MOUNTAIN VIEW, Calif., August 29, 2005 (Business Wire) – 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 Second Quarter 2005 Silicon Valley Venture Capital Survey.
The survey analyzed the valuations and terms of venture financings for 92 technology and life science companies headquartered in the Silicon Valley/San Francisco Bay Area that reported raising capital during the second quarter of 2005.
"The results indicate a continuation of positive trends in the venture environment," said Barry Kramer, partner in the firm and co-author of the survey.
"Up rounds outpaced down rounds 65% to 31% – better than a two-to-one margin," said Kramer. "It was the sixth consecutive quarter where up rounds outpaced down rounds."
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.
Additionally, the results showed that Fenwick & West's Venture Capital Barometer™—the measurement of change in share price of companies funded during the quarter compared with their previous financing round—was up significantly.
"The 41% increase in the Barometer in the second quarter was the largest we have seen to date," said Kramer.
Michael Patrick, also a partner in the firm and survey co-author, added, "Although these are very positive indications, there is some reason for caution as second quarter liquidity indicators were more mixed."
"For example," he said, "as reported by industry publications, both the aggregate dollar volume of acquisitions of U.S. venture backed companies and the number of transactions declined from the first quarter. And while the aggregate dollar volume remained historically high at $6.8 billion," he said, "the number of transactions, at 77, was the lowest in two years."
"Additionally, there were only five venture backed IPOs in the second quarter, only one of which was from the IT industry," said Patrick. "Nevertheless, with the Nasdaq composite index up 3.6% during the quarter, there is reason to believe that the IPO market may improve," he added.
Complete survey results are posted on Fenwick & West's website at www.fenwick.com/vctrends.htm.
Survey highlights are also published on SiliconValley.com, Knight Ridder Digital's technology news website, in conjunction with the San Jose Mercury News' Quarterly Venture Capital Report.
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 Survey complements the economic data presented in the Ernst & Young/Venture One U.S. Venture Capital Survey and the MoneyTree™ Survey by PricewaterhouseCoopers, Thomson Venture Economics, and the National Venture Capital Association.
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
Michael J. Patrick
Fenwick & West LLP
Sand Hill Partners (for Fenwick & West LLP)