Cooley LLP recently released its most recent report on venture capital financing trends. The report analyzes Cooley’s venture capital transactions nationwide that closed during the second quarter of 2011, with comparisons to the first quarter of 2011 as well as prior quarters. The full report can be downloaded here.
Overall, our data pointed to a slowing pace of financings from the prior quarter. However, median pre-money valuations increased across all deal stages. In Q3 2011, we saw invested capital of over $1.1 billion, as we handled 85 deals during the quarter. Median pre-money valuations increased across all deal stages, especially in early rounds. Up rounds represented 70% of all financings in Q3. Additionally, the percentage of deals with pre-money valuations greater than $100 million increased from the prior quarter.
Deal terms also mirrored the financing statistics. We observed decreases in the use of participating preferred and pay-to-play provisions in Q3, compared to the prior quarter. However, the number of recapitalization transactions and deals structured in tranches remained relatively flat.