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Background

This survey is a special interim report to highlight changes in the Silicon Valley venture capital environment in light of the COVID-19 pandemic.

To facilitate analysis, we are providing information on a monthly basis, rather than the typical quarterly basis. We are also providing monthly data for the comparable period in 2019.

There were 230 venture financings in Silicon Valley in the first quarter of 2020 and 185 in the first quarter of 2019.

Key Findings

Reduction in Number of Financings, Decline in Financing Price Increases as Quarter Progressed

  • In January 2020 there were 126 venture financings in Silicon Valley—the largest number of venture financings in a single month in at least five years—before declining to 60 in February 2020 and to 44 in March 2020. By comparison, there were 61 venture financings in March 2019.
  • The increase in January may have been due to increased concern about the economy, partly due to the growing effect of COVID-19 in China, and a resulting desire to complete financings as soon as possible.
  • The decline in March financings probably reflects both some pulling forward of deals into earlier months as well as a slow down in new deals due to the pandemic and related economic uncertainty, offset in part by a desire in March to complete financings as quickly as possible to make sure existing companies were adequately capitalized for the uncertain times ahead.

Fenwick & West Venture Capital Barometer Shows Average Price Increase Declines from 117% in January 2020 to 46% in March 2020

  • The Fenwick & West Venture Capital Barometer showed that while the average price increase in January 2020 was 117%, it declined to 76% in February 2020 and declined further to 46% in March 2020. By comparison, the average price increase in March 2019 was 63%.
  • The Fenwick & West Venture Capital Barometer measures the per share price change in a company’s current financing compared to its prior round.

No Significant Change in Non-Price Terms in the First Quarter of 2020

  • During past significant economic downturns we have typically seen an increase in terms like senior/multiple liquidation preference, ratchet anti-dilution and pay-to-play provisions, but there was no significant change in non-price terms in Q1 2020. These terms will bear watching in the coming months.

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