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Venture capital report - financing trends continue to improve
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Though the effects of the recession still linger, 2010 was a year of slow recovery for the venture capital industry - and 2011 should be even better, according to an annual report from law firm Cooley. The overall deal volume in 2010 reached 407 deals, a level not seen over the last five years. And, aggregate dollars invested - $4.6 billion - eclipsed levels seen in the years following the recession.
"The slow but steady growth we saw in 2010, and the continued growth thus far in 2011, leads us to be optimistic about financing trends continuing to improve," said Craig Jacoby, head of Cooley's Emerging Companies practice.
TechFlash reported in the first quarter of 2010 that the number of up rounds - venture capital deals completed at a higher valuation than the previous round - had increased to 58 percent of all deals. That trend continued, with an overall increase in the percentage of up rounds over 2009, and a significant increase in the fourth quarter when 72 percent of all fourth quarter financings were up rounds.
All series of financings saw an increase in median pre-money valuations over 2009, especially in later-stage deals. There was a sizable increase in the number and percentage of deals with a median pre-money valuation of more than $100 million.
The report said, in another sign of recovery, it saw recapitalization transactions decrease to 2007 levels.
Cooley's report analyzed 407 deals completed across the U.S., totaling approximately $4.6 billion. The data was not broken down by industry.
Though the VC industry appears to be improving, some analysts have speculated the tech industry could be headed towards another bubble. The NYT today launched a discussion comparing/contrasting the current climate (money again pouring in and valuations for companies like Facebook and Zynga quintupling in recent years) to that of the late 90's.
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