‘Honestly I didn’t think it could get any worse’
What is a software? company worth? It is not an idle question, but one that underlies an enormous amount of private market investment and human effort.
In 2021, the assumed value of software revenues grew, contributing to a longer upcycle that pushed tech company valuations into the stratosphere. However, since the end of 2021, a drop in technical valuations in private and public markets has completely shaken the game. And then, after quarters of declines, technology stocks another belly on Fridaywith a key index tracking the value of cloud and SaaS stocks, hitting a new 52-week low.
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To paraphrase SaaS investor Jason Lemkin in the wake of the sale, we didn’t think it could get any worse.
So much for misplaced optimism. The recent sell-off is news in itself, but after examining the latest contractions, it’s worth asking the question lurking at the back of the entire software revaluation saga: were we using the right valuation stats all along? ?
Maybe not. And if not, we see not only a re-evaluation of software companies, but perhaps a new era of technical valuation in general. It won’t be one that will appeal to startups. Public technology companies are also running into the shift.