I read my daily dose of VentureWire today. Dharmesh Shah also wrote a post with some interesting comments about the VentureWire median startup valuation numbers in OnStartups.

I really don't think this data matters much at all, for both VCs and entrepreneurs. Sometimes data gets aggregated to a point where it loses most of its meaning, and that probably happened here for a few reasons:

1. Since this data aggregates across INDUSTRIES, it hides rising valuations in one industry and lower valuations in other industries (quote from Venture Wire: "in health care U.S. companies raised later-stage rounds at a median pre-money valuation of $49.5 million in 2006, up from $40 million in 2005" [this 24% growth in valuation off of a base number about 1/3 higher than the median could really skew the statistic]
2. For the same reason, it hides different valuation trends by ROUND OF FINANCING, so while the MEDIAN valuation rose, this is from higher valuations in later rounds, while angel and A rounds seem to be staying about the same (quote from VentureWire: "The median pre-money valuation for later-stage financings of U.S. technology companies rose to $33 million in 2006, up from $29 million the year before. By contrast, the median pre-money first-round valuation in 2006 nudged to $6.2 million from $5.9 million in 2005")
3. Finally, because it is an overall median, even if the valuation per round of financing stayed the same, but there were more later stage deals, then this median would rise because generally valuations increase in later rounds (since companies not doing well can't raise more rounds usually) - this may or may not be the case right now, I don't have data on this one ;)
   
   Basically, as with all these VC stats, I think you should just focus on making your company successful (or funding and building companies that will be successful) and leave the aggregate stats to Dow Jones and the Fed. If you build value in your company, it will all work out in the end, no matter what the stats say.