Start-up Valuations Q1 Show Strong Growth

Start-up Valuations in Q1 Showed Strong Growth. The Fenwick & West Venture Capital Barometer™ showed an average price increase of 85%, a significant increase from 57% in 4Q13. ƒ The median price increase of financings in 1Q14 was 52%, a significant increase from 27% in 4Q13 and the highest amount since we began calculating medians in 2004. ƒ Software and internet/digital media continued to be the strongest industry sectors, with life science, cleantech and hardware lagging but showing respectable results.

The Journal and Dow Jones VentureSource are tracking companies that are valued at $1 billion or more by venture-capital firms. The club is becoming less exclusive as venture capitalists funnel large sums of capital in the best startups. Today there are more than 30 such companies in the U.S., Europe and China. Users can visit the site and research for company profiles, or sort by categories such as region, amount raised and valuation.

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Startup founders are driven by the desire to create something from nothing. A mobile startup entrepreneur is no different than an internet entrepreneur. Long work hours are still a natural part of the lifestyle. VCs are attracted to startups because of the potential of company growth and revenue generation. A venture capitalist in the mobile startup world is seeking to scale significantly from the investor standpoint.

Android developers have also taken an approach to developing lean startups. There have been challenges with the iOS platform development. Entrepreneurs developing iOS typically takes close to many weeks to reach confirmation of the review process. The Android product development life cycle is better, especially Google Play’s store platform.

U.S. venture capital investment in 1Q14 hit its highest quarterly level (in dollar terms) since 2001, and rose approximately 20% in dollar terms over 4Q13 according to the report. Investment in later stage deals was especially strong in 1Q14, comprising 47% of all dollars invested, while Series A investment fell to a five quarter low at 15%, per CBI. Valuations of late stage companies were also strong, with 11 venture backed companies raising funds at a valuation of over $1 billion for the first time in 1Q14, more than did so in all of 2013.