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Venture-Backed Valuations Dip Again
Venture Capital Fundraising at Its Lowest Point in Seven Years, According to VentureOne
SAN FRANCISCO, Dec 4, 2002-- Valuations of
venture-backed companies continued to decline mildly in the third quarter
of 2002, according to VentureOne, the leading information provider of
the venture capital industry. The median pre-money valuation fell from
$11 million in the second quarter of 2002 to $10 million in the third,
remaining in the neighborhood of 1996 figures. From an industry perspective,
the most highly valued sector is the biopharmaceuticals segment of healthcare,
where the median jumped from $10 million in 2Q02 to $22.3 million in 3Q02.
However, John Gabbert, VentureOne's Vice President of Worldwide Research,
cautioned against excessive emphasis on biotechnology valuations. "While
growing, biopharmaceuticals is still a small sector, and a sharp fluctuation
from one quarter to the next may easily result from the distribution of
deals among rounds." Indeed, the percentage of seed and first-round deals,
which was in the fifties during the first two quarters of the year, declined
to 43% in the third quarter.
Valuations continued to regress toward the median, with earlier rounds
rising in value and later rounds declining. Second-round financings increased
from a median valuation of $12.5 in 2Q02 to $14 in 3Q02, while later rounds
dropped from a median of $25 million to $18 million. However, more later-stage
rounds were completed than in any other round class, resulting in the
overall decrease.
The one area in which valuations have been remarkably consistent is the
shipping product category. These companies have maintained a median pre-money
valuation of just over $12 million throughout 2002.
Fundraising was negligible in the third quarter, with $1.2 billion committed
to venture capital funds. This is the lowest quarterly total since 2Q
1995, when $520 million was raised for venture investment. The largest
venture capital fund closed in 3Q02 was Outlook Ventures III, at $140
million.
The investment figures included in this release are based on aggregate
findings of VentureOne's proprietary US research. This data was collected
by surveying professional venture capital firms, through in-depth interviews
with company CEOs and CFOs, and from secondary sources. These venture
capital statistics are for equity investments into early-stage, innovative
companies and do not include companies receiving funding solely from corporate,
individual, and/or government investors.
About Alternative Investor: VentureOne & The Private Equity Analyst
Alternative Investor, the premier provider of information products for
private market professionals, leverages the research strengths of VentureOne
with the editorial expertise of The Private Equity Analyst and The Venture
Capital Analyst. Our databases, publications, conferences, directories,
and customized research offer investors and industry service providers
the comprehensive information they need to make informed investment decisions
and stay abreast of industry trends and events.
Flagship products include The Private Equity Analyst newsletter, covering
private equity fundraising and investment; VentureSource, an Internet
database of financial and valuation information on startups and investors
worldwide; The Directory of Alternative Investment Programs, profiling
institutional investors and their investments in private equity; and The
Private Equity Analyst Conference and VentureOne Summit, the nation's
leading private equity and venture capital events.
For more information about Alternative Investor, please visit our web
site: www.AlternativeInvestor.info.
CONTACT: Tamar Zemel, Senior Communications Manager of VentureOne/The Private Equity Analyst, +1-415-538-2658, or corpcomm@ventureone.com