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Valuations cooled considerably during Q3 when compared to the Q2. Source: Dow Jones
Valuations cooled considerably during Q3 when compared to Q2. Source: Dow Jones

Well, maybe folks in the venture business are listening to Bill Gurley. The Silicon Valley venture capitalist sounded an alarm last month, noting his concern about startup companies taking on too much risk as burn rates increase.

Equity Financings into U.S. – based, VC-backed Companies  (2011 – 2014)
Equity Financings into U.S. – based, VC-backed Companies
(2011 – 2014)

Now, here’s some evidence that things may be cooling a bit in startup land. The latest report from Dow Jones VentureSource indicates that pre-money valuations at startup companies fell to $30 million during the third quarter, down considerably from the $51.4 million in the second quarter. The number of deals and dollars also declined compared to the previous quarter.

The bubble has not popped entirely, though. After all, pre-money valuations are still nearly double what they were in the third quarter of 2013.

And it is worth noting that Uber — which raised $1.2 billion at a massive $17 billion valuation in June — may have skewed the second quarter numbers.

Photo via Shutterstock
Photo via Shutterstock

But as we’ve noted recently, things do seem to be changing a bit in the venture and startup community.

A bit more cautiousness. And, yes, even talk of the “b” word — bubble.

There’s a recognition that the good times may not be rolling forever, and as such some companies are hunkering down. At the GeekWire Summit earlier this month, Zulily co-founder Mark Vadon noted that “we are closer to the top of the cycle” than the bottom. And the angel investor and tech veteran warned: “When it turns, it turns fast.”

The IPO market may be a factor. Things have started to slow, with just 22 offerings during the third quarter. That was down from the peak of 38 offerings in the first quarter.


Meanwhile, in Washington state, venture capitalists pumped $394 million into startup companies, a good-sized haul that was buoyed by one massive deal for Juno Therapeutics, which raised $134 million during the quarter.  That was up over the previous quarter, and blew away the $76 million invested in the third quarter of 2013. Here’s a look at the top markets for VC:


Previously on GeekWire: A chill in Q3: Venture capital funding drops 29%, IPO market cools

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