Rosy conditions for raising VC
Private companies in Silicon Valley that raise venture capital are getting great deals.
When investors inject money into a company, they set a dollar value on it, to determine what portion of the company’s shares they get in return for their cash.
Bay Area companies funded during the quarter saw an average 74 percent increase in the value of their shares, when compared to their most recent funding around, according to a survey by law firm Fenwick & West of 126 technology and life science companies headquartered in the Silicon Valley region.
It was the second largest increase since the survey six years ago, exceeded only by a 75 percent increase in the first quarter of the year. The survey measured the change in share price during the round. Web 2.0 companies are especially hot. Of 12 financings where the stock price was more than three-fold higher, seven were Web 2.0 or related fields, said Barry Kramer, a partner at the firm.
So-called “up rounds,” or financing deals where the price per share is valued at a higher level when compared the prior round, exceeded down rounds for the 14th consecutive quarter. Up rounds exceeded down rounds 81 percent to 11 percents, a ratio that ties with the first quarter of 2007 for the highest ratio since the survey began.
[Disclosure: Fenwick & West is a sponsor of VentureBeat]
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About the Author, Matt Marshall
Matt launched VentureBeat in September of 2006, with the realization that no one else was covering the entrepreneurial and tech innovation scene with the velocity or depth that he was. Prior to founding VentureBeat, he covered venture capital for the San Jose Mercury News from 2001 to 2006. In 2002, Matt was awarded "Journalist of the Year" by the Northern California Society of Professional Journalists. Prior to working at the Merc, he was a correspondent for the Wall Street Journal in Bonn, Germany from 1995 to 1998, and a writer for the Washington Post in 1994. Matt holds a PhD in Government and an MA in German and European Studies from Georgetown University. In addition to VentureBeat, Matt is also the Executive Producer of DEMO, the leading launchpad event for emerging technologies.
