"The latest data from Carta is BRUTAL. Of 547 Series B deals in 2018..."
Okay, all caps was my addition. But Jason's take on Figma's Series B class was a pretty common one. Effectively, it boils down to: look how hard the VC-backed startup game is.
And it is hard, no doubt.
But I kinda think this data is as expected — or perhaps even hopeful?
Here's what we looked at. Figma raised a $25 million Series B in 2018, and 547 other companies on Carta raised Series B that year.
Figma obviously IPO'd recently - so how have the other companies done?
𝗦𝗶𝗻𝗰𝗲 𝟮𝟬𝟭𝟴:
38.6% of the Series Bs from that year are valued at par or less after 7 years. Not great.
27.4% are currently valued 1x-2x higher than Series B day. Also not great.
13.7% have valuations 2x-4.9x higher. This is okay.
8.6% have valuations 5x-9.9x higher. This is good.
11.7% have valuations 10x higher. This is great!
𝗧𝗵𝗼𝘂𝗴𝗵𝘁𝘀
Series B is still very venture-y. Not guaranteed by any means, and making real impactful money from any given Series B investment is tough.
2018 was 7 years ago. Many of these companies are still nowhere close to IPO. This asset class takes a helluva long time.
The investors in Figma's Series B probably made a 100x multiple on their investment. Those in earlier stages, even better. But in many cases, 𝘀𝗲𝗹𝗹𝗶𝗻𝗴 𝗲𝗾𝘂𝗶𝘁𝘆 at the B is actually the right call (in 66% of this example!)
Telling the difference between the potential Figma's and the startup that just stopped growing is the whole game — just as it is at Seed or Series A.
Brutal or just venture?
#startups #valuations
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