05/13/2010
Cooley Reports Solid First-Quarter Venture Financing Trends
Palo Alto, Calif. – May 13, 2010 – Cooley LLP today released its quarterly report on venture capital financing market terms for the first three months of 2010. The report analyzes Cooley's 83 venture capital transactions nationwide that closed during this period, totaling $935 million.
Highlights from the first quarter of 2010 include:
• Data points to a continued improvement in the investment climate. Most notable was the significant increase in the number of up rounds, which reached a level not experienced since mid-2008.
• The trend in some deal terms also showed increased optimism. There was a decrease in the use of pay-to-play provisions and a marked decrease in recapitalization transactions.
• However, not all data pointed to an improving environment. Pre-money valuations in early rounds were flat from the prior quarter. Additionally, 31 percent of transactions in Q1 2010 were tranched deals, a signal of caution on the part of investors.
"In the first quarter of 2010 investment terms continued to be favorable -- a trend that began in the second half of 2009," said
Craig Jacoby, head of Cooley's
Emerging Companies practice. "While not all indicators are positive, we believe the trends are moving in the right direction and point to a healthier investment climate."
Cooley's Private Company Financings Report is published quarterly and is based on private company transactions in which Cooley served as counsel to either the issuing company or the investors. A complete version of the report is available at
http://www.cooley.com/VFReport_May2010.
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