SaaS star Postman sees 30-40% cut in valuation in secondary deal

Postman, the most valued Indian-origin SaaS startup at $5.6 billion, has struck secondary deals at a 30-40% discount recently, said people aware of the matter.

While secondary transactions are typically finalised at 10-15% discount to the last primary valuation, Postman’s latest deals are at a steep discount to its valuation which more than doubled during the peak funding cycle of 2021, underscoring the steep decline in value for SaaS firms on revenue multiples. Angel and early investors have partially sold their stakes in the Bengaluru- and San Francisco-based firm in the latest rounds, people said.

ET had reported that SaaS unicorns that are raising funds, including secondaries, are seeing sharp correction in valuations, with some blended deals settled at lower valuations than previous rounds.


“Pretty much all the SaaS firms were overvalued during the peak funding cycle. Postman has been the most valued post its $225 million funding, and now based on revenue projections, the valuations are getting readjusted. There have been smaller batches of secondaries and more may happen as well at this range of discount,” a person aware of the matter said.

Postman didn’t respond to an email query.

Some of the startup’s existing investors have bought the shares on offer, people said without elaborating. Nexus Venture Partners, Bond Capital, and Battery Ventures are among its existing investors.

Across company stages, SaaS investments slowed last year, as per data from Venture Intelligence. Late-stage SaaS firms raised $1.53 billion from private equity and venture capital funds in 2022, which fell by more than a third to $421 million in 2023. For mid-stage SaaS firms, investments more than halved to $920 million in 2023 from $2.1 billion in 2022.

Started 10 years ago in Bengaluru, Postman is an application programming interface (API) management platform for enterprises. The tool allows interaction between apps and functionalities within apps.

ET first reported in May about healthcare-focused SaaS firm Innovaccer being in talks with US-based Kaiser Permanente for a $250 million deal, which will have a blended valuation of around $2.5 billion from its last valuation of $3.2 billion.

In a secondary transaction, existing investors sell shares to new investors and the money doesn’t go to company coffers.

Revenue multiples

People aware of Postman’s financials said it is estimated to be clocking annualised recurring revenue (ARR) of $120-150 million. “Some of the monetisation of users–which they thought will kick in –has taken longer than expected. That has impacted the overall ARR growth rate,” a person said. Another SaaS investor echoed the same on Postman’s ARR growth.

Icertis, which is in talks for a new funding round, is at an ARR of around $270 million and was last valued at around $5 billion, while Innovaccer is at an ARR of $130 million, ET had reported in May. Whatfix, which is raising new cash from Warburg Pincus, is at an ARR of around $70-75 million.

In July, ET reported that Goldman Sachs was in advanced stages of talks to double down on MoEngage with a $35-50-million investment through a secondary transaction.

According to a July report by investment banking firm DC Advisory, revenue multiples for listed software companies having over $1 billion enterprise value are currently stabilised at six times – trading two turns lower than pre-pandemic levels.

“Growth has come under pressure for the past three years and the revenue multiple premium that high growth companies enjoy has reduced substantially since the pandemic,” the report noted.

“India enterprise tech continues to trade at a three-turn revenue multiple premium over US SaaS multiples; however private capital providers frequently show reluctance to match this premium,” DC Advisory said.

According to Bessemer Venture Partners’ Nasdaq emerging cloud index, SaaS company valuations are trending at 6.7 times revenue on an average.