"Series A Crunch" Continued: Early Stage Deals See Slowdown in 3Q
October 01, 2013
Venture capital investing in 3Q 2013 was quite similar to the levels seen in recent quarters, both in terms of the number of financings and the amount of capital invested, new data released today by PitchBook show.
Deal flow was slightly down from the previous quarter and from 3Q 2012, with the slowdown being most pronounced in early stage financings, showing that the “Series A crunch” continues to be a topic of concern. Interestingly, the median size of early stage deals climbed to $4.37 million in 3Q 2013—the first time it has eclipsed $4.00 million in more than a year and a half—while the valuation of early stage companies actually declined. This indicates that VC investors are placing fewer, larger bets on early stage companies but are not having to pay higher prices. One area where we have seen valuations grow is in late stage financings. Since 1Q 2012, the median valuations in Series C and Series D or later rounds have risen by 78% and 48%, respectively.