Are Startup Valuations Still Too High? What Secondaries Investors Say


Startup valuations — especially at the later stages — have come down drastically over the last year and a half of the ongoing market correction. Companies that once boasted sky-high valuations like Klarna and Getir have seen their valuations slashed in their latest funding rounds.

Key Takeaway

Startup valuations, especially at the later stages, have seen a significant decline over the past year and a half. Secondary data indicates that companies are not worth their 2021 price tags, and many investors believe there is still potential for further valuation reductions.

The Current Scenario

Outside of Klarna and Getir, very few late-stage companies have raised new primary rounds since the booming 2021 market. This means secondary data is one of the few sources where the market can turn to get a feeling of what investors think these companies are really worth today. Spoiler: Nobody thinks they are still worth their 2021 price tag.

For example, neobank Chime, a 2021 IPO hopeful, was valued at $6.5 billion in a secondary deal that closed on Monday, according to data from Caplight. This is a noticeable haircut from the $25 billion valuation it garnered in 2021. Crypto exchange Kraken was valued at $1.4 billion in a recent secondary sale, well below its last primary round valuation of $10 billion.

Market Speculation

That got me wondering: Are late-stage valuations as low as they are going to go? Market signals would imply that may be the case; the IPO window seems to be on track to open back up in 2024, and the public markets are starting to regain ground.

Investor Sentiment

A recent survey of venture secondaries investors found that for those who focus on the industry, many think prices may still have room to drop.

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