What is a good revenue multiple for a SaaS startup?

For a seed or Series A company, a 5-10x ARR multiple is a common starting point. Elite startups with world-class growth, retention, and margins might achieve 15-25x or higher, though this is rare in a disciplined market.

Do investors use TTM revenue or ARR for valuation?

For early-stage SaaS companies with recurring revenue, investors almost always use Annual Recurring Revenue (ARR) run-rate. Trailing Twelve Month (TTM) revenue is more common for non-recurring business models or more mature companies.

How can I find comparable company multiples?

For public comps, look up the `EV/Revenue` or `P/S` ratio on sites like Yahoo Finance. For private comps, data is harder to find but exists in paid databases like PitchBook and Carta, which your investors will be using to benchmark your deal.

Does profitability matter if I'm being valued on a revenue multiple?

Yes, indirectly. Your gross margin is a key indicator of future profitability and directly impacts your multiple. High cash burn (your 'burn multiple') will cause investors to apply a more cautious, lower multiple to your revenue.

How to Value Your Startup Using a Revenue Multiple

Got revenue but no profit? A revenue multiple is how investors will value your startup. This guide breaks down the math, benchmarks, and strategy to justify the best valuation.

TL;DR: Startups are often valued using a revenue multiple (Valuation / Revenue). For SaaS companies, investors typically use a multiple of Annual Recurring Revenue (ARR), which can range from 5x to 25x+ depending on your growth, margins, and retention. To get a top-tier valuation, you must demonstrate elite metrics and a compelling growth story that convinces investors you can dominate a large market.

Key takeaways

Calculate your valuation using a multiple of revenue, not profit, in the early stages.
For SaaS, use Annual Recurring Revenue (ARR) run-rate, not trailing revenue (TTM).
Benchmark your metrics: 5-10x ARR is a common multiple; 15-25x requires elite performance.
Justify a higher multiple with fast growth (>20% MoM), high gross margins (>80%), and strong net retention (>120%).
Avoid common mistakes like applying high SaaS multiples to non-recurring services revenue.
Understand that market conditions dramatically impact what investors will pay.

Learn how investors use revenue multiples (ARR and TTM) to value startups. See typical SaaS multiples and learn how to justify a higher valuation.

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