Late-stage valuations take hit in fourth quarter


Taking a Punch

Late-stage valuations took a hit during the fourth quarter, with the median pre-money valuation for Series D and later rounds falling 32 percent, according to a study by the law firm Cooley.

Pre-money valuations for Series A and C rounds also slipped, though the median for Series B rounds rose, the study found. Cautious venture capitalists also increased the use of pay-to-play provisions during the period.

Still, VCs were relatively sanguine. Up rounds took place in 88 percent of deals and down rounds in only 9 percent, about the same ratio as in the third quarter of last year.

The observations come from a Cooley study of 150 transactions the firm handled during the final quarter of 2015.

The study found that the median pre-money valuation for Series D and later deals fell to $273 million from $400 million in the third quarter.

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