Tips for Mobile App Privacy Compliance
Safeguards against Data Security Breaches (Part Two)
Safeguards against Data Security Breaches (Part One)
For more than four decades, Fenwick & West has helped some of the world’s most recognized companies become, and remain, market leaders. From emerging enterprises to large public corporations, our clients are leaders in the technology, life sciences and cleantech sectors and are fundamentally changing the world through rapid innovation.
Fenwick & West was founded in 1972 in the heart of Silicon Valley—before “Silicon Valley” existed—by four visionary lawyers who left a top-tier New York law firm to pursue their shared belief that technology would revolutionize the business world and to pioneer the legal work for those technological innovations. In order to be most effective, they decided they needed to move to a location close to primary research and technology development. These four attorneys opened their first office in downtown Palo Alto, and Fenwick became one of the first technology law firms in the world.
From our founding in 1972, Fenwick has been committed to promoting diversity and inclusion both within our firm and throughout the legal profession. For almost four decades, the firm has actively promoted an open and inclusive work environment and committed significant resources towards improving our diversity efforts at every level.
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Background — We have analyzed the terms of venture financings for Israeli and Israeli-related technology companies that reported raising money during the first half of 2012. Our survey does not include financing rounds of less than US $500,000. The tables below also show, for purposes of comparison, the results of our previously released surveys.
Financing Round — The financings closed in H1 2012 and in the periods covered by our previous surveys may be broken down by types of round, or series, as follows:
| Series | H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
| A | 26% |
18% |
20% |
16% |
30% |
36% |
36% |
46% |
35% |
| B | 43% |
25% |
28% |
24% |
30% |
27% |
32% |
18% |
27% |
| C | 9% |
27% |
30% |
14% |
16% |
20% |
14% |
16% |
24% |
| D | 17% |
20% |
10% |
16% |
12% |
12% |
11% |
8% |
7% |
| E and higher | 5% |
10% |
12% |
30% |
12% |
5% |
7% |
12% |
7% |
Price Change — The financings closed in H1 2012 and in the periods covered by our previous surveys may be broken down by the directions of the change in price as compared to each company's respective previous round, as follows:
| Price Change | H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
| Down | 9% |
25% |
39% |
30% |
32% |
18% |
9% |
31% |
32% |
| Flat | 9% |
9% |
7% |
17% |
14% |
0% |
6% |
4% |
6% |
| Up | 82% |
66% |
54% |
53% |
54% |
82% |
85% |
65% |
62% |
The percentages of financing transactions that were down-rounds, broken down by series, were as follows:
| Series | H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
| B | 100% |
24% |
24% |
0% |
23% |
7% |
0% |
44% |
7% |
| C | 0% |
12% |
27% |
60% |
29% |
0% |
25% |
25% |
54% |
| D | 0% |
35% |
71% |
50% |
20% |
57% |
17% |
25% |
25% |
| E and higher | 0% |
30% |
67% |
36% |
60% |
33% |
0% |
17% |
50% |
Liquidation Preference — Senior liquidation preferences were used in the following percentages of financings:
| H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
77% |
77% |
69% |
81% |
83% |
75% |
75% |
63% |
72% |
The percentages of financing transactions with senior liquidation preference, broken down by series, were as follows:
| Series | H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
| B | 55% |
72% |
48% |
78% |
69% |
73% |
78% |
56% |
67% |
| C | 15% |
73% |
82% |
100% |
86% |
73% |
63% |
50% |
77% |
| D | 20% |
85% |
71% |
67% |
100% |
71% |
67% |
75% |
75% |
| E and higher | 10% |
80% |
89% |
82% |
100% |
100% |
100% |
83% |
75% |
Multiple Based Liquidation Preferences — The percentage of financing transactions with senior liquidation preferences that included multiple preferences was as follows:
| H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
5% |
16% |
8% |
32% |
10% |
7% |
22% |
6% |
4% |
Of the financings in which there were senior liquidation preferences based on multiples, the range of the multiples may be broken down as follows:
| Range of multiples | H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
| >1x – 2x | 100% |
70% |
100% |
75% |
100% |
100% |
83% |
100% |
100% |
| >2x – 3x | 0% |
20% |
0% |
13% |
0% |
0% |
17% |
0% |
0% |
| >3x | 0% |
10% |
0% |
12% |
0% |
0% |
0% |
0% |
0% |
Participation in Liquidation — The percentage of transactions, out of the total number of financing transactions, which included participation rights in liquidation were as follows:
| H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
60% |
77% |
72% |
84% |
88% |
86% |
82% |
84% |
89% |
Out of those financing transactions the terms of which provided for participation, the percentages of those in which no cap was placed on the investors' right to participation were as follows:
| H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
48% |
59% |
62% |
61% |
58% |
58% |
54% |
47% |
51% |
Cumulative Dividends and/or Accrued Interest as Part of the Liquidation Preference — Cumulative dividends and/or accrued interest constituted part of the liquidation preferences in the following percentages of financings:
| H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
34% |
48% |
45% |
38% |
58% |
64% |
63% |
58% |
56% |
Anti-dilution Provisions — The use of anti-dilution provisions in the financings which took place in H1 2012 and in the periods covered by our previous surveys may be broken down as follows:
| Type of Provision | H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
| Ratchet | 6% |
9% |
14% |
11% |
12% |
9% |
16% |
14% |
18% |
| Weighted Average | 83% |
85% |
81% |
89% |
88% |
91% |
82% |
78% |
82% |
| None | 11% |
6% |
5% |
0% |
0% |
0% |
2% |
8% |
0% |
Pay-to-Play Provisions — The use of pay-to-play provisions in the financings which took place in H1 2012 and in the periods covered by our previous surveys may be broken down as follows:
| H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
3% |
2% |
4% |
14% |
7% |
2% |
2% |
8% |
2% |
Redemption — The percentage of transactions in H1 2012 and the periods covered by our previous surveys, out of the total number of financings in each respective period, in which the terms provided for mandatory redemption or redemption at the option of the venture capitalist was as follows:
| H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
14% |
18% |
11% |
19% |
12% |
11% |
25% |
8% |
18% |
Corporate Reorganizations — The percentage of post-Series A financing transactions in H1 2012 and the periods covered by our previous surveys, out of the total number of financings in each respective period, which involved the conversion of senior securities into more junior securities was as follows:
| H1'12 | 2011 | 2010 | 2009 | H2'08 | H1'08 | H2'07 | H1'07 | H2'06 |
0% |
1% |
3% |
3% |
13% |
2% |
0% |
4% |
2% |
For additional information about this report please contact Lior Aviram – l.aviram@shibolet.com or Limor Peled – l.peled@shibolet.com, at Shibolet & Co., 972-3-7778333; or Barry Kramer at 650-335-7278; bkramer@fenwick.com or Michael Patrick at 650-335-7273; mpatrick@fenwick.com at Fenwick & West. To be placed on an email list for future editions of this survey please go to www.shibolet.com or our VC Survey sign up page.
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