Methodology Update: The data presented in this report includes an change to our data collection from Q4 2024 to Q1 2025.
- We have expanded our dataset for early stage companies. This update has contributed to a wider range of valuations, with a slightly lower median across all reported regions and most industries. While the observed trends reflect genuine market movements and broader macroeconomic factors, readers should be mindful that part of the observed decrease can be attributed to this change.
- We have refined how we classify ‘pre-seed’ funding stage to more appropriately represent the company risks and fundraising activity, rather than relying on metrics related to revenue. We now classify ‘pre-seed’ as companies without a fully built-out product (nothing beyond an MVP) raising their first institutional round of investment (no VCs on the cap table).
Pre-Seed Startup Valuation & Fundraising Trends
Pre-seed fundraising globally entered a relatively stable period from mid-2024 onwards, following a flattening trend that began in 2023. This stabilization occurred after a significant wave of AI-driven enthusiasm peaked around the end of 2023—particularly in Silicon Valley and broadly the US market. In contrast, regions outside the US experienced less pronounced AI-related valuation surges.
Political and economic uncertainty—fueled by factors like the US government’s shifting tariff policies and the ongoing conflict in Ukraine—has disrupted the broader sense of optimism that typically underpins pre-seed fundraising. Early-stage investors, who rely heavily on future outlook and market confidence, are becoming more cautious in the face of unpredictable global conditions. This hesitancy has led to slower decision-making, reduced risk appetite, and a tightening of capital availability at the earliest stages of startup development.
AI and Alpha Decay: According to Crunchbase, the surge in AI investment was driven by the intense desire among investors not to miss “the next OpenAI,” prompting many to pursue AI deals “without regard to price” (Crunchbase News, 2025). However, there is increasing concern among investors, who are more discerning as to who the winners may be—looking for companies with credible business models rather than just AI wrappers on existing solutions. In addition, there are pressing questions about the commoditized nature of models and the moats for anyone involved in commercializing AI today.
Competitive Moats: Energy has been a persistent theme in the last decade, and now shows continued investor interest, buoyed by regulatory support and strategic importance globally. There has been robust activity, with significant pre-seed rounds particularly in fields like battery efficiency and carbon capture. In fintech, a cautious recovery is underway; investment increased quarter-over-quarter through late 2024, driven by a shift toward sustainable business models. Investors have moved “from cautious to cautiously optimistic,” yet remain selective, prioritizing startups that demonstrate a clear path to profitability. Both sectors offer companies with more defensible propositions with stronger margins over time, which has typically come into focus for investors following a market downturn.
Access the Valuation Delta™ benchmarking engine
Compare your valuation with companies of a similar development stage, industry and location
Q4 2024 Pre-Seed by Region and Industry
The global pre-seed funding landscape displayed considerable variation last quarter, reflecting underlying regional dynamics driven by political, economic, and technological factors. Africa remains challenged, with median valuations at $2.29 million and notably higher dilution rates, suggesting founders there may be experimenting with raising fewer, larger rounds before reaching profitability. Latin America similarly saw modest valuation declines, down to $2.88 million, reflecting cautious investor sentiment amid continued economic volatility and political instability, notably driven by uncertainties in key markets such as Brazil and Argentina. Europe’s marked valuation decline to $4.57 million can largely be attributed to persistent geopolitical instability—particularly the unresolved conflict in Ukraine—and political and economic uncertainty within major economies like Germany and France, dampening investor confidence and tightening funding conditions for startups.
Southeast Asia, despite a quarter-over-quarter decline, maintained relative resilience at a median of $4.69 million. The region’s robust digital transformation, tech-savvy population, and sustained governmental support for innovation likely contributed to a tempered yet stable investment environment. Meanwhile, the Middle East stood out positively, with valuations holding strong at $6.69 million, driven by heightened interest in energy transition, technology diversification, and proactive government policies aimed at cultivating local innovation ecosystems. The United States, retaining the highest valuations at $7.87 million despite recent contraction, reflects investor recalibration towards profitability and fundamentals, following a period of inflated valuations particularly visible in AI-led sectors, now stabilizing into more realistic investment benchmarks.
Startup fundraising around the world
Understanding these graphs: Rises or falls in valuation are largely indicative of the enthusiasm or optimism around new technologies, or perceptions of how founder-friendly the market has become. Capital requirements are shaped by dilution, so generally correlate with valuation though a non-correlated change could indicate the market shifting to more or less capital intensive companies (e.g. SaaS vs hardware).
Data sources: This data is sourced from valuations completed on the Equidam platform, which represent an objective and methodological perspective on startup valuation. This data includes qualitative qualitative characteristics of the company as well as projected financial performance, and a degree of calibration with market pricing data which comes from Crunchbase. For more information about Equidam’s approach to valuation, see our methodology paper. Our definition for ‘pre-seed’ covers recently incorporated startups which have less than $200,000 in revenue.
Analysis: 2024 Q4 vs 2025 Q1
To compare the two data sets for startup valuations in Q4 2024 and Q1 2025, we can highlight the biggest shifts in valuation for each region and industry:
| Region | Q4 2024 ($USD) | Q1 2025 ($USD) | Change (%) |
|---|---|---|---|
| Latin America | 3,520,000 | 2,884,000 | -18.07% |
| Middle East | 6,836,000 | 6,688,000 | -2.16% |
| Europe | 6,021,000 | 4,569,000 | -24.11% |
| Southeast Asia | 6,603,000 | 4,693,000 | -28.93% |
| United States | 8,999,000 | 7,870,000 | -12.54% |
| Sector | Q4 2024 ($USD) | Q1 2025 ($USD) | Change (%) |
|---|---|---|---|
| Food & Drink | 5,390,000 | 5,110,000 | -5.19% |
| Energy | 7,071,000 | 13,592,000 | +92.22% |
| Health & Bio | 4,915,000 | 7,592,000 | +54.44% |
| Finance | 5,790,000 | 8,518,000 | +47.12% |
| Software & IT | 5,600,000 | 4,954,000 | -11.54% |
-
Latin America experienced an 18.1% decrease in median pre-seed valuations, falling from $3.52 million to $2.88 million. This decline reflects continued caution among investors, impacted by ongoing economic volatility and political instability.
-
In the Middle East, valuations slightly decreased by 2.2%, from $6.84 million to $6.69 million. Despite this modest adjustment, the region maintains strong investor interest, supported by diversification efforts and energy sector growth.
-
Europe saw a significant 24.1% valuation decline from $6.02 million to $4.57 million, heavily influenced by geopolitical instability related to Ukraine, compounded by economic uncertainties in major European markets, which have dampened investor confidence.
-
In Southeast Asia, pre-seed valuations sharply declined by 28.9%, from $6.60 million down to $4.69 million. Despite this correction, ongoing digital transformation and government-backed innovation initiatives continue to underpin investor activity in the region.
-
The United States recorded a 12.5% reduction in valuations, dropping from $9.00 million to $7.87 million. This recalibration reflects a broader market shift towards sustainability and realistic valuations, particularly as AI investment enthusiasm stabilizes.
-
The Food & Drink sector recorded a 5.2% decline, with median valuations decreasing from $5.39 million to $5.11 million, reflecting continued supply-chain challenges and inflationary pressures on consumer demand.
-
In contrast, Energy saw a dramatic 92.2% increase, with valuations surging from $7.07 million to $13.59 million, driven by heightened global investment in sustainable energy solutions and security concerns around energy independence.
-
The Health & Bio sector also grew notably, rising by 54.5% from $4.92 million to $7.59 million, benefiting from sustained investor interest fueled by healthcare innovation and ongoing digital health adoption trends.
-
Similarly, Fintech experienced robust growth of 47.1%, with valuations increasing from $5.79 million to $8.52 million, driven by continued fintech innovation, expanding financial inclusion, and integration of emerging technologies like blockchain.
-
Lastly, Software & IT valuations contracted by 11.5%, dropping from $5.60 million to $4.95 million, reflecting market polarization between high-value AI-driven startups and the commoditization pressures facing other software ventures.
Access the Valuation Delta™ benchmarking engine
Compare your valuation with companies of a similar development stage, industry and location
About Equidam's Startup Valuation Delta Quarterly
As the leading provider of valuations to early stage companies, we provide…
- Valuations with an open, standard methodology, focused on determining fair value
- Context on valuation data with associated capital requirements, revenue and EBITDA forecast data
- Coverage of established markets such as the US and Europe, as well as emerging markets like Africa and Southeast Asia.
These indicators collectively offer an understanding of the financial landscape and sentiment surrounding startups.
By examining these trends collectively, investors, entrepreneurs, and industry observers can gain insights into the overall health of the early-stage fundraising market. It helps identify emerging sectors, evaluate risk appetite, and make informed investment decisions. Additionally, analyzing these factors over time can provide a broader perspective on the evolving dynamics and trends within the startup ecosystem. Each quarter we will release our own analysis on this data, and what it implies for early stage fundraising.
Fair valuation for startups
By striving to make fair valuation easier to calculate, we hope to give the tools to both founders and investors to understand the value of the company and have a productive discussion about price. To allow them to navigate hype and downturns with confidence, to compensate their employees fairly and to make solid returns for all stakeholders.