#173 VC Market Insights (Mid-August)
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“Not knowing you can’t do something is sometimes all it takes to do it.” -Ally Carter
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State of Private Markets @ Q2 2024 (Peter Walker)
Top takeaways:
Fundraising grew from $18.7b (Q1) to $20.9b (Q2) across US startups
Down rounds fell from 24% to 17% Quarter over Quarter. Good news! Down round percentages had been climbing since mid-2022
Percent of bridge rounds fell for every stage except seed. More capital betting on new companies vs supporting current ones from VCs (so good for some, bad for others)
Number of total acquired companies hit the highest mark since Q3 2022
Strong median valuations at Seed ($15m pre-money) and Series A ($40m pre)
Startup Valuations (Chris Harvey)
Median Pre-Money Valuations:
• Seed: $14.9M
• Series A: $40M
• Series B: $116M
• Series C: $232M
Overall Trends:
• Valuations are on the rise across the board, but
—(1) All valuations except seed are below their peak over last two years
—(2) Deal volume remains muted or lower.
Key Insights:
Seed Stage
• Deal volume is down 30% from Q1 2022 and flat from the previous quarter, but pre-money valuations are up over ever quarter
• Indicates increased competition for high-quality seed deals
• Investors concentrating on fewer startups but prices remain elevated
Series A Crunch
• Significant jump from Seed ($14.9M) to Series A ($40M)
• Creates a Series A crunch, particularly for startups with high seed valuations
• Top quartile Series A is down -19%
• 5:1 ratio: it takes 5 seed companies to close 1 Series A company
Later Stage Resilience
• Stable valuations at Series B ($116M) and Series C ($232M)
• Flight to quality and pressure to deploy bigger checks keeps these companies afloat and growing
Going Deeper - VC Exits (DPI) & Industry Challenges
We wrote about this a few weeks ago but it keeps coming up in our conversations with fund managers and LP’s! Venture capital limited partners continue to look for exits but they just aren’t coming. The challenge is that the best companies don’t exit and the rest of the companies can’t make it happen.
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