May 24, 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 First Quarter 2007 Silicon Valley Venture Capital Survey.
The survey analyzed the valuations and terms of venture financings for 117 technology and life science companies headquartered in the Silicon Valley/San Francisco Bay Area that reported raising capital during the quarter.
The Fenwick & West Venture Capital Barometer™—which measures the change in share price of Silicon Valley companies funded during the quarter compared with the share price of their previous financing round—was up 75%.
"This is the largest increase we have seen since Fenwick & West started the survey in early 2002," said Barry Kramer, partner in the firm and co-author of the survey. "The increase was driven in significant part by eleven first quarter 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 eleven financings, most were in Web 2.0 and related fields."
"First quarter survey results show continuation of the strong positive trend in venture valuations witnessed over the past three years," he said. "Up rounds exceeded down rounds for the thirteenth quarter in a row and outpaced down rounds 79% to 9%, with 12% flat. This was the largest ratio of up rounds to down rounds since the survey began."
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, "The non-price terms of financings in the first quarter were also very company favorable, with the use of senior liquidation preference and participating liquidation preference at their lowest levels since the survey began."
Patrick also said that, according to Dow Jones/VentureSource, the amount invested by venture capitalists in the U.S. during the first quarter of 2007 was approximately $7 billion—the second highest amount since the fourth quarter of 2001—and that venture investment in healthcare hit $2.9 billion, the highest investment level on record for that industry.
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 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.
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)