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Published September 19, 2007 at 11:55 AM
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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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