US venture capital early-stage valuation trends | PitchBook

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The venture industry has continued to prove its resiliency in 2021—a year marked by outsized funds, numerous mega-deals and the soaring interest of multistage investors looking to back younger startups.

As a result, valuations of VC-backed companies are on the rise across most stages in the third quarter. Our latest US VC Valuations report takes a deep dive into startup valuations across the venture lifecycle through Q3 2021, including spotlights on sectors such as biotech, climate tech and enterprise tech.

Here’s a closer look at seven key charts that depict how startup valuations have changed amid the frenzied dealmaking of the last few quarters.

 

Early-stage dealmaking is undergoing an identity shift as late-stage and traditional investors increasingly bet on promising startups earlier in the venture lifecycle—boosting valuations to record levels. The median early-stage valuation has roughly doubled in the past three years and cracked the $50 million mark in Q3.

 

Early-stage mega-deals are more common than ever, and have pushed average valuation step-up multiples to a record 5.1 times through the third quarter.

Around 104 such mega-deals were completed by Q3—a significant jump from the previous full-year record of 61 in 2020, according to the latest edition of the PitchBook-NVCA Venture Monitor.

 

The median and average pre-money valuations for late-stage funding in Q3 2021 decreased slightly to $115 million and $736 million, respectively.

Despite the slight downturn in valuation metrics, late-stage activity has remained robust throughout the year—primarily due to high participation from non-traditional investors, elevated LP allocations for mature startups and numerous outsized deals surpassing $1 billion.

 

Early-stage biotech startups are commanding the highest proportion of deals compared with other stages through Q3, according to the Venture Monitor. The top quartile early-stage valuation in the sector also topped $100 million for the first time.

 

Valuations for early- and late-stage climate tech startups increased in Q3, but the gap between top and bottom quartile valuation was around $365 million—surpassing 2020’s record gap of $300 million.

Climate tech startups raised nearly $13 billion in VC investment globally across 203 deals in Q3 2021, up 38.3% year-over-year, according to a recent Emerging Tech Research report by PitchBook.

 

Enterprise tech commanded nearly half of all deal value through Q3, and median valuation step-ups for early- and late-stage startups in the sector soared to record levels.

 

High demand from public market investors is another factor pushing VC valuation growth to new heights. Public listing step-ups rose by 1.8 times, while the median valuation step-up for acquisitions swelled to 2.8 times, the highest increase on record.

Source: US venture capital valuation trends in seven charts | PitchBook

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