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PitchBook data shows that early-stage valuations in Ireland and UK were down 6pc last year while venture-growth pre-money valuation was up nearly 5pc.
Despite a sharp growth in the number of AI start-ups last year, latest figures published by PitchBook today (21 February) show that this hype around the emerging technology did not translate to a strong performance in median valuations.
Valuations in the venture growth stage halved while median pre-seed valuation was down 14pc. There were marginal increases in median seed and early-stage valuations last year.
“Although taking the median of a sample aims to mitigate the impact of both large and small outliers, a rising tide should lift all boats,” the market research firm writes in its annual European VC Valuations Report 2023.
While valuations were not promising, deal value medians showed more signs of growth, with nearly all stages showing an increase except the early stage – which remained unchanged.
Describing 2023 as a “breakout year” for AI, PitchBook cautions that generative AI stocks did not maintain share price gains, underperforming the Nasdaq in the last quarter of 2023.
“Given the still-nascent nature of the industry, we will be watching for developments in the space as the year progresses,” the report adds. “As private markets correct at a lag to public markets, it remains to be seen how much more of the benchmarking exercise is to come this year.”
Clean-tech resilience to persist
Another sector that showed resilience despite the many macroeconomic maladies of 2023 is clean-tech, which saw deal sizes increase in all stages – except for a decrease in the early stage.
Median venture-growth deal size was up nearly 27pc, but venture-growth valuation was down more than 30pc. Pre-seed median valuations showed the most gains, increasing by 46pc.
“However, clean-tech generally showed more resilience amid the tougher year last year, as demand for technologies in structurally growing industries has been somewhat more insulated,” the report says.
Clean-tech spans companies developing new technologies related to clean energy production, transmission, storage or use, as well as other areas such as water treatment and management, and efficiency in energy or resource management and use.
“We therefore expect the resilience to persist as the energy industry continues to transition to cleaner means of production and decarbonisation.”
Ireland and UK, studied in the PitchBook as one sub-market within Europe, aligned to trends in the wider European market with venture growth showing the most resilience. Median venture-growth pre-money valuation in Ireland and the UK was up nearly 5pc.
PitchBook said companies within the top tier of this mix include Blockchain.com, eToro and Getir. At the other end of the market, the median pre-seed and seed valuation in the region was also up 2.5pc while median early-stage valuation was the biggest laggard, down 6pc.
“Regarding deal sizes in the region, dynamics were similar across the stages, with the median venture-growth deal size increasing the most at 16.5pc. Notable large deals in 2023 included rounds by DAZN, Getir and Butternut Box.”
Last month, PitchBook released data that showed how the value of venture capital deals in Europe fell sharply last year, almost halving in value compared to 2022. Ireland and UK, however, remained “core” to European VC activity last year.
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