MoneyTree™ Report Definitions and Methodology
Stage of Development Definitions
Type of Financing/Financing Sequence
The Industry Classifications used in the MoneyTree™
Report are as follows:
Developers of technology promoting drug development, disease treatment, and a deeper understanding of living organisms. Includes human, animal, and industrial biotechnology products and services. Also included are biosensors, biotechnology equipment, and pharmaceuticals.
- Business Products and Services
Offers a product or service targeted at another business such as advertising, consulting, and engineering services. Also includes distributors, importers, and wholesalers.
- Computers and Peripherals
Includes manufacturers and distributors of PCs, mainframes, servers, PDAs, printers, storage devices, monitors, and memory cards. Also included are digital imaging and graphics services and equipment such as scanning hardware, graphics video cards and plotters. Integrated turnkey systems and solutions are also included in this category.
- Consumer Products and Services
Offers products or services targeted at consumers such as restaurants, dry cleaners, automotive service centers, clothing, toiletries, and house wares.
Includes electronic parts that are components of larger products and specialized instrumentation, including scientific instruments, lasers, power supplies, electronic testing products and display panels. Also included are business and consumer electronic devices such as photocopiers, calculators, and alarm systems.
- Financial Services
Providers of financial services to other businesses or individuals including banking, real estate, brokerage services, and financial planning.
- Healthcare Services
Includes both in-patient and out-patient facilities as well as health insurers. Included are hospitals, clinics, nursing facilities, managed care organizations, Physician Practice Management Companies, child care and emergency care.
Producers and suppliers of energy, chemicals, and materials, industrial automation companies and oil and gas exploration companies. Also included are environmental, agricultural, transportation, manufacturing, construction and utility-related products and services.
- IT Services
Providers of computer and internet-related services to businesses and consumers including computer repair, software consulting, computer training, machine leasing/rental, disaster recovery, web design, data input and processing, internet security, e-commerce services, web hosting and systems engineering.
- Media and Entertainment
Creators of products or providers of services designed to inform or entertain consumers including movies, music, consumer electronics such as TVs/stereos/games, sports facilities and events, recreational products or services. Online providers of consumer content are also included in this category (medical, news, education, legal).
- Medical Devices and Equipment
Manufactures and/or sells medical instruments and devices including medical diagnostic equipment (X-ray, CAT scan, MRI), medical therapeutic devices (drug delivery, surgical instruments, pacemakers, artificial organs), and other health related products such as medical monitoring equipment, handicap aids, reading glasses and contact lenses.
- Networking and Equipment
Providers of data communication and fiber optics products and services. Includes WANs, LANs, switches, hubs, routers, couplers, and network management products, components and systems.
Firms making consumer goods and services available for consumer purchase including discount stores, super centers, drug stores, clothing and accessories retailers, computer stores and book stores. Also included in this group are e-Commerce companies ---those selling their products or services via the Internet.
Design, develop or manufacture semiconductor chips/microprocessors ore related equipment including diodes and transistors. Also includes companies that test or package integrated circuits.
Producers of bundled and/or unbundled software applications for business or consumer use including software created for systems, graphics, communications and networking, security, inventory, home use, educational, or recreational. Also included is software developed for specific industries such as banking, manufacturing, transportation, or healthcare.
Companies focused on the transmission of voice and data including long distance providers, local exchange carriers, and wireless communications services and components. Also included are satellite and microwave communications services and equipment.
If the classification criterion in all of the other categories does not appropriately describe the product or service offered, the firm may be categorized in this group.
The Sector Classifications used in the MoneyTree Report are as follows:
- Clean technology
This designation crosses traditional MoneyTree industries and comprises companies that focus on alternative energy, pollution and recycling, power supplies and conservation.
A discrete classification assigned to a company whose business model is fundamentally dependent on the Internet, regardless of the company's primary industry category.
- Life sciences
Includes all deals completed and dollars invested into Biotechnology and Medical Device companies.
Stage of Development Definitions
The Stage of Development Classifications used in
the MoneyTree Report are as follows:
- Seed/Start-Up Stage
The initial stage. The company has a
concept or product under development, but is probably not fully operational. Usually in existence less than 18
- Early Stage
The company has a product or service
in testing or pilot production. In some cases, the product may be commercially available. May or may not be
generating revenues. Usually in business less than three years.
- Expansion Stage
Product or service is in production
and commercially available. The company demonstrates significant revenue growth, but may or may not be showing a
profit. Usually in business more than three years.
- Later Stage
Product or service is widely
available. Company is generating on-going revenue; probably positive cash flow. More likely to be, but not
necessarily profitable. May include spin-offs of operating divisions of existing private companies and
established private companies.
Type of Financing/Financing Sequence
The MoneyTree Report records cash for equity
investments as the cash is actually received by the company (also called a tranch) as opposed to when financing is
committed (often referred to as a "term sheet") to a company. Accordingly, the amount reported in a given
quarter may be less than the total round amount committed to the company at the time when the round of financing
The type of financing as it is used in the
MoneyTree Report refers to the number of tranches a company has received. The number designation (1, 2, 3,
etc.) does not refer to the round of financing. Rounds are usually designated alphabetically, e.g. Series A, Series
B, and so on. The MoneyTree Report does not track rounds.
The Geographical Classifications used in the
MoneyTree Report are as follows:
Alaska, Hawaii, and Puerto
The state of Colorado
Washington, D.C., Virginia, West
Virginia, and Maryland
Southern California (excluding San
Diego), the Central Coast and San Joaquin Valley
Illinois, Missouri, Indiana, Kentucky,
Ohio, Michigan, and western Pennsylvania
Maine, New Hampshire, Vermont,
Massachusetts, Rhode Island, and parts of Connecticut (excluding Fairfield county)
New York Metro
Metropolitan NY area, northern New
Jersey, and Fairfield County, Connecticut
Minnesota, Iowa, Wisconsin, North
Dakota, South Dakota, and Nebraska
Washington, Oregon, Idaho, Montana,
Eastern Pennsylvania, southern New
Jersey, and Delaware
San Diego area
Northern California, bay area and
Kansas, Oklahoma, Arkansas, and
Alabama, Florida, Georgia,
Mississippi, Tennessee, South Carolina, and North Carolina
Utah, Arizona, New Mexico, and
The state of Texas
Upstate New York
Northern New York state, except
Metropolitan New York City area
The MoneyTree Report measures
cash-for-equity investments by the professional venture capital community in private emerging companies in the U.S.
It is based on data provided by Thomson Reuters.
The report includes the investment activity of professional venture capital firms with or without a US office, SBICs, venture arms of corporations, institutions, investment banks and similar entities whose primary activity is financial investing. Where there are other participants such as angels, corporations, and governments in a qualified and verified financing round the entire amount of the round is included.
Qualifying transactions include cash investments by these entities either directly or by participation in various forms of private placement. All recipient companies are private, and may have been newly-created or spun-out of existing companies.
The report excludes debt, buyouts, recapitalizations, secondary purchases, IPOs, investments in public companies such as PIPES (private investments in public entities), investments for which the proceeds are primarily intended for acquisition such as roll-ups, change of ownership, and other forms of private equity that do not involve cash such as services-in-kind and venture leasing.
Investee companies must be domiciled in one of the 50 US states or DC even if substantial portions of their activities are outside the United States.
The focus of the report is on cash received by the company. Therefore, tranches not term sheets are the determining factor. Drawdowns on commitments are recognized at the time the company receives the money rather than recorded as a lump sum amount at the time the term sheet is executed. Convertible debt and bridge loans are recognized only when converted to equity.
Once a company has received a qualifying venture capital financing round, all subsequent equity financing rounds are included regardless of whether the round involved a venture capital firm as long as all other investment criteria are met (e.g. cash-for-equity, not buyout or services in kind).
Angel, incubator and similar investments are considered pre-venture financing if the company has received no prior qualifying venture capital investment and are not included in the MoneyTree results. Angel, incubator and similar investments that are part of a qualifying venture capital round or follow a qualifying venture capital round are included to the extent that such investments can be fully verified as meeting all other criteria (e.g. cash for equity, not buyout or services in kind).
Direct investment by corporations (not through a corporate venture capital arm) is excluded unless (a) the investment is clearly demonstrated to be primarily a financial investment rather than outsourced R&D or market development, (b) it is a co-investment in an otherwise qualifying round, or (c) it follows a qualifying venture round in a company and meets all other criteria (e.g. cash-for-equity, not buyout or services in kind).
Data is primarily obtained from a quarterly survey of venture capital practitioners conducted by Thomson Reuters. Information is augmented by other research techniques including other public and private sources. All data is subject to verification with the venture capital firms and/or the investee companies.
Only professional independent venture capital firms, institutional venture capital groups, and recognized corporate venture capital groups are included in venture capital industry rankings.
PricewaterhouseCoopers and the National Venture Capital Association have taken responsible steps to ensure that the information contained in the MoneyTree Report has been obtained from reliable sources. However, neither of the parties nor Thomson Reuters can warrant the ultimate validity of the data obtained in this manner. Results are updated periodically. Therefore, all data is subject to change at any time.