SaaStr · 2015-11-09
· 3859d
IPO Pricing Below Previous Valuation Round: Market Implications for Tech Sector
Jason Lemkin analyzes Square's IPO pricing below its last private round valuation, arguing this reflects market correction rather than systemic risk. He contends that overpriced late-stage rounds will naturally adjust downward, with SaaS multiples already declining accordingly, and that companies will continue to get funded despite longer timelines to achieve previous valuations.
Metrics in this report
Overpricing Range in Late-Stage Rounds
50-100%
range
Pre-IPO financing rounds relative to IPO pricing
Valuation Correction Rate
33%
illustrative decline
Example scenario for valuation adjustment in SaaS