Fenwick Silicon Valley Venture Capital Survey Reveals Continued Strong Valuations in Fourth Quarter of 2012 – Software Industry Leads

Mountain View, CA (February 19, 2013) – Fenwick & West announced the results of its Fourth Quarter 2012 Silicon Valley Venture Capital Survey today. The survey analyzed the valuations and terms of venture financings for 116 technology and life science companies headquartered in the Silicon Valley that raised capital in the fourth quarter of 2012.

“During the fourth quarter of 2012, up rounds exceeded down rounds 71% to 8%, with 21% flat. This was an increase over the third quarter of 2012, when up rounds exceeded down rounds 61% to 17%, with 22% flat. This was the fourteenth 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 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 an 85% average price increase for the quarter, a slight increase from the 78% reported in the third quarter of 2012. The median price increase of these financings was 41%, also an increase from the 23% recorded in the third quarter.

“The Barometer results were very strong this quarter,” said Kramer. “The increase in the Barometer was not due to a few financings with significant valuation increases, but reflected strength across the board.”

“Series B rounds continued to be the strongest rounds, and with Series A financings being more difficult to obtain, we are seeing that those companies that are able to raise Series A financings can often receive very healthy valuations in their Series B round,” Kramer added.

“The best performing industry in the quarter from a valuation perspective was software, but internet/digital media, hardware and even life sciences did well, with only cleantech performing poorly,” added Michael Patrick, a partner in Fenwick's corporate group and co-author of the survey.

“The overall results from the fourth quarter of 2012 show that good companies can continue to get very healthy valuations. But with venture investing down in both the fourth quarter and 2012 generally, raising venture capital is not easy. However with Nasdaq up in both 2012 and 2013 to date, there is reason to believe that risk taking and the liquidity markets will improve,” added Patrick.

Complete results of the survey with related discussion are posted on Fenwick & West’s website at www.fenwick.com/vcsurvey.

About the Survey
The Fenwick & West Quarterly Venture Capital Survey, co-authored by corporate partners Barry J. Kramer and Michael J. Patrick, has been published for over 10 years and 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™ 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 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 Kramer
Fenwick & West
Phone: 650.335.7278
Email: bkramer@fenwick.com

Michael Patrick
Fenwick & West
Phone: 650.335.7273
Email: mpatrick@fenwick.com

Merredith Branscombe
Leap! Public Relations
Phone: 720.235.7363
Email: merredith@leappr.com