Silicon Valley Venture Capital Survey – Fourth Quarter 2018

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We analyzed the terms of 234 venture financings closed in the fourth quarter of 2018 by companies headquartered in Silicon Valley. We found that valuation results are at three-year highs, with the software industry recording the strongest valuations. Our data also show a steep decline in the use of multiple liquidation preferences.

Key Findings

Valuation Results Hit Multiple-Year Highs

Valuation results in the fourth quarter of 2018 improved upon the already strong levels recorded in the prior quarters of the year and are at three-year highs.

  • Up rounds exceeded down rounds 81% to 8%, with 11% flat in Q4 2018, an increase from Q3, when up rounds exceeded down rounds 78% to 9%, with 13% flat.
  • The Fenwick & West Venture Capital Barometer™ showed an average price increase in Q4 2018 of 85%, up from the 71% recorded in the prior quarter, and the highest average price increase since Q3 2015.
  • The median price increase of financings in Q4 2018 was 52%, an increase from the 42% recorded in Q3, and the highest median price increase since Q2 2015.

All Financing Series on the Rise

  • Stronger valuation results compared to the prior quarter were recorded across each series of financing.

Software Industry Scores Strongest Valuations

  • The software industry recorded the strongest valuation results in Q4 2018, with an average price increase of 118% and a median price increase of 58%, both significantly higher compared to the prior quarter.
  • The internet/digital media industry recorded the next strongest valuation results in the quarter with an average price increase of 68% and a median price increase of 56% in Q4.
  • In contrast, the life sciences and hardware industries recorded weaker valuation results in Q4 compared to the prior quarter.

Use of Multiple Liquidation Preferences Plummets

  • The use of multiple liquidation preferences declined sharply in Q4 2018.

Download the full report covering top-line trends for venture capital financings of Silicon Valley companies in Q4.

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