European Q3 venture valuation trends in five charts

European venture valuations landed higher than expected in Q3 despite the current environment applying increasing pressure on startup price tags.

Here’s a look at five key trends from us Q3 2022 European VC Valuations Report that explains how the market has impacted valuations.

The median pre-money valuation for early-stage startups grew over 12% quarter-over-quarter to stand at €8 million in Q3.

Being further away from exit has helped insulate valuations from fluctuations in the public markets as investors are increasingly looking towards the earlier stages to find new opportunities, driving up competition.

For the second consecutive quarter, the median late-stage valuation has fallen from its peak of €19.7 million at the beginning of the year. It is still pacing higher than last year at €17.2 million.

Late-stage valuations are likely to continue on their decline as startups shift their focus from growth to conserving capital.

Seed investments saw the highest level of growth in deal sizes compared to other stages. From 2021 to Q3, the median round value increased by 63.6% remaining at €1.8 million.

Seed-stage startups benefit even more from being years away from exit than early-stage. With monthly financial metrics being less important for these startups, there’s more incentive from investors to write bigger checks.

Down rounds are once again becoming more prevalent in Europe’s VC ecosystem with these deals now accounting for 17.4% of overall count compared to 14.9% last year.

Funding continues to be harder to come by and, for startups looking to extend their runways, taking a valuation cut may be the only option if the current climate persists.

The median public listing valuation has fallen significantly with a quarter-over-quarter decline of 91.5%.

Acquisitions on the other hand have been buoyant with the median price tag coming in at €36.9 million in Q3 compared with €26.1 million in the same period last year.

Featured image via Martin Diebel/Getty Images

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