Tag Archives: Steve Bengston of PricewaterhouseCoopers

Feb. 7, 2012 SVForum PWC

On Tuesday February 7, 2012 in Palo Alto at Pillsbury Winthrop, SVForum presented the SVForum Quarterly Venture Breakfast with Pillsbury Winthrop and PricewaterhouseCoopers. The topic was “2011 The Year In Review.” Allison Leopold Tilley of Pillsbury Winthrop moderated panelists Steve Bengston of PricewaterhouseCoopers, Casper de Clercq of Norwest Venture Partners, Steve Goldberg of Venrock and Ann Winblad of Hummer Winblad. They discussed the past year and prospects for the next.

Venture capital investments went up from $23 billion in 2010 to $26 billion in 2011. Fundraising went up from $10 billion in 2010 to $12 billion in 2011. This growth is seen as unsustainable when the top sectors of cleantech, biotech, and medical devices are vulnerable to scaling and regulatory issues. Despite the IPOs of LinkedIn and Pandora, the trend toward VC backed companies going public declined from 75 in 2010 to 50 in 2011. This does not help the unemployed if over ninety percent of job creation occurs after a company has an IPO. The Facebook IPO may generate more Silicon Valley angel investing, but such investment has not generated well paying jobs in the US.

According to the US Dept of Commerce and Wall Street Journal, multinationals over the past decade have cut 2.9 million jobs in the US and moved 2.4 overseas. One result is that over 80 percent of internet growth is overseas where more than 90 percent of the children under 15 live in emerging markets. One place the population may not be growing is in China, where the workforce will peak in 2015 and become the world’s largest economy by 2017 but be surpassed in population by India in 2020. Growth in Europe is unlikely considering their continuing instability as seen in Greece.

Despite more money going in, there are fewer exits. The current situation is unsustainable.

 

Copyright 2012 DJ Cline All rights reserved.

 

Jul. 26, 2011 SVForum PWC Biotech

On July 26, 2011 in Palo Alto, SVForum with Pillsbury Winthrop and PricewaterhouseCoopers held their Quarterly Venture Breakfast on Biotech. Tom Thomas of Pillsbury Winthrop moderated panelists Steve Bengston of PricewaterhouseCoopers, Casper de Clercq of Norwest Venture Partners, Jonathan MacQuitty of Abingworth Venture Capital and Eric Shiozaki of Apposite Capital.

Developing drugs can be a slower and uncertain process in America than launching in Europe. Despite that, venture capitalists are still plowing what looks like an unsustainable amount of early stage funding into biotech. Savvy investors look for later rounds after new drugs or devices pass FDA scrutiny, which has become a financial gauntlet for small startups. A growing number of clinical trials are taking place in emerging economies but less regulation means less reliable results. This outsourcing risks losing America’s ability to develop drugs domestically. It also is slowing and some cases stopping new products from reaching patients.

The exits are more likely a buyout from a big pharmaceutical company than an IPO. Many of the pharma giants are looking for something to replace their expiring patents next month. Investing in new life saving drugs is as risky as taking them.

Copyright 2011 DJ Cline All rights reserved.

Feb. 1, 2011 SDF PWC

On Tuesday, February 1, 2011 in Palo Alto at Pillsbury Winthrop, SDForum presented a Quarterly Venture Breakfast with Pillsbury Winthrop and PricewaterhouseCoopers. Allison Leopold-Tilley of Pillsbury Winthrop moderated panelists Steve Bengston of PricewaterhouseCoopers, Tim Chang of Norwest Venture Partners, Mark Gorenberg of Hummer Winblad Venture Partners, Todd MacLean of Accel Partners and Jon Sakoda of NEA.

Where 2009 was a tough year, 2010 was a mixed year. Venture capitalists invested ten billion dollars more than they raised. Something has got to give and it will probably be the weaker VCs. Most of it went to cleantech, biotech, and medical devices facing infrastructure and regulatory obstacles. Meanwhile the mobile space grew with the demand for smart phones and the services they use.

With the economy down for so long, there is a thirst for growth. Companies with lots of cash are looking for new opportunities. The problem is the symbiotic relationship between M&A and IPOs does not work well in environment with Sarbanes Oxley and investors burned by too many bubbles. Few startups want to have an IPO and therefore have less leverage in negotiating M&As. Not every startup is like Facebook where they can attract large amounts of investment from Goldman Sachs and Russian private equity.

Which brings up the issue of foreign investment and growth. China has bigger market, more companies, more growth and more deals than the United States. While many Chinese startups come to America for the prestige of getting money from Silicon Valley VCs, eventually they may get more money staying home. The question is how to exit in a market that may be less transparent or stable.

The lack of foreign capital could mean a return to normal. At this point the number of jobs and the amount of investment in Silicon Valley are about where they were in the 1990s, before everything was caught up in the dotcom bubble. Most of the VC money in the country is still spent here. As VCs chase bigger deals, super angels are stepping in. While investors create wealth with M&As, they do not create jobs. Large companies are buying startups not just for their intellectual property but their talented employees. This process only consolidates the number of jobs. In order to increase the number of jobs, we need to increase the number of IPOs.

The next year will see the further rise of Apple, Facebook and Google platforms in the mobile space. Moving operations to the cloud will be normal. BRIC countries will continue to grow while other countries try to emulate them. After years of decline, there is a chance for growth.

Copyright 2011 DJ Cline All rights reserved.

Oct. 19, 2010 SDF PWC

On Tuesday, October 19, 2010 in Palo Alto, SDForum with Pillsbury Winthrop and PricewaterhouseCoopers held a Quarterly Venture Breakfast on “Clean Technology.” Allison Leopold-Tilley of Pillsbury Winthrop moderated panelists Steve Bengston of PricewaterhouseCoopers, Sven Strohband of Mohr Davidow Ventures, Don Wood of Draper Fisher Jurvetson and Rick Yang of NEA.

Steve Bengston of PricewaterhouseCoopers delivered Wayne Hedden’s report “Clean Technology Investment Trends October 2010” that included data from the MoneyTree Report and Thomson Reuters. After taking a dive with the economic downturn at the end of 2008, cleantech investments rose again only to decrease in the third quarter of 2010. The largest deal was $106 million for Trilliant who provide wireless network solutions for grid management. The cleantech sector is maturing and starting to behave like the sectors for biotech, medical and software.

One of the unique parts of cleantech are the large capital requirements for developing infrastructure to the last mile, best seen in smart grid or power generation startups. The other is the lack of Moore’s Law in the efficiency of photovoltaics. While the efficiency of solar panels is increasing, it is not increasing exponentially like semiconductors. What can increase dramatically is energy efficiency. If twenty five percent of US electricity is consumed for lighting, the potential for savings with sensors and LEDs could drive down it down to five percent of consumption.

The panel saw the next big growth in the cleantech sector as water. Just as smart grids can increase efficiency in electricity, smart pipes can reduce waste. Better measurement and management will be necessary as more of the world population moves into cities and consumption increases. Look for opportunities in water desalinization that requires less or even no electricity like forward osmosis developed by Oasis.

It is important to remember that like the old energy sector, the cleantech sector is very much a product of government policy and subsidy. China, Germany and other countries are making progress because they have a national consensus despite political changes in government. Recognizing and dealing with the inevitable changes we face will reward investors and the countries that move toward cleantech.

Copyright 2010 DJ Cline All rights reserved.