Buzz of the Week: – Trends in Legal Terms in Venture Financings In the San Francisco Bay Area (Fenwick & West)

We analyzed the terms of venture financings for 113 technology companies headquartered in the San Francisco Bay Area that reported raising money in the third quarter of 2004.

The results of Q3 ’04 were mixed as up rounds outpaced down rounds and valuations increased compared to prior financing rounds, but by less than in Q2 ’04. There was also a general toughening of the other financing terms in Q3 ’04.

These results are probably not surprising given the reduction in aggregate venture investment in the US in Q3 ’04 noted in various industry publications and the 7% decrease in the Nasdaq in Q3 ’04. Additionally, the significant improvements in valuations and terms that we saw in Q1 ’04 and Q2 ’04 was a difficult trend to maintain.

That said, we note that the overall results of Q3 ’04 were favorable, and the Nasdaq is up 9% so far this quarter, so the general trend continues to be favorable.

For the full report: http://vcexperts.com/vce/news/buzz/?referrer=buzz