Early-stage venture is so weird right now.
I've been trying to use data to put some evidence behind the general vibe that seems to dominate early-stage venture backed startups.
I'd describe the vibe as "generally gloomy with pockets of rabid enthusiasm". So...weird.
The chart below may have something to do with it. We looked at all primary rounds raised in the first half of each year since 2018. This analysis just includes SaaS companies but it applies to many other sectors as well.
Black line shows the change in median valuation since H1 2018, orange line shows the change in number of rounds.
These two metrics paint completely different pictures of the world.
𝗦𝗮𝗮𝗦 𝗦𝗲𝗲𝗱 𝗦𝘁𝗮𝗴𝗲
Median valuations in H1 2024 are up 103% since H1 2018. In fact they've never been higher!
Total rounds raised in H1 2024 is down 14% since H1 2018.
𝗦𝗮𝗮𝗦 𝗦𝗲𝗿𝗶𝗲𝘀 𝗔
Valuations up 111% today compared to H1 2018.
Total rounds down 7%.
𝗦𝗮𝗮𝗦 𝗦𝗲𝗿𝗶𝗲𝘀 𝗕
Valuations up 136% today compared to H1 2018. 136%!
Total rounds down 3%.
So the gloom people feel comes from the round activity. Things are moving slowly, fundraising is taking forever, etc.
And the bursts of energy come from the high valuations. These "prices" (if you think of it as a market with VCs on one side and founders on the other) are super high.
Now I don't think it's reasonable to assume that total rounds and valuations should always trend upwards together. There just aren't enough VC-investable startups for the line to increase linearly.
But this moment does feel out of whack. There is some influence from the AI boom on the high side of these valuations but honestly this analysis applies across industries and technologies. The increase in valuations brought on in the pandemic boom have been far stickier than the lack of funding would suggest.
What happens next?...No, I'm genuinely asking. Perhaps these lines have diverged permanently with only a few companies achieving high valuations in our future or maybe valuations will level off and fundraising will slowly climb.
Or something else entirely 🤷
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#cartadata #startups #venturecapital #valuations #founders
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