Software Stocks Enter Bear Market as Valuations Drop, But Some Positives Remain for Startups
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Software stocks have entered a bear market, with the Bessemer Cloud Index down 23% from its peak this year.
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The valuation of software revenue is now low, leading to reversed revenue multiples from earlier in 2022.
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Despite the downturn, some positive signs remain for startups - early-stage companies growing quickly may still command strong valuations.
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Public market investors seem to have already made up their minds on software companies ahead of upcoming Q3 earnings reports.
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For startups, growth premiums that traded off for cash may be coming back as the market shifts.