Today Fenwick & West released the results from their fourth quarter 2011 venture capital survey. Overall, the survey painted a positive picture of the venture capital landscape. Up rounds outnumbered down rounds by more than 4 to 1. This was the tenth quarter in a row that down rounds were exceeded by up rounds. Overall, venture investment was significantly higher in 2011 than 2010, and the average deal size increased in 2011. More venture capital was raised in 2011 than in 2012, although there were fewer funds raising money. Average valuations in the quarter increased by 85% improving on the 69% increase seen in the third quarter of 2011.
Not all of the survey results were positive. M & A activity in dollar terms declined significantly in 2011 as compared to 2010 and in 4Q ’11 as compared to 3Q ’11. And the survey references the Silicon Valley Venture Capitalist Confidence Index, which reported that the confidence of venture capitalists in venture capital declined for the third quarter in a row. The decline in confidence is due in part to greater international macroeconomic and political uncertainty. Additionally the survey references the Venture View survey of venture capitalists conducted by the NVCA and Dow Jones VentureSource which reports that a plurality of venture capitalists believe venture investment and fundraising will decline in 2012 as compared to 2011.