For the Youngest Startups, No Billions
Valuations Soar for a Select Few, While Many Early-Stage Ventures Struggle
ANGUS LOTEN, EMILY CHASAN and RUSS GARLAND
March 19, 2014 7:31 p.m. ET
Young companies thinking they might be worth billions may need a reality check.
Despite the hubbub over select startups such as WhatsApp, the mobile-messaging app bought by Facebook Inc. for $19 billion, first-round valuations for U.S. startups fell last year, data show, even as later-round valuations surpassed levels of the dot-com era.
Seed-round funding valuations—set as a business prepares to launch, or soon after—dropped nearly 30% in 2013 to nearly $2 million, from $2.7 million in 2012, and less than half of a $4.8 million high set in 2000, according to Dow Jones VentureSource. Likewise, first-round funding valuations fell 28% to $5 million, from $7 million in 2012, and $12 million in 2000.
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