Kaytes: Surfacing Market Compression in a B2B SaaS Fund

Akhil took on the valuation mandate for a B2B enterprise SaaS fund at a moment when the sector was under significant pressure. The fund had concentrated its portfolio in enterprise software companies, and the rapid rise of AI tools had begun to compress SaaS multiples globally. Listed SaaS benchmarks, including the BVP Nasdaq Emerging Cloud Index, showed companies like Palantir and Cloudflare absorbing the impact. Unlisted valuations were following the same pattern.

Before sitting with the fund's investment team, Akhil read sector reports, tracked listed comparable movements, and built a view on how the AI shift was affecting enterprise software valuations. SaaS multiples had compressed from seven to eight times revenue to four to five times, a shift that was hitting unlisted companies as hard as listed ones.

When he met with the investment managers, he presented this market context directly. The fund's portfolio companies had grown, some by 120-200% year-on-year from early-stage bases, but the multiple compression meant their fair values had moved in the opposite direction from what the team had expected. The fund had invested at multiples of ten to twelve times revenue; the market was now pricing comparable companies at four to five times.

The conversation shaped how the fund thought about its next fundraise. The team had been planning to raise a new fund on the back of their portfolio performance, but the compressed multiples required them to rethink and adjust their investment thesis before approaching LPs. Akhil's analysis gave them the market evidence to understand why the gap existed and what they needed to communicate to investors.