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SILICON VALLEY VENTURE FINANCINGS - UP ROUNDS RALLYING

A survey of second quarter 2009 Silicon Valley venture capital financings reveals that while the proportion of down round financings still exceeds up rounds (by 46% to 32%), the proportion of up rounds has inched up to 32% from 25% in the first quarter. In both the first and second quarters of 2009, down rounds accounted for 46% of financings. The corresponding down round figures for the first and second quarters of 2008 were 19% and 13%, respectively.

A down round is defined as a transaction in which the price is lower than that of the previous round of financing.

Overall Prices Down
Not surprisingly, the magnitude of price changes in second quarter 2009 venture financings also underwent a downward shift as compared to 2008. The average overall per share price change from the previous round in second quarter 2009 financings was -6%, as compared to +53% for the second quarter of 2008.

Health Care Financings Lead
Health care financings accounted for 42% of second quarter 2009 venture investments, leading information technology (37%) for the first time on record, according to Dow Jones VentureSource.

The transaction pricing survey covered 89 venture financings, and was carried out by Fenwick & West LLP, a global law firm specializing in services to high technology and life science clients. A copy of the report is available here.

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