Some Free Resources for SaaS Valuation Algebra
First, a warning. Valuation is in the eyes of the payer.
But at some point, all entrepreneurs need to tell investors, their board, or maybe their recruits that will be getting equity what the valuation of the company is going to be. The correct answer is, “I have no idea” but you will need to put something on your pitch deck, your prospectus, and your financials (don’t forget to do a Reverse Income Statement).
A few resources that I have found valuable:
- The BVP Cloud Computing Index [ https://www.bvp.com/strategy/cloud-computing/index ] This is the prospectus page for an index fund that is a great collection of SaaS company stocks and their basic financials – great data for your business plan. The listing is also sortable (though is handles the text fields incorrectly – poor form, my friends – but you can also download the XLS. The range in multiples should give you both pause and hope.
- Determining the worth of your SaaS company by Todd Gardner for TechCrunch [ https://techcrunch.com/2016/10/07/determining-the-worth-of-your-saas-company/ ] This includes the great visual below to help all your stakeholders understand the factors that contribute to valuation.