Early Stage / Series A Valuations Exploding

Issue 22 - The End of VC as We Know It

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Early Stage / Series A Valuations Exploding

[SVB] “Seed is the new A, A is the new B” has been a common phrase for a while and for good reason. Over the past decade, valuations for early-stage companies have exploded as the amount of capital flowing into the ecosystem has increased significantly. Since 2011, the median deal size and pre-money valuation have quadrupled. However, the increase in check size doesn’t come for free.

As Azafran Capital has been following internally in its strict evaluation process with each potential portfolio company, investors are more focused on revenues, market fit, operating metrics and unit economics, where before a minimum viable product (MVP) or proof of concept (PoC) would have sufficed.

The focus on fundamentals has made today’s Series A startups operate more like later-stage companies. The 2013 Series A cohort (below) provides an interesting case study. More robust than the 2012 cohort, its companies ramped up quicker in terms of fund raising rounds and revenue- illustrated by the median revenue at !PO.

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