Fenwick & West’s Silicon Valley Venture Capital Survey Reveals Up Rounds Are Up

The law firm Fenwick & West has released its third quarter Silicon Valley Capital Survey, and it shows that valuations are on the up and up. According to the survey of 107 tech and life sciences companies, up rounds exceeded down rounds 52% to 30%.  The press release is below. The survey is here.


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 Third Quarter 2010 Silicon Valley Venture Capital Survey.

The Third Quarter 2010 survey analyzed the valuations and terms of venture financings for 107 technology and life science companies headquartered in the Silicon Valley that reported raising capital in the third quarter of 2010.

“During the third quarter of 2010, up rounds exceeded down rounds 52% to 30% with 18% flat.  This was similar to the second quarter of 2010, when up rounds exceeded down rounds 55% to 27%, with 18% flat, and the fifth 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 a 28% average price increase for the quarter, compared to 30% in the first quarter of 2010.

“This was also the fifth consecutive quarter in which the Venture Capital Barometer was positive,” said Kramer. 

“The best performing industries in the quarter from a valuation perspective were internet/digital media, and to a lesser extent life sciences, with internet/digital media clearly out performing other industries from a valuation perspective through the first three quarters of 2010,” added Michael Patrick, survey co-author and also a partner at the firm.

“However, as reported by third party sources, since the beginning of 2009 venture capitalists have invested significantly more in companies than the amount of new funds that have been committed to venture funds.  This trend would likely result in valuations decreasing if commitments to venture funds do not increase,” noted Patrick.  “However with the recent improvement in liquidity for venture-backed companies, and improvements in the stock market in general, there is reason to be hopeful that an increase in commitments to venture funds may be on the horizon.”

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 the Silicon Valley/San Francisco Bay Area by providing insight into the changes in venture capital valuations and terms.  Focusing exclusively on trends in venture financing and valuations, the Fenwick & West Surveys complement 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.