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Fenwick & West LLP's venture capital group found some interesting trends in valuation in the second quarter, reporting that up rounds outnumbered discounts 81% to 11%, with only 8% pricing flat to previous investment. On average, deals drew a 74% average pricing increase over the previous round, just shy of the 75% increases deals won in the first quarter, which was the strongest result since Fenwick began conducting surveys in 2002. It was the 14th consecutive quarter where up rounds exceeded down rounds. Results were driven largely by 12 deals that came at multiples of three or more, and seven of those deals came from the Web 2.0 sector, which has drawn the biggest clamor from investors seeking to get into later-stage rounds. Initial public offering activity may well have driven those numbers, as Fenwick reports that the number of public market deals for venture-backed companies increased from 13 in the first quarter 2007 to 22 companies in the second quarter 2007, with proceeds jumping from $1.2 billion to $2.7 billion. Healthy valuations in the sector allowed startups to be a little more patient, as IPO results were met by a corresponding decrease in M&A activity, with deals dropping from 98 companies in the first quarter 2007 to 81 in the second quarter. - Clifford Carlsen See Fenwick & West's Silicon Valley VC survey
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