Public Market Valuation Premium Returns to High-Growth Software Companies

Enterprise value to forward ARR multiples for high-growth software companies (50%+ annual growth) have increased nearly 6x since 2016, reaching over 10x by 2020. Public market valuations have become more favorable than private market valuations starting in 2019, reversing a multi-decade trend. This shift suggests IPOs, direct listings, and SPACs will become more attractive financing options for later-stage founders.