State of Software-as-a-Service

H2 2022 SaaS Report

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.

US VC Saa S deal count and capital invested by year — **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.

US Saa S Valuation Step up by series 2 — **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.