Q1 2021 Venture Financing Report – A Strong Start to the Year

The robust financing environment we saw throughout the latter half of 2020 continued into the first quarter of 2021. Cooley handled 339 disclosable deals in Q1. This is relatively consistent with the prior quarter, but with an increase to more than $18.8 billion of invested capital – a record for this report, which has been published for more than 15 years.

During Q1, median pre-money valuations increased across substantially all deal stages, with only seed-stage transactions seeing relatively flat valuations compared to the prior quarter. Of note, the percentage of Q1 transactions with a median pre-money valuation greater than $100 million reached 40% of deals, a jump from prior quarters. As another signal of the continued strength of the financing environment, the percentage of up rounds again reached 93% of all deals, consistent with Q4 2020.

Deal terms continued to favor companies. In Q1, the percentage of deals using full participating liquidation preferences remained low at fewer than 6% of transactions. Additionally, the data pointed to decreases in recapitalizations and tranched deals.

Spotlight on life sciences

In Q1, Cooley handled 77 disclosable life sciences company financings representing more than $4.8 billion of invested capital, a record high for this report. As we witnessed in Q4 2020, deal sizes continued to surge. In Q1, the average life sciences deal size was $62.5 million, dwarfing the Q4 2020 average of $40 million. Of note, the percentage of life sciences deals structured in tranches again dropped to just 13% of transactions, continuing a trend seen in prior quarters. To view more details on life sciences trends, use the “Life Sciences” filter in our interactive data visualization tool.

Spotlight on tech

Cooley handled 184 disclosable technology company financings representing more than $9.6 billion of invested capital in Q1, marking a surge from prior quarters. Technology company deals represented more than 54% of our disclosable transactions in the quarter. As a signal of investor optimism and company-favorable terms, more than 93% of technology company financings were up rounds during the quarter. To view more details on technology sector trends, use the “Technology” filter in our interactive data visualization tool.

GO Visualize (powered by Tableau)

Welcome to Cooley GO Visualize, which allows you to drill down on trends gleaned from deals we’ve worked on with entrepreneurs. 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.

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