01/30/2006
Venture Financing Report—January 2006
The overall investment climate for privately-held startups remained strong in the third quarter of 2005, continuing the strength that was seen in the first half of the year. According to Cooley Godward's report, covering 80 venture capital transactions that closed in the quarter, early-stage startups continue to attract solid interest from centure capitalists. Companies receiving Series A and B financing accounted for 71% of all deals in the third quarter of 2005, up from just 62% in the same period of 2004. Series A financings alone accounted for 51% of all deals in the most recent quarter. The report also found that company valuations are continuing to rise when measured against prior financings for the same companies. The percentage of up-round financings rose to 69% in the third quarter of 2005, a significant jump from the previous wuarter's 54%. Lastly, the report found that entrepreneurs are striking better deals with investors. Ratchet antidilution provisions accounted for just 5% of all deals in the third quarter, compared to 18% in the same period of 2004. Nearly 10% of all deals in the third quarter of 2005 had no antidilution provision, compared to just 8% in the same period of 2004.
View the report