Fenwick & West's Silicon Valley Venture Capital Survey Reveals Continuation of Strong Positive Trend in Venture Valuations

August 22, 2006 (Mountain View, CA) – Fenwick & West LLP, one of the nation's premier law firms providing comprehensive legal services to high technology and life science clients, today announced results of its Second Quarter 2006 Silicon Valley Venture Capital Survey.

The survey analyzed the valuations and terms of venture financings for 90 technology and life science companies headquartered in the Silicon Valley/San Francisco Bay Area that reported raising capital during the second quarter of 2006.

"The results showed a continuation of a strong positive trend in venture valuations," said Barry Kramer, partner in the firm and co-author of the survey, "although the amount of increase in valuations was less than some recent quarters."

The quarterly survey disclosed that up rounds exceeded down rounds for the tenth consecutive quarter. "Up rounds outpaced down rounds 69% to 25%, with 6% flat," said Kramer. "This is somewhat less than the prior quarter when up rounds outpaced down rounds 74% to 15%, with 11% flat, but still a strong performance."

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. Conversely, a down round is one in which the price per share has declined since a company's prior financing round.

The Fenwick & West Venture Capital Barometer—which measures the change in share price of Silicon Valley companies funded during the quarter compared with the share price of their previous financing round—was up 34% for the quarter. "This was a significant increase," said Kramer, "although it was less than the increase we had seen in the prior four quarters."

Michael Patrick, also a partner in the firm and survey co-author, said, "As reported by Dow Jones/VentureSource, aggregate venture investment in the U.S. during the quarter was $6.7 billion, an increase over $6.4 billion in the second quarter of 2005 and $6.2 billion in the first quarter of 2006. The combined total of $12.9 billion for the first half of 2006 puts the industry on pace for its largest investing year since 2001."

Complete survey results are posted on Fenwick & West's website at

About the Survey

The Fenwick & West Quarterly Venture Capital Survey, co-authored by law firm partners Barry J. Kramer and Michael J. Patrick, offers a unique view of the venture capital market in Silicon Valley by providing insight into the changes in venture capital valuations and terms. Focusing exclusively on trends in venture financing and valuations, the Fenwick & West Survey complements the economic data presented in the Dow Jones/VentureSource Survey and the MoneyTree™ Survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.

About Fenwick & West

Established in 1972, Fenwick & West LLP is one of the nation's premier law firms with extensive expertise in 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.


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 LLP)
Phone: 650.631.0123