Startups Priced Like Value Stocks

This matters because the best late stage startups stopped being priced mainly on distant upside and started being priced more like operating businesses. In 2021, scarce private shares often traded on future stories and option value. By 2023, names like Databricks, Stripe, and Flexport had kept growing revenue while secondary prices fell hard, which meant the gap between business performance and market price narrowed or even flipped into value territory.

• The market regime changed. Private secondaries historically traded at about a 20% discount to the last preferred round, then flipped to huge premiums in 2020 and 2021. Stripe secondary reached a 453% premium to its last preferred price in January 2022, a sign that buyers were paying for future optionality more than current fundamentals.
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• The businesses kept compounding after the bubble broke. Databricks grew to $1.4B ARR and was framed at roughly a $14B fundamental value on a 12x sales multiple, while trading around $21B. Stripe was estimated at $74B on fundamentals versus a $49B market value, and Flexport at $5.8B versus $5B market value.
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• That is why secondaries started to look more like public value investing. Sophisticated buyers use public comps, company forecasts, and recent operating results to model what a private company is worth, then buy when market price lags business progress. Issuers also watch these prices closely because they reveal how outside investors value the company between rounds.
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Going forward, more of the private market will be priced on revenue quality, growth durability, and comparable public multiples, not just scarcity. That favors the top private companies that can keep compounding fundamentals while staying private longer, and it makes secondary markets a more important venue for real price discovery before the next primary round or eventual listing.