Cooley LLP recently released its 3rd Quarter 2012 venture financing report. The report analyzes Cooley’s venture capital transactions nationwide that closed during this period, representing 81 deals and over $960 million in invested capital.
Highlights of the report include:
- Overall, the data pointed to a quarter marked by slowing deal volumes and decreased invested capital during the quarter.
- In Q3 2012, we saw median pre-money valuations decline in Series A and B transactions. Additionally, the data showed a decrease in up versus flat/down rounds from the prior quarter.
- Up rounds represented 71% of all financings in Q3, down from 77% in Q2.
- The percentage of tranched transactions increased in Q3 to over 20% of all deals, though the percentage of recapitalization transactions decreased.
- Deal terms in Q3 2012 remained mixed. We observed increases in the use of fully participating preferred and pay-to-play provisions in Q3, compared to the prior quarter. The data pointed to increased utilization of greater than 1x liquidation preferences in Series A and C deals, while showing a decrease in Series B and D+ transactions. Additionally, we saw a decrease in the use of drag-along provisions during the quarter.