Valuation
What is Valuation?
Valuation is the estimated enterprise or equity value of a SaaS company, often informed by revenue multiples, growth, efficiency, and market conditions.
Valuation Formula
Valuation = ARR × Revenue Multiple | Variable | Meaning |
|---|---|
ARR | Annual recurring revenue. |
Revenue Multiple | Market revenue multiple for comparable SaaS companies. |
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How to Calculate Valuation
Worked example
- ARR
- $2,000,000
- Revenue Multiple
- 8
- → Valuation
- $16,000,000
Valuation Calculator
Valuation = ARR × Revenue Multiple | Variable | Meaning |
|---|---|
ARR | Annual recurring revenue. |
Revenue Multiple | Market revenue multiple for comparable SaaS companies. |
Worked example
- ARR
- $2,000,000
- Revenue Multiple
- 8
- → Valuation
- $16,000,000
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Valuation vs Related Metrics
- Valuation vs Revenue-Based Financing — how the two differ and when each matters.
- Valuation vs Venture Capital — how the two differ and when each matters.
- Valuation vs LTV to CAC Ratio — how the two differ and when each matters.
- Valuation vs Conversion Rate Optimization — how the two differ and when each matters.