Is the bubble back ?
Median pre-money valuations of U.S. venture-backed companies in the first quarter reached $15 million - the highest since 2001 - driven by an increase in first-round valuations. New numbers from VentureOne show that Q1 median valuation rose 23% from the same period last year, when median valuation was $12.2 million.
"The area with the most increase was the early stage round," said Matthew Garlick, research manager at VentureOne. The increase in first-round valuations might be partly due to the fact that companies raising first rounds are farther along in their stage of development compared to a year ago, as the median valuation for companies in product development stage dropped almost 22% to $8.3 million from $10.6 million a year ago.
Source : VentureOne
Hi Marc, I don't think the valuations are higher because of a speculation bubble. The VCs are investing first rounds in companies that are more mature, with cash flow, customers, and the like. That means the firms are worth more (in theory) than two guys in a garage. We are seeing it here in Europe too.
We've got a couple of reports on it at The Deal's new blog at
http://techconfidential.typepad.com/techconfidential/2005/05/european_vcs_up.html
and here http://www.thedeal.com/NASApp/cs/CS?pagename=TheDeal/TDDArticle/StandardArticle&bn=NULL&c=TDDArticle&cid=1115235457373
Cheers,
Valerie
Posted by: Valerie Thompson | May 27, 2005 at 11:55 AM
And for these kinds of companies, there tends to be a line-up of competitive syndicates, also leading to higher valuations.
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