On September 25, 2024, you’ll be upgraded to the latest version of Equidam with updated valuation parameters. This may result, on average, in a slight valuation increase.

What’s changing

1 | Average valuations used in the Scorecard Method and maximum valuations used in the Checklist Method

We base our estimates on real transactions by country since March 10th, 2022. Whenever we were not able to find a significant amount of real pre-money valuations in a given country, we broadened our perspective to the closest larger geographic entity (namely, continental region and continent). You can refer to the table at this link to see how they will change for your country specifically.

2 | Startup survival rates used in the Discounted Cash Flow methods

We determine startup survival rates by analyzing historical company data and fitting a function to forecast survival over time, which is then used to adjust the valuation by discounting forecasted cash flows according to the assessed risk of failure.

General comments on the effect of the changes

Between February 2024 and September 2024, startup valuations exhibited notable trends, particularly in emerging markets, while developed regions showed more stable patterns. In the majority of cases, these increases are the continuation of a correction from 2023 where our updates showed more red than green. On the whole this update is a positive signal, although it’s not immediately clear whether concentration of funding is playing a role in pushing up valuations — the sample size for this update was 6% smaller than our previous update in February. Indeed, Crunchbase themselves have reported a steady decline in the number of early stage deals taking place, along with an increase in deal value.

Emerging markets showed remarkable growth. In Latin America, Argentina’s top quartile valuation increased by 27%, and Costa Rica’s valuation grew by 32%, reflecting a robust growth trajectory for startups in these countries. Colombia also experienced a 23% increase in its top quartile valuation, highlighting the region’s appeal to investors. Similarly, the MENA region saw significant growth for early stage companies, with the UAE’s top quartile valuation rising by 39.6% and Egypt’s by 57.1%, indicating a burgeoning tech ecosystem and increasing investor confidence.

Conversely, developed markets presented a more mixed picture. In Europe, while countries like Belgium and Bulgaria reported substantial increases in valuations, Germany faced a slight decline in its top quartile valuation, dropping from $11.2 million to $10.6 million. This trend suggests a more mature startup environment in developed regions, where growth is less pronounced compared to emerging markets. In North America, Canada saw a 30.7% increase in its top quartile valuation, while the U.S. remained relatively flat, bouncing back from a dip reported in our previous update.

Overall, the data underscores a transformative period in the global startup landscape, characterized by rapid growth in emerging markets and stability in developed regions. Recent reports from sources like PitchBook have noted a significant shift in investor focus towards high-growth potential areas, particularly in technology and fintech sectors, further supporting these trends. As the startup ecosystem evolves, stakeholders must adapt to these changes to capitalize on emerging opportunities while navigating the challenges of a competitive landscape.

  • Europe: While Europe has mixed results in this update, countries like Belgium and France exhibited strong growth in both top quartile and average valuations, indicating a robust startup ecosystem that has tapped into some of the generative AI hype. This aligns with findings from Pitchbook about regional trends in valuations across Europe.
  • MENA: The UAE showed a healthy increase in valuations, with top quartile valuations rising by 39.6%. This reflects reports about a concentration into early stage startups in the Middle East, as later stage startups struggle more with headwinds.
  • Southeast Asia: Notable increases were observed in Bangladesh and Indonesia, reflecting a growing interest in technology startups. Bangladeshi startups have made headlines recently for attracting capital from major institutional investors.
  • Latin America: Significant growth for much of Latin America is marked in this update. Argentina’s dramatic increase in valuations highlights a resurgence in investor confidence within the region, spurred by a combination of Javier’s Milei’s economic policy and perhaps his enthusiasm to embrace tech and tech investment.
  • United States: Valuations remained relatively stable, with slight increases, indicating a mature market. While This update appears to show a large increase in average and top quartile valuations for the US, it’s actually just correcting for a fall in the previous update – which matches up with Carta’s reports of continued recovery in the US.

Please don’t hesitate to let us know if you have any questions. Thanks for using Equidam!

The Equidam Team