Five Predictions for 2023

Tunguz forecasts five major trends for 2023: ML-driven productivity gains becoming essential SaaS features, web3 cooling but finding niche adoption in marketing, Fed success in taming inflation leading to software valuation expansion to 7.0x forward multiples, private equity acquiring 10% of public software companies, and a thawing fundraising market at materially lower valuations with 30% of mid-stage rounds being flat or down rounds. The article frames 2023 as a transition year toward a 'new normal' characterized by longer diligence, fewer rounds, and lower valuations compared to the exuberant 2021 and volatile 2022.