High End SaaS Valuations Using the 2017 Inc. 5000 Data

Every year I love pouring over the Inc. 500 (now Inc. 5000). When I first read Inc. magazine in high school in the late 90s, I made it a personal goal to win the award. As a founder/CEO, I first succeeded with Hannon Hill (#247 on the 2007 Inc. 500) and then with Pardot (#172 on the 2012 Inc. 500). And, now, as a co-founder/chairman, succeeded with Rigor this year (#430 on the 2017 Inc. 500).

When looking through this year’s list, a number of well funded SaaS startups appeared:

• Gainsight – $23.1M, 3,843% growth, #102
• Bizible – $3.4M, 2,405% growth, #179
• Domo – $79.9M, 2,250% growth, #192
• GuideSpark – $24.8M, 525% growth, #856
• Smartsheet – $64.3M, 425% growth, #1021

Let’s take Gainsight as it has the highest growth rate and look at some high end SaaS valuations from their funding rounds.

Gainsight Notes

• Funding rounds listed in Crunchbase:
  • May, 2017 – $52M Series E
  • Nov, 2015 – $50M Series D
  • Oct, 2014 – $25M Series C
  • Nov, 2013 – $20M Series B
• Recognized revenue by year:
  • 2016 – $23.1M (based on the 2017 Inc. 500 award)
  • 2015 – $13M (guess)
  • 2014 – $5.6M (based on the 2015 Inc. 500 award)
  • 2013 – $2M (guess)
• Estimated end of year run rate (run rate is always ahead of recognized revenue for fast growing companies):
  • 2016 – $30M
  • 2015 – $17M
  • 2014 – $8.5M
  • 2013 – $3.5M
• Published valuations:
  • Nov, 2015 – $348M post-money (source)
• Estimated valuation as a multiple of run rate:
  • Nov, 2015 – $16M run rate with a $298M pre-money valuation making a valuation multiple of 18.6 times run rate
  • Nov, 2013 – $3M run rate with an estimated $80M pre-money valuation making a valuation multiple of 26.7 times run rate

SaaS valuations are typically in the range of 3-5x run rate and can go as high as 10x run rate for the fastest growing startups (see SaaS Funding Valuations Based on a Forward Multiple). When valuations are 18 and 26 times run rate, it’s a bet on building the category winner and a different game compared to 99% of the venture capitalists out there.

Want to explore more? Check out the 2017 Inc. 5000 and Crunchbase.