1. ®
1st Annual Excellence in Investing
Conference, in Partnership with the
Ira Sohn Research Conference Foundation
October 6, 2010
A Supply Side View of Tech IPO’s:
A Rising Tide Through 2014
1
3. ®
Who We Are
Accel works in support of exceptional entrepreneurs to build world-class companies.
Our contributions extend far beyond pure financing.
Accel Partners Confidential 3
5. …as the Current IPO Backlog ®
Continues to Build
IPOs Filed Monthly IPO Backlog
150
29
125
10
0 7
IPOs Priced Annually IPOs Priced Monthly
30
0 0
Source: Equidesk.
Data as of September 12, 2010. Data does not include REITs, Closed End Funds, and SPACs.
Accel Partners Confidential 5
6. Tech IPO Market Peaks About Every
®
15 Years – ’69, ‘83, ‘99, ’14?
Necessary Conditions:
Demand: “The Watched Pot” Supply: Real Causality
• Positive Cash Flow into • Quantity of Innovative
mutual/hedge funds with Companies
tech/growth small cap - High Growth
charters - High Quality
• Rising momentum price
trend
• Consistent trading of
IPO’s to premiums
Accel Partners Confidential 6
7. ®
Supply: Why 15 Years?
Forces of Creative Destruction Need Enough Time
• Semiconductors – Moore’s Law is intact
• Storage costs and densities
Creating
• Fiber/Broadband Costs and Ubiquity Your
Future
• Mobile Broadband
• Software Development Productivity
10x Productivity improvement at all levels
Accel Partners Confidential 7
8. ®
Supply: Pent-Up
• Hostile Public Market
• SOX Costs - $2M plus per year
• M&A Alternatives at 5-10x Revenue
• IPO Size Minimum at $100MM
• Poor IPO Trading Experience
Real but Nuisance Factors
Accel Partners Confidential 8
9. ®
Convergent Synergistic Platforms
Social Media
Ad
Digital Media
Serving/Targeting
Spectacular
Mobile
E-commerce
Models
Accelerated Broadband/LTE
Mobile Apps
Growth
Cloud Utilities
SaaS Models
Services/Storage
Security
Accel Partners Confidential 9
10. ®
Build it and they will come:
Many Great Companies Await in the Venture Portfolios
Tech Enabled - Examples
eCommerce Gilt, Diapers, Etsy, Fingerhut, Vente-Privee,
Iron Planet, Groupon, Hautelook, ModCloth,
Showroomprive, Chegg
SaaS Jive Software, Trustwave, Meltwater, Service-
Now.com, WorkXpress, Cloud9 Analytics, Grid
Dynamics, Brightcove, Workday, Cornerstone
Social Media Facebook, Twitter, Yelp, LinkedIn
Financial Integral Tech, Yodlee, FX Alliance, Liquidnet, Trading
Technology Screen, NetSpend, Mercury Payment Systems,
FXCM, LPL Financial, Promiss Solutions, Fleetcor,
Gain Capital, SunRun
Healthcare/IT ePocrates, Passport Healthcare, Meditech, Epic
Systems, MEDecision, ZirMed
Accel Partners Confidential 10
11. ®
Build it and they will come:
Many Great Companies Await in the Venture Portfolios
Enablers - Examples
Digital Media Glam Media, Sugar, Inc., HomeAway, Zillow, Trulia,
TheLadders, Kayak, Zynga, MLB.com, eHarmony,
NexTag, Gameforge
Mobile Apps/LTE MetroPCS, Sabre Industries, Force10, Skype, NextG
Cloud Utilities Atempo, Fusion-io, Nimbus Data Systems, Asigra
Low-Touch Atlassian, Acronis, ExactTarget, Zoho, TeamViewer,
Software SurveyMonkey
Ad Models Adknowledge, Collective Media, Demand Media,
Announce Media, Vibrant Media, Media Bank,
Responsys, Nextjump
Security SafeNet, Avast, Splunk, Qualys, Imperva, Webroot,
Barracuda Networks, AVG, ESET
Accel Partners Confidential 11
12. ®
Final Points
• Benefits of being Early to the Cycle
- Lower Prices
- More seasoned companies
- Higher Quality
- Longest Future Growth Trajectories
• Despite some even larger companies, this Cycle will be
more like ‘83 than ’99, moderated by both the memories of
excesses and weaker macro environment
• Health Care and CleanTech will participate tangentially but
have distinct characteristics – e.g. Government
Regulations and Capital Intensivity.
Accel Partners Confidential 12
13. ®
1st Annual Excellence in Investing
Conference, in Partnership with the
Ira Sohn Research Conference Foundation
October 6, 2010
A Supply Side View of Tech IPO’s:
A Rising Tide Through 2014
13
