Silicon Valley Venture Capital Survey Third Quarter 2020
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 1
Silicon Valley Venture Capital Survey
Third Quarter 2020
Cynthia Clarfield Hess, Mark Leahy and Khang Tran
Background
Our survey analyzed the terms of 211 venture financings closed in the third quarter of 2020 by
companies headquartered in Silicon Valley.
Key Findings
Valuation results rebounded from the prior quarter, but remain down from pre-pandemic
peak levels
� Up rounds exceeded down rounds 77% to 12%, with 11% flat in Q3, an increase from Q2 when
up rounds exceeded down rounds 71% to 15%, with 14% flat.
� The Fenwick & West Venture Capital Barometer™ showed an average price increase in Q3 of
76%, a significant increase from 51% in Q2, but still below the average price increase of 93% for
financings in 2019.
� The median price increase for financings was 42% in Q3. While a considerable increase from
26% in Q2, it remains below the median price increase of 60% for financings in 2019.
Valuation results improved for all series of financings
� Valuation results across all series of financings improved in Q3 compared to the prior quarter,
but continued to lag pre-pandemic levels. Series E and later financings, however, recorded the
smallest gains in average price increase compared to the prior quarter, and the percentage
of Series E and later financings that were downrounds also increased compared to the prior
quarter.
Valuations strengthened across all industries
� Similarly, valuation results strengthened across all industries in Q3 compared to the prior
quarter. The internet/digital media and software industries again recorded the strongest
valuation results in the quarter, while the hardware and life science industries recorded the
greatest gains in valuation results compared to the prior quarter.
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 2
Fenwick & West Data on Valuation
PRICE CHANGE — The direction of price changes for companies receiving financing in a quarter,
compared to their prior round of financing were as follows:
The percentage of DOWN ROUNDS by series were as follows:
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
UpDownFlat
Price Change Q4’18 Q1’19 Q2’19 Q3’19 Q4’19
Up 0.81 0.81 0.86 0.81 0.84
Down 0.08 0.11 0.06 0.07 0.05
Flat 0.11 0.08 0.08 0.12 0.11
12%
77%
11%
1
Series Q4’18 Q1’19 Q2’19 Q3’19 Q4’19
B 15% 10% 2% 3% 10%C 5% 9% 4% 3% 3%D 4% 9% 6% 6% 0%E and higher 6% 16% 14% 17% 6%
0%
5%
10%
15%
20%
25%
30%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
BCDE and higher
6%
8%
20%
22%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 3
EXPANDED PRICE CHANGE GRAPH — Below is the direction of price changes for each quarter
since 2004.
Quarter Q1’04 Q2’04 Q3’04 Q4’04 Q1’05Up Rounds 51% 67% 53% 60% 59%
Down Rounds 30% 21% 32% 28% 31%
Flat Rounds 19% 12% 15% 12% 10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Q1’04
Q1’05
Q1’06
Q1’07
Q1’08
Q1’09
Q1’10
Q1’11
Q1’12
Q1’13
Q1’14
Q1’15
Q1’16
Q1’17
Q1’18
Q1’19
Q3 '20
Up RoundsDown RoundsFlat Rounds
11%
12%
77%
Average percentage of up rounds 69%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 4
THE FENWICK & WEST VENTURE CAPITAL BAROMETER™ (magnitude of price change) — Below
is the average percentage change between the price per share at which companies raised funds in
a quarter, compared to the price per share at which such companies raised funds in their prior
round of financing. In calculating the average, all rounds (up, down and flat) were included, and
results were not weighted for the amount raised in a financing.
The Barometer results by series were as follows:
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19
Median Percentage Price Change 85% 75% 77% 88% 142%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
Percent Change Series B
Up rounds 1.38Down rounds -0.71Net result 1.19Median net 0.92
76%
1
Series Q4’18 Q1’19 Q2’19 Q3’19 Q4’19
B 1.1 0.92 1.06 1.19 1.57
C 0.81 0.73 0.76 1.24 1.93
D 1 0.9 0.89 0.4 1.14
E and higher 0.58 0.46 0.39 0.4 0.51
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
BCDE and higher
101%
89%
50%
39%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 5
EXPANDED BAROMETER GRAPH — Below is the average percentage price change for each
quarter since we began calculating this metric in 2004.
Quarter Q1’04 Q2’04 Q3’04 Q4’04 Q1’05Barometer 17% 28% 17% 36% 24%
-20%-10%
-0%
10%
20%30%
40%
50%60%
70%
80%
90%100%
110%
120%130%
140%
150%
Q1’04
Q1’05
Q1’06
Q1’07
Q1’08
Q1’09
Q1’10
Q1’11
Q1’12
Q1’13
Q1’14
Q1’15
Q1’16
Q1’17
Q1’18
Q1’19
Q1’20
Average 61%
76%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 6
MEDIAN PERCENTAGE PRICE CHANGE — Below is the median percentage change between the price per share at which companies raised funds in a quarter, compared to the price per share at which such companies raised funds in their prior round of financing. In calculating the median, all rounds (up, down and flat) were included, and results were not weighted for the amount raised in the financing. Please note that this is different from the Barometer, which is based on average percentage price change.
The median price change results by series were as follows:
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19
Median Percentage Price Change 52% 56% 58% 54% 76%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
Percent Change Series B
Up rounds 1.38Down rounds -0.71Net result 1.19Median net 0.92
42%
1
Series Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
B 73% 69% 87% 92% 109%63% 70% 57%
C 51% 40% 53% 85% 70%70% 28% 48%
D 54% 92% 60% 26% 75%38% 13% 31%
E and higher 42% 38% 36% 15% 42%45% 10% 16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
BCDE and higher
Percent Change
Up roundsDown roundsNet resultMedian net57%
48%
31%
16%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 7
EXPANDED MEDIAN PRICE CHANGE GRAPH — Below is the median percentage price change for
each quarter since we began calculating this metric in 2004.
Quarter Q1’04 Q2’04 Q3’04 Q4’04 Q1’05Median 7% 21% 6% 15% 18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Q1’04
Q1’05
Q1’06
Q1’07
Q1’08
Q1’09
Q1’10
Q1’11
Q1’12
Q1’13
Q1’14
Q1’15
Q1’16
Q1’17
Q1’18
Q1’19
Q1’20
Average 32%
42%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 8
RESULTS BY INDUSTRY FOR DIRECTION OF PRICE CHANGES AND AVERAGE AND MEDIAN
PRICE CHANGES — The table below illustrates the direction of price changes, and average and
median price change results, for companies receiving financing in this quarter, compared to their
previous round, by industry group. Companies receiving Series A financings were excluded as
they have no previous rounds to compare.
Industry
Up
Rounds
Down
Rounds
Flat
Rounds Barometer
Median
Price Change
Number of
Financings
Software 79% 13% 8% 84% 51% 61
Hardware 63% 25% 13% 41% 23% 16
Life Sciences 89% 8% 3% 73% 48% 36
Internet/Digital Media 75% 4% 21% 95% 42% 28
Other 50% 20% 30% 45% 2% 10
Total all Industries 77% 12% 11% 76% 42% 151
DOWN ROUND RESULTS BY INDUSTRY — The table below illustrates the percentage of “down
rounds,” by industry groups, for each of the past eight quarters.
Down Rounds Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20
Software 3% 12% 7% 9% 6% 13% 10% 13%
Hardware 26% 0% 0% 7% 8% 29% 20% 25%
Life Sciences 11% 27% 4% 0% 0% 25% 19% 8%
Internet/Digital Media 13% 5% 9% 8% 9% 0% 10% 4%
Other 0% 0% 7% 7% 0% 6% 31% 20%
Total all Industries 8% 11% 6% 7% 5% 14% 15% 12%
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 9
BAROMETER RESULTS BY INDUSTRY — The table below sets forth Barometer results by industry
group for each of the last eight quarters.
Industry Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20
Software 118% 78% 85% 93% 158% 102% 71% 84%
Hardware 44% 40% 74% 91% 100% 84% 1% 41%
Life Sciences 35% 30% 56% 47% 40% 67% 26% 73%
Internet/Digital Media 68% 102% 80% 94% 226% 87% 82% 95%
Other 90% 120% 67% 93% 109% 115% 22% 45%
Total all Industries 85% 75% 77% 88% 142% 93% 51% 76%
A graphical representation of the above data is below.
Industry Q4’18 Q1’19 Q2’19 Q3’19 Q4’19Software 1.18 0.78 0.85 0.93 1.58Hardware 0.44 0.4 0.74 0.91 1.00Life Sciences 0.35 0.3 0.56 0.47 0.40Internet/Digital Media 0.68 1.02 0.8 0.94 2.26
0%
25%
50%
75%
100%
125%
150%
175%
200%
225%
250%
275%
300%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
SoftwareHardwareLife SciencesInternet/Digital Media
84%
41%
73%
95%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 10
MEDIAN PERCENTAGE PRICE CHANGE RESULTS BY INDUSTRY — The table below illustrates
the median percentage price change results by industry group for each of the last eight quarters.
Please note that this is different than the Barometer, which is based on average percentage price
change.
Median % Price
Change Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20
Software 58% 66% 68% 77% 101% 82% 45% 51%
Hardware 24% 32% 48% 29% 69% 44% 7% 23%
Life Sciences 25% 9% 43% 16% 30% 22% 6% 48%
Internet/Digital Media 56% 96% 60% 60% 87% 69% 44% 42%
Other 48% 69% 60% 29% 114% 68% 5% 2%
Total all Industries 52% 56% 58% 54% 76% 54% 26% 42%
A graphical representation of the above data is below.
Industry Q4’18 Q1’19 Q2’19 Q3’19 Q4’19Software 0.58 0.66 0.68 0.77 1.01Hardware 0.24 0.32 0.48 0.29 0.69Life Sciences 0.25 0.09 0.43 0.16 0.30Internet/Digital Media 0.56 0.96 0.6 0.6 0.87
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
SoftwareHardwareLife SciencesInternet/Digital Media51%
23%
48%42%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 11
FINANCING ROUND — This quarter’s financings broken down by series were as follows:
Series Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20
Series A 31% 32% 26% 35% 39% 40% 22% 28%
Series B 20% 21% 25% 21% 22% 24% 21% 26%
Series C 18% 18% 22% 17% 18% 17% 20% 19%
Series D 11% 12% 7% 8% 11% 8% 15% 9%
Series E and Higher 20% 17% 20% 19% 10% 11% 23% 18%
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 12
Fenwick & West Data on Legal Terms
LIQUIDATION PREFERENCE — Senior liquidation preferences were used in the following
percentages of financings.
The percentage of senior liquidation preference by series was as follows:
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19Liquidation by Preference 0.24 0.27 0.28 0.26 0.23
0%
5%
10%
15%
20%
25%
30%
35%
40%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
21%
1
Series Q4’18 Q1’19 Q2’19 Q3’19 Q4’19
B 17% 31% 28% 18% 29%C 28% 24% 21% 22% 15%D 12% 23% 19% 38% 29%E and higher 34% 28% 40% 34% 17%
0%
8%
16%
24%
32%
40%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
BCDE and higher
19%
10%
20%
38%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 13
MULTIPLE LIQUIDATION PREFERENCES — The percentage of senior liquidation preferences that
were multiple liquidation preferences was as follows:
Of the senior liquidation preferences that were multiple preferences, the ranges of the multiples
broke down as follows:
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19LIQUIDATION PREFERENCE 0 0.09 0.07 0.03 0.04
0%
5%
10%
15%
20%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
6%
1
Series Q4’18 Q1’19 Q2’19 Q3’19 Q4’19>1x – 2x 0 1 1 1 1>2x – 3x 0 0 0 0 0>3x 0 0 0 0 0
0%
20%
40%
60%
80%
100%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
>1x – 2x>2x – 3x>3x
50%
50%
0%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 14
PARTICIPATION IN LIQUIDATION — The percentages of financings that provided for participation
were as follows:
Of the financings that had participation, the percentages that were not capped were as follows:
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19
Participation in Liquidation 0.11 0.12 0.1 0.11 0.07
0%
5%
10%
15%
Q4’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q3’20
11%
1
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19
Uncapped 0.58 0.65 0.68 0.6 0.71
0%
25%
50%
75%
100%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
52%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 15
CUMULATIVE DIVIDENDS – Cumulative dividends were provided for in the following percentages
of financings:
ANTIDILUTION PROVISIONS –The uses of (non-IPO) antidilution provisions in the financings were
as follows:
Please note that the chart above only applies to non-IPO antidilution provisions. In other words, the chart refers to antidilution provisions that protect the investor against a future venture financing at a price below what the investor paid. The chart does not include antidilution provisions designed to protect against an IPO at a price below the price paid by the venture investor (e.g., an IPO ratchet).
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19
CUMMULATIVE DIVIDENDS 0.04 0.04 0.05 0.05 0.03
0%
1%
2%
4%
5%
6%
7%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
4%
1
Type of Provision Q4’18 Q1’19 Q2’19 Q3’19 Q4’19Ratchet 0 0 0 0 0Weighted Average 0.97 1 0.98 0.99 0.99None 0.02 0 0.02 0.01 0.01
0%
20%
40%
60%
80%
100%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
RatchetWeighted AverageNone
97%
0%3%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 16
PAY-TO-PLAY PROVISIONS – The percentages of financings having pay-to-play provisions were as
follows:
REDEMPTION – The percentages of financings providing for mandatory redemption or redemption
at the option of the investor were as follows:
Q4’18 Q1’19 Q2’19
TOTAL ALL SERIES 0.03 0.04 0.04
0%
2%
4%
6%
8%
10%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
3%
1
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19
REDEMPTION 0.06 0.06 0.06 0.06 0.11
0%
2%
4%
6%
8%
10%
12%
14%
16%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
4%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 17
CORPORATE REORGANIZATIONS – The percentages of post-Series A financings involving a
corporate reorganization (i.e. reverse splits or conversion of shares into another series or classes
of shares) were as follows:
DUAL-CLASS COMMON STOCK – The percentages of financings with dual-class common stock
structures, where there is one class of common stock with more votes per share than the other
class, were as follows:
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19
REDEMPTION 0.06 0.09 0.05 0.04 0.09
0%
2%
4%
6%
8%
10%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
4%
3
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19
REDEMPTION 0.08 0.09 0.08 0.07 0.09
0%
2%
4%
6%
8%
10%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
10%
5
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 18
IPO DOWNSIDE PROTECTIONS – The percentages of financings with IPO downside protections
were as follows:
Type of Provision Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20Blocking right (IPO price must be at least as high as financing price)
0.44 0.41 0.45 0.38 0.44 39% 46% 46%
Ratchet (investors receive additional shares if IPO price is less than financing price, or in some cases, the financing price plus a premium)0.01 0.01 0 0.01 0 0.4% 2.5% 0%
0%
10%
20%
30%
40%
50%
Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20
Blocking right (IPO price must be at least as high
as financing price)
Ratchet (investors receive additional shares if IPO
price is less than financing price, or in some cases,
the financing price plus a premium)
0%
46%
1
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 19
About our Survey
The Fenwick & West Venture Capital Survey has been published quarterly since the first quarter of
2002. Its goal is to provide information to the global entrepreneurial and venture community on the
terms of venture financings in Silicon Valley.
The survey is available to all, without charge, by signing up at www.fenwick.com/vcsurvey/sign-up.
We are pleased to be a source of information to entrepreneurs, investors, educators, students,
journalists and government officials.
Our analysis of Silicon Valley financings is based on independent data collection performed by our
lawyers and paralegals, and is not skewed toward or overly representative of financings in which
our firm is involved. We believe that this approach, compared to only reporting on deals handled
by a specific firm, provides a more statistically valid and larger dataset.
For purposes of determining whether a company is based in “Silicon Valley” we use the area code
of the corporate headquarters. The area codes included are 650, 408, 415, 510, 925, 916, 707, 831
and 209.
Note on Methodology
When interpreting the Barometer results please bear in mind that the results reflect the average
price increase of companies raising money in a given quarter compared to their prior round of
financing, which was on average about 18 months prior. By definition the Barometer does not
include companies that do not do follow-on financings (which may be because they went out of
business, were acquired or went public). Accordingly we believe that our results are most valuable
for identifying trends in the venture environment, as opposed to calculating absolute venture
returns. Please also note that our calculations are not “dollar weighted,” i.e. all venture rounds are
treated equally, regardless of size.
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 20
About the Authors
Cynthia Clarfield Hess is co-chair of Fenwick’s startup and venture capital
group. Recognized as among the best corporate lawyers by Chambers
USA, Cindy has counseled technology companies on a broad range of
corporate transactional matters, from formation matters and venture capital
financings to mergers and acquisitions and public offerings, representing
both companies and underwriters. She has worked with a wide range of
high-technology clients – from established technology stalwarts to emerging
companies developing disruptive technologies, which include some of
the hottest and most innovative companies in the mobile, SaaS and social
media spaces.
Mark Leahy, co-chair of Fenwick’s startup and venture capital group and a
seasoned advisor to technology companies on a broad range of corporate
transactional matters, provides legal solutions that advance his clients’
business objectives. His practice focuses on venture capital financings,
corporate governance, mergers and acquisitions, and public offerings.
His expertise spans a wide range of technologies, including software,
semiconductor, internet/e-commerce, and data management and storage.
Khang Tran supports the firm’s knowledge management efforts by collecting
and sharing knowledge and expertise across the firm, which in turn, is
leveraged to improve the quality of legal services to the firm’s clients.
SILICON VALLEY VENTURE CAPITAL SURVEY THIRD QUARTER 2020 21
Contact/Sign Up Information
For additional information about this report please contact Cynthia Hess at 650.335.7238;
[email protected] or Mark Leahy at 650.335.7682; [email protected] at Fenwick & West.
To view the most recent survey please visit fenwick.com/vcsurvey. To be placed on an email list for
future editions of this survey please visit fenwick.com/vcsurvey/sign-up.
Disclaimer
The preparation of the information contained herein involves assumptions, compilations and analysis, and there
can be no assurance that the information provided herein is error-free. Neither Fenwick & West LLP nor any of its
partners, associates, staff or agents shall have any liability for any information contained herein, including any errors
or incompleteness. The contents of this report are not intended, and should not be considered, as legal advice or
opinion. To the extent that any views on the venture environment or other matters are expressed in this survey, they
are the views of the authors only, and not Fenwick & West LLP.
© 2020 Fenwick & West LLP
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