This report analyzes the terms of 200 venture financings closed in the first quarter of 2018 by companies headquartered in Silicon Valley.
Valuation Results Remain Strong But Have Flattened Valuation results were generally flat in Q1 2018 compared to the prior quarter. Overall, valuation metrics are well above historical averages, but have plateaued since Q3 2017. Up rounds exceeded down rounds 75% to 15%, with 10% flat in Q1 2018, an increase from Q4 2017 when up rounds exceeded down rounds 70% to 19%, with 11% flat.
The Fenwick & West Venture Capital Barometer™ showed an average price increase in Q1 2018 of 74%, which was flat compared to the prior quarter. The average price increase had previously peaked in Q3 2017 after five consecutive quarters of increases before decreasing moderately in Q4 2017.
The median price increase of financings in Q1 2018 was 41%, a slight decrease from the 42% recorded in Q4 2017, and the second consecutive quarter of declines following four quarters of increases.
Internet/Digital Media Continues to Score Highest Valuation Results Similar to the prior quarter, the internet/digital media industry recorded the strongest valuation results in Q1 2018 compared to the other industries, with an average price increase of 101% and a median price increase of 59%. However, the valuation results for the internet/digital media industry were moderately weaker compared to the prior quarter.
In contrast, the software, hardware and life sciences industries all recorded stronger valuation results in Q1 compared to the prior quarter. The hardware industry, in particular, recorded the second strongest valuation results in Q1 and the greatest improvement in valuation results compared to the prior quarter, with the average price increase increasing from 40% in Q4 2017 to 97% in Q1 2018 and the median price increase increasing from 13% in Q4 2017 to 52% in Q1 2018.
Our “First Look” report covers top-line trends for venture capital financings of Silicon Valley companies in Q1 2018. This initial report will be followed in several weeks with a more in-depth “Full Analysis” that will provide a broader perspective and include coverage of venture capital financings in other geographies drawing on data from a variety of industry reports.