Early Stage Valuations Are Holding Volumes Are Not

Valuations in early-stage venture aren't terrible — so why does it feel so tough out there?

In short, volume (just the total number of rounds being completed) is more impactful to the general fundraising environment than valuations.

In the chart below, I looked at the percent change in median valuation by stage and total rounds raised. Each data point in a given line is relative to the starting point of Q1 2022.

Only rounds raised by US startups on Carta in this analysis.

So take Seed stage, for instance. The median seed stage valuation is only down 9% over the past year - given the wild times in public markets, that's great!

But volume in Seed is down by nearly half. This disconnect means that the companies actually receiving seed investment these days are likely showing much better metrics (traction, team, etc) than the seed-stage companies of a year prior. Investors, even at this early point, are being more selective.

Once you move past Seed, the lines start to converge. In Series B, valuations are down ~44% and volume about 57%.

Heartening to see a little bounce back in valuations across all four displayed stages in the most recent quarter.

But when will the volume return? Or is the rest of this year destined to see far fewer rounds than we had been accustomed to in the sugar highs of 2021?

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