Increase in Valuations is Largest Since Survey Began
January 8, 2008 (Mountain View and San Francisco, CA) – /Business Wire/ - Fenwick & West LLP, one of the nation's premier law firms providing comprehensive legal services to technology and life science clients, today announced results of its Third Quarter 2007 San Francisco Bay Area Venture Capital Survey.
The survey analyzed the valuations and terms of venture financings for 104 technology and life science companies headquartered in the greater Silicon Valley/San Francisco Bay Area which reported raising capital in the third quarter of 2007.
"The Fenwick & West Venture Capital Barometer™ registered a 79% average price increase for companies receiving venture capital during the quarter compared with the share price of their previous financing round," said Barry Kramer, partner in the firm and co-author of the survey. "This is the largest increase that we have seen since the survey began."
The notable increase, he said, was driven in part by nine financings in which the purchase price of the stock sold in the financing was at least three times higher than the prior round. Three of those financings were in Web 2.0 and related fields and three were in clean tech.
Michael Patrick, survey co-author and partner in the firm, pointed out that up rounds also exceeded down rounds for the 15th consecutive quarter.
"Up rounds exceeded down rounds 79% to 14%, with 7% flat," said Patrick, "further underlying the continuation of the strong positive trend in Bay Area venture valuations."
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.
As reported by Dow Jones VentureSource, aggregate venture investment in the U.S. during the quarter was $8.1 billion in 635 transactions, compared to $7.5 billion in 727 transactions in the second quarter of 2007.
"This was the highest amount of venture investment since the first quarter of 2001," said Patrick.
Venture investment in health care continued to be robust, accounting for $2.5 billion of total investment during the quarter, according to VentureSource. Health care companies raised $7.9 billion in 2007 through the third quarter, of which $2.9 billion was in medical device companies.
"The amount raised by medical device companies year-to-date 2007 is more than this industry segment has raised in any prior full year," said Kramer.
Complete survey results are posted on Fenwick & West's Web site at http://fenwick.com/publications/6.12.1.asp?vid=4.
The Fenwick & West Quarterly Venture Capital Survey, launched by firm partners Barry J. Kramer and Michael J. Patrick in 2002, 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 Dow Jones VentureSource 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)