-- Increased Interest in Multiple Liquidation Preferences on East Coast.
The East Coast has witnessed a relatively steady decrease in deals with a
simple 1X liquidation preference over the last several quarters. During the
last three quarters there has been an increase in deals with multiple
liquidation preferences. By contrast, deals on the West Coast have seen
liquidation preference terms remain fairly steady from the fourth quarter
of 2005 through the first quarter of 2007.
-- Early Stage Financing Trend on East Coast. Another distinguishing
characteristic between regions is the differences between the number of
Series C and later stage financings. From the fourth quarter of 2005
through the first quarter of 2007, the West Coast accounted for an average
of 36 percent of all Series C and later stage transactions, while the East
Coast only saw an average of 21 percent during this same time period.
-- West Coast Yields Higher Median Valuations. Along with a greater
percentage of later-stage transactions, the West Coast also had higher
median valuations at each stage of financing. While the median pre-money
valuation for Series A financing was only slightly higher on the West Coast
than the East Coast, valuations were considerably higher for later-stage
financings on the West Coast.
"The industry has long spoken about 'East Coast' versus 'West Coast' with
respect to deal terms," said Jim Fulton, a partner in Cooley's Palo Alto
office, and head of the Firm's Emerging Companies practice group. "While
it's interesting to see some of the most significant differences, it's also
important to keep in mind that there are generally more similarities than
differences when it come to overall deal terms."
Cooley's Private Company Financings Report is published approximately every
quarter and is based on private company transactions in which the Firm
served as counsel to either the issuing company or the investors. A
complete version of the report is available at www.cooley.com.
In 1959, Cooley formed the first institutional venture capital limited
partnership in the western United States. Since then the Firm has been at
the vanguard of private company financings, both as a representative of
hundreds of venture capital and private equity partnerships and as counsel
to companies and entrepreneurs raising money from the venture capital
community. Industry sectors include all areas common to venture capital
financings, including communications, computer hardware and networking,
consumer electronics, general retail, Internet, life sciences,
semiconductors, and software.
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Contact Information: Media Contact: Ashley Kanigher Office: 415.732.7802 Cell: 415.786.2994 akanigher@cooley.com