Exit Valuation Trends: 2007 [Updated]

I posted last year’s figures from Icon Corporate Finance, showing how exit valuations were 1.5x -2x sales. I use figures like that as 3rd party data when discussing valuations.

This year’s data focuses on one of the same two metrics used last year price/EBIT (no price/sales data was provided). What’s clear though is that the multiples for 2007 are trending down from those of 2006…

Valuations2007_2

If you’re an entrepreneur out fundraising, you need to keep these multiples in mind. Many companies I’ve met with over the past 12 months have really pumped up their valuations. If the exit valuations aren’t increasing, then the entry price isn’t going to be increasing…

Fred summed it up well just before Christmas: funding in 2008 isn’t going to be the party its been over the past 2 years, so hold onto your hats.

P.S. Bonus points for spotting Fred in a Darth Vader mask in 2008!


[Update 28 January 2008]

Stacey over at GigaOm (thanks for the link love) has a good post on venture valuation trends from a US perspective- the party’s coming to an end stateside (and with the recent NASDAQ slide, perhaps even more abruptly):

… But for video startups who raised money based upon the valuations set by Google when it bought YouTube for $1.6 billion, or the open-source startups out there checking out MySQL’s eye popping $1 billion price tag on what’s reported to be about $50 million in 2006 sales, the party may be dragging to an end. Slide’s recent $550 million valuation set by private equity funds notwithstanding, free-spending strategic buyers are showing signs of coming to their senses, so valuations may be coming down…

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