Equity Who captures the most value after the SaaS-acre? Enterprises or Startups?
Apr 19, 2023
Janelle Teng, Partner at Bessemer Venture Partners and co-author of the Bessemer 2023 State of the Cloud Report, joins to dissect the current cloud landscape. She explores whether the recent valuation drops for startups are finally stabilizing and why investors are shifting their focus back to growth over profitability. The discussion also covers the altering dynamics of M&A, the influence of AI on SaaS, and the critical need for startups to demonstrate operational efficiency. Plus, expect some fun personal insights about snowboarding and playlists!
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SaaS Market Normalization
- Public cloud valuations have fallen significantly, but this represents a normalization, not a crash.
- Current multiples are closer to long-term averages, influenced by rising interest rates.
Interest Rates and Valuations
- Rising interest rates disproportionately affect growth stocks like cloud software companies.
- This is because future cash flows are discounted more heavily, impacting valuations.
Macro Stability and Optimism
- Macroeconomic conditions are stabilizing, with inflation easing.
- This stability, combined with operational discipline and new growth vectors like AI, drives optimism.