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Background
We analyzed the terms of 230 venture financings closed in the first quarter of 2020 by companies headquartered in Silicon Valley. This survey follows our recent Silicon Valley Venture Capital Flash Report – First Quarter 2020, a special interim report which reported information on a monthly basis—rather than the typical quarterly basis—and highlighted changes in the Silicon Valley venture capital environment in light of the COVID-19 pandemic.
Key Findings
Valuation Results in Q1 2020 Decline
- Valuation results in Q1 2020 declined both from the peak levels recorded in the prior quarter and over the course of the quarter.
- Up rounds exceeded down rounds 79% to 14%, with 7% flat in Q1 2020, a decline from Q4 2019 when up rounds exceeded down rounds 84% to 5%, with 11% flat. The percentage of down rounds was the highest since Q1 2018.
- The Fenwick & West Venture Capital Barometer™ showed the average price increase declining from a record 142% in the prior quarter to 94% in Q1. The average price increase declined sharply as the quarter progressed, from 117% in January to 76% in February to 46% in March.
- The median price increase declined over the course of the quarter, from 68% in January to 59% in February to 30% in March.
Average Price Increases for Series B, C and D Rounds Decline
- The average price increases for Series B, C and D financings declined in Q1 compared to the prior quarter, and the average price increase for Series E+ financing rounds increased moderately compared to the prior quarter, but declined sharply as the quarter progressed.
Software Industry Records Strongest Valuations in Q1 2020
- The software industry recorded the strongest valuation results in Q1, followed by the internet/digital media and hardware industries. However, their average and median price increases declined compared to the prior quarter.
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