Venture Financing Report - Q1 2013

Financing Environment Cools as Deal Volumes Decline

Cooley LLP is pleased to present our findings on venture financings for Q1 2013, which can be found by clicking on the PDF link below. 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 pointed to a quarter marked by decreasing deal volumes and aggregate dollars raised. Median pre-money valuations decreased across all deal stages with the exception of Series A transactions. In fact, valuations for Series A deals rose to a level not seen in over a decade. We also saw a slight decrease in up versus flat/down rounds from the prior quarter. Up rounds represented 75% of all financings in Q1. Additionally, the percentage of deals structured in tranches spiked in Q1 and the percentage of recapitalization transactions also increased. Deal terms in Q1 2013 moved away from the company-friendly terms we observed through much of 2012. We observed increases in the use of participating preferred and pay-to-play provisions in Q1, compared to the prior quarter. The data also pointed to increased utilization of greater than 1x liquidation preferences in early stage transactions during the quarter.

We hope you find this Report 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.

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Related Contacts
Tom Coll  Partner San Diego
Craig Jacoby  Partner San Francisco
Ryan Naftulin  Partner London
Patrick Loofbourrow  Partner Singapore, Shanghai, San Diego
Mike Lincoln  Vice Chair Reston, Washington, DC
Babak Yaghmaie  Partner New York
Pat Mitchell  Partner Boston, New York
Matthew Bartus  Partner San Francisco, Singapore, Palo Alto
Dave Young  Partner Los Angeles