When I worked in venture capital, I was lucky enough to have the opportunity to invest in some really great companies during their early rounds. Now some of those companies are going public, and I find myself spending some time thinking about when to sell my stock in these companies.
I don’t think anyone has truly figured out the formula to value these companies. There just aren’t enough examples of SaaS companies that have reached maturity and shown us what they really look like in the long term. Salesforce still grows at 23% annually and trades at over 100x EBITDA!
Nonetheless, I thought it’d be an honest exercise for me to write some thoughts down and then review them in a few years.
I think that growth should be the number one factor in considering SaaS valuations (when I say valuation, I mean how much is the company worth on a revenue/gross profit/EBITDA/FCF multiple basis). If a company can grow at 50% for 3 years, it’s topline will be nearly 3.4x higher! That’s powerful.
If you’re a real SaaS company, this means you have 80+% gross margins and should start seeing nearly 40 cents/dollar of new revenue start to fall down to operating cash flows. Assuming the company that grows at 50% annually was cash flow breakeven, that means your operating cash flow in three years is more than your current revenues.
No two companies are the same. The top factors that would effect valuation are how scalable growth is (sales/marketing channels and economics), how long growth can go for (market size, competition), churn (and how it contributes to growth), and margin profile (gross and net), barriers to entry (that will protect current revenues and make sure new competition doesn’t chip into existing growth prospects)…there are some other things pretty important too, like management’s incentive system.
I think what a lot of investors have figured out is that if a company keeps growing, you can pay through the nose (relative to what most companies trade at) and still make a nice IRR. I agree that growth is the most important aspect of valuation, and that most of the other factors are basically contributors to growth. Even in these heady times of crazy valuations, I’d say that a lot of the public companies are undervalued! The other main factor here is the margin profile. If you can’t ever be profitable, then forget it. And, in the case SaaS companies, it’s more like you have to be VERY profitable.
I don’t have time to look up various rules on making stock predictions for companies you own. So, I’ll leave you with this very basic spreadsheet (SaaS valuations thoughts) that should illustrate that growth is key in valuation and how I think various companies should be valued (although I guess the numbers in blue are very much up to interpretation in most companies). Enjoy.
Pretty section of content. I simply stumbled upon your weblog and in accession capital
to claim that I get in fact enjoyed account your blog
posts. Anyway I’ll be subscribing on your augment and even I fulfillment you
get right of entry to consistently fast.
Hi there, just became aware of your blog through Google, and found that it’s truly informative.
I am going to watch out for brussels. I will appreciate if you continue
this {in future}. Lots of people will be benefited from your writing.
Cheers!
Hello i am kavin, its my first occasion to commenting anywhere, when i read this post i thought i could
also create comment due to this good post.
It’s really a great and helpful piece of information. I’m satisfied that you shared this
helpful information with us. Please stay us up to date like
this. Thanks for sharing.
Furthermore, you do not have to download any games in their offerings.
My blog … 바카라주소
Your means of describing all in this piece of writing is genuinely fastidious, every one be
capable of simply understand it, Thanks a lot.
It’s amazing for me to have a web site, which is beneficial for my experience.
thanks admin
That is a very good tip especially to those new to the blogosphere.
Simple but very precise info… Many thanks for sharing
this one. A must read article!
Hey there I am so excited I found your website,
I really found you by mistake, while I was searching on Digg for something else,
Nonetheless I am here now and would just like to say many thanks
for a tremendous post and a all round exciting blog
(I also love the theme/design), I don’t have
time to look over it all at the minute but I have bookmarked it and
also added in your RSS feeds, so when I have time I will be back to
read more, Please do keep up the fantastic work.
My spouse and I stumbled over here by a different website and thought I should check things
out. I like what I see so now i am following you. Look forward
to looking over your web page yet again.
I always used to study piece of writing in news papers but now as I
am a user of web so from now I am using net for articles or reviews, thanks to web.
I am sure this post has touched all the internet viewers, its really really
fastidious article on building up new web site.
It’s awesome to pay a quick visit this site and reading the views of all colleagues on the topic of this piece of writing, while I am also
keen of getting experience.
Hi, i think that i saw you visited my blog so i came to “return the favorâ€.I’m trying to find things to
improve my website!I suppose its ok to use a few of your ideas!!
When someone writes an paragraph he/she maintains the idea of a user
in his/her brain that how a user can know it. Thus that’s
why this post is amazing. Thanks!
Hi there i am kavin, its my first occasion to
commenting anyplace, when i read this paragraph i thought i could also
create comment due to this sensible paragraph.
These are truly wonderful ideas in concerning blogging. You have touched some
nice points here. Any way keep up wrinting.
Thank you for the good writeup. It in fact was a amusement account it.
Look advanced to far added agreeable from you! By the way, how could we communicate?
Hey There. I discovered your blog the usage of msn. That is a really well written article.
I’ll make sure to bookmark it and return to learn more of your helpful info.
Thanks for the post. I will definitely return.
I like the helpful information you provide in your articles.
I’ll bookmark your weblog and check again here regularly. I’m quite certain I
will learn lots of new stuff right here! Best of luck for the next!
Spot on with this write-up, I truly think this amazing site needs a lot
more attention. I’ll probably be back again to read through
more, thanks for the info!
Usually I don’t learn post on blogs, however I would like to say that
this write-up very compelled me to take a look at and do it!
Your writing taste has been amazed me. Thank you,
very nice article.
My coder is trying to convince me to move to .net
from PHP. I have always disliked the idea because of the costs.
But he’s tryiong none the less. I’ve been using WordPress on numerous websites for about a year and
am nervous about switching to another platform. I have heard very good things about
blogengine.net. Is there a way I can import all my wordpress posts into it?
Any kind of help would be really appreciated!
continuously i used to read smaller articles that as well clear their motive, and that is also happening with this piece
of writing which I am reading now.
Hi there, I discovered your blog via Google whilst searching for a related matter, your web site got here up, it
appears great. I have bookmarked it in my google bookmarks.
Hello there, simply changed into alert to your weblog thru Google, and located
that it’s really informative. I am going to watch out for brussels.
I’ll appreciate should you continue this {in future}.
Numerous other people will probably be benefited out of your writing.
Cheers!
Etwas mysteriös und edgy, aber auch edel und sehr erwachsen – der Buzz-Cut ist
der krasseste Style der Kurzhaarfrisuren, unterstreicht aber wie kein anderer Schnitt die femininen Gesichtszüge
einer jeden Frau. Auf der Beliebtheitsskala liegen ebenfalls Kurzhaarfrisuren mit
frechem Undercut gähnend weit oben. Sie strahlen eine Extravaganz aus, ohne aufdringlich zu wirken und lassen sich Sekunde stylen. Wer
möchte, kann bankrott einige Strähnen seines Deckhaars über die kurzrasierten Stellen stylen. Der Schnitt ist beim Friseur außerdem leicht erklärt: Die Seiten sind mangels wenige Millimeter abrasiert, das Deckhaar bleibt dagegen länger.
Wer sich langsam an eine Kurzhaarfrisur herantasten möchte, der könnte mit einem einfachen Bob anfangen. Ein Bob eignet sich für wellige,
lockige und glatte Haarstrukturen und ist somit die ideale Einsteiger-Kurzhaarfrisur.
Der Short Bob etwa ist sehr feminin und gut für Unentschlossene
geeignet, die sich noch ehrlich gesagt nicht recht an eine Kurzhaarfrisur trauen. Die Haare reichen dabei maximal bis
zur Schulter, umspielen das Gesicht besonders schön und bekommen zusätzlich noch Volumen. Außerdem lässt der kurze Bob-Haarschnitt zahlreiche Möglichkeiten beim
Styling offen.
I’ve been exploring for a little bit for any high quality articles or blog posts on this kind of area .
Exploring in Yahoo I at last stumbled upon this web site. Reading this info So i am satisfied to convey that
I’ve an incredibly just right uncanny feeling I discovered
just what I needed. I most certainly will make sure to don?t omit this
web site and provides it a look on a relentless basis.
Hi to all, the contents present at this web page are in fact amazing
for people knowledge, well, keep up the nice work fellows.
I’m not that much of a online reader to be honest but your sites
really nice, keep it up! I’ll go ahead and bookmark your website to come back down the road.
Many thanks
It is really a great and helpful piece of info.
I’m glad that you simply shared this useful info with us.
Please stay us informed like this. Thanks for sharing.
It is appropriate time to make some plans for the longer term
and it is time to be happy. I’ve read this submit and if I could I desire to counsel you few interesting
issues or suggestions. Maybe you can write next articles regarding this
article. I want to learn even more things approximately it!
What’s up everyone, it’s my first pay a quick visit at this website, and paragraph is truly fruitful in support of me, keep
up posting such articles or reviews.
Thank you for the auspicious writeup. It in reality was once a amusement account it.
Look complex to far delivered agreeable from you! By the way, how
can we keep in touch?
Zusätzlich bestimmt das Kabel die Reichweite – ist es nicht lang genug, muss der Staubsauger an einer anderen Steckdose angeschlossen werden. Beim
Akkusauger treten diese Probleme des Saugens nicht auf.
Er besteht aus einer verstellbaren Saugstange ohne einen sperrigen Korpus und Kabel.
Treppen stellen jeden Bodensauger vor eine Herausforderung.
In beiden Fällen bietet der Akku-Staubsauger mit
leichtem tragbarem Korpus mehr Flexibilität und eine einfachere Handhabung.
Bei kabelgebundenen Staubsaugern ist der Saugschlauch zumeist nicht sehr lang, sodass höher
gelegene Stellen nicht oder nur schwer zu erreichen sind.
Wie gut reinigen Akku-Staubsauger den zu saugenden Bereich?
Die Saugleistung der Akku-Staubsauger wird von den kabelgebundenen Bodenstaubsaugern übertroffen.
Akku-Staubsauger haben nicht nur Vorteile gegenüber herkömmlichen Bodenstaubsaugern, sondern bringen auch Nachteile mit sich, die hier gegenübergestellt werden. Kabelgebundene Staubsauger
können beliebig lang auf beliebig starkem Saug-Modus instrumentalisiert werden, während die Laufzeit des Akkusaugers umso mehr bei hoher Saugstufe stark
begrenzt ist. Viele Akku-Staubsauger halten im stärksten Saug-Modus nur wenige Minuten durch.
Manche Modelle haben eine Laufzeit von nur 10 Minuten, was meist nicht ausreicht, um den gesamten Haushalt zu säubern.
Some gambling writers don’t know any greater, merely repeating what they’ve observed on a hundred other gaming portals.
Have a look at mmy ebpage – 바카라 카지노 슬롯
I blog frequently and I really thank you for your content.
This great article has truly peaked my interest.
I am going to take a note of your blog and keep checking for new information about once per week.
I subscribed to your RSS feed as well.
Pretty great post. I just stumbled upon your blog and wished to mention that I’ve really loved surfing around your
blog posts. After all I’ll be subscribing for your rss feed and I
hope you write again soon!
Very nice post. I just stumbled upon your blog and wished to mention that
I have really loved surfing around your weblog posts.
After all I will be subscribing to your rss feed and I’m
hoping you write again very soon!
Auch wenns letztlich “nur” Gehen mit Stöcken ist:
Harald Fichtner empfiehlt 1 oder 2 Stunden mit einem
Trainer oder einer Trainerin. Nicht ganz Stöcke,
fertig, los! Aufseiten VDNOWAS findest du übrigens Trainer oder
eine Laufschule in deiner Nähe. So klappt dein Einstieg ins Sportart garantiert.
Probier es einfach aus. Das Ziel: Zeitdifferenz aufeinander folgend joggen. Weißt du was?
Mit unserem speziell darauf ausgerichteten Trainingsplan kannst du es schaffen! Wir haben ein wichtiger Schritt in der Karriere als Läuferin: Der erste richtige Dauerlauf,
also im wahrsten Sinne ein Lauf, der dauert, und zwar länger als von hier bis zum Bus.
In den nächsten 12 Wochen warten verschiedene Intervall- und Dauerläufe auf dich, mit denen du dem 30-Minuten-Lauf hintereinanderweg immer einen Schritt näher kommst!
Keine angst: Wir fangen langsam an und steigern uns,
sodass du regelmäßig Erfolgserlebnisse feiern kannst. Dafür benötigst du höchstens
ein paar Laufschuhe und Sportklamotten. Wer zum ersten mal Zeit ohne Unterbrechung laufen will, allen grund haben nach professioneller Anleitung an dieses Ziel heranarbeiten. Unser Trainingsplan bildet dafür die perfekte Grundlage – starte den Download und lauf direkt los!
Appreciate the recommendation. Will try it
out.
There is definately a lot to know about this topic. I love all of the points
you’ve made.
Hey there! This is kind of off topic but I need some guidance
from an established blog. Is it very difficult to set
up your own blog? I’m not very techincal but I can figure things out
pretty fast. I’m thinking about making my own but I’m not sure where to begin. Do you have
any ideas or suggestions? Many thanks
Terrific post but I was wanting to know if you could write a litte more on this topic?
I’d be very thankful if you could elaborate a little bit more.
Cheers!
Its like you read my mind! You appear to know so
much about this, like you wrote the book in it or something.
I think that you could do with a few pics to drive the
message home a little bit, but instead of that,
this is wonderful blog. A great read. I will definitely be back.
Stunning quest there. What occurred after? Thanks!
I was recommended this web site by my cousin. I’m not sure whether this post is written by him as no one else know
such detailed about my problem. You are wonderful! Thanks!
I’ll right away grasp your rss feed as I can’t
find your email subscription link or newsletter service. Do you’ve any?
Please permit me know so that I may just subscribe.
Thanks.
I really like what you guys are up too. This kind
of clever work and exposure! Keep up the great works guys I’ve you guys to blogroll.
The other day, while I was at work, my cousin stole my iphone and tested to see if it can survive a thirty foot drop, just so she can be a youtube sensation. My
iPad is now broken and she has 83 views. I know this is totally off topic but I had to share
it with someone!
A motivating discussion is worth comment. There’s no doubt that that you ought to write
more about this subject matter, it may not be a taboo matter but usually folks don’t
speak about these subjects. To the next! Kind regards!!