An analysis of software session and valuation rebound in the tech industry

The tech industry witnessed a challenging year of software session with companies cutting jobs, shrinking, and facing negative growth in net new ARR. However, recent data suggests a turnaround with positive growth in Q3 indicating the end of the software session. While software revenues are expected to rebound, the question remains whether valuations will follow suit or require adjustment. The market may not be willing to return to previous high valuations, leading to a potential evaluation reset despite growth returning. This trend could explain why some startups are shutting down and why venture firms are facing challenges in raising capital and investing at premium valuations.