Investors are Pricing Rounds Up, but Fearing the Bubble

Analytics are out on the private financing market during Q3.  We should all appreciate that Wilson Sonsini and Cooley each make the effort to aggregate and publish term sheet analytics.  The law firms can only report on transactions where they advise, but the collective data are by far the most detailed view into trends in term sheet structure.

The big takeaway for CEOs thinking of funding is that capital remains available – 80+% of all financing rounds were up rounds in Q3.  WSGR reports it is the highest level of up rounds since they began tracking data.  The WSGR graph below shows the recent quarterly trend:

It is unlikely that 80+% of portfolio companies are making their budget numbers.   Therefore, the wealth of up rounds suggests investors are giving companies the benefit of the doubt and placing credence in future growth plans.

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