A new survey that detailed trends in venture capital investments in the fourth quarter of 2008 has found that, like the rest of the economy, venture capital and startups are feeling more pain from the deepening global crisis.
BusinessWeek reported that the survey, conducted by California law firm Fenwick & West, analyzed the terms of venture deals for 128 companies headquartered in the San Francisco Bay Area and found that valuations are falling for startups while venture capitalists are driving harder bargains.
Of the 128 companies that received financing, 33 percent of them experienced “down rounds,” or an investment that placed a lower valuation on the company than it received in the previous round.
In addition, the percentage of down rounds rose every month at year’s end, hitting 45 percent in December.
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