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

February 16, 2010 (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 Fourth Quarter 2009 Silicon Valley Venture Capital Survey, as well as its 2009 Annual Venture Industry Survey.

Fourth Quarter 2009 Survey

The Fourth Quarter survey analyzed the valuations and terms of venture financings for 112 technology and life science companies headquartered in the Silicon Valley which reported raising capital in the fourth quarter of 2009.

"During the fourth quarter, up rounds exceeded down rounds 48% to 29% with 23% flat. This was an improvement over the third quarter, where up rounds exceeded down rounds 41% to 36%, with 23% flat, and the second consecutive quarter in which up rounds exceeded down rounds," said Barry Kramer, a partner in Fenwick's Corporate Group 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 BarometerTM 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 21% average price increase for the quarter.

"This was also the second consecutive quarter in which the Venture Capital Barometer was positive," said Kramer. "And while the amount of the increase was affected by one particular high value financing in the fourth quarter, even without that financing the Barometer would have been up 13%, an increase over the 11% reported in the third quarter of 2009."

2009 Annual Venture Industry Survey

The 2009 Annual Venture Industry Survey analyzed the valuations of venture financings for 335 technology and life science companies headquartered in Silicon Valley which raised capital in 2009.

"During 2009, down rounds slightly outpaced up rounds, 40% to 36%, with 24% flat, across all industries. This was a significant decline from 2008 when up rounds out outpaced down rounds, 66% to 20%, with 14% flat," said Michael Patrick, survey co-author and partner in Fenwick's Corporate Group.

"However, significant improvement was seen over the course of 2009, with down rounds exceeding up rounds 47% to 28%, with 25% flat, in the first half of 2009, and up rounds exceeding down rounds 44% to 33%, with 23% flat, in the second half of 2009," Patrick said.

"When analyzed by industry, the internet/digital media, software and life science segments generally performed better than the industry average, and the hardware and to a lesser extent cleantech segments generally performed worse," added Patrick.

"Overall, 2009 was a very difficult year for the venture environment," concluded Patrick. "However with valuations trending up in both the third and fourth quarters of 2009, and other industry data reporting that the volume of venture investment, and venture-backed liquidity transactions, increased in the fourth quarter of 2009, there is reason to believe that the venture environment is slowly improving."

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 MoneyTreeTM Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

About Fenwick & West

Established in 1972, Fenwick & West LLP is one of the nations 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

Merredith Branscombe
The Hoffman Agency
Phone: 303.327.5478