100x AI multiples

Have we returned to the era of 100x multiples? Will this next generation of AI founders be able to overcome the challenges that come with inflated valuations? 3 examples of companies raising at 100x multiples are Perplexity, Poolside and Hugging Face. AI search engine Perplexity recently raised at a valuation of $3 billion. The aspiring Google-killer is currently generating just over $20 million in ARR. Poolside is an AI coding company which raised money at a $2 billion valuation, whilst not currently generating any revenue. Hugging Face raised $200 million at a $4 billion valuation. Companies that previously achieved valuations that were 100x their revenues include note-taking app Notion, video tool Loom and more. In 2020 Loom was valued at £325 million whilst having less than $10 million in annualized revenue. In 2021 Loom further quadrupled its valuation in another round thanks to the remote work trend. Eventually, in the reset of 2023, it sold for $975 million at 35% decrease from the peak valuation. The current valuations for AI startups is reminiscent of the valuations for productivity apps that was caused by WFH and competition amongst venture investors. These high valuations make for great headlines and protect founder equity however they make an exit much more difficult to achieve.