SaaS Valuations Update

This is an update on the data in my previous post on Software-as-a-Service (SaaS)Valuations. For full context, read the original post here:

Keeping it SaaS-y: Valuations for SaaS Companies

Many of you have reached out to me asking for the source data in this post.  Since it’s based on an internal analysis we did at Bain Capital Ventures, I thought I’d share the updated version of the data.

SaaS Valuations Grouped by Growth Rate & Margin (March 2013)

Updated SaaS 2x2In short, looking across all public SaaS Co’s, high growth (>30% YoY), high gross margin (>70%) companies trade at 7.6X Enterprise Value / Next Twelve Months (EV/NTM) Sales, vs. industry wide average of 5.5X.

And growth rate matters more than gross margin. The top-left quadrant (low growth, high gross margin) trades at 3.7X. The bottom right quadrant (high growth, low gross margin) trades at 6.2X, if you strip out Workday.

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About Indy Guha

Indy is a partner at Bain Capital Ventures and co-founded their Bay Area office. He invests in early and growth stage Software-as-a-Service companies, with a focus on sales and marketing technologies. Current investments include 6Sense, Wrike, BloomReach, Optimizely, etc. He also leads BCV’s Pulse.Commerce program, a custom demo day for Fortune 5000 CMOs. Indy works alongside entrepreneurs on everything from product strategy to acquisitions to hiring, including periodically taking operational roles within our companies. He was an early Product & Engagement Manager at BloomReach, working on key go-to-market issues such as performance attribution and pricing. He was also the interim Head of Marketing at Captora, helping launch the company out of stealth and managing 2 product releases.

Posted on April 16, 2013, in Uncategorized and tagged , , . Bookmark the permalink. Leave a comment.

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