As 2013 came to a close, it marked a year

of rising median pre-money valuations and

a very mixed picture around nancing deal
terms. During 2013, we handled 385 nancing
transactions, representing more than $4.2
billion of invested capital.
We witnessed a strong rise in median pre-
money valuations during 2013 across all
deal stages, with the exception of Series
C transactions. In fact, median pre-money
valuations in 2013 were higher than at any
point in the last six years in Series A, B and
D+ deals. Valuation increases were most
pronounced in early-stage deals during the
fourth quarter of the year. In Q4, median pre-
money valuations for Series A transactions
hit $11 million, while Series B valuations
reached over $40 million. The data also show
a decrease in the number of deals with median
pre-money valuations greater than $100 million.
The percentage of up versus at/down rounds
remained historically high in 2013, as 71%
of transactions were up rounds. Up round
percentages were strongest in the second
half of the year. In Q4, up rounds reached over
74% of all transactions.
During 2013, basic deal terms were somewhat
mixed. Deals including fully participating
preferred provisions in 2013 decreased to
just 18% of transactions, a level not seen in
the prior four years. However, the percentage
of deals with a liquidation preference of 1x
or less decreased across all deal stages
in 2013, compared to the prior year. We
witnessed a slight decrease in the percentage
of recapitalization transactions during the year,
as well as a slight rise in deals structured in
tranches. The use of pay-to-play provisions
increased slightly in 2013, notably in later
stage deals.
2013 Venture Financing in Review
Valuations Climb on Mixed Deal Terms
VENTURE FINANCING REPORT
2013 YE A R I N RE V I E W
attorney advertisement
MEDIAN PRE-MONEY VALUATION (millions $)By Series. We saw median pre-money
valuations increase across all deal stages in 2013, with the exception of Series C transactions.
2009 2010 2011 2012 2013
$0
$2
$4
$6
$8
$10
$12
SERIES A
$6.2
$7.3
$7.8
$8.8
$10.1
2009 2010 2011 2012 2013
$0
$5
$10
$15
$20
$25
$30
$35
SERIES B
$17.6
$24.4
$22.5
$25.0
$29.5
2009 2010 2011 2012 2013
$0
$30
$60
$90
$120
SERIES D or HIGHER
$57.2
$75.0
$91.4
$85.0
$102.8
2009 2010 2011 2012 2013
$0
$20
$40
$60
SERIES C
$32.0
$35.8
$46.5
$53.7
$50.0
2013 MEDIAN PRE-MONEY VALUATION (millions $)Quarterly and By Series. In Q4, we saw
median pre-money valuations rise markedly in early stage transactions. We witnessed valuation
decreases in later stage deals during the quarter.
2013 | Q1 2013 | Q2 2013 | Q3 2013 | Q4
$0
$2
$4
$6
$8
$10
$12
SERIES A
$10.5
$9.8
$7.5
$10.8
2013 | Q1 2013 | Q2 2013 | Q3 2013 | Q4
$0
$10
$20
$30
$40
$50
SERIES B
$14.5
$38.0
$26.0
$40.2
2013 | Q1 2013 | Q2 2013 | Q3 2013 | Q4
$0
$50
$100
$150
$200
SERIES D or HIGHER
$105.5
$88.0
$144.0
$80.0
2013 | Q1 2013 | Q2 2013 | Q3 2013 | Q4
$0
$50
$100
$150
$200
SERIES C
$28.0
$167.5
$85.0
$55.4
2
COOL EY VENT URE F I NANCI NG REP ORT
PRE-MONEY VALUATIONS OF MORE THAN $100 MILLIONBy Deal. The data point to a small
decrease in the number of 2013 deals with a median pre-money valuation greater than $100 million.
2009 2010 2011 2012 2013
0%
5%
10%
15%
20%
0
20
40
60
80
# of Deals 26 47 68 59 54
% of Deals

7% 11% 15% 13% 14%
2013 | Q1 2013 | Q2 2013 | Q3 2013 | Q4
0%
5%
10%
15%
20%
0
5
10
15
20
12 17 19 6
12% 17% 18% 8%
2009 2010 2011 2012 2013
0%
50%
100%
33%
61%
71%
74%
71%
UP ROUNDS
2013 | Q1 2013 | Q2 2013 | Q3 2013 | Q4
0%
50%
100%
72%
66%
74% 74%
2013 UP ROUNDS
PERCENTAGE OF UP ROUNDS. The data show a continued high level of up rounds during 2013, with
levels especially strong during the second half of the year.
DEAL BREAKDOWNBy Series. 2013 saw an uptick in the number of Series B and D+ transactions
over the prior year. The percentage of Series A and C deals fell slightly from 2012.
33%
28%
23%
16%
32%
29%
19%
20%
35%
26%
22%
17%
35%
30%
16%
19%
2008 2009 2010
2011
40%
24%
17%
19%
2012
35%
28%
16%
20%
2013
33%
28%
23%
16%
32%
29%
19%
20%
35%
26%
22%
17%
35%
30%
16%
19%
2008 2009 2010
2011
40%
24%
17%
19%
2012
35%
28%
16%
20%
2013
Series A Series B Series C Series D or Higher
3
COOL EY VENT URE F I NANCI NG REP ORT
<=1X >1X-=<2X >2X None
0%
20%
40%
60%
80%
100%
SERIES A
<=1X >1X-=<2X >2X None
0%
20%
40%
60%
80%
100%
SERIES B
<=1X >1X-=<2X >2X None
0%
20%
40%
60%
80%
100%
SERIES C
<=1X >1X-=<2X >2X None
0%
20%
40%
60%
80%
100%
SERIES D or HIGHER
<=1X >1X-=<2X >2X None
0%
20%
40%
60%
80%
100%
SERIES A
<=1X >1X-=<2X >2X None
0%
20%
40%
60%
80%
100%
SERIES B
<=1X >1X-=<2X >2X None
0%
20%
40%
60%
80%
100%
SERIES C
<=1X >1X-=<2X >2X None
0%
20%
40%
60%
80%
100%
SERIES D or HIGHER
LIQUIDATION PREFERENCEBy Series. In 2013, the percentage of deals with a liquidation preference
of 1x or less remained at relatively high levels (between 86% - 90%) in Series AC stages.

2009 85.1% 10.7% 3.3% 0.8%
2010

95.0% 4.3% 0.0% 0.7%
2011

91.9% 3.0% 2.2% 3.0%
2012 93.2% 6.1% 0.7% 0.0%
2013 90.8% 5.5% 0.9% 2.8%

2009 86.1% 7.4% 4.6% 1.9%
2010

95.0% 4.0% 1.0% 0.0%
2011

91.5% 7.6% 0.8% 0.0%
2012 92.0% 4.6% 3.4% 0.0%
2013 88.6% 9.1% 1.1% 1.1%

2009 73.2% 21.1% 5.6% 0.0%
2010

92.9% 2.4% 4.7% 0.0%
2011

87.1% 8.1% 3.2% 1.6%
2012 87.3% 9.5% 1.6% 1.6%
2013 86.3% 9.8% 2.0% 2.0%

2009 78.1% 16.4% 4.1% 1.4%
2010

77.9% 19.1% 0.0% 2.9%
2011

88.2% 7.9% 2.6% 1.3%
2012 83.1% 11.3% 2.8% 2.8%
2013 74.6% 17.5% 4.8% 3.2%
4
COOL EY VENT URE F I NANCI NG REP ORT
LIQUIDATION PREFERENCE: PARTICIPATION FEATURESBy Series. There was a marked decrease
in 2013 from the prior year in the percentage of deals with fully participating preferred provisions across
all deal stages.
None 2x Cap 3x Cap >3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES A
None 2x Cap 3x Cap >3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES B
None 2x Cap 3x Cap > 3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES C
None 2x Cap 3x Cap > 3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES D or HIGHER
None 2x Cap 3x Cap >3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES A
None 2x Cap 3x Cap >3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES B
None 2x Cap 3x Cap > 3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES C
None 2x Cap 3x Cap > 3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES D or HIGHER
None 2x Cap 3x Cap >3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES A
None 2x Cap 3x Cap >3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES B
None 2x Cap 3x Cap > 3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES C
None 2x Cap 3x Cap > 3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES D or HIGHER
None 2x Cap 3x Cap >3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES A
None 2x Cap 3x Cap >3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES B
None 2x Cap 3x Cap > 3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES C
None 2x Cap 3x Cap > 3x Cap Full
0%
20%
40%
60%
80%
100%
SERIES D or HIGHER

2009 32.0% 6.0% 13.0% 3.0% 46.0%
2010

33.0% 15.0% 11.0% 5.0% 36.0%
2011

55.0% 8.0% 10.0% 2.0% 26.0%
2012 41.0% 8.0% 13.0% 5.0% 33.0%
2013 63.0% 12.0% 4.0% 0.0% 22.0%

2009 37.0% 8.0% 11.0% 7.0% 37.0%
2010

47.0% 9.0% 10.0% 7.0% 26.0%
2011

51.0% 4.0% 17.0% 7.0% 21.0%
2012 48.0% 8.0% 13.0% 4.0% 27.0%
2013 51.0% 11.0% 11.0% 6.0% 21.0%

2009 50.0% 5.0% 10.0% 2.0% 32.0%
2010

54.0% 9.0% 6.0% 1.0% 29.0%
2011

69.0% 2.0% 7.0% 2.0% 19.0%
2012 68.0% 5.0% 6.0% 1.0% 20.0%
2013 76.0% 6.0% 4.0% 2.0% 12.0%

2009 40.0% 6.0% 8.0% 5.0% 41.0%
2010

63.0% 9.0% 4.0% 4.0% 20.0%
2011

61.0% 8.0% 7.0% 2.0% 23.0%
2012 57.0% 8.0% 5.0% 6.0% 24.0%
2013 65.0% 6.0% 5.0% 2.0% 23.0%
PERCENTAGE OF DEALS WITH FULLY PARTICIPATING PREFERREDBy Year.
2009 2010 2011 2012 2013
0%
25%
50%
38%
29%
22%
24%
18%
5
COOL EY VENT URE F I NANCI NG REP ORT
2009 2010 2011 2012 2013
0%
10%
20%
30%
PERCENTAGE OF DEALS WITH PAY-TO-PLAYBy Year and Series. During 2013, there was a slight
increase in the utilization of pay-to-play provisions, most notably in later stage deals.
2009 2010 2011 2012 2013
0%
5%
10%
15%
20%
16%
10%
5% 5%
6%

Series A 11% 8% 2% 1% 1%
Series B

13% 8% 1% 5% 2%
Series C

18% 8% 15% 11% 14%
Series D or Higher

22% 19% 9% 11% 14%
RECAPITALIZATIONSBy Year. We observed a continued trend of fewer recapitalization transactions
in 2013.
2009 2010 2011 2012 2013
0%
5%
10%
15%
10%
7%
6% 6%
6%
TRANCHED DEALSBy Year. The percentage of deals structured in tranches increased slightly from the
prior year.
2009 2010 2011 2012 2013
0%
10%
20%
30%
40%
27% 26%
20%
17%
20%
6
COOL EY VENT URE F I NANCI NG REP ORT
2009 2010 2011 2012 2013
40%
60%
80%
63%
68%
63%
72%
69%
PERCENTAGE OF DEALS WITH DRAG-ALONGBy Year and Series. Utilization of drag-along provi-
sions in 2013 decreased slightly to 69% of deals. The decrease was driven by Series D+ transactions.
2009 2010 2011 2012 2013
0%
20%
40%
60%
80%
100%

Series A 65% 68% 51% 72% 72%
Series B

70% 70% 73% 74% 76%
Series C

65% 73% 71% 70% 80%
Series D or Higher

48% 63% 71% 77% 63%
2013 | Q1 2013 | Q2 2013 | Q3 2013 | Q4
0%
25%
50%
42%
35%
30%
32%
2013 INTERIM BRIDGE FINANCINGSBy Quarter. A signicant percentage of 2013 deals were pre-
ceeded by an interim bridge nancing. Of all 2013 deals that had an interim bridge nancing, more than
66% of these deals included a conversion discount, while 4% included warrant coverage. 29% of these
deals did not include either a conversion discount or warrants.
2013 | Q1 2013 | Q2 2013 | Q3 2013 | Q4
0%
20%
40%
60%
80%
CONVERSION DISCOUNT TYPE

Conversion Discount 70% 53% 66% 67%
None

23% 33% 16% 29%

Warrant Coverage 7% 14% 19% 4%
7
COOL EY VENT URE F I NANCI NG REP ORT
ANTI-DILUTION PROTECTIONBy Year. Over the last three years, more than 88% of transactions
included broad-based weighted average anti-dilution protection compared to 85% in 2010 and 79% in
2009. The chart below breaks out the percentage of deals with broad-based weighted average, narrow-
based weighted average, full ratchet and no anti-dilution protection.
87%
5%
2%
6%
79%
10%
3%
8%
85%
5%
3%
7%
90%
3%
1%
5%
2008 2010 2009 2011
90%
1%
1%
8%
2012
88%
2%
10%
2013
87%
5%
2%
6%
79%
10%
3%
8%
85%
5%
3%
7%
90%
3%
1%
5%
2008 2010 2009 2011
90%
1%
1%
8%
2012
88%
2%
10%
2013
Broad Based
Wgt-Avg
Full Ratchet Narrow Based
Wgt-Avg
None
8
COOL EY VENT URE F I NANCI NG REP ORT

NorCal 16% 16% 12% 15% 13%
Other
48% 45% 44% 36% 36%

NorCal 5% 8% 6% 3% 5%
Other
28% 28% 23% 18% 17%
REDEMPTION PROVISION AND DIVIDEND PROVISION UTILIZATIONBy Region. We continue
to observe a gap in redemption and dividend provisions between San Francisco/Silicon Valley and other
regions.
2009 2010 2011 2012 2013
0%
20%
40%
60%
REDEMPTION PROVISIONS
2009 2010 2011 2012 2013
0%
10%
20%
30%
ACCRUING DIVIDENDS
2009 2010 2011 2012 2013
0%
20%
40%
60%
REDEMPTION PROVISIONS
2009 2010 2011 2012 2013
0%
10%
20%
30%
ACCRUING DIVIDENDS
About The Cooley Venture Financing Report. This quarterly report provides data reecting Cooleys experience in
venture capital nancing terms and trends. Information is taken from transactions in which Cooley served as counsel to
either the issuing company or investors. For more information regarding this report, please contact the Cooley attorneys
listed below.
About Cooley. Cooleys attorneys solve legal issues for entrepreneurs, investors, nancial institutions and established
companies. Clients partner with Cooley on transformative deals, complex IP and regulatory matters and bet-the-company
litigation, often where innovation meets the law.
Cooley has more than 750 lawyers across 11 ofces in the United States and China.
This Cooley Venture Financing Report is not intended to provide specic legal advice or to establish an attorney-client relationship. 2014
Cooley LLP, Five Palo Alto Square, 3000 El Camino Real, Palo Alto, CA, 94306. +1 650 843 5000. Permission is granted to make and redis-
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www.cooley.com
BOSTON, MA ............Patrick Mitchell ............... +1 617 937 2315
BROOMFI ELD, CO ......Brent Fassett.................. +1 720 566 4025
LOS ANGELES, CA ......David Young ....................+1 310 883 6416
NEW YORK, NY .........Babak (Bo) Yaghmaie ...+1 212 479 6556
PALO ALTO, CA .........Matt Bartus ..................... +1 650 843 5756
RESTON, VA .............Mike Lincoln ....................+1 703 456 8022
SAN DI EGO, CA .........Tom Coll .......................... +1 858 550 6013
SAN FRANCISCO, CA ..Craig Jacoby ...................+1 415 693 2147
SEATTLE, WA ............Gordon Empey ............. +1 206 452 8752
WASHI NGTON, DC .....Ryan Naftulin ...................+1 202 842 7822
SHANGHAI ..............Patrick Loofbourrow .. +86 21 6030 0608
Quarterly analysis based upon 74 completed deals totaling approximately $838 million in the fourth quarter of 2013, 105 completed
deals totaling approximately $1.05 billion in the third quarter of 2013, 102 completed deals totaling approximately $1.19 billion in
the second quarter of 2013 and 104 completed deals totaling approximately $1.21 billion in the rst quarter of 2013. Year-over-year
analysis based upon 385 completed deals totaling approximately $4.29 billion in 2013, 440 completed deals totaling approximately
$5.99 billion in 2012, 440 completed deals totaling approximately $6.69 billion in 2011, 430 completed deals totaling approximately
$5.01 billion in 2010 and 397 completed deals totaling approximately $4.25 billion in 2009. Please note our past deal numbers can
change based on data not available at the time of the report.