PitchBook News - Down rounds and deal terms

Continuing to see high top-line valuations in VC is surprising in this market but also somewhat expected. Investors have repositioned to invest in relatively "stronger" companies at each stage, increasing the KPIs necessary to receive funding from the loose deployment mechanics of 2021—and more truthfully pushing for paths to profitability.

However, down rounds are increasing, and because these financings are kept out of the headlines whenever possible, there is an added bias present alongside the strong figures.

Structured deals impact the data in a similar way. High valuations are great until the exit can't support the added investor protections.

The catalyst for a return to strength for VC will be a return of an exit market, which was historically slow in 2023. Until that occurs, VC investors will continue to hold leverage in the market, and their LPs will be pulling the strings.

For a nuanced dive into valuations, our new report tracks prices paid across various stages and sectors in VC and also looks at the increasing protections that are keeping investor-friendly deals flowing.

Download our 2023 Annual US VC Valuations Report.