Q1 2021 Venture Financing Report – A Strong Start To The Year - Corporate/Commercial Law


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The robust financing environment we saw in the second half of 2020 continued into the first quarter of 2021. Cooley had 339 disclosable deals in the first quarter. This is in line with the previous quarter, but with an increase in invested capital to more than $ 18.8 billion - a record for this report, which has been published for more than 15 years.

During the first quarter, mean pre-money valuations rose in essentially all phases of the business, with only transactions in the seed stage showing relatively flat valuations compared to the previous quarter. Notably, the percentage of transactions in the first quarter with an average pre-money valuation of more than $ 100 million hit 40% of transactions, a jump from previous quarters. As a further signal of the continued strength of the financing environment, the percentage of upward rounds in line with the fourth quarter of 2020 again reached 93% of all transactions.

The terms of the contract continued to favor companies. In the first quarter, the percentage of transactions with fully participating liquidation preferences remained low, with less than 6% of transactions. In addition, the data indicated a decrease in recapitalizations and tranched deals.

Life sciences in the spotlight

In the first quarter, Cooley processed 77 publicly funded life science companies representing more than $ 4.8 billion in invested capital. This is a record high for this report. As we saw in the fourth quarter of 2020, business sizes continued to grow. The average life sciences business for the first quarter was $ 62.5 million, above the fourth quarter 2020 average of $ 40 million. It is noteworthy that the percentage of life science transactions structured in tranches fell again to only 13% of the transactions, thus continuing the trend observed in the previous quarters. To see more details about trends in life sciences, use the Life Sciences filter on our interactive data visualization tool.

Tech in the spotlight

Cooley handled 184 disclosed financings from technology companies representing more than $ 9.6 billion in invested capital in the first quarter, an increase over the previous quarters. Transactions with technology companies accounted for more than 54% of our reportable transactions during the quarter. As a sign of investor optimism and the company's favorable terms, more than 93% of the financings in technology companies were closed in the quarter. Use the Technology filter in our interactive data visualization tool to see more details on trends in the technology sector.

Visit Cooley GO to view the interactive visualization

The content of this article is intended to provide general guidance on the subject. A professional should be obtained about your particular circumstances.

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