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Fenwick & West’s Silicon Valley Venture Capital Survey Reveals Continued Strong Valuations in Fourth Quarter of 2013

​Mountain View, CA (February 19, 2014) – Fenwick & West, 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 Fourth Quarter 2013 Silicon Valley Venture Capital Survey.

The survey analyzed the valuations and terms of venture financings for 124 technology and life science companies headquartered in the Silicon Valley that raised capital in the fourth quarter of 2013.

“During the fourth quarter of 2013, up rounds exceeded down rounds 71% to 16%, with 13% flat. This was slightly less strong than the third quarter of 2013, when up rounds exceeded down rounds 73% to 8%, with 19% flat, but still a very healthy quarter,” said survey co-author Barry Kramer, a partner in Fenwick's corporate group.

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 57% average price increase for the quarter, a mild decrease from the 65% reported in the third quarter of 2013. The median price increase of those financings was 27%, a decrease from the very strong 43% recorded in the third quarter, but healthy nonetheless.

An intriguing aspect of the fourth quarter results was the increase in life science financings to 24.5% of the total, the highest amount since the second quarter of 2011. As life science valuations were generally not as strong as other industries, this was a major factor in the slightly reduced valuation increase we saw this quarter.

“The best performing industries in the quarter from a valuation perspective were internet/digital media and software, which had median price increases of 50% and 36%, respectively, compared to 54% and 46% in the third quarter of 2013, while hardware and life sciences increased 20% and 12% respectively in the fourth quarter,” added Fenwick corporate partner and survey co-author Michael Patrick.

“At the big picture level, it was a solid quarter for the venture environment, with venture investment, IPOs and fundraising in the fourth quarter all showing good results,” added Patrick.

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 11 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 exclusively on trends in venture financing and valuations, the Fenwick & West Survey complements the economic data presented by Dow Jones VentureSource and the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

About Fenwick & West
Fenwick & West provides comprehensive legal services to ground-breaking technology and life sciences companies at every stage of their lifecycle. We craft innovative, cost-effective and practical solutions for established and emerging companies on issues ranging from venture capital, public offerings, joint ventures, M&A and strategic relationships, to intellectual property, litigation and dispute resolution, taxation, antitrust, and employment and labor law. For more than four decades, Fenwick has helped some of the world's most recognized companies become and remain market leaders.