It should come to no surprise that SaaS Valuations are all about the Growth.  How fast are you growing the top line revenue is all that matters.  

SaaS valuations have been very healthy and the trend looks to stay the same.  The only two metrics that matter to the financiers seem to be Forward Revenue and Trailing Revenue.   If you are bold and your trailing revenue supports a predictable high revenue growth, you can secure a huge multiple on your forward plans.  Something between 12-20X.  If not, you will have to settle for a 5X on forward revenue.  And you can easily see in this chart.

 Wait, so if you are a low growth SaaS company, you can still land a 5X valuation on forward revenue.  I think that rocks. 

The question the entrepreneur needs to ask is what kind of company are they and what do they want to be.  But it is pretty clear to me that most entrepreneurs and financiers want to be in SaaS companies because of charts like this.  

 

 

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