INSUBCONTINENT EXCLUSIVE:
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
Today, something
Continuing our loose collection of looks back of the past year, it worth remembering two related facts
First, that this time last year SaaS stocks were getting beat up
And, second, that in the ensuing year they&ve risen mightily.
If you are in a hurry, the gist of our point is that the recovery in value of
SaaS stocks probably made a number of 2019 IPOs possible
And, given that SaaS shares have recovered well as a group, that the 2020 IPO season should be active as all heck, provided that things
don&t change.
Let not forget how slack the public markets were a year ago for a startup category vital to venture capital returns.
Last
year
We&re depending on Bessemer cloud index today, renamed the &BVP Nasdaq Emerging Cloud Index& when it was rebuilt in October
The Cloud Index is a collection of SaaS and cloud companies that are trackable as a unit, helping provide good data on the value of modern
software and tooling concerns.
How many unicorns will exit before the market turns?
If the index rises, it generally good news for
startups as it implies that investors are bidding up the value of SaaS companies as they grow; if the index falls, it implies that revenue
multiples are contracting amongst the public comps of SaaS startups.*
Ultimately, startups want public companies that look like them (comps)
to have sky-high revenue multiples (price/sales multiples, basically)
That helps startups argue for a better valuation during their next round; or it helps them defend their current valuation as they
grow.
Given that it Christmas Eve, I&m going to present you with a somewhat ugly chart
Please excuse the annotation fidelity as well:
