Entry multiple is the valuation metric at which capital is deployed into an asset— the “price paid” expressed as a ratio to earnings, EBITDA, or revenue.

How it works

Private equity buys a company at 8× EBITDA—that is the entry EV/EBITDA multiple. A growth VC invests at 15× ARR—entry revenue multiple on last quarter’s annualized run rate.

Investors model returns as:

Exit value ≈ entry metric × growth × exit multiple expansion (or contraction)

If you enter at 10× EBITDA, grow EBITDA 2×, and exit at 10×, value quadruples before fees. If exit multiple compresses to 7×, returns suffer despite operational wins.

Entry multiples vary by interest rates, sector heat, competitive auction dynamics, and asset quality. Venture entry multiples on revenue can look extreme versus PE EBITDA multiples—different risk and growth profiles.

Why it matters

• Founders: Your round valuation sets investors’ entry multiple on your metrics. Justify with growth and retention so their model works at exit.
• Investors: Discipline on entry separates top quartile funds. Hot markets tempt paying up—LPs ask how entry compares to historical sector medians.
• Board: Secondary sales and insider rounds still imply an entry multiple for new capital—relevant for fairness opinions.

Common mistake

Quoting entry multiple on projected forward metrics while comparing to comps on trailing numbers. Apples-to-oranges makes a expensive deal look cheap.

Related ideas

• Enterprise Value to EBITDA — common PE entry metric
• Exit multiple — sale-side ratio
• Multiple expansion — paying more at exit than entry
• Enterprise Value — basis for many multiples