Public vs private tech valuations

Extracted Attributes

• Startup Failure Risk

  70% of entrepreneurs

• Private Market Stability Factor

  Grounded in long-term performance and due diligence

• Public Market Volatility Factor

  Real-time trading data and market sentiment

• Public IT Valuation Multiple (2024)

  Over 25x EBITDA

• Public SaaS Revenue Multiple (2025)

  6-7x

• Aggregate Value of Private Tech (>$1B)

  $4.7 trillion

• Aggregate Value of Ultra-Unicorns (>$5B)

  $3.5 trillion

• Public SaaS Revenue Multiple (2021 Peak)

  20-25x

Timeline

• Dot-com boom begins; tech stocks trade at multiples disconnected from earnings. (Source: Web Search: Phoenix Strategy Group)

  1990-01-01

• Dot-com bubble bursts, leading to an overnight collapse of tech valuation multiples. (Source: Web Search: Phoenix Strategy Group)

  2000-01-01

• Public IT company valuation multiples are recorded at less than 10x. (Source: Web Search: Phoenix Strategy Group)

  2010-01-01

• Public SaaS company valuations peak at 20-25x revenue during the zero interest rate policy era. (Source: Web Search: Softwareseni)

  2021-01-01

• Stripe raises $6.5 billion to provide liquidity to employees while remaining private. (Source: Web Search: Softwareseni)

  2023-03-01

• Anticipated valuation reset in the gap between public and private tech valuations. (Source: Document 5cad4e4e-79e4-401e-9806-ecf722cd9b15)

  2024-01-01

• Stripe conducts a tender offer at a $65 billion valuation. (Source: Web Search: Softwareseni)

  2024-02-01

• Public SaaS companies trade at approximately 6-7x revenue, reflecting a market correction. (Source: Web Search: Softwareseni)

  2025-01-01

Angel investor

An angel investor (also known as a business angel, informal investor, angel funder, private investor, or seed investor) is an individual who provides capital to a business or businesses, including startups, usually in exchange for convertible debt or ownership equity. Angel investors often provide support to startups at a very early stage (when the risk of their failure is relatively high), once or in a consecutive manner, and when most investors are not prepared to back them. According to a survey of 150 founders conducted by Wilbur Labs, approximately 70% of entrepreneurs risk facing potential business failure, and nearly 66% risk facing this potential failure within 25 months of launching their company. A small but growing number of angel investors invest online through equity crowdfunding or organize themselves into angel groups or angel networks to share investment capital and provide advice to their portfolio companies. The number of angel investors has greatly increased since the mid-20th century.

Web Search Results

• Public vs. Private EBITDA Multiples: Key Differences

  Take technology companies as an example: public IT firms often achieve higher multiples than their private counterparts, even if they experience similar growth rates. Why? Public markets react to real-time trading data, market sentiment, and macroeconomic trends, causing daily fluctuations in valuation. In contrast, private company valuations are grounded in long-term performance metrics and thorough due diligence, offering more stability but less immediate market-driven growth. [...] For growth-stage companies, benchmarking against both public and private peers is essential. Adjust for factors like company size, growth rate, and industry trends. Take the technology sector as an example: public IT companies have seen their valuation multiples climb from less than 10x in 2010 to over 25x in 2024. Private companies in the same space have followed similar trends, though always at a discount. [...] Public and private company valuations are influenced by different forces. Public company multiples are heavily impacted by market sentiment and broader economic trends. For example, during the dot-com boom of the late 1990s, tech stocks traded at sky-high multiples, often disconnected from actual earnings. When the bubble burst in 2000-2001, those multiples collapsed almost overnight - even for companies with solid fundamentals.

• Why Billion Dollar Tech Companies Are Choosing to Stay ...

  You don’t need to go public to raise billions anymore. Private tech companies valued above $1 billion now represent approximately $4.7 trillion in aggregate value. The infrastructure for staying private has matured—and it’s good infrastructure. ## How Do Public and Private Valuations Differ for Billion-Dollar Companies? Public SaaS companies trade at around 6-7x revenue as of 2025. That’s down from the 20-25x peak in 2021 during the zero interest rate policy era. [...] 211 companies are valued at $5 billion or more while remaining private. These “ultra-unicorns” represent $3.5 trillion in private market value. The reason comes down to maths. Public SaaS companies trade at around 6x revenue in 2025, down from 20-25x in 2021. This recovery narrative vs reality gap explains why private markets let companies control valuations and offer liquidity through tender offers and secondary markets. [...] In March 2023, Stripe raised $6.5 billion to provide liquidity to employees. In February 2024, it offered a tender offer at the $65 billion valuation. The company has provided multiple liquidity events for employees without ever going public. Databricks achieved a $100 billion+ valuation privately. Figma ran multiple tender offers. These aren’t companies that can’t go public. They’ve decided public markets don’t offer enough benefit to justify the costs.

• Converging Paths or Persistent Gaps? Understanding ...

  To some extent, the disparities in valuations between public and private market companies can largely be attributed to differences in industry and sector compositions. The major sectors, for the most part, exhibit similar valuations for both private and public markets. Notably, the information technology sector has been a significant driving force behind higher valuations in both markets. [...] As shown in Figures 3 and 4, the information technology (“IT”) sector has had one of the highest valuations among both public and private equity. This has been consistently the case in private markets, and less so in the (more fickle) public markets. [...] One complication when comparing public and private valuations is the level of confidence that should be put into these metrics. There is generally less confidence in private market metrics for two reasons. First, the owners of private market companies (e.g., General Partners) have significant latitude in applying valuation methodologies.9 Second, private companies are not required to publish their financial statements publicly like listed companies. With such limited data available to collect,

• Making sense of private tech company valuations

  Valuing shares in private tech companies is a complicated task. Unlike public firms, where prices change in real-time, private company valuations are inconsistent and often feel more like a matter of guesswork. For employees, founders, and early investors, this uncertainty makes it difficult to determine the true value of their equity. [...] it serves, and the size of your stake, the tool compares the company to a selected set of similar public tech firms and applies appropriate valuation multiples. Updated every three months, the tool offers users a reliable way to evaluate their equity position based on market conditions.

• Public vs Private Companies: Valuation Differences

  Fortunately, it’s easy to reconcile these concepts in finance: Public company valuation should be more like private company valuation – so eliminate some of the differences. You shouldn’t take a public company’s financial statements at face value. You shouldn’t assume that all public companies are equally “liquid.” And you shouldn’t assume that a public company can operate indefinitely or grow at the same rate until the end of time. [...] Since many companies achieve higher valuations in the private markets than they do in the public markets, it’s misleading to assume that all private companies are worth less than their public peers. If a private company’s shares trade like those of a public company and you can easily find its financial stats, you shouldn’t be applying much of a discount. On the other side, you could arguably apply an illiquidity discount to certain public companies. [...] And rather than assuming there are “differences” in private company valuation, you should use these differences to question the basic tenets of traditional valuation. ## Why the Public/Private Lines Have Blurred Regulatory changes, market practices, and new investors have blurred the lines: Change #1: Startups Are Staying Private for Much Longer