Category: valuation
May 20, 2025 Silicon Valley Bank : State of Enterprise Software 2025
307 US VC-backed unicorns are enterprise software. This number accounts for 40% of all US VC-backed unicorns last year, up from 31% five years ago. A record 40% of capital raised from US VC funds closed in 2024 came from funds that target the AI vertical. US enterprise software startups are exiting at the seed stage nearly a quarter of the time, up 13 percentage points since 2019. (read more…)
April 24, 2025 The Value VC : The Least Obvious Winners Often Pay Off: Miami and the Marlins…
I tend to do deals across a spectrum of scores (on my scoresheet) - the most obviously good ones score higher than the more questionable (though still good) deals. While the highest scoring deals should theoretically have a higher probability of outsized returns, the opposite has been true. (read more…)
CATEGORY: resilience, valuation, VC
November 19, 2024 SaaStr : The Arguments For Not Raising at a Unicorn Valuation
There are significant downsides to raising at $1B. Especially today: #1. It’s Going to Be Very Hard to Make Those Unicorn Investors Money Today. #2. You’ll Start Attracting The Wrong People to Join You #3. Internal Inflation Will Accelerate. Everything Will Get More Expensive. (read more…)
CATEGORY: capital, resilience, risk, valuation
June 20, 2024 SaaS Capital : What’s Your SaaS Company Worth?
Valuation Multiple = -2.43 + (0.19 * SCI) + (6.21 * ARR Growth Rate) + (4.38 * NRR Rate) (read more…)
April 11, 2024 SaaS Capital : 2024 Private SaaS Company Valuations
As of March 31, 2024, the SCI median valuation multiple stands at 6.8 times current run-rate annualized revenue (we believe run-rate revenue is the most accurate measure of the current scale of the business). While the multiple has stabilized in the 6-7x range, it is down roughly 60% from its peak achieved in 2021. (read more…)
April 1, 2024 SaaStr : The Most Important SaaS Metric of All: Net New Customer Growth
The leaders in SaaS and Cloud keep new customer count up in the double-digits … even at billions in ARR. The averages: + 14% new customer count growth + 23% ARR growth even at + 1.25B ARR on average But that’s the average. You want to do better than that, given that the average public SaaS company only trades at 6x ARR. So aim for 20%+ new customer growth at scale ($100m+), and 50%+ as you approach $50m ARR. Below that is just too low. Your present may be secure, but your future is at high risk. And try to keep your customer count growing at least 50% as fast as your NRR, higher if you are SMB. That ensures you have a future, and you aren’t overly reliant on upsells from the base. (read more…)
March 29, 2024 SaaStr : Can You Still Get Acquired for a Decent Price if Growth Has Slowed or Even Stopped? Yeah, Sometimes
Is a SaaS startup at $10m ARR growing basically 0% objectively worth $80m today? No. It might be worth close to nothing based on a DCD analysis. No VC would touch this startup for a Series B round. No VCs at all. Even a PE firm wouldn’t buy it with no growth at all, I don’t think. But even if you’re out of ideas for now, don’t give up all hope of a potentially decent M&A offer, especially if you are cash-flow neutral and haven’t raised too much (that’s important). If you’re in an important space, someone may still want you. Just keep doing what matters, and what keeps your customers happy. (read more…)
CATEGORY: leadership, resilience, valuation
December 1, 2023 Meritech Capital : Public SaaS Comparables Table
- 93% of companies have YoY Implied ARR growth <40%
- 74% of companies have FCF margin <20%
- 26% of companies are achieving Rule of 40
- 39% of companies have returned <1x since IPO
CATEGORY: profitability, SaaS, valuation
August 29, 2023 Iconiq Capital : The New Era of Efficient Growth
2023 has seen continued deterioration in top-line performance as the macro environment continues to be challenging for SaaS businesses. While topline growth has fallen across the board, early-stage companies saw the biggest impact to ARR growth, falling from peak levels of 200%+ YoY growth to 111% YoY as of 1H 2023. Median net dollar retention has also been impacted, falling from peak levels of 130+% in 2017 to ~105% as of 1H 2023. As of June 2023, forward revenue growth is the primary driver of valuation in the public markets. Coefficients measure the slope of the linear relationship between different variables. From December 2021 to June 2022, the relative importance of profitability increased significantly. FCF margin had a larger impact on public multiples than revenue growth in June 2022, as shown by the greater coefficient in the table above. However, the balance has shifted back towards growth as the primary driver of valuation. As of June 2023 revenue growth once again had a larger impact on public multiples than FCF margin. (read more…)
CATEGORY: growth, profitability, SaaS, valuation
July 26, 2023 SaaStr : What’s the Average Deal Size for SaaS Companies?
- Public SaaS companies that focus on SMBs have an ACV of about $4,800
- Public SaaS companies that focus on mid-market have an ACV of about $40k
- Public SaaS companies that focus on enterprise have an ACV of about $220k