San Francisco law firm Fenwick & West LLP released results of its annual Bay Area Life Science Venture Capital Survey, showing healthy increases in valuations of venture-backed biotech companies for the second year in a row.

The survey looked at 97 companies that closed venture investments in 2007 and found that 79% won increases in valuation compared to 12% that took haircuts, while 9% had flat rounds. The results were comparable to 2006, and an improvement over the previous two years.

The survey found the average price increase was up 45%, down slightly from 2006. But despite all the rosy news, Fenwick & West noted that results for the sample lagged in comparison to figures released earlier this week by Dow Jones VentureSource for venture-backed companies outside of the life sciences. The law firm attributed this in part to inflated valuations in cleantech and Web 2.0 companies. -- Clifford Carlsen

See March 19 press release from Fenwick & West
See March 18 press release from DowJones VentureSource