04/04/2006
Venture Financing Report—April 2006
The overall investment climate for privately-help startups remained strong in the fourth quarter of 2005, continuing the strength that was seen in the first three quarters of the year. According to our report, covering 73 venture capital transactions that closed in the fourth quarter, company valuations continued to rise at a strong pace. Up-round financings, transactions in which the valuation of a company increased relative to the prior round of financing, accounted for 75% of all deals in the fourth quarter, a significant jump from the 64% reported in teh third quarter. In addition, median pre-money valuations of later-stage companies increased in each of the last three quarters of 2005. The report also found that entrepreneurs arestriking better deals with investors, as full participation and full ratchet antidilution provisions decreased again in the fourth quarter. Companies receiving later stage financings accounted for a greater percentage of all deals in the fourth quarter, which is consistent with prior year data showing a seasonal decrease in early-stage financings (Series A and B) were very strong, accounting for an average 74% of all deals.
View the report