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Silicon Valley Venture Capital Survey – Fourth Quarter 2019

Full Analysis
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Download the full analysis.

Background

We analyzed the terms of 188 venture financings closed in the fourth quarter of 2019 by companies headquartered in Silicon Valley. The quarter recorded the highest average and median price increases in the 16-year history of our survey.

Key Findings

Valuation Results Spike in Q4 2019

  • Up rounds exceeded down rounds 84% to 5%, with 11% flat in Q4 2019, an increase from Q3 2019 when up rounds exceeded down rounds 81% to 7%, with 12% flat.
  • The Fenwick & West Venture Capital Barometer™ showed an average price increase in Q4 2019 of 142% — an increase from the 88% recorded in the prior quarter — and the highest average price increase in a quarter since we began calculating valuation metrics in 2004.
  • The median price increase of financings rose sharply from 54% in Q3 2019 to 76% in Q4 2019. This was also the highest median price increase in a quarter since we began calculating valuation metrics in 2004.

Series D Financings Valuations Considerably Stronger

  • In a reversal of the prior two quarters, Series D financing rounds recorded considerably stronger valuation results compared to the prior quarter. Series B and E financing rounds were also stronger compared to the prior quarter.

Software and Internet/Digital Media Industries Continue Showing Strongest Valuations

  • The software and internet/digital media industries recorded the strongest valuation results in Q4, and the valuation results of both industries were markedly stronger compared to the prior quarter.
  • The hardware industry recorded more moderate improvements in valuation results compared to the prior quarter, while the valuation results for the life sciences industry in Q4 lagged those for the other industries.

Additional Findings

  • The percentage of financings in the quarter providing for redemption at the option of the investors increased to 11%, the highest percentage since Q3 2015.
  • The percentage of financings with cumulative dividends in the quarter was the lowest since Q4 2017.

Nationwide Trends

  • There were a record 213 mega-rounds (investments of at least $100 million) that closed in 2019, surpassing the previous record of 194 mega-rounds set just one year prior.
  • With the addition of 76 new unicorns in 2019, the U.S. unicorn count stands at a record 199 with an aggregate valuation of $634.7 billion as of the end of 2019.
  • Initial public offering activity in 2019 declined moderately from a four-year high in 2018; however, the aggregate amount raised in IPOs in 2019 was a record high and more than double the amount raised in 2018.
  • Other than the consumer goods industry, and to a lesser extent the energy and utilities and industrial goods and materials industries, most industries recorded a decline in M&A deal volume.

Download the full analysis covering top-line trends for venture capital financings of Silicon Valley companies in Q4.


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