Understanding the Rule of X for SaaS Scaleups For SaaS scaleups, the Rule of X offers a straightforward framework to estimate revenue multiples. It was originally developed by Bessemer Venture Partners and supplemented with data last week by Dealroom founder Yoram Wijngaarde. It emphasizes that growth significantly outweighs profitability, even amid VC crunches. However, when growth is constrained, profitability becomes essential. Framework Overview: The Rule of X combines growth rate and free cash flow (FCF) margin to evaluate company value, using a multiplier (typically 2-3x) on growth. Datadog Example: With a 25% growth rate and a 25% EBITDA margin, Datadog achieves a Rule of X score of 100%, implying a 15x revenue multiple for 2024. Importance of Growth: Growth has a compounding impact on valuation, significantly outweighing FCF margins. Subscribe to ‘Siliconnector’ Telegram channel for insights and news from Tech world and Silicon Valley: https://t.me/siliconnector
Zamir Shukho, MBA’s Post
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Good framework on SaaS valuation
If you're a SaaS scaleup, Rule of X is a simple way get an idea what revenue multiple your company is valued at. Love this simple framework developed by Bessemer Venture Partners. Also, it shows that growth still matters way more than profitability, and always has, even during the VC crunch. But of course, if growth is limited, you have no other choice than go to profitability. Datadog example: growing 25% and EBITDA margin of 25% = Rule of X score of 3 x 25% + 25% = 100% which implies a 15x revenue '24 multiple.
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If you're a SaaS scaleup, Rule of X is a simple way get an idea what revenue multiple your company is valued at. Love this simple framework developed by Bessemer Venture Partners. Also, it shows that growth still matters way more than profitability, and always has, even during the VC crunch. But of course, if growth is limited, you have no other choice than go to profitability. Datadog example: growing 25% and EBITDA margin of 25% = Rule of X score of 3 x 25% + 25% = 100% which implies a 15x revenue '24 multiple.
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"The secret sauce to explosive growth is nailing your Go-To-Market Fit (GTMF). A good SaaS company can grow to $10+ million in ARR and exit to an M&A consolidator. But a great, enduring SaaS company can grow to $100+ million of ARR. The difference between a good SaaS company and a great one is often in perfecting GTMF." Check out the #gtmf toolkit by Oxx: https://loom.ly/inCsQIw
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Is your SaaS business leaking revenue? Revenue leakage in SaaS and subscription-based businesses can easily sneak in unnoticed, undermining your fiscal strength. In the startup world, especially SaaS, even small revenue leaks can snowball into critical issues. With 90% of startups facing failure and cash flow problems often at the root, safeguarding every dollar is crucial for survival and success. Don't let #revenue leaks ⛵ sink your #SaaS business. Learn more → https://lnkd.in/eF888ssw
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🎙️ Just Dropped: We Unpack Amplitude's Plus Plan with Katya Fuentes! Explore how this strategic move is revolutionizing SaaS growth and accessibility for startups and SMBs 🌟 Episode Highlights: 📈 Discover the genesis of the Plus Plan and its mission to democratize SaaS tools. 🌍 From Ukraine to the Bay Area, Katya shares her journey and the impact on Amplitude's direction. 🛠️ Peek behind the curtain at the collaborative effort to craft a plan that balances self-service with enterprise needs. Listen now https://lnkd.in/gMeqMzaC for the full story. What's your view on transparent pricing in SaaS? 💭 #saasrevolution #startupgrowth #thrivecast
#29 - 1/2 Amplitude’s leap into Self-Service and transparent pricing ft. Katya Fuentes
resources.thrivestack.ai
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Hey everyone! We know how tricky SaaS pricing can be, especially for startups and newly founded companies. You've got your awesome product but setting the right price? That's a whole different ball game. That's why we’ve created something special for you — a SaaS Pricing Model Calculator. Think of it as your trusty sidekick, helping you navigate the complexities of pricing without breaking a sweat. #estimation #saas
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Best-Selling Author & MVP Launch Expert | Helping you Slash Your MVP Launch Costs by Over 50% | Secure Your First 100 Customers & Raise Early Investment
Raising money to launch a SaaS Startup? Stop - you need to watch this. I spoke with hundreds of founders last week whilst speaking at #Climb24 and the stories that I heard shocked me. The way you think money gets raised for early startups is probably not aligned with the reality. In this weeks video I deep dive into: - How money really gets raised at a pre-seed level - How to execute a 7 figure SaaS launch in 12 months - How to find PMF faster than the typical result (16-24 months) https://lnkd.in/eSkYfURG
How to ACTUALLY Build and Scale a SaaS Business in Just (12 Months)
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Is your startup growing slower? Well most of the SaaS busineses are based on chartmogul data. For top quartile it used to be over 3X YoY growth in 2021 - now it is less than 2x... 2x is the new 3X?
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Sales in SaaS startups are paramount as they validate the product-market fit, generate revenue for reinvestment, and pave the way for scalability. A well-executed sales strategy can be the tipping point between thriving and stagnating in the competitive SaaS landscape.
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What Are Public SaaS Companies Taken Private At? 7.7x ARR On Average Per SaaSomomics So one thing that has exploded in SaaS in the past decade is the role of Private Equity buying both public SaaS companies
What Are Public SaaS Companies Taken Private At? 7.7x ARR On Average Per SaaSomomics | SaaStr
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1moGrowth supersedes profitability. Cash flow matters when growth stagnates.