Our quarterly survey of venture investment activity, like other surveys already released, shows a meaningful decline in the number of transactions and aggregate dollars invested across all sectors. Despite this decline, our survey still reflects a relatively stable, company-favorable market in key deal metrics. For instance, the percentage of venture-funding transactions representing up rounds during the third quarter of 2012 remained high, comparable to levels in the last two quarters of 2011. In addition, the median valuations for venture financings at all levels remained well above median valuations in 2010 and 2011. These results indicate that the venture-funding environment continues to be strong for entrepreneurs and early-stage companies.

Our review of the terms of venture-funding rounds closed during the first three quarters of 2012 mirrors this trend. The percentage of deals in which senior liquidation preferences were used during this period is lower compared with 2011 and 2010. Similarly, the percentage of deals with non-participating preferred stock increased during the first three quarters of 2012 compared with 2011 and 2010.

Therefore, while the level of activity appears to have declined during the third quarter, we believe that valuations and deal terms continue to indicate an overall healthy venture-funding environment.