In this issue:
- From the WSGR Database: Financing Trends for Q2 2014
- Trends in High Pre-money Valuation Financings
- Price and Preference
- Excerpt from Trends in High Pre-money Valuation Financings:
The advent of cloud computing, open source software, and other technological advances has enabled start-ups to become increasingly capital efficient. When coupled with growing global market opportunities and customer bases, this new capital efficiency has allowed more successful companies to scale their businesses early in their development without the need for a large influx of growth capital. As a result, successful VC-backed companies are able to remain private for longer periods and delay going public, with the average number of years from first financing to IPO increasing from 3.1 years in 2000 to 7.4 years in 2013, according to the National Venture Capital Association (NVCA) 2014 Yearbook. For example, Twitter and Facebook recently went public with market capitalizations of more than $18 billion and $104 billion, respectively, whereas Amazon, which went public in 1997, had a market capitalization of less than $500 million. This trend, among others, has led to more traditional public investors such as hedge funds and private equity funds, as well as corporate venture capital entrants such as Google, making stronger inroads into the world of private financings.
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