05/23/2008
Venture Financing Report—May 2008
The overall investment climate for privatelyheld startups improved slightly in the fourth quarter of 2007 after cooling in the third quarter. One sign of a stabilizing market is that the percentage of up-round financings increased, rising from 67% in the third quarter to 77% in the fourth quarter.
Further evidence of a healthy investing climate is that median pre-money valuations for all but Series D and later financings rose in the fourth quarter after falling in the third quarter. The median pre-money valuation for Series A financings rose from $5.6 million in the third quarter to $5.8 million in the fourth quarter, Series B financings rose from $20.3 million to $23.0 million in the comparable periods, and Series C jumped from $29.5 million to $62.8 million. The median pre-money valuation for Series D and later financings, on the other hand, fell from $100.0 million in the third quarter to $76.0 million in the fourth quarter.
Another notable change during the fourth quarter was that the percentage of later stage financings rose while the percentage of early stage financings declined from the previous quarter. Series D or higher financings accounted for 18% of all transactions in the fourth quarter, up from 13% in the third quarter. Series A financings accounted for just 26% of all transactions, the smallest percentage in two years, down from 33% in the third quarter.
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