SaaS Multiples & Valuation Guide for Founders

If you run a SaaS company, your valuation boils down to a single number: your multiple. SaaS multiples translate recurring revenue into company value, and understanding them is the difference between leaving money on the table and knowing exactly what your business is worth.

Whether you are planning a raise, considering an exit, or simply making better capital allocation decisions, SaaS multiples give you the scoreboard. At Founderpath, we calculate valuations for bootstrapped SaaS companies every day and use them to determine non-dilutive funding eligibility, so we have a front-row seat to what drives these numbers.

What Are SaaS Multiples?

A SaaS multiple is a ratio that converts your company’s revenue or earnings into an enterprise value. Investors, acquirers, and lenders use multiples because subscription revenue is predictable. A dollar of recurring SaaS revenue is worth more than a dollar of one-time revenue, and the multiple captures that premium.

There are three types of SaaS multiples you will encounter:

• ARR multiple: Enterprise Value ÷ Annual Recurring Revenue. The most common for pure-subscription SaaS. If your ARR is $2M and your multiple is 5x, your company is worth roughly $10M.
• Revenue multiple: Enterprise Value ÷ Total Revenue. Includes non-recurring items like professional services and one-time fees. For a pure-subscription business, ARR and revenue multiples converge.
• EBITDA multiple: Enterprise Value ÷ EBITDA. More common for profitable, later-stage companies, especially in PE-led transactions. Typical SaaS EBITDA multiples range from 15x to 25x.

For most SaaS companies under $20M ARR, the ARR multiple is the standard. It strips out noise from non-recurring revenue and gives investors a clean read on the value of your subscription engine.

How SaaS Multiples Are Calculated

The basic formula is straightforward:

Company Valuation = ARR × Multiple

A $3M ARR company at a 5x multiple is worth $15M. At 8x, that same company is worth $24M. The variable that matters most is the multiple itself, and it is driven by the quality metrics behind your revenue.

The calculation shifts depending on company stage:

ARR Stage	Typical Valuation Method	Why
Under $500K	SDE (Seller Discretionary Earnings) × 2–4x	Revenue too small for ARR multiple; buyers value cash flow
$500K–$2M	Transition zone: 2.5–4x ARR	ARR multiples start to apply, but profit still matters
$2M–$5M	ARR multiple: 3–5x	Scale is proven; buyers use revenue-based valuation
$5M–$20M	ARR + Rule of 40: 5–8x	Growth-efficiency balance becomes the key driver
$20M+	ARR + growth + profitability: 7–12x	Public-market comparables start to apply

If your company earns significant revenue from professional services or one-time setup fees, buyers will value those streams separately, typically at 1–2x earnings rather than at SaaS multiples. This is why improving your recurring revenue mix directly increases your overall valuation.

Current SaaS Valuation Multiples

SaaS multiples have settled into a post-bubble equilibrium. After peaking at roughly 18–19x in late 2021, the median public SaaS multiple fell more than 60% over the following two years. Here is where things stand now.

Public SaaS Companies

The SaaS Capital Index of publicly traded SaaS companies shows a year-end 2024 median of 7.0x ARR. Jamin Ball’s Clouded Judgement newsletter, tracking 100+ public software companies, reported a median EV/NTM Revenue of 6.2x in December 2024. Both figures reflect the same trend: the median public SaaS company now trades at roughly 6–7x revenue.

That range is comparable to 2015–2016 levels. The 2021 frenzy is not coming back.

Private SaaS Companies

Private companies trade at a discount to public peers because of illiquidity, higher execution risk, and smaller scale. According to SaaS Capital’s 2025 report:

• VC-backed private SaaS: 5.3x ARR (24% discount to public)
• Bootstrapped private SaaS: 4.8x ARR (31% discount to public)

In M&A transactions, multiples are even lower. Aventis Advisors, analyzing 537 private SaaS transactions from 2015 to 2025, found a 2025 median of 3.8x revenue, recovering from a 2024 trough of 2.9x.

Multiples by Growth Rate

Growth rate is the single most powerful driver of your multiple. Jamin Ball’s December 2024 data breaks public SaaS companies into growth buckets:

Growth Tier	NTM Revenue Growth	Median EV/Revenue Multiple
High growth	>27%	10.0x
Mid growth	15–27%	10.8x
Low growth	<15%	4.5x

The gap is stark. Companies growing above 27% trade at more than double the multiple of slow growers. If you want a higher valuation, improving your SaaS growth rate is the most direct lever. For context on what growth benchmarks to aim for, see our breakdown of SaaS KPIs every company should track.

Recent Acquisitions: What Buyers Actually Paid

Theory is useful, but transaction data tells the real story. Here are notable public SaaS acquisitions from 2023–2025 with disclosed multiples (source: Blossom Street Ventures):

Company	Acquirer	Deal Value	LTM Revenue	Multiple
Splunk	Cisco	$28B	$3.73B	7.5x
HashiCorp	IBM	$6.4B	$583M	11.0x
Smartsheet	Blackstone / Vista	$8.4B	$1.0B	8.4x
Confluent	IBM	$11B	$1.065B	10.3x
SolarWinds	Turn/River Capital	$4.4B	$784M	5.6x
Informatica	Salesforce	$8.0B	$1.64B	4.9x

The median across tracked public SaaS acquisitions sits at roughly 8–9x LTM revenue (Blossom Street Ventures). Strategic acquirers like Cisco and IBM tend to pay premiums, while PE firms like Vista and Blackstone are more disciplined on price. For bootstrapped SaaS founders, the most active acquirers are PE firms that buy SaaS companies.

What Drives Your SaaS Multiple Higher (or Lower)

Your multiple is not random. It reflects the quality, durability, and growth trajectory of your revenue. Here are the five factors that matter most.

Growth Rate

Growth is the primary driver. Bessemer Venture Partners’ “Rule of X” research found that a 1% increase in growth rate has 2.3x the positive impact on valuation multiple compared to a 1% increase in free cash flow margin. In other words, markets reward growth more than profitability, dollar for dollar.

Even one strong quarter of accelerated growth before a valuation event can materially shift your multiple. This is where revenue-based financing becomes a strategic tool: deploying non-dilutive capital into paid acquisition or hiring to spike growth before a raise or exit.

Net Revenue Retention (NRR)

NRR measures how much revenue you keep and expand from existing customers each year. It is the single best proxy for product-market fit, and acquirers price it accordingly.

The data from Software Equity Group (120+ public SaaS companies, Q2 2024) and SaasRise (private M&A transactions) is dramatic:

NRR Level	Public SaaS Median Multiple	Private M&A Median Multiple
Below 90%	3.1x	1.2x
100–110%	—	6.0x
Above 120%	9.3x	11.7x

The gap between sub-90% and 120%+ NRR is a 3x difference in public markets and nearly 10x in M&A. Fixing your top churn driver before any valuation event should be priority one.

Gross Margin

Companies with gross margins above 80% consistently command higher multiples than those below the line. The 80% threshold functions as a quality signal for acquirers. Below it, buyers question whether the business is truly software or whether it is service-heavy.

The median gross margin across public SaaS companies is 76% (Clouded Judgement, December 2024). Bootstrapped companies often outperform here because they did not over-hire customer success teams or invest in expensive infrastructure before they needed it.

Rule of 40

The Rule of 40 says your growth rate plus your profit margin should equal or exceed 40%. It captures the balance between growth and efficiency. Companies scoring above 40 traded at a median of 10.7x EV/Revenue, according to Aventis Advisors’ 2025 analysis.

Only 17% of public SaaS companies currently hit the Rule of 40 threshold. Bootstrapped founders have a structural advantage here: profitability is often the default operating mode, so even moderate growth rates can push them past 40.

Customer Concentration

If a single customer accounts for more than 10% of your ARR, expect acquirers to apply a material discount to your valuation. Customer concentration is a risk multiplier: losing that one account disproportionately damages the business. Diversifying your customer base is not glamorous, but it directly protects your multiple.

The Bootstrapped Founder’s Multiple Advantage

At first glance, bootstrapped companies appear to get a worse deal. SaaS Capital’s data shows bootstrapped SaaS at 4.8x versus 5.3x for VC-backed. But the headline multiple tells a misleading story.

The number that actually matters is what the founder takes home. A bootstrapped founder typically owns 80–100% of their company. A VC-backed founder who has raised Series A and B often owns 25–40%. When you multiply through, the math flips completely:

Metric	Bootstrapped	VC-Backed
ARR	$3M	$3M
Valuation multiple	4.8x	5.3x
Company valuation	$14.4M	$15.9M
Founder ownership	90%	30%
Founder payout	$12.96M	$4.77M

The bootstrapped founder walks away with 2.7x more money despite a lower headline multiple. This is the ownership math that valuation discussions almost never include.

Bootstrapped companies also bring structural advantages to any transaction:

• Cleaner cap table: Fewer stakeholders means faster diligence and simpler negotiations. Acquirers pay a premium for deals that close quickly.
• Proven profitability: PE buyers specifically seek companies generating free cash flow. A profitable bootstrapped SaaS is exactly what firms like Vista Equity and Thoma Bravo look for.
• Higher gross margins: Without “growth at all costs” pressure, bootstrapped companies avoid over-investing in infrastructure and support before the revenue justifies it.
• Better retention: SaaS Capital reports bootstrapped SaaS companies have a median NRR of 104%, meaning existing customers organically grow the revenue base each year.

The 0.5x gap in headline multiples is the cost of illiquidity and smaller scale. The ownership, profitability, and operational discipline advantages more than compensate for it. If you want to grow without giving up equity, non-dilutive funding lets you invest in growth while keeping your cap table intact.

How to Increase Your SaaS Multiple

Valuations reflect trailing metrics. You can meaningfully move your number in 6–12 months. Here is the priority sequence, ordered by impact and speed.

Fix Churn First

Reducing monthly churn from 3% to 1.5% has a compounding effect: it improves NRR, extends LTV, and signals product stickiness to buyers. The impact typically shows in 3–6 months of cohort data. Start by identifying your top cancellation reason and building a fix for it.

Add Annual Contracts

Moving customers from monthly to annual billing reduces churn mechanically (they cannot cancel mid-contract), improves cash flow, and increases NRR. Offer a 10–20% annual discount. Most B2B customers prefer the predictability. This change can start impacting your metrics within one quarter.

Grow ARR with Non-Dilutive Capital

The highest-leverage play for a bootstrapped founder is deploying capital into proven acquisition channels without giving up equity. Every $100K invested in a channel producing 3:1 LTV-to-CAC generates $300K in lifetime value, which directly increases your ARR and, consequently, your valuation. Founderpath provides revenue-based financing specifically for this purpose: funding the growth that lifts your multiple without diluting the ownership that makes your multiple matter.

Reduce Founder Dependency

The more the business depends on you personally, the lower the multiple. Acquirers discount for key-person risk. Documenting processes, hiring a second-in-command, and ensuring no single person is a bottleneck can add 0.2–0.5x to your multiple and often makes the difference between a good offer and a great one.

Diversify Customer Acquisition Channels

If 80% of your new revenue comes from a single channel (say, Google Ads), acquirers see concentration risk. Adding a second or third channel, whether outbound sales, partnerships, or content marketing, shows that the growth engine is not fragile. This typically takes 6–12 months to demonstrate results but meaningfully reduces the risk discount on your multiple.

Frequently Asked Questions

What is a good SaaS revenue multiple?

For private SaaS companies, a “good” revenue multiple is 5x or higher. The median private SaaS company trades at roughly 4.8–5.3x ARR, so anything above 5x puts you ahead of the pack. To reach 8x or higher, you typically need >30% growth, NRR above 110%, and gross margins above 80%.

What is the average SaaS EBITDA multiple?

Across 227 private SaaS M&A transactions with disclosed EBITDA data (Aventis Advisors, 2015–2025), the median EBITDA multiple was 22.1x. The SaasRise M&A Report 2025 found a public SaaS median of 38.2x EBITDA versus 19.2x for private companies.

How are bootstrapped SaaS companies valued differently?

Bootstrapped companies receive about a 0.5x lower headline multiple than VC-backed peers (4.8x vs 5.3x, per SaaS Capital), primarily because of illiquidity and smaller average scale. However, bootstrapped founders typically own 80–100% of their company versus 25–40% for VC-backed founders, resulting in significantly higher personal proceeds at exit.

How does the Rule of 40 affect my SaaS valuation?

Companies scoring above 40 on the Rule of 40 (growth rate % + profit margin %) trade at a median of 10.7x revenue, according to Aventis Advisors. Only 17% of public SaaS companies currently hit this threshold. Bootstrapped companies have an inherent advantage because they are often profitable, meaning even moderate growth rates can push them past 40.

Do AI SaaS companies get higher multiples?

Yes, but selectively. AI-native platforms with proprietary models and strong retention are commanding premium multiples well above the median in recent transactions. However, “AI wrapper” companies (thin layers built on third-party APIs like OpenAI) are seeing multiples compress as differentiation erodes and retention struggles. The premium goes to companies with defensible AI, not those that just added a chatbot.

Can I use my SaaS valuation to get non-dilutive funding?

Yes. Your valuation, driven by your ARR and multiple, determines how much non-dilutive funding you can access. Platforms like Founderpath use your valuation to calculate funding eligibility without requiring equity. This creates a positive cycle: use non-dilutive capital to grow, which lifts your ARR, which increases your valuation, which unlocks more capital.

The Bottom Line

SaaS multiples have normalized after the 2021 peak, and that is actually good news for bootstrapped founders. In a market that rewards profitability and efficiency alongside growth, the bootstrapped operating model is no longer a disadvantage. Your 4.8x multiple at 90% ownership beats a 5.3x multiple at 30% ownership every time.

The levers are in your hands: reduce churn, push NRR above 100%, get your gross margins above 80%, and invest in growth through channels that do not require giving up equity. Know your number, improve your number, and make sure you own enough of the company for that number to matter.

Ready to see what your SaaS is worth? Sign up for Founderpath to get a free valuation and explore non-dilutive funding options.