SaaS valuation multiples in 2026: what your ARR is worth

In June 2026 the median listed SaaS company was valued at 3.2 times its revenue. Aventis Advisors calls it the low point of the AI disruption sell-off. By the end of August the figure was back at 4.6, and in July 2025 it had been around 6.0.

If your startup has revenue, these numbers will come up at your next round, usually from across the table. This guide covers SaaS valuation multiples from the founder’s side: what listed companies and acquirers paid per euro of revenue in 2026, why a private company’s multiple differs, the methods investors mix, and a worked example for a Milan startup with €1.2 million of ARR. No revenue yet? Read how to value a pre-revenue startup.

What is a SaaS valuation multiple?

It’s a shortcut: what a company is worth divided by its revenue. Jamin Ball’s weekly Clouded Judgement, which tracks listed cloud software companies, uses enterprise value (market cap plus debt minus cash) over next-twelve-months revenue. The SaaS Capital Index puts market cap on top instead, over the revenue run rate a company has right now, annualised. So when someone tells you a company is worth five times revenue, ask which revenue.

Why revenue and not profit? Because most growing software companies don’t have much profit to multiply. In Ball’s data of 2 October 2026 the median listed cloud company ran an operating margin of 4%, against a gross margin of 76%. As he puts it, ‘SaaS businesses are generally valued on a multiple of their revenue’.

In a private round the starting point is usually ARR, annual recurring revenue: this month’s subscription revenue times twelve. Count only what recurs. Andreessen Horowitz says ARR ‘should exclude one-time (non-recurring) fees and professional service fees’, and that ‘letters of intent and verbal agreements are neither revenue nor bookings’. A valuation built on padded ARR comes apart in due diligence.

ARR multiples in 2026: what markets and buyers paid

Start with Italy. The half-year report by Growth Capital and Italian Tech Alliance counted 145 rounds and €813 million in the first half of 2026, with software the busiest sector at 25% of rounds. It publishes no valuations. PitchBook’s European data for the first quarter, reported by Crowdfund Insider, gives a median pre-seed or seed round of €2.0 million on a €6.0 million pre-money, but no revenue. So the benchmarks below come from listed companies and international deals.

Source and date	What it measures	Median multiple
Clouded Judgement, 2 Oct 2026	Listed cloud software, enterprise value / next-twelve-months revenue	4.2x overall; 19.4x if growth is over 22%; 6.8x at 15% to 22%; 3.4x under 15%
Aventis SaaS Index, Aug 2026	Listed SaaS, enterprise value / revenue (S&P Capital IQ)	4.6x (3.2x in June 2026; about 6.0x in July 2025)
Aventis, SaaS M&A 2015 to 2026	543 acquisitions with a disclosed multiple (Mergermarket)	4.5x; middle half between 2.4x and 8.1x; 3.8x in 2025
SaaS Capital, Jan 2025	Model for private B2B SaaS, multiple of ARR	4.8x bootstrapped, 5.3x equity-backed, with the public index at 7.0x

Two warnings. First, use medians. Bessemer’s cloud index page showed an average revenue multiple of 8.5 times when we checked it on 9 October 2026, about double the medians above: a few richly valued names drag the mean up, and the top five in Ball’s set had a median of 38.3 times. Second, check dates. The public median nearly halved between July 2025 and June 2026, then rose by more than 40% in two months. A multiple without a date is gossip.

Acquirers have paid less than the stock market lately: a median 3.8 times in 2025 and 3.1 on a small sample of first-quarter 2026 deals, says Aventis. Size pays. The median was almost twice as high for $50-100 million deals as for $20-50 million ones.

Why is a private startup’s multiple different?

Mostly size and liquidity: a small private company is much harder to sell than a listed one. SaaS Capital says private multiples are, ‘all else equal, lower’. How much lower? Back in January 2025 its public index sat at 7.0 times, and its model said a bootstrapped private B2B company was worth 4.8 times ARR. With investors on board, 5.3. That’s roughly a quarter to a third below the index. The 2026 white paper starts from the index level. Then it looks at two numbers of yours: ARR growth and net revenue retention.

Growth comes first. In Ball’s data, listed companies growing over 22% traded at 19.4 times forward revenue, those under 15% at 3.4. Bessemer’s ‘Rule of X’ (January 2024) weights growth two to three times more than free cash flow margin, because ‘a growth rate increase can have a compounding impact on value’.

Then the Rule of 40, which Brad Feld described in February 2015: ‘your growth rate + your profit should add up to 40%’. He used EBITDA, operating profit before depreciation and amortisation. Grow 60% while losing 20% and you pass; grow 10% at a 10% margin and you don’t. The median listed SaaS company scored 26% in Aventis’s 2026 sample.

Retention and margin come next. Net revenue retention (NRR) is how much of last year’s revenue your existing customers pay this year, upsells included; the listed median was 110%. Churn, the customers or revenue you lose each month, pulls the other way. At 2% a month, David Skok notes, ‘you are losing about 22% of your revenue every year’. And of each euro of revenue, the median listed company kept 76 cents after direct costs.

Driver	Pushes the multiple up	Pushes it down	Source
Revenue growth	Over 22% a year (listed median 19.4x)	Under 15% a year (3.4x)	Clouded Judgement, 2 Oct 2026
Growth against profit	Efficient growth, weighted two to three times free cash flow margin	Margin bought by cutting growth	Bessemer, Rule of X, Jan 2024
Rule of 40	Growth plus margin of 40% or more	Far below 40% (listed median 26%)	Feld, 2015; Aventis, 2026
Net revenue retention	Above the 110% listed median	Below 100%: the existing base shrinks	Clouded Judgement; SaaS Capital, 2026
Gross margin	At or above the 76% listed median	Revenue heavy with services or hosting costs	Clouded Judgement; Aventis
Size	Larger revenue: M&A median almost 2x for $50-100M deals	Small and hard to sell	Aventis, 2026; SaaS Capital, 2025
Market mood	Rising listed multiples	Sell-offs: a 3.2x median in June 2026	Aventis, 2026

Before you argue for a premium, check where you stand on each line. Our guides to startup metrics investors want at seed and to unit economics: CAC, LTV and payback show how to compute them.

How to value a startup with revenue: four methods

Investors rarely use just one. Here’s what each does, and where it breaks.

1. ARR multiple. ARR times a multiple drawn from comparable companies, adjusted for growth, retention and margin. Quick, and easy to argue about, which is why most rounds start here.
2. Comparables. A short list of listed peers and recent acquisitions in your niche, each with its date. A Turin startup selling to Italian accountants should look at vertical software deals, not the Nasdaq median.
3. Discounted cash flow (DCF). Future cash flows brought back to today. Sound in theory, rarely decisive early: Aswath Damodaran notes that ‘most young companies do not survive’, and a forecast has to price that in.
4. The VC method. Value at exit divided by the return the fund needs gives today’s post-money. Bill Payne’s example, from a method Harvard’s William Sahlman published in 1987: a $60 million exit and a 30x target give $2 million post-money, $1.5 million pre-money after a $0.5 million investment.

Damodaran calls the VC approach ‘flawed’: one target return bundles risk, failure and haggling into a single number. It’s still ‘widely used’, in his words, so learn its sums. The exit can be a sale or a listing, and our guide to an IPO on Euronext Growth Milan covers the second route.

Worked example: what is €1.2 million of ARR worth?

The company and the range are invented. The benchmarks are the ones above.

Say a Milan startup sells booking software to Italian dental clinics. At the end of September 2026 it has €1.2 million of ARR, double the €600,000 of a year earlier. Net revenue retention is 108%, gross margin 78%, and it burns €150,000 a month. It wants to raise €3 million.

Start from the public anchors: listed companies growing over 22% trade at a median 19.4 times forward revenue, and the overall median is 4.2. Then adjust. The startup grows far faster than any listed peer, but it’s tiny and hard to sell, with retention just under the listed median. Say you and the lead investor end up discussing 6 to 10 times current ARR.

Multiple of ARR	Pre-money	Post-money with €3M	Stake sold
6x	€7.2M	€10.2M	29.4%
8x	€9.6M	€12.6M	23.8%
10x	€12.0M	€15.0M	20.0%

The pre-money valuation is the company’s value before the new money arrives; post-money adds the €3 million. Our worked example of pre-money vs post-money valuation goes through the sums. Look at the last column. At 6 times you’d sell 29.4% of the company, at 10 times only 20.0%, and that gap of almost ten points is yours to keep or lose in the negotiation.

Now test the range against two other numbers. Carta’s median software round in mid-2026 sold 18% at seed and at Series A. Selling 18% while raising €3 million means a post-money of about €16.7 million, or 11.4 times ARR: a stretch here. Investors also quote forward multiples. If ARR doubles again, next-twelve-months revenue is about €1.8 million, and 10 times current ARR is only about 6.7 times that.

Last, run the investor’s sums. At €9 million pre-money the fund owns 25% for its €3 million. Say later rounds dilute it to about 17%. Ten times its money is €30 million, so it needs an exit near €180 million, or €30 million of ARR sold at six times. Your plan has to show ARR climbing from €1.2 million to €30 million in six or seven years. Does it? That’s the real negotiation, and price is only one line of the term sheet. Preparing that round? See our guide to raising a Series A in Europe.

Checklist: before you name a number

1. Strip your ARR down to what recurs. Setup fees, services and deals signed but not yet paid all come out.
2. Growth first: over the last 12 months and over the last 3. Investors will also want net revenue retention, gross margin, monthly churn and how many months it takes to earn back what you spend to win a customer (CAC payback).
3. Five to ten comparables is plenty. Mix listed companies with ones that were bought, and write the date beside every multiple.
4. Build a range from at least two methods, and know which assumption moves it most.
5. Turn every price into a post-money and a stake, then run the round through your model.
6. Write down the exit an investor needs at your price, and check that your plan gets there.

Our startup financial model template has a round simulator that shows the stake you sell at any price. New to all this? Begin with the beginner’s map, from zero to a first round.

This article is general information, not investment or valuation advice. Multiples move with markets: check the date of every figure before you use it in a negotiation.