Why Have Early Stage Valuations Remained Surprisingly High?

Few would dispute that we are in the midst of a cyclical downturn in the early-stage funding cycle. Exit and IPO activity have dropped precipitously, and funding has declined across the board. This is normal as shown in TCA Venture Group’s funding history since 1997: What is NOT normal is that valuations for early-stage funding rounds have remained stubbornly high, even though valuations in later stage funding have dropped dramatically: