How to value a startup in a downturn


This post is by Alex Wilhelm from SaaS – TechCrunch


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The value of technology companies has fallen as the broader public markets have repriced themselves in light of COVID-19-related market and economic disruptions.

And as the public markets sort out the new value of a huge piece of global business, private companies are being shaken as well. What happens in the public markets trickles into the private markets, so if we’re seeing the value of public tech companies fall, startups are going to take a hit. To understand that dynamic, we spoke with Mary D’Onofrio, an investor with Bessemer Venture Partners. She’s the right person to chat with about the links between private valuations and public share prices as she not only helps put capital into growing startups, she also helps run the Bessemer cloud index (now a partnership with Nasdaq, and trackable on a day-to-day basis). As she’s versed on both sides of the public-private divide, Continue reading "How to value a startup in a downturn"

Looking back at Zoom’s ascent a year after it filed to go public


This post is by Alex Wilhelm from SaaS – TechCrunch


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Zoom, a video chat service then popular with corporations, filed to go public on March 22, 2019.

Best known in venture and corporate circles, Zoom was far from a household name at the time. However, the groundwork for its 2020-era consumer breakthrough during the novel coronavirus epidemic was detailed during its IPO march in the years leading up to its public debut. The company didn’t begin trading until mid-April last year, but it was through its March 2019 IPO filing that its name took on new prominence; here was a quickly growing software as a service (SaaS) business that was posting profits at the same time. As the rate at which unprofitable companies went public set records, Zoom’s growth and positive net income helped it gain brand recognition even before its shares began to trade. Investors certainly recognized this was a rarity among SaaS companies, sending its IPO share Continue reading "Looking back at Zoom’s ascent a year after it filed to go public"

Startups valuations drop as exits are delayed and the stock market reprices tech


This post is by Alex Wilhelm from SaaS – TechCrunch


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Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

The public markets are in turmoil as the economic impact of COVID-19 comes into focus; however, it is less clear what the impact of the changing value of public companies today will have on the valuations of private firms. Startup valuations are impacted by a host of factors, one of which is the value of their public comparables (comps); if public comps lose value, private startup comps tend to earn lower valuations. This leads us to a key question: Are the stock market’s recent declines impacting the value of private startups? To get an answer, TechCrunch spoke with Phil Haslett, the chief revenue officer at EquityZen. Haslett is a founder at the company, which helps owners of stock in private startups sell their shares to interested buyers. We were Continue reading "Startups valuations drop as exits are delayed and the stock market reprices tech"

$100M rounds are down but not out in 2020


This post is by Alex Wilhelm from SaaS – TechCrunch


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Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

This morning we’re taking a look at mega-rounds: funding events of $100 million or more. What’s fun about these rounds is that they experience less temporal lag than other venture financings. Generally speaking, the larger a venture round is, the faster it becomes public knowledge. This is why seed rounds are the laggiest of all startup rounds and as you progress up the Series ladder (from A to B to C to D), the rounds that you hear about are increasingly fresh. If we wanted to take a look at 2020’s largest rounds to date, for example, instead of staring at an incomplete picture that might tell us nothing at all, we could get a reasonable handle on what’s going on in the very late-stages of private equity financings. This morning Continue reading "$100M rounds are down but not out in 2020"

As Uber and Lyft continue to melt, the 2019 unicorn class loses its shine


This post is by Alex Wilhelm from SaaS – TechCrunch


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You’d be excused for feeling that mid-2019 was in a different decade as far as venture-backed IPOs go.

Last year saw a number of successful flotations of venture-backed technology and technology-enabled companies, and most performed well after they began trading. But despite some early success, a number of the most famous 2019 IPOs have seen their valuations decline rapidly in ensuing quarters. In some cases, once richly valued public unicorns are off more than twice the market’s recent declines, have given up all their gains earned as public companies, or fallen under their final private market valuations. It’s a stunning reversal for several of the most-lauded companies to come out of the venture capital machine in a decade.

Have hundreds of unicorns missed their exit window as Q1 IPOs grind to a halt?


This post is by Alex Wilhelm from SaaS – TechCrunch


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Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

As investors struggle to price the stock market as economic and political news continues to break, the private market is entering a rough period. It seems increasingly likely that the period of disruption due to COVID-19 will persist for months, if not quarters. That means missed Q1 and Q2 revenue growth, bookings, and the like from startups domestically and around the world. And that’s the bullish case. For some cohorts of startups, the outlook is even worse. Think about travel startups, ride-hailing upstarts, and any grouping of private companies that pursued a high-burn, high-growth model; that final category is about to run into the twin issues of the inflexibility of cost structure and the impact of slowing sales. That alone would make fundraising more difficult; toss in a deflating stock Continue reading "Have hundreds of unicorns missed their exit window as Q1 IPOs grind to a halt?"

Stocks dive on Dow’s worst day since 1987, tech crashes and Bitcoin is no haven


This post is by Kirsten Korosec from SaaS – TechCrunch


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Well, that was terrible.

During the day’s wild trading session, the Dow Jones Industrial Average (DJIA) dropped by just under 10% in what was the largest single-day percentage decline since the stock market crash in 1987 (when markets were sufficiently scarred to institute failsafe measures for the future, to prevent similar, shocking declines).

Investors shrugged off news that the Federal Reserve was stepping in to offer nearly $1.5 trillion in emergency relief as the major indexes all fell sharply the morning after President Donald Trump addressed the nation to outline the government’s continued response to the novel coronavirus outbreak. Looking at the major American indices:

Slack shares plummet 20% after its growth forecast fails to excite investors


This post is by Alex Wilhelm from SaaS – TechCrunch


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Today after the bell, Slack, a popular workplace communication product, reported its FQ4 2020 earnings, the three-month period ending January 31 2020. The company’s results came in ahead of expectations. However, its shares have rapidly lost altitude in the wake of its news.

In the fourth quarter, Slack’s revenue rose to $181.9 million, a gain of 49% compared to the year-ago quarter. Investors had expected Slack to report $174.14 million in top line. The company, therefore, beat on growth. Slack also reported gross margins of 86.6% in the period, a large operating loss of $91.2 million, and negative net income of $89.1 million. On an adjusted basis the company did better, reporting a non-GAAP operating loss of $23.1 million and a non-GAAP net loss of just $0.04 per share. If investors will continue to allow Slack to lean on adjusted (non-GAAP) metrics Continue reading "Slack shares plummet 20% after its growth forecast fails to excite investors"

Stocks fall again, pushing deeper into bear territory as SaaS reaches 1 year lows


This post is by Alex Wilhelm from SaaS – TechCrunch


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American-listed shares are off sharply this morning, falling after a steep selloff yesterday was not staunched by a presidential address. The declines echo what happened to Asian-listed stocks earlier today.

All major American indices are now in bear-market territory, having shed the requisite 20% from recent highs. Today’s carnage is simply bleak. As we write to you, here’s where stocks are:
  • Dow Jones Industrial Average (DJIA): -1,688.5, or -7.2%
  • S&P 500: -191.2, or -7.0%
  • Nasdaq Composite: -557.1, or -7.0%
The bad news continued for tech’s darling cohort, SaaS and cloud companies. That group of public companies is off 6.7% today, according to the Bessemer-Nasdaq cloud index. SaaS and cloud companies are now trading at one-year lows, and could approach their lows set in late-2018, early 2019 with a few more bad days’ trading. (SaaS companies were early to the bear-market trend.)
Continue reading "Stocks fall again, pushing deeper into bear territory as SaaS reaches 1 year lows"

Why now is the best time to start a SaaS company


This post is by Alex Wilhelm from SaaS – TechCrunch


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With the markets in turmoil and fear running rampant through the global economy, you might not think it’s the right moment to start a company. According to at least one well-known venture capitalist, however, it’s a great time to start up.

TechCrunch recently caught up with former founder and active venture capitalist Jason Lemkin to chat about the world of software-as-service companies, better known as “SaaS.” Lemkin swung by TC HQ in San Francisco to spend some time with the Equity crew to discuss all things SaaS, markets and startups. Long-time listeners of our Equity podcast will recall that this is not the first or even second time that we’ve had Lemkin on. He was, after all, our first guest, as well as a repeat guest for Episode 100. But as it’s Equity’s third birthday, and the SaaStr conference was just around the corner (now postponed), Continue reading "Why now is the best time to start a SaaS company"