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Background
This survey is a special interim report to highlight changes in the Silicon Valley venture capital environment through August 2020 in light of the COVID-19 pandemic.
Please note that when providing data on a monthly basis, and especially when analyzing trends among industries or series on a monthly basis, we are working with smaller numbers than in our quarterly report and accordingly the possibility of statistical anomalies increases.
Key Findings
The venture environment continued to exhibit strong deal volume. Valuation metrics were solid although lagged pre-pandemic levels. The life sciences industry showed notable strength.
Financing volume continued strong.
- The number of Silicon Valley venture financings continued to be strong in August, with 73 financings. This was the same number of financings as July, but surpassed the 2019 average of 65 financings per month.
- July and August have been historically slower months for financings, likely due to venture industry participants taking vacations. However, this year there were 146 venture financings in July and August, compared to 105 in July and August of 2019, and 2020 had the highest combined number of financings for July and August in at least five years. Perhaps one side effect of the pandemic is the limitation on people’s ability to vacation has resulted in more time to put into financing activity.
Valuations solid and steady, but continue to lag pre-pandemic results.
- The percentage of up-rounds in August was 77%, effectively level with the 78% up-rounds in July. Both of these results were the highest since February, but continued to lag the 2019 average monthly result of 83%.
- The average share price change declined from 81% in July to 65% in August. Despite this decline, July and August results were the best results since February, although they lagged the 93% average monthly increase in 2019.
- The median per share price change increased from 30% in July to 39% in August. Again, both results were below the 60% median monthly increase seen in 2019.
Life sciences results strongest compared to historical norms.
- There were 19 life sciences financings in August, an increase from 14 in July and more than double the average monthly rate of nine seen in 2019. The monthly number of life sciences financings has surpassed the average rate in 2019 every month of 2020. The number of software and internet/new media financings were approximately even with life sciences, at 22 and 19, respectively.
- From a valuation perspective, life sciences also did well, with a 55% average increase in August, besting its 43% average in 2019. Software and internet/new media surpassed life sciences results, with 73% and 80% increases, respectively, but both of those industries significantly lagged their 2019 results.
- And notably, life sciences bested all other industries in August with a 49% median price increase, the first time that has happened since September 2018.
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