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November 27, 2022 | Tom Ballard

David Cummings suggests swallowing hard and resetting the unrealistic valuation

David Cummings, Founder of the Atlanta Tech Village and also Founder and Chief Executive Officer of Atlanta Ventures, writes about unrealistic valuations in his latest column.

Noting that one of the big challenges he’s been discussing with entrepreneurs is the massive reset in valuations, Cummings declares, “The huge ARR (annual rate of return) multiples are gone for all but the most exceptional of business models. If the last funding round valued the business at X, and the public markets value businesses with similar metrics at 1/2 to 1/4th the value, the reality is that the business is considerably less valuable now. Human nature is to ignore the data and try hard to grow into the valuation so that the next round is at least flat, if possible. The better solution is to make the hard call and reset the valuation and mental anchoring internally.”

Click here to read his thoughts.