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US venture valuations increase for third consecutive quarter in Q1

The valuations of US venture-backed companies rose for the third consecutive quarter in Q1 04. The average valuation reached its highest level in more than two years at almost $14m, up from just over $12m in the fourth quarter of 2003, according to research conducted by VentureOne.

Healthcare companies posted the highest valuations, with median valuations reaching $18.4m. Biotech companies were particularly successful, with average valuations surpassing $30m for the third quarter in a row. The medical devices sector also saw its median valuation increase to $19.3m this quarter.

'In the post-bubble environment, healthcare companies have now established a two and a half year record of posting higher valuations than information technology companies,' said John Gabbert, vice president of worldwide research at VentureOne.

'While there was a smaller pool of these healthcare companies receiving financing this quarter, investors are putting more capital at higher valuations into the select companies they fund. The increased valuations in this segment also reflects the appetite for healthcare companies by the public market and corporate acquirers,' he said.

The first quarter of 2004 also saw the highest levels of fundraising for US venture funds in more than two years, with a total of $4.3bn committed to new funds. Ten funds raised in excess of $200m, including the Technology Crossover Ventures V fund, which raised $900m.

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