Valuations have been a priority for the entire VC industry this year as many VCs attempt to navigate their overvalued portfolios and founders scramble to conserve cash and hit their lofty valuations.
One could therefore have predicted that valuations would fall off a cliff this year. But that didn’t happen because venture capital investing just isn’t that simple.
First, let’s look at the numbers: according to PitchBook data, the median valuation before buying seeds in the US was $10.5 million, up from $9 million last year. The median valuation from the early stages through the third quarter of this year was $55 million, down from $44 million last year. The median late-stage valuation was $91 million, up from $100 million in 2021.
It may seem silly that valuations continue to climb during certain stages – especially after investors made it look like they were crazy to arrive at last year’s prices, and, of course, in some respects, it is – but it also makes a lot of sense.
Kyle Stanford, senior venture analyst at PitchBook, told TechCrunch that, for starters, we can’t forget about those record highs of dry powder.
“There has been such a growth over the last few years of multi-stage investors or Andreessen [Horowitz] and Sequoia that have billion-dollar funds investing in early stages,” Stanford said. “The amount of capital that is still available for the early stages is still very high and many investors are still willing to put the best dollars into deals.”