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Private Equity Update 2000

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

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Private Equity Update 2000

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  1. Private Equity Update 2000 Steven P. Galante Publisher, The Private Equity Analyst October 16, 2000

  2. 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 ‘Nirvana’ versus ‘New Reality’ 1995-1999 2000-????

  3. Presentation Overview • Commitments • Investments • Valuations • Exits • Performance • Funding Sources

  4. Year-End Estimate US Private Equity Committed Capital Source: Venture Economics / NVCA

  5. US Private Equity Committed Capital Source: Venture Economics / NVCA

  6. US Venture and Buyouts Investments Source: Venture Economics / NVCA

  7. U.S. Venture InvestingTotal Investment by Quarter Source: Venture Economics / NVCA

  8. U.S. Venture InvestingAvg Invested per Company Source: Venture Economics / NVCA

  9. 2000ytd Venture Investments By Industry ($Bill) Source: Venture Economics / NVCA

  10. 2000 ytd Venture Investments by Stage ($Bill) Source: Venture Economics / NVCA

  11. Average Post Investment Enterprise Valuationof Venture Backed Companies Source: Venture Economics / NVCA

  12. 2000 Median Post Investment Valuationof Venture Backed Internet Related CompaniesBy Internet Sector Source: Venture Economics / NVCA

  13. Venture Backed IPOsIssues by Year Source: Venture Economics / NVCA

  14. Venture Backed IPOsIssues by MonthJanuary 1995- September 2000 Source: Venture Economics / NVCA

  15. Percent of IPOs Profitable at IssueVenture Backed Versus All Issues Source: Venture Economics / NVCA

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

  17. US Private Equity Performance BenchmarksUS Limited Partnerships Formed 1969-1999Cumulative Performance Net to Investors as of 3/31/00 Source: Venture Economics / NVCA

  18. Rolling Five Year IRRsVenture vs Buyouts Source: Venture Economics / NVCA

  19. So Where Will Money Come From?

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

  21. Heyday for Funds of Funds Commitments to Funds of Funds Est.

  22. ‘Market Share’ of Funds of Funds Five-Year Moving Averages

  23. Conclusions • Money remains available • You must expand universe of contacts • Track record is still important • Differentiation and relevant skill set are critical

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