Sacks @ 01:00:56Right
venturemarkets
Following the 30–40% correction in late-2021 public-market valuations for growth and SaaS stocks, private venture valuations will also decline in response to those public comps, with the effect beginning to appear in venture deal pricing in the subsequent period after this episode (late 2021 onward).
We've already seen in the past five weeks, we've seen 30 to 40% correction in the public markets for growth stocks and SaaS companies. That is absolutely going to trickle down to venture valuations. I think it already has.View on YouTube
Explanation
Evidence from multiple data sources shows that after the late‑2021 selloff in public growth and SaaS stocks, private venture valuations did fall materially, especially from early 2022 onward, matching Sacks’ prediction.
- Carta’s Q1 2022 “State of Private Markets” report already showed late‑stage private valuations starting to roll over: median Series C valuations were down 18% quarter‑over‑quarter and Series E+ down 25%, with median round sizes falling across all late stages. This is exactly the kind of early trickle‑down from public comps into private pricing Sacks described as already beginning. (carta.com)
- By Q4 2022, Carta reports that median venture valuations were down at every stage, with very large drops at later stages that are most tightly linked to public-market comps: median Series B valuations fell 46% over 2022, Series C fell 55%, Series D fell 58%, and Series E+ fell 72% year‑over‑year. Round sizes also shrank dramatically, reflecting investors’ lower pricing for growth. (carta.com)
- Crunchbase’s analysis of the downturn notes that when public markets began their downward slide in December 2021, it took about one quarter for private markets to start scaling back valuations, and by Q2 2022 late‑stage funding and valuations had come down significantly—explicitly describing the lagged “trickle down” from public to private markets. (news.crunchbase.com)
- Subsequent Carta data through 2023–2024 characterizes this as a sustained “valuation reset” in venture, with elevated down‑round rates (~19–20% of all rounds) and large cumulative valuation declines at later stages since early 2022, confirming that the correction in public growth/SaaS names ultimately translated into structurally lower venture valuations. (carta.com)
Because private venture valuations did in fact decline materially in the period after the podcast (beginning in early 2022), in a way that’s widely attributed to the public‑market growth-stock correction, Sacks’ forecast that those public‑market moves would "absolutely" trickle down to venture valuations is right in both direction and timing (with the expected short lag).