Additionally, Dick Kramlich, Co-Founder of New Enterprise Associates, received the 2010 Special Achievement Award to recognize his notable contributions to the VC industry, in particular for sponsoring at least eight companies that achieved market capitalizations exceeding $1.0 billion. Past winners of this prestigious award have included the following distinguished venture capitalists: David Morgenthaler, Irwin Federman, John Mumford, Reid Dennis, and William Draper III.

Seven key themes emerged:

Exit markets are thawing: There were nine VC backed IPOs in the first quarter of 2010 as opposed to twelve in 2009 and six in 2008. Mergers and acquisitions activity has picked up substantially. The 111 VC-backed deals in the first quarter greatly outpace the 68 deal per quarter average in 2009, evidence of future promise.

The “Lost Decade”: Returns generated by top quartile firms from the past decade have been below 4% annually. This compares to the average returns over 25 years of 25%+ for top tier firms as reported by NVCA, leading many top VCs to refer to this as the “lost decade” from a performance/returns standpoint.

Venture Capital industry is contracting: The consensus among conference participants was that the number of active Venture Capital firms has contracted by 30-40% from the peak in 2000 and that the number of investment professionals in the industry has contracted by up to 50%.

Fewer companies are getting funded: As a result of the contraction, fewer companies are getting funded. The number of VC deals peaked in 2000 at 8,000 and has decreased to an annualized rate of 2,800 per year currently.

Recessions are good: Returns from funds formed and invested during depressed economic cycles generally have outperformed historic averages. While there are numerous arguments why this trend exists, the two most powerful are: (1) fewer new companies were formed, increasing time and talent pool per deal and (2) VC firms ability to negotiate terms more aggressively.

Reasons for optimism: Steve Jurvetson of DFJ concluded the conference with an eye-opening presentation on the rapidly increasing pace of change and innovation. He argued that Moore’s law of exponential innovation applies across numerous sectors (clean tech, life sciences, etc…). As such, there will be no shortage of breakthroughs in technology and concepts to fuel innovation and the Venture Capital Industry.

What is hot?: Frequently mentioned were: social networking, clean tech, and of course life sciences, but most VCs have an ace up their sleeve they aren’t currently talking about.

Over 100 area professionals were gathered to hear the panel discuss topics including the availability of capital, the IPO climate, and the numerous challenges facing life science startups in 2010.

Cam Garner and David Hale, serial entrepreneurs and company founders, shared the many recent changes they have seen in the market. Both panelists agreed the issues facing the industry centered on the conservatism of venture capital groups and how they were managing their investment strategies.

“Historically, when you talked with venture capital you had to present a vision of how you were going to build a company,” said Hale. “Today the vision that you have to present is how to get to the exit with the least amount of capital.”

“I think one other thing that has shifted is how much money you invest doing marketing research in an early stage because the venture people want to see and understand the real commercial opportunity before they put the capital in,” said Garner. “They used to spend some time on it, but it was relatively negligible in the assessment.“

The panelists agreed the most important factor that distinguishes a company they are willing to work with is the management team. According to their experiences an untested team leads to additional challenges downstream.

“You want to work with people who have experience and you want to work with people that are financeable,” said Hale. “I think if there is one criteria that has really changed in terms of venture capital, it is the market research that Cam is talking about (to define what the opportunity is). The second one is the experience of the CEO. Getting a first time CEO financed today is difficult – you just kind of look around; there aren’t many.”

In closing, the panel was asked to present an outlook for the industry. Both Garner and Hale felt the market would remain challenging for the foreseeable future while Fred Muto was more optimistic.

“I think the industry is going to adapt as it has in every other cycle. Whether the levels of startup and venture dollars invested get back to their high points – I am a little doubtful,” said Muto. “There are a lot of very talented people who have been investing in this industry a long time. If you took a snapshot at any point of time there are several times in my thirty years where people just sat around the table and said the world was over as we know it.
I don’t think it is over, but there are some huge challenges structurally.”

The event concluded with a networking wine social where executives were able to talk with the speakers and present the unique challenges facing their own organizations in a more personal setting.

About Cabrillo Advisors, LLC – Cabrillo Advisors is a business valuation and investment banking firm serving the life science and technology sectors. Cabrillo provides a full range of valuation services for financial reporting and tax compliance including: 409a valuation for stock options, purchase price allocations for acquisitions and annual goodwill impairment testing. Cabrillo also provides high quality mergers and acquisitions advisory services for both public and privately held companies in the middle market. Cabrillo is pleased to celebrate its first 10 years in business in 2010, as well as its anticipated Bay Area office opening later this year.

About Cooley Godward Kronish, LLP – Cooley Godward Kronish’s 650 attorneys have an entrepreneurial spirit and deep, substantive experience, and are committed to solving clients’ most challenging legal matters. From small companies with big ideas to international enterprises with diverse legal needs, Cooley has the breadth of legal resources to enable companies of all sizes to seize opportunities in today’s global marketplace. The Firm represents clients across a broad array of dynamic industry sectors, including technology, life sciences, clean tech, real estate, financial services, retail and energy.

The Firm has full-service offices in major business and technology centers nationwide: Palo Alto, CA, New York, NY, San Diego, CA, San Francisco, CA, Reston, VA, Broomfield, CO, Washington, DC, Boston, MA and Seattle, WA.

Wade Hansen

Wade established Cabrillo Advisors and its predecessor firm in 2000. Prior to Cabrillo, Wade was a founding Principal at Dell Ventures in Austin, Texas, where he coordinated strategic partnerships and equity investments in the software, semiconductor, health care and internet services sectors. Wade was responsible for investing in excess of $300 million in such companies as Sina (Nasdaq: SINA), Navisite (Nasdaq: NAVI) Neoforma (Nasdaq: NEOF), and webMethods (Nasdaq: WEBM).

Prior to joining Dell Ventures, Wade spent four years with McKinsey & Company based in the Dallas and Palo Alto offices. While at McKinsey, Wade focused on corporate strategy issues of top-line revenue growth, M&A and post-merger management in the high tech and pharmaceutical distribution industries.

Wade received an MBA with distinction from Northwestern’s Kellogg Graduate School of Business, and bachelor’s degree in Accounting from San Diego State University summa cum laude.

Cam Garner

Cam Garner served as Chief Executive Officer of Dura Pharmaceuticals, Inc. from 1989-1995 and Chairman and CEO from 1995-2000. During his tenure, Dura’s annual revenues grew from $2 million to over $300 million. Dura was sold in November 2000, for $1.8 billion to Elan Corporation.

Mr. Garner has co-founded numerous specialty pharmaceutical companies including, Cadence Pharmaceuticals, Inc., DJ Pharma, Elevation Pharmaceuticals, Evoke Pharma, Meritage Pharma, Somaxon Pharmaceuticals Inc., Verus Pharmaceuticals, Inc., Xcel Pharmaceuticals, Inc. and Zogenix.

He currently serves as Chairman of Cadence, Elevation, Evoke, Meritage and Zogenix and served as Chairman of DJ Pharma and Xcel Pharmaceuticals until they were sold. Mr. Garner also serves on the Board of Directors of Aegis Therapeutics. Additionally, he is currently involved in local charitable organizations.

David F. Hale

David F. Hale is a Co-founder of Somaxon and has served as Chairman of the Board of Directors since August 2003. He served as Executive Chairman of the Board from December 2007 until June 2009 and as interim CEO from January 2008 until August 2008. Mr. Hale has served as Chairman and CEO of Hale BioPharma Ventures since its inception in August 2005.

Mr. Hale served as President and CEO of CancerVax Corporation from October 2000 until it merged with Micromet AG in 2006. He currently serves as Chairman of Micromet’s board of directors. Prior to joining CancerVax, he was President and Chief Executive
Officer of Women First HealthCare, Inc. Mr. Hale also previously served as President, Chief Executive Officer and Chairman of Gensia Inc., which became Gensia Sicor.

Prior to joining Gensia, Mr. Hale was President and CEO of Hybritech Inc. He serves as Chairman of the Board of Santarus, Inc., and Metabasis Therapeutics, Inc. He also serves on the board of directors of privately held SkinMedica, Inc., Neurelis, Inc., Conatus Pharmaceuticals, Inc. and Elevation Pharmaceuticals, Inc. Mr. Hale is a co-founder and a member of the boards of directors of industry organizations including BIOCOM/ San Diego and CONNECT, and is a member of the board of directors of the Biotechnology Industry Organization, Rady Children’s Hospital and Health Center, and the Burnham Institute for Medical Research. Mr. Hale received a B.A. degree in biology and chemistry from Jacksonville State University.

Fredrick T. Muto

Frederick T. Muto is a partner in the Cooley Godward Kronish Business department, a member of the Firm’s Management Committee, and partner in charge of the San Diego office. He was a founding partner of the Firm’s San Diego office, which opened in 1992, and has been with the Firm since 1980. The Firm’s San Diego office was recently named the #1 firm in San Diego as ranked by area corporate board members, according to Corporate Board Member magazine.

Mr. Muto specializes in corporate and securities law with an emphasis on representing emerging and public technology and growth companies. He also has extensive experience representing venture capital investors and investment banking firms. He has represented companies and investment banks in well over 100 public offerings. Mr. Muto has managed a broad range of major business transactions for these entities, including private placements and public offerings; mergers, acquisitions and spinoffs; joint ventures and other strategic collaborations; and commercial transactions, such as bank credit lines, lease lines and off-balance sheet financings. He has been counsel to companies in the biotechnology, communications, consumer, hardware, healthcare, internet, medical device, retail, semiconductor and telecommunications industries. These companies range from start-ups to companies with billions of dollars in annual revenues.

Mr. Muto has received numerous accolades and recognition for his leadership. For 2010, he was named Corporate Lawyer of the Year in San Diego by Best Lawyers. In 2007, he was listed by Lawdragon as one of 500 dealmakers in America. He was also named to the 2009, 2008 and 2007 Southern California Super Lawyers – San Diego list in the categories of The Top 10, The Top 50, and Securities & Corporate Finance. He has been selected as one of the “Transcript Top Ten” attorneys in San Diego and was named one of “San Diego’s Top 120 Influentials” by the San Diego Daily Transcript. He has been listed for many years in “The Best Lawyers in America.” He was named by San Diego Magazine as one of the “Best Lawyers in San Diego.” Mr. Muto has also been recognized as a leading lawyer in the Chambers USA: America’s Leading Lawyers for Business in the category of Corporate/M&A for a number of years. He was named by Nature magazine as one of 25 individuals – and one of two attorneys- instrumental to the success of San Diego as a high technology and biotechnology hub.

Mr. Muto attended Harvard Law School and the University of California, Berkeley School of Law (Boalt Hall), where he received a J.D. in 1979 and was a member of the California Law Review from 1977 to 1979. He was a New York State Regents Scholarship recipient and was awarded a B.A. in Political Science from the State University of New York, Buffalo in 1975, where he was a member of Phi Beta Kappa.