Some Secondary Investors Claim that Certain Valuations Remain Excessively High

Startup valuations have seen a sharp decrease in the past 18 months during the current market correction, particularly in later stages. High-flying companies like Klarna and Getir have experienced a significant drop in their valuations during their latest funding rounds.

However, besides Klarna and Getir, there have been few primary rounds for late-stage companies in the booming 2021 market. This lack of activity means that secondary data is one of the only sources available to gauge investor sentiment and determine the true value of these companies today. And unfortunately, it seems that nobody believes these companies are still worth their 2021 price tags.

“Nobody thinks they are still worth their 2021 price tag.”
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For example, Chime, a neobank with hopes of going public in 2021, was valued at $6.5 billion in a secondary deal just this week according to data from Caplight. This is a significant decrease from its valuation of $25 billion in 2021. Similarly, Kraken, a crypto exchange, was recently valued at $1.4 billion in a secondary sale, much lower than its previous primary round valuation of $10 billion.

“Are late-stage valuations as low as they are going to go?”
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This begs the question, have late-stage valuations reached their lowest point? Market indicators suggest that may be the case, as the IPO market seems to be reviving and the public markets are slowly recovering.

A survey of venture secondaries investors revealed that many believe there is still room for prices to drop in the industry.

“For those who focus on the industry, many think prices may still have room to drop.”
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Ultimately, only time will tell if late-stage valuations have hit rock bottom or if there is still further to fall. But as the market shows signs of improvement, we can only hope for a brighter future for startups and their valuations.

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