Silicon Valley Venture Capital Survey Reveals Solid Valuations in First Quarter of 2012

Strength Primarily in Software and Internet/Digital Media Industries

Some Moderating of Valuations Seen, Especially in Later Stage Financings

Mountain View, CA (May 24, 2012) – Fenwick & West LLP, one of the nation's premier law firms providing comprehensive legal services to high technology and life science clients, today announced the results of its First Quarter 2012 Silicon Valley Venture Capital Survey.

The survey analyzed the valuations and terms of venture financings for 114 technology and life science companies headquartered in the Silicon Valley that reported raising capital in the first quarter of 2012.

"During the first quarter of 2012, up rounds exceeded down rounds 65% to 22%, with 13% flat. This was a mild decrease from the fourth quarter of 2011, when up rounds exceeded down rounds 70% to 16%, with 14% flat, but still a strong quarter for valuations. This was the eleventh consecutive quarter in which up rounds exceeded down rounds," said Barry Kramer, partner in the Corporate Group of Fenwick & West 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 52% average price increase for the quarter, a decrease from the 85% reported in the fourth quarter of 2011.

"Although the Barometer declined in the quarter, it is still at a very healthy level," said Kramer. "The primary reason for the decline was that in the fourth quarter of 2011, eleven companies had price increases of over 200%, a very substantial amount, while in the first quarter of 2012, only two companies did. Additionally, we did see some weakness in late stage financing valuations in this quarter, with 37% of Series E and higher rounds being down rounds, and the Barometer for those financings reporting only a 12% increase."

"The best performing industries in the quarter from a valuation perspective were internet/digital media and software (including a significant number of "software as a service" companies and companies building applications for mobile devices), which substantially outpaced the other industries, followed by cleantech, while the hardware and life science industries continued to lag," added Michael Patrick, partner in the Corporate Group of Fenwick & West and co-author of the survey.

"The first quarter of 2012 was a mixed quarter for the venture capital industry, with venture valuations healthy but venture investment down, M&A valuations up but the number of deals down, venture fundraising mixed but corporate venture investing up, and IPOs and Nasdaq up, but Nasdaq down in the second quarter to date and global financial uncertainty continuing to be a problem," added Patrick.

Complete results of the survey with related discussion 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™ 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 J. Kramer
Fenwick & West LLP
Phone: 650.335.7278

Michael Patrick
Fenwick & West LLP
Phone: 650.335.7273

Merredith Branscombe
Le@p! Public Relations
Phone: 720.235.7363