Venture-backed companies are seeing a rebound after a challenging couple of years, with optimism growing that the worst of the downturn is over.
Investors like IVP's Tom Loverro suggest startups should shift focus from cash preservation to growth. Data from PitchBook indicates that while valuations dropped in 2023, they reached all-time highs for early and late-stage deals in the first half of 2024.
Fintech companies, previously out of favor, are now raising capital at higher valuations, exemplified by Monzo’s recent $5 billion valuation.
Although high valuations are noted, Kyle Stanford from PitchBook cautions that deal volume remains low, suggesting that only stronger companies are achieving these valuations.
Many startups resorted to alternative funding methods, like convertible notes, during the downturn. Renewed investor confidence is fueled by controlled inflation, potential Fed interest rate cuts, and a robust stock market.
Unsurprisingly, AI companies in particular are driving high valuations, contributing to the positive trend in 2024.
Article by Marina Temkin for TechCrunch. Read more here or in the PDF below.
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