Fenwick & West's Silicon Valley Venture Capital Survey – Reveals Significant Decline in Valuations in First Quarter of 2009

May 27, 2009 (Mountain View and San Francisco, CA) – Fenwick & West LLP, one of the nation's premier law firms providing comprehensive legal services to high technology and life science clients, today announced results of its First Quarter 2009 Silicon Valley Venture Capital Survey.

The survey analyzed the valuations and terms of venture financings for 90 technology and life science companies headquartered in the greater Silicon Valley/San Francisco Bay Area which reported raising capital in the first quarter of 2009.

"During the first quarter, down rounds exceeded up rounds 46% to 25% with 29% flat. This was the first time since the fourth quarter of 2003 that down rounds exceeded up rounds, and the largest amount by which down rounds exceeded up rounds since the first quarter of 2003," said Barry Kramer, partner in the firm 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 3% average price decrease for the quarter.

"This represents a significant decline from the 25% average price increase reported in the previous quarter and the lowest quarterly result since we began reporting the Barometer in the first quarter of 2004," said Kramer.

"When this information is combined with information from Dow Jones VentureSource and others that investments by venture funds in start up companies, fund raising by venture funds, and venture related merger and acquisition activity were all significantly down in the first quarter, and that there were no IPOs, the first quarter of 2009 appears to be one of the least favorable on record," said Michael Patrick, survey co-author and also a partner in the firm.

"However, there are rays of hope, as valuations actually improved somewhat during the course of the first quarter, Nasdaq is up over 10% in the second quarter to date, and we have already had two IPOs of venture backed companies in the second quarter," said Patrick.

Complete results of the survey with related discussion are posted on Fenwick & West's website.

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 the Silicon Valley/San Francisco Bay Area by providing insight into the changes in venture capital valuations and terms. Focusing exclusively on trends in venture financing and valuations, the Fenwick & West Surveys complement the economic data presented in the Dow Jones VentureSource Survey and the MoneyTree™ Survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.

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 J. Patrick
Fenwick & West LLP
Phone: 650.335.7273

Merredith Branscombe
The Hoffman Agency (for Fenwick & West LLP)
Phone: 303.327.5478