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Venture Financing Report - Q1 2016 - Transaction Volumes Slow on Mixed Deal Terms

Overall financing activity in the first quarter of 2016 slowed from prior quarters. In Q1 2016, Cooley handled 135 disclosable deals, representing more than $3.1 billion of invested capital. Deal volume was down by 15% from Q4 2015, while invested capital decreased by 12% from the prior quarter. Of note, Series A deals made up 48% of Q1 transactions, a level not seen in over a year. Median pre-money valuations increased in both Series A and Series C transactions, while declining in Series B and D+ deals. In general, valuations remained relatively strong based on historical data from prior quarters. The percentage of up rounds remained strong at 88% of Q1 transactions. Deal terms during the quarter remained mixed. The utilization of fully participating preferred provisions decreased from the prior quarter, while the utilization of drag-along provisions increased, primarily in Series A deals. We also saw a slight increase in the percentage of recapitalization transactions, while the percentage of deals structured in tranches decreased during the quarter.

This quarterly summary provides data reflecting Cooley's experience in venture capital financing terms and trends. Information is taken from a subset of the transactions in which Cooley served as counsel to either the issuing company or investors.

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