Revenue multiples for tech startups. 5x, which now sits closer to ~6.
Revenue multiples for tech startups Investor Confidence: High revenue multiples indicate strong investor confidence and anticipated growth in HR tech. For an example on how to value a tech startup using the multiple valuation methodology with listed comparables, read our article here. SEG’s reports offer interesting insights into FinTech valuation multiples. In tech startups, the value of the company is what another investor paid to acquire a similar company. 5x. This is down from 6. 1x. This multiple has evolved over time. The multiple varies based on growth rate, market position, and profitability potential. The credibility of an early stage startup rides mostly on the merit of its idea. Example of Revenue Multiples. Furthermore, it delves into comprehensive valuation methodologies tailored for startups at different stages—early, super early, and late—offering a spectrum of approaches such as revenue multiples, EBITDA multiples, discounted cash flow (DCF), and more, to accurately gauge a startup's worth. Jan 6, 2025 · In this article, we discuss the concept of revenue multiples, two popularly used multiples, and some industry specific data that will shed light on how this valuation method works. Significance of Revenue Multiples. 8x, up from 4. In today’s environment, however, this approach requires adjustments to account for hypothetical revenue projections in a rapidly shifting market. A company with a lower multiple but high growth potential might be undervalued. Learn how different niches like LLM vendors, HR tech, and search engines are driving strong investor confidence. Hardware businesses, another common type in the tech industry, have unique valuation considerations that differ from software and services companies. During this time, private SaaS companies changed hands at around 3x Revenue and 14-16x EBITDA. Companies with negative or volatile earnings. Dec 23, 2024 · Discover key Edtech valuation insights for 2025, including average 8. Median EV/Revenue multiple for AdTech companies were boosted as a result of the COVID-19 pandemic. Apr 26, 2025 · Apply market multiples (e. May 16, 2024 · Multiples then hovered around the 5x mark until mid-2022, when they saw a steep decline likely due to the adverse macro environment. Looking at the Edtech startups out there, we can find 10 publicly-listed company comparables. This guide focuses on revenue multiples, because those tend to be most relevant and more widely available for (early stage) startups. 65719 billion in revenue, the revenue multiple is 1. However, the platform also has EBITDA multiples, profit multiples, as well as growth metrics so growth adjusted multiples are possible. 7x. Dec 15, 2015 · Keep in mind most companies have a mix of different types of revenue (one time, recurring, high margin software, low margin services) and a blended revenue multiple is required to value a company Mar 14, 2022 · Last year, startups could expect richer and richer revenue multiples to come with faster growth rates. 56: Aerospace & Defense: 2. Dec 5, 2024 · Revenue multiples, particularly EV/Revenue, provide a crucial valuation method for early-stage start-ups lacking stable profits. 3x and the median was 7. There was something of a compounding valuation effect to faster growth, as investors baked in Feb 11, 2024 · Revenue Models and Profitability. Key Metrics: Essential benchmarks like median multiples and valuation ranges to support your analysis. Startup valuation multiples: SaaS: usually 10x revenues, but it could be more depending on the growth, stage and gross margin. Tech startup financial model templates Download an expert-built 5-year Excel financial model for your business plan Dec 23, 2023 · Health Tech Discrepancies: The health tech sector shows a broad range of revenue multiples, with Verily Life Sciences at 12. Private Company Valuation Factors: o Revenue and Earnings Multiples: Valuations are typically based on multiples of revenue or earnings before interest, taxes, depreciation, and amortization (EBITDA). As of April 2024, the average enterprise value (EV) to sales multiple is 4. Find Tech-Specific Metrics That Matter Valuation isn't just plain revenue or EBITDA. And after removing the effects of outliers and extreme multiples, the range is 1. This metric is particularly useful for: High-growth tech startups and SaaS businesses. What are revenue multiples for technology startups? Aug 7, 2024 · 2. 0x, reflecting the unpredictable nature of valuation in this critical and innovative sector. 75: 11. 5x in November 2023 and the average EV to EBITDA multiple range Jan 22, 2025 · As of Q1 2024, industry reports cited SaaS revenue multiples slowly picking back from their three-year low of ~5. , Revenue x Multiple) Crude, pro-cyclical, exploitable, one-dimensional; ignores company specifics; data scarcity. Apr 18, 2024 · Importance of Revenue Multiples: Average revenue multiple at 11. Apr 15, 2024 · Revenue Multiple Valuation Startup VCs have limited capital and try to make concentrated investments across scaleups where they have the highest conviction. In Q1 2025 the median revenue multiple for Robotics & AI companies was 2. The higher revenue multiple for HealthTech companies reflects the fact that the healthcare market is growing rapidly and there is a lot of demand for innovative digital health solutions Jun 2, 2024 · Industry Benchmarks: The average revenue multiple can vary significantly from one industry to another. Since most companies aren’t profitable while they actively invest in growth, profit multiples are not applicable. With physical advertisement spaces getting hardly any impressions, median multiples jumped from 3. 1 billion in revenue, giving a revenue multiple of 37. 2x to 2. From this analysis of 47 tech startups, the average revenue multiple for a startup valuation was 9. They contain average EBITDA and revenue multiples for tech companies within 9 industries, which we further subdivide by EBITDA or revenue range. At the same time, the revenue multiple divided by the target future profit margin can give a ballpark estimate of the future EBITDA multiple. 6x by Q4 2024. Apr 15, 2025 · The Q1 2025 AI Valuation Multiples dataset analyzes 417 companies across 15 categories, highlighting how revenue multiples vary by niche, funding stage, and company type (public, private, or M&A). 8x. After closing Q4 2020 with a median EV/Revenue multiple of 15x, companies in the Index peaked at 19x in the first quarter of 2021 before nosediving well below pre-pandemic levels. Unlock data on 150+ companies shaping the real estate tech industry. Valuation multiples. 6x. 5x in 2023 but still higher than the average revenue multiple for all technology companies, which is 3. 90 to stay ahead. Mar 21, 2025 · Startup valuation multiples are essential for founders, investors, and financial analysts to determine a business’s worth. 6 x. Imagine a startup, 'Tech Innovate', has annual revenues of $2 million. LLM Vendors and Search Engine startups command the highest multiples, despite relatively few players, while Infrastructure stands out for combining Feb 19, 2025 · Step 2: Calculate Revenue Multiples for Comparable Startups. 8x to 24. In 2023, the average EBITDA multiples for software companies also plummeted compared to 2022 Oct 2, 2023 · Valuation multiples used in hardware industry. Their index comprises over 100 publicly traded SaaS companies, broken down by sector. Sep 25, 2023 · It’s useful since it quantifies the firm’s profit after factoring in intangible asset write-offs. 25: Advertising & Marketing: 1. Coursera: At a $1. 8 billion with $0. Discover insights into the cautious investor approach and market recalibration within the insurance technology industry. Valuation multiples as a group can be categorized into two types: Equity multiples; Enterprise multiples; Revenue multiples per se belong to the category of AdTech & Marketing Tech Valuation Multiples. Deciphering Value in Innovation: The Comprehensive Guide to Proptech Startup Valuations in 2024. Sep 18, 2024 · Revenue multiples are an essential tool for evaluating technology startups, offering insight into their growth potential, market value, and investor appeal. There is one other use for multiples, which is in line with the way that they are applied to public companies: benchmarking company value with revenue or EBITDA. With Multiples you can benchmark tech-specific, niche metrics like rule of 40, growth-adjusted EV/Revenue, revenue per employee, or R&D expenses to sales ratio. 2. Looking at the HR tech startups out there, we can find 6 publicly-listed company comparables (see the full list here). Benchmarking with multiples. Tech companies often see multiples of 3x to 10x revenue, while traditional companies might see 5x to 10x EBITDA. May 29, 2024 · Exec Summary:The average revenue multiple for HealthTech companies mid 2024 is 4. Jan 19, 2023 · Healthtech Startup Valuation Multiples + Example A startup operating in the tech sector, for example, might exhibit a higher multiple than one in a more traditional industry, indicative of the tech sector's higher growth expectations. 26: Agricultural Chemicals: 2. . 6x is 50% to 60% lower than the revenue multiples of tech companies in 2022. But overall, the average revenue multiple of 2. 3x, and Atomic AI at 50. EV/Revenue (Enterprise Value-to-Revenue): Enterprise value is valued relative to total sales revenue in this multiple. 25 Feb 6, 2024 · Whether you're an investor, a startup founder, or just tech-curious, understanding these valuations is like having a map in the ever-exciting journey of proptech Feb 15, 2024 · The average revenue multiple for EdTech startups in 2024 is 14. 5x by the third quarter of 2022. In the first quarter, a 28% discount was proposed for valuing private businesses. Dec 29, 2023 · Let's break this down with an example. It’s important to note the valuation multiples are much higher in capital raising transactions than in 100% sales. Dec 11, 2023 · For instance, technology startups, especially those with a SaaS business model, often have higher multiples due to their scalable nature and recurring revenue streams. 33: 3. Using our formula, the revenue multiple for Tech Innovate would be: Revenue Multiple = $10 million / $2 million = 5 Public multiples methodology. Although sometimes very different, their respective valuation multiple is the result of their business model, revenue growth and profitability. After peaking again at 4. Jun 4, 2024 · 3. May 6, 2025 · Explore 2025 cybersecurity startup valuations across niches, with insights on revenue multiples, market trends, and deal types—based on data from 250+ public, private, and M&A companies. The Dec 10, 2024 · Revenue Multiples: Comprehensive data on revenue multiples for public companies, private startups, and M&A deals. Private software valuations have been relatively stable in the period between 2015 and 2020. Jan 24, 2024 · Valuation Multiples of Payments Startups. 4x, indicating strong market confidence. Feb 16, 2025 · The Revenue Multiple Method has long served as a straightforward way to project a startup’s future value by applying industry-specific multiples to estimated revenue figures. A multiple of 10x to 25x is typically considered a fair EV/EBIT range. The sample also includes the largest and most successful companies, so founders looking to sell their AI startups should take this data with a grain of salt. Jan 28, 2025 · Changes in valuation multiples between 2015-2024. The choice of revenue model and the startup's path to profitability are crucial valuation factors. 8 x run-rate revenue. As per this calculation, it can be said that this company is trading at a 1. The "Proptech Startup Valuation Report 2024" dives deep into the valuation landscape of property technology startups, illuminating the sector's current state and prospective future through rigorous analysis. 5x, which now sits closer to ~6. Private Fintech Revenue Multiples – 2025 However, as schools reopened in most countries and the momentum around the sector came to an end, median revenue multiples fell all the way down to 1. Aug 7, 2024 · 2. This offers a snapshot of the sector's meteoric growth. Mar 12, 2025 · Discover biotech valuation multiples for 2025, covering revenue & EBITDA benchmarks, M&A trends, and industry insights. Apr 7, 2024 · Revenue-based Multiples: Multiples such as EV/Revenue and P/S become directly applicable, allowing investors to assess a company's valuation in relation to its sales figures. 4. They focus on growth potential rather than traditional profitability metrics. Answers to The Most Asked Questions Feb 18, 2024 · Examine the valuation dynamics of Insurtech startups in 2024, focusing on revenue multiples and how they compare to other tech sectors. Growth Rate: A startup with a high growth rate is likely to have a higher revenue Apr 21, 2024 · Exec SummaryThe average multiples in HealthTech M&A deals in 2024 have slightly increased compared to 2023, reflecting a more optimistic but still cautious approach by investors in the face of broader socio economic and political uncertainty. Download the full dataset of 200 biotech companies for €32. Looking at the Fintech startups out there, we can find 15 publicly-listed company comparables. Mar 25, 2024 · Industry: Revenue Multiple: Advanced Medical Equipment & Technology: 5. 1x revenue multiples, niche-specific trends, and essential metrics. Although the end of 2023 showed a hint of an upwards trajectory, multiples have since stalled: the median revenue multiple for EdTech companies was 1. 7x, critical for assessing growth potential and market value. Jan 7, 2025 · Below, we present a table for both revenue multiples and EBITDA multiples. Startup multiples are also impacted by the performance of public companies in the same industry, so if B2B software companies trade at a 20x multiple, private valuations for that segment may also trade at a similar level. Why Download This Database? Indeed, the $38-54M valuation results in a EV/NTM Revenue (NTM for “next-twelve-months”) multiple of ~8-11x using the NTM revenue of $5M as shown earlier. Jul 30, 2024 · An example of how we apply multiples for startup valaution in the VC method. 03 billion valuation and $0. While both are common, revenue multiples are preferred in fintech M&A because of the high-growth, high-burn nature of these businesses. These multiples, often tied to metrics like revenue and earnings before interest, taxes, depreciation, and amortisation (EBITDA), provide a standardised approach to company valuation. Feb 25, 2025 · Revenue multiples: when are they relevant? Revenue multiples (EV/Revenue or ARR multiples) assess a company’s value relative to its revenue. 5x in Q1 2020 to 8. In contrast, consumer goods companies might exhibit lower multiples owing to higher capital expenditures and lower growth rates . The average revenue multiple for small tech companies increase slightly as their market cap increases, from 2. Apr 5, 2025 · Revenue Multiples in tech startups: Tech startups often experience rapid growth, which can make revenue multiples like Price-to-Sales (P/S) a preferred metric. Jan 3, 2025 · Explore 2025 PropTech valuations with insights on key niches, revenue multiples, and top valuation methods like EV/Revenue, EV/EBITDA, and DCF. Example: A startup with a revenue multiple of 2x could be expanding rapidly, whereas an established company with the same multiple might be nearing market saturation. g. First Chicago Method: Combines DCF/Multiples for multiple (best/worst/base) scenarios: Scenario generation can be arbitrary and lack insight; distracts from focusing on the most probable outcome. Method #4: Discounted Cash Flow methodology Discounted Cash Flow (DCF) is one of the most commonly used valuation methodologies. Industry Name: Number of firms: Price/Sales: Net Margin: EV/Sales: Pre-tax Operating Margin: Advertising: 54: 2. Growth Potential: Revenue multiples don't inherently reflect a company's future growth prospects. 25%: Aerospace/Defense Apr 20, 2025 · 2. Feb 28, 2025 · SaaS Revenue Multiples. Cycle-by-Cycle Comparisons: Year-over-year insights, including trends from 2024, mid-2024, and 2025. Jan 31, 2025 · For example, an HR Tech startup with $10 million in annual revenue valued at $100 million has a 10x revenue multiple. 00%: 2. While high multiples signal strong confidence, they also come with higher expectations and risks. Oct 21, 2021 · Revenue multiple = $41,050,000 / $25,000,000 Revenue multiple = 1. For example, tech startups might trade at higher multiples due to their growth potential, while more established industries might have lower multiples. 3x to 2. #2 Tech Startups. Mar 3, 2025 · The median revenue multiple for AI companies stood at 29. VCs use multiples for estimating valuations, a de facto due to the complexity involving tech startups and scaleups. 3. Once you have a list of 5–6 similar startups, calculate each startup’s revenue multiple using the Jun 5, 2024 · Discover the mid-2024 AI startup valuation insights with an average revenue multiple of 17. 5x, Freenome at 19. Unlike software and services, hardware firms are seldom valued using revenue multiples due to their different profit margins and cost structures. There is still a long ways to go, however, until they hit the record high set in Q3 2021of 9. 1x in Q1 2024, revenue multiples in the sector saw yet another drop for 5 consecutive quarters. For instance, a SaaS company might be valued at a higher P/S multiple due to its scalable business model and recurring revenue streams. Investors are excited about its potential and value the company at $10 million. 4x in Q1 2021, at their peak. For instance, a SaaS company might be valued at 10x its annual recurring revenue (ARR), reflecting its scalable business model and high margins. Explore strategies for valuing startups and unlocking market opportunities. Oct 4, 2024 · Discover revenue multiples as a key valuation method for early-stage companies, what they are, their pros and cons, how to calculate them, and the factors that impact their effectiveness in startup valuation and funding. These multiples can provide insights into the market's valuation of the company's current revenue generation and future growth prospects. While revenue multiples offer a quick way to assess valuation, they don’t account for profitability. Jul 9, 2024 · Articulate: Valued at $3. Sector-Specific Nuances : It's crucial to acknowledge that revenue multiples are not one-size-fits-all. It’s useful for gauging a company’s worth in light Feb 4, 2025 · In bull markets, fintech startups can command revenue multiples of 12x–15x, while in economic downturns, these multiples may drop to 5x–7x as investors focus on financial sustainability. Read our full methodology paper. Apr 6, 2025 · In the realm of tech startups, revenue multiples are often used to justify high valuations for companies with rapid growth rates. Revenue multiples offer insights into market expectations. We analyzed the latest valuations, revenues, EBITDA, EBITDA multiples, and revenue multiples of what we view as the 30 top payments companies as of 2024. HealthTech startups might adopt various revenue models, such as Software as a Service (SaaS) subscriptions, pay-per-use services, or licensing deals. The recent update shows that the valuation is equal to the medial multiple of 14. Jan 22, 2025 · The valuation multiple tables below reflect data collected by our analysts between H2 2022 and H1 2025 on private company M&A transactions within the tech sector. EV/Revenue is the most common multiple used for SaaS valuation. wjdwguwidrnrcaeyatdbblydlcebnzekwrdhriptzlhmnx