VCs reveal why startup valuations are climbing to record highs

Late-stage startups have reached record valuations, while younger companies  — at least for now — have given some investors a respite from the frenzy.Insider spoke with six investors about their experiences figuring out how to fairly price companies in an environment where unicorns are becoming less mythical and more mundane.Valuations for late-stage US startups — those raising Series C or later rounds — climbed to record heights at the end of 2020, and they have only pushed higher this year, according to data from PitchBook.The median pre-money valuation for a late-stage company rose to $170 million in the first quarter of 2021, from $120 million in the fourth quarter of 2020. The warrants, set for a 30-month period, enable the firm to put in additional capital at a predetermined price.In the event that the funding environment cools off considerably the next time his portfolio companies need to raise money, the warrants give him the opportunity to provide further support without financial penalty, Blumberg told Insider.Indeed, several investors told Insider that they expect the frothiness in venture capital to subside eventually.For instance, Natalie Hwang, founding managing partner of Apeira Capital, whose investment activities include shorting startups that the firm believes are overvalued, is looking to public markets — where technology stocks have recently cooled off — as a harbinger.Until then, investors have to decide whether they are willing to go toe-to-toe with a growing group of deep-pocketed funders."If you're incredibly disciplined on valuation, it's a hard market to play in right now," Tisch said.