Well the new year is not exactly off to a roaring start. According to VentureWire, it appears that there were two (2) venture backed companies that filed for IPOs in January. They were Medidata Solutions Inc. and Open Table Inc. If this pace keeps up, 2009 will see 24 IPO filings, representing an almost 500% increase over 2008 but still something in the general neighborhood of one-third of 2007. Also, we need to remember that filed and closed are two different things.
Dave heads the Emerging Enterprise Center. His practice focuses on representation of technology companies from start up to exit. Dave also handles venture financings, merger...
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Prithvi Tanwar is an Associate in the firm’s Business Department. His practice focuses on advising emerging life science and technology companies as well as U.S....
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It has been a long time since I wrote a blog post. In part, I just ran out of steam. In part, I have been running non-stop since May. Why? Because business has picked up in a major way. Since May the pace of financings and exits has picked up in a very noticeable way. So, here is a prediction, when I write the comparison of Q2 deals published by by Foley Hoag, Fenwick, it will show a major jump from the Q1 numbers.
Here is what my partner, Dave Pierson, had to say about Q1 activity, “The total number of New England Series A transactions dropped 46% from Q4 …. The total number of New Englsnd Series B and Later round transactions during Q1 decreased 21% from Q4…”
Fenwick had similar observations. Fenwick had this to say, “Venture capitalists invested $6.4 billion in 661 deals in the U.S. in 1Q11, compared to $7.6 billion in 735 deals reported in January 2011 for 4Q10, according to Dow Jones VentureSource (“VentureSource”). Although this represents a 16% decline in dollars and a 10% decline in deal volume from 4Q10, the 1Q11 results were generally flat with the average of $6.6 billion raised per quarter in 2010.”
All I can say is that either Foley Hoag is lucky or the venture world took off in Q2.
Here is the open question, given the turmoil in the public markets, will I have written plenty of new posts and be lamenting the amount of time available for such pursuits?
Without further adieu, below is the same table I produce each quarter. This is, of course, a table reflecting Q1 activity.
|
Term |
Foley Hoag New England Series A |
Foley Hoag New England Series B and Later |
Fenwick Silicon Valley All Series |
|
Cumulative Dividends |
42% |
52% |
8% |
|
Preference with Participation |
42% |
35% |
43% |
|
Redemption |
85% |
82% |
20% |
|
Pay to Play |
15% |
40% |
5% |
There is no surprise in these numbers. They have followed a consistent pattern from quarter to quarter for as long as I have been tracking them. Note the greater frequency of dividends and redemption provisions in New England deals. Having wondered about why there is not convergence on terms, given that so many of the leading venture firms do deals on both coasts and having asked a number of people in the business about it, I have come to the conclusion that it the divergence in these terms reflects a basic cultural bias. New England just has more of a lender mentality than the Valley.
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