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Valuations of U.S. venture-backed companies jumped in the first half of this year to the highest point since 2000, perhaps reflecting market exuberance from 2007 that is taking time to dissipate.
Valuations had climbed steadily since 2003, from a median value of $10 million to $18 million in 2006 before leveling off at $17.5 million in 2007. Through the first half of this year, the value hit $23.9 million, according to data from VentureSource, a research unit of Dow Jones & Co, publisher of this newsletter.
That inflation is especially noticeable in the information technology sector, where median valuations climbed to $28 million in the first half, compared with $19 million in full-year 2007. In fact, this year’s number is fast approaching the previous high in 2000 during the tech bubble days when IT valuations reached $29.5 million.
The same growth doesn’t apply to health-care companies, which saw valuations in the first half drop a bit to $19.7 million from $21.1 million in all of 2007. Specifically, biopharmaceutical companies saw valuations fall to $9.5 million from $20.5 million in 2007.
Overall later-round valuations (third round or higher) especially rose, with median prices reaching $51.2 million for the first half, compared with last year’s overall median of $42 million. This is the highest median price since 2000, when prices reached $89.5 million for the full year before dropping off precipitously in 2001.
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