CA Venture terms starting to recover
Fenwick & West’s venture barometer always provides useful insights into terms used in venture financing in Silicon Valley / the Bay Area. The good news for entrepreneurs is that Q3 seems to provide an inflection point for the better.
Let’s dig in:
- More uprounds (41%) than downrounds (36%) for the first time this year. Digital media very strong in this area with 70% uprounds (time to move on then…). Downrounds mostly affect later stage companies. Inside rounds are down 10% to 33%.
- Series A is back to normal with 17% of rounds (from 8% in Q2)
- Liquidation Preferences are used in half the rounds done, with multiple liquidation preferences still uses in 21% of cases (mostly 1.5 to 2X), a marked decrease from Q1 (28%). There was a Participation feature to the Liquidation Preference in 53% of cases
- Anti-dilution in the Bay Area is 97% of the time of the mild form (weighted average, not detailed by type), with only 3% of deals involving full-ratchet (a message to European entrepreneurs here!).
- The number of deals that involved corporate reorganisations was down to 8% from a high of 13%