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#CAPTUREIT LANDSCAPE SOFTWARE TRIAL#
#CAPTUREIT LANDSCAPE SOFTWARE SOFTWARE#
Simultaneously, enterprise software valuations have gone from 15x-25x forward to 5x-7x forward, trading at a premium to consumers. The top 10 consumer internet companies by EV/NTM went from a median of ~17x to ~6x, while the overall median EV/NTM went from ~6x to ~2x at the end of July 2022. Companies within the index have suffered a drop in average valuation multiples in the last 18 months.
More notably, we launched the Cobalt Consumer Index in 2021 and have watched multiples fall considerably. Companies are either having to lose out on good talent or pay stock-based compensation at higher levels than they would have historically. Founders who have recently raised capital at lofty valuations are now finding it difficult to hire executives who are valuing the equity portion of their potential compensation bearishly. In the current environment where interest rates have come up and capital has progressively become more expensive, the trading multiples will be lower, forcing companies to grow ARR at a faster rate for a longer period in order to justify its most recent valuation. We have seen many examples of companies raising capital at 100x ARR struggle to grow into their valuations.
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