Q3 2016 – Valuations Cool in Early Stage Deals

In the third quarter of 2016, there were slightly lower deal volumes and aggregate dollars raised compared to prior quarters. In Q3 2016, Cooley handled 143 disclosable deals representing more than $1.7 billion of invested capital. When aggregated across industries, our data pointed to a decrease in median pre-money valuations across all deal stages, with the exception of Series D+ transactions. A small number of very large, later stage deals in Q3 drove the average median pre-money valuation for Series D+ deals to $718 million, a level not seen for over seven years.

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Q&A with Brad Feld on the state of VC investing in Q3 2016

Brad Feld, co-founder of the Foundry Group, sat down with us to discuss his view on the state of VC investing.

Market outlook: “The existential freakout that occurred in January and February seemed like the distant past with the lingering hangover being a clearer focus on valuation and overall funding needs from new investors.”

Deal flow: “Most importantly from my frame of reference, the amount of activity at the early and seed stage seems to be extremely robust.”

Exits: “M&A activity on one hand seems very lively, although it’s less in everyone’s face.”

Advice to founders: “Yoda was right – do or do not, there is no try. Decide to do it. Then do the work.”

Read Cooley’s full Q&A with Brad Feld.

GO Visualize (powered by Tableau)

Welcome to Cooley GO Visualize, which allows you to drill down on trends gleaned from thousands of the deals we’ve worked on with entrepreneurs since 2009. The data you see here will be updated in conjunction with our quarterly VC Financing Reports. We hope you’ll find this and other Cooley GO resources such as the Convertible Note Term Sheet Generator and our guidance in Raise helpful in navigating and accelerating your fundraising efforts.