Valuations of venture capital (VC)-backed companies continued their dizzying climb across most stages in the third quarter of the year, according to PitchBook’s latest “VC Valuations Report.” Key takeaways include:
- Early-stage VC is the relatively strongest segment of the venture lifecycle as late stage and growth investors have been backing younger companies. The analysis shows that valuations at this stage have more than doubled on an annualized basis.
- Increased competition for most promising seed stage start-ups has pushed the pre-money valuations of top-quartile companies to $15 million, creating an unprecedented spread of $10 million above bottom quartile seed-stage valuations.
- While late stage valuations declined slightly quarter over quarter, the PitchBook analysis shows that half of all late stage financings in the last four quarters raised new capital at more than double their previous valuations.
- Exit demand likely reinforced VC valuation growth. Public listing step-ups advanced to 1.8x in Q3 while the median valuation step-up for acquisitions swelled to 2.8x, the highest increase on record.
The report can be downloaded at this link.