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Fenwick & West’s Silicon Valley Venture Capital Survey Shows Strong Valuation Increases in Third Quarter of 2014, But Not as Strong as the Second Quarter of 2014

Mountain View, Calif. (November 12, 2014) – Fenwick & West today announced the results of its Third Quarter 2014 Silicon Valley Venture Capital Survey.

The survey analyzed the valuations and terms of venture financings for 180 technology and life science companies headquartered in the Silicon Valley that raised capital in the third quarter of 2014.

“During the third quarter of 2014, up rounds exceeded down rounds 76% to 12%, with 12% flat.  This was less strong than the record setting second quarter of 2014, when up rounds exceeded down rounds 80% to 6%, with 14% flat, but was still very healthy,” 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 percentage change in share price of companies funded during the quarter compared with the share price of their previous financing round – showed a 79% average price increase for the quarter, a decline from the all time high of 113% reported in the second quarter of 2014, but still strong.  The median price increase of those financings was 43%, also a decrease from the 75% recorded in the second quarter, but still solid. 

“The best performing industries in the quarter from a valuation perspective were software (which had 50% of the deals), internet/digital media and hardware, all of which had over 80% up rounds, while life sciences, with only 47% up rounds, and cleantech, which had no up rounds in the three deals reported, lagged,” added Michael Patrick, also a partner in the Corporate Group of Fenwick & West and co-author of the survey. 

“At the big picture level, the third quarter of 2014 was one of the strongest quarters in the past decade, but not as strong as the record breaking second quarter of 2014, with venture investment, IPOs and fundraising all declining in the third quarter compared to the second quarter.”

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. ​​