The future looks bright. That's the message from a law firm that has represented tech companies ranging from Apple to Oracle.
In a recently released survey of 122 Silicon Valley startups conducted by law firm Fenwick & West, valuations were up for Valley startups, with 67% raising money based on higher valuations than in their last round of financing (this is known as an “up round” of financing). Software and internet/digital media companies were most likely to see increased valuations, according to the report.
This compares to 16% of Valley startups that experienced “down rounds” in the first quarter of 2011.
This spread—67% of up rounds versus 16% of down rounds—is the largest since 2008, during the US financial meltdown.
“The venture-capital environment really feels like it has fully recovered from the crash of the financial markets,” Fenwick & West attorney and study co-author Michael Patrick, told the Wall Street Journal.
There’s also been a long-awaited increase in investment to venture capital funds, with nearly $8 billion committed to 25 US funds in the first quarter of 2011 alone, according to Dow Jones VentureSource. (Only about $55 billion had been invested in VCs in the past three years.)
Among the study’s additional findings:
• There has been an anecdotal increase in early stage companies receiving significant funding from angel investors, thus delaying a first venture capital round.
• The initial public offering (IPO) market will continue to improve, with 45 companies registered to go public at the end of the first quarter of 2011.
• The University of San Francisco’s Silicon Valley Venture Capital Confidence Index reported that the confidence level of Silicon Valley venture capitalists was 3.91 on a 5-point scale, the highest since the third quarter of 2007.