Market Update.

Logan Bartlett
Software Multiples Normalizing At 6x NTM Revenue.

Source: Pitchbook, NTM Revenue Multiple calculated from a list of 84 High Performing SaaS Public Comps
©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission.
Public Companies Are Trading Growth For Profitability
With Private Businesses Following Suit.

Source: Pitchbook, NTM Revenue Multiple & LFCF Margin calculated from a list of 84 High Performing SaaS Public Comps
©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission.
There Has Been A Flight To Quality In Public and Private
Markets.
(45%) drop
in price

(32%) drop in
price

NTM FCF % of Revenue

(50%) drop
in price (35%) drop
in price

NTM Revenue Growth Rate

Source: Pitchbook, NTM revenue multiple by revenue growth analysis, Red: Unprofitable & low growth, Orange: Rules of 40% & <30% growth, Green: Rule of 40% & unprofitable, Blue: Rule of 40% & profitable
©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission.
Public Companies Guiding Down But May Just Be Setting
Stage to Beat.

Source: Pitchbook, Company Estimates & Guidance, Altimeter Research. Companies included in analysis: Alteryx, Bill.com, Paylocity, Zscaler, Hashicorp, Atlassian, Fastly, Monday.com, Paycom, Gitlab, MongoDB, ZoomInfo, Guidewire, Sentinel One, Procure, Samsara, Splunk,
nCino, Sumo Logic, Cloudflare, Confluent, Amplitude, Datadog, Crowdstrike, Braze, Digital Ocean, Five9, Elastic, Docusign, Snowflake, Jfrog, Asana, PagerDuty, Box, Okta, Qualtrics, Workiva, Q2 Holdings, Coupa, Twilio, Yext, RingCentral, Smartsheet, BlackLine, Freshworks,New
Relic, Dynatrace, Zuora, Veeva, BigCommerce, Salesforce, Hubspot, Wix.com, Domo, WalkMe, Zoom, Benefitfocus, Olo, UiPath
©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission.
Despite Slowdown Software Spending Keeps Growing.

Source: AlphaWise, Morgan Stanley Research, N= 100 (US & EU Data)

©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission.
Reminder: Venture Funding Typically Takes 9-10 Quarters
To Bottom Out.

Source: Pitchbook & NVCA, Venture Dollars Invested each quarter

©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission.
Private Market Valuation Observations.

Early stage valuations were quick to correct falling Series B and Series C company valuations remained
25-50% ⇒ much more consistent fundraises over elevated in the first half of 2022 before softening
the course of 2022 over the course of the second half of the year

Quality deal volume is very low ⇒ most high

performing businesses elected not to raise

©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission.
Growth Market Update.
Why Didn’t We Invest More In 2022?

Valuations Supply

Unprecedented disconnect between public Limited opportunities and adverse selection

and private markets with companies fundraising

©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission.
Unprecedented Disconnect Between Public & Private
Market Valuations.

Median 2017 2018 2019 2020 2021 2022

High Growth Software

8.2x 13.9x 19.5x 23.0x 32.4x 13.7x
Revenue Multiples

Series B and C Software

20.2x 21.9x 31.3x 39.7x 105.4x 76.7x
ARR Multiples

Premium to Public
246% 157% 160% 172% 325% 560%
Market

Note: High Growth LTM Revenue Multiple based on index of cloud and software companies growing >30% (average over period); Series B and C
©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission. current ARR multiples based on median of proprietary collected set of relevant deals done by peer firms.
Limited Supply & Adverse Selection With Companies
Funding.

©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission. Note: Series B and C based proprietary collected set of relevant deals done by peer firms.
But We’re More Optimistic About 2023.

Valuations Supply

Quarterly trend shows sanity remerging (but Major backlog of opportunities should be
still a ways to go) coming to market

©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission.
Quarterly Trend Show Some Sanity Reemerging But Still a
Long Way To Go.

Median Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023

High Growth Software

21.1x 12.7x 11.9x 9.7x 10.1x
Revenue Multiples

Series B and C ARR Multiples 91.7x 100.0x 55.0x 46.4x 38.9x

Premium to Public Market 435% 787% 462% 478% 385%

Note: High Growth LTM Revenue Multiple based on index of cloud and software companies growing >30% (average over period); Series B and C
©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission. current ARR multiples based on median of proprietary collected set of relevant deals done by peer firms.
Companies Are Waiting Longer To Fundraise But Can’t
Wait Forever.

Note: Represents the median number of months since the prior round for Series B & Series C raises during the respective time period.
©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission.
Major Backlog Of Opportunities Should Be Coming
To Market.

Will need to raise Series Bs

in coming quarters

Note: Number of Series A investments based on proprietary collected set of relevant cloud and software companies that Redpoint Omega IV tracks for potential Series B investments.
©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission.
Should Ultimately Prove A Great Time To Invest But
May Take Time.

Absolute valuations are Fewer funded
falling, while market competitors in any given
opportunities remain category as fewer
very large companies are able to
raise and stay in
business, leading to
marginally easier hiring
and less expensive
growth
Flight to quality for Financing constraints
founders looking for lead to better business
investors who have fundamentals early on
experience and are
purpose built for the
early stages

©2023 Redpoint Ventures. Proprietary and confidential. Do not copy or distribute without permission.