GROUP LLC, March 21, 2000

10. VC Investment Increases Drive Economic Growth
Greater number of Venture-backed companies go public in 1999 compared to earlier years -- 50% vs. 21% and 22% in 1998 and 1997 respectively.
Median age of venture-backed company was 4 years compared to 4.5 years in 1998; 5 years in compare to 10.5 years in 1994; Internet company short life is greatly contributing to this -- in 1999, the Internet-related company was 4.3 years to IPO, vs. the Non-Internet-related company at 7.6 years.
Increasing number of IPOs allows for quicker liquidity and reinvestment into new opportunities.
Source: National Venture Capital Association, Venture Economics
The DEALY STRATEGY GROUP LLC, March 21, 2000

11. Average Offering and Valuation of Venture-backed Companies Increasing
Average offering size was 77% greater than in 1998
Average post offer valuation was over 2x that of 1998
Note: numbers may be slightly off due to rounding
Source: National Venture Capital Association, Venture Economics
The DEALY STRATEGY GROUP LLC, March 21, 2000

12. Top Venture Capital Firms
Source: National Venture Capital Association, Venture Economics
The DEALY STRATEGY GROUP LLC, March 21, 2000

13. Top Venture Capital Firms Investing in Healthcare/Medical/Biotech
Chase Hambrecht & Quist
primary venture investing vehicle is Access Technology Partners, L.P., $330M fund
health/bio: biotechnology, bio-informatics, pharmaceuticals, medical devices, and drug delivery, and information, management, and outsourcing services
The DEALY STRATEGY GROUP LLC, March 21, 2000

14. Top Venture Capital Firms Investing in Healthcare/Medical/Biotech
New Enterprise Associates
investment focus: medical and life sciences -- biotechnology, pharmaceuticals, healthcare services, medical devices, instrumentation and information management
stage: principally in early stage companies
Three Primary questions asked:
Will the company change the way people behave, via a unique product or service?
Is there an unbounded opportunity, reflected by a large potential market, manageable competition and reasonable capital requirements?
Is there a quality management team with experience and breadth? Are they people NEA can work with "through thick and thin" - especially thin?
The DEALY STRATEGY GROUP LLC, March 21, 2000

15. Top Venture Capital Firms Investing in Healthcare/Medical/Biotech
Sequoia
investment focus: biotechnology, medical devices, services (primarily B2B), software instrumentation and information management)
makes 8 to 10 investments each year along with 12 to 15 follow-on investments
stage: very early stages
investing partners include: Kleiner, Perkins, Caulfield & Byers
The DEALY STRATEGY GROUP LLC, March 21, 2000

16. Top Venture Capital Firms Investing in Healthcare/Medical/Biotech
Kleiner, Perkins, Caulfield & Byers
investment focus: life sciences -- medical devices and diagnostics, drug discoveries and therapeutics, health care services and informatics
investing partners include: Sequoia, Weiss Peck & Greer Venture Partners
corporate partners through JAVA fund
“Keiretsu” approach -- shared information and knowledge, network of 175 companies and 1000s executives
The DEALY STRATEGY GROUP LLC, March 21, 2000

17. Top Venture Capital Firms Investing in Healthcare/Medical/Biotech
Integral Partners:
investment focus: life sciences sector -- emerging medical technologies and health care information systems; diseases -- particularly active with companies targeting the cardiology and oncology markets.
stage: expansion-stage private and growth-stage public
investing partners include: Kleiner, Perkins, Caulfield & Byers, Silver Lake Partners
The DEALY STRATEGY GROUP LLC, March 21, 2000