Peter Walker, Head of Insights at Carta the industry-leading Equity Management Platform shares equity valuation insights and data from the 36,000+ customers and $2.5T in equity value running on their platform. Peter's goal is to make the data Carta has in their platform useful for CEOs and CFOs to inform decision-making.

Start-up valuations trends increased dramatically in the 2020 - early 2022 timeframe - creating a valuation bubble. A few highlights from Peter included:

Seed Stage:

Q1-23: $13M pre-money (median)

Q2-23: $12.7M pre-money (median)

Series A: 

Q1-23: $40M pre-money (median)

Q2-23: $39M pre-money (median)

Series C: 

Q1-23:$300M pre-money (median)

Q2-23 $250M pre-money (median)

The ~ 20% decrease in pre-money valuations for Series C companies highlights the lack of a short-term IPO exit option and begins to normalize back to more historic valuations.

Overall VC investment trends also highlight a material decrease in the amount of Venture Capital investments being made:

Q4-21: $66B investment recorded on Carta (all-time high)

Q1-23: $10B investment recorded on Carta

Q2-23: $10B investment recorded on Carta - estimate only

Peter highlighted the "SAFE" market held up better than most other price equity markets. Specifically, SAFE's over $500,000 were priced fairly equivalent to price equity seed rounds. Because of the ease of use of a SAFE, it has become the most common fundraising vehicle for pre-seed and seed rounds.

Peter also highlighted that AI is a "hot space" for investors. The median cash raised for an AI company was $13M versus $8M for non AI companies in Q2-23.

Next during the conversation, we discussed the trends on staffing and operating expense trends. Carta tracks terminations and the trends are quite insightful:

January was the highest month for lay-offs ever for companies on Carta, numbering 17,000 lay-offs representing about 2% for the month (24% annualized) versus the norm of .5% - 1% per month. This number was reduced to 10,000 lay-offs in May. The other insight is that people are not leaving for voluntary termination reasons - highlighting the desire to not switch jobs in this market.

One other topic we discussed was the compensation trends in early-stage companies. The rapid increases in salaries experienced in 2020 through the first half of 2022 have changed dramatically. Even software engineering roles saw a -.3% decrease over the past 6+ months, which is not material, but much different than the 10%+ increases experienced in 2020 - 2021. Sales were the most impacted function as measured by compensation decreases, followed closely by recruiter compensation.

We also discussed the emerging trend of "down-rounds" which represented 20% of equity rounds in Q2-23. Moreover, the velocity of "angel investments" is down dramatically in 2023. After the explosion in angel investments in January 2020 - March 2023. Since then the # of angel investments is down by ~ one-third over the last six months - however, that is still above the historic levels of angel investments previous to 2021.

One last data point is that Silicon Valley and the Bay area is still the #1 geographic region for VC investment when compared to New York (79% in Northern California and 21% in New York). However, when looking at NYC versus San Francisco the mix is much more equal with an ~ 50% to 50% mix in equity rounds raised.

If you share my passion for all things metrics and data for B2B SaaS companies, this conversation with Peter Walker, Head of Insights at Carta is illuminating!!!