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Thank you for downloading SVB’s State of SaaS report , the daughter report of our flagship State of the Markets report, with a deep focus on SaaS venture trends.
Our State of SaaS report provides insights on investment and exit activity in the enterprise software-as-a-service ecosystem.
Connect with an SVB expert at sreply@svb.com.
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With nearly half of US workers still working remote, spending continues to increase on cloud computing as well as cybersecurity to protect against an exponentially growing number of cyberattacks.
Driven by factors such as wider acceptance of remote due diligence and heightened competition, US SaaS VC investment reached $90 billion spread over 3,901 deals in 2021.
After a spike last year, late-stage valuations have started to plateau as investment firms pivot toward tech stocks and early-stage startups.
US SaaS VC investment hit $90 billion in 2021, the highest on record, with over 263 US SaaS VC deals greater than $100 million – 3x the total last year and 7x the total in 2015.
Last year saw the first increase in US VC SaaS deal count since 2015, led by growth in Series C+ deals. The pace is expected to grow at a healthy clip in 2022, albeit at a more tempered pace, as $400B in US VC and PE dry powder is waiting to be deployed.
In 2021, fierce competition drove valuations to an all-time high with Series C valuations more than doubling. With the landscape in 2022 changing, investors are reassessing where and at what stage they want to deploy their capital.
Already, we are seeing a plateau as heightened valuations are brought into focus amid the continued downturn in public markets. If the public markets continue to slide and companies struggle to grow, pressure on late-stage private valuations to rebase will mount.
As public markets remain volatile, hybrid PE/VC firms have focused efforts on beaten-down public tech stocks as well as early-stage companies out of concerns over Series D+ valuations softening and muted exit activity.
Hybrid investment in SaaS companies has remained steady, with no material drop so far in 2022, due to strong enterprise demand and multi-year contracted revenues insulating companies from volatility.
Historically, revenue growth has been the primary driver of revenue multiples for SaaS startups. However, 2021 saw this relationship bend, which could signal other factors such as profitability, vision and addressable market are becoming increasingly more valued.
In order to maintain strong multiples, private companies will need to demonstrate strong revenue growth, as it is a major determinant of the multiple received in the public markets.
Our deep relationships with top entrepreneurs and investors inform our insights and give us a vantage point unlike any other bank.
This material including, without limitation, to the statistical information herein, is provided for informational purposes only. The material is based in part on information from third-party sources that we believe to be reliable but which have not been independently verified by us, and for this reason, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice, nor is it to be relied on in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction.
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Silicon Valley Bank Germany Branch ist eine Zweigniederlassung der Silicon Valley Bank. Silicon Valley Bank, eine Aktiengesellschaft nach dem Recht des U.S. Bundesstaates Kalifornien, mit Sitz in Santa Clara, Kalifornien, U.S.A. ist eingetragen beim California Secretary of State unter der Nr. C1175907, Vorstand (Chief Executive Officer): Gregory W Becker, Aufsichtsratsvorsitzender (Chairman of the Board of Directors): Roger F Dunbar. Silicon Valley Bank Germany Branch mit Sitz in Frankfurt am Main ist eingetragen im Handelsregister des Amtsgerichts Frankfurt am Main unter der Nr. HRB 112038, Geschäftsleiter: Dayanara Heisig. Silicon Valley Bank Germany Branch is a branch of Silicon Valley Bank.
Silicon Valley Bank, a public corporation with limited liability (Aktiengesellschaft) under the laws of the U.S. federal state of California, with registered office in Santa Clara, California, U.S.A. is registered with the California Secretary of State under No. C1175907, Chief Executive Officer (Vorstand): Gregory W Becker, Chairman of the Board of Directors (Aufsichtsratsvorsitzender): Roger F Dunbar.
Silicon Valley Bank Germany Branch with registered office in Frankfurt am Main is registered with the local court of Frankfurt am Main under No. HRB 112038, Branch Directors (Geschäftsleiter): Dayanara Heisig.