Why Retention Drives SaaS Valuation Multiples
Written by Harry Prabandham
Curated by Rubric Financial
Last updated
1 / 5
The Multiple Is About the Future
- A revenue multiple is really a bet on how much future cash a dollar of revenue will generate.
- Retention tells investors whether today's revenue will still exist and grow next year.
- High retention means growth compounds on a stable base instead of refilling a leaky bucket.
- That compounding is why retention moves valuation more than almost any other input.
Go deeper on this topic: How Startups Are Really Valued: Metrics, Models, and Market Dynamics→
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About the author
Harry PrabandhamFounder & CEO
Founder and CEO of StartupCFO. MBA from Wharton, MS in Computer Science, and decades of experience building and advising venture-backed startups.
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Revenue from your existing customer base 12 months later, including expansion and churn.
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