Next 24 months, we believe we will witness a deep migration of top cloud talent from public and late-stage private SaaS companies to healthy early-mid-stage companies that offer more rewarding professional development opportunities and higher financial return potential.
The reason is this:
The party is over
And what a party it was! For more than a decade since the Great Recession of 2008/2009, the cloud market has only known one direction: up and to the right.
Almost without interruption, the market grew, public investors got the hang of SaaS economics, and IPOs became more frequent and more profitable. That has fueled private market investment activity, speculation and a list of cloud unicorns. The rapid transition of business to digital caused by the pandemic, combined with stimulus money and cheap capital, acted as a big stimulus to create an unsustainable bubble in 2020 and 2021.
But as of late 2021, public cloud stocks have surrendered 50 percent of their combined market capitalization, and the IPO window has closed. Private late-stage companies that have taken a large round of higher valuations will experience valuation resets, most of which will begin to materialize during their annual 409A FMV valuation cycle.
