Yes, startup valuations are rising like crazy, but here’s the reason it’s not as dramatic as it looks.

Section 32
2 min readMar 16, 2021

Posted by Tom Zhang, Section 32’s Head of Data

Note: we’re going to start sharing posts on timely topics from subject matter experts on our team when inspiration strikes. First up, our Head of Data Tom weighs in on the startup valuation conversation.

Last week, The Information published an article pointing out the “crazy” rise of startup valuation since the last Global Financial Crisis ended in 2009. According to PitchBook data, the median pre-investment valuation for Series A rounds has increased sixfold to $37 million since 2010. The graph in that article demonstrates the trend. The median Series A pre valuation reached $38M in 2021, a whopping 90% higher than 2019 and 52% higher than 2020.

Source: The Information

This trend is definitely real and it’s across the board, valuations for Series B, C and D rounds are also on the rise. However, history tells us that the magnitude might be exaggerated due to an “early reporting” bias.

This bias happens because high-valuation deals tend to be more publicized, so they get into PitchBook (and other data providers) sooner than other “lackluster” deals which have lower valuations. As time goes by, more valuation data get disclosed, and the valuation metrics (median, mean, etc) will gradually go down, approaching the true metric.

This bias is bigger for the more recent time period. For example, if we look at PitchBook’s US VC 2018 Q1 Report, early stage rounds have a median pre valuation of $27.45M in 2018 (only with Q1 data then) and $20M in 2017. After about three years, these two numbers lowered to $22.50M and $18M for 2018 and 2017 respectively, in the 2020 Annual Report. The increase from 2017 to 2018 was 37.3% according to the then-newest data in Q1 2018, but revised down to 25% according to the more complete data available now.

For this reason, even though the newest data show a 52% valuation increase from 2020 to 2021, we would expect the actual increase to be smaller.

About Section 32:

Section 32 is a venture capital fund investing at the frontiers of technology and healthcare. Founded by Bill Maris, the team has vast experience building iconic companies. The firm’s goal is to improve the human condition by accelerating the discovery, development and distribution of important technologies and life saving medicines. Section 32 invests across the entirety of technology and healthcare. This includes software, cybersecurity, advanced communications and computation, space, climate change related technologies, machine learning, artificial intelligence, biotechnology, therapeutics, advanced diagnostics, precision medicine, genomics and more.



Section 32

Section 32 is a venture capital fund investing at the frontiers of technology, healthcare and the life sciences.