If you work in the legal department of a start-up funded by venture capital, odds are you have been doing financing rounds less often and raising less per round than in times past.
Fenwick & West has backed up this anecdotal observation with a survey containing some less-than-encouraging numbers for Silicon Valley tech firms that rely on VC. The survey found that 46% of companies that received money in the first
quarter of 2009 experienced a down round, while only 25% had an up
round and 29% stayed flat. That's the survey's largest differential
between down and up rounds since the first quarter of 2003, according
to the authors.
Overall, prices declined by 3% in the first
quarter, which is the first time there has been an overall price
decrease since Fenwick began tracking the stat in the first quarter of
The authors find it significant that the prices declined
even though overall venture investment dropped in the quarter as well.
VC investors put out $3.8 billion in 470 deals, which
represents almost a 50 percent drop year over year. As the survey puts
it: "This was the lowest amount invested in a quarter by venture
since 1998, and the lowest quarterly deal total since 1996."
If you do happen to work for one of the companies that are receiving financing, you may want to check out Wilson Sonsini's Term Sheet Generator,
which provides a VC financing term sheet based on your answers to a
questionnaire. It also has some tutorials and other educational
If you don't work for one of those companies, you can still use the
generator: Just plug in some numbers from the past and reminisce about
the good old days.