SaaS Capital Blog

SaaS Capital Index Q2 2020 Private SaaS Multiple


Private SaaS Company Valuations: Q2 2020 Update

Public SaaS company data is the best starting point when valuing a private SaaS business so we created the SaaS Capital Index (SCI) to be an up-to-date valuation tool for pure-play, B2B, SaaS businesses. As of June 30, the median SaaS valuation multiple for public companies stands at 11.4x ARR. Applying the historical private company discount of 28%, the median valuation multiple for private SaaS companies is currently 8.2x ARR.

New Retention Data and the Impact on Valuation

Because of its compounding effect on growth, revenue retention is now well established as the most important metric for ensuring medium- to long-term business health. Earlier this month, we published our 2020 B2B SaaS Retention Benchmarks, which explored retention benchmarks across of range of breakdowns, including annual contract value (ACV), growth, channel sales, venture-backed companies compared to bootstrapped companies, and other breakdowns.

Venture Debt Financing Options for SaaS Companies

There are more options than ever for SaaS businesses to borrow money today. Whether or not your company is profitable or formally venture-backed, and what your specific goals are with the debt will determine which lender and structure is best for your company.

COVID-19: SaaS Companies and the Customer Experience

For most of us, the past few months have been a difficult and challenging period.  Our normal daily lives have been upended from stay at home orders, the indefinite closing of schools, and parents required to fill the gap with online education platforms.  That is before considering the financial impact and emotional stress that the pandemic has caused.

Private SaaS Company Valuations: Q1 2020 Update

We created the SaaS Capital Index (SCI) as a resource for the owners and operators of software-as-a-service (SaaS) businesses to use as part of a valuation framework for private SaaS companies. With the recent market swings at the end of Q1, it is an opportune time to check in on the SCI.

Cash Flow Dynamics in a Shrinking SaaS Business

If a SaaS business is charging its customers annually in advance, and that business starts to shrink, teams and investors must be acutely aware that its cash flow will go down much quicker than the P&L will indicate.

When is a Good Time to Sell a SaaS Company?

A feature of a sustainable recurring revenue business model is that, unlike other business models, you can pretty much know your company’s valuation at any time, and depending on how confident you are in your forecasts, project it out into the future as well.

SaaS Industry 2019 Observations and Thoughts for 2020

Below are some thoughts on the SaaS industry this past year, our perspective on the market going forward, and a short recap of our previous year and decade.

Retention Benchmarks and Analysis for Channel Sales in SaaS

For the last two years, we have devoted several questions in our annual SaaS metrics survey to the area of channel sales. In our recently released research brief on revenue retention, we analyzed the channel sales data in relation to churn.

Capitalizing Software Development Costs in a SaaS Business

GAAP is the standard, and if your numbers are not based on GAAP, then they do not actually conform to a standard at all. That said, when it comes to the capitalization of software development costs, GAAP has it dead wrong.