INSUBCONTINENT EXCLUSIVE:
The value of technology companies has fallen as the broader public markets have repriced themselves in light of COVID-19-related market and
economic disruptions.And as the public markets sort out the new value of a huge piece of global business, private companies are being shaken
startups are going to take a hit
into growing startups, she also helps run the Bessemer cloud index (now a partnership with Nasdaq, and trackable on a day-to-day basis).As
turbulent times like today
We also dug into how founders are reacting to the changing world that may no longer be as amenable to their business plans
This interview has been edited for length and clarity; thanks to Holden Page and Walter Thompson for help with the transcription
A Technology News Room: During our last conversation, we discussed how to value startups
You explained a method in which you consider the future value of cash flows
that outside of a market disruption, which I think was the the nature of the question to begin with, cloud software tends to trade on
revenue and revenue growth
Companies should fundamentally be valued on the present value of their future free cash flows
margin structure on a very massive revenue base once you get there, and generating cash then.And so I think in bull markets, when capital is
readily available, prioritizing growth makes a lot of sense because you want to capture as much share as you can
And then losses are also tolerable because the capital is available to fund that massive growth
And there are actual measurable metrics that validate that structure, with CLTV to CAC [customer lifetime value to customer acquisition
costs] being one of them.
