So the markets are still down and multiples are still low, but growth rates in SaaS and Cloud are slowly creeping back. AI has driven a number of rapid unicorns, and at SaaStr Europa 2023, Iconiq Growth noted that while they did 0 brand new growth investments in 2022, they’d already done 5 in the first half of 2023.
So unicorns remain rare but we may have bounced off the lows. If you can raise at a high valuation today though … should you?
Let’s simplify. If you somehow are able to raise at $1B, then your investors will be looking for at least a 3x return, i.e. that you’ll be worth at least $3B post-IPO. Really more due to dilution, so probably at least $3.5 Billion. But let’s simplify.
Take a look at the valuations on this chart:
To exit at $3B+ post-IPO or acquisition, that means you have to do better, and get bigger, than:
It can be done. The best in SaaS and Cloud are still growing at epic rates. But be aware of what happens when you raise at valuations > $100m, if you’re lucky enough to be able to. You really need to build something epic today to justify it.