How art dealers are like venture capitalists
There’s one thing that art dealers and venture capitalists have in common: a severe allergy to “down rounds”. A dealer will never sell an artist’s new paintings for less than the cost of the paintings in the last show, and a VC-backed company will never raise funds at a lower valuation than in the last round of funding.
We analyzed the terms of venture financings for 89 companies headquartered in the Silicon Valley that reported raising money in the second quarter of 2009.
Down rounds exceeded up rounds 46% to 32%, with 22% flat. This was slightly better than 1Q09 when down rounds outpaced up rounds 46% to 25%, with 29% flat. The past two quarters are the only quarters since 4Q03 in which down rounds have exceeded up rounds.
The Fenwick & West Venture Capital Barometer™ showed an average price decrease of 6% for companies receiving venture capital in 2Q09 compared to such companies’ prior financing round.
I don’t know how you’d even begin to do this kind of analysis for primary art-market prices, but it would be fascinating. Have art dealers finally capitulated and started cutting their list prices from boom-era levels? Or are they just offering much larger discounts these days?