Blackhorse Silicon Valley Trip:GGV introduction & State of the VC Market

The Presentation inside:

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Blackhorse Silicon Valley Trip: GGV introduction & State of the VC Market June 2015 Glenn Solomon Managing Partner, GGV Capital

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Table of Contents Table of Contents GGV Capital Highlights Market Overview IPO Trends M&A Trends US Venture Capital Trends

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GGV Capital Highlights

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15 Years of Investing in the US & China Resulting in 18 IPOs since 2010 Resulting in 10 Private $1B+ Outcomes Resulting in 21 $1B+ Outcomes Tujia ????

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Our Proven Sectors Propel Deal Flow and Success E-Commerce Travel Internet of Things Gaming AAC Technologies CONFIDENTIAL Digital Media / Marketing Youku-Tudou Pandora LightChaser Percolate SoundCloud Buddy Media Cross-Border Ehang Zepp Wish Quixey Chukong OnDemand Services Opendoor 51Credit Xiaozhan IWJW Didi Dache FlightCar SaaS / Cloud Zendesk 21Vianet SuccessFactors Synack Kingsoft WPS Domo Global Discovery Prynt Wigo CareerDean Grubmarket Dianhuabang Totspot

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Deal Profile Cross-border advantage Sector focus Multi-stage investment Market leader with 10x return profile Typically lead Series A or Series B Median: $8-10m for 10-20%, double down on winners

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GGV Capital: Single Partnership Team Hany Nada Jeff Richards Glenn Solomon Hans Tung Jixun Foo Joined GGV in 2006 Prior: DFJ ePlanet, NSTB Singapore, HP Representative investments: MediaV, Qunar, Youku-Tudou, Meilishuo, Grabtaxi Founding Partner Prior: Piper Jaffray Representative investments: DraftKings, Glu Mobile, Houzz, Youku-Tudou, Soundcloud Joined GGV in 2008 Prior: Verisign, Founder of R4, QuantumShift, PWC Representative investments: Appirio, BlueKai, Buddy Media, HotelTonight, Flipboard Joined GGV in 2006 Prior: Partech, SPO, Goldman, Sachs & Co. Representative investments: AlienVault, Nimble Storage, Pandora, Square, Zendesk, SuccessFactors Joined GGV in 2013 Prior: Qiming, Bessemer, Crimson Asia, HelloAsia, Merrill Lynch Representative investments: Forgame, Wish, Curse, Xiaomi, Xiaohongxu Jenny Lee Joined GGV in 2005 Prior: JAFCO Asia, Morgan Stanley, ST Aerospace Representative investments: YY, 21Vianet, Pactera, Chukong, Zepp, Xiaozhan CONFIDENTIAL

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Market Overview

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VC Dollars Growing, but Deal # Holding Steady Source: MoneyTree, PwC and the National Venture Capital Association. US venture capital dollar volumes have grown significantly since the recession, reaching nearly $15B in Q4 2014, but are still far off from the high of $28B reached in Q1 2000 at the peak of the tech bubble. Volume of deals has been more stable, reflecting increasing deal sizes.

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Expansion & Late Stage Rounds Growing in Size Average deal sizes for seed and early stage companies have been relatively stable since 2000, but expansion and later stage round sizes have dipped and rebounded with the market, and are now at around 2000 levels. Source: MoneyTree, PwC and the National Venture Capital Association.

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M&A Volumes at 2-Year Low After Record Q4 ‘14 Source: NVCA & Thomson Reuters. The first quarter of 2015 has been slow for venture-backed M&A at $2B in disclosed deal value and 86 total deals, the lowest since Q1 2013.

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# of IPOs Similarly at 2-Year Lows in Q1 ‘15 The first quarter of 2015 has been slow for tech IPOs as well, with the lowest # for IPOs for a quarter since Q1 2013. Source: NVCA & Thomson Reuters.

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US IPO Trends

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Median Years to IPO Increasing Over Time… Technology companies that IPO’ed in 2014 had a median age of 11 years, up significantly from the trough of 4 years in 1999. Since the financial recession starting in 2008, the median age of a tech IPO company has been high relative to historical levels. Source: Jay Ritter, University of Florida.

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…And the Revenue Bar for Going Public is High… Tech companies’ median revenue at time of IPO was at record levels during 2008-2013, and remained high in 2014 at nearly $100M. Source: Jay Ritter, University of Florida.

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…But Profitability is Not a Prerequisite… Source: Jay Ritter, University of Florida. Despite the relatively older age and higher revenue levels shown by tech IPOs since 2008, % of companies showing profitability dropped in 2014 to nearly 1999-2000 levels, indicating that lack of profitability has not been a barrier to going public.

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2014’s Top >$1B Tech IPOs Were Enterprise Companies Source: Capital IQ. Data as of 6/26/15. Out of 2014’s >$1B Market Cap, venture-backed tech IPOs, horizontal SaaS (Zendesk, Paylocity) and enterprise infrastructure (New Relic, Hortonworks, Arista Networks) were the best performing categories. Post-IPO Trading Days Zendesk: +163% from Offer New Relic: +54% from Offer Paylocity: +109% from Offer Gruhub: +33% from Offer Wayfair: +32% from Offer Opower: -39% from Offer King: -37% from Offer -26% from Offer Lending Club: +2% from Offer

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2015’s Tech IPOs Show Early Promise Source: Capital IQ. Data as of 6/26/15. Of the 6 major venture / growth-equity backed tech IPOs in 2015, 4 (Fitbit, Shopify, GoDaddy, Box) are trading significantly above their offering prices. The other two, Mindbody and Etsy have both struggled in the public markets. Post-IPO Trading Days

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US M&A Trends

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M&A Deal Value Reached 16-Month High in May ‘15 Source: FactSet. US M&A (All Sectors) by Volume and Aggregate Deal Value

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At Least 34 2014 – 2015 YTD Tech M&As with TEV >$1B

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…But VC-Backed Unicorn M&A is Way Down from Last Year

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US Venture Capital Trends

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Seed Funding Volumes Have Grown Steadily… Seed venture capital financing dollar and deal volumes have both been on a steady increase, reaching nearly $400M in Q4 2014. Source: CB Insights.

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…And Seed Deal Sizes are Creeping Upward… Source: CB Insights.

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…Driven by a Record Number of Seed Funds… Source: CB Insights. In the first three quarters of 2014, there were 91 micro-VC funds (<$50M AUM) raised.

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…But Series A Volumes Overall Remain Steady The “Series A Crunch” persists as seed funding volumes continue to climb, but Series A volumes stay relatively stable. Source: CB Insights.

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2014 VC Fundraising Far Exceeded Tech IPO Proceeds Source: CB Insights.

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…And the Gap Has Only Widened in 2015 Source: CB Insights.

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Entrepreneurs are Accessing Diverse Capital Sources Selected Early Stage SMB / Startup Crowdfunding Platforms Over $104M raised for early stage tech startups in 2014 (estimated ~$70M in 2013) Over $300M raised for SMBs in total Over $200M raised for SMBs in total Over $189M raised for SMBs in total Over $135M raised for SMBs in total Over $100M raised for SMBs in total Over $90M raised for SMBs in total Over $70M raised for SMBs in total Over $35M raised for early stage tech startups over lifetime of platform Over $10M raised for early stage tech startups over lifetime of platform Startups have access to an increasing number of fundraising options beyond traditional venture capital, at both the early and late stages. Mutual Funds & Hedge Funds in VC-Backed Deals # of Mutual Fund Investments in VC-Backed Companies # of Hedge Fund Investments in VC-Backed Companies

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…Yielding More >$1B “Unicorns” Than Ever Before Source: CB Insights.

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...With Company Friendly Deal Terms (US standards) Fenwick & West conducted a survey of 37 companies who raised money at valuations >$1 Billion in the 12 months prior to March 31st, 2015 to evaluate the impact of deal terms on potential returns. Downside protections were stronger than upside benefits, and liquidation preferences and minimum IPO conversion prices in these unicorn deals significantly reduce downside risk for VCs. As a result, “valuations of these companies could fall on average by 90% before the unicorn investors would suffer a loss on their investment.” Source: Fenwick & West, “The Terms Behind the Unicorn Valuations.” Highlights Downside Protections For the 37 “unicorns” in the survey, average valuation was $4.4B and median valuation was $1.6B (implying a few super-unicorns in the mix) The average valuation increase over the prior round was 180% 25% of financings were led by traditional VCs, 75% by non-traditional VCs (mutual funds, hedge funds, sovereign wealth, corporations) 35% of the deals were valued at $1-$1.1B, implying that the companies were optimizing for attaining unicorn status in their negotiations Upside Participation