VC valuations by funding stage presented by Sampford Advisors
Detailed analysis of venture capital valuations from 2015 to 2024, highlighting the significant changes in early, mid, and late-stage financing multiples in response to economic shifts and interest rate fluctuations. Key observations include the sharp increase in early-stage multiples during the COVID era, followed by recent declines due to macroeconomic challenges, with late-stage funding being the exception with continued growth in 2024.
The presented chart outlines a historical tracking of VC valuations by funding stage from 2015 to the present day. There are some noticeable trends and insights to uncover with this view, from the post-COVID influx of capital into VC markets, to the current slowdown from the uncertain macroeconomic conditions, and high-interest rate environment.
Starting at early-stage financings, the story through the late 2010s into the COVID-era was the ascension of valuation multiples. Through 2018, early-stage multiples were tracking close to mid and late-stage rounds. However, 2019 saw a spike to 23.8x, an 83% increase on the prior year, which was especially notable, as the other financing stages were relatively unchanged. Early-stage multiples reached their peak in 2022, at 37.5x, while interest rates were increasing. 2023 saw the result of these changes, decreasing 21% to 29.6x. While 2024 has not produced as big of a decline, multiples have eroded another 9%, to 26.9x. It will be interesting to monitor if the incoming interest rate cuts will return early-stage financing multiples to 2022 figures, or if the risk associated with early-stage companies will keep these metrics in line with historical numbers.
Mid-stage financings have had a similar trajectory to that of early-stage until the current year. In 2024, mid-stage financing multiples have decreased significantly, by 54% to 15.0x. While we can attribute this decrease to the difficult macroeconomic conditions, we would expect these figures to rebound through the end of 2024, and into next year to be in tighter proximity to the other stages, as the historical performance has indicated.
Late-stage funding is the only stage that has seen an increase in valuation multiples in 2024. Historically, this stage has seen less volatility (outside of the 110% spike in 2021) as mature firms typically have established financial performance and will not be as exposed to headwinds compared to early and mid-stage firms, allowing them to maintain strong valuations.
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