As I reported last week (Current Pre-money Valuations of Pre-revenue Companies), I met with a group of 40-50 angel leaders to discuss the valuation of seed/startup angel deals at the Angel Capital Association Summit in Boston, April 4-6, 2001. We reviewed a survey of angel groups all over the country completed last summer (included in last week’s blog) and concluded that valuations are higher in some regions that others. We agreed that mid-range valuations for firms at this stage of development in most parts of the country are about $1.5 million.
Yesterday, I did a workshop on the valuation of pre-revenue companies for the Baylor Angel Network in Waco, Texas. They reported that their average valuation for pre-revenue companies for the past couple of years is a bit lower, perhaps only $1 million.
You may have seen the recent Angel/Seed Financing Survey by Fenwick & West which reported that average pre-money valuations for Silicon Valley and Seattle angel/seed financing of Internet/Digital Media startups is $3.4 million and for Software startups is $2.7 million. Typical rounds size was not too much different than we see elsewhere in the country. I guess I was surprised to see valuations so high in the Valley and Seattle. I am speculating that competition in these two markets (and in Boston) is driving up valuations there.