Valuations of startups have quietly rebounded to all-time highs Some investors say the slump is over [Video]

Generative AI businesses aside, the last couple of years have been relatively difficult for venture-backed companies. Very few startups were able to raise funding at prices that exceeded their previous valuations.

Now, approximately two years after the venture slump began in early 2022, some investors, like IVP general partner Tom Loverro, are saying that the worst of the downturn is behind us and the startups that survived should shift from cash preservation mode to spending money on growth.

These are not entirely empty words. According to PitchBook data, valuations for all but seed-stage companies dropped in 2023 compared to the year prior. But during the first six months of 2024, prices investors were willing to pay for new deals of U.S.-based companies not only recovered, but also reached an all-time high for median early- and late-stage deals, according to the latest report from PitchBook and the National Venture Capital Association.

“The valuations for companies that are getting term sheets have been high,” said Stephanie Choo, a partner at fintech-focused Portage Ventures.

PitchBook valuations of Early and Late-stage VC startups as of 06/30/2024
While fintech has been out of favor with investors since the start of the downturn, Choo said that the number of companies that can raise capital at higher valuations has increased since the beginning of the year. She pointed to U.K. challenger bank Monzo, which grabbed a valuation of over $5 billion in March, a nearly 15% increase from the $4.5 billion investors assigned it in early 2022.

Over the last two years, many startups have cut spending, which helped them grow and, in some cases, surpass their previous valuations, Choo said.

Samir Kaji, founder of Allocate, a startup that allows family offices and wealth advisers to invest in VC funds, is also optimistic that valuations and the fundraising environment have improved for startups this year. “Things are much more sanguine than I’ve seen since the beginning of 2022,” he said. “The capital markets are coming back slowly, and if you can achieve real growth and fundamentals, there is going to be capital for [your startup].”

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