![]() Most 2022 IPO candidates declined to comment on whether the WeTransfer listing had delayed their IPO plans and if they’d try to stay private longer as a result. However, the investment period when funds make new commitments might lengthen from two years back to three to four years, implying a slightly less frantic pace of dealmaking, he adds. “I think there is more competition in the private markets to get into those companies,” he says. Kanji, on the other hand, doesn’t think private market valuations are going to reflect much-reduced public multiples in their valuations. When asked whether he has himself started to reconsider valuations, he says that “not everyone in Web3 will be a winner, let’s say it that way.” Nobody will say it is a terrible thing that some froth is taken off.” He believes that “there will be more discipline” and that “people will not value everything as a winner any more”. Hoberman tells Sifted: “Clearly, we have been in one of the hottest tech markets since maybe 2000. “ Nobody will say it is a terrible thing that some froth is taken off” Higher interest rates also mean that future cashflows should get more heavily discounted in valuation models. Median revenue multiples on the BVP Cloud Index, which tracks high-performing SaaS companies, are down from 18x in September to 10x at the time of writing. You’ll see 100x multiples come down a bit because you’d never get that on the public market.” “Companies that got extremely favourable multiples based on revenues or profit - $5bn+ companies - that’s where it will get compressed. ![]() “Some funds are making pretty dramatic changes to valuations in rounds we’re currently involved in,” says Murphy. Valuations (unless stock markets rebound) will eventually adjust the first hints of reduced valuations is already emerging. Still, VCs won’t be immune to public market scepticism. …albeit valuations will probably come down Hoberman also tells Sifted that due to that huge amount of capital waiting to be deployed in tech, “2022 is still probably the second best year ever to be a founder, after 2021”. According to data provider Preqin, dry powder (cash raised but not yet spent) has hit $750bn for VCs and growth-focused PE funds globally. “There’s plenty of capital available to get us through, however long this lasts,” Paul Murphy, partner at Lightspeed, tells Sifted. ![]() Source: Analysis of PitchBook data by Rahul Parekh and Shahnaz Khan at 2150VC Record amount of VC capital means that startups will still get funded… Hussein Kanji from Hoxton Ventures, which saw three portfolio companies - Deliveroo, Darktrace and Babylon Health - go public last year, points to an analysis of PitchBook data by 2150VC that shows that “the valuations of early-stage rounds haven’t gone up nearly as much as later-stage rounds” - a nd therefore presumably won’t go down as much either. That will mean that private market investors who compete will see less price pressure and so it will cascade from there, with Series A investors probably hardly affected.” Those valuations will follow public markets with probably a three-six month delay. He says: “The cascade will start with hedge funds that invest in both private and public markets and that have been pricing later stage rounds. Tony Zappala from Highland Europe, who invested in WeTransfer, also thinks growth-stage companies will be the first to feel the pinch. What’s going on? Will the public market downturn affect startup raises and valuations? And if so, when? Growth-stage startups most affectedīrent Hoberman, cofounder of firstminute capital and Founders Forum, tells Sifted that “public market turbulence will have the strongest effect on the IPO market and on growth-stage companies”.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |