Fenwick & West's Silicon Valley Venture Capital Survey – Reveals Decline in Valuations in Second Quarter of 2009

August 10, 2009 (Mountain View and San Francisco, CA) – Fenwick & West LLP, one of the nation's premier law firms providing comprehensive legal services to technology and life science companies, today announced results of its Second Quarter 2009 Silicon Valley Venture Capital Survey.

The survey analyzed the valuations and terms of venture financings for 89 technology and life science companies headquartered in the greater Silicon Valley/San Francisco Bay Area which reported raising capital in the second quarter of 2009.

"During the second quarter, down rounds exceeded up rounds 46% to 32% with 22% flat. This was slightly better than the first quarter of 2009, when down rounds exceeded up rounds 46% to 25%, with 29% flat, but overall the first and second quarters of this year are the only quarters since the fourth quarter of 2003 that down rounds exceeded up rounds," said Barry Kramer, a partner in the firm and co-author of the survey.

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—showed a 6% average price decrease for the quarter.

"This represents a slight decline from the 3% average price decrease reported in the previous quarter, and the lowest quarterly result since we began reporting the Barometer in the first quarter of 2004," said Kramer.

"The venture financing environment continues to be very difficult," said Michael Patrick, survey co-author and also a partner in the firm.

"However, with industry publications reporting an increase in the amount of venture investment in the second quarter, and with the significant gains made by Nasdaq over the past few months, there is reason to believe that the environment may begin to improve," said Patrick.

Complete results of the survey with related discussion are posted on Fenwick & West's website.

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 the Silicon Valley/San Francisco Bay Area by providing insight into the changes in venture capital valuations and terms. Focusing exclusively on trends in venture financing and valuations, the Fenwick & West Surveys complement 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

Michael J. Patrick
Fenwick & West LLP

Merredith Branscombe
The Hoffman Agency