Silicon Valley Venture Capital Survey Fourth Quarter 2019 · U.S. venture capital investment deal flow in Q4 2019 declined compared to both the prior quarter and the year-ago period

Silicon Valley Venture Capital Survey Fourth Quarter 2019

Full Analysis

SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2019 1

Silicon Valley Venture Capital SurveyFourth Quarter 2019

Full Analysis

Cynthia Clarfield Hess, Mark Leahy and Khang Tran

Overview of Other Industry Data

The fourth quarter of 2019 concluded another strong year in the U.S. venture environment,

although deal activity, both in terms of deal volume and aggregate amount of capital invested,

trended downward throughout the year.

� The pace of investments and the aggregate amount of capital invested declined in Q4

2019 compared to both the prior quarter and the year-ago period. For the year, the pace of

investments and the aggregate amount of capital invested declined moderately compared to

2018.

� 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 2019. Seed/angel investment deal allocation

declined to the lowest percentage since 2010.

� The San Francisco Bay Area again took in the largest share of investments in terms of both deal

flow and invested capital in 2019, followed by the New York metro and Greater Boston areas.

� Initial public offering activity in 2019 declined moderately from a four-year high in 2018; however,

the aggregate amount raised in IPOs in 2019 was a record high and more than double the

amount raised in 2018.

� U.S. M&A deal volume and aggregate deal value in 2019 declined from 2018 levels.

� Venture capitalist fundraising remained strong, but declined in 2019 from the record high of

2018.

Venture Capital Investment

U.S. venture capital investment deal flow in Q4 2019 declined compared to both the prior

quarter and the year-ago period. The total dollar value of financings in Q4 2019 was relatively flat

compared to Q3 2019, but was substantially lower than in Q4 2018. For the year, both deal flow

and the amount of capital invested in 2019 declined moderately compared to 2018.


A summary of results published by three leading providers of venture data is below:

Comparison between Q4 and Q3 2019:

Q4 2019

($Billions)

Q3 2019

($Billions)

Difference

%

Q4 2019

Deals

Q3 2019

Deals

Difference

%

VentureSource1 $28.0 $28.0 0% 1,237 1,334 -7%

PitchBook-NVCA2 $34.2 $31.6 8% 2,215 2,724 -19%

MoneyTree3 $23.0 $27.5 -16% 1,324 1,481 -11%

Average $28.4 $29.0 -2% 1,592 1,846 -14%

Comparison between Q4 2019 and Q4 2018:

Q4 2019

($Billions)

Q4 2018

($Billions)

Difference

%

Q4 2019

Deals

Q4 2018

Deals

Difference

%

VentureSource $28.0 $45.5 -39% 1,237 1,563 -21%

PitchBook-NVCA $34.2 $47.4 -28% 2,215 2,704 -18%

MoneyTree $23.0 $40.0 -42% 1,324 1,469 -10%

Average $28.4 $44.3 -36% 1,592 1,912 -17%

Comparison between 2019 and 2018:

2019

Q4 2018

($Billions)

Difference

%

Q4 2019

Deals

Q4 2018

Deals

Difference

%

VentureSource $123.7 $137.0 -10% 5,542 6,618 -16%

PitchBook-NVCA $136.5 $140.2 -3% 10,777 10,542 2%

MoneyTree $108.0 $118.4 -9% 5,906 6,452 -8%

Average $122.7 $131.9 -7% 7,408 7,871 -6%

1 Dow Jones VentureSource (“VentureSource”)

2 PitchBook-NVCA Venture Monitor (“PitchBook-NVCA”)

3 PwC/CB Insights MoneyTree™ Report (“MoneyTree”)


There were a record 213 mega-rounds (investments of at least $100 million) that closed in 2019,

according to MoneyTree, surpassing the previous record of 194 mega-rounds set just one year

prior. However, the aggregate amount raised in mega-rounds declined from $56.6 billion in 2018

to $47.1 billion in 2019. In addition, a record 76 new VC-backed companies reached unicorn status

(a valuation of at least $1 billion) in 2019, up from the 43 new unicorns in 2018. With the addition of

these new unicorns, the U.S. unicorn count stands at a record 199 with an aggregate valuation of

$634.7 billion as of the end of 2019.

Number of Mega-Rounds and New Unicorns

Source: MoneyTree

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 $9.0 million in 2019, up from $7.5 million

in 2018 and the highest median amount since 2000. The median amount invested for later stage

rounds was flat in 2019 compared to the prior year, which contrasted with the prior few years when

later stage rounds recorded the greatest gains in median investment amount, while median deal

sizes across all other stages increased. Restart rounds, in particular, recorded the greatest gains

with the median amount invested in restart rounds increasing from $13.5 million in 2018 to $22.6

million in 2019, the highest median amount invested per restart round by VCs in over 20 years.

According to PitchBook-NVCA, the median age of companies receiving late VC funding has been

relatively flat over the past few years, while the median ages of companies receiving angel/seed

funding and early VC funding have trended higher.

Table 1

Year Mega-Rounds New Unicorns2015 110 422016 66 132017 120 292018 194 432019 213 76

0

20

40

60

80

100

120

140

160

180

200

220

240

2015 2016 2017 2018 2019

Mega-Rounds New Unicorns

76

213

1


Median Amount Invested Per Financing

Source: VentureSource

Median Company Age by Financing Round

Source: PitchBook-NVCA

Table 1

Year Angel/Seed Early VC Late VC2015 2.1 3.0 8.12016 2.3 3.1 8.12017 2.4 3.3 8.22018 2.7 3.3 8.02019 2.9 3.5 8.0

0

1

2

3

4

5

6

7

8

9

10

2015 2016 2017 2018 2019

Angel/Seed Early VC Late VC

3.5

2.9

8.0

2

Year

s

Year All Stages Seed Round First Round Second Round Later Stage Restart2015 $5.30 $1.03 $3.34 $8.00 $14.25 $10.002016 $5.00 $1.33 $3.00 $6.50 $11.00 $7.552017 $6.00 $1.70 $4.30 $7.50 $15.12 $15.802018 $7.50 $2.00 $5.20 $10.00 $20.00 $13.502019 $9.00 $2.50 $6.00 $11.50 $20.00 $22.60

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

2015 2016 2017 2018 2019

All Stages Seed Round First Round Second RoundLater Stage Restart

1

$ M

illio

ns


According to Moneytree, early stage (Series A) and expansion stage (Series B and C) deal

allocations (share of the total number of deals) increased in 2019, offset by a decline in seed stage

deal allocation from 30% in 2018 to 27% in 2019, the lowest percentage since 2010. Later stage

(Series D and E+) deals continued to represent the smallest share of the deal count at 9% in 2019,

flat compared to 2018, but the greatest share of the invested capital at 37% in 2019, up from 32%

in 2018. Expansion stage invested capital allocation also increased in 2019 compared to 2018,

while seed stage and early stage invested capital allocations were flat.

Deal Allocation by Financing Stage

Source: MoneyTree

Invested Capital Allocation by Financing Stage

Source: MoneyTree

Year Seed Stage Early Stage Expansion Stage Later Stage Other

2015 36% 25% 18% 9% 12%2016 35% 25% 17% 8% 15%2017 34% 25% 18% 8% 16%2018 30% 25% 20% 9% 15%2019 27% 27% 22% 9% 15%

0%

25%

50%

75%

100%

2015 2016 2017 2018 2019

Seed Stage Early Stage Expansion Stage Later StageOther

1

Year Seed Stage Early Stage Expansion Stage Later Stage Other

2015 3% 16% 31% 44% 5%2016 4% 19% 33% 36% 8%2017 4% 16% 33% 36% 11%2018 3% 16% 29% 32% 20%2019 3% 16% 34% 37% 10%

0%

25%

50%

75%

100%

2015 2016 2017 2018 2019

1

Seed Stage Early Stage Expansion Stage Later StageOther


Deal allocation by industry was relatively unchanged from 2018 to 2019, with investments into

information technology companies again representing the greatest share of the deal count in 2019

at 33%, up slightly from 32% in 2018, followed by business and financial services at 21%, down

slightly from 22% in 2018, and healthcare companies also at 21%, up slightly from 20% in 2018.

The IT industry also took in the greatest share of invested capital in 2019 at 26%, though this was

down considerably from 33% in 2018. The decline in invested capital allocation of the IT industry

was largely offset by an increase in invested capital allocation of the business and financial

services industry from 19% in 2018 to 25% in 2019. The consumer goods industry also recorded an

increase in invested capital allocation in 2019, while the consumer services and industrial goods

and materials industries recorded modest declines.

Deal Allocation by Industry


YearBusiness and

Financial Services

Consumer Goods

Consumer Services

Energy and Utilities Healthcare

Industrial Goods and Materials

Information Technology

2015 23% 5% 18% 1% 19% 3% 31%2016 22% 5% 17% 1% 19% 4% 32%2017 21% 6% 16% 1% 20% 4% 32%2018 22% 6% 15% 1% 20% 4% 32%2019 21% 6% 14% 1% 21% 4% 33%

0%

25%

50%

75%

100%

2015 2016 2017 2018 2019

Business and Financial Services Consumer GoodsConsumer Services Energy and UtilitiesHealthcare Industrial Goods and MaterialsInformation Technology

1


Invested Capital Allocation by Industry


Regionally, deal allocations in 2019 were largely unchanged from 2018, with the San Francisco

Bay Area continuing to take in the largest share of investments in 2019 at 30%, twice the share of

the New York-Newark metro area, which came in second in deal share. In terms of invested capital

allocation, the San Francisco Bay Area again came in first at 44% in 2019, down meaningfully

from 52% in 2018. The New York-Newark metro area received the second largest share of, and the

greatest gain in, the invested capital in 2019 at 16%, up from 12% in 2018.

YearBusiness and

Financial Services

Consumer Goods

Consumer Services




2015 22% 2% 25% 2% 22% 3% 23%2016 24% 3% 21% 3% 22% 3% 24%2017 22% 5% 19% 1% 25% 4% 25%2018 19% 6% 16% 1% 21% 5% 33%2019 25% 10% 14% 1% 21% 3% 26%

0%

25%

50%

75%

100%

2015 2016 2017 2018 2019


1


Deal Allocation by Region

Source: MoneyTree

Invested Capital Allocation by Region

Source: MoneyTree

YearSan Jose-San

Francisco-Oakland, CA

New York-Newark, NY-

NJ-CT-PA

Boston-Worcester-Providence,

MA-RI-NH-CT

Los Angeles-Long Beach,

CASeattle-

Tacoma, WA All Other U.S.

2015 34% 14% 8% 6% 3% 35%2016 32% 14% 8% 6% 3% 37%2017 31% 15% 8% 7% 3% 36%2018 31% 14% 8% 7% 3% 36%2019 30% 15% 8% 7% 3% 37%

0%

25%

50%

75%

100%

2015 2016 2017 2018 2019

San Jose-San Francisco-Oakland, CANew York-Newark, NY-NJ-CT-PABoston-Worcester-Providence, MA-RI-NH-CTLos Angeles-Long Beach, CASeattle-Tacoma, WAAll Other U.S.

1

YearSan Jose-San

Francisco-Oakland, CA

New York-Newark, NY-

NJ-CT-PA

Boston-Worcester-Providence,

MA-RI-NH-CT

Los Angeles-Long Beach,

CASeattle-

Tacoma, WA All Other U.S.

2015 48% 12% 9% 7% 2% 22%2016 44% 14% 10% 8% 2% 22%2017 40% 17% 9% 6% 2% 26%2018 52% 12% 9% 5% 2% 20%2019 44% 16% 8% 7% 3% 22%

0%

25%

50%

75%

100%

2015 2016 2017 2018 2019

San Jose-San Francisco-Oakland, CANew York-Newark, NY-NJ-CT-PABoston-Worcester-Providence, MA-RI-NH-CTLos Angeles-Long Beach, CASeattle-Tacoma, WAAll Other U.S.

1


IPO Activity

According to VentureSource, initial public offering activity in 2019 declined moderately from a four-

year high in 2018; however, the aggregate amount raised in IPOs in 2019 was a record high and

more than double the amount raised in 2018. There were 79 venture-backed IPOs in 2019, down

from 82 in 2018, that raised a record $25.0 billion in the aggregate, up from $11.2 billion in 2018.

As has been the case over the past several years, the healthcare industry once again recorded

by far the greatest number of IPOs with 52 in 2019, down from 56 healthcare IPOs in 2018. The

aggregate amount raised in these healthcare IPOs increased moderately from $6.1 billion in 2018

to $6.3 billion in 2019. The consumer services and consumer goods industries saw the greatest

increases in IPO activity in 2019, with eight consumer services company IPOs, up from four in

2018, raising an aggregate of $12.3 billion, up from $623.2 million in 2018, and three consumer

goods company IPOs, up from one in 2018, raising an aggregate of $2.7 billion, up from $15.6

million in 2018.

Number of U.S. Venture-Backed IPOs by Industry


YearBusiness and

Financial Services

Consumer Goods

Consumer Services




2015 11 1 4 1 49 1 112016 3 0 0 3 26 0 92017 7 0 4 2 28 1 192018 8 1 4 1 56 0 122019 4 3 8 1 52 0 11

0

10

20

30

40

50

60

70

80

90

2015 2016 2017 2018 2019

1



Aggregate Dollars Raised in U.S. Venture-Backed IPOs by Industry


According to VentureSource, the median time from initial equity funding to IPO increased from

5.4 years in 2018 to 6.3 years in 2019, moderately less than the 10-year average of 6.6 years. In

contrast, the median amount raised prior to IPO and the median pre-money valuation at time of

IPO both continued to trend upwards, with the median amount raised prior to IPO increasing from

$128.8 million in 2018 to a record $146.3 million in 2019 and the median pre-money valuation at

time of IPO increasing from $385.0 million in 2018 to a record $455.8 million in 2019.

YearBusiness and

Financial Services

Consumer Goods

Consumer Services




2015 $1,942.25 $346.37 $244.75 $3,910.51 $65.60 $1,393.582016 $297.20 $358.20 $1,614.42 $903.822017 $625.69 $586.00 $283.30 $2,276.78 $5.34 $6,244.252018 $2,019.59 $15.60 $623.16 $270.00 $6,102.41 $2,136.432019 $169.56 $2,746.98 $12,333.31 $168.00 $6,305.80 $3,307.17

$0

$3,000

$6,000

$9,000

$12,000

$15,000

$18,000

$21,000

$24,000

$27,000

$30,000

2015 2016 2017 2018 2019

1


$ M

illio

ns


Median Time from Initial Funding to IPO


U.S. Venture-Backed IPOs

Median Amount Raised Prior to IPO and Pre-Money Valuation at Time of IPO


Table 1

Year Median Years2015 6.132016 6.612017 7.482018 5.362019 6.28

0

1

2

3

4

5

6

7

8

9

10

2015 2016 2017 2018 2019

Year

s

6.3

2

Table 1

YearMedian Amount

Raised Prior to IPO

Median Pre-Money

Valuation at Time of IPO

2015 $94.25 $250.512016 $85.57 $234.652017 $105.86 $430.672018 $128.79 $385.042019 $146.31 $455.78

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

2015 2016 2017 2018 2019

Median Amount Raised Prior to IPOMedian Pre-Money Valuation at Time of IPO

$455.78

$146.31

3

$ M

illio

ns


Merger and Acquisition Activity

According to VentureSource, U.S. M&A deal volume declined from 759 acquisitions in 2018 to 708

acquisitions in 2019. The overall value of these deals also declined from $129.5 billion in 2018 to

$123.4 billion in 2019.

Other than the consumer goods industry, and to a lesser extent the energy and utilities and

industrial goods and materials industries, most industries recorded a decline in M&A deal volume.

While M&A deal activity for the IT industry was down in 2019, the aggregate value of the deals

increased considerably from $40.3 billion in 2018 to $49.3 billion in 2019.

Number of U.S. Venture-Backed M&A Deals by Industry


YearBusiness and

Financial Services

Consumer Goods

Consumer Services




2015 180 24 97 17 117 10 2302016 173 25 122 9 112 21 2412017 186 30 139 8 113 14 2402018 193 15 115 3 116 13 3042019 174 25 97 8 100 17 287

0

100

200

300

400

500

600

700

800

2015 2016 2017 2018 2019

1



Aggregate U.S. Venture-Backed M&A Deal Value by Industry


According to VentureSource, the median time from initial equity funding to acquisition continued to

trend upwards from 5.3 years in 2018 to 5.4 years in 2019.

Median Time from Initial Funding to M&A Exit


YearBusiness and

Financial Services

Consumer Goods

Consumer Services




2015 $28,500.17 $8,727.00 $5,681.22 $3,345.60 $21,408.48 $833.00 $16,179.722016 $30,124.38 $14,279.20 $17,104.67 $3,619.32 $22,392.77 $1,837.43 $31,172.622017 $22,293.20 $5,149.78 $12,206.08 $3,109.00 $13,498.75 $1,285.00 $31,427.082018 $41,797.56 $2,427.04 $20,504.03 $208.00 $18,990.19 $5,242.00 $40,332.352019 $29,215.30 $6,528.10 $16,499.66 $1,000.00 $18,230.75 $2,571.40 $49,306.92

$0$10,000

$20,000$30,000

$40,000$50,000$60,000

$70,000$80,000

$90,000$100,000$110,000

$120,000$130,000$140,000

2015 2016 2017 2018 2019

1


$ M

illio

ns

Table 1

Year Median Years2015 4.992016 5.122017 5.232018 5.272019 5.44

0

1

2

3

4

5

6

2015 2016 2017 2018 2019

5.4

2

Year

s


Venture Capital Fundraising

According to PitchBook-NVCA, venture capitalist fundraising, while still robust, declined in 2019

from the record high of 2018. VC firms in 2019 raised $46.3 billion, down from a record $58.0 billion

in 2018, across 259 funds, down from 299 funds in 2018.

U.S. VC Fundraising

Source: PitchBook-NVCA

The average fund size declined from $205.0 million in 2018 to $182.3 million in 2019, while the

median fund size increased from $75.0 million in 2018 to $78.5 million in 2019. Fundraising for

mega-funds (fund size of more than $1 billion) remained strong in 2019 with seven such funds

closing in the year, down from 10 such funds closing in 2018, but still the second 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 2018 to 93 in 2019, the lowest micro-fund

closing count since 2011.

The average and median number of months to close a fund increased moderately from 13.8

months and 12.0 months, respectively, in 2018 to 14.5 months and 12.4 months, respectively, in

2019.

Table 1

Year Capital Raised # of Funds Closed

2015 $36.93 3082016 $41.94 3212017 $33.89 2762018 $58.01 2992019 $46.30 259

$0

$15

$30

$45

$60

0

55

110

165

220

275

330

2015 2016 2017 2018 2019

# of Funds Closed Capital Raised

259

3

$ B

illio

ns


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 is as follows:

The percentage of DOWN ROUNDS by series were as follows:

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

UpDownFlat

Price Change Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

Up 0.75 0.78 0.78 0.81 0.81 0.86 0.81 0.84

Down 0.15 0.12 0.09 0.08 0.11 0.06 0.07 0.05

Flat 0.1 0.1 0.13 0.11 0.08 0.08 0.12 0.11

5%

84%

11%

Series Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19B 0.15 0.13 0 0.15 0.1 0.02 0.03 0.10C 0.15 0.07 0.13 0.05 0.09 0.04 0.03 0.03D 0.2 0.1 0.15 0.04 0.09 0.06 0.06 0.00E and higher 0.1 0.19 0.11 0.06 0.16 0.14 0.17 0.06

0%

5%

10%

15%

20%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

BCDE and higher

6%

0%

3%

10%


EXPANDED PRICE CHANGE GRAPH — Below is the direction of price changes for each quarter

since 2004.

Quarter Q1’04 Q2’04 Q3’04 Q4’04 Q1’05 Q2’05 Q3’05 Q4’05 Q1’06 Q2’06 Q3’06 Q4’06 Q1’07 Q2’07 Q3’07 Q4’07 Q1’08 Q2’08 Q3’08 Q4’08 Q1’09 Q2’09 Q3’09 Q4’09 Q1’10 Q2’10 Q3’10 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 AveragesUp Rounds 51% 67% 53% 60% 59% 65% 60% 69% 74% 69% 67% 67% 79% 81% 79% 69% 72% 68% 73% 54% 25% 32% 41% 47% 59% 55% 52% 67% 67% 61% 70% 70% 65% 74% 61% 71% 68% 64% 73% 71% 76% 80% 76% 79% 83% 83% 86% 82% 0.78 0.74 0.71 0.7 0.73 0.77 0.79 0.7 75% 0.78 0.78 0.81 0.81 0.86 0.81 0.84 69%Down Rounds 30% 21% 32% 28% 31% 31% 25% 19% 15% 25% 24% 22% 9% 11% 14% 22% 19% 13% 12% 33% 46% 46% 36% 30% 32% 27% 30% 21% 16% 25% 15% 16% 22% 11% 17% 8% 11% 22% 8% 16% 8% 6% 12% 6% 9% 8% 4% 12% 0.11 0.13 0.14 0.14 0.18 0.13 0.1 0.19 15% 0.12 0.09 0.08 0.11 0.06 0.07 0.05 18%Flat Rounds 19% 12% 15% 12% 10% 4% 15% 12% 11% 6% 9% 11% 12% 8% 7% 9% 9% 19% 15% 13% 29% 22% 23% 23% 19% 18% 18% 12% 17% 14% 15% 14% 13% 15% 22% 21% 21% 14% 19% 13% 16% 14% 12% 15% 8% 9% 10% 6% 0.11 0.13 0.15 0.16 0.09 0.1 0.11 0.11 10% 0.1 0.13 0.11 0.08 0.08 0.12 0.11 13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

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

Q1’19

Up RoundsDown RoundsFlat Rounds

11%

5%

84%

Average percentage of up rounds 69%


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:

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

Average Percentage Price Change 74% 70% 71% 85% 75% 77% 88% 142%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

140%

150%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

Percent Change

Series B Series C Series DSeries E and higher

Combined total for all Series for Q4’17








Combined total for all Series for

Q4'19

Up rounds 1.38 1.44 0.5 0.62 1.16 1.04 0.96 0.97 1.1 0.98 0.92 1.1 172%Down rounds -0.71 -0.72 -0.08 -0.14 -0.4 -0.28 -0.36 -0.49 -0.44 -0.38 -0.36 -0.26 -40%Net result 1.19 1.24 0.4 0.4 0.74 0.74 0.7 0.71 0.85 0.75 0.77 0.88 142%Median net 0.92 0.85 0.26 0.15 0.42 0.41 0.37 0.42 0.52 0.56 0.58 0.54 76%

This Number goes here

142%

Series Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19B 0.92 1.17 0.92 1.1 0.92 1.06 1.19 1.57C 0.81 0.36 0.58 0.81 0.73 0.76 1.24 1.93D 0.32 0.64 0.83 1 0.9 0.89 0.4 1.14E and higher 0.68 0.49 0.55 0.58 0.46 0.39 0.4 0.51

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

BCDE and higher

157%

193%

114%

51%


EXPANDED BAROMETER GRAPH — Below is the average percentage price change for each

quarter since we began calculating this metric in 2004.

Quarter Q1’04 Q2’04 Q3’04 Q4’04 Q1’05 Q2’05 Q3’05 Q4’05 Q1’06 Q2’06 Q3’06 Q4’06 Q1’07 Q2’07 Q3’07 Q4’07 Q1’08 Q2’08 Q3’08 Q4’08 Q1’09 Q2’09 Q3’09 Q4’09 Q1’10 Q2’10 Q3’10 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 AverageBarometer 17% 28% 17% 36% 24% 41% 38% 45% 64% 34% 49% 69% 75% 74% 79% 55% 49% 53% 55% 25% -3% -6% 11% 19% 21% 30% 28% 61% 52% 71% 69% 85% 52% 99% 78% 85% 57% 62% 65% 57% 85% 113% 79% 115% 100% 107% 116% 70% 53% 40% 52% 51% 54% 64% 80% 74% 74% 70% 71% 85% 75% 77% 88% 142% 60%

-20%-10%

-0%

10%

20%30%

40%

50%60%

70%

80%

90%100%

110%

120%130%

140%

150%

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

Q1’19

Average 60%

142%


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.

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

Median Percentage Price Change 41% 37% 42% 52% 56% 58% 54% 76%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

Percent Change Series B Series C Series D Series E and higher


Q4’17


Q1’18


Q2’18


Q3’18


Q4’18


Q1’19


Q2’19


Q3’19


Q4’19Up rounds 1.38 1.44 0.5 0.62 1.16 1.04 0.96 0.97 1.1 0.98 0.92 1.1 1.1Down rounds -0.71 -0.72 -0.08 -0.14 -0.4 -0.28 -0.36 -0.49 -0.44 -0.38 -0.36 -0.26 -0.26Net result 1.19 1.24 0.4 0.4 0.74 0.74 0.7 0.71 0.85 0.75 0.77 0.88 0.88Median net 0.92 0.85 0.26 0.15 0.42 0.41 0.37 0.42 0.52 0.56 0.58 0.54 0.54

This Number goes here

76%

Series Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

B 49% 66% 68% 73% 69% 87% 92% 109%

C 53% 22% 46% 51% 40% 53% 85% 70%

D 26% 32% 50% 54% 92% 60% 26% 75%

E and higher 11% 34% 14% 42% 38% 36% 15% 42%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

BCDE and higher



Q4’17


Q1’18


Q2’18


Q3’18


Q4’18


Q1’19


Q2’19


Q3’19

Up rounds 1.38 1.44 0.5 0.62 1.16 1.04 0.96 0.97 1.1 0.98 0.92 1.1Down rounds -0.71 -0.72 -0.08 -0.14 -0.4 -0.28 -0.36 -0.49 -0.44 -0.38 -0.36 -0.26Net result 1.19 1.24 0.4 0.4 0.74 0.74 0.7 0.71 0.85 0.75 0.77 0.88Median net 0.92 0.85 0.26 0.15 0.42 0.41 0.37 0.42 0.52 0.56 0.58 0.54

These numbers get added to the end each quarter.109%

70%75%

42%


EXPANDED MEDIAN PRICE CHANGE GRAPH — Below is the median percentage price change for

each quarter since we began calculating this metric in 2004.

Quarter Q1’04 Q2’04 Q3’04 Q4’04 Q1’05 Q2’05 Q3’05 Q4’05 Q1’06 Q2’06 Q3’06 Q4’06 Q1’07 Q2’07 Q3’07 Q4’07 Q1’08 Q2’08 Q3’08 Q4’08 Q1’09 Q2’09 Q3’09 Q4’09 Q1’10 Q2’10 Q3’10 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 AverageMedian 7% 21% 6% 15% 18% 29% 13% 33% 32% 23% 21% 33% 36% 42% 41% 27% 32% 25% 27% 5% 0% 0% 0% 0% 0% 11% 6% 37% 26% 25% 31% 47% 26% 29% 23% 41% 14% 19% 43% 27% 52% 75% 43% 61% 62% 74% 51% 39% 36% 31% 27% 27% 29% 30% 46% 42% 41% 37% 42% 52% 56% 58% 54% 76% 32%

0%

10%

20%

30%

40%

50%

60%

70%

80%

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

Q1’19

Average 32%



Q4’17


Q1’18


Q2’18


Q3’18


Q4’18


Q1’19


Q2’19


Q3’19Up rounds 1.38 1.44 0.5 0.62 1.16 1.04 0.96 0.97 1.1 0.98 0.92 1.1Down rounds -0.71 -0.72 -0.08 -0.14 -0.4 -0.28 -0.36 -0.49 -0.44 -0.38 -0.36 -0.26Net result 1.19 1.24 0.4 0.4 0.74 0.74 0.7 0.71 0.85 0.75 0.77 0.88Median net 0.92 0.85 0.26 0.15 0.42 0.41 0.37 0.42 0.52 0.56 0.58 0.54

76%


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 87% 6% 8% 158% 101% 52

Hardware 69% 8% 23% 100% 69% 13

Life Sciences 84% 0% 16% 40% 30% 19

Internet/Digital Media 87% 9% 4% 226% 87% 23

Other 86% 0% 14% 109% 114% 7

Total all Industries 84% 5% 11% 142% 76% 114

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 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

Software 16% 14% 11% 3% 12% 7% 9% 6%

Hardware 10% 5% 14% 26% 0% 0% 7% 8%

Life Sciences 16% 10% 5% 11% 27% 4% 0% 0%

Internet/Digital Media 17% 16% 5% 13% 5% 9% 8% 9%

Other 0% 16% 5% 0% 0% 7% 7% 0%

Total all Industries 15% 12% 9% 8% 11% 6% 7% 5%


BAROMETER RESULTS BY INDUSTRY — The table below sets forth Barometer results by industry

group for each of the last eight quarters.

Industry Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

Software 74% 75% 61% 118% 78% 85% 93% 158%

Hardware 97% 59% 58% 44% 40% 74% 91% 100%

Life Sciences 30% 63% 110% 35% 30% 56% 47% 40%


Other 72% 81% 70% 90% 120% 67% 93% 109%


A graphical representation of the above data is below.

Industry Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q3’19Software 0.74 0.75 0.61 1.18 0.78 0.85 0.93 1.58Hardware 0.97 0.59 0.58 0.44 0.4 0.74 0.91 1.00Life Sciences 0.3 0.63 1.1 0.35 0.3 0.56 0.47 0.40Internet/Digital Media 1.01 0.61 0.78 0.68 1.02 0.8 0.94 2.26

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

220%

240%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

SoftwareHardwareLife SciencesInternet/Digital Media

158%

100%

40%

226%


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 is different than the Barometer, which is based on average percentage price

change.

Median % Price Change Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

Software 40% 46% 45% 58% 66% 68% 77% 101%

Hardware 52% 27% 30% 24% 32% 48% 29% 69%

Life Sciences 28% 19% 44% 25% 9% 43% 16% 30%


Other 35% 53% 37% 48% 69% 60% 29% 114%


A graphical representation of the above data is below.

Industry Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19Software 0.4 0.46 0.45 0.58 0.66 0.68 0.77 1.01Hardware 0.52 0.27 0.3 0.24 0.32 0.48 0.29 0.69Life Sciences 0.28 0.19 0.44 0.25 0.09 0.43 0.16 0.30Internet/Digital Media 0.59 0.25 0.47 0.56 0.96 0.6 0.6 0.87

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

SoftwareHardwareLife SciencesInternet/Digital Media

101%

69%

30%

87%


FINANCING ROUND — This quarter’s financings broken down by series are as follows:

Series Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

Series A 25% 24% 27% 31% 32% 26% 35% 39%

Series B 27% 24% 20% 20% 21% 25% 21% 22%

Series C 21% 19% 18% 18% 18% 22% 17% 18%

Series D 13% 13% 13% 11% 12% 7% 8% 11%

Series E and Higher 16% 19% 22% 20% 17% 20% 19% 10%


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:

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19Liquidation by Preference 0.2 0.26 0.24 0.24 0.27 0.28 0.26 0.23

0%

5%

10%

15%

20%

25%

30%

35%

40%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

23%

Series Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19B 0.19 0.13 0.14 0.17 0.31 0.28 0.18 0.29C 0.15 0.4 0.26 0.28 0.24 0.21 0.22 0.15D 0.24 0.27 0.22 0.12 0.23 0.19 0.38 0.29E and higher 0.26 0.28 0.34 0.34 0.28 0.4 0.34 0.17

0%

8%

16%

24%

32%

40%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

BCDE and higher

Just graph these numbers.

29%

15%

29%

17%


MULTIPLE LIQUIDATION PREFERENCES — The percentage of senior liquidation preferences that

were multiple liquidation preferences was as follows:

Of the senior liquidation preferences that were multiple preferences, the ranges of the multiples

broke down as follows:

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19LIQUIDATION PREFERENCE 0.07 0.11 0.08 0 0.09 0.07 0.03 0.04

0%

5%

10%

15%

20%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

4%

Series Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19>1x – 2x 0.5 0.8 0.67 0 1 1 1 1>2x – 3x 0.5 0.2 0.33 0 0 0 0 0>3x 0 0 0 0 0 0 0 0

0%

20%

40%

60%

80%

100%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

>1x – 2x>2x – 3x>3x

100%

0%0%


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:

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19Participation in Liquidation 0.1 0.11 0.11 0.11 0.12 0.1 0.11 0.07

0%

5%

10%

15%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

7%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19Uncapped 0.53 0.56 0.54 0.58 0.65 0.68 0.6 0.71

0%

25%

50%

75%

100%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

71%


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.

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19CUMMULATIVE DIVIDENDS 0.06 0.05 0.06 0.04 0.04 0.05 0.05 0.03

0%

1%

2%

3%

4%

5%

6%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

3%

Type of Provision Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19Ratchet 0 0 0 0 0 0 0 0Weighted Average 1 0.98 0.98 0.97 1 0.98 0.99 0.99None 0 0.02 0.02 0.02 0 0.02 0.01 0.01

0%

20%

40%

60%

80%

100%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

RatchetWeighted AverageNone

Just graph these numbers.99%

0%1%


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:

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19TOTAL ALL SERIES 0.06 0.05 0.02 0.03 0.04 0.04 0.02 0.03

0%

2%

4%

6%

8%

10%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

3%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19REDEMPTION 0.04 0.05 0.06 0.06 0.06 0.06 0.06 0.11

0%

2%

4%

6%

8%

10%

12%

14%

16%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

11%


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:

DUAL-CLASS COMMON STOCK – The percentages of financings with dual-class common stock

structures, where there is one class of common stock with more votes per share than the other

class, were as follows:


0%

2%

4%

6%

8%

10%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

9%


0%

2%

4%

6%

8%

10%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

9%


IPO DOWNSIDE PROTECTIONS – The percentages of financings with IPO downside protections

were as follows:

Type of Provision Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19Blocking right (IPO price must be at least as high as financing price)

0.41 0.46 0.44 0.44 0.41 0.45 0.38 0.44

Ratchet (investors receive additional shares if IPO price is less than financing price, or in some cases, the financing price plus a premium)0.01 0 0 0.01 0.01 0 0.01 0

0%

10%

20%

30%

40%

50%

Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19

Blocking right (IPO price must be at least as high as financing price)

Ratchet (investors receive additional shares if IPO price is less than financing price, or in some cases, the financing price plus a premium)

0%

44%


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.

http://www.fenwick.com/vcsurvey/sign-up


About the Authors

Cynthia Clarfield Hess is co-chair of Fenwick’s startup and venture capital

group. Recognized as among the best corporate lawyers by Chambers

USA, 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, provides 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.

https://www.fenwick.com/professionals/Pages/cindyhess.aspx

https://www.fenwick.com/professionals/Pages/markleahy.aspx

https://www.fenwick.com/professionals/Pages/khangtran.aspx


Contact/Sign Up Information

For additional information about this report please contact Cynthia Hess at 650.335.7238;

[email protected] or Mark Leahy at 650.335.7682; [email protected] 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.

© 2020 Fenwick & West LLP

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Documents

Silicon Valley Venture Capital Survey Fourth Quarter 2019 · U.S. venture capital investment deal flow in Q4 2019 declined compared to both the prior quarter and the year-ago period