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US venture valuations return to 2000 values21/02/2007. Source: AltAssets. 
 US venture capital-backed companies are being valued at the highest level since 2000, according to the latest research from Dow Jones VentureOne. The median pre-money valuation of US venture-backed companies reached $18.5m for 2006, up from $15.9m in 2005.
In the fourth quarter alone, the median valuation was even higher, reaching $20m, compared to $11.7m in the fourth quarter of 2005.
The annual and quarterly medians are being pushed upward by higher valuations placed on information technology and healthcare companies. For example, the annual median valuation for an IT financing reached $20.8m in 2006 double what it was three years ago and the highest level since 2000. The median valuation for healthcare financings reached $19.5m in 2006, on par with 2000 levels as well.
The rebounding opportunities for venture-backed companies to achieve liquidity, either via an IPO or an acquisition, are boosting these median valuations higher. In 2006, the US had the strongest exit climate in several years with the median pre-money valuation of IPO companies reaching $201.6m and a median $52m being paid to acquire companies, said Steve Harmston, director of global research for VentureOne.
Within the information technology segment, communications companies posted the highest median valuation at $29.9m, up from $20m in 2005. Electronics and computer hardware companies median valuation also grew, from $14.9m in 2005 to $24.9m in 2006. In the health care category, only medical software and information systems companies saw an increase from a year ago, with the median posted at $22.6m, up from $8.2m.
Across all industries, companies at each stage of financing received higher median valuations. In the US The median valuation for seed round financings was $2.4m, up from $1.8m in 2005. For first round financings, it grew from $5.5m in 2005 to $6m in 2006. The later round median increased from $32m in 2005 to $35.4m in 2006.
In Europe, the overall median premoney valuation increased, to 5.6m, up from 4m in 2005, which is the highest annual point in five years. Reflecting the increased interest in early-stage investment in Europe last year, the median valuation for seed rounds increased significantly, to 1.9m, from 630,000 in 2005. The later round valuation rose as well, to 11.4m, from 8.8m.
The increased valuations reflect the increased interest of investors to refocus on early-stage rounds in Europe last year. Additionally, the positive exit environment for venture-backed companies in Europe, particularly in the IPO market, is contributing to higher later-stage valuations,' said Harmston.
The highest overall median by industry in Europe was for the healthcare category, which posted a median of 8m in 2006, up from 7m in the prior year. The overall IT median valuation was 5.7m, up from 3.8 million; the overall business, consumer and retail company valuation was 6.3m, up from 4m.
In Europe, by country, the UK posted the highest overall valuation in 2006 at 6.6m, up from 3.7m a year ago. The median valuation in France also climbed, to 5.3m, from 4.2m. The median valuation declined in Germany dropping from 8.5m in 2005 to 4m in 2006.
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