Venture capital investing fell in the third quarter, but not all the signs from the industry are pointing down.
Prices paid for shares in start-ups rose for the first time in 2009 and “up” rounds exceeded “down” rounds for the first time as well. In an up round, a company’s value increases from as earlier funding round while in a down round, it decreases.
Up rounds exceeded down rounds in the third quarter for the first time this year.
According to a survey from Fenwick & West, the price paid for a share of a start-ups’ stock rose 11 percent. The company calculated the increase by comparing up rounds and down rounds. The 11 percent increase was less exciting than the 55 percent increase of last year’s third quarter. But it represented an improvement from the first and second quarters of 2009, when prices fell.
Equally encouraging is that up rounds accounted for 41 percent of deals and down rounds, 36 percent. The quarter showed a reversal from the second quarter, when 46 percent of deals were down and 32 percent up.
For the quarter, venture investing fell $38 percent to $5.1 billion as activity in the industry fell for the third time this year. But at least VCs were a little more upbeat about the deals they did as they put money in clean-tech, IT and health-care companies.
