Financial software developer Orum, which disclosed a seed round over the summer, wasn’t seeking more capital when Bain Capital Ventures offered to lead its Series A investment last year. But the one-year-old startup took the money anyway and got a post-investment valuation of $100 million, according to a person with direct knowledge of the deal. Such unsolicited deals, carrying price tags once equated with more mature companies, have been driving early-stage valuations to record highs.
The median pre-investment valuation for a Series A round of funding has increased sixfold to $37 million since 2010, according to data on U.S. companies provided to The Information by research firm PitchBook. With more capital flowing into public and private tech stocks, investors are paying higher prices to win VC deals. These steep valuations allow founders to preserve their equity stakes but may hurt companies’ ability to raise capital in the future if they don’t grow fast enough.