Multiplies your ARR by a SaaS revenue multiple keyed to your growth rate and gross margin, returning a valuation range (low / mid / high) anchored in public comps. Use it before fundraise conversations, or when weighing an acquisition offer against staying independent. Don't run it pre-revenue — multiples don't apply yet, and team + traction signals carry that math instead.
Your numbers
Sum of all active annual subscriptions. MRR × 12 for monthly plans.
(ARR today / ARR 12 months ago) − 100. Sustained growth, not month-1 spike.
Revenue minus COGS, divided by revenue. SaaS averages 70-85%.
The verdict
14.4× ARR
Series A / B territory. The math holds — the negotiation is about growth durability and unit economics now.
How this is calculated
Mid valuation = ARR × base_multiple × (1 + margin_adjustment).
Base multiple by growth: <0%: 2×; 0-30%: 4×; 30-70%: 7×; 70-150%: 12×; >150%: 20×.
Margin adjustment: <50%: −30%; 50-70%: 0%; 70-85%: +20%; >85%: +40%.
Range: low = mid × 0.65, high = mid × 1.4.
Calibration source: long-run averages from Bessemer's State of the Cloud + the BVP Nasdaq Emerging Cloud Index, blended 2017-2024 to neutralize the 2021 peak. Specific multiples will differ in any given quarter — re-check against current public comps before fundraising.
What this doesn't tell you
- What investors will actually pay. Comps are the floor of the conversation, not the answer. Narrative, founder pedigree, market timing, and round size shift the multiple by 2-3× routinely.
- Whether your ARR is durable. A $2M ARR with 90% net revenue retention is worth far more than $2M ARR with 70% NRR. The calc treats ARR as fungible; investors don't.
- What private-company illiquidity costs you. Public SaaS comps are liquid. Private comps trade at 20-40% discount for the same metrics. Adjust the mid down if you're using this for a private exit price.
Use this with
7 Powers
The 7 Powers framework names every defensible advantage a business can have. If you can't pick one for your startup, you're betting on a fair fight.
Market Research
Most founder market research is a TAM slide that nobody believes. The numbers that actually matter are smaller, harder to defend, and tell you whether the market exists for the ten-customer version of your business.
What is product-market fit?
The state where a product satisfies a strong market demand from a specific buyer segment such that customer pull on the product exceeds the founder's effort to push it. Coined by Marc Andreessen in 2007 ('the only thing that matters'). Operational measure: 40%+ of active users would be 'very disappointed' if they could no longer use it (Sean Ellis test, popularized by Rahul Vohra at Superhuman in 2018). Below 40%, you don't have PMF yet, regardless of revenue or press.
Frequently asked questions
Why ARR-multiples and not DCF?
How does growth rate change the multiple?
Why does gross margin matter?
Should I use this for fundraising?
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