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      State of SaaS
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    State of Software-as-a-Service 

    H2 2022 SaaS Report

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    Key SaaS trends

    $551B

    Amount of global VC dry powder ready for deployment

    $4.8T

    Projected global IT spending in 2023 — a 6% increase

    10x

    Increase in market chatter about down rounds since 2019

    The data

     
    Still-steady deal activity, softening valuations and a renewed interest in debt financing: key trends defining the SaaS venture landscape.

    Deals and dollars: SaaS investment still strong

     

    Although investment has slowed down amid a tougher macroeconomic backdrop, deals continue at a healthy pace with record dry power ready for deployment.

    Notable investors are still averaging 20 to 30 global VC deals per month.

     

    Notes: Data as of 8/31/22 and subject to change due to data updates or methodology changes; deal count and capital invested excludes private equity (PE) growth and corporate deals without a series attached to the deal. SaaS vertical defined using PitchBook’s methodology for industry verticals.
    Source: PitchBook and SVB analysis.

     

    Notes: US SaaS defined using PitchBook’s classification methodology. The median percentage step-up is calculated by analyzing the change from the most recent post-money valuation of the prior equity round to the pre-money round of the next round.
    Source: PitchBook and SVB analysis.

    Softening valuations: Which areas are shielded?

     

    The early-stage remains resilient as the later-stage sees softening given its stronger connection to public comparables.

    Subsectors such as cyber as well as startups located on the urban coasts are continuing to command a premium, with median valuation step-ups well above the rest.

    Will down rounds see an upturn?

     

    While our analysis has yet to register a major uptick in the number of down rounds, market chatter reflects a growing number of startups discussing flat or down-round financing.

    Debt financing requests are on the rise as startups begin to hedge against a tougher equity market heading into 2023.

     

    Notes: 1) Deals analyzed excludes PE growth and corporate deals. SaaS vertical defined using PitchBook’s methodology for industry verticals. 2) Number of mentions calculated by analyzing proprietary internal call reports that included discussions around flat or down rounds.
    Source: PitchBook, SVB proprietary data and SVB analysis.

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    Written and researched by SVB experts

     

    Our deep relationships with top entrepreneurs and investors inform our insights and give us a vantage point unlike any other bank.

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    Alex Choy Headshot
    Alex Choy
    |
    Managing Director, SVB
    Alex is the Director of Silicon Valley Bank’s Enterprise Software team in San Francisco.
    Emma Eschweiler Headshot
    Emma Eschweiler
    |
    Director
    Emma Eschweiler is a director for Silicon Valley Bank’s Technology Group.
    Jake Ledbetter Headshot
    Jake Ledbetter
    |
    Senior Researcher, Market Insights
    Jake Ledbetter has been a Researcher at SVB since January 2022, having spent several years conducting research and consulting projects in the private equity and venture capital space.
    Andrew Pardo Headshot
    Andrew Pardo
    |
    Sr. Associate, Research
    Andrew Pardo is a senior research associate responsible for conducting data-driven analyses on the innovation economy that SVB serves.