Pre-Seed Startup Valuation & Fundraising Trends
Pre-seed startup valuations have shown notable stability across 2024, with the global median continuing a slight upward trend from $4.3 million in Q1 to $4.6 million in Q4. This consistency marks a sharp contrast to the volatility of 2022 and the fluctuations seen in 2023, ending in the dip in Q4 2023. The alignment of the bottom quartile with the median indicates a relatively uniform market, suggesting that even early-stage startups with limited traction are benefiting from steady investor interest. However, the top quartile’s rise—from $7.4 million to $8.8 million—highlights the outsized impact of investor enthusiasm for AI. Many AI startups have been able to command lofty valuations due to their perceived transformative potential, demonstrating a bifurcation within pre-seed valuations where certain sectors attract significantly higher premiums.
Regionally, the trends have largely mirrored global patterns, with the US, Europe, Latin America, and the Middle East seeing a drop into 2024 but stabilizing thereafter. Southeast Asia, however, diverges from this trend, with Q4 showing a notable decline in both median valuations (from $4.8 million to $4 million) and capital requirements (from $890,000 to $250,000), signaling waning investor confidence. This regional dip may reflect broader macroeconomic challenges or localized market conditions. Despite this outlier, the overall Q4 2024 landscape is optimistic as global stock markets perform well and expectations for IPO activity and later-stage capital liquidity grow. These factors, combined with potential moderation in AI valuations, may provide a solid foundation for sustained stability and productivity in early-stage investments heading into 2025.
Looking to put the shifts we see here in context, we can look to some of the early Q4 market reports which track the venture capital industry more broadly:
- According to CB Insights’ “State of Venture Global Q4 2024“: In 2024, the global pre-seed market was shaped by distinct trends as highlighted in the CB Insights report. While overall venture activity hit an 8-year low, early-stage investments displayed resilience, particularly in emerging technologies like artificial intelligence (AI), which accounted for 37% of venture funding, an all-time high. The median valuation for early-stage deals reached a record $25 million, indicating continued investor appetite for pre-seed and seed-stage opportunities, especially in transformative sectors. However, outside of hot sectors like AI, pre-seed startups faced a cautious funding environment, reflecting broader global declines in deal activity and a focus on startups demonstrating capital efficiency and clear growth trajectories.
- On the other hand, the PitchBook’s ‘First Look at Q4 2024‘ reported the following: In 2024, the global pre-seed market faced headwinds as broader venture capital activity continued to recalibrate following the peak in 2021. Fundraising trends highlighted a sharp contraction, with total capital raised dropping significantly to $169.7 billion, reflecting investor caution and a selective approach to deploying capital. Despite this, artificial intelligence (AI) maintained its dominance, accounting for approximately 18% of deal activity, suggesting that pre-seed investors remain particularly interested in early-stage opportunities within AI and machine learning. However, the overall decline in global deal counts and values suggests that pre-seed startups outside of high-demand sectors like AI are navigating a more challenging funding environment, with investors prioritizing clear product-market fit and growth potential.
Both reports point to a market still undergoing correction, with varying degrees of recovery across regions, deal types, and stages, but with cautious optimism for continued stabilization in the coming quarters.
Q4 2024 Pre-Seed by Region and Industry
Analysis of our valuation data offers a perspective on the disparity and opportunity across different regions.. In Africa, the median pre-seed valuation is notably lower at $3,040,000, attributed to economic challenges and limited venture capital access. Conversely, regions like the United States see much higher valuations, averaging $7,420,000, driven by a mature venture capital ecosystem and robust tech talent. Latin America and Southeast Asia also exhibit relatively high valuations of $4,050,000 and $4,060,000 respectively, reflecting improved economic conditions and a growing digital infrastructure. The convergence of valautions in these two markets may reflect the wider trend of stability, as well as overseas investors looking for opportunities outside of AI. The Middle East’s median valuation of $5,040,000 is bolstered by government investments aimed at diversifying economies away from oil dependence, and a significant drive to support innovation in the region.
Industry-specific trends further complicate the valuation landscape. The Food & Beverage sector shows the lowest median valuation of $2,690,000 due to its vulnerability to consumer preference shifts and commodity price volatility. In contrast, the Finance sector enjoys a robust median valuation of $5,400,000, fueled by fairly consistent investor interest in fintech innovations. The Software & IT industry also benefits from high scalability and continuous demand for tech solutions with a median valuation of $5,210,000. Notably, the Health & Medicine industry stands out with a median valuation of $6,240,000 driven by advancements in healthcare technology. Current trends such as the rise of AI are influencing a number of these industries; for instance, AI startups are commanding higher valuations than their peers as investor interest surges in innovative technologies that promise substantial growth potential. This is likely to explain the extension of the top quartile range in industries where AI is having an impact, such as finance, software and health.
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 $200,000 in revenue.
Startup valuation around the world
Analysis: 2024 Q3 vs Q4
To compare the two data sets for startup valuations in Q3 and Q4 2024, we can highlight the biggest shifts in valuation for each region and industry:
| Region | Q3 2024 ($USD) | Q4 2024 ($USD) | Change (%) |
|---|---|---|---|
| Latin America | 3,470,000 | 4,050,000 | 16.71% |
| Middle East | 4,490,000 | 5,040,000 | 12.25% |
| Europe | 4,430,000 | 4,610,000 | 4.06% |
| Southeast Asia | 4,780,000 | 4,060,000 | -15.06% |
| United States | 7,640,000 | 7,420,000 | -2.88% |
| Sector | Q3 2024 ($USD) | Q4 2024 ($USD) | Change (%) |
|---|---|---|---|
| Food & Beverage | 2,239,300 | 2,690,000 | 20.13% |
| Renewable Energy | 7,636,400 | 2,740,000 | -64.12% |
| Health & Medicine | 8,902,500 | 6,240,000 | -29.91% |
| Finance | 4,280,300 | 5,400,000 | 26.16% |
| Software & IT | 6,108,600 | 5,210,000 | -14.71% |
- United States: The United States recorded a slight decrease of 2.88%, with pre-seed valuations falling to $7,420,000 in Q4 2024. This decline may be indicative of market saturation and heightened competition among startups vying for limited venture capital resources. While the U.S. remains a leader in innovation and investment, economic uncertainties and rising interest rates could be influencing investor decisions to adopt a more conservative approach toward funding early-stage companies. Despite this decrease, the overall valuation remains robust compared to global standards, reflecting the ongoing strength of the U.S. startup ecosystem.
- Europe: Europe experienced a more modest increase of 4.06%, with Q4 valuations reaching $4,610,000. The slower growth rate reflects ongoing challenges within the region, including economic instability and regulatory hurdles that have impacted investor sentiment. Despite these challenges, there are pockets of resilience in sectors like health tech and sustainability that continue to attract interest. The slight increase may also indicate a stabilization phase as investors adjust their expectations amid broader market fluctuations.
- Middle East: In the Middle East, the median pre-seed valuation increased by 12.25% to $5,040,000 in Q4 2024. This uptick is likely influenced by a surge in funding for technology and digital transformation initiatives, driven by government support and strategic investments in innovation. The region has seen a growing number of successful startups that have gained traction both locally and internationally, which has bolstered investor confidence and elevated valuations. However, geopolitical uncertainties continue to pose risks that could affect future investment trends.
- Latin America: In Q4 2024, pre-seed startup valuations in Latin America rose to $4,050,000, marking a significant increase of 16.71% from Q3. This growth can be attributed to several factors, including increased investor interest in the region’s tech ecosystem and ongoing economic recovery post-pandemic. Additionally, the rise of innovative startups in sectors such as fintech and e-commerce has attracted venture capital, contributing to higher valuations. The positive sentiment in the market may also reflect a broader trend of optimism surrounding emerging markets.
- Southeast Asia: In Southeast Asia, however, pre-seed valuations saw a decline of 15.06%, dropping to $4,060,000 in Q4 2024. This downturn can be attributed to various factors such as tightening monetary policies and reduced investor appetite following previous highs. Additionally, market corrections in specific sectors may have led to cautious investment behavior. As startups face increased scrutiny and competition for funding, this shift reflects a more challenging environment for early-stage ventures in the region.
- Health and Medicine: The health and medicine sector saw its median valuation decrease by 29.91% to $6,240,000 in Q3 2024. This decline follows a period of heightened valuations driven by innovations in healthcare technology and ongoing demand for medical solutions post-pandemic. The drop may indicate a correction after previous overvaluations as investors recalibrate their expectations amidst changing market dynamics. Nonetheless, the sector remains attractive due to its resilience and the continuing interest in AI-driven health tech solutions that promise substantial growth potential.
- Renewable Energy: The renewable energy sector experienced a dramatic decline in median startup valuations, plummeting by 64.12% to $2,740,000 in Q3 2024. This downturn can be largely attributed to a tightening of funding sources and investor caution following a period of inflated valuations. The previous year’s surge in investment was not sustained due to economic uncertainties and a shift in focus towards more immediate returns rather than long-term projects typical of renewable energy initiatives. Moreover, the reduction in large individual investments reflects a broader trend of venture capitalists preferring smaller, less risky funding rounds amid a cooling market.
- Software and IT: The software and IT sector experienced a decline of 14.71%, with median valuations dropping to $5,210,000 in Q3 2024. This decrease may be linked to market saturation and increased competition among tech startups, which has led to a more cautious investment environment. While there remains strong interest in AI-related technologies driving some valuations higher, the overall slowdown suggests that investors are becoming more selective about where they allocate funds. The volatility seen in tech markets has prompted many investors to reassess their portfolios and focus on sustainable growth rather than speculative investments.
- Finance: In the finance sector, median startup valuations increased by 26.16%, reaching $5,400,000 in Q3 2024. This uptick reflects renewed investor confidence as economic conditions stabilize and interest rates begin to normalize. The financial services industry is adapting to technological advancements and regulatory changes that create new opportunities for innovation and growth. Additionally, the shift towards digital finance solutions has attracted significant investment, indicating a positive trend for startups operating within this space.
- Food and Beverage: In Q3 2024, the median startup valuation in the food and beverage sector rose to $2,690,000, marking a significant increase of 20.13% from the previous quarter. This growth can be attributed to several factors, including a resurgence in consumer demand and strategic mergers and acquisitions aimed at consolidating market positions. The sector has seen robust valuation multiples, driven by larger firms seeking growth through acquisitions as economic conditions stabilize. Additionally, the ongoing recovery from supply chain disruptions has allowed companies to improve their operational efficiencies, further enhancing investor confidence in this industry.
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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.