Valuations

The recovery and AI premium

2024 startup valuations reflected a resilient venture industry, shaped by strong early-stage medians, recalibrations at later stages, and sky-high valuations for AI-driven innovation.

Pre-money valuations across all stages increased in 2024. Median valuations at the seed and Series A stages each increased by approximately 25% and reached decade highs of $14 million and $40 million, respectively. While Series B valuations likewise increased year-over-year, the 42% and 112% increases at the Series C and Series D+ stages, respectively, were most notable, reflecting investors’ enthusiasm for standout companies with proven traction and growth, and opportunities with clear scaling potential.

2024 also witnessed the increasing concentration of value in a handful of top-performing companies, particularly in AI. The top five deals during the fourth quarter of 2024 - Databricks, OpenAI, xAI, Waymo, and Anthropic - accounted for 43% of total deal value for the year, illustrating the outsized influence of a small number of companies. When broadening the scope to deals of $500 million or more, just 15 companies captured over 54% of total deal value, highlighting the narrowing flow of capital to elite startups.

43% OF TOTAL 2024 DEAL VALUE

Notable later-stage financings during 2024 included Vuori’s $825 million raise at a $5.5 billion valuation, Tenstorrent’s $693 million round, and Crusoe’s $600 million round.

The Series E+ category featured even larger deals, headlined by Databricks’ $10 billion Series J at a $62 billion valuation, with additional significant rounds from Insider at $500 million, Form Energy at $405 million, and Zepto at $350 million. These deals spotlighted strong investor interest in AI, energy storage, and disruptive technologies across various industries in 2024.

One of 2024's standout narratives was the valuation premium commanded by AI startups. Across all stages, pre-money valuations for AI companies were typically 25%-40% higher than those of non-AI peers. This premium was most pronounced in late-stage rounds, with Series D AI startups achieving valuations 201% higher than their non-AI counterparts.

The sense of urgency among investors to capitalize on AI’s transformative potential, and outsized returns, fueled the valuation premiums, insulating the sector from the broader venture headwinds. The elevated valuations highlight the unique position of AI startups within the ecosystem as a key driver of investor optimism and competition.

With AI capturing nearly half of all venture capital deployed in 2024, it is clear that the narrative around valuations is increasingly tied to advancements in this space. Meanwhile, the extended time between first VC round and exit, averaging 8.5 years for unicorns, suggests that much of the ecosystem’s value remains locked up in private markets. Investor demand for AI-driven innovation is likely to persist and impact valuation trends, but valuations will also be impacted by the overall health of the financing and exit markets.

Source : PitchBook