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San Francisco Startup Valuations Proceed to Balloon
I’ve been writing about rising valuations for some time now. However this week, I noticed a deal that was so crazily priced, I simply have to jot down about it once more.
This younger San Francisco-based startup had about $700ok in annual recurring income (ARR). It was a B2B Software program-as-a-Service (SaaS) product — limiting it to mainly only a handful of consumers.
The valuation on the deal was $72 million post-money! Sure, the corporate clearly has potential. However at that valuation, buyers are betting on a really excessive chance of a big success. And the corporate is simply getting began.
We seem to have reached some extent on this bubbly market the place pricing insanity is more and more leaking over into personal offers. In my opinion, it’s going to be very arduous to earn cash in the long term investing in seed-stage corporations at $70M+ valuations.
I proceed to take a position largely in offers outdoors of the San Francisco Bay Space (SFBA). Startup valuations are much more cheap past this hotbed of enterprise capital exercise. There are just too many VCs competing for too few high quality offers in that space. They’re bidding costs as much as insane ranges.
I’d a lot moderately search for promising offers elsewhere. The one San Francisco-based offers I’m investing in lately are early-stage corporations which can be outdoors of super-hot areas like SaaS.
I’ve seen a number of fascinating offers popping out of Canada just lately. I plan to proceed to search for extra deal sources there as valuations are much more cheap north of the border. Barney Pell was certainly one of my favourite syndicates with nice Canadian deal circulate (nonetheless is) — however he’s solely had one syndicate deal within the final 12 months.
I’ll allow you to all know as I discover extra high quality syndicates providing offers outdoors of the SFBA.
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