ARR Multiple

“If you sell for two million and up, You should be, I'll say, thinking in terms of an ARR multiple, even if you're not growing quickly. Let's say you're, you know, flat, or just growing 10% a year or something, and you're at two million, I would be looking at a…”

“And if you're at two or three million, I mean, or five million, it doesn't really matter, And you've doubled in the last year, let's say you grew a hundred percent. Yeah, you're talking five to 10 X ARR, four to eight X, somewhere in that range.”

“Eventually at some future point, you will be measured on, on a set of metrics that are much more boring than AR multiples and they will be free cashflow multiples or whatnot.”

“For instance, an AR multiple, we want to see like on average a three X. So if we see a two X that's rewarded, if we see a five X that's punitive, but it's not a deal breaker.”

“When you try to go raise next year, assuming you're the best of the best, you'll get 20 to 30 times ARR.”

“The average cloud 100 company, so the top cloud companies in the world at any one moment, had a nine X ARR multiple in 2016, increasing 270% until 2021, where it earned a 34 X multiple.”

“Also true that a lot of these companies won't live up to it, and it'll take a year or two before people realize, hey, you know, they're nowhere close to being worth what we thought.”

“Now what's really interesting is the peak of the market was actually March, 2014, where companies are trading at 10 times ARR multiple.”