August 17, 2011 (Mountain View, 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 the results of its Second Quarter 2011 Silicon Valley Venture Capital Survey.
The Second Quarter 2011 survey analyzed the valuations and terms of venture financings for 117 technology and life science companies headquartered in the Silicon Valley that reported raising capital in the second quarter of 2011.
"During the second quarter of 2011, up rounds exceeded down rounds 61% to 25% with 14% flat. Although this was a slight decline from the first quarter of 2011, when up rounds exceeded down rounds 67% to 16%, with 17% flat, it was still a strong performance and the eighth consecutive quarter in which up rounds exceeded doFcwn 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 71% average price increase for the quarter, higher than the 52% reported in the first quarter of 2011, and the best Barometer result since 2007.
"This was also the eighth consecutive quarter in which the Venture Capital Barometer was positive," said Kramer.
"The best performing industries in the quarter from a valuation perspective were software (including a significant number of "software as a service" companies and companies building applications for mobile devices) and Internet/Digital Media, which substantially outpaced the other industries, followed by hardware and cleantech, while the life science industry continued to lag," added Michael Patrick, partner in the Corporate Group of Fenwick & West and co-author of the survey.
"The second quarter of 2011 was generally a healthy quarter for the venture capital industry, with improved valuations, increased investing, an improving IPO market and reasonable fund raising by venture funds. However, 3Q11 has started off very turbulently, with a falling Nasdaq, financial market volatility and reports of IPOs being postponed," added Patrick. The effect of all this on the venture environment bears watching."
Complete results of the survey with related discussion are posted on Fenwick & West's website at www.fenwick.com/vctrends.
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.
Established in 1972, Fenwick & West LLP is one of the nations 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
Fenwick & West LLP
Le@p! Public Relations