How do public markets value high-growth software companies differently from their private-market prices?

Jamin Ball · Jan 10, 2024

Private multiples will converge more with public multiples, so founders must ask what metrics they need to reach a 2-3x markup and whether their market can support a business that size

When raising a round you are implicitly signing up for specific performance over the next few years and should be honest about it

43:33 20VC: Did Figma Kill M&A Markets in 2024, The Three Biggest Mistakes Made in Growth Investing, The Three Requirements Companies Need to Go Public in 2024 with Ed Sim and Jamin Ball

David Frankel · Oct 14, 2024

The collapse in public SaaS multiples from around 20x to 5-6x has trickled down into private markets, so later-stage investors refuse to top up at the last valuation and down rounds follow even for companies that were valued enormously

Late-stage investors who paid a billion privately expected rule-of-40 performance that never materialized, so they now tell companies to go test the market instead of re-upping at the old price

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David Frankel · Oct 14, 2024

The funding market is now a haves-and-have-nots split: AI companies still get rich pricing while vertical SaaS companies are capped by depressed public comparables

A vertical SaaS business at $50M revenue can't get a 20x multiple when the listed comparable trades at six or seven times

63:24 20VC: Investing Lessons from FC Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

Harry Stebbings · Mar 7, 2026

There is a massive and silly valuation disconnect between private and public markets, with private investors seemingly ignoring public comparables

Stripe at $150B versus Adyen at $45B on similar transaction volume, and Replit at $9B versus Wix at $4.5B

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Chad Peets · May 23, 2026

Databricks can probably go public, but not at $150B — nobody can justify it being worth two and a half times Snowflake

Snowflake's public market cap sets a comparable, and private prices are set by three people while public prices are set by millions, so public markets will reprice it lower

Scope: 'can they go out? Probably' — the doubt is about the valuation, not the listing

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Chris Degnan · May 23, 2026

Public market valuations behave very differently from private market valuations

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Severin Hacker · May 19, 2025 · hedged

Public financial markets care about predictability even more than about actual profit margins or growth.

Investors read an inability to forecast your business as a sign you're not a good operator or don't understand your own drivers, which erodes trust in management.

Scope: Framed as his feeling / 'something like that'

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Harry Stebbings · May 19, 2025

Public markets' premium on predictability is a serious weakness right now, because in the current AI environment nobody can predict the future well.

Models change and events like DeepSeek's emergence can overturn assumptions about AI, China and open source overnight; even as an investor and acquirer he doesn't think anyone forecasts well today.

69:24 20VC: Duolingo Co-Founder on Why $3M is Harder than $100M to Raise | Why You Should Always Take Tier 1 VCs Even at Worse Terms | Why Europe Can't Win Unless the US Screws Up | How AI Impacts the Future of Work and Education with Severin Hacker

Harry Stebbings · Dec 15, 2025

Software companies without a human-labor-replacement story will tap out and won't earn a premium in today's public markets

A recent guest argued that absent labor replacement there is no premium available in public markets; Harry applies this to his own holdings

29:01 Public markets only pay a premium for a labor replacement story

Aravind Srinivas · Jun 15, 2026

Public markets currently reward top-line growth more than bottom-line efficiency

High growth is rare and hard, so it is prized; efficiency matters once it becomes the objective

65:17 Public markets currently reward growth over efficiency

Chris Degnan · May 23, 2026 · hedged

Databricks may struggle to go public because it is selling at negative margin

Negative-margin selling is hard to take to public markets

64:34 Negative margin selling blocks a public listing

Chris Degnan · May 23, 2026

Private investors reward top-line revenue while public markets reward free cash flow, and founders need to plan for that switch

Snowflake's own experience: pre-IPO it was all about top line, post-IPO the market rewarded free cash flow generation

66:15 Public markets reward free cash flow not top line