Originally published by TOMASZ TUNGUZ, Venture Capitalist at Redpoint
Last week, SaaS stocks fell by about 18% on average. The chart above shows the most recent enterprise value to forward multiple for a basket of next-generation software companies. The red line is the value and the blue line is the median over the same time frame.
As of Friday, the median forward multiple is 9.3x which is a 11% drop from the previous high of 10.5x. The current valuation level is still top decile across this time period, despite the drop. In other words, the valuation environment is still at elevated levels.