Buzz Archive:
Trends in Terms of Venture Financings In the San Francisco Bay Area (First Quarter 2007)

by Barry J. Kramer and Michael J. Patrick of Fenwick & West, 6/5/2007

Did you know:

• Up rounds exceeded down rounds for the thirteenth quarter in a row--the largest ratio of up rounds to down rounds since early 2002.
• Eleven 1Q07 financings in which the purchase price of the stock sold in the financing was at least three times higher than the prior round. Of these eleven financings, most were in Web 2.0 and related fields.
• Non price terms of financings in 1Q07 were also company favorable, with the use of senior liquidation preference and participating liquidation preference at the lowest levels since 2002. (for the most detailed info available on non-price deal terms, see our new Private Equity Data Center)
• Acquisitions of venture-backed companies in the U.S. in 1Q07 was very strong, with 95 transactions totaling $9.4 billion compared to 79 transactions totaling $7.5 billion in 4Q06. Acquisition activity in 1Q07 was the highest amount in dollar terms since 4Q00. The median acquisition amount, at $105 million, was very strong, and approximately equal with the internet bubble year of 2000.
• but...IPOs of venture-backed companies declined on a transaction basis but were flat in dollar terms compared to 4Q06, with 13 IPOs raising $1.2 million in 1Q07 compared to 18 IPOs raising $1.2 million in 4Q06. Seven of the 13 IPOs were IT, the most since 3Q04, five were healthcare and one was retail.

All this when the Nasdaq was flat in 1Q07. Read more from Barry J. Kramer and Michael J. Patrick of Fenwick & West as they give us more Trends in Terms of Venture Financings In the San Francisco Bay Area (First Quarter 2007).