December 9, 2023

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Welcome to the new week.

While entering equities this morning, I surprisingly noted an interesting bit of data that got me thinking about the current premiums that venture investors are paying for startup stocks, and if we compare that to 2022 data. We might see something new in the future, especially considering the complaints about YC startup prices are in the news again.

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The Exchange explores startups, markets and money.

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What follows is a somewhat numerical consolidation of several pieces issued by the exchange over the past week. Read on if you have a minute and a fresh coffee, and as always thank you for your patience:

Today’s Startup Prices

One way to think about startup valuations is to bucket them by their venture stage, using average results to build a mental market map. Carta recently bucketed the average pre-money valuations for Series A, B and C startups into $40 million, $90 million and $173 million buckets, respectively, to pick one recent example.

Each figure is down from recent highs: $49.4 million for Series A in the first quarter of 2022; $161 million for Series B in the first quarter of 2022; and a staggering $416 million for a Series C round in the second quarter of 2021.

However, those assessments are incomplete. First, Carta doesn’t have information on every deal, as it can only see those that its startup customers pick up, so its very useful dataset has some understandable data completeness issues.

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Second, just looking at the sticker price isn’t enough. We need more data than just the trailing average price range to understand how startup valuations are earned.

how prices are made

Why do we need all that data? We also want to know what startups have in those Series A buckets: the why behind what. That’s why Nine Point’s SaaS Napkin, which provides timely data on inputs that generate valuations, has become a go-to for us data nerds who track the startup fundraising game. And the historical record of the SaaS napkin — basically all the data related to software startup fundraising that can fit on a small piece of paper — lets us compare and contrast benchmarks over time. it’s helpful.

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