The soaring valuations of the early 2020s are, finally, coming back to earth.
AI continues to be a bright spot in many ways—but isn’t entirely exempt either, as 29.3% of down rounds were in PitchBook’s broad AI and machine learning vertical. Of course, the biggest names in AI—like OpenAI, reportedly heading towards a $500 billion valuation, and Anthropic, reportedly raising at a $170 billion valuation—continue to hit eye-popping levels. And lower on the food chain, AI is still consistently valued at a premium, with PitchBook reporting that median Series B step-up for AI startups is 2.1x, well above the median of 1.4x that all other categories fetch.
The IPO market is, some would say, back. (I think it pretty much is, but also has been for a while, for those with the stomach for it.) In Q2, venture-backed startups in the U.S. generated $67 billion in exit value, PitchBook said—the highest since the last quarter of 2021. But here’s a sobering fact: There are still lots of unicorns out there, so distributions back to VC firms and by extension their LPs are limited.
An unsurprising but ice-cold (and very down-to-earth) number to leave you with: The unicorns that have made their public debut this year comprise a mere 1% of all U.S. unicorns.
See you tomorrow,
