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30x revenue multiples are actually not too uncommon, especially for a SaaS firm that appeals to both small & enterprise customers, is already profitable, and ha
by ineedasername 6y ago
30x revenue multiples are actually not too uncommon, especially for a SaaS firm that appeals to both small & enterprise customers, is already profitable, and has a large addressable market.
Here's an article that has a frequency chart based on valuation multiples. Keep in mind that, while it's front-loaded with lower multiples, not all business models have the same potential for revenue growth: https://onstartupexits.com/how-to-value-the-exit-price-for-an-early-stage-startup/ https://onstartupexits.com/how-to-value-the-exit-price-for-a...
- valuearb 6y ago30x revenues is a marker for an excellent short position. Revenue growth always slows and almost never justifies such ridiculous valuations.
- ineedasername 6y agoSure, though I was just saying these valuations aren't too uncommon. Still, in Zapier's case, they're in hockey-stick revenue growth, and accelerating. It's still a gamble, but not an unreasonable one to believe they'll ultimately justify the $5B valuation. Of course by that point they've be valued at some other ridiculously high number.
- valuearb 6y agoAre they in hockey stick revenue growth, or is growth slowing like it does for 90% of startups? How large is their total addressable market anyways? Seems like a super niche product. One thing I could have been clearer on is that private valuations should be at a large discount to public valuations. You buy shares at a $5B valuation only because you believe it can IPO close to a $10B valuation, or what is the point of investing? And a $10B valuation would crazy town.