TLDR:
- Flat and down rounds have hit a decade high, according to new PitchBook data.
- Median late-stage valuations are surpassing the 2021 bull market, indicating a mixed signal in the venture market.
Flat and down rounds have hit a decade high, according to new PitchBook data. The venture market is showing signs of being bifurcated, with AI sectors thriving while others slump. VCs are facing challenges, with many newer managers struggling to raise new funds. The uncertainty around exits is impacting venture investments, leading to cautions decisions and tough choices for companies. Almost 29% of deals in Q2 were flat or down rounds, marking a decade-high. While this may not spell doom, it does indicate challenges in the market.
The report also highlights that the median late-stage valuation in 2024 is higher than that of the 2021 boom. Companies are taking longer to raise funds, leading to a competitive window for high-valuation opportunities. However, unpriced rounds are keeping the valuation dataset smaller compared to previous years, adding complexity to the picture.
AI sectors continue to show strength, with almost half of the total deal value in the U.S. attributed to AI in Q2. Despite some positive signals in AI investments, the overall market remains cautious and uncertain. The data indicates a mixed signal in the venture market, with challenges and opportunities coexisting.
