Financial gravity is back

Jamin Ball writes Clouded Judgement, and is anything but, about SaaS and valuations and the last issue of 2022 included a wrap-up for the year. A chart of enterprise value divided with expected revenue for the next twelve month shows just how high valuations got in 2020 and 2021.

Inflation and higher interest rates have been two major triggers, but another factor why valuations of great tech companies are down 60-90 % in 2022 is that their valuations doubled to tripled from multiple expansion in 2020 and 2021 to very high levels.

Financial gravity exists, so what goes up will come down to more normal levels.

Author: Henrik Torstensson

Partner at Alliance VC. Investing in Nordic early-stage tech startups.

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