Shifting VC, Wall Street Priorities Impact MSP Software Staffing

Shifting venture capital priorities — which now emphasize a path to profitability rather than record revenue growth rates — have begun to impact staffing at MSP software companies.

A case in point: Liongard, a software startup that has considerable traction with MSP partners, cut some staff members today, CEO Joe Alapat confirmed on LinkedIn.

The cuts come a few days after multiple MSP software industry companies told ChannelE2E that they were concerned about downward valuation pressures — and the potential impact on employees who have been working long hours to chase the “exit” dream (either through IPOs or M&A deals).

For those who haven’t been watching Wall Street, fast-growing (but money-losing) SaaS companies have seen their valuations cut dramatically in recent months. ChannelE2E warned that the shift may begin to impact MSP service provider valuations. Among the areas of potential concern: As interest rates rise, it will cost private equity firms more to borrow money to fund MSP acquisitions.

Fast forward to present day, and venture-backed MSP software companies are beginning to witness the valuation pressures.

In the case of Liongard, the company is well-funded and growing. But read between the lines, and the company needed to adjust its overall financial model to more closely align with the VC market’s “path to profitability” priorities.

According to Liongard CEO Joe Alapat’s statement on LinkedIn:

“As we have all seen in the press and social media, the market for technology companies has been difficult to navigate in recent months. We listened and learned from the market and investors and are evolving our plan. While Liongard‘s market, product, and growth remain strong, we are prioritizing a path to profitability.

To implement this new plan, we must make organizational changes that require us to part ways with a portion of our teammates who have been with us on our journey. This has been the most difficult decision I’ve had to make at Liongard and I know it will be challenging for our teammates.”

Alapat, loyal to the MSP community, called on peers to help impacted employees to find new jobs through referrals, advice and network connections. “I cannot thank them enough for their contributions to Liongard,” Alapat noted. “Each of them would be an asset to any organization.”

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