We are excited to announce the launch of the CEE SaaS Index, a simple valuation tool for startup founders and investors in the Central and Eastern European region. Developed in collaboration with Warsaw Equity Group and Vestbee, the index aims to provide a more relevant benchmark for the rapidly growing CEE tech ecosystem.
Currently, most available indexes are based on US-listed SaaS companies, which don't accurately reflect the unique challenges and opportunities faced by CEE startups. The CEE SaaS Index fills this gap by valuing publicly traded SaaS companies in the CEE region based on revenue multiples.
“We are thrilled to announce our partnership with Warsaw Equity Group to create and develop the highly anticipated CEE SaaS Index, a benchmarking tool for startup founders and investors in CEE. Currently, the available indexes are mainly based on US-listed SaaS companies, leaving a significant gap in relevant benchmarks for the CEE region. As per our recent report, the CEE region has a thriving ecosystem and record-breaking VC investments, which exceeded EUR 5.9B in 2022. Therefore, it is crucial to have a more appropriate valuation tool for regional startups and investors, given the projected growth and increased investments in CEE tech companies. Our shared vision and previous successful collaboration with WEG underline our unwavering commitment to support the startup and VC ecosystem in the CEE region. “– comments Ewa Chronowska, CEO of Vestbee and General Partner of Next Road Ventures, an early-stage VC fund.
“The CEE region has seen unpreceded growth in the last 5 years, increasing its size 10x since 2017 to reach 5,9B eur in 2022. However, the ecosystem still had to rely on the US benchmarks due to lack of any other alternatives. This is why Warsaw Equity Group, in partnership with Vestbee, decided to create CEE SaaS Index to provide a more relevant tool for startups as well local and international investors, which will be regularly updated. We decided to partner with Vestbee for this project since it’s not only the largest platform in the CEE region bringing together startups, VC funds, accelerators, business angels and corporations, but also because of great cooperation to date” – adds Pawel Maj, Partner at Warsaw Equity Group.
The CEE SaaS Index's recent update shows a slight decrease in the median CEE revenue multiple at the end of March 2023, but it remains above pre-pandemic levels. This is in contrast to the sharp decline in the median revenue multiple for listed SaaS companies in the US, which has fallen by 66% since the record high in Q2 2021.
The median CEE revenue multiple slightly decreased at the end of March 2023 to 4.79x ARR, down 13% from the record high of 5.51x in December 2021. August 2022 marked the lowest CEE revenue multiple (3,63x) since the start of the pandemic.
For comparison, the median US revenue multiple at the end of March 2023 slightly increased to 6,86x ARR (from 6,27x ARR at the end of February 2023), but is still 63% lower from its record high of 18,34x at the end of December 2021.
However, the gap in valuation differences between ARR multiples in the US and the CEE has been decreasing in the long term. At the beginning of 2020, the median ARR multiple in the US was 3.5x times larger than in the CEE (10.32x vs 2.89x), but it has since reduced to only a 43% difference.
Although we see a slight recovery of the multiples, we are still not out of the woods as the global macroeconomic situation is far from predictable and further slowdown of major global economies is not out of the question.
Stay tuned for the CEE SaaS Index updates from WEG and Vestbee teams!
