The valuations of venture-backed firms hit a four-year high in the second quarter of $15.6 million, VentureOne reported on Wednesday.
The median pre-money valuation is the highest since $17.3 million in the second quarter of 2001.
“The pool of companies that were founded during the bubble has been weeded through,” Josh Grove, a research analyst at VentureOne, told Venture Wire. Those that have survived the downturn “have buckled down and made themselves into stronger, more established companies.”
VentureOne cited “continuing investor interest in late stage technology companies” as a primary reason for the increase in value. The $15.6 million figure is a $2.1 million increase over the same quarter of 2004.
Breaking down valuations by later rounds of financing, second round and first round financing, VentureOne cited medians of $29.5 million, $14 million and $5 million. Later-round valuations were down slightly from the first quarter but still were $2 million higher than a year ago, VentureOne reported. Second-round valuations were flat while first-round valuations dropped a bit from the previous quarter.
“The rise in valuations seems to be related to the increase in liquidity activity, particularly the fact that venture-backed companies are being acquired at higher prices,” said John Gabbert, vice president of worldwide research at VentureOne. “The median amount paid for an acquired company in the second quarter was $70 million, more than $30 million higher than the median amount paid a year earlier. These higher acquisition prices result in driving up the value of recent company financings.”
Driving the later-round valuations up was an increase in information technology companies to $27 million, which is almost $5 million higher than the same time period in 2004. Healthcare valuations dropped to $39 million from $45.4 million.
Median pre-money valuations for healthcare firms was $18.1 million; for medical device firms $27.4 million; IT firms $15.2 million; software $15 million; communication and networking companies $23.5 million.