09/01/2010
Cooley Venture Financing Report Offers Mixed Signals
Palo Alto, Calif. – September 1, 2010 – Cooley LLP today released its quarterly report on venture capital financing market terms for the second quarter of 2010. The report analyzes Cooley's 82 venture capital transactions that closed during the second quarter, totaling $855 million.
Highlights from the second quarter of 2010 include:
• While outpacing the percentage of flat and down rounds, up rounds decreased from 61 percent to 52 percent from the previous quarter. The number of up rounds were still significantly higher than levels seen throughout 2009.
• Median pre-money valuations were mixed. Valuations for Series A and C rounds increased, while valuations for Series B and D+ rounds decreased.
• Deal terms likewise offered divergent investment outlooks. Negative indicators included an increase in pay for play provisions and recapitalization transactions. Positive indicators included a significant reduction in the number of deals with participating preferred provisions, as well as fewer liquidation preferences of greater than 1x.
"The optimism stoked by generally improving financing trends in late 2009 and the first quarter of 2010, was tempered somewhat in the second quarter," said Craig Jacoby, head of Cooley's Emerging Companies practice. "It is important to note that, while the report showed several varying indicators, the number of up rounds were still considerably higher than levels recorded throughout 2009."
Cooley's Private Company Financings Report is published quarterly and is based on private company transactions in which Cooley served as counsel to either the issuing company or the investors. A complete version of the report is available here.
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