How a Revenue Multiple Becomes a Startup Valuation
ARR × multiple = enterprise value — then adjust for cash, debt, and stage risk.
Example only: $5M ARR × 8× = $40M EV. High-growth SaaS may clear higher; hardware / marketplaces often lower. Always state TTM vs forward ARR.
ARR (or NTM revenue)
$5M
+
Indicative multiple
8×
=
Enterprise value
$40M
Equity value (simplified)
EV − net debt (+ cash)
Public industry revenue multiples (Damodaran-style) are context for exits and late-stage comps — not a plug-and-play seed price. Stage, dilution, and preferences still dominate early rounds.