Venture capital deal terms are becoming friendly, according to the latest edition of the VentureOne Deal Terms Report.

You’d expect this. Investors are giving more money to venture capitalists to invest in start-ups, leading VCs to compete with each other to find the best deals. They’ll be more accomodating to entrepreneurs in the process. The report covers a 15-month period from April 2005 through June 2006, and surveyed more than 350 companies in the U.S. and Europe.

You’ll have to pay for the whole report, but among the key findings:

· The median share of U.S.-based companies sold to investors in Series A rounds fell from 50% in last year’s study to 40% this year. Because first round valuations held relatively steady during the survey period, this appears to be the result of companies raising smaller first rounds.

· Liquidation preferences improved as no U.S.-based companies this year were required to agree to liquidation preferences in excess of three times the investment. In addition, 82% of the U.S. companies reported liquidation preferences that were equal to only one times capital investment plus accrued interest, up from 73% of the companies in last year’s study. Higher multiples were reported mostly by companies closing third or later rounds.

· The majority of U.S. companies closing second rounds—80%—saw an increase in their premoney valuation, up from 73% that did so in the previous year’s study.

· Full-ratchet dilution protection—a deal term that achieved notoriety after the tech bubble — has become less common. Only 19% of U.S. respondents reported having this in their term sheets, down from 22% last year. In 2002, 34% of anti-dilution provisions were the full-ratchet variety, which require a company closing a subsequent down round to fully adjust the price of the prior investors’ shares to compensate for the company’s lower valuation