Industry Ventures Partnership Holdings V, L.P. Hybrid Fund of Funds Strategy Em Employees' ' Retir etirement Syste tem of of the he Sta tate of of Rho hode Island February 28, , 2018 These materials are provided for convenience only and may not be relied upon. Prospective investors may rely only upon the fund's private placement memorandum or an official supplement thereto.
Employees’ Retirement System of the State of Rhode Island As of September 30 th 2017, ERSRI’s commitment to Industry Ventures funds has performed as follows: Vintage Contributed Unfunded Capital % Industry Ventures Fund Year Commitment Capital Capital Distributions Account Value Called DPI TVPI Net IRR Partnership Holdings III, L.P. 2013 $ 25,000,000 $ 19,500,000 $ 5,500,000 $ 2,412,108 $ 23,103,347 78.0% 12.4% 1.31x 14.0% Partnership Holdings III-C, L.P. 2015 $ 15,000,000 $ 6,900,000 $ 8,100,000 $ - $ 9,040,649 46.0% 0.0% 1.31x 33.9% Partnership Holdings IV, L.P. 2016 $ 10,000,000 $ 3,100,000 $ 6,900,000 $ - $ 3,552,676 31.0% 0.0% 1.15x 29.0% Total $ 50,000,000 $ 29,500,000 $ 20,500,000 $ 2,412,108 $ 35,696,672 59.0% 8.2% 1.29x 16.7% Capital Account as of 09/30/17. Net IRR based on LP cash flows. Calculations are provided for convenience only and are estimates, they cannot be relied upon. Strictly Confidential 2 Strictly Confidential (#)
Industry Ventures Overview $3B+ 2000 240+ 275+ 18% (1) Number of Number of Firm Net IRR Year Firm Assets Under Fund Direct Founded Management Investments Investments 2 offices $1.4B 74% (2) 2.1x (3,4) San Francisco & Total Realized Net Realized Firm Distributions Washington D.C. ROC to Paid-In Capital All figures are unaudited and estimated as of 9/30/2017. Past performance is not indicative of future results. 1. As of 9/30/2017, net of fees, expenses and carried interest paid to the general partner entity of each respective fund. 2. DPI is on an aggregate basis including all current and prior Industry Ventures Funds 3. Represents the aggregate performance of realized investments determined on a deal by deal basis using realized proceeds, total invested (i.e. full cost basis) and remaining NAV (if any). Net multiple is calculated by [(Realized Proceeds + Remaining NAV)/Total Invested] for realized investments. Realized investments are defined as those in which over half of the invested cost has been realized [Realized Proceeds > (0.5 * Total Invested)]. 4. Net Realized ROC and Net Realized IRRs are estimated by allocating all management fees and expenses across individual investment s based on each investment’s proportional cost basis in its respective fund and by allocating carried interest across all of the individual investments in the applicable fund, and based on each investment’s p roportional value (realized and unrealized) in its respective fund. Please see detailed track record information and a full list of funds for each strategy Strictly Confidential 3 Strictly Confidential (#)
Our Team FIRM MANAGEMENT SECONDARY TEAM HYBRID AND DIRECT TEAM LINDSAY SHARMA HANS SWILDENS ROBERT MAY JUSTIN BURDEN VICTOR HWANG ROLAND REYNOLDS KEN WALLACE Founder & CEO COO & CCO Managing Director Managing Director Principal Managing Director Managing Director Founders Fund, Mohr Davidow GE Equity, Wells Fargo Intuit, Great Hill Partners, Speedera, Microline Internet Capital Group, Columbia Capital, JP Morgan Bessemer Trust Bear Stearns UCSB | Columbia MBA San Jose State University UC Berkeley | London School Goldman Sachs Princeton | Harvard MBA Wake Forest | UC of Economics MSC Stanford BA | MBA Indiana | Harvard MBA Berkeley MBA FINANCE & INVESTOR RELATIONS AARON HINZ ALEX ADAM AMIR MALAYERY NATE LEUNG IRA SIMKHOVITCH KATHLEEN COLLINS JONATHAN ROOSEVELT VP of Finance VP, Head of Investor Relations Vice President Vice President Venture Partner Principal Senior Associate Thomas Weisel | Venrock NEPC | Babson MBA Dapper Shopping, Optimizely The Carlyle Group, Bulger Partners GuestDNA, SoFi, Battery UC Santa Cruz Boston University Summit Partners Stanford | Harvard MBA Commonfund, Booz Allen Dartmouth | Durham Ventures Stanford | Harvard MBA Harvard BA | MBA MIT | Columbia MBA University CHRIS HIPPLE LENA McNULTY Accounting Manager Manager of Investor Relations Standish Management Santa Clara University Santa Clara University ERIC YEE JUSTINE HUANG KEMPER AHL BRIAN LANGNER FANNI FAN Senior Associate Associate Business Development Senior Associate Associate LISA BREIMAN Moelis & Co Goldman Sachs Associate Standish Management Rosemark Capital Investor Relations Claremont McKenna UC Berkeley Artist Capital UC Santa Barbara MIT University of Denver Davidson College Strictly Confidential 4 Strictly Confidential (#)
Hybrid Fund of Funds Focuses on Early Stage Venture Industry Ventures’ Platform approach Partnership Holdings - Hybrid Fund of Funds Diversified exposure to early stage venture capital SECONDARY Primary Fund Early Secondary FUND Commitments Fund Interests Direct Co- Special Purpose Investments Vehicles (SPVs) IV leverages existing relationships to DIRECT HYBRID FUND of access proprietary FUND FUNDS deal flow • Highly complementary to Secondary Fund and Direct Fund • Enables deep collaboration with General Partners of smaller funds • Limited Partners gain exposure to early stage companies with mitigated risk Strictly Confidential 5 Strictly Confidential (#)
Hybrid Fund of Funds Overview Building a portfolio of early stage venture assets designed to earn a high investment multiple with downside protection and a shortened j-curve. Investments in seed and early stage managers. Relationships integral for PH Primaries strategy and investment optionality. Early Mitigate J-curve with mid-stage companies & earlier distributions. Secondaries Early Primary Secondary & 40% SPV 40% Direct Co- Concentrate capital in high conviction, mid stage companies. Investments Direct 20% Proactively create concentrated portfolios targeting specific mid-stage SPVs companies with IV typically as sole investor. Strictly Confidential 6 Strictly Confidential (#)
Summary of Proposed Terms Name Industry Ventures Partnership Holdings V, L.P. Structure Delaware limited partnership Target Fund Size $250 million Term 10 years Commitment Period 4 years Management Fee 1% Carry 5% primary; 10% early secondary/SPV; 20% direct co-investments Preferred Return 6% Target Allocation 40% early secondary/SPV; 40% primary; 20% direct co-investments Timing First close expected Q1 2018 *Targeted net returns involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements to differ materially from these projections. These projections speak only as of the date hereof, and Industry Ventures disclaims any obligation or undertaking to provide updates or revisions to reflect any change in its expectations. Strictly Confidential 7 Strictly Confidential (#)
Conclusion Experienced and Proven Team Targeting High Investment Multiple Deep venture capital expertise and relationships • • Investments in small early stage venture capital funds • Pioneers in small fund investing for over a decade Diversified Exposure to Early Stage VC Differentiated Portfolio Inclusion of secondary transactions, SPVs, • With a shortened J-curve and • and direct co-investments accelerated time to liquidity Strictly Confidential 8 Strictly Confidential (#)
Appendix
Venture Capital Fundraising Returns to ‘06 - ’08 Levels US VC FUNDRAISING BETWEEN 1990 – 2017* $120 60% $101 $100 50% LP Commitments ($B) $80 40% $60 30% $53 $40 $38 $36 $35 $35 $35 $40 20% $32 $31 $30 $30 $25 $24 $21 $20 $18 $18 $20 10% $12 $9 $9 $12 $11 $3 $2 $5 $4 $4 - 0% US Venture Capital Fundraising ($B) % of Total PE Fundraising *2017 figures annualized based off data through 9/30 Sources: NVCA.org - ‘NVCA 2017 Yearbook’ Pitchbook.com ‘ Pitchbook 2017 PE/VC Fundraising Report’, ‘3Q 2017 Pitchbook /NVCA Venture Monitor’ Strictly Confidential Strictly Confidential (#) 10
Late-Stage Valuations Resume Climb MEDIAN PRE-MONEY VALUATION ($M) BY SERIES $300 $249.5 $250 $200 $150 $84.0 $100 $77.1 $41.0 $40.0 $50 $19.4 $15.9 $6.9 $6.0 $0 $3.7 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Angel/Seed Series A Series B Series C Series D+ Commentary • Valuations up dramatically at late stage, after slight pause in 2016 2017* = estimated 2017 pro-forma amount based off annualizing 1H 2017 Source: Pitchbook.com - ‘3Q 2017 Pitchbook /NVCA Venture Monitor’ Strictly Confidential Strictly Confidential (#) 11
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