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US venture-backed valuations creep up in Q3 to highest since 2001

There was more fragile evidence the US venture sector is undergoing something of a recovery with figures showing valuations for venture-backed companies had risen to their highest level in the third quarter since 2001. The overall median pre-money valuation was $11.4m, up from $8.7m in the second quarter, according to VentureOne.

The data showed an increase in later round valuations and a fall in first round valuations, suggesting the overall recovery was being driven expectations of an improvement in exit conditions, VentureOne said.

‘The increase in valuations this quarter for companies that are either profitable or completing a later round suggests that investors and companies are expecting this to be the final round in preparation for a liquidity event. We’ll see next year is those events materialise to validate the elevated levels,’ said Amity Wall of VentureOne.

There have been growing signs that the venture industry in the US is beginning to haul itself off the sick bed after the prolonged depression that followed the implosion of the technology bubble. Investment activity has been gently picking, there have been a handful of exits, and venture investors have been professing an improvement in confidence.

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