Background
We analyzed the terms of 148 venture financings closed in the first quarter of 2016 by companies headquartered in Silicon Valley.
Overview of Results
The weakening in valuations that began in 4Q15 continued in 1Q16, although the results for 1Q16 are still mostly above our historical averages.
- Up rounds exceeded down rounds 78% to 11%, with 11% flat in 1Q16. This was a small decline from 4Q15, when up rounds exceeded down rounds 82% to 12% with 6% flat.
- The average price increase of financings in 1Q16 compared to the company's prior financing was 53%. This was a decline from the 70% recorded in 4Q15, and the lowest amount since 1Q12.
- The median price increase of financings in 1Q16 compared to the company's prior financing was 36%. This was a small decline from the 39% recorded in 4Q15 and the lowest amount since 4Q13.
- This quarter we have included expanded graphs in the survey showing percentage up rounds, average price change and median price change for each quarter since we began calculating such amounts in 2004. This was done to provide more historical context for the current results, and these new graphs appear on pages 3, 5 and 8, respectively. In summary, the 1Q16 up round percentage was above the historical average (78% vs 66%), the average price increase was slightly below the historical average (53% vs 56%) and the median price increase was above the historical average (36% vs 28%).
- The software, hardware and internet/digital media industries each led one of the valuation metrics, with the software industry have the largest percentage of up rounds (83%), the hardware industry having the largest average price increase (96%) and the internet/digital media industry having the largest median price increase (65%). The life science industry trailed the other industries in valuation metrics.
For additional detailed information on the valuation and terms of financing in Silicon Valley, download the full version of the Silicon Valley Venture Survey - First Quarter 2016 (PDF).
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