B2B Technology Equity Trends - with Peter Walker, Head of Insights Carta

**Ray Rike** (0:00)
Hello, I'm Ray Reich, Founder and CEO of RevOp Squared and your host of the Metrics that Measure Up podcast. We talked to a wide variety of B2B, SaaS and Cloud thought leaders, executives, investors, and people just like you to discuss the metrics and benchmarks they use to make metrics informed decisions. Now on to today's show.
Welcome to today's episode of the Metrics That Measure Up podcast. Today, we are joined by Peter Walker, the head of Insights at Carta. We'll be covering four main areas with Peter today. First, startup valuation trends in Q1 and Q2-23. Second, overall venture capital investment trends, including volumes and dollars. Third, the latest startup acquisition trends, especially coming from Peter's latest LinkedIn post. And fourth, some compensation and staffing trends. So with that, Peter, please take a moment to give a brief overview of your journey to becoming a guest on the Metrics That Measure Up podcast.

**Peter Walker** (1:16)
Absolutely. Pleasure to be here, Ray. So I'm the head of Insights at Carta. Carta is an equity management platform, although we've expanded into a whole host of other businesses as well. But my journey over the past couple years running this team within the marketing department at Carta has all been about trying to make Carta data more useful. So in that vein, it fits really neatly into the B2B Metrics That Measure Up podcast. There's a ton of data that Carta has access to that we feel is pretty opaque and not widely available to startup founders and CFOs, anyone on the C-suite who's trying to make decisions about fundraising, how they should think about valuations or structuring their rounds, and then even into things like headcount and how they should think about hiring and growth. So Carta touches on all those areas, and it gives us a unique insight into what's going on in B2B SaaS startups.

**Ray Rike** (2:07)
Well, I'll tell you what, Peter, I love your LinkedIn post, and it's what really turned me on to have you as a guest here on the Metrics to Measure Up podcast, but it also was one of the most challenging episode briefings I've ever prepared because there's so much rich data that you have, and I was like, how do I narrow this down to three or four topics in 30 minutes? But here we go. Now, I recently interviewed Janelle Ting at Bessemer Ventures, and we were talking about the state of the Cloud 2023 report. And we did a little rear view looking, and part of that was the overall valuation trends for VC-backed investments over the past two to four quarters. But I want to look at the post you wrote just a few days ago and get you to share some of the valuation trends that you're seeing.

**Peter Walker** (2:54)
Absolutely. Big fan of Janelle, by the way. She's fantastic. So if we take a step back and look at startup valuations as a whole, I think the easiest way to think about it is that if you take the early 21 to early 22 period, that is the bubble. That is the example of a sugar rush in valuation that really throws off the rest of the charts that otherwise would look pretty stable and or just even slightly up in some cases.
So we'll break it out a little bit by funding round, starting with the earliest rounds, which are seed rounds. And we'll just talk about priced equity seed rounds. We can get into the distinction between that and SAFES later on. But on Carta, which has 36,000 startups using the CapCable platform at the moment, primarily seed, Series A and pre-seed companies, within the seed stage, the valuations from Q1 2023, the median valuation was 13 million on a pre-money basis.
In Q2 23, the valuation was 12.7 million, again, on a pre-money basis. Essentially flat, maybe slightly down, but fewer rounds happening between those two quarters. Then a similar pattern cascades through some of the other rounds, especially early stage. Series A goes from 40 million as a pre-money valuation to 39 million. Series B, there was a big bump, but I'm pretty sure that's mostly noise. Somewhere around 75 to 90 million is a good indicator there. Then Series C, 300 million was the median in Q1, 250 million the median in Q2. You can see that we've maybe started to bottom out in terms of valuation. I think they're unlikely to go a whole lot of a lot lower, but this is all happening on the backdrop of fewer funding rounds in general. It's much harder for entrepreneurs to get that capital in, even if valuation seems to be relatively stable.

**Ray Rike** (4:44)