Late-stage SaaS startups may have the most problems when it comes to changing valuations at tech companies, new data shows.
A report from Silicon Valley Bank (SVB) examining first-quarter software startup trends shows that late-stage SaaS valuations in the United States scaled the fastest in 2021, closing the year with the highest sales multiples of their comparable series.
The Exchange explores startups, markets and money.
Read it every morning on MovieUpdates+ or get The Exchange’s newsletter every Saturday.
Rapid inflation in software stock values in the wake of the outbreak of the pandemic in 2020 and throughout much of 2021 has been known to provide rocket fuel for the valuations of late-stage startups. But how much damage late-stage SaaS startups can still do is only now becoming clear.
Keep in mind that the market is already seeing a rise in layoffs and some unicorns are looking to reprice their equity for employee retention.
Is it ironic that the startups whose valuations have risen the most seem to be undergoing the biggest correction? New. It’s causal. Let’s talk about why.
What’s going up?
We’re on the cusp of Q1 venture capital data, which means it’s almost time to disregard 2021 results as temporarily relevant.
But below the deadline, see how SVB describes how revenue multiples scaled for two subsets of the United States SaaS market: business apps (lighter colors) and enterprise infrastructure (darker colors):