Mountain View, Calif. (August 11, 2014) – Fenwick & West today announced the results of its Second Quarter 2014 Silicon Valley Venture Capital Survey.
The survey analyzed the valuations and terms of venture financings for 174 technology and life science companies headquartered in the Silicon Valley that raised capital in the second quarter of 2014.
“During the second quarter of 2014, up rounds exceeded down rounds 80 percent to 6 percent, with 14 percent flat. This was the largest difference between up rounds and down rounds (74 points) since we began the survey in 2002,” said Barry Kramer, a partner in Fenwick's corporate group 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 percentage change in share price of companies funded during the quarter compared with the share price of their previous financing round – showed a 113 percent average price increase for the quarter, a significant increase from the (also substantial) 85 percent reported in the first quarter of 2014, and the largest increase since we began calculating the Barometer in 2004. The median price increase of those financings was 75 percent, another significant increase from the 52 percent recorded in the first quarter, and the largest increase since we began calculating medians in 2010.
“The best performing industries in the quarter from a valuation perspective were Internet/digital media, software and hardware, which had median price increases of 99 percent, 94 percent and 78 percent, respectively, while life sciences and cleantech had median increases of 30 percent and 3 percent, respectively, in the second quarter,” said Michael Patrick, also a partner in Fenwick's corporate group and co-author of the survey.
“At the big picture level, it was a very strong quarter for the venture environment, with venture investment hitting the highest level since the first quarter of 2001, and IPOs and venture fundraising on track for the best years since 2000,” added Patrick. “That said, these amounts are substantially below the dot-com bubble years, and it seems like it is a more select group of companies that are receiving the high valuations and capital infusions that we are currently seeing.”
Complete results of the survey with related discussion are posted on Fenwick & West’s website at www.fenwick.com/vcsurvey.
About the Survey
The Fenwick & West Quarterly Venture Capital Survey, co-authored by law firm partners Barry J. Kramer and Michael J. Patrick, has been published for over 12 years and 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 on trends in venture financing and valuations, the Fenwick & West Survey complements the economic data presented by Dow Jones VentureSource, the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters, and CB Insights.
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.