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.

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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