Fenwick & West's Silicon Valley Venture Capital Survey Reveals 74% Increase in Valuations in the 2nd Quarter of 2007

September 10, 2007 (Mountain View and San Francisco, CA) – 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 Second Quarter 2007 San Francisco Bay Area Venture Capital Survey.

The survey analyzed the valuations and terms of venture financings for 126 technology and life science companies headquartered in the Silicon Valley/San Francisco Bay Area that reported raising capital during the second quarter of 2007.

"Our findings show a continuation of the strong positive trend in Bay Area venture valuations," said Barry Kramer, partner in the firm and co-author of the survey.

The Fenwick & West Venture Capital Barometer™—which measures the change in share price of Bay Area companies funded during the quarter compared with the share price of their previous financing round—showed a 74% average price increase during the quarter.

"This was the second largest increase since the survey began," said Kramer, "exceeded only by a 75% increase in the first quarter of this year."

"The increase," he said, "was driven in part by 12 financings in which the purchase price of the stock sold in the financing was at least three times higher than the prior round. Of these financings, seven were in Web 2.0 and related fields."

The quarterly survey also disclosed that up rounds exceeded down rounds for the 14th consecutive quarter. "Up rounds exceeded down rounds 81% to 11%, with 8% flat," said Kramer. "The ratio of up rounds to down rounds was tied with the first quarter of 2007 for the highest ratio since we began 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.

Michael Patrick, also a partner in the firm and survey co-author, said, "As reported by Dow Jones VentureSource, aggregate venture investment in the U.S. during the quarter was $7.4 billion in 717 transactions, compared to $7 billion in 584 transactions in the first quarter of 2007. This was the highest amount of venture investment since the fourth quarter of 2001."

Further citing VentureSource, Patrick added, "Venture investment in health care continued to be especially strong. There was $2.4 billion in total health care investment, of which $1 billion went to medical device companies, the highest total on record for that segment of the health care industry."

Complete survey results are posted on Fenwick & West's website.

About the Survey

The Fenwick & West Quarterly Venture Capital Survey, launched by law firm partners Barry J. Kramer and Michael J. Patrick in 2002, 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 in the Dow Jones VentureSource Survey and the MoneyTree™ Survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.

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.


Barry J. Kramer
Fenwick & West LLP
Phone: 650.335.7278

Michael J. Patrick
Fenwick & West LLP
Phone: 650.335.7273

Richard Wood
Sand Hill Partners (for Fenwick & West LLP)
Phone: 650.631.0123