Fenwick & West Venture Capital Survey Reveals Improvement In Silicon Valley Valuations In Q4 2003

MOUNTAIN VIEW, Calif., February 5, 2004/Business Wire/ - Valuations improved noticeably in the fourth quarter of 2003, according to the Fenwick & West Venture Capital Survey.

"The number of up rounds increased to the highest levels we have seen since we began the survey in the first quarter of 2002," said Barry J. Kramer, co-author of the survey. "Overall, the number of up rounds was slightly exceeded by the number of down rounds. Forty two percent of Silicon Valley venture financing rounds were up rounds in 4Q03 and 45 percent were down rounds. In the prior quarter, 35 percent were up rounds and 53 percent were down rounds."

"The change was most pronounced in series B and C rounds where only 33 percent of the financings were down rounds," said Kramer. "When combined with the significant increase in the amount of venture capital investment during the quarter, we have clear indications that the venture environment is improving."

An ‘up’ round is one in which the price per share at which a company sells its stock has increased since its prior financing round. Up rounds represent greater investor confidence, enhanced enterprise viability and reduced equity dilution for company management and early stage investors.

Fenwick & West LLP analyzed the terms of venture financings for 107 technology companies headquartered in the Silicon Valley/San Francisco Bay Area that reported raising capital in the fourth quarter of 2003. The Survey, which focuses on trends in venture financing terms, complements economic data presented in the Ernst & Young/Venture One U.S. Venture Capital Survey and the PricewaterhouseCoopers/ Thomson Venture Economics/National Venture Capital Association MoneyTree™ Survey.

"While there are likely a number of reasons for the improvement," said Michael J. Patrick, survey co-author, "the continued increase in the Nasdaq average, which increased 9 percent in the fourth quarter and 44 percent for all of 2003, is likely a significant factor by facilitating liquidity exits and generally improving industry and investor confidence."

The full results of the latest Fenwick & West Survey will be presented at a special meeting of Silicon Valley’s VC Task Force on February 17, 2004 at the offices of Fenwick & West.

Complete survey results also will be posted on the Fenwick & West website on February 17, 2004. Please visit for access to the full results.

About the Fenwick & West Survey

The Fenwick & West Venture Capital Survey, co-authored by Barry J. Kramer and Michael J. Patrick, offers a unique view of the venture capital market in the Silicon Valley/San Francisco Bay Area by providing insight into the changes in venture capital terms. About Fenwick & West Established in 1972, Fenwick & West LLP is one of the nation’s premier law firms providing comprehensive legal services to national and international high technology and life science clients, particularly in the areas of venture capital, public offerings and other corporate finance, joint ventures, M&A and strategic relationships, intellectual property, litigation and dispute resolution, taxation, antitrust and employment and labor law. The only law firm included in Fortune’s 1999-2002 lists of the "100 Best Companies to Work For," Fenwick & West has offices in Mountain View and San Francisco, California. Fenwick & West’s website is found at


Barry J. Kramer
Fenwick & West LLP
Phone: 650.335.7278

Michael J. Patrick
Fenwick & West LLP
Phone: 650.335.7273

Richard Wood
Sand Hill Partners for Fenwick & West
Phone: 650.631.0123