VCs commonly note that it takes longer for valuations to correct among private companies than among public ones. But the lag-time might not be that long, judging by fourth quarter data from Angelsoft, a software company that tracks valuation trends.
Today, the company reported that valuations for funded startups in Q4 of 2008 fell by 24% when compared to Q3 of the same year. The company’s software, which is used by more than 450 angel groups and venture funds worldwide, tracked a total of 128 deals in the quarter with a median pre-money valuation of $3 million. In the third quarter, it tracked 123 deals with a median value of $3.9 million.
Angelsoft says the Q4 numbers represent the largest quarter-to-quarter drop in the 4 years that it has been tracking company valuations.
However, there was some encouraging news embedded in the numbers, according to Ryan Janssen, Angelsoft’s COO. He called it “damn near a miracle” that angels and vcs actually did more deals on its platform last quarter than in the prior one.