Did VC Valuations Peak in 2015? Early Numbers Indicate Return to 2013 Levels

The U.S. venture capital (VC) industry continued a gradual deflation in activity in Q1 2016, even as capital invested remained at a historically robust level according to Pitchbook’s 1Q 2016 U.S. Venture Industry Report. In Q1 2016, the VC industry also continued the trend of massive late-stage VC rounds with $9.4 billion of $17.7 billion invested in late-stage financing. While VC activities declined in Q1, angel and seed capital deals continued to plateau for another quarter. In its recently released 2015 Annual VC Valuations & Trends Report, Pitchbook researchers projected that the VC industry has peaked and VC activity will slowly return to 2013 levels and its 2016 Q1 report may confirm that assertion over the next couple years. Pitchbook researchers contend that the decline in VC valuations/deals and the plateau in angel/seed financing activity is clear evidence that investors at all levels are exercising a bit more caution in their investments. However, they highlight that both VC and angel investors are still willing to make investments in startups, which are viewed as low-risk, due to the significant size of many late-stage investments.