VC valuations continued their descent in Q1. The dearth of IPO exits, a pullback from nontraditional investors, and ongoing economic headwinds have all contributed to lower valuations and smaller round sizes for all stages except seed, PitchBook reports.
Not only did valuations drop, but the share of down rounds as a percentage of all deals began to creep higher, according to PitchBook’s Q1 2023 US VC Valuations Report, sponsored by Morgan Stanley At Work. PitchBook analysts estimate the market environment has become the most investor-friendly in nearly a decade. Other takeaways include:
Pressures from a lack of capital availability also trickled down to earlier stages of the venture ecosystem.
The median deal size for late-stage rounds fell 25% to $6 million, the lowest figure recorded since Q2 2017.
Pre-money valuations for venture growth-stage companies fell to a median of $90 million, a nearly 75% decline from the 2021 full-year record high of $355 million. Read more.
