| Trends in Terms of Venture Financings in Silicon | | | | information technology. |
| Valley - Q2 2009 | | | | Fundraising by U.S. venture capitalists was $1.7 billion in |
| (Abhishek Uppal) | | | | 2Q09, which was the lowest amount raised in a |
| Venture financings for 89 companies headquartered | | | | quarter since the first quarter of 2003. |
| in the Silicon Valley that raised money in the second | | | | There were 67 acquisitions of venture-backed |
| quarter of 2009. | | | | companies in the U.S. in 2Q09, for a total of $2.6 |
| Overview | | | | billion, a decline from 70 transactions totalling $3.4 |
| Down rounds exceeded up rounds 46% to 32%, | | | | billion in 1Q09 and a significant decline from the 89 |
| with 22% flat. This was slightly better than 1Q09 | | | | transactions totalling $6.5 billion in 2Q08. This was the |
| when down rounds outpaced up rounds 46% to | | | | lowest dollar volume of acquisition transactions since |
| 25%, with 29% flat. The past two quarters are the | | | | 1999. |
| only quarters since 4Q03 in which down rounds have | | | | There were three IPOs of venture-backed |
| exceeded up rounds. | | | | companies in the U.S. in 2Q09. |
| There is an average price decrease of 6% for | | | | In light of the currently reduced liquidity of venture |
| companies receiving venture capital in 2Q09 | | | | investments, 75% of venture capital funds surveyed |
| compared to such companies' prior financing round. | | | | by Ernst & Young indicated in 1Q09 that they |
| This was a slight decline from 1Q09. The past two | | | | would be increasing their reserves for follow-on |
| quarters are the only quarters in which there has | | | | investments in current portfolio companies. This |
| been a price decrease since 1Q04. | | | | increase in reserves for current investments could |
| Other U.S. venture industry-related results for the | | | | make less funds available for new investments. |
| quarter include the following: | | | | The reduced liquidity for venture investments also |
| Dow Jones VentureSource reported that the amount | | | | appears to have resulted in increased interest in |
| invested by venture capitalists in the U.S. in 2Q09 | | | | secondary venture funds, which purchase limited |
| was approximately $5.3 billion in 595 deals, an increase | | | | partnership interests in venture funds from limited |
| from the $4.0 billion invested in 680 deals in 1Q09, but | | | | partners who want liquidity for their investment, and |
| a significant decline from the $8.3 billion invested in | | | | private equity exchanges and marketplaces, which |
| 726 deals in 2Q08. | | | | provide company insiders with the ability to sell stock |
| The Money Tree™ Report by | | | | in non-public companies. |
| PricewaterhouseCoopers and the National Venture | | | | The Silicon Valley Venture Capitalists Confidence |
| Capital Association based on data from Thomson | | | | Index™, produced by Professor Mark Cannice at |
| Reuters also reported an increase in venture funding | | | | the University of San Francisco, reports the |
| in 2Q09 compared to 1Q09, although at lower overall | | | | confidence level of Silicon Valley venture capitalists at |
| levels, reporting $3.7 billion of investment in 612 deals | | | | 3.37 on a 5 point scale. This was an increase from |
| in 2Q09 compared to $3.2 billion in 603 deals in 1Q09. | | | | last quarter's reading of 3.03 and the second |
| The health care industry received 42% of 2Q09 | | | | consecutive quarterly increase in the index. |
| investment, and information technology attracted | | | | Nasdaq was up 22% in 2Q09, and is up 8% in 3Q09 |
| 37%, the first time on record that quarterly | | | | through August 5, 2009. |
| investment in health care exceeded investment in | | | | |