Startup valuations: Why venture capital investors are investing at higher and higher valuations
Competition to fund the next hottest startup has arguably never been fiercer, and it's showing in the valuations that venture capital investors are willing to give to startups.
According to data from Pitchbook, the median early-stage startup was funded at a pre-money valuation of $30m last year. In 2006, it was $10m. For later-stage companies, who have demonstrated significant traction or product development, the valuations are even frothier, with the median late-stage startup getting an $80m pre-money valuation.
Hot potato, hot potato
Intentionally or not, venture stage investors often take their lead from the public markets - where the valuations of technology companies have skyrocketed. To name but a few examples (there are many): Palantir is valued at 31x its revenue, Airbnb is on 21x and Snowflake is on 80x its revenue.
Those kinds of multiples mean that if you're a venture investor, you're a bit more comfortable investing at higher valuations, as there's a decent chance someone else will take those shares off your hands at a considerably higher price if the company does well. For founders, it's even simpler; more investment, in exchange for fewer shares.
