Study: the median valuation for SaaS companies raising their Series C rose by 40% to $210M this year, while their median revenue grew 20%
Valuations soar in Silicon Valley with venture capitalists racing to find next big thing — The surging value of cloud software companies … Tweets: @trengriffin , @outsidadgitator , @julianklymochko , and @caffeinatedinv1 Tweets: Tren Griffin / @trengriffin : “Median valuation for software-as-a-service companies raising their third round of venture funding, or Series C, rose by 40% to $210m this year, according to an internal study by the Silicon Valley Bank seen by the FT. Their median revenues grew by 20%.” https://www.ft.com/... @outsidadgitator : 2)the shift to work-from-home has added real value to cloud computing platforms, allowing Amazon to sweep the table on both sides, selling to producers and distributing products. https://www.ft.com/... @julianklymochko : Less than 20 years ago, SaaS businesses were typically valued at 3x - 5x sales These days some are being valued at 200x - 250x sales https://www.ft.com/... https://twitter.com/... @caffeinatedinv1 : Been wondering for some time, does Marathon's Capital Cycle theory not apply to SaaS players? Effectively ppl are expecting them all to fight the fade due to a sust. compet. adv? Some will for sure, but all or even most? https://twitter.com/...
Context & Ripple Effects
Silicon Valley Bank's internal study lands at the top of a valuation arc the coverage has been tracking all year: Meritech's analysis of 12 high-growth SaaS companies that went public in 2019 already showed median revenue of $242M growing ~48% YoY, and by mid-December the FT/WSJ thread noted [[a:961077|recent IPO valuations relative to revenue are at their highest levels since the dot-com era]]. The new data point extends that froth upstream into the private Series C market.
The telling detail is the spread: median valuations up 40% against median revenue up 20% means buyers are paying roughly double the multiple for the same growth. That echoes [[a:941663|the argument that online markets have grown 10X over two decades, letting software startups scale faster than ever]] — VCs are underwriting that faster-growth thesis with richer entry prices.
First-order effects
- Series C-stage founders raise $210M-median rounds while giving up less equity per revenue dollar than last year's cohort, and the VCs writing those checks accept materially lower ownership targets for the same stage.
Second-order effects
- Later-stage and crossover investors facing dot-com-era public comps must either move downstream into earlier, cheaper rounds or chase the same inflated Series Cs, compressing their return math; portfolio companies that miss the window price against a benchmark set by this cohort.
Third-order effects
- If multiples keep expanding faster than revenue, the private market is repricing the entire SaaS capital cycle around terminal-scale assumptions — leaving the next funding environment exposed to a sharp correction whenever growth rates normalize, much as the dot-com-era comparison implies.
The trend: Private software valuations are decoupling from current revenue growth as venture capital chases a shrinking pool of fast-scaling cloud winners.