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					 Silicon Valley Venture Survey
 Second Quarter 2012
 Barry Kramer and Michael Patrick                                                Fenwickfenwick & west llp


Background
We analyzed the terms of venture financings for 115 companies headquartered in Silicon Valley that raised
money in the second quarter of 2012.

Overview of Fenwick & West Results
   n   Up rounds exceeded down rounds in 2Q12, 74% to 11%, with 15% of rounds flat. This was better than
       1Q12, when up rounds exceeded down rounds 65% to 22%, and the best quarter since 2007. Series
       B rounds were especially strong, although we note that the percentage of Series B financings in the
       survey has declined for three straight quarters, perhaps indicating that companies are having difficulty
       securing Series B funding, but those that do are being rewarded with substantial valuation increases.
       This was the twelfth quarter in a row in which up rounds exceeded down rounds.
   n   The Fenwick & West Venture Capital Barometer™ showed an average price increase of 99% in 2Q12,
       an increase from 52% in 1Q12. This was the highest Barometer result since we began calculating the
       Barometer in 2004. That said, we note that there were two financings (one in the internet industry and
       one in the software industry) that were each up over 1000% (i.e. over 10x), and if they were excluded,
       the Barometer result would have been 70%. The median price increase in 2Q12 was 30%.
   n   The results by industry are set forth below. In general, internet/digital media and software continued
       to be the strongest industries by far, with Barometer increases of 248% and 123% respectively (which
       would have been 176% and 86% respectively if the two aforementioned 10x deals were excluded).
       The median price increase for internet/digital media and software financings were 105% and 56%,
       respectively. Cleantech and life science trailed significantly.

Overview of Other Industry Data
   n   Venture investment was up in the software and internet/digital media industries in 2Q12 versus 1Q12,
       while cleantech and life science lagged. However, overall venture funding in 2012 is modestly lagging
       2011 to date.
   n   M&A was up slightly in 2Q12 versus 1Q12, and 2012 is generally flat in dollars compared to 2011.
   n   The number of IPOs was down in 2Q12 compared to 1Q12, but dollars raised were up, as the Facebook
       IPO dominated the quarter. 2012 is ahead of 2011 year to date.
   n   Venture fundraising in dollars was up, but the number of funds raising money declined in 2Q12,
       compared to 1Q12. Fundraising in 2012 is ahead of 2011 in dollars.
       The venture environment continues to be a “tale of two cities” with software and internet/digital media
       thriving and life science and cleantech lagging. Additionally, we note that venture investment, M&A
       and IPOs have all returned to 2007 (pre financial industry meltdown) levels, but fundraising by venture
       capitalists continues to be significantly below those levels.



                                                                                                                1
         The effects of the increasing concentration of venture capital in fewer funds also bears watching. There
         are understandable reasons for this trend (capital moving to managers with the best results, early
         stage companies going global sooner and benefitting from venture capitalists with a more global reach)
         but this increased financial concentration could leave companies with fewer alternatives. However,
         the growth of super angels and micro VCs discussed below, and the commitment of some of the larger
         funds to continue making smaller investments, may offset this trend.

n   Venture Capital Investment.
         Dow Jones VentureSource (“VentureSource”) reported that U.S.-based companies raised $8.1 billion in
         863 venture deals in 2Q12, a 31% increase in dollars and a 20% increase in deals compared to 1Q12,
         when $6.2 billion was raised in 717 deals (as reported in April 2012). However, investment in the first
         half of 2012 slightly lags the first half of 2011. Over half of all venture capital was invested in California
         in 2Q12, with 42% of the total in Northern California.
         Similarly, the PwC/NVCA MoneyTree™ Report based on data from Thomson Reuters (the “MoneyTree
         Report”) reported $7.0 billion of venture investments in 898 deals in 2Q12, a 21% increase in dollars
         and a 18% increase in deals from the $5.8 billion invested in 758 deals in 1Q12 (as reported in April
         2012). The MoneyTree reported that the software and internet industries were especially strong, while
         life science was weak.

n   Merger and Acquisitions Activity.
         Dow Jones reported 110 acquisitions of venture-backed companies in 2Q12 for $13.6 billion, a 7%
         increase in transaction dollars, and a 12% increase in transactions, from the 98 acquisitions for $12.7
         billion in 1Q12 (as reported in July 2012 – the initial April 2012 numbers were subsequently revised
         substantially and so are not being used). The largest acquisition in the quarter was Facebook’s
         acquisition of Instagram for $1 billion.
         Thomson Reuters and the NVCA (“Thomson/NVCA”) reported 102 transactions in 2Q12, a 19% increase
         from the 86 transactions reported in 1Q12 (as reported in April 2012). IT companies dominated, with 77
         of the 102 deals.

n   IPO Activity.
         VentureSource reported 11 venture-backed IPOs raising $7.7 billion in 2Q12 ($6.8 billion from
         Facebook), compared to 20 IPOs raising $1.4 billion in 1Q12 (as reported in April 2012). 72% of the
         companies going public were based in Silicon Valley, as opposed to 35% in 1Q12.
         Similarly, Thomson/NVCA reported 11 IPOs raising $17.1 billion in 2Q12 ($15.8 billion from Facebook)
         compared to 19 IPOs raising $1.5 billion in 1Q12. (It appears that Thomson/NVCA includes shares sold
         by shareholders in the IPO amount, while VentureSource does not.) Nine of the eleven IPOs were IT
         companies and all were U.S. based.




trends in terms of venture financings in silicon valley — second quarter 2012                                         2
n   Venture Capital Fundraising.
         Dow Jones reported that for the first half of 2012, 82 U.S. venture capital funds raised $13 billion, a 31%
         increase in dollars over the first half of 2011.
         Thomson/NVCA reported that 38 U.S. venture capital funds raised $5.9 billion in 2Q12, a 20% increase
         in dollar commitments and a 10% decrease in the number of funds compared to the $4.9 billion raised
         by 42 funds in 1Q12 (as reported in April 2012). The top 5 funds accounted for almost 80% of the total
         fundraising in the quarter. Mark Heesen, President of the NVCA, noted that this concentration of capital
         in fewer funds has narrowed the field of venture funds for both entrepreneurs seeking venture capital,
         and limited partners looking to invest in venture capital.
         Some traditional investors in venture capital are also indicating a reduction in commitment to the
         asset class when they cannot get into the best funds. For example, the Mercury News has reported
         that CalPERS will likely decrease its venture commitment from 6% of its private equity portfolio to 1%,
         due to poor returns on its investments. And the Kauffman Foundation has indicated similar plans (see
         “Kauffman Foundation Venture Capital Report” below).
         Venture fundraising by venture capital funds in 2Q12 was again less than the amount of venture capital
         invested in companies in the quarter.
         The SBA, after 8 years out of the market, has recently allocated $1 billion over the next five years to
         increase access to early stage venture capital – i.e. companies looking to raise $1 4 million. Early stage
         venture funds can borrow from the SBA an amount equal to what they can raise privately.

n   Secondary Trading.
         Secondary trading was estimated to be $10 billion in 2011. The Venture Capital Journal reported that
         80% of such trading occurred in negotiated one-on-one transactions (as opposed to on secondary
         exchanges), and that half of late stage primary financings included a secondary component, triple the
         amount from five years ago.
         That said, secondary exchanges had a good year in 2011, with Second Market reporting $558 million
         in trades and SharesPost reporting $625 million. However, with the IPOs of Zynga, LinkedIn, GroupOn
         and now Facebook, it seems doubtful that secondary exchange trading of other venture-backed
         companies will be able to take up the slack in 2012. Some exchanges are working to address this by
         proactively working with late stage companies to facilitate liquidity arrangements for the companies’
         employees and early stage investors with the exchange’s investor base.
         In general, it seems that late stage companies are becoming more comfortable with secondary
         sales, and are leaning towards negotiated sales where information provided to investors can remain
         confidential, the purchasers are known and the transaction can be combined with a primary sale, if
         desired.




trends in terms of venture financings in silicon valley — second quarter 2012                                      3
n   Seed Investment.
         Although concern continues that the valuations of seed stage companies are getting frothy, the
         expansion of the accelerator/incubator model continues. Accelerators focused on Swiss, Danish,
         Israeli and German entrepreneurs have each been started in the past year, or are in the process of
         being started, in Silicon Valley. And General Catalyst Partners has joined Yuri Milner, SV Angel and
         Andreesen Horowitz in the Start Fund which commits to loan $150,000 to each Y Combinator company
         (foregoing information from Venture Wire).
         Additionally, the two most active venture capitalists n 2Q12 were 500 Startups and First Round Capital
         (tied for second with NEA), both of whom are seed investors. (VentureSource)
         And perhaps most interestingly, a significant number of super angels/micro VCs are seeking to raise
         larger funds or taking on LPs, which if successful could act as a counterweight to the decreasing
         number of venture capital funds (Venture Capital Journal).

n   The Kauffman Foundation Venture Capital Report.
         In May 2012 the respected Kauffman Foundation issued a report that concluded, based on their 20 year
         history of venture investing experience in nearly 100 funds, that “the Limited Partner investment model
         is broken.” The report based its conclusion on, among other things, poor returns from most venture
         funds, incentives for managers to create larger funds to increase management fees, the increasing
         length of life of venture funds and the relatively small amounts invested personally by many fund
         managers. It recommended that limited partners require a better alignment of interests between LPs
         and GPs, more transparency and better governance provisions.
         The Kauffman Foundation has indicated that it intends to focus its future venture investment in funds of
         less than $400 million, with historical performance above what could be achieved in equivalent public
         market funds (which it believes are better performance measures than IRR, top quartile, vintage year
         and gross return measurements), and in which GPs commit at least 5% of the capital. They also plan
         to increase their direct investing and to move a portion of their capital allocated to venture capital into
         the public markets, as they do not believe that there are enough strong venture capitalists to absorb
         the available capital.
         Other suggestions from the Kauffman report include (i) that management fees should be based on a
         budget, not a percentage of funds under management, (ii) that investors should receive their funds
         back plus a preferred return before venture capitalists share in profits, and (iii) that there should be
         more transparency in how the venture capital management company is structured to understand how
         the individual venture capitalists are incented.

n   Venture Capital Return.
         Cambridge Associates reported that the value of its venture capital index increased by 4.7% in 1Q12
         (2Q12 information has not been publicly released) compared to 18.7% for Nasdaq, although for the 12
         month period ended March 31, 2012, the venture capital index was up 12.8%, which slightly beat Nasdaq
         which was up 11.2%. The Cambridge venture index is net of fees, expenses and carried interest.
         For the ten years ended March 31, 2012 the Cambridge venture capital index was up 4.4% per year,
         while Nasdaq was up 5.30%.

trends in terms of venture financings in silicon valley — second quarter 2012                                       4
n   Venture Capital Sentiment.
         The Silicon Valley Venture Capitalist Confidence Index® produced by Professor Mark Cannice at the
         University of San Francisco reported that the confidence level of Silicon Valley venture capitalists was
         3.47 on a 5-point scale in 2Q12, a decrease from the 3.79 reported in 1Q12. Reasons given for the
         decrease in confidence were primarily macro oriented (global economy, life science regulation), as
         there was general agreement that the entrepreneurial environment viewed in isolation was strong.
         The Deloitte/NVCA Global Confidence Survey reported that global venture capitalists were most
         confident about the prospects of the cloud computing, software, new media, healthcare IT and
         consumer businesses (in order of higher confidence to lower) and were least confident about the
         medical device, financial services, biopharmaceuticals, cleantech, telecom and semiconductor
         industries (in order of higher confidence to lower).

n   Nasdaq.
         Nasdaq decreased 4.9% in 2Q12, but has increased 2.8% in 3Q12 through August 10, 2012.




trends in terms of venture financings in silicon valley — second quarter 2012                                       5
   40%
       62%                                                                                                         >3x
   30%                                                                           25%
                                                   25%
 60%                                                                                              59%
   20%       15%                     17%
                                                              57%                                           57%
       60%
                                                     13%                                           14%
  10%
        &
Fenwick0% West Data on Valuation
                 0%        0%                                      0%
                                                                            0%
                                                                                                            0%
    0%                                                                                             0%       0%
          Q3’10       Q4’10         Q1’11         Q2’11
                                                 44%            Q3’11      50%
                                                                             Q4’11           Q1’12       Q2’12           Series B
                   46%
price change — The direction of price changes for companies receiving financing in a quarter, compared to their
                             47%
                                                                                                       Series C
                                                                                  45%
prior round of financing.     42%                                                                      Series D
  Price Change
                    42%                        39%                                                                       Series E and Higher
 40%

   80%                                           37%          33%
                                                                           36%
                                                                                                  32%      74%
       32%
                                                31%            70%
   70%                67%           67%
       27%          27%                                                    29%               65%            25%
                                                  61%                                                       25%
   60%                            24%
                                                                                                            25%
          52%                                                                                     24%
   50%                                                                    21%                                     Up rounds
 20%                                                        20%
                    12%                                      19%                                                  Down rounds
   40%
                                                                                                                  Flat rounds
          30%
   30%
                                                  25%
                      21%                                                                    22%
   20%                              16%                        15%
          18%                                                                                               15%
                                    17%
                                                  14%          15%                                          11%
   10%                12%                                                                   13%
  0%
      Q3’10         Q4’10         Q1’11         Q2’11         Q3’11         Q4’11           Q1’12        Q2’12
    0%
          Q3’10       Q4’10         Q1’11        Q2’11         Q3’11            Q4’11       Q1’12        Q2’12




  Percentage of of down rounds by series were as follows:
The percentageDown Rounds

  50%


  45%


  40%
         38%
                                                                                                  37%

  35%                                             33%
        33%


  30%
                                                  28%
                       27%
         30%
                                    25%                         25%
  25%                                             27%                                                                    Series B
                                                                                                                         Series C
                      23%                                                                         21%
                                                                 19%                                                     Series D
  20%                                                                       20%
                                    17%                                                                     19%
        20%                                                     15%                                                      Series E and Higher
                                                                                16%
                      17%                         17%
  15%                               12%
                                                                           14%        14%          14%      14%
                                                                                                            12%
  10%                 12%
                                                                                            10%
                                    10%

                                                                                6%
   5%


   0%                                                                                                        0%

         Q3’10       Q4’10         Q1’11         Q2’11         Q3’11            Q4’11       Q1’12        Q2’12



trends in terms of venture financings in silicon valley — second quarter 2012                                                       6
 168%



 142%
the fenwick & west venture capital barometer™ (magnitude of price change) — Set forth below is the average
                                                                                  **
percentage change between the price per share at which companies raised funds in a quarter, compared to the
  116%                                                                                      Software
price per share at which such companies raised funds in their prior round of financing. In calculating the average, all
                                                                                            Hardware
rounds (up, down and flat) are included, and results are not weighted for the amount raised in a financing.
 Barometer Combined Total                                                                   Lifescience
  90%
 100%                                                                                                        *   Internet/Digital Media
                                                                                                                 99%
                                                                                                                                                 comp
  90%
  64%                                                                  85%
                                                                                                                 Cleantech
                                                                                                                                                    x
  80%
                                             71%
                                                             69%
  38%
  70%
                    61%
  60%
                                   52%
                                                                                    52%
  12%
  50%
                                                                                                                                                 com
  40%
  -14% 28%
  30%

  20%
  -40%
  10% Q3’10        Q4’10       Q1’11       Q2’11      Q3’11        Q4’11          Q1’12             Q2’12
   0%
         Q3’10     Q4’10        Q1’11        Q2’11       Q3’11         Q4’11              Q1’12             Q2’12


*Please note that one software company had a 1460% up round and one internet/digital media company had a 1190% up
  Redemption
 round. If these were excluded the Barometer result for 2Q12 would have been 70%.
  30%
The Barometer results by series are as follows:
 Barometer Percentage Change By Series
          22%
 22.5%                                                   21%
 200%                              20%
                    19%                      19%
                                                                                        18%                                                       com
                                                                                                                16%
  15%                                                                                                       * 177%
                                                                           164%
 160%
                                                                      9%
                                                                                                             147%
  7.5%
                                           134%

                                                        121%
 120%
    0%                         104%
                                                                                                                       Series B                  comp
         Q3’10      Q4’10          Q1’11     Q2’11       Q3’11         Q4’11              Q1’12             Q2’12      Series C
                                                                                              92%
                                                                                                                       Series D
                                                                                                                                                    x
  80% 74%                                   74%                                                                        Series E and Higher
                    73%
  Senior Liquidation Preferences
                                                       54%                        62%
                    67%                                             56%
                               44%                                                         58%
 50%                                                                       49%
                    53%                     39%                                                              43%
 45%
 40%                           36%
                                43%                    44%
          41%                                                        42%             41%
 40% 13%                                      37%
 35% 7%            24%                                                 34%                                    35%
                                                                                                             19%
                                             1%        18%31%                              12%
                               10%
                                                                                                                                                  com
 30%    6%          28%
  0%
 25%
 20%
 15%
 -40%
 10%     Q3’10     Q4’10       Q1’11        Q2’11       Q3’11        Q4’11           Q1’12              Q2’12
  5%
*Please note that the two above mentioned software and internet/digital media companies with greater than 10x up rounds
   0%
                                                                                           Q2’12
                   Q4’10        Q1’11       Q2’11
 were Q3’10 Series C rounds. If these were excluded theQ3’11
      both                                                        Q4’11        Q1’12
                                                       Barometer result for Series C rounds in 2Q12 would have been 72%.


  Uncapped Liquidation
trends in terms of venture financings in silicon valley — second quarter 2012                                                                7

 70%                                         64%
 Series D                       9%            14%             20%           15%           14%           17%            17%          14%

 Series E and Higher            20%           12%             14%           15%           18%           16%            24%          24%

results by industry for current quarter — The table below sets forth the direction of price changes,
Barometer results and number of financings for companies receiving financing in 2Q12, compared to their
previous round, by industry group. Companies receiving Series A financings are excluded as they have no
previous By Industry Down Rounds Over Time
Resultsrounds to compare.

                                                                                                               Number of
 Industry                      Up Rounds           Down Rounds         Flat Rounds         Barometer
                                                                                                               Financings

 Software                            86%               8%                   5%              +123%*                 37

 Hardware                            71%              15%                   14%                 +46%               14

 Lifescience                         53%               6%                   41%                 +11%               17

 Internet/Digital Media              93%               0%                   7%              +248%*                 14

 Cleantech                           25%              75%                   0%                  -34%               4

 Other                               0%               50%                   50%                 -33%               2

 Total all Industries                74%              11%                   15%                 99%                88

*These include the two previously mentioned companies with greater than 10x up rounds in 2Q12. Excluding those two
 companies, the Software Barometer would have been 86% and the Internet/Digital Media Barometer would have been
 176%.


down round results by industry — The table below sets forth the percentage of “down rounds,” by industry
groups, for each of the past eight quarters.
Results By Industry Down Rounds Over Time

  Down Rounds                Q3’10         Q4’10       Q1’11        Q2’11         Q3’11         Q4’11     Q1’12         Q2’12

  Software                   32%            7%         14%           14%          14%           11%       14%            8%

  Hardware                   35%           36%         15%           15%          12%            0%       42%            15%

  Lifescience                27%           36%         31%           31%          22%           33%       24%            6%

  Internet/Digital Media      0%           25%         11%           11%          18%           12%       20%            0%

  Cleantech                  60%           14%          0%           0%           11%           43%           0%         75%

  Other                      33%            0%         25%           25%           0%            0%           0%         50%

  Total all Industries       30%           21%          16%          16%          15%           16%       22%            11%




Barometer Rainbow Table Over Time

 Barometer                   Q3’10         Q4’10       Q1’11        Q2’11         Q3’11         Q4’11     Q1’12         Q2’12

 Software                    23%           121%        75%          121%          71%           105%      85%           123%**

 Hardware                    10%           38%         43%           35%          34%           58%           5%         46%

 Lifescience                 44%           -5%          -8%          6%            4%           36%       26%            11%

 Internet/Digital Media      82%           20%         77%          115%          201%*         122%      72%           248%**

  Cleantech                    5%          73%           54%         24%          41%           -3%       61%           -33%
trends in terms of venture financings in silicon valley — second quarter 2012                                                   8
  Total all Industries        28%          61%           52%         71%          69%           85%       52%            99%
  Other                          33%          0%            25%          25%         0%            0%               0%           50%

  Total all Industries           30%         21%            16%          16%        15%           16%               22%          11%


 barometer results by industry — The table below sets forth Barometer results by industry group for each of
 the last eight quarters.
 Barometer Rainbow Table Over Time

  Barometer                      Q3’10       Q4’10          Q1’11       Q2’11       Q3’11         Q4’11          Q1’12          Q2’12

  Software                       23%         121%           75%         121%        71%           105%              85%         123%**

  Hardware                       10%         38%            43%          35%        34%           58%               5%           46%

  Lifescience                    44%         -5%            -8%           6%         4%           36%               26%          11%

  Internet/Digital Media         82%         20%            77%         115%        201%*         122%              72%         248%**

  Cleantech                       5%         73%            54%          24%        41%           -3%               61%         -33%

  Total all Industries           28%         61%            52%          71%        69%           85%               52%          99%



  graphical representation of the Time
A Results By Industry Barometer Overabove is below.
 Financing Round                                                                                   **
 246%

  Series                         Q3’10       Q4’10          Q1’11       Q2’11       Q3’11         Q4’11          Q1’12          Q2’12
 220%
  Series A                       20%         13%            18%          19%        18%           24%               24%          24%

  Series B                       23%         26%            24% *        25%        31%           24%               18%          17%
 194%
  Series C                       28%         35%            24%          26%        19%           19%               17%          21%

  Series
 168% D                           9%         14%            20%          15%        14%           17%               17%          14%

  Series E and Higher            20%         12%            14%          15%        18%           16%               24%          24%
 142%

                                                                                                   **
 116%                                                                                                          Software

 Results By Industry Down Rounds Over Time                                                                     Hardware

  90%                                                                                                          Lifescience

  Industry                       Up Rounds      Down Rounds           Flat Rounds     Barometer
                                                                                                           Number of
                                                                                                               Internet/Digital Media        co
                                                                                                           Financings
                                                                                                               Cleantech
  64%
  Software                         86%                 8%                5%            +123%*                  37

  Hardware
  38%                              71%               15%                 14%              +46%                 14

  Lifescience                      53%                 6%                41%              +11%                 17

  12%
  Internet/Digital Media           93%                 0%                7%            +248%*                  14

  Cleantech                        25%               75%                 0%               -34%                  4
  -14%
  Other                             0%               50%                 50%              -33%                  2

  Total all Industries             74%               11%                 15%              99%                  88
  -40%
          Q3’10          Q4’10      Q1’11      Q2’11          Q3’11        Q4’11     Q1’12         Q2’12


 *Please note that one internet/digital media company had a 1500% up round in 3Q11. If this were excluded the Barometer
  result for the internet/digital media industry in 3Q11 would have been 73%.
**These include the two previously mentioned companies with greater than 10x up rounds in 2Q12. Excluding those two
  companies, the Software Barometer would have been 86% and the Internet/Digital Media Barometer would have been
  176%.
 Barometer Percentage Change By Series
 trends in terms of venture financings in silicon valley — second quarter 2012                                                           9
 200%
 Total all Industries        28%          61%           52%         71%         69%           85%             52%   99%




financing round — This quarter’s financings broke down by series according to the chart below.
Financing Round

 Series                     Q3’10        Q4’10          Q1’11      Q2’11        Q3’11         Q4’11        Q1’12    Q2’12

 Series A                    20%          13%           18%         19%         18%           24%             24%   24%

 Series B                    23%          26%           24%         25%         31%           24%             18%   17%

 Series C                    28%          35%           24%         26%         19%           19%             17%   21%

 Series D                     9%          14%           20%         15%         14%           17%             17%   14%

 Series E and Higher         20%          12%           14%         15%         18%           16%             24%   24%




Results By Industry Down Rounds Over Time

                                                                                                      Number of
 Industry                    Up Rounds        Down Rounds        Flat Rounds      Barometer
                                                                                                      Financings

 Software                       86%               8%                 5%            +123%*                37

 Hardware                       71%               15%               14%               +46%               14

 Lifescience                    53%               6%                41%               +11%               17

 Internet/Digital Media         93%               0%                 7%            +248%*                14

 Cleantech                      25%               75%                0%               -34%                4

 Other                          0%                50%               50%               -33%                2

 Total all Industries           74%               11%               15%               99%                88




trends in terms of venture financings in silicon valley — second quarter 2012                                               10
 7.5%



  0%
               Data
Fenwick & WestQ4’10 on Legal Terms Q2’11
    Q3’10               Q1’11                                Q3’11         Q4’11         Q1’12     Q2’12


liquidation preference — Senior liquidation preferences were used in the following percentages of financings.
Senior Liquidation Preferences

50%
45%                               43%
         41%                                                                        41%
40%                                             37%
35%                                                                        34%                       35%
                                                              31%
30%                 28%

25%
20%
15%
10%
 5%
 0%
        Q3’10      Q4’10         Q1’11         Q2’11         Q3’11        Q4’11      Q1’12         Q2’12




 Uncapped Liquidation
Liquidation Preferences
 The percentage of senior liquidation preference by series was as follows:

70%                                            64%
80%
                                 60%
        58%
60%                                                                                54%

                                  71%                                      47%                       51%
50%
                    40%
40%
      62%                                                    32%

30%
60%                                                                                        59%
                                                            57%                                       57%
20%   60%


10%
                                               44%                       50%                                Series B
                   46%          47%
 0%                                                                                                         Series C
                                                                                            45%
      Q3’10       Q4’10         Q1’11
                                 42%          Q2’11         Q3’11        Q4’11      Q1’12         Q2’12     Series D
                  42%                        39%                                                            Series E and Higher
40%

                                               37%          33%
                                                                         36%
                                                                                           32%
      32%
                                              31%
      27%          27%                                                   29%                          25%
                                                                                                      25%
                                24%
                                                                                                      25%
                                                                                           24%
                                                                        21%
20%                                                        20%
                  12%                                       19%




 0%
      Q3’10       Q4’10         Q1’11         Q2’11         Q3’11         Q4’11      Q1’12        Q2’12


trends in terms of venture financings in silicon valley — second quarter 2012                                          11
                                                                                4%              4%              4%
 4%

 3%

 2%
multiple liquidation preferences — The percentage of senior liquidation preferences that were multiple
liquidation preferences were as follows:
  1%
  Multiple Liquidation Preference
 0%
     Q3’10         Q4’10         Q1’11         Q2’11         Q3’11           Q4’11           Q1’12            Q2’12
                                                    29%
   30%

  Participation In Liquidation
   25%
                                                                  21%
   60% 20%
   20% 53%                                                                                     19%
   50%                               14%
                        45%                                                         13%
   15%                 13%           43%
                                                  38%           39%                          40%
   40%
   10%                                                                          31%                               34%

   30%
    5%
   20%                                                                                                                  3%

    0%
   10% Q3’10          Q4’10          Q1’11         Q2’11         Q3’11              Q4’11          Q1’12          Q2’12


    0%
    Corporate Reorganizations Q1’11                                                           Q2’12
        Q3’10       Q4’10                    Q2’11       Q3’11       Q4’11
Of the senior liquidation preferences that were a multiple preference, the ranges Q1’12 multiples broke down as
                                                                                  of the
follows:
    15%
  Range Of Multiples
    12%
                      100%                                      100%                                              100%
  100%
        9%
   90% 85%
     9%                              83%
                                                                                                     86%
   80%                                 7%                                         13%
                                                                                75%
   70%
     6%                                            62%
                                                    5%                                             5%
   60%                  4%                                                                                                    >1x - 2x
   50%
     3%                                                                                                                       >2x - 3x
                                                                     2%
   40%
                                                                                                                              >3x
   30%                                                                          25%
                                                   25%                                                                  1%
     0%
   20% 15%
        Q3’10           Q4’10
                                     17%
                                      Q1’11          Q2’11           Q3’11           Q4’11            Q1’12           Q2’12
                                                   13%                                               14%
   10%                                                                                                            0%
           0%           0%            0%                          0%
                                                                               0%                    0%           0%
    0%
       Q3’10        Q4’10           Q1’11         Q2’11         Q3’11           Q4’11          Q1’12            Q2’12
  Pay To Play Provisions

  20%
  Price Change

  16% 15%
  80%                                              14%
                                                                                                                  74%
                                                                70%
  70%                  67%          67%
  12%                                                                                          65%
                                                  61%
   60%
          52%
    8%
   50%                  7%                                                                                            8%     Up rounds
                                                                       6%                      6%
                                                                                                                             Down rounds
   40%                                   5%                                    5%
    4%                                                                                                                       Flat rounds
          30%
   30%
                                                  25%
                      21%                                                                      22%
    0%                              16%
   20%                                                          15%
trends in terms of venture financingsQ1’11
         Q3’10         Q4’10         in silicon valley — second quarter 2012
                                                    Q2’11         Q3’11             Q4’11          Q1’12          Q2’12                  12
          18%                                                                                                     15%
                                    17%
   10%                                            14%           15%                           13%                 11%
                       12%
1% 7.5%

0%
   Q3’10        Q4’10       Q1’11        Q2’11        Q3’11         Q4’11        Q1’12        Q2’12
    0%
participation in liquidation — The percentages of financings that provided for participation were as follows:
        Q3’10       Q4’10       Q1’11       Q2’11        Q3’11        Q4’11        Q1’12       Q2’12
Participation In Liquidation

 60%
  Senior Liquidation Preferences
          53%

 50%
  50%                  45%
                                      43%
  45%                                 43%                          39%                      40%
           41%                                      38%
 40%                                                                                       41%
  40%                                                37%
                                                                                 31%                             34%
  35%                                                                            34%                           35%
 30%                                                               31%
  30%                   28%

 20%
  25%
  20%
 10%
  15%
  10%
  0%
   5%Q3’10           Q4’10          Q1’11          Q2’11          Q3’11          Q4’11          Q1’12         Q2’12
     0%
          Q3’10       Q4’10          Q1’11          Q2’11         Q3’11         Q4’11       Q1’12            Q2’12
Range Of Multiples
Of the financings that had participation, the percentages that were not capped were as follows:
                      100%                                         100%                                             100%
  Uncapped Liquidation
100%
 90% 85%                              83%
 70%                                                64%
                                                                                                      86%
 80%
                                      60%                                         75%
 70%       58%
 60%                                                 62%                                  54%
 60%                                                                                                           51%          >1x - 2x
 50%                                                                             47%
 50%                   40%                                                                                                  >2x - 3x
 40%
 40%                                                               32%                                                      >3x
 30%                                                                              25%
 30%                                                 25%

 20% 15%                              17%
 20%                                                 13%                                              14%
 10%                                                                                                                0%
           0%           0%             0%                            0%
                                                                                0%                    0%            0%
 10%
  0%
          Q3’10       Q4’10          Q1’11          Q2’11          Q3’11          Q4’11         Q1’12         Q2’12
     0%
          Q3’10       Q4’10         Q1’11          Q2’11         Q3’11          Q4’11      Q1’12            Q2’12
Price Change

 80%
                                                                                                                    74%
                                                                   70%
 70%                  67%            67%
                                                                                                65%
                                                    61%
 60%
          52%
 50%                                                                                                                       Up rounds
                                                                                                                           Down rounds
 40%
                                                                                                                           Flat rounds
          30%
 30%
                                                    25%
                     21%                                                                        22%
 20%                                 16%                           15%
          18%                                                                                                       15%
                                     17%
                                                     14%            15%
trends in terms of venture financings in silicon valley — second quarter 2012                                       11%
 10%                   12%                                                                      13%                           13


  0%
                      4%

  3%                                                                  2%


                                                                                                                                 1%
  cumulative dividends – Cumulative dividends were provided for in the following percentages of financings:
   0%
      Q3’10      Q4’10
  Cumulative Dividends      Q1’11        Q2’11       Q3’11        Q4’11        Q1’12       Q2’12

                                           8%
   8%
Pay To Play Provisions
         7%
  7%
20%                                                          6%              6%
  6%
                           5%
  5%
16% 15%
                                                     14%                                          4%                 4%                 4%

   4%
12%
  3%

  2%
 8%                   7%                                                                                                        8%
   1%                                                                  6%                              6%

                                      5%                                           5%
 4%
  0%
        Q3’10          Q4’10           Q1’11               Q2’11           Q3’11               Q4’11              Q1’12               Q2’12

 0%
    Q3’10         Q4’10       Q1’11                  Q2’11           Q3’11              Q4’11            Q1’12             Q2’12
   Participation In Liquidation
  antidilution provisions –The uses of antidilution provisions in the financings were as follows:
      60%
 Anti-Dilution Provisions
          53%

   50%
100%                  95% 45%                                          97%               97%             97%                    96%
        93%                            92% 43%         92%
                                                              38%            39%                                  40%
   40%
 80%                                                                                             31%                                      34%

      30%
                                                                                                                                          Ratchet
 60%
   20%                                                                                                                                    Weighted Average
                                                                                                                                          None
 40%
   10%


 20% 0%
            Q3’10          Q4’10           Q1’11             Q2’11           Q3’11              Q4’11              Q1’12               Q2’12
        4%                            5%              5%                                 3%
                      3%                                              2%                                    2%                   2%
   0% 3%                                                                                                                         2%
                      2%              3%              3%               1%                                    1%
                                                                                         0%
   Range Of Multiples
       Q3’10         Q4’10           Q1’11           Q2’11           Q3’11              Q4’11            Q1’12             Q2’12
                             100%                                             100%                                                        100%
   100%
      90%      85%
                                             83%
                                                                                                                          86%
      80%
                                                                                                  75%
      70%
                                                              62%
      60%                                                                                                                                           >1x - 2x
      50%
                                                                                                                                                    >2x - 3x
      40%
                                                                                                                                                    >3x
      30%                                                                                         25%
                                                              25%

      20%      15%                           17%
                                                              13%                                                         14%
      10%                                                                                                                                 0%
               0%               0%              0%                                0%
                                                                                                0%                        0%              0%
      0%
  trends in terms of venture financings in silicon valleyQ2’11
           Q3’10          Q4’10          Q1’11           — second quarter 2012
                                                                      Q3’11                      Q4’11              Q1’12               Q2’12        14
                                                                                                                             1%
    0%
          Q3’10         Q4’10          Q1’11          Q2’11             Q3’11          Q4’11              Q1’12          Q2’12


pay-to-play provisions – The percentages of financings having pay-to-play provisions were as follows:
 Pay To Play Provisions

  20%


  16% 15%
                                                     14%


  12%

Barometer Combined Total
   8%                   7%                                                                                                8%
100%                                                                      6%                         6%            *   99%

 90%                                    5%                                       5%
   4%                                                                            85%

 80%
                                                   71%
                                                                   69%
   0%
 70%
         Q3’10         Q4’10
                      61%             Q1’11          Q2’11          Q3’11            Q4’11            Q1’12             Q2’12
 60%
                                     52%
                                                                                               52%
Note that anecdotal evidence indicates that companies are increasingly using contractual “pull up”
50%
  Anti-Dilution Provisions
provisions instead of charter based “pay to play” provisions. These two types of provisions have similar
40%
economic effect but are implemented differently. The above information includes some, but likely not all, pull
  100%
30%
      28%
                     95%                                   97%         97%        97%              96%
          93%                    92%
up provisions, and accordingly may understate 92% use of these provisions.
                                              the
 20%
   80%
 10%

  0%                                                                                                                              Ratchet
     Q3’10
   60%              Q4’10          Q1’11          Q2’11          Q3’11          Q4’11            Q1’12            Q2’12
redemption – The percentages of financings providing for mandatory redemption or redemption at the option of
                                                                                                           Weighted Aver
the investor were as follows:                                                                              None
 Redemption
   40%

 30%
   20%

        4%                              5%               5%                            3%
                        3%                                               2%                               2%                 2%
      22%
22.5%
    0% 3%                                                         21%                                                        2%
                        2%           20%3%               3%              1%                                1%
                      19%                          19%                                 0%
                                                                                                18%
         Q3’10        Q4’10           Q1’11          Q2’11          Q3’11            Q4’11            Q1’12             Q2’12
                                                                                                                       16%
 15%

                                                                                9%

 7.5%



  0%
        Q3’10        Q4’10          Q1’11          Q2’11          Q3’11          Q4’11           Q1’12            Q2’12



 Senior Liquidation Preferences

 50%
 45%                                43%
        41%                                                                                    41%
40%                                                  37%
trends in terms of venture financings in silicon valley — second quarter 2012                                                     15
35%                                                                              34%                                   35%
                                                                  31%
                      28%
  5%
                                                                                                3%

  0%
       Q3’10         Q4’10       Q1’11     Q2’11        Q3’11       Q4’11        Q1’12       Q2’12
corporate reorganizations – The percentages of post-Series A financings involving a corporate reorganization
(i.e. reverse splits or conversion of shares into another series or classes of shares) were as follows:
  Corporate Reorganizations

  15%


  12%

         9%
   9%
                                   7%                                13%
                                                                                                                            com
   6%                                          5%                                5%                                            x
                      4%

   3%                                                    2%


                                                                                                1%
   0%
        Q3’10         Q4’10       Q1’11        Q2’11     Q3’11        Q4’11          Q1’12    Q2’12



     n	 Notes on Methodology.
Pay To Play Provisions

 20%          When interpreting the Barometer results please bear in mind that the results reflect the average price
              increase of companies raising money in a given quarter compared to their prior round of financing,
 16% 15%      which was in general 12 to 1814%months prior. Given that venture capitalists (and their investors)
              generally look for at least a 20% IRR to justify the risk that they are taking, and that by definition we
 12%          are not taking into account those companies that were unable to raise a new financing (and that likely        com
              resulted in a loss to investors), a Barometer increase in the 40% range should be considered normal.             x
  8%                  7%                                                                       8%
                                                           6%                   6%
          When comparing current period results to prior period results based on third party data (e.g., amounts
                               5%                            5%
  4%      invested by venture capitalists, amount of M&A proceeds, etc.), we use the prior period results initially
          published by the third party for the period, not the results that have been updated with additional
  0%      information over time, to provide better comparability with the current period published results. For
      Q3’10        Q4’10     Q1’11       Q2’11      Q3’11       Q4’11     Q1’12      Q2’12
          example, when comparing fourth quarter results to third quarter results, we use the initially published
          third quarter results, typically provided in October, not the updated results that are typically
  Anti-Dilution Provisions
          provided in January. Such situations are set forth in our report with a parenthetical as to the date the
 100%     information was initially reported.
                     95%                              97%        97%      97%           96%
         93%                       92%         92%


  80%
       n	     Disclaimer.
              The preparation of the information contained herein involves assumptions, compilations and analysis,
                                                                                                    Ratchet
  60%         and there can be no assurance that the information provided herein is error-free. Neither Fenwick &           com
                                                                                                    Weighted Average
                                                                                                     for
              West LLP nor any of its partners, associates, staff or agents shall have any liabilityNone any information
  40%         contained herein, including any errors or incompleteness. The contents of this report are not intended,          x
              and should not be considered, as legal advice or opinion.
  20%

       n	 Contact/Sign
         4%       3%          Up Information
                                    5%         5%                     3%             2%         2%
                                                          2%
   0% 3%                                                                              2%
                                          this
         For additional information about3% report please contact Barry Kramer at 650-335-7278;
                   2%         3%                   1%                 0%  1%

            bkramer@fenwick.com or Michael Patrick at 650-335-7273; mpatrick@fenwick.com at Fenwick & West.
        Q3’10     Q4’10     Q1’11      Q2’11       Q3’11      Q4’11     Q1’12     Q2’12

              To be placed on an email list for future editions of this survey please visit fenwick.com/vcsurvey and
              go to the sign-up link at the bottom of the page.
              © 2012 Fenwick & West LLP

trends in terms of venture financings in silicon valley — second quarter 2012                                          16

				
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