What are you hoping for when you get in at this valuation that will follow dillution? That a cloud web hosting company will be publicly valuated at 30B ?
Founders are getting better terms in private markets instead of public markets. This is why you are seeing these massive series rounds.
Vercel was able to get $250M with much less overhead compared to creating an S-1 and publicly listing for a similar amount of money.
Most of these companies will remain private long term, get acquired by large players, and a couple will publicly list once expectations for public listing ease.
An IPO isn't an end goal - it's just one milestone of multiple that companies will need to hit.
Microsoft bought Github for $7.5bil and LinkedIn for $26.2bil. I think any big tech company of an even remotely close caliber would have no reservations about purchasing Vercel, if they cared to.
I mean ffs, Adobe almost acquired Figma (“it’s just a software service for software UI mockups!”) for ~$20bil, and the only reason they abandoned the deal was due to legal challenges from the European Commission and the UK Competition and Markets Authority. With the take of those authorities, in crude and simplified terms, essentially meaning “this deal seems way too good for you and gives you [Adobe] too much of an unfair anti-competitive advantage”. So yeah, it kinda makes sense why Adobe and the rest don’t mind spending billions on those types of acquisitions (assuming they actually go through), given how good it ends up for their business.
So yes, if Adobe was more than willing to buy Figma for $20bil, then I don’t think there would be a lack of big tech companies having any reservations about acquiring Vercel for “multiple of $3bil” (assuming they were interested in the company in the first place).
That's exactly what I was thinking when I read this. I like vercel as a technology but am always baffled by these sorts of valuations in the sense that I just can't imagine a future where they have enough profit from Saas revenue to earn that out in any feasible amount of time. I guess people are assuming that they get snapped up by someone like Heroku was bought by salesforce, but that was for <$250m which is a very different proposition from $3.25B.
The methodology of startup valuations is completely opaque, so it's in the interest of VCs to claim the highest possible number, because why not? Everybody putting in money is NDA'd up to here and they're certainly not going to upset the apple cart by broadcasting skepticism about the 'valued at' number.
WeWork was worth $50bn when only VCs could look at their numbers, and $10bn when the S-1 came out.
It's really simple, this is VC pyramid scheme at play. Say you put $100M into a company at $1B valuation. A year later you put $250M at a $3.25B valuation. Your $350M is now valued at made up $580M. When the company later sells for just double, $7B, your $350M became $1.2B.
They may have clear path to "when", since they invest. For example, I see some transactions where smaller company is acquired by larger company, and it looks like both companies have the same core investors who guide through this route.
Probably "hey crazy times are over and everything was too highly valued your only options are to admit you f'd up and lost or to try push this thing higher and leave someone else holding the bag, what you wanna do?"
vercel costs 20 bucks. if every eng makes 100 websites using it, and theres 1% of the population = developer, then revenue would be 20 million a year, or a valuation of 100m tops. and thats if everyone buys..
Yes. At a minimum it’s very easy to imagine contracts on the order of 10k per month and 100k per month. If you read about enterprise sales those numbers are normal.
In my opinion their huge valuation is wack but the parent comment wasted their time doing math based on $20/month services - not even including all the add-ons they have in the “hobby”/small project tier.
