United States: Silicon Valley Venture Capital Survey - Fourth Quarter 2015

Background

We analyzed the terms of 152 venture financings closed in the fourth quarter of 2015 by companies headquartered in Silicon Valley.

Overview of Fenwick & West Results

Valuation results in 4Q15 were moderately strong, but were not as strong as recent quarters.

• Up rounds exceeded down rounds 82% to 12%, with 6% flat. This was a decrease from a very strong 3Q15, when up rounds exceeded down rounds 86% to 4%, with 10% flat.
• The Fenwick & West Venture Capital Barometer showed an average price increase in 4Q15 of 70%. While still strong, this was a significant decrease from the 116% recorded in 3Q15, and was the lowest Barometer reading since 4Q13.
• The median percentage increase of financings in 4Q15 was 39%. This was a noticeable decline from the 51% recorded in 3Q15 and the 74% recorded in 2Q15.
• For the first time since 1Q10, when we began tracking data by industry, the software industry was not in our top two industries from a valuation perspective, although it did lead with 48% of all deals. Rather the internet/digital media industry, with 94% up rounds, a 111% Barometer reading and a 95% median price increase, and the hardware industry, with 82% up rounds, a 100% Barometer reading and a 63% median increase, were the two strongest industries, followed by the software industry, with the life science industry trailing.
• Series E and later financings (which can consist of both high valuation and struggling companies) were generally tougher than other series, with down rounds increasing to 26%, the Barometer declining to 16%, the percentage having senior liquidation preference increasing to 52%, and such financings declining as a percentage of all financings to 15%.

For additional detailed information on the valuation and terms of financing in Silicon Valley, download the full version of the Silicon Valley Venture Survey - Fourth Quarter 2015 (PDF).

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