Why the yield curve cratered your valuation, not your tech
Copyright pitchhawk 2025.
📉 If your valuation dropped 60–70% since 2021, you’re not alone
And no—it wasn’t just you. It wasn’t even about your product or tech-enabled service. It was about capital, and its cost.
Rivers of money and zero interest rate policy (ZIRP) inflated valuations after Covid.
By 2021, SaaS companies were trading at forward revenue multiples of 15x.
By early 2023, that had fallen below 5x. That’s a 70%+ valuation collapse in just 18 months.
But the shift didn’t come from declining performance—it came from something much bigger: the 10-Year US Treasury Yield.
🧮 The most important virtual machine most innovators miss
The U.S. 10-year treasury yield is the benchmark for the risk-free rate—the bedrock of the capital asset pricing model (CAPM), and how investors calculate value.
When yields (cost of money) are low, the future looks brighter because:
A dollar of revenue 10 years from now is worth more today.
High-growth, long-duration companies look like smart bets.
But when yields rise—as they did from mid-2022 onward—the cost of capital embedded in the discount rate rises too. And that crushes the present value of future cash flows. Especially if your business isn’t profitable yet.
This is why valuations collapsed, even when tech was still working.
📉 SaaS as a proxy, the chart says it all
pitchhawk analysts charted the Bessemer Cloud Index (forward revenue multiples) against the 10-year yield.
Copyright, pitchhawk, 2025. All tights reserved.
The inverse relationship is clear:
In 2020, yields dropped to 0.55% → capital flooded into growth tech.
In 2023, yields rose to 4.9% → valuations fell sharply.
What’s more, yields tend to lead valuations by 6–9 months.
So, if the Fed cuts in late 2025, we could see meaningful valuation uplift by mid–2026.
You weren’t overvalued because you were misunderstood. You were overvalued because bonds were yielding 0.55%.
🔎 So What Should Founders Do?
You can’t control the macro—but you can control how you respond.
Founders today need to:
✅ Understand capital behaviour
✅ Build margin and execution discipline
✅ Frame valuation through today’s lens, not yesterday’s euphoria
✅ Raise strategically—not reactively—get ready and stay ready
🦅 Where pitchhawk comes in
At pitchhawk, we help founders fortify their innovations into investor-ready businesses.
Our Pre-Flight sessions diagnose and highlight blind spots in your business, commercial model, structure, strategy, and investment thesis—so when the time is right, your investment ask doesn’t just land. It flies.
Because in markets like this, understanding the macro and what professional investors want is critical—while business strength, clarity, and speed are your strongest currencies.
💥 Final Word
If yields lead valuations by 6–9 months—smart founders and innovators are preparing now for 2026.
Good luck out there!
Hawk1
