What Does the Post Crash VC Market Look Like?

And reset they must. When you look at how much median valuations were driven up in the past 5 years alone it’s bananas. Median valuations for early-stage companies tripled from around $20m pre-money valuations to $60m with plenty of deals being prices above $100m.

But here’s the magic few people ever talk about …We’ve created more than $1.5 billion in value to Upfront from just 6 deals that WERE NOT immediately up and to the right.The beauty of these businesses that weren’t immediate momentum is that they didn’t raise as much capital (so neither we nor the founders had to take the extra dilution), they took ... See more

Our conclusion was that this isn’t a temporary blip that will swiftly trend-back up in a V-shaped recovery of valuations but rather represented a new normal on how the market will price these companies somewhat permanently. We drew this conclusion after a meeting we had with Morgan Stanley where they showed us historical 15 & 20 year valuation ... See more

This happens slowly because while public markets trade daily and prices then adjust instantly, private markets don’t get reset until follow-on financing rounds happen which can take 6–24 months.

What Happens Next?There is a LOT of money still sitting on the sidelines waiting to be deployed. And it WILL be deployed, that’s what investors do. Pitchbook estimates that there is about $290 billion of VC “overhang” in the US alone. But I believe it will be patiently deployed , waiting for a cohort of founders who aren’t artificially clinging to ... See more

Should SaaS companies trade at a 24x Enterprise Value (EV) to Next Twelve Month (NTM) Revenue multiple as they did in November 2021? Probably not and we think 10x (May 2022) seems more in line with the historical trend.

What happens in the public markets is highly likely to filter back to the private markets because the ultimate exit of these companies is either an IPO or an acquisition.

feel like we were the expert or where the valuation metrics weren’t in line with our funding goals.

Valuations will get reset. First in late-stage tech companies and then it will filter back to Growth and then A and ultimately Seed Rounds.