While this year the decline in the stock market was rapid, it was also widespread, and very few companies escaped the downturn. But current market conditions have not resulted in the same uniform trajectory for startups.
When public stock prices started to fall, everyone remembered that it would take several months for the real impact on the private market to take place – historically, a delay of six months. However, data from Caplight, a fintech looking to make secondary trading more transparent, showed late-stage startups were not following a single trend.
The sample of startups surveyed by Caplight includes the top 10 most valued venture capital backed companies, including recognizable names like Canva, ByteDance and Stripe. We focus on changes in share prices at which these companies were traded on the secondary market. These prices, in turn, result from the valuation of the company established during secondary trading.
The data showed that the valuations of some of these late-stage startups fell in line with the public market, while some started to fall in 2021 before the public markets shook and others still seeing their valuation go up. While we don’t know exactly why, when, or how much each company’s valuation drops — if at all — there are a few observations worth noting.