43 rd NASBIC Annual Meeting. Arjun Gupta, CEO TeleSoft Partners October 15, 2001. www.telesoftvc.com. AGENDA. Page. Public Market Pricing Dynamics 2 Private Market Pricing Dynamics 3 Macro Trends & Industry Structure 4. PRICING EFFECTS. Public Market Players LBO & Buyout Firms.
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43rd NASBIC Annual Meeting Arjun Gupta, CEO TeleSoft Partners October 15, 2001 www.telesoftvc.com
AGENDA Page • Public Market Pricing Dynamics 2 • Private Market Pricing Dynamics 3 • Macro Trends & Industry Structure 4
PRICING EFFECTS • Public Market Players • LBO & Buyout Firms $147MM = $50MM • ICP • TCV • “Crossover Funds” 1 = $950MM 2 $1BN • Morgan Stanley Study(From 1/1/80 – 3/31/96) • 801 Technology IPO’s • Average IPO was $147MM • Largest IPO was MSFT at $300MM Public Market$$$ • Dot.com IPO’s > $1BN $100MM Private VC Market $$$ Early Middle Late I. Public Market Pricing Dynamics
TRENDS IN PRICING L $400MM - $500M } 2-3x 1-2 Years MarketingDevelopment M $200MM - $300MM } ProductDevelopment 5-10x 6 Months E <$25MM - $35MM Stage PRE ’98 ’98-99 ’99-00 IPO Expectations $150-300M $400-500M $1+ B $200MM - $300MM $100MM 2-3x 1-2 Years 2-3x 1-2 Years DANGER $40MM - $60MM $100MM 2-3x 1-2 Years 4-5x 9 Months <$10MM - $20MM <$20MM - $25MM II. Private Market Pricing Dynamics
CUSTOMER AND SUPPLIER INDUSTRY STRUCTURES Personal Computing Fortune 100 Businesses Fortune 1000 Businesses Every Business Millions of Households Billions of Consumers Communications 200 PTT’s 500 – 1,000 Wireless + LD + Local 5,000 Carriers 10,000 Carriers (B/C/D – LEC’s) 1998-99Over Expansion Customer Industry Structure 2000-01 Retrenching North America Europe Japan Full-Service Lucent Cisco Nortel Alcatel Ericsson Siemens NEC Point Players ADC Ciena Motorola Tellabs Nokia Hitachi Toshiba Enterprise Applications SAP, Oracle Oracle Databases IBM Supplier Industry Structure Microsoft, Lotus Applications OperatingSystems Microsoft Intel Microprocessors III. Macro Trends & Industry Structure
KEY OPPORTUNITIES DIGITAL DECADE (2000-2010) • Digital to Optical Transition • Last mile bottleneck (100Mb Fast Ethernet Access & VDSL) • 40 Ghz requirements (4x capacity + 1x space @ 2x 10 Ghz cost) • Wavelength conversion • Optical packet switching (buffering) • Broadband wireless • 2.5G, 3G, 802.11x, wide band CDMA, GPRS, UMTS • Applications & Services • Cost effective infrastructure & mobility management • Circuit (TDM) to packet switching transition • SLA, QOS & voice requirements & compliance • Video conferencing & video email • Innovative, easier to use Advanced Services (Interrupt driven) • Enterprise software apps need to be re-engineered to new data model • .NET, XML, XP (client server becomes legacy system) • Software imaging • Enterprise Network & Data Center • Storage management, provisioning, virtualization • Storage processors, blades & management software for SANs, LANs • Disaster recovery & security • Navy Data Center example (2,000 TB storage + 60,000 servers + 350,000 clients) • Next Gen semis across the board