Are There Clouds On The Venture Horizon? Fenwick Is A Little Less Sanguine Than Cooley

Earlier this week, Cooley offered a sanguine portrait of the venture landscape.

More than 72% of second quarter financings were up rounds, the largest percent since the fourth quarter of 2009, the law firm said. This enthusiasm for deals was so strong that the average Series A valuation rose to $8 million, the highest in three quarters.

The firm based its conclusions on 112 transactions it handled during the period.

A report released since then by cross-valley rival Fenwick & West is a little more circumspect. Fenwick found 61% of second-quarter deals were up rounds while a quarter of transactions were down rounds. Up rounds had accounted for 67% of financings in the first quarter, so the quarter was a small decline.

The strongest interest appeared among software and Internet/Digital Media startups, where per-share price increases were considerable (123% and 115%, respectively). Deal pricing was far more modest in other sectors, such as hardware, life sciences and cleantech. Overall, per-share prices in the quarter were up 71% (please see Fenwick & West chart above).

The firm looked at 117 deals to reach its conclusions.

Venture capitalists increased their investments 5% in the quarter, compared with a year earlier. So VCs clearly remained ready to pull the trigger. But sentiment measured by the Silicon Valley Venture Capital Confidence Index fell during the period.

Perhaps there are a few more clouds over the industry today than on a typical California summer afternoon.