2016 Tech IPO Report: The Most Highly-Valued Disruptors

The Presentation inside:

Slide 0

2016 Tech IPO Pipeline December 16, 2015 @cbinsights ©2015 CB Insights www.cbinsights.com #2016TECHIPOPIPELINE

Slide 1

The Future S&P 500 Welcome to the 4th annual CB Insights Tech IPO Pipeline Report. This year’s Tech IPO Pipeline features 531 of the most promising and highly valued private venture and private equity-backed technology companies in the United States. These 531 companies represent the cream of the technology crop. You can expect that many of these companies will go on to become the S&P 500 companies of tomorrow. Interestingly, as we built this year’s list, we noticed some differences vs years past: • The “Dragged-to-IPO” pipeline – There are some companies on this year’s list who may be forced to go public because their valuations priced them for perfection and their results came in somewhere below perfect. And as a result, the private markets may close up on these firms forcing them to go public. This is something we’ve not observed before. • A smaller pipeline – We’ve spent considerable time building technology, Mosaic, that assesses & scores private company health & momentum, i.e., customer signings, hiring activity, favorable sentiment, etc. As Mosaic has advanced, we’ve been able to be more discerning & rigorous about who deserves to be on the list. And so this year’s list is smaller. CB Insights is a National Science Foundation backed softwareas-a-service company that uses data science, machine learning and predictive analytics to help our customers predict what’s next—their next investment, the next market they should attack, the next move of their competitor, their next customer, or the next company they should acquire. For more information, visit: http://www.cbinsights.com Many of the highly likely IPO candidates for 2016, as you will see, are not household consumer names. They tend to be focused on less sexy areas (of course, this depends on your perspective) like analytics, datacenters, security and application integration. As always, it is worth remembering that not all of these 531 companies will IPO next year. Many have just crossed the $100M valuation threshold. Others, given the advent of the proverbial “private IPO” (large private market $100M financings) may not need to go public because well-heeled private market financiers have already made them flush with cash. But given the maturity of many of the companies in the pipeline, the uncertainty about private markets and the increasing calls by investors for companies to go public, we expect 2016 will see public market activity pick up. Given how bad 2015 was, the reality is it couldn’t get worse. Sincerely, Anand Sanwal CEO & Co-Founder, CB Insights ©2015 CB Insights #2016TECHIPOPIPELINE 2

Slide 2

THE 2016 TECH IPO PIPELINE – SUMMARY STATS There are 531 venture capital and private equity-backed technology companies in the 2016 Tech IPO Pipeline. These companies are demonstrating significant momentum based on our private company Mosaic ratings. Below is a breakdown of trends observed across these firms: $89 Billion 64 vs 44 Equity financing raised to-date by Tech IPO Pipeline companies New York IPO pipeline companies versus Massachusetts $182 Million 291 Average amount raised by 2016 pipeline companies, a jump from $111M last year The number of Tech IPO Pipeline companies in California. Silicon Valley dominates 92 SV Angel Mega-rounds ($100M+) raised by Tech IPO pipeline companies in 2015, up from 48 in 2014 Has the most 2016 Tech IPO Pipeline companies valued at $1B or more. 21 in total, of which they were an early investor in 67% 163 Top IPO Picks Tech IPO Pipeline companies which raised their first round of funding in 2012 or later, 31% Based on CB Insights Mosaic, top tech IPO candidates for 2016 include Actifio, MuleSoft, Nutanix, Okta, and Zuora. ©2015 CB Insights #2016TECHIPOPIPELINE 3

Slide 3

$89B HAS BEEN RAISED BY TECH IPO PIPELINE COMPANIES A slew of “private IPOs” driven by increased investment from hedge funds, mutual funds, and corporates has led to the 531 companies in the pipeline raising $89.03B in equity investment across more than 2,600 deals since 2000. $36.1B (40.6%) of the funding came in 2015. 2016 Tech IPO Pipeline Investment Activity 2000 – 2015 YTD ©2015 CB Insights #2016TECHIPOPIPELINE 4

Slide 4

$100M+ MEGA ROUNDS CONTINUE TO DOMINATE FUNDING The number of $100M+ financing rounds to Tech IPO Pipeline companies nearly doubled, going from 48 in 2014 to 92 in 2015. The 92 mega rounds raised a cumulative $24.4B with Uber alone raising $5.1B. 2016 Tech IPO Pipeline $100M+ Equity Financing Rounds, 2010 – 2015 YTD ©2015 CB Insights #2016TECHIPOPIPELINE 5

Slide 5

AVERAGE TOTAL FUNDING RAISED BY 2016 TECH IPO PIPELINE HIGHEST EVER As non-traditional investors continue to pour money into tech startups, the need to go public wasn’t there. In fact, total average and median funding raised by this year’s Tech IPO Pipeline companies reached an all-time high at $182M in total funding raised on average and $105M on a median basis. These figures were up 64% and 42% respectively versus last year’s Tech IPO Pipeline as many companies on 2015’s list took advantage of frothy private markets to raise more money and ultimately stay private longer. 2016 Tech IPO Pipeline Average and Median Funding Raised, $M ©2015 CB Insights #2016TECHIPOPIPELINE 6

Slide 6

UNICORNS RISING: 39 PIPELINE COMPANIES JOIN THE $1B+ VALUATION CLUB IN 2015 The number of VC-backed Tech IPO Pipeline companies that entered the billion-dollar valuation club has skyrocketed in the past two years, with 39 companies joining the list this year alone. In the past two years 62 pipeline companies have become Unicorns versus just 16 from 2011 – 2013. 2016 Tech IPO Pipeline VC-Backed Companies with New $1B+ Valuations, 2011 – 2015 YTD ©2015 CB Insights #2016TECHIPOPIPELINE 7

Slide 7

SECTOR BREAKDOWN OF THE TECH IPO PIPELINE Internet companies make up 64% of the 2016 Tech IPO Pipeline. Mobile & Telecom companies are a distant second with 77 companies including titans such as Uber & Snapchat among others. 2016 Tech IPO Pipeline Company Count, by Sector ©2015 CB Insights #2016TECHIPOPIPELINE 8

Slide 8

WHEN DID TECH IPO PIPELINE COMPANIES FIRST RAISE FUNDING? 54% of Tech IPO Pipeline companies raised their first round of funding in the last 6 years. 31% of the firms took their first funding after 2011, which highlights the current strength of the private company financing market as well as the pace at which company building is occurring. 2016 Tech IPO Pipeline Company Count by Year of First Financing ©2015 CB Insights #2016TECHIPOPIPELINE 9

Slide 9


Slide 10