In this Chart of the Week, we revamp a popular chart comparing the valuation-to-revenue multiples of industries in both the private and public markets for 2024. While some of the industries are not exact matches, the comparisons still provide a nice visualization of just how much higher private market valuations tend to be in similar industries.
Note: For public companies, we used enterprise value and sales multiples. For private companies, we only included companies with revenue above $50,000.
Again, as expected, the valuation-to-revenue multiples for public companies tend to be much lower than the revenue multiples of companies raising in the Regulation Crowdfunding and Regulation A markets. Startups are usually expected to see hypergrowth within three to five years of their investment opportunities going live. Therefore, investors are willing to pay a much higher premium on this future growth, leading to higher overall revenue multiples. Public companies, on the other hand, tend to be far more mature and developed with very stable future cash flows. Therefore, given the lack of hypergrowth, investors pay a far lower premium to invest in these types of public companies.
Energy, Power, and Natural Resources once again had one of the highest valuation-to-revenue industries in equity crowdfunding, reaching nearly 100X in 2024. Energy startups in the equity crowdfunding space are generally renewables focused companies looking to disrupt the status quo and contribute to the phasing out of fossil fuels. However, many of them only have pilot revenues and have not successfully commercialized yet, instead baking in future growth to its high valuations. Public companies in the renewable space, on the other hand, are generally fully commercialized and scaled up, leading to much lower valuation-to-revenue multiples.
There is so much to unpack here, so stay tuned to the investment roundtable to hear more discussion on revenue multiples in equity crowdfunding!