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VC up rounds and valuations surge in Q2

Venture capital valuations for startups based in Silicon Valley were strong in the second quarter of the year, with the period seeing the highest percentage of up rounds compared with down rounds since 2004, when Fenwick & West began keeping track of startup valuations.

The law firm’s quarterly survey found that 86 percent of Q2 deals were valued higher while only 6 percent of transactions were marked down.

The median price increase from one round to the next rose by 58 percent during the period, up from a 56 percent increase in the previous quarter. This is the strongest price increase in three years, according to Fenwick & West’s analysis.

Median percentage price increase from one round to the next. Source: Fenwick & West.

The survey reviewed 215 venture financings, including 159 Series B and later rounds, that the firm worked on during the quarter. The software industry accounted for 45 percent of all Series B or later rounds, followed by internet/digital media deals, which comprised 20 percent of later rounds.

The industries with the most deals also fared the best. Software and internet, or digital media, companies saw the highest valuation increases during the quarter with a median price increases of 68 percent and 60 percent, respectively.