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Background
Our survey analyzed the terms of 171 venture financings closed
in the fourth quarter of 2023 by companies headquartered in Silicon
Valley.
Summary
Fourth-quarter Bay Area venture capital financings remained
largely flat from the preceding four quarters (average of 174). Q4
was also notably consistent with the prior quarter, aside from
select data points.
The Fenwick Venture Capital Barometer”, measuring the
average percentage share price change between rounds, has remained
consistent since Q4 2022 (87% in Q4 2023).
Key Findings
Series B Financings Lead Growth, Other Series
Largely Flat
Series B financings (55 in total) comprised 32% of all Q4
financings, up from 25% in Q3. Series A financings (80 in total)
comprised 47% of all Q4 financings, falling slightly from 53% in
Q3. Later stage financings (36 in total) comprised 21% of all Q4
financings, which is largely flat from 22% in Q3.
Down Rounds Grow Slightly
The percentage of down rounds grew slightly, continuing its
upward trend from 1% of all financings in Q1 2022 to 13% in Q4
2023. This is the highest percentage of down-round financings since
Q1 2020, when they jumped to 14% around the onset of the COVID-19
pandemic. Series E+ financings continue to be the most heavily
impacted. Life science companies represented the greatest
percentage of down rounds in Q4, at 26%.
Median Price Change Flat
Overall, median price change remained unchanged at 44% in Q4
compared to Q3. Software and internet / digital media companies
continue to outperform other companies in median price change.
Pay-to-Play Provisions Flat
The share of financings that included pay-to-play provisions
providing for conversion of nonparticipating investors’
preferred stock into common stock or shadow preferred stock was 4%
in Q4, which is consistent with the average level in the preceding
four quarters.
Fundraising Environment Remains
Difficult
Overall, financing terms continue to be investor favorable, and
the fundraising environment remains challenging, as evidenced by an
elevated level in corporate restructurings (6% of all financings in
Q4), the slight increase in down rounds and other key markers.
Fenwick Data on Valuations
Price Change
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