What Slowdown? Silicon Valley Is Doing Nearly as Many Deals as Last Year

Ben Bergman

Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.

What Slowdown? Silicon Valley Is Doing Nearly as Many Deals as Last Year

Deal volume increased – especially at the later stages – and software valuations fared much better than hardware companies in April compared to March, according to a Silicon Valley VC Flash Report released Friday from the law firm Fenwick & West. And most significantly, amid talk of VCs sitting on the sidelines, deal volume in April was comparable to the same average last year.


The results only cover Bay Area deals and should be taken with a grain of salt, given that they only a limited time period as opposed to the usual quarterly reports. That means there is a limited sample size. But they show that in the first full month of coronavirus restrictions, plenty of deals got done.

"Even though we didn't see the pandemic causing huge changes to top-level results, the devil is in the details," Barry Kramer, Partner Emeritus at Fenwick & West and co-author of the report, wrote in an e-mail. "While it's hard to draw conclusions from a month of data, some companies have benefited from work/learn/stay at home and others are hurt. You can see signals in our industry price/valuation info where internet/new media and software industry results in April were similar to what we were seeing in 2019; however, hardware, life sciences and other industries showed notable drop-offs. Probably not surprising, it's easier to work at home if you are a software developer than a biotech researcher, and better right now to be offering apps that enable work from home than trying to sell robotic devices to assembly lines that aren't operating."

The new report comes the same week as a survey from NFX Ventures that showing valuations dropping substantially, pessimism about the economy is growing, and most VCs remain skeptical about investing in fully remote companies.

Here are the main takeaways from the Fenwick report:

    • The percentage of up-rounds declined modestly from 72% in March to 70% in April, and both were lower than the 83% of financings that were up-rounds in 2019. surprisingly, down-rounds also declined, from 16% in March to 12% in April, although both were higher than the 8% down-rounds in 2019. Flat rounds increased, to 18%, compared to 13% in March and 9% in 2019, perhaps a signal that there were more rounds led by insiders.
    • The Fenwick & West Venture Capital Barometer, which measures the per-share price change in a company's current financing compared to its prior financing, showed an increase of 60% in April from 42% in March, both below the 2019 average of 93%. The median price increase increased slightly, from 26% in March to 30% in April, again below the 60% median price increase seen in 2019.
    • Internet/new media and software were by far the strongest industries from a valuation increase perspective. Hardware had the worst results.
    • The number of deals increased from 54 in March to 64 in April. By comparison, the average number of monthly deals in 2019 was 65.
    • The percentage of Series D and E+ deals increased to 38% of all financings in April, an increase from 21% in March and the highest since August 2018 when Series D/E+ deals combined for 42% of all financings. That said, the average price increase for late-stage financings was only 26%, compared to 35% in March and 59% in 2019.
    • The percentage of life sciences deals continued high at 25% of all financings, compared to 28% in March. During 2019 the percentage of life sciences deals was 14%.
    https://twitter.com/thebenbergman
    ben@dot.la

    Subscribe to our newsletter to catch every headline.

    Cadence

    Genies Wants To Help Creators Build ‘Avatar Ecosystems’

    Christian Hetrick

    Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

    Genies Wants To Help Creators Build ‘Avatar Ecosystems’

    When avatar startup Genies raised $150 million in April, the company released an unusual message to the public: “Farewell.”

    The Marina del Rey-based unicorn, which makes cartoon-like avatars for celebrities and aims to “build an avatar for every single person on Earth,” didn’t go under. Rather, Genies announced it would stay quiet for a while to focus on building avatar-creation products.

    Genies representatives told dot.LA that the firm is now seeking more creators to try its creation tools for 3D avatars, digital fashion items and virtual experiences. On Thursday, the startup launched a three-week program called DIY Collective, which will mentor and financially support up-and-coming creatives.

    Read moreShow less

    Here's What To Expect At LA Tech Week

    Christian Hetrick

    Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

    Here's What To Expect At LA Tech Week

    LA Tech Week—a weeklong showcase of the region’s growing startup ecosystem—is coming this August.

    The seven-day series of events, from Aug. 15 through Aug. 21, is a chance for the Los Angeles startup community to network, share insights and pitch themselves to investors. It comes a year after hundreds of people gathered for a similar event that allowed the L.A. tech community—often in the shadow of Silicon Valley—to flex its muscles.

    From fireside chats with prominent founders to a panel on aerospace, here are some highlights from the roughly 30 events happening during LA Tech Week, including one hosted by dot.LA.

    Read moreShow less

    PCH Driven: Director Jason Wise Talks Wine, Documentaries, and His New Indie Streaming Service SOMMTV

    Jamie Williams
    ­Jamie Williams is the host of the “PCH Driven” podcast, a show about Southern California entrepreneurs, innovators and its driven leaders on their road to success. The series celebrates and reveals the wonders of the human spirit and explores the motivations behind what drives us.
    Jason Wise holding wine glass
    Image courtesy of Jason Wise

    Jason Wise may still consider himself a little kid, but the 33-year-old filmmaker is building an IMDB page that rivals colleagues twice his age.

    As the director behind SOMM, SOMM2, SOMM3, and the upcoming SOMM4, Wise has made a career producing award-winning documentary films that peer deep into the wine industry in Southern California and around the world.

    On this episode of the PCH Driven podcast, he talks about life growing up in Cleveland as a horrible student, filmmaking, Los Angeles and his latest entrepreneurial endeavor: A streaming service called SOMMTV that features–what else?–documentaries about wine.

    The conversation covers some serious ground, but the themes of wine and film work to anchor the discussion, and Wise dispenses bits of sage filmmaking advice.

    “With a documentary you can just start filming right now,” he says. “That’s how SOMM came about. I got tossed into that world during the frustration of trying to make a different film, and I just started filming it, because no one could stop me because I was paying for it myself. That’s the thing with docs,” or “The good thing about SOMM is that you can explain it in one sentence: ‘The hardest test in the world is about wine, and you’ve never heard about it.’”

    …Or at least maybe you hadn’t before he made his first film. Now with three SOMM documentaries under his belt, Wise is nearing completion of “SOMM4: Cup of Salvation,” which examines the history of wine’s relationship with religion. Wise says it’s “a wild film,” that spans multiple countries, the Vatican and even an active warzone. As he puts it, the idea is to show that “wine is about every subject,” rather than “every subject is about wine.”

    For Wise, the transition to launching his own streaming service came out of his frustration with existing platforms holding too much power over the value of the content he produces.

    “Do we want Netflix to tell us what our projects are worth or do we want the audience to do that?” he asks.

    But unlike giants in the space, SOMMTV has adopted a gradual approach of just adding small bits of content as they develop. Without the need to license 500 or 1,000 hours of programming, Wise has been able to basically bootstrap SOMMTV and provide short form content and other more experimental offerings that typically get passed over by the Hulus and Disneys of the world.

    So far, he says, the experiment is working, and now Wise is looking to raise some serious capital to keep up with the voracious appetites of his subscribers.

    “Send those VCs my way,” Wise jokes.

    Subscribe to PCH Driven on Apple, Stitcher, Spotify, iHeart, Google or wherever you get your podcasts.

    dot.LA reporter David Shultz contributed to this report.

    RELATEDEDITOR'S PICKS
    LA TECH JOBS
    interchangeLA
    Trending