Rosy conditions for raising VC

Private companies in Silicon Valley that raise venture capital are getting great deals.

When investors inject money into a company, they set a dollar value on it, to determine what portion of the company’s shares they get in return for their cash.

Bay Area companies funded during the quarter saw an average 74 percent increase in the value of their shares, when compared to their most recent funding around, according to a survey by law firm Fenwick & West of 126 technology and life science companies headquartered in the Silicon Valley region.

It was the second largest increase since the survey six years ago, exceeded only by a 75 percent increase in the first quarter of the year. The survey measured the change in share price during the round. Web 2.0 companies are especially hot. Of 12 financings where the stock price was more than three-fold higher, seven were Web 2.0 or related fields, said Barry Kramer, a partner at the firm.

So-called “up rounds,” or financing deals where the price per share is valued at a higher level when compared the prior round, exceeded down rounds for the 14th consecutive quarter. Up rounds exceeded down rounds 81 percent to 11 percents, a ratio that ties with the first quarter of 2007 for the highest ratio since the survey began.

[Disclosure: Fenwick & West is a sponsor of VentureBeat]