Private SaaS valuations are hard to find. We analyzed private SaaS companies so you could what types of valuations you should expect by taxonomy, revenue levels, and funding round stages.
Some of these SaaS founders trade at higher multiples than others. The median? 11.7x. The multiples and valuations are highly correlated to company growth. The founders who received the highest revenue multiples and raise at such high valuations were growing the fastest in the shortest amount of time. If escape velocity growth isn’t in your playbook, maximize your ARPU through upsells and expansion revenue to drive ARR multiple expansion. It is interesting to look at the valuations assigned to SaaS companies throughout the different stages of their company. Typically, as ARR increases, we should typically see higher multiple due to the decrease in risk which usually causes a discount to the valuations in the earlier rounds.
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83 of the fastest growing companies that also have the most revenue have a clear expansion revenue strategy. On average, sales reps are selling plans where starting contract value is $4,606.
Those same companies employ 1,678 sales reps that carry a quota. The most common compensation plan used by these companies is a 1:5 ratio of sales rep on target earnings (OTE) to quota. Meaning if a rep can earn $200k in base and commissions, quota target for that year is set at 5x, or $1m in new ARR closed.
If you’re going to build a high growth SaaS company, you need to figure out how to scale with quota carrying sales reps.
We can measure this a variety of ways. Which company has the most revenue per employee? What about dollars in revenue compared to dollars raised? What about time, which founder went from $0 to $10m the fastest?
Looking deeper at dollars in revenue compared to dollars raised, bootstrappers take the cake because they self fund (denominator zero). When we look at companies that have raised at least $1m, Actito is the clear winner generating $21m in revenue, growing 100% yoy, on just 1m raised ($.05 dollars raised for every $1 of revenue).
Omnisend comes in a close second with $.08 dollars raised for every dollar of revenue. Doing $19m as of December 2020. Proposify gets honorable mention with $0.46 dollars raised (3.25m) for every dollar of revenue ($7m).
The worst performers here are companies like YayPay with $3.68 dollars raised ($14m) per dollar of revenue ($3.8m). Many of the worst performers just did a round of funding and haven’t had a chance to deploy to drive growth yet. That makes this data less valuable but still illustrative.