📉 Valuation Trends and Discrepancies in 2023
1. Valuations Compressed After Previous Peaks
Many segments of the VC market saw valuation decreases in 2023 compared with prior years. For example:
Median deal values and valuations declined in European VC markets, with median pre-money valuations dropping about 26.2% year-over-year. $
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PitchBook data shows valuation compression in the venture-growth stage, with median valuations significantly lower than earlier peaks.
AIV Capital
2. Broad Variability Across Sectors & Regions
Valuations did not fall uniformly across all sectors:
AI and cleantech retained relatively stronger deal values, even as overall medians declined.
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In the UK & Ireland, median valuations held up better than in other parts of Europe.
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This creates wide valuation dispersion meaning similar companies were valued quite differently depending on sector, location, and investor sentiment.
3. Deal Volume vs. Valuation Discrepancies
Even as investment activity and deal volume dropped sharply in 2023:
Early-stage deal volume and funding totals declined to levels not seen in years.
EisnerAmper
Global VC deal count fell toward Q3 2016 levels, while median deal sizes and valuations adjusted downward.
KPMG
This mismatch between fewer deals and mixed valuation levels contributed to valuation gaps between investor expectations and actual terms.
4. Down Rounds and Flat Rounds Became More Common
With tougher market conditions:
Flat rounds (no increase in valuation over the prior round) were frequent — sometimes joked about as the new “up” round.
PwC Belgium
Companies seeking extensions, bridge rounds, or secondary transactions often faced reluctant investors or lower marks.
5. Investor Disagreements on Valuation Direction
A survey of European VCs found:
A large majority said valuationswent down in 2023 compared with 2022.
PwC Belgium
Only a small minority reported valuations increasing."
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