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Silicon Valley Venture Capital Survey - Second Quarter 2016

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Background

We analyzed the terms of 195 venture financings closed in the second quarter of 2016 by companies headquartered in Silicon Valley.

Overview of Results

The weakening in venture valuations that began in the second half of 2015 continued in 2Q16. Valuation metrics have fallen from all time highs1 in mid-2015 to now being generally flat with their 12 year averages.

  • Up rounds exceeded down rounds 74% to 13%, with 13% flat, in 2Q16. This was a decline from 1Q16, when up rounds exceeded down rounds 78% to 11%, with 11% flat. This quarter was the third straight quarter in which the percentage of up rounds declined and the lowest percentage of up rounds since 4Q13. The 12 year average of up rounds is 66%.
  • The average price increase of financings in 2Q16 compared to the company’s prior financing (the “Barometer”) was 40%. This was a decline from the 53% recorded in 1Q16, the third straight quarterly decline and the lowest average price increase since 3Q10. The 12 year average for the Barometer is 56%.
  • The median price increase of financings in 2Q16 compared to the company’s prior financing was 31%. This was a decline from the 36% recorded in 1Q16, the fourth straight quarterly decline and the lowest median increase since 4Q13. The 12 year average median increase is 28%.
  • The highest percentage up round in 2Q was 279%. This was the lowest “highest percentage up round” in a quarter since 2Q09.
  • Valuation metrics were generally similar across the four major industries (software, internet/digital media, hardware and life sciences).
  • The percentage of financings that were either Series A2 or Series B financings was 44%, the lowest percentage since 2Q14.


1   Since we began calculating valuation metrics in 2004.
2   Includes venture backed seed rounds in which at least $1 million raised.


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