Table of Contents
What multiples do SaaS companies trade at?
Premium SaaS businesses trade at premium multiples. In the data set, 68 companies trade at greater than 10x revenue, 54 trade at greater than 15x, and 41 trade at greater than 20x. Growth is strong. The median of 21\% is good given the size of these companies.
How do you value a private SaaS company?
4 Key Metrics to Calculate a Private SaaS Valuation
- Business Size (Annual Recurring Revenue)
- Momentum (Growth Rate)
- Quality of Products/Services (Net Revenue Retention)
- Profitability (Gross Margin)
What are SaaS valuation multiples?
SaaS valuation multiples range from four (for low revenue, young companies with high owner involvement, flat growth, and high churn) to 10 (for higher revenue, more established companies less reliant on owner involvement with growing revenues and low churn).
What is a good Arr multiple?
Revenue-based valuation (ARR Multiples) The first method of valuing a software business is through Annual Recurring Revenue (ARR). To achieve a valuation based on a revenue multiple, you need an ARR greater than $2 million and YOY growth rates over 50\%.
What is Arr multiples?
ARR Multiple, which divides a company’s worth by its annual recurring revenue, is mainly used to determine how a company’s ARR stacks against its valuation. Investors value companies based on multiple factors including revenue and growth.
How much is my SaaS worth?
To determine what your private SaaS company is worth: Find the current revenue multiple of public SaaS companies growing at a similar rate. Subtract 2 to get the discounted private SaaS company multiple. Multiply your company’s trailing twelve month revenue by the discounted private SaaS company multiple.
What is the current valuation multiple for private SaaS companies?
Applying the historical private company discount of 28\% to the current market, the estimated valuation multiple for private SaaS companies is currently 12.0x ARR. The chart above shows the long-term trend for public valuations and our estimation of private valuations.
How many SaaS companies sold or raised financing in December?
Five SaaS Capital portfolio companies sold or raised financing in the quarter, most of those happening in December. Public valuations continue to climb, but we haven’t yet seen private valuations pulled up to the same degree.
Why is the standard deviation of SaaS companies so high?
The large standard deviation is driven more by really high valuations on the high end than very low ones on the low end. True, not all companies are benefitting from the run-up in valuations, but the lowest valuation multiple out of all public SaaS companies is 3.4x run rate ARR. Ten years ago, that was the median valuation multiple!
What is SaaS Capital™?
SaaS Capital™ pioneered alternative lending to SaaS. Since 2007 we have spoken to thousands of companies, reviewed hundreds of financials, and funded 60+ companies. We can make quick decisions. The typical time from first “hello” to funding is just 5 weeks. Learn more about our philosophy. Who Is SaaS Capital?