In the third quarter of 2018, both deal volumes and aggregate dollars raised remained extremely high. In Q3 2018, Cooley handled 243 disclosable deals, representing more than $6.6 billion of invested capital. Up rounds represented 87% of deals during the quarter. Our data points to a notable increase in median pre-money valuations in later stage deals relative to prior quarters, with Series C median pre-money valuations rising from $115 million to $190 million and Series D and later median pre-money valuations rising from $245 million to $450 million. In Q3, Cooley handled six disclosable deals having pre-money valuations greater than $1 billion, one of which had a valuation greater than $6 billion.
Other than late-stage median valuations, deal terms during the quarter trended modestly toward the investors. For example, the percentage of deals with no participation feature decreased from 87% in Q2 to 83% in Q3.
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Commentary from Bruce Booth of Atlas Venture
On deal terms: The pendulum is definitely favoring entrepreneurs and founders, which in life sciences also typically includes venture creation-focused investors.
On shifting dynamics: These trends bring life sciences terms closer to where technology terms have been in recent years – where companies and entrepreneurs have many options to play off each other.
On pharma deal flow: There’s been a real disconnect between pharma partnering and the equity capital markets recently, in particular around M&A. … If the equity markets cool considerably, I would anticipate an increase in pharma dealmaking.
On market outlook: I think we’ll see a cooling of venture financing and public offerings through the end of 2018 with a likely resurgence in early 2019 as markets stabilize and IPO activity picks up again.
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