View the full Silicon Valley Venture Capital Survey—Third Quarter 2015.
Background
We analyzed the terms of 175 venture financings closed in the third quarter of 2015 by companies headquartered in Silicon Valley.
Overview of Fenwick & West Results
Valuation results continued to be strong in 3Q15, but a little less strong overall than in 2Q15.
- Up rounds exceeded down rounds 86% to 4%, with 10% flat. This was a small increase from 2Q15 when up rounds exceeded down rounds 83% to 8%, with 9% flat. The 82 point difference between up and down rounds was the largest since we began calculating up/down rounds in 1Q02.
- The Fenwick & West Venture Capital Barometer™ showed an average price increase in 3Q15 of 116%, an increase over the 107% recorded in 2Q15. However, the result was affected by one financing of a non-tech company that had a valuation increase of over 3000%. If this financing was excluded, the Barometer result for 3Q15 would have been 93%.
- The median price increase of financings in 3Q15 was 51%, a decrease from the 74% recorded in 2Q15 and the lowest median price increase over the past 12 months.
- The software industry again had a strong performance in 3Q15 with over 50% of all deals and the second highest valuation results. However, the Barometer results and median price increase for the software industry declined to 88% and 51%, respectively, in 3Q15, from 107% and 74% in 2Q15. The internet/digital media industry had the second highest percentage of deals and the highest valuation results in 3Q15. The hardware and life sciences industries trailed, but still had solid results in 3Q15, with the hardware industry valuation results improving slightly and the life science industry valuation results declining from 2Q15.
- The use of senior liquidation preference increased to 35% in 3Q15 from 29% in 2Q15 and was the highest amount since 2Q13. This increasing use of senior liquidation preference could indicate that investor leverage in negotiations is increasing, or that companies are willing to provide investors better terms in exchange for higher valuations.
View the full Silicon Valley Venture Capital Survey—Third Quarter 2015.