SaaS Series B Funding Valuation

Goals

To understand SaaS revenue multiples valuation benchmark for Series B funding round in order to facilitate proper company valuation.

Early Findings

  • Our preliminary research suggests that data on valuation of SaaS companies specific to just series B funding round is limited, however, we found revenue multiples for SaaS in general.
  • At the end of 2017, valuation of private SaaS companies in terms of revenue multiples was an average of about 15.9x of AAR.
  • In 2018, "public cloud companies (SaaS unicorns, often) are trading for a 10x trailing enterprise value-revenue multiple." However, the value is only "8.2 times when present-day enterprise values are compared to 2019 revenue."
  • Our preliminary research also showed that valuation can vary widely: for instance while some public SaaS companies are valued as high as 20.8 times their ARR, some are valued at only 3.4 times their ARR.
  • Data on private SaaS company valuation is generally more easily available because private companies generally do not publicly post their annual recurring revenue before funding rounds.
  • Private SaaS companies are generally valued higher than public SaaS companies based on ARR multiples valuation. For instance at the end of 2017, while public cloud companies were valued at 6.0 times their ARR, private cloud companies were valued at 15.9 times their ARR.

Proposed next steps:

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