Venture Financing Report - May 2010
Q1 2010 — A Solid Start to the Year
Cooley LLP is pleased to present our findings on venture financings for the first quarter of 2010. This report provides a summary of data reflecting our experience in venture capital financing terms and trends. Information is taken from transactions in which Cooley served as counsel to either the issuing company or the investors.
Overall, our data points to a continued improvement in the investment climate during the initial quarter of the year. Most notable was the significant increase in the number of up rounds, which reached a level we have not seen since the middle of 2008. The trend in some deal terms also showed increased optimism. We saw a decrease in the use of pay to play provisions and a marked decrease in recapitalization transactions. However, not all data pointed to an improving environment. Pre-money valuations in early rounds were flat from the prior quarter. Additionally, 31% of transactions in Q1 2010 were tranched deals, a signal of caution on the part of investors.
We hope you find this Update informative. Please let us know what other information you would find useful by contacting any of the Cooley partners listed at the end of the report or your local Cooley counsel.