Click here for the “First Look” report.
This report analyzes the terms of 190 venture financings closed in the fourth quarter of 2017 by companies headquartered in Silicon Valley.
Valuation Results Remain Strong
Valuation results continued to be strong in Q4 2017, but the percentage price increases declined moderately compared to the prior quarter, following three consecutive quarters of increases. Up rounds exceeded down rounds 70% to 19%, with 11% flat in Q4 2017, a decrease from Q3 when up rounds exceeded down rounds 79% to 10%, with 11% flat. This was the lowest percentage of up rounds since Q4 2016 and the highest percentage of down rounds since Q2 2013.
The Fenwick & West Venture Capital Barometer™ showed an average price increase in Q4 2017 of 74%, a decrease from the 80% recorded in Q3 and the first quarter in 2017 in which the average percentage price increase had decreased compared to the prior quarter.
Internet/Digital Media Scores Highest Valuation Results
The internet/digital media industry recorded the strongest valuation results in Q4 2017 compared to the other industries, with an average price increase of 179% and a median price increase of 51%, both up from the prior quarter. The software industry also recorded strong valuation results in Q4, though moderately weaker compared to Q3. The life sciences industry, along with the hardware industry, recorded the lowest valuation metrics in Q4 2017.
Valuation Results Down for Series D Financings
Series D financings recorded the weakest valuation results in Q4 2017 compared to the other financing rounds, with the highest percentage of down rounds and the lowest average and median price increases of all the financing rounds. The valuation metrics for Series D financings in Q4 also declined sharply compared to the prior quarter. In contrast, the valuation results for Series E+ financings in Q4 improved moderately compared to the prior quarter.
Our “First Look” report covering top line trends for venture capital financings of Silicon Valley companies in Q4 2017 is available on Fenwick & West’s website. This initial report will be followed in several weeks with a more in-depth “Full Analysis” that will provide a broader perspective and include coverage of venture capital financings in other geographies drawing on data from a variety of industry reports.