A Flat Exit? In This Economy?!
As the IPO market slowly comes back to life, it’s becoming easier to understand just how far off the mark some startup valuations were back in 2021. Instacart had an impossible $39 billion valuation during the heyday of startup investments, but the delivery company is now nibbling its way toward the $10 billion mark as it heads to the public markets.
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Normally, any startup going public with a price tag in excess of $9 billion would warrant ample celebrations on the part of its builders and backers. But with a peak valuation nearly four times higher around its neck, the narrative surrounding Instacart’s IPO is more mixed.
Not all valuation metrics from that era are so far off, though, provided you didn’t go completely insane when pricing that last private round and have managed to post stellar results since. Easy enough, right?
Klaviyo: A Case Study
Klaviyo is a company that earned the $9.5 billion valuation in 2021. Let’s compare its numbers with how the company was doing back then:
- In the June 2021 quarter, the company had revenue of $67 million, which gave it run-rate revenue of $268 million.
- Against a $9.5 billion valuation, that makes for a multiple of around 35x, which wasn’t all that crazy for the time.
The Valuation Debate
But is the lesson here that many of the late-stage startups with colossal valuations will be able to defend them when they go public in the near future? Nope. Just that it is possible provided you did not go completely insane when pricing that last private round and have managed to post stellar results since.
Klaviyo’s IPO
Klaviyo’s valuation might be a bit light, given its revenue growth rate. The company generates lots of free cash flow, unlike some slower-growing companies with better revenue multiples on the public markets. This makes us wonder if we will see a higher target price attached to its IPO.
Comparison with Other Companies
Let’s compare Klaviyo’s valuation with other companies on the public markets:
- According to Bessemer data, Klaviyo is growing faster than every company on the public markets with a revenue multiple above 12x.
- The closest, in terms of revenue growth, is Zscaler.
Conclusion
In conclusion, it’s possible for late-stage startups with colossal valuations to defend them when they go public in the near future. However, this requires stellar results since the last private round and a valuation that is not completely insane.
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Instacart IPO
The Instacart IPO is an upcoming event that will likely attract significant attention from investors and the media.
Klaviyo
Klaviyo is a company that earned the $9.5 billion valuation in 2021. It’s known for its email marketing platform and expertise in e-commerce.
Startups
Startups are young, fast-growing companies that often receive venture capital funding to achieve scalability and expansion.
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