Start up Valuation
What kind of valuation multiples can be looked at for valuing a up & coming tech start up? Can we use Revenue based multiples instead of Net Revenue based multiples? WHat would be the cons of this?
What kind of valuation multiples can be looked at for valuing a up & coming tech start up? Can we use Revenue based multiples instead of Net Revenue based multiples? WHat would be the cons of this?
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Generally you use revenue/ARR multiples. Right now, sought after but not one-of-a-kind companies are getting 8-10x, maybe 9-10x 2023 revenue. Obviously that number compresses as you get crummier companies or expands if you get companies with wild growth and somehow yet-to-be-tapped insanely large TAMs.
Typically use an ARR multiple, for specific transaction-based businesses you can also use Gross profit multiples.
Thank you guys :)
SaaS ARR valuation multiples in recent bull mkt were commonly 20-30x
Most SaaS companies sub $10M are valued at 4-6x ARR (for a typical GE shop). ARR growth, gross churn, and vertical move the valuation dial.
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