Not every sector is taking the same amount of damage as the startup market digests a changing valuation environment and climate. One is faring better than the rest.
It is not the most flashiest sector in startupland. The category that appears to be in the best shape is the software-as-a-service category.
Money, markets and startups are explored by the Exchange.
You can get The Exchange newsletter every Saturday.
You may be surprised to know that the SaaS startups are still collecting venture capital. This column has covered all the warning signs of the category to kick off the new year and the Q3 2021. This is a collection of startups that investors are comfortable with.
Yes. It makes sense, as we will explore soon. It was just over a week ago that The Exchange asked if the selloff was over and there was some indication that we could be reaching a local minimum.
That could keep the trend going for a while. Why are SaaS companies doing better than other companies? Their boringness is a strength and their predictability is an asset. With the model that generated a huge portion of technology wealth in the last decade finding their trough, why wouldn't investors still sitting on dry powder switch to startups?
We reported yesterday that SaaS has resisted the slowdown better than we had expected.
The platform raised a total of $1.04 billion in Series A deals, which is only 38% less than in the fourth quarter of 2011. Health tech Series A funding fell from $1 billion to $370 million.
The decline is less pronounced for seed-stage deal-making. In a segment that is typically revealing of things to come, seed deal volume for biotech was down by over 70% over the same period, which shows that SaaS is comparatively resisting the slowdown quite well.
The data shows that the number of seed rounds on Carta decreased in the last quarter. There was a slight dip in dollar volume despite a much lower number of deals.
It is in later stages that we would expect to see a faster impact of public markets troubles. Is early-stage startups just enjoying a grace period before the correction happens? Maybe. The late-stage peers of Silicon Valley Bank may be spared the worst of the changing market's damage.
All Rights Reserved © 2024
