![]() (I wrote a guide for founders on fundraising in 2023 that’s packed with a lot of good advice from some top investors.) And in fact, VC funding into seed startups started to fall, particularly in the latter half of last year, as my colleague Jessica Mathews reported last month. As I’ve written about lately, VCs and analysts alike expect the markets to remain challenged in 2023, even for earlier stages. Overall the PitchBook analysts note that those valuations were “on par” with 2021 and showed strength.īut 2023 is shaping up to be a tough year for venture-backed companies. Q1 showed the highest median step-up valuations, at 2.5x, but, after a slump in Q2, they continued to tick up in the following quarters. However, it hasn’t been a straight shot up for seed valuations: On a quarterly basis, those median seed step-up valuations fluctuated. “I think that leverage combined with the fact that more investors are moving downstream can help buoy up seed-stage valuations,” Harrison told me. Plus, Vincent Harrison, a venture capital analyst at PitchBook and one of the authors of the report, made an interesting point: Seed-stage companies probably have and may continue to have a bit more leverage when it comes to deal terms given the investor-friendly market (read: more VC-friendly deal terms) for companies at the later stages is “much more pronounced” than for seed. Indeed, the PitchBook analysts note that the rise of micro funds in recent years helped fuel these seed startups, as well as “investors shifting their focus toward startups in nascent stages of development, allowing more buffer time before the gate to exit reopens.” That exit window, or rather, lack thereof, is becoming increasingly worrying for VCs and LPs alike. ![]() It’s proof of what we’ve all been hearing anecdotally for a while-that startups in the seed and early stages have largely been more insulated from the massive drawdowns we’ve seen in later-stage companies that were closer to the IPO phase. Valuations for seed stage startups saw record growth in 2022. ![]()
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