Startup valuations: Why venture capital investors are investing at higher and higher valuations

3/9/21 7:00PM

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.

Max Knoblauch7h

American Airlines joins the flock, hiking bag fees amid higher jet fuel prices

American Airlines on Thursday announced that it, too, will be hiking the fees it charges customers to check luggage.

With the move, all four of the major US airlines, which together control about 80% of the US market, have now hiked their baggage fees in recent days amid surging jet fuel prices.

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Since late March, JetBlue, Delta Air Lines, United Airlines, Canada’s WestJet, and Southwest have hiked their fees. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

American Airlines updates bag fees and Basic Economy fares

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Max Knoblauch8h

Less than a year after implementing them, Southwest is also hiking its bag fees

Southwest Airlines has joined the growing list of airlines opting to hike their bag fees amid sustained higher jet fuel costs.

Starting today, the first checked bag at the carrier — which implemented bag fees less than a year ago — will jump from $35 to $45, and the second from $45 to $55. Southwest quietly disclosed the change Tuesday.

Southwest assigned the decision to “part of an ongoing analysis of the business and against the evolving global backdrop.”

As of Wednesday, jet fuel prices dropped to $4.16 a gallon, per the Argus US Jet Fuel Index, down from $4.81 on Tuesday following President Trump’s ceasefire announcement, which sent travel stocks soaring. Major airlines have shed some of those gains in premarket trading Thursday.

With the move to hike bag fees, Southwest joins JetBlue, United Airlines, Delta Air Lines, and Canada’s WestJet, all of which also boosted fees this month. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.