NAIC Annual Meeting 2000 Private Equity Update 2000 Steven P. Galante Publisher, The Private Equity Analyst October 16, 2000.

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Presentation transcript:

NAIC Annual Meeting 2000 Private Equity Update 2000 Steven P. Galante Publisher, The Private Equity Analyst October 16, 2000

NAIC Annual Meeting ‘Nirvana’ versus ‘New Reality’ Rapid PE growth Remarkable VC returns Increasing institutional demand Re-entry of HNW investors Rapid economic growth PE growth stabilizes VC returns return to earth Institutional allocations sated HNW demand satisfied? Slowing economy ????

NAIC Annual Meeting Presentation Overview Commitments Investments Valuations Exits Performance Funding Sources

NAIC Annual Meeting US Private Equity Committed Capital Year-End Estimate Source: Venture Economics / NVCA

NAIC Annual Meeting US Private Equity Committed Capital Source: Venture Economics / NVCA

NAIC Annual Meeting US Venture and Buyouts Investments Source: Venture Economics / NVCA

NAIC Annual Meeting U.S. Venture Investing Total Investment by Quarter Source: Venture Economics / NVCA

NAIC Annual Meeting U.S. Venture Investing Avg Invested per Company Source: Venture Economics / NVCA

NAIC Annual Meeting ytd Venture Investments By Industry ($Bill) Source: Venture Economics / NVCA

NAIC Annual Meeting ytd Venture Investments by Stage ($Bill) Source: Venture Economics / NVCA

NAIC Annual Meeting Average Post Investment Enterprise Valuation of Venture Backed Companies Source: Venture Economics / NVCA

NAIC Annual Meeting Median Post Investment Valuation of Venture Backed Internet Related Companies By Internet Sector Source: Venture Economics / NVCA

NAIC Annual Meeting Venture Backed IPOs Issues by Year Source: Venture Economics / NVCA

NAIC Annual Meeting Venture Backed IPOs Issues by Month January September 2000 Source: Venture Economics / NVCA

NAIC Annual Meeting Percent of IPOs Profitable at Issue Venture Backed Versus All Issues Source: Venture Economics / NVCA

NAIC Annual Meeting Public Market Returns: Venture-Backed Stocks vs. Indices As of December 31, 1999 As of September 15, 2000 Source: Venture Economics / NVCA

NAIC Annual Meeting US Private Equity Performance Benchmarks US Limited Partnerships Formed Cumulative Performance Net to Investors as of 3/31/00 Source: Venture Economics / NVCA

NAIC Annual Meeting Rolling Five Year IRRs Venture vs Buyouts Source: Venture Economics / NVCA

NAIC Annual Meeting So Where Will Money Come From?

NAIC Annual Meeting Four Sources U.S. Institutions (but in smaller quantities) Foreign Institutions (just starting) Funds of funds (but mainly established ones) High-net-worth investors

NAIC Annual Meeting Heyday for Funds of Funds Commitments to Funds of Funds Est.

NAIC Annual Meeting ‘Market Share’ of Funds of Funds Five-Year Moving Averages

NAIC Annual Meeting Conclusions Money remains available You must expand universe of contacts Track record is still important Differentiation and relevant skill set are critical