The venture capital market appears to be bottoming out after a long decline, according to a Fenwick & West survey of the venture capital market for the third quarter of 2009.
There are two significant data points worth pulling out. First, the number of investment rounds for higher valuations (i.e. “up rounds”) exceeded the number of investment rounds for lower valuations (i.e “down rounds”) for the first time this year. Up rounds exceeded down rounds 41% to 36%, according to the survey. In the second quarter, down rounds exceeded up rounds 46% to 32%.
This the equivalent of a rising valuations in the stock market, suggesting that VCs are getting more optimistic about the value of venture-backed startups.
The second related point is that the average price of venture deals increased 11%, the first increase this year. That compares to a 6% decline in the second quarter, and a 3% decline in the first quarter.