Silicon Valley venture capitalists turned slightly more cautious in the fourth quarter of last year, with down rounds ticking up to a four-year high and more modest deal price hikes.
Nineteen percent of the 190 Silicon Valley deals law firm Fenwick & West monitored during the year’s final three months were down rounds, compared with 10 percent a quarter earlier. This was the highest percentage of down rounds to show up in Fenwick’s quarterly deal survey since the second quarter of 2013.
At the same time, the percentage of up rounds among Silicon Valley startups fell to 70 percent from 79 percent, the lowest level in a year.
Hand in hand with the decline was a softening of private company share-price increases. The average price increase in completed rounds was 74 percent, compared with 80 percent in the third quarter. This is still well above the 13-year average of 57 percent.
Startups in the internet and digital-media industries saw the greatest valuation increases in the quarter, with an average price increase of 179 percent. Gains by life sciences companies were the weakest at 31 percent.
Hardware companies had the greatest percentage of down rounds, 28 percent, followed by life sciences companies, where 21 percent of deals were down rounds.
Eighty-one percent of internet and digital-media companies experienced up rounds.
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