Tech Valuations Q3’23 Report

TechValuationsReport Q3 2023 Tech Valuations Report Q3'23 Tech valuations are (finally) on therise, especially at later stages. Tech valuations bounced back in Q3’23, with each stage experiencing a quarter-over-quarter(QoQ) increase in median valuation. The valuation uptick was particularly strong for Series C andD+ startups, which saw their median valuations jump 54% and 43%QoQ, respectively. However,deal countremains low relative to recent years’ totals and is on track to fall on an annual basisacross all stages in 2023. This suggests that Q3’23’s valuation bump is partly a reflection ofsome startups not being able to raise even at low valuations as investors pursue a “flight-to-quality” strategy. Tech Valuations Report Q3'23 Late-stage investors remaincautious, doing fewer deals andfavoring downside protection. Investors remain"risk-off" in the face of market turbulence and bankruptcies among high-profilelate-stage companies. As a result, despite a 6% uptickQoQin Q3’23, late-stage deal count is ontrack to drop by 39% year-over-year for all of 2023. For the late-stage deals that do happen, investors arefavoring downsideprotection. Notably,65% of US late-stage deals in Q3’23 includedprioritized payouts for new investors, up from 48%in the previous quarter. Tech Valuations Report Q3'23 Contents Seed/Angel5Series A8Series B11Series C14Series D+17Methodology20 About this report This report will help you understand private market technologycompany valuations based on CB Insights valuation data. We define“technology companies” as businesses that primarily generaterevenue from proprietary and/or differentiated software, hardware,or platforms. This report will help you see: •Technologyvaluation trends over time by stage andwherethere is relative strength and weakness•Wheretechnologyvaluations today stand relative tohistoricaltechnologyvaluation benchmarks•Protective provisions on US deals and whether they’reincreasing or decreasing over time Seed/Angel Global median valuations Tech Valuations Report Q3'23|Seed/AngelGLOBAL Seed/angel funding and valuations Series A Global median valuations Tech Valuations Report Q3'23|Series AGLOBAL Series A deal trends Series B Global median valuations Series B deal trends Series C Global median valuations Series C deal trends Series D+ Global median valuations Series D+ deal trends Tech Valuations Report Q3'23 If you have questions about the definitionsormethodological principles used, or if you feelthat your firmhas been underrepresented,please reach out toinfo@cbinsights.com. What is included: What is excluded: No contingent funding. If a company receives acommitment for $20M subject to hitting certainmilestones but first gets $8M, only the $8M is includedin our data. Equity financings into private technology companies only. Technology companies are generally defined asbusinesses that primarily generate revenue fromproprietary and/or differentiated software, hardware, ortechnology-driven platforms. No business development/R&D arrangements, whethertransferable into equity now, later, or never. If acompany signs a $300M R&D partnership with a largercorporation, this is not equity financing nor is it fromventure capital firms. As a result, it is not included. Only includes the investment made in the quarterfortranchedinvestments. If a company does a secondclosingof its Series B round for $5M and previously hadclosed$2M in a prior quarter, only the $5M is reflected. No buyouts, consolidations, or recapitalizations. Allthree of these transaction types are commonlyemployed by private equity firms and are tracked by CBInsights. However, they are excluded for the purposes ofthis report. Round numbers reflect what has closed, not whatisintended. If a company indicates the closing of $5Mout ofa desired raise of $15M, our numbers reflect onlytheamount which has closed. Only verifiable fundings are included. Data andinformation are verifiedvia (1) various federal and stateregulatory filings; (2) directconfirmation with firm orinvestor; (3) press release; or (4)credible media sources. No private placements. These investments, also knownas PIPEs (Private Investment in Public Equities), are notincluded even if made by a venture capital firm. No debt/loans of any kind (except convertible notes).Venture debt or any kind of debt/loan issued toemerging, startup companies, even if included as anadditional part of an equity financing, is not included. Ifa company receives $3M with $2M from ventureinvestors and $1M in debt, only the $2M is included inthese statistics. Valuation data includes estimates to calibrate medianandaverage valuations based on current and previousquarterdisclosed valuations gathered fromtheaforementioned foursources.Valuation data reflectspost-money valuations. Deal terms are extracted from state regulatory filings inthe US (equityfinancing only). No non-equity government funding. Grants or loans bythe federal government, state