A volatile stock market is one factor making angels more cautious. This is one input that has led startup valuations to drop to their lowest level since 2012
After valuations for young companies seeking funding soared to five-year highs last year, some angel investors—or wealthy individuals who buy stakes in startups—are starting to pull back. On AngelList, a crowdfunding site aimed at such investors, the average valuation for a company receiving funding reached $4.9 million for two quarters last year, its highest level in five years. But valuations dropped to $4.2 million in the fourth quarter, the lowest level since early 2012. Dow Jones VentureSource data shows that deals involving angel investors fell by 16% last year. “Are angels more cautious? Most likely, yes,” said AngelList co-founder Naval Ravikant. Angel investors have been a growing source of financing for early-stage companies as they try to get in on the ground floor of the next Uber ride-sharing service or Twitter social-media platform.