Q3 2021 Venture Financing Report –
Deal Volumes Moderate as Terms Continue to Favor Companies

The third quarter of 2021 continued to support a strong financing environment, as we have witnessed throughout the year. In Q3, Cooley handled 339 disclosable deals representing more than $18.1 billion of invested capital. While slightly lower than recent prior quarters, this is still robust compared to historical trends. Median pre-money valuations remained strong during the quarter, and we saw significant valuation increases in Series A and B rounds. Of note, 47% of transactions had a median pre-money valuation greater than $100 million. Similarly, the percentage of transactions that were up rounds reached another notable level, as 97% of transactions during the quarter were up rounds.

Deal terms in Q3 continued a company-friendly trend, as we have seen throughout the year. For example, only about 3% of transactions involved the sale of fully participating preferred stock, the percentage of transactions that included a recapitalization declined, and a smaller percentage of our life sciences deals included tranching. Q3 did show a slight uptick in the utilization of pay-to-play provisions – but even with that increase, only approximately 3% of our disclosable deals incorporated those structures.

Spotlight on life sciences

After a surge in deal volumes in Q2, Cooley handled 61 disclosable life sciences-focused deals in Q3 2021, representing more than $3.5 billion of invested capital. Though deal volume was down relative to Q3 2020, the dollars raised represented a 25% increase relative to the same quarter of 2020. Of note, the percentage of life sciences deals structured in tranches decreased to just over 8% of transactions in Q3. This represented a marked decrease from prior quarters, which may be a sign of investor optimism in the sector. To view more details on life sciences trends, use the “Life Sciences” filter in our interactive data visualization tool.

Spotlight on technology

In a continuation of robust trends seen throughout the year, Cooley handled 195 disclosable technology sector deals in Q3 2021, representing more than $9.9 billion of invested capital. Deal volume was more than 19% higher relative to Q3 2020. Aggregate dollars raised in Q3 2021 increased 77% relative to Q3 2020. To view more details on technology sector trends, use the “Technology” filter in our interactive data visualization tool.

View the interactive visualization on Cooley GO

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