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Summary of Venture Capital Year Book 2000

Summary of Venture Capital Year Book 2000. Professor Yasuyuki HAMADA Hokkaido University July 2001 　　　　　　　　平成１３年３月２９日. The Summary of the Questionnaire Survey. Response Rate 　７０．８％ 　－ 131 of 185 Companies Responded.

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Summary of Venture Capital Year Book 2000

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  1. Summary of Venture Capital Year Book 2000 Professor Yasuyuki HAMADA Hokkaido University July 2001 　　　　　　　　平成１３年３月２９日

  2. The Summary of the Questionnaire Survey Response Rate　７０．８％ 　－ 131 of 185 Companies Responded. 　－ Among Them the Valid Response about the Situation of Venture Capital Investment Amounted to 120. The Period of the Questionnaire 　－ In Principle, From July 1, 1999 to June 30, 2000

  3. Contents of Questionnaire Results • The Situation of Investment by Venture Capital (Capital under Management and the Amount of Investment throughout a Year) • The Situation of Establishment of Funds • Investors in Venture Capital Funds • Venture Capital Investment Stage • Exits for Venture Capital Investment • Investment by Sectors • Investment by Geographical Area

  4. Capital under Management June 1999775.7 billion Yen(Corporate Venture Investment: 425.5, Venture Fund Investment: 350.2) 　　↓ June 2000815.5 billion Yen（Corporate Venture Investment: 433.2, Venture Fund Investment: 382.4） 　［ 5.1％ Increase (Corporate 1.8％, Fund 9.2％)］ ・Increased the Share of Investment by Venture Fund Investment: 45.1％→46.9％ ・The Number of Invested Companies Amounted to 16,959 or 4.7% increase. Note) The Amount of Loan Amounted to 51.4 billion Yen or 20.5% decrease.

  5. Changes in Capital under Management 100 million Yen 10,000 9,193 9,000 8,391 8,258 8,155 7,695 7,757 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 1996.3 1997.3 1998.3 1999.3 1999.6 2000.6 Note) Data from March 1996 to March 1999 taken from Venture Capital Investment Survey by the Venture Enterprise Center.

  6. Corporate Venture Investment versus Venture Fund Investment (based on capital under management) Corporate (100 million yen) Fund (100 million yen) 100% 90% 80% 4,332 4,255 4,497 70% 5,299 5,423 6,128 60% 50% 47% 45% 42% 40% 37% 34% 33% 30% 3,824 3,502 3,198 20% 3,092 2,835 3,065 10% 0% 1996.3 1997.3 1998.3 1999.3 1999.6 2000.6 Note) Data from March 1996 to March 1999 taken from Venture Capital Investment Survey by the Venture Enterprise Center.

  7. Changes in Capital under Management for Japan, US, EU million $ 100 million yen million Euro 160,000 160,000 Japan(100 million yen) US(million $) 134,500 140,000 140,000 EU(million Euro) 120,000 120,000 100,000 100,000 89,500 80,000 80,000 61,700 58,350 60,000 60,000 46,400 40,594 39,400 40,000 40,000 32,785 27,286 25,108 20,000 20,000 9,193 8,258 8,391 7,757 8,155 7,695 0 0 1995 1996 1997 1998 1999 2000 (Source) Figures for the US come from the 2000 National Venture Capital Association Yearbook (Prepared by Thomson Financial Securities Data/Venture Economics). The figures for Europe come from the 2000 Yearbook (European Private Equity & Venture Capital Association). The figures for Japan for 1995 to 1999 are from Venture Capital Investment Survey by the Venture Enterprise Center. Data for 2000 is from the survey of the most recent year ending in June, but the data for 1995 to 1999 is for the relevant fiscal year.

  8. The Amount of Investment throughout a Year July 1999-June 2000230.1 billion yen/year (Corporate 100.4, Fund 129.7 billion yen) 〔Reference〕 99% Increase in Simple Comparison with the Data in 1998 Fiscal Year by VEC Investigation April 1998-March 1999115.7 billion yen/year （Corporate 61.3, Fund 54.9 billion yen） ・The Share of Venture Fund Investment: 56.3% （47.4% in the Investigation in 1998 Fiscal Year） ・The Amount of Investment per Portfolio Company: Corporate 55.1, Fund 74.9 million yen (Corporate 44.6, Fund 58.9 million yen in 1998 Fiscal Year)

  9. Changes in Capital Disbursement (initial and follow-on investment) 100 million yen 3,000 2,427 2,500 2,301 2,004 2,000 1,644 1,511 1,500 1,157 1,000 500 0 1995 1996 1997 1998 1999 2000 (Note) Data for 1995 to 1999 taken from Venture Capital Investment Survey by the Venture Enterprise Center. Data for 2000 is from the most recent year ending in June, but data for 1995 to 1999 is for the relevant fiscal year.

  10. Corporate Venture Investment versus Fund Investment (Based on initial and follow-on investment and capital under management) Corporate Fund 100% 90% 80% 43.7% 53.1% 54.9% 70% 60% 50% 40% 30% 56.3% 46.9% 45.1% 20% 10% 0% June 1999 Capital under Management June 2000 Capital under Management Initial and Follow-on Investment (July 1999 to June 2000)

  11. Fund versus Corporate Venture Investment per Portfolio Company (Capital under management/initial and follow-on investment) Fund 10 thousand yen Corporate 8,000 7,491 7,000 6,264 6,067 6,000 5,511 5,000 4,065 4,013 4,000 3,000 2,000 1,000 0 June 1999 Capital under Management June 2000 Capital under Management Initial and Follow-on Investment (July 1999 to June 2000)

  12. Changes in Per-Portfolio Initial and Follow-on Investment (Fund versus corporate venture investment) 10 thousand yen 8,000 7,490 Per-portfolio initial and follow-on investment (corporate) 7,000 Per-portfolio initial and follow-on investment (fund) 5,840 5,890 6,000 5,690 5,510 4,790 5,000 4,460 4,100 4,000 3,000 2,000 1,000 0 96/4～97/3 97/4～98/3 98/4～99/3 99/7～00/6 (Note) Data for 1996 to 1998 taken from Venture Capital Investment Survey by the Venture Enterprise Center.

  13. Changes in Capital Disbursement for Japan, US, EU million $ 100 million yen million Euro 60,000 60,000 Japan (100 million yen) 48,000 50,000 50,000 US (million $) EU (million Euro) 40,000 40,000 30,000 30,000 25,116 19,200 20,000 20,000 14,000 14,461 9,900 9,655 10,000 10,000 6,788 5,700 5,546 2,427 2,301 2,004 1,511 1,644 1,157 0 0 1995 1996 1997 1998 1999 2000 (Source) Figures for the US come from the 2000 National Venture Capital Association Yearbook (Prepared by Thomson Financial Securities Data/Venture Economics). The figures for Europe come from the 2000 Yearbook (European Private Equity & Venture Capital Association). The figures for Japan for 1995 to 1999 are from Venture Capital Investment Survey by the Venture Enterprise Center. Data for 2000 is from the survey of the most recent year ending in June, but the data for 1995 to 1999 is for the relevant fiscal year.

  14. The Situation of Establishment of Funds Number of FundsAmount of Funds June 1999174526.9 billion yen June 2000238715.4 billion yen About Newly Established Funds from July 1999 to June 2000 ・Number of Funds 64 ・Sum of Funds 204.4 billion yen ・Average Amount of Funds 3.19 billion yen, or 73.99 million yen per one fund (Both indicators became larger in comparison with 1998 FY investigation by VEC) ・Number of Portfolio Companies per Fund 18.7 (It shows tendency to reduce)

  15. Portfolio Companies per Fund and Disbursements per Portfolio Number of Portfolio Disbursements ( 10 thousand yen / company) 60.0 8,000 55.6 Number of portfolio companies per fund (left axis) Capital disbursements per portfolio (right axis) 7,000 7,399 50.0 5,898 6,000 40.0 5,000 34.4 4,525 30.0 4,000 3,000 18.7 20.0 2,000 10.0 1,000 0.0 0 97/4～98/3 98/4～99/3 99/7～00/6 Average size of fund ：2.56 billion yen 1.21 billion yen 3.19 billion yen (Note) Data for 1996 to 1998 taken from Venture Capital Investment Survey by the Venture Enterprise Center.

  16. Investors in Venture Capital Funds Characteristics 1. Investment by Pension Funds (6% Share) 2. High Share of Foreign Investors (26% Share) 3. Investment by Individual Investors (6% Share) 〔Reference〕 Share According to 1998 FY Investigation by VEC 1. Pension Funds 0％, 2. Foreign Investors 1%, 3. Individuals 1％

  17. Investor Composition for Newly Established VC Funds (total)(Funds established between July 1999 and June 2000, including general partners) General Partners Others Banks, Credit Unions/Associations 3% 1.5% 17.6% Foreign Investors Securities Companies 26.3% 2.4% Insurance Companies 11.2% Individuals 6.0% Corporations Venture Capital Firms 19.8% Pension Funds 6.3% 5.6%

  18. Japan Others Banks, Credit Unions/Associations 1.6% 18% Foreign Investors 27.1% Securities Companies 2.5% Insurance Companies 11.6% Individuals 6.1% US Corporations Europe Venture Capital Firms 20.5% 6.5% Academic Institutions Corporations Capital Markets Pension Funds 15% 5.8% Not Available Pension Funds 6.7% 0.2% 0.4% 23% Fund of Funds 4% Banks Government Agencies 29.1% 4.7% 6.2% Private Investors Endowments & Foundations 21% Realized Capital Gains Financial & Insurance 13% 7% Corporate Investors Foreign Investors 9.5% 6% Pension Funds Individuals & Families Insurance Companies 18.7% 22% 13.2% (Source) 2000 National Venture Capital Association Yearbook (prepared by Thomson Financial Securities Data/Venture Economics) (Source)2000Yearbook (European Private Equity & Venture Capital Association)

  19. Venture Capital Investment Stage Characteristics In Terms of Stage of Investment Stage, Venture Capital Investment Is Moving toward the Earlier Stages. Share of Investment to Companies at Start-up or in First 5 Years: （July 1998-June 1999）　50%: （July 99-June 00）　62% Share of Investment to Companies over 15 Years Old: （July 1998-June 1999）　32%: （July 99-June 00）　12%

  20. 70.0% 59.2% 60.0% 1998/7-1999/6 1999/7-2000/6 48.9% 50.0% 40.0% 32.4% 30.0% 20.0% 14.9% 11.6% 11.3% 8.9% 8.5% 10.0% 3.0% 1.3% 0.0% 15 yrs or more Start-up Less than 5 yrs 5 yrs to less than 10 yrs 10 yrs to less than 15 yrs Initial and Follow-on Investments by Stage

  21. Exits for Venture Capital Investment Characteristics 1. Notable Increase in the Share of Initial Public Offerings (IPO) Because of the Substantial Increase of the Number of Companies which Carried out IPO 2. Low Share of M&A in Spite of the Increase of its Number 3. The Number of Bankrupt Companies Remained Unchanged in Comparison with the Previous Year. Its Share Decreased from 36% to 20%.

  22. Venture Capital Exits (based on no. of portfolio companies) No. of companies 600 Other M&A 500 Bankruptcy IPO 140 400 24 107 300 50 13 200 106 259 100 125 0 1998/7-1999/6 1999/7-2000/6

  23. Percent of Venture Capital Exits (based on no. of portfolio companies) 100% 17.0% 90% 26.4% 4.4% 80% 4.5% 70% Other M&A 36.1% 60% Bankruptcy 20.2% IPO 50% 40% 30% 48.9% 42.5% 20% 10% 0% 1998/7-1999/6 1999/7-2000/6 (Note) Valid replies from 53 companies. “Other” includes buy-backs by management.

  24. Venture Capital Exits(based on realized profit/loss) 100 million yen 180.0 0.5 Other 160.0 M&A IPO 140.0 120.0 100.0 168.2 80.0 60.0 40.0 1.4 20.0 15.3 0.0 -2.2 -0.1 -20.0 1998/7-1999/6 1999/7-2000/6 (Note) Valid replies from 44 companies. “Other” includes buy-backs by management.

  25. Investment by Sectors Changes in the Amount of Investment (98FY) (99FY) (00/Apr-Jun) Internet-related* 4.4% 15.0% 21.9% Computers-related* 24.1% 25.3% 12.4% Consumer-related 3.8% 10.4% 10.8% Semiconductors /Other Elect.* 26.4% 15.6% 8.7% Communications* 3.7% 3.9% 7.2% (Information Technology(IT)-related 4 sectors * total) (58.5% 59.9% 50.3%) Characteristics 1. Continuous increase in the share of the investment to sectors related to Internet 2. The decrease in the share of investment to sectors related to Internet in the last 3 months

  26. Share of Investments by Industrial Sectors 100% Other Utilities Transportation 80% Semiconductors/ Other Elect. Internet-related Medical/Health 60% Manufacturing Industrial/Energy Finance/Insurance/ Real Estate 40% Consumer-related Construction 20% Computers Communications Business Services Biotechnology 0% Agriculture/Forestry/ Fishery -20% -96/3 96/4-97/3 97/4-98/3 98/4-99/3 99/4-00/3 00/4-6 (Note) These amounts represent differences from the previous year for each sectors; negative values mean that the return was less than the investment.

  27. IT-related Portfolio Companies 100% 90% 80% 40.1% 41.5% 46.5% 49.7% 70% 74.4% 60% 83.7% Not IT-related 50% IT-related 40% 30% 59.9% 58.5% 53.5% 50.3% 20% 25.6% 10% 16.3% 0% -96/3 96/4-97/3 97/4-98/3 98/4-99/3 99/4-00/3 00/4-6

  28. Investment by Geographical Area Changes in the Share of Investment 　　　　　　　　　　　　　　（98FY）　　 （99FY）　　 （00/Apr-Jun） Domestic53.0%70.8%71.5 (including Tokyo22.2%35.7%32.1%) Overseas47.0%29.2%28.5% (including Asia-Pacific 37.1%23.7%22.8%） Characteristics 1. While the share of domestic (especially Tokyo) investment from April 1999 to March 2000 increased in comparison with the previous year, investment to foreign countries decreased. 2. Investment is concentrated in Tokyo of domestic (50% of domestic investment in 1999 FY), and in Asia Pacific of overseas (81% of overseas investment in 1999 FY)

  29. Investment by Geographical Area 億円 1,000 900 800 700 Overseas total Kyushu-Okinawa 600 Chugoku-Shikoku Osaka Kinki (other than Osaka) 500 Tokai-Hokuriku Tokyo 400 Kanto-Koshinetsu (other than Tokyo) Hokkaido-Tohoku 300 200 100 0 97/4-98/3 98/4-99/3 99/4-00/3 00/4-6

  30. Share of Investment by Geographical Area 100% 90% 80% 70% Overseas total Kyushu-Okinawa 60% Chugoku-Shikoku Osaka 50% Kinki (other than Osaka) Tokai-Hokuriku Tokyo 40% Kanto-Koshinetsu (other than Tokyo) Hokkaido-Tohoku 30% 20% 10% 0% 97/4-98/3 98/4-99/3 99/4-00/3 00/4-6

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