Startup Valuation Calculator

Calculate an estimated valuation for your startup based on annual recurring revenue and revenue multiple.

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Valuation

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Quick Valuation Guide

  • SaaS2-3x revenue or 5x profit
  • Ecommerce1-2x revenue or 3x profit
  • Marketplace1-3x revenue
  • Agency1x revenue or 1-3x profit
  • Startup2-5x revenue or 5x profit

Quick Valuation Guide

Annual Recurring Revenue (ARR)

The total revenue that a startup earns on a yearly basis from its subscriptions.

Revenue Multiple

A multiplier that represents how much investors are willing to pay per dollar of ARR. This multiple is usually based on industry norms or recent market trends.

Why it matters?

Knowing your startup’s valuation is important for several reasons:
  1. Fundraising: If you are raising capital for your startup, you’ll have a clear picture of how much equity you’re giving away and how much you want to raise at certain valuation.
  2. Ownership and Equity: A clear picture of your startup's worth allows you to estimate exactly how much equity you’ll be giving up in each funding round. This insight is valuable at every stage of your startup’s journey.
  3. Exit Planning: If you’re acquired or go public in the future, understanding your valuation helps you gauge how much you might earn from selling your business. It also allows you to plan an exit strategy that aligns with your financial goals.

Formula

Let's say you run a startup business that generates $1M per year, and you use an industry - standard revenue multiple of 5.

Annual Recurring Revenue = $1M

Multiple = 5x

Valuation = $1,000,000 x 5 = $5,000,000

This approach gives a quick estimation of a startup’s worth based on its recurring revenue and a market-aligned revenue multiple.