Silicon Valley Venture Capital Survey Reveals Continued Improved Valuations in Fourth Quarter of 2011

Mountain View, CA (February 28, 2012) – Fenwick & West LLP, one of the nation's premier law firms providing comprehensive legal services to high technology and life science clients, today announced the results of its Fourth Quarter 2011 Silicon Valley Venture Capital Survey.

The Fourth Quarter 2011 survey analyzed the valuations and terms of venture financings for 117 technology and life science companies headquartered in the Silicon Valley that reported raising capital in the fourth quarter of 2011.

"During the fourth quarter of 2011, up rounds exceeded down rounds 70% to 16% with 14% flat. This was virtually identical with the third quarter of 2011, when up rounds exceeded down rounds 70% to 16%, with 14% flat, and the tenth consecutive quarter in which up rounds exceeded down rounds," said Barry Kramer, a partner in the firm and co-author of 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.

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 – showed an 85% average price increase for the quarter, up from 69% in the third quarter of 2010. This was also the tenth consecutive quarter in which the Venture Capital Barometer was positive.

"The largest increase in percentage valuations was seen in Series B financings, where a good number of companies funded by "micro-VCs" at the Series A level received very healthy valuation increases at the time of their Series B financing," said Kramer.

"The best performing industries in the quarter from a valuation perspective were software (including cloud, big data, and software as a service companies) and internet/digital media companies, with cleantech and life sciences lagging," added Michael Patrick, survey co-author and also a partner at the firm.

"However, as reported by third party sources, the fourth quarter saw a continuation of the trend that began in early 2009 of venture capitalists raising significantly less than was invested in venture-backed companies," noted Patrick. "This may have contributed to the reduction in venture investment seen in the fourth quarter of 2011, compared to the third quarter. However, fundraising by venture capitalists did tick up in the fourth quarter, as did IPOs and Nasdaq, and with that trend continuing in 1Q12 to date, there is reason to believe that fundraising, and the venture environment in general, may continue to improve."

Complete results of the survey with related discussion 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™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

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.