08/13/2009
Venture Financing Report—August 2009
In general the second quarter of 2009 showed signs of improvement in market terms for companies. Median pre-money valuations increased from the low points seen in the prior two quarters and, although a majority of transactions continued to be down or flat rounds, a higher percentage of deals were up rounds as compared to the prior quarter. While fewer transactions this past quarter included pay-to-play provisions, a significant number of deals continue to include more onerous terms such as full ratchet anti-dilution protection and greater than 1x fully participating liquidation preferences.
While there appear to be some encouraging early signs of improvements and reversal of some of the downward trends of the prior two quarters, transaction volumes and valuations during this past quarter and during the first half of the year are significantly below the first half of last year.
We expect to continue this more detailed report for the next several quarters as we hope we will see the market stabilize. Regular readers of these reports will find the data they are accustomed to receiving in the Annex at the end of this report, along with other statistical data collected for the current period.
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