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Silicon Valley Venture Capital Survey Fourth Quarter 2018

Full Analysis

fenwick & west

SILICON VALLEY VENTURE CAPITAL SURVEY FOURTH QUARTER 2018 1

fenwick & west

Silicon Valley Venture Capital SurveyFourth Quarter 2018

Full Analysis

Cynthia Clarfield Hess, Mark Leahy and Khang Tran

Background

We analyzed the terms of 234 venture financings closed in the fourth quarter of 2018 by companies

headquartered in Silicon Valley. We found that valuation results are at three-year highs, with the

software industry recording the strongest valuations. Our data also show a steep decline in the use of

multiple liquidation preferences.

Overview of Fenwick & West Results

Valuation results in the fourth quarter of 2018 improved upon the already strong levels recorded in the

prior quarters of the year and are at three-year highs.

� Up rounds exceeded down rounds 81% to 8%, with 11% flat in Q4 2018, an increase from Q3 when

up rounds exceeded down rounds 78% to 9%, with 13% flat.

� The Fenwick & West Venture Capital Barometer™ showed an average price increase in Q4 2018

of 85%, an increase from the 71% recorded in the prior quarter, and the highest average price

increase since Q3 2015.

� The median price increase of financings in Q4 2018 was 52%, an increase from the 42% recorded

in Q3, and the highest median price increase since Q2 2015.

� Stronger valuation results compared to the prior quarter were recorded across each series of

financing.

� The software industry recorded the strongest valuation results in Q4 2018, with an average price

increase of 118% and a median price increase of 58%, both significantly higher compared to the

prior quarter. The internet/digital media industry recorded the next strongest valuation results in

the quarter with an average price increase of 68% and a median price increase of 56% in Q4.

In contrast, the life sciences and hardware industries recorded weaker valuation results in Q4

compared to the prior quarter.

� The use of multiple liquidation preferences declined sharply in Q4 2018.


Overview of Other Industry Data

The fourth quarter of 2018 capped a strong year in the U.S. venture environment.

� The pace of investments has continued to decline; however, the amount of capital invested was

up in Q4 2018 compared to the prior quarter and the year-ago period. For the year, the pace of

investments declined moderately compared to 2017, but the amount of capital invested increased

substantially.

� 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 2018. Seed/angel investment deal allocation

declined to the lowest percentage since 2010.

� The San Francisco area again took in the largest share of investments in 2018, followed by the

New York and Silicon Valley areas, which came in second and third, respectively, in terms of deal

flow and third and second, respectively, in terms of share of invested capital.

� Initial public offering activity in 2018 was at a four-year high in terms of both the number of deals

and the amount of capital raised.

� U.S. M&A deal volume surged in 2018 while the aggregate value of these deals hit a record high.

� Venture capitalist firms raised a record amount in 2018. Fundraising for mega-funds (fund size of

more than $1 billion) was particularly strong.

Venture Capital Investment

U.S. venture capital investment deal flow in Q4 2018 declined compared to the prior quarter and

the year-ago period. However, owing in large part to the $12.8 billion raise by JUUL Labs, the total

dollar value of financings in Q4 2018 increased compared to Q3 2018 and was substantially higher

compared to Q4 2017. For the year, deal flow in 2018 declined moderately compared to 2017, but the

amount of capital invested in 2018 greatly increased compared to 2017.

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

Comparison between Q4 and Q3 2018:

Q4 2018

($Billions)

Q3 2018

($Billions)

Difference

%

Q4 2018

Deals

Q3 2018

Deals

Difference

%

VentureSource1 $43.0 $32.2 34% 1,343 1,451 -7%

PitchBook-NVCA2 $41.8 $31.5 33% 2,072 2,228 -7%

MoneyTree3 $25.0 $28.0 -11% 1,211 1,325 -9%

Average $36.6 $30.6 20% 1,542 1,668 -8%


Comparison between Q4 2018 and Q4 2017:

Q4 2018

($Billions)

Q4 2017

($Billions)

Difference

%

Q4 2018

Deals

Q4 2017

Deals

Difference

%

VentureSource1 $43.0 $22.1 95% 1,343 1,336 1%

PitchBook-NVCA2 $41.8 $20.4 105% 2,072 2,224 -7%

MoneyTree3 $25.0 $20.3 23% 1,211 1,379 -12%

Average $36.6 $20.9 75% 1,542 1,646 -6%

Comparison between 2018 and 2017:

2018

($Billions)

2017

($Billions)

Difference

%

2018

Deals

2017

Deals

Difference

%

VentureSource1 $130.4 $87.0 50% 5,883 5,668 4%

PitchBook-NVCA2 $130.9 $83.0 58% 8,948 9,489 -6%

MoneyTree3 $99.5 $76.4 30% 5,536 5,824 -5%

Average $120.3 $82.1 46% 6,789 6,994 -3%

1 Dow Jones VentureSource (“VentureSource”)

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

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

The trend toward fewer but larger deals manifested in a record 184 mega-rounds (investments of

at least $100 million) that closed in 2018, according to MoneyTree, surpassing the previous record

of 120 mega-rounds set just one year prior. In addition, a record 53 new VC-backed companies

reached unicorn status (a valuation of at least $1 billion) in 2018, up from the 29 new unicorns in 2017.

MEGA-ROUNDS AND NEW UNICORNS

YearMega-Rounds

New Unicorns

2014 80 362015 110 422016 66 132017 120 292018 184 53

0

20

40

60

80

100

120

140

160

180

200

2014 2015 2016 2017 2018

Mega-RoundsNew Unicorns

1

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 $8.0 million in 2018, up from $6.1 million in 2017 and

the highest median amount since 2000. While median deal sizes have increased across all stages

in recent years, later stage rounds recorded the largest gains with the median amount for later stage

rounds increasing from $15.0 million in 2017 to $20.0 million in 2018, the highest median amount

invested per later stage round by VCs in over 20 years. At the same time, according to PitchBook-

NVCA, the median age of companies receiving funding at each stage has also trended higher over

the past several years.

MEDIAN AMOUNT INVESTED PER FINANCING

Source: PitchBook-NVCA

Year All Stages Seed Round First RoundSecond Round Later Stage Restart

2014 $5.00 $0.88 $3.00 $7.00 $13.00 $14.002015 $5.50 $1.00 $3.33 $8.00 $14.00 $10.002016 $5.00 $1.32 $3.00 $6.50 $11.00 $7.062017 $6.13 $1.75 $4.20 $7.50 $15.00 $15.092018 $8.00 $2.20 $5.50 $10.00 $20.00 NS

$0

$5

$10

$15

$20

2014 2015 2016 2017 2018

1

All StagesSeed RoundFirst RoundSecond RoundLater StageRestart

Source: VentureSource

MEDIAN COMPANY AGE BY FINANCING ROUND

Year 2014 2015 2016 2017 2018Angel/Seed 1.9 2.1 2.3 2.4 2.9

Series A 2.9 3.3 3.4 3.6 3.8Series B 4.6 4.8 5.2 5.0 5.1Series C 6.5 6.2 6.2 6.7 6.7

Series D+ 8.4 8.3 8.8 8.7 8.7

0

1

2

3

4

5

6

7

8

9

10

2014 2015 2016 2017 2018

Angel/SeedSeries ASeries BSeries CSeries D+

Year 2014 2015 2016 2017 2018Angel/Seed 1.9 2.1 2.3 2.4 2.9

Series A 2.9 3.3 3.4 3.6 3.8Series B 4.6 4.8 5.2 5.0 5.1Series C 6.5 6.2 6.2 6.7 6.7

Series D+ 8.4 8.3 8.8 8.7 8.7

1

$ M

illio

nsYe

ars


According to Moneytree, seed/angel investment deal allocation (share of the total number of deals)

declined from 31% in 2017 to 25% in 2018, the lowest percentage since 2010. Seed/angel invested

capital allocation (share of the aggregate invested capital amount) also declined moderately from

4% in 2017 to 3% in 2018. Meanwhile, expansion stage (Series B and C) deal allocation recorded

the greatest gains, increasing from 19% in 2017 to 23% in 2018. Later stage (Series D and E+) deals

continued to represent the smallest share of the deal count at 10% in 2018, up slightly from 9% in

2017, but the greatest share of the invested capital at 37% in 2018, down moderately from 39% in

2018.

DEAL ALLOCATION BY FINANCING STAGE

Year Seed Stage Early Stage Expansion Stage Later Stage Other2014 35% 24% 20% 11% 10%2015 35% 25% 19% 10% 12%2016 34% 25% 18% 8% 15%2017 31% 25% 19% 9% 16%2018 25% 25% 23% 10% 17%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017 2018

Seed StageEarly StageExpansion StageLater StageOther

1

Source: MoneyTree

INVESTED CAPITAL ALLOCATION BY FINANCING STAGE

Year Seed Stage Early Stage Expansion Stage Later Stage Other2014 4% 15% 35% 40% 6%2015 3% 16% 31% 44% 6%2016 4% 18% 33% 35% 9%2017 4% 16% 33% 39% 9%2018 3% 17% 33% 37% 10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017 2018

Seed StageEarly StageExpansion StageLater StageOther

1

Source: MoneyTree


Deal allocation by industry was relatively unchanged from 2017 to 2018, with investments into

information technology companies again representing the greatest share of the deal count at 31%

in 2018, up slightly from 30% in 2017, followed by business and financial services companies at

23% in 2018, up slightly from 22% in 2017, and healthcare companies at 20% in both 2018 and 2017.

The IT industry also took in the greatest share of, and recorded the largest gains in, the amount of

invested capital, increasing from 23% in 2017 to 33% in 2018. The gains by the IT industry came at

the expense of the healthcare and business and financial services industries with the invested capital

allocations for these industries declining from 26% and 25%, respectively, in 2017 to 21% and 20%,

respectively, in 2018.

DEAL ALLOCATION BY INDUSTRY

Year

Business and Financial Services

Consumer Goods

Consumer Services

Energy and Utilities Healthcare

Industrial Goods and Materials

Information Technology

2014 24% 5% 19% 2% 19% 2% 28%2015 24% 5% 19% 1% 19% 3% 30%2016 23% 5% 17% 1% 19% 4% 31%2017 22% 6% 16% 1% 20% 4% 30%2018 23% 6% 15% 1% 20% 4% 31%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017 2018

Business and Financial ServicesConsumer GoodsConsumer ServicesEnergy and UtilitiesHealthcareIndustrial Goods and MaterialsInformation Technology

1


INVESTED CAPITAL ALLOCATION BY INDUSTRY

Year


Consumer Goods

Consumer Services




2014 24% 3% 22% 5% 20% 2% 25%2015 23% 2% 25% 2% 22% 3% 22%2016 24% 3% 22% 3% 21% 3% 24%2017 25% 4% 17% 1% 26% 4% 23%2018 20% 4% 16% 1% 21% 4% 33%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017 2018


1



Regionally, the San Francisco area continued to take in the largest share of investments in 2018 at

20% of the total number of deals, up slightly from 19% in 2017, and 28% of the invested capital, up

from 23% in 2017. The amount of capital invested in the San Francisco area reached a record high

of $27.5 billion in 2018, up from $17.7 billion in 2017 and surpassing the $26.5 billion previous high

in 2015. The New York metro area also set a new high with $13.3 billion in funding in 2018, up from

the previous high of $12.2 billion in 2017. Nevertheless, the New York metro area’s deal and invested

capital allocations declined from 14% and 16%, respectively, in 2017 to 13% and 13%, respectively,

in 2018. The Silicon Valley area again came in third in terms of share of deal count at 12% in 2018,

unchanged from 2017, and second in terms of share of invested capital at 18% in 2018, up slightly

from 17% in 2017.

DEAL ALLOCATION BY REGION

YearSan

Francisco Silicon ValleyNew York

Metro New England

Los Angeles/Orange County

All Other U.S.

2014 21% 13% 13% 10% 6% 37%2015 21% 13% 13% 10% 7% 36%2016 21% 12% 14% 9% 6% 38%2017 19% 12% 14% 9% 7% 38%2018 20% 12% 13% 10% 8% 38%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017 2018

San FranciscoSilicon ValleyNew York MetroNew EnglandLos Angeles/Orange CountyAll Other U.S.

1

Source: MoneyTree

INVESTED CAPITAL ALLOCATION BY REGION

YearSan

Francisco Silicon ValleyNew York

Metro New England

Los Angeles/Orange County

All Other U.S.

2014 27% 19% 10% 9% 7% 29%2015 34% 13% 11% 9% 8% 24%2016 30% 13% 13% 11% 8% 25%2017 23% 17% 16% 10% 6% 28%2018 28% 18% 13% 11% 6% 24%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017 2018

San FranciscoSilicon ValleyNew York MetroNew EnglandLos Angeles/Orange CountyAll Other U.S.

1

Source: MoneyTree


IPO Activity

Initial public offering activity in 2018 was at a four-year high. According to VentureSource, there were

86 venture-backed IPOs that raised an aggregate of $11.4 billion in 2018, up from 60 venture-backed

IPOs that raised an aggregate of $9.3 billion in 2017.

U.S. VENTURE-BACKED IPOs DOLLARS RAISED

Year Dollars Raised2014 $11,986.782015 $7,991.302016 $2,852.442017 $9,259.712018 $11,430.61

$0

$3,000

$6,000

$9,000

$12,000

2014 2015 2016 2017 2018

Dollars Raised

1

$Mill

ions



The healthcare industry recorded by far the greatest number of IPOs with 59 in 2018, up from 29

healthcare IPOs in 2017. The aggregate amount raised in these healthcare IPOs increased from

$5.3 billion in 2017 to $6.3 billion in 2018. The gains by the healthcare industry accounted for most

of the increase in IPO activity. In contrast, the number of IPOs of information technology companies

declined from 18 in 2017 to 12 in 2018 and the aggregate amounts raised in these IT IPOs declined

from $5.5 billion in 2017 to $2.1 billion in 2018.

U.S. VENTURE-BACKED IPOs BY INDUSTRY

Year


Consumer Goods

Consumer Services




2014 24 1 6 5 74 2 142015 11 1 5 1 49 1 112016 2 0 0 1 26 0 92017 6 0 4 2 29 1 182018 9 1 4 1 59 0 12

0

10

20

30

40

50

60

70

80

90

100

110

2014 2015 2016 2017 2018


1


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

7.4 years in 2017 to 5.2 years in 2018, the first decrease since 2015 and the shortest IPO timeline

observed since 2002. This decrease was attributable to the IPOs of healthcare companies, which

recorded a median time from initial equity funding to IPO of 3.5 years in 2018, substantially shorter

than the 7.1 years in 2017.

In contrast, the median amount raised prior to IPO increased from $123.0 million in 2017 to $179.8

million in 2018, the highest median amount in over 25 years. The median pre-money valuation at

time of IPO also increased from $360.3 million in 2017 to $371.2 million in 2018, the highest median

valuation since 2012.

MEDIAN TIME FROM INITIAL FUNDING TO IPO

Year Median Years2014 6.842015 6.142016 7.222017 7.362018 5.24

4

5

6

7

8

2014 2015 2016 2017 2018

1


U.S. VENTURE-BACKED IPOs MEDIAN AMOUNT RAISED PRIOR TO IPO AND PRE-MONEY VALUATION AT

TIME OF IPO

Year

Median Amount

Raised Prior to IPO

Median Pre-Money

Valuation at Time of IPO

2014 $93.02 $246.562015 $93.95 $272.722016 $92.01 $232.202017 $105.86 $360.332018 $126.20 $371.16

$0

$50

$100

$150

$200

$250

$300

$350

$400

2014 2015 2016 2017 2018

2

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


Year

s$

Mill

ions


Merger and Acquisition Activity

U.S. M&A deal volume surged in 2018, with VentureSource reporting a substantial increase in the

number of acquisitions of U.S. venture-backed companies from 707 in 2017 to 784 in 2018. The

overall value of these deals increased by an even greater percentage from $89.4 billion in 2017 to a

record $146.2 billion in 2018.

In contrast to the IPO market, M&A deal activity was buoyed by acquisitions of companies in the IT

industry. The IT industry recorded 307 deals for an aggregate value of $43.1 billion in 2018, up from

239 deals for an aggregate value of $32.1 billion in 2017.

U.S. VENTURE-BACKED M&A DEAL AMOUNTS

$ M

illio

ns

Year Deal Amounts2014 $121,162.732015 $93,160.462016 $94,202.802017 $89,353.022018 $146,226.24

$0

$25,000

$50,000

$75,000

$100,000

$125,000

$150,000

2014 2015 2016 2017 2018

1


U.S. VENTURE-BACKED M&A DEALS BY INDUSTRY

Year


Consumer Goods

Consumer Services




2014 160 24 113 20 99 18 2612015 174 24 95 13 108 13 2212016 152 12 118 8 97 14 2232017 182 28 138 9 97 14 2392018 204 18 126 3 113 12 307

0

100

200

300

400

500

600

700

800

900

2014 2015 2016 2017 2018


1



According to VentureSource, the median time from initial equity funding to acquisition was 5.0 years

in 2018, little changed from 2017.

MEDIAN TIME FROM INITIAL FUNDING TO M&A EXIT

Year Median Years2014 5.162015 4.822016 5.082017 5.012018 5.02

4

4.5

5

5.5

2014 2015 2016 2017 2018

1


Venture Capital Fundraising

According to PitchBook-NVCA, venture capitalist firms raised a record $55.5 billion across 256 funds

in 2018, up from $34.1 billion across 254 funds in 2017.

Year Capital Raised # of Funds Closed

2014 $35.96 2882015 $36.01 2892016 $40.95 3102017 $34.14 2542018 $55.49 256

$0

$10

$20

$30

$40

$50

$60

2014 2015 2016 2017 2018

1

0

80

160

240

320

Capital RaisedNumber of Funds Closed

Source: PitchBook-NCVA

Year

s$

Bill

ions


The rise of larger financing rounds has resulted in VCs raising more outsized funds. Average and

median fund size continued their increases over the past several years to $226.5 million and $82.0

million, respectively, in 2018 from $140.5 million and $50.0 million, respectively, in 2017. Fundraising

for mega-funds (fund size of more than $1 billion) was particularly strong in 2018 with 11 such funds

closing in the year, the 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 2017 to 92 in

2018, the lowest micro-fund closing count since 2011.

Meanwhile, the average and median number of months to close a fund declined significantly from

15.9 months and 13.0 months, respectively, in 2017 to 12.3 months and 12.0 months, respectively, in

2018, the lowest average and median fund closing period since 2011.


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.

The percentage of DOWN ROUNDS by series were as follows:

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

UpDownFlat

Price Change Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

Up 73% 77% 79% 70% 75% 78% 78% 81%

Down 18% 13% 10% 19% 15% 12% 9% 8%

Flat 9% 9% 11% 11% 10% 10% 13% 11%

8%

81%

11%

1

Series Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18B 17% 10% 12% 24% 15% 13% 0% 15%C 23% 17% 3% 7% 15% 7% 13% 5%D 14% 6% 10% 28% 20% 10% 15% 4%E and higher 18% 17% 16% 13% 10% 19% 11% 6%

0%

5%

10%

15%

20%

25%

30%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

BCDE and higher

6%

4%5%

15%

1


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

since 2004.

!"#$%&$ !'()* !+()* !,()* !*()* !'()- !+()- !,()- !*()- !'(). !+(). !,()./0123"456 !"# $%# !&# $'# !(# $!# $'# $(# %)# $(# $%#7384123"456 &'# *"# &*# *+# &"# &"# *!# "(# "!# *!# *)#9:#%123"456 "(# "*# "!# "*# "'# )# "!# "*# ""# $# (#

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Up RoundsDown RoundsFlat Rounds

11%8%

81%

Average percentage of Up Rounds 68%

1

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


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:

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Average Percentage Price Change 54% 64% 80% 74% 74% 70% 71% 85%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

Percent Change

Series B Series C Series DSeries E and higher

Combined total for all Series for Q1’17








Up rounds 149% 100% 117% 78% 84% 90% 106% 116% 104% 96% 97% 110%Down rounds -42% -20% -67% -57% -40% -42% -44% -40% -28% -36% -49% -44%Net result 110% 81% 100% 58% 54% 64% 80% 74% 74% 70% 71% 85%Median net 73% 51% 54% 42% 29% 30% 46% 42% 41% 37% 42% 52%

This Number goes here

85%

1


-5%

5%

15%

25%

35%

45%

55%

65%

75%

85%

95%

105%

115%

125%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

BCDE and higher

These numbers get added to the end each quarter.

110%

81%

100%

58%

Series Q3’16 Q4’16 Q1’17 Q2’17 Q3’17B 79% 107% 75% 98% 102%C 61% 41% 35% 50% 90%D 1% 16% 45% 25% 52%E and higher 18% -1% 60% 55% 19%

1


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

since we began calculating this metric in 2004.

!"#$%&$ !'()* !+()* !,()* !*()* !'()- !+()- !,()- !*()- !'(). !+(). !,().A#$3B&%&$ "%# *+# "%# &$# *)# )"# &+# )!# $)# &)# )(#

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

Average 58%

Percent Change Series B Series C Series D

Up rounds 101% 80% 117%Down rounds N/A -42% -54%Net result 92% 58% 83%Median net 68% 46% 50%

85%

1

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


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.

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Median Percentage Price Change 29% 30% 46% 42% 41% 37% 42% 52%

0%

10%

20%

30%

40%

50%

60%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

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

Combined total for all Series for

Q1’17


Q2’17


Q3’17


Q4’17


Q1’18


Q2’18


Q3’18


Q4’18Up rounds 149% 100% 117% 78% 84% 90% 106% 116% 104% 96% 97% 110%Down rounds -42% -20% -67% -57% -40% -42% -44% -40% -28% -36% -49% -44%Net result 110% 81% 100% 58% 54% 64% 80% 74% 74% 70% 71% 85%Median net 73% 51% 54% 42% 29% 30% 46% 42% 41% 37% 42% 52%

This Number goes here

52%

1


0%

10%

20%

30%

40%

50%

60%

70%

80%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

BCDE and higher



Q1’17


Q2’17


Q3’17


Q4’17


Q1’18

Up rounds 149% 100% 117% 78% 84% 90% 106% 116% 104%Down rounds -42% -20% -67% -57% -40% -42% -44% -40% -28%Net result 110% 81% 100% 58% 54% 64% 80% 74% 74%Median net 73% 51% 54% 42% 29% 30% 46% 42% 41%

These numbers get added to the end each quarter.

73%

51%54%

42%

1


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

each quarter since we began calculating this metric in 2004.

!"#$%&$ A"B') A*B') A&B') A)B') A"B'! A*B'! A&B'! A)B'! A"B'$ A*B'$ A&B'$C&5D#4 %# *"# $# "!# "+# *(# "&# &&# &*# *&# *"#

0%

10%

20%

30%

40%

50%

60%

70%

80%

Average 30%



Q1’17


Q2’17


Q3’17Up rounds 149% 100% 117% 78% 84% 90% 106%Down rounds -42% -20% -67% -57% -40% -42% -44%Net result 110% 81% 100% 58% 54% 64% 80%Median net 73% 51% 54% 42% 29% 30% 46%

52%

1

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


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 85% 3% 13% 118% 58% 78

Hardware 63% 26% 11% 44% 24% 19

Life Sciences 78% 11% 11% 35% 25% 27

Internet/Digital Media 79% 13% 8% 68% 56% 24

Other 92% 0% 8% 90% 48% 13

Total all Industries 81% 8% 11% 85% 52% 161

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 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

Software 20% 14% 10% 18% 16% 14% 11% 3%

Hardware 18% 17% 8% 28% 10% 5% 14% 26%

Life Sciences 17% 16% 9% 21% 16% 10% 5% 11%

Internet/Digital Media 24% 11% 8% 14% 17% 16% 5% 13%

Other 0% 8% 15% 13% 0% 16% 5% 0%

Total all Industries 18% 13% 10% 19% 15% 12% 9% 8%


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

group for each of the last eight quarters.

Industry Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

Software 42% 87% 82% 62% 74% 75% 61% 118%

Hardware 81% 62% 82% 40% 97% 59% 58% 44%

Life Sciences 41% 15% 89% 31% 30% 63% 110% 35%


Other 69% 43% 107% 73% 72% 81% 70% 90%


A graphical representation of the above data is below.

Industry Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Software 42% 87% 82% 62% 74% 75% 61% 118%Hardware 81% 62% 82% 40% 97% 59% 58% 44%Lifescience 41% 15% 89% 31% 30% 63% 110% 35%Internet/Digital Media 65% 57% 49% 179% 101% 61% 78% 68%

0%

30%

60%

90%

120%

150%

180%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

SoftwareHardwareLife SciencesInternet/Digital Media

C2/:076;D-0:-5/50923456/?

Industry Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18Software 46% 42% 87% 82% 62% 74%Hardware 50% 81% 62% 82% 40% 97%Lifescience 123% 41% 15% 89% 31% 30%Internet/Digital Media 31% 65% 57% 49% 179% 101%Other -5% 69% 43% 107% 73% 72%Total - All Industries 51% 54% 64% 80% 74% 74%

118%

44%

35%

68%

1


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

Median % Price Change Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

Software 27% 36% 47% 37% 40% 46% 45% 58%

Hardware 38% 42% 56% 13% 52% 27% 30% 24%

Life Sciences 26% 14% 34% 24% 28% 19% 44% 25%


Other 59% 44% 18% 63% 35% 53% 37% 48%


A graphical representation of the above data is below.

FINANCING ROUND — This quarter’s financings broke down by series according to the chart below.

Industry Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Software 27% 36% 47% 37% 40% 46% 45% 58%Hardware 38% 42% 56% 13% 52% 27% 30% 24%Lifescience 26% 14% 34% 24% 28% 19% 44% 25%Internet/Digital Media 25% 18% 47% 51% 59% 25% 47% 56%

0%

10%

20%

30%

40%

50%

60%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

SoftwareHardwareLife SciencesInternet/Digital Media

58%

24%25%

56%

1


Series Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

Series A 29% 28% 27% 29% 25% 24% 27% 31%

Series B 18% 23% 32% 26% 27% 24% 20% 20%

Series C 20% 23% 19% 15% 21% 19% 18% 18%

Series D 15% 9% 11% 13% 13% 13% 13% 11%

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


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:

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Liquidation by Preference 28% 27% 25% 27% 20% 26% 24% 24%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

24%

1


0%

10%

20%

30%

40%

50%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

BCDE and higher

Just graph these numbers.

17%

28%

12%

34%

1


MULTIPLE LIQUIDATION PREFERENCES — The percentage of senior liquidation preferences that

were multiple liquidation preferences was as follows:

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

broke down as follows:

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18LIQUIDATION PREFERENCE 16% 5% 12% 11% 7% 11% 8% 0%

0%

5%

10%

15%

20%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

0%

1

Series Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18>1x – 2x 67% 100% 100% 100% 50% 80% 67% 0%>2x – 3x 33% 0% 0% 0% 50% 20% 33% 0%>3x 0% 0% 0% 0% 0% 0% 0% 0%

0%

20%

40%

60%

80%

100%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

>1x – 2x>2x – 3x>3x

Just graph these numbers.

0%0%0%

1


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:

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Participation in Liquidation 22% 13% 11% 14% 10% 11% 11% 11%

0%

5%

10%

15%

20%

25%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

11%

1

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Uncapped 57% 69% 57% 42% 53% 56% 54% 58%

0%

25%

50%

75%

100%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

58%

1


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.

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18CUMMULATIVE DIVIDENDS 7% 6% 8% 3% 6% 5% 6% 4%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

4%

1

Type of Provision Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18Ratchet 1% 0% 1% 0% 0% 0% 0% 0%Weighted Average 98% 99% 98% 99% 100% 98% 98% 97%None 1% 1% 1% 1% 0% 2% 2% 2%

0%

20%

40%

60%

80%

100%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

RatchetWeighted AverageNone

C2/:076;D-0:-5/50923456/?98%

0%2%

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:

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18TOTAL ALL SERIES 4% 4% 2% 5% 6% 5% 2% 3%

0%

2%

4%

6%

8%

10%

12%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 Series Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18A 7% 4% 3% 0% 5% 4% 4% 0%B 3% 3% 4% 3% 0% 7% 6% 2%C 0% 3% 4% 0% 10% 10% 7% 3%D 0% 0% 0% 5% 8% 0% 3% 0%E and higher 9% 9% 8% 5% 6% 6% 5% 4%Total - All Series 4% 4% 4% 2% 5% 6% 5% 2%

3%

1

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18REDEMPTION 8% 8% 9% 7% 4% 5% 6% 6%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

6%

1


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:

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18REDEMPTION 6% 5% 3% 6% 7% 6% 7% 6%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

6%

2


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.


About the Authors

Cynthia Clarfield Hess is Co-Chair of Fenwick’s Startup and Venture Capital

Group. In her 25 plus years as a corporate attorney, 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, focuses on providing 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.


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.

© 2019 Fenwick & West LLP

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