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Silicon Valley Venture Capital Survey Fourth Quarter 2018
Full Analysis
fenwick & west
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 1
fenwick & west
Silicon Valley Venture Capital SurveyFourth Quarter 2018
Full Analysis
Cynthia Clarfield Hess, Mark Leahy and Khang Tran
Background
We analyzed the terms of 234 venture financings closed in the fourth quarter of 2018 by companies
headquartered in Silicon Valley. We found that valuation results are at three-year highs, with the
software industry recording the strongest valuations. Our data also show a steep decline in the use of
multiple liquidation preferences.
Overview of Fenwick & West Results
Valuation results in the fourth quarter of 2018 improved upon the already strong levels recorded in the
prior quarters of the year and are at three-year highs.
� Up rounds exceeded down rounds 81% to 8%, with 11% flat in Q4 2018, an increase from Q3 when
up rounds exceeded down rounds 78% to 9%, with 13% flat.
� The Fenwick & West Venture Capital Barometer™ showed an average price increase in Q4 2018
of 85%, an increase from the 71% recorded in the prior quarter, and the highest average price
increase since Q3 2015.
� The median price increase of financings in Q4 2018 was 52%, an increase from the 42% recorded
in Q3, and the highest median price increase since Q2 2015.
� Stronger valuation results compared to the prior quarter were recorded across each series of
financing.
� The software industry recorded the strongest valuation results in Q4 2018, with an average price
increase of 118% and a median price increase of 58%, both significantly higher compared to the
prior quarter. The internet/digital media industry recorded the next strongest valuation results in
the quarter with an average price increase of 68% and a median price increase of 56% in Q4.
In contrast, the life sciences and hardware industries recorded weaker valuation results in Q4
compared to the prior quarter.
� The use of multiple liquidation preferences declined sharply in Q4 2018.
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 2
Overview of Other Industry Data
The fourth quarter of 2018 capped a strong year in the U.S. venture environment.
� The pace of investments has continued to decline; however, the amount of capital invested was
up in Q4 2018 compared to the prior quarter and the year-ago period. For the year, the pace of
investments declined moderately compared to 2017, but the amount of capital invested increased
substantially.
� Later stage (Series D and E+) deals continued to represent the smallest share of the deal count,
but the greatest share of the invested capital in 2018. Seed/angel investment deal allocation
declined to the lowest percentage since 2010.
� The San Francisco area again took in the largest share of investments in 2018, followed by the
New York and Silicon Valley areas, which came in second and third, respectively, in terms of deal
flow and third and second, respectively, in terms of share of invested capital.
� Initial public offering activity in 2018 was at a four-year high in terms of both the number of deals
and the amount of capital raised.
� U.S. M&A deal volume surged in 2018 while the aggregate value of these deals hit a record high.
� Venture capitalist firms raised a record amount in 2018. Fundraising for mega-funds (fund size of
more than $1 billion) was particularly strong.
Venture Capital Investment
U.S. venture capital investment deal flow in Q4 2018 declined compared to the prior quarter and
the year-ago period. However, owing in large part to the $12.8 billion raise by JUUL Labs, the total
dollar value of financings in Q4 2018 increased compared to Q3 2018 and was substantially higher
compared to Q4 2017. For the year, deal flow in 2018 declined moderately compared to 2017, but the
amount of capital invested in 2018 greatly increased compared to 2017.
A summary of results published by three leading providers of venture data is below:
Comparison between Q4 and Q3 2018:
Q4 2018
($Billions)
Q3 2018
($Billions)
Difference
%
Q4 2018
Deals
Q3 2018
Deals
Difference
%
VentureSource1 $43.0 $32.2 34% 1,343 1,451 -7%
PitchBook-NVCA2 $41.8 $31.5 33% 2,072 2,228 -7%
MoneyTree3 $25.0 $28.0 -11% 1,211 1,325 -9%
Average $36.6 $30.6 20% 1,542 1,668 -8%
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 3
Comparison between Q4 2018 and Q4 2017:
Q4 2018
($Billions)
Q4 2017
($Billions)
Difference
%
Q4 2018
Deals
Q4 2017
Deals
Difference
%
VentureSource1 $43.0 $22.1 95% 1,343 1,336 1%
PitchBook-NVCA2 $41.8 $20.4 105% 2,072 2,224 -7%
MoneyTree3 $25.0 $20.3 23% 1,211 1,379 -12%
Average $36.6 $20.9 75% 1,542 1,646 -6%
Comparison between 2018 and 2017:
2018
($Billions)
2017
($Billions)
Difference
%
2018
Deals
2017
Deals
Difference
%
VentureSource1 $130.4 $87.0 50% 5,883 5,668 4%
PitchBook-NVCA2 $130.9 $83.0 58% 8,948 9,489 -6%
MoneyTree3 $99.5 $76.4 30% 5,536 5,824 -5%
Average $120.3 $82.1 46% 6,789 6,994 -3%
1 Dow Jones VentureSource (“VentureSource”)
2 PitchBook-NVCA Venture Monitor (“PitchBook-NVCA”)
3 PwC/CB Insights MoneyTree™ Report (“MoneyTree”)
The trend toward fewer but larger deals manifested in a record 184 mega-rounds (investments of
at least $100 million) that closed in 2018, according to MoneyTree, surpassing the previous record
of 120 mega-rounds set just one year prior. In addition, a record 53 new VC-backed companies
reached unicorn status (a valuation of at least $1 billion) in 2018, up from the 29 new unicorns in 2017.
MEGA-ROUNDS AND NEW UNICORNS
YearMega-Rounds
New Unicorns
2014 80 362015 110 422016 66 132017 120 292018 184 53
0
20
40
60
80
100
120
140
160
180
200
2014 2015 2016 2017 2018
Mega-RoundsNew Unicorns
1
Source: MoneyTree
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 4
According to VentureSource, the median amount invested per financing round by venture capitalists
or venture capital-type investors (i.e., those making equity investments in early-stage companies
from a fund with multiple limited partners) was $8.0 million in 2018, up from $6.1 million in 2017 and
the highest median amount since 2000. While median deal sizes have increased across all stages
in recent years, later stage rounds recorded the largest gains with the median amount for later stage
rounds increasing from $15.0 million in 2017 to $20.0 million in 2018, the highest median amount
invested per later stage round by VCs in over 20 years. At the same time, according to PitchBook-
NVCA, the median age of companies receiving funding at each stage has also trended higher over
the past several years.
MEDIAN AMOUNT INVESTED PER FINANCING
Source: PitchBook-NVCA
Year All Stages Seed Round First RoundSecond Round Later Stage Restart
2014 $5.00 $0.88 $3.00 $7.00 $13.00 $14.002015 $5.50 $1.00 $3.33 $8.00 $14.00 $10.002016 $5.00 $1.32 $3.00 $6.50 $11.00 $7.062017 $6.13 $1.75 $4.20 $7.50 $15.00 $15.092018 $8.00 $2.20 $5.50 $10.00 $20.00 NS
$0
$5
$10
$15
$20
2014 2015 2016 2017 2018
1
All StagesSeed RoundFirst RoundSecond RoundLater StageRestart
Source: VentureSource
MEDIAN COMPANY AGE BY FINANCING ROUND
Year 2014 2015 2016 2017 2018Angel/Seed 1.9 2.1 2.3 2.4 2.9
Series A 2.9 3.3 3.4 3.6 3.8Series B 4.6 4.8 5.2 5.0 5.1Series C 6.5 6.2 6.2 6.7 6.7
Series D+ 8.4 8.3 8.8 8.7 8.7
0
1
2
3
4
5
6
7
8
9
10
2014 2015 2016 2017 2018
Angel/SeedSeries ASeries BSeries CSeries D+
Year 2014 2015 2016 2017 2018Angel/Seed 1.9 2.1 2.3 2.4 2.9
Series A 2.9 3.3 3.4 3.6 3.8Series B 4.6 4.8 5.2 5.0 5.1Series C 6.5 6.2 6.2 6.7 6.7
Series D+ 8.4 8.3 8.8 8.7 8.7
1
$ M
illio
nsYe
ars
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 5
According to Moneytree, seed/angel investment deal allocation (share of the total number of deals)
declined from 31% in 2017 to 25% in 2018, the lowest percentage since 2010. Seed/angel invested
capital allocation (share of the aggregate invested capital amount) also declined moderately from
4% in 2017 to 3% in 2018. Meanwhile, expansion stage (Series B and C) deal allocation recorded
the greatest gains, increasing from 19% in 2017 to 23% in 2018. Later stage (Series D and E+) deals
continued to represent the smallest share of the deal count at 10% in 2018, up slightly from 9% in
2017, but the greatest share of the invested capital at 37% in 2018, down moderately from 39% in
2018.
DEAL ALLOCATION BY FINANCING STAGE
Year Seed Stage Early Stage Expansion Stage Later Stage Other2014 35% 24% 20% 11% 10%2015 35% 25% 19% 10% 12%2016 34% 25% 18% 8% 15%2017 31% 25% 19% 9% 16%2018 25% 25% 23% 10% 17%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2015 2016 2017 2018
Seed StageEarly StageExpansion StageLater StageOther
1
Source: MoneyTree
INVESTED CAPITAL ALLOCATION BY FINANCING STAGE
Year Seed Stage Early Stage Expansion Stage Later Stage Other2014 4% 15% 35% 40% 6%2015 3% 16% 31% 44% 6%2016 4% 18% 33% 35% 9%2017 4% 16% 33% 39% 9%2018 3% 17% 33% 37% 10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2015 2016 2017 2018
Seed StageEarly StageExpansion StageLater StageOther
1
Source: MoneyTree
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 6
Deal allocation by industry was relatively unchanged from 2017 to 2018, with investments into
information technology companies again representing the greatest share of the deal count at 31%
in 2018, up slightly from 30% in 2017, followed by business and financial services companies at
23% in 2018, up slightly from 22% in 2017, and healthcare companies at 20% in both 2018 and 2017.
The IT industry also took in the greatest share of, and recorded the largest gains in, the amount of
invested capital, increasing from 23% in 2017 to 33% in 2018. The gains by the IT industry came at
the expense of the healthcare and business and financial services industries with the invested capital
allocations for these industries declining from 26% and 25%, respectively, in 2017 to 21% and 20%,
respectively, in 2018.
DEAL ALLOCATION BY INDUSTRY
Year
Business and Financial Services
Consumer Goods
Consumer Services
Energy and Utilities Healthcare
Industrial Goods and Materials
Information Technology
2014 24% 5% 19% 2% 19% 2% 28%2015 24% 5% 19% 1% 19% 3% 30%2016 23% 5% 17% 1% 19% 4% 31%2017 22% 6% 16% 1% 20% 4% 30%2018 23% 6% 15% 1% 20% 4% 31%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2015 2016 2017 2018
Business and Financial ServicesConsumer GoodsConsumer ServicesEnergy and UtilitiesHealthcareIndustrial Goods and MaterialsInformation Technology
1
Source: VentureSource
INVESTED CAPITAL ALLOCATION BY INDUSTRY
Year
Business and Financial Services
Consumer Goods
Consumer Services
Energy and Utilities Healthcare
Industrial Goods and Materials
Information Technology
2014 24% 3% 22% 5% 20% 2% 25%2015 23% 2% 25% 2% 22% 3% 22%2016 24% 3% 22% 3% 21% 3% 24%2017 25% 4% 17% 1% 26% 4% 23%2018 20% 4% 16% 1% 21% 4% 33%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2015 2016 2017 2018
Business and Financial ServicesConsumer GoodsConsumer ServicesEnergy and UtilitiesHealthcareIndustrial Goods and MaterialsInformation Technology
1
Source: VentureSource
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 7
Regionally, the San Francisco area continued to take in the largest share of investments in 2018 at
20% of the total number of deals, up slightly from 19% in 2017, and 28% of the invested capital, up
from 23% in 2017. The amount of capital invested in the San Francisco area reached a record high
of $27.5 billion in 2018, up from $17.7 billion in 2017 and surpassing the $26.5 billion previous high
in 2015. The New York metro area also set a new high with $13.3 billion in funding in 2018, up from
the previous high of $12.2 billion in 2017. Nevertheless, the New York metro area’s deal and invested
capital allocations declined from 14% and 16%, respectively, in 2017 to 13% and 13%, respectively,
in 2018. The Silicon Valley area again came in third in terms of share of deal count at 12% in 2018,
unchanged from 2017, and second in terms of share of invested capital at 18% in 2018, up slightly
from 17% in 2017.
DEAL ALLOCATION BY REGION
YearSan
Francisco Silicon ValleyNew York
Metro New England
Los Angeles/Orange County
All Other U.S.
2014 21% 13% 13% 10% 6% 37%2015 21% 13% 13% 10% 7% 36%2016 21% 12% 14% 9% 6% 38%2017 19% 12% 14% 9% 7% 38%2018 20% 12% 13% 10% 8% 38%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2015 2016 2017 2018
San FranciscoSilicon ValleyNew York MetroNew EnglandLos Angeles/Orange CountyAll Other U.S.
1
Source: MoneyTree
INVESTED CAPITAL ALLOCATION BY REGION
YearSan
Francisco Silicon ValleyNew York
Metro New England
Los Angeles/Orange County
All Other U.S.
2014 27% 19% 10% 9% 7% 29%2015 34% 13% 11% 9% 8% 24%2016 30% 13% 13% 11% 8% 25%2017 23% 17% 16% 10% 6% 28%2018 28% 18% 13% 11% 6% 24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2015 2016 2017 2018
San FranciscoSilicon ValleyNew York MetroNew EnglandLos Angeles/Orange CountyAll Other U.S.
1
Source: MoneyTree
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 8
IPO Activity
Initial public offering activity in 2018 was at a four-year high. According to VentureSource, there were
86 venture-backed IPOs that raised an aggregate of $11.4 billion in 2018, up from 60 venture-backed
IPOs that raised an aggregate of $9.3 billion in 2017.
U.S. VENTURE-BACKED IPOs DOLLARS RAISED
Year Dollars Raised2014 $11,986.782015 $7,991.302016 $2,852.442017 $9,259.712018 $11,430.61
$0
$3,000
$6,000
$9,000
$12,000
2014 2015 2016 2017 2018
Dollars Raised
1
$Mill
ions
Source: VentureSource
Source: VentureSource
The healthcare industry recorded by far the greatest number of IPOs with 59 in 2018, up from 29
healthcare IPOs in 2017. The aggregate amount raised in these healthcare IPOs increased from
$5.3 billion in 2017 to $6.3 billion in 2018. The gains by the healthcare industry accounted for most
of the increase in IPO activity. In contrast, the number of IPOs of information technology companies
declined from 18 in 2017 to 12 in 2018 and the aggregate amounts raised in these IT IPOs declined
from $5.5 billion in 2017 to $2.1 billion in 2018.
U.S. VENTURE-BACKED IPOs BY INDUSTRY
Year
Business and Financial Services
Consumer Goods
Consumer Services
Energy and Utilities Healthcare
Industrial Goods and Materials
Information Technology
2014 24 1 6 5 74 2 142015 11 1 5 1 49 1 112016 2 0 0 1 26 0 92017 6 0 4 2 29 1 182018 9 1 4 1 59 0 12
0
10
20
30
40
50
60
70
80
90
100
110
2014 2015 2016 2017 2018
Business and Financial ServicesConsumer GoodsConsumer ServicesEnergy and UtilitiesHealthcareIndustrial Goods and MaterialsInformation Technology
1
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 9
According to VentureSource, the median time from initial equity funding to IPO decreased from
7.4 years in 2017 to 5.2 years in 2018, the first decrease since 2015 and the shortest IPO timeline
observed since 2002. This decrease was attributable to the IPOs of healthcare companies, which
recorded a median time from initial equity funding to IPO of 3.5 years in 2018, substantially shorter
than the 7.1 years in 2017.
In contrast, the median amount raised prior to IPO increased from $123.0 million in 2017 to $179.8
million in 2018, the highest median amount in over 25 years. The median pre-money valuation at
time of IPO also increased from $360.3 million in 2017 to $371.2 million in 2018, the highest median
valuation since 2012.
MEDIAN TIME FROM INITIAL FUNDING TO IPO
Year Median Years2014 6.842015 6.142016 7.222017 7.362018 5.24
4
5
6
7
8
2014 2015 2016 2017 2018
1
Source: VentureSource
U.S. VENTURE-BACKED IPOs MEDIAN AMOUNT RAISED PRIOR TO IPO AND PRE-MONEY VALUATION AT
TIME OF IPO
Year
Median Amount
Raised Prior to IPO
Median Pre-Money
Valuation at Time of IPO
2014 $93.02 $246.562015 $93.95 $272.722016 $92.01 $232.202017 $105.86 $360.332018 $126.20 $371.16
$0
$50
$100
$150
$200
$250
$300
$350
$400
2014 2015 2016 2017 2018
2
Median Amount Raised Prior to IPOMedian Pre-Money Valuation at Time of IPO
Source: VentureSource
Year
s$
Mill
ions
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 10
Merger and Acquisition Activity
U.S. M&A deal volume surged in 2018, with VentureSource reporting a substantial increase in the
number of acquisitions of U.S. venture-backed companies from 707 in 2017 to 784 in 2018. The
overall value of these deals increased by an even greater percentage from $89.4 billion in 2017 to a
record $146.2 billion in 2018.
In contrast to the IPO market, M&A deal activity was buoyed by acquisitions of companies in the IT
industry. The IT industry recorded 307 deals for an aggregate value of $43.1 billion in 2018, up from
239 deals for an aggregate value of $32.1 billion in 2017.
U.S. VENTURE-BACKED M&A DEAL AMOUNTS
$ M
illio
ns
Year Deal Amounts2014 $121,162.732015 $93,160.462016 $94,202.802017 $89,353.022018 $146,226.24
$0
$25,000
$50,000
$75,000
$100,000
$125,000
$150,000
2014 2015 2016 2017 2018
1
Source: VentureSource
U.S. VENTURE-BACKED M&A DEALS BY INDUSTRY
Year
Business and Financial Services
Consumer Goods
Consumer Services
Energy and Utilities Healthcare
Industrial Goods and Materials
Information Technology
2014 160 24 113 20 99 18 2612015 174 24 95 13 108 13 2212016 152 12 118 8 97 14 2232017 182 28 138 9 97 14 2392018 204 18 126 3 113 12 307
0
100
200
300
400
500
600
700
800
900
2014 2015 2016 2017 2018
Business and Financial ServicesConsumer GoodsConsumer ServicesEnergy and UtilitiesHealthcareIndustrial Goods and MaterialsInformation Technology
1
Source: VentureSource
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 11
According to VentureSource, the median time from initial equity funding to acquisition was 5.0 years
in 2018, little changed from 2017.
MEDIAN TIME FROM INITIAL FUNDING TO M&A EXIT
Year Median Years2014 5.162015 4.822016 5.082017 5.012018 5.02
4
4.5
5
5.5
2014 2015 2016 2017 2018
1
Source: VentureSource
Venture Capital Fundraising
According to PitchBook-NVCA, venture capitalist firms raised a record $55.5 billion across 256 funds
in 2018, up from $34.1 billion across 254 funds in 2017.
Year Capital Raised # of Funds Closed
2014 $35.96 2882015 $36.01 2892016 $40.95 3102017 $34.14 2542018 $55.49 256
$0
$10
$20
$30
$40
$50
$60
2014 2015 2016 2017 2018
1
0
80
160
240
320
Capital RaisedNumber of Funds Closed
Source: PitchBook-NCVA
Year
s$
Bill
ions
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 12
The rise of larger financing rounds has resulted in VCs raising more outsized funds. Average and
median fund size continued their increases over the past several years to $226.5 million and $82.0
million, respectively, in 2018 from $140.5 million and $50.0 million, respectively, in 2017. Fundraising
for mega-funds (fund size of more than $1 billion) was particularly strong in 2018 with 11 such funds
closing in the year, the highest mega-fund closing count in over 10 years. Meanwhile, the number of
micro-funds (fund size of less than $50 million) declined from 116 such fund closings in 2017 to 92 in
2018, the lowest micro-fund closing count since 2011.
Meanwhile, the average and median number of months to close a fund declined significantly from
15.9 months and 13.0 months, respectively, in 2017 to 12.3 months and 12.0 months, respectively, in
2018, the lowest average and median fund closing period since 2011.
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 13
Fenwick & West Data on Valuation
PRICE CHANGE — The direction of price changes for companies receiving financing in a quarter,
compared to their prior round of financing.
The percentage of DOWN ROUNDS by series were as follows:
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
UpDownFlat
Price Change Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
Up 73% 77% 79% 70% 75% 78% 78% 81%
Down 18% 13% 10% 19% 15% 12% 9% 8%
Flat 9% 9% 11% 11% 10% 10% 13% 11%
8%
81%
11%
1
Series Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18B 17% 10% 12% 24% 15% 13% 0% 15%C 23% 17% 3% 7% 15% 7% 13% 5%D 14% 6% 10% 28% 20% 10% 15% 4%E and higher 18% 17% 16% 13% 10% 19% 11% 6%
0%
5%
10%
15%
20%
25%
30%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
BCDE and higher
6%
4%5%
15%
1
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 14
EXPANDED PRICE CHANGE GRAPH — Below is the direction of price changes for each quarter
since 2004.
!"#$%&$ !'()* !+()* !,()* !*()* !'()- !+()- !,()- !*()- !'(). !+(). !,()./0123"456 !"# $%# !&# $'# !(# $!# $'# $(# %)# $(# $%#7384123"456 &'# *"# &*# *+# &"# &"# *!# "(# "!# *!# *)#9:#%123"456 "(# "*# "!# "*# "'# )# "!# "*# ""# $# (#
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Up RoundsDown RoundsFlat Rounds
11%8%
81%
Average percentage of Up Rounds 68%
1
Q1’04
Q1’05
Q1’06
Q1’07
Q1’08
Q1’09
Q1’10
Q1’11
Q1’12
Q1’13
Q1’14
Q1’15
Q1’16
Q1’17
Q1’18
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 15
THE FENWICK & WEST VENTURE CAPITAL BAROMETER™ (magnitude of price change) — Below is
the average percentage change between the price per share at which companies raised funds in a
quarter, compared to the price per share at which such companies raised funds in their prior round
of financing. In calculating the average, all rounds (up, down and flat) are included, and results are
not weighted for the amount raised in a financing.
The Barometer results by series are as follows:
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Average Percentage Price Change 54% 64% 80% 74% 74% 70% 71% 85%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
Percent Change
Series B Series C Series DSeries E and higher
Combined total for all Series for Q1’17
Combined total for all Series for Q2’17
Combined total for all Series for Q3’17
Combined total for all Series for Q4’17
Combined total for all Series for Q1’18
Combined total for all Series for Q2’18
Combined total for all Series for Q3’18
Combined total for all Series for Q4’18
Up rounds 149% 100% 117% 78% 84% 90% 106% 116% 104% 96% 97% 110%Down rounds -42% -20% -67% -57% -40% -42% -44% -40% -28% -36% -49% -44%Net result 110% 81% 100% 58% 54% 64% 80% 74% 74% 70% 71% 85%Median net 73% 51% 54% 42% 29% 30% 46% 42% 41% 37% 42% 52%
This Number goes here
85%
1
Series Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18B 75% 98% 102% 110% 92% 117% 92% 110%C 35% 50% 90% 97% 81% 36% 58% 81%D 45% 25% 52% 16% 32% 64% 83% 100%E and higher 60% 55% 19% 44% 68% 49% 55% 58%
-5%
5%
15%
25%
35%
45%
55%
65%
75%
85%
95%
105%
115%
125%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
BCDE and higher
These numbers get added to the end each quarter.
110%
81%
100%
58%
Series Q3’16 Q4’16 Q1’17 Q2’17 Q3’17B 79% 107% 75% 98% 102%C 61% 41% 35% 50% 90%D 1% 16% 45% 25% 52%E and higher 18% -1% 60% 55% 19%
1
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 16
EXPANDED BAROMETER GRAPH — Below is the average percentage price change for each quarter
since we began calculating this metric in 2004.
!"#$%&$ !'()* !+()* !,()* !*()* !'()- !+()- !,()- !*()- !'(). !+(). !,().A#$3B&%&$ "%# *+# "%# &$# *)# )"# &+# )!# $)# &)# )(#
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
Average 58%
Percent Change Series B Series C Series D
Up rounds 101% 80% 117%Down rounds N/A -42% -54%Net result 92% 58% 83%Median net 68% 46% 50%
85%
1
Q1’04
Q1’05
Q1’06
Q1’07
Q1’08
Q1’09
Q1’10
Q1’11
Q1’12
Q1’13
Q1’14
Q1’15
Q1’16
Q1’17
Q1’18
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 17
MEDIAN PERCENTAGE PRICE CHANGE — Below is the median percentage change between the price per share at which companies raised funds in a quarter, compared to the price per share at which such companies raised funds in their prior round of financing. In calculating the median, all rounds (up, down and flat) are included, and results are not weighted for the amount raised in the financing. Please note that this is different from the Barometer, which is based on average percentage price change.
MEDIAN PERCENTAGE PRICE CHANGE BY SERIES.
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Median Percentage Price Change 29% 30% 46% 42% 41% 37% 42% 52%
0%
10%
20%
30%
40%
50%
60%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
Percent Change Series B Series C Series D Series E and higher
Combined total for all Series for
Q1’17
Combined total for all Series for
Q2’17
Combined total for all Series for
Q3’17
Combined total for all Series for
Q4’17
Combined total for all Series for
Q1’18
Combined total for all Series for
Q2’18
Combined total for all Series for
Q3’18
Combined total for all Series for
Q4’18Up rounds 149% 100% 117% 78% 84% 90% 106% 116% 104% 96% 97% 110%Down rounds -42% -20% -67% -57% -40% -42% -44% -40% -28% -36% -49% -44%Net result 110% 81% 100% 58% 54% 64% 80% 74% 74% 70% 71% 85%Median net 73% 51% 54% 42% 29% 30% 46% 42% 41% 37% 42% 52%
This Number goes here
52%
1
Series Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18B 43% 54% 48% 56% 49% 66% 68% 73%C 24% 23% 64% 60% 53% 22% 46% 51%D 25% 22% 40% 8% 26% 32% 50% 54%E and higher 32% 18% 10% 25% 11% 34% 14% 42%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
BCDE and higher
Percent Change Series B Series C Series D Series E and higher
Combined total for all Series for
Q1’17
Combined total for all Series for
Q2’17
Combined total for all Series for
Q3’17
Combined total for all Series for
Q4’17
Combined total for all Series for
Q1’18
Up rounds 149% 100% 117% 78% 84% 90% 106% 116% 104%Down rounds -42% -20% -67% -57% -40% -42% -44% -40% -28%Net result 110% 81% 100% 58% 54% 64% 80% 74% 74%Median net 73% 51% 54% 42% 29% 30% 46% 42% 41%
These numbers get added to the end each quarter.
73%
51%54%
42%
1
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 18
EXPANDED MEDIAN PRICE CHANGE GRAPH — Below is the median percentage price change for
each quarter since we began calculating this metric in 2004.
!"#$%&$ A"B') A*B') A&B') A)B') A"B'! A*B'! A&B'! A)B'! A"B'$ A*B'$ A&B'$C&5D#4 %# *"# $# "!# "+# *(# "&# &&# &*# *&# *"#
0%
10%
20%
30%
40%
50%
60%
70%
80%
Average 30%
Percent Change Series B Series C Series D Series E and higher
Combined total for all Series for
Q1’17
Combined total for all Series for
Q2’17
Combined total for all Series for
Q3’17Up rounds 149% 100% 117% 78% 84% 90% 106%Down rounds -42% -20% -67% -57% -40% -42% -44%Net result 110% 81% 100% 58% 54% 64% 80%Median net 73% 51% 54% 42% 29% 30% 46%
52%
1
Q1’04
Q1’05
Q1’06
Q1’07
Q1’08
Q1’09
Q1’10
Q1’11
Q1’12
Q1’13
Q1’14
Q1’15
Q1’16
Q1’17
Q1’18
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 19
RESULTS BY INDUSTRY FOR DIRECTION OF PRICE CHANGES AND AVERAGE AND MEDIAN
PRICE CHANGES — The table below illustrates the direction of price changes, and average and
median price change results, for companies receiving financing in this quarter, compared to their
previous round, by industry group. Companies receiving Series A financings are excluded as they
have no previous rounds to compare.
Industry
Up
Rounds
Down
Rounds
Flat
Rounds
Average
Price Change
Median
Price Change
Number of
Financings
Software 85% 3% 13% 118% 58% 78
Hardware 63% 26% 11% 44% 24% 19
Life Sciences 78% 11% 11% 35% 25% 27
Internet/Digital Media 79% 13% 8% 68% 56% 24
Other 92% 0% 8% 90% 48% 13
Total all Industries 81% 8% 11% 85% 52% 161
DOWN ROUND RESULTS BY INDUSTRY — The table below illustrates the percentage of “down
rounds,” by industry groups, for each of the past eight quarters.
Down Rounds Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
Software 20% 14% 10% 18% 16% 14% 11% 3%
Hardware 18% 17% 8% 28% 10% 5% 14% 26%
Life Sciences 17% 16% 9% 21% 16% 10% 5% 11%
Internet/Digital Media 24% 11% 8% 14% 17% 16% 5% 13%
Other 0% 8% 15% 13% 0% 16% 5% 0%
Total all Industries 18% 13% 10% 19% 15% 12% 9% 8%
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 20
BAROMETER RESULTS BY INDUSTRY — The table below sets forth Barometer results by industry
group for each of the last eight quarters.
Industry Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
Software 42% 87% 82% 62% 74% 75% 61% 118%
Hardware 81% 62% 82% 40% 97% 59% 58% 44%
Life Sciences 41% 15% 89% 31% 30% 63% 110% 35%
Internet/Digital Media 65% 57% 49% 179% 101% 61% 78% 68%
Other 69% 43% 107% 73% 72% 81% 70% 90%
Total all Industries 54% 64% 80% 74% 74% 70% 71% 85%
A graphical representation of the above data is below.
Industry Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Software 42% 87% 82% 62% 74% 75% 61% 118%Hardware 81% 62% 82% 40% 97% 59% 58% 44%Lifescience 41% 15% 89% 31% 30% 63% 110% 35%Internet/Digital Media 65% 57% 49% 179% 101% 61% 78% 68%
0%
30%
60%
90%
120%
150%
180%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
SoftwareHardwareLife SciencesInternet/Digital Media
C2/:076;D-0:-5/50923456/?
Industry Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18Software 46% 42% 87% 82% 62% 74%Hardware 50% 81% 62% 82% 40% 97%Lifescience 123% 41% 15% 89% 31% 30%Internet/Digital Media 31% 65% 57% 49% 179% 101%Other -5% 69% 43% 107% 73% 72%Total - All Industries 51% 54% 64% 80% 74% 74%
118%
44%
35%
68%
1
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 21
MEDIAN PERCENTAGE PRICE CHANGE RESULTS BY INDUSTRY — The table below illustrates the
median percentage price change results by industry group for each of the last eight quarters. Please
note that this different than the Barometer, which is based on average percentage price change.
Median % Price Change Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
Software 27% 36% 47% 37% 40% 46% 45% 58%
Hardware 38% 42% 56% 13% 52% 27% 30% 24%
Life Sciences 26% 14% 34% 24% 28% 19% 44% 25%
Internet/Digital Media 25% 18% 47% 51% 59% 25% 47% 56%
Other 59% 44% 18% 63% 35% 53% 37% 48%
Total all Industries 29% 30% 46% 42% 41% 37% 42% 52%
A graphical representation of the above data is below.
FINANCING ROUND — This quarter’s financings broke down by series according to the chart below.
Industry Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Software 27% 36% 47% 37% 40% 46% 45% 58%Hardware 38% 42% 56% 13% 52% 27% 30% 24%Lifescience 26% 14% 34% 24% 28% 19% 44% 25%Internet/Digital Media 25% 18% 47% 51% 59% 25% 47% 56%
0%
10%
20%
30%
40%
50%
60%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
SoftwareHardwareLife SciencesInternet/Digital Media
58%
24%25%
56%
1
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 22
Series Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
Series A 29% 28% 27% 29% 25% 24% 27% 31%
Series B 18% 23% 32% 26% 27% 24% 20% 20%
Series C 20% 23% 19% 15% 21% 19% 18% 18%
Series D 15% 9% 11% 13% 13% 13% 13% 11%
Series E and Higher 17% 17% 10% 17% 16% 19% 22% 20%
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 23
Fenwick & West Data on Legal Terms
LIQUIDATION PREFERENCE — Senior liquidation preferences were used in the following
percentages of financings.
The percentage of senior liquidation preference by series was as follows:
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Liquidation by Preference 28% 27% 25% 27% 20% 26% 24% 24%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
24%
1
Series Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18B 17% 29% 25% 20% 19% 13% 14% 17%C 38% 19% 23% 24% 15% 40% 26% 28%D 34% 33% 33% 44% 24% 27% 22% 12%E and higher 21% 31% 21% 28% 26% 28% 34% 34%
0%
10%
20%
30%
40%
50%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
BCDE and higher
Just graph these numbers.
17%
28%
12%
34%
1
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 24
MULTIPLE LIQUIDATION PREFERENCES — The percentage of senior liquidation preferences that
were multiple liquidation preferences was as follows:
Of the senior liquidation preferences that were a multiple preference, the ranges of the multiples
broke down as follows:
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18LIQUIDATION PREFERENCE 16% 5% 12% 11% 7% 11% 8% 0%
0%
5%
10%
15%
20%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
0%
1
Series Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18>1x – 2x 67% 100% 100% 100% 50% 80% 67% 0%>2x – 3x 33% 0% 0% 0% 50% 20% 33% 0%>3x 0% 0% 0% 0% 0% 0% 0% 0%
0%
20%
40%
60%
80%
100%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
>1x – 2x>2x – 3x>3x
Just graph these numbers.
0%0%0%
1
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 25
PARTICIPATION IN LIQUIDATION — The percentages of financings that provided for participation
were as follows:
Of the financings that had participation, the percentages that were not capped were as follows:
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Participation in Liquidation 22% 13% 11% 14% 10% 11% 11% 11%
0%
5%
10%
15%
20%
25%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
11%
1
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Uncapped 57% 69% 57% 42% 53% 56% 54% 58%
0%
25%
50%
75%
100%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
58%
1
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 26
CUMULATIVE DIVIDENDS – Cumulative dividends were provided for in the following percentages of
financings:
ANTIDILUTION PROVISIONS –The uses of (non-IPO) antidilution provisions in the financings were as
follows:
Please note that the chart above only applies to non-IPO anti-dilution provisions. In other words, the chart refers to anti-dilution provisions that protect the investor against a future venture financing at a price below what the investor paid. The chart does not include anti-dilution provisions designed to protect against an IPO at a price below the price paid by the venture investor (e.g., an IPO ratchet), because those provisions are generally only negotiated/included in very late-stage, high-value deals. We believe it would not be useful to provide a percentage of all financings that have IPO anti-dilution provisions, because it will provide a result that is artificially low. An analysis of IPO anti-dilution provisions is included in our Unicorn Survey, which by its nature is focused on late-stage, high-value deals.
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18CUMMULATIVE DIVIDENDS 7% 6% 8% 3% 6% 5% 6% 4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
4%
1
Type of Provision Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Ratchet 1% 0% 1% 0% 0% 0% 0% 0%Weighted Average 98% 99% 98% 99% 100% 98% 98% 97%None 1% 1% 1% 1% 0% 2% 2% 2%
0%
20%
40%
60%
80%
100%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
RatchetWeighted AverageNone
C2/:076;D-0:-5/50923456/?98%
0%2%
1
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 27
PAY-TO-PLAY PROVISIONS – The percentages of financings having pay-to-play provisions were as
follows:
REDEMPTION – The percentages of financings providing for mandatory redemption or redemption at
the option of the investor were as follows:
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18TOTAL ALL SERIES 4% 4% 2% 5% 6% 5% 2% 3%
0%
2%
4%
6%
8%
10%
12%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 Series Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18A 7% 4% 3% 0% 5% 4% 4% 0%B 3% 3% 4% 3% 0% 7% 6% 2%C 0% 3% 4% 0% 10% 10% 7% 3%D 0% 0% 0% 5% 8% 0% 3% 0%E and higher 9% 9% 8% 5% 6% 6% 5% 4%Total - All Series 4% 4% 4% 2% 5% 6% 5% 2%
3%
1
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18REDEMPTION 8% 8% 9% 7% 4% 5% 6% 6%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
6%
1
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 28
CORPORATE REORGANIZATIONS – The percentages of post-Series A financings involving a
corporate reorganization (i.e. reverse splits or conversion of shares into another series or classes of
shares) were as follows:
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18REDEMPTION 6% 5% 3% 6% 7% 6% 7% 6%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
6%
2
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 29
About our Survey
The Fenwick & West Venture Capital Survey has been published quarterly since the first quarter of
2002. Its goal is to provide information to the global entrepreneurial and venture community on the
terms of venture financings in Silicon Valley.
The survey is available to all, without charge, by signing up at www.fenwick.com/vcsurvey/sign-up.
We are pleased to be a source of information to entrepreneurs, investors, educators, students,
journalists and government officials.
Our analysis of Silicon Valley financings is based on independent data collection performed by our
lawyers and paralegals, and is not skewed toward or overly representative of financings in which our
firm is involved. We believe that this approach, compared to only reporting on deals handled by a
specific firm, provides a more statistically valid and larger dataset.
For purposes of determining whether a company is based in “Silicon Valley” we use the area code of
the corporate headquarters. The area codes included are 650, 408, 415, 510, 925, 916, 707, 831 and
209.
Note on Methodology
When interpreting the Barometer results please bear in mind that the results reflect the average
price increase of companies raising money in a given quarter compared to their prior round of
financing, which was on average about 18 months prior. By definition the Barometer does not
include companies that do not do follow-on financings (which may be because they went out of
business, were acquired or went public). Accordingly we believe that our results are most valuable
for identifying trends in the venture environment, as opposed to calculating absolute venture returns.
Please also note that our calculations are not “dollar weighted,” i.e. all venture rounds are treated
equally, regardless of size.
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 30
About the Authors
Cynthia Clarfield Hess is Co-Chair of Fenwick’s Startup and Venture Capital
Group. In her 25 plus years as a corporate attorney, Cindy has counseled
technology companies on a broad range of corporate transactional
matters, from formation matters and venture capital financings to mergers
and acquisitions and public offerings, representing both companies and
underwriters. She has worked with a wide range of high-technology clients –
from established technology stalwarts to emerging companies developing
disruptive technologies, which include some of the hottest and most innovative
companies in the mobile, SaaS and social media spaces.
Mark Leahy, Co-Chair of Fenwick’s Startup and Venture Capital Group
and a seasoned advisor to technology companies on a broad range of
corporate transactional matters, focuses on providing legal solutions that
advance his clients’ business objectives. His practice focuses on venture
capital financings, corporate governance, mergers and acquisitions, and
public offerings. His expertise spans a wide range of technologies, including
software, semiconductor, internet/e-commerce, and data management and
storage.
Khang Tran supports the firm’s knowledge management efforts by collecting
and sharing knowledge and expertise across the firm, which in turn, is
leveraged to improve the quality of legal services to the firm’s clients.
SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 31
Contact/Sign Up Information
For additional information about this report please contact Cynthia Hess at 650.335.7238;
chess@fenwick.com or Mark Leahy at 650.335.7682; mleahy@fenwick.com at Fenwick & West.
To view the most recent survey please visit fenwick.com/vcsurvey. To be placed on an email list for
future editions of this survey please visit fenwick.com/vcsurvey/sign-up.
Disclaimer
The preparation of the information contained herein involves assumptions, compilations and analysis, and there
can be no assurance that the information provided herein is error-free. Neither Fenwick & West LLP nor any of its
partners, associates, staff or agents shall have any liability for any information contained herein, including any errors or
incompleteness. The contents of this report are not intended, and should not be considered, as legal advice or opinion.
To the extent that any views on the venture environment or other matters are expressed in this survey, they are the views
of the authors only, and not Fenwick & West LLP.
© 2019 Fenwick & West LLP
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