Survey on Legal Terms of Venture Capital Transactions – For the Year of 2016
We are pleased to present the results of our survey for the year of 2016, which analyzes legal terms of venture capital (VC) investments in Israeli and “Israeli related” hi-tech companies, and comparing these terms to those common in the Silicon Valley, United States.
The annual results demonstrate that the second half of 2016 maintained the “conflicting” trends that were observed in the first half of 2016. The annual result once again revealed an unprecedented number of up-rounds, the highest rate we have surveyed thus far: a rate 90% of the rounds surveyed were up-rounds! This rate is even higher than the rate in Silicon Valley – where the rate was 73%.
Alongside the increase in the number of up-rounds at the unprecedented rate, the survey also revealed a decrease in the number of Series A rounds in Israel in comparison to 2015. Although the rate rose slightly compared to the rate observed in the first half of 2016 (29% in the first half of 2016 compared to the annual average of 33%) it still declined compared to the rate in 2015, which was at 44%. In this sense we have neared the numbers in Silicon Valley, but here the rate is still higher (in Silicon Valley the rate of Series A rounds was 23%). The significance of this finding is that in comparison with 2015 there is a drop in new investments, which may be an indication of a slowdown in the industry which continues to finance existing companies but is less eager to invest in new ventures.