Five Predictions for 2023
Tomasz Tunguz forecasts five major trends for 2023: ML becoming a requisite feature in SaaS, web3 continuing its decline with marketing as the primary use case, Fed inflation control driving software multiples to 7.0x forward, private equity acquiring 10% of public software companies, and a thawed but lower-priced fundraising market with 30% flat/down rounds. The article frames 2023 as a transition to a 'new-normal era' characterized by longer diligence, fewer rounds, and lower valuations after the exuberance of 2021 and volatility of 2022.
Metrics in this report
5.8x revenue
baseline at time of writing
public software companies
30%
of mid-stage rounds
2023 projection vs <5% in H1 2022
7.0x revenue
projected 2023 level
public software companies
10%
of 70+ public software companies
acquisitions by end of 2023
2-3xfactor
reduction in composition time
SaaS workflow applications
10-15$M post-money
early stage market
2023 fundraising environment
50-60$M post-money
with ~$500k ARR
early stage market in 2023
5.0%
end of year 2023
Federal Reserve policy
2.5%
below this level
end of 2023
35%
of Americans
2022 prediction that did not materialize