Silicon Valley Venture Capital Survey Reveals that Financings in the Second Quarter of 2012 had the Largest Valuation Increases in more than Five Years

Strength Focused in Software and Internet/Digital Media Industries

Mountain View, CA(August 23, 2012)– Fenwick & West announced the results of its Second Quarter 2012 Silicon Valley Venture Capital Survey.

The survey analyzed the valuations and terms of venture financings for 115 technology and life science companies headquartered in the Silicon Valley that raised capital in the second quarter of 2012.

“During the second quarter of 2012, up rounds exceeded down rounds 74% to 11%, with 15% flat. This was an increase from the first quarter of 2012, when up rounds exceeded down rounds 65% to 22%, with 13% flat, and the strongest performance since the third quarter of 2007. This was also the twelfth 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 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 99% average price increase for the quarter, an increase from the 52% reported in the first quarter of 2012, and the highest amount since the firm began calculating the Barometer in 2004.

“The Barometer results were very strong this quarter,” said Kramer. “Two financings that had over 10x increases in valuation played a significant role, but even excluding those two financings the Barometer would have still been up a very healthy 70%. Series B financings were especially strong, but we also note that the percentage of financings that were Series B financings have declined for three straight quarters, perhaps indicating that a significant filtering of Series A financed companies is occurring at the time of Series B fundraising:”

“The best performing industries in the quarter from a valuation perspective continued to be internet/digital media and software, which substantially outpaced other industries, followed by hardware, while the cleantech and life science industries lagged,” added Michael Patrick, partner in the Corporate Group of Fenwick & West and co-author of the survey.

“The overall results from the second quarter of 2012 shows a venture industry that has mostly recovered from the 2008 financial industry meltdown, with venture investment levels, acquisitions and IPOs all in a similar range to where they were in 2007, but fundraising by venture capitalists still significantly lags 2007 levels. And, venture capital continues to be a tale of two cities, where the internet/digital media and software industries dominate other industries, and venture capitalists with proven track records can raise large funds but fundraising for others is much more problematic,” 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 MoneyTreeTMReport 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