Fenwick & West's Silicon Valley Venture Capital Survey Reveals Continued Strong Increase in Valuations in 3rd Quarter of 2006

November 16, 2006 (Mountain View, CA) - Fenwick & West LLP, one of the nation's premier law firms providing comprehensive legal services to technology and life sciences clients, today announced results of its Third Quarter 2006 Silicon Valley Venture Capital Survey.

The survey analyzed the valuations and terms of venture financings for 120 technology and life science companies headquartered in the Silicon Valley/San Francisco Bay Area that reported raising capital during the third quarter of 2006.

"The results showed a continuation of the strong positive trend in venture valuations," said Barry Kramer, partner in the firm and co-author of the survey.

"Up rounds exceeded down rounds for the eleventh consecutive quarter," said Kramer. "During the quarter, up rounds outpaced down rounds 67% to 24%, with 9% of the rounds remaining flat."

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.

Fenwick & West's 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 49% for the quarter.

"This compares to 34% in the second quarter of 2006, 64% in the first quarter, and 45% in the fourth quarter of 2005 – forming a very positive trend line," said Kramer.

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 $6.4 billion, which is a similar amount to the previous two quarters. If current trends continue through the remainder of the year, 2006 is on track to have the largest amount of venture investing in the U.S. since 2001."

"This increased volume of venture investment," he said, "combined with the improved valuations we are seeing, is making for a robust venture financing environment."

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

About the Survey

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.

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