Revenue Multiple

A valuation method that values a company as a multiple of its annual revenue or ARR. Common in SaaS and high growth businesses where profit does not yet exist.

Revenue multiples vary dramatically by growth rate, margin, and market conditions. A SaaS company growing at 100% per year might command 10x ARR. One growing at 20% might be worth 3x ARR. Knowing the multiples in your category shapes your fundraising expectations.

Your SaaS has £500,000 ARR and grows 80% year over year. At a 7x revenue multiple, you would be valued at £3.5M. Increasing ARR to £750,000 at the same multiple values the company at £5.25M without changing your multiple.