What's Your SaaS Company Worth?
Updated in Q2 2022, this white paper is written for entrepreneurs, angel investors, and the management teams of SaaS businesses. The intent of the paper is to describe the approach used by most professional investors and strategic buyers to value a SaaS company.
Private B2B SaaS companies are typically valued using a multiple of annualized recurring revenue (ARR) but determining the correct multiple to apply is difficult. We provide a data-driven, statistically backed methodology for determining a baseline valuation multiple from a company’s ARR growth rate and net revenue retention, and the current level of the SaaS Capital IndexTM, which is published as a free service by SaaS Capital®. A full formula, as well as an Excel spreadsheet and summary table, are provided for your convenience.
Valuing companies will always be more art than science, but we’re confident that this Q2 2022 update of “What’s Your SaaS Company Worth” will provide founders and shareholders of private growth-stage B2B SaaS businesses a data-driven foundation to any valuation estimate.
The framework described in this paper is designed to work with the current private company multiples found in the SaaS Capital Index, which is updated monthly.
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SaaS Capital® is the leading provider of long-term Credit Facilities to SaaS companies.Read More