Venture Financing Report - Q3 2013

Company-Friendly Deal Terms as Up Rounds Increase

Cooley LLP is pleased to present our findings on venture financings for Q3 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 another solid quarter with deal volumes consistent with the prior quarter. In Q3 2013, we saw up rounds reach over 74% of transactions, a level not seen since 2012. Median pre-money valuations decreased in all deal stages, with the exception of Series D+ transactions. The percentage of tranched transactions decreased in Q3 to just 16% of all deals, while the percentage of recapitalization transactions also decreased. Additionally, deal terms moved in a company-friendly direction during the quarter. We observed decreases in the use of fully participating preferred and pay-to-play provisions in Q3, compared to the prior quarter. The percentage of transactions utilizing no participating preferred features increased across all deal stages, another signal of investor confidence. We also witnessed a decrease in the use of drag-along provisions during the quarter, reaching levels not seen in over a year.

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.

View the Report